EXHIBIT 10.11
GUARANTOR SECURITY AGREEMENT
This Guarantor Security Agreement ("Agreement") dated as of
August 16, 2000, is by MICROTEL INTERNATIONAL INC., a Delaware corporation
("Guarantor") in favor of XXXXX FARGO BUSINESS CREDIT, INC., a Minnesota
corporation ("Lender").
W I T N E S S E T H:
WHEREAS, Lender has entered or is about to enter into certain
financing arrangements with XIT Corporation, a New Jersey corporation, and CXR
Telcom Corporation, a Delaware corporation (together, "BORROWER"), pursuant to
which Lender may make loans and provide other financial accommodations to
Borrower; and
WHEREAS, Guarantor has executed and delivered or is about to
execute and deliver to Lender a guarantee in favor of Lender pursuant to which
Guarantor absolutely and unconditionally guarantees to Lender the payment and
performance of all now existing and hereafter arising obligations, liabilities
and indebtedness of Borrower to Lender.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS.
All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code shall have the meanings given therein
unless otherwise defined in this Agreement. All references to the plural herein
shall also mean the singular and to the singular shall also mean the plural
unless the context otherwise requires. All references to Guarantor, Borrower and
Lender pursuant to the definitions set forth in the recitals hereto, or to any
other person herein, shall include their respective successors and assigns. The
words "hereof", "herein", "hereunder", "this Agreement" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not any particular provision of this Agreement and as this Agreement now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced. The word "including" when used in this Agreement shall mean
"including, without limitation". An Event of Default shall exist or continue or
be continuing until such Event of Default is waived in accordance with Section
7.3 or is cured in a manner satisfactory to Lender, if such Event of Default is
capable of being cured as determined by Lender. Any accounting term used herein
unless otherwise defined in this Agreement shall have the meanings customarily
given to such term in accordance with GAAP. For purposes of this Agreement, the
following terms shall have the respective meanings given to them below:
1.1 "ACCOUNTS" shall mean all present and future rights of
Guarantor to payment for goods sold or leased or for services rendered, which
are not evidenced by instruments or chattel paper, and whether or not earned by
performance.
1.2 "CREDIT AGREEMENT" shall mean the Credit and Security
Agreement, dated August 16, 2000, by and between Borrower and Lender, as the
same now exists and may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
1.3 "EQUIPMENT" shall mean all of Guarantor's now owned and
hereafter acquired equipment, machinery, computers and computer hardware and
software (whether owned or licensed), vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.
1.4 "EVENT OF DEFAULT" shall have the meaning set forth in
Section 6.1 hereof.
1.5 "FINANCING AGREEMENTS" shall mean, collectively, the
Credit Agreement, this Agreement and all notes, guarantees, security
agreements and other agreements, documents and instruments now or at any time
hereafter executed and/or delivered by Borrower, Guarantor or any Obligor in
connection with the Credit Agreement, as the same now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced.
1.6 "INFORMATION CERTIFICATE" shall mean the Information
Certificate of Guarantor constituting EXHIBIT A hereto containing material
information with respect to Guarantor, its business and assets provided by or
on behalf of Guarantor to Lender in connection with the preparation of this
Agreement and the other Financing Agreements and the financing arrangements
provided for herein.
1.7 "INVENTORY" shall mean all of Guarantor's now owned and
hereafter existing or acquired raw materials, work in process, finished goods
and all other inventory of whatsoever kind or nature, wherever located.
1.8 "OBLIGATIONS" shall mean any and all obligations,
liabilities and indebtedness of every kind, nature and description owing by
Guarantor to Lender and/or its affiliates, including principal, interest,
charges, fees, costs and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, whether arising under this
Agreement or otherwise, whether now existing or hereafter arising, whether
arising before, during or after the initial or any renewal term of the Credit
Agreement or after the commencement of any case with respect to Borrower or
Guarantor under the United States Bankruptcy Code or any similar statute
(including the payment of interest and other amounts which would accrue and
become due but for the commencement of such case, whether or not such amounts
are allowed or allowable in whole or in part in such case), whether direct or
indirect, absolute or contingent, joint or several, due or not due, primary
or secondary, liquidated or unliquidated, secured or unsecured, and however
acquired by Lender.
1.9 "OBLIGOR" shall mean any other guarantor, endorser,
acceptor, surety or other person liable on or with respect to the Obligations
or who is the owner of any property which is security for the Obligations,
other than Borrower.
1.10 "PERSON" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which
elects subchapter S status under the Internal Revenue Code of 1986, as
amended), limited liability company, limited liability
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partnership, business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.11 "RECORDS" shall mean all of Guarantor's present and
future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping
evidence, statements, correspondence, memoranda, credit files and other data
relating to the Collateral or any account debtor, together with the tapes,
disks, diskettes and other data and software storage media and devices, file
cabinets or containers in or on which the foregoing are stored (including any
rights of Guarantor with respect to the foregoing maintained with or by any
other person).
SECTION 2. GRANT OF SECURITY INTEREST.
To secure payment and performance of all Obligations,
Guarantor hereby grants to Lender a continuing security interest in, a lien
upon, and a right of set off against, and hereby assigns to Lender as
security, the following property and interests in property, whether now owned
or hereafter acquired or existing, and wherever located (collectively, the
"Collateral"):
2.1 all Accounts and other indebtedness owed to Guarantor;
2.2 all present and future contract rights, general
intangibles (including, but not limited to, tax and duty refunds, registered
and unregistered patents, trademarks, service marks, copyrights, trade names,
applications for the foregoing, trade secrets, goodwill, processes, drawings,
blueprints, customer lists, licenses, whether as licensor or licensee,
choses in action and other claims and existing and future leasehold
interests in equipment, real estate and fixtures), chattel paper, documents,
instruments, securities, investment property, letters of credit, proceeds of
letters of credit, bankers' acceptances and guaranties;
2.3 all present and future monies, securities, credit
balances, deposits, deposit accounts and other property of Guarantor now or
hereafter held or received by or in transit to Lender or its affiliates or at
any other depository or other institution from or for the account of
Guarantor whether for safekeeping, pledge, custody, transmission, collection
or otherwise, and all present and future liens, security interests, rights,
remedies, title and interest in, to and in respect of Accounts and other
Collateral, including, without limitation:
(a) rights and remedies under or relating to
guaranties, contracts of suretyship, letters of credit and credit and other
insurance related to the Collateral;
(b) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party;
(c) goods described in invoices, documents,
contracts or instruments with respect to, or otherwise representing or
evidencing, Accounts or other Collateral, including, without limitation,
returned, repossessed and reclaimed goods; and
(d) deposits by and property of account debtors or
other persons securing the obligations of account debtors;
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2.4 all Inventory;
2.5 all Equipment;
2.6 all Records; and
2.7 All products and proceeds of the foregoing, in any
form, including, without limitation, insurance proceeds and any claims
against third parties for loss or damage to or destruction of any or all of
the foregoing.
SECTION 3. COLLATERAL COVENANTS.
3.1 ACCOUNTS COVENANTS.
(a) Lender shall have the right at any time or
times, in Lender's name or in the name of a nominee of Lender, to verify
the validity, amount or any other matter relating to any Account or other
Collateral, by mail, telephone, facsimile transmission or otherwise.
