SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: March 19, 1996
(Date of earliest event reported)
Aeroflex Incorporated
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(Exact name of registrant as specified in its charter)
Delaware 1-8037 11-1974412
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
35 South Service Road, Plainview, New York 11803
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number
including area code (516) 694-6700
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
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1. (a) On February 13, 1996, the Registrant entered into an agreement to
acquire all of the outstanding stock of MIC Technology Corporation, a Texas
Corporation ("MIC") with its principal office located in North Andover,
Massachusetts. The rights under this agreement were assigned to Aeroflex
Acquisition Corp. ("Acquisition"), a subsidiary of the Registrant, which
completed the transaction on March 19, 1996 by acquiring all of the outstanding
stock of MIC and contemporaneously merged into MIC with MIC being the surviving
corporation. Acquisition paid approximately $36,000,000 in cash and issued
300,000 shares of common stock and warrants to purchase 400,000 shares of common
stock (at exercise prices ranging from $7.05 to $7.50 per share). The total
consideration paid was approximately $37,000,000. The Registrant used available
cash of $9,000,000 and borrowings under its new Revolving Credit and Term Loan
Agreement with NatWest Bank, N.A. and Chemical Bank of $27,000,000. The
Agreement also provides for a contingent payment of $4,000,000 based upon
certain operating results.
(b) MIC's facilities were used by it in the manufacture of high frequency
thin film circuits and interconnect products, and the Registrant will continue
such operations under leases thereof.
ITEM 5. Other Events
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1. (a) Effective on March 19, 1996 the Registrant and its subsidiaries ("The
Co-Borrowers") entered into the Third Amended and Restated Loan and Security
Agreement ("the Agreement") with NatWest Bank, N.A. and Chemical Bank ("the
Banks"). The Agreement provides for revolving credit loans up to $22,000,000,
expiring on March 31, 1999 and term loans of $16,000,000 requiring quarterly
re-payments of $900,000 beginning June 30, 1996 and final payment due on
September 30, 2000 ("the Loans"). The Loans were made for the purpose of
acquiring MIC Technology Corporation and for general working capital needs. The
Co-Borrowers have pledged substantially all of their assets to the Banks under
the Agreement.
<PAGE>
ITEM 7. Financial Statements, Pro Forma Financial
Information and Exhibits
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(a) Financial Statements of business acquired.
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Since it is impractical to provide the required financial
statements at this time, the Company will file the required financial
statements on Form 8-K/A as soon as practicable, but not later than sixty
days after the required filing date of this report.
(b) Pro forma financial information.
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Any required pro forma financial information also will be filed
on Form 8-K/A within sixty days after the required filing date of this
report.
(c) Exhibits.
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(2) Common Stock Purchase Agreement dated as of February 13,
1996 and closed on March 19, 1996 among Aeroflex Acquisition Corp. (as
Assignee of the Registrant), MIC Technology Corporation and the Stockholders
of MIC Technology Corporation.
(10) Third Amended and Restated Loan and Security Agreement,
effectively dated as of March 19, 1996 among Aeroflex Incorporated and its
subsidiaries and NatWest Bank, N.A. and Chemical Bank.
<PAGE>
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Aeroflex Incorporated
By: /s/ Michael Gorin
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Michael Gorin
President and Chief Financial Officer
Date: March 22, 1996
COMMON STOCK PURCHASE AGREEMENT
COMMON STOCK PURCHASE AGREEMENT made as of this 13th day of February 1996,
by and among MIC TECHNOLOGY CORPORATION, a Texas corporation (the "Company"),
AEROFLEX INCORPORATED, a Delaware corporation (the "Purchaser"), and the persons
whose signatures appear at the foot hereof (individually a "Stockholder" and
collectively the "Stockholders").
W I T N E S S E T H:
WHEREAS, the Stockholders in the aggregate own all of the outstanding
Common Stock, no par value per share (the "Common Stock"), and all outstanding
warrants to purchase Common Stock (the "Stockholder Warrants") of the Company;
and
WHEREAS, the Purchaser and the Stockholders have agreed to the sale by the
Stockholders to the Purchaser of all of the outstanding Common Stock and
Stockholder Warrants of the Company upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the covenants, warranties and mutual
agreements herein set forth, and in reliance upon the representations and
warranties contained herein, the parties do hereby agree as follows:
1. Purchase and Sale of Stock and Stockholder Warrants.
In reliance on the representations and warranties contained herein and
subject to all of the terms and conditions hereof, each of the Stockholders
hereby severally (and not jointly) agrees to sell, assign, transfer and deliver
to the Purchaser, and the Purchaser hereby agrees to purchase from the
Stockholders, on the Closing Date, all of the issued and outstanding Common
Stock held by each of the Stockholders (the "Stock") and all of the outstanding
Stockholder Warrants held by certain of the Stockholders.
2. Purchase Price.
2.1 Purchase Price. In full consideration of the sale of the Stock and
the Stockholder Warrants to the Purchaser, and subject to the terms and
conditions hereinafter set forth, the Purchaser hereby agrees (i) at the Closing
(A) to pay to the Stockholders' Representative, Thirty Five Million Four Hundred
Ninety-Seven Thousand Ninety-Eight Dollars ($35,497,098) by wire transfer in
immediately available funds to be allocated among the Stockholders in the
amounts set forth on Schedule 4.4 (B) to deposit with the Escrow Agent an
additional Five Hundred and Ninety Thousand Dollars ($590,000) which together
with the Deposit (as defined in Section 2.3) shall equal Nine Hundred Fifty
Thousand Dollars ($950,000) (the "Escrow Fund"), to be distributed to the
Stockholders as provided in the Escrow Agreement and, if distributed, to be
allocated among the Stockholders, in the amounts set forth on Schedule 4.4; (C)
to issue 100,000 Warrants in the form of Exhibit F-1 to the Stockholders in the
denominations and registered in the names specified on Schedule 4.4; and (D) to
issue 300,000 Warrants in the form of Exhibit F-2 and 300,000 shares of the
Purchaser's Common Stock in the denominations and registered in the names
specified by Purchaser as set forth in the Allocation Agreement delivered to the
Stockholders' Representative on the date of this Agreement; and (ii) on the
Contingent Payment Date, to pay the Contingent Payment as provided in Section
2.2 hereof. The exercise price of the 100,000 Warrants in the form of Exhibit
F-1 shall be the average closing price per share of the Purchaser's Common Stock
on the New York Stock Exchange during the ten (10) trading days ending on the
second trading day immediately preceding the Closing Date (as defined below). In
the event Purchaser exercises the option to extend the Closing Date and
termination date as provided in Section 3.1(b) by increasing the Deposit to Five
Hundred Thousand Dollars ($500,000) then at the Closing the additional amount
delivered to the Escrow Agent under Section 2.1(i)(B) shall be Four Hundred
Fifty Thousand Dollars ($450,000)
2.2 Contingent Payment
(a) Amount. If the aggregate Gross Profit Dollars (as hereinafter
defined) of the Company during the Measurement Period (as hereinafter defined)
are $24,000,000 or more, the Purchaser shall pay to the Stockholders on a date
(the "Contingent Payment Date") within ninety (90) days after the end of the
Measurement Period an amount (the "Contingent Payment") equal to Four Million
Dollars ($4,000,000). The Contingent Payment shall be allocated among the
Stockholders in the amounts as set forth in Schedule 4.4 hereto.
(b) Certain Definitions.
(i) "Cost of Sales" means Cost of Sales as determined in the audited
Financial Statements of the Company as of October 31, 1995, and shall be
calculated for the Measurement Period in the same manner as Cost of Sales has
been historically determined by the Company. Consistent with the foregoing, Cost
of Sales (A) shall not include any amount charged to depreciation or
amortization expense; and (B) shall not include the cost of ten percent (10%) of
the gold, ten percent (10%) of the ceramics, and twenty-five percent (25%) of
other sputtering materials incurred during the Measurement Period which amounts
shall be appropriately charged to development expense.
(ii) "Gross Profit Dollars" means Net Sales less Cost of Sales;
(iii) "Measurement Period" means the eighteen month period from March 1,
1996 to August 31, 1997, provided if Purchaser exercises the option to extend
the Closing Date and termination date as provided in Section 3.1(b) then the
eighteen month period shall be from April 1, 1996 to September 30, 1997.
(iv) "Net Sales" means Gross Sales of the Company's products and services
less returns, price and quantity adjustments and other credits historically
reflected as sales adjustments by the Company, and shall be calculated for the
Measurement Period in the same manner as has been historically determined by the
Company.
(c) Certain Undertakings
(i) From and after the Closing and during the Measurement
Period, the Purchaser agrees with the Stockholders as follows:
(A) Purchaser shall, in good faith, use its best
efforts to operate the Company in a commercially reasonable manner.
(B) The Company shall remain a separate corporation
and direct or indirect wholly-owned subsidiary of the Purchaser until the end
of the Measurement Period.
(C) Purchaser shall make available to the Company
(x) sufficient working capital and (y) sufficient capital to enable the Company
to make capital equipment investments of up to $4,000,000 in the first twelve
months of the Measurement Period and up to $2,000,000 in the next twelve months
of the Measurement Period, in the case of both (x) and (y) in an amount
sufficient so as not to impair the Company's ability to achieve Gross Profit
Dollars of $24,000,000 or more during the Measurement Period. The cost of any
working capital or other equity or debt capital shall not be included in Cost of
Sales.
(D) Revenues will be recognized in accordance with
GAAP. The Company shall not cause shipments to be made in advance of customers
requested delivery dates. The Company will not defer shipments in order to
avoid payment of the Contingent Payment.
(E) From and after the Closing and during the
Measurement Period, the Purchaser shall consistently apply all of the
Company's accounting policies as such policies are reflected in the
Company's October 31, 1995 audited Financial Statements.
(ii) Within sixty (60) days after the end of
the first six month period and the end of the second six month period during
the Measurement Period, the Purchaser shall provide the Stockholders'
Representative with a detailed schedule reflecting the calculation of Gross
Profit Dollars for such periods and such backup for the determination,
including the ability to meet with the Company's officers as the
Stockholders' Representative may reasonably request.
(d) Payment and Audit Right.
(i) The parties hereto agree that within sixty
(60) days after the end of the Measurement Period, the Purchaser shall
determine Gross Profit Dollars and advise the Stockholders' Representative
in writing (the "Contingent Payment Notice") of such determination and shall
provide the Stockholders' Representative with such information as is
reasonably necessary to enable him to confirm such determination. The
Purchaser shall deliver the Contingent Payment to the Stockholders within
ninety (90) days after the end of the Measurement Period in accordance with
written instructions provided to the Purchaser by the Stockholders'
Representative.
(ii) If the Stockholders disagree with the
Purchaser's determination of Gross Profit Dollars, the Stockholders shall be
entitled within thirty (30) days after receipt of the Contingent Payment Notice
to commence, or cause to be commenced, an audit of the Company's underlying
accounting records. Such audit will be conducted by an independent national
("Big Six") accounting firm selected by the Stockholders and approved by the
Purchaser (such approval not to be unreasonably withheld). Such audit shall be
conducted after reasonable notice and during the Purchaser's normal business
hours. Within thirty (30) days after such audit, such firm shall advise
the Purchaser and the Stockholders' Representative of such firm's
determination of Gross Profit Dollars and, if different from the
determination by Purchaser, the Purchaser's President and the Stockholders'
Representative shall meet and in good faith seek to reach agreement on
the determination of Gross Profit Dollars. If such agreement is not reached
within fifteen (15) days, then the Purchaser and the Stockholders shall select
a new, mutually acceptable independent national ("Big Six") accounting firm
to review the determination of Gross Profit Dollars (which second firm
shall have access to the Company's accounting records and the records of the
first accounting firm related to the determination of Gross Profit Dollars) and
such second firm's decision shall be binding on the Purchaser and the
Stockholders. If the Purchaser and the Stockholders cannot agree upon a second
accounting firm, an accounting firm shall be selected by the first accounting
firm. All costs and expenses of the first such accounting firm and of the second
such accounting firm shall be paid (A) by the Stockholders if the final
determination of Gross Profit Dollars is less than $24,000,000, and (B) by the
Purchaser if the final determination of Gross Profit Dollars is $24,000,000 or
more.
2.3 Deposit. Upon execution of this Agreement, the Purchaser shall
deposit Three Hundred Sixty Thousand Dollars ($360,000) (the "Deposit") with the
Escrow Agent, which shall be held and disbursed by the Escrow Agent in
accordance with and subject to the terms of the Escrow Agreement and Section 8.2
of this Agreement. The Deposit shall be increased by One Hundred Forty Thousand
Dollars ($140,000) if Purchaser exercises the option to extend the Closing Date
and termination date as provided in Section 3.1(b).
All of the foregoing, including the Deposit, shall be collectively referred
to hereinafter as the "Purchase Price." The cash portion of the Purchase Price,
the Deposit and the Contingent Payment shall be allocated among the Stockholders
as set forth in Schedule 4.4 hereto.
3. The Closing.
3.1 Place and Date; Option to Extend.
(a) The closing of the transactions contemplated by this
Agreement shall take place in New York, New York at such place as the parties
may agree upon in writing, on March 25, 1996, (or at such earlier time as the
Purchaser wants to close). The closing is referred to in this Agreement as the
"Closing" and the date of the closing is referred to herein as the "Closing
Date".
(b) Purchaser may at Purchaser's option extend the Closing Date
and date of termination under Section 8.1(b)(i) and 8.1(c)(i) from March 25,
1996, to April 4, 1996 by delivering prior to the close of business New York
Time on March 25, 1996, both written notice of such extension to the
Stockholders' Representative and wire transfer of One Hundred and Forty Thousand
Dollars ($140,000) to the Escrow Agent to increase the Deposit to Five Hundred
Thousand Dollars ($500,000).
3.2 Documents to be delivered by the Stockholders and the Company.
(a) Upon execution of this Agreement, the Stockholders shall
execute and deliver to the Custodian as set forth in the Custody Agreement and
Irrevocable Election to Sell in the form of Exhibit A-1 attached hereto (i) duly
issued certificates representing all of the Stock duly endorsed in blank, with
blank stock powers attached and with all required stock transfer stamps attached
and signatures guaranteed by a commercial bank or trust company or a member firm
of a national securities exchange; (ii) all of the stock options set forth on
Schedule 4.4 hereto (the "Options"), together with duly executed notices of
exercise; (iii) an Irrevocable Power of Attorney in the form of Exhibit A-2,
(iv) instruments contributing to the capital of the Company and canceling
promissory notes with principal amounts outstanding of $200,000 by Laurance A.
Ingham and $80,000 by Charles V. Ristagno, and (v) the Stockholder Warrants.
(b) At the date of this Agreement the executed Escrow Agreement
among the Company, the Stockholders, the Purchaser and the Escrow Agent, in the
form attached hereto as Exhibit E shall be delivered to each party.
(c) At the date of this Agreement a copy of resolutions of the
Board of Directors of the Company authorizing the execution, delivery and
performance of this Agreement, the Employment Agreements, the Escrow Agreement
and the Non-Competition Agreements by the Company and a certificate of its
secretary or assistant secretary, dated the date of this Agreement, to the
effect that such resolutions were duly adopted and are in full force and effect
shall be delivered to the Custodian;
(d) At the date of this Agreement the executed Employment
Agreements among the Purchaser, the Company and Messrs. Brian J. Mitchell,
David F. Chapman and Malcolm D. Hill, in the forms agreed to by such
parties and the executed Noncompetition Agreements among the Purchaser,
the Company and Messrs. Charles H. Greer, Donner Management Company, Charles V.
Ristagno and Laurance A. Ingham, in the form attached hereto as Exhibit B shall
be delivered to the Custodian.
(e) At the Closing, the Stockholders or the Company, as the
case may be, shall deliver to the Purchaser the following:
(i) the executed Employment Agreements among the Purchaser, the Company and
Messrs. Brian J. Mitchell, David F. Chapman and Malcolm D. Hill, in the forms
agreed to by such parties and delivered to the Custodian on the date of
execution of this Agreement;
(ii) the executed Noncompetition Agreements between the, Company and
Messrs. Charles H. Greer, Donner Management Company, Charles V. Ristagno and
Laurance A. Ingham, in the form attached hereto as Exhibit B and delivered to
the Custodian on the date of execution of this Agreement;
(iii) a certificate of the Company's secretary or its assistant secretary
dated the Closing Date to the effect that the resolutions referred to in Section
3.2(c) are in full force and effect.
(iv) confirmation of the exercise of all Options and payment therefor.
(v) stock certificates for all the Stock and the Stockholders Warrants.
(vi) the opinions, certificates and other documents or instruments
specified in Section 7.1 of this Agreement; and
(f) the Stockholders and the Company shall each execute
such other documents and instruments and take such action as may be necessary
or reasonably requested by the Purchaser to fully vest in Purchaser full
title to the Stock and the Stockholder Warrants and place the Purchaser in
possession and control of the Company, its Subsidiary and their assets.
3.3 Documents to be Delivered by the Purchaser.
(a) Upon execution of this Agreement, the Purchaser (i) shall
deliver the Deposit to the Escrow Agent; (ii) shall execute and deliver the
executed Escrow Agreement; (iii) shall deliver to the Stockholders a copy of
resolutions of the Board of Directors of the Purchaser authorizing the
execution, delivery and performance of this Agreement, the Employment Agreements
and the Escrow Agreement by the Purchaser, and a certificate of its secretary or
assistant secretary, to the effect that such resolutions were duly adopted and
are in full force and effect; and (iv) shall deliver to the Custodian the
Employment Agreements and the Non-Competition Agreements executed by the
Purchaser.
(b) At the Closing the Purchaser shall deliver to the
Stockholders:
(i) a certificate of the Purchaser's secretary or its assistant secretary
dated the Closing Date to the effect that the resolutions referred to in Section
3.3(a)(iii) are in full force and effect;
(ii) the opinions, certificates and other documents or instruments
specified in Section 7.2 of this Agreement; and
(iii) the Purchaser shall deliver to the Stockholders' Representative the
cash portion of the Purchase Price (i.e., $35,497,098), and Warrants for 400,000
shares of Purchaser Common Stock and 300,000 shares of unregistered Purchaser
Common Stock and shall deposit $590,000 into the Escrow Fund with the Escrow
Agent as specified in Section 2 above, provided if Purchaser exercised the
option to extend the Closing Date and termination date as provided in Section
3.1(b) the amount delivered to the Escrow Agent shall be $450,000.
3.4 Form of Documents.
Unless specifically otherwise provided herein, all documents to be
delivered pursuant to this Section 3 by one party to the other party to this
Agreement shall be in form and substance reasonably satisfactory to such other
party and its counsel.
4. Representations and Warranties of the Stockholders and the Company.
The Stockholders and the Company, jointly and severally, (except with
respect to Section 4.3 as it pertains to the legal capacity and actions of the
Stockholders, in which case the Stockholders severally, and not jointly)
represent and warrant to the Purchaser as of the date hereof and as of the
Closing Date, except as set forth in the Schedules delivered by the Stockholders
and the Company to the Purchaser on the date hereof, as follows:
4.1 Organization and Authority.
Each of the Company and the Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with all requisite power and authority
(corporate and governmental) to own, operate and lease its properties and to
carry on its business as now being conducted, except where the failure to have
such power and authority would have an adverse effect of less than $15,000 in
the aggregate on the Company and the Subsidiary. Except as set forth in Schedule
4.1, the Company and the Subsidiary are duly licensed or qualified to do
business and are in good standing in each jurisdiction in which either of them
is required to be so licensed or qualified, except where the failure to be so
licensed or qualified would have an adverse effect of less than $15,000 in the
aggregate on the Company and the Subsidiary. Schedule 4.1 sets forth the
jurisdictions in which the Company and the Subsidiary are incorporated and
licensed or qualified to do business.
4.2 Subsidiary.
The Company owns all of the shares of the issued and outstanding
capital stock of MIC TECHNOLOGY SARL (the "Subsidiary") free and clear of any
security interest, claim, lien, pledge, option or encumbrance whatsoever, or any
restrictions except for restrictions under applicable securities laws or
provisions of French law. The Company has no subsidiaries except for the
Subsidiary. Neither the Company nor the Subsidiary has any direct or indirect
interest or interests by stock ownership or otherwise in any firm, association,
corporation or business enterprise, except for the Company's ownership of the
Subsidiary.
4.3 Authorization of Agreements.
The Stockholders have the legal capacity to execute, deliver and
perform their respective obligations under this Agreement. This Agreement has
been duly executed and delivered by each of the Stockholders and constitutes the
legal, valid and binding obligation of each of the Stockholders enforceable
against each of them in accordance with its terms, except as the enforcement
thereof may be subject to or limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies. The Company has the power
and authority to execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally now or hereafter in effect and subject to the application of
equitable principles and the availability of equitable remedies.
4.4 Capital Stock.
The authorized, issued and outstanding capital stock of all classes of
the Company and the Subsidiary are set forth on Schedule 4.4. All of the
outstanding capital stock of the Company and the Subsidiary has been duly
authorized and is validly issued, fully paid and nonassessable. All outstanding
capital stock and any other outstanding securities of the Company and the
Subsidiary (including any employee stock options and the Stockholder Warrants)
were issued in compliance with all federal and state securities laws. The
lawful, registered and beneficial owners (and their addresses) of all shares of
the capital stock of the Company and the Subsidiary and the Stockholder Warrants
and the number of shares and Stockholder Warrants held by each is as indicated
on Schedule 4.4 hereto. The Stockholders have, and on the Closing Date will
convey to the Purchaser, good title to the Stock and the Stockholder Warrants,
free and clear of any security interest, claim, lien, pledge, option, or
encumbrance whatsoever or any restrictions except for restrictions under
applicable securities laws. Except as set forth on Schedule 4.4, which sets
forth all of the Options and the Stockholder Warrants, including the holders and
exercise prices thereof, there are no rights, subscriptions, warrants, options,
conversion rights, commitments or agreements of any kind authorized or
outstanding to purchase or otherwise acquire from the Stockholders, the Company,
the Subsidiary or any other person, any shares of stock, or securities or
obligations of any kind convertible into or exchangeable for any shares of
stock, of any class of the Company or the Subsidiary or any other equity
interest in the Company or the Subsidiary. There is no proxy, or any agreement,
arrangement or understanding of any kind authorized or outstanding which
restricts, limits or otherwise affects the right to vote any share of Stock or
any share of capital stock issued by the Subsidiary.
4.5 No Conflicts.
The execution, delivery and performance of this Agreement, the
Employment Agreements, the Noncompetition Agreements, the Escrow Agreement and
any other agreement or document contemplated herein or therein and the
consummation of all of the transactions contemplated hereby and thereby: (i) do
not and will not require the consent, waiver, approval, license, designation or
authorization of, or declaration with, any court to which the Company is subject
or any governmental authority or agency; and (ii) do not and will not, with or
without the giving of notice or the passage of time or both, violate or conflict
with or result in a breach or termination of any provision of, or constitute a
default under, or accelerate or permit the acceleration of the performance
required by the terms of, or result in the creation of any mortgage, security
interest, claim, lien, charge or other encumbrance upon any of the assets of the
Company or the Subsidiary pursuant to, or otherwise give rise to any liability
or obligation under, the certificate of incorporation or bylaws of the Company
or the Subsidiary, any agreement, mortgage, deed of trust, indenture, license,
permit or any other agreement or instrument or any order, judgment, decree,
statute or regulation to which the Stockholders, the Company or the Subsidiary
is a party or by which the Stockholders, the Company or the Subsidiary or any of
their assets may be bound, except for any such violations, conflicts, breaches,
defaults or other occurrences which would not have a material adverse effect on
the Company and the Subsidiary, taken as a whole and (iii) do not and will not
require the consent of any natural person, firm, partnership, association,
corporation or trust, except for any such consent which would not have had a
material adverse effect on the Company and the Subsidiary, taken as a whole.
4.6 Financial Statements.
Schedule 4.6 sets forth the Financial Statements of the Company.
(a) Except as set forth on Schedule 4.6, for the relevant
periods, the Financial Statements: (1) are complete and correct in all material
respects; (2) present fairly the consolidated financial position of the Company
and the subsidiary at such dates and the results of operations and changes in
financial position for the respective periods ended on such dates; and (3) were
prepared in accordance with generally accepted accounting principles,
consistently applied during the periods, and are in accordance with the books
and records maintained by the Company and the Subsidiary in all material
respects.
(b) Except as set forth on Schedule 4.6, as of December 31, 1995,
neither of the Company nor the Subsidiary had any liabilities, commitments or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
not shown and adequately provided for in the Financial Statements as of such
date or in the Schedules to this Agreement or in the Notes to the October 31,
1995 Financial Statements.
4.7 Taxes.
True and correct copies of the Company's consolidated federal and
state income tax returns for the years ended October 31, 1994, 1993, 1992 and
1991 have been delivered to the Purchaser. All tax returns (including
information returns) required by any jurisdiction to have been filed by or with
respect to the Company or the Subsidiary have been timely filed, except for
returns with respect to which extensions have been granted, and all taxes shown
due on such returns have been paid.
Except as set forth in Schedule 4.7, all liabilities of the Company or
the Subsidiary to any jurisdiction for taxes of every kind and nature, including
interest thereon and penalties with respect thereto, (collectively "Taxes")
relating to any period ending on or prior to December 31, 1995, have been timely
paid by the Company or are accrued and provided for in the Financial Statements
for the period ended December 31, 1995. Any liability for Taxes incurred by the
Company or the Subsidiary since December 31, 1995 was incurred in the ordinary
course of business.
Except as set forth in Schedule 4.7, the U.S. consolidated (or
separate, as the case may be) federal income tax returns and state and foreign
income tax returns of the Company and the Subsidiary have not been audited by
the Internal Revenue Service or other taxing authority within the past five
years. Neither the Internal Revenue Service nor any state, local or other taxing
authority has proposed any additional taxes, interest or penalties with respect
to the Company or the Subsidiary or any of their operations or business; there
are no pending or, to the knowledge of the Company and the Stockholders,
threatened tax claims or assessments; and there are no pending or, to the
knowledge of the Company and the Stockholders, threatened tax examinations by
any taxing authorities.
Neither the Company nor the Subsidiary has given any waivers of rights
(which are currently in effect) under applicable statutes of limitations with
respect to the federal income tax returns for any fiscal year. The Company has
not consented to the application of Section 341(f) of the Code.
Since November 1, 1994, the Company has been a "C" corporation, as
defined in Section 1361(a) of the Code.
4.8 No Adverse Changes.
Since October 31, 1995, except as set forth in Schedule 4.8 hereto:
(i) the business of the Company and the Subsidiary has been conducted only in
the ordinary course, except for the transactions contemplated by this Agreement;
(ii) there has been no change in the condition (financial or otherwise), assets,
liabilities, business, operations or affairs of the Company and the Subsidiary,
other than changes in the ordinary course of business, none of which singly and
no combination of which, in the aggregate, has been materially adverse; and
(iii) there has been no damage, destruction or loss or other occurrence or
development, whether or not insured against, which, either singly or in the
aggregate, materially adversely affects, and the Stockholders have no knowledge
of any threatened occurrence or development which would materially adversely
affect, the condition (financial or otherwise), assets, liabilities, business,
operations or affairs of the Company or the Subsidiary, taken as a whole.
4.9 Conduct of Business.
Except as disclosed on Schedule 4.9 hereto, and except for the
execution of this Agreement since October 31, 1995, neither the Company nor the
Subsidiary has: (i) created or incurred any liability (absolute, accrued,
contingent or otherwise) except unsecured current liabilities incurred in the
ordinary course of business consistent with past practice for other than money
borrowed; (ii) mortgaged, pledged or subjected to any lien or otherwise
encumbered any of its assets, tangible or intangible; (iii) discharged or
satisfied any lien or encumbrance or paid any obligation or liability (absolute,
accrued, contingent or otherwise) other than current liabilities shown on the
Financial Statements as of October 31, 1995 and taxes and current liabilities
incurred since October 31, 1995 in the ordinary course of business for other
than money borrowed or under contracts or agreements entered into in the
ordinary course of business (other than as a result of any default or breach of,
or penalty under, any such contracts of agreements); (iv) waived, released or
compromised any claims or rights of substantial value, or experienced any labor
trouble (including without limitation any actual or threatened strike or
lock-out) or lost, or been threatened with the loss of, any key employees or any
substantial number of employees; (v) entered into any settlement, compromise or
consent with respect to any claim, proceeding or investigation; (vi) made
capital expenditures or capital additions or betterments in excess of $200,000;
(vii) sold, assigned, transferred, leased or otherwise disposed of any of its
assets, tangible or intangible, or canceled any debts or claims except, in each
case, for fair consideration in the ordinary course of business; (viii) declared
or paid any dividends, or made any other distribution on or in respect of, or
directly or indirectly purchased, retired, redeemed or otherwise acquired any
shares of its capital stock, paid any notes or open accounts, or paid any amount
or transferred any asset to the Stockholders, any member of their families or
any other holder of any capital stock of the Company; (ix) made or become a
party to, or become bound by, any contract or commitment or renewed, extended,
amended, modified or terminated any contract or commitment which in any one case
involved an amount in excess of $100,000; (x) issued or sold any shares of its
capital stock; (xi) except in the ordinary course of business, granted any
increase in the compensation of, made any other change in employment terms for,
or adopted, amended, modified or terminated any bonus, profit-sharing,
incentive, severance or other plan, contract or commitment for the benefit of,
any of its directors, officers or employees; (xii) entered into any transaction
not in the ordinary course of business (except for this Agreement); (xiii)
changed any of its accounting methods or principles used in preparing the
Financial Statements; or (xiv) entered into any contract or commitment to do any
of the foregoing.
