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TMCI ELECTRONICS, INC.
TOUCHE MANUFACTURING COMPANY, INC.,
TOUCHE ELECTRONICS, INC.,
ENTERPRISE INDUSTRIES, INC., and
TRINITY ELECTRONICS, INC.
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LOAN AND SECURITY AGREEMENT
Dated: March 2, 1998
$25,000,000.00
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FLEET CAPITAL CORPORATION
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(vi)
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY...................................................1
1.1 Revolving Credit Loans.................................................1
1.1.1 Loans and Reserves.................................................1
1.1.2 Use of Proceeds....................................................1
1.2 Term and Equipment Loans...............................................2
1.2.1 Term Loans-A.......................................................2
1.2.2 Term Loan-B........................................................2
1.2.3 Equipment Loans....................................................2
1.3 Letters of Credit; LC Guaranties.......................................2
SECTION 2. INTEREST, FEES AND CHARGES........................................2
2.1 Interest...............................................................2
2.1.1 Rates of Interest..................................................2
2.1.2 Default Rate of Interest...........................................3
2.1.3 Maximum Interest...................................................3
2.1.4 Adjustment to Interest Rate Margin.................................3
2.1.5 LIBOR Rate Loans...................................................3
2.2 Computation of Interest and Fees.......................................3
2.3 Commitment Fee.........................................................4
2.4 Letter of Credit and LC Guaranty Fees..................................4
2.5 Unused Line Fee........................................................4
2.6 Reimbursement of Expenses..............................................4
2.7 Bank Charges...........................................................5
SECTION 3. LOAN ADMINISTRATION...............................................5
3.1 Manner of Borrowing Revolving Credit Loans.............................5
3.1.1 Loan Requests......................................................5
3.1.2 Disbursement.......................................................6
3.1.3 Authorization......................................................6
3.2 Payments...............................................................6
3.2.1 Principal on Revolving Credit Loans................................6
3.2.2 Principal on Term Loans and Equipment Loans........................6
3.2.3 Interest...........................................................7
3.2.4 Costs, Fees and Charges............................................7
3.2.5 Other Obligations..................................................7
3.3 Mandatory Prepayments..................................................7
3.4 Application of Payments and Collections................................7
3.5 All Loans to Constitute One Obligation.................................7
3.6 Loan Accounts..........................................................8
3.7 Statements of Account..................................................8
3.8 Appointment of TMCI as Agent...........................................8
3.9 Funding Losses on LIBOR Loans..........................................8
3.10 Changes in Law and LIBOR Loans........................................9
SECTION 4. TERM AND TERMINATION..............................................9
4.1 Term of Agreement......................................................9
4.2 Termination............................................................9
4.2.1 Termination by Lender..............................................9
4.2.2 Termination by Borrower...........................................10
4.2.3 Termination Charges...............................................10
4.2.4 Effect of Termination.............................................10
SECTION 5. SECURITY INTERESTS...............................................10
5.1 Security Interest in Collateral.......................................11
5.2 Lien Perfection; Further Assurances...................................11
SECTION 6. COLLATERAL ADMINISTRATION........................................11
6.1 General...............................................................12
6.1.1 Location of Collateral............................................12
6.1.2 Insurance of Collateral...........................................12
6.1.3 Protection of Collateral..........................................12
6.2 Administration of Accounts............................................12
6.2.1 Records, Schedules and Assignments of Accounts....................12
6.2.2 Discounts, Allowances, Disputes...................................13
6.2.3 Taxes.............................................................13
6.2.4 Account Verification..............................................13
6.2.5 Maintenance of Dominion Account...................................13
6.2.6 Collection of Accounts, Proceeds of Collateral....................14
6.3 Administration of Inventory...........................................14
6.3.1 Records and Reports of Inventory..................................14
6.3.2 Returns of Inventory..............................................14
6.4 Administration of Equipment...........................................14
6.4 Administration of Equipment...........................................14
6.4.1 Records and Schedules of Equipment................................14
6.4.2 Dispositions of Equipment.........................................14
6.5 Payment of Charges....................................................15
SECTION 7. REPRESENTATIONS AND WARRANTIES...................................15
7.1 General Representations and Warranties................................15
7.1.1 Organization and Qualification....................................15
7.1.2 Corporate Power and Authority.....................................15
7.1.3 Legally Enforceable Agreement.....................................16
7.1.4 Capital Structure.................................................16
7.1.5 Corporate Names...................................................16
7.1.6 Business Locations; Agent for Process.............................16
7.1.7 Title to Properties; Priority of Liens............................16
7.1.8 Accounts..........................................................16
7.1.9 Equipment.........................................................17
7.1.10 Financial Statements; Fiscal Year................................18
7.1.11 Full Disclosure..................................................18
7.1.12 Solvent Financial Condition......................................18
7.1.13 Surety Obligations...............................................18
7.1.14 Taxes............................................................18
7.1.15 Brokers..........................................................19
7.1.16 Patents, Trademarks, Copyrights and Licenses.....................19
7.1.17 Governmental Consents............................................19
7.1.18 Compliance with Laws.............................................19
7.1.19 Restrictions.....................................................19
7.1.20 Litigation.......................................................19
7.1.21 No Defaults......................................................20
7.1.22 Leases...........................................................20
7.1.23 Pension Plans....................................................20
7.1.24 Trade Relations..................................................20
7.1.25 Labor Relations..................................................20
7.1.26 Environmental Matters............................................20
7.1.27 Interdependent Businesses and Operations.........................21
7.1.28 Acquisitions.....................................................21
7.2 Continuous Nature of Representations and Warranties...................21
7.3 Survival of Representations and Warranties............................21
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS..............................21
8.1 Affirmative Covenants.................................................21
8.1.1 Visits and Inspections............................................21
8.1.2 Notices...........................................................22
8.1.3 Financial Statements..............................................22
8.1.4 Landlord and Storage Agreements...................................23
8.1.5 Intentionally Deleted.............................................23
8.1.6 Projections.......................................................23
8.1.7 Compliance with Laws..............................................23
8.1.8 Payment of Taxes, Charges.........................................24
8.1.9 Business and Existence............................................25
8.1.10 Maintain Properties..............................................25
8.1.11 ERISA Compliance.................................................25
8.2 Negative Covenants....................................................25
8.2.1 Mergers; Consolidations; Acquisitions.............................25
8.2.2 Loans.............................................................26
8.2.3 Total Indebtedness................................................26
8.2.4 Affiliate Transactions............................................27
8.2.5 Limitation on Liens...............................................27
8.2.6 Subordinated Debt.................................................27
8.2.7 Distributions.....................................................27
8.2.8 Capital Expenditures..............................................28
8.2.9 Disposition of Assets.............................................28
8.2.10 Stock of Subsidiaries............................................28
8.2.11 Xxxx-and-Hold Sales, Etc.........................................28
8.2.12 Restricted Investment............................................28
8.2.13 Leases...........................................................28
8.2.14 Tax Consolidation................................................28
8.2.15 Fiscal Year......................................................28
8.3 Specific Financial Covenants..........................................28
8.3.2 Minimum Adjusted Tangible Net Worth...............................28
8.3.2 Cash Flow.........................................................29
SECTION 9. CONDITIONS PRECEDENT.............................................29
9.1 Conditions to Initial Loans and LC Guaranties.........................29
9.1.1 Documentation.....................................................29
9.1.2 Other Loan Documents..............................................29
9.1.3 Availability......................................................29
9.1.4 No Litigation.....................................................30
9.1.5 Acquisitions......................................................30
9.1.6 Landlord Waivers..................................................30
9.1.7 Lien Filings......................................................30
9.1.8 Insurance.........................................................30
9.1.9 Subordinated Debt.................................................30
9.1.10 Solvency.........................................................30
9.1.11 No Material Adverse Change.......................................30
9.1.12 Pen Electronics Litigation.......................................31
9.1.13 Inventory Testing/Analysis.......................................31
9.2 Conditions to All Loans and LC Guaranties.............................31
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT...............31
10.1 Events of Default....................................................31
10.1.1 Payment of Notes.................................................31
10.1.2 Payment of Other Obligations.....................................31
10.1.3 Misrepresentations...............................................31
10.1.4 Breach of Specific Covenants.....................................32
10.1.5 Breach of Other Covenants........................................32
10.1.6 Default Under Security Documents/Other Agreements /Purchase
Documents...............................................................32
10.1.7 Other Defaults...................................................32
10.1.8 Uninsured Losses.................................................32
10.1.9 Adverse Changes..................................................32
10.1.10 Insolvency and Related Proceedings..............................32
10.1.11 Business Disruption; Condemnation...............................32
10.1.12 Change of Ownership.............................................33
10.1.13 ERISA...........................................................33
10.1.14 Challenge to Agreement..........................................33
10.1.15 Intentionally Omitted...........................................33
10.1.16 Criminal Forfeiture.............................................33
10.1.17 Judgments.......................................................33
10.2 Acceleration of the Obligations......................................33
10.3 Other Remedies.......................................................34
10.4 Remedies Cumulative; No Waiver.......................................35
SECTION 11. MISCELLANEOUS...................................................35
11.1 Power of Attorney....................................................35
11.2 Indemnity............................................................36
11.3 Modification of Agreement; Sale of Interest..........................37
11.4 Severability.........................................................37
11.5 Successors and Assigns...............................................37
11.6 Cumulative Effect; Conflict of Terms.................................37
11.7 Execution in Counterparts............................................37
11.8 Notice...............................................................38
11.9 Intentionally Omitted................................................39
11.10 Joint and Several Liability.........................................39
11.11 Suretyship Waivers and Consents.....................................39
11.12 Contribution Agreement..............................................41
11.13 Credit Inquiries....................................................42
11.14 Time of Essence.....................................................42
11.15 Entire Agreement....................................................42
11.16 Interpretation......................................................43
11.17 Governing Law; Consent To Forum.....................................43
11.18 Waivers By Borrowers................................................44
11.19 Prejudgement Remedy Waiver; Commercial Transaction..................44
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 2nd day of March, 1998, by
and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at 000 Xxxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxx 00000 and
TMCI ELECTRONICS, INC., a Delaware corporation ("TMCI"), TOUCHE MANUFACTURING
COMPANY, INC., a California corporation ("Touche Manufacturing"), TOUCHE
ELECTRONICS, INC., a California corporation ("Touche Electronics"), ENTERPRISE
INDUSTRIES, INC., a California corporation ("Enterprise") and TRINITY
ELECTRONICS, INC., a California corporation ("Trinity") (TMCI, Touche
Manufacturing, Touche Electronics, Enterprise and Trinity are each referred to
as a "Borrower" and collectively as the "Borrowers") with their chief executive
office and principal place of business at 0000 Xxxxxx Xxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000. Capitalized terms used in this Agreement have the meanings
assigned to them in Appendix A, General Definitions. Accounting terms not
otherwise specifically defined herein shall be construed in accordance with GAAP
consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $25,000,000.00
available upon Borrowers' request therefor, as follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, for so long as no Default or
Event of Default exists, to make Revolving Credit Loans to Borrowers from time
to time, as requested by Borrowers in the manner set forth in subsection 3.1.1
hereof, up to a maximum principal amount at any time outstanding equal to the
Borrowing Base at such time minus the LC Amount and reserves, if any. Lender
shall have the right to establish reserves in such amounts, and with respect to
such matters, as Lender shall deem reasonably necessary or appropriate, against
the amount of Revolving Credit Loans which Borrowers may otherwise request under
this subsection 1.1.1, including, without limitation, with respect to (i) sums
chargeable against Borrowers' Loan Account as Revolving Credit Loans under any
section of this Agreement; (ii) amounts owing by any Borrower to any Person to
the extent secured by a Lien on, or trust over, any Property of any Borrower;
and (iii) such other matters, events, conditions or contingencies as to which
Lender, in its reasonable credit judgment, determines reserves should be
established from time to time hereunder.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely for
the satisfaction of existing Indebtedness of Borrowers to Manufacturers Bank,
and for Borrowers' general operating capital needs in a manner consistent with
the provisions of this Agreement and all applicable laws.
1.2 Term and Equipment Loans.
1.2.1 Term Loan-A. Lender agrees to make a term loan to Borrowers on the
Closing Date in the principal amount of $4,700,000.00, which shall be repayable
in accordance with the terms of the Term Note-A and shall be secured by all of
the Collateral. The proceeds of the Term Loan-A shall be used solely for
purposes for which the proceeds of the Revolving Credit Loans are authorized to
be used.
1.2.2 Term Loan-B. Lender agrees to make a second term loan to Borrowers
on the Closing Date in the principal amount of $2,000,000.00, which shall be
repayable in accordance with the terms of the Term Note-B and shall be secured
by all of the Collateral. The proceeds of the Term Loan-B shall be used solely
for the purposes for which the proceeds of Revolving Credit Loans are authorized
to be used.
1.2.3 Equipment Loans. Lender agrees, for so long as no Default or Event
of Default exists, to make Loans ("Equipment Loans") to Borrowers from time to
time, during the Original Term, to finance Borrowers' purchases of Equipment for
use in their businesses. Each Equipment Loan shall be in a principal amount
mutually agreed upon but not to exceed ninety percent (90%) of the Eligible
Equipment Cost, shall be secured by all of the Collateral and shall be evidenced
by and payable in accordance with the Equipment Note. The principal amount of
Equipment Loans hereunder shall not exceed, in the aggregate, $1,500,000.00
during any twelve consecutive months during the Original Term and shall not
exceed in the aggregate $4,000,000.00 during the Original Term.
1.3 Letters of Credit; LC Guaranties.
Lender agrees, for so long as no Default or Event of Default exists and if
requested by Borrowers, to (i) issue its, or cause to be issued by its
Affiliates, standby Letters of Credit for the account of Borrower or (ii)
execute LC Guaranties by which Lender or its Affiliate shall guaranty the
payment or performance by Borrower of its reimbursement obligations with respect
to standby Letters of Credit, provided that the LC Amount at any time shall not
exceed $2,000,000.00. No Letter of Credit or LC Guaranty may have an expiration
date that is after the last day of the Original Term or the then applicable
Renewal Term. Any amounts paid by Lender under any LC Guaranty or in connection
with any Letter of Credit shall be treated as Revolving Credit Loans, shall be
secured by all of the Collateral and shall bear interest and be payable at the
same rate and in the same manner as Revolving Credit Loans.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest. Interest shall accrue on the Term Loans and the
Equipment Loans in accordance with the terms of the respective Term Notes and
the Equipment Note. Interest shall accrue on the principal amount of the
Revolving Credit Loans outstanding at the end of each day at a fluctuating rate
per annum equal to .25% plus the Prime Rate. The rate of interest shall increase
or decrease by an amount equal to any increase or decrease in the Prime Rate,
effective as of the opening of business on the day that any such change in the
Prime Rate occurs.
2.1.2 Default Rate of Interest. Upon and after the occurrence of an Event
of Default, and during the continuation thereof, the principal amount of all
Loans shall bear interest at a rate per annum equal to 2.0% above the interest
rate otherwise applicable thereto (the "Default Rate").
2.1.3 Maximum Interest. In no event whatsoever shall the aggregate of all
amounts deemed interest hereunder or under the Term Notes or the Equipment Note
and charged or collected pursuant to the terms of this Agreement or pursuant to
the Term Notes or the Equipment Notes exceed the highest rate permissible under
any law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. If any provisions of this Agreement, the Term Notes or
the Equipment Note are in contravention of any such law, such provisions shall
be deemed amended to conform thereto.
2.1.4 Adjustment to Interest Rate Margin. The margin above the Prime Rate
with respect to the Revolving Credit Loans, Term Loans and Equipment Loans shall
be reduced by (a) .25%, the first day after the month following the receipt by
Lender of TMCI's audited financial statements from TMCI's fiscal year ending
December 31, 1998, prepared and delivered in accordance with subsection 8.1.3(i)
evidencing that the Cash Flow for TMCI for the fiscal year then ended, exceeded
$750,000.00 (the "First Adjustment Date"); and (b) with respect to the Term
Loans and Equipment Loans only, by an additional reduction of .25%, the first
day of the month following the receipt by Lender of TMCI's audited financial
statements for TMCI's fiscal quarter ending December 31, 1999, prepared and
delivered in accordance with subsection 8.1.3(i) evidencing that the Cash Flow
for TMCI for the fiscal year then ended exceeded $1,000,000.00 (the "Second
Adjustment Date").
2.1.5 LIBOR Rate Loans. Following the satisfaction of the conditions to
the First Adjustment Date, the Borrowers may elect, in accordance with the terms
of this Agreement, (a) with respect to Revolving Credit Loans, or portions
thereof, as provided herein, for such Loans to bear interest based upon the
LIBOR Rate, at a rate per annum equal to two and one-half percent (2.50%) plus
the LIBOR Rate for the applicable LIBOR Interest Period, (b) with respect to
Term Loan-A and the Equipment Loans or portions thereof, as provided herein, for
such Loans to bear interest based on the LIBOR Rate, at a rate per annum equal
to two and three-quarters percent (2.75%) plus the LIBOR Rate for the applicable
LIBOR Interest Period, and(c) with respect to Term Loan-B or portions thereof,
as provided herein, for such Loan to bear interest based upon the LIBOR Rate, at
a rate per annum equal to three and three-quarters percent (3.75%) plus the
LIBOR Rate for the applicable LIBOR Interest Period. Following the satisfaction
of the conditions to the Second Adjustment Date, the foregoing margins above the
LIBOR Rate will be reduced by one-quarter percent (.25%).
2.2 Computation of Interest and Fees.
Interest, Letter of Credit and LC Guaranty fees and unused line fees
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days. For the purpose of computing interest
hereunder, all items of payment received by Lender shall be deemed applied by
Lender on account of the Obligations (subject to final payment of such items)
one (1) Business Day after receipt by Lender of such items in Lender's account
located in Fleet National Bank, Boston, Massachusetts.
2.3 Commitment Fee.
Borrowers shall pay to Lender a commitment fee of $250,000.00, which shall
be paid concurrently with the initial Loan hereunder. Borrower has deposited
$100,000 with Lender which Lender shall account for and after written approval
thereof shall promptly remit balance after expenses to Borrower.