(b) Guarantor shall deliver or cause to be
delivered to Lender, with appropriate endorsement and assignment, with full
recourse to Guarantor, all chattel paper and instruments which Guarantor now
owns or may at any time acquire immediately upon Guarantor's receipt thereof,
except as Lender may otherwise agree.
(c) Lender may, at any time or times that an Event
of Default exists or has occurred and is continuing:
(i) notify any or all account debtors
that the Accounts have been assigned to Lender and that Lender has a
security interest therein and Lender may direct any or all accounts debtors
to make payment of Accounts directly to Lender;
(ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations;
(iii) demand, collect or enforce payment
of any Accounts or such other obligations, but without any duty to do so, and
Lender shall not be liable for its failure to collect or enforce the payment
thereof nor for the negligence of its agents or attorneys with respect
thereto; and
(iv) take whatever other action Lender
may deem necessary or desirable for the protection of its interests. At any
time that an Event of Default exists or has occurred and is continuing, at
Lender's request, all invoices and statements sent to any account debtor
shall state that the Accounts and such other obligations have been assigned
to Lender and are payable directly and only to Lender and Guarantor shall
deliver to Lender such originals of
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documents evidencing the sale and delivery of goods or the performance of
services giving rise to any Accounts as Lender may require.
3.2 INVENTORY COVENANTS. With respect to the Inventory:
(a) Guarantor shall at all times maintain
inventory records reasonably satisfactory to Lender, keeping correct and
accurate records itemizing and describing the kind, type, quality and
quantity of Inventory, Guarantor's cost therefor and daily withdrawals
therefrom and additions thereto;
(b) Guarantor shall conduct a physical count of
the Inventory at least once each year, but at any time or times as Lender may
request on or after an Event of Default, and promptly following such physical
inventory shall supply Lender with a report in the form and with such
specificity as may be reasonably satisfactory to Lender concerning such
physical count;
(c) Guarantor shall not remove any Inventory from
the locations set forth or permitted herein, without the prior written
consent of Lender, except for sales of Inventory in the ordinary course of
Guarantor's business and except to move Inventory directly from one location
set forth or permitted herein to another such location;
(d) upon Lender's request, Guarantor shall, at its
expense, no more than once in any twelve (12) month period, but at any time
or times as Lender may request on or after an Event of Default, deliver or
cause to be delivered to Lender written reports or appraisals as to the
Inventory in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender or upon which Lender is
expressly permitted to rely;
(e) Guarantor shall produce, use, store and
maintain the Inventory, with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including the requirements of the Federal Fair Labor
Standards Act of 1938, as amended and all rules, regulations and orders
related thereto);
(f) Guarantor assumes all responsibility and
liability arising from or relating to the production, use, sale or other
disposition of the Inventory;
(g) Guarantor shall not sell Inventory to any
customer on approval, or any other basis which entitles the customer to
return or may obligate Guarantor to repurchase such Inventory;
(h) Guarantor shall keep the Inventory in good and
marketable condition; and Guarantor shall not, without prior written notice
to Lender, acquire or accept any Inventory on consignment or approval.
3.3 EQUIPMENT COVENANTS. With respect to the Equipment:
(a) upon Lender's request, Guarantor shall, at its
expense, at any time or times as Lender may request on or after an Event of
Default, deliver or cause to be delivered
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to Lender written reports or appraisals as to the Equipment in form, scope
and methodology acceptable to Lender and by appraiser acceptable to Lender;
(b) Guarantor shall keep the Equipment in good
order, repair, running and marketable condition (ordinary wear and tear
excepted);
(c) Guarantor shall use the Equipment with all
reasonable care and caution and in accordance with applicable standards of
any insurance and in conformity with all applicable laws;
(d) the Equipment is and shall be used in
Guarantor's business and not for personal, family, household or farming use;
(e) Guarantor shall not remove any Equipment from
the locations set forth or permitted herein, except to the extent necessary
to have any Equipment repaired or maintained in the ordinary course of the
business of Guarantor or to move Equipment directly from one location set
forth or permitted herein to another such location and except for the
movement of motor vehicles used by or for the benefit of Borrower in the
ordinary course of business;
(f) the Equipment is now and shall remain personal
property and Guarantor shall not permit any of the Equipment to be or become
a part of or affixed to real property; and
(g) Guarantor assumes all responsibility and
liability arising from the use of the Equipment.
3.4 POWER OF ATTORNEY. Guarantor hereby irrevocably
designates and appoints Lender (and all persons designated by Lender) as
Guarantor's true and lawful attorney-in-fact, and authorizes Lender, in
Guarantor's or Lender's name, to:
(a) at any time an Event of Default or event which
with notice or passage of time or both would constitute an Event of Default
exists or has occurred and is continuing;
(i) demand payment on Accounts or other
proceeds of Inventory or other Collateral;
(ii) enforce payment of Accounts by legal
proceedings or otherwise;
(iii) exercise all of Guarantor's rights
and remedies to collect any Account or other Collateral;
(iv) sell or assign any Account upon such
terms, for such amount and at such time or times as the Lender deems
advisable;
(v) settle, adjust, compromise, extend or
renew an Account;
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(vi) discharge and release any Account;
(vii) prepare, file and sign Guarantor's
name on any proof of claim in bankruptcy or other similar document against an
account debtor;
(viii) notify the post office authorities
to change the address for delivery of Guarantor's mail to an address
designated by Lender, and open and dispose of all mail addressed to Guarantor;
(ix) and do all acts and things which are
necessary, in Lender's determination, to fulfill Guarantor's obligations
under this Agreement and the other Financing Agreements; and
(b) at any time to;
(i) take control in any manner of any
item of payment or proceeds thereof,;
(ii) have access to any lockbox or postal
box into which Guarantor's mail is deposited;
(iii) endorse Guarantor's name upon any
items of payment or proceeds thereof and deposit the same in the Lender's
account for application to the Obligations;
(iv) endorse Guarantor's name upon any
chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Account or any goods pertaining thereto or any
other Collateral;
(v) sign Guarantor's name on any
verification of Accounts and notices thereof to account debtors; and
(vi) execute in Guarantor's name and file
any UCC financing statements or amendments thereto.
Guarantor hereby releases Lender and its officers, employees and designees
from any liabilities arising from any act or acts under this power of
attorney and in furtherance thereof, whether of omission or commission,
except as a result of Lender's own gross negligence or willful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
3.5 RIGHT TO CURE. Lender may, at its option:
(a) cure any default by Guarantor under any
agreement with a third party or pay or bond on appeal any judgment entered
against Guarantor;
(b) discharge taxes, liens, security interests or
other encumbrances at any time levied on or existing with respect to the
Collateral; and
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(c) pay any amount, incur any expense or perform
any act which, in Lender's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Lender with
respect thereto. Lender may add any amounts so expended to the Obligations
and charge Guarantor's account therefor, such amounts to be repayable by
Guarantor on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of Guarantor. Any payment made or other action taken
by Lender under this Section shall be without prejudice to any right to
assert an Event of Default hereunder and to proceed accordingly.