4.10 Title to Assets.
Except as set forth in Schedule 4.10, the Company or the Subsidiary
has valid title to all of its personal property and valid leasehold interests in
all real and personal property leased by it, free and clear of all claims,
liens, charges, mortgages, pledges, security interests, restrictions and other
encumbrances of any kind whatsoever, excluding (i) any such liens relating to
carriers, ware- housemen, real property lessors, mechanics, materialmen, and
similar persons, affecting leased real property, or arising as a matter of law,
which, in the aggregate, do not exceed $25,000; (ii) defects, zoning
restrictions, restrictions on use, irregularities, encumbrances or clouds on
title of real property, which do not materially impair the property affected
thereby for the purpose for which it was acquired or leased; and (iii) any
mortgages, pledges, security interests, restrictions and other encumbrances
caused by parties other than the Company or the Subsidiary or the Stockholders
relating to any leased real property, which, in the aggregate, do not materially
affect the use and enjoyment of such leased real property by the Company or the
Subsidiary. No instrument, easement, license or grant of record, applicable
zoning or building law, ordinance or administrative regulation or other
impediment of any kind prohibits or interferes with, limits or impairs, or
would, if not permitted by any prior nonconforming use, prohibit or interfere
with or limit or impair, the use, operation, maintenance of, or access to, or
the value of, the real or personal property owned or leased by the Company or
the Subsidiary as presently used, operated, maintained and accessed by the
Company or the Subsidiary to carry on its business as presently conducted. All
of the assets and properties owned or leased by the Company and the Subsidiary
are (i) sufficient and adequate to carry on their business as presently
conducted; (ii) are in as good condition and repair as necessary to carry on
their business as presently conducted, normal wear and tear excepted, and are in
a state of maintenance, repair and operating condition required for the proper
operation and use thereof as necessary to carry on their business as presently
conducted; and (iii) comply with all applicable federal, state or local laws,
ordinances, rules and regulations and with the terms and conditions of all
leases and other agreements affecting or relating to any such property, except
where the noncompliance with any of the foregoing does not have a material
adverse effect on the business of the Company and the Subsidiary, taken as a
whole.
4.11 Real Property.
Neither the Company nor the Subsidiary owns any real property.
Schedule 4.11 sets forth a true and complete list of all leases of real property
to which the Company or the Subsidiary is a party. Except as set forth in
Schedule 4.11, the Company and the Subsidiary enjoy quiet possession under all
of their leases of real property, each of which is enforceable in accordance
with its terms against the lessor thereunder and the Company and the Subsidiary
are not in default under the terms of any of said leases, except for any such
default which does not have an adverse effect of $15,000 or more on the Company
and the Subsidiary; and no condition exists and no event has occurred which,
with or without the passage of time or the giving of notice or both, could
constitute such a default.
4.12 Personal Property.
Schedule 4.12 hereto sets forth a true and complete list of all items
of personal property except inventory having an original cost of more than
$5,000, owned or leased by the Company and the Subsidiary and the location of
each such item. No shortage or damage exists in (i) any raw materials, supplies,
work in process or finished goods owned by customers or suppliers of the Company
and the Subsidiary and stored upon their premises of the business or (ii) any
other items of personal property owned by another for which the Company or the
Subsidiary is accountable to another, and any such items referred to in clauses
(i) or (ii) are described in Schedule 4.12 hereto.
4.13 Inventory
The inventory shown on the Company's consolidated balance sheet as of
October 31, 1995, and all additions thereto acquired since October 31, 1995 and
now on hand, consist of items which are in good condition, of a quantity and
quality usable and saleable in the ordinary course of business and are adequate
and appropriate for the business of the Company and the Subsidiary as now
conducted. Obsolete, discontinued, returned, damaged, overage or off-quality
items do not constitute a material part of such inventory. Finished goods in
such inventory conform to specifications, including without limitation all
applicable governmental regulations, are free from defects and are marketable in
their current condition.
4.14 Accounts Receivable.
All accounts receivable, net of reserves, shown on the consolidated
balance sheet as of December 31, 1995, and all accounts receivable acquired by
the Company or the Subsidiary since December 31, 1995, net of reserves
established consistent with the reserves shown on the consolidated balance sheet
as of December 31, 1995, have been collected or will be collected and are
subject to no known counterclaims or setoffs. All such accounts receivable have
been generated in the ordinary course of business and reflect a bona fide
obligation for the payment of goods or services provided by the Company or the
Subsidiary.
4.15 Material, Service Agreements; Other Contracts.
(a) Schedule 4.15(a) sets forth a complete list with regard to
the Company and the Subsidiary of (i) all bids, applications or proposals
submitted by any of them to provide materials or services with a value of
$50,000 or more to any Person and for which the award, approval or selection is
pending, (ii) all contracts or agreements for the provision of materials or
services with a value of $50,000 or more to which the Company or the Subsidiary
is a party and which has not yet been performed in full (the items referred to
in the foregoing clauses (i) and (ii) being herein collectively called the
"Material/Service Agreements"). All of such Material/Service Agreements are
fully performable by the Company or the Subsidiary in compliance with their
terms. To the knowledge of the Company and the Stockholders, no grounds exist
for the termination or cancellation of any Material/Service Agreement by the
other party thereto. Schedule 4.15(a) sets forth for each Material/Service
Agreement: (i) the branch of the Company responsible; and (ii) the customer.
(b) Except as disclosed in Schedule 4.15(b) hereto, other than as
disclosed on Schedule 4.15(a), neither the Company nor the Subsidiary is a party
to or bound by any oral or written contracts, obligations or commitments,
including without limitation any:
(i) contract, commitment or arrangement involving, in any one case, $30,000
or more;
(ii) contract with a term of, or requiring performance, more than six
months from its date; (iii) lease or lease purchase agreement, mortgage,
conditional sale or title retention agreement, indenture, security agreement,
credit agreement, pledge or option with respect to any property, real or
personal (tangible or intangible), in any capacity;
(iv) commitment, contract or undertaking for the purchase or use of
services, materials, supplies, inventory, machinery or equipment and involving
more than $50,000 in the aggregate;
(v) employment contracts or agreements;
(vi) contract or agreement with any labor union or other collective
bargaining group;
(vii) note, loan, credit or financing agreement or other contract for money
borrowed, and all related security agreements and collateral documents,
including any agreement for any commitment for future loans, credit or
financing;
(viii) guarantee;
(ix) contract or understanding regarding any capital expenditures in excess
of $25,000;
(x) agency (sales or otherwise), distribution, brokerage (including,
without limitation, any brokerage or finder's agreement or arrangement with
respect to any of the transactions contemplated by this Agreement) or
advertising agreement;
(xi) contract with investment bankers, accountants, attorneys, consultants
or other independent contractors;
(xii) shareholder agreement or contract with any Stockholder (or family
member thereof), director or officer of the Company or the Subsidiary or any
Affiliate of such persons, except agreements or contracts referred to herein
which relate to the transactions contemplated by this Agreement;
(xiii) contract, commitment or arrangement which would restrain the Company
or the Subsidiary from engaging or competing in any business or to maintain the
confidentiality of any matter, except agreements made in the ordinary course of
business to maintain confidentiality of their vendors and customers;
(xiv) contract, commitment or arrangement not made in the ordinary course
of business;
(xv) permit or franchise which is material to the business of the Company
and the Subsidiary, taken as a whole or license or royalty agreement requiring
an annual payment of $25,000 or more by the Company or the Subsidiary; and
(xvi) bonus, pension, savings, welfare, profit sharing, stock option,
retirement, commission, executive compensation, hospitalization, insurance or
similar plan providing for employee benefits or any other arrangement providing
for benefit or any former or current employees or for the remuneration, direct
or indirect, of the directors, officers or employees of the Company or the
Subsidiary.
(c) The Stockholders have made available to the Purchaser
correct and complete copies of all of the contracts, agreements and other
documents listed in Schedules 4.15(a) and 4.15(b) hereto and all
amendments thereto and any waivers granted thereunder (the "Scheduled
Contracts"). Except as specifically set forth on Schedules 4.15(a) and
4.15(b), the sale of the Stock and the Stockholder Warrants to the
Purchaser and the consummation of the other transactions contemplated
by this Agreement are not a violation of or grounds for the modification or
cancellation of any of the Scheduled Contracts or for the imposition of any
penalty or security interests thereunder. No unresolved disputes are pending
or, to the Stockholders' knowledge, threatened under or in respect of any such
Scheduled Contracts. Neither the Company nor the Subsidiary has any
outstanding power of attorney other than routine power of attorney
relating to representation before governmental agencies or given in
connection with qualification to do business in another jurisdiction.
Except as described in Schedule 4.15(a) and (b) hereto, all Scheduled
Contracts described in such Schedule 4.15(a) and (b) are valid and enforceable
in accordance with their respective terms, except as the enforcement thereof may
be subject to or limited by bankruptcy, insolvency, reorganization, moratorium
or other laws affecting the enforcement of creditors' rights generally now or
hereafter in effect and subject to the application of equitable principles and
the availability of equitable remedies; and there is not, under any of such
documents or agreements or any obligation, or covenant or condition contained
therein, any existing default by the Company or the Subsidiary, or to the
Stockholders knowledge by any other party, or any event which with notice, lapse
of time, or both, would constitute a default and which would have an adverse
effect of $15,000 or more on the Company and the Subsidiary.
4.16 Intellectual Property.
Schedule 4.16 hereto sets forth a true and complete list of all of
trademarks, service marks and trade names, and the federal, state and foreign
registrations and applications thereof, patents and patent applications and
extensions and renewals thereof and copyrights and copyright applications and
renewals thereof owned by the Company and the Subsidiary (the Intellectual
Property"). All the Intellectual Property is owned by the Company or the
Subsidiary free and clear of any and all licenses, liens, claims, security
interests, charges or other encumbrances or restrictions of any kind, and no
licenses for the use of any of such rights or Trade Secrets have been granted by
the Company or the Subsidiary to any third parties, except as set forth in
Schedule 4.16 hereto. All of the Intellectual Property and the Trade Secrets are
valid, enforceable and in good standing, and are sufficient and appropriate for
the conduct of business of the Company and the Subsidiary as currently
conducted. The sale of the Stock to the Purchaser and the consummation of the
other transactions contemplated hereby will not adversely affect any rights in
the Intellectual Property or Trade Secrets of the Company and the Subsidiary. To
the knowledge of the Company and the Stockholders, the operation of the business
of the Company and the Subsidiary does not infringe in any way on any patent,
trademark, trade name, copyright, trade secret, contract, license or other
similar right, of any person, and neither the Company nor the Subsidiary
licenses any such right from others except as set forth on Schedule 4.16. No
claim is pending or, to the knowledge of the Company and the Stockholders,
threatened, with respect to such infringement or conflict. To the knowledge of
the Company and the Stockholders, no other intellectual property or trade secret
other than those owned or licensed by the Company and the Subsidiary are
required by either of them for their business as presently conducted. The
Stockholders have no knowledge of any infringement by any third parties upon any
of the Intellectual Property.
4.17 Insurance.
Schedule 4.17 hereto contains a complete and correct list of all
insurance policies maintained by the Company and the Subsidiary together with a
schedule of required premiums, premium payment dates and any prepaid premiums
under each such policy. The Stockholders have made available to the Purchaser
complete and correct copies of all such policies together with all riders and
amendments thereto. Such policies are in full force and effect, and all premiums
due thereon have been paid. The Company and the Subsidiary have complied in all
material respects with the provisions of such policies. No notice has been
received canceling or threatening to cancel or refusing to renew any of such
insurance. The rights of the insured under such policies will not be terminated
or adversely affected by the Closing or the consummation of the other
transactions contemplated hereby. To the knowledge of the Company and the
Stockholders, there is currently no basis for any insurance claim by the Company
or the Subsidiary.
4.18 Customer and Supplier Relationships.
Attached as Schedule 4.18 is a complete and correct list of all
current customers of the Company and the Subsidiary showing the sales to each
for the year ended October 31, 1995 and of all suppliers whose sales to the
Company and the Subsidiary amounted to more than $100,000 during any of such
periods showing the sales of each. Except as set forth in Schedule 4.18, with
respect to any such customer or supplier or group of related customers or
suppliers listed thereon, the Stockholders have no knowledge that any such
customer, supplier or group of related customers or suppliers has terminated or
expects to terminate a material portion of its normal business with the Company
and the Subsidiary. Except as disclosed in Schedule 4.18 hereto, no Stockholders
or director or officer of the Company or the Subsidiary or any of their family
members or Affiliates has any direct or indirect interest, either by way of
stock ownership or otherwise, in any firm, corporation, association or business
enterprise, which competes with, is a supplier or customer of, or is a
distributor or sales agent for, or is a party to any contract with the Company
or the Subsidiary.
4.19 Employees.
The Stockholders have furnished to Purchaser a true and complete list
setting forth all of the employees and officers of the Company and the
Subsidiary whose annual salary and bonus is in the aggregate $50,000 or more
(listing each such person individually by name) with a description of their job
designations, compensation, benefits (including severance pay and bonuses),
outstanding loans to officers or employees and all understandings not in the
ordinary course of business relating to terms and conditions of employment.
Except as set forth on Schedule 4.19, proper and accurate amounts have been
withheld by the Company and the Subsidiary from their employees for all periods
in compliance with tax withholding provisions of applicable federal, state,
local or foreign law, except where failure to be in compliance would have an
adverse effect of less than $15,000 in the aggregate on the Company and the
Subsidiary. Proper and accurate federal, state, local and foreign returns have
been filed by the Company and the Subsidiary for all periods for which returns
were due with respect to employee income tax withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and payable have
been paid.
4.20 Labor Relations.
Except as set forth on Schedule 4.20, there has been no material
violation of any federal, state or local statutes, laws, ordinances, rules,
regulations, orders or directives with respect to the employment of individuals
by, or the employment practices or work conditions of, the Company or the
Subsidiary, or their respective terms and conditions of employment, wages and
hours. To the knowledge of the Company and the Stockholders, neither the Company
nor the Subsidiary is engaged in any unfair labor practice or other unlawful
employment practice. There are no unfair labor practice charges or other
employee related complaints against the Company or the Subsidiary pending or, to
the knowledge of the Company and the Stockholders, threatened before the
National Labor Relations Board, the Equal Employment Opportunity Commission, the
Occupational Safety and Health Review Commission, the Department of Labor, or
any other federal, state, or local, or other governmental authority by or
concerning the employees of the Company and the Subsidiary. No representation
question, grievance or arbitration proceedings arising out of collective
bargaining agreements covering employees of the Company or the Subsidiary exists
or is pending or, to the knowledge of the Company and the Stockholders,
threatened respecting the employees of the Company or the Subsidiary. There is
no work stoppage, strike, slowdown, lockout, picketing or other labor problem
involving persons employed by the Company or the Subsidiary pending or, to the
knowledge of the Company and the Stockholders, threatened. There are no labor
union contracts or collective bargaining agreements relating to the business of
the Company and the Subsidiary.
4.21 Benefit Plans.
(a) Schedule 4.21(a) hereto sets forth a true and complete list
of each "employee welfare benefit plan" (as defined in Section 3(1) of ERISA)
maintained by the Company or an Affiliate or to which the Company or an
Affiliate contributes or is required to contribute, including any multiemployer
employee welfare benefit plan, on behalf of officers and employees of the
Company or an Affiliate (such multiemployer and other employee welfare benefit
plans being hereinafter collectively referred to as the "Welfare Benefit
Plans"). With respect to each Welfare Benefit Plan, all contributions or
premiums due by the Closing Date have been paid or accrued.
(b) Schedule 4.21(b) hereto sets forth a true and complete list
of each "employee pension benefit plan" (as defined in Section 3(2) of ERISA)
maintained by the Company or an Affiliate or to which the Company or an
Affiliate contributes or is required to contribute, including any multiemployer
employee pension benefit plan, on behalf of officers and employees of the
Company or an Affiliate (such multiemployer and other employee pension benefit
plans being hereinafter collectively referred to as the "Pension Benefit
Plans"). No Pension Benefit Plan is a "defined benefit plan" (as defined in
Section 3(35) of ERISA). With respect to each Pension Benefit Plan including an
"individual account plan" (as defined in Section 3(34) of ERISA), all
contributions due by the Closing Date have been made or will be made or accrued
prior to-the Closing Date.
(c) Each Pension Benefit Plan, each Welfare Benefit Plan and each
related trust agreement and annuity contract and insurance policy (and any other
funding instruments) com- plies and has complied, both as to form and operation,
with the provisions of (A) the Code in order to be tax qualified under Section
401(a) or 403(a) of the Code; (B) ERISA; and (C) all other applicable laws,
rules and regulations; all necessary government approvals for the Pension
Benefit Plans have been obtained; and favorable determination letters, copies of
which have been made available to the Purchaser, as to the qualification under
the Code of each of the Pension Benefit Plans and each amendment thereto have
been received from the Internal Revenue Service and no event has occurred or
condition exists which would adversely affect such determination.
(d) Each Welfare Benefit Plan and each Pension Benefit Plan has
been administered to date in material compliance with the requirements of the
Code, ERISA and all other applicable laws and all reports required by any
government agency with respect to each Welfare Benefit Plan and each Pension
Benefit Plan have been timely filed, except to the extent failure to so file
would not result in an aggregate cost, fine or penalty in excess of $5,000.
Future compliance with the requirements of the Code, ERISA or any other
applicable laws as in effect on the date of the Closing or any collective
bargaining agreements to which the Company or an Affiliate is a party will not
result in any increase in the rate of benefit accrual under any Pension Benefit
Plan.
(e) Neither the Company, nor any Affiliate, nor any plan
fiduciary of any Welfare Benefit Plan or Pension Benefit Plan has engaged in any
transaction in violation of Section 406 of ERISA or any "prohibited transaction"
(as described in Section 4975(c) of the Code), except to the extent that such
violation would not result in an aggregate cost, fine or penalty in excess of
$5,000.
(f) Schedule 4.21(f) lists each deferred compensation plan, bonus
plan, stock option plan, employee stock purchase plan and any other employee
benefit plan, agreement, arrangement or commitment not required under a previous
subsection to be listed on Schedule 4.21(a) or 4.21(b) maintained by the Company
or an Affiliate with respect to the compensation of any of their employees.
(g) No liability to the PBGC has been incurred by the Company or
the Subsidiary or other trade or business under common control with the Company
(as determined under Sections 414(b), 414(c), 414(m) or 414(o) of the Code)
("Common Control Entity") on account of any termination of an employee pension
benefit plan subject to Title IV of ERISA. No filing has been made by the
Company (or any Common Control Entity) with the PBGC (and no proceeding has been
commenced by the PBGC) to terminate any employee pension benefit plan subject to
Title IV of ERISA maintained, or wholly or partially funded, by the Company (or
any Common Control Entity). Neither the Company nor any Common Control Entity
has (i) ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA, (ii) withdrawn as a substantial employer
so as to become subject to the provisions of Section 4063 of ERISA, (iii) ceased
making contributions on or before the date of the Closing to any employee
pension benefit plan subject to Section 4064(a) of ERISA to which the Company
(or any Common Control Entity) made contributions during the five years prior to
the date of the Closing, or (iv) made a complete or partial withdrawal (as each
is defined in Sections 4203 and 4205, respectively, of ERISA) or a reduction in
contribution base units which if sustained for three years would constitute a
partial withdrawal under Section 4205 of ERISA, from a multiemployer plan (as
defined in Section 3(37) of ERISA) so as to incur withdrawal liability as
defined in Section 4201 of ERISA (without regard to subsequent reduction or
waiver of such liability under Section 4207 or 4208 of ERISA). Neither the
Company, any Affiliate nor any Common Control Entity, including both single
employer and multi-employer pension plans has engaged in a transaction designed
to avoid or evade liability until Title IV of ERISA within the five years
preceding the Closing Date.
(h) There are no actions, suits or claims (other than routine
claims for benefits) pending or which could reasonably be expected to be
asserted against any Pension Benefit Plan or Welfare Benefit Plan; there are no
civil or criminal actions pending or, to the knowledge of the Stockholders,
threatened against any fiduciary, Pension Benefit Plan or Welfare Benefit Plan
with respect to the plan; and no Pension Benefit Plan or Welfare Benefit Plan is
the direct or indirect subject of any audit, investigation or examination by any
governmental or quasi governmental agency, and no such completed audit,
investigation or examination, if any, has resulted in the imposition of any fine
or penalty on any person.
(i) True and complete copies of each Welfare Benefit Plan and
each Pension Benefit Plan, related trust agreements or annuity contracts (or any
other funding instruments), each plan, agreement, arrangement, and commitment
referred to in subsection (vi) of this Section 4.21, summary plan descriptions,
the most recent determination letter issued by the Internal Revenue Service with
respect to each Pension Benefit Plan, Annual Reports on Form 5500 Series
required to be filed with any governmental agency for each Welfare Benefit Plan
and each Pension Benefit Plan for the three most recent plan years, investment
management agreements and amendments thereto, all financial statements
reflecting plan assets other than group annuity and insurance contracts as of
the most recent valuation date, summaries of material modifications, any
material communication received by the Company or the Subsidiary from PBGC, the
United States Department of Labor ("DOL") and the U.S. Internal Revenue service
("IRS") regarding any of the Welfare Benefit Plans and Pension Benefit Plans,
and the trustee's report for the most recent plan year of each Pension Benefit
Plan have heretofore been made available by the Company to the Purchaser.
(j) All Welfare Benefit Plans, Pension Benefit Plans, related
trust agreements or annuity contracts (or any other funding instruments), and
all plans, agreements, arrangements and commitments referred to in subsection
(i) of this Section are legally valid and binding and in full force and effect.
(k) No Pension Benefit Plan containing a section 401(k) cash or
deferred arrangement in which employees of the Company or an Affiliate,
participated has been terminated on or after October, 1989.
4.22 Litigation; Compliance; Permits.
Except as disclosed in Schedule 4.22 hereto, there are no actions,
suits, proceedings, arbitrations or governmental investigations pending, or, to
the Stockholders' knowledge, threatened against, by or affecting the Company or
the Subsidiary in which, individually or in the aggregate, an unfavorable
determination could adversely affect by $15,000 or more the Company or the
Subsidiary, or result in any liability of $15,000 or more on the part of the
Company and the Subsidiary, or prevent, hinder or delay the execution and
performance of this Agreement or any of the transactions contemplated hereby, or
could declare this Agreement unlawful or cause the rescission of any of the
transactions hereunder, or require the Purchaser to divest itself of the Stock
and the Stockholder Warrants; nor has any such suit been pending within the two
years prior to the date hereof. Neither the Company nor the Subsidiary has been
charged with or received notice of any violation of any applicable federal,
state, local or foreign law, rule, regulation, ordinance, order or decree
relating to it, or the operation of its business, and the Stockholders are not
aware of any threatened claim of such violation (including any investigation) or
any basis therefor.
The Company and the Subsidiary have complied and are in compliance with,
all laws, rules, regulations, ordinances, orders, judgments, decrees, writs,
injunctions, building codes, safety, fire and health approvals, certificates of
occupancy or other governmental restrictions applicable to them, their assets,
employees and employment practices, except where the failure to so comply would
not have an adverse effect of $15,000 or more on them, their business, assets,
financial condition, employees and employment practices.
The Company and the Subsidiary have all material governmental licenses,
permits, approvals or other authorizations required for the conduct of their
business as now conducted, all of which are in full force and effect; there is
no action pending or, to the knowledge of the Stockholders, threatened, to
terminate any rights under any such governmental licenses, permits or
authorizations; and except as disclosed on Schedule 4.22 at the Closing, none of
such licenses, permits, approvals and authorizations will be materially
adversely affected by the sale of the Stock and the Stockholder Warrants to the
Purchaser or the consummation of the other transactions contemplated by this
Agreement.
4.23 Environmental Compliance.
Except as set forth in Schedule 4.23, (i) all of the assets and
properties presently owned, leased or operated by the Company and the Subsidiary
are in compliance with all Environmental Laws, except where the noncompliance
with any such Environmental Laws would have an adverse effect of $15,000 or less
in the aggregate on the Company and the Subsidiary, and are not subject to any
pending or, to the knowledge of the Stockholders or the Company, threatened
Environmental Actions; (ii) none of the assets and properties which have been or
are now owned, leased or operated by the Company and the Subsidiary have been
used by the Company or the Subsidiary for the generation, storage, manufacture,
use, transportation, disposal or treatment of Hazardous Substances in violation
of applicable Environmental Laws except where the violation would have an
adverse effect of $15,000 or less in the aggregate or the Company and the
Subsidiary; (iii) there has been no Hazardous Discharge by the Company and the
Subsidiary on or from any of the assets and properties presently or formerly
owned, leased or operated by the Company and the Subsidiary; (iv) there are no
outstanding, or to the knowledge of the Company and the Stockholders, threatened
Environmental Actions against the Company or the Subsidiary; and (v) neither the
Company nor the Subsidiary has owned, possessed or arranged for the
transportation of Hazardous Substances at any site where either the Company or
the Subsidiary has performed remediation services. No employee or other person
has ever made a claim or demand against the Company or the Subsidiary of which
the Company or the Subsidiary has received written notice based on alleged
damage to health caused by any Hazardous Substance. All services performed by
the Company and the Subsidiary in the conduct of their business, including,
without limitation, remediation activities, were and are in full compliance with
all Environmental Laws, except where the noncompliance with any of the foregoing
would have an adverse effect of $15,000 or less in the aggregate on the Company
and the Subsidiary.
4.24 Corporate Records.
The copy of the certificate of incorporation of the Company and the
Subsidiary, and all amendments thereof to date, certified by the Secretary of
State of their respective jurisdictions of incorporation and of the by-laws of
the Company and the Subsidiary, as amended to date, certified by the Secretary
or an Assistant Secretary of the Company or the Subsidiary, as applicable, all
under a date not more than five (5) days prior to the Closing Date which have
been delivered to the Purchaser are complete and correct, and the minute books
of the Company correctly reflect all material corporate actions taken at all
meetings of directors (including committees thereof) and Stockholders, and
correctly record all resolutions certified copies of which have been delivered
to other parties. The stock transfer books (with all canceled and unused stock
certificates attached) and stock ledgers are complete and correct and correctly
reflect all issuances and transfers of the capital stock of the Company and the
Subsidiary.
4.25 Bank Accounts; Power of Attorney.
Schedule 4.25 hereto correctly sets forth: (i) a list of all banks in
which the Company or the Subsidiary has an account or safety deposit box,
account number, purpose of such account or safety deposit box and the names of
all persons authorized to draw thereon or have access thereto; and (ii) the
names of all persons holding powers of attorney from the Company or the
Subsidiary and a description of the power of attorney.
4.26 Warranties.
Except as described in Schedule 4.26 hereto, during the past three
years neither the Company nor the Subsidiary has given any written warranties
with respect to any of their respective products or services. Schedule 4.26 also
sets forth a description of all claims in excess of $50,000 concerning product
liability or arising from services provided which have been made against the
Company or the subsidiary during the past three years.
4.27 Disclosure.
No representation or warranty by the Stockholders or the Company and
no written statement or certificate furnished or to be furnished at or before
the Closing by or on behalf of the Stockholders, the Company or the Subsidiary
to the Purchaser or its agents pursuant to this Agreement or in connection with
the transactions contemplated hereby, as qualified by the Schedules to this
Agreement, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
As used in this Section 4.27 and elsewhere in this Agreement the term
"to the knowledge of the Stockholders" or means the actual knowledge of the
Stockholders or any executive officer or director of the Company or the
Subsidiary.
4.28 Foreign Corrupt Practices
To the knowledge of the Company and the Stockholders, neither the
Company nor its subsidiary has made, offered or agreed to offer anything of
value to any government official, political party or candidate for government
office nor has it taken any action which would cause the Company or its
Subsidiary to be in violation of any law of any foreign jurisdiction or the
United States, including the Foreign Corrupt Practices Act of 1977.
4.29 Investment Intent.
Those Stockholders who are acquiring the Warrants and the unregistered
Common Stock of Purchaser are doing so for investment purposes only and not with
a view to, or for sale in connection with, any distribution thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"); the
holders of the Warrants and the unregistered Common Stock of Purchaser
understand that none of the Warrants or the shares covered thereby and none of
the unregistered Common Stock have been registered under the Securities Act or
qualified under applicable state securities laws, and all of such Warrants and
shares are restricted securities within the meaning of the Securities Act and
may not be transferred or sold without registration under the Securities Act or
an exemption therefrom.
