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ADVANCED ENERGY INDUSTRIES, INC.
LOAN AND SECURITY AGREEMENT
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TABLE OF CONTENTS
Page
1. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms. . . . . . . . . . . . . . . . . . . . . . . 7
2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Foreign Exchange Contract; Foreign Exchange Settlements . . . 10
2.3 Acquisition Term Facility . . . . . . . . . . . . . . . . . . 11
2.4 Equipment Advances. . . . . . . . . . . . . . . . . . . . . . 11
2.5 Existing Term Loan. . . . . . . . . . . . . . . . . . . . . . 12
2.6 Overadvances. . . . . . . . . . . . . . . . . . . . . . . . . 13
2.7 Interest Rates, Payments, and Calculations. . . . . . . . . . 13
2.8 Crediting Payments. . . . . . . . . . . . . . . . . . . . . . 13
2.9 Bank Expenses . . . . . . . . . . . . . . . . . . . . . . . . 14
2.10 Additional Costs. . . . . . . . . . . . . . . . . . . . . . . 14
2.11 Conversion/Continuation of Advances . . . . . . . . . . . . . 14
2.12 Additional Requirements/Provisions Regarding LIBOR Rate
Advances or Optional Currency Rate Advances.. . . . . . . . . 15
2.13 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3. CONDITIONS OF LOANS . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Conditions Precedent to Initial Advance . . . . . . . . . . . 17
3.2 Conditions Precedent to all Advances. . . . . . . . . . . . . 17
4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . 18
4.1 Grant of Security Interest. . . . . . . . . . . . . . . . . . 18
4.2 Delivery of Additional Documentation Required . . . . . . . . 18
4.3 Right to Inspect. . . . . . . . . . . . . . . . . . . . . . . 18
4.4 Stock Pledge. . . . . . . . . . . . . . . . . . . . . . . . . 18
5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . 19
5.1 Due Organization and Qualification. . . . . . . . . . . . . . 19
5.2 Due Authorization; No Conflict. . . . . . . . . . . . . . . . 19
5.3 No Prior Encumbrances . . . . . . . . . . . . . . . . . . . . 19
5.4 Merchantable Inventory. . . . . . . . . . . . . . . . . . . . 19
5.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.7 No Material Adverse Change in Financial Statements. . . . . . 20
5.8 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.9 Regulatory Compliance . . . . . . . . . . . . . . . . . . . . 20
5.10 Environmental Condition . . . . . . . . . . . . . . . . . . . 20
5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.12 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 21
5.13 Government Consents . . . . . . . . . . . . . . . . . . . . . 21
5.14 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . 21
6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 21
6.1 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . 21
6.2 Government Compliance . . . . . . . . . . . . . . . . . . . . 21
6.3 Financial Statements, Reports, Certificates . . . . . . . . . 21
6.4 Inventory; Returns. . . . . . . . . . . . . . . . . . . . . . 22
6.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.7 Quick Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.8 Debt-Tangible Net Worth Ratio . . . . . . . . . . . . . . . . 22
6.9 Tangible Net Worth. . . . . . . . . . . . . . . . . . . . . . 23
6.10 Profitability . . . . . . . . . . . . . . . . . . . . . . . . 23
6.11 Debt Service Coverage . . . . . . . . . . . . . . . . . . . . 23
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6.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 23
7. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Dispositions. . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Change in Business or Control . . . . . . . . . . . . . . . . 23
7.3 Mergers or Acquisitions . . . . . . . . . . . . . . . . . . . 23
7.4 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Encumbrances. . . . . . . . . . . . . . . . . . . . . . . . . 23
7.6 Distributions . . . . . . . . . . . . . . . . . . . . . . . . 24
7.7 Investments . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.8 Transactions with Affiliates. . . . . . . . . . . . . . . . . 24
7.9 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . 24
7.10 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1 Payment Default . . . . . . . . . . . . . . . . . . . . . . . 24
8.2 Covenant Default. . . . . . . . . . . . . . . . . . . . . . . 24
8.3 Material Adverse Change . . . . . . . . . . . . . . . . . . . 25
8.4 Attachment. . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.5 Insolvency. . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.6 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . 25
8.7 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.8 Misrepresentations. . . . . . . . . . . . . . . . . . . . . . 25
9. BANKS' RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . 25
9.1 Rights and Remedies . . . . . . . . . . . . . . . . . . . . . 25
9.2 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . 27
9.3 Bank Expenses . . . . . . . . . . . . . . . . . . . . . . . . 27
9.4 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 27
9.5 Demand; Protest . . . . . . . . . . . . . . . . . . . . . . . 27
10. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. . . . . . . . . . . . . . 28
12. INTERCREDITOR PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 28
12.1 Proportionate Interests . . . . . . . . . . . . . . . . . . . 28
12.2 Designation of Service Agent. . . . . . . . . . . . . . . . . 29
12.3 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.4 Servicing Agent as Bank . . . . . . . . . . . . . . . . . . . 29
12.5 No Agency . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.6 No Reliance . . . . . . . . . . . . . . . . . . . . . . . . . 29
13. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.1 Successors and Assigns. . . . . . . . . . . . . . . . . . . . 29
13.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 29
13.4 Waivers of Notice . . . . . . . . . . . . . . . . . . . . . . 30
13.5 Subrogation Defenses. . . . . . . . . . . . . . . . . . . . . 30
13.6 Right to Settle, Release. . . . . . . . . . . . . . . . . . . 30
13.7 Primary Obligation. . . . . . . . . . . . . . . . . . . . . . 31
13.8 Subordination . . . . . . . . . . . . . . . . . . . . . . . . 31
13.9 Enforcement of Rights . . . . . . . . . . . . . . . . . . . . 31
13.10 AEI as Agent. . . . . . . . . . . . . . . . . . . . . . . . . 31
13.11 Time of Essence . . . . . . . . . . . . . . . . . . . . . . . 31
13.12 Severability of Provisions. . . . . . . . . . . . . . . . . . 31
13.13 Amendments in Writing, Integration. . . . . . . . . . . . . . 31
13.14 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 32
13.15 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 32
13.17 Optional Currency Rate Instruments. . . . . . . . . . . . . . 32
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This LOAN AGREEMENT is entered into as of August 15, 1997 by and among
SILICON VALLEY BANK ("SVB") as Servicing Agent and a Bank and BANK OF HAWAII
("BofH;" SVB and BofH are referred to individually herein as a "Bank," and
collectively as the "Banks") and ADVANCED ENERGY INDUSTRIES, INC., a Delaware
corporation ("AEI") and Tower Electronics Inc., a Minnesota corporation
("Tower") (individually a "Borrower" and collectively, the "Borrowers").
RECITALS
Borrowers wish to obtain credit from time to time from Banks, and Banks
desire to advance credit to Borrowers. This Agreement sets forth the terms on
which Banks will lend to Borrowers, and Borrowers will repay the advances to
Banks.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Acquisition" means the acquisition by AEI of all of the issued
and outstanding capital stock of Tower pursuant to that certain Stock Purchase
Agreement dated as of August 15, 1997.
"Advance" or "Advances" means a cash advance under the Revolving
Facility.
"Affiliate" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and partners.
"Bank Expenses" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; and each Bank's reasonable attorneys' fees and expenses incurred in
amending, enforcing or defending the Loan Documents, whether or not suit is
brought.
"Borrower's Books" means all of each Borrower's books and records
relating to its property.
"Business Day" means a day of the year (a) that is not a
Saturday, Sunday or other day on which banks in the States of California or
Hawaii or the City of London are authorized or required to close and (b) on
which dealings are carried on in the interbank market in which Bank customarily
participates and, (c) with respect to Advances and payments in an Optional
Currency or any requests or notices related thereto, that is not a day on which
the BofH branch or other banks in the country of such Optional Currency are
authorized or required to close.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial Code.
"Collateral" means the property described on attached EXHIBIT A.
"Committed Line" means Ten Million Dollars ($10,000,000).
"Contingent Obligation" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that
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Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a Person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term "Contingent Obligation" shall not
include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.
"Credit Extension" mean an Advance, a Letter of Credit or a
Foreign Exchange Contract.
"Current Liabilities" means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current liabilities
on the consolidated balance sheet of Borrower and its Subsidiaries, excluding
all outstanding Advances made under Section 2.1 hereof, but including all other
Indebtedness that is payable upon demand or within one year from the date of
determination thereof unless such Indebtedness is renewable or extendable at the
option of Borrower or any Subsidiary to a date more than one year from the date
of determination.
"Daily Balance" means the amount of the Obligations owed at the
end of a given day.
"EBITDA" means, for any period, earnings before interest expense,
taxes, depreciation and amortization.
"Equipment" means machinery, equipment, tenant improvements,
furniture, fixtures, vehicles, tools, parts and attachments.
"Equivalent Amount" means the equivalent in United States Dollars
of an Optional Currency, calculated at the spot rate for the purchase of such
Optional Currency by BofH.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Indebtedness" means (a) all indebtedness for borrowed money or
the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.
"Insolvency Proceeding" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, extension generally with all or
substantially all creditors, or proceedings seeking general reorganization,
arrangement, or other relief.
"Interest Period" means for each LIBOR Rate Advance, a period of
approximately one, three or six months as Borrower may elect, PROVIDED that the
last day of an Interest Period for a LIBOR Rate Advance shall be determined in
accordance with the practices, of the LIBOR interbank market as from time to
time in effect, PROVIDED, FURTHER, in all cases such period shall expire not
later than the applicable Revolving Maturity Date.
"Inventory" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing.
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"Investment" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"Issuing Bank" means the Bank issuing a Letter of Credit pursuant
to Section 2.1.1. SVB shall be the issuing bank, except that BofH shall be the
Issuing Bank if (i) SVB is unable to issue a Letter of Credit or (ii) a Letter
of Credit issued by SVB would require confirmation by another bank under
circumstances in which a Letter of Credit issued by BofH would not require
confirmation.
"Letter of Credit" means a Letter of Credit issued pursuant to
Section 2.1.1.
"LIBOR Base Rate" means, for any Interest Period for a LIBOR Rate
Advance, the rate of interest per annum determined by SVB to be the per annum
rate of interest at which deposits in United States Dollars are offered to SVB
in the London interbank market in which SVB customarily participates at
11:00 A.M. (local time in such interbank market) three (3) Business Days before
the first day of such Interest Period for a period approximately equal to such
Interest Period and in an amount approximately equal to the amount of such
Advance.
"LIBOR Rate" shall mean, for any Interest Period for a LIBOR Rate
Advance, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) equal to (i) the LIBOR Base Rate for such Interest Period divided by (ii) 1
minus the Reserve Requirement for such Interest Period.
"LIBOR Rate Advances" means any Advances made or a portion
thereof on which interest is payable based on the LIBOR Rate in accordance with
the terms hereof.
