EXHIBIT 10.1
EXECUTION COPY
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CREDIT AGREEMENT
dated as of
September 15, 2003
between
UNIVERSAL ELECTRONICS INC.,
as Borrower,
and
COMERICA BANK,
as Bank
$15,000,000
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INTERPRETATIONS................................................ 1
1.1 Definitions.................................................................. 1
"Acquisition"................................................................ 1
"Affiliate".................................................................. 1
"Agreement" ................................................................. 1
"Applicable Unused Revolving Commitment Fee Percentage"...................... 1
"Asset" ..................................................................... 2
"Asset Sale"................................................................. 2
"Bank" ...................................................................... 2
"Bankruptcy Code"............................................................ 2
"Base Lending Rate Portion".................................................. 2
"Base LIBOR"................................................................. 2
"Base Rate".................................................................. 2
"Borrower"................................................................... 2
"Borrowing".................................................................. 3
"Business Day"............................................................... 3
"Capital Expenditures"....................................................... 3
"Capital Lease".............................................................. 3
"Capital Lease Obligations" ................................................. 3
"Capital Stock" ............................................................. 3
"Change of Control" ......................................................... 3
"Closing Date"............................................................... 4
"Closing Fee"................................................................ 4
"Compliance Certificate"..................................................... 4
"Consolidated EBITDA"........................................................ 4
"Consolidated Effective Tangible Net Worth".................................. 4
"Consolidated Interest Expense".............................................. 4
"Consolidated Net Income".................................................... 4
"Consolidated Total Liabilities to Consolidated Effective Tangible Net
Worth Ratio".......................................................... 4
"Current Liabilities"........................................................ 5
"Debt" ...................................................................... 5
"Distributions".............................................................. 5
"Dollars" or "$"............................................................. 5
"ERISA"...................................................................... 5
"ERISA Event"................................................................ 5
"ERISA Group"................................................................ 6
"Event of Default"........................................................... 6
"Expenses"................................................................... 6
"Fees"....................................................................... 6
"Financial Statement(s)"..................................................... 6
"GAAP"....................................................................... 6
"Governing Documents"........................................................ 7
"Governmental Authority"..................................................... 7
"Hazardous Materials"........................................................ 7
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"Indemnified Person(s)"...................................................... 7
"Insolvency Proceeding"...................................................... 7
"Intangible Assets".......................................................... 8
"Interest Payment Date"...................................................... 8
"Interest Period"............................................................ 8
"Internal Revenue Code"...................................................... 8
"ISP"........................................................................ 8
"Knowledge".................................................................. 9
"Late Payment Fee"........................................................... 9
"Lending Office"............................................................. 9
"Letter(s) of Credit"........................................................ 9
"Letter of Credit Application"............................................... 9
"Letter of Credit Fee"....................................................... 9
"Letter of Credit Sublimit".................................................. 9
"Letter of Credit Usage"..................................................... 9
"LIBOR"...................................................................... 9
"LIBOR Business Day"......................................................... 9
"LIBOR Lending Rate"......................................................... 9
"LIBOR Lending Rate Margin".................................................. 10
"LIBOR Lending Rate Portion"................................................. 10
"LIBOR Reserve Percentage"................................................... 10
"Lien"....................................................................... 10
"Loan Document(s)"........................................................... 10
"Loans"...................................................................... 11
"Material Adverse Effect".................................................... 11
"Multiemployer Plan" ........................................................ 11
"Note"....................................................................... 11
"Notice of Borrowing"........................................................ 11
"Notice of Conversion or Continuation"....................................... 11
"Obligations"................................................................ 11
"Old Lender"................................................................. 12
"Operating Lease"............................................................ 12
"Participant"................................................................ 12
"Pay-Off Letter"............................................................. 12
"PBGC"....................................................................... 12
"Permitted Debt"............................................................. 12
"Permitted Liens"............................................................ 12
"Person"..................................................................... 13
"Plan"....................................................................... 13
"Purchase Agreement"......................................................... 13
"Purchase Money Lien"........................................................ 13
"Quick Ratio"................................................................ 13
"Regulation D"............................................................... 13
"Reimbursement Obligations".................................................. 13
"Reportable Even" ........................................................... 13
"Responsible Officer"........................................................ 14
"Retiree Health Plan"........................................................ 14
"Revolving Credit Commitment" ............................................... 14
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"Revolving Loans"............................................................ 14
"Revolving Loans Maturity Date".............................................. 14
"SEC"........................................................................ 14
"Solvent".................................................................... 14
"Subsidiary"................................................................. 14
"Swaps"...................................................................... 15
"Taxes"...................................................................... 15
"Transferee"................................................................. 15
"Uniform Customs"............................................................ 15
"Unmatured Event of Default" ................................................ 15
"Unused Revolving Commitment Fee"............................................ 15
1.2 Accounting Terms and Determinations.......................................... 15
1.3 Computation of Time Periods.................................................. 15
1.4 Construction................................................................. 16
1.5 Exhibits and Schedules....................................................... 16
1.6 No Presumption Against Any Party............................................. 16
1.7 Independence of Provisions................................................... 16
ARTICLE II TERMS OF THE CREDIT........................................................... 17
2.1 Revolving Loans.............................................................. 17
2.2 Reserved..................................................................... 17
2.3 Reserved..................................................................... 17
2.4 Interest Rates; Payments of Interest......................................... 17
2.5 Notice of Borrowing Requirements............................................. 18
2.6 Conversion or Continuation Requirements...................................... 19
2.7 LIBOR Costs.................................................................. 20
2.8 Illegality; Impossibility.................................................... 21
2.9 Disaster .................................................................... 21
2.10 Increased Risk-Based Capital Cost............................................ 21
2.11 Note; Statements of Obligations.............................................. 22
2.12 Holidays..................................................................... 22
2.13 Time and Place of Payments................................................... 22
2.14 Fees......................................................................... 23
ARTICLE III LETTERS OF CREDIT............................................................ 23
3.1 Letters of Credit............................................................ 23
3.2 Procedure for Issuance of Letters of Credit.................................. 24
3.3 Fees, Commissions and Other Charges.......................................... 24
3.4 Reimbursement Obligations.................................................... 25
3.5 Obligations Absolute......................................................... 25
3.6 Letter of Credit Payments.................................................... 26
3.7 Outstanding Letters of Credit Following Event of Default..................... 26
3.8 Letter of Credit Applications................................................ 26
ARTICLE IV CONDITIONS PRECEDENT.......................................................... 27
4.1 Conditions to Initial Loans or Letter of Credit.............................. 27
4.2 Conditions to all Loans and Letters of Credit................................ 28
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ARTICLE V REPRESENTATIONS AND WARRANTIES................................................. 29
5.1 Legal Status................................................................. 29
5.2 No Violation; Compliance..................................................... 29
5.3 Authorization; Enforceability................................................ 29
5.4 Approvals; Consents.......................................................... 29
5.5 Liens ....................................................................... 30
5.6 Debt......................................................................... 30
5.7 Litigation................................................................... 30
5.8 No Default................................................................... 30
5.9 Subsidiaries................................................................. 30
5.10 Taxes ....................................................................... 30
5.11 Correctness of Financial Statements.......................................... 30
5.12 ERISA........................................................................ 31
5.13 Other Obligations............................................................ 31
5.14 Public Utility Holding Company Act........................................... 31
5.15 Investment Company Act....................................................... 31
5.16 Patents, Trademarks, Copyrights, and Intellectual Property, etc.............. 31
5.17 Environmental Condition...................................................... 32
5.18 Solvency..................................................................... 32
ARTICLE VI AFFIRMATIVE COVENANTS......................................................... 32
6.1 Punctual Payments............................................................ 32
6.2 Books and Records............................................................ 32
6.3 Financial Statements......................................................... 32
6.4 Existence; Preservation of Licenses; Compliance with Law..................... 33
6.5 Insurance.................................................................... 34
6.6 Assets....................................................................... 34
6.7 Taxes and Other Liabilities.................................................. 34
6.8 Notice to Bank............................................................... 34
6.9 Employee Benefits............................................................ 35
6.10 Further Assurances........................................................... 36
6.11 Bank Accounts................................................................ 36
6.12 Environment.................................................................. 36
ARTICLE VII NEGATIVE COVENANTS........................................................... 36
7.1 Use of Funds; Margin Regulation.............................................. 36
7.2 Debt......................................................................... 36
7.3 Liens ....................................................................... 37
7.4 Merger, Consolidation, Transfer of Assets.................................... 37
7.5 Reserved..................................................................... 37
7.6 Sales and Leasebacks......................................................... 37
7.7 Asset Sales.................................................................. 37
7.8 Investments and Acquisitions................................................. 37
7.9 Character of Business........................................................ 38
7.10 Distributions................................................................ 38
7.11 Guaranty..................................................................... 39
7.12 Reserved..................................................................... 39
7.13 Transactions with Affiliates................................................. 39
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7.14 Reserved..................................................................... 39
7.15 Financial Condition.......................................................... 39
7.16 Transactions Under ERISA..................................................... 40
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES.............................................. 41
8.1 Events of Default............................................................ 41
8.2 Remedies..................................................................... 42
8.3 Appointment of Receiver or Trustee........................................... 43
8.4 Remedies Cumulative.......................................................... 43
ARTICLE IX TAXES......................................................................... 43
9.1 Taxes on Payments............................................................ 43
9.2 Indemnification For Taxes.................................................... 44
9.3 Evidence of Payment.......................................................... 44
ARTICLE X MISCELLANEOUS.................................................................. 44
10.1 Notices...................................................................... 44
10.2 No Waivers................................................................... 44
10.3 Expenses; Documentary Taxes; Indemnification................................. 45
10.4 Amendments and Waivers....................................................... 46
10.5 Successors and Assigns; Participations; Disclosure........................... 46
10.6 Confidentiality.............................................................. 47
10.7 Counterparts; Effectiveness; Integration..................................... 47
10.8 Severability................................................................. 47
10.9 Knowledge.................................................................... 47
10.10 Additional Waivers........................................................... 48
10.11 Destruction Of Borrower's Documents.......................................... 48
10.12 CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER................................... 48
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EXHIBITS AND SCHEDULES
Exhibit 2.5(b) - Form of Notice of Borrowing
Exhibit 2.6(b) - Form of Notice of Conversion or Continuation
Exhibit 4.1(b) - Form of Opinions of Borrower's Counsel
Exhibit 6.3(b) - Form of Compliance Certificate
Schedule 5.7 - Litigation
Schedule 5.9 - Subsidiaries
Schedule 5.12 - Employee Benefit Plans
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CREDIT AGREEMENT
This CREDIT AGREEMENT, dated as of September 15, 2003, is
entered into between Borrower and Bank.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
1.1 Definitions. The following terms, as used herein,
shall have the following meanings:
"Acquisition" means the acquisition of beneficial ownership of
the Assets or Capital Stock of another Person in one or a series of
transactions.
"Affiliate" means any Person (other than Borrower or any
Subsidiary) (i) that, directly or indirectly, controls, is controlled by or is
under common control with Borrower or any Subsidiary; (ii) which directly or
indirectly beneficially owns or controls more than twenty-five percent (25%) or
more of any class of voting stock of Borrower or any Subsidiary; or (iii) of
whom more than twenty-five percent (25%) or more of the voting stock of which is
directly or indirectly beneficially owned or held by Borrower or any Subsidiary.
For purposes of the foregoing, control (including controlled by and under common
control with) shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Credit Agreement, as amended or
restated from time to time in accordance with its terms.
"Applicable Unused Revolving Commitment Fee Percentage" means
the percentage set forth in the table below opposite the average daily collected
deposits of Borrower maintained at Bank for the prior fiscal quarter:
AVERAGE DAILY COLLECTED DEPOSITS OF APPLICABLE UNUSED REVOLVING COMMITMENT
BORROWER MAINTAINED AT BANK FEE PERCENTAGE
Greater than $7,000,000 0.000%
Equal to or greater than $4,000,000 and less 0.125%
than or equal TO $7,000,000
Less than $4,000,000 0.250%
"Asset" means any interest of a Person in any kind of property
or asset, whether real, personal, or mixed real and personal, and whether
tangible or intangible.
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"Asset Sale" means any sale, transfer or other disposition of
Borrower's or any Subsidiary's businesses or Asset(s) now owned or hereafter
acquired, including shares of stock and indebtedness of any Subsidiary,
receivables and leasehold interests.
"Bank" means Comerica Bank, a Michigan banking corporation.
"Bankruptcy Code" means The Bankruptcy Reform Act of 1978
(Pub. L. No. 95-598; 11 U.S.C.), as amended or supplemented from time to time,
or any successor statute, and any and all rules and regulations issued or
promulgated in connection therewith.
"Base Lending Rate Portion" means any portion of any Loan
designated by Borrower as bearing interest at the Base Lending Rate pursuant to
Section 2.5 or 2.6.
"Base LIBOR" applicable to any Interest Period for a LIBOR
Lending Rate Portion means the offered rate per annum (rounded upward to the
nearest one-hundredth of one percent (.001%)), if any, to first-class banks in
the LIBOR market quoted by Bank at 11:00 a.m. Pacific time, two (2) LIBOR
Business Days prior to the first day of such Interest Period for Dollar deposits
of an amount comparable to the principal amount of the LIBOR Lending Rate
Portion for which the LIBOR Lending Portion is being determined with maturities
comparable to the Interest Period for which such LIBOR Lending Rate will apply.
"Base Rate" means the variable rate of interest announced by
Bank at its corporate headquarters as its prime rate and which serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto. The Base Rate is determined by Bank from time to time
as a means of pricing credit extensions to some customers and is neither
directly tied to some external rate of interest or index nor necessarily the
lowest rate of interest charged by Bank at any given time for any particular
class of customers or credit extensions.
"Borrower" means Universal Electronics Inc., a Delaware
corporation.
"Borrowing" means a borrowing of Revolving Loans from Bank
pursuant to the terms and conditions hereof.
"Business Day" means any day other than a Saturday, a Sunday,
or a day on which commercial banks in the City of Los Angeles, California are
authorized or required by law or executive order or decree to close.
"Capital Expenditures" means expenditures made in cash, or
financed with long term debt, by any Person for the acquisition of any fixed
Assets or improvements, replacements, substitutions, or additions thereto that
have a useful life of more than one (1) year, including the direct or indirect
acquisition of such Assets by way of increased product or service charges,
offset items, or otherwise, and the principal portion of payments with respect
to Capital Lease Obligations, calculated in accordance with GAAP.
"Capital Lease" means any lease of an Asset by a Person as
lessee which would, in conformity with GAAP, be required to be accounted for as
an Asset and corresponding liability on the balance sheet of that Person.
2
"Capital Lease Obligations" of a Person means the amount of
the obligations of such Person under all Capital Leases which would be shown as
a liability on a balance sheet of such Person prepared in accordance with GAAP.
"Capital Stock" means any and all shares, interests,
participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Change of Control" means the time at which (i) any Person
(including a Person's Affiliates and associates) or group (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) (other than
the shareholders of Borrower on the Closing Date) becomes the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of a
percentage (based on voting power, in the event different classes of stock shall
have different voting powers) of the voting stock of Borrower equal to more than
twenty-five percent (25%), or such Person or group shall otherwise obtain the
power to control the election of the Board of Directors of Borrower, (ii) there
shall be consummated any consolidation or merger of Borrower pursuant to which
Borrower's common stock (or other capital stock) would be converted into cash,
securities or other property, other than a merger or consolidation of Borrower
in which the holders of such common stock (or other capital stock) immediately
prior to the merger have the same proportionate ownership, directly or
indirectly, of common stock of the surviving corporation immediately after the
merger as they had of Borrower's common stock immediately prior to such merger,
or (iii) all or substantially all of Borrower's Assets shall be sold, leased,
conveyed. or otherwise disposed of as an entirety or substantially as an
entirety to any Person (including an Affiliate or associate of Borrower) in one
or a series of transactions.
"Closing Date" means the date when all of the conditions set
forth in Section 4.1 have been fulfilled to the reasonable satisfaction of Bank
and its counsel.
"Closing Fee" has the meaning set forth in Section 2.14(b).
"Compliance Certificate" means a certificate of compliance to
be delivered quarterly in accordance with Section 6.3(b), substantially in the
form of Exhibit 6.3(b).