5. Representations and Warranties of Purchaser.
The Purchaser represents and warrants to the Stockholders and the Company
on the date hereof and on the Closing Date as follows:
5.1 Corporate Status.
The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with full corporate power
and authority to carry on its business as now conducted.
5.2 Authority for Agreements.
The Purchaser has the power and authority to execute and deliver this
Agreement, the Employment Agreements, the Warrants and the Escrow Agreement and
to carry out its obligations hereunder and thereunder. The execution, delivery
and performance by the Purchaser of this Agreement, the Employment Agreements,
the Warrants and the Escrow Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement, the Employment
Agreements and the Escrow Agreement have been and as of the Closing the Warrants
will have been, duly executed and delivered by the Purchaser and constitute the
legal, valid and binding obligations of the Purchaser enforceable against the
Purchaser in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and similar laws of
general application relating to or affecting the rights and remedies of
creditors.
5.3 Investment Intent.
The Purchaser is acquiring the Stock and the Stockholder Warrants for
investment purposes only and not with a view to, or for sale in connection with,
any distribution thereof within the meaning of the Securities Act; the Purchaser
understands that none of the shares of the Stock and none of the Stockholder
Warrants have been registered under the Securities Act or qualified under
applicable state securities laws, and all of such shares are "restricted
securities" within the meaning of the Securities Act and may not be transferred
or sold without registration under the Securities Act or an exemption therefrom.
5.4. Warrants and Unregistered Common Stock.
The Warrants and the 300,000 shares of unregistered Common Stock have
been duly authorized, validly issued, and are fully paid and nonassessable, and
are free and clear of any tax, security interest, claim, lien, pledge or
encumbrance whatsoever; the representations, warranties, covenants and
agreements of the Purchaser set forth in the Warrants are true and correct; and
the shares of Common Stock of the Purchaser issuable upon exercise of the
Warrants, when so issued, will be duly authorized, validly issued, fully paid
and nonassessable, and shall be free and clear of any tax, security interest,
claim, lien, pledge or encumbrance whatsoever.
5.5 No Conflicts.
The execution, delivery and performance of this Agreement, the
Employment Agreements, the Escrow Agreement and the Warrants, and the issuance
of the Warrants, and the consummation of the other transactions contemplated
hereby and thereby, do not and will not (i) require the consent, waiver,
approval, license, designation or authorization of, or declaration with, any
court or any government authority or agency, except for listing on the New York
Stock Exchange of the Common Stock issuable upon exercise of the Warrants and
the 300,000 shares of Common Stock delivered at Closing and for the taking of
action necessary for applicable exemptions or registrations or qualifications
under federal and state securities laws for the issuance of the Warrants,
exercise of the Warrants and issuance of 300,000 shares of Common Stock at the
Closing; or (ii) with or without the giving of notice or the passage of time or
both, violate, conflict with or result in a breach or termination of, constitute
a default under, accelerate or permit the acceleration of the performance
required by the terms of, result in the creation of any mortgage, security
interest, claim, lien, charge or other encumbrance upon any of the assets of the
Purchaser pursuant to, or otherwise give rise to any liability or obligation
under, the certificate of incorporation or bylaws of the Purchaser or any
agreement, mortgage, deed of trust, indenture, license, permit or any other
agreement or instrument, or any order, judgment, decree, statute or regulation,
to which the Purchaser is a party or by which the Purchaser or any of its assets
may be bound, excluding liens created by Purchaser in connection with obtaining
debt financing to complete the transaction contemplated by this Agreement.
6. Covenants.
6.1 Operation of Business.
From the date hereof until the Closing Date (the "Pre-Closing
Period"), the Company shall and the Stockholders shall use their best efforts to
cause the Company and the Subsidiary to operate their business in the ordinary
course and in a manner consistent with past practice. The Stockholders and the
Company shall use all reasonable efforts to maintain and preserve the Company's
and the Subsidiary's present business organization, keep available the services
of their employees and preserve their relationships with customers, suppliers
and others having business dealings with them. The Company shall and the
Stockholders shall use their best efforts to cause the Company and the
Subsidiary to:
(a) maintain all its material structures, equipment and other
tangible personal property currently in use in good operating condition and
repair, except for ordinary wear and tear and damage by unavoidable casualty;
(b) keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it;
(c) perform in all material respects all of its obligations
under agreements, contracts and instruments relating to or affecting its
properties, assets and business;
(d) maintain its books of account and records in the usual,
regular and ordinary manner; and
(e) effect no change in the accounting methods employed to
prepare the Financial Statements.
6.2 Access to Information; Confidentiality.
During the Pre-Closing Period, the Stockholders and the Company shall
cause the Purchaser and its counsel, accountants and other representatives
(collectively, its "Representatives") to be given reasonable access during
normal business hours to the assets, books, commitments, agreements, records and
files of the Company and the Subsidiary; and the Stockholders shall cause to be
furnished to the Purchaser or any of its Representatives during the Pre-Closing
Period all documents, or copies thereof, and information concerning the business
and affairs of the Company and the Subsidiary relating to that business as the
Purchaser or any of its Representatives may reasonably request. Until the sale
of the Stock is consummated in accordance with the terms of this Agreement, the
Purchaser shall hold, and cause its Representatives to hold, all information and
documents so obtained by the Purchaser or any of its Representatives
confidential, except that neither the Purchaser nor any of its Representatives
shall be required to keep confidential any information which (i) is or
subsequently may become, through no fault of the Purchaser, generally available
to the public, (ii) was available on a non-confidential basis to Purchaser prior
to its disclosure by the Company or the Stockholders or (iii) becomes available
to the Purchaser on a nonconfidential basis from a source not bound by any
obligation of confidentiality with respect to such information. If this
Agreement is terminated during the Pre-Closing Period or otherwise, the
Purchaser shall, and shall cause each of its Representatives to, promptly
deliver to the Company all information and documents (and copies thereof)
furnished to the Purchaser or its Representatives by or on behalf of the Company
or otherwise obtained by the Purchaser or any of its Representatives pursuant to
this Agreement, and all other information regarding the business and affairs of
the Company and the Subsidiary prepared by the Purchaser or its Representatives
shall be destroyed and no copy thereof shall be retained. Notwithstanding such
return or destruction of information, the Purchaser and its Representatives
shall continue to be bound by their respective obligations of confidentiality
hereunder for a period of three years after such termination. Pending the
Closing (or any earlier termination of this Agreement) the Company, the
Subsidiary and the Stockholders shall keep confidential and after the Closing
the Stockholders will not use (except while employed by the Company and for
Company purposes) or disclose to others and keep confidential any Trade Secrets
of the Company and the Subsidiary.
6.3 Conduct of the Business Pending the Closing.
Until the Closing the Stockholders and the Company:
(a) shall promptly notify the Purchaser in writing of, and
furnish any information that the Purchaser reasonably may request with respect
to, the occurrence of any event or the existence of any state of facts (whether
or not permitted by the provisions of this Agreement) that would result in any
of their representations and warranties not being true or his covenants not
fulfilled as of the Closing Date;
(b) shall not permit the amendment of, or the adoption of
resolutions increasing the amount to be funded or awarded under, any of the
Pension Benefit Plans, Welfare Benefit Plans or any of the plans, agreements or
arrangements described in Section 4.21, except as may otherwise be required by
law.
6.4 Other Action.
Except for action permitted by this Agreement (resulting from the
operation of business in the ordinary course), the Company and the Subsidiary
shall not and the Stockholders shall not and shall use their best efforts to
cause the Company and the Subsidiary not to take any action that is intended to
result in any of the Stockholders' and the Company's representations and
warranties not being true as of the Closing Date. Without limiting the
foregoing, the Company shall not and the Stockholders shall not permit the
Company or any Subsidiary to (i) incur any extraordinary expense or become a
party to or become obligated by any contract, commitment or agreement for the
sale, lease or other disposition of its assets having an aggregate fair market
value of $15,000 or more, except for any such sale, lease or disposition in the
ordinary course of business; (ii) create or incur any liability (absolute or
contingent) except unsecured current liabilities incurred for other than money
borrowed and liabilities under contracts entered into in the ordinary course of
business; (iii) discontinue the insurance in the amounts and of the types now
carried; (iv) enter into any compromise or settlement of any litigation,
proceeding or governmental investigation relating to its properties or business,
except settlements made by insurers which are fully covered by existing
insurance policies of the Company; (v) enter into any agreement or commitment to
make capital expenditures of more than $25,000 in any single instance or more
than $100,000 in the aggregate; and (vi) make any changes in its Certificate of
Incorporation or By-laws. The Stockholders, the Company and the Purchaser shall
each use their respective best efforts to cause the fulfillment at the earliest
practicable date of all of the conditions to their respective obligations to
consummate the sale and purchase and the other transactions contemplated by this
Agreement. The Stockholders holding at least 94% of the Company's outstanding
Stock as of the Closing shall consent to all the terms of the Employment
Agreements and the execution and delivery thereof by the Company and the
distribution of the Warrants and unregistered shares of Purchaser's Common Stock
as provided in the Allocation Agreement referred to in Section 2.1(i)(D).
6.5 Consents.
The Stockholders and the Company shall use their best efforts to
obtain at the earliest practicable date, by instruments in form and substance
reasonably satisfactory to the Purchaser, all consents and approvals, if any,
required by any governmental entity or under any of the Scheduled Contracts to
the sale of the Stock to the Purchaser.
6.6 Employment Agreements.
On the date of this Agreement, Messrs. Brian J. Mitchell, David F. Chapman
and Malcolm D. Hill shall execute and deliver the Employment Agreements to be
effective contingent upon and only after the Closing.
6.7 Noncompetition Agreements.
On the date of this Agreement, Messrs. Charles Greer, Donner
Management Company, Charles Ristagno and Laurance Ingham shall have executed and
delivered to the Purchaser the Noncompetition Agreements to be effective
contingent upon and only after the Closing.
6.8 Exercise of Employee Stock Options, Delivery of Stockholder
Warrants and Debt Due Certain Stockholders.
(a) The Stockholders and the Company shall secure on or before
the Closing the exercise of all of the Options and payment of the exercise price
therefor to the Company and the payment of any required withholding taxes.
(b) At the Closing, the Stockholder Warrants shall be delivered
to Purchaser.
(c) Prior to the Closing Date, the debt of $280,000 of the
Company due Laurance A. Ingham and Charles V. Ristagno shall have been
contributed to the capital of the Company and canceled and the Company's
liability in respect of such indebtedness shall have been extinguished.
6.9 Interim Financial Statements.
Prior to the Closing Date, the Stockholders and the Company shall
provide the Purchaser after they are available in accordance with past practice
any financial statements or financial reports generated by the Company or the
Subsidiary.
6.10 Expenses.
The Purchaser and the Stockholders shall bear their own respective
expenses incurred in connection with this Agreement and the transaction
contemplated hereby and in connection with all obligations required to be
performed by each of them under this Agreement. Neither the Company nor the
Subsidiary shall pay any such expenses of the Stockholders, except that the
Company may expend up to $200,000 for accounting, legal, financial advisory,
investment banking and environmental expenses of the Stockholders in connection
with this Agreement, and the Purchaser agrees that an amount up to such limit
may be paid by the Company prior to or at the Closing. The Company will provide
releases from Robert E. Harris and Harris Raja Corporation and Wilson, Sonsini,
Goodrich & Rosati, P.C to the Company at the Closing.
6.11 Resignations of Directors and Officers.
The Stockholders shall provide to the Purchaser written resignations
effective as of the Closing Date of all of the directors and officers, bank
signatories and trustees of any pension, profit-sharing or similar plan of the
Company and, if requested in writing by Purchaser at least fifteen (15) days
before Closing, of the Subsidiary. In the event that the Purchaser requests any
bank signatory resignations, the Stockholders and the Company shall cause to be
delivered to Purchaser written instructions to each bank at which the Company or
the Subsidiary has an account or credit facility or at which the Company or the
Subsidiary rents a safe deposit box informing such bank of the said resignations
and revoking the authority of said persons to act with respect to said account
or credit facility and to have access to said safe deposit box. The Stockholders
and the Company shall also cause to be delivered to the Purchaser effective the
Closing Date the written surrender by all persons holding powers of attorney
from the Company or the Subsidiary of their authority and power to act under
such powers of attorney.
6.12 Minute Books, Stock Books and Corporate Records.
The complete and correct minute books, certificate of incorporation,
by-laws, stock certificate and transfer books, stock ledgers, financial and
other corporate records and the corporate seal of the Company and the Subsidiary
shall be delivered to the Purchaser by the Company on or before the Closing
Date.
6.13 Taxes.
The Stockholders shall pay any federal, state or local sales, transfer
or stamp taxes payable in connection with the sale and transfer of the Stock and
the Stockholder Warrants pursuant to this Agreement.
6.14 Blue Sky Laws.
The Purchaser shall take such steps as may be necessary to comply with
the securities and Blue Sky laws of all applicable jurisdictions in connection
with the issuance and grant of the Warrants and the unregistered Common Stock to
the Stockholders.
6.15 Stock Exchange Listing.
The Purchaser shall promptly prepare and submit to the New York Stock
Exchange a listing application covering the shares of the Common Stock of the
Purchaser issuable upon exercise of the Warrants and the 300,000 shares of
unregistered Common Stock and use its best efforts to cause such shares to be
approved for listing on the New York Stock Exchange prior to the Closing Date.
6.16 Amendment of Lease.
Prior to the Closing, the Company will cause the lease dated August 6,
1992 between the Company and MIC Technology Partners Ltd. to be duly amended in
the form of Exhibit G hereto.
6.17 Cancellation of Lormar Agreement.
On or before the Closing, the Company will cause any agreement for
management services between the Company and Lormar Corporation to be terminated
without liability to the Company or the Stockholders.
6.18 Option to Purchase Real Estate.
Concurrently with the Closing, the Company and MIC Technology Partners
Limited shall enter into the Option to Purchase Real Estate in the form of
Exhibit H hereto.
6.19 Post-Closing Company Tax Returns.
Purchaser shall cause the Company, at the Company's expense, to
prepare and file the necessary tax returns for the tax year from November 1,
1995 to the Closing Date.
7. Conditions Precedent.
7.1 Conditions to Obligations of the Purchaser.
The obligation of the Purchaser to pay the Purchase Price to the
Stockholders and to satisfy its other obligations hereunder shall be subject to
the fulfillment (or waiver by the Purchaser) at or prior to the Closing, of the
following additional conditions:
(a) Representations, Performance. The representations and
warranties contained in Section 4 hereof shall be true at and as of the date
hereof and shall be repeated and shall be true at and as of the Closing Date
with the same effect as though made at and as of the Closing Date, except as
affected by the transactions contemplated hereby. The Stockholders and the
Company shall have each duly performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or complied
with by each prior to or on the Closing Date. The Stockholders' Representative
and the Company shall have delivered to the Purchaser a certificate dated the
Closing Date to the effect set forth above in this Section 7.1(a).
(b) Consents Under Scheduled Contracts. All required consents
to the sale of the Stock or any of the other transactions contemplated
hereby under any Scheduled Contracts shall have been obtained.
(c) Litigation. No suit, action or other proceeding or
investigation shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit or to obtain material
damage or other material relief in connection with this Agreement or the
consummation of the transactions contemplated hereby or which is likely to
affect materially the value of the assets, business or condition (financial or
otherwise) of the Company or the Subsidiary.
(d) Exercise of Options, Delivery of Stockholder Warrants and
Payment of Certain Indebtedness of the Company. The Options shall have all been
exercised and payment of the exercise price therefor made to the Company, the
Stockholder Warrants shall have been delivered to the Purchaser, and the debt
referred to in Section 6.8(c) shall have been contributed to the capital of the
Company and canceled.
(e) Opinions of Counsel. The Purchaser shall have received a
favorable opinion, addressed to the Purchaser and dated the Closing Date, of
Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Company and the Stockholders, in the form annexed hereto as Exhibit C.
(f) Proceedings and Documentation. All corporate and other
proceedings of the Company and its Stockholders in connection with the
transactions contemplated by this Agreement, and all documents and instruments
incident to such corporate proceedings, shall be satisfactory in substance and
form to the Purchaser and the Purchaser's counsel, and the Purchaser and the
Purchaser's counsel shall have received all such receipts, documents and
instruments, or copies thereof, certified if requested, to which the Company is
entitled and as may be reasonably requested.
(g) Damage to Property. No portion of the plants, machinery or
equipment of or occupied by the Company or the Subsidiary material to the
operation of the business of the Company and the Subsidiary as a whole shall,
after the date hereof and before the Closing Date, be materially damaged,
destroyed or taken by condemnation or eminent domain.
(h) Consents and Approvals. All material licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
or regulatory bodies which are necessary for the consummation of the
transactions contemplated hereby shall have been obtained.
(i) Employment Agreements. The Custodian shall have delivered
to the Company the Employment Agreements of Messrs. Brian J. Mitchell, David
F. Chapman and Malcolm D. Hill.
(j) Noncompetition Agreements. The Custodian shall have
delivered to the Purchaser the Noncompetition Agreements of Messrs. Charles
Greer, Donner Management Company, Charles Ristagno and Laurance Ingham.
(k) Good Standing Certificates. The Stockholders shall have
delivered to the Purchaser certificates as of a date not more than 5 days prior
to the Closing Date attesting to the good standing of the Company and the
Subsidiary as a corporation in their respective jurisdiction of incorporation by
the Secretary of State of the applicable jurisdiction.
(l) Delivery of Stock and Stockholder Warrants. The Custodian
shall have delivered the Stock and Stockholder Warrants to the Purchaser
pursuant to the letter to the Custody Agreement and Irrevocable Election to Sell
attached hereto as Exhibit A.
(m) Option to Purchase Real Estate. The Purchaser and MIC
Technology Partners Ltd. shall have executed and delivered the Option to
Purchase Real Estate.
7.2 Conditions to obligations of the Stockholders and the Company.
The obligation of the Stockholders and the Company to deliver the
Stock and the Stockholder Warrants and to satisfy their respective obligations
hereunder shall be subject to the fulfillment (or waiver by the Stockholders),
on or prior to the Closing Date, of the following conditions:
(a) Representations, Performance, Etc. The representations and
warranties of the Purchaser contained in Section 5 hereof shall be true at and
as of the date hereof and shall be repeated and shall be true at and as of the
Closing Date with the same effect as though made at and as of such time. The
Purchaser shall have duly performed and complied with all covenants, agreements
and conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date. The Purchaser shall have delivered to the
Stockholders an officer's certificate dated the Closing Date to the effect set
forth above in this Section 7.2(a).
(b) Opinion of Counsel. The Stockholders shall have received a
favorable opinion, addressed to the Stockholders and dated the Closing Date, of
Blau, Kramer, Wactlar & Lieberman, P.C., counsel for the Purchaser, in the form
annexed hereto as Exhibit D.
(c) Proceedings and Documentation. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement,
and all documents and instruments incident thereto, shall be satisfactory in
substance and form to the Stockholders and Stockholders' counsel, and the
Stockholders and Stockholders' counsel shall have received all such receipts,
documents and instruments, or copies thereof, certified if requested, to which
the Stockholders is entitled and as may be reasonably requested.
(d) Employment Agreements. The Company and the Purchaser shall
have executed and delivered to each of Messrs. Brian J. Mitchell, David F.
Chapman and Malcolm D. Hill the Employment Agreements.
(e) Escrow Agreement. The Escrow Agent, Stockholders and
the Purchaser shall have executed and delivered to each other the Escrow
Agreement.
8. Termination; Amendment; Waiver.
8.1 Termination.
This Agreement may be terminated at any time prior to the Closing
Date:
(a) by mutual consent of the parties.
(b) by the Purchaser by notice to the Company, (i) if any of the
conditions set forth in Section 7.1 hereof shall not have been fulfilled by
March 25, 1996, or (ii) if any material default under or material breach of any
covenant, agreement or condition of this Agreement, or any misrepresentation or
breach of any warranty contained herein, on the part of the Stockholders shall
have occurred and shall not have been cured to the satisfaction of the Purchaser
or (iii) at Purchaser's election for any reason prior to the Closing; or
(c) by the Stockholders by notice to the Purchaser, (i) if any of
the conditions set forth in Section 7.2 hereof shall not have been fulfilled by
March 25, 1996, or (ii) if any material default under or material breach of any
agreement or condition of this Agreement, or any misrepresentation or breach of
any warranty contained herein, on the part of the Purchaser shall have occurred
and shall not have been cured to the satisfaction of the Stockholders.
(d) The termination date of March 25, 1996, shall be extended to
April 4, 1996, if Purchaser exercises its option to extend the Closing Date and
termination date as provided in Section 3.1(b).
8.2 Effect of Termination; Failure to Close.
(a) Except as set forth in paragraphs (b) and (c) of this Section
8.2 and Section 6.2, in the event of the failure to close the transaction
contemplated hereby or termination of this Agreement pursuant to the provisions
of Section 8.1 hereof, this Agreement shall become void and have no effect,
without any liability on the part of any party hereto or its directors, officers
or stockholders in respect of this Agreement.
(b) The Deposit shall be distributed to the Company in accordance
with Escrow Agreement as liquidated damages to the Company and the Stockholders
if the Purchaser fails to consummate the transactions contemplated hereby by end
of the day New York time on March 25, 1996 for any reason other than (i) a
willful breach or willful default by the Company or any of the Stockholders, or
(ii) the Company's or any of the Stockholders' breach, default or failure to
comply with, or perform any of the representations, warranties, covenants and
conditions set forth in Sections 3.2(a), 4.3, 4.4, 7.1(i), 7.1(j) and 7.1(l).
(c) If the Company and the Stockholders fail to consummate the
transaction contemplated by end of the day New York time on March 25, 1996,
notwithstanding that the Purchaser has fulfilled or is prepared to fulfill all
of its obligations on the Closing Date, all of the conditions set forth in
Section 7.2 and is not in default under or in breach of any agreement,
condition, representation or warranty contained in this Agreement, the Purchaser
shall be entitled to either (i) seek and obtain injunctive and other equitable
relief to enforce the consummation and Closing of this Agreement in accordance
with the terms hereof, or (ii) receive a return of the Deposit from the Escrow
Agent in accordance with the Escrow Agreement and a payment from the Company of
$360,000 as liquidated damages to the Purchaser. If a court does not order
consummation and Closing of this Agreement pursuant to the Purchaser's request
under 8.2(c)(i) within one hundred and eighty (180) days or denies the
Purchaser's request for injunctive relief, the Purchaser shall receive the
remedy in Section 8.2(c)(ii) and this Agreement shall be terminated without any
other liability by the Company or its officers, directors or the Stockholders to
the Purchaser.
(d) The Company, the Stockholders and the Purchaser agree that
the remedies in Section 8.2(b) and 8.2(c) of the Agreement are intended to be
the sole and exclusive remedies of the parties for failure to close the
transaction contemplated hereby or termination of this Agreement pursuant to the
provisions of Section 8.1 hereof.
(e) If Purchaser exercises its option to extend the Closing Date
and termination date as provided in Section 3.1(b) then the Deposit referred to
in Section 8.2(b) and 8.2(c) shall include the increase of $140,000 and the
March 25, 1996, date shall be changed to April 4, 1996.
8.3 Amendment.
This Agreement may not be amended except by an instrument in writing
duly executed and delivered on behalf of each of the parties hereto.
9. Definitions; Miscellaneous.
9.1 Definition of Certain Terms.
As used herein, the following terms shall have the following meanings:
Affiliate: with respect to any Person, any Person which, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. The term "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
Agreement: this Stock Purchase Agreement.
Allocation Agreement: as defined in Section 2.1(i)(D).
Closing: as defined in Section 3.1.
Closing Date: as defined in Section 3.1.
Company: as defined in the Preamble to this Agreement.
Company's Pension Benefit Plans: as defined in Section 4.21(b).
Code: the Internal Revenue Code of 1986, as amended, together with
the U.S.Treasury rulings and regulations promulgated thereunder.
Deposit: as defined in Section 2.3 hereof.
Employment Agreements: the Employment Agreements between each of
Messrs. Brian J. Mitchell, David F. Chapman and Malcolm D. Hill and the
Company in the forms agreed to by such parties.
Employee Benefit Plan: any pension, retirement, profit-sharing,
deferred compensation, bonus or other incentive plan, or other employee benefit
program, arrangement, agreement or understanding, or medical, vision, dental or
other health plan, or life insurance or disability plan, or any other employee
benefit plan, including, without limitation, any Employee benefit plan" as
defined in Section 3(3) of ERISA to which the Company contributes or is a party
or is bound or under which it may have liability and which employees or former
employees of the Company (or their beneficiaries) are eligible to participate or
derive a benefit.
Environmental Actions: refers to any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, proceeding,
judgment, letter or other written communication from any federal, state, local
or municipal agency, department, bureau, office or other authority or any third
party involving a Hazardous Discharge or any violation of any environmental
order, environmental permit or Environmental Laws.
Environmental Laws: as defined in the definition of Hazardous
Substances.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: the law firm of Hiersche, Martens, Hayward, Drakeley
& Urbach, P.C., Dallas, Texas.
Escrow Agreement: the agreement among the Escrow Agent, Stockholders'
Representative (on behalf of the Stockholders), the Company and the Purchaser
in the form attached hereto as Exhibit F.
Escrow Fund: as defined in Section 2.1 hereof.
Expenditures: as defined in Section 10.l(b).
Financial Statements: the consolidated financial statements of the
Company and the Subsidiary, as at, and for the years ended October 31, 1993,
1994 and 1995, audited by KPMG Peat Marwick, L.L.P., certified public
accountants for the Company (for fiscal 1994 and 1995), and by Cohen, Friedman,
Dorman, Spector & Co., certified public accountants for the Company (for fiscal
1993), which financial statements include in each case a balance sheet, a
statement of earnings and accumulated earnings, and a statement of cash flows;
and the unaudited consolidated financial statements of the Company and the
Subsidiary as at and for the two-month period ended December 31, 1995, which
unaudited financial statements include in each case, a balance sheet, a
statement of earnings and accumulated earnings, and a statement of cash flows.
Hazardous Discharge: means any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping of Hazardous Substances in violation of
applicable Environmental Laws.
Hazardous Substance: means any substance, compound, chemical or
element which is (i) defined as a hazardous substance, hazardous material, toxic
substance, hazardous waste, pollutant or contaminant under any Environmental
Law, or (ii) a petroleum hydrocarbon, including crude oil or any fraction
thereof, regulated pursuant to any Environmental Law. The term "Environmental
Law" means each and every applicable federal, state, local and foreign law,
statute, ordinance, regulation, rule, judicial or administrative order or
decree, permit license, approval, authorization or similar requirement of each
and every federal, and pertinent state, local and foreign governmental agency or
other governmental authority, pertaining to the protection of human health and
safety or the environment including, without limitation, the Comprehensive
Environmental Response Compensation and Liability Act (CERCLA), 42 U.S.C. 9601
et seq, the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6901 et
seq., the Toxic Substances Control Act (TSCA), 15 U.S.C. 2601 et seq., and the
Water Pollution Control Act (FWPCA), 33 U.S.C. 1251 et seq. The term "Hazardous
Substance" shall also include asbestos-containing materials and manufactured
products containing Hazardous Substances.
Indemnified Party: as defined in Section 10.1.
Indemnifying Party: as defined in Section 10.1.
Intellectual Property: as defined in Section 4.16.
Material/Service Agreements: as defined in Section 4.15(a).
Option to Purchase Real Estate: Exhibit H hereto.
Options: the Options set forth in Schedule 4.4 hereto.
Pension Benefit Guaranty Corporation: as defined in Section 4.21.
Person: any natural person, firm, partnership, association,
corporation, trust, public body or government.
Plan: each Pension Benefit Plan and each Welfare Benefit Plan.
Purchaser: as defined in the Preamble to the Agreement.
Purchase Price: as defined in Section 2.
Required Minimum: as defined in Section 10.1(b).
Stockholders: as defined in the Preamble to this Agreement.
Stockholders' Representative: as defined in Section 11.1.
Stockholder Warrants: the warrants to purchase Common Stock of the
Company held by Laurance A. Ingham and Charles V. Ristagno as set
forth on Schedule 4.4.
Subsequent Environmental Claim: any claim that is based upon or
arises out of the representations and warranties set forth in Section
4.23, hereof which is made by Purchaser after the first anniversary
of the Closing Date and prior to the second anniversary of the
Closing Date.
Subsidiary: as defined in Section 4.2.
Taxes: as defined in Section 4.7.
Trade Secret: any proprietary or confidential information used by the
Company or the Subsidiary in its business, including a formula, pattern,
compilation, program, device, method, technique, or process, that has a material
independent economic value, actual or potential, not being generally known to,
and not being readily ascertainable by proper means by other Persons who can
obtain economic value by its disclosure or use.