2.4 Letter of Credit and LC Guaranty Fees.
Borrower shall pay to Lender for standby Letters of Credit and LC
Guaranties of standby Letters of Credit, 1.75% per annum of the aggregate face
amount of such Letters of Credit and LC Guaranties outstanding from time to time
during the term of this Agreement, plus all normal and customary charges
associated with the issuance thereof, which fees and charges shall be deemed
fully earned upon issuance of each such Letter of Credit or LC Guaranty, shall
be due and payable on the first Business Day of each month and shall not be
subject to rebate or proration upon the termination of this Agreement for any
reason.
2.5 Unused Line Fee.
Borrower shall pay to Lender a fee equal to .25% per annum of the average
monthly amount by which the total Credit Facility exceeds the sum of the
outstanding principal balance of the Revolving Credit Loans, Term Loans, and
Equipment Loans plus the LC Amount. The unused line fee shall be payable monthly
in arrears on the first day of each calendar month hereafter.
2.6 Reimbursement of Expenses.
If, at any time or times regardless of whether or not an Event of Default
then exists, Lender incurs reasonable legal or accounting expenses or any other
costs or out-of-pocket expenses in connection with (i) the negotiation and
preparation of this Agreement or any of the other Loan Documents, any amendment
of or modification of this Agreement or any of the other Loan Documents; (ii)
the administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby; (iii) audits and appraisals of
Borrowers' books and records and of the Collateral; (iv) any litigation,
contest, dispute, suit, proceeding or action (whether instituted by Lender,
Borrowers or any other Person) in any way relating to the Collateral, this
Agreement or any of the other Loan Documents or Borrowers' affairs; (v) any
attempt to enforce any rights of Lender against any Borrower or any other Person
which may be obligated to Lender by virtue of this Agreement or any of the other
Loan Documents, including, without limitation, the Account Debtors; or (vi) any
attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate
or otherwise dispose of or realize upon the Collateral; then all such legal and
accounting expenses, other costs and out of pocket expenses of Lender shall be
charged to Borrowers. All amounts chargeable to Borrowers under this Section 2.6
shall be Obligations secured by all of the Collateral, shall be payable on
demand to Lender, and shall bear interest from the date such demand is made
until paid in full at the rate applicable to Revolving Credit Loans from time to
time. Borrowers shall also reimburse Lender for expenses incurred by Lender in
its administration of the Collateral to the extent and in the manner provided in
Section 6 hereof.
2.7 Bank Charges.
Borrowers shall pay to Lender, on demand, any and all fees, costs or
expenses which Lender pays to a bank or other similar institution (including,
without limitation, any fees paid by Lender) arising out of or in connection
with (i) the forwarding to any Borrower or any other Person on behalf of any
Borrower, by Lender, of proceeds of loans made by Lender to any Borrower
pursuant to this Agreement and (ii) the depositing for collection, by Lender, of
any check or item of payment received or delivered to Lender on account of the
Obligations.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans.
Borrowings under the credit facility established pursuant to Section 1
hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan bearing
interest with reference to the Prime Rate shall be made, or shall be deemed to
be made, in the following manner: (i) Borrowers may give Lender notice of their
intention to borrow, in which notice Borrowers shall specify the amount of the
proposed borrowing and the proposed borrowing date, no later than 2:30 p.m.,
Hartford, Connecticut time on the proposed borrowing date, provided, however,
that no such request may be made at a time when there exists a Default or an
Event of Default; and (ii) the becoming due of any amount required to be paid
under this Agreement or the Term Notes or the Equipment Note, whether as
interest or for any other Obligation, including, without limitation, at any time
that LIBOR Loans may be available hereunder, upon the maturity of any LIBOR Loan
at the end of the applicable LIBOR Internal Period, shall be deemed irrevocably
to be a request for a Revolving Credit Loan on the due date in the amount
required to pay such interest or other Obligation. As an accommodation to
Borrowers, Lender may permit telephonic requests for loans and electronic
transmittal of instructions, authorizations, agreements or reports to Lender by
Borrowers. Unless Borrowers specifically direct Lender in writing not to accept
or act upon telephonic or electronic communications from a Borrower, Lender
shall have no liability to any Borrower for any loss or damage suffered by any
Borrower as a result of Lender's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to Lender by a Borrower and Lender shall have no duty to verify the origin
of any such communication or the authority of the person sending it. At such
time as LIBOR Loans may be available to Borrowers hereunder, Borrowers may
convert any Loan or portion thereof bearing interest with reference to the Prime
Rate to a LIBOR Loan or request a LIBOR Loan by giving Lender not less than
three (3) Business Days prior irrevocable written notice thereof specifying the
amount of such LIBOR Loan, which shall not be less than $500,000 or an integral
multiple of $100,000 in excesses thereof, the date of the requested LIBOR Loan
(which shall be a Business Day) and the duration of the LIBOR Interest Period of
such LIBOR Loan, provided, however, that in no event shall the number of LIBOR
Loans outstanding at any time exceed five (5), and provided, further that no
such Loan request may be made at a time when there exists a Default or an Event
of Default
3.1.2 Disbursement. Borrowers hereby irrevocably authorize Lender to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this subsection 3.1.2 as follows: (i) the proceeds of
each Revolving Credit Loan requested under subsection 3.1.1(i) shall be
disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrowers, and in the
case of each subsequent borrowing, by wire transfer to such bank account as may
be agreed upon by Borrowers and Lender from time to time or elsewhere if
pursuant to a written direction from Borrowers; and (ii) the proceeds of each
Revolving Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by
Lender by way of direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrowers hereby irrevocably authorize Lender, in
Lender's sole discretion, to advance to Borrowers, and to charge to Borrowers'
Loan Account(s) hereunder as a Revolving Credit Loan, a sum sufficient to pay
all interest accrued on the Obligations during the immediately preceding month
and to pay all costs, fees and expenses at any time owed by Borrowers to Lender
hereunder.
3.2 Payments.
Except where evidenced by notes or other instruments issued or made by
Borrowers to Lender specifically containing payment provisions which are in
conflict with this Section 3.2 (in which event the conflicting provisions of
said notes or other instruments shall govern and control), the Obligation shall
be payable as follows:
3.2.1 Principal on Revolving Credit Loans. Principal payable on account of
Revolving Credit Loans shall be payable by Borrowers to Lender immediately upon
the earliest of (i) the receipt by Lender or Borrowers of any proceeds of any of
the Collateral (other than proceeds that under the terms of this Agreement are
specifically to be applied to the Term Loans or Equipment Loans), to the extent
of said proceeds, (ii) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations,
or (iii) termination of this Agreement pursuant to Section 4 hereof; provided,
however, that if an Overadvance shall exist at any time, Borrowers shall, on
demand, repay the Overadvance.
3.2.2 Principal on Term Loans and Equipment Loans. Principal payable on
the Term Loans and the Equipment Loans shall be payable in accordance with the
terms of the Notes applicable thereto and shall in any event be payable to
Lender immediately upon the earliest of (i) the occurrence of an Event of
Default in consequence of which Lender elects to accelerate the maturity and
payment of the Obligations or (ii) termination of this Agreement.
3.2.3 Interest. Interest accrued on the Loans shall be due on the earliest
of (i) the first calendar day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding month, (ii) the
occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of the Obligations or (iii) termination of
this Agreement pursuant to Section 4 hereof.
3.2.4 Costs, Fees and Charges. Costs, fees and charges payable pursuant to
this Agreement shall be payable by Borrowers as and when provided in Section 2
hereof, to Lender or to any other Person designated by Lender in writing.
3.2.5 Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrowers to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or
on demand, whichever is later.
3.3 Mandatory Prepayments.
Except as provided in subsection 6.4.2 hereof, if any Borrower sells any
of the Equipment or real Property, or if any of the Collateral is lost or
destroyed or taken by condemnation, Borrowers shall pay to Lender, unless
otherwise agreed by Lender, as and when received by Borrowers and as a mandatory
prepayment of the Term Loans or the Equipment Loans, in such order and to such
Loans, as determined by Lender, a sum equal to the proceeds (including insurance
payments) received by Borrowers from such sale, loss, destruction or
condemnation.
3.4 Application of Payments and Collections.
All items of payment received by Lender by 2:30 p.m., Hartford,
Connecticut time, on any Business Day shall be deemed received on that Business
Day. All items of payment received after 2:30 p.m., Hartford, Connecticut time,
on any Business Day shall be deemed received on the following Business Day.
Borrowers irrevocably waive the right to direct the application of any and all
payments and collections at any time or times hereafter received by Lender from
or on behalf of Borrowers, and Borrowers do hereby irrevocably agree that Lender
shall have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by Lender or
its agent against the Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records. If as the
result of collections of Accounts as authorized by subsection 6.2.6 hereof a
credit balance exists in the Loan Account, such credit balance shall not accrue
interest in favor of Borrowers, but shall be available to Borrowers at any time
or times for so long as no Default or Event of Default exists. Such credit
balance shall not be applied or be deemed to have been applied as a prepayment
of the Term Loan or any Equipment Loan, except that Lender may, at its option,
offset such credit balance against any of the Obligations upon and after the
occurrence of an Event of Default.
3.5 All Loans to Constitute One Obligation.
The Loans shall constitute one general Obligation of Borrowers, and shall
be secured by Lender's Lien upon all of the Collateral.
3.6 Loan Accounts.
Lender shall enter all Loans as debits to the Loan Account(s) and shall
also record in the Loan Account all payments made by Borrowers on any
Obligations and all proceeds of Collateral which are finally paid to Lender, and
may record therein, in accordance with customary accounting practice, other
debits and credits, including interest and all charges and expenses properly
chargeable to Borrowers.
3.7 Statements of Account.
Lender will account to Borrowers monthly with a statement of Loans,
charges and payments made pursuant to this Agreement, and such account rendered
by Lender shall be deemed final, binding and conclusive upon Borrowers unless
Lender is notified by Borrowers in writing to the contrary within 30 days of the
date each accounting is mailed to Borrowers. Such notice shall only be deemed an
objection to those items specifically objected to therein.
3.8 Appointment of TMCI as Agent.
Borrowers hereby irrevocably appoint and constitute TMCI as their agent to
request Revolving Credit Loans and to take all actions required or permitted
hereunder in the name of and on behalf of each and all the Borrowers. This
appointment shall include, without implied limitation, the designation of TMCI
as the agent of the Borrowers to furnish all notices to the Lender including,
without limitation, any notice under subsection 4.2.2, and to receive all
notices from the Lender including, without limitation, all statements of Loan
Account(s) under this Agreement and the other Loan Documents. This appointment
may not be terminated while this Agreement is in effect or the Obligations are
outstanding without the prior written consent of Lender. Loans may be made by
Lender to TMCI for the benefit of the Borrowers and shall be disbursed by TMCI
to the other Borrowers in accordance with the lending formulas under Section
1.1, and the value of the Eligible Accounts, Eligible Inventory and Equipment of
each Borrower and the advance rates applicable thereto as provided herein. At
any time Lender may, in its discretion, disburse Loans to the Borrowers directly
or as otherwise provided in this Agreement.
3.9 Funding Losses on LIBOR Loans.
In the event that any LIBOR Loan is repaid or terminated for any reason on
a date prior to the expiration of the LIBOR Interest Period with respect thereto
or Borrowers fail to borrow a LIBOR Loan when requested under Section 3.1.1,
then in addition to any other amounts which are due and payable under the terms
of this Agreement (including, but not limited to, Section 4.2.3 hereof)
Borrowers shall pay to Lender, upon Lender's demand therefor, such amount or
amounts as shall compensate Lender for any loss, cost or expense incurred by
Lender as a result of (i) any payment or prepayment (whether pursuant to Section
4.2 or otherwise) of a LIBOR Loan on a date other than the last day of the LIBOR
Interest period applicable to such LIBOR Loan, or (ii) any failure by Borrowers
to pay or prepay a LIBOR Loan on the date specified in the relevant notice of
prepayment delivered by Borrowers, or (iii) any failure by Borrowers to borrow a
LIBOR Loan on the date specified in the applicable notice delivered pursuant to
Section 3.1.1. Such compensation shall include, without limitation, an amount
equal to the excess, if any, of (x) the amount of interest which would have
accrued on the amount so paid or prepaid or not prepaid or borrowed for the
period from the date of such payment, prepayment or failure to prepay or borrow
to the last day of the applicable LIBOR Interest Period for such LIBOR Loan (or,
in the case of a failure to prepay or borrow, the LIBOR Interest Period for such
LIBOR Loan which would have commenced on the date of such failure to prepay or
borrow) at the applicable rate of interest for such LIBOR Loan, over (y) the
amount of interest (as reasonably determined by Lender) that Lender would have
been paid on deposits in the United States dollars of comparable amounts for a
comparable period of time by leading banks in the London Interbank Market. A
certificate as to the amounts due from Borrowers to Lender shall be conclusive,
absent manifest error.
3.10 Changes in Law and LIBOR Loans.
Notwithstanding any other provision hereof, if any applicable law, treaty,
regulation or directive, or any change therein or in the interpretation or
application thereof, shall make it unlawful for Lender to make or maintain its
LIBOR Loans, or if with respect to any LIBOR Rate relating thereto, or adverse
or unusual conditions in the applicable London Interbank Market or changes in
applicable law relating thereto make it, in the reasonable good faith judgment
of Lender, impracticable to fund LIBOR Loans or make the projected LIBOR Rate
unreflective of the actual costs of funds therefor to Lender, the obligation of
Lender to make LIBOR Loans hereunder shall forthwith be canceled and the
Borrowers shall, if any affected LIBOR Loans are then outstanding promptly upon
request of Lender, either pay all such affected LIBOR Loans or convert such
affected LIBOR Loans into Prime Rate Loans. If any such payment or conversion of
any LIBOR Loan is made on a day that is not the last day of the applicable LIBOR
Interest Period, Borrowers shall pay Lender, upon Lender's request, such amount
or amounts as may be required pursuant to Section 3.9 hereof.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement.
Subject to Lender's right to cease making Loans to Borrowers upon or after
the occurrence of any Default or Event of Default, this Agreement shall be in
effect for a period of five years from the date hereof, through and including
March 2, 2003 (the "Original Term"), and this Agreement shall automatically
renew itself for one-year periods thereafter (the "Renewal Terms"), unless
terminated as provided in Section 4.2 hereof.
4.2 Termination.
4.2.1 Termination by Lender. Upon at least 90 days prior written notice to
Borrowers, Lender may terminate this Agreement as of the last day of the
Original Term or the then current Renewal Term and Lender may terminate this
Agreement without notice upon or after the occurrence of an Event of Default.
4.2.2 Termination by Borrower. Upon at least 90 days prior written notice
to Lender, Borrowers may, at their option, terminate this Agreement; provided,
however, no such termination shall be effective until Borrowers have paid all of
the Obligations in immediately available funds and all Letters of Credit and LC
Guaranties have expired or have been cash collateralized to Lender's
satisfaction. Any notice of termination given by Borrowers shall be irrevocable
unless Lender otherwise agrees in writing, and Lender shall have no obligation
to make any Loans or issue or procure any Letters of Credit or LC Guaranties on
or after the termination date stated in such notice. Borrowers may elect to
terminate this Agreement in its entirety only. No section of this Agreement or
type of Loan or credit facility available hereunder may be terminated singly.
4.2.3 Termination Charges. At the effective date of termination of this
Agreement for any reason, Borrowers shall pay to Lender (in addition to the then
outstanding principal, accrued interest and other charges owing under the terms
of this Agreement and any of the other Loan Documents) as liquidated damages for
the loss of the bargain and not as a penalty as a result of the agreement by
Lender to defer payment of fees that would otherwise be charged at the inception
of this Agreement, an amount equal to 2% of the Average Loan Balance if
termination occurs during the first twelve-month period of the Original Term
(March 2, 1998 through March 1, 1999); 1% of the Average Loan Balance if
termination occurs during the second 12-month period of the Original Term (March
2, 1999) through March 1, 2000); 1% of the Average Loan Balance if termination
occurs during the third 12 month period of the Original Term (March 2, 2000
through March 1, 2001). If termination occurs on or after March 2, 2001, no
termination charge shall be payable.
4.2.4 Effect of Termination. All of the Obligations shall be immediately
due and payable upon the termination date stated in any notice of termination of
this Agreement. All undertakings, agreements, covenants, warranties and
representations of Borrowers contained in the Loan Documents shall survive any
such termination and Lender shall retain its Liens in the Collateral and all of
its rights and remedies under the Loan Documents notwithstanding such
termination until Borrowers have paid the Obligations to Lender, in full, in
immediately available funds, together with the applicable termination charge, if
any. Notwithstanding the payment in full of the Obligations, Lender shall not be
required to terminate its security interests in the Collateral unless, with
respect to any loss or damage Lender may incur as a result of dishonored checks
or other items of payment received by Lender from Borrowers or any Account
Debtor and applied to the Obligations, Lender shall, at its option, (i) have
received a written agreement, executed by Borrowers and by any Person whose
loans or other advances to Borrowers are used in whole or in part to satisfy the
Obligations, indemnifying Lender from any such loss or damage; or (ii) have
retained such monetary reserves and Liens on such monetary reserves for such
period of time as Lender, in its reasonable discretion, may deem necessary to
protect Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral.
To secure the prompt payment and performance to such Lender of the
Obligations, each Borrower hereby grants to Lender a continuing Lien upon all of
such Borrower's assets, including all of the following Property and interests in
Property of such Borrower, whether now owned or existing or hereafter created,
acquired or arising and wheresoever located:
(i) Accounts;
(ii) Inventory;
(iii) Equipment;
(iv) General Intangibles;
(v) Investment Property;
(vi) All monies and other Property of any kind now or at any time or
times hereafter in the possession or under the control of Lender or a
bailee or Affiliate of Lender;
(vii) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (vi) above,
including, without limitation, proceeds of and unearned premiums with
respect to insurance policies insuring any of the Collateral; and
(viii) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other
computer materials and records) of Borrower pertaining to any of (i)
through (vii) above.
