EXHIBIT 10.4
REVOLVING CREDIT AGREEMENT
Dated as of April 30, 1997
This Revolving Credit Agreement is entered into by and between
ITI TECHNOLOGIES, INC., a Delaware corporation (the "Borrower"), and NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking association (the
"Bank").
ARTICLE I
Definitions
Section 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in the preamble hereto have the meanings
therein assigned to them;
(b) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP; and
(d) all accounting terms, unless otherwise specified, shall be
deemed to refer to Persons and their Subsidiaries on a consolidated
basis in accordance with GAAP.
"Advance" means a loan of funds by the Bank to the Borrower
pursuant to Article II hereof, including both Floating Rate Advances and
Eurodollar Advances.
"Agreement" means this Revolving Credit Agreement and all
exhibits, amendments and supplements hereto.
"Bank" shall have the meaning specified in the preamble.
"Base Rate" means the rate of interest publicly announced from
time to time by the Bank as its "base rate" or "prime rate", or, if the Bank
ceases to announce a rate so designated, any similar successor rate designated
by the Bank.
"Borrower" shall have the meaning specified in the preamble.
"Borrowing" means a borrowing by the Borrower pursuant to
Article II hereof, consisting of Advances made to the Borrower by the Bank on
the date requested by the Borrower.
"Business Day" means any day other than a Saturday or Sunday
on which national banks are open for business in Minneapolis, Minnesota, and, in
addition, if such day relates to a Eurodollar Advance or fixing of a Eurodollar
Rate, a day on which dealings in U.S. dollar deposits are carried on in the
London interbank eurodollar market.
"CADDX" means CADDX Controls, Inc., a Texas corporation and
wholly-owned subsidiary of the Borrower.
"Capital Adequacy Rule" has the meaning specified in Section
2.18(b)(ii).
"Capital Adequacy Rule Change" has the meaning specified in
Section 2.18(b)(iii).
"Capital Expenditures" of any Person means, with respect to
the applicable Covenant Computation Period, the sum of:
(a) the aggregate amount of all expenditures of such Person
for fixed or capital assets made during such period which, in
accordance with GAAP would be classified as capital expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities
of such Person incurred during such Covenant Computation Period.
"Capitalized Lease Interest Expense" of any Person means, with
respect to the applicable Covenant Computation Period, the total expenditures by
such Person to pay the interest portion of any Capitalized Lease Obligations
during such Covenant Computation Period.
"Capitalized Lease Liabilities" of any Person means, with
respect to the applicable Covenant Computation Period, all monetary obligations
of such Person under any leasing or similar arrangement which, in accordance
with GAAP, would be classified as capitalized leases, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Capitalized Lease Obligations" of any Person means, with
respect to the applicable Covenant Computation Period, the total expenditures by
such Person to pay Capitalized Lease Liabilities during such Covenant
Computation Period, as determined on a basis in accordance with generally
accepted accounting principles.
"Capitalized Lease Principal" of any Person means, with
respect to the applicable Covenant Computation Period, the total expenditures by
such Person to pay the principal portion of any Capitalized Lease Obligations
during such Covenant Computation Period.
"Cash Flow Available for Funded Debt" of any Person means,
with respect to the applicable Covenant Computation Period, such Person's Net
Income plus Non-Cash Charges.
"Cash Flow Available for Debt Service" of any Person means,
with respect to the applicable Covenant Computation Period, such Person's Net
Income, plus Interest Expense and Non-Cash Charges, less Capital Expenditures.
"Cash Flow Available for Interest" of any Person means, with
respect to the applicable Covenant Computation Period, such Person's Pre-Tax
Earnings plus Interest Expense.
"Commitment" means the obligation of the Bank to make Advances
and issue Letters of Credit to the Borrower under Article II hereof in an amount
not to exceed the Commitment Amount.
"Commitment Amount" means Fifteen Million Dollars
($15,000,000), being the maximum amount of Advances and the Letter of Credit
Amount, in the aggregate, at any time to be outstanding pursuant to Article II
hereof, subject to reduction in accordance with Section 2.15.
"Commitment Termination Date" means the earlier of (i) April
30, 2000 or (ii) the date on which the Commitment Amount is terminated in full
or reduced to zero pursuant to Section 2.15 or Section 7.2.
"Confidential Information" has the meaning specified in
Section 8.5.
"Covenant Computation Date" means the last day of each
calendar quarter, commencing June 30, 1997.
"Covenant Computation Period" means the four (4) consecutive
calendar quarters ending with the calendar quarter in which a Covenant
Computation Date occurs.
"Customer Finance Program" means any financing transactions
administered through ITI Finance Corporation, and related to either the sales of
equipment by ITI to customers or the financing of acquisition costs of dealers
of ITI equipment.
"Debt" of any Person means, without duplication (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all Capitalized Lease Liabilities of such Person, (v) all debt of
others secured by a lien on any asset of such Person, whether or not such debt
is assumed by such Person, (vi) all debt of others guaranteed by such other
Person, (vii) all obligations of such Person to pay a specified purchase price
for goods or services, whether or not delivered or accepted (i.e., take-or-pay
and similar obligations), (viii) all obligations of such Person under any
interest rate swap program or any similar agreement, arrangement or undertaking
relating to fluctuations in interest rates and (ix) all obligations of such
person to advance funds to, or purchase assets, property or services from, any
other Person in order to maintain the financial condition of such Person.
"Debt Service Coverage Ratio" of any Person means, with
respect to the applicable Covenant Computation Period, the ratio of (i) such
Person's Cash Flow Available for Debt Service to (ii) such Person's Debt Service
Requirements.
"Debt Service Requirements" of any Person means, with respect
to the applicable Covenant Computation Period, the aggregate, without
duplication, of (i) Interest Expense of such Person (ii) all scheduled
installments of principal on Funded Debt of such Person (excluding any principal
payments made (or to be made) under the Note) which are due on demand or during
such Covenant Computation Period, and (iii) all Capitalized Lease Principal of
such Person which is due on demand or during the Covenant Computation Period.
"Default" means an event that, with giving of notice or
passage of time or both, would constitute an Event of Default.
"Default Rate" shall have the meaning specified in Section
2.8(c).
"Environmental Laws" has the meaning specified in Section
4.12.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Eurodollar Advance" means any Advance which bears interest at
a rate determined by reference to the Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to an Interest
Period, the rate per annum equal to the rate (rounded up to the nearest
one-sixteenth of one percent (1/16%)) determined by the Bank to be a rate at
which U.S. dollar deposits are offered to major banks in the London interbank
eurodollar market for funds to be made available on the first day of
such Interest Period and maturing at the end of such Interest Period, as
determined by the Bank between the opening of business and 12:00 Noon,
Minneapolis, Minnesota time, on the second Business Day prior to the beginning
of such Interest Period.
"Eurodollar Rate" means, with respect to an Interest Period,
the rate obtained by adding (i) one percent (1.00%) to (ii) the rate obtained by
dividing (A) the applicable Eurodollar Base Rate by (B) a percentage equal to
one (1.00) minus the applicable percentage (expressed as a decimal) prescribed
by the Board of Governors of the Federal Reserve System (or any successor
thereto) for determining reserve requirements applicable to eurodollar fundings
(currently referred to as "Eurocurrency Liabilities" in Regulation D) or any
other reserve requirements applicable to a member bank of the Federal Reserve
System with respect to such eurodollar liabilities.
"Event of Default" has the meaning specified in Section 7.1.
"Floating Rate" means an annual rate at all times equal to the
Base Rate less one and one quarter percent (1.25%), which Floating Rate shall
change when and as the Base Rate changes.
"Floating Rate Advance" means any Advance which bears interest
at a rate determined by reference to the Floating Rate.
"Funded Debt" of any Person means all interest-bearing Debt of
such Person, and shall include all interest-bearing Debt created, assumed or
guaranteed by such Person either directly or indirectly, including obligations
secured by liens upon property of such Person and upon which such entity
customarily pays the interest, and all Capitalized Lease Liabilities.
"Funded Debt Coverage Ratio" of any Person means, with respect
to the applicable Covenant Computation Period, the ratio of (i) such Person's
Cash Flow Available for Funded Debt to (ii) such Person's Funded Debt.
"GAAP" means generally accepted accounting principles.
"Guarantors" means ITI and CADDX.
"Hazardous Substance" means any asbestos, urea-formaldehyde,
polychlorinated biphenyls ("PCBs"), nuclear fuel or material, chemical waste,
radioactive material, explosives, known carcinogens, petroleum products and
by-products and other dangerous, toxic or hazardous pollutants, contaminants,
chemicals, materials or substances listed or identified in, or regulated by, any
Environmental Laws.
"Indemnitees" shall have the meaning specified in Section
2.7(e).
"Interest Coverage Ratio" of any Person means, with respect to
the applicable Covenant Computation Period, the ratio of (i) such Person's Cash
Flow Available for Interest to the (ii) Interest Expense of such Person.
"Interest Expense" of any Person means, with respect to the
applicable Covenant Computation Period, the total gross interest expense on all
Debt of such Person during such period, and shall in any event include, without
limitation and without duplication, (i) interest expenses (whether or not paid)
on all Debt, (ii) the amortization of Debt discounts, (iii) the amortization of
all fees payable in connection with the incurrence of Debt to the extent
included in interest expense, and (iv) Capitalized Lease Interest Expense.