Warrants: warrants to purchase 400,000 shares of the Common Stock,
$.10 par value, of the Purchaser pursuant to and in accordance with the Warrant
Certificate and Agreements attached hereto as Exhibit F-1 for 100,000 shares and
F-2 for 300,000 shares.
Welfare Benefit Plans: as defined in Section 4.21(a).
10. Indemnification; Survival.
10.1 Indemnification.
(a) The Stockholders severally will indemnify the Purchaser and
the Company against, and hold the Purchaser and the Company harmless from, any
and all liability, damage, deficiency, loss, cost or expense (including
reasonable attorneys' fees) that are based upon or that arise out of any
misrepresentation or breach of any representation, warranty, covenant or
agreement made by the Stockholders herein (it being agreed that such
representations and warranties are qualified by the Schedules as delivered on
the date of this Agreement and as updated as of the Closing for changes, events
or notice of claims occurring or received after the date of this Agreement and
prior to Closing) or in any certificate delivered pursuant hereto (individually,
any one such item being called a "Loss" and more than one such item, "Losses").
The Purchaser shall use its best efforts to notify any insurance carrier whose
coverage may be implicated or available in connection with Losses for which
Purchaser is seeking indemnification from the Stockholders. Thereafter Purchaser
shall use its best efforts to perfect such insurance claims ("Insurance Claims")
and to recover the proceeds therefrom ("Insurance Proceeds"). The Purchaser
shall not be obligated to institute and/or pursue any action or other proceeding
("Insurance Action") against any of its insurance carriers with regard to such
Insurance Claims unless instructed to do so in writing by the Stockholders, in
which event the Stockholders shall be required to pay all attorneys' and other
fees, costs and disbursements incurred in connection with such Insurance Action
and Purchaser shall conduct such Insurance Action as reasonably directed by the
Stockholders.
Only those insurance proceeds actually received by Purchaser shall
constitute an offset against indemnification to paid by the Stockholders,
including after any arbitration award finally rendered in favor of the Purchaser
in respect of such Losses. Any insurance proceeds recovered by Purchaser as a
result of an Insurance Action, after indemnification paid by the Stockholders,
including after an arbitration award in favor of Purchaser is paid in full by
the Stockholders, shall be paid to the Stockholders to the extent that such
payment does not exceed the indemnification payments made by the Stockholders to
the Purchaser.
The Purchaser shall not be required to waive or release any
subrogation rights the Purchaser's insurance carriers may have against the
Stockholders unless permitted by the terms of the insurance policy concerned.
(b) (i) No claim for indemnification shall be made by the
Purchaser under Section 10.1(a) unless and until, and only to the extent that,
the aggregate amount of Losses of the Purchaser in respect thereof shall exceed
$1,000,000 (the "Required Minimum") and such indemnification shall be by
recourse first to, and payable from, the Escrow Fund and then, subject to the
limitations on aggregate liability set forth in Section 10.3(b) hereof, by cash
payment from the Stockholders with respect to claims for Losses made prior to
the first anniversary of the Closing Date.
(ii) Notwithstanding (i) above, Losses based on Subsequent
Environmental Claims shall be paid by the Stockholders to the Purchaser in cash
to the extent that the aggregate Losses for all breaches exceed the Required
Minimum; provided, however, the aggregate liability of the Stockholders for
Losses based on Subsequent Environmental Claims shall not exceed $1,800,000, and
in any case shall be subject to the limitation on aggregate liability set forth
in Section 10.3(b) hereof.
(iii) If a Loss is based on the Company spending money or
compensating third parties (an "Expenditure"), 75% of any such Expenditure will
be paid from the Escrow Fund or the Stockholders, as the case may be, and 25% of
such Expenditure shall be paid by the Company.
(c) Notwithstanding anything to the contrary in Section 10.1(b)
above, the Stockholder's liability in respect of Losses that are based upon or
arise out of Sections 4.4, 6.8(a), 6.8(c), 6.10 and 11.8 shall not be subject
to, or limited by, the Required Minimum, nor any other monetary limitation set
forth in Section 10.1(b) above, including those relating to Expenditures, but
shall be subject to the limitations in Section 10.3(b).
(d) The Purchaser will indemnify the Stockholders against, and
hold the Stockholders harmless from, any and all liability, damage, deficiency,
loss, cost or expense (including reasonable attorneys' fees) that are based upon
or that arise out of the breach or default of any representation, warranty,
covenant or agreement made by the Purchaser herein or in any certificate
delivered pursuant hereto (individually, any one such item being called a "Loss"
and more than one such item, "Losses").
(e) Each party entitled to indemnification under this Agreement
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party (at its expense) to assume the defense of any
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be reasonably satisfactory to the Indemnified Party, and the Indemnified
Party may participate in such defense, but only at such Indemnified Party's
expense, and provided, further, that the omission by any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
indemnification obligations under this Agreement except and only to the extent
that the omission results in a failure of actual notice to the Indemnifying
Party and such Indemnifying Party is damaged as a result of the failure to give
notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. Notwithstanding the foregoing, the Indemnified Party shall have the
right at all times to take over and assume control of the defense, settlement,
negotiations or lawsuit relating to any claim or demand. In the event that the
Indemnifying Party does not accept the defense of any matter as above provided,
or after so accepting fails to diligently prosecute such defense, the
Indemnified Party shall have the full right to defend against any such claim or
demand, and shall be entitled to settle or agree to pay in full such claim or
demand, in its sole discretion. In any event, the Company, the Stockholders and
the Purchaser shall cooperate in the defense of such action and the records of
each shall be available to the other with respect to such defense.
(f) During the period between the Closing Date and the first
anniversary thereof, the Purchaser will use its best efforts to advise the
Stockholders' Representative (at least quarterly) of those claims which may
result in the first $1,000,000 of Losses.
(g) The Stockholders agree with Purchaser that if any of the
matters referred to in the Reports identified in Schedule 4.23 were caused by
the Company prior to the Closing Date then such matters shall be included in the
indemnification provided by the Stockholders subject to the limitations in this
Section 10 and provided that Purchaser shall only be entitled to submit a claim
during the Claims Period (as defined in Section 10.3(a)) related to a matter
referred to in such Reports if a reputable environmental consulting firm
indicated in writing (with a copy provided to the Stockholders' Representative)
that there is a reasonable basis for concluding that the environmental problem
was caused at least in part by the Company prior to the Closing Date.
(h) Except as set forth in this Section 10, the Purchaser hereby
waives and releases the Stockholders from all other claims or causes of action
of any nature relating to any Hazardous Substance, Environmental Law or
Hazardous Discharge.
10.2 Survival.
The representations, warranties, agreements and indemnities contained
in this Agreement shall survive the execution and delivery of this Agreement,
any examination by or on behalf of such parties, and the completion of the
transactions contemplated herein, provided that (i) all such representations,
warranties, agreements and indemnities of the Stockholders shall terminate one
(1) year after the Closing Date, except for representations and warranties in
Section 4.23 and related indemnities, which shall terminate two (2) years after
the Closing Date, and except for the representations and warranties in Sections
4.4 and 11.8, which shall survive indefinitely; and (ii) all such
representations, warranties, agreements and indemnities of the Purchaser shall
terminate two (2) years after the Closing Date, except for representations and
warranties and related indemnities for the Warrants which shall terminate when
all Warrants have been exercised or expired.
10.3 Claim Period; Liability Limitation.
(a) Except as provided in this Section 10.3, no claim for
indemnification under this Agreement may be asserted by an Indemnified Party
after the expiration of the appropriate claims period (the "Claims Period"),
which shall commence on the Closing Date and shall terminate on the first
anniversary of the Closing Date; provided, however, that the Claims Period with
respect to the Purchaser's Losses based on or arising from Subsequent
Environmental Claims shall terminate on the second anniversary of the Closing
Date and the Purchaser's Losses based on or arising under Sections 4.4, 6.8(a),
6.8(c), 6.10 and 11.8 shall remain in effect without limitation except as
limited by law, and the Claims Period for claims by the Stockholders with
respect to the Stockholders' Losses shall terminate two (2) years after the
Closing except with respect to the Warrants for which claims shall terminate
when all the Warrants have been exercised or have expired. No Indemnified Party
shall be entitled to make any claim for indemnification hereunder after the
appropriate Claims Period; provided, however, that if prior to the close of
business on the last day of the Claims Period an Indemnified Party shall have
been notified of a claim for indemnification hereunder and such claim shall not
have been finally resolved or disposed of at such date, the basis of such claim
shall continue to survive with respect to such claim until such claim is finally
resolved or disposed of in accordance with the terms hereof.
(b) The Stockholders' sole liability for breach of this
Agreement, or any certificate delivered pursuant hereto, shall be as provided in
this Section 10, and the obligations in this Section 10 shall not exceed in the
aggregate $3,600,000, whether for claims during the Escrow Period or for
Subsequent Environmental Claims, except for claims for breach of Sections 4.4,
6.8(a), 6.8(c), 6.10 and 11.8 for which the Stockholders' obligation in this
Section 10 shall not exceed the aggregate purchase price; provided, however,
that the indemnification obligation of each Stockholder with respect to any
claim or claims under this Section 10 shall be in the same proportion as that
which the Total Cash Proceeds for such Stockholder at Closing as set forth on
Schedule 4.4 hereto bears to the Total Cash Proceeds for all Stockholders at
Closing as set forth on Schedule 4.4 hereto, except that the indemnification
obligation of a Stockholder for any claim or claims arising out of a breach of
such Stockholder's several representations and warranties contained in Section
4.4 hereof shall not exceed such breaching Stockholder's share of the Total
Cash Proceeds, and the non-breaching Stockholders shall have no indemnification
obligation with respect to any such claim or claims under Section 4.4.
10.4 Effect of Purchaser Investigation. The rights of the Purchaser to
indemnification under Section 10 shall not be modified, waived or limited by any
examination or investigation conducted by the Purchaser of the books, records or
operations of the Company including any knowledge of Purchaser resulting
therefrom.
10.5 Right to Offset. The Purchaser shall be entitled to offset
against the Contingent Payment any Losses for which Purchaser is entitled to
recover from the Stockholders under this Section 10 only to the extent the
Purchaser has not recovered such Losses from the Escrow Fund or by a payment by
the Stockholders. If the Purchaser offsets any amount of the Contingent Payment,
and it is subsequently determined that such offset was in excess of the amount
of Losses the Purchaser was entitled to, then the Purchaser shall pay to the
Stockholders the attorneys fees and costs incurred by the Stockholders in
recovering such amount and interest thereon at the prime rate as adjusted from
time to time of Citibank plus 2% (or if such Bank is no longer providing a prime
rate then any equivalent national bank) computed from the date the Contingent
Payment should have been paid to the Stockholders.
11. Miscellaneous.
11.1 Stockholders' Representative.
(a) Appointment. The Stockholders, and each of them, hereby
appoint Laurance A. Ingham (the "Stockholders' Representative") as their agent
to (i) represent, act for and on behalf of, and bind each of the Stockholders in
the performance of all of their obligations arising from or relating to this
Agreement, including (A) the execution and delivery of any document, certificate
or agreement required under this Agreement to be delivered by the Stockholders
at the Closing and (B) the making, negotiation and settlement of claims of
either the Purchaser or the Stockholders for indemnification pursuant to Section
10 of this Agreement; (ii) accept delivery from the Purchaser of the cash
portion of the Purchase Price and the Warrants and the unregistered Common Stock
and to distribute such cash and Warrants and the unregistered Common Stock to
the Stockholders in the manner provided in or pursuant to this Agreement; (iii)
give and receive notices and receive service of process under or pursuant to
this Agreement; (iv) execute and deliver the Escrow Agreement on behalf of the
Stockholders, and to represent, act for, and bind each of the Stockholders in
the performance of all of their obligations and in securing all their rights
arising from or relating to the Escrow Agreement, including, without limitation,
(A) the settlement of claims made by the Purchaser during the Escrow Period (as
defined in the Escrow Agreement), or the making of any objection thereto, or the
representation of the Stockholders at any arbitration or litigation in respect
thereof, and (B) the giving and receiving of notices required under or pursuant
to the Escrow Agreement; (v) to represent, act for, and bind each of the
Stockholders in the performance of all of their obligation arising from or
related to indemnification in Section 10, including, without limitation, (A) the
settlement of claims made by Purchaser in excess of the Escrow Fund or after the
Escrow Period for Subsequent Environmental Claims; or the making of any
objection thereto, or the representation of the Stockholders in any arbitration
or litigation of the Stockholders' in any arbitration or litigation in respect
thereof; (vi) to deduct on a pro rata basis from the proceeds payable to the
Stockholders at Closing or upon termination of the Escrow Period or from any
Contingent Payment any amounts reasonably necessary to pay expenses of the
Stockholders incurred in connection with this Agreement including the amount of
estimated expenses provided any amount withheld shall be distributed on a pro
rata basis to the Stockholders when the Stockholders' Representative concludes
such retainer is no longer needed for anticipated expenses; (vii) if the
Stockholders' Representative determines legal action is necessary to enforce
rights of the Stockholders under this Agreement to assess each Stockholder for a
pro rata share of the expenses and if such Stockholder does not remit such
amounts within thirty (30) days of written request to exclude such Stockholder
entirely from any recovery notwithstanding anything to the contrary in this
Agreement, and (viii) to deduct from the proceeds payable to any Stockholder at
Closing an amount (A) required for any federal or state withholding or other tax
owed by such Stockholder and (B) required to assure payment of any Option
exercise price. For purposes of this Section 11.1 "pro rata" means the same
proportion as that which the Total Cash Proceeds for such Stockholder at Closing
as set forth on Schedule 4.4 hereto bears to the Total Cash Proceeds for all
Stockholders at Closing as set forth on Schedule 4.4 hereto. The Stockholders'
Representative hereby accepts such appointment.
(b) Successors; Compensation; Reliance. In the event that the
Stockholders' Representative shall die, become incapacitated, resign or
otherwise be unable to fulfill his duties hereunder, a successor Stockholders'
Representative shall be selected by the Stockholders receiving a majority of the
cash portion of the Purchase Price as soon as reasonably practicable thereafter.
If the Stockholders desire to remove or replace the Stockholders' Representative
for any reason, any such Stockholders' Representative may be so removed or
replaced by the Stockholders receiving a majority of the cash portion of the
Purchase Price. The Stockholders' Representative shall receive no compensation
from the Purchaser or the Stockholders for his services hereunder. Any decision,
act, consent or instruction of the Stockholders' Representative shall constitute
a decision of the Stockholders and shall be conclusive and binding upon the
Stockholders, and the Purchaser may rely upon any such decision, act, consent or
instruction of the Stockholders' Representative as being the decision, act,
consent or instruction of the Stockholders.
11.2 Arbitration.
All disputes or controversies of any nature arising from or relating
to this Agreement and the transactions contemplated hereby shall be decided by
arbitration by the American Arbitration Association (the "Association") in
accordance with the rules and regulations of the Association, except that either
party shall have the right in accordance with Section 11.3 hereof to seek
equitable relief independently, including, but not limited to, provisional
and/or permanent injunctive relief, specific performance or other equitable
remedy as may be appropriate to enforce or prevent the violation of, any of the
terms and conditions of this Agreement.
In the event a dispute or controversy arises, either party may submit
the dispute to the American Arbitration Association in Garden City, New York for
arbitration in accordance with and subject to the rules of the American
Arbitration Association then in effect, and, specifically, the Supplementary
Procedures for Large, Complex Disputes (the "Procedures"). The parties agree
that the arbitration shall be conducted before three (3) arbitrators. The
parties agree that prior to the conduct of hearings, they will cooperate in the
exchange of documents, exhibits and information pursuant to demands therefor,
and such other discovery as they may agree upon or the arbitrators may deem
appropriate.
The decision of a majority of the arbitrators so selected shall be
binding and conclusive upon the parties, and judgment upon any decision so
rendered by the arbitrators may be entered in any court of competent
jurisdiction. Each party required to participate shall be responsible for its or
his pro rata share of the fees and costs of arbitration, including the cost of a
stenographic record of the proceedings; provided, however, that the arbitrators
shall be authorized to award legal fees and costs to prevailing party, based
upon their consideration of the merits of the claims, the merits of the
defenses, and the results obtained from the arbitration.
At the request of either the Purchaser or the Stockholders'
Representative, arbitration proceedings shall be conducted confidentially; in
which case all documents, testimony and records shall be received, heard and
maintained by the arbitrators in confidence under seal, available for the
inspection only by the Association, the parties and their respective attorneys
and experts. Hearings in the arbitration proceeding shall commence within one
hundred twenty (120) days after the selection of the arbitrators.
11.3 Consent to Jurisdiction and Waivers For Injunctive Relief.
The Purchaser and the Stockholders each irrevocably consents that any
legal action or proceeding for equitable relief which may be brought against any
of them pursuant to the terms of this Agreement which arise out of or in any
manner related to, this Agreement may be brought in any court of the State of
New York located within Nassau County or in the United States District Court for
the Eastern District of New York. The Purchaser and the Stockholders by the
execution and delivery of this Agreement, expressly and irrevocably consent and
submit to the personal jurisdiction of any of such courts in any such action or
proceeding. The Purchaser and the Stockholders further irrevocably consent to
the service of any complaint, summons notice or other process relating to any
such action or proceeding by delivery thereof to it by hand or by any other
manner provided for in Section 11.5. The Purchaser and the Stockholders hereby
expressly and irrevocably waive any claim or defense in any such action or
proceeding based on any alleged lack of personal jurisdiction, improper venue or
forum non convenient or any similar basis. Nothing in this Section shall affect
or impair in any manner or to any extent the right of the Purchaser to commence
legal proceedings for equitable relief or otherwise proceed for equitable relief
against the Stockholders in any jurisdiction or to serve process in any manner
permitted by law.
11.4 Severability.
If any provision of this Agreement, and, in particular, if any
provision of the covenant not to compete, shall be held or deemed to be or
shall, in fact, be inoperative or unenforceable as applied in any particular
case because it conflicts with any other provision or provisions hereof or any
constitution or statute or rule of public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case or circumstance, or of rendering
any other provision or provisions herein contained invalid, inoperative, or
unenforceable to any extent whatever. The invalidity of any one or more phrases,
sentences, clauses, sections, or subsections of this Agreement shall not affect
the remaining portions of this Agreement.
11.5 Notices.
All notices, consents, requests, instructions, approvals and other
communications provided for herein and all legal process in regard hereto shall
be validly given, made or served, if in writing and delivered personally or sent
by registered or certified mail (return receipt requested), postage prepaid,
recognized national or international air courier or by facsimile transmission
electronically confirmed:
if to Purchaser:
Aeroflex Incorporated
35 South Service Road
Plainview, New York 11803
Fax: (516) 694-4823
Attn.: Mr. Michael Gorin
President
with a copy to:
Edward I. Kramer, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Fax: (516) 822-4824
if to the Company or Stockholders, to the Stockholder's Representative:
Laurance A. Ingham
865 Franklin Lake Road
Franklin Lake, NJ 07417
Facsimile: (201) 891-8119
with a copy to:
Barry E. Taylor, Esq.
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Fax: (415) 493-6811
(if to the Company prior to the Closing Date, to the Stockholders'
Representative, as aforesaid, and after the Closing Date, to the Purchaser, as
aforesaid) or, in each case, at such other address as may be specified in
writing to the other parties.
11.6 Waiver.
Any party may waive compliance by another with any of the provisions
of this agreement. No waiver of any provisions shall be construed as a waiver of
any other provision or a future waiver of any other provision hereof. Any waiver
must be in writing.
11.7 Publicity.
Until the Closing, none of the Purchaser, the Company or the
Stockholders shall issue any press release or public announcement of any kind
concerning the transactions contemplated by this Agreement without consulting
with the other.
11.8 Brokers, Finders, etc.
The Company, Stockholders and Purchaser represent and warrant to each
other that they have not dealt with or employed any broker, finder, investment
banker or financial advisor in connection with the negotiation, execution or
performance of this Agreement, except Robert E. Harris and Harris Roja
Corporation. The Stockholders agree to pay all such compensation which may be
due Mr. Harris and Harris Roja Corporation and to indemnify and hold harmless
the Purchaser and the Company therefrom.
11.9 Assignment.
Prior to the payment of the Contingent Payment under Section 2.2 of
this Agreement, the Purchaser may not assign any of its rights or obligations
hereunder without the prior written consent of the Stockholders' Representative,
except that such consent shall not be required for an assignment to a direct or
indirect wholly-owned subsidiary of the Purchaser, which subsidiary, at and
contemporaneously with the Closing, may be merged with the Company, provided
that in the event of any such assignment and/or merger with or without the
consent of the Stockholders' Representative, as the case may be, the Purchaser
and any such subsidiary or merged subsidiary shall remain subject to the
Purchaser's obligations hereunder. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
11.10 Miscellaneous.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, and all of
which shall constitute one and the same instrument. This Agreement shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of New York, applicable to contracts made and to be performed
in New York. This Agreement shall be binding upon and inure to the benefit of
the successors and assigns of the parties hereto. The rights and obligations
contained in this Agreement are solely for the benefit of the parties hereto and
are not intended to benefit or be enforceable by any other party, under the
third party beneficiary doctrine or otherwise.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
PURCHASER
Aeroflex Incorporated
By:
Title:
COMPANY
MIC Technology Corporation
By:
Title:
STOCKHOLDERS
Joseph J. Assenza
Michael K. Barna
Kevin F. Callery
David F. Chapman
<PAGE>
Patricia Clemens
Mark Doherty
Donner Management Company
By:
Charles H. Greer
David H. Farbsten
Philip C. Foster
Marc A. Gannon
Malcolm D. Hill
Tom Hyltin
Ingham Family Trust
By:
Margaret E. Ingham, Trustee
Howard A. Ingham
Laurance A. Ingham
Lormar Corporation
By:
Laurance A. Ingham, President
Ronald S. Miller
Brian J. Mitchell
Dennis L. Naylor
Charles V. Ristagno
Valery Sbarra
James A. Sharp
Lauren I. Sisson
James B. Walters
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A-1: Custody Agreement and Irrevocable Election to Sell
Exhibit A-2: Irrevocable Power of Attorney
Exhibit B: Noncompetition Agreements
Exhibit C: Opinion of Stockholders' Counsel
Exhibit D: Opinion of Purchaser's Counsel
Exhibit E: Escrow Agreement
Exhibit F-1: Warrant Agreement for 100,000 shares
Exhibit F-2: Warrant Agreement for 300,000 shares
Exhibit G: Lease Amendment
Exhibit H: Option to Purchase Real Estate
SCHEDULES
4.1 Organization and Authority
4.4 Capital Stock
4.5 No Conflicts
4.6 Financial Statements
4.7 Taxes
4.8 No Adverse Changes
4.9 Conduct of Business
4.10 Title to Assets
4.11 Real Property
4.12 Personal Property
4.15(a) Material, Service Agreements; Other Contracts
4.15(b) Other Contracts
4.16 Intellectual Property
4.17 Insurance
4.18 Customer and Supplier Relationships
4.19 Employees
4.20 Labor Relations
4.21 Benefit Plans
4.22 Litigation; Compliance; Permits
4.23 Environmental Compliance
4.25 Bank Accounts; Powers of Attorney
4.26 Warranties
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
-among-
AEROFLEX INCORPORATED
(f/k/a ARX, Inc.),
AEROFLEX LABORATORIES INCORPORATED,
AEROFLEX INTERNATIONAL INC.,
AEROFLEX LINTEK CORP.