"Consolidated EBITDA" means, with respect to any period, the
sum of (without duplication) (i) Consolidated Net Income for such period
(excluding extraordinary gains and losses); (ii) Consolidated Interest Expense
during such period; (iii) accrued federal and state income taxes payable by
Borrower and the Subsidiaries during such period which are included in the
determination of Consolidated Net Income; and (iv) Borrower's and the
Subsidiaries' consolidated depreciation and amortization during such period; in
each case calculated in accordance with GAAP.
"Consolidated Effective Tangible Net Worth" means, as of any
date of determination, the result of (a) Borrower's consolidated total
stockholder's equity, minus (b) the sum of (i) all Intangible Assets of
Borrower, and (ii) all amounts due to Borrower from Affiliates.
"Consolidated Interest Expense" means, with respect to any
period, the current interest accrued during such period in accordance with GAAP
on the aggregate amount of Borrower's and the Subsidiaries' consolidated Debt,
including the interest portion of Borrower's and the Subsidiaries' consolidated
Capital Lease Obligations.
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"Consolidated Net Income" means, with respect to any period,
the consolidated net income of Borrower and the Subsidiaries after all federal,
state and local income taxes reflected on Borrower's Financial Statement for
such period, calculated in accordance with GAAP.
"Consolidated Total Liabilities to Consolidated Effective
Tangible Net Worth Ratio" means, as of the date of determination, the ratio of
(i) Borrower's consolidated total liabilities, calculated in accordance with
GAAP; to (ii) Consolidated Effective Tangible Net Worth.
"Current Liabilities" means, as of the date of determination,
the sum of Borrower's consolidated liabilities coming due within one year
(including all amounts due to Borrower's shareholders, officers and Affiliates),
calculated in accordance with GAAP.
"Debt" means, as of the date of determination, the sum, but
without duplication, of any and all of a Person's: (i) indebtedness heretofore
or hereafter created, issued, incurred or assumed by such Person (directly or
indirectly) for or in respect of money borrowed; (ii) Capital Lease Obligations;
(iii) obligations evidenced by bonds, debentures, notes, or other similar
instruments; (iv) obligations for the deferred purchase price of property or
services (including trade obligations); (v) current liabilities in respect of
unfunded vested benefits under any Plan; (vi) obligations under letters of
credit; (vii) obligations under acceptance facilities; (viii) obligations under
all guaranties, endorsements (other than for collection or deposit in the
ordinary course of business), and other contingent obligations to purchase, to
provide funds for payment, or supply funds to invest in any other Person, or
otherwise to assure creditor against loss; (ix) obligations secured by any Lien
on any Asset of such Person, whether or not such obligations have been assumed;
and (x) Swaps; provided, however, Debt shall not include obligations arising out
of trade payables incurred in the ordinary course of Borrower's business.
"Distributions" means dividends or distributions of earnings
made by a Person to its shareholders, partners or members, as the case may be.
"Dollars" or "$" means lawful currency of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor statute, and any and all
regulations thereunder.
"ERISA Event" means (a) a Reportable Event with respect to a
Plan or Multiemployer Plan, (b) the withdrawal of a member of the ERISA Group
from a Plan during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA), (c) the providing of notice of intent
to terminate a Plan in a distress termination (as described in Section 4041 (c)
of ERISA), (d) the institution by the PBGC of proceedings to terminate a Plan or
Multiemployer Plan, (e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of or the
appointment of a trustee to administer any Plan or Multiemployer Plan, or (ii)
that may result in termination of a Multiemployer Plan pursuant to Section 4041A
of ERISA, (f) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA of a member of the ERISA Group from a Multiemployer Plan,
or (g) providing any security to any Plan under Section 401(a)(29) of the
Internal Revenue Code by a member of the ERISA Group.
"ERISA Group" means Borrower and all members of a controlled
group of corporations and all trades or business (whether or not incorporated)
under common control which,
4
together with Borrower are treated as a single employer under Section 414 of the
Internal Revenue Code.
"Event of Default" has the meaning set forth in Section 8.1.
"Expenses" means (i) all expenses of Bank paid or incurred in
connection with their due diligence and investigation of Borrower, including
appraisal, filing, recording, documentation, publication and search fees and
other such expenses, and all attorneys' fees and expenses (including attorneys'
fees incurred pursuant to proceedings arising under the Bankruptcy Code)
incurred in connection with the structuring, negotiation, drafting, preparation,
execution and delivery of this Agreement, the Loan Documents, and any and all
other documents, instruments and agreements entered into in connection herewith;
(ii) all expenses of Bank, including attorneys' fees and expenses (including
attorneys' fees incurred pursuant to proceedings arising under the Bankruptcy
Code) paid or incurred in connection with the negotiation, preparation,
execution and delivery of any waiver, forbearance, consent, amendment or
addition to this Agreement or any Loan Document, or the termination hereof and
thereof; (iii) all costs or expenses paid or advanced by Bank which are required
to be paid by Borrower under this Agreement or the Loan Documents, including
taxes and insurance premiums of every nature and kind of Bank; and (iv) if an
Event of Default occurs, all expenses paid or incurred by Bank, including
attorneys' fees and expenses (including attorneys' fees incurred pursuant to
proceedings arising under the Bankruptcy Code), costs of collection, suit,
arbitration, judicial reference and other enforcement proceedings, and any other
out-of-pocket expenses incurred in connection therewith or resulting therefrom
whether or not suit is brought, or in connection with any refinancing or
restructuring of the Obligations and the liabilities of Borrower under this
Agreement, any of the Loan Documents, or any other document, instrument or
agreement entered into in connection herewith in the nature of a workout.
"Fees" means the Closing Fee, the Late Payment Fee, the Letter
of Credit Fees and the Unused Revolving Commitment Fees.
"Financial Statement(s)" means, with respect to any accounting
period of any Person, statements of income and statements of cash flows of such
Person for such period, and balance sheets of such Person as of the end of such
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year or, if such period is a full
fiscal year, corresponding figures from the preceding annual audit, all prepared
in reasonable detail and in accordance with GAAP, subject to year-end
adjustments in the case of monthly Financial Statements. Financial Statement(s)
shall include the schedules thereto and annual Financial Statements shall also
include the footnotes thereto.
"GAAP" means generally accepted accounting principles in the
United States of America, consistently applied, which are in effect as of the
date of this Agreement. If any changes in accounting principles from those in
effect on the date hereof are hereafter occasioned by promulgation of rules,
regulations, pronouncements or opinions by or are otherwise required by the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with similar functions),
and any of such changes results in a change in the method of calculation of, or
affects the results of such calculation of, any of the financial covenants,
standards or terms found herein, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial covenants,
standards or terms so as to equitably reflect such changes, with the desired
result that the criteria for evaluating financial condition and
5
results of operations of Borrower and the Subsidiaries shall be the same after
such changes as if such changes had not been made.
"Governing Documents" means the certificate or articles of
incorporation, amended and restated by-laws or other organizational or other
governing documents of Borrower.
"Governmental Authority" means any federal, state, local or
other governmental department, commission, board, bureau, agency, central bank,
court, tribunal or other instrumentality or authority or subdivision thereof,
domestic or foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Materials" means all or any of the following: (a)
substances that are defined or listed in, or otherwise classified pursuant to,
any applicable laws or regulations as hazardous substances, hazardous materials,
hazardous wastes, toxic substances, or any other formulation intended to define,
list, or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity,
or EP toxicity or are otherwise regulated for the protection of persons,
property or the environment; (b) oil, petroleum, or petroleum derived
substances, natural gas, natural gas liquids, synthetic gas, drilling fluids,
produced waters, and other wastes associated with the exploration, development,
or production of crude oil, natural gas, or geothermal resources; (c) any
flammable substances or explosives or any radioactive materials; and (d)
asbestos in any form or electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty (50) parts per million.
"Indemnified Person(s)" has the meaning given to such term in
Section 10.3(c).
"Insolvency Proceeding" means any proceeding commenced by or
against any Person, under any provision of the Bankruptcy Code, or under any
other bankruptcy or insolvency law, including, but not limited to, assignments
for the benefit of creditors, formal or informal moratoriums, compositions, or
extensions with some or all creditors.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Interest Payment Date" means:
(i) with respect to each Base Lending
Rate Portion, the first day of each and every month commencing the first such
day after the making of such Loan, and the Revolving Loans Maturity Date; and
(ii) with respect to each LIBOR Lending
Rate Portion, the earlier of: (1) the last day of the Interest Period with
respect thereto, or (2) if the Interest Period has a duration of more than three
months, every LIBOR Business Day that occurs during such Interest Period every
three months from the first day of such Interest Period.
"Interest Period" means, with respect to each LIBOR Lending
Rate Portion, the period commencing on the date of such LIBOR Lending Rate
Portion and ending on the numerically corresponding day one (1), two (2), three
(3), four (4), or six (6) months thereafter as Borrower may
6
elect pursuant to the applicable Notice of Borrowing or Notice of Conversion or
Continuation; provided, however, that:
(i) any Interest Period which would
otherwise end on a day which is not a LIBOR Business Day shall be extended to
the next succeeding LIBOR Business Day unless such LIBOR Business Day falls in
another calendar month in which case such Interest Period shall end on the
immediately preceding LIBOR Business Day;
(ii) any Interest Period which begins on
the last LIBOR Business Day of the calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last LIBOR Business Day of the calendar month
in which it would have ended if there were a numerically corresponding day in
such calendar month; and
(iii) no Interest Period respecting a
Revolving Loan may extend beyond the Revolving Loans Maturity Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, or any successor statute, and any and all
regulations thereunder.
"ISP" means the International Standby Practices (1998
version), and any subsequent versions or revisions approved by a Congress of the
International Chamber of Commerce Publication 590 and adhered to by Bank.
"Knowledge" has the meaning given to such term in Section
10.9.
"Late Payment Fee" has the meaning given to such term in
Section 2.14(c).
"Lending Office" means Bank's office located at its address
set forth on the signature pages hereof, or such other office of Bank as it may
hereafter designate as its Lending Office by notice to Borrower.
"Letter(s) of Credit" means any commercial or standby
letter(s) of credit issued by Bank, pursuant to Section 3.1.
"Letter of Credit Application" means Bank's standard form of
Commercial Letter of Credit Application or Standby Letter of Credit Application,
as applicable.
"Letter of Credit Fee" has the meaning given to such term in
Section 3.3(a).
"Letter of Credit Sublimit" means Four Million Five Hundred
Thousand Dollars ($4,500,000).
"Letter of Credit Usage" means, on any date of determination,
the aggregate maximum amounts available to be drawn under all outstanding
Letters of Credit, without regard to whether any conditions to drawing could
then be met.
"LIBOR" means London interbank offered rate.
7
"LIBOR Business Day" means any Business Day on which major
commercial banks are open for international business (including dealings in
Dollar deposits) in Los Angeles, California and London, England.
"LIBOR Lending Rate" means, with respect to a LIBOR Lending
Rate Portion, the rate per annum (rounded upwards if necessary to the nearest
one hundredth of one percent (.001%)), determined as the sum of: (a) the
quotient of: (i) Base LIBOR for the relevant Interest Period of such LIBOR
Lending Rate Portion; divided by (ii) the number equal to one hundred percent
(100%) minus the LIBOR Reserve Percentage with respect to such Interest Period;
plus (b) the LIBOR Lending Rate Margin. The LIBOR Lending Rate shall be adjusted
automatically on the effective date of any change in the LIBOR Reserve
Percentage, such adjustment to affect any LIBOR Lending Rate Portion outstanding
on such effective date to the extent such change is applied retroactively to
eurocurrency funding of a member bank in the Federal Reserve System. Each
determination of a LIBOR Lending Rate by Bank, including, but not limited to,
any determination as to the applicability or allocability of reserves to
eurocurrency liabilities or as to the amount of such reserves, shall be
conclusive and final in the absence of manifest error.
"LIBOR Lending Rate Margin" means one and one quarter
percentage points (125 basis points).
"LIBOR Lending Rate Portion" means any portion of any Loan
designated by Borrower as bearing interest at the LIBOR Lending Rate pursuant to
Section 2.5 or 2.6.
"LIBOR Reserve Percentage" means, for any Interest Period of
any LIBOR Lending Rate Portion, the daily average of the stated maximum rate
(rounded upward to the nearest one hundredth of one percent (.001%)), as
determined by Bank in accordance with its usual procedures (which determination
shall be conclusive in the absence of manifest error), at which reserves are
required to be maintained during such Interest Period by Bank (including
supplemental, marginal, and emergency reserves) under Regulation D by Bank
against Eurocurrency liabilities (as such term is defined in Regulation D), but
without benefit or credit of proration, exemptions, or offsets that might
otherwise be available to Bank from time to time under Regulation D. Without
limiting the generality of the foregoing, LIBOR Reserve Percentage shall include
any other reserves required to be maintained by Bank against (i) any category of
liabilities that includes deposits by reference to which the LIBOR Lending Rate
for a LIBOR Lending Rate Portion is being determined and (ii) any category of
extension of credit or other assets that includes LIBOR Lending Rate Portion.
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment, deposit arrangement or other preferential
arrangement, charge or encumbrance (including, any conditional sale or other
title retention agreement, or finance lease) of any kind.
"Loan Document(s)" means each of the following documents,
instruments, and agreements individually or collectively, as the context
requires:
(i) the Note; and
(ii) such other documents, instruments,
and agreements as Bank may reasonably request in connection with the
transactions contemplated hereunder.
"Loans" means the Revolving Loans.
8
"Material Adverse Effect" means a material adverse effect on
(i) the business, Assets, condition (financial or otherwise) or results of
operations of Borrower or any Subsidiary; provided that in the case of a
Subsidiary, taken as a whole with Borrower: (ii) the ability of Borrower to
perform its obligations under this Agreement and the Loan Documents to which it
is a party (including, without limitation, repayment of the Obligations as they
come due), or (iii) the validity or enforceability of this Agreement, the Loan
Documents, or the rights or remedies of Bank hereunder and thereunder.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA or Section 3(37) of ERISA to which any member of the
ERISA Group has contributed, or was obligated to contribute, within the
preceding six plan years (while a member of such ERISA Group) including for
these purposes any Person which ceased to be a member of the ERISA Group during
such six year period.
"Note" means, the Promissory Note, dated as of even date
herewith, executed by Borrower to the order of Bank, in the principal amount of
Fifteen Million Dollars ($15,000,000).
"Notice of Borrowing" means an irrevocable notice from
Borrower to Bank of Borrower's request for a Borrowing pursuant to the terms of
Section 2.5, substantially in the form of Exhibit 2.5(b).
"Notice of Conversion or Continuation" means a written notice
given pursuant to the terms of Section 2.6(b), substantially in the form of
Exhibit 2.6(b).
"Obligations" means any and all indebtedness, liabilities, and
obligations of Borrower owing to Bank and to its successors and assigns,
previously, now, or hereafter incurred, and howsoever evidenced, whether direct
or indirect, absolute or contingent, joint or several, liquidated or
unliquidated, voluntary or involuntary, due or not due, legal or equitable,
whether incurred before, during, or after any Insolvency Proceeding and whether
recovery thereof is or becomes barred by a statute of limitations or is or
becomes otherwise unenforceable or unallowable as claims in any Insolvency
Proceeding, together with all interest thereupon (including interest under
Section 2.4(b) and including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued during the pendency of an Insolvency
Proceeding. The Obligations shall include, without limiting the generality of
the foregoing, all principal and interest owing under the Loans, all
Reimbursement Obligations, all Expenses, the Fees, any other fees and expenses
due hereunder and under the Loan Documents (including any fees or expenses that,
but for the provisions of the Bankruptcy Code, would have accrued during the
pendency of an Insolvency Proceeding), and all other indebtedness evidenced by
this Agreement and/or the Loan Documents.
"Old Lender" means Bank of America. N.A.
"Operating Lease" means any lease of an Asset by a Person
which, in conformity with GAAP, is not a Capital Lease.
"Participant" has the meaning set forth in Section 10.5(d).