"Interest Period" means, relative to any Eurodollar Advance,
the period beginning on (and including) the date on which such Eurodollar
Advance is made or continued as, or converted into, a Eurodollar Advance
pursuant to Sections 2.3, 2.4 or 2.5 and shall end on (but exclude) the day
which numerically corresponds to such date one (1), two (2), three (3) or six
(6) months thereafter (or, if such month has no numerically corresponding day,
on the last Business Day of such month), as the Borrower may select in its
relevant notice pursuant to Sections 2.3, 2.4, or 2.5; provided, however, that:
(a) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates
occurring on more than four (4) different dates;
(b) if an Interest Period would otherwise end on a day which
is not a Business Day, such Interest Period shall end on the next
following Business Day (unless such next following Business Day is the
first Business Day of a calendar month, in which case such Interest
Period shall end on the next preceding Business Day); and
(c) no Interest Period may end later than the Commitment
Termination Date.
"ITI" means Interactive Technologies, Inc., a Minnesota
corporation and wholly-owned subsidiary of the Borrower.
"Letter of Credit" has the meaning specified in Section 2.7.
"Letter of Credit Amount" means the sum of (i) the aggregate
face amount of all issued and outstanding Letters of Credit and (ii) amounts
drawn under Letters of Credit for which the Bank has not been reimbursed with
proceeds of an Advance or otherwise.
"Loan Documents" means this Agreement, the Note and each and
every application or other agreement pursuant to which a Letter of Credit is
issued.
"Net Income" of a Person means, with respect to the applicable
Covenant Computation Period, such Person's after-tax net income as determined in
accordance with GAAP, before any extraordinary or non-recurring items.
"Non-Cash Charges" of a Person means, with respect to the
applicable Covenant Computation Period, such Person's depreciation,
amortization, deferred taxes and other non-cash charges which have the effect of
reducing Pre-Tax Earnings or Net Income, as the case may be, all as determined
in accordance with GAAP.
"Note" means the promissory note of the Borrower payable to
the Bank in the amount of the Commitment Amount, in substantially the form of
Exhibit A hereto (as such promissory note may be amended, extended or otherwise
modified from time to time), evidencing the aggregate indebtedness of the
Borrower to the Bank resulting from outstanding Advances, and also means all
other promissory notes accepted from time to time in substitution therefor or in
renewal thereof.
"Obligations" means each and every debt, liability and
obligation of every type and description arising under or in connection with any
of the Loan Documents which the Borrower may now or at any time hereafter owe to
the Bank whether such debt, liability or obligation now exists or is hereafter
created or incurred, whether it is direct or indirect, due or to become due,
absolute or contingent, primary or secondary, liquidated or unliquidated, or
sole, joint, several or joint and several, and including specifically, but not
limited to, the Letter of Credit Amount and all indebtedness, liabilities and
obligations of the Borrower arising under or evidenced by the Note.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan or other plan maintained
for employees of the Borrower and covered by Title IV of ERISA.
"Pre-Tax Earnings" of any Person means, with respect to the
applicable Covenant Computation Period, such Person's Net Income, plus any
income taxes and extraordinary or non-cash loss or expense paid or incurred by
such Person, less any extraordinary, non-operating and non-cash income claimed
or earned by such Person, all as determined in accordance with GAAP.
"Reportable Event" has the meaning assigned to that term in
Title IV of ERISA.
"Return" has the meaning specified in Section 2.18(b)(i).
"Stockholders' Equity" of a Person means the aggregate capital
and retained earnings of such Person, as determined in accordance with GAAP.
"Subsidiary" means any corporation of which more than fifty
percent (50%) of the outstanding shares of capital stock having general voting
power under ordinary circumstances to elect a majority of the board of directors
of such corporation, (irrespective of whether or not at the time stock of any
other class or classes shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by the
Borrower, by the Borrower and one or more Subsidiaries, or by one or more other
Subsidiaries.
"Taxes" has the meaning specified in Section 2.17.
"Type of Advance" has the meaning specified in Section 2.2.
"UCC" means the Uniform Commercial Code as in effect from time
to time in the state designated in Section 8.6 hereof as the state whose laws
shall govern this Agreement, or in any other state whose laws are held to govern
this Agreement or any portion hereof.
ARTICLE II
REVOLVING CREDIT FACILITY
Section 2.1 Commitment to Make Advances. The Bank agrees, on
the terms and subject to the conditions herein set forth, to make Advances to
the Borrower from time to time during the period from the date hereof to and
including the Commitment Termination Date, or the earlier date of termination in
whole of the Commitment pursuant to Sections 2.15 or 7.2, in an aggregate amount
at any time outstanding not to exceed the Commitment Amount less the Letter of
Credit Amount. Within the above limits, the Borrower may borrow, prepay in
accordance with the terms hereof and reborrow in accordance with this Article
II.
Section 2.2 Various Types of Advances. Each Borrowing
hereunder shall be funded by the Bank as either Floating Rate Advances or
Eurodollar Advances (each being herein called a "Type of Advance"), as the
Borrower shall specify in the related notice of proposed Borrowing or notice of
conversion pursuant to Section 2.3 or 2.4. Floating Rate Advances and Eurodollar
Advances may be outstanding at the same time. It is understood, however, that
(i) in the case of Advances which are Floating Rate Advances, the principal
amount of each such Advance shall be in an amount equal to or greater than
$50,000 and (ii) in the case of Advances which are Eurodollar Advances, the
principal amount of each such Advance shall be in an amount equal to $100,000 or
a higher integral multiple of $100,000.
Section 2.3 Procedures for Borrowing. The Borrower shall give
notice to the Bank of each proposed Borrowing not later than 12:00 Noon,
Minneapolis, Minnesota time, on a Business Day which, in the case of a Borrowing
that is to bear interest initially at a Floating Rate, is the proposed date of
such Borrowing or, in the case of a Borrowing that is to bear interest initially
at a Eurodollar Rate, is at least two (2) Business Days prior to the proposed
date of such Borrowing. Each such notice shall be effective upon receipt by the
Bank, shall be in writing or by telephone or telecopy transmission, to be
confirmed in writing by the Borrower if so requested by the Bank (in the form of
Exhibit B), and shall specify whether the Borrowing is to bear interest
initially at a Floating Rate or a Eurodollar Rate, and in the case of a
Borrowing that is to bear interest initially at a Eurodollar Rate, shall specify
the Interest Period to be applicable thereto. Subject to satisfaction of the
conditions precedent set forth in Article III with respect to such Borrowing,
the Bank shall fund the requested Advance to the Borrower prior to the close of
business on the requested Borrowing date.
Section 2.4 Converting Floating Rate Advances to Eurodollar
Advances; Procedures. So long as no Default or Event of Default shall exist, the
Borrower may convert all or any part of any outstanding Floating Rate Advances
into a Eurodollar Advance by giving notice to the Bank of such conversion not
later than 12:00 Noon, Minneapolis, Minnesota time, on a Business Day which is
at least two (2) Business Days prior to the date of the requested conversion.
Each such notice shall be effective upon receipt by the Bank, shall be in
writing or by telephone or telecopy transmission, to be confirmed in writing by
the Borrower if so requested by the Bank (in the form of Exhibit C), shall
specify the date and amount of such conversion, the total amount of Advances to
be so converted and the Interest Period therefor. Each conversion of Advances
shall be on a Business Day, and the aggregate amount of each such conversion of
Floating Rate Advances to a Eurodollar Advance shall be in an amount equal to
$100,000 or a higher integral multiple of $100,000.
Section 2.5 Procedures at End of an Interest Period. Unless
the Borrower requests a new Eurodollar Advance in accordance with the procedures
set forth below, or prepays the principal of an outstanding Eurodollar Advance
at maturity thereof, the Bank shall automatically and without request by the
Borrower, convert each Eurodollar Advance to a Floating Rate Advance on the last
day of the relevant Interest Period. So long as no Default or Event of Default
shall exist, the Borrower may cause all or any part of any outstanding
Eurodollar Advances to continue to bear interest at a Eurodollar Rate after the
end of the then applicable Interest Period by notifying the Bank not later than
12:00 Noon, Minneapolis, Minnesota time, on a Business Day which is at least two
(2) Business Days prior to the first day of the new Interest Period. Each such
notice shall be in writing or by telephone or telecopy transmission, to be
confirmed in writing by the Borrower if so requested by the Bank (in the form of
Exhibit D), shall be effective when received by the Bank, and shall specify the
first day of the applicable Interest Period, the amount of the expiring
Eurodollar Advances to be continued and the Interest Period therefor. Each new
Interest Period shall
begin on a Business Day and the aggregate amount of the Advances bearing the new
Eurodollar Rate shall be in an amount equal to $100,000 or a higher multiple of
$100,000.
Section 2.6 Setting and Notice of Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the Bank and
notice thereof (which may be by telephone) shall be given by the Bank to the
Borrower. Each such determination of the applicable Eurodollar Rate shall be
conclusive and binding upon the parties hereto, in the absence of demonstrable
error. The Bank, upon written request of the Borrower, shall deliver to the
Borrower a statement showing the computations used by the Bank in determining
the applicable Eurodollar Rate hereunder.