AEROFLEX SYSTEMS CORP.,
AEROFLEX ACQUISITION CORP.,
COMSTRON INTERNATIONAL, S.A.R.L.,
MIC TECHNOLOGY CORPORATION,
MIC TECHNOLOGY S.A.R.L.,
and
VIBRATION MOUNTINGS AND CONTROLS, INC.,
as Borrowers,
-and-
CHEMICAL BANK
and
NATWEST BANK N.A.,
as Banks,
-and-
NATWEST BANK N.A.,
as Administrator
Dated as of: March 15, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Section Title Page
Introduction
Recitals
Article I Definitions
1.01 Certain Defined Terms. . . . . . . . . . . . . . . . 2
1.02 Pronouns . . . . . . . . . . . . . . . . . . . . . . 19
Article II Amounts and Terms of the Obligations
2.01 The Revolving Credit Loans. . . . . . . . . . . . . 19
2.02 The Term Loan . . . . . . . . . . . . . . . . . . . 20
2.03 The Amended and Restated Notes. . . . . . . . . . . 21
2.04 Interest; Optional Fixed Rates; Additional Interest 21
2.05 Voluntary and Mandatory Payments. . . . . . . . . . 24
2.06 Commitment Fee; Restructure Fee;Administration Fee;Etc. 26
2.07 Letters of Credit . . . . . . . . . . . . . . . . . . 26
2.08 Payments and Applications . . . . . . . . . . . . . 30
2.09 Lost or Damaged Notes . . . . . . . . . . . . . . . 31
2.10 Maximum Interest Rate . . . . . . . . . . . . . . . 31
2.11 Obligations and Communications of the Borrowers . . 31
2.12 Subrogation and Contribution. . . . . . . . . . . . 32
2.13 Waiver of Impairment of Contribution and Other Rights 32
2.14 Guaranty of Payment and Expenses. . . . . . . . . . . 33
2.15 Continuing Guaranty,Payment in Accordance with Terms,Etc33
2.16 Waivers of Notice, Etc. . . . . . . . . . . . . . . . 33
2.17 Agreement Not Affected. . . . . . . . . . . . . . . . 34
2.18 Bankruptcy; Reinstatement . . . . . . . . . . . . . . 34
2.19 Transitional Matters. . . . . . . . . . . . . . . . . 35
Article III Representations and Warranties
3.01 Organization, Powers, Etc. . . . . . . . . . . . . 35
3.02 Authorization, Conflicts and Validity . . . . . . . 35
3.03 Consents, Etc. . . . . . . . . . . . . . . . . . . 36
3.04 Litigation. . . . . . . . . . . . . . . . . . . . . 36
3.05 Financial Statements. . . . . . . . . . . . . . . . 36
3.06 Absence of Defaults and Certain Agreements. . . . . 36
3.07 Compliance with Applicable Laws . . . . . . . . . . 36
3.08 Payment of Debts and Taxes. . . . . . . . . . . . . 36
3.09 Indebtedness, Guaranties, ERISA Plans, Etc. . . . . 37
3.10 Assets and Collateral . . . . . . . . . . . . . . . 37
3.11 Subsidiaries and Other Ventures . . . . . . . . . . 40
3.12 Relationship of the Borrowers . . . . . . . . . . . 40
3.13 Securities, Etc. . . . . . . . . . . . . . . . . . . 40
3.14 Federal Reserve Regulations, Etc. . . . . . . . . . 41
3.15 No Misrepresentation by the Borrowers . . . . . . . 41
Article IV Conditions to Lending
4.01 Representations and Warranties. . . . . . . . . . . 41
4.02 No Default. . . . . . . . . . . . . . . . . . . . . 41
4.03 Borrowers' Bringdown Certificate. . . . . . . . . . 42
4.04 Delivery of the Loan Instruments and Collateral . . 42
4.05 Opinion of Counsel to the Borrowers, Etc. . . . . . 42
4.06 Supporting Documents . . . . . . . . . . . . . . . . . 42
4.07 Minimum Availability . . . . . . . . . . . . . . . . . . 42
4.08 Plainview Mortgage, Etc. . . . . . . . . . . . . . . . . 42
<PAGE>
Article V Affirmative Covenants
5.01 Required Notices . . . . . . . . . . . . . . . . . . . 43
5.02 Accounts and Reports . . . . . . . . . . . . . . . . . 43
5.03 Access to Premises, Records and Collateral . . . . . . 46
5.04 Existence, Properties, Etc. . . . . . . . . . . . . . 46
5.05 Compliance with Applicable Laws; Operations. . . . . . 47
5.06 Payment of Debts, Taxes, Etc. . . . . . . . . . . . . 47
5.07 Maintenance and Insurance. . . . . . . . . . . . . . . 47
5.08 Contracts and Other Collateral . . . . . . . . . . . . 48
5.09 Defense of Collateral, Etc. . . . . . . . . . . . . . 48
5.10 Maintenance of Borrowing Base. . . . . . . . . . . . . . 48
5.11 Additional Subsidiary Borrowers. . . . . . . . . . . . 48
Article VI Negative Covenants
6.01 Certain Financial Requirements . . . . . . . . . . . . 49
6.02 Indebtedness . . . . . . . . . . . . . . . . . . . . . 50
6.03 Guaranties . . . . . . . . . . . . . . . . . . . . . . 50
6.04 Liens and Encumbrances . . . . . . . . . . . . . . . . 51
6.05 Sale or Disposition of Collateral, Etc. . . . . . . . 51
6.06 Investments, Loans, Advances, Etc. . . . . . . . . . . 52
6.07 Certain Fundamental Changes. . . . . . . . . . . . . . 52
6.08 Distributions to Shareholders. . . . . . . . . . . . . 52
6.09 Use of Loans . . . . . . . . . . . . . . . . . . . . . 53
6.10 ERISA Plans. . . . . . . . . . . . . . . . . . . . . . 53
6.11 Transactions with Affiliates . . . . . . . . . . . . . 53
6.12 Modification of the Plainview Bond Documents . . . . . 54
6.13 Modification of the Subordinated Debt Documents, Etc.. 54
6.14 Modification of the Equipment Finance Documents. . . . 54
6.15 Modification of the Purchase Documents . . . . . . . . . 54
Article VII Collateral
7.01 Continuation and Grant of Security Interests . . . . . 54
7.02 Collateral Documentation . . . . . . . . . . . . . . . 56
7.03 Rights of the Borrowers to the Collateral, Etc. . . . 58
7.04 Releases . . . . . . . . . . . . . . . . . . . . . . . 59
7.05 Litigation Respecting Collateral . . . . . . . . . . . 60
7.06 Power of Attorney. . . . . . . . . . . . . . . . . . . 60
7.07 Rights of the Banks to the Collateral, Deficiencies, Etc. 61
7.08 Performance by the Administrator . . . . . . . . . . 63
7.09 Certain Acknowledgments and Waivers by the Borrowers . . 63
7.10 Termination of Security Interests. . . . . . . . . . . 64
Article VIII Defaults and Remedies
8.01 Events of Default. . . . . . . . . . . . . . . . . . . 64
8.02 Remedies upon Default. . . . . . . . . . . . . . . . . 66
8.03 Enforcement, Etc. . . . . . . . . . . . . . . . . . . 67
8.04 Equitable Relief. . . . . . . . . . . . . . . . . . . . 67
8.05 Consent to Jurisdiction, Waiver of Personal Service,Etc. 67
8.06 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . 68
8.07 Waiver of Setoff, Special Damages, Etc. . . . . . . . . 68
8.08 No Fiduciary Relationship, Etc. . . . . . . . . . . . . 68
<PAGE>
Article IX The Administrator and the Banks
9.01 Appointment of Administrator. . . . . . . . . . . . 68
9.02 Undivided Interest and Committed Share, Etc. . . . 68
9.03 Notice of Intent Not to Advance; Letters of Credit. 69
9.04 Collection and Distribution . . . . . . . . . . . . 70
9.05 Direct Billing, Fixed Rates, Additional Interest, Etc. 71
9.06 Voting Rights, Etc. . . . . . . . . . . . . . . . . 72
9.07 Powers and Duties of the Administrator, Etc. . . . 73
9.08 Notices and Knowledge of Events of Default, Etc. . 74
9.09 Administration During Certain Events of Default . . 74
9.10 Reports and Information . . . . . . . . . . . . . . 75
9.11 Bank's Representations, Warranties and Covenants. . 75
9.12 Credit Waivers and Exculpations . . . . . . . . . . 76
9.13 Reliance on Documents and Experts . . . . . . . . . 76
9.14 Status and Liability of the Administrator, Etc. . . 76
9.15 Bank's Risk of Loss; Expenses; Indemnification. . . 76
9.16 Invalidation of Distributions . . . . . . . . . . . 77
9.17 No Waiver of Rights, Independent Transactions, Etc. 77
9.18 Communications with the Borrowers . . . . . . . . . 78
9.19 Delinquent Banks. . . . . . . . . . . . . . . . . . 78
9.20 No Third Party Rights . . . . . . . . . . . . . . . 78
9.21 Resignation and Successor Administrator . . . . . . 79
9.22 Delegation of Duties by Administrator . . . . . . . 79
Article X Miscellaneous
10.01 Notice. . . . . . . . . . . . . . . . . . . . . . . 79
10.02 Banks' Right of Setoff, Etc. . . . . . . . . . . . 81
10.03 Expenses of the Administrator and the Banks . . . . 81
10.04 Further Assurances. . . . . . . . . . . . . . . . . 81
10.05 Reliance, Exculpation and Indemnification . . . . . 82
10.06 Interpretation. . . . . . . . . . . . . . . . . . . 82
10.07 Section and Other Headings. . . . . . . . . . . . . 82
10.08 Provisions of the Notes and Security Documents. . . 82
10.09 Governing Law . . . . . . . . . . . . . . . . . . . 83
10.10 Severability. . . . . . . . . . . . . . . . . . . . 82
10.11 Survival of Representations, Etc. . . . . . . . . . 83
10.12 Counterparts. . . . . . . . . . . . . . . . . . . . 84
10.13 Effective Date. . . . . . . . . . . . . . . . . . . 84
10.14 Successors and Assigns; Assignment. . . . . . . . . 84
10.15 Limits on the Administrator's Ability to Act, Etc. 85
10.16 No Third Party Rights . . . . . . . . . . . . . . . 85
10.17 No Waiver by Action, Etc. . . . . . . . . . . . . . 86
10.18 Modification, Amendment, Etc. . . . . . . . . . . . 87
10.19 Entire Agreement. . . . . . . . . . . . . . . . . . 87
Signatures . . . . . . . . . . . . . . . . . . . . . . . . 87
<PAGE>
Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . 89
Exhibit A Form of Amended and Restated Revolving Promissory Note
Exhibit B Form of Amended and Restated Term Promissory Note
Exhibit C Form of Bringdown Certificate
Exhibit D-I Form of Financial Covenants Compliance Certificate
Exhibit D-II Form of Borrowing Base Certificate
Exhibit E Committed Shares
Exhibit F Wire Instructions
Exhibit G Form of Assignment and Assumption Agreement
Schedule 1.01EEPI Eligible Extended Payment Invoices
Schedule 1.01PPRI Permitted Puerto Rican Indebtedness
Schedule 3.01(c) Qualifications, Licenses and Registrations
Schedule 3.03 Required Consents
Schedule 3.04 Litigation
Schedule 3.06 Certain Existing Defaults and Adverse Agreements
Schedule 3.07 Certain Violations of Applicable Law
Schedule 3.09(a) Existing Indebtedness
Schedule 3.09(b) Existing Guaranties, Etc.
Schedule 3.09(c) Existing ERISA Plans
Schedule 3.10(a) Existing Liens and Encumbrances
Schedule 3.10(d) Other Locations of Collateral and Other Assets
Schedule 3.10(e) Certain Accounts Receivable
Schedule 3.10(f) Pledged Securities
Schedule 3.10(g) Certain Contracts and other General Intangibles
Schedule 3.10(i) Certain Violations of Applicable Law
Schedule 3.10(j) Patents and Trademarks
Schedule 3.11 Subsidiaries, Partnerships and Other Ventures
Schedule 4.08 Permitted Exceptions to Plainview Mortgage
Schedule 6.02(b) Existing Operating Leases
Schedule 6.06(b) Existing Investments
</TABLE>
<PAGE>
Introduction
This Third Amended and Restated Loan and Security Agreement, dated as
of March 15, 1996, is by and among Aeroflex Incorporated, a Delaware corporation
formerly known as ARX, Inc., and currently having an address at 35 South Service
Road, Plainview, New York 11803 ("Aeroflex"), Aeroflex Laboratories
Incorporated, a Delaware corporation currently having an address at 35 South
Service Road, Plainview, New York 11803 ("Laboratories"), Aeroflex International
Inc., a Delaware corporation currently having an address at 35 South Service
Road, Plainview, New York 11803 ("International"), Aeroflex Lintek Corp., an
Ohio corporation currently having an address at 60 Grace Drive South, Powell,
Ohio 43065 ("Lintek"), Aeroflex Systems Corp., a Delaware corporation currently
having an address at 35 South Service Road, Plainview, New York 11803
("Systems"), Aeroflex Acquisition Corp., a Texas corporation currently having an
address at 35 South Service Road, Plainview, New York 11803 ("Acquisition"),
Comstron International, S.A.R.L., a French corporation currently having an
address at 4 Centre Administratif Des #7, MARES, 78990, Elancourt, France
("Comstron"), MIC Technology Corporation, a Texas corporation currently having
an address at 797 Turnpike Street, North Andover, Massachusetts 01845 ("MIC"),
MIC Technology S.A.R.L. (a\k\a S.A.R.L. MIC Technology and S.A.R.L. MIC
Technologie), a French corporation currently having an address at 15, Rue
Boudeville, Thibaud Center, 31100 Toulouse, France ("MICSARL"), and Vibration
Mountings and Controls, Inc., a New York corporation currently having an address
at 113 Main Street, Box 37, Bloomingdale, New Jersey 07403 ("Vibrations")
(Aeroflex, Laboratories, International, Lintek, Systems, Acquisition, Comstron,
MIC, MICSARL and Vibrations may be referred to individually, a "Borrower", and
collectively, the "Borrowers"), Chemical Bank, a New York state banking
corporation currently having an address at 7600 Jericho Turnpike, Suite 306,
Woodbury, New York 11797 ("Chemical"), NatWest Bank N.A. (f/k/a National
Westminster Bank USA), a national banking association currently having an
address at 100 Jericho Quadrangle, Jericho, New York 11753 ("NatWest"), and
NatWest Bank N.A. (f/k/a National Westminster Bank USA), as Administrator, a
national banking association currently having an address at 100 Jericho
Quadrangle, Jericho, New York 11753.
Recitals
The Borrowers, the Banks and the Administrator are parties to the
Existing Loan Agreement (as these and the other capitalized terms used and not
otherwise defined in these Recitals are defined in Article I hereof), pursuant
to which the Banks continued a committed revolving credit facility of
$16,000,000 and a term loan of $4,000,000. The Existing Loan Agreement is
secured by the Existing Collateral granted by the Borrowers to the Administrator
(for the benefit of all of the Banks) under the Existing Loan Agreement.
The Borrowers have requested that the Banks extend the existing
facility and modify various financial and other covenants, and the Banks have
agreed to do so.
The Borrowers and the Banks have entered into this Agreement in order
to (a) provide funds for the acquisition of all of the stock of MIC by
Acquisition for the benefit of Aeroflex and the other Borrowers (after which
acquisition Acquisition will merge into MIC, leaving MIC a direct subsidiary of
Aeroflex), continue and restructure the existing loan facilities and provide for
the working capital needs of the Borrowers, (b) increase the maximum principal
amount of the Commitment to $22,000,000.00 ($2,000,000.00 of which may be
requested as Letters of Credit), (c) advance $16,000,000.00 in Term Loans under
this Agreement, (d) reflect the addition of Acquisition and (upon the
acquisition of MIC by Acquisition) MIC and MICSARL as Borrowers (after which
Acquisition will merge into MIC), (e) confirm and continue the indebtedness,
other obligations and security interests created under the Existing Loan
Agreement and other Existing Loan Instruments, (f) continue, modify (in various
respects), add to and restate the representations, warranties, covenants and
other obligations originally made in or created under the Existing Loan
Agreement and other Existing Loan Instruments, and (g) amend, restate and
completely replace the Existing Loan Agreement, all upon the terms and
provisions and subject to the conditions hereinafter set forth.
<PAGE>
Agreement
In consideration of the foregoing and the mutual covenants and
agreements hereinafter set forth, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
Section 1.01. Certain Defined Terms. As used in this Agreement, the
following capitalized terms and non-capitalized words and phrases shall have the
meanings respectively assigned to them below, which meanings shall be applicable
equally to the singular and plural forms of the terms so defined:
"accounts receivable" shall mean all of the referenced person's rights
to receive payments for goods and other products sold or leased or for services
rendered, whether or not earned by performance, recognized by the referenced
person or recorded on its books and records, and irrespective of whether any may
be characterized as accounts, chattel paper, choses-in-action, contract rights,
general intangibles, instruments, invoices, notes or otherwise in any document,
by any person or under any applicable law.
"Adjusted Eurocurrency Rate shall mean the rate of interest equal to
the rate per annum (rounded upward to the nearest whole multiple of 1/6 of 1%
per annum, if such amount is not such a multiple) obtained by dividing (i) the
rate (rounded upwards, if necessary, to the next 1/6 of 1% per annum, if such
amount is not such a multiple) at which deposits in United States Dollars
approximately equal to Chemical's share of the portion of the Loans to which
such rate is to apply and for a duration equal to the proposed Interest Period
for such portion (as selected by the Borrowers as provided in Section 2.04
hereof) are offered by Chemical in immediately available funds in an interbank
market for eurodollars (as selected by Chemical) at approximately 11:00 A.M.
(New York City time) two Business Days prior to the commencement of such
Interest Period, by (ii) a percentage equal to 100% minus the applicable Reserve
Percentage for such Interest Period. The Adjusted Eurocurrency Rate shall change
from time to time simultaneously with each corresponding change in the
applicable Reserve Percentage, including (without limitation) changes within
Interest Periods.
"Adjusted LIBO Rate" shall mean the rate of interest equal to the rate
per annum (rounded upward to the nearest whole multiple of 1/6 of 1% per annum,
if such amount is not such a multiple) obtained by dividing (i) the rate of
interest per annum (rounded upward to the nearest whole multiple of 1/6 of 1%
per annum, if such amount is not a multiple) determined by the Administrator at
which deposits in United States Dollars are offered in the London interbank
market by any reference bank selected by the Administrator (which may be NatWest
or any of its affiliates) at 11:00 A.M. (London time) two Business Days before
the first day of such Interest Period in an amount approximately equal or
comparable to NatWest's share of the portion of the Loans to which such rate is
to apply and with a maturity equal to the Interest Period for such portion (as
selected by the Borrowers as provided in Section 2.04 hereof) by (ii) a
percentage equal to 100% minus the applicable Reserve Percentage for such
Interest Period. The Adjusted LIBO Rate shall change from time to time
simultaneously with each corresponding change in the applicable Reserve
Percentage, including (without limitation) changes within Interest Periods.
"Administrator" shall mean NatWest or such other person as from time to
time may be designated as "Administrator" in accordance with Section 9.21
hereof.
"Advance" shall have the meaning assigned to it in Section 2.01(c)
hereof.
"Advance Date" shall mean either (i) the date duly requested by the
Borrowers under Section 2.01(b) for a particular Advance, or (ii) the actual
date of the Advance if made, as applicable.
"Aeroflex" shall have the meaning assigned to it in the introduction.
<PAGE>
"affiliate" of a referenced person shall mean (a) another person
controlling, controlled by or under common control with such referenced person,
(b) any other person beneficially owning or controlling ten percent (10%) or
more of the outstanding voting securities or rights or of the interest in the
capital, distributions or profits of the referenced person or (c) any officer or
director of or partner in the referenced person. The terms "control",
"controlling", "controlled" and the like shall mean the direct or indirect
possession of the power to direct or cause the direction of the management or
policies of a person or the disposition of its assets or properties, whether
through ownership, by contract, arrangement or understanding, or otherwise.
"Agreement" shall mean this Third Amended and Restated Loan and
Security Agreement, together with all schedules and exhibits hereto, and as the
same may be supplemented, modified, amended or restated from time to time in the
manner provided herein.
"Alternate Base Rate" shall mean a fluctuating annual rate of interest
in effect from time to time that for any day shall be equal to (i) in the case
of Chemical, the Base Rate of Chemical, or (ii) in the case of NatWest or any
other Bank (other than Chemical), the Base Rate of NatWest, from time to time in
effect.
"Amendment Fee Balance" shall have the meaning assigned to it in
Section 2.06(b) hereof.
"Applicable Base Margin Rate" shall mean the fluctuating rate of
interest per annum equal to the rate set forth below for the indicated types of
Loans corresponding to the Applicable Pricing Level then applicable:
<TABLE>
<S> <C> <C> <C> <C>
Applicable Pricing Level: Level 1 Level 2 Level 3 Level 4
Applicable Base Margin Rate
for Revolving Credit Loans: 0.00% 0.00% 0.25% 0.75%
Applicable Base Margin Rate
for the Term Loans: 0.25% 0.25% 0.50% 1.00%
</TABLE>
The Applicable Base Margin Rate shall change from time to time simultaneously
with each change in the Applicable Pricing Level.
"Applicable Commitment Fee Rate" shall mean the fluctuating rate of
fees per annum equal to the rate set forth below corresponding to the Applicable
Pricing Level then applicable:
<TABLE>
<S> <C> <C> <C> <C>
Applicable Pricing Level: Level 1 Level 2 Level 3 Level 4
Applicable Commitment Fee Rate: 0.25% 0.375% 0.50% 0.50%
</TABLE>
The Applicable Commitment Fee Rate shall change from time to time simultaneously
with each change in the Applicable Pricing Level.
"Applicable Euro Margin Rate" shall mean the fluctuating rate of
interest per annum equal to the rate set forth below for the indicated types of
Loans corresponding to the Applicable Pricing Level then applicable:
<TABLE>
<S> <C> <C> <C> <C>
Applicable Pricing Level: Level 1 Level 2 Level 3 Level 4
Applicable Euro Margin Rate
for Revolving Credit Loans: 1.50% 1.75% 2.25% 3.00%
Applicable Euro Margin Rate
for the Term Loans: 1.75% 2.00% 2.50% 3.25%
</TABLE>
<PAGE>
The Applicable Euro Margin Rate shall change from time to time simultaneously
with each change in the Applicable Pricing Level.
"Applicable Euro Rate" shall mean the rate of interest in effect for a
particular Interest Period with respect to the portion of the Loans subject to
it, which rate shall be equal to the sum of:
(a) the higher of the Adjusted LIBO Rate or the Adjusted Eurocurrency
Rate determined (in accordance with the definition thereof) two (2) Business
Days before the first day of such Interest Period with respect to the
portions of the Loans subject to it;
(b) the Assessment Rate per annum applicable with respect thereto,
if any, for such Interest Period;
(c) a rate per annum calculated by the Administrator so as to reimburse
the affected Bank(s) for any of the increased costs and reduced receipts
described in Section 2.04(d) or (f) hereof determined from time to time by
the affected Bank(s) in accordance with those Sections (and not otherwise
paid or reimbursed pursuant to those Sections), including (without
limitation) any capital adequacy assessment (without, however, limiting any
Bank's rights under those Sections if no adjustment or an incomplete
adjustment is made pursuant to this clause); and
(d) the Applicable Euro Margin Rate for the Term Loans in the case of
the Term Loans and the Applicable Euro Margin Rate for the Revolving Credit
Loans for all other Loans.
The Applicable Euro Rate shall change from time to time simultaneously with each
corresponding change in the applicable Reserve Percentage (through a change in
the Adjusted LIBO Rate or Adjusted Eurocurrency Rate or otherwise), applicable
Assessment Rate or Applicable Euro Margin Rate, including, without limitation,
changes within Interest Periods.
"applicable law" shall mean any applicable law, including (without
limitation) any: (a) federal, state, territorial, county, municipal or other
governmental or quasi-governmental law, statute, ordinance, rule, regulation,
requirement or use or disposal classification or restriction, whether domestic
or foreign; (b) judicial, administrative or other governmental or
quasi-governmental order, injunction, writ, judgment, decree, ruling,
interpretation, finding or other directive, whether domestic or foreign; (c)
common law or other legal or quasi-legal precedent; or (d) arbitrator's,
mediator's or referee's decision, finding, award or recommendation.
"Applicable Pricing Level" shall mean the numerically lowest pricing
level (i.e., "Level 1", "Level 2", "Level 3" or "Level 4", with Level 1 being
the numerically lowest level possible) set forth below where the Borrowers'
Consolidated Effective Leverage Ratio does not exceed the specified maximum:
<TABLE>
<CAPTION>
Maximum
Applicable Consolidated Effective
Pricing Level Leverage Ratio
<S> <C> <C>
Level 1 1.00:1
Level 2 1.50:1
Level 3 2.00:1
Level 4 any ratio over 2.00:1
</TABLE>
The Applicable Pricing Level shall change from time to time quarterly on the
first Business Day of each fiscal quarter of the Borrowers based upon the
certificate (if any) delivered during the preceding quarter to the Banks under
Section 5.02(e) hereof containing the required calculation of their Consolidated
Effective Leverage Ratio; provided, however, that irrespective of the Borrowers'
Consolidated Effective Leverage Ratio, the Applicable Pricing Level shall be (i)
Level 4 from the Effective Date through June 30, 1996 (or September 30, 1996, in
the event the closing under the Purchase Agreement does not occur on or before
March 31, 1996 ), and (ii) Level 4 for any fiscal quarter following a quarter in
which the Borrowers shall not have timely delivered the required calculation
certificate. (For example, in the event the Borrowers' Consolidated Effective
Leverage Ratio is 1.60:1 at September 30, 1997, that ratio would be calculated
in the Financial Covenant Compliance Certificate delivered in mid-November and
that ratio would determine the Applicable Pricing Level for the quarter
commencing with the first Business Day in January of 1998, which in this case
would be Level 3, as such ratio does not exceed 2.00:1 but does exceed 1.50:1.)
<PAGE>
"Assessment Rate" for any Interest Period for the corresponding portion
of the Loans shall mean the annual assessment rate per annum estimated by
Chemical or NatWest, as applicable, on the first day of such Interest Period for
determining the then current annual assessment payable by such Bank to the
Federal Deposit Insurance Corporation (or any successor) for such Corporation's
(or such successor's) insuring United States Dollar deposits of such Bank in the
United States.
"Assignee" shall have the meaning assigned to it in Section
10.14(b) hereof.
"Assignment Agreement" shall have the meaning assigned to it in
Section 10.14(b) hereof.
"Assignor" shall have the meaning assigned to it in Section 10.14(b)
hereof.
"authority" shall mean any governmental or quasi-governmental
authority, including (without limitation) any federal, state, territorial,
county, municipal or other government or governmental or quasi-governmental
agency, board, branch, bureau, commission, court, department or other
instrumentality or political unit or subdivision, whether domestic or foreign.
"Bank" and "Banks" shall respectively mean any one or more of Chemical
and NatWest, the Administrator in its capacity as Administrator or a Bank, and
any Assignee, but shall exclude any Assignor following its assignment of all of
its rights, powers, privileges, remedies and interests in accordance with (and
to the extent permitted by) this Agreement.
"Base Rate" shall mean the fluctuating annual rate of interest in
effect from time to time equal to:
(a) in the case of Chemical, the rate of interest publicly announced
at its principal office from time to time as its "Prime Rate"; and
(b) in the case of NatWest or any other Bank (other than Chemical), the
rate of interest established by NatWest in New York, New York, from time to
time as its "Prime Rate".
Each Borrower acknowledges and agrees that each Bank announces such rate for
reference purposes only and such rate may not represent the lowest or best rate
available to its customers.
"BBNY" shall mean Barclays Business Credit, Inc., as assignee of
Barclays Bank of New York, N.A., a Connecticut corporation currently having an
address at 12 East 49th Street, New York, New York 10017.
"books", "records" and "books and records" each shall mean all of the
referenced person's books and records, including (without limitation) financial
books, ledgers and other records, corporate books and minutes, stock books and
transfer ledgers, records, schedules and other evidence of sales, inventory and
accounts receivable and payable, rent rolls, tax returns, registration reports
and other filings with governmental authorities, leases, contracts and other
agreements, insurance policies, correspondence, invoices, canceled checks and
check registers, and other documents and papers, whether on paper or film, in
electronic storage or in some other storage medium, and whether or not in the
possession of such person.
"Borrower" and "Borrowers" shall have the meanings respectively assigned to
them in the Introduction.
"Borrowing Base" shall mean the amount determined as of a particular
date equal to the excess of: (a) the sum of: (i) 85% of the gross book value of
all Eligible Receivables of the Borrowers then outstanding; (ii) prior to July
25, 1996, 40%, and on and after July 25, 1996, 25% of the net book value of all
Eligible Inventory (other than Eligible Gold Inventory) of the Borrowers at the
time (i.e., the gross value of such inventory, determined at the lower of cost
or market, less any and all reserves for obsolescence, damage, theft and the
like); and (iii) 85% of the net book value of all Eligible Gold Inventory of the
Borrowers at the time (i.e., the gross value of such inventory, determined at
the lower of cost or market, less any and all reserves for obsolescence, damage,
theft and the like); provided that the Administrator (with the consent of the
Majority Banks) at any time and from time to time may modify or add categories
of eligibility or ineligibility in order to reflect the composition of and the
Borrowers' experience with its Eligible Receivables, Eligible Inventory and
Eligible Gold Inventory; and provided further that if the Administrator at any
time determines any such method of valuation overstates the actual fair market
value at the time, the Administrator may recalculate those values to fair market
value; minus (b) until such time as payment of the Earn-out Amount, if any, and
the Excess Cash Flow Initial Payment, if any, have been made, the greater of
(but not more than $4,000,000.00) (A) the Earn-out Accrual, or (B) the Excess
Cash Flow Initial Payment accrued (and not paid) to the date of determination.
The Administrator may determine the Borrowing Base at any time and from time to
time, which may (but need not) be based upon the Borrowers' periodic report on
the form of Borrowing Base Certificate required under Section 5.02(f) of this
Agreement.
"Business Day" shall mean any day during which the Banks are open for
business in New York, New York, other than any Saturday, Sunday or other
applicable legal holiday; provided, however, that for the purposes of particular
Fixed Rate elections or transactions (excluding payments) involving a foreign
jurisdiction, "Business Day" shall be further limited to one during which
dealings are carried on in the relevant interbank market.
"Chemical" shall have the meaning assigned to it in the Introduction.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provisions of any applicable law in any foreign jurisdiction, and
as the same may be supplemented, modified, amended or restated from time to
time, and the rules and regulations promulgated thereunder, or any corresponding
or succeeding provisions of applicable law.
"Collateral" shall have the meaning assigned to it in Section 7.01
hereof.
"Comar" shall mean Comar Products, Inc., a New Jersey corporation
currently having an address at 113 Main Street, Box 37, Bloomingdale, New Jersey
07403.
"Commitment" shall mean the commitment to make revolving credit loans
to the Borrowers by the Banks, collectively, in the aggregate principal amount
outstanding at any one time not to exceed the remainder of (i) $22,000,000 minus
(ii) the sum of all voluntary reductions made under Section 2.01(d) hereof and
all mandatory prepayments of the Revolving Credit Loans required under Section
2.05(e) or 2.05(f) hereof to the extent required therein (but with the
commitment of any particular Bank limited solely to its respective Committed
Share of the Commitment), as such amount may be further reduced from time to
time or terminated pursuant to the terms of this Agreement.
"Commitment Fee" shall have the meaning assigned to it in Section
2.06(a) hereof.
"Committed Share" shall have the meaning assigned to it in Section
9.02(a) hereof.
"Comstron" shall have the meaning assigned to it in the Introduction.
"Consolidated Available Earnings" shall mean, for any period, the sum
of (a) the Consolidated EBIT of the Borrowers for such period, plus (b) the
consolidated depreciation and amortization of the Borrowers included in such
Consolidated EBIT for such period, including (without limitation) the
amortization of goodwill and other non-cash charges, minus (c) the aggregate
capital expenditures of the Borrowers during such period, all as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Debt Service" shall mean, for any period, the sum of (a)
the Consolidated Interest Expense of the Borrowers for such period, plus (b) the
principal amounts of all long-term indebtedness payable by them during the next
succeeding twelve-month period determined in accordance with GAAP, excluding,
however, from such indebtedness (i) the Revolving Credit Loans during the final
twelve months of the Revolving Credit Period and (ii) the current maturities of
indebtedness secured fully and only by cash and cash equivalents, plus (c) the
interest expense of the Borrowers respecting discontinued operations for such
period and the principal amounts of all indebtedness payable by them respecting
discontinued operations during the next succeeding twelve-month period.
"Consolidated Debt Service Ratio" shall mean, for any period, the ratio
of (a) the Consolidated Available Earnings of the Borrowers for such period plus
the portion of capital expenditures included therein financed through Other
Debt, to (b) their Consolidated Debt Service for such period.
"Consolidated EBIT" shall mean, for any period, (a) the net income (or
loss) of the Borrowers for such period, minus (b) any extraordinary or unusual
gains included in net income (or loss) of the Borrowers for such period, plus
(c) any extraordinary or unusual loss included in such net income (or loss) for
such period, plus (d) the sum of any and all amounts that, in the determination
of such net income (or loss) for such period, has been deducted for (i)
Consolidated Interest Expense, and (ii) total federal, state, local and foreign
income and franchise taxes, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Effective Leverage Ratio" shall mean, as at any date of
determination, the ratio of the Consolidated Unsubordinated Liabilities of the
Borrowers at such date to their Consolidated Effective Net Worth at such date.
"Consolidated Effective Net Worth" shall mean, as at any date of
determination, the sum of (a) the Consolidated Tangible Net Worth of the
Borrowers at such date plus (b) the aggregate principal balance outstanding
under their Consolidated Subordinated Indebtedness at such date, plus (c) 50% of
the increase in goodwill since the Effective Date attributable to the payments
made or accrued under the Earn-out Agreement.
"Consolidated Funded Debt Ratio" shall mean, as at any date of
determination, the ratio of the Consolidated Senior Funded Indebtedness of the
Borrowers at such date to their Consolidated Available Earnings for the fiscal
year or rolling four quarter period ending at such date.
