This AMENDED AND RESTATED LOAN AGREEMENT
dated as of December 21, 2005 (the Agreement), is
executed by and between HUTCHINSON TECHNOLOGY INCORPORATED, a Minnesota corporation (the
Borrower), whose address is 40 W. Highland Park, Hutchinson, Minnesota 55350, and LASALLE BANK
NATIONAL ASSOCIATION, a national banking association (the Bank), whose address is 135 South La
Salle Street, Chicago, Illinois 60603.
FIRST: Borrower and Bank are parties to that certain Loan Agreement dated as of January 30,
2004 which was amended by that certain Amendment to Loan Agreement dated July 20, 2004 (as so
amended, the Original Credit Agreement) with a Revolving Loan Commitment of $10,000,000 which
obligation is evidenced by a Note in the original principal amount of $10,000,000 (Original
SECOND: The Borrower and Bank desire to amend and restate the Original Loan Agreement
pursuant to the terms set forth herein. Pursuant thereto, the Borrower will deliver a new Note (as
defined herein) which shall be in substitution for and not in payment of the Original Note.
In consideration of the mutual agreements hereinafter set forth, the Borrower and the Bank
hereby agree as follows:
1.1 Defined Terms. For the purposes of this Agreement, the following capitalized
words and phrases shall have the meanings set forth below.
Acceptable Subordination Provisions means those provisions contained in any
documentation with respect to Subordinated Debt providing for the subordination of the payment of
such Subordinated Debt to the payment of the Obligations provided that such provisions are no less
favorable to Bank than the subordination provisions applicable to the Subordinated Notes.
Asset Disposition shall mean the sale, lease, assignment or other transfer for value
(each a Disposition) by the Borrower or any Subsidiary to any Person (other than the Borrower or
any Subsidiary) of any asset or right of the Borrower or any Subsidiary (including, the loss,
destruction or damage of any thereof or any condemnation, confiscation, requisition, seizure or
taking thereof), other than the sale or lease of inventory in the ordinary course of business.
Bankruptcy Code shall mean the United States Bankruptcy Code, as now existing or
Business Day shall mean any day other than a Saturday, Sunday or a legal holiday on
which banks are authorized or required to be closed for the conduct of commercial banking business
in Chicago, Illinois.
Capital Expenditures shall mean expenditures (including Capitalized Lease
Obligations) for the acquisition of fixed assets which are required to be capitalized under GAAP.
Capital Lease shall mean, as to any Person, a lease by such Person, as lessee, of
any interest in any kind of property or asset, whether real, personal or mixed, or tangible or
intangible, that is, or should be, in accordance with Financial Accounting Standards Board
Statement No. 13, as amended from time to time, or, if such Statement No. 13 is not then in effect,
such statement of GAAP as may be applicable, recorded as a capital lease on the financial
statements of such Person prepared in accordance with GAAP.
Capitalization shall mean Borrowers total Covenant Indebtedness plus its recorded
Capitalized Lease Obligations shall mean, as to any Person, all rental obligations
of such Person, as lessee under a Capital Lease which are or will be required to be capitalized on
the books of such Person.
Cash and Marketable Securities shall mean the Borrowers total of cash on hand, cash
equivalents and marketable securities.
Change of Control means any event that would constitute a Change in Control as
that term is defined in the Subordinated Debt Indenture as originally executed on February 24, 2003
and not as it has or may be amended or modified.
Covenant Indebtedness shall mean, without duplication, (a) the principal amount of
all indebtedness of the Borrower for borrowed money or for the deferred purchase price of property
or services, (b) the maximum amount available to be drawn under all letters of credit, bankers
acceptances and similar obligations issued for the account of the Borrower and all unpaid drawings
in respect of such letters of credit, bankers acceptances and similar obligations, (c) all
indebtedness secured by any Lien on any property owned by the Borrower, whether or not such
indebtedness has been assumed by the Borrower (provided, however, if the Borrower has not assumed
or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be
in an amount equal to the fair market value of the property subject to such Lien), (d) the
aggregate amount of all Capitalized Lease Obligations of the Borrower, (e) all Contingent
Liabilities of the Borrower, whether or not reflected on its balance sheet, and (f) all monetary
obligations of the Borrower under an agreement for the use or possession of property creating
obligations that do not appear on the balance sheet of the Borrower but which, upon the insolvency
or bankruptcy of the Borrower, would be characterized as the indebtedness of the Borrower (without
regard to accounting treatment). Notwithstanding the foregoing, Covenant Indebtedness shall not
include trade payables and accrued expenses incurred by the Borrower in accordance with customary
practices and in the ordinary course of business of the Borrower or obligations under operating
Collateral means any assets of the Borrower which become subject to a lien, mortgage
or security interest in favor of the Bank.
Closing Fee shall have the meaning set forth in Section 2.5(b)
Contingent Liability and Contingent Liabilities shall mean, respectively,
each obligation and liability of the Borrower and all such obligations and liabilities of the
Borrower incurred pursuant to any agreement, undertaking or arrangement by which the Borrower: (a)
guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise
to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, dividend,
obligation or other liability of any other Person in any manner (other than by endorsement of
instruments in the course of collection), including without limitation, any indebtedness, dividend
or other obligation which may be issued or incurred at some future time; (b) guarantees the payment
of dividends or other distributions upon the shares or ownership interest of any other Person; (c)
undertakes or agrees (whether contingently or otherwise): (i) to purchase, repurchase, or
otherwise acquire any indebtedness, obligation or liability of any other Person or any or any
property or assets constituting security therefor, (ii) to advance or provide funds for the payment
or discharge of any indebtedness, obligation or liability of any other Person (whether in the form
of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency,
assets, level of income, working capital or other financial condition of any other Person, or (iii)
to make payment to any other Person other than for value received; (d) agrees to lease property or
to purchase securities, property or services from such other Person with the purpose or intent of
assuring the owner of such indebtedness or obligation of the ability of such other Person to make
payment of the indebtedness or obligation; (e) to induce the issuance of, or in connection with the
issuance of, any letter of credit for the benefit of such other Person; or (f) undertakes or agrees
otherwise to assure a creditor against loss. The amount of any Contingent Liability shall (subject
to any limitation set forth herein) be deemed to be the outstanding
principal amount (or maximum permitted principal amount, if larger) of the indebtedness, obligation
or other liability guaranteed or supported thereby.
Default Rate shall mean a per annum rate of interest equal to the Prime Rate
plus two percent (2.0%).
Depreciation shall mean the total amounts added to depreciation, amortization,
obsolescence, valuation and other proper reserves, as reflected on the Borrowers financial
statements and determined in accordance with GAAP
Designated Senior Debt shall have the meaning as set forth in Section 1.01 of the
Subordinated Debt Indenture.
Distributions shall mean: a) any amounts used by the Borrower to purchase or redeem
any shares of stock; b) any dividends, whether declared or paid (other than stock dividends),
whether in cash or otherwise, including any funds set aside for any such purpose; and c) any other
distribution made by Borrower to its shareholders.
EBITDA shall mean, for any period, (a) the sum for such period of: (i) Net Income,
plus (ii) Interest Charges, plus (iii) federal and state income taxes (including
the Illinois replacement tax), plus (iv) Depreciation, plus (v) non-cash management
compensation expense, plus (vi) all other non-cash charges, minus (b) income or
loss attributable to equity in any unconsolidated Subsidiary except to the extent distributed to
the Borrower, in each case to the extent included in determining Net Income for such period.
Employee Plan means any defined benefit pension plan subject to Section 412 of the
Internal Revenue Code or Title IV of ERISA or any multiemployer plan as defined in Section 3(37) of
ERISA which is maintained or contributed to by the Borrower for the benefit of Borrowers employees
or to which the Borrower is a party or may have any liability or by which the Borrower is bound.
Environmental Laws shall mean any Federal, state, or local statute, law, rule,
regulation, ordinance or code, now or hereafter in effect, relating to the environment, Hazardous
Materials, employee health and safety, including, without limitation, CERCLA; the Resource
Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Toxic Substances Control Act,
15 U.S.C. § 2601 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et
seq.; the Safe Drinking Water Act, 42 U.S.C. § 3803 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; the Emergency Planning and the
Community Right-to-Know Act of 1986, 42 U.S.C. § 11001 et seq.; the Hazardous
Material Transportation Act, 49 U.S.C. § 1801 et seq.; the Occupational Safety and
Health Act, 29 U.S.C. § 651 et seq.; and any state and local counterparts or
equivalents, in each case as amended from time to time.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time.
Event of Default shall mean any of the events or conditions set forth in Section 10
GAAP shall mean generally accepted accounting principles, using the accrual basis of
accounting and consistently applied with prior periods, provided, however, that GAAP with respect
to any interim financial statements or reports shall be deemed subject to fiscal year-end
adjustments and footnotes made in accordance with GAAP.
Hazardous Materials shall mean (a) any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable, foam insulation, dielectric fluid
containing levels of polychlorinated biphenyls; and (b) any chemicals, materials or substances
defined as or included in the definition of hazardous substances, hazardous waste, hazardous
materials, extremely hazardous substances, restricted hazardous waste, toxic substances,
toxic pollutants, contaminants, pollutants or words of similar import, under any applicable
Hedging Agreement shall mean any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to
protect a Person against fluctuations in interest rates, currency exchange rates or commodity
prices including but not limited to any Interest Rate Agreement.
Hedging Obligation shall mean, with respect to any Person, any liability of such
Person under any Hedging Agreement
Indebtedness shall mean, without duplication, (a) all indebtedness (including
principal, interest, fees and charges) of the Borrower for borrowed money or for the deferred
purchase price of property or services, (b) the maximum amount available to be drawn under all
letters of credit, bankers acceptances and similar obligations issued for the account of the
Borrower and all unpaid drawings in respect of such letters of credit, bankers acceptances and
similar obligations, (c) all indebtedness secured by any Lien on any property owned by the
Borrower, whether or not such indebtedness has been assumed by the Borrower (provided, however, if
the Borrower has not assumed or otherwise become liable in respect of such indebtedness, such
indebtedness shall be deemed to be in an amount equal to the fair market value of the property
subject to such Lien), (d) the aggregate amount of all Capitalized Lease Obligations of the
Borrower, (e) all Contingent Liabilities of the Borrower, whether or not reflected on its balance
sheet, (f) all obligations under any Hedging Agreements, and (g) all monetary obligations of the
Borrower under (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an
agreement for the use or possession of property creating obligations that do not appear on the
balance sheet of the Borrower but which, upon the insolvency or bankruptcy of the Borrower, would
be characterized as the indebtedness of the Borrower (without regard to accounting treatment).