"Pay-Off Letter" means that certain letter, in form and
substance reasonably satisfactory to Bank, from Old Lender respecting the amount
necessary to repay in full all of the obligations of Borrower or any Subsidiary
owing to Old Lender and obtain a termination or release
9
of all of the Liens existing in favor of Old Lender in and to the Assets of
Borrower and such Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Debt" means (i) Debt owing to Bank in accordance
with the terms of this Agreement and the Loan Documents, and (ii) Debt up to a
maximum aggregate amount of One Million Dollars ($1,000,000) outstanding at any
one time incurred in the ordinary course of business and secured by the Liens
described in clause (iv) of the definition of Permitted Liens hereinbelow and
(iii) Debt owing to ABN Amro from Borrower's Subsidiary, Universal Electronics
BV located in Enschede Netherlands pursuant to a $500,000 revolving credit line.
"Permitted Liens" means (i) Liens for current taxes,
assessments or other governmental charges which are not delinquent or remain
payable without any penalty, or are being contested in good faith by appropriate
proceedings, provided that, if delinquent, adequate reserves have been set aside
with respect thereto as required by GAAP and, by reason of nonpayment, no
property is subject to a material risk of loss or forfeiture; (ii) Liens in
favor of Bank, in accordance with the Loan Documents, (iii) statutory Liens,
such as inchoate mechanics', inchoate materialmen's, landlord's, warehousemen's,
and carriers' liens, and other similar liens, other than those described in
clause (i) above, arising in the ordinary course of business with respect to
obligations which are not delinquent or are being contested in good faith by
appropriate proceedings, provided that, if delinquent, adequate reserves have
been set aside with respect thereto as required by GAAP and, by reason of
nonpayment, no property is subject to a material risk of loss or forfeiture;
(iv) Liens relating to Capital Lease Obligations permitted hereunder and Liens
securing any leases permitted in Section 7.5, (v) judgment Liens that do not
constitute an Event of Default under Section 8.1(i), (vi) Liens, if they
constitute such, of any true lease and consignment UCC filings permitted
hereunder, and (vii) Purchase Money Liens.
"Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Plan" means an employee benefit plan as defined in Section
3(3) of ERISA in which any personnel of any member of the ERISA Group
participate or from which any such personnel may derive a benefit or with
respect to which any member of the ERISA Group may incur liability, excluding
any Multiemployer Plan, but including any plan either established or maintained
by any member of the ERISA Group or to which such Person contributes under the
laws of any foreign country.
"Purchase Agreement" means an agreement between a purchaser
and a seller setting forth the terms and conditions for the consummation of an
Acquisition.
"Purchase Money Lien" means a Lien on any item of equipment
of Borrower; provided that (i) such Lien attaches only to that Asset and (ii)
the purchase-money obligation secured by such item of equipment does not exceed
one hundred percent (100%) of the purchase price of such item of equipment.
10
"Quick Ratio" means, as of the date of determination, the
ratio of (i) Borrower's accounts receivable plus Borrower's cash on hand and
marketable securities, to (ii) Current Liabilities (including the Obligations).
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System, as such regulation may be amended or supplemented
from time to time.
"Reimbursement Obligations" means the obligations of Borrower
to reimburse Bank pursuant to Section 3.5 amounts drawn under Letters of Credit.
"Reportable Event" means any of the events described in
Section 4043 (c) of ERISA other than a Reportable Event as to which the
provision of 30 days notice to the PBGC is waived under applicable regulations.
"Responsible Officer" means either the Chief Executive
Officer, Chief Financial Officer or Controller of a Person, or such other
officer, or employee of such Person designated by a Responsible Officer in a
writing delivered to Bank.
"Retiree Health Plan" means an employee welfare benefit plan
within the meaning of Section 3(1) of ERISA that provides benefits to
individuals after termination of their employment, other than as required by
Section 601 of ERISA.
"Revolving Credit Commitment" means Fifteen Million Dollars
($15,000,000).
"Revolving Loans" has the meaning given to such term in
Section 2.1.
"Revolving Loans Maturity Date" means August 31, 2006.
"SEC" means United States Securities and Exchange Commission.
"Solvent means, with respect to any Person on the date any
determination thereof is to be made, that on such date: (a) the present fair
valuation of the Assets of such Person is greater than such Person's probable
liability in respect of existing debts; (b) such Person does not intend to, and
does not believe that it will, incur debts beyond such Person's ability to pay
as such debts mature; and (c) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, which
would leave such Person with Assets remaining which would constitute
unreasonably small capital after giving effect to the nature of the particular
business or transaction. For purposes of this definition (i) the fair valuation
of any property or assets means the amount realizable within a reasonable time,
either through collection or sale of such Assets at their regular market value,
which is the amount obtainable by a capable and diligent Person from an
interested buyer willing to purchase such property or assets within a reasonable
time under ordinary circumstances; and (ii) the term debts includes any payment
obligation, whether or not reduced to judgment, equitable or legal, matured or
unmatured, liquidated or unliquidated, disputed or undisputed, secured or
unsecured, absolute, fixed or contingent.
"Subsidiary" means any corporation, limited liability company,
partnership, trust or other entity (whether now existing or hereafter organized
or acquired) of which Borrower or one or more Subsidiaries of Borrower at the
time owns or controls directly or indirectly more than 50% of the shares of
stock or partnership or other ownership interest having general voting power
under
11
ordinary circumstances to elect a majority of the board of directors, managers
or trustees or otherwise exercising control of such corporation, limited
liability company, partnership, trust or other entity (irrespective of whether
at the time stock or any other form of ownership of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
"Swaps" means payment obligations with respect to interest
rate swaps, currency swaps and similar obligations obligating a Person to make
payments, whether periodically or upon the happening of a contingency. For the
purposes of this Agreement, the amount of the obligation under any Swap shall be
the amount determined, in respect thereof as of the end of the then most
recently ended fiscal quarter of Borrower, based on the assumption that such
Swap had terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides for the netting
of amounts payable by and to each party thereto or if any such agreement
provides for the simultaneous payment of amounts by and to each party, then in
each such case, the amount of such obligation shall be the net amount so
determined.
"Taxes" has the meaning set forth in Section 9.1.
"Transferee" has the meaning set forth in Section 11.5(e).
"Uniform Customs" means the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Unmatured Event of Default" means any condition or event
which with the giving of notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Unused Revolving Commitment Fee" has the meaning given to
such term in Section 2.14(a).
1.2 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP.
1.3 Computation of Time Periods. In this Agreement, with
respect to the computation of periods of time from a specified date to a later
specified date, the word from means from and including and the words to and
until each mean to but excluding. Periods of days referred to in this Agreement
shall be counted in calendar days unless otherwise stated.
1.4 Construction. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular and to
the singular include the plural, references to any gender include any other
gender, the part includes the whole, the term including is not limiting, and the
term or has, except where otherwise indicated, the inclusive meaning represented
by the phrase and/or. References in this Agreement to determination by Bank
include good faith estimates by Bank (in the case of quantitative
determinations), and good faith beliefs by Bank (in the case of qualitative
determinations). The words hereof, herein, hereby, hereunder, and similar terms
in this Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement, except when a specific reference to a particular
provision is made.
12
Article, section, subsection, clause, exhibit and schedule references are to
this Agreement, unless otherwise specified. Any reference in this Agreement or
any of the Loan Documents to this Agreement or any of the Loan Documents
includes any and all permitted alterations, amendments, changes, extensions,
modifications, renewals, or supplements thereto or thereof, as applicable.
1.5 Exhibits and Schedules. All of the exhibits and
schedules attached hereto shall be deemed incorporated herein by reference.
1.6 No Presumption Against Any Party. Neither this
Agreement, any of the Loan Documents, any other document, agreement, or
instrument entered into in connection herewith, nor any uncertainty or ambiguity
herein or therein shall be construed or resolved using any presumption against
any party hereto, whether under any rule of construction or otherwise. On the
contrary, this Agreement, the Loan Documents, and the other documents,
instruments, and agreements entered into in connection herewith have been
reviewed by each of the parties and their counsel and shall be construed and
interpreted according to the ordinary meanings of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
1.7 Independence of Provisions. All agreements and
covenants hereunder, under the Loan Documents, and the other documents,
instruments, and agreements entered into in connection herewith shall be given
independent effect such that if a particular action or condition is prohibited
by the terms of any such agreement or covenant, the fact that such action or
condition would be permitted within the limitations of another agreement or
covenant shall not be construed as allowing such action to be taken or
condition to exist.
ARTICLE II
TERMS OF THE CREDIT
2.1 Revolving Loans. Provided that no Event of Default or
Unmatured Event of Default has occurred and is continuing, and subject to the
other terms and conditions hereof, Bank agrees to make revolving loans
"Revolving Loans") to Borrower, upon notice in accordance with Section 2.5(b),
from the Closing Date up to but not including the Revolving Loans Maturity Date,
the proceeds of which shall be used only for the purposes allowed in Section 7.1
(a), subject to the following conditions and limitations:
(a) the principal amount of Revolving Loans
outstanding after giving effect to any proposed Borrowing plus the Letter of
Credit Usage on such date shall not exceed the Revolving Credit Commitment;
(b) Borrower shall not be permitted to borrow,
and Bank shall not be obligated to make, any Revolving Loans to Borrower, unless
and until all of the conditions for a Borrowing set forth in Section 4.2 have
been met to the satisfaction of Bank in its sole and absolute discretion; and
(c) Borrower may repay and, subject to the terms
and conditions hereof, reborrow Revolving Loans. All such repayments shall be
without penalty or premium except as otherwise required by Section 2.7 with
respect to repayments of LIBOR Lending Rate Portions. Borrower shall give Bank
at least three (3) Business Days' prior written notice of any repayment of a
Base Lending Rate Portion and at least three (3) LIBOR Business Days' prior
written notice of any
13
repayment of a LIBOR Lending Rate Portion. On the Revolving Loans Maturity Date,
Borrower shall pay to Bank the entire unpaid principal balance of the Revolving
Loans together with all accrued but unpaid interest thereon,
2.2 Reserved.
2.3 Reserved.
2.4 Interest Rates; Payments of Interest.
(a) Revolving Loans. Subject to the terms and
conditions hereof, all Revolving Loans, or portions thereof, may be outstanding
as either Base Lending Rate Portions or LIBOR Lending Rate Portions, by
designating, in accordance with Sections 2.5(b) and 2.6(b), either the Base
Lending Rate or the LIBOR Lending Rate to apply to all or any portion of the
unpaid principal balance of the Revolving Loans.
(b) Reserved.
(c) Limitations on LIBOR Lending Rate Portions.
LIBOR Lending Rate Portions shall be in minimum aggregate amounts each of One
Million Dollars ($1,000,000).
(d) Lending Office. Each type of Loan shall be
made and maintained by Bank at Bank's Lending Office for such type of Loan.
(e) Default Rate. Upon the occurrence and during
the continuance of an Event of Default, in addition to and not in substitution
of any of Bank's other rights and remedies with respect to such Event of
Default, at Bank's option, the entire unpaid principal balance of the Loans
shall bear interest at the otherwise applicable rate(s) plus three hundred (300)
basis points. In addition, interest, Expenses, the Fees, and other amounts due
hereunder not paid when due shall bear interest at the Base Lending Rate plus
three hundred (300) basis points until such overdue payment is paid in full.
(f) Computation of Interest. All computations of
interest shall be calculated on the basis of a year of three hundred sixty (360)
days for the actual days elapsed. In the event that the Base Rate announced is,
from time to time, changed, adjustment in the rate of interest payable hereunder
on all Base Lending Rate Portions shall be made as of 12:01 a.m. (Pacific time)
on the effective date of the change in the Base Rate. Interest shall accrue from
the Closing Date to the date of repayment of the Loans in accordance with the
provisions of this Agreement; provided, however, if a Loan is repaid on the same
day on which it is made, then one (1) day's interest shall be paid on that Loan.
Any and all interest not paid when due shall thereafter be deemed to be a
Revolving Loan as a Base Lending Rate Portion made under Section 2.1 and shall
bear interest thereafter as provided for in Section 2.4(e).
(g) Maximum Interest Rate. In no event shall the
interest rate and other charges hereunder exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such a court determines
that Bank has received interest and other charges hereunder in excess of the
highest rate applicable hereto, such excess shall be deemed received on account
of, and shall automatically be applied to reduce, the Obligations, other than
interest, in the inverse order of maturity, and the
14
provisions hereof shall be deemed amended to provide for the highest permissible
rate. If there are no Obligations outstanding, Bank shall refund to Borrower
such excess.
(h) Payments of Interest. All accrued but unpaid
interest on the Loans, calculated in accordance with this Section 2.4, shall be
due and payable, in arrears, on each and every Interest Payment Date.
2.5 Notice of Borrowing Requirements.
(a) Each Borrowing of a Base Lending Rate
Portion shall be made on a Business Day, and each Borrowing of a LIBOR Lending
Rate Portion shall be made on a LIBOR Business Day.
(b) Each Borrowing shall be made upon telephonic
notice given by a Responsible Officer of Borrower, and, at Bank's request,
followed by a Notice of Borrowing, given by facsimile or personal service,
delivered to Bank at the address set forth in the Notice of Borrowing. If for a
Base Lending Rate Portion, Bank shall be given such notice no later than 11:00
a.m., Pacific time, one (1) Business Day prior to the day on which such
Borrowing is to be made, and, if for a LIBOR Lending Rate Portion, Bank shall be
given notice no later than 9:00 a.m., Pacific time, three (3) LIBOR Business
Days prior to the day on which such Borrowing is to be made, and such notice
shall state the amount thereof (subject to the provisions of Section 2.1).
(c) Bank shall not incur any liability to
Borrower in acting upon any telephonic notice which Bank believes in good faith
to have been given by a Responsible Officer of Borrower, or for otherwise acting
in good faith under this Section 2.5, and in making any Loans pursuant to any
such telephonic notice.
(d) So long as all of the conditions for a
Borrowing of a Loan set forth herein have been satisfied, Bank shall credit the
proceeds of such Loan on the applicable Borrowing date into Borrower's general
deposit account number 1892476985 maintained with Bank or any other demand
deposit account maintained by Borrower with Bank as Borrower may, from time to
time, specify by notice to Bank.
2.6 Conversion or Continuation Requirements.
(a) Borrower shall have the option to: (i)
convert, at any time, all or any portion of any of the outstanding Loans,
subject to the limitations and requirements of Section 2.4(a), from a portion
bearing interest at one of the interest rate options available pursuant to
Section 2.4(a) to another; or (ii) upon the expiration of any Interest Period
applicable to a LIBOR Lending Rate Portion, to continue all or any portion of
such LIBOR Lending Rate Portion as a LIBOR Lending Rate Portion with the
succeeding Interest Period(s) of such continued LIBOR Lending Rate Portion
commencing on the expiration date of the Interest Period previously applicable
thereto, subject to the following limitations:
(i) a LIBOR Lending Rate Portion may
only be converted to a Base Lending Rate Portion, or continued as a LIBOR
Lending Rate Portion, on the expiration date of the Interest Period applicable
thereto;
15
(ii) no outstanding Loan, or portion
thereof, may be continued as, or be converted into, a LIBOR Lending Rate Portion
in the event that, on the earlier of the date of the delivery of the Notice of
Conversion or Continuation or the telephonic notice in respect thereof, any
Event of Default or Unmatured Event of Default has occurred and is continuing;
(iii) if Borrower fails to deliver the
appropriate Notice of Conversion or Continuation or the telephonic notice in
respect thereof pursuant to the required notice period before the expiration
of the Interest Period of a LIBOR Lending Rate Portion, such LIBOR Lending Rate
Portion shall automatically be converted to a Base Lending Rate Portion; and
(iv) no outstanding portion of a Loan
may be continued as, or be converted into, a LIBOR Lending Rate Portion in the
event that, after giving effect to such conversion or continuation, there would
be more than five (5) LIBOR Lending Rate Portions outstanding.
(b) Borrower shall give telephonic notice of any
proposed continuation or conversion pursuant to this Section 2.6, and, at Bank's
request, followed by a Notice of Conversion or Continuation, given by facsimile
or personal service, delivered to Bank at the address set forth in the Notice of
Conversion or Continuation. Bank shall be given such notice no later than 11:00
a.m., Pacific time, on the Business Day which is the proposed conversion date
(in the case of a conversion to a Base Lending Rate Portion) and no later than
9:00 a.m., Pacific time, three (3) LIBOR Business Days in advance of the
proposed conversion or continuation date(in the case of a conversion to, or a
continuation of, a LIBOR Lending Rate Portion). If such Notice of Conversion or
Continuation is received by Bank not later than 11:00 a.m., Pacific time, on a
LIBOR Business Day, such day shall be treated as the first LIBOR Business Day of
the required notice period. In any other event, such notice will be treated as
having been received at the opening of business of the next LIBOR Business Day.