"Consolidated Interest Expense" shall mean, for any period, (a) the
consolidated total interest expense of the Borrowers accrued for such period
(including the interest component of capitalized leases), including (without
limitation) all commissions, discounts and other fees and charges owed with
respect to letters of credit and net costs under interest rate contracts, minus
(b) the total interest income accrued for such period, all as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Quick Ratio" shall mean, as at any date of determination,
the ratio of (a) the unencumbered consolidated current assets of the Borrowers
at such date consisting of cash, marketable securities and accounts receivable (
treating as unencumbered for this purpose those assets and properties that are
subject only to the security interests of the Administrator for the benefit of
all of the Banks), to (b) the consolidated current liabilities of the Borrowers
at such date (excluding from current liabilities for this purpose the current
portion of long term debt), all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Senior Funded Indebtedness" shall mean any indebtedness
of the Borrowers with original maturities of one year or more outstanding as at
any date of determination, including all current portions, excluding, however,
from such indebtedness (i) Consolidated Subordinated Indebtedness and (ii) any
indebtedness secured fully and only by cash and cash equivalents, all as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Subordinated Indebtedness" shall mean any indebtedness of
the Borrowers outstanding, as at any date of determination, under: (a) the
Debentures; and (b) any other indebtedness subordinated to the Obligations to at
least the same degree as the Debentures and approved by the Banks in their
discretion; all as consolidated in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean, as at any date of
determination, the amount by which (a) the total assets of the Borrowers at such
date, excluding goodwill and patents (however classified) and all other assets
and properties properly classified as "intangible assets" under GAAP, exceeds
(b) the sum of the aggregate amount of their Consolidated Total Liabilities at
such date all as determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Liabilities" shall mean, as at any date of
determination, the sum for the Borrowers of all of their obligations that would
be included in determining their total liabilities (including any liabilities
for discontinued operations) at such date as shown on the liabilities side of
their balance sheet, all as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Unsubordinated Liabilities" shall mean, as at any date of
determination, (a) the Consolidated Total Liabilities of the Borrowers at such
date, minus (b) the aggregate principal balance outstanding under their
Consolidated Subordinated Indebtedness at such date.
"Contract" and "Contracts" shall respectively mean any one or more of
the procurement or purchase contracts, purchase orders or similar agreements or
arrangements respecting the sale or provision of inventory or other goods or
services by any Borrower, as executed and delivered from time to time, and as
the same may be supplemented, modified, amended or restated from time to time in
the manner provided therein.
"Corporate Document" and "Corporate Documents" shall mean any or all of
the following: (a) the Certificate of Incorporation or By-Laws of any Borrower;
(b) any resolution with continuing effect adopted by the Board of Directors, any
management or other committee of directors, or the shareholders of any Borrower;
or (c) any term or provision of any shareholders' agreement or trust respecting
the securities issued by any Borrower or any related rights; in each case
whether now or hereafter existing, and irrespective of whether reduced to
writing, and as each has been and hereafter may be supplemented, modified,
restated or amended from time to time.
"Debentures" shall mean the 7-1/2% Senior Subordinated
Convertible Debentures issued by Aeroflex (f/k/a ARX, Inc.), and due June 15,
2004, as the same may be supplemented, modified, amended or restated from time
to time in the manner provided therein.
"Default" shall mean any event that, with the giving of notice or the
passage of time (or both), would constitute an Event of Default.
"Default Declaration" shall mean any notice from the Majority Banks to
the Borrowers declaring that an Event of Default has occurred and is continuing
(as contemplated in Section 9.08(b) hereof), which may be given by the
Administrator if so directed by the Majority Banks.
"Delinquent Bank" shall have the meaning assigned to it in Section
9.19 hereof.
"DEL Warrants" shall mean the warrants dated October 7, 1991, from Del
Electronics Corp. to purchase 89,402 shares of its common stock (as adjusted).
"Earn-out Accrual" shall mean, as at any date of determination, (a) $0
prior to such time as the cumulative Earn-out Gross Profit first equals or
exceeds the Earn-out Threshold at such time, or November 30, 1996, whichever
occurs later, and (b) thereafter an amount equal to the product of (i) 0.16667
times (ii) the cumulative Earn-out Gross Profit from the beginning of the
Earn-out Period to the date of determination.
"Earn-out Agreement" shall mean Section 2.2 of the Purchase Agreement
(a copy of which section is annexed hereto as Exhibit __ for convenience).
"Earn-out Amount" shall mean the amount payable under the Earn-out
Agreement (which will be either $0 or $4,000,000, depending upon the performance
of MIC).
"Earn-out Gross Profit" shall mean , as at any date of determination,
the Gross Profit Dollars under (and as defined) the Earn-out Agreement.
"Earn-out Period" shall mean the period commencing March 1, 1996, and
ending on August 31, 1997.
"Earn-out Threshold" shall mean, as at any date of determination, the
product of (a) $1,333,333.00 times (b) the number of calendar months that have
(at the date of determination) elapsed since the commencement of the Earn-out
Period (counting March 1996 as month one for the April determination, etc.).
"Effective Date" shall have the meaning assigned to it in Section
10.13 hereof.
"Eligible Assignee" shall mean any: (i) commercial bank that is
organized under the laws of the United States, or any state thereof, and has
total assets of not less than $1,000,000,000; (ii) savings and loan association
or savings bank that is organized under the laws of the United States, or any
state thereof, and has total assets of not less than $500,000,000; (iii)
commercial bank that (A) is organized under the laws of the Cayman Islands, or
under the laws of any country, or any political subdivision of any country, that
is a member of the Organization for Economic Cooperation and Development
("OECD") or that has concluded special lending arrangements with the
International Monetary Fund associated with its General Arrangements to
Borrower, and (B) has total assets of not less than $1,000,000,000, provided
that such bank is acting through a branch or agency located in the United
States, in the country in which it is organized or in another country described
in this clause (iii); (iv) central bank of any country that is a member of the
OECD; and (v) finance company, insurance company, mutual fund or other financial
institution (whether a corporation, partnership or other entity) that is engaged
in making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business, and has total assets in excess of $500,000,000.
"Eligible Extended Payment Invoices" shall mean any of the invoices
listed in Schedule 1.01EEPI hereto or hereafter accepted in writing by the
Administrator (with the consent of the Majority Banks); provided, however, that
no invoice will be included in Eligible Extended Payment Invoices where the
invoice permits payment after the invoice date more than the number of days (or
other time periods) indicated in such schedule or written acceptance. (Eligible
Extended Payment Invoices must qualify as Eligible Receivables (except where
expressly excluded) in order to be included in the Borrowing Base.)
"Eligible Gold Inventory" shall mean all Eligible Inventory consisting
of gold used as raw material by MIC, including gold purchased under the Gold
Purchase Agreement to the extent the relevant Borrower's obligations thereunder
are fully backed by a Letter of Credit.
"Eligible Inventory" as of a particular time shall mean all inventory
of materials and finished goods then owned by any Borrower and held for sale in
the ordinary course of business (as then conducted) as determined in accordance
with generally accepted accounting principles consistently applied; provided,
however, that no item of inventory will be included in Eligible Inventory if
that item: (a) is not in good condition or of merchantable quality; (b) is
defective or does not meet the established specifications of such Borrower for
its type; (c) is obsolete or infrequently sold (unless the subject of a current
purchase order); (d) is in the possession or control of any person other than
the Borrowers or a party to a bailment agreement with the Administrator (for the
benefit of all of the Banks) in such form and substance as may be acceptable to
the Administrator; (e) is located at any location not identified in Schedule
3.10(d) hereto or any supplement thereto accepted by the Banks; (f) is located
on any leased premises where the landlord is not a party to a waiver and access
agreement with the Administrator (for the benefit of all of the Banks) in such
form and substance as may be acceptable to the Administrator; (g) is located at
any location outside the United States of America; (h) is one in which the
Administrator (for the benefit of all of the Banks) does not have a perfected
first priority security interest; (i) is the subject of any financing statement,
lien or other encumbrance other than in favor of the Administrator (for the
benefit of all of the Banks); (j) is the subject of any other person's claim of
ownership or other interest, whether legal, beneficial or otherwise; (k) does
not conform at the time to the Borrowers' representations and warranties
respecting Collateral in general or inventory in particular; or (l) is deemed
unacceptable by the Administrator in its reasonable discretion, whether
individually or as a function of its type, age or quantity; provided that the
Administrator (with the consent of the Majority Banks) in its sole and absolute
discretion may permit the partial inclusion of certain excluded items of
inventory having some value, which shall be subject to such criteria,
limitations, valuations and discounts as the Administrator (with the consent of
the Majority Banks) may establish from time to time.
"Eligible Receivables" as of a particular time shall mean all accounts
receivable of any Borrower then outstanding for inventory and other goods,
merchandise and tangible assets and properties sold or services rendered in the
ordinary course of such Borrower's business (as then conducted) (collectively,
the "Products") as determined in accordance with generally accepted accounting
principles consistently applied; provided, however, that no account receivable
will be included in Eligible Receivables where: (a) the invoice is more than (i)
120 days past due in the case of those due by their terms no later than 30 days
after invoice and (ii) 60 days past due in the case of those due by their terms
later than 30 days after invoice; (b) a final or progress invoice has not been
issued; (c) delivery of the invoiced Product(s) (or the progress stage agreed
upon with the customer) has not been completed; (d) the invoice is conditional,
permits returns or restricts collection rights or assignments in any respect;
(e) the invoice permits payment (i) more than 92 days after the invoice date
(other than Eligible Extended Payment Invoices), (ii) in any currency other than
United States Dollars, or (iii) at any location outside the United States; (f)
the obligation to pay is evidenced by chattel paper or any note or other
instrument (unless duly endorsed and delivered to the Administrator (for the
benefit of all of the Banks)); (g) the invoiced Product(s) have been rejected,
returned or disputed in any way, whether in whole or in part, or the customer
has attempted to renegotiate the invoiced price, other than because of mistake
or in accordance with the customary credit and collection practices of such
Borrower; (h) the customer has asserted any right of reduction, setoff,
recoupment, counterclaim or defense; (i) the account receivable is one in which
the Administrator (for the benefit of all of the Banks) does not have a
perfected first priority security interest other than those owed by the United
States of America (or any division or department thereof) for which no
Assignments of Claims have been requested pursuant to Section 7.02 or any other
provision of this Agreement; (j) the invoice or corresponding account receivable
is the subject of any financing statement, lien or other encumbrance other than
in favor of the Administrator (for the benefit of all of the Banks); (k) more
than 50% of the accounts receivable of the customer and its affiliates are past
due by more than that allowed under clause (a); (l) the customer is any other
Borrower or an affiliate of any Borrower; (m) the customer is any governmental
authority other than the United States of America or a department or division
thereof; (n) the customer is located outside the United States; (o) the customer
does not meet the established credit standards of such Borrower; (p) the
customer has taken or committed any of the actions specified in Section 8.01(h)
hereof in respect of itself or all or substantially all of its assets and
properties or has had any of those actions taken against it; (q) the account
receivable does not conform at the time to the Borrowers' representations and
warranties respecting Collateral in general or accounts receivable in
particular; or (r) the Administrator has determined in its reasonable discretion
that the account receivable should be excluded, whether individually, by
customer, by amount or otherwise; provided that the Administrator (with the
consent of the Majority Banks) in its sole and absolute discretion may permit
the partial inclusion of certain excluded accounts receivable having some value,
which shall be subject to such criteria, limitations, valuations and discounts
as the Administrator (with the consent of the Majority Banks) may establish from
time to time.
"Environmental Claim" shall mean: (a) any responsibility, liability or
unlawful act or omission under any Environmental Law (whether alleged or
otherwise); (b) any tortious act or omission or breach of contract pertaining to
any Environmental Substance (whether alleged or otherwise); or (c) any other
violation or claim under any Environmental Law or in respect of any
Environmental Substance (whether alleged or otherwise).
"Environmental Law" and "Environmental Laws" shall respectively mean
any one or more of the applicable laws pertaining to: (a) any emission,
discharge, release, runoff, disposal or presence in the environment of any
Environmental Substance; (b) any cleanup, containment, manufacturing, treatment,
handling, transportation, storage or sale of or other activity pertaining to any
Environmental Substance; or (c) any other peril to public or occupational health
or safety or to the environment that may be posed by an Environmental Substance.
"Environmental Substance" shall mean any toxic substance, hazardous
material, contaminant, waste, pollutant or other similar product or substance
that may pose a threat to public or occupational health or safety or to the
environment.
"Equipment Finance Document" and "Equipment Finance Documents" shall
respectively mean any one or more of: (a) the Equipment Lease dated December 31,
1992, between Laboratories and GECC; (b) the Equipment Lease dated December 31,
1992, between Vibrations and GECC; (c) the Corporate Guaranties dated December
31, 1992, given by Aeroflex to GECC in connection with items (a) and (b), above;
(d) the Equipment Lease dated May 11, 1994, between Laboratories and GECC; (e)
the Corporate Guaranty dated May 11, 1994, between Aeroflex and GECC in
connection with item (d), above; (f) the Equipment Lease, dated December 12,
1994, between Laboratories and Fleet; (g) the Corporate Guaranty dated December
12, 1994, between Aeroflex and Fleet in connection with item (f), above; (h) the
Equipment Lease dated February 11, 1994, between Vibration and Commercial
Leasing; (i) the Equipment Lease dated March 17, 1994, between Lintek and
Hewlett Packard; (j) the Automobile Loan dated November 2, 1993, between Lintek
and National City Bank; (k) any other equipment lease entered into in any
sale/leaseback transaction contemplated under Section 6.05(c)(i)(A) hereof; (l)
any other equipment financing approved from time to time by the Majority Banks
(in their sole discretion); and (m) any and all waivers, consents, agreements,
instruments and other documents executed by the requisite person(s) pursuant to
or in connection with any of the foregoing; in each case whether now or
hereafter existing, and irrespective of whether reduced to writing, and as each
may be supplemented, modified, amended or restated from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and as the same may be supplemented, modified, amended or restated
from time to time, and the rules and regulations promulgated thereunder, or any
corresponding or succeeding provisions of applicable law.
"ERISA Affiliate" and "ERISA Affiliates" shall respectively mean any
one or more of any: (i) subsidiary of any Borrower; and (ii) other trade,
business, person or persons that together with any Borrower would be deemed to
be a single employer within the meaning of Section 4001 of ERISA.
"ERISA Effect" shall mean any material and adverse effect on (a) any
Plan, (b) the assets and properties of any Plan or (c) any funding or other
liability of any one or more of the Borrowers or any ERISA Affiliate in respect
of any Plan (individually or in the aggregate).
"ERISA Event" shall mean any (a) "accumulated funding deficiency"
(whether or not waived), "prohibited transaction", "reportable event" (other
than any event for which the 30-day notice requirement has been waived by
regulation), "disqualification", "partial withdrawal" or "withdrawal", "partial
termination" or "termination", "insolvency", "reorganization", or the imposition
of any "penalty" or "withdrawal liability" in respect of any Plan under (and as
such words and phrases are defined in) ERISA or the Code, as applicable, (b) any
other violation of ERISA, the Code or any other applicable law in respect of any
Plan (whether alleged or otherwise), (c) supplement or amendment to or
modification or restatement of any Plan that could have or has had an ERISA
Effect, or (d) imposition, increase or other adverse change in any funding
obligation or other liability of any one or more of the Borrowers or any ERISA
Affiliate in respect of any Plan or to the Pension Benefit Guaranty Corporation
(individually or in the aggregate).
"event" shall include (without limitation) any event, occurrence,
circumstance, condition or state of facts.
"Event of Default" shall have the meaning assigned to it in Section
8.01 hereof.
"Excess Cash Flow" shall mean, for any period of determination, the sum
of: (a) the amount of the change (positive for an increase or negative for a
decrease) in the cash and cash equivalents of the Borrowers from the beginning
of period of such determination to its end; plus (b) the amount of the change
(positive for a decrease or negative for an increase) in the Revolving Credit
Loans (other than any decrease due to a mandatory prepayment); minus (c)
one-half of the amount of any increase in Other Debt from the beginning of
period of such determination to its end.
"Excess Cash Flow Initial Payment" shall mean one-half of the amount of
Excess Cash Flow for the period from the initial Advance Date (after giving
effect to the closing payments under the Purchase Agreement and this Agreement
and the initial Advance and Term Loan Advance) through March 31, 1997.
"Excluded Disposition" shall have the meaning assigned to it in
Section 2.05(e) hereof.
"Existing Collateral" shall mean all of the assets and properties of
the Borrowers pledged pursuant to the Existing Loan Agreement (as more
particularly described in Section 7.01 of the Existing Loan Agreement), in each
case whenever acquired or created, together with the products and proceeds
thereof, all payments and other distributions with respect thereto and any and
all renewals, substitutions, modifications and extensions of any or all of the
foregoing.
"Existing Loan Agreement" shall mean the Second Amended and Restated
Loan and Security Agreement among the Borrowers, Chemical, NatWest and the
Administrator dated as of April 11, 1994, as amended by a First Amendment dated
as of June 22, 1994, and modified by various waiver and consent letters
(including the consent letter dated as of January 1, 1995). That Second Amended
and Restated Loan and Security Agreement amended, restated and completely
replaced the Prior Loan Agreement.
"Existing Loan Instruments" shall mean the Existing Loan Agreement, the
Prior Notes, the various mortgages, assignments, instruments and other documents
creating or evidencing the interest of the Administrator or any Bank in any
collateral securing or intended to secure anyone's obligations under any of the
foregoing, and all waivers, consents, agreements, reports, statements,
certificates, schedules and other documents executed by the requisite person(s)
pursuant to or in connection with any of the foregoing and accepted or delivered
by the Bank thereunder prior to the Effective Date of this Agreement.
"Existing Note" and "Existing Notes" shall respectively mean any one or
more of the Existing Revolving Credit Notes and the Existing Term Notes.
"Existing Obligations" shall mean any and all of the "Obligations"
under (and as defined in) the Existing Loan Agreement, together with any and all
of the Borrower's other obligations under the Prior Notes and Existing Loan
Instruments, which Existing Obligations include (without limitation) the
outstanding Loans described in Sections 2.01 and 2.02 of this Agreement.
"Existing Revolving Credit Note" and "Existing Revolving Credit Notes"
shall respectively mean any one or more of Second Amended and Restated Revolving
Promissory Notes dated April 11, 1994, issued by the Borrowers severally (i) to
Chemical in the original principal amount of $6,400,000, and (ii) to NatWest in
the original principal amount of $9,600,000, which notes were issued to amend,
extend, restate and completely replace the Prior Revolving Notes.
"Existing Term Note" and "Existing Term Notes" shall respectively mean
any one or more of Second Amended and Restated Term Promissory Notes dated April
11, 1994, issued by the Borrowers severally (i) to Chemical in the original
principal amount of $1,600,000, and (ii) to NatWest in the original principal
amount of $2,400,000, which notes were issued to amend, extend, restate and
completely replace the Prior Term Notes.
"Facility Fee" shall have the meaning assigned to it in Section
2.06(b) hereof.
"Federal Funds Rate" shall mean a fluctuating annual rate of interest
in effect from time to time that for any day shall be equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Administrator from three Federal funds
brokers of recognized standing selected by it.
"Fixed Rate" shall mean the rate of interest in effect for a particular
Interest Period with respect to the portion of the Loans subject to such rate,
which rate shall be equal to the Applicable Euro Rate as selected in accordance
with Sections 2.04(b) and (c) hereof. The Fixed Rate shall change from time to
time simultaneously with each corresponding change in the Applicable Euro Margin
Rate, applicable Reserve Percentage or applicable Assessment Rate, including,
without limitation, changes within Interest Periods.
"Fixed Rate Loan" and "Fixed Rate Loans" shall respectively mean any
and all portions of the Loans bearing interest at any Fixed Rate(s).
"Fronting Bank" shall have the meaning assigned to it in Section
2.07(a) hereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America consistent with those applied in the preparation of the
financial statements referred to in Section 3.05 hereof.
"GECC" shall mean General Electric Corporation, a Delaware corporation
currently having an address at 44-2 Old Ridgebury Road, Danbury, Connecticut
06810.
"Gold Purchase Agreement" shall mean the Precious Metals Sales
Agreement between Fleet Precious Metals Inc. and MIC, as the same may be
supplemented, modified, amended or restated from time to time.
"guaranty" and "guaranties" shall respectively mean any and all
agreements, arrangements and obligations whereby the referenced person directly
or indirectly has guarantied, assumed or otherwise become liable or responsible
for the indebtedness or other obligation of any other person, whether contingent
or otherwise, and whether or not recourse is limited to specified amounts or any
asset or property of the referenced person, including(without limitation) (a)
any guaranty or other assurance of payment or performance of any obligation of
any other person, (b) any indemnification, hold harmless or similar agreement,
arrangement or obligation respecting any obligation of any other person, (c) any
pledge, hypothecation or other encumbrance, or any loan or other availability,
of any asset or property of the referenced person in respect of any obligation
of any other person, or (d) any agreement, arrangement or other obligation (i)
to purchase, repurchase or otherwise acquire any obligation of any other person,
(ii) to purchase, repurchase, sell, lease or otherwise provide any securities or
other assets and properties in connection with any obligation of any other
person, (iii) to provide any discounts, services or other accommodations in
connection with any obligation of any other person, (iv) to make any capital
contribution, advance or loan in connection with the obligation of any other
person or (v) to otherwise enhance, support, repay or discharge any obligation
of any other person; excluding, however, negotiable instruments endorsed for
collection or deposit in the ordinary course of business.
"Guaranty" shall have the meaning assigned to it in Section 2.14
hereof.
"HARX" shall mean HARX, Inc., a New York corporation formerly known as
Huxley Envelope Corp. and currently having an address at 35 South Service Road,
Plainview, New York 11803.
"hereunder", "herein", "hereof" and other words and phrases of like
import shall refer to each and every term and provision of this Agreement.
"improvements" shall mean all land development, construction and other
improvements to real estate, whether planned, authorized, under construction or
completed, and whether or not enhancing the value of the referenced real estate,
including (without limitation) all demolitions, excavations, fills and other
site work, roads and sidewalks, water, sewer and utility lines, buildings and
other structures, and all fixtures, furnishings and equipment located on or used
in connection with the referenced real estate, whether or not affixed thereto.
"indebtedness" of any referenced person shall mean any and all
obligations of the referenced person: (a) for borrowed money, however evidenced;
(b) evidenced by any promissory note, bond, debenture or other similar written
obligation to pay money; (c) for the deferred purchase price of any asset,
property or service; (d) under any interest rate protection, foreign currency
exchange, or other interest or exchange rate swap or hedging agreement or
arrangement; (e) in respect of any letter of credit or banker's acceptance; (f)
to reimburse or compensate any other person respecting any provisional or other
temporary credit in advance of collection for deposits of any checks,
instruments or other documents made by the referenced person or any of its
affiliates; (g) as lessee under leases that have been capitalized or should be
capitalized under GAAP; (h) for unfunded accrued benefits under plans covered by
Title IV of ERISA and unfunded accrued post-retirement benefits under "welfare
benefit plans" (as defined in ERISA); or (i) respecting other items treated as
liabilities under GAAP; provided, however, that indebtedness shall not include
obligations incurred in the ordinary course of business that are (i) treated as
current trade accounts payable under GAAP, or (ii) owed by one Borrower to
another. In the event the referenced person is a corporation with one or more
subsidiaries, the term "indebtedness" shall mean the indebtedness of all of them
consolidated in accordance with GAAP consistently applied as of the date of
calculation.
"Indenture" shall mean the Indenture dated June 23, 1994, between
Aeroflex and the Trustee respecting the Debentures, as the same may be
supplemented, modified, amended or restated from time to time in the manner
provided therein.
"Independent Transaction" shall have the meaning assigned to it in
Section 9.17(b) hereof.
"Interest Period" shall mean the period during which a Fixed Rate is
applicable to a portion of the Loans, which period shall be as determined
pursuant to Sections 2.04(b) and (c) hereof.
"International" shall have the meaning assigned to it in the
Introduction.
"inventory" shall mean any and all goods, merchandise and other items
held by the referenced person (or on its behalf) for manufacture, sale, lease or
other delivery or consumption, wherever located, whether raw materials,
supplies, parts or other components, work-in-progress, finished goods, returned
goods or otherwise.
"investment" shall mean, with respect to any referenced person, (i) any
and all stocks, warrants, options, puts, calls, bonds, debentures, commercial
paper, governmental obligations, notes, certificates of deposit, partnership
interests (general or limited), trust interests, investment contracts,
commodities (other than inventory), futures, foreign currencies, money, bank
accounts, brokerage and trading accounts, and other securities, investments and
interests, any and all other securities, investments, interests or assets or
properties received by the referenced person on account of or related to any of
the foregoing, any and all splits and reclassifications thereof, and any and all
options, warrants and other rights to acquire any such securities, investments
or interests, in each case to the extent owned or held of record by or
beneficially (or otherwise) for the referenced person, whether owned or held
individually, jointly or otherwise, and whether now existing or hereafter
acquired or created, (ii) any direct or indirect capital or other equity
contribution to any other person made or committed to by the referenced person,
(iii) any purchase by the referenced person of all or substantially all of the
assets and properties of any other person or any discrete division or other
business unit of such other person, (iv) any agreement or arrangement by or with
the referenced person for the purpose of entering into any partnership or joint
venture with or providing funds or credit to or for the benefit of any other
person, or (v) any direct or indirect loan, advance or guaranty thereof by the
referenced person to or for the benefit of any other person, excluding, however,
any trade liability (other than any indebtedness) owed to the referenced person
by any other person that arose from the purchase or sale by the referenced
person of goods or services in the ordinary course of its business. The amount
of any investment shall be the original cost of such investment, plus the cost
of all additions thereto, and minus the amount of any return of capital or
principal to the extent such return is in cash with respect to such investment,
without, however, any adjustments for increases or decreases in value or
write-ups, write-downs or write-offs with respect to such investment.
"Issuance Date" shall mean either (i) the date duly requested by the
Borrowers under Section 2.07(b) for the issuance, renewal or extension of a
particular Letter of Credit, or such later date as may be proposed by the
Administrator, or (ii) the actual date of issuance, renewal or extension of the
Letter of Credit if issued, as applicable.
"Laboratories" shall have the meaning assigned to it in the
Introduction.
"Letter of Credit" and "Letters of Credit" shall mean respectively any
one or more of the letters of credit issued for the account of any one or more
of the Borrowers pursuant to Section 2.07 hereof, whether issued by or through
the actions of one or more of the Banks, as the same may be transferred,
renewed, modified, amended or restated from time to time in the manner provided
therein.
"Letter of Credit Advance" shall have the meaning assigned to it in
Section 2.07(d) hereof.
"Letter of Credit Fee" shall have the meaning assigned to it in Section
2.07(e) hereof.
"Letter of Credit Participation" shall have the meaning assigned to it
in Section 9.03() hereof.
"Letters of Credit Amount" as of a particular date shall mean the sum
of (i) the aggregate issued but unadvanced face amount of all Letters of Credit
then outstanding under this Agreement and (ii) the principal balance of the
Letter of Credit Advances then outstanding and not converted to Revolving Credit
Loans.
"liabilities" of a person shall mean all items (other than
shareholders' equity) included in the liabilities section of a balance sheet of
that person prepared in accordance with GAAP consistently applied as of the date
of calculation, including (without limitation): (a) all indebtedness secured by
any mortgage, lien, pledge, security interest, charge or encumbrance upon or in
property owned by that person, to the extent attributable to that person's
interest in the property, even though that person has not assumed or become
liable for the payment of the indebtedness; and (b) the aggregate amount of the
reserves established or that should have been established on the books of that
person in accordance with GAAP in respect of contingent liabilities and other
contingencies (except reserves that are properly treated as deductions from
assets). In the event the referenced person is a corporation with one or more
subsidiaries, the term "liabilities" shall mean the liabilities of all of them
consolidated in accordance with GAAP consistently applied as of the date of
calculation.
"Loan" and "Loans" shall respectively mean any and all principal
amounts outstanding from time to time (including future advances) in respect of
the Revolving Credit Loans, the Term Loan, the Letter of Credit Advances and all
other amounts advanced from time to time to or on behalf of any one or more of
the Borrowers by the Administrator, the Banks or their respective designees
pursuant to this Agreement or any other Loan Instrument.
"Loan Collateral" shall have the meaning assigned to it in Section
9.02(a) hereof.
"Loan Instrument" and "Loan Instruments" shall respectively mean any
one or more of this Agreement, the Revolving Credit Notes, the Term Notes, the
Mortgages, the Letters of Credit, the applications for Letters of Credit, and
the various other mortgages, assignments, instruments and other documents
creating or evidencing any interest of the Administrator or any other Bank in
any collateral securing or intended to secure anyone's obligations under any of
the foregoing, the Registration Rights Agreement, and all waivers, consents,
agreements, reports, statements, certificates, schedules and other documents
executed by the requisite person(s) pursuant to or in connection with any of the
foregoing and accepted or delivered by the Administrator (with the consent of
the Requisite Banks, as and if required) (whether prior to, on or from time to
time after the Effective Date), as each may be supplemented, modified, amended
or restated from time to time in the manner provided therein.