"Lien" means any mortgage, lien, deed of trust, security interest
or other encumbrance.
"Loan Documents" means, collectively, this Agreement, any note or
notes executed by Borrower, and any other agreement entered into between
Borrower and Banks in connection with this Agreement, all as amended or extended
from time to time.
"Material Adverse Effect" means a material adverse effect on (i)
the business operations or financial condition of Borrower and its Subsidiaries
taken as a whole or (ii) the ability of Borrowers, taken as a whole, to repay
the Obligations.
"Maturity Date" means August 14, 2002.
"Negotiable Collateral" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
"Obligations" means all debt, principal, interest, Bank Expenses
and other amounts owed to the Banks by Borrower pursuant to this Agreement,
whether absolute or contingent, due or to become due (including any interest
accruing after the commencement of an Insolvency Proceeding and any interest
that would have accrued but for the commencement of an Insolvency Proceeding),
now existing or hereafter arising.
"Operating Loss" means an operating loss under GAAP, specifically
excluding non-cash losses arising from business-combination activities.
"Optional Currency" means the lawful currency of Japan.
"Optional Currency Rate Advance" means an Advance in an Optional
Currency, made pursuant to and in accordance with Section 2.1(c).
"Optional Currency Rate" means, with respect to Advances in
Japanese Yen, the Japanese Short Term Prime Rate, as quoted by the office of
BofH located in Japan.
"Optional Currency Rate Instruments" means the promissory notes
and other agreements and instruments requested by Banks as a condition to making
Optional Currency Rate Advances.
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"Percentage Share" means, as to each Bank, the percentage
calculated in accordance with Section 12.1 hereof.
"Periodic Payments" means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to either
Bank pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and such Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrower in favor of Banks arising under
this Agreement or any other Loan Document;
(b) Subordinated Debt;
(c) Capital leases or indebtedness incurred solely to purchase
equipment, which is secured in accordance with clause (c) of "Permitted Liens"
below and is not in excess of the lesser of the purchase price of such equipment
or the fair market value of such equipment on the date of acquisition, provided
the outstanding principal balance of such Indebtedness incurred in any fiscal
year shall not exceed Two Million Five Hundred Thousand Dollars ($2,500,000);
(d) Indebtedness to trade creditors incurred in the ordinary
course of business;
(e) Indebtedness set forth on the Schedule;
(f) Indebtedness of Borrower to any Subsidiary and Contingent
Obligations of any Subsidiary with respect to obligations of Borrower (provided
that the primary obligations are not prohibited hereby), and Indebtedness of any
Subsidiary to any other Subsidiary and Contingent Obligations of any Subsidiary
with respect to obligations of any other Subsidiary (provided that the primary
obligations are not prohibited hereby), and Indebtedness consisting of
Investments that are "Permitted Investments" under clause (l) of the definition
of Permitted Investments;
(g) Indebtedness secured by Permitted Liens;
(h) Extensions, refinancings, modifications, amendments and
restatements of any of items of Permitted Indebtedness (a), (b), (c), (e) and
(g) above, PROVIDED that the principal amount thereof is not increased or the
terms thereof are not modified to impose more burdensome terms upon Borrower or
its Subsidiaries, as the case may be.
"Permitted Investment" means:
(a) Investments existing on the Closing Date disclosed on the
Schedule;
(b) Investments made or obtained through either Bank that
consist of (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency or any State thereof
maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.,
(iii) certificates of deposit maturing no more than one (1) year from the date
of investment therein issued by either Bank or (iv) that are permitted by
Borrower's investment policy, as amended from time to time by its board of
directors, provided that such investment policy (and any such amendment thereto)
has been approved by the Banks, which approval shall not be unreasonably
withheld; and
(c) Investments made in connection with the merger or
consolidation with another Person or the acquisition of all or substantially all
of the capital stock or property of another Person where the sole consideration
paid by Borrower or any Subsidiary consists of Borrower's equity securities and
cash and the aggregate value of such equity securities and cash paid after the
date hereof does not exceed Fifteen Percent (15%) of Borrower's Tangible Net
Worth immediately prior to the date such Investment is made.
"Permitted Liens" means the following:
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(a) Any liens existing as of the date hereof and disclosed on
the Schedule;
(b) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, PROVIDED the same have no priority over any of Banks'
security interests;
(c) Liens (i) upon or in any equipment acquired by Borrower or
any of its Subsidiaries after the date hereof to secure the purchase price of
such equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, PROVIDED that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not constituting a Material Adverse Effect;
(e) Liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by Liens of the type described in
clauses (a), (c), and (d) above, PROVIDED that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase.
"Person" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or governmental agency.
"Prime Rate" means the variable rate of interest, per annum, most
recently announced by SVB as its "prime rate," or BofH as its "base rate," as
applicable to the Advances made hereunder by each such Bank, whether or not such
announced rate is the lowest rate available from such Bank.
"Prime Rate Advances" means any Advances made or a portion
thereof on which interest is payable based on the Prime Rate in accordance with
the terms hereof.
"Quick Assets" means, at any date as of which the amount thereof
shall be determined, the consolidated cash, cash-equivalents, accounts
receivable and investments, with maturities not to exceed 90 days, of Borrower
determined in accordance with GAAP.
"Regulatory Change" means, with respect to Bank, any change on or
after the date of this Agreement in United States federal, state or foreign laws
or regulations, including Regulation D, or the adoption or making on or after
such date of any written interpretations, directives or requests applying to a
class of lenders including Bank of or under any United States federal or state,
or any foreign, laws or regulations (whether or not having the force of law) by
any court or governmental or monetary authority charged with the interpretation
or administration thereof.
"Reserve Requirement" means, for any Interest Period, the average
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined as provided in the definition of "LIBOR
Base Rate" or (ii) any category of extensions of credit or other assets which
include Advances.
"Responsible Officer" means each of the Chief Executive Officer,
the Chief Financial Officer, the Treasurer and the Controller of AEI.
"Revolving Facility" means the facility under which a Borrower
may request Bank to issue cash advances, as specified in Section 2.1 hereof.
"Revolving Maturity Date" means the day before the second
anniversary of the Closing Date.
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"Schedule" means the schedule of exceptions attached hereto.
"Servicing Agent" means SVB or such entity as may succeed to such
position.
"Shares" means the shares of capital stock of Tower.
"Subordinated Debt" means any debt incurred by a Borrower that is
subordinated to the Obligations under this Agreement on terms reasonably
acceptable to Banks.
"Subsidiary" means any corporation or partnership in which
(i) any general partnership interest or (ii) more than 50% of the stock of which
by the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity shall, at the time as of which any
determination is being made, is owned by Borrower, either directly or through an
Affiliate.
"Tangible Net Worth" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrowers MINUS,
without duplication, (i) the sum of any amounts attributable to (a) goodwill,
(b) intangible items such as unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and research and development
expenses except prepaid expenses, and (c) all reserves not already deducted from
assets, AND (ii) Total Liabilities.
"Total Liabilities" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of
Borrowers, including in any event all Indebtedness, but specifically excluding
Subordinated Debt.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT
2.1 ADVANCES. Subject to the terms and conditions of this Agreement,
each Bank severally will make Advances to Borrowers as set forth herein. BofH
shall make all of the Advances made in an Optional Currency. Each Bank
severally will make its Percentage Share of Advances such that the aggregate
amount of each Bank's Advances (including Optional Rate Advances) under this
Agreement shall not exceed such Bank's Percentage Share of the Committed Line
minus the face amount of the outstanding Letters of Credit minus the Foreign
Exchange Reserve, provided that the aggregate outstanding Advances in an
Optional Currency shall not exceed Five Million Dollars ($5,000,000). Subject
to the terms and conditions of this Agreement, amounts borrowed pursuant to this
Section 2.1 may be repaid and reborrowed at any time prior to the Revolving
Maturity Date.
(a) REQUESTS FOR ADVANCES. Whenever Borrowers desire an
Advance, AEI will notify Servicing Agent by facsimile transmission or telephone
no later than 11:00 a.m. California time on the Business Day that a Prime Rate
Advance is to be made, noon California time on the Business Day that is two (2)
Business Days in the country of the Optional Currency prior to the Business Day
on which an Optional Currency Rate Advance is to be made, and noon California
time on the Business Day that is three (3) Business Days prior to the Business
Day on which a LIBOR Rate Advance is to be made. Servicing Agent shall promptly
deliver such notice to the Banks. Each Bank may make Advances under this
Agreement, based upon instructions received by Servicing Agent from a
Responsible Officer, or without instructions if in Servicing Agent's discretion
such Advances are necessary to meet Obligations under this Agreement which have
become due and remain unpaid. Each Bank shall be entitled to rely on any notice
by telephone or otherwise given by a person who Servicing Agent reasonably
believes to be a Responsible Officer, and Borrowers shall indemnify and hold
such Bank harmless for any damages or loss suffered by such Bank as a result of
such reliance. Such Bank will wire or credit, as appropriate, the amount of
Advances in United States Dollars made under this Section 2.1 to a Borrower's
deposit account held by Servicing Agent, as specified by AEI, or, as to an
Advance in an Optional Currency, to a Borrower's deposit account held by BofH in
the respective branch office in the country of the Optional Currency.
Each such notice shall specify:
(i) the date such Advance is to be made, which shall be
a Business Day;
6
(ii) the amount of such Advance;
(iii) whether such Advance is to be a Prime Rate Advance, an
Optional Currency Rate Advance, or a LIBOR Rate Advance;
(iv) if the Advance is to be a LIBOR Rate Advance, the
Interest Period for such Advance; and
(v) if the Advance is to be in an Optional Currency, the
type of currency.
Each written request for an Advance, and each confirmation of a telephone
request for such an Advance, shall be in the form of a Borrowing Certificate in
the form of EXHIBIT B executed by AEI on behalf of Borrowers.
(b) PRIME RATE ADVANCES. Each Prime Rate Advance shall be in an
amount not less than Twenty Five Thousand Dollars ($25,000). The outstanding
principal balance of each Prime Rate Advance shall bear interest until principal
is due (computed daily on the basis of a 360 day year and actual days elapsed),
at a rate per annum equal to the Prime Rate minus Three Quarters of One Percent
(0.75%). Borrower shall pay the entire outstanding principal amount of each
Prime Rate Advance on the Revolving Maturity Date.
(c) OPTIONAL CURRENCY RATE ADVANCES. Each Optional Currency
Rate Advance shall be in an Equivalent Amount of not less than Fifty Thousand
Dollars ($50,000). The outstanding principal balance of each Optional Currency
Rate Advance shall bear interest until principal is due (computed daily on the
basis of a 360 day year and actual days elapsed or, where required by any law or
is customary in the country of the Optional Currency, a 365 day year) at a rate
per annum equal to the Optional Currency Rate plus 100 basis points for such
Optional Currency Rate Advance. The Optional Currency Rate Advances shall be
evidenced by this Agreement and by the Optional Currency Rate Instruments.