A Notice of Conversion or Continuation shall specify: (1) the proposed
conversion or continuation date (which shall be a Business Day or a LIBOR
Business Day, as applicable); (2) the amount of the Revolving Loan to be
converted or continued; (3) the nature of the proposed conversion or
continuation; and (4) in the case of a conversion to or continuation of a LIBOR
Lending Rate Portion, the requested Interest Period.
(c) Bank shall not incur any liability to
Borrower in acting upon any telephonic notice referred to above which Bank
believes in good faith to have been given by a Responsible Officer of Borrower
or for otherwise acting in good faith under this Section 2.6. Any Notice of
Conversion or Continuation (or telephonic notice in respect thereof) shall be
irrevocable and Borrower shall be bound to convert or continue in accordance
therewith.
2.7 LIBOR Costs.
(a) Borrower shall reimburse Bank for any
increase in Bank's costs (which shall include, but not be limited to, taxes,
other than taxes imposed on the overall net income of Bank, fees or charges), or
any loss or expense (including, without limitation, any loss or expense incurred
by reason of the liquidation or re-employment of deposits or other funds
acquired by Bank to fund or maintain outstanding the principal amount of the
Loans) incurred by it directly or indirectly resulting from the making of any
LIBOR Lending Rate Portion due to: (i) the modification, adoption, or enactment
of any law, rule, regulation or treaty or the interpretation thereof by any
governmental or other authority (whether or not having the force of law) which
becomes effective after the date hereof; (ii) the modification or new
application of any law,
16
regulation or treaty or the interpretation thereof by any governmental or other
authority (whether or not having the force of law) which becomes effective after
the date hereof; (iii) compliance by Bank with any request or directive (whether
or not having the force of law) of any monetary or fiscal agency or authority
which becomes effective after the date hereof; (iv) violations by Borrower of
the terms of this Agreement; or (v) any prepayment of a LIBOR Lending Rate
Portion at any time prior to the end of the applicable Interest Period,
including pursuant to Section 8.2.
(b) The amount of such costs, losses, or
expenses shall be reasonably determined solely by Bank based upon the assumption
that Bank funded one hundred percent (100%) of each LIBOR Lending Rate Portion
in the LIBOR market. In attributing Bank's general costs relating to its
eurocurrency operations to any transaction under this Agreement or averaging any
costs over a period of time, Bank may use any reasonable attribution or
averaging methods which it deems appropriate and practical. Bank shall notify
Borrower of the amount due Bank pursuant to this Section 2.7 in respect of any
LIBOR Lending Rate Portion as soon as practicable but in any event within
forty-five (45) days after the last day of the Interest Period of such LIBOR
Lending Rate Portion, and Borrower shall pay to Bank the amount due within
fifteen (15) days of its receipt of such notice. A certificate as to the amounts
payable pursuant to the foregoing sentence together with whatever detail is
reasonably available to Bank shall be submitted by Bank to Borrower. Such
determination shall, if not objected to within ten (10) days, be conclusive and
binding upon Borrower in the absence of manifest error. If Bank claims increased
costs, loss, or expenses pursuant to this Section 2.7, then Bank, if requested
by Borrower, shall use reasonable efforts to take such steps that Borrower
reasonably requests, including designating different Lending Offices, as would
eliminate or reduce the amount of such increased costs, losses, or expenses, so
long as taking such steps would not, in the reasonable judgment of Bank,
otherwise be disadvantageous to Bank. Any recovery by Bank or its Lending Office
of amounts previously borne by Borrower pursuant to this Section 2.7 shall be
promptly remitted, without interest (unless Bank received interest on such
recovered amounts), to Borrower by Bank.
2.8 Illegality; Impossibility. Notwithstanding anything
herein to the contrary, if Bank determines (which determination shall be
conclusive absent manifest error) that any law, rule, regulation, treaty or
directive, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Bank (or its Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for Bank (or its Lending Office) to
fund or maintain a LIBOR Lending Rate Portion in the LIBOR market or to continue
such funding or maintaining, then Bank shall give notice of such circumstances
to Borrower and (a) in the case of each and every LIBOR Lending Rate Portion
which is outstanding, Borrower shall, if requested by Bank, prepay such LIBOR
Lending Rate Portion(s) on or before the date specified in such request,
together with interest accrued thereon, and the date so specified shall be
deemed to be the last day of the Interest Period of that LIBOR Lending Rate
Portion, and concurrent with any such prepayment, Bank shall make a Base Lending
Rate Portion to Borrower in the principal amount equal to the principal amount
of the LIBOR Lending Rate Portions so prepaid, and (b) Bank shall not be
obligated to make any further LIBOR Lending Rate Portions until Bank determines
that it would no longer be unlawful or impossible to do so.
2.9 Disaster. Notwithstanding anything herein to the
contrary, if Bank determines (which determination shall be conclusive absent
manifest error) that (a) Bank is unable
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to determine the LIBOR Lending Rate with respect to any Notice of Borrowing or
Notice of Conversion or Continuation selecting the LIBOR Lending Rate because
quotations of interest rates for the relevant deposits are not being provided in
the relevant amounts or for the relative maturities or (b) the LIBOR Lending
Rate will not adequately reflect the cost to Bank of making or funding LIBOR
Lending Rate Portions, then (i) the right of Borrower to select the LIBOR
Lending Rate shall be suspended until Bank notifies Borrower that the
circumstances causing such suspension no longer exist, and (ii) Borrower shall
repay in full the then outstanding principal balance of all LIBOR Lending Rate
Portions, together with interest accrued thereon, on the last day of the
Interest Period applicable to each such LIBOR Lending Rate Portion, and
concurrent with any such prepayment, Bank shall make a Base Lending Rate Portion
to Borrower in the principal amount equal to the principal amount of the LIBOR
Lending Rate Portions so repaid.
2.10 Increased Risk-Based Capital Cost. If the amount of
capital required or expected to be maintained by Bank or any Person directly or
indirectly owning or controlling Bank (each a "Control Person"), shall be
affected by:
(a) the introduction or phasing in of any law,
rule or regulation after the date hereof;
(b) any change after the date hereof in the
interpretation of any existing law, rule or regulation by any central bank or
United States or foreign governmental authority charged with the administration
thereof; or
(c) compliance by Bank or such Control Person
with any directive, guideline or request from any central bank or United States
or foreign governmental authority (whether or not having the force of law)
promulgated or made after the date hereof, and Bank shall have reasonably
determined that such introduction, phasing in, change or compliance shall have
had or will thereafter have the effect of reducing (x) the rate of return on
Bank's or such Control Person's capital, or (y) the asset value to Bank or such
Control Person of the Loans made or maintained by Bank, in either case to a
level below that which Bank or such Control Person could have achieved or would
thereafter be able to achieve but for such introduction, phasing in, change or
compliance (after taking into account Bank's or such Control Person's policies
regarding capital), in either case by an amount which Bank in its reasonable
judgment deems material, then, on demand by Bank, Borrower shall pay to Bank or
such Control Person such additional amount or amounts as shall be sufficient to
compensate Bank or such Control Person, as the case may be, for such reduction.
2.11 Note; Statements of Obligations. The Loans and
Borrower's obligation to repay the same shall be evidenced by the Note, this
Agreement and the books and records of Bank. Bank shall render monthly
statements of the Loans to Borrower, including statements of all principal and
interest owing on the Loans, and all Fees and Expenses owing, and such
statements shall be presumed to be correct and accurate and constitute an
account stated between Borrower and Bank's unless, within thirty (30) days after
receipt thereof by Borrower, Borrower delivers to Bank, at the address specified
in Section 10.1, written objection thereof specifying the error or errors, if
any, contained in any such statement.
2.12 Holidays. Any principal or interest in respect of the
Loans (other than in respect of a LIBOR Lending Rate Portion) which would
otherwise become due on a day other than a Business Day, shall instead become
due on the next succeeding Business Day and such adjustment shall be reflected
in the computation of interest; provided, however, that in the event that such
due
18
date shall, subsequent to the specification thereof by Bank, for any reason no
longer constitute a Business Day, Bank may change such specified due date in
accordance with this Section 2.12.
2.13 Time and Place of Payments.
(a) All payments due hereunder shall be made
available to Bank in immediately available Dollars, not later than 12:00 p.m.,
Pacific time, on the day of payment, to the following address or such other
address as Bank may from time to time specify by notice to Borrower:
Comerica Bank
301 East Ocean Boulevard, Suite 1800
Long Beach, CA 90802
Attention: Thomas R. Kelly
(b) Borrower hereby authorizes Bank to charge
Borrower's demand deposit account number 1892476985 with Bank, or any other
demand deposit account maintained by Borrower with Bank, for the amount of any
payment due or past due hereunder or under any Loan Document, for the full
amount thereof. Should there be insufficient funds in any such demand deposit
account to pay all such sums when due, the full amount of such deficiency shall
be immediately due and payable in cash by Borrower.
(c) In addition, Borrower hereby authorizes Bank
at its option, without prior notice to Borrower, to advance a Revolving Loan as
a Base Lending Rate Portion for any payment due or past due hereunder, including
interest owing on the Loans, the Fees and all Expenses, and to pay the proceeds
of such Revolving Loan to Bank for application toward such due or past due
payment.
2.14 Fees.
(a) Borrower shall pay to Bank on a quarterly
basis an unused commitment fee (the "Unused Revolving Commitment Fee") in an
amount equal to the Applicable Unused Commitment Fee Percentage times the
difference of the Revolving Credit Commitment minus the sum of (i) the average
daily outstanding Revolving Loans during the prior quarter plus (ii) the average
daily Letter of Credit Usage during the prior quarter. The Unused Commitment Fee
shall begin to accrue on the Closing Date and shall be due and payable, in
arrears, on the first Business Day of each and every calendar quarter, and the
Revolving Loans Maturity Date. The Unused Commitment Fee shall be calculated on
the basis of a year of three hundred sixty (360) days for the actual days
elapsed.
(b) Borrower shall pay to Bank a fee (the
"Closing Fee") in an amount equal to Two Thousand Five Hundred Dollars ($2,500),
receipt of which is hereby acknowledged. The Closing Fee is fully earned and
nonrefundable.
(c) If any payment due hereunder, whether for
principal, interest, or otherwise, is not paid on or before the tenth (10th) day
after the date such payment is due, in addition to and not in substitution of
any of Bank's other rights and remedies with respect to such nonpayment,
Borrower shall pay to Bank a late payment fee (the "Late Payment Fee") equal to
five
19
percent (5%) of the amount of such overdue payment. The Late Payment Fee shall
be due and payable on the eleventh (11th) day after the due date of the overdue
payment with respect thereto.
ARTICLE III
LETTERS OF CREDIT
3.1 Letters of Credit.
(a) Provided that no Event of Default or
Unmatured Event of Default is continuing and subject to the other terms and
conditions hereof, Bank agrees to issue commercial and standby letters of credit
("Letters of Credit") for the account of Borrower in such form as may be
approved from time to time by Bank, subject to the following limitations:
(i) The face amount of the Letter of
Credit requested if and when issued must not cause the sum of the aggregate
principal amount outstanding of all Revolving Loans plus the Letter of Credit
Usage to exceed the Revolving Credit Commitment;
(ii) The face amount of the Letter of
Credit requested if and when issued must not cause the Letter of Credit Usage to
exceed the Letter of Credit Sublimit;
(iii) Standby Letters of Credit may not
have an expiry date or draw period which extends beyond the earlier of (x) 365
days following the date of issuance, or (y) the date which is thirty (30) days
prior to the Revolving Loans Maturity Date;
(iv) Commercial Letters of Credit may
not have an expiry date or draw period which extends beyond the date which is
thirty (30) days prior to the Revolving Loans Maturity Date; and
(v) The conditions specified in Section
4.2 shall have been satisfied on the date of issuance of such Letter of Credit.
(b) Each Letter of Credit shall (i) be
denominated in Dollars, and (ii) be a standby letter of credit issued to support
obligations of Borrower or any Subsidiary, contingent or otherwise, to finance
the working capital and business needs of Borrower or such Subsidiary, in the
ordinary course of business or Acquisitions, either permitted under Section 7.8
or otherwise consented to, in writing, by Bank.
(c) Each Letter of Credit shall be subject to
the Uniform Customs or the ISP, as determined by Bank, in its sole discretion,
and, to the extent not inconsistent therewith, the laws of the State of
California.
(d) The Bank shall not at any time be obligated
to issue any Letter of Credit hereunder if such issuance would conflict with, or
cause the Bank to exceed any limits imposed by its organizational or governing
documents or by any applicable law, rule, regulation or treaty or determination
of an arbitrator or a court or other governmental authority to which Bank is
subject.
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3.2 Procedure for Issuance of Letters of Credit. Borrower
may request that the Bank issue a Letter of Credit at any time prior to the date
which is thirty (30) days prior to the Revolving Loans Maturity Date by
delivering to the Bank a Letter of Credit Request at its address for notices
specified herein a Letter of Credit Request therefor, completed to the
satisfaction of the Bank, together with such other certificates, documents and
other papers and information as the Bank may request. Upon receipt of any Letter
of Credit Request, the Bank will process such Letter of Credit Request and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Bank be required to issue any Letter of Credit earlier than three (3) Business
Days after its receipt of the Letter of Credit Request therefor and all such
other certificates, documents and other papers and information relating thereto)
by issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed by the Bank and Borrower. The Bank shall furnish a
copy of such Letter of Credit to Borrower promptly following the issuance
thereof.
3.3 Fees, Commissions and Other Charges.
(a) With respect to each Standby Letter of
Credit, Borrower shall pay to Bank a fee in an amount equal to the greater of
$600 or the face amount of such Standby Letter of Credit times one and
one quarter percent (1.25%) per annum pro-rated for time period shorter than one
year (the "Standby Letter of Credit Fee"). The Standby Letter of Credit Fee
shall be due and payable Upon issuance of the applicable Letter of Credit and
again on" each anniversary thereof; "With respect to each Commercial Letter of
Credit, Borrower shall pay to Bank Bank's standard fees as set forth on Bank's
Commercial Letter of Credit Fee Schedule, as updated from time to time (the
"Commercial Letter of Credit Fee"). The Standby Letter of Credit Fee and the
Commercial Letter of Credit Fee are collectively referred to herein as the
"Letter of Credit Fees".
(b) In addition to the foregoing, Borrower shall
pay or reimburse the Bank for such normal and customary costs and expenses as
are reasonably incurred or charged by the Bank in issuing, effecting payment
under, amending or otherwise administering any Letter of Credit.
3.4 Reimbursement Obligations.
(a) Borrower agrees to reimburse the Bank on the
same Business Day on which a draft is presented under any Letter of Credit and
paid by the Bank, provided that the Bank provides notice to Borrower prior to
11:00 a.m., Pacific time, on such Business Day and otherwise Borrower will
reimburse the Bank on the next succeeding Business Day; provided, further, that
the failure to provide such notice shall not affect Borrower's absolute and
unconditional obligation to reimburse the Bank when required hereunder for any
draft paid under any Letter of Credit. The Bank shall provide notice to Borrower
on such Business Day as a draft is presented and paid by the Bank indicating
the amount of (i) such draft so paid and (ii) any taxes, fees, charges or other
costs or expenses incurred by the Bank in connection with such payment. Each
such payment shall be made to the Bank at its address specified on the signature
pages hereof in Dollars.
(b) Interest shall be payable on any and all
amounts remaining unpaid by Borrower under this Section from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Revolving Loans that are (i) in the case of the first day on which
such amounts become
21
payable (except where such amounts become payable by reason of the acceleration
thereof), Base Lending Rate Portions which were not then overdue and (ii) in all
cases to which clause (i) is not applicable, Base Lending Rate Portions which
were then overdue.
(c) Each drawing under any Letter of Credit
shall constitute a request by Borrower to Bank for a Borrowing of a Revolving
Loan as a Base Lending Rate Portion. The date of such drawing shall be deemed
the date on which such Borrowing is made.