"Loan Obligations" shall have the meaning assigned to it in Section
9.02(a) hereof.
"Majority Banks" shall have the meaning assigned to it in Section
9.02(d) hereof.
"Margin Stock" shall have the meaning assigned to it in Section 3.14
(a) hereof.
"Material Adverse Effect" shall mean any material and adverse effect,
whether individually or in the aggregate, upon (a) the assets, business,
operations, properties or condition, financial or otherwise, of the Borrowers
taken as a whole, (b) the collective ability of the Borrowers to make payment as
and when due of all or any part of the Obligations, or (c) the Collateral.
"Material Contract" and "Material Contracts" shall respectively mean
any one or more of the Contracts (including Material Government Contracts), in
each case having an aggregate contract amount or payments (per Contract) of
$750,000 or more.
"Material Contract Schedule" shall mean any schedule prepared by the
Borrowers from time to time listing all Material Contracts of each Borrower,
noting with respect to each purchaser the date of the Contract and the contract
amount and with respect to each Material Contract the gross profit margin, all
amounts paid to date, the delivery date(s), the approximate percentage of work
completed and the estimated cost to complete. (All Contracts are included in the
Collateral whether or not ever listed on any Material Contract Schedule.)
"Material Document" shall mean any: (a) Plainview Bond Document; (b)
Subordinated Debt Document; (c) any Equipment Finance Document; or (d) any other
material instrument, indenture, agreement, document, arrangement or other
obligation (i) to which any Borrower is or may be a party, (ii) by which any
Borrower or any of the Collateral is or may be bound or subject, or (iii) by
which any of the other assets and properties of any Borrower (if any) is or may
be bound or subject, in each case whether now or hereafter existing, and
irrespective of whether reduced to writing, and as each has been and hereafter
may be supplemented, modified, amended or restated from time to time.
"Material Government Contract" and "Material Government Contracts"
shall respectively mean any one or more of the Contracts made directly with any
governmental authority having an aggregate contract amount or payments (per
Contract) of $250, 000 or more.
"Maturity Date" shall mean the earliest of (a) March 31, 1999, with
respect to the Revolving Credit Loans, and September 30, 2000, with respect to
the Term Loans and all other Obligations, (b) with respect to the Revolving
Credit Loans, the date on which the Commitment shall have been reduced
permanently to zero, (c) the date payment is demanded or otherwise due with
respect to any Letter of Credit Advance or reimbursable amount or expense or
other advance as provided in Section 2.05(g) hereof, and (d) with respect to all
Obligations the date on which the maturity of the Obligations shall have been
accelerated pursuant to Section 8.02 hereof.
"MHTC" shall mean Manufacturers Hanover Trust Company, a former New
York state banking corporation that merged into Chemical.
"MIC" shall have the meaning assigned to it in the Introduction.
"MICSARL" shall have the meaning assigned to it in the Introduction.
"mortgage" shall mean any mortgage, deed or trust or other security
deed or security interest in real estate.
"Mortgage" and "Mortgages" shall respectively mean any one or more of
the Plainview Mortgage and any other mortgages from Aeroflex or any other
Borrower to the Administrator as mortgagee (for the benefit of all of the
Banks), as executed and delivered from time to time, and as the same may be
supplemented, modified, amended or restated from time to time in the manner
provided therein.
"NatWest" shall have the meaning assigned to it in the Introduction.
"Note" and "Notes" shall respectively mean any one or more of the
Revolving Credit Notes and the Term Notes.
"Obligations" as of any date shall mean the Borrowers' obligations to
repay the balance of the Loans then outstanding, including accrued and unpaid
interest thereon (including, without limitation, any and all interest and other
amounts accrued during the pendency of any bankruptcy, insolvency, receivership
or other similar proceedings, irrespective of whether such interest and other
amounts are allowed or allowable as claims in such proceedings), and to pay or
otherwise satisfy all of the other amounts to be paid and obligations to be
performed or otherwise satisfied by the Borrowers (whether jointly or severally)
under this Agreement and the other Loan Instruments.
"Old Corp shall mean Old Corp., a New York corporation formerly known
as Filtron Co., Inc., and currently having an address at 35 South Service Road,
Plainview, New York 11803.
"Original Note" and "Original Notes" shall respectively mean any one or
more of the Revolving Credit Notes dated April 24, 1989, issued by Aeroflex
severally (i) to BBNY in the original principal amount of $20,000,000, (ii) to
MHTC in the original principal amount of $10,000,000, and (iii) to NatWest in
the original principal amount of $20,000,000, which amended and restated notes
were issued on November 27, 1990, in connection with the execution of the other
documents dated November 27, 1990, and referenced in the definition of Existing
Loan Agreement.
"Other Debt" shall mean (a) purchase money indebtedness incurred in the
purchase of equipment in the ordinary course of business so long as each is
secured only by the equipment purchased (excluding any Loans used for such
purposes), (b) indebtedness secured by equipment and similar tangible assets and
properties (other than Collateral) refinanced in the ordinary course of business
so long as the net book value of the assets and properties so pledged does not
exceed 200% of the amount of such indebtedness, and (c) obligations arising
under leases, whether or not constituting indebtedness under GAAP, excluding,
however, leases (i) of real property or (ii) having aggregate rental payments
for the initial term (discounted to present value) of less than $100,000 for any
lease (with multiple equipment schedules constituting a single lease) or series
of related leases.
"Permitted Investments" shall mean: (a) certificates of deposit,
commercial paper or other market rate instruments with final maturities of one
year or less issued by and normal business banking accounts with (i) any
commercial bank that (A) is a Bank hereunder, or (B) is organized under the laws
of the United States or any state thereof and has total capital and surplus in
excess of $1,000,000,000, or (ii) the holding company of any such bank or any
subsidiary of such holding company; (b) commercial paper or other debt
securities with final maturities of one year or less from the date of
acquisition and a rating from Standard & Poor's Corporation or Moody's Investors
Services of not less than "A-1" or "P-1", respectively; (c) securities or other
obligations with final maturities of one year or less from the date of
acquisition issued or unconditionally guarantied by the government of the United
States of America or any agency or instrumentality thereof (but only to the
extent backed by the full faith and credit of the United States of America); (d)
money market preferred stock with a Standard & Poor's Corporation rating of "A"
or greater; and (e) shares of money market mutual or similar funds having net
assets in excess of $1,000,000,000.
"Permitted Puerto Rican Indebtedness" shall mean the existing
indebtedness listed in Schedule 1.01PPRI hereto.
"Permitted Puerto Rican Investments" shall mean: (a) certificates of
deposit, commercial paper or other market rate instruments with final maturities
of six years or less issued by any person that (i) is a Bank hereunder, or (ii)
is a commercial bank that (A) is organized under the laws of the United States,
any state thereof, or the Commonwealth of Puerto Rico, (B) has total capital and
surplus in excess of $1,000,000,000, and (C) has been approved by the Majority
Banks respecting such investments (which approval shall not be withheld
unreasonably); or (b) securities or other obligations issued or unconditionally
guarantied by the government of the United States of America or any agency or
instrumentality thereof (but only to the extent backed by the full faith and
credit of the United States of America).
"person" shall include (without limitation) any manner of association,
business trust, company, corporation, estate, governmental or other authority,
joint venture, natural person, partnership, trust or other entity.
"Placement Memorandum" shall mean the Confidential Private Placement
Memorandum from Aeroflex dated June 6, 1994.
"Plainview Bond Authority" shall mean the Nassau County Industrial
Development Agency, a governmental agency having its principal place of business
at 1550 Franklin Avenue, Mineola, New York 11501, or any successor.
"Plainview Bond Document" and "Plainview Bond Documents" shall
respectively mean any one or more of: (i) the Bond Purchase Agreement dated as
of March 1, 1983, by and among the Plainview Bond Authority, Aeroflex (under its
previous name, Aeroflex Laboratories Incorporated) and The Bank of New York (as
assignee of Barclays Bank of New York, N.A.); (ii) the Installment Sale
Agreement dated as of March 1, 1983, between the Plainview Bond Authority and
Aeroflex, as assigned to The Bank of New York (as assignee of Barclays Bank of
New York, N.A.) pursuant to an Assignment of Sale Agreement dated as of March 1,
1983; (iii) a Guaranty Agreement dated as of March 1, 1983, from Aeroflex (under
its previous name, Aeroflex Laboratories Incorporated) to The Bank of New York;
and (iv) the Mortgage and Security Agreement dated as of March 1, 1983, from the
Plainview Bond Authority, as mortgagor, to The Bank of New York (as assignee of
Barclays Bank of New York, N.A.), as mortgagee; as each may be supplemented,
modified, amended or restated from time to time in the manner provided therein.
"Plainview Mortgage" shall mean the Mortgage dated as of March 15,
1996, from Aeroflex and the Plainview Bond Authority, as mortgagors, to the
Administrator, as mortgagee (for the benefit of all of the Banks), respecting
Aeroflex's Plainview facility, as the same may be supplemented, modified,
amended or restated from time to time in the manner provided therein.
"Plan" and "Plans" shall have the meanings respectively assigned to
them in Section 3.09(c) hereof.
"Pledged Security" and "Pledged Securities" shall respectively mean any
and all securities issued by any Borrower (other than Aeroflex), Comar, HARX,
Old Corp, T-Cas, or any other subsidiary of any Borrower, and any and all
dividends and distributions with respect thereto (whether cash, stock or
otherwise) and splits and reclassifications thereof, and any and all options,
warrants and other rights to acquire any securities (whether from the issuer or
otherwise); provided, however, that the shares of Comar, Inc., shall be excluded
until such time (if ever) as the environmental issues pertaining to its real
estate shall have been resolved to the satisfaction of the Majority Banks.
"Prior Loan Agreement" shall mean the Amended and Restated Loan and
Security Agreement among the Borrowers (other than Comstron), Chemical (as
successor to MHTC), NatWest (individually and as assignee of BBNY) and the
Administrator dated as of October 10, 1991, as amended by a First Amendment
dated as of October 5, 1992, and modified by various waiver and consent letters.
That Amended and Restated Loan and Security Agreement amended, restated and
completely replaced: (a) the Revolving Credit and Term Loan Agreement among
Aeroflex, BBNY, MHTC and NatWest dated as of April 24, 1989, as amended by a
First Amendment dated as of November 2, 1989, a Second Amendment dated as of
September 27, 1990, and a Third Amendment dated as of November 27, 1990; (b) the
separate: (i) Guarantee Agreements made by each Borrower (other than Aeroflex)
to BBNY; (ii) Corporate Guarantee of All Liability and Security Agreements made
by each Borrower (other than Aeroflex) to MHTC; and (iii) Guarantees made by
each Borrower (other than Aeroflex) to NatWest; two sets of each of which were
prepared on the printed forms of the recipient Banks, with one set dated April
24, 1989, and the second set dated November 2, 1989 (delivered in connection
with the First Amendment to such previous Loan Agreement); and (c) the Pledge
Agreement dated as of November 27, 1990, among Aeroflex, BBNY, MHTC and NatWest.
"Prior Loan Instruments" shall mean the Prior Loan Agreement, the Prior
Notes, the various mortgages, assignments, instruments and other documents
creating or evidencing the interest of the Administrator or any Bank in any
collateral securing or intended to secure anyone's obligations under any of the
foregoing, and all waivers, consents, agreements, reports, statements,
certificates, schedules and other documents executed by the requisite person(s)
pursuant to or in connection with any of the foregoing and accepted or delivered
by the Bank thereunder prior to the Effective Date of this Agreement.
"Prior Note" and "Prior Notes" shall respectively mean any one or more
of the Prior Revolving Credit Notes and the Prior Term Notes.
"Prior Revolving Credit Note" and "Prior Revolving Credit Notes" shall
respectively mean any one or more of Amended and Restated Revolving Promissory
Notes dated October 10, 1991, issued by the Borrowers (other than Comstron)
severally (i) to NatWest (as assignee of BBNY) in the original principal amount
of $9,400,000, (ii) to Chemical (as successor to MHTC) in the original principal
amount of $4,700,000, and (iii) to NatWest in the original principal amount of
$9,400,000, which notes (together with the Prior Term Notes) were issued to
amend, extend, restate and completely replace the Original Notes.
"Prior Term Note" and "Prior Term Notes" shall respectively mean any
one or more of Amended and Restated Term Promissory Notes dated October 10,
1991, issued by the Borrowers (other than Comstron) severally (i) to NatWest (as
assignee of BBNY) in the original principal amount of $6,000,000, (ii) to
Chemical (as successor to MHTC) in the original principal amount of $3,000,000,
and (iii) to NatWest in the original principal amount of $6,000,000, which notes
(together with the Prior Revolving Credit Notes) were issued to amend, extend,
restate and completely replace the Original Notes.
"Pro Rata Share" shall have the meaning assigned to it in Section
9.02(c) hereof.
"Purchase Agreement" shall mean the Common Stock Purchase Agreement
among MIC, the individual selling stockholders listed therein and Aeroflex dated
as of February 13, 1996, as the same may be supplemented, modified, amended or
restated from time to time in the manner provided therein.
"Purchase Documents" shall mean the Purchase Agreement, and any and all
waivers, consents, agreements, instruments and other documents executed by the
requisite person(s) pursuant to or in connection with any of the foregoing, in
each case whether now or hereafter existing, and irrespective of whether reduced
to writing, and as each may be supplemented, modified, amended or restated from
time to time.
"real estate" shall include (without limitation) (a) all land,
leasehold interests, easements, licenses, rights-of-way or use, appurtenances
and other rights and interests in real property, (b) all buildings and other
structures and improvements, (c) all fixtures, furnishings, equipment and other
personal property (including, without limitation, leasehold interests in such
personal property and mobile homes of the type usually installed on a developed
site) located on or used in connection therewith, whether or not affixed
thereto, (d) all leases and subleases thereof, and (e) all rents, profits and
other income, payments and proceeds with respect to any and all of the
foregoing.
"Registration Rights Agreement" shall mean the Stock Registration
Rights Agreement among Aeroflex, the Banks and the Administrator dated as of
March 15, 1996, together with all schedules and exhibits thereto, as the same
may be supplemented, modified, amended or restated from time to time in the
manner provided therein.
"Representative" and "Representatives" shall respectively mean any or
all of a referenced persons affiliates, directors, officers, employees,
attorneys, agents and other representatives, and in the case of the
Administrator, any Bank, any issuer or any other financial institution, the
referenced person's participants, correspondents, confirming banks, custodians
and designees and their respective affiliates, directors, officers, employees,
attorneys, agents and other representatives.
"Requisite Banks" shall mean such number of Banks (if any) as may have
the aggregate applicable shares required for a particular action by Sections
9.06, 9.08 and 9.09 hereof or any other term or provision of this Agreement or
any other Loan Instrument.
"Reserve Percentage" for any Interest Period for the corresponding
portion of the Loans shall mean the percentage established from time to time by
the Board of Governors of the Federal Reserve System (or any successor) and then
in effect for determining the maximum reserve requirement (including, but not
limited to, any marginal reserve requirement) for a member bank of the Federal
Reserve System in New York City with deposits exceeding one billion dollars (or
any higher threshold) with respect to liabilities consisting of or including
(among other liabilities) eurocurrency liabilities or liabilities respecting
United States Dollar non-personal time deposits in the United States (whichever
may be relevant to the particular Fixed Rate) with maturities equal or
comparable to such Interest Period. The Borrowers acknowledge and agree any
portion of the Loans bearing interest at the Applicable Euro Rate shall be
deemed to constitute a "eurocurrency liability" as defined in Regulation D of
said Board of Governors and to be subject to the reserve requirements of such
Regulation, and that the Reserve Percentage shall be calculated without any
regard to or benefit of any credit, proration, deduction, offset or other
reduction that otherwise may be available from time to time under such
Regulation.
"Revolving Credit Loans" shall have the meaning assigned to it in
Section 2.01(a) hereof.
"Revolving Credit Note" and "Revolving Credit Notes" shall respectively
mean any one or more of the Third Amended and Restated Revolving Promissory
Notes dated as of March 15, 1996, issued by the Borrowers severally to each of
the Banks to evidence its Pro Rata Share of the Revolving Credit Loans (as
referenced in Section 2.03(a) hereof), as each may be modified, amended or
restated from time to time in the manner provided therein.
"Revolving Credit Period" shall mean that period commencing on the
Effective Date and terminating on the earlier of (a) March 31, 1999, or (b) the
Maturity Date.
"Rule 144" shall mean Rule 144 as promulgated by the SEC under the
Securities Act, as such rule may be supplemented, modified, amended or restated
from time to time, or any corresponding or succeeding provisions of applicable
law.
"SEC" shall mean the Securities Exchange Commission of the United
States.
"securities" of any person shall mean equity securities and debt
securities, general or limited partnership interests, investment contracts and
any other instrument or interest commonly understood to be a security issued by
that person.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
as the same may be supplemented, modified, amended or restated from time to
time, and the rules and regulations promulgated thereunder, or any corresponding
or succeeding provisions of applicable law.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and as the same may be supplemented, modified, amended or
restated from time to time, and the rules and regulations promulgated
thereunder, or any corresponding or succeeding provisions of applicable law.
"Subordinated Debt Document" and "Subordinated Debt Documents" shall
respectively mean (a) any one or more of the Debentures, the Indenture and the
Placement Memorandum, (b) any other debentures and indentures respecting
subordinated indebtedness approved from time to time by the Majority Banks (as
provided in Section 6.13 hereof), and (c) any and all waivers, consents,
agreements, instruments and other documents executed by the requisite person(s)
pursuant to or in connection with any of the foregoing, in each case whether now
or hereafter existing, and irrespective of whether reduced to writing, and as
each may be supplemented, modified, amended or restated from time to time.
"Subrogation Right" and "Subrogation Rights" shall have the meanings
respectively assigned to them in Section 2.12 hereof.
"subsidiary" shall mean any corporation or other entity in respect of
which a person at the time shall own directly or indirectly (through one or more
corporations, nominees or other persons or otherwise) at least one-half of the
aggregate voting interests of such corporation or other entity, whether owned or
held (i) of record or beneficially or (ii) individually, jointly or otherwise.
"Systems" shall have the meaning assigned to it in the Introduction.
"Taxes" shall have the meaning assigned to it in Section 2.07(f)
hereof.
"T-Cas" shall mean T-Cas Corp., a Virginia corporation currently having
an address at 35 South Service Road, Plainview, New York 11803.
"Term Loan" and "Term Loans" shall have the meanings respectively
assigned to them in Section 2.02 hereof.
"Term Note" and "Term Notes" shall respectively mean any one or more of
the Third Amended and Restated Term Promissory Notes dated as of March 15, 1996,
issued by the Borrowers severally to each of the Banks to evidence its Pro Rata
Share of the Term Loans (as referenced in Section 2.03(b) hereof), as each may
be modified, amended or restated from time to time in the manner provided
therein.
"Trustee" shall mean the American Stock Transfer & Trust Company, a New
York corporation currently having an address at 40 Wall Street, New York, New
York 10005, or any successor or other trustee under the Indenture.
"Vibrations" shall have the meaning assigned to it in the Introduction.
"VTX" shall mean VTX Electronics Corp., a Delaware corporation
currently having its executive office at 61 Executive Boulevard, Farmingdale,
New York 11735.
Section 1.02. Pronouns. Each use in this Agreement of a neuter pronoun
shall be deemed to include references to the masculine and feminine variations
thereof, and vice versa, and a singular pronoun shall be deemed to include a
reference to the plural variation thereof, and vice versa, in each case as the
context may permit or require.
ARTICLE II
Amounts and Terms of the Obligations
Section 2.01. The Revolving Credit Loans.
(a) The Borrowers hereby acknowledge, certify and agree that: (i)
pursuant to the Existing Loan Agreement, the Banks have made loans on a
revolving basis to the Borrowers that are outstanding as of the date of this
Agreement in the aggregate principal amount of $0; (ii) the obligations of the
Borrowers to repay those loans (with interest) to the Banks and to perform or
otherwise satisfy their other obligations under the Existing Loan Agreement and
other Existing Loan Instruments are not subject as of the date of this Agreement
to any defense, counterclaim, setoff, right of recoupment, abatement, reduction
or other claim or determination; and (iii) those loans shall continue and
constitute Revolving Credit Loans of the Borrowers under and subject to the
terms and provisions of this Agreement, which Agreement has amended, restated
and completely replaced the Existing Loan Agreement.
(b) Upon the terms and provisions and subject to the conditions
contained in this Agreement, each Bank shall make revolving credit loans (with
all such loans by the Banks being referred to collectively as the "Revolving
Credit Loans") from time to time during the Revolving Credit Period to the
Borrowers at their request (as provided in subsection (c), below) up to an
aggregate maximum principal amount outstanding (including such Bank's Pro Rata
Share of the Letters of Credit Amount) at any one time not to exceed such Bank's
Committed Share of the Commitment; provided that the maximum obligation of such
Bank shall be further limited to the amount such Bank's Committed Share of the
Borrowing Base from time to time if the Borrowing Base is less than the
Commitment. Subject to the terms and provisions of this Agreement, during the
Revolving Credit Period the Borrowers may reborrow Advances previously repaid by
them.
(c) The Borrowers may request an advance of Revolving Credit Loans from
all of the Banks pursuant to subsection (b) of this Section (as made by the
Banks, an "Advance") by giving the Banks a signed notice of their request, or by
giving the Banks notice of their request both by telephone and telecopy of a
signed notice and promptly confirming their request by delivery to each Bank of
an original copy of the signed notice to the Banks. The notice requesting an
Advance (i) may be combined with a request under Section 2.04(c) hereof that all
or a portion of the Advance bear interest at a Fixed Rate when made, (ii) shall
be delivered to the Banks at least one Business Day prior to the requested
Advance Date or such greater number of Business Days as may be required under
Section 2.04(c) hereof if combined with such a Fixed Rate request, (iii) shall
be deemed to have been delivered on the following Business Day unless actually
received by each of the Banks prior to 11:00 A.M. (New York City time) on a
Business Day, (iv) shall be irrevocable once given, and (v) shall specify (A)
the requested Advance Date, (B) the principal amount of the requested Advance
and (C) the amount to be advanced by each Bank in accordance with its Committed
Share. Each requested Advance shall be for an integral multiple of $50,000 in an
amount that is not less than $250,000 or such larger multiple and minimum as may
be required under Section 2.04(b) hereof if the Advance is to bear interest at a
Fixed Rate. Subject to compliance with the terms and provisions of Article IV of
this Agreement, each Bank shall make its Committed Share of the requested
Advance on the proposed Advance Date by crediting the demand deposit account
maintained by the Borrowers with such Bank at its office at the address set
forth in the Introduction.
(d) The Borrowers may voluntarily elect to permanently reduce the
Commitment in full at any time, or in part from time to time in integral
multiples of $100,000 in an amount that is not less than $1,000,000, by giving
the Banks a signed notice of their election, or by giving the Banks notice of
their election both by telephone and telecopy of a signed notice and promptly
confirming their election by delivery of the original signed notice; provided,
however, that no such reduction shall be made that would result in the payment
or prepayment of any portion of any Fixed Rate Loan unless the Borrowers repay
such Fixed Rate Loan in full and concurrently pay all amounts (if any) required
under Section 2.04(d) hereof. Notice of such reduction election (i) shall be
delivered to the Banks at least three Business Days prior to the requested
reduction date, (ii) shall be deemed to have been delivered on the following
Business Day unless actually received by each of the Banks prior to 11:00 A.M.
(New York City time), and (iii) shall be irrevocable once given. Each such
reduction shall be accompanied by a prepayment of the Revolving Credit Loans in
the amount, if any, necessary to make the aggregate outstanding principal
balance of the Revolving Credit Loans, after giving effect to the prepayment,
not more than the Commitment (as so reduced).
Section 2.02. The Term Loan. Upon the terms and provisions and subject
to the conditions contained in this Agreement, on the Effective Date each Bank
shall make a term loan to the Borrowers equal to the amount of such loan
committed by such Bank as set forth in Exhibit E hereto (with all such loans by
the Banks, which aggregate $16,000,000.00, being referred to collectively as the
"Term Loan"). Subject to compliance with the terms and provisions of Article IV
of this Agreement, each Bank shall make its Committed Share of the Term Loan on
the Effective Date by crediting the demand deposit account maintained by the
Borrowers with such Bank at its office at the address set forth in the
Introduction.
Section 2.03. The Amended and Restated Notes.
(a) The obligation of the Borrowers to repay the Revolving Credit
Loans, together with interest thereon, shall be evidenced by a Third Amended and
Restated Revolving Promissory Note issued by the Borrowers to each Bank in the
form of Exhibit A hereto in the amount of such Bank's Committed Share of the
Commitment and dated as of the date hereof.
(b) The obligation of the Borrowers to repay the Term Loan, together
with interest thereon, shall be evidenced by a Third Amended and Restated Term
Promissory Note issued by the Borrower to each Bank in the form of Exhibit B
hereto in the amount of such Bank's Committed Share of the Term Loans and dated
as of the date hereof.
(c) The Revolving Credit Notes have been issued to amend, extend,
restate and completely replace the Existing Revolving Credit Notes, to evidence
all amounts outstanding under the Existing Revolving Credit Notes and to
evidence any further advances or readvances of the Revolving Credit Loans.
Although issued in substitution for and restatement and replacement of the
Existing Notes, the Notes shall not be deemed to have been issued in payment,
satisfaction, cancellation or novation of the Existing Notes. The Banks shall be
entitled to retain the Existing Notes until all of the Obligations have been
fully paid and satisfied, after which time the Existing Notes shall be returned
to the Borrower at the same time as the Notes, unless some other time or manner
of delivery shall be provided by any other written agreement between the
Borrower and the Banks. Promptly following the Effective Date, each Bank shall
legend the Existing Note issued to it as follows:
"This Note is one of the Existing Notes that has been superseded by the
Third Amended and Restated Revolving Promissory [Term] Notes of the
Borrowers dated as of March 15, 1996, which amended, restated and completely
replaced this Note and the other Existing Revolving Credit [Term] Notes and
evidences the indebtedness formerly evidenced by this Note and the other
Existing Revolving Credit [Term] Notes, but which shall not be deemed or
construed to be issued in payment, satisfaction, cancellation or novation of
this Note or any other Existing Revolving Credit [Term] Note. Reference
should be made to such new Notes for all purposes, as the terms and
provisions of this Note have no further independent force or effect."
Section 2.04. Interest; Optional Fixed Rates; Additional Interest.
(a) Except as otherwise provided in this Section, the Loans shall bear
interest (computed on the basis of the actual number of days elapsed and a year
of 360 days) on the unpaid principal balance of those Loans outstanding from
time to time, from and including the date of advance until such principal
balance of such Loans is repaid in full (including, without limitation, any and
all interest and other amounts accrued during the pendency of any bankruptcy,
insolvency, receivership or other similar proceedings, irrespective of whether
such interest and other amounts are allowed or allowable as claims in such
proceedings), at a fluctuating annual rate that for the Pro Rata Share of the
Loans of each Bank shall be equal to such Bank's Alternate Base Rate plus (i)
the Applicable Base Margin Rate for the Term Loans in the case of the Term
Loans, and (ii) the Applicable Base Margin Rate for the Revolving Loans in the
case of all other Loans, which fluctuating rate shall change from time to time
simultaneously with each corresponding change in the Alternate Base Rate or
Applicable Base Margin Rate. Interest on those Loans shall be payable by the
Borrowers in arrears: (x) prior to the Maturity Date, on the last Business Day
of each calendar month; (y) in full on the Maturity Date; and (z) on demand
after the Maturity Date.
(b) The Borrowers from time to time may request that a portion of the
Loans outstanding bear interest at the Applicable Euro Rate for an Interest
Period of one, two, three or six months, which portion must be in an integral
multiple of $250,000 in an amount that is not less than $1,250,000. Any portion
or portions of the Loans for which a Fixed Rate is in effect shall bear interest
for the applicable Interest Period (computed on the basis of the actual number
of days elapsed and a year of 360 days) at an annual rate equal to the
corresponding Fixed Rate(s). Interest on the Fixed Rate Loans shall be payable
by the Borrowers in arrears: (i) prior to the relevant Maturity Date, on the
last Business Day of each calendar month and on the last Business Day of the
applicable Interest Period, unless the Borrowers and Administrator (with the
consent of the Banks participating in such loans) shall otherwise agree in
connection with a particular Fixed Rate Loan; (ii) in full on the relevant
Maturity Date; and (iii) on demand after the relevant Maturity Date.