Notwithstanding the foregoing, Indebtedness shall not include trade payables and accrued expenses
incurred by the Borrower in accordance with customary practices and in the ordinary course of
business of the Borrower.
Indemnified Party and Indemnified Parties shall mean, respectively, each
of the Bank and any parent corporations, affiliated corporations or subsidiaries of the Bank, and
each of their respective officers, directors, employees, attorneys and agents, and all of such
parties and entities.
Interest Charges shall mean, for any period, the sum of the following amounts
determined in accordance with GAAP for the Borrower and its Subsidiaries on a consolidated basis
after eliminating all inter-company transactions: (a) the aggregate amount of all interest accrued
(whether or not actually paid and whether deducted or capitalized) during such period on
Indebtedness (including, without limitation, imputed interest on Capitalized Lease Obligations and
any amounts incurred pursuant to any Interest Rate Agreement), plus (b) amortization of debt
discount and expense during such period, plus (c) all fees or commissions payable in connection
with any Letters of Credit during such period.
Interest Period shall mean, with regard to any LIBOR Loan, successive one, two or
three month periods as selected from time to time by the Borrower by notice given to the Bank not
less than three Business Days prior to the first day of each respective Interest Period; provided,
however, that: (i) each such Interest Period occurring after the initial Interest Period of any
LIBOR Loan shall commence on the day on which the preceding Interest Period for such LIBOR Loan
expires, (ii) whenever the last day of any Interest Period would otherwise occur on a day other
than a Business Day, the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided, however, that if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, then the last day of such Interest
Period shall occur on the immediately preceding Business Day; (iii) whenever the first day of any
Interest Period occurs on a day of a month for which there is no numerically corresponding day in
the calendar month in which such Interest Period terminates, such Interest Period shall end on the
last Business Day of such calendar month; and (iv) the final Interest Period for any Loan must be
such that its expiration occurs on or before the Maturity Date of such Loan.
Interest Rate Agreements shall mean any interest rate protection agreement, interest
rate swap or other interest rate hedge arrangement (other than any interest rate cap or other
similar agreement or arrangement pursuant to which the Borrower has no credit exposure to the Bank)
to or under which the Borrower or any Subsidiary of the Borrower is a party or beneficiary.
Invested Property shall have the meaning ascribed to it in Section 8.12.
Investment Downgrade Default shall mean a default under Section 7.3 of this
Agreement caused by the downgrade of an investment owned by the Borrower that met the requirements
of Section 7.3 when made.
Letter of Credit and Letters of Credit shall mean, respectively, a letter
of credit and all such letters of credit issued by the Bank, in its sole discretion, upon the
execution and delivery by the Borrower and the acceptance by the Bank of a Master Letter of Credit
Agreement and an application for Letter of Credit, as set forth in Section 2.4 of this Agreement.
Letter of Credit Commitment shall mean, at any time, an amount equal to the lesser
of the following: (a) Revolving Loan Commitment less the aggregate amount of all Revolving
Loans outstanding; or (b) $10,000,000.
Letter of Credit Maturity Date shall mean the Maturity Date.
Letter of Credit Obligations shall mean, at any time, an amount equal to the
aggregate of the original face amounts of all Letters of Credit minus the sum of (i) the amount of
any reductions in the original face amount of any Letter of Credit which did not result from a draw
thereunder, (ii) the amount of any payments made by the Bank with respect to any draws made under a
Letter of Credit for which the Borrower has reimbursed the Bank, (iii) the amount of any payments
made by the Bank with respect to any draws made under a Letter of Credit which have been converted
to a Revolving Loan as set forth in Section 2.4, and (iv) the portion of any issued but expired
Letter of Credit which has not been drawn by the beneficiary thereunder. For purposes of
determining the outstanding Letter of Credit Obligations at any time, the Banks acceptance of a
draft drawn on the Bank pursuant to a Letter of Credit shall constitute a draw on the applicable
Letter of Credit at the time of such acceptance.
Liabilities shall mean at all times all liabilities of the Borrower that would be
shown as such on a balance sheet of the Borrower prepared in accordance with GAAP.
LIBOR shall mean a rate of interest equal to (a) the per annum rate of interest at
which United States dollar deposits in an amount comparable to the amount of the relevant LIBOR
Loan and for a period equal to the relevant Interest Period are offered in the London Interbank
Eurodollar market at 11:00 a.m. (London time) two Business Days prior to the commencement of such
Interest Period (or three Business Days prior to the commencement of such Interest Period if banks
in London, England were not open and dealing in offshore United States dollars on such second
preceding Business Day), as displayed in the Bloomberg Financial Markets system (or other
authoritative source selected by Lender in its sole discretion), divided by (b) a number determined
by subtracting from 1.00 the then stated maximum reserve percentage for determining reserves to be
maintained by member banks of the Federal Reserve System for Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under Regulation D), such rate to
remain fixed for such Interest Period, or as LIBOR is otherwise determined by the Bank in its sole
and absolute discretion. The Banks determination of LIBOR shall be conclusive, absent manifest
LIBOR Loan or LIBOR Loans shall mean that portion, and collectively those
portions, of the aggregate outstanding principal balance of the Revolving Loans that will bear
interest at the LIBOR Rate, of which at any time, the Borrower may identify no more than five (5)
advances of the Revolving Loans which will bear interest at the LIBOR Rate, of which each
particular LIBOR Loan must be in the amount of Five Hundred Thousand and 00/100 Dollars
($500,000.00) or a higher integral multiple of One Hundred Thousand and 00/100 Dollars
LIBOR Rate shall mean a per annum rate of interest equal to LIBOR for the relevant
Interest Period, plus one and one-quarter percent (1.25%), which LIBOR Rate shall remain
fixed during such Interest Period.
Lien shall mean any mortgage, pledge, hypothecation, judgment lien or similar legal
process, title retention lien, or other lien or security interest, including, without limitation,
the interest of a vendor under any
conditional sale or other title retention agreement and the interest of a lessor under a lease of
any interest in any kind of property or asset, whether real, personal or mixed, or tangible or
intangible, by such Person as lessee that is, or should be, a Capital Lease on the balance sheet of
the Borrower prepared in accordance with GAAP.
Loan Year shall mean each one year period ending on January 31st of each
Loans shall mean, collectively, all Revolving Loans (whether Prime Loans or LIBOR
Loans) made by the Bank to the Borrower and all Letter of Credit Obligations, under and pursuant to
Loan Documents shall have the meaning set forth in Section 3.1.
Mandatory Prepayment shall have the meaning set forth in Section 2.1(c).
Maturity Date shall mean January 31, 2009, unless extended by the Bank pursuant to
any modification, extension or renewal note executed by the Borrower and accepted by the Bank in
its sole and absolute discretion in substitution for the Note.
Net Income shall mean with respect to the Borrower for any period, the net income
(or loss) of the Borrower for such period as determined in accordance with GAAP, excluding
any gains from Asset Dispositions, any extraordinary gains and any gains from discontinued
Note shall have the meaning set forth in Section 4.1 hereof.
Obligations shall mean the Loans, as evidenced by the Note, all interest accrued
thereon, any fees due the Bank hereunder, any expenses incurred by the Bank hereunder and any and
all other liabilities and obligations of the Borrower (and of any partnership in which the Borrower
is or may be a partner) to the Bank, howsoever created, arising or evidenced, and howsoever owned,
held or acquired, whether now or hereafter existing, whether now due or to become due, direct or
indirect, absolute or contingent, and whether several, joint or joint and several, including, but
not limited to, any Hedging Agreement.
Obligor shall mean the Borrower, any guarantor, accommodation endorser, third party
pledgor, or any other party liable with respect to the Obligations.
Permitted Liens shall mean (a) Liens for taxes, assessments or other governmental
charges not yet due or which are being contested in good faith by appropriate proceedings in such a
manner as not to make the property forfeitable; (b) Liens or charges incidental to the conduct of
the Borrowers business or the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of an advance or credit, and which do not
in the aggregate materially detract from the value of the property or assets of the Borrower or
materially impair the use thereof in the operation of the Borrowers business; (c) Liens arising
out of judgments or awards against the Borrower with respect to which it shall concurrently
therewith be prosecuting a timely appeal or proceeding for review and with respect to which it
shall have secured a stay of execution pending such appeal or proceedings for review; (d) pledges
or deposits to secure obligations under workers compensation laws or similar legislation; (e) good
faith deposits in connection with leases to which the Borrower is a party; (f) deposits to secure
public or statutory obligations of the Borrower; (g) Liens existing on the date hereof and
disclosed on the financial statements referred to in Section 6 or on Schedule 7.2; and (h)
Liens granted to the Bank hereunder.
Person shall mean any individual, partnership, limited liability company,
corporation, trust, joint venture, joint stock company, association, unincorporated organization,
government or agency or political subdivision thereof, or other entity.
Prime Loan or Prime Loans shall mean that portion, and collectively, those
portions of the aggregate outstanding principal balance of the Revolving Loans that will bear
interest at the Prime Rate.
Prime Rate shall mean the floating per annum rate of interest which at any time, and
from time to time, shall be most recently announced by the Bank as its Prime Rate, which is not
intended to be the Banks lowest or most favorable rate of interest at any one time. The effective
date of any change in the Prime Rate shall for purposes hereof be the date the Prime Rate is
changed by the Bank. The Bank shall not be obligated to give notice of any change in the Prime
Regulatory Change shall mean the introduction of, or any change in any applicable
law, treaty, rule, regulation or guideline or in the interpretation or administration thereof by
any governmental authority or any central bank or other fiscal, monetary or other authority having
jurisdiction over the Bank or its lending office.
Revolving Interest Rate shall mean the Borrowers from time to time option of (i)
the Prime Rate, or (ii) the LIBOR Rate.
Loan and Revolving Loans shall mean, respectively, each direct advance and the aggregate of all such direct advances, from time to time in the form of either
Prime Loans and/or LIBOR Loans, made by the Bank to the Borrower under and pursuant to this
Agreement, as set forth in Section 2.1 of this Agreement.