Borrower shall pay the entire outstanding principal amount of each Optional
Currency Rate Advance on the Revolving Maturity Date.
(d) LIBOR RATE ADVANCES. Each LIBOR Rate Advance shall be in an
amount or an Equivalent Amount of not less than Five Hundred Thousand Dollars
($500,000). The outstanding principal balance of each LIBOR Rate Advance shall
bear interest until principal is due (computed daily on the basis of a 360 day
year and actual days elapsed) at a rate per annum equal to the LIBOR Rate plus
175 basis points for such LIBOR Rate Advance. The entire outstanding principal
amount of each LIBOR Rate Advance shall be due and payable on the last day of
the LIBOR Rate Interest Period for such LIBOR Rate Advance and on the Revolving
Maturity Date.
(e) PREPAYMENT OF THE ADVANCES. Borrowers may at any time
prepay any Prime Rate Advance, any Optional Currency Rate Advance, or any LIBOR
Rate Advance, in full or in part. Each partial prepayment for a LIBOR Rate
Advance shall be in an amount not less than Two Hundred Fifty Thousand Dollars
($250,000). Each prepayment shall be made upon the irrevocable written or
telephone notice of Borrowers received by Servicing Agent not later than
10:00 a.m. California time on the date of the prepayment of a Prime Rate
Advance, not less than two Business Days in the country of the Optional Currency
prior to the date of the prepayment of an Optional Currency Rate Advance, and
not less than three (3) Business Days prior to the date of the prepayment of a
LIBOR Rate Advance. The notice of prepayment shall specify the date of the
prepayment, the amount of the prepayment, and the Advance or Advances to be
prepaid. Each prepayment of an Optional Currency Rate Advance for which the
term and interest rate have been fixed or LIBOR Rate Advance shall be
accompanied by the payment of accrued interest on the amount prepaid and any
amount required by Section 2.12.
(f) FEES. Borrower shall pay Servicing Agent a facility fee of
Twelve Thousand Five Hundred Dollars ($12,500) on the Closing Date. On each
anniversary of the Closing Date, Borrower shall pay SVB a non-usage fee equal to
One Fourth of One Percent (0.25%) of the difference between the Committed Line
and the average Daily Balance during the prior year.
(g) TERM. The Revolving Facility shall terminate on the
Revolving Maturity Date, at which time all Advances under this Section 2.1 shall
be immediately due and payable.
7
2.1.1 LETTERS OF CREDIT.
(a) At AEI's written request, Issuing Bank shall issue
Letters of Credit for Borrowers' account. Each Bank severally agrees to
participate in Letters of Credit, in accordance with such Bank's Percentage
Share.
(b) Issuing Bank shall issue the Letter of Credit upon
receipt of a Borrower's written request and Issuing Bank's standard form of
application, stating (a) the date such Borrower wishes to receive the Letter of
Credit (which shall be a Business Day); (b) the requested amount of such Letter
of Credit; (c) the aggregate amount of all Advances and Letters of Credit then
outstanding; (d) if appropriate, the conditions requested by Borrower under
which the Letter of Credit may be drawn upon; and (e) any other information
Issuing Bank might need to issue the Letter of Credit. Issuing Bank shall
promptly notify all of the Banks upon receipt of a request for a Letter of
Credit.
(c) The maximum aggregate obligation at any one time for
undrawn and drawn but unreimbursed Letters of Credit shall be One Million Five
Hundred Thousand Dollars ($1,500,000). Each Letter of Credit shall be issued
pursuant to the terms and conditions of this Agreement and of the Issuing Bank's
standard form of application and security agreement for letters of credit. Each
Letter of Credit shall (a) expire no later than the Revolving Maturity Date; and
(b) be otherwise in form and substance satisfactory to Issuing Bank. Upon
issuing a Letter of Credit, the Issuing Bank shall immediately notify the other
Bank of such issuance and shall, on a continuing basis, keep the other Bank
informed of the drawn and undrawn but unreimbursed amount of each Letter of
Credit for so long as such Letter of Credit is outstanding. Borrower shall pay
Issuing Bank its standard fees on account of each Letter of Credit issued
hereunder, which shall be shared by Banks in accordance with their agreement.
On the day on which Issuing Bank honors any drawing made by the beneficiary of a
Letter of Credit, Borrowers shall pay to Issuing Bank the full amount of the
drawing so honored, or at Borrowers' option, shall treat the amount of such
drawing as an Advance under Section 2.1. The obligation to reimburse Issuing
Bank for the amount of such drawing is absolute, unconditional, and irrevocable.
(d) Borrowers may request that Issuing Bank issue a
Letter of Credit payable in a currency other than United States Dollars. If a
demand for payment is made under any such Letter of Credit, Issuing Bank shall
treat such demand as an advance to Borrowers of the Equivalent Amount thereof.
Upon the issuance of any Letter of Credit payable in a currency other than
United States Dollars, Banks shall create a reserve under the Committed Line for
letters of credit against fluctuations in currency exchange rates, in an amount
equal to ten percent (10%) of the face amount of such Letter of Credit. The
amount of such reserve may be amended by Banks from time to time to account for
fluctuations in the exchange rate. The availability of funds under the
Committed Line shall be reduced by the amount of such reserve for so long as
such Letter of Credit remains outstanding.
2.2 FOREIGN EXCHANGE CONTRACT; FOREIGN EXCHANGE SETTLEMENTS.
(a) Subject to the terms of this Agreement, Borrowers may
utilize up to Five Million Dollars ($5,000,000) for Exchange Contracts, pursuant
to which a Bank shall sell to or purchase from Borrower foreign currency on a
spot or future basis. All Exchange Contracts must provide for delivery of
settlement on or before the Maturity Date. The limit available at any time
shall be reduced by the following amounts (the "Foreign Exchange Reserve") on
each day (the "Determination Date"): (i) on all outstanding Exchange Contracts
on which delivery is to be effected or settlement allowed more than two business
days from the Determination Date, 10% of the gross amount of the Exchange
Contracts. In lieu of the Foreign Exchange Reserve for 100% of the gross amount
of any Exchange Contract, Borrowers may request that Banks treat such amount as
an Advance under the Committed Line.
(b) Banks may, in their discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or (b) that there is
no sufficient availability under the Committed Line and Borrower does not have
available funds in its bank account to satisfy the Foreign Exchange Reserve. If
Banks terminate the Exchange Contracts, and without limitation of any applicable
indemnities, Borrowers shall reimburse Banks for any and all fees, costs and
expenses relating thereto or arising in connection therewith.
(c) Borrowers shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and settlement allowed in
any two business day period to be more than Five Million Dollars ($5,000,000)
nor shall Borrowers permit the total gross amount of all Exchange Contracts to
which a Borrower is a party, outstanding at any one time, to exceed Five Million
Dollars ($5,000,000).
8
(d) As a condition to requesting any Exchange Contracts,
Borrowers shall execute all standard form applications and agreements of Banks
in connection with the Exchange Contracts and, without limiting any of the terms
of such applications and agreements, Borrowers will pay all standard fees and
charges of Banks in connection with the Exchange Contracts.
2.3 ACQUISITION TERM FACILITY.
(a) TERM ADVANCE. Subject to and upon the terms and conditions
of this Agreement, and provided that Borrowers are in compliance with this
Agreement, Borrowers may make one request on or prior to August 19, 1997 for a
Term Advance in an aggregate principal amount of up to Twelve Million Dollars
($12,000,000).
(b) PROCEDURE. To request the Term Advance on a date other than
the Closing Date, AEI shall complete, execute and deliver a Loan Payment Advance
Request Form to Servicing Agent on the Business Day of the requested Term
Advance.
(c) INTEREST AND PRINCIPAL. Interest shall accrue from the date
of the Term Advance at a floating rate equal to the Prime Rate minus One Quarter
of One Percent (0.25%) or a fixed rate equal to Two and One Half (2.5)
percentage points above the yield of 60 month Treasury Notes as reported in the
Western Edition of THE WALL STREET JOURNAL on the date that is one (1) Business
Day before the effective date of the Term Advance. Borrowers shall give
Servicing Agent written notice of their interest rate election at the time
Borrowers request the Term Advance. If Servicing Agent does not timely receive
such notice, then the applicable rate shall be the floating rate specified in
the first sentence of this section. Notwithstanding the foregoing, beginning
the fiscal quarter immediately following Borrowers' achieving two (2)
consecutive fiscal quarters of Indebtedness to EBITDA of not more than 0.50 to
1.00, the floating interest rate shall be the Prime Rate minus One Half of One
Percent (0.5%), and the fixed rate shall be Two and Thirty-five Hundredths
(2.35) percentage points above the yield of 60 month Treasury Notes in effect on
the effective date of the Term Advance. Borrower shall repay the Term Advance
in Twenty (20) equal quarterly installments, plus accrued interest, beginning
the first day of the fiscal quarter following the fiscal quarter in which the
Term Advance was made, and continuing on the first day of each fiscal quarter
thereafter. The Term Facility shall terminate on the Term Maturity Date, at
which time all Obligations owing under this Section 2.3, and all other amounts
under this Agreement, shall be immediately due and payable.
(d) PREPAYMENT. Borrower may prepay all or any portion of the Term
Advance, provided that any prepayment made before the first anniversary of the
Closing Date shall be accompanied by a prepayment fee equal to Three Quarters of
One Percent (0.75%) of the amount of the prepayment, any prepayment made after
the first anniversary but before the second anniversary of the Closing Date
shall be accompanied by a prepayment fee equal to One Half of One Percent
(0.50%) of the amount of the prepayment, and any prepayment made after the
second anniversary but before the third anniversary of the Closing Date shall be
accompanied by a prepayment fee equal to One Quarter of One Percent (0.25%) of
the amount of the prepayment.
(e) CASH FLOW RECAPTURE. Beginning December 31, 1997, and
continuing on the last day of each of Borrower's fiscal years, Borrower shall
make a mandatory prepayment on account of the Term Advance equal to the lesser
of (i) the amount by which EBITDA for such fiscal year exceeded Twenty Million
Dollars ($20,000,000) or (ii) Three Million Dollars ($3,000,000) per year.
Payments made under this section shall be applied to principal installments in
the reverse order of maturity. Each such payment shall be made by not later
than April 30 for the prior fiscal year.
(f) FEE. Borrower shall pay Servicing Agent a fee equal to Sixty
Thousand Dollars ($60,000) on the Closing Date on account of the Acquisition
Term Facility.