5.2 Lien Perfection; Further Assurances.
Borrowers shall execute such UCC-1 financing statements as are required by
the Code and such other instruments, assignments or documents as are necessary
to perfect Lender's Lien upon any of the Collateral and shall take such other
action as may be required to perfect or to continue the perfection of Lender's
Lien upon the Collateral. Unless prohibited by applicable law, each Borrower
hereby authorizes Lender to execute and file any such financing statement on
such Borrower's behalf. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof. At Lender's request,
Borrowers shall also promptly execute or cause to be executed and shall deliver
to Lender any and all documents, instruments and agreements deemed necessary by
Lender to give effect to or carry out the terms or intent of the Loan Documents.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General.
6.1.1 Location of Collateral. All Collateral, other than Inventory in
transit and motor vehicles, will at all times be kept by Borrowers and their
Subsidiaries at one or more of the business locations set forth in Exhibit B
hereto and shall not, without the prior written approval of Lender, be moved
therefrom except, prior to an Event of Default and Lender's acceleration of the
maturity of the Obligations in consequence thereof, for (i) sales of Inventory
in the ordinary course of business; and (ii) removals in connection with
dispositions of Equipment that are authorized by subsection 6.4.2 hereof.
6.1.2 Insurance of Collateral. Borrowers shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrowers'
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrowers shall deliver the originals of such policies to Lender with
satisfactory lender's loss payable endorsements, naming Lender as sole loss
payee, assignee or additional insured, as appropriate. Each policy of insurance
or endorsement shall contain a clause requiring the insurer to give not less
than 30 days prior written notice to Lender in the event of cancellation of the
policy for any reason whatsoever and a clause specifying that the interest of
Lender shall not be impaired or invalidated by any act or neglect of any
Borrower or the owner of the Property or by the occupation of the premises for
purposes more hazardous than are permitted by said policy. If Borrowers fail to
provide and pay for such insurance, Lender may, at its option, but shall not be
required to, procure the same and charge Borrowers therefor. Borrowers agree to
deliver to Lender, promptly as rendered, true copies of all reports made in any
reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral or in respect of the sale thereof shall
be borne and paid by Borrowers. If Borrowers fail to promptly pay any portion
thereof when due, Lender may, at its option, but shall not be required to, pay
the same and charge Borrowers therefor. Lender shall not be liable or
responsible in any way for the safekeeping of any of the Collateral or for any
loss or damage thereto (except for reasonable care in the custody thereof while
any Collateral is in Lender's actual possession) or for any diminution in the
value thereof, or for any act or default of any warehouseman, carrier,
forwarding agency, or other person whomsoever, but the same shall be at
Borrowers' sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts. Borrowers shall keep
accurate and complete records of their Accounts and all payments and collections
thereon and shall submit to Lender on such periodic basis as Lender shall
request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the fifteenth day of each month from and
after the date hereof, Borrowers shall deliver to Lender, in form acceptable to
Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Lender's request therefor, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of $25,000 become
ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible Accounts or otherwise
established by Lender, Borrowers shall notify Lender of such occurrence on the
first Business Day following such occurrence and the Borrowing Base shall
thereupon be adjusted to reflect such occurrence. If requested by Lender,
Borrowers shall execute and deliver to Lender formal written assignments of all
of their Accounts weekly or daily, which shall include all Accounts that have
been created since the date of the last assignment, together with copies of
invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrowers grant any discounts,
allowances or credits that are not shown on the face of the invoice for the
Account involved, Borrowers shall report such discounts, allowances or credits,
as the case may be, to Lender as part of the next required Schedule of Accounts.
If any amounts due and owing in excess of $25,000 are in dispute between any
Borrower and any Account Debtor, Borrowers shall provide Lender with written
notice thereof at the time of submission of the next Schedule of Accounts,
explaining in detail the reason for the dispute, all claims related thereto and
the amount in controversy. Upon and after the occurrence of an Event of Default,
Lender shall have the right to settle or adjust all disputes and claims directly
with the Account Debtor and to compromise the amount or extend the time for
payment of the Accounts upon such terms and conditions as Lender may deem
advisable, and to charge the deficiencies, costs and expenses thereof, including
attorney's fees, to Borrowers.
6.2.3 Taxes. If an Account includes a charge for any tax payable to any
governmental taxing authority, Lender is authorized, in its sole discretion, to
pay the amount thereof to the proper taxing authority for the account of
Borrowers and to charge Borrowers therefor, provided, however that Lender shall
not be liable for any taxes to any governmental taxing authority that may be due
by Borrowers.
6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or any Borrower, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or otherwise. Borrowers
shall cooperate fully with Lender in an effort to facilitate and promptly
conclude any such verification process.
6.2.5 Maintenance of Dominion Account. Borrowers shall maintain Dominion
Accounts pursuant to lockbox arrangements acceptable to Lender with such banks
as may be selected by Borrowers and be acceptable to Lender. Borrowers shall
issue to any such banks an irrevocable letter of instruction directing such
banks to deposit all payments or other remittances received in the lockbox to
the Dominion Account(s) for application on account of the Obligations. All funds
deposited in any Dominion Account shall immediately become the property of
Lender and Borrowers shall obtain the agreement by such banks in favor of Lender
to waive any offset rights against the funds so deposited. Lender assumes no
responsibility for such lockbox arrangements, including, without limitation, any
claim of accord and satisfaction or release with respect to deposits accepted by
any bank thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrowers shall endeavor in the first instance to make collection of
their Accounts for Lender. All remittances received by Borrowers on account of
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrowers as trustee of an express trust for Lender's
benefit and Borrowers shall immediately deposit same in kind in the Dominion
Account(s). Lender retains the right at all times after the occurrence of a
Default or an Event of Default to notify Account Debtors that Accounts have been
assigned to Lender and to collect Accounts directly in its own name and to
charge the collection costs and expenses, including reasonable attorneys' fees
to Borrowers.
6.3 Administration of Inventory.
6.3.1 Records and Reports of Inventory. Borrowers shall keep accurate and
complete records of their inventory. Borrowers shall furnish to Lender Inventory
reports in form and detail satisfactory to Lender at such times as Lender may
request, but at least once each month, not later than the twentieth day of such
month. Borrowers shall conduct a physical inventory no less frequently than
annually and shall provide to Lender a report based on each such physical
inventory promptly thereafter, together with such supporting information as
Lender shall request.
6.3.2 Returns of Inventory. If at any time or times hereafter any Account
Debtor returns any Inventory to a Borrower the shipment of which generated an
Account on which such Account Debtor is obligated in excess of $25,000 Borrowers
shall immediately notify Lender of the same, specifying the reason for such
return and the location, condition and intended disposition of the returned
Inventory.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrowers shall keep accurate
records itemizing and describing the kind, type, quality, quantity and value of
their Equipment and all dispositions made in accordance with subsection 6.6.2
hereof, and shall furnish Lender with a current schedule containing the
foregoing information on at least an annual basis and more often if requested by
Lender. Immediately on request therefor by Lender, Borrowers shall deliver to
Lender any and all evidence of ownership, if any, of any of the Equipment.
6.4.2 Dispositions of Equipment. Borrowers will not sell, lease or
otherwise dispose of or transfer any of the Equipment or any part thereof
without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $100,000 or less, provided that all proceeds thereof are
remitted to Lender for application to the Loans, or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with Equipment of like
kind, function and value, provided that the replacement Equipment shall be
acquired prior to or concurrently with any disposition of the Equipment that is
to be replaced, the replacement Equipment shall be free and clear of Liens other
than Permitted Liens that are not Purchase Money Liens, and Borrowers shall have
given Lender at least 5 Business Days prior written notice of such disposition.
6.5 Payment of Charges.
All amounts chargeable to Borrowers under Section 6 hereof shall be
Obligations secured by all of the Collateral, shall be payable on demand and
shall bear interest from the date such advance was made until paid in full at
the rate applicable to Revolving Credit Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties.
To induce Lender to enter into this Agreement and to make advances
hereunder, each Borrower warrants, represents and covenants to Lender that:
7.1.1 Organization and Qualification. Each Borrower and its Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Each Borrower and its
Subsidiaries is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in each state or jurisdiction listed on
Exhibit C hereto and in all other states and jurisdictions in which the failure
of a Borrower or any of its Subsidiaries to be so qualified would have a
material adverse effect on the financial condition, business or Properties of
such Borrower or any of its Subsidiaries.
7.1.2 Corporate Power and Authority. Each Borrower and its Subsidiaries is
duly authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Loan Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other Loan
Documents have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the shareholders of any
Borrower or any of their Subsidiaries; (ii) contravene any Borrower's or any of
their Subsidiaries' charter, articles or certificate of incorporation or
by-laws; (iii) violate, or cause any Borrower or any of their Subsidiaries to be
in default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to any Borrower or any of their Subsidiaries; (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which any Borrower or
any of their Subsidiaries is a party or by which any Borrower or any of their
Subsidiaries or their Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
any Borrower or any of their Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of the
other Loan Documents when delivered under this Agreement will be, a legal, valid
and binding obligation of each Borrower and their Subsidiaries enforceable
against each of them in accordance with its respective terms.
7.1.4 Capital Structure. Exhibit D hereto states (i) the correct name of
each of the Subsidiaries of each Borrower, their jurisdictions of incorporation
and the percentage of Voting Stock owned by Borrowers, (ii) the name of each
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number, nature and holder of five percent (5%) or more of
any class, series or type of outstanding Securities of each Borrower and each
Subsidiary of any Borrower and (iv) the number of authorized, issued and
treasury shares of each Borrower and each Subsidiary of any Borrower. Each
Borrower has good title to all of the shares it purports to own of the stock of
each of its Subsidiaries, free and clear in each case of any Lien other than
Permitted Liens. All such shares have been duly issued and are fully paid and
non-assessable. There are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any commitments or agreements to issue or sell, or
any Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of any Borrower or any of its
Subsidiaries. There are no outstanding agreements or instruments binding upon
any Borrower's shareholders relating to the ownership of its shares of capital
stock, except as disclosed in Exhibit R hereto.
7.1.5 Corporate Names. No Borrower nor any of its Subsidiaries has been
known as or used any corporate, fictitious or trade names except those listed on
Exhibit E hereto. Except as set forth on Exhibit E, no Borrower nor any of its
Subsidiaries has been the surviving corporation of a merger or consolidation or
acquired all or substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Each Borrower's and its
Subsidiaries' chief executive office and other places of business are as listed
on Exhibit B hereto. During the preceding one-year period, no Borrower nor any
of its Subsidiaries has had an office, place of business or agent for service of
process other than as listed on Exhibit B. Except as shown on Exhibit B, no
inventory is stored with a bailee, warehouseman or similar party, nor is any
Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens. Each Borrower and its
Subsidiaries has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of the Collateral and all of its other Property,
in each case, free and clear of all Liens except Permitted Liens. Each Borrower
has paid or discharged all lawful claims which, if unpaid, might become a Lien
against any Borrower's Properties that is not a Permitted Lien. The Liens
granted to Lender under Section 5 hereof are first priority Liens, subject only
to Permitted Liens.
7.1.8 Accounts. Lender may rely, in determining which Accounts are
Eligible Accounts, on all statements and representations made by Borrowers with
respect to any Account or Accounts. Unless otherwise indicated in writing to
Lender, with respect to each Account:
(i) It is genuine and in all respects what it purports to
be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery of
goods or rendition of services by a Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase
orders, contracts or other documents relating thereto and forming a part
of the contract between such Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy of
which has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest therein, is not,
and will not (by voluntary act or omission of a Borrower) be in the
future, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except for disputes resulting
in returned goods where the amount in controversy is deemed by Lender to
be immaterial, and each such Account is absolutely owing to a Borrower and
is not contingent in any respect or for any reason;
(v) No Borrower has made an agreement with any Account Debtor
thereunder for any extension, compromise, settlement or modification of
any such Account or any deduction therefrom, except discounts or
allowances which are granted by Borrowers in the ordinary course of their
businesses for prompt payment and which are reflected in the calculation
of the net amount of each respective invoice related thereto and are
reflected in the Schedules of Accounts submitted to Lender pursuant to
subsection 6.2.1 hereof;
(vi) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to reduce
the amount payable thereunder from the face amount of the invoice and
statements delivered to Lender with respect thereto;
(vii) To the best of Borrowers' knowledge, the Account Debtor
thereunder (1) had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (2) such
Account Debtor is Solvent; and
(viii) To the best of Borrowers' knowledge, there are no proceedings
or actions which are threatened or pending against any Account Debtor
thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such
Account.
7.1.9 Equipment. The Equipment is in good operating condition and repair,
and all necessary replacements of and repairs thereto shall be made so that the
value and operating efficiency of the Equipment shall be maintained and
preserved, reasonable wear and tear excepted. Borrowers will not permit any of
the Equipment to become affixed to any real Property leased to any Borrower so
that an interest arises therein under the real estate laws of the applicable
jurisdiction unless the landlord of such real Property has executed a landlord
waiver or leasehold mortgage in favor of and in form acceptable to Lender, and
Borrowers will not permit any of the Equipment to become an accession to any
personal Property other than Equipment that is subject to first priority (except
for Permitted Liens) Liens in favor of Lender.
7.1.10 Financial Statements; Fiscal Year. The Consolidated and
consolidating balance sheets of TMCI and such other Persons described therein
(including the accounts of all Subsidiaries of TMCI for the respective periods
during which a Subsidiary relationship existed) as of September 30, 1997, and
the related statements of income, changes in stockholder's equity, and changes
in financial position for the periods ended on such dates, have been prepared in
accordance with GAAP, and present fairly the financial positions of TMCI and
such persons at such dates and the results of TMCI's and its Subsidiaries'
operations for such periods. Since September 30, 1997, there has been no
material change in the condition, financial or otherwise, of TMCI and such other
Persons as shown on the Consolidated balance sheet as of such date and no change
in the aggregate value of Equipment and real Property owned by Borrowers, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse. The fiscal year of TMCI and each of its
Subsidiaries ends on December 31st of each year.
7.1.11 Full Disclosure. The financial statements referred to in subsection
7.1.10 hereof do not, nor does this Agreement or any other written statement of
Borrowers to Lender, contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein not
misleading. There is no fact which Borrowers have failed to disclose to Lender
in writing which materially affects adversely or, so far as any Borrower can now
foresee, will materially affect adversely the Properties, business, prospects,
profits or condition (financial or otherwise) of any Borrower or any of their
Subsidiaries or the ability of any Borrower or their Subsidiaries to perform
this Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. Each Borrower and its Subsidiaries is
now and, after giving effect to the Loans to be made and the Letters of Credit
and LC Guaranties to be issued hereunder, at all times will be, Solvent.
7.1.13 Surety Obligations. No Borrower nor any of their Subsidiaries is
obligated as surety or indemnitor under any surety or similar bond or other
contract issued or entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of any Person.
7.1.14 Taxes. Each Borrower's federal tax identification number is shown
on Exhibit F. The federal tax identification number of each Borrower's
Subsidiaries is shown on Exhibit F hereto. Each Borrower and each of its
Subsidiaries has filed all federal, state and local tax returns and other
reports it is required by law to file and has paid, or made provision for the
payment of, all taxes, assessments, fees, levies and other governmental charges
upon it, its income and Properties as and when such taxes, assessments, fees,
levies and charges that are due and payable, unless and to the extent any
thereof are being actively contested in good faith and by appropriate
proceedings and Borrowers maintains reasonable reserves on their books therefor.
The provision for taxes on the books of Borrowers and their Subsidiaries are
adequate for all years not closed by applicable statutes, and for its current
fiscal year.
7.1.15 Brokers. There are no claims for brokerage commissions, finder's
fees or investment banking fees in connection with the transactions contemplated
by this Agreement except as disclosed on Exhibit Q hereto.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each Borrower and its
Subsidiaries owns or possesses all the patents, trademarks, service marks, trade
names, copyrights and licenses necessary for the present and planned future
conduct of its business without any known conflict with the rights of others.
All such patents, trademarks, service marks, tradenames, copyrights, licenses
and other similar rights are listed on Exhibit G hereto.
7.1.17 Governmental Consents. Each Borrower and its Subsidiaries has, and
is in good standing with respect to, all governmental consents, approvals,
licenses, authorizations, permits, certificates, inspections and franchises
necessary to continue to conduct its business as heretofore or proposed to be
conducted by it and to own or lease and operate its Properties as now owned or
leased by it.
7.1.18 Compliance with Laws. Each Borrower and its Subsidiaries has duly
complied with, and its Properties, business operations and leaseholds are in
compliance in all material respects with, the provisions of all federal, state
and local laws, rules and regulations applicable to any Borrower or their such
Subsidiary, as applicable, its Properties or the conduct of its business and
there have been no citations, notices or orders of noncompliance issued to any
Borrower or any of their Subsidiaries under any such law, rule or regulation.
Each Borrower and its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in compliance with all federal,
state and local laws, rules and regulations applicable to it. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. ss. 201 et
seq.), as amended.
7.1.19 Restrictions. No Borrower nor any of its Subsidiaries is a party or
subject to any contract, agreement, or charter or other corporate restriction,
which materially and adversely affects its business or the use or ownership of
any of its Properties. No Borrower nor any of its Subsidiaries is a party or
subject to any contract or agreement which restricts its right or ability to
incur Indebtedness, other than as set forth on Exhibit H hereto, none of which
prohibit the execution of or compliance with this Agreement or the other Loan
Documents by any Borrower or any of their Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit I hereto, there are no
actions, suits, proceedings or investigations pending, or to the knowledge of
any Borrower, threatened, against or affecting any Borrower or any of their
Subsidiaries, or the business, operations, Properties, prospects, profits or
condition of any Borrower or any of their Subsidiaries. No Borrower nor any of
their Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition exists which
would, upon or after the execution and delivery of this Agreement or Borrowers'
performance hereunder, constitute a Default or an Event of Default. No Borrower
nor any of their Subsidiaries is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage of time or the
giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed.