Revolving Loan Availability shall mean, at any time, an amount equal to the
Revolving Loan Commitment less the Letter of Credit Obligations.
Revolving Loan Commitment shall mean Fifty Million and 00/100 Dollars
Senior Debt means all Covenant Indebtedness less the Subordinated Debt.
Subordinated Debt means the outstanding obligations due under the Subordinated
Notes and any hereafter incurred unsecured Indebtedness subordinated in payment to the Obligations
to the extent such subordinated Indebtedness is permitted under this Agreement.
Subordinated Debt Indenture shall mean that certain Indenture dated as of February
24, 2003, between Hutchinson Technology Incorporated and LaSalle Bank National Association, as
trustee as the same may be amended from time to time.
Subordinated Notes means the two and one-quarter percent (2.25%) Convertible
Subordinated Notes due 2010 issued by the Borrower pursuant to the Subordinated Debt Indenture.
Subsidiary and Subsidiaries shall mean, respectively, each and all such
corporations, partnerships, limited partnerships, limited liability companies, limited liability
partnerships or other entities of which or in which the Borrower owns directly or indirectly fifty
percent (50.00%) or more of (i) the combined voting power of all classes of stock having general
voting power under ordinary circumstances to elect a majority of the board of directors of such
entity if a corporation, (ii) the management authority and capital interest or profits interest of
such entity, if a partnership, limited partnership, limited liability company, limited liability
partnership, joint venture or similar entity, or (iii) the beneficial interest of such entity, if a
trust, association or other unincorporated organization.
TTM Capital Expenditures shall mean the total Capital Expenditures for the 12 month
period ending on the date of measurement.
TTM Distributions shall mean the total Distributions made by Borrower during the 12
month period ending on the date of measurement.
TTM EBITDA shall mean the EBITDA for the 12 month period ending on the date of
TTM Interest Charges shall mean the total Interest Charges for the 12 month period
ending on the date of measurement.
UCC shall mean the Uniform Commercial Code in effect in Illinois from time to time.
Unused Amount means $50,000,000 less all outstanding Revolving Loans and
less the Letter of Credit Obligations.
Unused Fee shall have the meaning ascribed to it in Section 2.5(a).
1.2 Accounting Terms. Any accounting terms used in this Agreement which are not
specifically defined herein shall have the meanings customarily given them in accordance with GAAP.
Calculations and determinations of financial and accounting terms used and not otherwise
specifically defined hereunder and the preparation of financial statements to be furnished to the
Bank pursuant hereto shall be made and prepared, both as to classification of items and as to
amount, in accordance with GAAP as used in the preparation of the financial statements of the
Borrower on the date of this Agreement. If any changes in accounting principles or practices from
those used in the preparation of the financial statements are hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified Public Accountants (or any
successor thereto or agencies with similar functions), which results in a material change in the
method of accounting in the financial statements required to be furnished to the Bank hereunder or
in the calculation of financial covenants, standards or terms contained in this Agreement, the
parties hereto agree to enter into good faith negotiations to amend such provisions so as equitably
to reflect such changes to the end that the criteria for evaluating the financial condition and
performance of the Borrower will be the same after such changes as they were before such changes;
and if the parties fail to agree on the amendment of such provisions, the Borrower will furnish
financial statements in accordance with such changes but shall provide calculations for all
financial covenants, perform all financial covenants and otherwise observe all financial standards
and terms in accordance with applicable accounting principles and practices in effect immediately
prior to such changes. Calculations with respect to financial covenants required to be stated in
accordance with applicable accounting principles and practices in effect immediately prior to such
changes shall be reviewed and certified by the Borrowers accountants.
1.3 Other Terms Defined in UCC. All other capitalized words and phrases used herein
and not otherwise specifically defined shall have the respective meanings assigned to such terms in
the UCC, as amended from time to time, to the extent the same are used or defined therein.
1.4 Other Definitional Provisions; Construction. Whenever the context so requires,
the neuter gender includes the masculine and feminine, the single number includes the plural, and
vice versa, and in particular the word Borrower shall be so construed. The words hereof,
herein and hereunder and words of similar import when used in this Agreement shall refer to
this Agreement as a whole and not to any particular provision of this Agreement, and references to
Article, Section, Subsection, Annex, Schedule, Exhibit and like references are references to this
Agreement unless otherwise specified. An Event of Default shall continue or be continuing
until such Event of Default has been waived in accordance with Section 12.3 hereof. References in
this Agreement to any party shall include such partys successors and permitted assigns.
References to any Section shall be a reference to such Section of this Agreement unless otherwise
stated. To the extent any of the provisions of the other Loan Documents are inconsistent with the
terms of this Loan Agreement, the provisions of this Loan Agreement shall govern.
2. COMMITMENT OF THE BANK.
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and conditions of this
Agreement and the other Loan Documents, and in reliance upon the representations and
warranties of the Borrower set forth herein and in the other Loan Documents, the Bank agrees
to make such Revolving Loans at such times as
the Borrower may from time to time request until, but not including, the Maturity Date,
and in such amounts as the Borrower may from time to time request, provided, however, that
the aggregate principal balance of all Revolving Loans outstanding at any time shall not
exceed the Revolving Loan Availability. Revolving Loans made by the Bank may be repaid and,
subject to the terms and conditions hereof, borrowed again up to, but not including the
Maturity Date unless the Revolving Loans are otherwise terminated or extended as provided in
this Agreement. The Revolving Loans shall be used by the Borrower for the purpose of
(b) Revolving Loan Interest and Payments. Except as otherwise provided in this
Section 2.1(b), the principal amount of the Revolving Loans outstanding from time to time
shall bear interest at the Revolving Interest Rate. Accrued and unpaid interest on the
unpaid principal balance of all Revolving Loans outstanding from time to time which are
Prime Loans, shall be due and payable monthly, in arrears, commencing on January 31, 2004
and continuing on the last Business day of each calendar month thereafter, and on the
Maturity Date. Accrued and unpaid interest on the unpaid principal balance of all Revolving
Loans outstanding from time to time which are LIBOR Loans shall be payable on the last
Business Day of each Interest Period, commencing on the first such date to occur after the
date hereof, on the date of any principal repayment of a LIBOR Loan and on the Maturity
Date. Any amount of principal or interest on the Revolving Loans which is not paid when
due, whether at stated maturity, by acceleration or otherwise, shall bear interest payable
on demand at the Default Rate.
(c) Revolving Loan Principal Payments.
(i) Mandatory Principal Prepayments Overadvances and Mandatory
Cleanup/Cleandown Provision. All Revolving Loans hereunder shall be repaid by
the Borrower on the Maturity Date, unless payable sooner pursuant to the provisions
of this Agreement. In the event the aggregate outstanding principal balance of all
Revolving Loans hereunder exceed the Revolving Loan Availability, the Borrower
shall, without notice or demand of any kind, immediately make such repayments of the
Revolving Loans or take such other actions as shall be necessary to eliminate such
During each Loan Year ending during the term of this Agreement, the Borrower
shall have a period of no less than 60 consecutive days when there shall be no
outstanding Revolving Loans.
(ii) Optional Prepayments. In addition to the Mandatory Prepayment,
the Borrower may from time to time prepay the Revolving Loans which are Prime Loans,
in whole or in part, without any prepayment penalty whatsoever, subject to the
following conditions: (i) each partial prepayment shall be in an amount equal to
Ten Thousand and 00/100 Dollars ($10,000.00), or a higher integral multiple of Five
Thousand and 00/100 Dollars ($5,000.00); and (ii) any prepayment of the entire
principal balance of the Prime Loans shall include accrued interest on such Prime
Loans to the date of such prepayment and payment in full of all other Obligations
(other than the LIBOR Loans), then due and payable.
2.2 Additional LIBOR Loan Provisions.
(a) LIBOR Loan Prepayments. If, for any reason, a LIBOR Loan is paid prior to
the last Business Day of any Interest Period, whether voluntary, involuntary, by reason of
acceleration or otherwise, each such prepayment of a LIBOR Loan will be accompanied by the
amount of accrued interest on the amount prepaid and any and all costs, expenses, penalties
and charges incurred by the Bank as a result of the early termination or breakage of a LIBOR
Loan, plus the amount, if any, by which (i) the additional interest which would have been
payable during the Interest Period on the LIBOR Loan prepaid had it not been prepaid,
exceeds (ii) the interest which would have been recoverable by the Bank by placing the
amount prepaid on deposit in the domestic certificate of deposit market, the eurodollar
deposit market, or other appropriate money market selected by the Bank, for a period
starting on the date on which it was
prepaid and ending on the last day of the Interest Period for such LIBOR Loan. The
amount of any such loss or expense payable by the Borrower to the Bank under this section
shall be determined in the Banks sole discretion based upon the assumption that the Bank
funded its loan commitment for LIBOR Loans in the London Interbank Eurodollar market and
using any reasonable attribution or averaging methods which the Bank deems appropriate and
practical, provided, however, that the Bank is not obligated to accept a deposit in the
London Interbank Eurodollar market in order to charge interest on a LIBOR Loan at the LIBOR
(b) LIBOR Unavailability. If the Bank determines in good faith (which
determination shall be conclusive, absent manifest error) prior to the commencement of any
Interest Period that (i) the making or maintenance of any LIBOR Loan would violate any
applicable law, rule, regulation or directive, whether or not having the force of law, (ii)
United States dollar deposits in the principal amount, and for periods equal to the Interest
Period for funding any LIBOR Loan are not available in the London Interbank Eurodollar
market in the ordinary course of business, (iii) by reason of circumstances affecting the
London Interbank Eurodollar market, adequate and fair means do not exist for ascertaining
the LIBOR Rate to be applicable to the relevant LIBOR Loan, or (iv) the LIBOR Rate does not
accurately reflect the cost to the Bank of a LIBOR Loan, the Bank shall promptly notify the
Borrower thereof and, so long as the foregoing conditions continue, Loans may not be
advanced as a LIBOR Loan thereafter. In addition, at the Borrowers option, each existing
LIBOR Loan shall be immediately (i) converted to a Prime Loan on the last Business Day of
the then existing Interest Period, or (ii) due and payable on the last Business Day of the
then existing Interest Period, without further demand, presentment, protest or notice of any
kind, all of which are hereby waived by the Borrower.