Section 2.7 Commitment to Issue Letters of Credit. The Bank
agrees, from the date hereof to and including the Commitment Termination Date,
to issue one or more letters of credit for the account of the Borrower, on the
terms and subject to the conditions set forth below:
(a) Each new letter of credit issued pursuant to this Section
2.7 and each letter of credit issued by the Bank for the account of the
Borrower and outstanding as of the date of this Agreement shall be
referred to herein as a "Letter of Credit". Notwithstanding anything in
the foregoing to the contrary, the Letter of Credit Amount outstanding
at any one time shall not exceed the lesser of (i) $1,000,000 or (ii)
the Commitment Amount less the aggregate outstanding principal balance
of all outstanding Advances. The expiration date of any Letter of
Credit shall not be later than the Commitment Termination Date. Each
Letter of Credit will be issued upon no less than five (5) Business
Days' prior written application from the Borrower to the Bank. The
application requesting issuance of a Letter of Credit shall be on the
Bank's standard form or such other form as may be agreed to by the Bank
and the Borrower. In the event that any of the terms of such
application are inconsistent with the terms and provisions of this
Agreement, the terms and provisions of this Agreement shall govern. The
Bank shall not be obligated to issue a Letter of Credit unless on the
date of issuance all of the conditions precedent specified in Section
3.2 shall have been satisfied as fully as if the issuance of such
Letter of Credit were an Advance.
(b) The Borrower agrees to pay to the Bank a commission with
respect to each Letter of Credit issued as a standby Letter of Credit
at a rate of one percent (1.00%) per annum of the face amount of such
standby Letter of Credit, payable annually in advance. The Borrower
agrees to pay to the Bank a commission with respect to each Letter of
Credit issued as a documentary Letter of Credit at such annual rate as
may be agreed upon by the Borrower and the Bank at the time of issuance
of any such documentary Letter of Credit
(c) Whenever a draft submitted under a Letter of Credit is
paid by the Bank, the Borrower shall be deemed to have requested a
Floating Rate Advance pursuant to
Section 2.3. If all applicable conditions to the making of an Advance
have been satisfied, the Bank will make such Advance to the Borrower
for purposes of reimbursing the Bank for the amount of such draft so
paid by the Bank. If for any reason or under any circumstance the Bank
does not make an Advance as contemplated above and the Borrower does
not otherwise reimburse the Bank for the amount of such draft so paid
by the Bank, the Borrower shall nonetheless be obligated to reimburse
the amount of the draft, upon demand of the Bank, with interest upon
such amount at the Default Rate from and after the date such draft is
paid by the Bank until the amount thereof is repaid in full.
(d) The obligation of the Borrower to reimburse the Bank for
the amount of any payment made by the Bank under any Letter of Credit
shall be absolute, unconditional, and irrevocable, and the Borrower
shall make all such payments without offset or counterclaim of any
kind.
(e) The Borrower shall indemnify, protect, defend and hold
harmless the Bank and its respective directors, officers, employees,
attorneys and agents (collectively the "Indemnitees") from and against
all losses, liabilities, claims, damages, judgments, costs and
expenses, including but not limited to all reasonable attorneys' fees
and legal expenses, incurred by the Indemnitees or imposed upon the
Indemnitees at any time by reason of the issuance, demand for honor or
honor of any Letter of Credit or the enforcement, protection or
collection of the Bank's claims against the Borrower under this Section
2.7 or by reason of any act or omission of any Indemnitee in connection
with any of the foregoing; provided, however, that such indemnification
shall not extend to losses, liabilities, claims, damages, judgments,
costs and expenses arising solely from any act or omission of an
Indemnitee which constitutes gross negligence or willful misconduct.
Section 2.8 Interest on Advances. The Borrower hereby agrees
to pay interest on the unpaid principal amount of each Advance for the period
commencing on the date such Advance is made by the Bank until such Advance is
paid in full, in accordance with the following:
(a) Floating Rate Advances. Subject to subsection (c) below,
while an Advance is a Floating Rate Advance, the outstanding principal
balance thereof shall bear interest at an annual rate at all times
equal to the Floating Rate.
(b) Eurodollar Rate Advances. Subject to subsection (c)
below, while an Advance is a Eurodollar Advance, the outstanding
principal balance thereof shall bear interest for the applicable
Interest Period at an annual rate equal to the Eurodollar Rate
established with respect such Eurodollar Advance in accordance with
Section 2.3, 2.4 or 2.5 hereof.
(c) Default Rate. From and after the occurrence of an Event
of Default and continuing thereafter until such Event of Default shall
be remedied to the written satisfaction of the Bank, the outstanding
principal balance of each Advance shall bear interest, until paid in
full, at a rate equal to the sum of (i) the interest rate otherwise in
effect with respect such Advance and (ii) two percent (2%) (the
"Default Rate").
Section 2.9 Obligation to Repay Advances; Representations. The
Borrower shall be obligated to repay all Advances under this Article II
notwithstanding the failure of the Bank to receive any written request therefor
or written confirmation thereof and notwithstanding the fact that the person
requesting the same was not in fact authorized to do so. Any request for a
Borrowing under this Article II, whether written, telephonic, telecopy or
otherwise, shall be deemed to be a representation by the Borrower that (i) the
amount of the Borrowing, when added to all outstanding Advances, would not
exceed the Commitment Amount less the Letter of Credit Amount and (ii) the
statements set forth in Section 3.2 hereof are correct as of the time of the
request.
Section 2.10 Revolving Note. All Advances made by the Bank
shall be evidenced by and repayable with interest in accordance with the Note.
The aggregate unpaid principal amount of the Note shall be payable as provided
therein and herein on the earlier of the Commitment Termination Date or demand
by the Bank pursuant to Section 7.2 hereof.
Section 2.11 Interest Due Dates. Accrued interest on each
Eurodollar Advance shall be payable on the last day of the Interest Period
relating to such Eurodollar Advance; provided, however, that if any Interest
Period is longer than three (3) months, interest shall be payable monthly in
arrears on the last day of each monthly period occurring after commencement of
such Interest Period and on the last day of the Interest Period. Accrued
interest on each Floating Rate Advance shall be payable in arrears on the last
day of each month and at maturity or conversion of such Floating Rate Loan to a
Eurodollar Advance.
Section 2.12 Computation of Interest and Fees. Interest
accruing on the Note and on the unreimbursed portion of any Letter of Credit
Amount and all fees payable hereunder (including all Letter of Credit fees
described in Section 2.7 and all commitment fees described in Section 2.13)
shall be computed on the basis of actual number of days elapsed in a year of
three hundred sixty (360) days.
Section 2.13 Commitment Fees. The Borrower agrees to pay to
the Bank a commitment fee computed at the rate of one tenth of one percent
(0.10%) per annum on the daily average amount by which the Commitment Amount
exceeds the aggregate principal amount of the sum of (i) all outstanding
Advances and (ii) the Letter of Credit Amount, from the date hereof to and
including the Commitment Termination Date, payable quarterly in arrears on the
last day of each March, June, September and December, commencing June 30, 1997.
Any such commitment fee remaining unpaid upon termination of the Commitment or
demand for payment of the Note shall be due and payable on the date of such
termination or demand.
Section 2.14 Use of Proceeds. The proceeds of the initial
Borrowing hereunder shall be used by the Borrower for its general corporate
purposes.
Section 2.15 Voluntary Reduction or Termination of the
Commitment; Prepayments.
(a) Reduction or Termination of Commitment. The Borrower,
from time to time upon not less than three (3) Business Days' prior
written notice, may permanently reduce the Commitment Amount; provided,
however, that no such reduction shall reduce the Commitment Amount to
an amount less than the outstanding principal balance of all
Obligations then outstanding. Any such voluntary reduction shall be in
an amount equal to $500,000 or a higher integral multiple of $100,000.
The Borrower at any time prior to the Commitment Termination Date may
terminate the Commitment by (i) providing to the Bank not less than
three (3) Business Days prior written notice of its intention to so
terminate the Commitment and (ii) making payment in full of the Note
and all other Obligations and terminating, or making a cash deposit
with respect to, all outstanding Letters of Credit.
(b) Voluntary Prepayments. The Borrower from time to time may
prepay Advances in whole or in part without premium or penalty,
provided that (i) each prepayment of Advances shall be made to the Bank
not later than 12:00 Noon, Minneapolis, Minnesota time, on a Business
Day, and funds received after that hour shall be deemed to have been
received by the Bank on the next following Business Day, (ii) any
partial prepayment of Advances which, at the time of such prepayment,
bear interest at a Eurodollar Rate shall be accompanied by accrued
interest on such partial prepayment through the date of prepayment and
additional compensation calculated in accordance with Section 2.19,
(iii) each partial prepayment of Advances which, at the time of such
prepayment, bear interest at a Eurodollar Rate, shall be in an amount
equal to $100,000 or a higher integral multiple of $100,000 and (iv)
each partial prepayment of Advances which, at the time of such
prepayment, bear interest at a Floating Rate, shall be in an amount
equal to or greater than $50,000.
Section 2.16 Payments
(a) Making of Payments. All payments of principal of and
interest on the Note and all payments of fees and other Obligations due
hereunder shall be made to the Bank at its office in Minneapolis,
Minnesota, not later than 12:00 Noon, Minneapolis, Minnesota, time, on
the date due, in immediately available funds, and funds received after
that hour shall be deemed to have been received by the Bank on the next
following Business Day. The Borrower hereby authorizes the Bank to
charge the Borrower's demand deposit account maintained with the Bank
for the amount of any such payment on the due date therefor, but the
Bank's failure to so charge such account shall in no way affect the
obligation of the Borrower to make any such payment.
(b) Setoff. The Borrower agrees that the Bank shall have all
rights of setoff and bankers' lien provided by applicable law, and in
addition thereto, the Borrower agrees that at any time (i) any amount
owing by the Borrower under this Agreement is due to the Bank and (ii)
any Event of Default exists, the Bank may apply to the payment of any
amount owing by the Borrower under this Agreement any and all balances,
credits, and deposits, accounts or moneys of the Borrower then or
thereafter in the possession of the Bank.