3.5 Obligations Absolute.
(a) Borrower's obligations under this Article
III shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which any
Borrower may have or have had against the Bank or any beneficiary of a Letter of
Credit.
(b) Borrower also agrees with the Bank that
Borrower's Reimbursement Obligations under Section 3.4 shall not be affected by,
among other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or (iii) any claims whatsoever of Borrower against
the beneficiary of such Letter of Credit or any such transferee
(c) Bank shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit,
except for errors or omissions caused by the Bank's gross negligence or willful
misconduct.
(d) Borrower agrees that any action taken or
omitted by the Bank under or in connection with any Letter of Credit or the
related drafts or documents, if done in the absence of gross negligence or
willful misconduct and in accordance with the standards of care specified in the
UCC, shall be binding on Borrower and shall not result in any liability of the
Bank to Borrower.
3.6 Letter of Credit Payments. If any draft shall be
presented for payment under any Letter of Credit, the responsibility of the Bank
to Borrower in connection with such draft shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit. In determining whether to pay under any Letter of Credit, only
the Bank shall be responsible for determining that the documents and
certificates required to be delivered under the Letter of Credit have been
delivered and that they comply on their face with the requirements of such
Letter of Credit.
3.7 Outstanding Letters of Credit Following Event of
Default. With respect to all Letters of Credit outstanding upon the occurrence
of an Unmatured Event of Default or Event of Default, Borrower shall either
replace such Letters of Credit, whereupon such Letters of Credit shall be
canceled, with letters of credit issued by another issuer acceptable to the
beneficiary of such Letter of Credit, or provide the Bank, as security for such
Letters of Credit, with a cash collateral deposit in an amount equal to one
hundred and five percent (105%) of the Letter of Credit Usage for so long as
such Letters of Credit remain outstanding during the continuance of such
Unmatured
22
Event of Default or Event of Default. Borrower hereby grants to Bank a security
interest in such cash collateral to secure all Obligations of Borrower under
this Agreement and the other Loan Documents. Amounts held in such cash
collateral account shall be applied by Bank to the payment of drafts drawn under
such Letters of Credit and the payment of customary costs and expenses charged
or incurred by the Bank in connection therewith, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon,
if any, shall be applied to repay other Obligations. After all such Letters of
Credit shall have expired or been fully drawn upon, all Reimbursement
Obligations shall have been satisfied and all other Obligations shall have been
paid in full in cash, and the obligations of Bank hereunder have terminated the
balance, if any, in such cash collateral account shall be returned to Borrower.
Borrower shall execute and deliver to Bank such further documents and
instruments as Bank may request to evidence the creation and perfection of the
within security interest in such cash collateral account.
3.8 Letter of Credit Applications. In the event of any
conflict between the terms of this Article III and the terms of any Letter of
Credit Application, the terms of such Letter of Credit Application shall govern
and control any such conflict.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Initial Loans or Letter of Credit.
"Bank's obligation to make the initial Loans and/or to issue the initial Letter
of Credit is subject to and contingent upon the fulfillment of each of the
following conditions to the satisfaction of Bank and its counsel:
(a) receipt by Bank of this Agreement and each
of the Loan Documents, all duly executed by Borrower and/or the other Persons
party thereto, acknowledged where required, and in form and substance
satisfactory to Bank in its sole and absolute discretion;
(b) receipt by Bank, of a duly executed opinion
of Borrower's counsel, dated as of the Closing Date, covering the matters set
forth in Exhibit 4.1(b) and otherwise in form and substance satisfactory to Bank
in its sole and absolute discretion;
(c) receipt by Bank of a Certificate of the
Secretary of Borrower, dated as of the Closing Date, certifying (i) the
incumbency and signatures of the Responsible Officers of Borrower who are
executing this Agreement and the Loan Documents on behalf of Borrower; (ii) the
Amended and Restated By Laws of Borrower and all amendments thereto as being
true and correct and in full force and effect; and (iii) the resolutions of the
Board of Directors of Borrower as being true and correct and in full force and
effect, authorizing the execution and delivery of this Agreement and the Loan
Documents, and authorizing the transactions contemplated hereunder and
thereunder, and authorizing the Responsible Officers of Borrower to execute the
same on behalf of Borrower;
(d) receipt by Bank of Borrower's Amended and
Restated Certificate of Incorporation and all amendments thereto, certified by
the Delaware Secretary of State and dated a recent date prior to the Closing
Date;
(e) receipt by Bank of a certificate of status
and good standing for Borrower, dated a recent date prior to the Closing Date,
showing that Borrower is in good standing under the laws of the State of
Delaware;
23
(f) receipt by Bank of certificates of foreign
qualification and good standing for Borrower, dated a recent date prior to the
Closing Date, showing that Borrower is in good standing under the laws of the
State of California;
(g) receipt by Bank of a certificate signed by
the President and Chief Financial Officer of Borrower, dated as of the Closing
Date, certifying that (i) both immediately before and immediately after giving
effect to the transactions contemplated by this Agreement and the Loan
Documents, Borrower is and will be Solvent; (ii) to the best of their knowledge
after due and diligent inquiry, the representations and warranties of Borrower
contained in this Agreement and the Loan Documents are true and correct in all
material respects, and (iii) to the best of their knowledge after due and
diligent inquiry, both immediately before and immediately after giving effect to
the transactions contemplated by this Agreement and the Loan Documents, no Event
of Default or Unmatured Event of Default is continuing or shall occur;
(h) receipt by Bank of (i) the Closing Fee, and
(ii) all Expenses owing on the Closing Date, of which Bank acknowledges receipt
of $12,500;
(i) no Material Adverse Effect shall have
occurred, as reasonably determined by Bank in its sole and absolute discretion;
(j) receipt by Bank of copies of insurance
binders or insurance certificates evidencing Borrower's having caused to be
obtained insurance in accordance with Section 6.5;
(k) receipt by Bank of the Pay-Off Letter from
the Old Lender, if any, and such UCC-2 Termination Statements and other Lien
releases as Bank shall require, duly executed by such Old Bank's, all of the
foregoing in form and substance satisfactory to Bank;
(1) receipt by Bank of such other documents,
instruments and agreements as Bank may reasonably request in connection with the
transactions contemplated hereunder; and
(m) the Closing Date shall have occurred on or
before September 30, 2003.
4.2 Conditions to all Loans and Letters of Credit. Bank's
obligation hereunder to make any Loans to Borrower (including the initial
Loans), and/or to issue any Letters of Credit (including the initial Letter of
Credit), is further subject to and contingent upon the fulfillment of each of
the following conditions to the satisfaction of Bank:
(a) (i) in the case of a Borrowing, receipt by
Bank of a Notice of Borrowing as required by Section 2.5(b) and written
disbursement instructions to Bank consistent with Section 7.1, and (ii) in the
case of a Letter of Credit, receipt by Bank of a Letter of Credit Request and
the other papers and information required under Section 3.2;
(b) the fact that, immediately before and after
such Borrowing or issuance of Letter of Credit, as the case may be, no Event of
Default or Unmatured Event of Default shall have occurred or be continuing; and
24
(c) the fact that the representations and
warranties of Borrower contained in this Agreement shall be true on and as of
the date of such Borrowing, or issuance of Letter of Credit, as the case may be.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce Bank to enter into this Agreement and to
make Loans and/or issue any Letters of Credit, Borrower represents and warrants
to Bank that on the Closing Date and on the date of each Borrowing or issuance
of a Letter of Credit:
5.1 Legal Status. Borrower is a corporation duly
organized and existing under the laws of the State of Delaware. Borrower and
each Subsidiary has the power and authority to own its own Assets and to
transact the business in which it is engaged, and is properly licensed,
qualified to do business and in good standing in every jurisdiction in which it
is doing business where failure to so qualify could have a Material Adverse
Effect.
5.2 No Violation; Compliance. The execution, delivery and
performance of this Agreement and the Loan Documents to which Borrower is a
party are within Borrower's powers, are not in conflict with the terms of the
Governing Documents, and do not result in a breach of or constitute a default
under any contract, obligation, indenture or other instrument to which
Borrower is a party or by which Borrower is bound or affected, which breach or
default could reasonably be expected to have a Material Adverse Effect. There is
no law, rule or regulation (including Regulations T, U and X of the Federal
Reserve Board), nor is there any judgment, decree or order of any court or
Governmental Authority binding on Borrower which would be contravened by the
execution, delivery, performance or enforcement of this Agreement and the Loan
Documents to which Borrower is a party.
5.3 Authorization; Enforceability. Borrower has taken all
corporate action necessary to authorize the execution and delivery of this
Agreement and the Loan Documents to which Borrower is a party, and the
consummation of the transactions contemplated hereby and thereby. Upon their
execution and delivery in accordance with the terms hereof, this Agreement, and
the Loan Documents to which Borrower is a party will constitute legal, valid and
binding agreements and obligations of Borrower enforceable against Borrower in
accordance with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, and similar laws and equitable principles affecting
the enforcement of creditors' rights generally.
5.4 Approvals; Consents. No approval, consent, exemption
or other action by, or notice to or filing with, any Governmental Authority is
necessary in connection with the execution, delivery, performance or enforcement
of this Agreement or the Loan Documents. All requisite Governmental Authorities
and third parties have approved or consented to the transactions contemplated by
this Agreement and Loan Documents, and all applicable waiting periods have
expired and there is no governmental or judicial action, actual or threatened,
that has or could have a reasonable likelihood of restraining, preventing or
imposing burdensome conditions on the transactions contemplated by this
Agreement and Loan Documents.
25
5.5 Liens. Borrower and each of the Subsidiaries has good
and marketable title to, or valid leasehold interests in, all of its Assets,
free and clear of all Liens or rights of others, except for Permitted Liens.
5.6 Debt. Borrower and each of the Subsidiaries has no
Debt other than Permitted Debt.
5.7 Litigation. Except as set forth in Schedule 5.7,
there are no suits, proceedings, claims or disputes pending or, to the Knowledge
of Borrower, threatened, against or affecting (i) Borrower, (ii) or any of
Borrower's Assets, (iii) or any Subsidiary, or (iv) any of such Subsidiary's
Assets, which are not fully covered by applicable insurance and as to which no
reservation of rights has been taken by the insurer thereunder.
5.8 No Default. No Event of Default or Unmatured Event of
Default has occurred and is continuing or would result from the incurring of
obligations by Borrower or any Subsidiary under this Agreement or the Loan
Documents.
5.9 Subsidiaries. Set forth in Schedule 5.9 is a complete
and accurate list of the Subsidiaries, showing the jurisdiction of incorporation
of each and showing the percentage of Borrower's ownership of the Capital Stock
of each Subsidiary. All of the outstanding Capital Stock of each Subsidiary has
been validly issued, is fully paid and nonassessable, and is owned by Borrower
free and clear of all Liens except Permitted Liens
5.10 Taxes. All tax returns required to be filed by
Borrower and each of the Subsidiaries in any jurisdiction have in fact been
filed, and all taxes, assessments, fees and other governmental charges upon
Borrower and each of the Subsidiaries or upon any of their Assets, income or
franchises, which are due and payable have been paid. The provisions for taxes
on the books of Borrower and each of the Subsidiaries are adequate for all open
years, and for Borrower's and each of the Subsidiaries current fiscal period.
5.11 Correctness of Financial Statements. Borrower's
audited Financial Statement as of its fiscal year ended December 31, 2003, and
Borrower's internally prepared Financial Statement as of its fiscal quarters
ended March 31, 2003 and June 30, 2003, and all other information and data
furnished by Borrower to Bank in connection therewith, are complete and correct
and accurately and fairly present the financial condition and results of
operations of Borrower and the Subsidiaries as of their respective dates. Any
forecasts of future financial performance delivered by Borrower to Bank have
been made in good faith and are based on reasonable assumptions and
investigations by Borrower. Said Financial Statements have been prepared in
accordance with GAAP. Since the date of such Financial Statements, there has
been no change in Borrower's or its Subsidiaries' financial condition or results
of operations sufficient to have a Material Adverse Effect. Borrower and the
Subsidiaries have no contingent obligations, liabilities for taxes or other
outstanding financial obligations which are material in the aggregate, except as
disclosed in such statements, information and data.
5.12 ERISA. Neither Borrower nor any member of the ERISA
Group maintains or contributes to any Plan or Multiemployer Plan, other than
those listed on Schedule 5.12. Borrower and each member of the ERISA Group have
satisfied the minimum funding standards of ERISA and the Internal Revenue Code
with respect to each Plan and Multiemployer Plan to which it is obligated to
contribute. No ERISA Event has occurred nor has any other event occurred that
26
may result in an ERISA Event that reasonably could be expected to result in a
Material Adverse Effect. None of Borrower, any member of the ERISA Group, or any
fiduciary of any Plan is subject to any direct or indirect liability with
respect to any Plan (other than to make regularly scheduled required
contributions and to pay Plan benefits in the normal course) under any
applicable law, treaty, rule, regulation, or agreement. Neither Borrower nor any
member of the ERISA Group is required to provide security to any Plan under
Section 401(a)(29) of the Internal Revenue Code. Each Plan will be able to
fulfill its benefit obligations as they come due in accordance with the Plan
documents and under GAAP.
5.13 Other Obligations. Neither Borrower nor any of its
Subsidiaries is in default on any (i) Debt or (ii) any other lease, commitment,
contract, instrument or obligation which is material to the operation of its
business.
5.14 Public Utility Holding Company Act. Borrower is not a
holding company, or an affiliate of a holding company or a subsidiary company of
a holding company, within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
5.15 Investment Company Act. Borrower is not an investment
company, or a company controlled by an investment company, within the meaning of
the Investment Company Act of 1940, as amended.
5.16 Patents, Trademarks, Copyrights, and Intellectual
Property, etc. To Borrower's knowledge, Borrower and each Subsidiary has all
necessary, patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights, copyrights, permits, and franchises in order for it to
conduct its business and to operate its Assets, without known conflict with the
rights of third Persons, and all of same are valid and subsisting and the
consummation of the transactions contemplated by this Agreement will not alter
or impair any of such rights of Borrower or any Subsidiary. Except as set forth
in Schedule 5.7, Borrower and each Subsidiary has not been charged or, to the
best of Borrower's knowledge after due inquiry, threatened to be charged with
any infringement or, after due inquiry, infringed on any, unexpired trademark,
trademark registration, trade name, patent, copyright, copyright registration,
or other proprietary right of any Person.
5.17 Environmental Condition, (i) None of Borrower's or
any Subsidiary's Assets has ever been used by Borrower or such Subsidiary or, to
Borrower's knowledge, by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials;
(ii) none of Borrower's or any Subsidiary's Assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, or a candidate for closure pursuant to any
environmental protection statute; (iii) no Lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned or operated by Borrower or any Subsidiary; and (iv) neither
Borrower nor any Subsidiary has received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing or disposing of Hazardous Materials into
the environment.
5.18 Solvency. Borrower and each Subsidiary is Solvent. No
transfer of property is being made by Borrower or any Subsidiary and no
obligation is being incurred by Borrower or any Subsidiary in connection with
the transactions contemplated by this Agreement or the Loan
27
Documents with the intent to hinder, delay, or defraud either present or future
creditors of Borrower or any Subsidiary.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that from the Closing Date and
thereafter until the indefeasible payment, performance and satisfaction in full
of the Obligations, all of Bank's obligations hereunder have been terminated and
no Letters of Credit are outstanding, Borrower shall:
6.1 Punctual Payments. Punctually pay the interest and
principal on the Loans, the Fees and all Expenses and any other fees and
liabilities due under this Agreement and the Loan Documents at the times and
place and in the manner specified in this Agreement or the Loan Documents.
6.2 Books and Records. Maintain, and cause each of the
Subsidiaries to maintain, adequate books and records in accordance with GAAP,
and permit any officer, employee or agent of Bank, upon reasonable notice and
during normal business hours from time to time, to inspect, audit and examine
such books and records, and to make copies of the same.