2.4 EQUIPMENT ADVANCES.
(a) Subject to and upon the terms and conditions of this
Agreement, at any time from the date hereof through August 14, 1998, Banks will
make advances (each an "Equipment Advance" and, collectively, the "Equipment
Advances") to Borrower in an aggregate outstanding amount not to exceed Four
Million Dollars ($4,000,000). To evidence the Equipment Advance or Equipment
Advances, Borrower shall deliver to Servicing Agent, at the time of each
Equipment Advance request, an invoice for the equipment to be purchased. The
Equipment Advances shall be used only to purchase or refinance Equipment
approved from time to time by
9
Banks that was purchased in any case on or after ninety (90) days prior to the
Closing Date and shall not exceed one hundred percent (100%) of the invoice
amount of such Equipment, excluding taxes, shipping, warranty charges, freight
discounts and installation expense. Each Equipment Advance must be in a minimum
amount of One Hundred Thousand Dollars ($100,000).
(b) Interest shall accrue from the date of each Equipment
Advance through August 14, 1998, at a floating rate equal to the Prime Rate
minus One Half of One Percent (0.5%), and shall be payable monthly for each
month through August 14, 1998. Any Equipment Advances that are outstanding on
such date will be payable in sixteen (16) equal quarterly installments of
principal, beginning on September 15, 1998, and continuing on the fifteenth
calendar day preceding the last day of each fiscal quarter thereafter through
August 14, 2002. Interest thereon shall be payable monthly, beginning
September 15, 1998, and continuing on the fifteenth calendar day of each month
until the Equipment Advances have been paid in full. The Equipment Advances
that are outstanding on August 14, 1998 shall bear interest at a floating rate
equal to the Prime Rate minus One Half of One Percent (0.5%); provided Borrower
shall have a one-time option, on August 14, 1998 to select a fixed rate of
interest equal to Two and One Half (2.50) percentage points above the yield of
48 month Treasury Notes as reported in the Western Edition of THE WALL STREET
JOURNAL on August 13, 1998. If SVB does not timely receive written notice of
Borrower's election of the fixed rate, the Equipment Advances shall bear
interest at the floating rate specified in the first sentence of this section.
Equipment Advances, once repaid, may not be reborrowed.
(c) When Borrower desires to obtain an Equipment Advance,
Borrower shall notify Bank (which notice shall be irrevocable) by facsimile
transmission to be received no later than 3:00 p.m. Pacific time three (3)
Business Days before the day on which the Equipment Advance is to be made. Such
notice shall be substantially in the form of EXHIBIT B. The notice shall be
signed by a Responsible Officer or its designee and include a copy of the
invoice and proof of payment for the Equipment to be financed.
(d) Borrower may prepay all or any portion of any Equipment
Advance without penalty or premium, provided that any prepayment of an Equipment
Advance bearing a fixed rate of interest shall be accompanied by a prepayment
fee equal to the breakage costs advised by Banks at the time of such prepayment.
(e) Borrower shall pay Servicing Agent a fee equal to Ten
Thousand Dollars ($10,000) on account of the Equipment Facility.
2.5 EXISTING TERM LOAN.
Borrowers acknowledge that Borrowers owe a principal amount of
One Million, One Hundred Twenty-Four Thousand Nine Hundred Ninety-Nine Dollars
and 97/100 ($1,124,999.97) to Banks on account of a term loan previously made to
Borrower. Such term loan shall bear interest at a rate equal to the Prime Rate
minus One Quarter of One Percent (0.25%). Borrower shall repay such term loan
in Twenty Seven (27) equal monthly installments of principal, plus accrued
interest, on the fifteenth day of each month, beginning August 15, 1997 and
continuing through November 15, 1999, on which date the entire principal balance
and all accrued but unpaid interest thereon shall be due and payable.
2.6 OVERADVANCES. If, at any time or for any reason, the sum of
(i) Advances owed by Borrowers to Banks pursuant to Section 2.1 of this
Agreement plus (ii) the Foreign Exchange Reserve plus (iii) the face amount of
any outstanding Letters of Credit is greater than the Committed Line, Borrowers
shall immediately pay to SVB, in cash, the amount of such excess, for payment to
the Banks according to their respective Percentage Shares. If, at any time or
for any reason, the Equivalent Amount of Outstanding Optional Currency Advances
exceeds Five Million Dollars ($5,000,000), Borrowers shall immediately pay to
BofH the amount of such excess.
2.7 INTEREST RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATE. Except as set forth in Section 2.7(b), any
Obligations shall bear interest, on the average Daily Balance, at the rates
specified in the provisions relating to each facility under this Agreement.
(b) DEFAULT RATE. All Obligations shall bear interest, from and
after the occurrence of an Event of Default, at a rate equal to the lesser of
(i) three (3) percentage points above the interest rate applicable immediately
prior to the occurrence of the Event of Default or (ii) the maximum rate
permitted by law including, to the extent applicable to Optional Currency
Advances, the law of the country of such Optional
10
Currency.
(c) PAYMENTS. Accrued interest shall be due and payable in
arrears upon the earlier of (i) the end of the Interest Period or (ii) any
payment of principal or (iii) on the fourteenth day of each calendar month.
With respect to repayments of Prime Rate Advances and LIBOR Rate Advances,
Servicing Agent shall, at the option of each Bank, charge such interest, all
Bank Expenses, and all Periodic Payments against a Borrower's deposit account
held at SVB or against the Committed Line, in which case those amounts shall
thereafter accrue interest at the rate then applicable hereunder. With respect
to repayments of Optional Currency Advances, the branch of BofH in the country
of the Optional Currency shall, at the option of each Bank, charge such interest
and all periodic payments against a Borrower's deposit account in such country
or against the Committed Line, in which case those amounts shall thereafter
accrue interest at the rate then applicable hereunder. Any interest not paid
when due shall be compounded by becoming a part of the Obligations, and such
interest shall thereafter accrue interest at the rate then applicable hereunder.
(d) COMPUTATION. In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m. on the day the Prime Rate is
changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed, except that
interest chargeable on account of Optional Rate Currency Advances shall be
computed on the basis of a three hundred sixty five (365) day year where such
computation is required by any law or is customary in the country of the
Optional Currency.
2.8 CREDITING PAYMENTS. Prior to the occurrence of an Event of
Default, each Bank shall credit a wire transfer of funds, check, or other item
of payment to such deposit account held at such Bank or Obligation as a Borrower
specifies; provided that payments in an Optional Currency shall be made only at
the branch of BofH in the country of such Optional Currency. After the
occurrence and during the continuation of an Event of Default, the receipt by a
Bank of any wire transfer of funds, check, or other item of payment shall be
immediately applied to conditionally reduce Obligations, but shall not be
considered a payment on account unless such payment is of immediately available
federal funds or unless and until such check or other item of payment is honored
when presented for payment. Notwithstanding anything to the contrary contained
herein, any wire transfer or payment received by a Bank after noon California
time (or, as to a payment in an Optional Currency, noon at the BofH branch
office in the country of the Optional Currency) shall be deemed to have been
received by such Bank as of the opening of business on the immediately following
Business Day. Whenever any payment to a Bank under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest, as the case may be, shall accrue and be payable for
the period of such extension.
2.9 BANK EXPENSES. Borrowers shall pay to Banks upon the date
hereof, all Bank Expenses incurred through the date hereof, including reasonable
attorneys' fees and expenses, and, within thirty (30) days of demand, other Bank
Expenses as they become due from time to time hereunder.
2.10 ADDITIONAL COSTS. In case any law, regulation, treaty or
official directive or the written interpretation or application thereof by any
court or any governmental authority charged with the administration thereof or
the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(a) subjects any Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of such Bank imposed by the United States of America
or any political subdivision thereof);
(b) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by, or
deposits in or for the account of, or loans by, any Bank; or
(c) imposes upon any Bank any other material condition with
respect to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to such Bank,
reduce the income receivable by such Bank or impose any expense upon such Bank
with respect to any loans, such Bank shall notify Borrowers thereof in writing.
Borrowers shall pay to such Bank the amount of such increase in cost, reduction
in income or additional
11
expense as and when such cost, reduction or expense is incurred or determined,
upon presentation by such Bank of a statement of the amount and setting forth
such Bank's calculation thereof, all in reasonable detail, which statement shall
be deemed true and correct absent manifest error; PROVIDED, HOWEVER, that
Borrowers shall not be liable for any such amount attributable to any period
prior to 180 days prior to the date of such certificate.
2.11 CONVERSION/CONTINUATION OF ADVANCES.
(a) Borrowers may from time to time submit in writing a request
that Prime Rate Advances be converted to LIBOR Rate Advances or that any
existing LIBOR Rate Advances continue for an additional Interest Period. Such
request shall specify the amount of the Prime Rate Advances which will
constitute LIBOR Rate Advances (subject to the limits set forth below) and the
Interest Period to be applicable to such LIBOR Rate Advances. Each written
request for a conversion to a LIBOR Rate Advance or a continuation of a LIBOR
Rate Advance shall be substantially in the form of an Optional Currency Rate or
LIBOR Rate Conversion/Continuation Certificate as set forth on Exhibit B, which
shall be duly executed by a Responsible Officer. Subject to the terms and
conditions contained herein, three (3) Business Days after Servicing Agent's
receipt of such a request from Borrowers, such Prime Rate Advances shall be
converted to LIBOR Rate Advances or such LIBOR Rate Advances or an Optional
Currency Rate Advance shall continue, as the case may be provided that:
(i) no Event of Default or event which with
notice or passage of time or both would constitute an Event of Default exists;
(ii) no party hereto shall have sent any notice of
termination of the Agreement;
(iii) Borrowers shall have complied with such
customary procedures as Banks have established from time to time for Borrowers'
requests for Optional Currency Rate Advances or LIBOR Rate Advances;
(iv) the amount of a Prime Rate Advance shall be
$25,000 or more, the amount of an Optional Currency Rate Advance shall be
$50,000 or more, and the amount of a LIBOR Rate Advance shall be $500,000 or
such greater amount which is an integral multiple of $50,000; and
(v) Servicing Agent shall have determined that
the Interest Period or LIBOR Rate or Optional Currency Rate is available to
Banks as of the date of the request for such LIBOR Rate Advance or Optional
Currency Rate Advance.
Any request by Borrowers to convert Prime Rate Advances to LIBOR Rate
Advances or continue any existing LIBOR Rate Advances shall be irrevocable.
Notwithstanding anything to the contrary contained herein, Banks shall not be
required to purchase United States Dollar deposits in the London interbank
market or other applicable LIBOR Rate market to fund any LIBOR Rate Advances,
but the provisions hereof shall be deemed to apply as if Banks had purchased
such deposits to fund the LIBOR Rate Advances.