7.1.22 Leases. Exhibit J hereto is a complete listing of all capitalized
leases of Borrowers and their Subsidiaries and Exhibit K hereto is a complete
listing of all operating leases of Borrowers and their Subsidiaries. Each
Borrower and its Subsidiaries is in full compliance with all of the terms of
each of its respective capitalized and operating leases.
7.1.23 Pension Plans. Except as disclosed on Exhibit L hereto, no Borrower
nor any of their Subsidiaries has any Plan. Each Borrower and each of their
Subsidiaries is in full compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of any Borrower or any of their Subsidiaries exists in connection with
any Plan. No Borrower nor any of their Subsidiaries has any withdrawal liability
in connection with a Multi-employer Plan.
7.1.24 Trade Relations. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between any Borrower or any of its Subsidiaries and any customer or
any group of customers whose purchases individually or in the aggregate are
material to the business of Borrowers or any of their Subsidiaries, or with any
material supplier, and there exists no present condition or state of facts or
circumstances which would materially affect adversely any Borrower or any of its
Subsidiaries or prevent any Borrower or any of its Subsidiaries from conducting
such business after the consummation of the transaction contemplated by this
Agreement in substantially the same manner in which it has heretofore been
conducted.
7.1.25 Labor Relations. Except as described on Exhibit M hereto, no
Borrower nor any of its Subsidiaries is a party to any collective bargaining
agreement. There are no material grievances, disputes or controversies with any
union or any other organization of any Borrower's or any of its Subsidiaries'
employees, or threats of strikes, work stoppages or any asserted pending demands
for collective bargaining by any union or organization.
7.1.26 Environmental Matters. Each Borrower and their respective
Subsidiaries has obtained and is in compliance with all permits, licenses and
other authorizations required under all Environmental Laws to carry on its
business as now being conducted, except to the extent failure to have any such
permit, license or authorization would not reasonably be expected (either
individually or in the aggregate) to have a material adverse effect on the
Borrowers and their Subsidiaries. Each Borrower and their respective
Subsidiaries is also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder, except to the extent any such
non-compliance would not reasonably be expected (either individually or in the
aggregate) to have a material adverse effect on the Borrowers or their
Subsidiaries.
7.1.27 Interdependent Businesses and Operations. Each of the Borrowers
acknowledges and agrees that it acts interdependently with the other Borrowers
as part of an integrated group of businesses, relies upon the other Borrowers in
its operations and business and will derive direct and indirect economic
benefits from the Loans, Letters of Credit and LC Guaranties to be made and
issued hereunder by Lender. The consolidation of the borrowings by Borrowers
under this Agreement will utilize the combined financial capabilities of the
Borrowers in the most efficient and economical manner and enhances the aggregate
borrowing power of the Borrowers to the mutual benefit and advantage of the
Borrowers.
7.1.28 Acquisitions. No default has occurred under any of the
Purchase Documents.
7.2 Continuous Nature of Representations and Warranties.
Each representation and warranty contained in this Agreement and the other
Loan Documents shall be continuous in nature and shall remain accurate, complete
and not misleading at all times during the term of this Agreement, except for
changes in the nature of any Borrower's or its Subsidiaries' business or
operations that would render the information in any exhibit attached hereto
either inaccurate, incomplete or misleading, so long as Lender has consented to
such changes or such changes are expressly permitted by this Agreement.
7.3 Survival of Representations and Warranties.
All representations and warranties of Borrowers contained in this
Agreement or any of the other Loan Documents shall survive the execution,
delivery and acceptance thereof by Lender and the parties thereto and the
closing of the transactions described therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants.
During the term of this Agreement, and thereafter for so long as there are
any Obligations to Lender, each Borrower covenants that, unless otherwise
consented to by Lender in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of Lender, from time
to time, as often as may be reasonably requested, but only during normal
business hours, to visit and inspect the Properties of Borrowers and each of
their Subsidiaries, inspect, audit and make extracts from its books and records,
and discuss with its officers, its employees and its independent accountants,
Borrowers' and each of their Subsidiaries' business, assets, liabilities,
financial condition, business prospects and results of operations.
8.1.2 Notices. Promptly notify Lender in writing of the occurrence of any
event or the existence of any fact which renders any representation or warranty
in this Agreement or any of the other Loan Documents inaccurate, incomplete or
misleading. Notify Lender ten (10) days in advance of Borrowers' non-compliance
with Section 8.1.12 or Section 8.1.13.
8.1.3 Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with GAAP reflecting all its
financial transactions; and cause to be prepared and furnished to Lender the
following (all to be prepared in accordance with GAAP applied on a consistent
basis, unless Borrowers' certified public accountants concur in any change
therein and such change is disclosed to Lender and is consistent with GAAP):
(i) not later than 90 days after the close of each fiscal year of
TMCI, unqualified audited financial statements of TMCI and its
Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by TMCI but acceptable to
Lender (except for a qualification for a change in accounting principles
with which the accountant concurs);
(ii) not later than 45 days after the end of each fiscal quarter
hereafter, including the last fiscal quarter of TMCI's fiscal year,
unaudited interim financial statements of TMCI and its Subsidiaries as of
the end of such quarter and of the portion of TMCI's financial year then
elapsed, on a consolidated and consolidating basis, certified by the
principal financial officer of TMCI as prepared in accordance with GAAP
and fairly presenting the consolidated financial position and results of
operations of TMCI and its Subsidiaries for such quarter and period
subject only to changes from audit and year-end adjustments and except
that such statements need not contain notes;
(iii) not later than 30 days after the end of each month hereafter,
including the last month of TMCI's fiscal year, unaudited interim
financial statements of TMCI and its Subsidiaries as of the end of such
month and of the portion of TMCI's financial year then elapsed, on a
Consolidated and consolidating basis, certified by the principal financial
officer of TMCI as prepared in accordance with GAAP and fairly presenting
the Consolidated financial position and results of operations of TMCI and
its Subsidiaries for such month and period subject only to changes from
audit and year-end adjustments and except that such statements need not
contain notes;
(iv) promptly after the sending or filing thereof, as the case may
be, copies of any proxy statements, financial statements or reports which
TMCI has made available to its shareholders and copies of any regular,
periodic and special reports or registration statements which TMCI files
with the Securities and Exchange Commission or any governmental authority
which may be substituted therefor, or any national securities exchange;
(v) promptly after the filing thereof, copies of any annual report
to be filed in compliance with ERISA in connection with each Plan; and
(vi) such other data and information (financial and otherwise) as
Lender, from time to time, may reasonably request, bearing upon or related
to the Collateral or Borrowers' and each of their Subsidiaries' financial
condition or results of operations.
Concurrently with the delivery of the financial statements described in
clause (i) of this subsection 8.1.3, Borrowers shall forward to Lender a copy of
the accountants' letter to Borrowers' management that is prepared in connection
with such financial statements and also shall cause to be prepared and shall
furnish to Lender a certificate of the aforesaid certified public accountants
certifying to Lender that, based upon their examination of the financial
statements of TMCI and its Subsidiaries performed in connection with their
examination of said financial statements, they are not aware of any Default or
Event of Default, or, if they are aware of such Default or Event of Default,
specifying the nature thereof, and acknowledging, in a manner satisfactory to
Lender, that they are aware that Lender is relying on such financial statements
in making its decisions with respect to the Loans. Concurrently with the
delivery of the financial statements described in clauses (i), (ii) and (iii) of
this subsection 8.1.3, or more frequently if requested by Lender, Borrowers
shall cause to be prepared and furnished to Lender a Compliance Certificate in
the form of Exhibit N hereto executed by the Chief Financial Officer of
Borrower.
8.1.4 Landlord and Storage Agreements. Provide Lender with copies of all
agreements between any Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.
8.1.5 Intentionally Deleted.
8.1.6 Projections. No later than 30 days prior to the end of each fiscal
year of Borrowers, deliver to Lender Projections of Borrowers for the
forthcoming fiscal year, month by month.
8.1.7 Compliance with Laws. Borrowers shall, at all times, comply in all
material respects with all laws, rules, regulations, licenses, permits,
approvals and orders applicable to it and duly observe all requirements of any
Federal, State or local governmental authority, including, without limitation,
ERISA, the Occupational Safety and Hazard Act of 1970, as amended, the Fair
Labor Standards Act of 1938, as amended, and all statutes, rules, regulations,
orders, permits and stipulations relating to environmental pollution and
employee health and safety, including, without limitation, all of the
Environmental Laws.
(a) Borrowers shall establish and maintain, at their expense, a
system to assure and monitor their continued compliance with all
Environmental Laws in all of their operations, which system shall include
annual reviews of such compliance by employees or agents of Borrowers who
are familiar with the requirements of the Environmental Laws. Copies of
all environmental surveys, audits, assessments, feasibility studies and
results of remedial investigations shall be promptly furnished, or caused
to be furnished, by Borrowers to Lender. Borrowers shall take prompt and
appropriate action to respond to any non-compliance with any of the
Environmental Laws and shall regularly report to Lender on such response.
(b) Borrowers shall give both oral and written notice to Lender
immediately upon any Borrower's receipt of any notice of, or any
Borrower's otherwise obtaining knowledge of, (i) the occurrence of any
event involving the release, spill or discharge, threatened or actual, of
any Hazardous Material or (ii) any investigation, proceeding, complaint,
order, directive, claims, citation or notice with respect to: (A) any non-
compliance with or violation of any Environmental Law by any Borrower or
(B) the release, spill or discharge, threatened or actual, of any
Hazardous Material or (C) the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any
Hazardous Materials or (D) any other environmental, health or safety
matter, which affects any Borrower or its business, operations or assets
or any properties at which any Borrower transported, stored or disposed of
any Hazardous Materials.
(c) Without limiting the generality of the foregoing, whenever
Lender reasonably determines that there is non- compliance, or any
condition which requires any action by or on behalf of Borrowers or any of
their Subsidiaries in order to avoid any material non-compliance, with any
Environmental Law, Borrowers shall, at Lender's request and Borrowers'
expense: (i) cause an independent environmental engineer acceptable to
Lender to conduct such tests of the site where any Borrower's or its
Subsidiaries' non-compliance or alleged non-compliance with such
Environmental Laws has occurred as to such non-compliance and prepare and
deliver to Lender a report as to such non- compliance setting forth the
results of such tests, a proposed plan for responding to any environmental
problems described therein, and an estimate of the costs thereof and (ii)
provide to Lender a supplemental report of such engineer whenever the
scope of such non-compliance, or Borrowers' response thereto or the
estimated costs thereof, shall change in any material respect.
(d) Borrowers shall indemnify and hold harmless Lender, its
directors, officers, employees, agents, invitees, representatives,
successors and assigns, from and against any and all losses, claims,
damages, liabilities, costs, and expenses (including attorneys' fees and
legal expenses) directly or indirectly arising out of or attributable to
the use, generation, manufacture, reproduction, storage, release,
threatened release, spill, discharge, disposal or presence of a Hazardous
Material, including, without limitation, the costs of any required or
necessary repair, cleanup or other remedial work with respect to any
property of Borrowers or any of their Subsidiaries and the preparation and
implementation of any closure, remedial or other required plans. All
representations, warranties, covenants and indemnifications in this
Section 9.3 shall survive the payment of the Obligations and the
termination or non-renewal of this Agreement.
8.1.8 Payment of Taxes, Charges. Pay and cause each of its Subsidiaries to
pay and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its Property prior to the
date on which penalties attached thereto, except for any such tax, assessment,
charge or levy the payment of which is being contested in good faith and by
proper proceedings and against which adequate reserves are being maintained in
accordance with GAAP.
8.1.9 Business and Existence. Preserve and not change its business from
the manufacture and sale of metal fabrications, cable assemblies and electronic
components for original equipment manufacturers, preserve and maintain its
separate corporate existence and all rights, privileges, and franchises in
connection therewith, and maintain its qualification and good standing in all
states in which such qualification is necessary in order for Borrowers to
conduct their businesses in such states or in which the failure of a Borrower to
be so qualified would have a material adverse effect on the financial condition,
business or Properties of such Borrower.
8.1.10 Maintain Properties. Maintain its Properties in good
condition and make all necessary renewals, repairs, replacements, additions
and improvements thereto.
8.1.11 ERISA Compliance. (i) At all times make prompt payment of
contributions required to meet the minimum funding standards set forth in ERISA
with respect to each Plan; (ii) furnish to Lender, promptly upon Lender's
request therefor, copies of any annual report required to be filed pursuant to
ERISA in connection with each Plan and any other employee benefit plan of it and
its subject to said Section; (iii) notify Lender as soon as practicable of any
Reportable Event and of any additional act or condition arising in connection
with any Plan which Borrowers believe might constitute grounds for the
termination thereof by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate United States district court of a trustee to
administer the Plan; and (iv) furnish to Lender, promptly upon Lender's request
therefor, such additional information concerning any Plan or any other such
employee benefit plan.
8.1.12 Mandatory Conversion of Subordinated Debt. If the subordinated
indebtedness of TMCI under the Convertible Subordinated Debenture due 2001 dated
February 10, 1998 has not previously been converted into common stock of TMCI
prior to February 10, 2001, TMCI shall convert such subordinated indebtedness
into common stock on February 15, 2001.
8.1.13 Mandatory Payment Through Stock Delivery. Payments of the
"Shortfall Amount" under that certain Settlement and Release Agreement by and
among Pen Interconnect, Inc., TMCI Electronics, Inc., Touche Electronics, Inc.,
and Xxxxxxx Xxxxx dated December 5, 1997 shall be paid through the delivery of
stock only and not in cash.
8.2 Negative Covenants.
During the term of this Agreement, and thereafter for so long as there are
any Obligations to Lender, each Borrower covenants that, unless Lender has first
consented thereto in writing, it will not:
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any Subsidiary of any Borrower to merge or consolidate, with any Person;
nor acquire, nor permit any of its Subsidiaries to acquire, all or any
substantial part of the Properties of any Person. Notwithstanding the foregoing,
TMCI or a Subsidiary of TMCI may acquire substantially all of the assets or all
of the capital stock of First Source, Inc. provided that Borrowers shall (i)
provide to Lender copies of any letter of intent, memorandum of understanding or
offer letters with respect to such acquisitions promptly following the signing
thereof, (ii) provide to Lender copies of all Purchase Documents relating to
such acquisition at least five (5) Business Days prior to the signing thereof,
which Purchase Documents must be satisfactory to Lender, (iii) arrange for
Lender and its representatives to have access to the entity to be acquired and
its books, records and assets and to the Borrowers' due diligence information
and evaluation thereof prior to any closing on such acquisition for the purpose
of conducting a due diligence investigation thereof and to verify that after
giving effect to such acquisition, Borrowers will continue to have sufficient
Availability, as reasonably determined by Lender, (iv) cause the entity to be
acquired or, if a Subsidiary of TMCI that acquires the business thereof, to
become a co-borrower under this Agreement or a guarantor of the Obligations, as
the Lender may determine, and to grant to Lender a first priority perfected Lien
in all of its personal and real Property, tangible and intangible.
8.2.2 Loans. Make, or permit any Subsidiary of any Borrower to make, any
loans or other advances of money (other than for salary, travel advances,
advances against commissions and other similar advances in the ordinary course
of business) to any Person.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist, or
permit any Subsidiary of any Borrower to create, incur or suffer to exist, any
Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Subordinated Debt existing on the date of this Agreement and
Subordinated Debt issued hereafter on terms and conditions approved by
Lender and subject to a Subordination Agreement acceptable to Lender;
(iii) Indebtedness of any Subsidiary of any Borrower to such
Borrower or of any Borrower to another Borrower;
(iv) accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed) which are not aged more than 120
days from billing date or more than 30 days from the due date, in each
case incurred in the ordinary course of business and paid within such time
period, unless the same are being actively contested in good faith and by
appropriate and lawful proceedings, and Borrowers or such Subsidiary shall
have set aside such reserves, if any, with respect thereto as are required
by GAAP and deemed adequate by Borrowers or such Subsidiary and their
independent accountants;
(v) Obligations to pay Rentals permitted by subsection
8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii) contingent liabilities arising out of endorsements of checks
and other negotiable instruments for deposit or collection in the ordinary
course of business; and
(viii) Indebtedness not included in paragraphs (i) through (vii)
above which does not exceed at any time, in the aggregate, the sum of
$100,000.00.
8.2.4 Affiliate Transactions. Enter into, or be a party to, or permit any
Subsidiary of any Borrower to enter into or be a party to, any transaction with
any Affiliate of a Borrower or stockholder, except in the ordinary course of and
pursuant to the reasonable requirements of Borrowers' or such Subsidiary's
business and upon fair and reasonable terms which are fully disclosed to Lender
and are no less favorable to Borrowers than would obtain in a comparable arm's
length transaction with a Person not an Affiliate or stockholder of a Borrower
or such Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
Subsidiary of any Borrower to create or suffer to exist, any Lien upon any of
its Property, income or profits, including, without limitation, the capital
stock of the Subsidiaries, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to any of
the provisions of ERISA) not yet due, or being contested in the manner
described in subsection 7.1.14 hereto, but only if in Lender's judgment
such Lien does not adversely affect Lender's rights or the priority of
Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of a Borrower's business
by operation of law or regulation, but only if payment in respect of any
such Lien is not at the time required and such Liens do not, in the
aggregate, materially detract from the value of the Property of such
Borrower or materially impair the use thereof in the operation of
Borrower's business;
(iv) Purchase Money Liens securing Permitted Purchase
Money Indebtedness;
(v) Liens securing Indebtedness of a Borrower's Subsidiaries to such
Borrower or another such Subsidiary;
(vi) such other Liens as appear on Exhibit O hereto; and
(vii) such other Liens as Lender may hereafter approve in writing.
8.2.6 Subordinated Debt. Make, or permit any Subsidiary of any Borrower to
make, any payment of any part or all of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt,
except for regularly scheduled payments of interest thereon, so long as no
Default or Event of Default exists hereunder.
8.2.7 Distributions . Declare or make, or permit any Subsidiary of
Borrower to declare or make, any Distributions.