6.3 Financial Statements. Deliver to Bank the following,
all in form and detail reasonably satisfactory to Bank and in such number of
copies as Bank may reasonably request:
(a) as soon as available but not later than
forty-five (45) days after the end of each fiscal quarter, a consolidating and
consolidated internally prepared Financial Statement for Borrower and the
Subsidiaries which shall include Borrower's and the Subsidiaries' consolidating
and consolidated balance sheet as of the close of such period, and Borrower's
and the Subsidiaries' consolidating and consolidated statement of income and
retained earnings and statement of cash flow for such period and year to date,
certified by the Chief Financial Officer of Borrower, to the best of his or her
knowledge after due and diligent inquiry, as being complete and correct and
fairly presenting in all material respects Borrower's and its Subsidiaries'
financial condition and results of operations for such period;
(b) as soon as available but not later than
forty-five (45) days after the end of each fiscal quarter, a Compliance
Certificate from the Chief Financial Officer of Borrower, stating, among other
things, that he or she has reviewed the provisions of this Agreement and the
Loan Documents and that, to the best of his or her knowledge after due and
diligent inquiry there exists no Event of Default or Unmatured Event of Default,
and containing the calculations and other details necessary to demonstrate
compliance with Sections 7.15;
(c) as soon as available but not later than
thirty (30) days after the end of each fiscal year, an annual operating budget
for the following fiscal year;
(d) as soon as available but not later than
ninety (90) days after the end of each fiscal year, a complete copy of
Borrower's and the Subsidiaries' consolidated and consolidating audited
Financial Statement, which shall include at least Borrower's and the
Subsidiaries' balance sheet as of the close of such fiscal year, and Borrower's
and the Subsidiaries' statement of income and retained earnings and statement of
cash flow for such fiscal year, certified
28
by a certified public accountant selected by Borrower and satisfactory to Bank,
(Bank acknowledges that PricewaterhouseCoopers is satisfactory to Bank), which
certificate shall not be qualified in any manner whatsoever, and shall include
or be accompanied by a statement from such accountant that during the
examination, solely with respect to accounting and auditing matters herein,
there was observed no Event of Default or Unmatured Event of Default, or a
statement of such Event of Default or Unmatured Event of Default if any is found
and the actions taken or to be taken with respect thereto;
(e) promptly upon receipt by Borrower, copies of
any and all reports and management letters submitted to Borrower or any
Subsidiary by any certified public accountant in connection with any examination
of Borrower's or any Subsidiary's financial records made by such accountant;
(f) as soon as available but not later than
three (3) days after filing, notify Bank that they are available on the
Borrower's website or deliver copies of all quarterly, annual and any other
reports filed with the SEC; and
(g) from time to time, operating statistics,
operating plans and any other information as Bank may reasonably request,
promptly upon such request.
6.4 Existence; Preservation of Licenses; Compliance with
Law. Preserve and maintain, and cause each Subsidiary to preserve and
maintain, its corporate existence and good standing in the state of its
organization, qualify and remain qualified, and cause each Subsidiary to qualify
and remain qualified, as a foreign corporation in every jurisdiction where the
failure to preserve and maintain or be so qualified could have a Material
Adverse Effect; and preserve, and cause each of the Subsidiaries to preserve,
all of its licenses, permits, governmental approvals, rights, privileges and
franchises required for its operations; and comply, and cause each of the
Subsidiaries to comply, with the provisions of its Governing Documents; and
comply, and cause each of the Subsidiaries to comply, with the requirements of
all applicable laws, rules, regulations, orders of any Governmental Authority
having authority or jurisdiction over it, except for such laws, rules and
regulations where the failure to so comply could not have a Material Adverse
Effect, and comply, and cause each of the Subsidiaries to comply, with all
requirements for the maintenance of its business, insurance, licenses, permits,
governmental approvals, rights, privileges and franchises.
6.5 Insurance.
(a) Maintain, at Borrower's expense, insurance
respecting its Assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrower also shall
maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation.
(b) Original policies or certificates thereof
satisfactory to Bank evidencing such insurance shall be delivered to Bank at
least 30 days prior to the expiration of the existing or preceding policies.
Borrower shall give Bank prompt notice of any loss covered by such insurance.
Borrower shall, concurrently with the annual Financial Statements required to be
delivered by Borrower pursuant to Section 6.3(d), deliver to Bank, as Bank may
request, copies of certificates describing all insurance of Borrower and the
Subsidiaries then in effect.
29
6.6 Assets. Maintain, keep and preserve, and cause each
Subsidiary to maintain, keep and preserve, all of its Assets (tangible or
intangible) which are necessary to its business in good repair and condition,
and from time to time make necessary repairs, renewals and replacements thereto
so that such Assets shall be fully and efficiently preserved and maintained.
6.7 Taxes and Other Liabilities. Pay and discharge when
due, and cause each Subsidiary to pay and discharge when due, any and all
assessments and taxes, both real or personal and including federal and state
income taxes, and any and all other Permitted Debt.
6.8 Notice to Bank. Promptly, upon Borrower acquiring
Knowledge thereof, give written notice to Bank of:
(a) all litigation affecting Borrower or any
Subsidiary where the amount in controversy is in excess of Five Hundred Thousand
Dollars ($500,000);
(b) any dispute which may exist between Borrower
or any Subsidiary, on the one hand, and any Governmental Authority, on the
other;
(c) any labor controversy resulting in or
threatening to result in a strike against Borrower or any Subsidiary;
(d) any proposal by any Governmental Authority
to acquire the Assets or business of Borrower or any Subsidiary, or to compete
with Borrower or any Subsidiary;
(e) any reportable event under Section
4043(c)(5), (6) or (13) of ERISA with respect to any Plan, any decision to
terminate or withdraw from a Plan, any finding made with respect to a Plan under
Section 4041(c) or (e) of ERISA, the commencement of any proceeding with
respect to a Plan under Section 4042 of ERISA, or any material increase in the
actuarial present value of unfunded vested benefits under all Plans over the
preceding year;
(f) any Event of Default or Unmatured Event of
Default; and
(g) any other matter which has resulted or could
reasonably be expected to result in a Material Adverse Effect.
6.9 Employee Benefits.
(a) (i) Promptly, and in any event within ten
(10) Business Days after Borrower obtains Knowledge that an ERISA Event has
occurred that reasonably could be expected to result in a Material Adverse
Effect, deliver or cause to be delivered a written statement of the Chief
Financial Officer of Borrower describing such ERISA Event and any action that is
being taken with respect thereto by Borrower or member of the ERISA Group, and
any action taken or threatened by the Internal Revenue Service, Department of
Labor, or PBGC. Borrower shall (i) be deemed to know all facts known by the
administrator of any Plan of which it is the plan sponsor; (ii) promptly and in
any event within three (3) Business Days after the filing thereof with the
Internal Revenue Service, deliver or cause to be delivered a copy of each
funding waiver request filed with respect to any Plan and all communications
received by Borrower or, to the knowledge of Borrower, any member of the ERISA
Group with respect to such request; and (iii) promptly and in any event within
three (3) Business Days after receipt by Borrower or, to the knowledge of
Borrower, any member
30
of the ERISA Group, of the PBGC's intention to terminate a Plan or to have a
trustee appointed to administer a Plan, copies of each such notice.
(b) Cause to be delivered to Bank, upon Bank's
request, each of the following: (i) a copy of each Plan (or, where any such plan
is not in writing, complete description thereof) (and if applicable, related
trust agreements of other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of Borrower or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to each
Plan; (iii) for the three (3) most recent Plan years, annual reports on Form
5500 Series required to be filed with any governmental agency for each Plan;
(iv) all actuarial reports prepared for the last three (3) Plan years for each
Plan; (v) a listing of all Multiemployer Plans, with the aggregate amount of the
most recent annual contributions required to be made by Borrower or any member
of the ERISA Group to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to Borrower or any member of the ERISA Group regarding withdrawal
liability under any Multiemployer Plan; and (vii) the aggregate amount of the
most recent annual payments made to former employees of Borrower or its
Subsidiaries under any Retiree Health Plan.
6.10 Further Assurances. Execute and deliver, or cause to
be executed and delivered, upon the request of Bank and at Borrower's expense,
such additional documents, instruments and agreements as Bank may reasonably
determine to be necessary or advisable to carry out the provisions of this
Agreement and the Loan Documents, and the transactions and actions contemplated
hereunder and thereunder.
6.11 Bank Accounts. Maintain its primary operating
accounts at Bank and its cash equivalent investments in accounts at an Affiliate
of Bank.
6.12 Environment. Be and remain, and cause each Subsidiary
and each operator of any of Borrower's or any Subsidiary's Assets to be and
remain, in compliance with the provisions of all federal, state and local
environmental, health and safety laws, codes and ordinances, and all rules and
regulations issued thereunder; notify Bank immediately of any notice of a
hazardous discharge or environmental complaint received from any Governmental
Authority or any other Person; notify Bank immediately of any hazardous
discharge from or affecting its premises; immediately contain and remove the
same, in compliance with all applicable laws; promptly pay any fine or penalty
assessed in connection therewith; permit Bank to inspect the premises, to
conduct tests thereon, and to inspect all books, correspondence, and records
pertaining thereto; and at Bank's request, and at Borrower's expense, provide a
report of a qualified environmental engineer, satisfactory in scope, form and
content to Bank, and such other and further assurances reasonably satisfactory
to Bank that the condition has been corrected.
ARTICLE VII
NEGATIVE COVENANTS
Borrower further covenants and agrees that from the Closing
Date and thereafter until the indefeasible payment, performance and satisfaction
in full of the Obligations, all of Bank's obligations hereunder have been
terminated and no Letters of Credit are outstanding, Borrower shall not:
31
7.1 Use of Funds; Margin Regulation.
(a) Use any proceeds of the Revolving Loans for
any purpose other than (i) for working capital and general corporate purposes,
and (ii) Acquisitions, subject to Section 7.8(b); or
(b) Use any portion of the proceeds of the Loans
in any manner which might cause the Loans, the application of the proceeds
thereof, or the transactions contemplated by this Agreement to violate
Regulation T, U, or X of the Board of Governors of the Federal Reserve System,
or any other regulation of such board, or to violate the Securities and Exchange
Act of 1934, as amended or supplemented.
7.2 Debt. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any Debt
except Permitted Debt.
7.3 Liens. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any Lien
(including the lien of an attachment, judgment or execution) on any of its
Assets, whether now owned or hereafter acquired, except Permitted Liens; or sign
or file, or permit any Subsidiary to sign or file, under the UCC as adopted in
any jurisdiction, a financing statement which names Borrower or any Subsidiary
as a debtor, except with respect to Permitted Liens, or sign, or permit any
Subsidiary to sign, any security agreement authorizing any secured party
thereunder to file such a financing statement, except with respect to Permitted
Liens.
7.4 Merger, Consolidation, Transfer of Assets. Wind up,
liquidate or dissolve, reorganize, reincorporate, merge or consolidate with or
into any other Person, or acquire all or substantially all of the Assets or the
business of any other Person, or permit any Subsidiary to do so, except as may
be otherwise permitted under Section 7.8(b); provided, however, upon prior
written notice to Bank, any Subsidiary may merge into or consolidate with or
transfer Assets to Borrower or any other Subsidiary,
7.5 Reserved.
7.6 Sales and Leasebacks. Sell, transfer, or otherwise
dispose of, or permit any Subsidiary to sell, transfer, or otherwise dispose of,
any real or personal property to any Person, and thereafter directly or
indirectly leaseback the same or similar property.
7.7 Asset Sales. Conduct any Asset Sale, or permit any
Subsidiary to do so, other than (i) sales of Inventory in the ordinary course of
business, (ii) dispositions of obsolete, worn or nonfunctional equipment, and
(iii) other Asset Sales involving Assets valued in the aggregate not more than
$2,500,000.
7.8 Investments and Acquisitions.
(a) Except as otherwise provided in Section
7.8(b), make, or permit any Subsidiary to make, any loans or advances to, or any
investment in, any Person; or acquire, or permit any Subsidiary to acquire, any
Capital Stock, Assets, obligations, or other securities of, make any
contribution to, or otherwise acquire any interest in, any Person; or acquire or
form or permit any Subsidiary to acquire or form, any new Subsidiary; or
participate, or permit any Subsidiary to participate, as a partner or joint
venturer with any other Person.
32
(b) Notwithstanding the terms of Section 7.8(a),
Borrower may make Acquisitions from time to time, provided that all of the
following conditions with respect thereto have been fulfilled to the
satisfaction of Bank, in its sole discretion, prior to the closing of any
Acquisition:
(i) The aggregate investment of
Borrower in all Acquisitions shall not exceed $35,000,000 over the Revolving
Credit Commitment;
(ii) No Acquisition shall be "hostile";
(iii) The target company must be in the
electronics industry and sell products related to Borrower's products;
(iv) Borrower shall have delivered to
Bank a pro forma Compliance Certificate, certified by the Chief Financial
Officer of Borrower, demonstrating that both before and after giving effect to
the applicable Acquisition, no Event of Default is continuing or will result
therefrom;
(v) Borrower shall not close in any 12
month period more than two Acquisitions each of which having total consideration
payable to the seller of greater than $5,000,000;
(vi) Borrower shall not close in any 12
month period more than five Acquisitions of any size;
(vii) Borrower shall not close any
Acquisition having total consideration payable to the seller of greater than
$5,000,000 unless the Consolidated EBITDA for the target company is positive on
a trailing 12 month basis; and
(viii) Borrower shall not be a party to
more than two Purchase Agreements at a time unless the aggregate consideration
payable to the sellers under all such Purchase Agreements is less than
$15,000,000.
7.9 Character of Business. Engage in any business
activities or operations substantially different from or unrelated to its
present business activities and operations, or permit any Subsidiary to do so.
7.10 Distributions.
(a) Except as otherwise permitted by Sections
7.10(b) and (c), declare or pay any Distributions; or purchase, redeem, retire,
or otherwise acquire for value any of its Capital Stock now or hereafter
outstanding; or make any distribution of Assets to its shareholders, whether in
cash, Assets, or in obligations of Borrower; or allocate or otherwise set apart
any sum for the payment of any Distribution on, or for the purchase, redemption
or retirement of, any of its Capital Stock; or make any other distribution by
reduction of capital or otherwise in respect of any of its Capital Stock; or
permit any Subsidiary to purchase or otherwise acquire for value any Capital
Stock of Borrower or any other Subsidiary.
33
(b) Notwithstanding Section 7.10(a), commencing
with Borrower's fiscal year which began January 1, 2003, Borrower may declare
and pay quarterly cash Distributions to its shareholders in an amount not to
exceed one hundred percent (100%) of Borrower's Consolidated Net Income for the
prior fiscal quarter; provided that such Distributions are paid within 90 days
of the applicable fiscal quarter end; provided, further, that any Distributions
permitted under this Section 7.10(b) but not paid, may be carried forward and
paid at any time within 90 days of the end of the same fiscal year.
(c) Notwithstanding Section 7.10(a), Borrower
may redeem or purchase on the open market up to 1,500,000 shares of its
outstanding Common Stock.
7.11 Guaranty. Assume, guaranty, endorse (other than
checks and drafts received by Borrower in the ordinary course of business or
otherwise be or become directly or contingently responsible or liable, or permit
any Subsidiary to assume, guaranty, endorse (other than checks and drafts
received by such Subsidiary in the ordinary course of business), or otherwise be
or become directly or contingently responsible or liable (including, any
agreement to purchase any obligation, stock, Assets, goods, or services or to
supply or advance any funds, Assets, goods, or services, or any agreement to
maintain or cause such Person to maintain, a minimum working capital or net
worth, or otherwise to assure the creditors of any Person against loss) for the
obligations of any other Person; or pledge or hypothecate, or permit any
Subsidiary to pledge or hypothecate, any of its Assets as security for any
liabilities or obligations of any other Person.
7.12 Reserved.
7.13 Transactions with Affiliates. Enter into any
transaction, including borrowing or lending and the purchase, sale, or exchange
of property or the rendering of any service (including management services),
with any Affiliate, or permit any Subsidiary to enter into any transaction,
including borrowing or lending and the purchase, sale, or exchange of property
or the rendering of any service (including management services), with any
Affiliate, other than in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to Borrower or such Subsidiary than would be
obtained in a comparable arm's length transaction with a Person not an
Affiliate.
7.14 Reserved.
7.15 Financial Condition. Permit or suffer:
(a) Consolidated Effective Tangible Net Worth,
measured as of the end of each fiscal quarter, at any time to be less than
$66,000,000.