(c) Due Date Extension. If any payment of principal of or
interest on any Advance or any fees payable hereunder falls due on a
day which is not a Business Day, then such due date shall be extended
to the next following Business Day, and (in the case of principal)
additional interest shall accrue and be payable for the period of such
extension.
(d) Application of Certain Payments. Except as otherwise
provided herein, so long as no Default or Event of Default has occurred
and is continuing hereunder, each payment of principal shall be applied
to such Type of Advances as the Borrower shall direct by notice to be
received by the Bank on or before the date of such payment, or in the
absence of such notice, as the Bank shall determine in its discretion.
Section 2.17 Taxes. All payments made by the Borrower to the
Bank under or in connection with this Agreement or the Note shall be made
without any setoff or other counterclaim, and free and clear of and without
deduction for or on account of any present or future taxes now or hereafter
imposed by any governmental or other authority, except to the extent that any
such deduction or withholding is compelled by law. As used herein, the term
"Taxes" shall include all income, excise and other taxes of whatever nature
(other than taxes generally assessed on the overall net income of the Bank by
the government or other authority of the country, state or political subdivision
in which the Bank is incorporated or in which the office through which the Bank
is acting is located) as well as all levies, imposts, duties, charges, or fees
of whatever nature. If the Borrower, or any Guarantor, is compelled
by law to make any deductions or withholdings on account of any Taxes (including
any foreign withholding) it will:
(a) pay to the relevant authorities the full amount required
to be so withheld or deducted;
(b) pay such additional amounts (including, without
limitation, any penalties, interest or expenses) as may be necessary in
order that the net amount received by the Bank after such deductions or
withholdings (including any required deduction or withholding on such
additional amounts) shall equal the amount the Bank would have received
had no such deductions or withholdings been made; and
(c) promptly forward to the Bank an official receipt or other
documentation satisfactory to the Bank evidencing such payment to such
authorities.
The amount that the Borrower shall be required to pay to the Bank pursuant to
the foregoing clause (b) shall be reduced, to the extent permitted by applicable
law, by the amount of any offsetting tax benefit which the Bank receives as the
result of Borrower's payment to the relevant authorities as reasonably
determined by the Bank; provided, however, that if the Bank shall subsequently
determine that it has lost the benefit of all or a portion of such tax benefit,
the Borrower shall promptly remit to the Bank the amount certified by the Bank
to be the amount necessary to restore the Bank to the position it would have
been in if no payment had been made pursuant to this sentence. If any Taxes
otherwise payable by the Borrower pursuant to the foregoing paragraph are
directly asserted against the Bank, the Bank may pay such taxes and the Borrower
promptly shall reimburse the Bank to the full extent otherwise required by such
paragraph. The obligations of the Borrower under this Section 2.17 shall survive
any termination of this Agreement.
Section 2.18 Increased Costs; Capital Adequacy; Funding
Exceptions
(a) Increased Costs on Eurodollar Advances. If Regulation D
of the Board of Governors of the Federal Reserve System or after the
date of this Agreement, the adoption of any applicable law, rule or
regulation, or any change in any existing law, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall:
(i) subject the Bank to or cause the withdrawal or
termination of any exemption previously granted any Bank with
respect to, any tax, duty or other charge with respect to its
Eurodollar Advances or its obligation to make Eurodollar
Advances, or shall change the basis of taxation of payments to
the
Bank of the principal of or interest under this Agreement in
respect of its Eurodollar Advances or its obligation to make
Eurodollar Advances (except for changes in the rate of tax on
the overall net income of such Bank imposed by the
jurisdictions in which the Bank's principal executive office
is located); or
(ii) impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the
Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of
interest rates pursuant to Section 2.8), special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by, the Bank; or
(iii) impose on the Bank any other condition
affecting its making, maintaining or funding of its Eurodollar
Advances or its obligation to make Eurodollar Advances;
and the result of any of the foregoing is to increase the cost to the
Bank of making or maintaining any Eurodollar Advance, or to reduce the
amount of any sum received or receivable by the Bank under this
Agreement or under the Note with respect to a Eurodollar Advance, then
the Bank will notify the Borrower within ninety (90) days after
discovering such increased cost and within fifteen (15) days after
demand by the Bank (which demand shall be accompanied by a statement
setting forth the basis of such demand), the Borrower shall pay to the
Bank such additional amount or amounts as will compensate the Bank for
such increased cost or such reduction. The Bank will promptly notify
the Borrower of any event of which it has knowledge, occurring after
the date hereof, which will entitle the Bank to compensation pursuant
to this Section 2.18. If the Borrower receives notice from the Bank of
any event which will entitle the Bank to compensation pursuant to this
Section 2.18, the Borrower may prepay any then outstanding Eurodollar
Advances or notify the Bank that any pending request for a Eurodollar
Advance shall be deemed to be a request for a Floating Rate Advance, in
each case subject to the provisions of Section 2.19.
(b) Capital Adequacy. If the Bank determines at any time that
the Bank's Return has been reduced as a result of any Capital Adequacy
Rule Change, the Bank may require the Borrower to pay to the Bank the
amount necessary to restore the Bank's Return to what it would have
been had there been no Capital Adequacy Rule Change. For purposes of
this Section 2.18(b), the following definitions shall apply:
(i) "Return", for any calendar quarter or shorter
period, means the percentage determined by dividing (A) the
sum of interest and ongoing fees earned by the Bank under this
Agreement during such period by (B) the average capital the
Bank is required to maintain during such period as a result
of its being a party to this Agreement, as determined by the
Bank based upon its total capital requirements and a
reasonable attribution formula that takes account of the
Capital Adequacy Rules then in effect. Return may be
calculated for the Bank for each calendar quarter and for the
shorter period between the end of a calendar quarter and the
date of termination in whole of this Agreement.
(ii) "Capital Adequacy Rule" means any law, rule,
regulation or guideline regarding capital adequacy that
applies to the Bank, or the interpretation thereof by any
governmental or regulatory authority. Capital Adequacy Rules
include rules requiring financial institutions to maintain
total capital in amounts based upon percentages of outstanding
loans, binding loan commitments and letters of credit.
(iii) "Capital Adequacy Rule Change" means any change
in any Capital Adequacy Rule occurring after the date of this
Agreement, but does not include any changes in applicable
requirements that at the date hereof are scheduled to take
place under the existing Capital Adequacy Rules or any
increases in the capital that the Bank is required to maintain
to the extent that the increases are required due to a
regulatory authority's assessment of the Bank's financial
condition.
The initial notice sent by the Bank shall be sent as promptly as
practicable after the Bank learns that its Return has been reduced,
shall include a demand for payment of the amount necessary to restore
the Bank's Return for the quarter in which the notice is sent, and
shall state in reasonable detail the cause for the reduction in the
Bank's Return and the Bank's calculation of the amount of such
reduction. Thereafter, the Bank may send a new notice during each
calendar quarter setting forth the calculation of the reduced Return
for that quarter and including a demand for payment of the amount
necessary to restore the Bank's Return for that quarter. The Bank's
calculation in any such notice shall be conclusive and binding absent
demonstrable error.
(c) Basis for Determining Interest Rate Inadequate or Unfair.
If with respect to any Interest Period:
(i) the Bank determines that deposits in U.S. dollars
(in the applicable amounts), as the case may be, are not being
offered in the London interbank eurodollar market for such
Interest Period; or
(ii) the Bank otherwise determines (which
determination shall be binding and conclusive on all parties)
that by reason of circumstances affecting the
London interbank eurodollar market adequate and reasonable
means do not exist for ascertaining the applicable Eurodollar
Rate; or
(iii) the Bank advises the Borrower that the
Eurodollar Rate as determined by the Bank will not adequately
and fairly reflect the cost to the Bank of maintaining or
funding a Eurodollar Advance for such Interest Period, or that
the making or funding of Eurodollar Advances has become
impracticable as a result of an event occurring after the date
of this Agreement which in the opinion of the Bank materially
affects such Eurodollar Advances;
then the Bank shall promptly notify the Borrower and the Borrower shall
enter into good faith negotiations with the Bank in order to determine
an alternate method to determine the Eurodollar Rate for the Bank, and
during the pendency of such negotiations with the Bank, the Bank shall
be under no obligation to make Eurodollar Advances.
(d) Illegality. In the event that any change in (including
the adoption of any new) applicable laws or regulations, or any change
in the interpretation of applicable laws or regulations by any
governmental authority, central bank, comparable agency or any other
regulatory body charged with the interpretation, implementation or
administration thereof, or compliance by the Bank with any request or
directive (whether or not having the force of law) of any such
authority, central bank, comparable agency or other regulatory body,
should make it (or, in the good faith judgment of the Bank, shall raise
a substantial question as to whether it is) unlawful for the Bank to
make, maintain or fund Eurodollar Advances, then (i) the Bank shall
promptly notify the Borrower, (ii) the obligation of the Bank to make,
maintain or convert into Eurodollar Advances shall, upon the
effectiveness of such event, be suspended for the duration of such
unlawfulness, and (iii) for the duration of such unlawfulness, any
notice by the Borrower pursuant to Sections 2.3, 2.4 or 2.5 requesting
the Bank to make or convert into Eurodollar Advances shall be construed
as a request to make or to continue making Floating Rate Advances.