8.2.8 Capital Expenditures. Make Capital Expenditures that are not
financed by way of capitalized leases or purchase money financings or as
otherwise permitted hereunder, which, in the aggregate, as to Borrowers and
their Subsidiaries as a group, exceed $750,000.00 during any fiscal year of
Borrower.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of any of,
or permit any Subsidiary of any Borrower to sell, lease or otherwise dispose any
of, its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder, (ii) a transfer of Property to a Borrower by a Subsidiary of
such Borrower or (iii) dispositions expressly authorized by this Agreement.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to issue any
additional shares of its capital stock except director's qualifying shares.
8.2.11 Xxxx-and-Hold Sales, Etc. Make a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, or permit any
Subsidiary of any Borrower to make or have, any Restricted Investment.
8.2.13 Leases. Become, or permit any of its Subsidiaries to become, a
lessee under any operating lease (other than a lease under which a Borrower or
any of its Subsidiaries is lessor) of Property if the aggregate Rentals payable
during any current or future period of 12 consecutive months under the lease in
question and all other leases under which Borrowers or any of their Subsidiaries
is then lessee would exceed $1,000,000. The term "Rentals" means, as of the date
of determination, all payments which the lessee is required to make by the terms
of any such operating lease.
8.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a Borrower or a
Subsidiary of a Borrower.
8.2.15 Fiscal Year. Change its fiscal year.
8.3 Specific Financial Covenants.
During the term of this Agreement, and thereafter for so long as there are
any Obligations to Lender, Borrowers covenant that, unless otherwise consented
to by Lender in writing, TMCI shall:
8.3.1 Minimum Adjusted Tangible Net Worth. Maintain at all times a
Consolidated Adjusted Tangible Net worth of not less than the amount shown below
for the period corresponding thereto:
Period Amount
Closing Date through December $3,750,000.00
31,1998
January 1, 1999 through December $4,500,000.00
31, 1999
Each January 1st thereafter The amount for the
through the following December prior year plus
31st $750,000.00
8.3.2 Cash Flow. Achieve Cash Flow for each fiscal period set forth below
of not less than the amount show below for the period corresponding thereto:
Period Amount
Three Months Ended March 31, 1998 $ - 0 Six Months Ended June
30, 1998 $ - 0 Nine Months Ended September 30, $250,000.00 1998
Twelve Months Ended December 31, $500,000.00 1998 Each Fiscal
Quarter Ending $500,000.00 Thereafter For the Prior Four Fiscal
Quarters
SECTION 9. CONDITIONS PRECEDENT
9.1 Conditions to Initial Loans and LC Guaranties.
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other sections of this Agreement, Lender shall not be required to make the
initial Loans and LC Guaranties under this Agreement unless and until each of
the following conditions has been and continues to be satisfied:
9.1.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Lender and its counsel.
9.1.2 Other Loan Documents. Each of the conditions precedent set forth in
the other Loan Documents shall have been satisfied.
9.1.3 Availability. Lender shall have determined that immediately after
Lender has made the initial Loans and issued the initial Letters of Credit and
LC Guaranties contemplated hereby, and paid all closing costs incurred in
connection with the transactions contemplated hereby, Availability shall not be
less than $2,000,000.00.
9.1.4 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
9.1.5 Acquisitions. The Borrowers shall have furnished to Lender and its
legal counsel complete copies of all Purchase Documents relating to the
Borrowers' proposed acquisitions of Trinity Electronics, Inc. and First Source,
Inc. and such Purchase Documents shall be in form and substance satisfactory to
Lender.
9.1.6 Landlord Waivers. Landlord, warehouseman or other necessary
agreements satisfactory to Lender shall be furnished to Lender for all locations
where Collateral is located that are not owned by Borrower.
9.1.7 Lien Filings. Lender shall have received copies of all filing
receipts or acknowledgments issued to evidence all filings or recordations
necessary to perfect the Liens of Lender in the Collateral in a form acceptable
to Lender to ensure that such Liens constitute first and only priority valid and
perfected Liens.
9.1.8 Insurance. Borrowers shall deliver to Lender certified copies of
Borrowers' casualty insurance policies, together with loss payable endorsements
on Lender's standard form of loss payee endorsement naming Lender as loss payee,
and certified copies of Borrowers' liability insurance policies, together with
endorsements naming Lender as a co-insured.
9.1.9 Subordinated Debt. Borrowers shall have received a cash investment
of Subordinated Debt of not less than $3,000,000.00 and the holders of all
Subordinated Debt issued by any Borrower shall have duly executed and delivered
to Lender a Subordination Agreement in form and substance satisfactory to
Lender.
9.1.10 Solvency. Lender shall have received such certificates and
documents demonstrating the Solvency of each Borrower, including, without
limitation, the Solvency Certificate after giving effect to the transactions
contemplated by this Agreement and the Purchase Documents, as Lender shall find
acceptable, including, without limitation, the pro forma balance sheet,
forecasted financial statements consisting of balance sheets, income statements
and cash flow statements for Borrowers covering at least the three-year period
commencing on the Closing Date, prepared by Borrowers and a fair valuation
balance sheet for Borrower.
9.1.11 No Material Adverse Change. Since September 30, 1997 there shall
not have occurred any material adverse change in the business, financial
condition or results of operations of the Seller or the Borrower, or the
existence or value of any Collateral, or any event, condition or state of facts
which would reasonably be expected materially and adversely to affect the
business, financial condition or results of operations of Borrower.
9.1.12 Pen Electronics Litigation. The litigation between Pen
Electronics, Inc. and TMCI shall have been resolved in a manner satisfactory
to Lender and Pen Electronics, Inc. shall have released its Liens, if any, on
the assets of the Borrowers.
9.1.13 Inventory Testing/Analysis. Lender shall have conducted further
testing and analysis of the Borrowers' Inventory and of the Borrowers'
management information systems and such testing and analysis shall be
satisfactory to Lender.
9.2 Conditions to All Loans and LC Guaranties.
Notwithstanding any other provision of this Agreement or other Loan
Documents and without affecting in any manner the rights of Lender under the
other sections of this Agreement, Lender shall not be required to make any Loan
or LC Guaranty (including the initial Loans and LC Guaranties) unless each of
the following conditions are satisfied:
(a) All representations and warranties contained herein and in the
other Loan Documents shall be true and correct in all respects.
(b) No material adverse change in the business, financial condition,
or results of operations of any Borrower shall have occurred since the
date of Lender's latest audit of Borrowers including, without limitation,
that no material investigation, litigation or other proceedings shall be
pending or threatened against any Borrower.
(c) No Default or Event of Default shall exist.
(d) Lender shall have received such additional documents,
statements, certificates, information and evidence as Lender may request
and all documents and all actions required to be taken on or before the
making of any Loan shall have been taken.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default.
The occurrence of one or more of the following events shall constitute an
"Event of Default":
10.1.1 Payment of Notes. Borrowers shall fail to pay any installment of
principal, interest or premium, if any, owing on the Term Notes or the Equipment
Note on the due date of such installment.
10.1.2 Payment of Other Obligations. Borrowers shall fail to pay any of
the Obligations that are not evidenced by the Term Notes or the Equipment Note
on the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise).
10.1.3 Misrepresentations. Any representation, warranty or other statement
made or furnished to Lender by or on behalf of any Borrower, any Subsidiary of
any Borrower in this Agreement, any of the other Loan Documents or any
instrument, certificate or financial statement furnished in compliance with or
in reference thereto proves to have been false or misleading in any material
respect when made or furnished or when reaffirmed pursuant to Section 7.2
hereof.
10.1.4 Breach of Specific Covenants. Borrowers shall fail or neglect to
perform, keep or observe any covenant contained in Sections 5.2, 6.1.1, 6.1.2,
6.2.4, 6.2.5, 6.2.6, 8.1.1, 8.1.3, 8.1.12, 8.1.13, 8.2 or 8.3 hereof on the date
that Borrowers are required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrowers shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Lender's satisfaction within
15 days after the sooner to occur of Borrowers' receipt of notice of such breach
from Lender or the date on which such failure or neglect first becomes known to
any officer of any Borrower.
10.1.6 Default Under Security Documents/Other Agreements/Purchase
Documents. Any event of default shall occur under, or Borrowers shall default in
the performance or observance of any term, covenant, condition or agreement
contained in, any of the Security Documents; or the Other Agreements or the
Purchase Documents and such default shall continue beyond any applicable grace
period.
10.1.7 Other Defaults. There shall occur any default or event of default
on the part of any Borrower under any agreement, document or instrument to which
a Borrower is a party or by which a Borrower or any of its Property is bound,
creating or relating to any Indebtedness (other than the Obligations) if the
payment or maturity of such Indebtedness is accelerated in consequence of such
event of default or demand for payment of such Indebtedness is made.
10.1.8 Uninsured Losses. Any material loss, theft, damage or destruction
of any of the Collateral not fully covered (subject to such deductibles as
Lender shall have permitted) by insurance.
10.1.9 Adverse Changes. There shall occur any material adverse
change in the financial condition or business prospects of any Borrower.
10.1.10 Insolvency and Related Proceedings. Any Borrower shall cease to be
Solvent or shall suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit of creditors, or
any petition for an order for relief shall be filed by or against any Borrower
under the Bankruptcy Code (if against any Borrower, the continuation of such
proceeding for more than 30 days), or any Borrower shall make any offer of
settlement, extension or composition to their respective unsecured creditors
generally.
10.1.11 Business Disruption; Condemnation. There shall occur a cessation
of a substantial part of the business of any Borrower, any Subsidiary of any
Borrower for a period which significantly affects any Borrower's capacity to
continue its business, on a profitable basis; or any Borrower, or any Subsidiary
of Borrower shall suffer the loss or revocation of any license or permit now
held or hereafter acquired by such Borrower which is necessary to the continued
or lawful operation of its business; or any Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower or any Guarantor leases,
uses or occupies any Property shall be canceled or terminated prior to the
expiration of its stated term; or any part of the Collateral shall be taken
through condemnation or the value of such Property shall be impaired through
condemnation.
10.1.12 Change of Ownership. A Change in Control shall occur with respect
to TMCI or TMCI shall cease to own and control, beneficially and of record, all
of the issued and outstanding capital stock of each of its Subsidiaries.
10.1.13 ERISA. A Reportable Event shall occur which Lender, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Borrower, any Subsidiary of any Borrower is in "default"
(as defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from any Borrower's, or such Subsidiary's complete
or partial withdrawal from such Plan.
10.1.14 Challenge to Agreement. Any Borrower, any Subsidiary of Borrower,
or any Affiliate of any of them, shall challenge or contest in any action, suit
or proceeding the validity or enforceability of this Agreement, or any of the
other Loan Documents, the legality or enforceability of any of the Obligations
or the perfection or priority of any Lien granted to Lender.
10.1.15 Intentionally Omitted.
10.1.16 Criminal Forfeiture. Any Borrower, or any Subsidiary of Borrower
shall be criminally indicted or convicted under any law that could lead to a
forfeiture of any Property of Borrower, or any Subsidiary of Borrower.
10.1.17 Judgments. Any money judgment, in an amount in excess of
$50,000.00 for any single judgment or exceeding $100,000.00 in the aggregate or
any writ of attachment or similar process is filed against any Borrower, or any
Subsidiary of Borrower, or any of their respective Property.
10.2 Acceleration of the Obligations.
Without in any way limiting the right of Lender to demand payment of any
portion of the Obligations payable on demand in accordance with Section 3.2
hereof, upon or at any time after the occurrence of an Event of Default, all or
any portion of the Obligations shall, at the option of Lender and without
presentment, demand protest or further notice by Lender, become at once due and
payable and Borrowers shall forthwith pay to Lender, the full amount of such
Obligations, provided, that upon the occurrence of an Event of Default specified
in subsection 10.1.10 hereof, all of the Obligations shall become automatically
due and payable without declaration, notice or demand by Lender.
10.3 Other Remedies.
Upon and after the occurrence of an Event of Default, Lender shall have
and may exercise from time to time the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party under the Code or
under other applicable law, and all other legal and equitable rights to which
Lender may be entitled, all of which rights and remedies shall be cumulative and
shall be in addition to any other rights or remedies contained in this Agreement
or any of the other Loan Documents, and none of which shall be exclusive.
10.3.2 The right to take immediate possession of the Collateral, and to
(i) require Borrowers to assemble the Collateral, at Borrowers' expense, and
make it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrowers,
Borrowers agree not to charge Lender for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any Collateral in
its then condition, or after any further manufacturing or processing thereof, at
public or private sale or sales, with such notice as may be required by law, in
lots or in bulk, for cash or on credit, all as Lender, in its sole discretion,
may deem advisable. Borrowers agree that 10 days written notice to Borrowers of
any public or private sale or other disposition of Collateral shall be
reasonable notice thereof, and such sale shall be at such locations as Lender
may designate in said notice. Lender shall have the right to conduct such sales
on Borrowers' premises, without charge therefor, and such sales may be adjourned
from time to time in accordance with applicable law. Lender shall have the right
to sell, lease or otherwise dispose of the Collateral, or any part thereof, for
cash, credit or any combination thereof, and Lender may purchase all or any part
of the Collateral at public or, if permitted by law, private sale and, in lieu
of actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Collateral
may be applied, after allowing 2 Business Days for collection, first to the
costs, expenses and attorneys' fees incurred by Lender in collecting the
Obligations, in enforcing the rights of Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral, second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, Borrowers shall remain jointly and severally liable to
Lender therefor.
10.3.4 Lender is hereby granted a license or other right to use, without
charge, Borrowers' labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any Property of a
similar nature, as it pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrowers' rights under all licenses and all
franchise agreements shall inure to Lender's benefit.
10.3.5 Lender may, at its option, require Borrowers to deposit with Lender
funds equal to the LC Amount and, if Borrowers fail to promptly make such
deposit, Lender may advance such amount as a Revolving Credit Loan (whether or
not an Overadvance is created thereby). Any such deposit or advance shall be
held by Lender as a reserve to fund future payments on such LC Guaranties and
future drawings against such Letters of Credit. At such time as all LC
Guaranties have been paid or terminated and all Letters of Credit have been
drawn upon or expired, any amounts remaining in such reserve shall be applied
against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full in cash, returned to Borrowers.
10.4 Remedies Cumulative; No Waiver.
All covenants, conditions, provisions, warranties, guaranties,
indemnities, and other undertakings of Borrowers contained in this Agreement and
the other Loan Documents, or in any document referred to herein or contained in
any agreement supplementary hereto or in any schedule or in any Guaranty
Agreement given to Lender or contained in any other agreement between Lender and
Borrowers, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrowers herein contained. The failure
or delay of Lender to require strict performance by Borrowers of any provision
of this Agreement or to exercise or enforce any rights, Liens, powers, or
remedies hereunder or under any of the aforesaid agreements or other documents
or security or Collateral shall not operate as a waiver of such performance,
Liens, rights, powers and remedies, but all such requirements, Liens, rights,
powers, and remedies shall continue in full force and effect until all Loans and
all other Obligations owing or to become owing from Borrowers to Lender shall
have been fully satisfied. None of the undertakings, agreements, warranties,
covenants and representations of Borrowers contained in this Agreement or any of
the other Loan Documents and no Event of Default by Borrowers under this
Agreement or any other Loan Documents shall be deemed to have been suspended or
waived by Lender, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of Lender and directed to Borrowers.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney.
Each Borrower hereby irrevocably designates, makes, constitutes and
appoints Lender (and all Persons designated by Lender) as each such Borrower's
true and lawful attorney (and agent-in-fact) and Lender, or Lender's agent, may,
without notice to Borrowers and in either any or all Borrowers' or Lender's
names, but at the cost and expense of Borrowers:
11.1.1 At such time or times as Lender or said agent, in its sole
discretion, may determine, endorse any Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
11.1.2 At such time or times upon or after the occurrence of an Event of
Default as Lender or its agent in its sole discretion may determine: (i) demand
payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of
Borrowers' rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign any Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to Borrowers and to notify postal authorities to
change the address for delivery thereof to such address as Lender may designate;
(vii) endorse the name of Borrowers upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrowers upon any
chattel paper, document, instrument, invoice, freight xxxx, xxxx of lading or
similar document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrowers' stationery and sign the name of Borrowers to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Lender's
determination, to fulfill Borrowers' obligations under this Agreement.
11.2 Indemnity.
Each Borrower hereby agrees to indemnify Lender and hold Lender harmless
from and against any liability, loss, damage, suit, action or proceeding ever
suffered or incurred by Lender (including reasonable attorneys fees and legal
expenses) in connection with or arising out of the transactions under this
Agreement and the other Loan Documents whether as the result of any Borrower's
failure to observe, perform or discharge any Borrower's duties hereunder, the
actions or omissions of any other Person or otherwise, except to the extent that
such is determined by a final and non-appealable judgment or court order to have
arisen from Lender's gross negligence or willful misconduct. In addition and
without limitation of the foregoing, Borrower shall defend Lender against and
save it harmless from all claims of any Person with respect to the Collateral.
Without limiting the generality of the foregoing, these indemnities shall extend
to any claims asserted against Lender by any Person under any Environmental Laws
or similar laws by reason of any Borrower's or any other Person's failure to
comply with laws applicable to solid or hazardous waste materials or other toxic
substances. Notwithstanding any contrary provision in this Agreement, the
obligation of Borrowers under this Section 11.2 shall survive the payment in
full of the Obligations and the termination of this Agreement.
11.3 Modification of Agreement; Sale of Interest.
This Agreement may not be modified, altered or amended, except by an
agreement in writing signed by Borrowers and Lender. Borrowers may not sell,
assign or transfer any interest in this Agreement, any of the other Loan
Documents, or any of the Obligations, or any portion thereof, including, without
limitation, Borrowers' rights, title, interests, remedies, powers, and duties
hereunder or thereunder. Borrowers hereby consent to Lender's participation,
sale, assignment, transfer or other disposition, at any time or times hereafter,
of this Agreement and any of the other Loan Documents, or of any portion hereof
or thereof, including, without limitation, Lender's rights, title, interests,
remedies, powers, and duties hereunder or thereunder. In the case of an
assignment, the assignee shall have, to the extent of such assignment, the same
rights, benefits and obligations as it would if it were "Lender" hereunder and
Lender shall be relieved of all obligations hereunder upon any such assignments.