(b) the Consolidated Total Liabilities to
Consolidated Effective Tangible Net Worth Ratio, measured as of the end of each
fiscal quarter, at any time to exceed the 0.65:1.0.
(c) the Quick Ratio, measured as of the end of
each fiscal quarter, at any time to be less than 1.50:1.0.
(d) Consolidated Net Income at the end of any
two consecutive fiscal quarters to be less than $0.
34
(e) Consolidated Net Income at the end of any
fiscal year to be less than $2,500,000.
7.16 Transactions Under ERISA. Directly or indirectly:
(a) engage, or permit any member of the ERISA
Group to engage, in any prohibited transaction which is reasonably likely to
result in a civil penalty or excise tax described in Sections 406 of ERISA or
4975 of the Internal Revenue Code for which a statutory or class exemption is
not available or a private exemption has not been previously obtained from the
Department of Labor;
(b) permit to exist with respect to any Plan any
accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of
the Internal Revenue Code), whether or not waived;
(c) fail, or permit any member of the ERISA
Group to fail, to pay timely required contributions or installments due with
respect to any waived funding deficiency to any Plan;
(d) terminate, or permit any member of the ERISA
Group to terminate, any Plan where such event would result in any liability of
Borrower or any member of ERISA Group under Title IV of ERISA;
(e) fail, or permit any member of the ERISA
Group to fail, to make any required contribution or payment to any Multiemployer
Plan;
(f) fail, or permit any member of the ERISA
Group to fail, to pay to a Plan or Multiemployer Plan any required installment
or any other payment required under Section 412 of the Internal Revenue Code on
or before the due date for such installment or other payment;
(g) amend, or permit any member of the ERISA
Group to amend, a Plan resulting in an increase in current liability for the
plan year such that either of Borrower or any member of the ERISA Group is
required to provide security to such Plan under Section 401(a)(29) of the
Internal Revenue Code; or
(h) withdraw, or permit any member of the ERISA
Group to withdraw, from any Multiemployer Plan where such withdrawal is
reasonably likely to result in any liability of any such entity under Title IV
of ERISA;
(i) which, individually or in the aggregate,
results in or reasonably would be expected to result in a claim against or
liability of Borrower, any of the Subsidiaries or any member of the ERISA Group
in excess of Five Hundred Thousand Dollars ($500,000).
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
8.1 Events of Default. The occurrence of any one or more
of the following events, acts or occurrences shall constitute an event of
default (an "Event of Default) hereunder:
35
(a) Borrower fails to pay when due any payment
of principal or interest due on the Loans;
(b) Borrower fails to pay when due any Fees,
Expenses or any other amount payable hereunder or under any Loan Document
involving individually or in the aggregate Twenty-Five Thousand Dollars
($25,000.00) or more and such failure continues for fifteen (15) days after the
same shall have been due;
(c) Borrower fails to observe or perform any of
the covenants and agreements set forth in Article VII;
(d) Borrower fails to observe or perform any
covenant or agreement set forth in this Agreement or the Loan Documents (other
than those covenants and agreements described in Sections 8.1 (a) and 8.1(b)),
and such failure continues for fifteen (15) days after the earlier to occur of
(i) Borrower obtaining Knowledge of such failure or (ii) Bank's dispatch of
notice to Borrower of such failure;
(e) Any representation, warranty or
certification made by Borrower or any Responsible Officer of Borrower in this
Agreement or any Loan Document, in any certificate, financial statement or other
document delivered pursuant to this Agreement or any Loan Document proves to
have been misleading or untrue in any material respect when made or if any such
representation warranty or certification is withdrawn;
(f) Any event or condition occurs that: (i)
results in the acceleration of the maturity of any of Borrower's Debt; or (ii)
permits (or, with the giving of notice or lapse of time or both, would permit)
the holder or holders of such Debt or any Person acting on behalf of such holder
or holders to accelerate the maturity thereof;
(g) Borrower commences a voluntary Insolvency
Proceeding seeking liquidation, reorganization or other relief with respect to
itself or its Debt or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official over it or any substantial part
of its property, or consents to any such relief or to the appointment of or
taking possession by any such official in an involuntary Insolvency Proceeding
or fails generally to pay its Debt as it becomes due, or takes any action to
authorize any of the foregoing;
(h) An involuntary Insolvency Proceeding is
commenced against Borrower seeking liquidation, reorganization or other relief
with respect to it or its Debt or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property and any of the following events occur: (i) the
petition commencing the Insolvency Proceeding is not timely controverted; (ii)
the petition commencing the Insolvency Proceeding is not dismissed within thirty
(30) calendar days of the date of the filing thereof; (iii) an interim trustee
is appointed to take possession of all or a substantial portion of the Assets
of, or to operate all or any substantial portion of the business of, Borrower or
such Guarantor; or (iv) an order for relief shall have been issued or entered
therein;
(i) Borrower suffers (i) one or more judgements
in the aggregate over applicable insurance coverage or (ii) one or more writs,
warrant of attachment, or similar process; any of which individually or in the
aggregate involves One Hundred Fifty Thousand Dollars ($150,000) or more;
36
(j) A judgment creditor obtains possession of
any of the Assets of Borrower by any means, including levy, distraint, replevin,
or self-help, or any order, judgment or decree is entered decreeing the
dissolution of Borrower;
(k) Borrower is enjoined, restrained or in any
way prevented by court order from continuing to conduct all or any material part
of its business affairs;
(l) A notice of lien, levy or assessment is
filed of record with respect to any or all of Borrower's Assets by any
Governmental Authority, or any taxes or debts owing at any time hereafter to any
Governmental Authority becomes a Lien, whether inchoate or otherwise, upon any
or all of Borrower's Assets and the same is not paid on the payment date
thereof;
(m) If Borrower's records are prepared and kept
by an outside computer service bureau on the Closing Date or during the term of
this Agreement such an agreement with an outside service bureau is entered into,
and at any time thereafter, or Borrower terminates, modifies, amends or changes
its contractual relationship with said computer service bureau, each without
first obtaining the written consent of Bank, (provided however, that Bank
acknowledges that Borrower maintains or is in the process of maintaining its
stock option plan information with Transcentive, Inc.) or said computer service
bureau fails to provide Bank with any requested information or financial data
pertaining to Borrower's financial condition or the results of Borrower's
operations;
(n) Any reportable event, which Bank determines
constitutes grounds for the termination of any Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer any such Plan, shall have occurred and be continuing thirty (30) days
after written notice of such determination shall have been given to Borrower by
Bank, or any such Plan shall be terminated within the meaning of Title IV of
ERISA, or a trustee shall be appointed by the appropriate United States District
Court to administer any such Plan, or the PBGC shall institute proceedings to
terminate any Plan and in case of any event described in this Section 8.1(o),
the aggregate amount of Borrower's liability to the PBGC under Sections
4062,4063 or 4064 of ERISA shall exceed five percent (5%) of the Consolidated
Effective Tangible Net Worth;
(o) Any Change of Control occurs;
(p) Any of the Loan Documents fails to be in
full force and effect for any reason, or a breach, default or an event of
default occurs under any Loan Document; or
(q) Any other Material Adverse Effect occurs.
8.2 Remedies. Upon the occurrence of any Event of Default
described in Section 8.1(g) or 8.1(h), Bank's obligation hereunder to make Loans
to Borrower and/or Bank's to issue Letters of Credit shall immediately terminate
and the Obligations shall become immediately due and payable without any
election or action on the part of Bank, without presentment, demand, protest or
notice of any kind, all of which Borrower hereby expressly waives. Upon the
occurrence and continuance of any other Event of Default, either or both of the
following actions may be taken: (i) Bank may without notice of its election and
without demand, immediately terminate the Revolving Credit Commitment, whereupon
Bank's obligation to make Loans to Borrower and/or to issue Letters of Credit
shall immediately cease; and (ii) Bank may, without notice of its election and
without demand, declare the Obligations to be due and payable, whereupon the
Obligations shall
37
become immediately due and payable, without presentment, demand, protest or
notice of any kind, all of which Borrower hereby expressly waives.
8.3 Appointment of Receiver or Trustee. Borrower hereby
irrevocably agrees that Bank, has the right under this Agreement, upon the
occurrence of an Event of Default, to seek the appointment of a receiver,
trustee or similar official over Borrower to effect the transactions
contemplated by this Agreement, and that Bank is entitled to seek such relief.
Borrower hereby irrevocably agrees not to object to such appointment on any
grounds.
8.4 Remedies Cumulative. The rights and remedies of Bank
herein and in the Loan Documents are cumulative, and are not exclusive of any
other rights, powers, privileges, or remedies, now or hereafter existing, at
law, in equity or otherwise.
ARTICLE IX
TAXES
9.1 Taxes on Payments. All payments in respect of the
Obligations shall be made free and clear of and without any deduction or
withholding for or on account of any present and future taxes, levies, imposts,
deductions, charges, withholdings, assessments or governmental charges, and all
liabilities with respect thereto, imposed by the United States of America, any
foreign government, or any political subdivision or taxing authority thereof or
therein, excluding any taxes imposed on Bank under the Internal Revenue Code
or similar state and local laws and determined by such Bank's net income, and
any franchise taxes imposed on Bank by any state (or any political subdivision
thereof) (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings, assessments, charges and liabilities being hereinafter referred to
as "Taxes"). If any Taxes are imposed and required by law to be deducted or
withheld from any amount payable to Bank, then Borrower shall (i) increase the
amount of such payment so that Bank will receive a net amount (after deduction
of all Taxes) equal to the amount due hereunder, and (ii) pay such Taxes to the
appropriate taxing authority for the account of Bank prior to the date on which
penalties attach thereto or interest accrues thereon; provided, however, if any
such penalties or interest shall become due, Borrower shall make prompt payment
thereof to the appropriate taxing authority.
9.2 Indemnification For Taxes. Borrower shall indemnify
Bank for the full amount of Taxes (including penalties, interest, expenses and
Taxes arising from or with respect to any indemnification payment) arising
therefrom or with respect thereto, whether or not the Taxes were correctly or
legally asserted. This indemnification shall be made on demand. If Borrower
makes a payment under Section 9.1 or this Section 9.2 for account of Bank and
Bank reasonably determines that it has received or been granted a credit against
or relief or remission for, or repayment of, any Tax paid or payable by it in
respect of or calculated with reference to the deduction or withholding giving
rise to such payment, Bank shall, to the extent that it can do so without
prejudice to the retention of the amount of such credit, relief, remission or
repayment, pay to Borrower such amount as Bank shall have reasonably determined
to be attributable to such deduction or withholding. The amount paid by Bank to
Borrower pursuant to the immediately preceding sentence shall not exceed: (x) in
the case of a refund of cash, the amount of cash refunded to Bank with respect
to such Tax; or (y) in the case of a refund taking the form of a credit against
Tax, the economic benefit to Bank with respect to the amount received as credit
with respect to such Tax. Borrower further agrees promptly to return to Bank the
amount of any credit or refund actually paid to Borrower by Bank if Bank is
required to repay it.
38
9.3 Evidence of Payment. Within thirty (30) days after
the date of payment of any Taxes, Borrower shall furnish to Bank the original or
a certified copy of a receipt evidencing payment thereof. If no Taxes are
payable in respect of any payment due hereunder or under the Notes, Borrower
shall furnish to Bank a certificate from each appropriate taxing authority, or
an opinion of counsel acceptable to Bank, in either case stating that such
payment is exempt from or not subject to Taxes.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party at its address
or facsimile number set forth on the signature pages hereof or such other
address or facsimile number as such party may hereafter specify by notice to the
other party in accordance with this Section 10.1. Each such notice, request or
other communication shall be deemed given on the second (2nd) business day after
mailing; provided that actual notice, however and from whomever given or
received, shall always be effective on receipt; provided further that notices to
Bank pursuant to Article II and Article III shall not be effective until
received by a Responsible Officer of Bank.
10.2 No Waivers. No failure or delay by Bank in exercising
any right, power or privilege hereunder or under any Loan Document shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.
10.3 Expenses; Documentary Taxes; Indemnification.
(a) Borrower shall pay all Expenses on demand.
(b) Borrower shall pay all and indemnify Bank
against any and all transfer taxes, documentary taxes, assessments, or charges
made by any Governmental Authority and imposed by reason of the execution and
delivery of this Agreement, any of the Loan Documents, or any other document,
instrument or agreement entered into in connection herewith.
(c) Borrower shall and hereby agrees to
indemnify, protect, defend and hold harmless Bank and their respective
directors, officers, Banks, employees and attorneys (collectively, the
"Indemnified Persons" and individually, an "Indemnified Person") from and
against (i) any and all losses, claims, damages, liabilities, deficiencies,
judgments, costs and expenses (including attorneys' fees and attorneys' fees
incurred pursuant to proceedings arising under the Bankruptcy Code) incurred by
any Indemnified Person (except to the extent that it is finally judicially
determined to have resulted from the gross negligence or willful misconduct of
any Indemnified Person) arising out of or by reason of any litigations,
investigations, claims or proceedings (whether administrative, judicial or
otherwise), including discovery, whether or not Bank is designated a party
thereto, which arise out of or are in any way related to (1) this Agreement, the
Loan Documents or the transactions contemplated hereby or thereby, (2) any
actual or proposed use by Borrower of the proceeds of the Loans, or (3) Bank's
entering into this Agreement, the Loan Documents or any other agreements and
documents relating hereto; (ii) any such losses, claims, damages, liabilities,
deficiencies, judgments, costs and expenses arising out of or by reason of the
39
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence on, under or about Borrower's operations or
property or property leased by Borrower of any material, substance or waste
which is or becomes designated as Hazardous Materials; and (iii) any such
losses, claims, damages, liabilities, deficiencies, judgments, costs and
expenses incurred in connection with any remedial or other action taken by
Borrower or Bank in connection with compliance by Borrower with any federal,
state or local environmental laws, acts, rules, regulations, orders, directions,
ordinances, criteria or guidelines (except to the extent that it is finally
judicially determined to have resulted from the gross negligence or willful
misconduct of any Indemnified Person); and (iv) all losses and expenses which
any Indemnified Person sustains or incurs as a result of (x) any prepayment of a
LIBOR Lending Rate Portion prior to the last day of the applicable Interest
Period for any reason, including termination of this Agreement or pursuant to
Section 8.2, or (y) any failure by Borrower, for any reason, to borrow any LIBOR
Lending Rate Portion in accordance with the terms hereof. The indemnification
set forth herein shall include, without limitation, all losses and expenses
arising from interest and fees that Bank pays to lenders of funds it obtained in
order to fund the Loans to Borrower at the LIBOR Lending Rate, and all losses
incurred in liquidating or re-deploying deposits from which such funds were
obtained and loss of profit for the period after termination. If and to the
extent that the obligations of Borrower hereunder are unenforceable for any
reason, Borrower hereby agrees to make the maximum contribution to the payment
and satisfaction of such obligations to Bank which is permissible under
applicable law.
(d) Borrower's obligations under this Section
10.3 and under Section 9.2 shall survive any termination of this Agreement and
the Loan Documents and the payment in full of the Obligations, and are in
addition to, and not in substitution of, any other of its obligations set forth
in this Agreement.
10.4 Amendments and Waivers. Neither this Agreement nor
any Loan Document, nor any terms hereof or thereof may be amended, supplemented
or modified except in accordance with the provisions of this Section 10.4. Bank
may from time to time, (a) enter into with Borrower or any other Person written
amendments, supplements or modifications hereto and to the Loan Documents or (b)
waive, on such terms and conditions as Bank may specify in such instrument, any
of the requirements of this Agreement or the Loan Documents or any Event Default
or Unmatured Event of Default and its consequences, if, but only if, such
amendment, supplement, modification or waiver is in writing and is signed by the
party asserted to be bound thereby, and then such amendment, supplement,
modification or waiver shall be effective only in the specific instance and
specific purpose for which given. Any such waiver and any such amendment,
supplement or modification shall be binding upon Borrower, Bank and all future
holders of the Loans. In the case of any waiver, Borrower and Bank shall be
restored to their former positions and rights hereunder and under the Loan
Documents, and any Event of Default or Unmatured Event of Default waived shall
be deemed to be cured and not continuing; no such waiver shall extend to any
subsequent or other Event of Default or Unmatured Event of Default or impair any
right consequent thereon.