(c) Regulatory Change. In addition, if, after the date hereof, a Regulatory
Change shall, in the reasonable determination of the Bank, make it unlawful for the Bank to
make or maintain the LIBOR Loans, then the Bank shall promptly notify the Borrower and the
Loans may not be advanced as a LIBOR Loan thereafter. In addition, at the Borrowers
option, each existing LIBOR Loan shall be immediately (i) converted to a Prime Loan on the
last Business Day of the then existing Interest Period or on such earlier date as required
by law, or (ii) due and payable on the last Business Day of the then existing Interest
Period or on such earlier date as required by law, all without further demand, presentment,
protest or notice of any kind, all of which are hereby waived by the Borrower.
(d) LIBOR Loan Indemnity. If any Regulatory Change (whether or not having the
force of law) shall (a) impose, modify or deem applicable any assessment, reserve, special
deposit or similar requirement against assets held by, or deposits in or for the account of
or loans by, or any other acquisition of funds or disbursements by, the Bank; (b) subject
the Bank or any LIBOR Loan to any tax, duty, charge, stamp tax or fee or change the basis of
taxation of payments to the Bank of principal or interest due from the Borrower to the Bank
hereunder (other than a change in the taxation of the overall net income of the Bank); or
(c) impose on the Bank any other condition regarding such LIBOR Loan or the Banks funding
thereof, and the Bank shall determine (which determination shall be conclusive, absent
manifest error) that the result of the foregoing is to increase the cost to the Bank of
making or maintaining such LIBOR Loan or to reduce the amount of principal or interest
received by the Bank hereunder, then the Borrower shall pay to the Bank, on demand, such
additional amounts as the Bank shall, from time to time, determine are sufficient to
compensate and indemnify the Bank for such increased cost or reduced amount.
2.3 Interest and Fee Computation; Collection of Funds. Except as otherwise set forth
herein, all interest and fees shall be calculated on the basis of a year consisting of 360 days and
shall be paid for the actual number of days elapsed. Principal payments submitted in funds not
immediately available shall continue to bear interest until collected. If any principal payment to
be made by the Borrower hereunder or under the Note shall become due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day and such extension of time
shall be included in computing any interest in respect of such payment. Notwithstanding anything
to the contrary contained herein, the final payment due under any of the Revolving Loans must be
made by wire transfer or other immediately available funds.
2.4 Letters of Credit. Subject to the terms and conditions of this Agreement and upon
(i) the execution by the Borrower and the Bank of a Master Letter of Credit Agreement and, (ii)
upon the execution and delivery by the Borrower, and the acceptance by the Bank, in its sole and
absolute discretion, of an application for letter of credit, the Bank agrees to issue for the
account of the Borrower such Letters of Credit in the standard form of the Bank and otherwise in
form and substance acceptable to the Bank, from time to time during the term of this Agreement,
provided that the Letter of Credit Obligations may not at any time exceed the Letter of Credit
Commitment and provided further, that no Letter of Credit shall have an expiration date later than
the Letter of Credit Maturity Date. The amount of any payments made by the Bank with respect to
draws made by a beneficiary under a Letter of Credit for which the Borrower has failed to reimburse
the Bank upon the earlier of (i) the Banks demand for repayment, or (ii) five (5) days from the
date of such payment to such beneficiary by the Bank, shall be deemed to have been converted to a
Revolving Loan as of the date such payment was made by the Bank to such beneficiary. Upon the
occurrence of an Event of a Default and at the option of the Bank, all Letter of Credit Obligations
shall be converted to Revolving Prime Loans, all without demand, presentment, protest or notice of
any kind, all of which are hereby waived by the Borrower.
(a) Unused Fee. The Borrower agrees to pay to the Bank a fee in the amount
one-quarter of one percent (0.25%) per annum of the Unused Amount (Unused Fee) which shall
be determined daily and calculated based upon a 360 day year. The Unused Fee shall be paid
four times per year, in arrears, on the last Business Day of each calendar quarter.
(b) Closing Fee. Immediately upon execution of this Agreement, the Borrower
shall pay the Bank a fee in the amount of One Hundred Thousand Dollars ($100,000.00)
3. CONDITIONS OF BORROWING.
Notwithstanding any other provision of this Agreement, the Bank shall not be required to
disburse or make all or any portion of the Loans if any of the following conditions shall have
3.1 Loan Documents. The Borrower shall have failed to execute and deliver to the Bank
any of the following loan documents (together with any amendments, restatements, or replacements
therefor and any other document executed and delivered to the Bank in connection with the Loans
being collectively referred to herein as the Loan Documents), all of which must be satisfactory
to the Bank and the Banks counsel in form, substance and execution:
(a) Loan Agreement. Two copies of this Agreement duly executed by the
(b) Note. The Note duly executed by the Borrower, in the form attached hereto
as Exhibit A.
(c) Resolutions. Resolutions of the board of directors and/or shareholders of
the Borrower authorizing the execution of this Agreement and the Loan Documents.
(d) Additional Documents. Such other certificates, financial statements,
schedules, resolutions, opinions of counsel, notes and other documents which are provided
for hereunder or which the Bank shall require.
3.2 Event of Default. Any Event of Default, or any event which, with notice or lapse
of time, or both would constitute an Event of Default, shall have occurred and be continuing.
3.3 Representations and Warranties. Any representation or warranty of the Borrower
contained herein or in any Loan Document shall be untrue or incorrect in any material respect as of
the date of any Loan as though made on such date, except to the extent such representation or
warranty expressly relates to an earlier date.
3.4 Closing Fee. The Borrower has not paid to the Bank the Closing Fee on or before
the execution of this Agreement by the Bank.
4. NOTES EVIDENCING LOANS.
4.1 Note. The Revolving Loans and the Letter of Credit Obligations shall be evidenced
by a single Replacement Note (together with any and all renewal, extension, modification or
replacement notes executed by the Borrower and delivered to the Bank and given in substitution
therefor, the Note) in the form of Exhibit A attached hereto, duly executed by the
Borrower and payable to the order of the Bank. At the time of the initial disbursement of a
Revolving Loan and at each time an additional Revolving Loan shall be requested hereunder or a
repayment made in whole or in part thereon, an appropriate notation thereof shall be made on the
books and records of the Bank. All amounts recorded shall be, absent demonstrable error,
conclusive and binding evidence of (i) the principal amount of the Revolving Loans advanced
hereunder and the amount of all Letter of Credit Obligations, (ii) any unpaid interest owing on the
Revolving Loans, and (iii) all amounts repaid on the Revolving Loans or the Letter of Credit
Obligations. The failure to record any such amount or any error in recording such amounts shall
not, however, limit or otherwise affect the obligations of the Borrower under the Note to repay the
principal amount of the Loans, together with all interest accruing thereon.
5. MANNER OF BORROWING.
Each Revolving Loan shall be made available to the Borrower upon its request, from any Person
whose authority to so act has not been revoked by the Borrower in writing previously received by
the Bank. Each Revolving Loan may be advanced either as a Prime Loan or a LIBOR Loan, provided,
however, that at any time, the Borrower may identify no more than five (5) Revolving Loans which
may be LIBOR Loans. A request for a Prime Loan must be received by no later than 11:00 a.m.
Chicago, Illinois time, on the day it is to be funded. A request for a LIBOR Loan must be (i)
received by no later than 11:00 a.m. Chicago, Illinois time, three days before the day it is to be
funded, and (ii) in an amount equal to Five Hundred Thousand and 00/100 Dollars ($500,000.00) or a
higher integral multiple of One Hundred Thousand and 00/100 Dollars ($100,000.00). If for any
reason the Borrower shall fail to select timely an Interest Period for an existing LIBOR Loan, then
such LIBOR Loan shall be immediately converted to a Prime Loan on the last Business Day of the then
existing Interest Period, all without demand, presentment, protest or notice of any kind, all of
which are hereby waived by the Borrower. The proceeds of each Prime Loan or LIBOR Loan shall be
made available at the office of the Bank by credit to the account of the Borrower or by other means
requested by the Borrower and acceptable to the Bank.
Each Letter of Credit shall be issued by the Bank upon the execution of the Banks standard
Master Letter of Credit Agreement by the Borrower and the Bank, and the execution and delivery by
the Borrower and the acceptance by the Bank, in its sole discretion, of the Banks standard
application for Letter of Credit and the payment by the Borrower of the Banks fees charged in
connection therewith. In addition to all other applicable fees, charges and/or interest payable by
the Borrower pursuant to the Master Letter of Credit Agreement or otherwise payable in accordance
with the Banks standard letter of credit fee schedule, all standby Letters of Credit issued under
and pursuant to this Agreement shall bear an annual fee equal to one and one-quarter percent
(1.25%) of the face amount of such standby Letter of Credit, payable by the Borrower in quarterly
installments as follows: a) the first payment will be due on or before the date of issuance in an
amount pro rated for the remaining portion of the calendar quarter in which the Letter of Credit is
issued; and b) subsequently quarterly payments will be due in advance on the first day of each
calendar quarter occurring during the period in which the Letter of Credit is outstanding. All
Letters of Credit other than standby Letters of Credit shall bear such fees, costs and interest as
charged by the Bank and shall contain such other terms as set forth in the Master Letter of Credit
Agreement and the Banks standard letter of credit fee schedule.
The Bank is authorized to rely on any written, electronic or telecopy loan requests which the
Bank believes in its good faith judgment to emanate from a properly authorized representative of
the Borrower, whether or not that is in fact the case. The Borrower does hereby irrevocably
confirm, ratify and approve all such advances by the Bank and does hereby indemnify the Bank
against losses and expenses (including court costs, attorneys and paralegals fees) and shall hold
the Bank harmless with respect thereto.
6. REPRESENTATIONS AND WARRANTIES.
To induce the Bank to make the Loans, the Borrower makes the following representations and
warranties to the Bank, each of which shall be true and correct as of the date of the execution and
delivery of this Agreement, and which shall survive the execution and delivery of this Agreement:
6.1 Borrower Organization and Name. The Borrower is a corporation duly organized,
existing and in good standing under the laws of the State of Minnesota, with full and adequate
corporate power to carry on and conduct its business as presently conducted. The Borrowers state
issued organizational identification number is 1I-896. The Borrower is duly licensed or qualified
in all foreign jurisdictions wherein the nature of its activities require such qualification or
licensing except where failure to be so qualified would not have a material adverse effect on the
Borrower. The exact legal name of the Borrower is as set forth in the first paragraph of this
Agreement, and the Borrower currently does not conduct, nor has it during the last five (5) years
conducted, business under any other name or trade name.