Borrowers agree that they will use their best efforts to assist and cooperate
with Lender in any manner reasonably requested by Lender to effect the sale of
participations in or assignments of any of the Loan Documents or any portion
thereof or interest therein, including, without limitation, assisting in the
preparation of appropriate disclosure documents. Borrowers further agree that
Lender may disclose credit information regarding Borrowers and their
Subsidiaries to any potential participant or assignee.
11.4 Severability.
Wherever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11.5 Successors and Assigns.
This Agreement, the Other Agreements and the Security Documents shall be
binding upon and inure to the benefit of the successors and assigns of Borrowers
and Lender permitted under Section 11.3 hereof.
11.6 Cumulative Effect; Conflict of Terms.
The provisions of the Other Agreements and the Security Documents are
hereby made cumulative with the provisions of this Agreement. Except as
otherwise provided in Section 3.2 hereof and except as otherwise provided in any
of the other Loan Documents by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in direct
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
11.7 Execution in Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
11.8 Notice.
Except as otherwise provided herein, all notices, requests and demands to
or upon a party hereto, to be effective, shall be in writing and shall be sent
by certified or registered mail, return receipt requested, by personal delivery
against receipt, by overnight courier or by facsimile and, unless otherwise
expressly provided herein, shall be deemed to have been validly served, given or
delivered immediately when delivered against receipt, one Business Day after
deposit in the mail, postage prepaid, or with an overnight courier or, in the
case of facsimile notice, when sent, addressed as follows:
If to Lender: Fleet Capital Corporation
000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Northeast Loan Administrator
Facsimile No.: (000) 000-0000
With a copy to: Brown, Rudnick, Freed & Gesmer
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Borrower: TMCI Electronics, Inc.
Touche Manufacturing, Inc.
Touche Electronics, Inc. and
Enterprise Industries, Inc.
0000 Xxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx, Chief Executive Officer
Facsimile No.:(000) 000-0000
With a copy to: Xxxxxxxxx, Parish & Xxxxxx
000 Xxxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender.
11.9 Intentionally Omitted.
11.10 Joint and Several Liability.
All Loans, Letters of Credit and LC Guaranties made or issued hereunder
are made to or for the benefit of each of the Borrowers. The Borrowers are
jointly and severally, directly and primarily liable for the full and
indefeasible payment when due and performance of all Obligations and for the
prompt and full payment and performance of all of the promises, covenants,
representations, and warranties made or undertaken by each Borrower under this
Agreement and the Loan Documents and Borrowers agree that such liability is
independent of the duties, obligations, and liabilities of each of the joint and
several Borrowers. In furtherance of the foregoing, each Borrower jointly and
severally, absolutely and unconditionally guaranties to Lender and agrees to be
liable for the full and indefeasible payment and performance when due of all the
Obligations. This guarantee is a continuing guarantee, and shall apply to all
Obligations whenever arising.
11.11 Suretyship Waivers and Consents.
(i) Each Borrower acknowledges that the obligations of such Borrower
undertaken herein might be construed to consist, at least in part, of the
guaranty of obligations of persons other than such Borrower (including the
other Borrower) and, in full recognition of that fact, each Borrower
consents and agrees that Lender may, at any time and from time to time,
without notice or demand (except as provided in and in accordance with the
terms of this Agreement), whether before or after any actual or purported
termination, repudiation or revocation of this Agreement by any Borrower,
and without affecting the enforceability or continuing effectiveness
hereof as to each Borrower: (a) increase, extend, or otherwise change the
time for payment or the terms of the Obligations or any part thereof; (b)
supplement, restate, modify, amend, increase, decrease, or waive, or enter
into or give any agreement, approval or consent with respect to, the
Obligations or any part thereof, this Agreement, or any of the Loan
Documents or any additional security or guarantees, or any condition,
covenant, default, remedy, right, representation, or term thereof or
thereunder; (c) accept new or additional instruments, documents, or
agreements in exchange for or relative to any of the loan Documents or the
Obligations or any part thereof; (d) accept partial payments on the
Obligations; (e) receive and hold additional security or guarantees for
the Obligations or any part thereof; (f) release, reconvey, terminate,
waive, abandon, fail to perfect, subordinate, exchange, substitute,
transfer, or enforce any Collateral, security or guarantees, and apply any
Collateral or security and direct the order or manner of sale thereof as
Lender in its sole and absolute discretion may determine; (g) release any
person from any personal liability with respect to the Obligations or any
part thereof; (h) settle, release on terms satisfactory to Lender or by
operation of applicable laws or otherwise liquidate or enforce any
Obligations and any Collateral or security therefor or guaranty thereof in
any manner, consent to the transfer of any Collateral or security and bid
and purchase at any sale; or (i) consent to the merger, change, or any
other restructuring or termination of the corporate or partnership
existence of any Borrower, and correspondingly restructure the
Obligations, and any such merger, change, restructuring, or termination
shall not affect the liability of any Borrower or the continuing
effectiveness hereof, or the enforceability hereof with respect to all or
any part of the Obligations.
(ii) Lender may enforce this Agreement independently as to each
Borrower and independently of any other remedy or security Lender at any
time may have or hold in connection with the Obligations, and it shall not
be necessary for Lender to marshal assets in favor of any Borrower or to
proceed upon or against or exhaust any Collateral or security or remedy
before proceeding to enforce this Agreement. Each Borrower expressly
waives any right to require Lender to marshal assets in favor of any
Borrower or any guarantor of the Obligations or to proceed against any
other Borrower, and agrees that Lender may proceed against Borrowers or
any Collateral in such order as Lender shall determine in its sole and
absolute discretion.
(iii) Lender may file a separate action or actions against any
Borrower, whether such action is brought or prosecuted with respect to any
security or against any guarantor of the Obligations, or whether any other
person is joined in any such action or actions. Each Borrower agrees that
Lender and each Borrower and any affiliate of any Borrower may deal with
each other in connection with the Obligations or otherwise, or alter any
contracts or agreements now or hereafter existing between any of them, in
any manner whatsoever, all without in any way altering or affecting the
continuing enforceability of this Agreement. Each Borrower, as a joint and
several Borrower hereunder, expressly waives the benefit of any statute of
limitations affecting its joint and several liability hereunder or the
enforcement of the Obligations or any rights of Lender created or granted
herein.
(iv) Lender's rights hereunder shall be reinstated and revived, and
the enforceability of this Agreement shall continue, with respect to any
amount at any time paid on account of the Obligations which thereafter
shall be required to be restored or returned by Lender, all as though such
amount had not been paid. The rights of Lender created or granted herein
and the enforceability of this Agreement at all times shall remain
effective to cover the full amount of all the Obligations even though the
Obligations, including any part thereof or any Collateral, other security
or guaranty therefor, may be or hereafter may become invalid or otherwise
unenforceable as against any Borrower and whether or not any Borrower
shall have any personal liability with respect thereto.
(v) Each Borrower expressly waives any and all defenses now or
hereafter arising or asserted by reason of (a) any disability or other
defense of any other Borrower with respect to the Obligations; (b) the
unenforceability or invalidity of any security or guaranty for the
Obligations or the lack of perfection or continuing perfection or failure
of priority of any security for the Obligations; (c) the cessation for any
cause whatsoever of the liability of any Borrower (other than by reason of
the full payment and performance of all Obligations as required herein);
(d) any failure of Lender to xxxxxxxx assets in favor of any Borrower; (e)
any failure of Lender to give notice to any Borrower of sale or other
disposition of Collateral of another Borrower or any defect in any notice
that may be given in connection with any such sale or disposition of
Collateral of any Borrower securing the Obligations; (f) any failure of
Lender to comply with applicable law in connection with the sale or other
disposition of any Collateral or other security of any Borrower, for any
Obligation, including any failure of Lender to conduct a commercially
reasonable sale or other disposition of any Collateral or other security
of any Borrower for any Obligation; (g) any act or omission of Lender or
others that directly or indirectly results in or aids the discharge or
release of any Borrower or the Obligations of any Borrower or any security
or guaranty therefor by operation of law or otherwise; (h) any law which
provides that the obligation of a surety or guarantor must neither be
larger in amount nor in other respects more burdensome than that of the
principal or which reduces a surety's or guarantor's obligation in
proportion to the principal obligation; (i) any failure of Lender to file
or enforce a claim in any bankruptcy or other proceeding with respect to
any Borrower; (j) the avoidance of any lien or security interest in assets
of any Borrower in favor of Lender for any reason; or (k) any action taken
by Lender that is authorized by this section or any other provision of any
Loan Document. Until such time, if any, as all of the Obligations have
been indefeasibly paid and performed in full and no portion of any
commitment of Lender to Borrowers under any Loan Document remains in
effect, each Borrowers' indebtedness, claims and rights of subrogation,
contribution, reimbursement, or indemnity against the other Borrowers
shall be fully and completely subordinated to the indefeasible repayment
in full of the Obligations, and each Borrower expressly waives until such
indefeasible payment any right to enforce any remedy that it now has or
hereafter may have against any other Person and waives the benefit of, or
any right to participate in, any Collateral now or hereafter held by
Lender.
(vi) To the fullest extent permitted by applicable law, each
Borrower expressly waives and agrees not to assert, any and all defenses
in its favor based upon an election of remedies by Lender which destroys,
diminishes, or affects such Borrower's subrogation rights against the
other Borrowers, or against any Guarantor, and/or (except as explicitly
provided for herein) any rights to proceed against each other Borrower, or
any other party liable to Lender, for reimbursement, contribution,
indemnity, or otherwise.
(vii) Borrowers and each of them warrant and agree that each of the
waivers and consents set forth herein are made after consultation with
legal counsel and with full knowledge of their significance and
consequences, with the understanding that events giving rise to any
defense or right waived may diminish, destroy, or otherwise adversely
affect rights which Borrowers otherwise may have against each other,
Lender, or others, or against Collateral, and that, under the
circumstances, the waivers and consents herein given are reasonable and
not contrary to public policy or law. If any of the waivers or consents
herein are determined to be contrary to any applicable law or public
policy, such waivers and consents shall be effective to the maximum extent
permitted by law.
11.12 Contribution Agreement.
As an inducement to Lender to enter into the Loan Documents and to make
the loans and extend credit to the Borrowers, each Borrower agrees to indemnify
and hold the other harmless from and each shall have a continuing right of
contribution against the other Borrowers, if and to the extent that a Borrower
makes or is caused to make payments or contributions (from dispositions of its
assets or otherwise) to the repayment and satisfaction of the Obligations in
excess of the aggregate amount of Loan proceeds actually received and used by
such Borrower in its business (such excess amount being referred to as an
"Accommodation Payment"). If an Accommodation Payment is made by a Borrower then
the other Borrowers (such Borrowers being referred to as "Contributing
Borrowers") shall be obligated to make contribution to such Borrower (the
"Paying Borrower") in an amount equal to (A) the product derived by multiplying
the sum of each Accommodation Payment of each Borrower by the Allocable
Percentage of the Borrowers from whom contribution is sought less (B) the
amount, if any, of the then outstanding Accommodation Payment of the
Contributing Borrowers (such last mentioned amount which is to be subtracted
from the aforesaid product to be increased by any amounts theretofore paid by
Contributing Borrowers by way of contribution hereunder, and to be decreased by
any amounts theretofore received by such Contributing Borrowers by way of
contribution hereunder); provided, however, that a Paying Borrower's recovery of
contribution hereunder from the other Borrowers shall be limited to that amount
paid by the Paying Borrower in excess of its Allocable Percentage of all
Accommodation Payments then outstanding of all Borrowers. As used herein, the
term "Allocable Percentage" shall mean, on any date of determination thereof, a
fraction the denominator of which shall be equal to the number of Borrowers who
are parties to this Agreement on such date and the numerator of which shall be
1; provided, however, that such percentages shall be modified in the event that
contribution from a Borrower is not possible by reason of insolvency, bankruptcy
or otherwise by reducing such Borrower's Allocable Percentage equitably and by
adjusting the Allocable Percentage of the other Borrowers proportionately so
that the Allocable Percentages of all Borrowers at all times equals 100%. These
indemnification and contribution obligations shall be unconditional and
continuing obligations of the Borrowers and shall not be waived, rescinded,
modified, limited or terminated in any way whatsoever without the prior written
consent of Lender, in its sole discretion. These indemnification and
contribution obligations are subordinated to the prior indefeasible payment in
full in immediately available funds of all Obligations.
11.13 Credit Inquiries.
Borrowers hereby authorize and permit Lender to respond to usual and
customary credit inquiries from third parties concerning Borrower or any of its
Subsidiaries.
11.14 Time of Essence.
Time is of the essence of this Agreement, the Other Agreements and the
Security Documents.
11.15 Entire Agreement.
This Agreement and the other Loan Documents, together with all other
instruments, agreements and certificates executed by the parties in connection
therewith or with reference thereto, embody the entire understanding and
agreement between the parties hereto and thereto with respect to the subject
matter hereof and thereof and supersede all prior agreements, understandings and
inducements, whether express or implied, oral or written.
11.16 Interpretation.
No provision of this Agreement or any of the other Loan Documents shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.
11.17 GOVERNING LAW; CONSENT TO FORUM.
THIS AGREEMENT HAS BEEN NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE
DEEMED TO HAVE BEEN MADE IN GLASTONBURY, CONNECTICUT. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CONNECTICUT: PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL SHALL BE LOCATED
IN ANY JURISDICTION OTHER THAN CONNECTICUT, THE LAWS OF SUCH JURISDICTION SHALL
GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON
SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF
SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT
FROM OR INCONSISTENT WITH THE LAWS OF CONNECTICUT. AS PART OF THE CONSIDERATION
FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR
PRINCIPAL PLACE OF BUSINESS OF ANY BORROWER OR LENDER, EACH BORROWER HEREBY
CONSENTS AND AGREES THAT THE STATE OF CONNECTICUT SUPERIOR COURT JURIDICAL
DISTRICT OF HARTFORD/NEW BRITAIN AT HARTFORD, CONNECTICUT, OR, AT LENDER'S
OPTION, THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT,
HARTFORD DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN BORROWERS AND LENDER PERTAINING TO THIS AGREEMENT OR
TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWERS EXPRESSLY
SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWERS HEREBY WAIVE ANY OBJECTION WHICH
BORROWERS MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENT TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWERS HEREBY WAIVE
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT
THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF ANY BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS
AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
11.18 WAIVERS BY BORROWERS.
EACH BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH LENDER HEREBY
ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING
OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS OR THE
COLLATERAL: (ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS,
DOCUMENTS, INSTRUMENTS CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER
ON WHICH ANY BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION
OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY
ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (iv)
THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF
ACCEPTANCE HEREOF. EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS. EACH
BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
11.19 PREJUDGEMENT REMEDY WAIVER; COMMERCIAL TRANSACTION.
EACH BORROWER HEREBY WAIVES RIGHTS AS IT MAY HAVE TO NOTICE AND/OR HEARING
UNDER ANY APPLICABLE FEDERAL OR STATE LAWS INCLUDING, WITHOUT LIMITATION,
CONNECTICUT GENERAL STATUTES SECTION 52-278A, ET SEQ. AS AMENDED, PERTAINING TO
THE EXERCISE BY LENDER OF SUCH RIGHTS AS THE LENDER MAY HAVE, INCLUDING, BUT NOT
LIMITED TO, THE RIGHT TO SEEK PREJUDGEMENT REMEDIES AND/OR DEPRIVE BORROWERS OF
OR AFFECT THE USE OF OR POSSESSION OR ENJOYMENT OF ANY BORROWER'S PROPERTY PRIOR
TO THE RENDITION OF A FINAL JUDGMENT AGAINST ANY BORROWER. EACH BORROWER FURTHER
WAIVES ANY RIGHT IT MAY HAVE TO REQUIRE LENDER TO PROVIDE A BOND OR OTHER
SECURITY AS A PRECONDITION TO OR IN CONNECTION WITH ANY PREJUDGMENT REMEDY
SOUGHT BY AGENT AND LENDER, AND WAIVE ANY OBJECTION TO THE ISSUANCE OF SUCH
PREJUDGMENT REMEDY BASED ON ANY OFFSETS, CLAIMS, DEFENSES OR COUNTERCLAIMS TO
ANY ACTION BROUGHT BY ANY LENDER. EACH BORROWER HEREBY REPRESENTS, COVENANTS AND
AGREES THAT THE PROCEEDS OF THE LOANS EVIDENCED BY THIS AGREEMENT SHALL BE USED
FOR GENERAL COMMERCIAL PURPOSES AND THAT SUCH LOANS CONSTITUTE A "COMMERCIAL
TRANSACTION" AS DEFINED BY THE STATUTES OF THE STATE OF CONNECTICUT.
IN WITNESS WHEREOF, this Agreement has been duly executed as an instrument
under seal on the day and year specified at the beginning of this Agreement.
ATTEST: TMCI ELECTRONICS, INC.
("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Name_________________________________
Title__________________________________
[CORPORATE SEAL]
ATTEST: TOUCHE MANUFACTURING COMPANY, INC.
("Borrower")
By ______________________________________
______________________________ Name_________________________________
Secretary/Assistant Secretary Title _________________________________
ATTEST: TOUCHE ELECTRONICS, INC.
("Borrower")
By ______________________________________
______________________________ Name_________________________________
Secretary/Assistant Secretary Title _________________________________
ATTEST: ENTERPRISE INDUSTRIES, INC.
("Borrower")
By ______________________________________
______________________________ Name_________________________________
Secretary/Assistant Secretary Title _________________________________
ATTEST: TRINITY ELECTRONICS, INC.