Section 2.19 Funding Losses. The Borrower hereby agrees that
upon demand by the Bank (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed) the
Borrower will indemnify the Bank against any loss or expense which the Bank may
have sustained or incurred (including, without limitation, any net loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by the Bank to fund or maintain Eurodollar Advances) or
which may be deemed to have sustained or incurred, as reasonably determined by
the Bank, (i) as a consequence of any failure by the Borrower to make any
payment when due of any amount due hereunder in connection with any Eurodollar
Advances, (ii) due to any failure of the Borrower to borrow or convert any
Eurodollar Advances on a date specified therefor in a notice thereof or (iii)
due to any payment or prepayment of any Eurodollar Advance on a date
other than the last day of the applicable Interest Period for such Eurodollar
Advance. For this purpose, all notices of Borrowing pursuant to this Agreement
shall be deemed to be irrevocable.
Section 2.20 Right of Bank to Fund through Other Offices. The
Bank, if it so elects, may fulfill its Commitment as to any Eurodollar Advance
by causing a foreign branch or affiliate of such Bank to make such Eurodollar
Advance; provided, that in such event the obligation to the Borrower to repay
such Eurodollar Advance shall nevertheless be to the Bank and shall be deemed
held by the Bank, to the extent of such Eurodollar Advance, for the account of
such branch or affiliate.
Section 2.21 Discretion of Bank as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, the Bank shall
be entitled to fund and maintain its funding of all or any part of its
Eurodollar Advances in any manner it deems fit, it being understood, however,
that for the purposes of this Agreement (specifically including, without
limitation, Section 2.19 hereof) all determinations hereunder shall be made as
if the Bank had actually funded and maintained each Eurodollar Advance during
each Interest Period for such Eurodollar Advance through the purchase of
deposits having a maturity corresponding to such Interest Period and bearing an
interest rate equal to the appropriate Eurodollar Rate for such Loan Period.
Section 2.22 Conclusiveness of Statements; Survival of
Provisions. Determinations and statements of the Bank pursuant to Section 2.17,
2.18, or 2.19 shall be conclusive absent demonstrable error. The Bank may use
reasonable averaging and attribution methods in determining compensation
pursuant to such Sections and the provisions of such Sections shall survive
termination of this Agreement.
ARTICLE III
CONDITIONS OF LENDING
Section 3.1 Conditions Precedent to the Initial Advances. The
obligation of the Bank to fund the initial Borrowing request of the Borrower or
issue any Letter of Credit is subject to the condition precedent that the Bank
shall have received the following, each in form and substance satisfactory to
the Bank:
(a) The Note, properly executed on behalf of the Borrower.
(b) A certified copy of the resolutions of the Board of
Directors and shareholders, if necessary, of the Borrower evidencing
approval of all Loan Documents and the other matters contemplated
hereby.
(c) Copies of the Articles of Incorporation and Bylaws of the
Borrower, certified by the Secretary or Assistant Secretary of the
Borrower as being true and correct copies thereof.
(d) A certificate of good standing of the Borrower, dated not
more than sixty (60) days prior to the date hereof and evidence
satisfactory to the Bank that the Borrower is qualified to conduct its
business in each state where it presently conducts such business.
(e) A signed copy of a certificate of the Secretary or an
Assistant Secretary of the Borrower which shall certify the names of
the officers of the Borrower authorized to sign the Loan Documents and
the other documents or certificates to be delivered pursuant to this
Agreement by the Borrower or any of its officers, including requests
for Advances, together with the true signatures of such officers. The
Bank may conclusively rely on such certificate until it shall receive a
further certificate of the Secretary or Assistant Secretary of the
Borrower canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate.
(f) A guaranty, properly executed by ITI, pursuant to which
ITI unconditionally guarantees the full and prompt payment of all
Obligations.
(g) A certified copy of the resolutions of the Board of
Directors and shareholders, if necessary, of ITI evidencing approval of
the guaranty and the other matters contemplated hereby.
(h) Copies of the Articles of Incorporation and Bylaws of ITI,
certified by the Secretary or Assistant Secretary of ITI as being true
and correct copies thereof.
(i) A certificate of good standing of ITI, dated not more than
sixty (60) days prior to the date hereof and evidence satisfactory to
the Bank that ITI is qualified to conduct its business in each state
where it presently conducts such business.
(j) A signed copy of an opinion of counsel for the Borrower
and ITI, addressed to the Bank, in form and content acceptable to the
Bank.
Section 3.2 Conditions Precedent to All Advances. The
obligation of the Bank to make each Advance or issue a Letter of Credit shall be
subject to the further conditions precedent that on such date:
(a) the representations and warranties contained in Article IV
hereof are correct on and as of the date of such Advance as though made
on and as of such date,
except to the extent that such representations and warranties relate
solely to an earlier date; and
(b) no event has occurred and is continuing, or would result
from such Advance, which constitutes a Default or an Event of Default.
Section 3.3 Conditions Subsequent to Initial Advance. By May
20, 1997, the Bank shall have each of the following in form and content
acceptable to the Bank:
(a) A guaranty, properly executed by CADDX, pursuant to which
CADDX unconditionally guarantees the full and prompt payment of all
Obligations.
(b) A certified copy of the resolutions of the Board of
Directors and shareholders, if necessary, of CADDX evidencing approval
of the guaranty and the other matters contemplated hereby.
(c) Copies of the Articles of Incorporation and Bylaws of
CADDX, certified by the Secretary or Assistant Secretary of CADDX as
being true and correct copies thereof.
(d) A certificate of good standing of CADDX, dated not more
than sixty (60) days prior to the date hereof and evidence satisfactory
to the Bank that CADDX is qualified to conduct its business in each
state where it presently conducts such business.
(e) A signed copy of an opinion of counsel for CADDX,
addressed to the Bank, in form and content acceptable to the Bank.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Bank as follows:
Section 4.1 Corporate Existence and Power; Name; Chief
Executive Office. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Minnesota, and is
duly licensed or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary and where
failure to obtain such licensing or qualification would have a material adverse
effect on the Borrower. The Borrower has all requisite power and authority,
corporate or otherwise, to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations under, the Loan
Documents. Within the last twelve (12) months, the Borrower has done business
solely under the names set forth in Schedule 4.0 hereto. The chief executive
office and principal place of business of the Borrower is located at the address
set forth in Schedule 4.0 hereto, and all of the Borrower's records relating to
its businesses are kept at that location.
Section 4.2 Authorization for Borrowings and Letters of
Credit; No Conflict as to Law or Agreements. The execution, delivery and
performance by the Borrower of the Loan Documents, and the Letters of Credit and
Borrowings from time to time obtained hereunder, have been duly authorized by
all necessary corporate action and do not and will not (i) require any consent
or approval which has not been obtained prior to the date hereof, (ii) require
any authorization, consent or approval by, or registration, declaration or
filing with, or notice to, any governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any third party,
except such authorization, consent, approval, registration, declaration, filing
or notice as has been obtained, accomplished or given prior to the date hereof,
(iii) violate any provision of any law, rule or regulation (including, without
limitation, Regulation X of the Board of Governors of the Federal Reserve
System) or of any order, writ, injunction or decree presently in effect having
applicability to the Borrower or of the Articles of Incorporation or Bylaws of
the Borrower, (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other material agreement, lease or
instrument to which the Borrower is a party or by which it or its properties may
be bound or affected, or (v) result in, or require, the creation or imposition
of any mortgage, deed of trust, pledge, lien, security interest or other charge
or encumbrance of any nature upon or with respect to any of the properties now
owned or hereafter acquired by the Borrower.
Section 4.3 Legal Agreements. The Loan Documents constitute
the legal, valid and binding obligations and agreements of the Borrower,
enforceable against the Borrower in accordance with their respective terms.
Section 4.4 Subsidiaries. Except as set forth in Schedule 4.0,
the Borrower has no Subsidiaries.
Section 4.5 Financial Condition; No Adverse. The Borrower has
heretofore furnished to the Bank audited financial statements for its fiscal
year ended December 31, 1996, and unaudited financial statements for the months
ended February 28, 1997, and those statements fairly present the financial
condition of the Borrower on the dates thereof and the results of its operations
and cash flows for the periods then ended and were prepared in accordance with
GAAP. Since the date of the most recent financial statements, there has been no
material adverse change in the business, properties or condition (financial or
otherwise) of the Borrower.
Section 4.6 Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or the properties of the Borrower before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to the Borrower, could have
a material adverse effect on the financial condition, properties or operations
of the Borrower, except as set forth and described in Schedule 4.6.
Section 4.7 Regulation U. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Advance will be used
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.
Section 4.8 Taxes. The Borrower has paid or caused to be paid
to the proper authorities when due all federal, state and local taxes required
to be withheld by it. The Borrower has filed all federal, state and local tax
returns which to the knowledge of the officers of the Borrower, are required to
be filed, and the Borrower has paid or caused to be paid to the respective
taxing authorities all taxes as shown on said returns or on any assessment
received by it to the extent such taxes have become due.
Section 4.9 Titles and Liens. The Borrower has good and
absolute title to all properties and assets reflected in the latest balance
sheet referred to in Section 4.5, free and clear of all mortgages, security
interests, liens and encumbrances, except for (i) mortgages, security interests
and liens permitted by Section 6.1, and (ii) covenants, restrictions, rights,
easements and minor irregularities in title which do not materially interfere
with the business or operations of the Borrower as presently conducted. In
addition, no financing statement naming the Borrower as debtor is on file in any
office except to perfect only security interests permitted by Section 6.1.