3.6 ACCESS TO PREMISES. From time to time as requested by
Lender, at the cost and expense of Guarantor:
(a) Lender or its designee shall have complete
access to all of Guarantor's premises during normal business hours and after
notice to Guarantor, or at any time and without notice to Guarantor if an
Event of Default exists or has occurred and is continuing, for the purposes
of inspecting, verifying and auditing the Collateral and all of Guarantor's
books and records, including the Records;
(b) Guarantor shall promptly furnish to Lender
such copies of such books and records or extracts therefrom as Lender may
request; and
(c) use during normal business hours such of
Guarantor's personnel, equipment, supplies and premises as may be reasonably
necessary for the foregoing and if an Event of Default exists or has occurred
and is continuing for the collection of Accounts and realization of other
Collateral.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Guarantor hereby represents and warrants to Lender the
following (which shall survive the execution and delivery of this Agreement):
4.1 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES.
Guarantor is a corporation duly organized and in good standing under the laws
of its state of incorporation and is duly qualified as a foreign corporation
and in good standing in all states or other jurisdictions where the nature
and extent of the business transacted by it or the ownership of assets makes
such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on Guarantor's
financial condition, results of operation or business or the rights of
Lender in or to any of the Collateral. The execution, delivery and
performance of this Agreement, the other Financing Agreements and the
transactions contemplated hereunder and thereunder are all within Guarantor's
corporate powers, have been duly authorized and are not in contravention of
law or the terms of Guarantor's certificate of incorporation, by-laws, or
other organizational documentation, or any indenture, agreement or
undertaking to which Guarantor is a party or by which Guarantor or its
property are bound. This Agreement and the other Financing Agreements
constitute legal, valid and binding obligations of Guarantor enforceable in
accordance with their respective terms. Guarantor does not have any
subsidiaries except as set forth on the Information Certificate.
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4.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All
financial statements relating to Guarantor which have been or may hereafter
be delivered by Guarantor to Lender have been prepared in accordance with
GAAP and fairly present the financial condition and the results of operation
of Guarantor as at the dates and for the periods set forth therein. Except as
disclosed in any interim financial statements furnished by Guarantor to
Lender prior to the date hereof, there has been no material adverse change in
the assets, liabilities, properties and condition, financial or otherwise, of
Guarantor, since the date of the most recent audited financial statements
furnished by Guarantor to Lender prior to the date hereof.
4.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. The chief
executive office of Guarantor and Guarantor's Records concerning Accounts are
located only at the address set forth below and its only other places of
business and the only other locations of Collateral, if any, are the
addresses set forth in the Information Certificate, subject to the right of
Guarantor to establish new locations in accordance with Section 5.2 below.
The Information Certificate correctly identifies any of such locations which
are not owned by Guarantor and sets forth the owners and/or operators
thereof, and to the best of Guarantor's knowledge, the holders of any
mortgages on such locations.
4.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security
interests and liens granted to Lender under this Agreement and the other
Financing Agreements constitute valid and perfected first priority liens and
security interests in and upon the Collateral subject only to the liens
indicated on SCHEDULE 4.4 hereto and the other liens permitted under Section
5.8 hereof. Guarantor has good and marketable title to all of its properties
and assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind, except those granted to Lender and such
others as are specifically listed on SCHEDULE 4.4 hereto or permitted under
Section 5.8 hereof.
4.5 TAX RETURNS. Guarantor has filed, or caused to be
filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it (without requests for extension except as
previously disclosed in writing to Lender). All information in such tax
returns, reports and declarations is complete and accurate in all material
respects. Guarantor has paid or caused to be paid all taxes due and payable
or claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Guarantor and with respect to
which adequate reserves have been set aside on its books. Adequate provision
has been made for the payment of all accrued and unpaid Federal, State,
county, local, foreign and other taxes whether or not yet due and payable and
whether or not disputed.
4.6 LITIGATION. Except as set forth on the Information
Certificate, there is no present investigation by any governmental agency
pending, or to the best of Guarantor's knowledge threatened, against or
affecting Guarantor, its assets or business and there is no action, suit,
proceeding or claim by any Person pending, or to the best of Guarantor's
knowledge threatened, against Guarantor or its assets or goodwill, or against
or affecting any transactions contemplated by this Agreement, which if
adversely determined against Guarantor would result in any material adverse
change in the assets, business or prospects of Guarantor or which would
impair the ability of Guarantor to perform its obligations hereunder or under
any of the other
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Financing Agreements to which it is a party or of Lender to enforce the
Obligations or realize upon any Collateral.
4.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.
Guarantor is not in default in any material respect under, or in violation in
any material respect of any of the terms of, any agreement, contract,
instrument, lease or other commitment to which it is a party or by which it
or any of its assets are bound and Guarantor is in compliance in all material
respects with all applicable provisions of laws, rules, regulations,
licenses, permits, approvals and orders of any foreign, Federal, State or
local governmental authority.
4.8 BANK ACCOUNTS. All of the deposit accounts, investment
accounts or other accounts in the name of or used by Guarantor maintained at
any bank or other financial institution are set forth on SCHEDULE 4.8 hereto,
subject to the right of Guarantor to establish new accounts in accordance
with Section 5.13 below.
4.9 ACCURACY AND COMPLETENESS OF INFORMATION. All
information furnished by or on behalf of Guarantor in writing to Lender in
connection with this Agreement or any of the other Financing Agreements or
any transaction contemplated hereby or thereby, including all information on
the Information Certificate is true and correct in all material respects on
the date as of which such information is dated or certified and does not omit
any material fact necessary in order to make such information not misleading.
No event or circumstance has occurred which has had or could reasonably be
expected to have a material adverse affect on the business, assets or
prospects of Guarantor, which has not been fully and accurately disclosed to
Lender in writing.
4.10 SURVIVAL OF WARRANTIES; CUMULATIVE. All
representations and warranties contained in this Agreement or any of the
other Financing Agreements shall survive the execution and delivery of this
Agreement and shall be deemed to have been made again to Lender on the date
of each additional borrowing or other credit accommodation under the Credit
Agreement and shall be conclusively presumed to have been relied on by Lender
regardless of any investigation made or information possessed by Lender. The
representations and warranties set forth herein shall be cumulative and in
addition to any other representations or warranties which Guarantor shall now
or hereafter give, or cause to be given, to Lender.
SECTION 5. AFFIRMATIVE AND NEGATIVE COVENANTS.
5.1 MAINTENANCE OF EXISTENCE. Guarantor shall at all times
preserve, renew and keep in full, force and effect its corporate existence
and rights and franchises with respect thereto and maintain in full force and
effect all permits, licenses, trademarks, tradenames, approvals,
authorizations, leases and contracts necessary to carry on the business as
presently or proposed to be conducted. Guarantor shall give Lender thirty
(30) days prior written notice of any proposed change in its corporate name,
which notice shall set forth the new name and Guarantor shall deliver to
Lender a copy of the amendment to the Certificate of Incorporation of
Guarantor providing for the name change certified by the Secretary of State
of the jurisdiction of incorporation of Guarantor as soon as it is available.