("Borrower")
By ______________________________________
______________________________ Name_________________________________
Secretary/Assistant Secretary Title _________________________________
Accepted in Glastonbury, Connecticut
FLEET CAPITAL CORPORATION
(Lender)
By ______________________________________
Xxxxxx X. Xxxxxx,
Vice President
-14-
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of March 2, 1998, by
and between Fleet Capital Corporation and TMCI, Inc., Touche Manufacturing
Company, Inc., Touche Electronics, Inc., Enterprise Industries, Inc. and Trinity
Electronics, Inc. the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Accounts - all accounts, contract rights, chattel paper, instruments and
documents, whether now owned or hereafter created or acquired by a Borrower or
in which a Borrower now has or hereafter acquired any interest.
Adjusted Net Earnings From Operations - with respect to any fiscal period,
means the net earnings (or loss) after provision for income taxes for such
fiscal period of Borrower, as reflected on the financial statement of Borrowers
supplied to Lender pursuant to subsection 8.1.3 of the Agreement, but excluding:
any gain or loss arising from the sale of capital
assets;
any gain arising from any write-up of assets;
earnings of any Subsidiary of any Borrower accrued
prior to the date it became a Subsidiary;
earnings of any corporation, substantially all the
assets of which have been acquired in any manner by any Borrower,
realized by such corporation prior to the date of such acquisition;
net earnings of any business entity (other than a
Subsidiary of a Borrower) in which any Borrower has an ownership
interest unless such net earnings shall have actually been received by
a Borrower in the form of cash distributions;
any portion of the net earnings of any Subsidiary of
a Borrower which for any reason is unavailable for payment of
dividends to any Borrower;
the earnings of any Person to which any assets of any
Borrower shall have been sold, transferred of disposed of, or into
which a Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date of
such transaction;
any gain arising from the acquisition of any
Securities of any Borrower; and
any gain arising from extraordinary or non-recurring
items.
Adjusted Tangible Assets - all assets except: (i) any surplus resulting
from any write-up of assets subsequent to December 31, 1996; (ii) deferred
assets, other than prepaid insurance and prepaid taxes; (iii) patents,
copyrights, trademarks, trade names, non-compete agreements, franchises and
other similar intangibles; (iv) goodwill, including any amounts, however
designated on a Consolidated balance sheet of a Person or its Subsidiaries,
representing the excess of the purchase price paid for assets or stock over the
value assigned thereto on the books of such Person; (v) Restricted Investments;
(vi) unamortized debt discount and expense; (vii) assets located and notes and
receivables due from obligors outside of the United States of America; and
(viii) Accounts, notes and other receivables due from Affiliates or employees.
Adjusted Tangible Net Worth - at any date means a sum equal to:
the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other proper
reserves) at which the Adjusted Tangible Assets of a Person would be
shown on a balance sheet at such date in accordance with GAAP, minus
the amount at which such Person's liabilities
(other than capital stock and surplus) would be shown on such balance
sheet in accordance with GAAP, and including as liabilities all
reserves for contingencies and other potential liabilities.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A.
Availability - the amount of money which Borrowers are entitled to borrow
from time to time as Revolving Credit Loans, such amount being the difference
derived when the sum of the principal amount of Revolving Credit Loans then
outstanding (including any amounts which Lender may have paid for the account of
Borrowers pursuant to any of the Loan Documents and which have not been
reimbursed by Borrowers) and the LC Amount is subtracted from the Borrowing
Base. If the amount outstanding is equal to or greater than the Borrowing Base,
Availability is 0.
Average Loan Balance - for any month, the amount obtained by adding the
unpaid balance of the Revolving Credit Loans, Term Loans, Equipment Loans and LC
Amounts at the end of each day for each day during the applicable month and by
dividing such sum by the number of the days in such month.
Bank - Fleet National Bank.
Borrowing Base - as at any date of determination thereof, an amount equal
to the lesser of:
$25,000,000 minus the unpaid principal balances of
the Term Loans and the Equipment Loans at such date; or
an amount equal to:
(a) 85% of the net amount of Eligible Accounts
outstanding at such date;
PLUS
(b) the lesser of (1) $6,000,000 or (2) 55%, of the
value of Eligible Inventory at such date calculated on the basis of the
lower of cost or market with the cost of raw materials and finished
goods calculated on a first-in, first-out basis.
For purposes hereof, the net amount of Eligible Accounts
at any time shall be the face amount of such Eligible Accounts less any
and all returns, rebates, discounts (which may, at Lender's option, be
calculated on shortest terms), credits, allowances or excise taxes of
any nature at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with such Accounts at
such time.
Business Day - any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of Connecticut or the State of
California or is a day on which banking institutions located in either of such
states are closed.
Capital Expenditures - expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or
additions thereto which have a useful life of more than one year, including the
total principal portion of Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Cash Flow - for any period, means TMCI's Consolidated (i) Adjusted Net
Earnings from Operations for such period, plus (ii) depreciation and
amortization expenses for such period, less (iii) unfinanced Capital
Expenditures for such period, less (iv) current maturities and prepayments of
long term Indebtedness that occur during such period and less (v) all
Distributions made during such period, all as determined in accordance with
GAAP.
Change in Control - shall be deemed to have occurred at such time as (i) a
"person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934), becomes the beneficial owner (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly,
of more than fifty (50%) percent of the total voting power of all classes of
stock the outstanding of TMCI entitled to vote in the election of directors, or
(ii) a change in the Board of Directors of TMCI occurs in which individuals who
constituted the Board of Directors at the beginning of the two-year period
immediately preceding such change (together with any other director whose
nomination for election by the shareholders of TMCI was approved by a vote of at
least two-thirds of the directors at the beginning of such period or whose
nomination and election was previously so approved) cease for any reason to
constitute a majority of the directors then in office.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made or the
initial Letter of Credit or LC Guaranty is issued under the Agreement.
Code - the Uniform Commercial Code as adopted and in force in the State of
Connecticut, as from time to time in effect.
Collateral - all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
Consolidated - the consolidation in accordance with GAAP of the accounts
or other items as to which such term applies.
Current Assets - at any date means the amount at which all of the current
assets of a Person would be properly classified as current assets shown on a
balance sheet at such date in accordance with GAAP, except that amounts due from
Affiliates and investments in Affiliates shall be excluded therefrom.
Current Liabilities - at any date means the amount at which all of the
current liabilities of a Person would be properly classified as current
liabilities on a balance sheet at such date in accordance with GAAP, excluding
the Loans and current maturities of any long-term Indebtedness.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in subsection 2.1.2 of the Agreement.
Distribution - in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
Dominion Account - a special account of Lender established by Borrowers
pursuant to the Agreement at a bank selected by Borrowers, but acceptable to
Lender in its reasonable discretion, and over which Lender shall have sole and
exclusive access and control for withdrawal purposes.
EBIT - with respect to any fiscal period, the sum of TMCI's Consolidated
net earnings (or loss) before interest expense and taxes for said period as
determined in accordance with GAAP.
Eligible Account - an Account arising in the ordinary course of a
Borrower's business from the sale of goods or rendition of services which
Lender, in its reasonable credit judgment, deems to be an Eligible Account.
Without limiting the generality of the foregoing, no Account shall be an
Eligible Account if:
it arises out of a sale made by a Borrower to a
Borrower or a Subsidiary or an Affiliate of a Borrower or to a
Person controlled by an Affiliate of a Borrower; or
it is unpaid for more than 60 days after the
original due date shown on the invoice; or
it is due or unpaid more than 90 days after the
original invoice date; or
50% or more of the Accounts from the Account Debtor are
not deemed Eligible Accounts hereunder; or
the total unpaid Accounts of the Account Debtor exceed
20% of the net amount of all Eligible Accounts (or, in the case of XXX
Research, 30% of the net amount of all Eligible Accounts), to the
extent of such excess; or
any covenant, representation or warranty contained
in the Agreement with respect to such Account has been breached; or
the Account Debtor is also a Borrower's creditor or
supplier, or the Account Debtor has disputed liability with respect to
such Account, or the Account Debtor has made any claim with respect to
any other Account due from such Account Debtor to Borrower, or the
Account otherwise is or may become subject to any right of setoff by
the Account Debtor; or
the Account Debtor has commenced a voluntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or made an assignment for the benefit of creditors, or a decree or
order for relief has been entered by a court having jurisdiction in the
premises in respect of the Account Debtor in an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter amended,
or any other petition or other application for relief under the federal
bankruptcy laws has been filed against the Account Debtor, or if the
Account Debtor has failed, suspended business, ceased to be Solvent, or
consented to or suffered a receiver, trustee, liquidator or custodian
to be appointed for it or for all or a significant portion of its
assets or affairs; or
it arises from a sale to an Account Debtor outside the
United States, unless the sale is on letter of credit, guaranty or
acceptance terms, in each case acceptable to Lender in its sole
discretion; or
it arises from a sale to the Account Debtor on a
xxxx-and-hold, guaranteed sale, sale-or-return, sale-on-approval,
consignment or any other repurchase or return basis; or
the Account Debtor is the United States of America or
any department, agency or instrumentality thereof, unless the Borrower
that generated such Account assigns its right to payment of such
Account to Lender, in a manner satisfactory to Lender, so as to comply
with the Assignment of Claims Act of 1940 (31 U.S.C. ss.203 et seq., as
amended); or
the Account is subject to a Lien other than a
Permitted Lien; or
the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services giving
rise to such Account have not been performed by the Borrower that
generated such Account and accepted by the Account Debtor or the
Account otherwise does not represent a final sale; or
the Account is evidenced by chattel paper or an
instrument of any kind, or has been reduced to judgment; or
Any Borrower has made any agreement with the Account
Debtor for any deduction therefrom, except for discounts or allowances
which are made in the ordinary course of business for prompt payment
and which discounts or allowances are reflected in the calculation of
the face value of each invoice related to such Account; or
Any Borrower has made an agreement with the Account
Debtor to extend the time of payment thereof.
Eligible Equipment - shall mean Equipment acquired by a Borrower after the
date hereof, which is in new and unused condition, located at Borrowers'
premises and reasonably acceptable to Lender for lending purposes. In
determining such acceptability Lender may, but need not, rely on reports
furnished to Lender by Borrowers, but reliance thereon by Lender from time to
time shall not be deemed to limit Lender's right to revise standards of
eligibility at any time. Without limiting the generality of the foregoing,
Eligibility Equipment shall not include (a) Equipment at the premises of third
parties or subject to a security interest or lien in favor of any third parties,
(b) Equipment which is not subject to Lender's perfected security interest, (c)
fixtures, (d) defective Equipment (e) Equipment not used or usable in the
ordinary course of a Borrower's business as presently conducted; provided,
however, any Equipment which would otherwise be deemed Eligible Equipment at
locations which are not owned and operated by Borrower may nevertheless be
considered Eligible Equipment if Lender shall have received an agreement in
writing, in form and substance satisfactory to Lender, from the owner and/or
operator of such location, as the case may be, pursuant to which such owner
and/or operator, if required by Lender: (I) acknowledges the first priority lien
of Lender on such Equipment, (ii) agrees to waive any and all claims such owner
and/or operator may, at any time, have against such Equipment and (iii) grants
to Lender the right to enter and remain on the premises in order to exercise
Lender's rights and remedies on terms acceptable to Lender. Any Equipment which
Lender determines to be ineligible or unacceptable for lending purposes shall
nevertheless be and remain at all times part of the Collateral.
Eligible Equipment Cost - shall mean the price paid by a Borrower for
Eligible Equipment, including software that is an integral part thereof and that
is sold as part of the purchase price and not an add-on, but excluding any and
all "soft costs", as reasonably determined by Lender, including, without
limitation, shipping, engineering, labor, installation, setup, testing and other
software costs and expenses and further excluding all commissions, fees and
sales, excise and other taxes.
Eligible Inventory - such Inventory of Borrowers (other than packaging
materials and supplies) which Lender, in its reasonable credit judgment, deems
to be Eligible Inventory. Without limiting the generality of the foregoing, no
Inventory shall be Eligible Inventory if:
it is not raw materials or finished goods that is,
in Lender's opinion, readily marketable in its current form; or
it is not in good, new and saleable condition; or
it is slow-moving, obsolete or unmerchantable; or
it does not meet all standards imposed by any
governmental agency or authority; or
it does not conform in all respects to the
warranties and representations set forth in the Agreement,
it is not at all times subject to Lender's duly
perfected, first priority security interest and no other Lien except a
Permitted Lien; or
it is not situated at a location in compliance with
the Agreement or is in transit.
Environmental Claim shall mean, with respect to any Person, any written or
oral notice, claim, demand or other communication (collectively, a "claim") by
any other Person alleging or asserting such Person's liability for investigatory
costs, cleanup costs, governmental response costs, damages to natural resources
or other Property, personal injuries, fines or penalties arising out of, based
on or resulting from (a) the presence, or Release into the environment, of any
Hazardous Material at any location, whether or not owned by such Person, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law. The term "Environmental Claim" shall include, without
limitation, any claim by any governmental authority for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant to any
applicable Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to the environment.
Environmental Laws shall mean any and all present and future Federal,
state, local and foreign laws, rules or regulations, and any orders or decrees,
in each case as now or hereafter in effect, relating to the regulation or
protection of the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants or toxic or hazardous substances
or wastes into the indoor or outdoor environment, including, without limitation,
ambient air, soil, surface water, ground water, wetlands, land or subsurface
strata, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants
or toxic or hazardous substances or wastes.
Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or owned
by Borrower or in which Borrower has an interest, whether now owned or hereafter
acquired by Borrower and wherever located, and all parts, accessories and
special tools and all increases and accessions thereto and substitutions and
replacements therefor.
Equipment Loans - the Loans to be made by Lender to Borrowers pursuant to
subsection 1.2.2 of the Agreement.
Equipment Note - the Equipment Promissory Note to be executed by Borrowers
in favor of Lender as provided in Section 2.2(B) of the Agreement, which shall
be in the form of Exhibit A-3 to the Agreement.
ERISA - the Employee Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
GAAP - generally accepted account principles in the United States of
America in effect from time to time.
General Intangibles - all personal property of each Borrower (including
things in action) other than goods, Accounts, chattel paper, documents,
instruments and money, whether now owned or hereafter created or acquired by any
Borrower.
Indebtedness - as applied to a Person means, without duplication
all items which in accordance with GAAP would be
included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including, without limitation,
Capitalized Lease Obligations,
all obligations of other Persons which such Person
has guaranteed,
all reimbursement obligations in connection with
letters of credit or letter of credit guaranties issued for the
account of such Person, and
in the case of Borrower (without duplication), the
Obligations.
Hazardous Material shall mean, collectively, (a) any petroleum or
petroleum products, explosives, radioactive materials, asbestos, urea
formaldehyde foam insulation, and transformers or other equipment that contain
polychlorinated biphenyls ("PCB's") in concentrations that are regulated under
the Toxic Substances Control Act, as amended, or any other Environmental Law,
(b) any chemicals or other materials or substances that are now or hereafter
become defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous wastes",
"restricted hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants", "pollutants" or words of similar import under any Environmental
Law and (c) any other chemical or other material or substance, exposure to which
is now or hereafter prohibited, limited or regulated under any Environmental
Law.
Inventory - all of each Borrower's inventory, whether now owned or
hereafter acquired including, but not limited to, all goods intended for sale or
lease by Borrower, or for display or demonstration; all work in process; all raw
materials and other materials and supplies of every nature and description used
or which might be used in connection with the manufacture, printing, packing,
shipping, advertising, selling, leasing or furnishing of such goods or otherwise
used or consumed in Borrower's business; and all documents evidencing and
General Intangibles relating to any of the foregoing, whether now owned or
hereafter acquired by Borrower.
Investment Property - all investment property, financial assets,
certificated and uncertificated securities, securities accounts, securities
entitlements, commodities contracts and commodities accounts of the Borrowers,
whether now owned or hereafter acquired or created by Borrowers.
LC Amount - at any time, the aggregate undrawn face amount of all Letters
of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Lender or any Affiliate of
Lender shall guaranty the payment or performance by a Borrower of its
reimbursement obligation under any letter of credit.
Letter of Credit - any letter of credit issued by Lender or any of
Lender's Affiliates for the account of Borrower.
LIBOR Loans - any portion of the Revolving Credit Loans, the Term Loan or
Equipment Loans on which Borrowers elect pursuant to Section 3.1.1 of this
Agreement, to pay interest during the LIBOR Interest Period applicable thereto
at a fixed rate of interest based on the LIBOR Rate.
LIBOR Interest Period - with respect to each LIBOR Loan, the period
commencing on (and including) the date that such LIBOR Loan is made and ending
on (but excluding) the numerically corresponding date in the first, second,
third or sixth month thereafter, as Borrowers may elect in the applicable
request for such LIBOR Loan, provided that:
(i) any LIBOR Interest Period (other than a LIBOR Interest period
determined pursuant to paragraph (iii) below) which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
LIBOR Interest period shall end on the next preceding Business Day.
(ii) any LIBOR Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the appropriate subsequent calendar month, in which case such LIBOR Interest
period shall end on the next preceding Business Day of the appropriate
subsequent calendar month, and
(iii) any LIBOR Interest Period which begins before the last day of the
Original Term or any Renewal Term, as applicable, and would otherwise end after
the last day of the Original Term or such Renewal Term shall end on the last day
of the Original Term or such Renewal Term.
LIBOR Rate - with respect to any LIBOR Interest Period, the rate per annum
determined by Lender on the basis of the offered rate for deposits in United
States dollars in the London Interbank Market of an amount equal to or
comparable to the amount of the LIBOR Loan to which such LIBOR Interest Period
relates offered for a term comparable to such LIBOR Interest Period as of 1:00
p.m. Boston, Massachusetts time two (2) Business Days period to the first day
for such LIBOR Interest Period. The LIBOR Rate shall be adjusted to the next
higher 1/8th of 1 percent equal to the quotient of (a) the rate set forth in the
previous sentence, divided by (b) a number equal to 1.00 minus the aggregate of
the rates (expressed as a decimal) of the reserve requirements current on the
day that it is two Business Days prior to the beginning of the LIBOR Interest
Period under any regulation promulgated by the Board of Governor of the Federal
Reserve System (or any other governmental authority having jurisdiction over
Lender) as in effect from time to time, dealing with reserve requirements
prescribed for LIBOR funding including any reserve requirements with respect to
"Eurocurrency" liabilities having a term approximately equal to or comparable
with the LIBOR Interest Period under Regulation D of the Board of Governors of
the Federal Reserve System.