Section 4.10 Plans. Except as disclosed to the Bank in writing
prior to the date hereof, the Borrower does not maintain and has not in the past
maintained any Plan. The
Borrower has not received any notice or has any knowledge to the effect that it
is not in full compliance with any of the requirements of ERISA. No Reportable
Event or other fact or circumstance which may have an adverse effect on the
Plan's tax qualified status exists in connection with any Plan. The Borrower,
does not have:
(a) any accumulated funding deficiency within the meaning of
ERISA; or
(b) any liability or knows of any fact or circumstances which
could result in any liability to the Pension Benefit Guaranty
Corporation, the Internal Revenue Service, the Department of Labor or
any participant in connection with any Plan (other than accrued
benefits which or which may become payable to participants or
beneficiaries of any such Plan).
Section 4.11 Default. The Borrower is in material compliance
with all provisions of all agreements, instruments, decrees and orders to which
it is a party or by which it or its property is bound or affected, the breach or
default of which could have a material adverse effect on the financial
condition, properties or operations of the Borrower.
Section 4.12 Environmental Protection. The Borrower has
obtained all permits, licenses and other authorizations which are required under
federal, state and local laws and regulations relating to emissions, discharges,
releases of pollutants, contaminants, hazardous or toxic materials, or wastes
into ambient air, surface water, ground water or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
materials or wastes ("Environmental Laws") at the Borrower's facilities or in
connection with the operation of its facilities. Except as disclosed in Schedule
4.12, the Borrower and all activities of the Borrower at its facilities comply
with all Environmental Laws and with all terms and conditions of any required
permits, licenses and authorizations applicable to the Borrower with respect
thereto. Except as disclosed in Schedule 4.12, the Borrower is also in
compliance with all limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
Environmental Laws or contained in any plan, order, decree, judgment or notice
of which the Borrower is aware. Except as disclosed in Schedule 4.12, the
Borrower is not aware of, nor has the Borrower received notice of, any events,
conditions, circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent continued compliance with, or which may give
rise to any liability under, any Environmental Laws.
Section 4.13 Submissions to Bank. All financial and other
information provided to the Bank by or on behalf of the Borrower in connection
with the Borrower's request for the credit facilities contemplated hereby is
true and correct in all material respects and, as to projections, valuations or
proforma financial statements, present a good faith opinion as to such
projections, valuations and proforma condition and results.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE BORROWER
So long as the Note shall remain unpaid or the Commitment
shall be outstanding, the Borrower will comply with the following requirements,
unless the Bank shall otherwise consent in writing:
Section 5.1 Reporting Requirements. The Borrower will deliver,
or cause to be delivered, to the Bank each of the following, which shall be in
form and detail acceptable to the Bank:
(a) as soon as available, and in any event within one hundred
and twenty (120) days after the end of each fiscal year of the
Borrower, audited financial statements of the Borrower with the
unqualified opinion of independent certified public accountants
selected by the Borrower and acceptable to the Bank, which annual
financial statements shall include the balance sheets of the Borrower
as at the end of such fiscal year and the related statements of income,
retained earnings and cash flows of the Borrower for the fiscal year
then ended, prepared, if the Bank so requests, on a consolidating and
consolidated basis to include any Subsidiaries, all in reasonable
detail and prepared in accordance with GAAP applied on a basis
consistent with the accounting practices applied in the financial
statements referred to in Section 4.5, together with a certificate of
the chief financial officer of the Borrower, substantially in the form
of Exhibit E, stating that such financial statements have been prepared
in accordance with GAAP applied on a basis consistent with the
accounting practices reflected in the annual financial statements
referred to in Section 4.5 and whether or not such officers have
knowledge of the occurrence of any Default or Event of Default
hereunder and, if so, stating in reasonable detail the facts with
respect thereto;
(b) as soon as available and in any event within thirty (30)
days after the end of each calendar quarter, an unaudited/internal
balance sheet and statements of income, cash flow, and retained
earnings of the Borrower as at the end of and for such quarter and for
the year to date period then ended, prepared, if the Bank so requests,
on a consolidating and consolidated basis to include any Subsidiaries,
in reasonable detail and stating in comparative form the figures for
the corresponding date and periods in the previous year, all prepared
in accordance with GAAP applied on a basis consistent with the
accounting practices reflected in the financial statements referred to
in Section 4.5 hereof, subject to year-end audit adjustments; and
accompanied by a certificate of the chief financial officer of the
Borrower, substantially in the form of Exhibit E, stating (i) that such
financial statements have been prepared in accordance with GAAP applied
on a basis consistent with the accounting practices reflected in the
financial statements referred to in Section 4.5, subject to year-end
audit adjustments, (ii) whether or not such officer has knowledge of
the occurrence of any Default or Event of Default hereunder not
theretofore reported and remedied and, if so, stating in
reasonable detail the facts with respect thereto, and (iii) all
relevant facts in reasonable detail to evidence, and the computations
as to, whether or not the Borrower is in compliance with the
requirements set forth in Sections 5.8, 5.9, 5.10, and 5.11;
(c) not later than ninety (90) days after the beginning of
each fiscal year of the Borrower, the projected balance sheets, income
statements, and cash flow statements for each quarter of such year,
each in reasonable detail, representing the good faith projections of
the Borrower and certified by the Borrower's chief financial officer as
being the most accurate projections available and identical to the
projections used by the Borrower for internal planning purposes,
together with such supporting schedules and information as the Bank in
its discretion may require;
(d) immediately after the commencement thereof, notice in
writing of all litigation and of all proceedings before any
governmental or regulatory agency affecting the Borrower, or any of its
Subsidiaries, of the type described in Section 4.6 or which seek a
monetary recovery against the Borrower, or any of its Subsidiaries, in
excess of $500,000;
(e) as promptly as practicable (but in any event not later
than five (5) business days) after an officer of the Borrower obtains
knowledge of the occurrence of a Default or Event of Default hereunder,
notice of such occurrence, together with a detailed statement by a
responsible officer of the Borrower of the steps being taken by the
Borrower to cure the effect of such breach, default or event;
(f) as soon as possible and in any event within thirty (30)
days after the Borrower, or any of its Subsidiaries, knows or has
reason to know that any Reportable Event with respect to any Plan has
occurred, the statement of the chief financial officer of the Borrower,
setting forth details as to such Reportable Event and the action which
the Borrower proposes to take with respect thereto, together with a
copy of the notice of such Reportable Event to the Pension Benefit
Guaranty Corporation;
(g) as soon as possible, and in any event within ten (10) days
after the Borrower fails to make any quarterly contribution required
with respect to any Plan under Section 4.12(m) of the Internal Revenue
Code of 1986, as amended, the statement of the chief financial officer
of the Borrower setting forth details as to such failure and the action
which the Borrower proposes to take with respect thereto, together with
a copy of any notice of such failure required to be provided to the
Pension Benefit Guaranty Corporation;
(h) promptly upon their distribution, copies of all financial
statements, reports and proxy statements which the Borrower shall have
sent to its stockholders;
(i) promptly after the sending or filing thereof, copies of
all regular and periodic financial reports which the Borrower shall
file with the Securities and Exchange Commission or any national
securities exchange; and
(j) promptly upon knowledge thereof, notice of the violation
by the Borrower of any law, rule or regulation, the non-compliance with
which could materially and adversely affect its business or its
financial condition.
Section 5.2 Books and Records; Inspection and Examination. The
Borrower and its Subsidiaries will keep accurate books of record and account for
itself pertaining to its business and financial condition and such other matters
as the Bank may from time to time request in which true and complete entries
will be made in accordance with GAAP consistently applied and, upon request of
and reasonable notice by the Bank, will permit any officer, employee, attorney
or accountant for the Bank at the Bank's expense, to audit, review, make
extracts from or copy any and all corporate and financial books and records of
the Borrower at all reasonable times during ordinary business hours, to send and
discuss with account debtors and other obligors requests for verification of
amounts owed to the Borrower, and to discuss the affairs of the Borrower with
any of its directors, officers, employees or agents. The Borrower and its
Subsidiaries will permit the Bank or its employees, accountants, attorneys or
agents, at the Bank's expense, to examine and inspect any property of the
Borrower and its Subsidiaries at any time during ordinary business hours.
Section 5.3 Compliance with Laws; Environmental Indemnity. The
Borrower and its Subsidiaries will (i) comply with the requirements of
applicable laws and regulations, the non-compliance with which would materially
and adversely affect its business or its financial condition, (ii) comply with
all applicable Environmental Laws and obtain any permits, licenses or similar
approvals required by any such Environmental Laws, and (iii) use and keep its
assets, and will require that others use and keep its assets, only for lawful
purposes, without violation of any federal, state or local law, statute or
ordinance. The Borrower and its Subsidiaries will indemnify, defend and hold the
Bank harmless from and against any claims, loss or damage to which the Bank may
be subjected as a result of any past, present or future existence, use,
handling, storage, transportation or disposal of any Hazardous Substance by the
Borrower and its Subsidiaries, or on property owned, leased or controlled by the
Borrower, or its Subsidiaries. This indemnification agreement shall survive the
termination of this Agreement and payment of all Obligations.