6.2 Authorization; Validity. The Borrower has full right, power and authority to
enter into this Agreement, to make the borrowings and execute and deliver the Loan Documents as
provided herein and to perform all of its duties and obligations under this Agreement and the Loan
Documents. The execution and delivery of this Agreement and the Loan Documents will not, nor will
the observance or performance of any of the matters and things herein or therein set forth, violate
or contravene any provision of law or of the articles of incorporation of the Borrower. All
necessary and appropriate corporate action has been taken on the part of the Borrower to authorize
the execution and delivery of this Agreement and the Loan Documents. This Agreement and the Loan
Documents are valid and binding agreements and contracts of the Borrower in accordance with their
respective terms, except as limited by applicable bankruptcy, insolvency, moratorium or other
similar laws affecting the rights and remedies of creditors generally and by general principles of
6.3 Compliance With Laws. The nature and transaction of the Borrowers business and
operations and the use of its properties and assets, including, but not limited to, any real estate
owned or occupied by the Borrower, do not and during the term of the Loans shall not, violate or
conflict with any applicable law, statute, ordinance, rule, regulation or order of any kind or
nature, including, without limitation, the provisions of the Fair Labor Standards Act or any
zoning, land use, building, noise abatement, occupational health and safety or other laws, any
building permit or any condition, grant, easement, covenant, condition or restriction, whether
recorded or not, other than such violations and conflicts which would not have a material adverse
effect on the Borrower.
6.4 Environmental Laws and Hazardous Substances. The Borrower represents, warrants
and agrees with the Bank that except as set forth in Schedule 6.4 (i) the Borrower has not
generated, used, stored, treated, transported, or disposed of any Hazardous Materials, on or off
any of the premises of the Borrower (whether or not owned by it) in any manner which at any time
violates any Environmental Law or any license, permit certificate, approval or similar
authorization thereunder, (ii) the operations of the Borrower comply in all material respects with
all Environmental Laws and all licenses, permits, certificates, approvals and similar
authorizations thereunder, (iii) there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any governmental authority or any other Person, nor is any
pending or, to the best of the Borrowers knowledge, threatened, and the Borrower shall immediately
notify the Bank upon becoming aware of any such investigation, proceeding, complaint, order,
directive, claim, citation or notice, and shall take prompt and appropriate actions to respond
thereto, with respect to any material non-compliance with, or material violation of, the
requirements of any Environmental Law by the Borrower or the release, spill or discharge,
threatened or actual, of any Hazardous Material or the generation, use, storage, treatment,
transportation or disposal of any Hazardous Material or any other environmental, health or safety
matter, which materially affects the Borrower or its business operations or assets or any
properties at which the Borrower has transported, stored or disposed of any Hazardous Materials,
(iv) the Borrower has no material liability, contingent or otherwise, in connection with a release,
spill or discharge, threatened or actual, of any Hazardous Materials or the generation, use,
storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous
Material; and (v) without limiting the generality of the foregoing, the Borrower shall, following
determination by the Bank that there is material non-compliance, or any condition which requires
any action by or on behalf of the Borrower in order to avoid any material non-compliance,
with any Environmental Law, at the Borrowers sole expense, prepare a proposed plan for such
testing and remediation as may be necessary to cure such non-compliance and an estimate of the
6.5 Absence of Breach. The execution, delivery and performance by the Borrower of
this Agreement, the Loan Documents and any other documents or instruments to be executed and
delivered by the Borrower in connection with the Loans shall not: (i) violate any provisions of law
or any applicable regulation, order, writ, injunction or decree of any court or governmental
authority applicable to the Borrower, or (ii) conflict with, be inconsistent with, or result in any
breach or default of any of the terms, covenants, conditions, or provisions of any indenture,
mortgage, deed of trust, instrument, document, agreement or contract of any kind to which the
Borrower is a party or by which the Borrower or any of its property or assets may be bound.
6.6 Asset Representations. The Borrower is the sole owner of its real and personal
property, free from any Lien of any kind, other than Permitted Liens and Liens permitted by Section
7.2. The Borrower has good and marketable title to all real properties and good and sufficient
title to all other properties, including all properties and assets referred to as owned by the
Borrower in the audited financial statement of the Borrower referred to in Section 6.7 (other than
property disposed of since the date of such financial statement in the ordinary course of business)
reasonably necessary to conduct its business as presently conducted. None of the properties,
revenues or assets of the Borrower is subject to a Lien, except for Permitted Liens. Except as set
forth in Schedule 6.6, during the last five years, all assets of the Borrower have been
located in the States of Minnesota, South Dakota and Wisconsin.
6.7 Financial Statements. All financial statements submitted to the Bank have been
prepared in accordance with GAAP on a consolidated basis, except as otherwise noted therein,
consistent with the previous fiscal year and truly and accurately reflect the financial condition
of the Borrower and the results of the operations for the Borrower as of such date and for the
6.8 Litigation and Taxes. Except as set forth on Schedule 6.8, there is no
litigation, demand, charge, claim, petition or governmental investigation or proceeding pending, or
threatened, against the Borrower, which, if adversely determined, would result in any material
adverse change in the financial condition or properties, business or operations of the Borrower.
The Borrower has duly filed all applicable income or other tax returns and has paid all income or
other taxes shown on such returns when due. Except as disclosed on Schedule 6.8, there is no
controversy or objection pending, or threatened in respect of any tax returns of the Borrower.
6.9 Event of Default. No Event of Default has occurred and is continuing, and no
event has occurred and is continuing which, with the lapse of time, the giving of notice, or both,
would constitute such an Event of Default under this Agreement or any of the Loan Documents and the
Borrower is not in default (without regard to grace or cure periods) under any material contract or
agreement to which it is a party.
6.10 ERISA Obligations. All Employee Plans of the Borrower that are not multiemployer
plans meet the minimum funding standards of Section 302 of the Employee Retirement Income Security
Act of 1974 (ERISA) where applicable and each such Employee Plan that is intended to be qualified
within the meaning of Section 401 of the Internal Revenue Code of 1986 is qualified. No withdrawal
liability has been incurred under any Employee Plans that are multiemployer plans. No Reportable
Event or Prohibited Transaction (as such terms are defined in ERISA), has occurred with respect
to any Employee Plans that are not multiemployer plans unless approved by the appropriate
governmental agencies. The Borrower has promptly paid and discharged all obligations and
liabilities arising under ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its properties or assets.
6.11 Adverse Circumstances. No condition, circumstance, event, agreement, document,
instrument, restriction, litigation or proceeding (or threatened litigation or proceeding or basis
therefor) exists which (a) could materially adversely affect the ability of the Borrower to perform
its obligations under the Loan Documents, (b) would constitute a default under any of the Loan
Documents, or (c) would constitute such a default with the giving of notice or lapse of time or
6.12 Lending Relationship. The Borrower acknowledges and agrees that the relationship
hereby created with the Bank is and has been conducted on an open and arms length basis in which
no fiduciary relationship exists and that the Borrower has not relied and is not relying on any
such fiduciary relationship in executing this Agreement and in consummating the Loans. The Bank
represents that it will receive the Note payable to its order as evidence of a bank loan.
6.13 Business Loan. The Loans, including interest rate, fees and charges as
contemplated hereby, (i) are business loans within the purview of 815 ILCS 205/4(1)(c), as amended
from time to time, (ii) are an exempted transaction under the Truth In Lending Act, 12 U.S.C. 1601
et seq., as amended from time to time, and (iii) do not, and when disbursed shall
not, violate the provisions of the Illinois or Minnesota usury laws, any consumer credit laws or
the usury laws of any state which may have jurisdiction over this transaction, the Borrower or any
property securing the Loans.
6.14 Compliance with Regulation U. No portion of the proceeds of the Loans shall be
used by the Borrower, or any affiliates of the Borrower, either directly or indirectly, for the
purpose of purchasing or carrying any margin stock, within the meaning of Regulation U as adopted
by the Board of Governors of the Federal Reserve System.
6.15 Governmental Regulation. The Borrower and its Subsidiaries are not, or after
giving effect to any loan, will not be, subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Investment Company Act of 1940 or to any federal
or state statute or regulation limiting its ability to incur indebtedness for borrowed money.
6.16 Invested Property. The Borrower has Invested Property invested with the Bank
that has market value of not less than Ten Million and 00/100 Dollars ($10,000,000.00).
6.17 Place of Business. The principal place of business of the Borrower is 40 W.
Highland Park, Hutchinson, Minnesota 55350 and the Borrower shall promptly notify the Bank of any
change in such location.
6.18 Complete Information. This Agreement and all financial statements, schedules,
certificates, confirmations, agreements, contracts, and other materials submitted to the Bank in
connection with or in furtherance of this Agreement by or on behalf of the Borrower fully and
fairly state the matters with which they purport to deal, and neither misstate any material fact
nor, separately or in the aggregate, fail to state any material fact necessary to make the
statements made not misleading.
6.19 Designated Senior Debt. The subordination provisions contained in the
Subordinated Debt Indenture are enforceable against the Borrower and the holders of the
Subordinated Notes and all of the Obligations hereunder and the other Loan Documents are within the
definition of Senior Debt as that term is defined in the Subordinated Debt Indenture and, at such
times as the minimum principal requirement contained in the definition of Senior Designated Debt is
satisfied, all of the Obligations and the Loan Documents are within the definition of Designated
Senior Debt. The Borrower hereby designates all Obligations as Designated Senior Debt as that
term is defined in the Subordinated Debt Indenture, and the Obligations as well as this Agreement
and the other Loan Documents shall be afforded the benefit of the subordination provisions as well
as all other rights afforded to Senior Debt and (subject to the minimum outstanding principal
amount requirement contained in the definition Designated Senior Debt) Designated Senior Debt
under the Subordinated Debt Indenture. All Loans and other Obligations that are incurred hereafter
are and will be permitted under the Subordinated Debt Indenture
7. NEGATIVE COVENANTS.
7.1 Indebtedness. The Borrower shall not, either directly or indirectly, create,
assume, incur or have outstanding any Indebtedness (including purchase money indebtedness), or
become liable, whether as endorser, guarantor, surety or otherwise, for any debt or obligation of
any other Person, except:
(a) the Obligations;
(b) endorsement for collection or deposit of any commercial paper secured in the
ordinary course of business;
(c) obligations of the Borrower for taxes, assessments, municipal or other governmental
(d) obligations of the Borrower for accounts payable, other than for money borrowed,
incurred in the ordinary course of business;
(e) obligations existing on the date hereof which are disclosed on the financial
statements referred to in Section 6.7 or on Schedule 7.1.