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5.2 NEW COLLATERAL LOCATIONS. Guarantor may open any new
location within the continental United States provided Guarantor gives Lender
thirty (30) days prior written notice of the intended opening of any such new
location and executes and delivers, or causes to be executed and delivered,
to Lender such agreements, documents, and instruments as Lender may deem
reasonably necessary or desirable to protect its interests in the Collateral
at such location, including UCC financing statements.
5.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC. Guarantor
shall, at all times, comply in all material respects with all laws, rules,
regulations, licenses, permits, approvals and orders of any Federal, State
or local governmental authority applicable to it.
5.4 PAYMENT OF TAXES AND CLAIMS. Guarantor shall duly pay
and discharge all taxes, assessments, contributions and governmental charges
upon or against it or its properties or assets, except for taxes the validity
of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Guarantor and with respect to which
adequate reserves have been set aside on its books. Guarantor shall be liable
for any tax or penalties imposed on Lender as a result of the financing
arrangements provided for herein and Guarantor agrees to indemnify and hold
Lender harmless with respect to the foregoing, and to repay to Lender on
demand the amount thereof, and until paid by Guarantor such amount shall be
added and deemed part of the Loans, provided, that, nothing contained herein
shall be construed to require Guarantor to pay any income or franchise taxes
attributable to the income of Lender from any amounts charged or paid
hereunder to Lender. The foregoing indemnity shall survive the payment of the
Obligations, the termination of this Agreement and the termination or
non-renewal of the Credit Agreement.
5.5 INSURANCE. Guarantor shall, at all times, maintain with
financially sound and reputable insurers insurance with respect to the
Collateral against loss or damage and all other insurance of the kinds and in
the amounts customarily insured against or carried by corporations of
established reputation engaged in the same or similar businesses and
similarly situated. Said policies of insurance shall be satisfactory to
Lender as to form, amount and insurer. Guarantor shall furnish certificates,
policies or endorsements to Lender as Lender shall require as proof of such
insurance, and, if Guarantor fails to do so, Lender is authorized, but not
required, to obtain such insurance at the expense of Guarantor. All policies
shall provide for at least thirty (30) days prior written notice to Lender of
any cancellation or reduction of coverage and that Lender may act as attorney
for Guarantor in obtaining, and at any time an Event of Default exists or has
occurred and is continuing, adjusting, settling, amending and canceling such
insurance. Guarantor shall cause Lender to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Guarantor shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Lender. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Lender as its
interests may appear and further specify that Lender shall be paid regardless
of any act or omission by Guarantor or any of its affiliates. At its option,
Lender may apply any insurance proceeds received by Lender at any time to the
cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as
Lender may determine or hold such proceeds as cash collateral for the
Obligations.
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5.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Guarantor shall keep proper books and records
in which true and complete entries shall be made of all dealings or
transactions of or in relation to the Collateral and the business of
Guarantor and its subsidiaries (if any) in accordance with GAAP and Guarantor
shall furnish or cause to be furnished to Lender:
(i) within thirty (30) days after the end
of each fiscal month, monthly unaudited consolidated financial statements
and, if Guarantor has any subsidiaries, consolidating financial statements
(including in each case balance sheets, statements of income and loss,
statements of cash flow and statements of shareholders' equity), all in
reasonable detail, fairly presenting the financial position and the results
of the operations of Guarantor and its subsidiaries as of the end of and
through such fiscal month; and
(ii) within ninety (90) days after the
end of each fiscal year, audited consolidated financial statements and, if
Guarantor has any Subsidiaries, consolidating financial statements of
Guarantor and its subsidiaries (including in each case balance sheets,
statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and the results of the
operations of Guarantor and its subsidiaries as of the end of and for such
fiscal year, together with the unqualified opinion of independent certified
public accountants, which accountants shall be an independent accounting firm
selected by Guarantor and reasonably acceptable to Lender, that such
financial statements have been prepared in accordance with GAAP, and present
fairly the results of operations and financial condition of Guarantor and its
subsidiaries as of the end of and for the fiscal year then ended.
(b) Guarantor shall promptly notify Lender in
writing of the:
(i) details of any loss, damage,
investigation, action, suit, proceeding or claim relating to the Collateral
or any other property which is security for the Obligations or which would
result in any material adverse change in Guarantor's business, properties,
assets, goodwill or condition, financial or otherwise; and
(ii) occurrence of any Event of Default
or event which, with the passage of time or giving of notice or both, would
constitute an Event of Default.
(c) Guarantor shall promptly after the sending or
filing thereof furnish or cause to be furnished to Lender copies of all
reports which Guarantor sends to its stockholders generally and copies of all
reports and registration statements which Guarantor files with the Securities
and Exchange Commission, any national securities exchange or the National
Association of Securities Dealers, Inc.
(d) Guarantor shall furnish or cause to be
furnished to Lender such budgets, forecasts, projections and other
information respecting the Collateral and the business of Guarantor, as
Lender may, from time to time, reasonably request. Lender is hereby
authorized to deliver a copy of any financial statement or any other
information relating to the business of Guarantor to any court or other
government agency or to any participant or assignee or prospective
participant or assignee. Guarantor hereby irrevocably authorizes and directs
all
-12-
accountants or auditors to deliver to Lender, at Guarantor's expense, copies
of the financial statements of Guarantor and any reports or management
letters prepared by such accountants or auditors on behalf of Guarantor and
to disclose to Lender such information as they may have regarding the
business of Guarantor. Any documents, schedules, invoices or other papers
delivered to Lender may be destroyed or otherwise disposed of by Lender one
(1) year after the same are delivered to Lender, except as otherwise
designated by Guarantor to Lender in writing.
5.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION,
ETC. Guarantor shall not, directly or indirectly:
(a) merge into or with or consolidate with any
other Person or permit any other person to merge into or with or consolidate
with it;
(b) sell, assign, lease, transfer, abandon or
otherwise dispose of any stock or indebtedness to any other Person or any of
its assets to any other Person, EXCEPT FOR: (i) sales of Inventory in the
ordinary course of business; and (ii) the disposition of worn-out or obsolete
Equipment or Equipment no longer used in the business of Guarantor so long
as: (A) if an Event of Default exists or has occurred and is continuing, any
proceeds are paid to Lender; and (B) such sales do not involve Equipment
having an aggregate fair market value in excess of $5,000 for all such
Equipment disposed of in any fiscal year of Guarantor);
(c) form or acquire any subsidiaries;
(d) wind up, liquidate or dissolve; or
(e) agree to do any of the foregoing.