Section 5.4 Payment of Taxes and Other Claims. The Borrower
and its Subsidiaries will pay or discharge, when due, (i) all taxes, assessments
and governmental charges levied or imposed upon it or upon its income or
profits, upon any properties belonging to it prior to the date on which
penalties attach thereto, (ii) all federal, state and local taxes required to be
withheld by it, and (iii) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a lien or charge upon any properties of
the Borrower, or its Subsidiaries; provided, however, that the Borrower, or its
Subsidiaries, shall
not be required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
Section 5.5 Maintenance of Properties. The Borrower and its
Subsidiaries will keep and maintain all of its properties necessary or useful in
its business in good condition, repair and working order (normal wear and tear
excepted); provided, however, that nothing in this Section 5.5 shall prevent the
Borrower, or its Subsidiaries, from discontinuing the operation and maintenance
of any of its properties if such discontinuance is, in the reasonable judgment
of the Borrower, or its Subsidiaries, desirable in the conduct of its business
and not disadvantageous in any material respect to the Bank.
Section 5.6 Insurance. The Borrower and its Subsidiaries will
obtain and at all times maintain insurance with insurers believed by the
Borrower, and its Subsidiaries, to be responsible and reputable in such amounts
and against such risks as is usually carried by companies engaged in similar
business and owning similar properties in the same general areas in which the
Borrower, and its Subsidiaries, operate.
Section 5.7 Preservation of Corporate Existence. The Borrower
and its Subsidiaries will preserve and maintain its corporate existence and all
of its rights, privileges and franchises necessary or desirable in the normal
conduct of its business and shall conduct its business in an orderly, efficient
and regular manner.
Section 5.8 Interest Coverage Ratio. The Borrower will
maintain, as of each Covenant Computation Date, its Interest Coverage Ratio at
not less than 3.50 to 1.00.
Section 5.9 Debt Service Coverage Ratio. The Borrower will
maintain, as of each Covenant Computation Date, its Debt Service Coverage Ratio
at not less than 1.50 to 1.00.
Section 5.10 Funded Debt Coverage Ratio. The Borrower will
maintain, as of each Covenant Computation Date, its Funded Debt Coverage Ratio
at not less than 0.35 to 1.00.
Section 5.11 Minimum Stockholders' Equity. The Borrower will
maintain, as of each Covenant Computation Date, its Stockholders' Equity at not
less than an amount equal to the sum of $70,000,000 plus seventy-five percent
(75%) of Net Income (with any negative Net Income counting as zero (0) for
purposes of the foregoing) that has been earned by the Borrower from January 1,
1997, to the applicable Covenant Computation Date.
ARTICLE VI
NEGATIVE COVENANTS
So long as the Note, or any Letter of Credit shall remain
unpaid or outstanding or the Commitment shall be outstanding, the Borrower will
comply with the following requirements, unless the Bank shall otherwise consent
in writing:
Section 6.1 Liens. The Borrower will not, nor will any of the
Borrower's Subsidiaries, create, incur or suffer to exist any mortgage, deed of
trust, pledge, lien, security interest, assignment or transfer upon or of any of
its assets, now owned or hereafter acquired, to secure any indebtedness;
excluding, however, from the operation of the foregoing:
(a) mortgages, deeds of trust, pledges, liens, security
interests and assignments in existence on the date hereof and listed in
Schedule 6.0;
(b) liens for taxes or assessments or other governmental
charges to the extent not required to be paid by Section 5.4;
(c) materialmen's, merchants', carriers', worker's,
repairer's, or other like liens arising in the ordinary course of
business to the extent not required to be paid by Section 5.4;
(d) pledges or deposits to secure obligations under worker's
compensation laws, unemployment insurance and social security laws, or
to secure the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases or to secure statutory
obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds in the ordinary course of business;
(e) zoning restrictions, easements, licenses, restrictions on
the use of real property or minor irregularities in title thereto,
which do not materially impair the use of such property in the
operation of the business of the Borrower, or its Subsidiaries, or the
value of such property for the purpose of such business; and
(f) purchase money mortgages, liens or security interests
(including conditional sale agreements or other title retention
agreements and leases in the nature of title retention agreements) upon
or in property acquired after the date hereof by the Borrower, or
mortgages, liens or security interests existing in such property at the
time of the acquisition thereof, provided that:
(i) no such mortgage, lien or security
interest extends or shall extend to or cover any property of
the Borrower, or its Subsidiaries, other than the property
then being acquired; and
(ii) the aggregate principal amount of the
indebtedness secured by any such mortgage, lien or security
interest shall not exceed the cost of such property so
acquired by the Borrower, or its Subsidiaries, in connection
therewith or the fair market value of such property, whichever
is less.
Section 6.2 Indebtedness. The Borrower will not, nor will it
allow its Subsidiaries to, incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or advances or any indebtedness
for borrowed money, or any other indebtedness or liability evidenced by notes,
bonds, debentures or similar obligations, except:
(a) Obligations arising hereunder;
(b) indebtedness of the Borrower, or its Subsidiaries, in
existence on the date hereof and listed in Schedule 6.0;
(c) indebtedness of the Borrower to or from any Subsidiary;
and
(d) Capitalized Lease Liabilities, indebtedness of the
Borrower, or its Subsidiaries, secured by security interests permitted
by Section 6.1(f) and other indebtedness of the Borrower, or its
Subsidiaries, in connection with and specifically related to the
purchase of property by the Borrower, or its Subsidiaries, after the
date hereof, in the aggregate not to exceed $2,000,000 at any time
outstanding.
Section 6.3 Guaranties. The Borrower will not, nor will it
allow its Subsidiaries to, assume, guarantee, endorse or otherwise become
directly or contingently liable in connection with any obligations of any other
Person, except:
(a) the endorsement of negotiable instruments by the Borrower,
or its Subsidiaries, for deposit or collection or similar transactions
in the ordinary course of business;
(b) guaranties, endorsements and other direct or contingent
liabilities in connection with the obligations of other Persons in
existence on the date hereof and listed in Schedule 6.0; and
(c) guaranties of the Guarantors to the Bank, issued in
connection with this credit facility.
Section 6.4 Investments. The Borrower will not, nor will it
allow its Subsidiaries to, purchase or hold beneficially any stock or other
securities or evidences of indebtedness of, make or permit to exist any loans or
advances to, or make any investment or
acquire any interest whatsoever in, any other Person, including specifically but
without limitation any partnership or joint venture, except:
(a) investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose obligations
constitute full faith and credit obligations of the United States of
America having a maturity of one year or less, commercial paper issued
by a U.S. corporation rated "A-1" or "A-2" by Standard & Poors
Corporation or "P-1" or "P-2" by ▇▇▇▇▇'▇ Investors Service, investments
in money market mutual funds whose underlying assets are investments
which would otherwise be permitted investments under this Section
6.4(a), or repurchase agreements, certificates of deposit or bankers'
acceptances having a maturity of one (1) year or less issued by members
of the Federal Reserve System having deposits in excess of $100,000,000
(which certificates of deposit or bankers' acceptances are fully
insured by the Federal Deposit Insurance Corporation);
(b) advances in the form of progress payments, prepaid rent or
security deposits;
(c) investments made after the date hereof in an aggregate
principal amount not to exceed $5,000,000 to purchase all outstanding
stock of or otherwise make any investment or acquire a controlling
interest in a Person, or to acquire substantially all of the assets of
a Person, or, to purchase a minority ownership in a Person if such
Person is in a business not materially different than, or related to,
the business of the Borrower and the Borrower anticipates that such
purchase will benefit the Borrower's line of business; provided that
any such contemplated investment or acquisition does not constitute a
hostile or unfriendly takeover action or investment by the Borrower
toward or against a Person with which the Bank has a depository, trust,
lending or other financial relationship; and
(d) advances or loans made to customers of the Borrower under
the Borrower's Customer Finance Program;
(e) investments in, or advances or loans to or from, any
Subsidiary; and
(f) other investments in an aggregate amount not to exceed
$500,000 at any time outstanding.
Section 6.5 Restricted Payments. The Borrower will not declare
or pay any dividends on any shares of any class of stock of the Borrower, or
directly or indirectly apply any assets of the Borrower to the redemption,
retirement, purchase or other acquisition of any shares of any class of stock of
the Borrower, during any fiscal year of the Borrower in an amount in excess of
twenty-five percent (25%) of the Borrower's Net Income for the immediately
preceding fiscal year.
Section 6.6 Sale or Transfer of Assets; Suspension of Business
Operations. The Borrower will not sell, lease, assign, transfer or otherwise
dispose of the stock of any Subsidiary, all or a substantial part of its assets
(whether in one transaction or in a series of transactions) to any other Person
other than the sale of its inventory in the ordinary course of business and will
not liquidate, dissolve or suspend its business operations; provided, however,
that the Borrower, or any of its Subsidiaries, may make such sales, transfers,
assignments, leases or other dispositions of assets in an aggregate amount not
to exceed $5,000,000 in any year.
Section 6.7 Consolidation and Merger; Asset Acquisitions. The
Borrower will not consolidate with or merge into any Person, or permit any other
Person to merge into it, or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all the assets of any
other Person, unless the Borrower survives as the sole remaining entity.
Section 6.8 Restrictions on Nature of Business. The Borrower
and its Subsidiaries will not engage in any line of business materially
different from or unrelated to the business presently engaged in by the
Borrower, and its Subsidiaries, and will not purchase, lease or otherwise
acquire assets not related to its business, other than the acquisition of assets
permitted under Section 6.4 hereof.
Section 6.9 Accounting. The Borrower and its Subsidiaries will
not adopt any material change in accounting principles other than as required
by, or acceptable under, GAAP. The Borrower will not, nor will it allow its
Subsidiaries to, adopt, permit or consent to any change in its fiscal year.