(f) Indebtedness not to exceed in the aggregate the sum of $10,000,000 provided however
that such indebtedness shall not be secured by a Lien in any asset of the Borrower and such
Indebtedness shall not be Designated Senior Debt;
(g) Capitalized Lease Obligations for property acquired (or deemed to be acquired) by
the Borrower or claims arising from the use or loss of, or damage to, such property;
(h) Indebtedness for Capital Expenditures;
(i) Indebtedness subject to Acceptable Subordination Provisions provided however that:
(1) such Indebtedness shall not be secured by a Lien in any assets of the Borrower; (2) such
Indebtedness shall not be Designated Senior Debt; and (3) following the incurrence of such
Indebtedness and the application of the proceeds thereof, Borrower is in compliance with
Section 9.3; and
(j) Obligations under Hedging Agreements for bona fide hedging purposes and not for
7.2 Encumbrances. The Borrower shall not, either directly or indirectly, create,
assume, incur or suffer or permit to exist any Lien or charge of any kind or character upon any
asset of the Borrower, whether owned at the date hereof or hereafter acquired, except for the
(a) Permitted Liens; and
(b) Liens in connection with the acquisition of property after the date hereof by way
of purchase money mortgage, conditional sale or other title retention agreement, Capitalized
Lease or other deferred payment contract, provided, that such Liens attach only to
the property being acquired and that the Indebtedness secured thereby does not exceed the
fair market value of such property at the time of acquisition thereof and that the
Indebtedness is otherwise permitted under Section 7.1.
7.3 Investments. The Borrower shall not, either directly or indirectly, make or have
outstanding any new investments (whether through purchase of stocks, obligations or otherwise) in,
or loans or advances to, any other Person, or acquire all or any substantial part of the assets,
business, stock or other evidence of beneficial ownership of any other Person except to the extent
permitted under the terms of Schedule 7.3.
7.4 Transfer; Merger. The Borrower shall not, either directly or indirectly, merge,
consolidate, sell, transfer, license, lease or otherwise dispose of all or any part of its property
or business or all or any substantial part of its assets, or sell or discount (with or without
recourse) any of its Promissory Notes, Chattel Paper, Payment Intangibles or Accounts.
Notwithstanding the foregoing sentence, the Borrower may transfer and lease back real property
currently owned by the Borrower and located in Eau Claire, Wisconsin and Sioux Falls, South Dakota
in connection with a bona fide sale/leaseback transactions, provided however that, at least 20 days
prior to the closing of any such transaction, the Borrower will give the Lender notice of such
proposed sale/leaseback transaction and
will provide the Bank with copies of any documents related thereto and will respond to any
other reasonable requests for information or documentation in connection therewith.
7.5 Distributions. The Borrower shall not, either directly or indirectly, purchase or
redeem any shares of stock, or declare or pay any dividends (other than stock dividends), whether
in cash or otherwise, or set aside any funds for any such purpose or make any distribution to its
shareholders that, in the aggregate, exceed Eighty Million and 00/100 Dollars ($80,000,000.00) for
the period commencing on January 30, 2004 and ending on January 31, 2009.
7.6 Use of Proceeds. Neither the Borrower nor any of its Subsidiaries or affiliates
shall use any portion of the proceeds of the Loans, either directly or indirectly, for the purpose
of purchasing any securities underwritten by ABN AMRO Incorporated, an affiliate of the Bank.
7.7 Change of Legal Status. The Borrower shall not change its name, its jurisdiction
of organization to another state within the United States of America or its organizational
identification number, if it has one, without prior written notice to the Bank. The Borrower shall
not change its jurisdiction of organization to a foreign jurisdiction and shall not change its type
7.8 No Other Designation of Senior Indebtedness. The Borrower shall not designate, or
permit the designation of, any Indebtedness (other than now owing or hereafter arising Obligations)
as Designated Senior Debt for the purpose of the definition of the same or the subordination
provisions contained in the Subordinated Debt Indenture provided however that if there is no Event
of Default, Capitalized Lease Obligations that are otherwise permitted under this Agreement may be
designated as Designated Senior Debt.
8. AFFIRMATIVE COVENANTS.
8.1 Compliance with Bank Regulatory Requirements. Upon demand by the Bank, the
Borrower shall reimburse the Bank for the Banks additional costs and/or reductions in the amount
of principal or interest received or receivable by the Bank if at any time after the date of this
Agreement any law, treaty or regulation or any change in any law, treaty or regulation or the
interpretation thereof by any governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority having jurisdiction over the Bank or the
Loans, whether or not having the force of law, shall impose, modify or deem applicable any reserve
(except reserve requirements taken into account in calculating the Revolving Interest Rate) and/or
special deposit requirement against or in respect of assets held by or deposits in or for the
account of the Loans by the Bank or impose on the Bank any other condition with respect to this
Agreement or the Loans, the result of which is to either increase the cost to the Bank of making or
maintaining the Loans or to reduce the amount of principal or interest received or receivable by
the Bank with respect to such Loans. Said additional costs and/or reductions will be those which
directly result from the imposition of such requirement or condition on the making or maintaining
of such Loans. All Loans shall be deemed to be match funded for the purposes of the Banks
determination in the previous sentence. Notwithstanding the foregoing, the Borrower shall not be
required to pay any such additional costs which could be avoided by the Bank with the exercise of
reasonable conduct and diligence.
8.2 Corporate Existence. The Borrower shall at all times preserve and maintain its
corporate existence, rights, franchises and privileges, and shall at all times continue as a going
concern in the business which the Borrower is presently conducting. If the Borrower does not have
a state issued identification number and later obtains one, the Borrower shall promptly notify the
Bank of such organizational identification number.
8.3 Maintain Property. The Borrower shall at all times maintain, preserve and keep
its plant, properties and Equipment, in good repair, working order and condition, and shall from
time to time make all needful and proper repairs, renewals, replacements, and additions thereto so
that at all times the efficiency thereof shall be fully preserved and maintained.
8.4 Maintain Insurance. The Borrower shall at all times insure and keep insured in
insurance companies acceptable to the Bank, all insurable property owned by it which is of a
character usually insured by
companies similarly situated and operating like properties, against loss or damage from fire
and such other hazards or risks as are customarily insured against by companies similarly situated
and operating like properties. Prior to the date of the funding of the Note, the Borrower shall
deliver to the Bank a certificate setting forth in summary form the nature and extent of the
insurance maintained by the Borrower pursuant to this Section 8.4.
8.5 Tax Liabilities. The Borrower shall at all times pay and discharge all property
and other taxes, assessments and governmental charges upon, and all claims (including claims for
labor, materials and supplies) against the Borrower or any of its properties, Equipment or
Inventory, before the same shall become delinquent and before penalties accrue thereon, provided
that if there is no Event of Default, the Borrower shall have the right to contest in good faith,
by appropriate proceedings promptly initiated and diligently conducted which will prevent the
forfeiture or sale of any property of the Borrower or the imposition of a lien on any property of
the Borrower or any material interference with the use thereof by the Borrower, the validity,
amount or imposition of any of the foregoing and upon such good faith contest to delay or refuse
8.6 ERISA Liabilities; Employee Plans. The Borrower shall (i) keep in full force and
effect any and all Employee Plans which are presently in existence or may, from time to time, come
into existence under ERISA, and not withdraw from any such Employee Plans, unless such withdrawal
can be effected or such Employee Plans can be terminated without material liability to the
Borrower; (ii) make contributions to all of such Employee Plans in a timely manner and in a
sufficient amount to comply in all material respects with the standards of ERISA; including the
minimum funding standards of ERISA; (iii) comply with all material requirements of ERISA which
relate to such Employee Plans; (iv) notify the Bank immediately upon receipt by the Borrower of any
notice concerning the imposition of any withdrawal liability or of the institution of any
proceeding or other action which may result in the termination of any such Employee Plans or the
appointment of a trustee to administer such Employee Plans; (v) promptly advise the Bank upon
learning of the occurrence of any Reportable Event or Prohibited Transaction (as such terms are
defined in ERISA), with respect to any such Employee Plans; and (vi) amend any Employee Plan that
is intended to be qualified within the meaning of Section 401 of the Internal Revenue Code of 1986
to the extent necessary to keep the Employee Plan qualified, and to cause the Employee Plan to be
administered and operated in all material respects in a manner that does not cause the Employee
Plan to lose its qualified status.
8.7 Financial Statements. The Borrower shall at all times maintain a standard and
modern system of accounting, on the accrual basis of accounting and in all respects in accordance
with GAAP, and shall furnish to the Bank or its authorized representatives such information
regarding the business affairs, operations and financial condition of the Borrower, including, but
not limited to:
(a) As soon as available, and in any event, within forty five (45) days following the
end of each fiscal quarter, a copy of the Borrowers Form 10-Q that it has filed with the
Securities and Exchange Commission which Form 10-Q shall include a balance sheet, statement
of income and retained earnings, and statement of cash flows for such fiscal quarter.
(b) As soon as available, and in any event, within ninety (90) days following the end
of the Borrowers fiscal year, a copy of the Borrowers Form 10-K that it has filed with the
Securities and Exchange Commission which Form 10-K shall include a balance sheet, statement
of income and retained earnings and statement of cash flows for such fiscal year.
The Borrower represents and warrants to the Bank that the financial statements delivered to
the Bank at or prior to the execution and delivery of this Agreement and to be delivered at all
times thereafter accurately reflect and will accurately reflect the financial condition of the
8.8 Covenant Compliance Report. Upon the request of the Bank, but in any event,
within forty-five days after the end of each quarter, the Borrower shall deliver to the Bank: a) a
computation in such detail as the Bank shall specify, showing compliance by the Borrower with the
financial covenants set forth in Section 9 including but not limited to a list detailing all Cash
and Marketable Securities, and certified as accurate by the Borrower; and b) a report of all
transfers or transactions of the type described in Section 7.5 of this Agreement made by the
during the previous quarter and made in the aggregate by the Borrower since January 30, 2004,
and certified as accurate by the Borrower.