5.8 ENCUMBRANCES. Guarantor shall not create, incur, assume
or suffer to exist any security interest, mortgage, pledge, lien, charge or
other encumbrance of any nature whatsoever on any of its assets or
properties, including the Collateral, except:
(a) liens and security interests of Lender;
(b) liens securing the payment of taxes, either
not yet overdue or the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to Guarantor and
with respect to which adequate reserves have been set aside on its books;
(c) non-consensual statutory liens (other than
liens securing the payment of taxes) arising in the ordinary course of
Guarantor's business to the extent: (i) such liens secure indebtedness which
is not overdue; or (ii) such liens secure indebtedness relating to claims or
liabilities which are fully insured and being defended at the sole cost and
expense and at the sole risk of the insurer or being contested in good faith
by appropriate proceedings diligently pursued and available to Guarantor, in
each case prior to the commencement of foreclosure or other similar
proceedings and with respect to which adequate reserves have been set aside
on its books;
-13-
(d) zoning restrictions, easements, licenses,
covenants and other restrictions affecting the use of real property which do
not interfere in any material respect with the use of such real property or
ordinary conduct of the business of Guarantor as presently conducted thereon
or materially impair the value of the real property which may be subject
thereto; purchase money security interests in Equipment (including capital
leases);
(e) purchase money mortgages on real estate not to
exceed $[AMOUNT] in the aggregate at any time outstanding so long as such
security interests and mortgages do not apply to any property of Guarantor
other than the Equipment or real estate so acquired, and the indebtedness
secured thereby does not exceed the cost of the Equipment or real estate so
acquired, as the case may be; and
(f) the security interests and liens set forth on
SCHEDULE 4.4 hereto.
5.9 INDEBTEDNESS. Guarantor shall not incur, create,
assume, become or be liable in any manner with respect to, or permit to
exist, any obligations or indebtedness, except:
(a) the Obligations;
(b) trade obligations and normal accruals in the
ordinary course of business not yet due and payable, or with respect to which
the Guarantor is contesting in good faith the amount or validity thereof by
appropriate proceedings diligently pursued and available to Guarantor, and
with respect to which adequate reserves have been set aside on its books;
(c) purchase money indebtedness (including capital
leases) to the extent not incurred or secured by liens (including capital
leases) in violation of any other provision of this Agreement; and
(d) the indebtedness set forth on SCHEDULE 5.9
hereto; PROVIDED, THAT:
(i) Guarantor may only make regularly
scheduled payments of principal and interest in respect of such indebtedness
in accordance with the terms of the agreement or instrument evidencing or
giving rise to such indebtedness as in effect on the date hereof;
(ii) Guarantor shall not, directly or
indirectly;
(A) amend, modify, alter or
change the terms of such indebtedness or any agreement, document or
instrument related thereto as in effect on the date hereof; or
(B) redeem, retire, defease,
purchase or otherwise acquire such indebtedness, or set aside or otherwise
deposit or invest any sums for such purpose; and
(iii) Guarantor shall furnish to Lender
all notices or demands in connection with such indebtedness either received
by Guarantor or on its behalf, promptly after
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the receipt thereof, or sent by Guarantor or on its behalf, concurrently with
the sending thereof, as the case may be.
5.10 LOANS, INVESTMENTS, GUARANTEES, ETC. Guarantor shall
not, directly or indirectly, make any loans or advance money or property to
any person, or invest in (by capital contribution, dividend or otherwise) or
purchase or repurchase the stock or indebtedness or all or a substantial part
of the assets or property of any person, or guarantee, assume, endorse, or
otherwise become responsible for (directly or indirectly) the indebtedness,
performance, obligations or dividends of any Person or agree to do any of the
foregoing, EXCEPT:
(a) The endorsement of instruments for collection
or deposit in the ordinary course of business;
(b) Investments in:
(i) short-term direct obligations of the
United States Government;
(ii) negotiable certificates of deposit
issued by any bank satisfactory to Lender, payable to the order of the
Guarantor or to bearer and delivered to Lender; and
(iii) commercial paper rated A1 or P1;
PROVIDED, THAT, as to any of the foregoing, unless waived in writing by
Lender, Guarantor shall take such actions as are deemed necessary by Lender
to perfect the security interest of Lender ill such investments; and
(c) the loans, advances and guarantees set forth
on SCHEDULE 5.10 hereto; PROVIDED, THAT, as to such loans, advances and
guarantees:
(i) Guarantor shall not, directly or
indirectly;
(A) amend, modify, alter or
change the terms of such loans, advances or guarantees or any agreement,
document or instrument relating thereto; or
(B) as to such guarantees,
redeem, retire, defease, purchase or otherwise acquire the obligations
arising pursuant to such guarantees, or set aside or otherwise deposit or
invest any sums for such purpose; and
(ii) Guarantor shall furnish to Lender
all notices or demands in connection with such loans, advances or guarantees
or other indebtedness subject to such guarantees either received by Guarantor
or on its behalf, promptly after the receipt thereof, or sent by Guarantor or
on its behalf, concurrently with the sending thereof, as the case may be.
5.11 DIVIDENDS AND REDEMPTIONS. Guarantor shall not,
directly or indirectly, declare or pay any dividends on account of any shares
of class of capital stock of Guarantor now or hereafter outstanding, or set
aside or otherwise deposit or invest any sums for such purpose, or
-15-
redeem, retire, defease, purchase or otherwise acquire any shares of any
class of capital stock (or set aside or otherwise deposit or invest any sums
for such purpose) for any consideration other than common stock or apply or
set apart any sum, or make any other distribution (by reduction of capital or
otherwise) in respect of any such shares or agree to do any of the foregoing.
5.12 TRANSACTIONS WITH AFFILIATES. Guarantor shall not,
directly or indirectly:
(a) purchase, acquire or lease any property from,
or sell, transfer or lease any property to, any officer, director, agent or
other person affiliated with Guarantor, except in the ordinary course of and
pursuant to the reasonable requirements of Guarantor's business and upon fair
and reasonable terms no less favorable to Guarantor than Guarantor would
obtain in a comparable arm's length transaction with an unaffiliated person;
or
(b) make any payments of management, consulting or
other fees for management or similar services, or of any indebtedness owing
to any officer, employee, shareholder, director or other person affiliated
with Guarantor except reasonable compensation to officers, employees and
directors for services rendered to Guarantor in the ordinary course of
business.
5.13 ADDITIONAL BANK ACCOUNTS. Guarantor shall not,
directly or indirectly, open, establish or maintain any deposit account,
investment account or any other account with any bank or other financial
institution, other than the accounts set forth in SCHEDULE 4.8 hereto, except:
(a) as to any new or additional accounts which
contain any Collateral or proceeds thereof, with the prior written consent of
Lender and subject to such conditions thereto as Lender may establish; and
(b) as to any accounts used by Guarantor to make
payments of payroll, taxes or other obligations to third parties, after prior
written notice to Lender.
5.14 COSTS AND EXPENSES. Guarantor shall pay to Lender on
demand all costs, expenses, filing fees and taxes paid or payable in
connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including:
(a) all costs and expenses of filing or recording
(including Uniform Commercial Code financing statement filing taxes and fees,
documentary taxes, intangibles taxes and mortgage recording taxes and fees,
if applicable);
(b) insurance premiums, appraisal fees and search
fees;
(c) costs and expenses of preserving and
protecting the Collateral;
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(d) costs and expenses paid or incurred in
connection with obtaining payment of the Obligations, enforcing the security
interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters);
(e) and the fees and disbursements of counsel
(including legal assistants) to Lender in connection with any of the
foregoing.