10.5 Successors and Assigns; Participations; Disclosure.
(a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that Borrower may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of all Bank's
and any such prohibited assignment or transfer by Borrower shall be void.
40
(b) Bank may make, carry or transfer the Loans
at, to or for the account of, any of its branch offices or the office of an
Affiliate of Bank or to any Federal Reserve Bank, all without Borrower's
consent.
(c) Bank may, at its own expense, assign to one
or more banks or other financial institutions all or a portion of its rights
(including voting rights) and obligations under this Agreement and the Loan
Documents. In the event of any such assignment by Bank pursuant to this Section
10.5(c), Bank's obligations under this Agreement arising after the effective
date of such assignment shall be released and concurrently therewith,
transferred to and assumed by Bank's assignee to the extent provided for in the
document evidencing such assignment, and Bank shall give prompt notice of such
assignment to Borrower. The provisions of this Section 10.5 relate only to
absolute assignments (whether or not arising as the result of foreclosure of a
security interest) and that such provisions do not prohibit assignments creating
security interests, including, without limitation, any pledge or assignment by
Bank of any Loan or the Note to any Federal Reserve Bank in accordance with
applicable law.
(d) Bank may at any time sell to one or more
banks or other financial institutions (each a "Participant") participating
interests in the Loans, the Letters of Credit and in any other interest of Bank
hereunder. In the event of any such sale by Bank of a participating interest to
a Participant, Bank's obligations under this Agreement shall remain unchanged,
Bank shall remain solely responsible for the performance thereof, and Borrower
shall continue to deal solely and directly with Bank in connection with Bank's
rights and obligations under this Agreement. Borrower agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article IX with respect to its participating
interest.
(e) Borrower authorizes each Bank to disclose to
any assignee under Section 10.5(c) or any Participant (either, a "Transferee")
and any prospective Transferee any and all financial information in such Bank's
possession concerning Borrower which has been delivered to such Bank by Borrower
pursuant to this Agreement or which has been delivered to such Bank by Borrower
in connection with such Bank's credit evaluation prior to entering into this
Agreement; provided that such Transferee or prospective Transferee has first
agreed to be bound by the provisions of Section 10.6.
(f) Borrower agrees that Bank may use Borrower's
and the Subsidiaries' name(s) in advertising and promotional materials, and in
conjunction therewith, Bank may disclose the amount of the Loans and the purpose
thereof.
10.6 Confidentiality. Bank agrees to keep confidential any
information relating to Borrower and the Subsidiaries previously delivered or
delivered from time to time by Borrower hereunder; provided that nothing herein
shall prevent Bank from disclosing such information: (a) to any Affiliate of
Bank or any actual or potential Transferee that agrees to be bound by this
Section 10.6, (b) upon order, subpoena, or other process of any court or
administrative agency, (c) upon the request or demand of any regulatory agency
or authority having jurisdiction over Bank, (d) which has been publicly
disclosed (other than by Bank or any Transferee unless such disclosure was
otherwise permitted hereunder), (e) which has been obtained from any Person that
is not a party hereto or an Affiliate of any such party, (f) in connection with
the exercise of any remedy, or the resolution of any dispute, hereunder or under
any Loan Document, (g) to the legal counsel or certified public accountants for
Bank or (h) as otherwise permitted by Borrower or as expressly contemplated by
this Agreement.
41
10.7 Counterparts; Effectiveness; Integration. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall be effective when executed by each of
the parties hereto. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof.
10.8 Severability. The provisions of this Agreement are
severable. The invalidity, in whole or in part, of any provision of this
Agreement shall not affect the validity or enforceability of any other of its
provisions. If one or more provisions hereof shall be declared invalid or unen-
forceable, the remaining provisions shall remain in full force and effect and
shall be construed in the broadest possible manner to effectuate the purposes
hereof.
10.9 Knowledge. For purposes of this Agreement, an
individual will be deemed to have knowledge of a particular fact or other matter
if: (a) such individual is actually aware of such fact or other matter; or (b) a
prudent individual could be expected to discover or otherwise become aware of
such fact or other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other matter. Borrower
will be deemed to have knowledge of a particular fact or other matter if the
chief executive officer, chief operating officer, chief financial officer,
controller, treasurer, president, senior vice president or other such officer of
Borrower has, or at any time had, knowledge of such fact or other matter.
10.10 Additional Waivers.
(a) Borrower agrees that checks and other
instruments received by Bank in payment or on account of the Obligations
constitute only conditional payment until such items are actually paid to Bank
and Borrower waives the right to direct the application of any and all payments
at any time or times hereafter received by Bank on account of the Obligations
and Borrower agrees that Bank shall have the continuing exclusive right to apply
and reapply such payments in any manner as Bank may deem advisable,
notwithstanding any entry by Bank upon its books.
(b) Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, documents,
instruments, chattel paper, and guarantees at any time held by Bank on which
Borrower may in any way be liable.
(c) Borrower waives the right and the right to
assert a confidential relationship, if any, it may have with any accountant,
accounting firm and/or service bureau or consultant in connection with any
information requested by Bank pursuant to or in accordance with this Agreement,
and agrees that a Bank may contact directly any such accountants, accounting
firm and/or service bureau or consultant in order to obtain such information.
10.11 Destruction Of Borrower's Documents. Any documents,
schedules, invoices or other papers delivered to Bank may be destroyed or
otherwise disposed of by Bank six (6) months after they are delivered to or
received by Bank, unless Borrower requests, in writing, the return of the said
documents, schedules, invoices or other papers and makes arrangements, at
Borrower's expense, for their return.
42
10.12 CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF LAWS.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY
BE BROUGHT, AT BANK'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE BANK
ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. BORROWER AND BANK WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO
OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 10.12.
(c) BORROWER AND BANK HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
BORROWER AND BANK REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
* * *
[remainder of this page intentionally left blank]
* * *
43
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
UNIVERSAL ELECTRONICS INC.
By /s/ Mark Z. Belzowski
----------------------------------------
Mark Z. Belzowski, Vice President and
Chief Financial Officer
Address for notices:
Universal Electronics Inc.
6101 Gateway Drive
Cypress, CA 90630
Attn: Chief Financial Officer
Telephone: (714) 820-1000
Facsimile: (714)820-1151
with a required copy to:
Richard A. Firehammer, Jr.
Sr. VP and General Counsel
Universal Electronics Inc.
8190 Carrington Place
Bainbridge Township, Ohio 44023
Telephone: (440) 708-0720
Facsimile: (440) 708-0721
COMERICA BANK
By /s/ Thomas R. Kelly
----------------------------------------
Thomas R. Kelly, Vice President
Address for notices and Lending Office:
Comerica Bank - California
301 Ocean Boulevard, Suite 1800
Long Beach, CA 90802
Attn: Thomas R. Kelly
Telephone: (562) 590-2530
Facsimile: (562) 590-2534
44
Exhibit 2.5(b)
To
Credit Agreement
Form of Notice of Borrowing
NOTICE OF BORROWING
To: COMERICA BANK
301 Ocean Boulevard, Suite 1800
Long Beach, California 90802
Attn: Thomas R. Kelly
Vice President
This Notice of Borrowing is given pursuant to Section 2.5(b)
of that certain Credit Agreement, dated as of September 15, 2003 (the
"Agreement"), between UNIVERSAL ELECTRONICS INC., a Delaware corporation
("Borrower"), and COMERICA BANK, a Michigan banking corporation ("Bank"). All
initially capitalized terms used but not defined in this Notice of Borrowing
shall have the meanings assigned to such terms in the Agreement.
The undersigned hereby requests a Borrowing as follows:
$_______________Base Lending Rate Portion(1)
$_______________ LIBOR Lending Portion with an Interest Period
of ___ [1, 2, 3, 4 or 6] months and expiring
on _______________,20 ____ ($1,000,000
minimum)(2)
$_______________Total
The undersigned requests that such Borrowing be made available
on ________________, 20____, and credited into Borrower's general deposit
account number______________maintained with Bank.
The undersigned certifies that, as of the date of the
requested Borrowing:
(a) the representations and warranties of Borrower
contained in the Agreement and the Loan Documents are true and correct on and as
of such date, except to the extent such representations and warranties expressly
relate solely to an earlier date;
(b) no Event of Default or Unmatured Event of Default has
occurred or will result from the proposed Borrowing;
(c) after giving effect to the Loans requested hereby,
the aggregate principal amount of Revolving Loans outstanding plus the Letter of
Credit Usage will not exceed the aggregate amount of the Revolving Credit
Commitment;
- ---------------------------
(1) Notice must be given to Bank no later than 11:00 a.m., Pacific time,
one (1) Business Day prior to the day on which such Borrowing is to be
made.
(2) Notice must be given to Bank no later than 9:00 a.m., Pacific time,
three (3) LIBOR Business Days prior to the day in which such Borrowing
is to be made.
Exhibit 2.5(b)
1
(d) after giving effect to the Borrowing(s) requested
hereby, there shall be no more than three (3) LIBOR Lending Rate Portions
outstanding;
(e) the proceeds of the Loan requested hereby shall be
used in accordance with Section 7.1 of the Agreement; and
(f) Borrower has satisfied in all respects all conditions
under the Agreement to be performed or satisfied by it on or before such date.
Dated: __________, 20___ UNIVERSAL ELECTRONICS INC.
By __________________________________
Name:________________________________
Title: ______________________________
Exhibit 2.5(b)
2
Exhibit 2.6(b)
To
Credit Agreement
Form of Notice of Conversion or Continuation
NOTICE OF CONVERSION OR CONTINUATION
To: COMERICA BANK
301 Ocean Boulevard, Suite 1800
Long Beach, California 90802
Attn: Thomas R. Kelly
Vice President
This Notice of Conversion or Continuation is given pursuant to Section
2.6(b) of that certain Credit Agreement, dated as of September 15, 2003 (the
"Agreement"), between UNIVERSAL ELECTRONICS INC., a Delaware corporation
("Borrower"), and COMERICA BANK, a Michigan banking corporation ("Bank"). All
initially capitalized terms used but not defined in this Notice of Conversion or
Continuation shall have the meanings assigned to such terms in the Agreement.
We hereby request that you:
1. Convert $_______________________ [$1,000,000 minimum] in
principal amount of Base Lending Rate Portions of Revolving Loans
on_________________________, 20___, to a LIBOR Lending Rate Portion with an
Interest Period of_________[1, 2, 3, 4 or 6] months and expiring on ___________,
20___;
2. Convert $______________________ in principal amount of LIBOR
Lending Portions of Revolving Loans on the expiration of the Interest Period
applicable thereto, to a Base Lending Rate Portion;
3. Continue as LEBOR Lending Rate Portions
$______________________________in principal amount of presently outstanding
LIBOR Lending Rate Portions of Revolving, commencing on the expiration of the
Interest Period applicable thereto, with a new Interest Period of _____ [1,2,
3,4 or 6] months and expiring on______________________, 20___;
We certify that, as of the date hereof:
(a) no Event of Default or Unmatured Event of Default is
continuing; and
(b) after giving effect to the continuation or conversion
requested hereby, there shall be no more than three (3) LIBOR Lending Rate
Portions outstanding.
Dated: ______, 20___ UNIVERSAL ELECTRONICS INC.
By /s/ MARK Z. BELZOWSKI
-----------------------------------
Name: ________________________________
Title: _______________________________
Exhibit 2.6(b)
1
Exhibit 4.l(b)
To
Credit Agreement
Form of Opinions of Borrower's Counsel
Exhibit 6.3(b)
To
Credit Agreement
Form of Compliance Certificate
COMPLIANCE CERTIFICATE
To: COMERICA BANK
301 Ocean Boulevard, Suite 1800
Long Beach, California 90802
Attn: Thomas R. Kelly
Vice President
This Compliance Certificate is given pursuant to Section 6.3(b) of that
certain Credit Agreement, dated as of September 15, 2003 (the "Agreement"),
between UNIVERSAL ELECTRONICS INC., a Delaware corporation ("Borrower"), and
COMERICA BANK, a Michigan banking corporation ("Bank"). All initially
capitalized terms used but not defined in this Compliance Certificate shall have
the meanings assigned to such terms in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
(1) He/She is the duly elected Chief Financial Officer of
Borrower;
(2) He/She reviewed the terms of the Agreement and has made, or
has caused to be made under his/her supervision, a detailed
review of the transactions and condition of Borrower during
the accounting period covered by the attached financial
statements; and
(3) The examinations described in Paragraph (2) above did not
disclose, and he/she has no knowledge of, the existence of any
condition or event which constitutes an Unmatured Event of
Default or Event of Default during, or at the end of. the
accounting period covered by the attached financial statements
or as of the date of this Compliance Certificate, except as
set forth below; and
Described below are the exceptions, if any, to Paragraph (3) above
which list, in detail, the nature of the condition or event, the period during
which it has existed and the action which Borrower has taken, is taking, or
proposes to take with respect to each such condition or event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
This Compliance Certificate, together with the computations set forth
in Schedule 1 hereto and the financial statements delivered concurrently
herewith in support hereof, are made and delivered this 16 day of September,
2003
UNIVERSAL ELECTRONICS INC.
By: /s/ MARK Z. BELZOWSKI
---------------------------------
Chief Financial Officer
Exhibit 6.3(b)
1
COMPLIANCE CERTIFICATE
SCHEDULE 1
SCHEDULE OF COMPLIANCE
FOR THE FISCAL QUARTER ENDED ON_______________________, 20_____
SECTION 7.15(a) - CONSOLIDATED EFFECTIVE TANGIBLE NET WORTH
A. Borrower's consolidated total stockholder's equity: $___________
B. Intangible Assets of Borrower: $___________
C. Amounts due to Borrower from Affiliates: $___________
D. Line A minus the sum of Lines B and C: $___________
E. Base Amount $ 66,000,000
F. Covenant: Is Line D greater than Line E Yes ____ No ____
SECTION 7.15(b) - CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED EFFECTIVE
TANGIBLE NET WORTH
A. Borrower's consolidated total liabilities, calculated
in accordance with GAAP: $___________
B. Consolidated Effective Tangible Net Worth: $___________
C. Ratio of Line A to Line B: ____ :1.0
D. Covenant: (Not greater than): 0.65:1.0
SECTION 7.15(c) - QUICK RATIO
A. The sum of Borrowers' accounts receivable plus
Borrowers' cash on hand and marketable securities: $___________
B. Current Liabilities (including the Obligations): $___________
C. Ratio of Line A to Line B: ____ :1.0
D. Covenant: (Not less than) 1.50:1.0
SECTION 7.15(d) - CONSOLIDATED NET INCOME (FISCAL QUARTERS)
A. The consolidated net income of Borrower and the
Subsidiaries after all federal, state and local income taxes
reflected on Borrower's Financial Statement, as of the end
Exhibit 6.3(b)
1
of the last two consecutive fiscal quarters, calculated in
accordance with GAAP: $___________
B. Base Amount $ 0
G. Covenant: Line A less than Line B Yes____No___
SECTION 7.15(e) - CONSOLIDATED NET INCOME (FISCAL YEAR) (3)
C. The consolidated net income of Borrower and the
Subsidiaries after all federal, state and local
income taxes reflected on Borrower's Financial
Statement, as of the end of the last fiscal year,
calculated in accordance with GAAP: $___________
D. Base Amount $ 2,500,000
H. Covenant: Line A less than Line B Yes ___ No ___
- --------------------------
(3) Required to be reported for fiscal quarter ending December 31.
Exhibit 6.3(b)
2
Schedule 5.7
To
Credit Agreement
Litigation
See Borrower's filings with the Securities and Exchange Commission
Schedule 5.9
To
Credit Agreement
Subsidiaries
See Borrower's filings with the Securities and Exchange Commission
Schedule 5.12
To
Credit Agreement
Employee Benefit Plans
Universal Electronics Inc. Flexible Spending Plan
Universal Electronics Inc. 401(k) And Profit Sharing Plan
Universal Electronics Inc. Jefferson Pilot Group Long Term Disability Insurance
Policy
Universal Electronics Inc. Jefferson Pilot Group Insurance Policy
Universal Electronics Inc. Jefferson Pilot Group Dental Policy
Universal Electronics Inc. Aetna U.S. Healthcare (Customer #US 033846)
Universal Electronics Inc. Executive Bonus 162 Plan - Life Insurance - Equitable
Life