8.9 Other Reports. The Borrower shall, within such period of time as the Bank may
specify, deliver to the Bank such other schedules and reports as the Bank may reasonably require
including reports regarding the Borrowers Cash and Marketable Securities and reports regarding
pending litigation, suits, proceedings, investigations or other similar matters.
8.10 Notice of Proceedings. The Borrower shall, promptly after knowledge thereof
shall have come to the attention of any officer of the Borrower, give written notice to the Bank of
all threatened or pending actions, suits, and proceedings before any court or governmental
department, commission, board or other administrative agency which may have a material adverse
effect on the business, property or operations of the Borrower.
8.11 Notice of Default. The Borrower shall, promptly after the commencement thereof,
give notice to the Bank in writing of the occurrence of an Event of Default or of any event which,
with the lapse of time, the giving of notice or both, would constitute an Event of Default
8.12 Banking Relationship. At all times during the term of this Agreement, the
Borrower shall maintain with the Bank investments with a market value of not less than $10,000,000
8.13 Reports to Securities and Exchange Commission. The Borrower shall timely file
all reports and other documents that it is required to file with the Securities and Exchange
8.14 OFAC Compliance Covenant. The Borrower shall (a) ensure, and cause each
Subsidiary to ensure, that no person who owns a controlling interest in or otherwise controls the
Borrower or any Subsidiary is or shall be listed on the Specially Designated Nationals and Blocked
Person List or other similar lists maintained by the Office of Foreign Assets Control (OFAC), the
Department of the Treasury, or included in any Executive Orders, (b) not use or permit the use of
the proceeds of the Loans to violate any of the foreign asset control regulations of OFAC or any
enabling statute or Executive Order relating thereto, and (c) comply, and cause each Subsidiary to
comply, with all applicable Bank Secrecy Act (BSA) laws and regulations, as amended
9. FINANCIAL COVENANTS.
9.1 Senior Debt to EBITDA. As of the end of each of its fiscal quarters, the Borrower
shall maintain a ratio of Senior Debt outstanding as of the end of such fiscal quarter to TTM
EBITDA as of the end of such fiscal quarter, of not greater than 0.75 to 1.00.
9.2 Interest Coverage. As of the end of each of its fiscal quarters, the Borrower
shall maintain a ratio of (a) the total TTM EBITDA plus the total Cash and Marketable
Securities of Borrower as of the first day of the period commencing 12 months prior to the end of
such quarter minus all TTM Capital Expenditures, minus TTM Distributions to (b) TTM
Interest Charges, of not less than 2.00 to 1.00.
9.3 Total Debt to Capitalization. As of the end of each of its fiscal quarters, the
Borrower shall maintain a ratio of (i) Covenant Indebtedness to (ii) Capitalization shall not
exceed 0.50 to 1.00.
10. EVENTS OF DEFAULT.
The Borrower, without notice or demand of any kind, shall be in default under this Agreement
upon the occurrence of any of the following events (each an Event of Default).
10.1 Nonpayment of Obligations. Any amount due and owing on the Note or any of the
Obligations, whether by its terms or as otherwise provided herein, is not paid within five (5) days
after the due date thereof.
10.2 Misrepresentation. Any written warranty, representation, certificate or
statement in this Agreement, the Loan Documents or any other agreement with the Bank shall be false
in any material respect when made.
10.3 Nonperformance. Any failure to perform or default in the performance of any
covenant, condition or agreement contained in this Agreement or in the Loan Documents or any other
agreement with the Bank and such failure or default shall continue unremedied for a period of ten
(10) Business Days provided that if such default is an Investment Downgrade Default, then such
period shall be 60 calendar days from the date of such Investment Downgrade Default.
10.4 Default under Loan Documents. A default under any of the other Loan Documents
that is not cured within any cure period provided for in such Loan Documents, all of which
covenants, conditions and agreements contained therein are hereby incorporated in this Agreement by
express reference, shall be and constitute an Event of Default under this Agreement and any other
of the Obligations.
10.5 Default under Other Agreements. Any default in the payment of principal,
interest or any other sum for any other obligation in excess of $10,000,000 including, but not
limited to, obligations outstanding under the Subordinated Notes, beyond any period of grace
provided with respect thereto or in the performance of any other term, condition or covenant
contained in any agreement (including, but not limited to any capital or operating lease or any
agreement in connection with the deferred purchase price of property) under which any such
obligation is created, the effect of which default is to cause or permit the holder of such
obligation (or the other party to such other agreement) to cause such obligation to become due
prior to its stated maturity or terminate such other agreement.
10.6 Assignment for Creditors. Any Obligor makes an assignment for the benefit of
creditors, fails to pay, or admits in writing its inability to pay its debts as they mature; or if
a trustee of any substantial part of the assets of any Obligor is applied for or appointed.
10.7 Bankruptcy. Any proceeding involving any Obligor, is commenced by or against
such Obligor under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law or statute of the federal government or any state government
provided that in the case of any such proceeding is commenced against the Borrower, such proceeding
is not dismissed or discharged within thirty (30) days after the commencement thereof.
10.8 Judgments. The entry of any judgment, decree, levy, attachment, garnishment or
other process, or the filing of any Lien against any Obligor which is not fully covered by
insurance and which exceeds the sum of $10,000,000.
10.9 Change of Control. There shall occur a Change of Control.
Upon the occurrence of an Event of Default and for so long as such Event of Default shall
continue, the Bank shall have all rights, powers and remedies set forth in the Loan Documents, in
any written agreement or instrument (other than this Agreement or the Loan Documents) relating to
any of the Obligations or any security therefor, or as otherwise provided at law or in equity.
Without limiting the generality of the foregoing, the Bank may, at its option upon the occurrence
of an Event of Default, declare its commitments to the Borrower to be terminated and all
Obligations to be immediately due and payable, provided, however, that upon the occurrence of an
Event of Default under either Section 10.6, Assignment for Creditors, or Section 10.7,
Bankruptcy, all commitments of the Bank to the Borrower shall immediately terminate and all
Obligations shall be automatically due and payable, all without demand, notice or further action of
any kind required on the part of the Bank. The Borrower hereby waives any and all presentment,
demand, notice of dishonor, protest, and all other notices and demands in connection with the
enforcement of Banks rights under the Loan Documents, and hereby consents to, and waives notice of
release, with or without consideration, of any of the Borrower, any guarantor or of any Collateral,
notwithstanding anything contained herein or in the Loan Documents to the contrary. In addition to
the foregoing the Bank shall be entitled to exercise all rights and remedies available to it under
the Loan Documents.
11.1 Offset Rights and Other Remedies. Upon the occurrence of an Event of Default and
for so long as such Event of Default shall continue, the Bank may exercise any and all rights and
remedies available to it under any other applicable law in addition to, and not in lieu of, any
rights and remedies expressly granted in this Agreement or in any other agreements between any
Obligor and the Bank, and may, without demand or notice of any kind, appropriate and apply toward
the payment of such of the Obligations, whether matured or unmatured, including costs of collection
and attorneys and paralegals fees, and in such order of application as the Bank may, from time to
time, elect, any indebtedness of the Bank to any Obligor, however created or arising, including,
but not limited to, balances, credits, deposits, accounts or moneys of such Obligor in the
possession, control or custody of, or in transit to the Bank. The Borrower, on behalf of itself
and each Obligor, hereby waives the benefit of any law that would otherwise restrict or limit the
Bank in the exercise of its right, which is hereby acknowledged, to appropriate at any time
hereafter any such indebtedness owing from the Bank to any Obligor.
11.2 Pledge Collateral. Upon the occurrence of an Event of Default and for so long as
such Event of Default shall continue, immediately upon the request of the Bank, the Borrower shall
pledge to the Bank all Invested Property to secure all Obligations of the Borrower to the Bank.
The Borrower shall execute any and all documents that the Bank may request to create such security
interest and/or perfect such lien in the Invested Property including but not limited to control
11.3 Remedies as a Holder of Designated Senior Debt. Upon the occurrence of an Event
of Default, the Lender may exercise any and all rights and remedies as a holder of Designated
Senior Debt pursuant to Section 11.03 of Subordinated Debt Indenture.
11.4 Additional Remedies. The Bank shall have the right and power to:
(a) extend, renew or modify for one or more periods (whether or not longer than the
original period) any obligation of any nature of any other obligor with respect to the Note
or any of the Obligations; or
(b) grant releases, compromises or indulgences with respect to the Note, any of the
Obligations, any extension or renewal of any of the Obligations, any security therefor, or
to any other obligor with respect to the Note or any of the Obligations;
11.5 No Marshaling. The Bank shall not be required to marshal any present or future
collateral security for, or other assurances of payment of, the Obligations or any of them or to
resort to such collateral security or other assurances of payment in any particular order. To the
extent that it lawfully may, the Borrower hereby agrees that it will not invoke any law relating to
the marshaling of collateral which might cause delay in or impede the enforcement of the Banks
rights under this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any of the Obligations
is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the
Borrower hereby irrevocably waives the benefits of all such laws.
11.6 Application of Proceeds. The Bank will within three (3) business days after
receipt of cash or solvent credits from collection of items of payment, proceeds of any Collateral
or any other source, apply the whole or any part thereof against the Obligations secured hereby.
The Bank shall further have the exclusive right to determine how, when and what application of such
payments and such credits shall be made on the Obligations, and such determination shall be
conclusive upon the Borrower. Any proceeds of any disposition by the Bank of all or any part of
the Collateral may be first applied by the Bank to the payment of expenses incurred by the Bank in
connection with the Collateral, including attorneys fees and legal expenses as provided for in
Section 12 hereof.