(b) Any LIBOR Rate Advances shall automatically convert to Prime
Rate Advances upon the last day of the applicable Interest Period, unless Banks
have received and approved a complete and proper request to continue such LIBOR
Rate Advance at least three (3) Business Days prior to such last day in
accordance with the terms hereof. Any LIBOR Rate Advances or Optional Currency
Rate Advances shall, at Banks' option, convert to Prime Rate Advances in the
event that an Event of Default shall exist. Borrowers shall pay to Banks, upon
demand by Banks (or Servicing Agent may, at its option, charge a Borrower's
deposit account) any amounts required to compensate Banks for any loss
(including loss of anticipated profits), cost or expense incurred by such
person, as a result of the conversion of LIBOR Rate Advances or Optional
Currency Rate Advances to Prime Rate Advances pursuant to any of the foregoing.
2.12 ADDITIONAL REQUIREMENTS/PROVISIONS REGARDING LIBOR RATE ADVANCES
OR OPTIONAL CURRENCY RATE ADVANCES.
(a) If for any reason (including voluntary or mandatory
prepayment or acceleration), Banks receive all or part of the principal amount
of a LIBOR Rate Advance prior to the last day of the Interest Period for such
LIBOR Rate Advance or the proposed term of any Optional Currency Rate Advance
for which the term and the interest rate have been fixed, Borrowers shall on
demand by Servicing Agent, pay Servicing
12
Agent the amount (if any) by which (i) the additional interest which would have
been payable on the amount so received had it not been received until the last
day of such Interest Period or term exceeds (ii) the interest which would have
been recoverable by Banks by placing the amount so received on deposit in the
certificate of deposit markets or the offshore currency interbank markets or
United States Treasury investment products, as the case may be, for a period
starting on the date on which it was so received and ending on the last day of
such Interest Period or term at the interest rate determined by Servicing Agent
in its reasonable discretion. Servicing Agent's determination as to such amount
shall be conclusive absent manifest error.
(b) Borrowers shall pay to a Bank, upon demand by a Bank, from
time to time such amounts as such Bank may reasonably determine to be necessary
to compensate it for any costs incurred by such Bank that such Bank determines
are attributable to its making or maintaining of any amount receivable by such
Bank hereunder in respect of any Advances relating thereto (such increases in
costs and reductions in amounts receivable being herein called "Additional
Costs"), in each case resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable
to such Bank under this Agreement in respect of any Advances (other than changes
which affect taxes measured by or imposed on the overall net income of such Bank
by the jurisdiction in which such Bank has its principal office); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of such Bank (including any Advances or
any deposits referred to in the definition of "LIBOR Base Rate"); or
(iii) imposes any other material condition affecting this
Agreement (or any of such extensions of credit or liabilities).
Such Bank will notify Borrowers of any event occurring after the date of the
Agreement which will entitle such Bank to compensation pursuant to this section
as promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Such Bank will furnish Borrower with a statement
setting forth the basis and amount of each request by such Bank for compensation
under this Section 2.12. Determinations and allocations by a Bank for purposes
of this Section 2.12 of the effect of any Regulatory Change on its costs of
maintaining its obligations to make Advances or of making or maintaining
Advances or on amounts receivable by it in respect of Advances, and of the
additional amounts required to compensate such Bank in respect of any Additional
Costs, shall be conclusive absent manifest error.
(c) Borrowers shall pay to a Bank, upon the request of such
Bank, such amount or amounts as shall be sufficient (in the sole good faith
opinion of such Bank) to compensate it for any reasonable loss, costs or expense
incurred by it as a result of any failure by Borrower to borrow a LIBOR Rate
Advance on the date for such borrowing specified in the relevant notice of
borrowing hereunder.
(d) If a Bank shall determine that the adoption or
implementation of any applicable law, rule, regulation or treaty regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Bank (or its applicable lending office) with any respect or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank or any person or entity
controlling Bank (a "Parent") as a consequence of its obligations hereunder to a
level below that which Bank (or its Parent) could have achieved but for such
adoption, change or compliance (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by Bank to be material, then
from time to time, within 15 days after demand by such Bank, Borrowers shall pay
to Bank such additional amount or amounts as will compensate such Bank for such
reduction. A statement of such Bank claiming compensation under this Section
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive absent manifest error.
13
(e) If at any time a Bank, in its sole and absolute discretion,
determines that: (i) the amount of the LIBOR Rate Advances or Optional Currency
Rate Advances for periods equal to the corresponding Interest Periods or any
other period are not available to such Bank in the offshore currency interbank
markets, or (ii) the LIBOR Rate or Optional Currency Rate does not accurately
reflect the cost to Bank of lending the LIBOR Rate Advance or Optional Currency
Rate Advance, then such Bank shall promptly give notice thereof to Borrowers,
and upon the giving of such notice such Bank's obligation to make the LIBOR Rate
Advances or Optional Currency Rate Advances shall terminate, unless Banks and
Borrowers agree in writing to a different interest rate applicable to LIBOR Rate
Advances or Optional Currency Rate Advances. If it shall become unlawful for a
Bank to continue to fund or maintain any Advances, or to perform its obligations
hereunder, upon demand by such Bank, Borrower shall prepay the Advances in full
with accrued interest thereon and all other amounts payable by Borrower
hereunder (including, without limitation, any amount payable in connection with
such prepayment pursuant to Section 2.12(a)).
2.13 TERM. This Agreement shall become effective upon the date hereof
and shall continue in full force and effect for a term ending on the Maturity
Date. Notwithstanding the foregoing, Banks shall have the right to terminate
any obligation to make Advances under this Agreement immediately and without
notice upon the earlier of (i) the occurrence and during the continuance of an
Event of Default or (ii) the Revolving Maturity Date. On the date of
termination, all Obligations shall become immediately due and payable in cash or
by wire transfer.
Upon satisfaction of all Obligations hereunder (including prepayment
fees, if applicable) this Agreement shall, at Borrowers' request, terminate, and
Banks shall execute such terminations of financing statements as Borrowers may
reasonably request.
3. CONDITIONS OF LOANS
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of
either Bank to make the initial Advance is subject to the condition precedent
that such Bank shall have received, in form and substance satisfactory to such
Bank, the following:
(a) this Agreement;
(b) a certificate of the Secretary of each Borrower with respect
to incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(c) the Optional Currency Rate Instruments (with respect to
Optional Currency Rate Advances only);
(d) a financing statement (Form UCC-1) for each Borrower;
(e) evidence of the consummation of the Acquisition;
(f) solvency certificates;
(g) an opinion of Borrower's counsel;
(h) payment of the fees and Bank Expenses then due specified in
Section 2.5 hereof, provided reasonably detailed invoices are received; and
(i) such other documents, and completion of such other matters,
as Banks may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of any Bank
to make each Advance, including the initial Advance, is further subject to the
following conditions:
(a) timely receipt by Servicing Agent of the Loan
Payment/Advance Form as provided in Section 2.1;
(b) the representations and warranties contained in Section 5
shall be true and correct in all material respects on and as of the date of
such Loan Payment/Advance Form and on the effective date of each Advance as
though made at and as of each such date (except to the extent they relate
specifically to an
14
earlier date, in which case such representations and warranties shall
continue to have been true and accurate as of such date), and no Event of
Default shall have occurred and be continuing, or would result from such
Advance; and
(c) as to each Optional Currency Rate Advance, all of the terms
and conditions contained in the applicable Optional Currency Rate Instruments
have been satisfied.
The making of each Advance shall be deemed to be a representation and
warranty by each Borrower on the date of such Advance as to the accuracy of the
facts referred to in this Section 3.2(b).
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to Banks
a continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall
from time to time execute and deliver to Servicing Agent, at the request of
Servicing Agent, all Negotiable Collateral, all financing statements and other
documents that Servicing Agent may reasonably request, in form satisfactory to
Servicing Agent, to perfect and continue perfected Banks' security interests in
the Collateral and in order to fully consummate all of the transactions
contemplated under the Loan Documents.
4.3 RIGHT TO INSPECT. Any Bank (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's Books
and to make copies thereof and to check, test, and appraise the Collateral in
order to verify Borrower's financial condition or the amount, condition of, or
any other matter relating to, the Collateral.
4.4 STOCK PLEDGE.
(a) AEI hereby pledges, assigns and delivers to Banks and grants
to Banks a security interest in the Shares, together with all proceeds and
substitutions thereof, all cash, stock and other moneys and property paid
thereon, all rights to subscribe for securities declared or granted in
connection therewith, and all other cash and noncash proceeds of the foregoing
(all hereinafter called the "Pledged Collateral"), as security for the prompt
performance of all of the Obligations.
(b) The term "Pledged Collateral" shall also include any
securities, instruments or distributions of any kind issuable, issued or
received by AEI upon conversion of, in respect of, or in exchange for any other
Pledged Collateral, including, but not limited to, those arising from a stock
dividend, stock split, reclassification, reorganization, merger, consolidation,
sale of assets or other exchange of securities or any dividends or other
distributions of any kind upon or with respect to the Pledged Collateral.
(c) The certificate or certificates for the securities included
in the Pledged Collateral, accompanied by an instrument of assignment duly
executed in blank by AEI, have been delivered by AEI to Bank. Tower shall cause
its books to reflect the pledge of the Shares. Upon the occurrence of an Event
of Default hereunder, Banks may effect the transfer of any securities included
in the Pledged Collateral into the name of Banks and cause new certificates
representing such securities to be issued in the name of Banks. AEI will
execute and deliver such documents, and take or cause to be taken such actions,
as Banks may reasonably request to perfect or continue the perfection of Banks'
security interest in the Pledged Collateral.
(d) Unless an Event of Default (as defined below) shall have
occurred and be continuing, AEI shall be entitled to exercise any voting rights
with respect to the Pledged Collateral and to give consents, waivers and
ratifications in respect thereof, PROVIDED that no vote shall be cast or
consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms. All such rights of AEI to vote
and give consents, waiver and ratifications shall cease in case such an Event of
Default hereunder shall occur and be continuing.
(e) AEI recognizes that Banks may be unable to effect a public
sale of all or a part of the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, as amended
15
("Act"), so that Banks may be compelled to resort to one or more private sales
to a restricted group of purchasers who will be obliged to agree, among other
things, to acquire the Pledged Collateral for their own account, for investment
and without a view to the distribution or resale thereof. AEI understands that
private sales so made may be at prices and on other terms less favorable to the
seller than if the Pledged Collateral were sold at public sales, and agrees that
Banks have no obligation to delay the sale of any of the Pledged Collateral for
the period of time necessary (even if Banks would agree), to register such
securities for sale under the Act. AEI agrees that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner.
5. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Each Borrower is a
corporation duly existing and in good standing under the laws of its state of
incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be so qualified except for states as to which any
failure so to qualify would not have a Material Adverse Effect.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within each Borrower's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in such Borrower's Articles or Certificate of Incorporation
or Bylaws, nor will they constitute an event of default under any material
agreement to which such Borrower is a party or by which such Borrower is bound.