5.15 FURTHER ASSURANCES. At the request of Lender at any
time and from time to time, Guarantor shall, at its expense, at any time or
times duly execute and deliver, or cause to be duly executed and delivered,
such further agreements, documents and instruments, and do or cause to be
done such further acts as may be necessary or proper to evidence, perfect,
maintain and enforce the security interests and the priority thereof in the
Collateral and to otherwise effectuate the provisions or purposes of this
Agreement or any of the other Financing Agreements. Where permitted by law,
Guarantor hereby authorizes Lender to execute and file one or more UCC
financing statements signed only by Lender.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. The occurrence or existence of any
Event of Default under the Credit Agreement is referred to herein
individually as an "EVENT OF DEFAULT", and collectively as "EVENTS OF
DEFAULT".
6.2 REMEDIES.
(a) At any time an Event of Default exists or has
occurred and is continuing, Lender shall have all rights and remedies
provided in this Agreement, the other Financing Agreements, the Uniform
Commercial Code and other applicable law, all of which rights and remedies
may be exercised without notice to or consent by Guarantor or any Obligor,
except as such notice or consent is expressly provided for hereunder or
required by applicable law. All rights, remedies and powers granted to Lender
hereunder, under any of the other Financing Agreements, the Uniform
Commercial Code or other applicable law, are cumulative, not exclusive and
enforceable, in Lender's discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Guarantor of this Agreement or any
of the other Financing Agreements. Lender may, at any time or times, proceed
directly against Guarantor or any Obligor to collect the Obligations without
prior recourse to the Collateral.
(b) Without limiting the foregoing, at any time an
Event of Default exists or has occurred and is continuing, Lender may, in its
discretion and without limitation:
(i) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender (provided, that,
upon the occurrence of any Event of
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Default described in Sections 8.l(d) and 8.l(e) of the Credit Agreement, all
Obligations shall automatically become immediately due and payable);
(ii) with or without judicial process or
the aid or assistance of others, enter upon any premises on or in which any
of the Collateral may be located and take possession of the Collateral or
complete processing, manufacturing and repair of all or any portion of the
Collateral;
(iii) require Guarantor, at Guarantor's
expense, to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender; and
(iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, remove any or
all of the Collateral from any premises on or in which the same may be
located for the purpose of effecting the sale, foreclosure or other
disposition thereof or for any other purpose, sell, lease, transfer, assign,
deliver or otherwise dispose of any and all Collateral (including entering
into contracts with respect thereto, public or private sales at any exchange,
broker's board, at any office of Lender or elsewhere) at such prices or terms
as Lender may deem reasonable, for cash, upon credit or for future delivery,
with the Lender having the right to purchase the whole or any part of the
Collateral at any such public sale;
all of the foregoing being free from any right or equity of redemption of
Guarantor, which right or equity of redemption is hereby expressly waived and
released by Guarantor. If any of the Collateral is sold or leased by Lender
upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally collected by
Lender. If notice of disposition of Collateral is required by law, five (5)
days prior notice by Lender to Guarantor designating the time and place of
any public sale or the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be reasonable
notice thereof and Guarantor waives any other notice. In the event Lender
institutes an action to recover any Collateral or seeks recovery of any
Collateral by way of prejudgment remedy, Guarantor waives the posting of any
bond which might otherwise be required.
(c) Lender may apply the cash proceeds of
Collateral actually received by Lender from any sale, lease, foreclosure or
other disposition of the Collateral to payment of the Obligations, in whole
or in part and in such order as Lender may elect, whether or not then due.
Guarantor shall remain liable to Lender for the payment of any deficiency
with interest at the highest rate provided for in the Credit Agreement and
all costs and expenses of collection or enforcement, including attorneys'
fees and legal expenses.
SECTION 7. JURY TRIAL WAIVER; OTHER WAIVERS, AND CONSENTS; GOVERNING LAW.
7.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS;
JURY TRIAL WAIVER.
(a) The validity, interpretation and enforcement
of this Agreement and the other Financing Agreements and any dispute arising
out of the relationship between the
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parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of California (without giving
effect to principles of conflicts of law).
(b) Guarantor irrevocably consents and submits to
the non-exclusive jurisdiction of the Courts of the State of California and
the United States District Court for the Central District of California and
waives any objection based on venue or forum non conveniens with respect to
any action instituted therein arising under this Agreement or any of the
other Financing Agreements or in any way connected or related or incidental
to the dealings of Guarantor and Lender in respect of this Agreement or the
other Financing Agreements or the transactions related hereto or thereto, in
each case whether now existing or hereafter arising, and whether in contract,
tort, equity or otherwise, and agrees that any dispute with respect to any
such matters shall be heard only in the courts described above (except that
Lender shall have the right to bring any action or proceeding against
Guarantor or its property in the courts of any other jurisdiction which
Lender deems necessary or appropriate in order to realize on the Collateral
or to otherwise enforce its rights against Guarantor or its property).
(c) Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may
be made by certified mail (return receipt requested) directed to its address
set forth on the signature pages hereof and service so made shall be deemed
to be completed five (5) days after the same shall have been so deposited in
the U.S. mails, or, at Lender's option, by service upon Guarantor in any
other manner provided under the rules of any such courts. Within thirty (30)
days after such service, Guarantor shall appear in answer to such process,
failing which Guarantor shall be deemed in default and judgment may be
entered by Lender against Guarantor for the amount of the claim and other
relief requested.
(d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF GUARANTOR AND
LENDER IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS
OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT GUARANTOR OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR AND
LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to
Guarantor (whether in tort, contract, equity or otherwise) for losses
suffered by Guarantor in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement,
or any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Lender that the losses were the result of acts or omissions constituting
gross negligence or willful misconduct. In any such litigation, Lender
-19-
shall be entitled to the benefit of the rebuttable presumption that it acted
in good faith and with the exercise of ordinary care in the performance by it
of the terms of this Agreement and the other Financing Agreements.
7.2 WAIVER OF NOTICES. Guarantor hereby expressly waives
demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on Guarantor which Lender may
elect to give shall entitle Guarantor to any other or further notice or
demand in the same, similar or other circumstances.
7.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any
provision hereof shall be amended, modified, waived or discharged orally or
by course of conduct, but only by a written agreement signed by an authorized
officer of Lender, and as to amendments, as also signed by an authorized
officer of Guarantor. Lender shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights,
powers and/or remedies unless such waiver shall be in writing and signed by
an authorized officer of Lender. Any such waiver shall be enforceable only to
the extent specifically set forth therein. A waiver by Lender of any right,
power and/or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right, power and/or remedy which Lender would otherwise
have on any future occasion, whether similar in kind or otherwise.
7.4 WAIVER OF COUNTERCLAIMS. Guarantor waives all rights to
interpose any claims, deductions, setoffs or counterclaims of any nature
(other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter
arising therefrom or relating hereto or thereto.