Section 6.10. Hazardous Substances. The Borrower and its
Subsidiaries will not cause or permit any Hazardous Substances to be disposed
of, in any manner which might result in any material liability to the Borrower
or its Subsidiaries, on, under or at any real property which is operated by the
Borrower or its Subsidiaries or in which the Borrower or its Subsidiaries has
any interest.
ARTICLE VII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 7.1 Events of Default. "Event of Default", wherever
used herein, means any one of the following events:
(a) default in the payment of any interest on or principal of
the Note when it becomes due and payable and the continuation of such
default for more than three (3) Business days; or
(b) default in the payment of any fees, costs or expenses
required to be paid by the Borrower under this Agreement or any other
Loan Document and the continuation of such default for more than three
(3) Business days; or
(c) default in the performance, or breach, of any covenant or
agreement on the part of the Borrower contained in Sections 5.8, 5.9,
5.10, and 5.11; or
(d) default in the performance, or breach, of any covenant or
agreement of the Borrower in this Agreement (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere
in this Section specifically dealt with), and the continuance of such
default or breach for a period of thirty (30) days after there has been
given a written notice specifying such default or breach and requiring
it to be remedied; or
(e) the Borrower, or either of the Guarantors, shall be or
become insolvent, or admit in writing its inability to pay its debts as
they mature, or make an assignment for the benefit of creditors; or the
Borrower, or either of the Guarantors, shall apply for or consent to
the appointment of any receiver, trustee, or similar officer for it or
for all or any substantial part of its property; or such receiver,
trustee or similar officer shall be appointed without the application
or consent of the Borrower, or either of the Guarantors, and such
appointment shall continue undischarged for a period of thirty (30)
days; or the Borrower, or either of the Guarantors, shall institute (by
petition, application, answer, consent or otherwise) any insolvency,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of any
jurisdiction; or any such proceeding shall be instituted (by petition,
application or otherwise) against the Borrower, or either of the
Guarantors, or any judgment, writ, warrant of attachment or execution
or similar process shall be issued or levied against a substantial part
of the property of the Borrower, or either of the Guarantors, and such
judgment, writ, or similar process shall not be released, vacated or
fully bonded within thirty (30) days after its issue or levy; or
(f) a petition naming the Borrower, or either of the
Guarantors, as debtor shall be filed under the United States Bankruptcy
Code; or
(g) any representation or warranty made by the Borrower in
this Agreement or by the Borrower (or any of its officers) in any
request for a Borrowing, or in any other certificate, instrument, or
statement contemplated by or made or delivered
pursuant to or in connection with this Agreement, shall prove to have
been incorrect in any material respect when made; or
(h) the rendering against the Borrower, or either of the
Guarantors, of a final judgment, decree or order for the payment of
money in excess of $500,000 (unless the payment of such judgment is
fully insured) and the continuance of such judgment, decree or order
unsatisfied and in effect for any period of thirty (30) consecutive
days without a stay of execution; or
(i) a default shall occur under any bond, debenture, note or
other obligation of the Borrower, or either of the Guarantors,
evidencing indebtedness in the amount of $500,000 or more, or under any
indenture or other instrument under which any such evidence of
indebtedness or other instrument under which any such evidence of
indebtedness has been issued or by which it is governed, and the
expiration of the applicable period of grace, if any, specified in such
evidence of indebtedness, indenture or other instrument; or
(j) any Reportable Event, which the Bank determines in good
faith might constitute grounds for the termination of any Plan or for
the appointment by the appropriate United States District Court of a
trustee to administer any Plan, shall have occurred and be continuing
thirty (30) days after written notice to such effect shall have been
given to the Borrower by the Bank; or any Plan shall have been
terminated, or a trustee shall have been appointed by an appropriate
United States District Court to administer any Plan, or the Pension
Benefit Guaranty Corporation shall have instituted proceedings to
terminate any Plan or to appoint a trustee to administer any Plan; or
(k) the Borrower, or either of the Guarantors, shall
liquidate, dissolve, terminate or suspend its business operations or
otherwise fail to operate its business in the ordinary course, or shall
sell all or substantially all of its assets, without the prior written
consent of the Bank; or
(l) the Borrower, or either of the Guarantors, shall fail to
pay, withhold, collect or remit any tax or tax deficiency when assessed
or due (other than any tax deficiency which is being contested in good
faith and by proper proceedings and for which it shall have set aside
on its books adequate reserves therefor) or notice of any state or
federal tax liens shall be filed or issued.
Section 7.2 Rights and Remedies. Upon the occurrence of an
Event of Default or at any time thereafter until such Event of Default is cured
or waived to the written satisfaction of the Bank, the Bank may exercise any or
all of the following rights and remedies:
(a) by notice to the Borrower, declare the Commitment to be
terminated, whereupon the same shall forthwith terminate;
(b) by notice to the Borrower, declare the entire unpaid
principal amount of the Note, all interest accrued and unpaid thereon,
and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Note, all such accrued interest and all such
amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Borrower;
(c) by notice to the Borrower, demand payment by the Borrower
of funds with respect to each outstanding Letter of Credit in an amount
sufficient to fund a cash escrow for each such Letter of Credit, which
cash escrow will be held by the Bank, without interest, in a special
cash collateral account and applied to reimbursement of each draft
under a Letter of Credit;
(d) without notice to the Borrower and without further action,
apply any and all money owing by the Bank to the Borrower to the
payment of the Note, including interest accrued thereon, and of all
other sums then owing by the Borrower hereunder;
(e) exercise and enforce the rights and remedies available to
the Bank under any Loan Document or any guaranty given to the Bank by
either of the Guarantors; and
(f) exercise any other rights and remedies available to the
Bank by law or agreement.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(f) hereof, the entire unpaid principal amount of the
Note, all interest accrued and unpaid thereon, and all other amounts payable
under this Agreement shall be immediately due and payable without presentment,
demand, protest or notice of any kind.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or
delay on the part of the Bank in exercising any right, power or remedy under the
Loan Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
under the Loan Documents. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.
Section 8.2 Amendments, Requested Waivers, Etc. No amendment,
modification, termination or waiver of any provision of any Loan Document or
consent to any departure by the Borrower therefrom shall be effective unless the
same shall be in writing and signed by the Bank. Any waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
Section 8.3 Addresses for Notices, Etc. Except as otherwise
expressly provided herein, all notices, requests, demands and other
communications provided for under the Loan Documents shall be in writing and
mailed or delivered to the applicable parties at their respective addresses set
forth on the execution pages hereto, or, as to each party, at such other address
as shall be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section 8.3. All such notices,
requests, demands and other communications, when delivered, shall be effective
upon actual delivery, when mailed, shall be effective when sent by nationally
recognized overnight mail courier or delivery service, addressed as aforesaid,
except that notices or requests to the Bank pursuant to any of the provisions of
Article II shall not be effective until received by the Bank.
Section 8.4 Costs and Expenses. The Borrower will reimburse
the Bank for any and all out of pocket costs and reasonable expenses (including
without limitation attorneys' fees) paid or incurred by the Bank in connection
with (i) the preparation of the Loan Documents and any other document or
agreement related hereto or thereto, and the transactions contemplated hereby,
which amount shall not exceed $6,000, (ii) the negotiation of any amendments,
modifications or extensions to or of any of the foregoing documents, instruments
or agreements and the preparation of any and all documents necessary or
desirable to effect such amendments, modifications or extensions and (iii) the
enforcement by the Bank of any of the rights or remedies of the Bank under any
of the foregoing documents, instruments or agreements or under applicable law,
whether or not suit is filed with respect thereto.
Section 8.5 Confidentiality. The Bank acknowledges that, in
connection with entering into the Agreement and in the course of performance of
each party's obligations under the Agreement, the Bank will obtain confidential
non-public information of the Borrower ("Confidential Information"). The Bank
shall treat all such Confidential Information as strictly confidential, and
shall use the same care to prevent the disclosure of such information as the
Bank uses with respect to its own confidential and proprietary information
(which shall be no less than the care a reasonable person would use under
similar circumstances).
Section 8.6 Execution in Counterparts. This Agreement and
other Loan Documents may be executed in any number of counterparts, each of
which when so executed
and delivered shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same instrument.
Section 8.7 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) Governing Law. The Loan Documents shall be governed by,
and construed in accordance with, the laws of the State of Minnesota.
(b) Jurisdiction. The Borrower hereby irrevocably submits to
the jurisdiction of any Minnesota State or Federal court sitting in
Minneapolis or St. ▇▇▇▇, Minnesota, in any action or proceeding arising
out of or relating to this Agreement or any of the other Loan
Documents, and the Borrower hereby irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined in
such Minnesota State court or in such Federal court. The Borrower
hereby irrevocably waives, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of such
action or proceeding. The Borrower irrevocably consents to the service
of copies of the summons and complaint and any other process which may
be served in any such action or proceeding by the mailing of copies of
such process to the Borrower at its addresses specified in Section 8.3
above. The Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. Nothing in this Section 8.7(b) shall affect the right of the
Bank to serve legal process in any other manner permitted by law or
affect the right of the Bank to bring any action or proceeding against
the Borrower or their property in the courts of other jurisdictions.
(C) WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR ANY
INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER.
Section 8.8 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
Section 8.9 Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
Address: ITI TECHNOLOGIES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President Finance and Administration By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ Its Vice President-Finance
and Administration
Address: NORWEST BANK MINNESOTA,
Norwest Center NATIONAL ASSOCIATION
Sixth and Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Vice President,
Structured Finance Division By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ Its Vice President