No Borrower is in default under any agreement to which it is a party or by which
it is bound, which default is reasonably likely to have a Material Adverse
Effect.
5.3 NO PRIOR ENCUMBRANCES. Each Borrower has good and indefeasible
title to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 MERCHANTABLE INVENTORY. All Inventory is in all material
respects of good and marketable quality, free from all material defects.
5.5 LITIGATION. There are no actions or proceedings pending by or
against any Borrower before any court or administrative agency in which an
adverse decision is reasonably likely to have a Material Adverse Effect. No
Borrower has knowledge of any such pending or threatened actions or proceedings.
5.6 SHARES. There are no subscriptions, warrants or other options
exercisable with respect to the Shares. The Shares represent one hundred
percent (100%) of the issued and outstanding stock of Tower, there are no
agreements that require Tower to issue any additional shares, and there are no
outstanding options to purchase such additional shares. The Shares have been
duly authorized and validly issued, and are fully paid and non-assessable.
5.7 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated financial statements related to Borrowers that have been delivered
to Banks fairly present in all material respects the consolidated financial
condition as of the date thereof of each such entity and consolidated results of
operations for the period then ended of each such entity. There has not been a
material adverse change in the consolidated financial condition of a Borrower
since the date of the most recent of such financial statements submitted to
Banks.
5.8 SOLVENCY. Each Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
5.9 REGULATORY COMPLIANCE. Each Borrower has met the minimum funding
requirements of ERISA with respect to any employee benefit plans subject to
ERISA. No Borrower has withdrawn from, and no termination or partial
termination has occurred with respect to, any deferred compensation plan, and no
Borrower has withdrawn from any multi-employer plan under ERISA. No event has
occurred resulting from a Borrower's failure to comply with ERISA that is
reasonably likely to result in such Borrower's incurring any liability that is
reasonably likely to have a Material Adverse Effect. No Borrower is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. No Borrower is engaged
principally, or as one of the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of
16
Governors of the Federal Reserve System), and no part of the proceeds of the
Advances will be used to purchase or carry any margin stock or for any purpose
that would violate any of Regulations G, T and U. Each Borrower has complied
with all the provisions of the Federal Fair Labor Standards Act. Each Borrower
has complied with all laws and regulations to which it is subject, noncompliance
with which is reasonably likely to have a Material Adverse Effect.
5.10 ENVIRONMENTAL CONDITION. None of any Borrower's properties or
assets has ever been used by Borrower or any Subsidiary or, to each Borrower's
knowledge, without any independent investigation, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for closure pursuant to any
environmental protection statute; no lien arising under any environmental
protection statute has attached to any revenues or to any real or personal
property owned by a Borrower or any Subsidiary; and neither Borrower nor any
Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by a Borrower or any Subsidiary
resulting in the releasing, or otherwise disposing of hazardous waste or
hazardous substances into the environment.
5.11 TAXES. Each Borrower and each Subsidiary have filed or caused to
be filed all material tax returns required to be filed, and has paid, or have
made adequate provision for the payment of, all taxes reflected therein.
5.12 SUBSIDIARIES. No Borrower owns any stock, partnership interest
or other equity securities of any Person, except for Permitted Investments.
5.13 GOVERNMENT CONSENTS. Each Borrower has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all governmental authorities that are necessary for the
continued operation of their respective businesses as currently conducted.
5.14 FULL DISCLOSURE. The representations, warranties and other
statements included in the documents, certificates and written statements
furnished by each Borrower to either Bank prior to or as of the date of this
Agreement for use in connection with the transactions contemplated by this
Agreement, taken as a whole, do not contain any untrue statement of a material
fact or omit to state a material fact (known to a Borrower, in the case of any
document not furnished by it) necessary in order to make the statements
contained herein or therein not misleading (it being recognized by Banks that
the projections and forecasts provided by Borrowers are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections and forecasts may differ from the projected or forecasted results).
6. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, from and after the Closing
Date until payment in full of all outstanding Obligations, and for so long as
any Bank may have any commitment to make an Advance hereunder, such Borrower
shall do all of the following:
6.1 GOOD STANDING. Maintain its and cause to be maintained each of
its Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify is reasonably likely to have a Material Adverse Effect.
Borrower shall maintain, and shall cause each of its Subsidiaries to maintain in
force all licenses, approvals and agreements, the loss of which would have a
Material Adverse Effect.
6.2 GOVERNMENT COMPLIANCE. Meet, and shall cause each Subsidiary to
meet, the minimum funding requirements of ERISA with respect to any employee
benefit plans subject to ERISA. Borrower shall comply, and shall cause each
Subsidiary to comply, with all statutes, laws, ordinances and government rules
and regulations to which it is subject, noncompliance with which could have a
Material Adverse Effect or a material adverse effect on the Collateral or the
priority of Banks' Lien on the Collateral.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. AEI shall deliver
to Banks: (a) upon the sooner of 45 days after the last day of each fiscal
quarter as to Form 10-Q, and the sooner of 90 days after the last
17
day of each fiscal year as to Form 10-K, or within five (5) days upon becoming
available, copies of all statements, reports and notices sent or made available
generally by Borrower to its security holders or to any holders of Subordinated
Debt and all reports on Form 10-K and 10-Q filed with the Securities and
Exchange Commission; (b) promptly upon receipt of notice thereof, a report of
any legal actions pending or threatened against Borrower or any Subsidiary that
is reasonably likely to result in damages or costs to Borrower or any Subsidiary
of Five Hundred Thousand Dollars ($500,000) or which could have a Material
Adverse Effect; and (c) such budgets, sales projections, operating plans or
other financial information as Bank may reasonably request from time to time.
AEI shall deliver to Banks with the quarterly financial statements a
Compliance Certificate signed by a Responsible Officer in substantially the form
of EXHIBIT C hereto.
Any Bank shall have a right from time to time hereafter to audit Borrower's
Accounts, provided that such audits will be conducted at Borrower's expense no
more often than annually, unless an Event of Default has occurred and is
continuing, with the auditing Bank to conduct all other audits at its own
expense.
6.4 INVENTORY; RETURNS. Keep all Inventory in good and marketable
condition, free from all material defects. Returns and allowances, if any, as
between a Borrower and its account debtors shall be on the same basis and in
accordance with the usual customary practices of Borrower, as they exist at the
time of the execution and delivery of this Agreement. Borrower shall promptly
notify Bank when any particular return, recovery, dispute or claim causes the
aggregate returns for any fiscal month to exceed Ten Percent (10%) of the gross
sales for such month.
6.5 TAXES. Make, and shall cause each Subsidiary to make, due and
timely payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, and will execute and
deliver to Banks, on demand, appropriate certificates attesting to the payment
or deposit thereof; and Borrower will make, and will cause each Subsidiary to
make, timely payment or deposit of all material tax payments and withholding
taxes required of it by applicable laws, including, but not limited to, those
laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and
federal income taxes, and will, upon request, furnish each Bank with proof
satisfactory to such Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.
6.6 INSURANCE.
(a) Borrowers, at their expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where their
respective businesses are conducted on the date hereof. Each Borrower shall
also maintain insurance relating to Borrower's ownership and use of the
Collateral in amounts and of a type that are customary to businesses similar to
Borrower's.
(b) All such policies of insurance shall be in such form, with
such companies, and in such amounts as are reasonably satisfactory to Banks.
All such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Banks, showing Banks as additional loss
payees thereof and all liability insurance policies shall show Banks as
additional insureds, and shall specify that the insurer must give at least
twenty (20) days notice to Bank before canceling its policy for any reason. At
a Bank's request, Borrowers shall deliver to Banks certified copies of such
policies of insurance and evidence of the payments of all premiums therefor.
All proceeds payable under any such policy shall, at the option of Banks, be
payable to Banks to be applied on account of the Obligations.
6.7 QUICK RATIO. Maintain, on a consolidated basis, as of the last
day of each fiscal quarter, a ratio of Quick Assets to Current Liabilities of at
least 1.25 to 1.00, increasing to not less than 1.50 to 1.00 as of December 31,
1997.
6.8 DEBT-TANGIBLE NET WORTH RATIO. Maintain, on a consolidated
basis, as of the last day of each fiscal quarter, a ratio of Total Liabilities
to Tangible Net Worth of not more than 1.00 to 1.00.
6.9 TANGIBLE NET WORTH. Maintain, on a consolidated basis, as of the
last day of each fiscal quarter, a Tangible Net Worth of not less than Forty
Million Dollars ($40,000,000) plus Seventy Five Percent (75%)
18
of Borrowers' quarterly profits beginning December 31, 1997.
6.10 PROFITABILITY. On a consolidated basis, have a minimum net
profit of One Dollar ($1.00) for each fiscal quarter, provided Borrowers may
suffer a loss in any one fiscal quarter per fiscal year of not more than Five
Hundred Thousand Dollars ($500,000). Non-cash charges incurred in the
Acquisition shall not be included in the calculation of profitability for the
fiscal quarter ending September 30, 1997.
6.11 DEBT SERVICE COVERAGE. Borrower shall maintain, as of the last
day of each fiscal quarter, a Debt Service Coverage of at least 2.0 to 1.0 on a
rolling two quarter basis, excluding capital expenditures. "Debt Service
Coverage" means (a) the sum of (i) earnings after tax plus (ii) depreciation and
amortization expense less (iii) capital expenditures, divided by
(b) the current portion of total long term debt, excluding Advances under the
Committed Line.
6.12 FURTHER ASSURANCES. At any time and from time to time Borrowers
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by any Bank to effect the purposes of this
Agreement.
7. NEGATIVE COVENANTS
Each Borrower covenants and agrees that, from and after the Closing
Date, so long as any credit hereunder shall be available and until payment in
full of the outstanding Obligations or for so long as any Bank may have any
commitment to make any Advances, such Borrower will not do any of the following:
7.1 DISPOSITIONS. Without the Banks' consent, which shall not be
unreasonably withheld, convey, sell, lease, transfer or otherwise dispose of
(collectively, a "Transfer"), or permit any of its Subsidiaries to Transfer, all
or any part of its business or property, other than: (i) Transfers in the
ordinary course of business; (ii) Transfers of non-exclusive licenses and
similar arrangements for the use of the property of Borrower or its
Subsidiaries; (iii) Transfers of worn-out or obsolete Equipment; or
(iv) Transfers which constitute liquidation of Investments permitted under
Section 7.7.
7.2 CHANGE IN BUSINESS OR CONTROL. Engage in any business, or permit
any of its Subsidiaries to engage in any business, other than the businesses
currently engaged in by Borrower and any business substantially similar or
related thereto (or incidental thereto).