7.5 INDEMNIFICATION. Guarantor shall indemnify and hold
Lender, and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with
any litigation, investigation, claim or proceeding commenced or threatened
related to the negotiation, preparation, execution, delivery, enforcement,
performance or administration of this Agreement, any other Financing
Agreements, or any undertaking or proceeding related to any of the
transactions contemplated hereby or any act, omission, event or transaction
related or attendant thereto, including amounts paid in settlement, court
costs, and the fees and expenses of counsel. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in this Section may
be unenforceable because it violates any law or public policy, Guarantor
shall pay the maximum portion which it is permitted to pay under applicable
law to Lender in satisfaction of indemnified matters under this Section. The
foregoing indemnity shall survive the payment of the Obligations, the
termination of this Agreement and the termination or non-renewal of the
Credit Agreement.
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SECTION 8. MISCELLANEOUS.
8.1 NOTICES. All notices, requests and demands hereunder
shall be in writing and:
(a) made to Lender at 000 X. Xxx Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, Attn: Account Executive, and to
Guarantor at its chief executive office set forth below, or to such other
address as either party may designate by written notice to the other in
accordance with this provision; and
(b) deemed to have been given or made: (i) if
delivered in person, immediately upon delivery; (ii) if by telex, telegram or
facsimile transmission, immediately upon sending and upon confirmation of
receipt; (iii) if by nationally recognized overnight courier service with
instructions to deliver the next business day, one (1) business day after
sending; and (iv) if by certified mail, return receipt requested, five (5)
days after mailing.
8.2 PARTIAL INVALIDITY. If any provision of this Agreement
is held to be invalid or unenforceable, such invalidity or unenforceability
shall not invalidate this Agreement as a whole, but this Agreement shall be
construed as though it did not contain the particular provision held to be
invalid or unenforceable and the rights and obligations of the parties shall
be construed and enforced only to such extent as shall be permitted by
applicable law.
8.3 SUCCESSORS. This Agreement, the other Financing
Agreements and any other document referred to herein or therein shall be
binding upon Guarantor and its successors and assigns and inure to the
benefit of and be enforceable by Lender and its successors and assigns,
except that Guarantor may not assign its rights under this Agreement, the
other Financing Agreements and any other document referred to herein or
therein without the prior written consent of Lender.
8.4 ENTIRE AGREEMENT. This Agreement, the other Financing
Agreements, any supplements hereto or thereto, and any instruments or
documents delivered or to be delivered in connection herewith or therewith
represents the entire agreement and understanding concerning the subject
matter hereof and thereof between the parties hereto, and supersede all other
prior agreements, understandings, negotiations and discussions,
representations, warranties, commitments, proposals, offers and contracts
concerning the subject matter hereof, whether oral or written. In the event
of any inconsistency between the terms of this Agreement and any schedule or
exhibit hereto, the terms of this Agreement shall govern.
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IN WITNESS WHEREOF, Guarantor has caused these presents to
be duly executed as of the day and year first above written.
MICROTEL INTERNATIONAL INC.
By: /s/ XXXXXXXX XXXXX
------------------------------------
Name: Xxxxxxxx Xxxxx
----------------------------------
Title: SR/VP/CFO
---------------------------------
CHIEF EXECUTIVE OFFICE:
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
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EXHIBIT A
Information Certificate
Exhibit A
INFORMATION CERTIFICATE
OF
Microtel International, Inc.
CXR Telcom Corp., A wholly owned subsidiary of Microtel International, Inc.
XIT Corp., A wholly owned subsidiary of Microtel International, Inc.
Dated: May 23, 2000
Xxxxx Fargo Business Credit, Inc.
000 X. Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
In order to assist you in the continuing evaluation of the financing you are
considering of MICROTEL INTERNATIONAL, INC. (the "Corporation") and to
expedite the preparation of any documentation which may be required and to
induce you to provide such financing to the Corporation, we represent and
warrant to you the following information about the Corporation, its
organizational structure and other matters of interest to you:
1. The full and exact name of the Corporation as set forth in its Articles
of Incorporation is (PLEASE ATTACH COPY):
1) MicrTel International Inc.
2) NAME CHANGED FROM CXR CORPORATION 3/1/95
2. The Corporation uses and owns the following trade name(s) in the
operation of its businesses (e.g. billing, advertising, etc.; Note: do
not include names which are product names only), (PLEASE ATTACH A COPY
OF THE FICTITIOUS NAME REGISTRATION):
XIT CORPORATION CXR Telecom CORPORATION XIT CORPORATION
XCELETCH - TEK Division HALCYON XCEL Information
Technologies
Corporation
DIGITRAN CXR XXXXXXXX-XXXXXXXX XCEL INFO TECH
XCEL CIRCUITS
DIVISION
In the event any trade name appears on an invoice, a sample copy of
such invoice is annexed.
3. The date of incorporation of the Corporation was JULY 14, 1989 under
the laws of the State of DELAWARE, and the Corporation is in good
standing under those laws. The Corporation has never been involved in
a bankruptcy or reorganization except:
(EXPLAIN)
4. The Corporation is duly qualified and authorized to transact business
as a foreign corporation in the following states and is in good
standing in such states:
MICROTEL INTERNATIONAL, INC.: CA, DE
XIT CORPORATION: CA, NJ
CXR TELCOM CORPORATION: DE, CA, GA, IL, MD, MA, NJ, NY, PA, TX
5. Since the date of incorporation, the corporate name of the Corporation
has been changed as follows:
Date Prior Name
---- ----------
3/1/95 CXR CORPORATION
--------- ------------------------------
--------- ------------------------------
--------- ------------------------------
(PLEASE ATTACH A COPY OF YOUR FILED AMENDMENT TO THE ARTICLES OF INCORPORATION)
6. Since the date of incorporation, the Corporation has made or entered
into the following mergers or acquisitions:
SEE ATTACHED EXPLANATIONS.
7a. The chief executive office of the Corporation, being the place at which
the Corporation maintains its books and records and where the principal
corporate officers work, is located at:
Street Address City State County
0000 XXXXX XXX. XXXXX 000, XXXXXX XXXXXXXXX, XX SAN BERNARDINO
7b. If chief executive office is leased and not owned by the Corporation,
complete the following (INCLUDE LEGAL DESCRIPTION, IF AVAILABLE):
Lessor (legal owner) Xxxxxx Xxxxxxx Xxxx Xxxxx
XXXXXXXX XXXXXXX, INC. 0000 XXXXX XXX. XXXXXX XXXXXXXXX XX
X/X XXXXXXXX XXXXXXXXXX XXXXX 000
GROUP
8. The books and records of the Corporation pertaining to accounts,
contract rights, inventory, etc. are located at (if other than the
chief executive office referred to in Section 7a above):
Street Address City State Lessor
9. The Corporation has other places of business and/or maintains inventory
or other assets at the following addresses. Indicate whether locations
are owned or leased and if leased the name of the lessor (legal owner).
INCLUDE LEGAL DESCRIPTION, IF AVAILABLE.
SEE SCHEDULE E.
(ATTACH ADDITIONAL SHEETS FOR OTHER LOCATIONS)
10. The premises listed below owned by the Corporation are subject to
mortgages as follows (STATE NAME AND ADDRESS OF MORTGAGEE AND
APPROXIMATE PRINCIPAL BALANCE OF MORTGAGE):
Location Mortgagee Principal Balance
-------- --------- -----------------
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
11. The places of business or other locations of any assets used by the
Corporation during the last four (4) months other than those listed
above are as follows:
Xxxxxx Xxxxxxx Xxxx Xxxxx Xxxxxx
XXXX
Xxxxxx Address City State Lessor
12. The Corporation is affiliated with, or has ownership in, the following
corporations (including subsidiaries):
Chief Jurisdiction Ownership
Executive of Percentage or
Name Officer Incorporation Relationship
XIT CORPORATION SEE ATTACHED CHART 100% OWNED BY MICROTEL INT.