Lien - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
Loan Account - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Loans - all loans and advances of any kind made by Lender pursuant to the
Agreement.
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any Person to a Borrower; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to a Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease
Obligation; (iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Indebtedness of a Borrower under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by a Borrower.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
-------------------
ERISA.
Obligations - all Loans and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and other
charges thereon, owing, arising, due or payable from any and all Borrowers to
Lender of any kind or nature, present or future, whether or not evidenced by any
note, guaranty or other instrument, whether arising under the Agreement or any
of the other Loan Documents or otherwise whether direct or indirect (including
those acquired by assignment), absolute or contingent, primary or secondary, due
or to become due, now existing or hereafter arising and however acquired.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other third
party and delivered to Lender in respect of the transactions contemplated by the
Agreement.
Overadvance - the amount, if any, by which the outstanding principal
amount of Revolving Credit Loans plus the LC Amount exceeds the Borrowing Base.
Permitted Liens - any Lien of a kind specified in subsection 8.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrowers incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of Borrowers at the time
outstanding, does not exceed $1,800,000. For the purposes of this definition,
the principal amount of any Purchase Money Indebtedness consisting of
capitalized leases shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of Borrower that is covered by Title IV of ERISA.
Projections - Borrowers' forecasted Consolidated and consolidating (a)
balance sheets, (b) profit and loss statements, (c) cash flow statements, and
(d) capitalization statements, all prepared on a consistent basis with
Borrowers' historical financial statements, together with appropriate supporting
details and a statement of underlying assumptions.
Prime Rate - the rate of interest announced or quoted by Bank from time to
time as its prime rate for commercial loans, whether or not such rate is the
lowest rate charged by Bank to its most preferred borrowers; and, if such prime
rate for commercial loans is discontinued by Bank as a standard, a comparable
reference rate designated by Bank as a substitute therefor shall be the Prime
Rate.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Documents - the agreements, documents and instruments relating
to the acquisitions of Trinity Electronics, Inc., First Sources, Inc. and
D.C. Electronics, Inc.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within 10 days prior to or after the acquisition of any fixed
assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined solely
to the fixed assets the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien.
Release shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
Rentals - as defined in subsection 8.2.12 of the Agreement.
Renewal Terms - as defined in Section 4.1 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
-----------------
ERISA.
Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following:
investments in one or more Subsidiaries of Borrowers
to the extent existing on the Closing Date;
Property to be used in the ordinary course of
business;
Current Assets arising from the sale of goods and
services in the ordinary course of business of Borrowers and their
Subsidiaries;
investments in direct obligations of the United States
of America, or any agency thereof or obligations guaranteed by the
United States of America, provided that such obligations mature within
one year from the date of acquisition thereof;
investments in certificates of deposit maturing within
one year from the date of acquisition issued by a bank or trust company
organized under the laws of the United States or any state thereof
having capital surplus and undivided profits aggregating at least
$100,000,000; and
investments in commercial paper given the highest
rating by a national credit rating agency and maturing not more than
270 days from the date of creation thereof.
Revolving Credit Loan - a Loan made by Lender as provided in Section
-----------------------
2.1 of the Agreement.
Schedule of Accounts - as defined in subsection 6.4.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - the Pledge and Security Agreement, Patent Security
Agreement, Trademark Security Agreement and all other instruments and agreements
now or at any time hereafter securing the whole or any part of the Obligations.
Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is subordinated to the
Obligations in a manner satisfactory to Lender.
Subordination Agreement - a Subordination Agreement to entered into among
Borrower, Lender and the holders of Subordinated Debt in form and substance
satisfactory to Lender.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting Stock
at the time of determination.
Term Loan - A - the loan described in Section 1.2.1 of the Agreement.
Term Loan - B - the Loan described in subsection 1.2.2 of the Agreement.
Term Notes- the Secured Promissory Notes to be executed by Borrower on or
about the Closing Date in favor of Lender to evidence the Term Loans, which
shall be in the form of Exhibit A-1 and Exhibit A-2 to the Agreement.
Total Credit Facility - $25,000,000.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Working Capital - at any date means Current Assets minus Current
Liabilities.
Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
Certain Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
LIST OF EXHIBITS
Exhibit A-1 Term Note - A
Exhibit A-2 Term Note - B
Exhibit A-2 Equipment Note
Exhibit B Borrower's and each Subsidiary's Business Locations
Exhibit C Jurisdictions in which Borrower and each Subsidiary is
Authorized to do Business
Exhibit D Capital Structure of Borrower
Exhibit E Corporate Names
Exhibit F Tax Identification Numbers of Subsidiaries
Exhibit G Patents, Trademarks, Copyrights and Licenses
Exhibit H Contracts Restricting Borrower's Right to Incur Debts
Exhibit I Litigation
Exhibit J Capitalized Leases
Exhibit K Operating Leases
Exhibit L Pension Plans
Exhibit M Labor Contracts
Exhibit N Compliance Certificate
Exhibit O Permitted Liens
Exhibit P Environmental
Exhibit Q Broker's Fee
Exhibit R Options
A-3
SECURED PROMISSORY NOTE-A
$4,700,000.00
March 2, 0000
Xxxxxxxxxxx, Xxxxxxxxxxx
FOR VALUE RECEIVED, each of the undersigned (hereinafter collectively, the
"Borrowers"), hereby jointly and severally promises to pay to the order of FLEET
CAPITAL CORPORATION, a Rhode Island corporation (hereinafter "Lender"), in such
coin or currency of the United States which shall be legal tender in payment of
all debts and dues, public and private, at the time of payment, the principal
sum of $4,700,000.00, together with interest from and after the date hereof on
the unpaid principal balance outstanding at a variable rate per annum equal to
.50% above the Prime Rate.
This Secured Promissory Note (the "Note") is the Term Note-A referred to
in, and is issued pursuant to, that certain Loan and Security Agreement between
Borrowers and Lender dated the date hereof (hereinafter, as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement.
The rate of interest in effect hereunder shall increase or decrease by an
amount equal to any increase or decrease in the Prime Rate, effective as of the
opening of business on the date that any such change in the Prime Rate occurs.
Interest shall be computed in the manner provided in Section 2 of the Loan
Agreement. The interest rate margin of .50% above the Prime Rate is subject to
reduction in the manner provided in Section 2.1.4 of the Loan Agreement and,
under the circumstances set forth in Section 2.1.5 of the Loan Agreement all, or
a portion, of the outstanding principal amount of this Note may bear interest
based upon the LIBOR Rate.
For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
Interest shall be due and payable monthly, in
arrears, on the first day of each month, commencing on April 1, 1998, and
continuing until such time as the full principal balance, together with all
other amounts owing hereunder, shall have been paid in full;
Principal shall be due and payable monthly
commencing on April 1, 1998, and continuing on the first day of each month
thereafter to and including the first day of March, 2003, in installments of
$55,952.38 each; and
The entire remaining principal amount then
outstanding, together with any and all other amounts due hereunder, shall be due
and payable on March 2, 2003.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.3 of the Loan Agreement. Borrowers may also terminate
the Loan Agreement and, in connection with such termination, prepay this Note in
the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement.
Borrowers shall pay a late payment fee equal to 5% of the amount of any
installment of principal or interest, or both, required hereunder which is
received by Lender more than 10 days after the due date thereof.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrowers, for themselves and their legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrowers, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrowers. Borrowers agree that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Connecticut.
EACH BORROWER HEREBY WAIVES RIGHTS AS IT MAY HAVE TO NOTICE AND/OR HEARING
UNDER ANY APPLICABLE FEDERAL OR STATE LAWS INCLUDING, WITHOUT LIMITATION,
CONNECTICUT GENERAL STATUTES SECTION 52-278A, ET SEQ. AS AMENDED, PERTAINING TO
THE EXERCISE BY LENDER OF SUCH RIGHTS AS THE LENDER MAY HAVE, INCLUDING, BUT NOT
LIMITED TO, THE RIGHT TO SEEK PREJUDGEMENT REMEDIES AND/OR DEPRIVE BORROWERS OF
OR AFFECT THE USE OF OR POSSESSION OR ENJOYMENT OF ANY BORROWER'S PROPERTY PRIOR
TO THE RENDITION OF A FINAL JUDGMENT AGAINST ANY BORROWER. EACH BORROWER FURTHER
WAIVES ANY RIGHT IT MAY HAVE TO REQUIRE LENDER TO PROVIDE A BOND OR OTHER
SECURITY AS A PRECONDITION TO OR IN CONNECTION WITH ANY PREJUDGMENT REMEDY
SOUGHT BY AGENT AND LENDER, AND WAIVE ANY OBJECTION TO THE ISSUANCE OF SUCH
PREJUDGMENT REMEDY BASED ON ANY OFFSETS, CLAIMS, DEFENSES OR COUNTERCLAIMS TO
ANY ACTION BROUGHT BY ANY LENDER. EACH BORROWER HEREBY REPRESENTS, COVENANTS AND
AGREES THAT THE PROCEEDS OF THE LOANS EVIDENCED BY THIS AGREEMENT SHALL BE USED
FOR GENERAL COMMERCIAL PURPOSES AND THAT SUCH LOANS CONSTITUTE A "COMMERCIAL
TRANSACTION" AS DEFINED BY THE STATUTES OF THE STATE OF CONNECTICUT.
IN WITNESS WHEREOF, Borrowers have caused this Note to be duly executed
and delivered for acceptance by Lender in Glastonbury, Connecticut on the date
first above written.
ATTEST: TMCI ELECTRONICS, INC.,
a Delaware corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TOUCHE MANUFACTURING COMPANY, INC.
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TOUCHE ELECTRONICS, INC.,
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: ENTERPRISE INDUSTRIES, INC.,
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TRINITY ELECTRONICS, INC.,
a California corporation ("Borrower")
By_____________________________________
______________________________ Name_________________________________
Secretary/Assistant Secretary Title _________________________________
B-3
SECURED PROMISSORY NOTE-B
$2,000,000.00 March 2, 0000
Xxxxxxxxxxx, Xxxxxxxxxxx
FOR VALUE RECEIVED, each of the undersigned (hereinafter collectively, the
"Borrowers"), hereby jointly and severally promises to pay to the order of FLEET
CAPITAL CORPORATION, a Rhode Island corporation (hereinafter "Lender"), in such
coin or currency of the United States which shall be legal tender in payment of
all debts and dues, public and private, at the time of payment, the principal
sum of $2,000,000.00, together with interest from and after the date hereof on
the unpaid principal balance outstanding at a variable rate per annum equal to
1.50% above the Prime Rate.
This Secured Promissory Note (the "Note") is the Term Note-B referred to
in, and is issued pursuant to, that certain Loan and Security Agreement between
Borrowers and Lender dated the date hereof (hereinafter, as amended from time to
time, the "Loan Agreement"), and is entitled to all of the benefits and security
of the Loan Agreement. All of the terms, covenants and conditions of the Loan
Agreement and the Security Documents are hereby made a part of this Note and are
deemed incorporated herein in full. All capitalized terms used herein, unless
otherwise specifically defined in this Note, shall have the meanings ascribed to
them in the Loan Agreement. The interest rate margin of 1.50% above the Prime
Rate is subject to reduction in the manner provided in Section 2.1.4 of the Loan
Agreement and, under the circumstances set forth in Section 2.1.5 of the Loan
Agreement all, or a portion, of the outstanding principal amount of this Note
may bear interest based upon the LIBOR Rate.
The rate of interest in effect hereunder shall increase or decrease by an
amount equal to any increase or decrease in the Prime Rate, effective as of the
opening of business on the date that any such change in the Prime Rate occurs.
Interest shall be computed in the manner provided in Section 2 of the Loan
Agreement.
For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
Interest shall be due and payable monthly, in
arrears, on the first day of each month, commencing on April 1, 1998, and
continuing until such time as the full principal balance, together with all
other amounts owing hereunder, shall have been paid in full;
Principal shall be due and payable monthly
commencing on April 1, 1998, and continuing on the first day of each month
thereafter to and including the first day of March, 2003, in installments of
$33,333.33 each; and
The entire remaining principal amount then
outstanding, together with any and all other amounts due hereunder, shall be due
and payable on March 2, 2003 .
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.3 of the Loan Agreement. Borrowers may also terminate
the Loan Agreement and, in connection with such termination, prepay this Note in
the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement.
Borrowers shall pay a late payment fee equal to 5% of the amount of any
installment of principal or interest, or both, required hereunder which is
received by Lender more than 10 days after the due date thereof.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrowers, for themselves and their legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrowers, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrowers. Borrowers agrees that, without releasing or impairing Borrowers'
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Connecticut.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and
delivered for acceptance by Lender in Glastonbury, Connecticut on the date first
above written.
ATTEST: TMCI ELECTRONICS, INC.,
a Delaware corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TOUCHE MANUFACTURING COMPANY, INC.,
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TOUCHE ELECTRONICS, INC.,
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: ENTERPRISE INDUSTRIES, INC.
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TRINITY ELECTRONICS, INC.,
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
A-3
SECURED PROMISSORY NOTE
$4,000,000.00 March 2, 0000
Xxxxxxxxxxx, Xxxxxxxxxxx
FOR VALUE RECEIVED, each of the undersigned (hereinafter collectively the
"Borrowers"), hereby jointly and severally promises to pay to the order of FLEET
CAPITAL CORPORATION, a Rhode Island corporation (hereinafter "Lender"), in such
coin or currency of the United States which shall be legal tender in payment of
all debts and dues, public and private, at the time of payment, the principal
sum of $4,000,000.00 or such amount as may be advanced from time to time to
Borrowers as Equipment Loans under the Loan Agreement (as hereinafter defined),
together with interest from and after the date hereof on the unpaid principal
balance outstanding at a variable rate per annum equal to .50% above the Prime
Rate.
This Secured Promissory Note (the "Note") is the Equipment Note referred
to in, and is issued pursuant to, that certain Loan and Security Agreement
between Borrowers and Lender dated the date hereof (hereinafter, as amended from
time to time, the "Loan Agreement"), and is entitled to all of the benefits and
security of the Loan Agreement. All of the terms, covenants and conditions of
the Loan Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full. All capitalized terms used
herein, unless otherwise specifically defined in this Note, shall have the
meanings ascribed to them in the Loan Agreement. The interest rate margin of
.50% above the Prime Rate is subject to reduction in the manner provided in
Section 2.1.4 of the Loan Agreement and, under the circumstances set forth in
Section 2.1.5 of the Loan Agreement all, or a portion, of the outstanding
principal amount of this Note may bear interest based upon the LIBOR Rate.
The rate of interest in effect hereunder shall increase or decrease by an
amount equal to any increase or decrease in the Prime Rate, effective as of the
opening of business on the date that any such change in the Prime Rate occurs.
Interest shall be computed in the manner provided in Section 2 of the Loan
Agreement.
For so long as no Event of Default shall have occurred the principal
amount and accrued interest of this Note shall be due and payable on the dates
and in the manner hereinafter set forth:
Interest shall be due and payable monthly, in
arrears, on the first day of each month, commencing on April 1, 1998, and
continuing until such time as the full principal balance, together with all
other amounts owing hereunder, shall have been paid in full;
Principal shall be due and payable monthly
commencing on April 1, 1998, and continuing on the first day of each month
thereafter to and including the first day of March, 2003, in installments equal
to 1/84th of the aggregate amount theretofore advanced to Borrowers as Equipment
Leases; and
The entire remaining principal amount then
outstanding, together with any and all other amounts due hereunder, shall be due
and payable on March 2, 2003.
Notwithstanding the foregoing, the entire unpaid principal balance and accrued
interest on this Note shall be due and payable immediately upon any termination
of the Loan Agreement pursuant to Section 4 thereof.
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.3 of the Loan Agreement. Borrowers may also terminate
the Loan Agreement and, in connection with such termination, prepay this Note in
the manner provided in Section 4 of the Loan Agreement.
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies set forth in Section 10 of the Loan Agreement.
Borrowers shall pay a late payment fee equal to 5% of the amount of any
installment of principal or interest, or both, required hereunder which is
received by Lender more than 10 days after the due date thereof.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, Borrowers, for themselves and their legal representatives,
successors and assigns, expressly waives presentment, demand, protest, notice of
dishonor, notice of non-payment, notice of maturity, notice of protest,
presentment for the purpose of accelerating maturity, diligence in collection,
and the benefit of any exemption or insolvency laws.
Wherever possible, each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Note shall be prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or remaining provisions of
this Note. No delay or failure on the part of Lender in the exercise of any
right or remedy hereunder shall operate as a waiver thereof, nor as an
acquiescence in any default, nor shall any single or partial exercise by Lender
of any right or remedy preclude any other right or remedy. Lender, at its
option, may enforce its rights against any collateral securing this Note without
enforcing its rights against Borrowers, any guarantor of the indebtedness
evidenced hereby or any other property or indebtedness due or to become due to
Borrowers. Borrowers agree that, without releasing or impairing Borrower's
liability hereunder, Lender may at any time release, surrender, substitute or
exchange any collateral securing this Note and may at any time release any party
primarily or secondarily liable for the indebtedness evidenced by this Note.
This Note shall be governed by, and construed and enforced in accordance
with, the laws of the State of Connecticut.
IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed and
delivered and accepted in Glastonbury, Connecticut on the date first above
written.
ATTEST: TMCI ELECTRONICS, INC.,
a Delaware corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TOUCHE MANUFACTURING COMPANY, INC.,
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TOUCHE ELECTRONICS, INC.,
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: ENTERPRISE INDUSTRIES, INC.,
a California corporation ("Borrower")
______________________________ By________________________________________
Secretary/Assistant Secretary Title_____________________________________
ATTEST: TRINITY ELECTRONICS, INC.,
a California corporation ("Borrower")
By________________________________________
Secretary/Assistant Secretary Title_____________________________________