7.3 MERGERS OR ACQUISITIONS. Except in the ordinary course of
Borrower's business, merge or consolidate, or permit any of its Subsidiaries to
merge or consolidate, with or into any other business organization, or acquire,
or permit any of its Subsidiaries to acquire, all or substantially all of the
capital stock or property of another Person; provided that this Section 7.3
shall not apply to Permitted Investments or to transactions among a Borrower and
its Subsidiaries in which such Borrower is the surviving entity or among its
Subsidiaries.
7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien
with respect to any of its property, or assign or otherwise convey any right to
receive income, including the sale of any Accounts, or permit any of its
Subsidiaries so to do, except for Permitted Liens.
7.6 DISTRIBUTIONS. Pay any dividends or make any other distribution
or payment on account of or in redemption, retirement or purchase of any capital
stock, except for so long as an Event of Default has not occurred and is not
continuing (and would not exist immediately after such payment), a Borrower may
repurchase its stock from former employees of such Borrower in accordance with
the terms of repurchase or similar agreements between such Borrower and such
employees.
7.7 INVESTMENTS. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments and except as made in the ordinary course of
Borrower's business.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of
19
Borrower's business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm's length transaction with a
nonaffiliated Person, and except for transactions with a Subsidiary that are
upon fair and reasonable terms and transactions constituting Permitted
Investments.
7.9 SUBORDINATED DEBT. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Banks' prior written consent.
7.10 COMPLIANCE. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose.
Fail to meet the minimum funding requirements of ERISA, permit a Reportable
Event or Prohibited Transaction, as defined in ERISA, to occur, permit any
condition to exist that would entitle any Person to obtain a decree adjudicating
that any Plan under ERISA must be terminated, fail to comply with the Federal
Fair Labor Standards Act or violate any law or regulation, which violation could
have a Material Adverse Effect or a material adverse effect on the Collateral or
the priority of Banks' Lien on the Collateral, or permit any of its Subsidiaries
to do any of the foregoing.
8. EVENTS OF DEFAULT
Any one or more of the following events shall constitute an Event of
Default by Borrowers under this Agreement:
8.1 PAYMENT DEFAULT. If a Borrower fails to pay the principal of, or
any interest on, any Credit Extensions when due and payable; or fails to pay any
portion of any other Obligations not constituting such principal or interest,
including without limitation Bank Expenses, within thirty (30) days of receipt
by such Borrower of a reasonably detailed invoice on account of such other
Obligations;
8.2 COVENANT DEFAULT. If a Borrower fails to perform any obligation
under Article 5 or violates any of the covenants contained in Article 6 of this
Agreement, or fails or neglects to perform, keep, or observe any other material
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between a Borrower and any Bank and as to any default under such other term,
provision, condition, covenant or agreement that can be cured, has failed to
cure such default within twenty (20) days after a Borrower receives notice
thereof or any Responsible Officer becomes aware thereof; provided, however,
that if the default cannot by its nature be cured within the twenty (20) day
period or cannot after diligent attempts by such Borrower be cured within such
twenty (20) day period, and such default is likely to be cured within a
reasonable time, then Borrowers shall have an additional reasonable period
(which shall not in any case exceed thirty (30) days) to attempt to cure such
default, and within such reasonable time period the failure to have cured such
default shall not be deemed an Event of Default (provided that no Advances will
be required to be made during such cure period);
8.3 MATERIAL ADVERSE CHANGE. If there occurs a material adverse
change in the business or financial condition of Borrowers, taken as a whole, or
if there is a material impairment of the prospect of repayment of any portion of
the Obligations;
8.4 ATTACHMENT. If any material portion of a Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within thirty (30) days, or if a Borrower
is enjoined, restrained, or in any way prevented by court order from continuing
to conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of a
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of a Borrower's assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within thirty (30) days after a Borrower receives notice thereof, provided that
none of the foregoing shall constitute an Event of Default where such action or
event is stayed or an adequate bond has been posted pending a good faith contest
by such Borrower (provided that no Advances will be required to be made during
such cure period);
20
8.5 INSOLVENCY. If a Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by a Borrower, or if an Insolvency Proceeding is
commenced against a Borrower and is not dismissed or stayed within thirty (30)
days (provided that no Advances will be made prior to the dismissal of such
Insolvency Proceeding);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to
which a Borrower is a party with a third party or parties resulting in a right
by such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of Five Hundred Thousand
Dollars ($500,000) or which would have a Material Adverse Effect;
8.7 JUDGMENTS. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least Five Hundred
Thousand Dollars ($500,000) shall be rendered against a Borrower and shall
remain unsatisfied and unstayed for a period of thirty (30) days (provided that
no Advances will be made prior to the satisfaction or stay of such judgment); or
8.8 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to any Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
9. BANKS' RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, any Bank may, at its election, do any one or
more of the following, all of which are authorized by Borrowers:
(a) Declare all Obligations owing to such Bank, whether
evidenced by this Agreement, by any of the other Loan Documents, or otherwise,
immediately due and payable (provided that upon the occurrence of an Event of
Default described in Section 8.5 all Obligations shall become immediately due
and payable without any action by any Bank);
(b) Cease advancing money or extending credit to or for the
benefit of Borrowers under this Agreement or under any other agreement between a
Borrower and any Bank; and
(c) Set off and apply to the Obligations any and all (i)
balances, deposits and investments of any Borrower held by such Bank, or (ii)
indebtedness at any time owing to or for the credit or the account of a Borrower
held by such Bank;
(d) Liquidate any Exchange Contracts not yet settled and demand
that Borrower immediately deposit cash with Banks in an amount sufficient to
cover any losses incurred by Bank due to liquidation of the Exchange Contracts
at the then prevailing market price;
(e) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Bank reasonably
considers advisable;
(f) Without notice to or demand upon Borrower, make such
payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Bank's determination appears to be prior or superior to
its security interest and to pay all expenses incurred in connection therewith.
With respect to any of Borrower's premises, Borrower hereby grants Bank a
license to enter such premises and to occupy the same, without charge, in order
to exercise any of Bank's rights or remedies provided herein, at law, in equity,
or otherwise;
(g) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;
(h) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise
21
for sale, and sell (in the manner provided for herein) the Collateral. Bank is
hereby granted a non-exclusive, royalty-free license or other right, solely
pursuant to the provisions of this Section 9.1, to use, without charge,
Borrower's labels, patents, copyrights, mask works, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank's exercise of its rights under this Section 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure to
Bank's benefit;
(i) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply the proceeds thereof to the
Obligations in whatever manner or order Bank deems appropriate;
(j) Bank may credit bid and purchase at any public sale, or at
any private sale as permitted by law; and
(k) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably appoints
Bank (and any of Bank's designated officers, or employees) as Borrower's true
and lawful attorney to: (a) send requests for verification of Accounts or
notify account debtors of Bank's security interest in the Accounts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into Bank's possession; (c) sign Borrower's name on any invoice or ▇▇▇▇ of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) make, settle, and adjust all claims under and decisions with
respect to Borrower's policies of insurance; (e) settle and adjust disputes and
claims respecting the Accounts directly with account debtors, for amounts and
upon terms which Bank determines to be reasonable; and (f) dispose of the
Collateral in accordance with applicable law. The appointment of Bank as
Borrower's attorney in fact, and each and every one of Bank's rights and powers,
being coupled with an interest, is irrevocable until all of the Obligations have
been fully repaid and Bank's obligation to provide Advances hereunder is
terminated.
9.3 BANK EXPENSES. After the occurrence of an Event of Default, if a
Borrower fails to pay any amounts or furnish any required proof of payment due
to third persons or entities, as required under the terms of this Agreement,
then Banks may do any or all of the following: (a) make payment of the same or
any part thereof; (b) set up such reserves under the Committed Line as Banks
deem necessary to protect Banks from the exposure created by such failure; or
(c) obtain and maintain insurance policies of the type discussed in Section 6.6
of this Agreement, and take any action with respect to such policies as Banks
reasonably deem prudent. Any amounts so paid or deposited by Banks shall
constitute Bank Expenses, shall be immediately due and payable, and shall bear
interest at the then applicable rate hereinabove provided. Any payments made by
any Bank shall not constitute an agreement by such Bank to make similar payments
in the future or a waiver by Bank of any Event of Default under this Agreement.
9.4 REMEDIES CUMULATIVE. Banks' rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Banks shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by any Bank of one
right or remedy shall be deemed an election. No waiver by any Bank of any Event
of Default on a Borrower's part shall be effective unless also waived in writing
by any other Bank. No waiver shall be deemed a continuing waiver. No delay by
any Bank shall constitute a waiver, election, or acquiescence by it.
9.5 DEMAND; PROTEST. Each Borrower waives protest, notice of
protest, notice of dishonor, notice of payment and nonpayment, notice of any
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by any Bank on which Borrower may in any way be liable.
22
10. NOTICES
Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other agreement entered into in
connection herewith shall be in writing and (except for financial statements and
other informational documents which may be sent by first-class mail, postage
prepaid) shall be personally delivered or sent by certified mail, postage
prepaid, return receipt requested, or by prepaid telefacsimile to Borrowers or
to each Bank, as the case may be, at its addresses set forth below:
If to AEI: Advanced Energy Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to Tower: Tower Electronics, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to Banks: Silicon Valley Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Bank of Hawaii
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. NOTICES TO ONE BANK SHALL NOT BE DEEMED NOTICE TO THE OTHER BANK.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in accordance with,
the internal laws of the State of California, without regard to principles of
conflicts of law. Borrowers and Banks hereby submit to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
▇▇▇▇▇, State of California. BORROWERS AND BANKS HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12. INTERCREDITOR PROVISIONS
12.1 PROPORTIONATE INTERESTS. Except for Optional Currency Advances,
which shall be the sole responsibility of BofH, and except as otherwise provided
in this Agreement, the rights, interests, and obligations of each Bank under
this Agreement and the Loan Documents at any time shall be shared in the ratio
of (a) the maximum amount the Bank has committed to advance as set forth on the
signature page signed by the Bank to (b) the Committed Line. Any reference in
this Agreement or the Loan Documents to an allocation between or sharing by the
Banks of any right, interest, or duty "ratably," "proportionally," "pro rata,"
or in similar terms shall refer to
23
this ratio. No Bank is obligated to advance any funds in lieu of or for the
account of the other Bank if the latter Bank fails to make such Advance.
12.2 DESIGNATION OF SERVICE AGENT. To facilitate the administration
of this Agreement, SVB shall act as "Servicing Agent" for itself and BofH.
Servicing Agent shall have only such duties as are expressly set forth in this
Agreement, or as otherwise agreed in writing by the Banks. Servicing Agent
shall be deemed to act on behalf of both Banks whenever Servicing Agent acts
under this Agreement.