CXR TELCOM CORPORATION 100% OWNED BY MICROTEL INT.
XCEL CORPORATION LTD. 100% OWNED BY MICROTEL INT.
EXCEL POWER SYSTEMS LTD 100% OWNED BY XCEL CORPORATION
LTD.
CXR, S.A. 100% OWNED BY MICROTEL, INT.
XCEL JAPAN LTD. 100% OWNED BY XIT CORPORATION
RECENT ACQUISITIONS & INCORPORATIONS
BELIX GROUP ACQUIRED 4/17/00
IN OK BY -------
CXR XXXXXXXX XXXXXXXX, INC. ------- 100% OWNED BY CXR X.X.
XXXXX POWER CONVERSION LTD. 100% OWNED BY XCEL POWER
SYSTEM LTD.
BELIX WOUND COMPONENTS LTD. 100% OWNED BY XCEL POWER
SYSTEM LTD.
13. The Federal Employer Identification Number of the Corporation is as
follows:
00-0000000
14. There is no provision in the Articles of Incorporation or By-laws of
the Corporation, or in the laws of the State of its incorporation,
requiring any vote or consent of shareholders to borrow or to authorize
the mortgage or pledge of or creation of a security interest in any
assets of the Corporation or any subsidiary. Such power is vested
exclusively in its Board of Directors.
15. The officers of the Corporation and their respective titles are as
follows:
Title Name
----- ----
PRESIDENT-CEO XXXXXXX X. XXXXX
------------------------- ---------------------------
SENIOR VICE PRESIDENT-CFO XXXXXXXX X. XXXXX
------------------------- ---------------------------
EXECUTIVE VICE PRESIDENT XXXXXX XXXXXXXXX
------------------------- ---------------------------
SECRETARY XXXXXX X. XXXXXX
------------------------- ---------------------------
The following corporate officers have signatory powers to execute loan
documents to obtain credit and other required legal documents in the
name of the Corporation (INDICATE TITLE OF THOSE AUTHORIZED TO SIGN AND
WHETHER AUTHORIZED SINGLY, ANY TWO, COMBINATION THEREOF, ETC.):
16. With respect to the officers noted above, such officers are affiliated
???? have ownership in, or serve on the Board of Directors of the
following corporation (INDICATE NAME AND ADDRESS OF AFFILIATED
COMPANIES, TYPE OF OPERATIONS, OWNERSHIP PERCENTAGE OR OTHER
RELATIONSHIP):
17. The members of the Board of Directors of the Corporation are:
XXXXXXX X. XXXXX
XXXXXX X. XXXXXX
XXXXXXXX X. XXXXXXXX XX.
18. The name of the stockholders of the Corporation and their stock
holdings are as follows (IF STOCK IS WIDELY HELD INDICATE ONLY
STOCKHOLDERS OWNING 10% OR MORE OF THE VOTING STOCK):
Ownership
Name No. of Shares Percentage
------------------------------------------------------------------
ORBIT II PARTNERS, L.P. 2,821,485 13.72%
19. There are no judgments or litigation pending by or against the
Corporation, its subsidiaries and/or affiliates or any of its
officers/principals (in excess of $100,000), except as follows:
20. At the present time, there are no delinquent taxes due (including, but
not limited to, all payroll taxes, personal property taxes, real estate
taxes or income taxes), except as follows:
NONE
21. The Corporation's assets are owned and held free and clear of any
security interests, liens or attachments, except as follows:
CONGRESS FINANCIAL CORPORATION:
ALL ASSETS
Amount of
Lienholder Assets ??????????
---------- --------- -----------------
------------------------ ---------------------- ----------------------
------------------------ ---------------------- ----------------------
------------------------ ---------------------- ----------------------
------------------------ ---------------------- ----------------------
22. The Corporation has not guaranteed and is not otherwise liable for the
obligations of others, except as follows:
Amount of
Debtor Creditor Obligation
---------- --------- -----------------
XCEL XXXXXX X. CIRCU??S,
INC. STATE BANK OF FARGO $55,032
------------------------ ---------------------- ----------------------
------------------------ ---------------------- ----------------------
------------------------ ---------------------- ----------------------
------------------------ ---------------------- ----------------------
23. The Corporation does not own or license any trademarks, patents,
copyrights or other intellectual property, except as follows (INDICATE
TYPE OF INTELLECTUAL PROPERTY AND WHETHER OWNED OR LICENSED,
REGISTRATION NUMBER, DATE OF REGISTRATION, AND IF LICENSED, THE NAME AND
ADDRESS OF THE LICENSOR):
24. The Corporation's fiscal year ends: DECEMBER.
25. With regard to any pension or profit sharing plan:
(a) A determination as to qualification has been issued. YES
(b) Funding is on a current basis and in compliance with established
requirements. YES
26. Certified Public Accountants for the Corporation is the firm of:
Name BDO XXXXXXX LLP
Address 0000 XXXXXXX XXXXXX, XXX. 000, XXXXX XXXX, XX 00000
Partner Handling Relationship XXXX XXXXXX
Were statements uncertified for any fiscal year? NO.
27. Attorney for the Corporation is the firm of:
Name XXXXXXXXX, XXXXXX & XXXXXX
Address 000 XXXXXXXX XXXXXX, XXXXX 000, XXXXXXXXX, XX 00000
Partner Handling Relationship XXXXXX X. XXXXXXXXX
Telephone 000 000 0000
28. Insurance company for the Corporation is:
Name XXXXXXXXX/XXXXXXXXXX INSURANCE SERVICES
Address 000 XXXXXXXXX XXXXX #000, X.X. XXX 00000, XXXXXXXXX, XX
00000-00??
Contact XXXXX XXXXX
Telephone 000 000 0000
Policy Number(s)
(ATTACH SUMMARY OR CERTIFICATE OF INSURANCE)
29. Prompt written notice will be given you of any change or amendment with
respect to any of the foregoing. Until such notice is received by you,
you shall be entitled to rely upon the foregoing in all respects.
Very truly yours,
CORPORATE SEAL TO BE
AFFIXED HEREIN BELOW
By: XXXXXXXX X. XXXXX
Title: SENIOR VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
By: XXXXXXX X. XXXXX
Title: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
SCHEDULE 4.4
Permitted Liens
None
Schedule 4.4
SCHEDULE 4.8
Bank Accounts
Union Bank of California, N.A.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Deposit Account No.: 3340007742
(Account in the name of MicroTel International Inc.)
Schedule 4.8
SCHEDULE 5.9
Indebtedness
None
Schedule 5.9
SCHEDULE 5.10
Loans, Advances and Guarantees
Various loans and advances to, and guaranties of,
Guarantor's foreign subsidiaries
Schedule 5.10