11.7 No Waiver. No Event of Default shall be waived by the Bank except in writing.
No failure or delay on the part of the Bank in exercising any right, power or remedy hereunder
shall operate as a waiver of the
exercise of the same or any other right at any other time; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy hereunder. There shall be no obligation on the part
of the Bank to exercise any remedy available to the Bank in any order. The remedies provided for
herein are cumulative and not exclusive of any remedies provided at law or in equity. The Borrower
agrees that in the event that the Borrower fails to perform, observe or discharge any of its
Obligations or liabilities under this Agreement or any other agreements with the Bank, no remedy of
law will provide adequate relief to the Bank, and further agrees that the Bank shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity of proving actual
12.1 Obligations Absolute. None of the following shall affect the Obligations of the
Borrower to the Bank under this Agreement:
(a) acceptance or retention by the Bank of other property or any interest in property
as security for the Obligations;
(b) release by the Bank of the Borrower or any Guarantor or of any party liable with
respect to the Obligations;
(c) release, extension, renewal, modification or substitution by the Bank of the Note,
or any note evidencing any of the Obligations, or the compromise of the liability of any
guarantor of the Obligations; or
12.2 Entire Agreement. This Agreement (i) is valid, binding and enforceable against
the Borrower and the Bank in accordance with its provisions and no conditions exist as to its legal
effectiveness; (ii) constitutes the entire agreement between the parties; and (iii) is the final
expression of the intentions of the Borrower and the Bank. No promises, either expressed or
implied, exist between the Borrower and the Bank, unless contained herein. This Agreement
supersedes all negotiations, representations, warranties, commitments, offers, contracts (of any
kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof.
12.3 Amendments; Waivers. No amendment, modification, termination, discharge or
waiver of any provision of this Agreement or of the Loan Documents, or consent to any departure by
the Borrower therefrom, shall in any event be effective unless the same shall be in writing and
signed by the Bank, and then such waiver or consent shall be effective only for the specific
purpose for which given.
12.4 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWER, AFTER CONSULTING OR HAVING HAD
THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER
OBLIGATIONS, THE COLLATERAL, OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN
CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE BANK
AND THE BORROWER ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK
GRANTING ANY FINANCIAL ACCOMMODATION TO THE BORROWER.
12.5 LITIGATION. TO INDUCE THE BANK TO MAKE THE LOANS, THE BORROWER IRREVOCABLY
AGREES THAT ALL ACTIONS ARISING, DIRECTLY OR INDIRECTLY, AS A RESULT OR CONSEQUENCE OF THIS
AGREEMENT, THE NOTE, ANY OTHER AGREEMENT WITH THE BANK OR THE COLLATERAL, SHALL BE INSTITUTED AND
LITIGATED ONLY IN COURTS HAVING THEIR SITUS IN THE CITY OF CHICAGO, ILLINOIS. THE BORROWER HEREBY
CONSENTS TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN
SAID CITY, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. THE BORROWER
HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO THE BORROWER AS SET
FORTH HEREIN IN THE MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.
12.6 Assignability. The Bank may at any time assign the Banks rights in this
Agreement, the Note, the Obligations, or any part thereof and transfer the Banks rights in any or
all of the collateral that may hereafter be pledged to the Bank, and the Bank thereafter shall be
relieved from all liability with respect to such collateral. In addition, the Bank may at any time
sell one or more participations in the Loans. The Borrower may not sell or assign this Agreement,
or any other agreement with the Bank or any portion thereof, either voluntarily or by operation of
law, without the prior written consent of the Bank. This Agreement shall be binding upon the Bank
and the Borrower and their respective legal representatives and successors. All references herein
to the Borrower shall be deemed to include any successors, whether immediate or remote. In the
case of a joint venture or partnership, the term Borrower shall be deemed to include all joint
venturers or partners thereof, who shall be jointly and severally liable hereunder.
12.7 Confidentiality. The Borrower and the Bank hereby agree and acknowledge that any
and all information relating to the Borrower which is (i) furnished by the Borrower to the Bank (or
to any affiliate of the Bank), and (ii) non-public, confidential or proprietary in nature, shall be
kept confidential by the Bank or such affiliate in accordance with applicable law, provided,
however, that such information and other credit information relating to the Borrower may be
distributed by the Bank or such affiliate to the Banks or such affiliates directors, officers,
employees, attorneys, affiliates, auditors and regulators, and upon the order of a court or other
governmental agency having jurisdiction over the Bank or such affiliate, to any other party. The
Borrower and the Bank further agree that this provision shall survive the termination of this
12.8 Binding Effect. This Agreement shall become effective upon execution by the
Borrower and the Bank. If this Agreement is not dated or contains any blanks when executed by the
Borrower, the Bank is hereby authorized, without notice to the Borrower, to date this Agreement as
of the date when it was executed by the Borrower, and to complete any such blanks according to the
terms upon which this Agreement is executed.
12.9 Governing Law. This Agreement, the Loan Documents and the Note shall be
delivered and accepted in and shall be deemed to be contracts made under and governed by the
internal laws of the State of Illinois (but giving effect to federal laws applicable to national
banks), and for all purposes shall be construed in accordance with the laws of such State, without
giving effect to the choice of law provisions of such State.
12.10 Enforceability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such
provision shall as to such jurisdiction, be severable and be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other jurisdiction.
12.11 Survival of Borrower Representations. All covenants, agreements,
representations and warranties made by the Borrower herein shall, notwithstanding any investigation
by the Bank, be deemed material and relied upon by the Bank and shall survive the making and
execution of this Agreement and the Loan Documents and the issuance of the Note, and shall be
deemed to be continuing representations and warranties until such time as the Borrower has
fulfilled all of its Obligations to the Bank, and the Bank has been paid in full. The Bank, in
extending financial accommodations to the Borrower, is expressly acting and relying on the
aforesaid representations and warranties.
12.12 Extensions of Banks Commitment and Note. This Agreement shall secure and
govern the terms of any extensions or renewals of the Banks commitment hereunder and the Note
pursuant to the execution of any modification, extension or renewal note executed by the Borrower
and accepted by the Bank in its sole and absolute discretion in substitution for the Note.
12.13 Time of Essence. Time is of the essence in making payments of all amounts due
the Bank under this Agreement and in the performance and observance by the Borrower of each
covenant, agreement, provision and term of this Agreement.
12.14 Counterparts. This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall constitute one and the same
12.15 Facsimile Signatures. The Bank is hereby authorized to rely upon and accept as
an original any Loan Documents or other communication which is sent to the Bank by facsimile,
telegraphic or other electronic transmission (each, a Communication) which the Bank in good faith
believes has been signed by Borrower and has been delivered to the Bank by a properly authorized
representative of the Borrower, whether or not that is in fact the case. Notwithstanding the
foregoing, the Bank shall not be obligated to accept any such Communication as an original and may
in any instance require that an original document be submitted to the Bank in lieu of, or in
addition to, any such Communication.
12.16 Notices. Except as otherwise provided herein, the Borrower waives all notices
and demands in connection with the enforcement of the Banks rights hereunder. All notices,
requests, demands and other communications provided for hereunder shall be in writing, sent by
certified or registered mail, postage prepaid, by facsimile, telegram or delivered in person, and
addressed as follows:
||If to the Borrower:
||Hutchinson Technology Incorporated
||40 W. Highland Park
||Hutchinson, Minnesota 55350
||If to the Bank:
||LaSalle Bank National Association
||135 South LaSalle Street,
||Chicago, Illinois 60603
||Attention: John D. Gatzlaff or Philip P. Krump
or, as to each party, at such other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this subsection. No notice
to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances.
12.17 Expenses and Indemnification. The Borrower shall pay all reasonable costs and
expenses in connection with the preparation of this Agreement and the other Loan Documents,
including, without limitation, reasonable attorneys fees and time charges of counsel to the Bank,
which shall also include attorneys fees and time charges of attorneys who may be employees of the
Bank or any affiliate or parent of the Bank. The Borrower shall pay any and all stamp and other
taxes, UCC search fees, filing fees and other costs and expenses in connection with the execution
and delivery of this Agreement, the Note and the other Loan Documents to be delivered hereunder,
and agrees to save and hold the Bank harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such costs and expenses. The Borrower
also agrees to defend (with counsel satisfactory to the Bank), protect, indemnify and hold harmless
each Indemnified Party from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and distributions of any kind or
nature (including, without limitation, the disbursements and the reasonable fees of counsel for
each Indemnified Party thereto, which shall also include, without limitation, attorneys fees and
time charges of attorneys who may be employees of any Indemnified Party), which may be imposed on,
incurred by, or asserted against, any Indemnified Party (whether direct, indirect or consequential
and whether based on any federal, state or local laws or regulations, including, without
limitation, securities, Environmental Laws and commercial laws and regulations, under common law or
in equity, or based on contract or otherwise) in any manner relating to or arising out of this
Agreement or any of the Loan Documents, or any act, event or transaction related or attendant
thereto, the preparation, execution and delivery of this Agreement and the Loan Documents,
including, but not limited to, the making or issuance and management of the Loans, the use or
intended use of the proceeds of the Loans, the
enforcement of the Banks rights and remedies under this Agreement, the Loan Documents, the
Note, any other instruments and documents delivered hereunder, or under any other agreement between
the Borrower and the Bank; provided, however, that the Borrower shall not have any obligations
hereunder to any Indemnified Party with respect to matters caused by or resulting from the willful
misconduct or gross negligence of such Indemnified Party. To the extent that the undertaking to
indemnify set forth in the preceding sentence may be unenforceable because it violates any law or
public policy, the Borrower shall satisfy such undertaking to the maximum extent permitted by
applicable law. Any liability, obligation, loss, damage, penalty, cost or expense covered by this
indemnity shall be paid to each Indemnified Party on demand, and failing prompt payment, together
with interest thereon at the Default Rate from the date incurred by each Indemnified Party until
paid by the Borrower, shall be added to the Obligations of the Borrower and be secured by any
collateral. The provisions of this section shall survive the satisfaction and payment of the other
Obligations and the termination of this Agreement.
12.18 Customer Identification USA PATRIOT Act Notice. The Bank hereby notifies the
Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56,
signed into law October 26, 2001) (the Act), and the Banks policies and practices, the Bank is
required to obtain, verify and record certain information and documentation that identifies the
Borrower, which information includes the name and address of the Borrower and such other
information that will allow the Bank to identify the Borrower in accordance with the Act.
IN WITNESS WHEREOF, the Borrower and the Bank have executed this Loan Agreement as of the date
first above written.
||INCORPORATED, a Minnesota corporation
||/s/ Ruth N. Bauer
Ruth N. Bauer
||Agreed and accepted:
||LASALLE BANK NATIONAL ASSOCIATION,
||a national banking association
||/s/ Philip P. Krump
Philip P. Krump