12.3 RESIGNATION. Servicing Agent may resign as Servicing Agent, upon
thirty (30) day's written notice to the other Banks and to Borrower and
appointment of a successor Servicing Agent approved by Banks. Upon receipt of
notice of resignation, the Banks shall appoint a successor Servicing Agent. The
resigning Servicing Agent shall cooperate fully in delivering to the successor
Servicing Agent the Loan Documents and copies of all records relating to the
Advances and payments made hereunder that the successor Servicing Agent
reasonably requests.
12.4 SERVICING AGENT AS BANK. Servicing Agent shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though it were not Servicing Agent. The term "Banks" includes Servicing
Agent in Servicing Agent's individual capacity. Servicing Agent and its
Subsidiaries and Affiliates may accept deposits from, lend money to, act as
agent or trustee for other lenders to, and generally engage in any kind of
banking, trust, or other business with, any Borrower or any Subsidiary or
Affiliates as if Servicing Agent were not Servicing Agent.
12.5 NO AGENCY. EXCEPT AS SPECIFIED HEREIN, NEITHER BANK IS AN AGENT
OF THE OTHER. NEITHER BANK HAS ANY AUTHORITY TO ACT OR FAIL TO ACT FOR THE
OTHER. THE OBLIGATIONS OF EACH BANK HEREUNDER ARE SEVERAL. NO BANK SHALL BE
LIABLE FOR THE FAILURE OF ANY OTHER BANK TO PERFORM ITS OBLIGATIONS HEREUNDER.
12.6 NO RELIANCE. The provisions of this Article 12 are solely for
the benefit of Banks in specifying their rights and obligations with respect to
each other, and not for the benefit of any Borrower or its assigns or
successors.
13. GENERAL PROVISIONS
13.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; PROVIDED, HOWEVER, that neither this Agreement nor any rights hereunder
may be assigned by any Borrower without each Bank's prior written consent, which
consent may be granted or withheld in each Bank's sole discretion. Subject to
the terms of any agreement between Banks, each Bank shall have the right with
the consent (which shall not be unreasonably withheld) of Borrower to sell,
transfer, negotiate, or grant participations in all or any part of, or any
interest in, Bank's obligations, rights and benefits hereunder; provided no Bank
will sell, transfer, negotiate or grant participations in any part of, or any
interest in, such obligations, rights and benefits in a principal amount of less
than Five Million Dollars ($5,000,000).
13.2 INDEMNIFICATION. Borrowers shall defend, indemnify and hold
harmless each Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement (except
with regard to a dispute between the Banks); and (b) all losses or Bank Expenses
in any way suffered, incurred, or paid by such Bank as a result of or in any way
arising out of, following, or consequential to transactions between such Bank
and Borrowers whether under this Agreement, or otherwise (including without
limitation reasonable attorneys fees and expenses), except for losses caused by
such Bank's gross negligence or willful misconduct and except with regard to a
dispute between the Banks.
13.3 SUBROGATION AND SIMILAR RIGHTS. Notwithstanding any other
provision of this Agreement or any other Loan Document, until all amounts that
Borrowers owe to Banks have been paid in full, each Borrower irrevocably waives
all rights that it may have at law or in equity (including, without limitation,
any law subrogating such Borrower to the rights of Bank under the Loan
Documents) to seek contribution, indemnification, or any other form of
reimbursement from any other Borrower, or any other Person now or hereafter
primarily or secondarily liable for any of the Obligations, for any payment made
by such Borrower with respect to the Obligations in connection with the Loan
Documents or otherwise and all rights that it might have to benefit from, or to
participate in, any security for the Obligations as a result of any payment made
by such Borrower with respect to the
24
Obligations in connection with the Loan Documents or otherwise. Until all
amounts that Borrowers owe to Banks have been paid in full, any agreement
providing for indemnification, reimbursement or any other arrangement prohibited
under this Section 13.3 shall be null and void. If any payment is made to a
Borrower in contravention of this Section 13.3, such Borrower shall hold such
payment in trust for Bank and such payment shall be promptly delivered to Bank
for application to the Obligations, whether matured or unmatured.
13.4 WAIVERS OF NOTICE. Each Borrower waives notice of acceptance
hereof; notice of the existence, creation or acquisition of any of the
Obligations; notice of an Event of Default; notice of the amount of the
Obligations outstanding at any time; notice of intent to accelerate; notice of
acceleration; notice of any adverse change in the financial condition of any
other Borrower or of any other fact that might increase the Borrower's risk;
presentment for payment; demand; protest and notice thereof as to any
instrument; default; and all other notices and demands to which the Borrower
would otherwise be entitled. Each Borrower waives any defense arising from any
defense of any other Borrower, or by reason of the cessation from any cause
whatsoever of the liability of any other Borrower. Bank's failure at any time
to require strict performance by any Borrower of any provision of the Loan
Documents shall not waive, alter or diminish any right of Bank thereafter to
demand strict compliance and performance therewith. Nothing contained herein
shall prevent Bank from foreclosing on the Lien of any deed of trust, mortgage
or other security instrument, or exercising any rights available thereunder, and
the exercise of any such rights shall not constitute a legal or equitable
discharge of any Borrower. Each Borrower also waives any defense arising from
any act or omission of Bank that changes the scope of the Borrower's risks
hereunder. Each Borrower hereby waives any right to assert against Bank any
defense (legal or equitable), setoff, counterclaim, or claims that such Borrower
individually may now or hereafter have against another Borrower or any other
Person liable to Bank with respect to the Obligations in any manner or
whatsoever.
13.5 SUBROGATION DEFENSES. Until all amounts that Borrowers owe to
Banks have been paid in full, each Borrower hereby waives any defense based on
impairment or destruction of its subrogation or other rights against any other
Borrower and waives all benefits which might otherwise be available to it under
California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850,
2899, and 3433 and California Code of Civil Procedure Sections 580a, 580b, 580d
and 726, as those statutory provisions are now in effect and hereafter amended,
and under any other similar statutes now and hereafter in effect.
13.6 RIGHT TO SETTLE, RELEASE.
(a) The liability of Borrowers hereunder shall not be diminished
by (i) any agreement, understanding or representation that any of the
Obligations is or was to be guaranteed by another Person or secured by other
property, or (ii) any release or unenforceability, whether partial or total, of
rights, if any, that Bank may now or hereafter have against any other Person,
including another Borrower, or property with respect to any of the Obligations.
(i) Without notice to any Borrower and without affecting
the liability of any Borrower hereunder, Banks may (i) compromise, settle,
renew, extend the time for payment, change the manner or terms of payment,
discharge the performance of, decline to enforce, or release all or any of the
Obligations with respect to a Borrower, (ii) grant other indulgences to a
Borrower in respect of the Obligations, (iii) modify in any manner any documents
relating to the Obligations with respect to a Borrower, (iv) release, surrender
or exchange any deposits or other property securing the Obligations, whether
pledged by a Borrower or any other Person, or (v) compromise, settle, renew, or
extend the time for payment, discharge the performance of, decline to enforce,
or release all or any obligations of any guarantor, endorser or other Person who
is now or may hereafter be liable with respect to any of the Obligations.
13.7 PRIMARY OBLIGATION. This Agreement is a primary and original
obligation of each Borrower and shall remain in effect notwithstanding future
changes in conditions, including any change of law or any invalidity or
irregularity in the creation or acquisition of any Obligations or in the
execution or delivery of any agreement between Bank and any Borrower. Each
Borrower shall be liable for existing and future Obligations as fully as if all
of the Loan were advanced to the Borrower. Bank may rely on any certificate or
representation made by any Borrower as made on behalf of, and binding on, all
Borrowers, including without limitation Borrowing Certificates, Borrowing Base
Certificates and Compliance Certificates.
13.8 SUBORDINATION. All indebtedness of a Borrower now or hereafter
arising held by another Borrower is subordinated to the Obligations and the
Borrower holding the indebtedness shall take all actions reasonably requested by
Bank to effect, to enforce and to give notice of such subordination.
25
13.9 ENFORCEMENT OF RIGHTS. Borrowers are jointly and severally
liable for the Obligations and Bank may proceed against one or more of the
Borrowers to enforce the Obligations without waiving its right to proceed
against any of the other Borrowers.
13.10 AEI AS AGENT. Each of the Borrowers irrevocably appoints
AEI as its agent to accept and deliver all notices, certificates and other
documents under this Agreement on behalf of all of the Borrowers, and to
request, accept and disburse all Advances, and to make payments hereunder.
13.11 TIME OF ESSENCE. Time is of the essence for the performance
of all obligations set forth in this Agreement.
13.12 SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
13.13 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot
be changed or terminated orally. No amendment shall be effective without the
consent of all the parties hereto, except the provisions of Article 12 may be
amended by Banks without Borrower's approval. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties hereto with respect to the subject matter of this Agreement, if any, are
merged into this Agreement and the Loan Documents.
13.14 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.
13.15 SURVIVAL. All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 13.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
13.16 CONFIDENTIALITY. In handling any confidential information
each Bank shall exercise the same degree of care that it exercises with respect
to its own proprietary information of the same types to maintain the
confidentiality of any non-public information thereby received or received
pursuant to this Agreement except that disclosure of such information may be
made (i) to the subsidiaries or affiliates of such Bank in connection with their
present or prospective business relations with Borrower, (ii) to prospective
transferees or purchasers of any interest in the Loans, provided that they have
entered into a comparable confidentiality agreement in favor of Borrower and
have delivered a copy to Borrower, (iii) as required by law, regulations, rule
or order, subpoena, judicial order or similar order, (iv) as may be required in
connection with the examination, audit or similar investigation of Bank, and (v)
as may be appropriate in the exercise of any remedies hereunder. Confidential
information hereunder shall not include information that either: (a) is in the
public domain or in the knowledge or possession of Bank when disclosed to Bank,
or becomes part of the public domain after disclosure to Bank through no fault
of Bank; or (b) is disclosed to the Bank by a third party, provided the Bank
does not have actual knowledge that such third party is prohibited from
disclosing such information.
13.17 OPTIONAL CURRENCY RATE INSTRUMENTS. To the extent the terms
of any Optional Currency Rate Instrument differ from the terms of this Agreement
then the terms of such Optional Currency Rate Instrument shall govern the rights
and obligations of the parties thereto.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ADVANCED ENERGY INDUSTRIES, INC.
By:
---------------------------------------------
Title:
------------------------------------------
TOWER ELECTRONICS, INC.
By:
---------------------------------------------
Title:
------------------------------------------
SILICON VALLEY BANK
By:
---------------------------------------------
Title:
------------------------------------------
Maximum Commitment Amount: $13,562,499.99 (50%)
BANK OF HAWAII
By:
---------------------------------------------
Title:
------------------------------------------
Maximum Commitment Amount: $13,562,499.98 (50%)
27