(c) The Borrowers may elect to have a Fixed Rate apply by giving the
Banks a signed notice of their election, or by giving the Banks notice of their
election both by telephone and telecopy of a signed notice and promptly
confirming their election by delivery of the original signed notice. The notice
electing a Fixed Rate (i) may be combined with a request under Section 2.01(b)
hereof for an Advance, (ii) shall be delivered to the Banks two Business Days
prior to commencement of interest at the Applicable Euro Rate, (iii) shall be
deemed to have been delivered on the following Business Day unless actually
received by each of the Banks prior to 11:00 A.M. (New York City time) on a
Business Day, (iv) shall be irrevocable once given, and (v) shall specify the
requested Fixed Rate, date of commencement, duration of Interest Period and
portion of the Loans to which the Fixed Rate is to apply. The Borrowers'
election of a Fixed Rate is conditioned upon each of the following:
(A) no more than five (5) Interest Periods shall be in effect at any one
time unless the Administrator (with the consent of the Banks
participating in such loans) in its discretion shall consent otherwise;
(B) the portion(s) of the Loans subject to a Fixed Rate(s) shall not exceed
an amount equal to (X) the principal balance of the Loans outstanding
on the date such Fixed Rate(s) would commence (including any concurrent
Advance) less (Y) those portions thereof that are scheduled to be paid
as set forth in Section 2.05 hereof within the requested Interest
Period(s);
(C) no Event of Default or Default shall have occurred and be then
continuing; and
(D) no adverse determination shall have been made by any Bank pursuant to
subsection (e) of this Section.
From and after the end of any Interest Period, interest shall accrue at the rate
based upon the Alternate Base Rate (as provided in subsection (a) of this
Section) until that portion of the principal balance is repaid or a new Fixed
Rate with respect thereto is adopted hereunder. If any Interest Period ends on a
day other than a Business Day, such Interest Period shall be extended to the
next succeeding day that is a Business Day unless (in the case of a Loan bearing
interest at the Applicable Euro Rate) such succeeding day would fall in the next
calendar month, in which event such Interest Period shall end on the immediately
preceding Business Day.
(d) In addition to the payment of interest as stated above, if there
shall be any increase in the direct or indirect costs to any one or more of the
Banks of lending, funding or maintaining any Fixed Rate Loan, or any reduction
in any amount received or to be received by any one or more of the Banks
hereunder, due to:
(i) the introduction of or any change in any applicable law or the
interpretation or administration thereof, including (without limitation) the
imposition, modification or application of, or increase in, (A) any reserve,
capital adequacy, special deposit, assessment or similar requirements, (B) any
requirement to withhold or deduct from any amount payable to any one or more of
the Banks any taxes, levies, imposts, duties, fees, deductions, withholdings or
charges of a similar nature (other than federal, state and local income and
franchise taxes imposed upon any Bank), or any interest thereon or any penalties
with respect thereto, imposed, levied, collected, assessed, withheld or deducted
by any governmental authority, including subdivisions and tax- ing authorities
thereof, or (C) any other restriction or condition affecting a Fixed Rate or
this Agreement;
(ii) the compliance by any one or more of the Banks with any regulation,
guideline or request from any central bank or other authority (whether or not
having the force of law);
(iii) the failure by the Borrowers to take or accept any requested Advance
for which they have also requested a Fixed Rate, or the failure of the Borrowers
to satisfy the conditions precedent to the making of any such Advance or the
establishment of any requested Fixed Rate;
(iv) the repayment, prepayment or other reduction, in whole or in part, of
any Fixed Rate Loan prior to the natural expiration of the applicable Interest
Period, whether as a result of miscalculation, change in circumstance, consent
of the Administrator or the Requisite Banks (as and if required), acceleration
of the Obligations or otherwise; or
(v) the failure by the Borrowers to pay the accrued and unpaid interest on
or repay the outstanding principal balance of any Fixed Rate Loan, or any
portion thereof, when required by the terms and provisions of this Agreement;
then the Borrowers from time to time, upon demand by the Administrator, shall
pay to the Administrator (for the benefit of each affected Bank) additional
amounts sufficient to indemnify each such Bank against and reimburse each such
Bank for such increased costs and reduced receipts (but only to the extent such
increased cost or reduced receipt has not already been included in the
calculation of any interest rate or fee or otherwise reimbursed under any other
subsection of this Section), including (without limitation) amounts sufficient
to compensate each affected Bank for any breakage or other costs and any
decrease in margin or other return incurred in connection with the repayment,
prepayment or other reduction of any Fixed Rate Loan and the liquidation or
redeployment of the affected deposits or other funding arrangements. A
certificate as to the amount of such increased costs and reduced receipts
submitted to the Borrowers by the Administrator (which may be the certificate of
each relevant Bank) shall be conclusive as to the existence and amount thereof
absent manifest error. If the Administrator has not received payment for such
amounts within five (5) Business Days of the date of such certificate, the
Administrator (with the consent of the Majority Banks) may direct the
application of all or a portion of the next succeeding payment or prepayment
made by the Borrowers, whether intended by the Borrowers to be interest,
principal or otherwise, first to the reduction of the amounts of such increased
costs and reduced receipts.
(e) If, on or before the date of commencement of any Interest Period,
any one or more of the Banks shall have determined (which determination shall be
final, conclusive and binding on the Borrowers) that (i) it is impermissible for
such Bank to make any Fixed Rate Loan due to any of the circumstances described
in clauses (i) and (ii) of subsection (d) of this Section, (ii) deposits in
United States Dollars in amounts equal to the portion of the Loans to be subject
to a Fixed Rate for that Interest Period are not being offered to such Banks in
the applicable market, (iii) by reason of changes affecting the applicable
market, the Fixed Rate to be in effect for that period will not adequately and
fairly reflect the cost to such Banks of maintaining for that period the portion
of the Loans for which the Fixed Rate was requested, or (iv) the Fixed Rate or
requested Interest Period is otherwise unavailable, then the portion of the
Loans so affected shall continue to bear interest based upon the Base Rate as
provided in subsection (a) of this Section. Furthermore, if any one or more of
the Banks shall have determined (which determination shall be final, conclusive
and binding upon the Borrowers) that it is impermissible for such Bank(s) to
continue any Fixed Rate Loan during the relevant Interest Period due to any of
the circumstances described in clauses (i) and (ii) of subsection (d) of this
Section, then (A) that Interest Period shall be deemed to have been terminated
as of the date specified in that determination, (B) the Borrowers shall
indemnify each such Bank against and reimburse each such Bank for any increased
costs or reduced receipts relating to that termination as provided in
subsections (d) and (e) of this Section as if there had been a voluntary
prepayment of that Fixed Rate Loan by the Borrowers, and (C) after the date
specified in that determination the portion of the Loans so affected shall bear
interest based upon the Base Rate as provided in subsection (a) of this Section.
The Administrator shall notify the Borrowers in the event any Bank makes such a
determination; provided, however, that the failure to give such notice shall not
affect the validity of that determination or the continued accrual of interest
based upon the Base Rate on the applicable portion of the Loans.
(f) In addition to the payment of interest or fees under this
Agreement, if one or more of the Banks or any of their respective affiliates
determines or has determined that (i) compliance with any existing or future
applicable law, including (without limitation) any regulation, guideline or
request from any central bank or other authority (whether or not having the
force of law), or any change therein or in the interpretation or administration
thereof, affects or would affect the amount of capital required or expected to
be maintained by such Bank(s) or affiliate(s) (taking into account its policies
with respect to capital adequacy and desired rate of return on capital), and
(ii) the amount of such capital is increased by or based upon any commitment or
funding to the Borrowers or any other obligation of such Bank or affiliate(s)
under or related to this Agreement or any other Loan Instrument (using such
averaging, attribution and allocation methods as each affected Bank may
reasonably deem appropriate), then the Borrowers from time to time, upon demand
by the affected Bank(s), shall pay to the affected Bank(s) additional amounts
sufficient to compensate the affected Bank(s) for those circumstances (without,
however, duplicating any amount paid by the Borrowers pursuant to subsection (d)
of this Section). A certificate as to the amount of such compensation submitted
to the Borrowers by the affected Bank(s) or affiliate shall be conclusive as to
the existence and amount thereof absent manifest error. If the Administrator has
not received payment for such amounts within five (5) Business Days of the date
of such certificate, the Administrator (with the consent of the Majority Banks)
may direct the application of all or a portion of the next succeeding payment or
prepayment made by the Borrowers, whether intended by the Borrowers to be
interest, principal or otherwise, first to the reduction of such billed amount.
(g) In the event any payment of principal, interest or other amounts is
not paid to any Bank as and when due under this Agreement or any other Loan
Instrument prior to the Maturity Date, the overdue amount(s) shall, to the
extent permitted by applicable law, bear interest until repaid in full at a
fluctuating annual rate equal to the rate charged by such Bank under subsection
(a) of this Section plus three percent (3.00%) per annum, which amounts shall be
payable by the Borrowers instead of the rate established by subsection (a) of
this Section and shall be payable upon demand, subject, however, to the maximum
rate permitted by applicable law in Section 2.10 hereof.
(h) After notice from the Banks during the continuance of any Event of
Default prior to maturity that has not been remedied or waived (i) within five
(5) Business Days of occurrence respecting any Event of Default described in
Section 8.01(c) hereof, (ii) within thirty (30) days of occurrence respecting
any Event of Default resulting from any act or omission within the control of
any Borrower or any of its officers, directors, employees, agents and other
representatives (it being understood and agreed that the covenants contained in
Sections 6.01(a), 6.01(b), 6.01(c), 6.01(d) and 6.01(e) are not within such
control), or (iii) within ninety (90) days of occurrence respecting any other
Event of Default (it being further understood and agreed that any violation of
Sections 6.01(a), 6.01(b), 6.01(c), 6.01(d) or 6.01(e) will cease to be
continuing for the purposes of this subsection if and when next satisfied, if
ever), in any such case irrespective of whether a Default Declaration has been
issued or any other action has been taken by the Administrator or the Banks, and
at all times on and after the Maturity Date, the Loans shall bear additional
interest (computed on the basis of the actual number of days elapsed and a year
of 360 days) on the unpaid principal balance of the Loans outstanding from time
to time during such period(s) (from and including the date such notice is given
by the Banks or the Maturity Date, as applicable) at a rate equal to three
percent (3.00%) per annum, which amounts shall be payable by the Borrowers in
addition to, and at the same times as, the regular interest payments on the
Loans required pursuant to the preceding subsections of this Section, subject,
however, to the maximum rate permitted by applicable law as provided in Section
2.10 hereof.
Section 2.05. Voluntary and Mandatory Payments.
(a) The Borrowers may voluntarily elect to prepay the Loans in full at
any time, or in part from time to time in integral multiples of $50,000 in an
amount that is not less than $250,000, in either case without premium or penalty
or reduction of the Commitment, by giving the Banks a signed notice of their
election, or by giving the Banks notice of their election both by telephone and
telecopy of a signed notice and promptly confirming their election by delivery
of the original signed notice; provided further that the Borrowers shall not in
any event prepay any portion of any Fixed Rate Loan unless the Borrowers prepay
such Fixed Rate Loan in full and concurrently pay all amounts (if any) required
under Section 2.04(d) hereof; provided, however, that the Borrowers may not
voluntarily prepay any portion of the Term Loans secured by the Plainview
Mortgage prior to the Maturity Date so long as any principal balance remain
outstanding under the Revolving Credit Loans. Notice of such prepayment election
(i) shall be delivered to the Banks at least three Business Days prior to the
requested prepayment date, (ii) shall be deemed to have been delivered on the
following Business Day unless actually received by each of the Banks prior to
11:00 A.M. (New York City time) on a Business Day, and (iii) shall be
irrevocable once given. The Borrowers shall repay the Loans on the date and in
the amount specified in such notice of prepayment election. Except as otherwise
provided in this Section, and except as the Borrowers may otherwise request with
respect to any voluntary prepayment, each voluntary or mandatory prepayment
shall be applied first to the outstanding balance of the Revolving Credit Loans,
with any excess then applied to the Term Loans. So long as the principal balance
of the Term Loans exceeds the amount secured by the Plainview Mortgage, any
payment or prepayment of the Term Loans (A) shall be applied to and deemed and
construed to have reduced such excess portion of the Term Loans and (B) shall
not be applied against or deemed or construed to have reduced the portion of the
Term Loans secured by the Plainview Mortgage.
(b) The Borrowers shall repay the Revolving Credit Loans immediately at
any time and from time to time in an amount by which the outstanding principal
balance of the Revolving Credit Loans plus the Letters of Credit Amount together
exceeds the lesser of (i) the Commitment or (ii) the Borrowing Base; provided
that the Borrowers instead may cure any such Borrowing Base deficiency through
the delivery of additional Collateral as provided in Section 5.10 hereof. In the
event the Letters of Credit Amount alone exceeds the lesser of the Commitment or
the Borrowing Base, then the Borrowers immediately shall repay the Revolving
Credit Loans in full and deposit cash collateral with the Administrator or its
designee in an amount equal to the remaining deficiency (which collateral shall
be deposited and administered in the manner contemplated in Section 8.02(d)
hereof); provided that the Borrowers instead may cure any such Borrowing Base
deficiency through the delivery of additional Collateral as provided in Section
5.10 hereof.
(c) The Borrowers shall repay the principal balances then outstanding
under the Revolving Credit Loans in full on March 31, 1999.
(d) The Borrowers shall repay the Term Loans in quarterly installments
of $900,000.00 each on the last Business Day of each calendar quarter,
commencing with the quarter ending June 30, 1996. The Borrowers shall repay the
principal balance then outstanding under the Term Loans in full on September 30,
2000.
(e) The Borrowers shall make an additional mandatory prepayment of the
Loans (to be applied as described below) promptly, but in any event within five
Business Days, following each receipt and in an amount equal to the net proceeds
received by any of the Borrowers in connection with (1) any voluntary sale,
lease, transfer, assignment, liquidation or other disposition of any investment
or property, plant or equipment by any Borrower (whether or not Collateral) or
(2) any involuntary transfer, assignment, discontinuation, liquidation,
condemnation, destruction or other disposition of any Collateral or other
business, asset or property of any Borrower, in each case other than any
Excluded Disposition (as defined below); provided, however, that the first
$100,000 in the aggregate of net proceeds received in connection with any such
disposition (other than any Excluded Disposition) within any fiscal year shall
be excluded for the purpose of determining such Mandatory Prepayments. To the
extent applicable and not already reflected, the Borrowers may deduct reasonable
and usual costs of involuntary disposition (other than payments to affiliates),
and taxes paid or currently payable in respect to the transaction, as well as
the principal amount of any permitted purchase money indebtedness repaid from
the proceeds of any disposition of the underlying collateral. The Borrowers
shall give the Banks prompt notice of any occurrence that would result or has
resulted in any of the events described above involving net proceeds in excess
of $100,000, which notice shall specify the material terms thereof, and upon the
request of any Bank the Borrower shall give the Banks copies of all related
documentation as it becomes available to the Borrowers. "Excluded Disposition"
shall mean: (i) any sale of equipment in any sale-leaseback transaction
permitted under Section 7.03(c) hereof; (ii) any sale or other voluntary or
involuntary disposition of any Collateral or other asset or property specified
in Section 7.03(b) hereof if the conditions of that subsection are satisfied and
the repair, rebuilding, replacement or acquisition contemplated by that
subsection are completed within 90 days or such additional period of time in the
case of involuntary dispositions as may be reasonably necessary for completion;
or (iii) any sale or other disposition of any Permitted Puerto Rican Investment
to the extent applied to the repayment of Permitted Puerto Rican Indebtedness.
Each such payment shall be applied to reduce the outstanding balance of the Term
Loans until repaid in full, and thereafter each such payment (including the
remainder after any partial application to the Term Loans) shall be applied to
reduce the Revolving Credit Loans. The Commitment shall be permanently reduced
at the time and in the amount of each such mandatory prepayment (or portion
thereof) required to be applied to the Revolving Credit Loans. This subsection
is not intended, and shall not be deemed or construed, to authorize or permit
any sale or other disposition of any Collateral, irrespective of whether any
payment is made as required hereunder.
(f) The Borrowers shall make an additional mandatory prepayment of the
Loans (to be applied as described below): (i) promptly, but in any event within
five Business Days, following each incurrence of Other Debt by the Borrowers, in
an amount equal to one-half of (1) in the case of indebtedness (including a
lease treated as indebtedness under GAAP), the principal amount (or imputed
principal amount) of such Other Debt or (2) in the case of any lease (other than
a lease treated as indebtedness under GAAP), the aggregate lease payments during
the initial term of such Other Debt, discounted to present value; (ii) on the
last Business Day of April of 1997, in an amount equal to the Excess Cash Flow
Initial Payment in excess of $4,000,000.00; (iii) on the first Business Day of
September of 1997, in an amount equal to the Excess Cash Flow Initial Payment
minus the sum of (1) the Earn-out Amount paid or to be paid and (2) the portion
of the Excess Cash Flow Initial Payment previously paid; (iv) on the last
Business Day of April of each year, commencing in 1998, in an amount equal to
one-half of the Excess Cash Flow for the twelve month period ended on the
immediately preceding March 31; and (v) promptly, but in any event within five
Business Days, following each incurrence of additional indebtedness under any
Subordinated Debt Documents by the Borrowers, in an amount equal to (A) the
principal amount of such subordinated indebtedness less (B) the issuance and
other costs reasonably incurred by the Borrowers in connection therewith. Each
such payment shall be applied to reduce the outstanding balance of the Term
Loans until repaid in full, and thereafter each such payment (including the
remainder after any partial application to the Term Loans) shall be applied to
reduce the Revolving Credit Loans. The Commitment shall be permanently reduced
at the time and in the amount of each such mandatory prepayment (or portion
thereof) required to be applied to the Revolving Credit Loans.
(g) Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Instrument, the Borrowers acknowledge and agree that
any Letter of Credit Advance, if not paid on the date specified in Section
2.07(d) (as result of which non-payment it is deemed converted into a Revolving
Credit Loan), or any reimbursable amount or expense or other advance not
described elsewhere in this Section, together with interest thereon as provided
in Section 2.04, shall be due (or in the case of an unreimbursed Letter of
Credit Advance, overdue) and payable on demand, and that the representations,
warranties, covenants and other terms and provisions of this Agreement and the
other Loan Instruments set forth herein and therein are not intended and shall
not be deemed or construed to limit the demand nature of the Borrowers'
obligations in respect of the Letter of Credit Advances and such other advances
hereunder and thereunder, without, however, in any way limiting the
applicability of the terms and provisions of this Agreement and the other Loan
Instruments in respect of any collateral or any of the other Loans or
Obligations of the Borrowers.
(h) Nothing contained in this Section shall be deemed or construed to
be a waiver of any term or provision of this Agreement respecting the
reimbursement of any increased costs or reduced receipts of any Bank in the
event of any prepayment or repayment (whether mandatory or otherwise) of any
portion of any of the Fixed Rate Loans.
(i) The Obligations then outstanding shall be due and payable in full
on the Maturity Date, and to the extent arising thereafter shall be due and
payable on demand, thereafter notwithstanding anything in this Article to the
contrary.
Section 2.06. Commitment Fee; Restructure Fee; Administration Fee;
Etc.
(a) The Borrowers shall pay to the Banks sharing in the Revolving
Credit Loans on the last Business Day of each March, June, September and
December of each year during the Revolving Credit Period, and on the last day of
the Revolving Credit Period, in arrears, commencing on the first such date
following the Effective Date, a fee (computed on the basis of the actual number
of days elapsed and a year of 360 days) respecting the availability of the
Commitment (the "Commitment Fee") at a fluctuating annual rate equal to the
Applicable Commitment Fee Rate, which availability shall be the average daily
unadvanced portion of the Commitment during the then most recently concluded
calendar quarter or portion thereof (with the Letters of Credit Amount being
considered an advance under the Commitment).
(b) The Borrowers shall pay to the Banks a fee respecting the
restructuring of the Borrowers' current loan facilities equal to $200,000 (the
"Facility Fee") payable at closing (reduced, however, by the amount of the
$50,000 in work fees to the extent previously paid to the Banks). In addition,
Aeroflex shall deliver certificates representing 100,000 shares of common stock
issued by Aeroflex to the Banks at closing (60,000 shares of which shall be
issued to NatWest and 40,000 shares of which shall be issued to Chemical),
unregistered but of the same class as Aeroflex's shares of voting common stock
that is registered under the Securities Act (as defined in the Registration
Rights Agreement), and subject to registration under the Securities Act pursuant
to the Registration Rights Agreement.
(c) The Borrowers shall pay to the Administrator (solely for its
benefit and not to be shared by the other Banks) (i) an annual administration
fee of $15,000.00, payable at the closing and annually in advance on each
anniversary of the closing, and (ii) such other administration, cash management,
collateral monitoring and other fees as may be agreed upon from time to time by
the Borrowers and the Administrator.
(d) In the event the Term Loans then outstanding exceed $5,000,000.00
on December 31, 1997, the Borrowers shall pay to the Banks an additional fee
respecting the Term Loans of either $125,000.00 or additional shares of common
stock issued by Aeroflex having a fair market value (which value shall be equal
to the average trading value of such stock on the New York Stock Exchange (or
other relevant exchange) for the ten Business Days ending on December 31, 1997,
and which determination shall be made as close to the proposed date of delivery
as practicable) of $125,000.00, as selected by each Bank in its sole and
absolute discretion with respect to its Pro Rata Share ($75,000 of which shall
be issued to NatWest if it requests stock and $50,000 of which shall be issued
to Chemical if it requests stock). In the event either or both of the Banks
elect to receive such stock, Aeroflex shall promptly issue and deliver
certificates evidencing such stock to the requesting Bank(s), which shares will
be unregistered but of the same class as Aeroflex's shares of voting common
stock that is registered under the Securities Act (as defined in the
Registration Rights Agreement), and subject to registration under the Securities
Act pursuant to the Registration Rights Agreement.
Section 2.07. Letters of Credit.
(a) Upon the terms and provisions and subject to the conditions
contained in this Agreement, in lieu of a cash advance under the Commitment the
Administrator (the "Fronting Bank") in its discretion may issue or cause the
issuance of Letters of Credit from time to time upon the request of the
Borrowers up to a cumulative maximum face amount (whether or not advanced) not
to exceed $2,000,000.00 in order to secure the debts or obligations of the
Borrowers; provided that the Fronting Bank's agreement to consider the issuance
of Letters of Credit shall terminate on the first to occur of the Maturity Date
and the expiration of the Revolving Credit Period; and provided further that the
Fronting Bank shall not consider the issuance of any Letter of Credit if (to the
actual knowledge of the Fronting Bank) the face amount of the Letter of Credit
to be issued plus the sum of the Letters of Credit Amount and the principal
balance outstanding under the Revolving Credit Loans together would exceed the
lesser of the Commitment or the Borrowing Base.
(b) The Borrowers may request that a Letter of Credit be issued
pursuant to subsection (a) of this Section by giving the Fronting Bank (with a
copy to the Administrator if not the Fronting Bank) a signed notice of their
request, or by giving the Fronting Bank notice of their request both by
telephone and telecopy of a signed notice and promptly confirming their request
by delivery of the original signed notice (with copies of such telecopy and
notice to the Administrator if not the Fronting Bank). The notice requesting a
Letter of Credit (i) shall be delivered to the Fronting Bank (with a copy to the
Administrator if not the Fronting Bank) at least five Business Days prior to the
requested Issuance Date, (ii) shall be deemed to have been delivered on the
following Business Day unless actually received by the Fronting Bank prior to
11:00 A.M. (New York City time) on a Business Day, (iii) shall be irrevocable
once given, and (iv) shall specify (A) the requested Issuance Date, face amount
and expiration date of the desired Letter of Credit, (B) the beneficiary to whom
it is to be issued, and (C) the purpose for which the Letter of Credit is being
requested. On or before the requested Issuance Date, the Borrowers also must
complete and deliver to the Fronting Bank an application for each requested
Letter of Credit in form and substance acceptable to the Fronting Bank and
issuer and pay the issuer's normal application and issuance fees for each
requested Letter of Credit. Each requested Letter of Credit shall be in a face
amount of not less than $10,000 and shall terminate no later than the first
anniversary of the Issuance Date or the scheduled expiration of the Revolving
Credit Period, whichever occurs first. The issuance of each Letter of Credit is
subject to compliance on the issuance date with the conditions precedent to
obtaining an Advance under this Agreement and subject always to the sole and
absolute discretion of the Fronting Bank. Each Letter of Credit will be issued
on a standard form of the issuing bank then in effect. Each Letter of Credit
shall be governed by and construed in accordance with: (a) the Uniform Customs
and Practice for Documentary Credits, 1993 Revision, ICC Publication 500LF, as
supplemented, revised and restated from time to time; and (b) to the extent the
UCP is not dispositive, the applicable laws pertaining in the State of New York
(including the Uniform Commercial Code). The requested Letter of Credit may be
delivered by the Fronting Bank to the beneficiary, to the Borrowers or to such
other person as the Borrowers reasonably may request. The Letters of Credit may
not be transferred or assigned without (i) the prior written consent of the
Fronting Bank and issuer, (ii) submission to the Fronting Bank of a notice of
transfer in the form annexed to the Letter of Credit, and (iii) the payment of
the issuer's normal transfer fee.
(c) Each of the Letters of Credit may be drawn upon by presentment to
the Fronting Bank, at its office at 175 Water Street, 3rd Floor, New York, New
York 10038, Attention: Trade Services Standby Unit (or such other office as may
be specified therein), of the original Letter of Credit, duly endorsed by the
beneficiary (which presentment may be waived by the Fronting Bank with respect
to Letters of Credit permitting multiple drawings), together with a sight draft
payable to the beneficiary or its order and the beneficiary's certificate that
it is entitled to the amount of the sight draft as a result of nonpayment of the
obligations thereby secured, each substantially in the form annexed to the
relevant Letter of Credit. The promissory note or other instrument evidencing
the obligation thereby secured, duly endorsed to the Fronting Bank, also shall
be presented with the Letter of Credit if that obligation will be paid in full
as a result of the payment in accordance with the Letter of Credit. If the
relevant note or other instrument will not be so paid in full, the person
presenting the Letter of Credit shall present it to the Fronting Bank for
copying and return. The Fronting Bank and/or issuer may accept any draft,
certificate or other document reasonably conforming in form and substance to the
requirements described in the Letter of Credit and the forms annexed thereto,
and may afford the beneficiary notice of and an opportunity to correct
non-conforming items capable of cure, each in the sole and absolute discretion
of the Fronting Bank and/or issuer and without any notice to or assent from any
Borrower. The Fronting Bank, any other issuer and their respective
Representatives may in good faith (without inquiry): (i) act in reliance upon
any written, telegraphic, facsimile, electronic, telephonic, oral or other
request, notice or communication believed to be from, by, on behalf of or
authorized by any Borrower, the Beneficiary or their respective Representatives,
successors or assigns, whether or not from or signed by an authorized person;
(ii) accept or pay as complying with the terms of the relevant Letter of Credit
any drafts or other documents that appear on their face (A) to be reasonably
conforming to the required forms or (B) to be issued or signed by the
Beneficiary or other proper party or their respective Representatives,
successors or assigns (including, without limitation, any bankruptcy trustee or
similar official); (iii) reject any presentment, draft or other document that it
determines (in its sole and absolute discretion) to not conform to the
requirements of the Letter of Credit or this Agreement; or (iv) act or refrain
from acting in reliance upon or in accordance with the UCP, applicable law
(including, without limitation, statutes, orders, regulations, decisions or
directives) or customs in effect in the place of issuance, confirmation,
presentment, negotiation or payment of the Letter of Credit.
(d) Each amount paid by the Fronting Bank or its designee pursuant to a
Letter of Credit or otherwise in respect of the obligation thereby secured (a
"Letter of Credit Advance") shall be repaid by the Borrowers to the Fronting
Bank on the same day payment is made by the Fronting Bank or its designee. If a
Letter of Credit Advance is not so repaid (without, however, in any way
consenting to such non-payment), (i) such Letter of Credit Advance shall be
deemed to be an Advance of a Revolving Credit Loan (as provided in Section 9.03
hereof) and shall be repayable ON DEMAND, together with interest thereon at the
rate specified in this Article for overdue payments of the Loans, pursuant to
the terms and provisions of this Agreement notwithstanding any term or provision
contained in any Letter of Credit application to the contrary, and (ii) the
resulting default shall not be deemed or construed to have been cured until
payment has been duly made. Nothing in this subsection, however, is intended to
limit the ability of the Borrowers to request an Advance prior to an anticipated
Letter of Credit payment date or (assuming satisfaction of the requisite
conditions) to apply the proceeds thereof to the payment of a Letter of Credit
Advance.
(e) The Borrowers shall pay to the Administrator (for the benefit of
all of the Banks) on each of the anniversaries of the issuance of each
outstanding Letter of Credit, in advance, a fee respecting each Letter of Credit
(the "Letter of Credit Fee") for the year commencing with that date (computed on
the basis of the actual number of days in such year and a year of 360 days)
equal to two percent (2%) per annum of the unadvanced face amount thereof, with
such amount being determined as of the Business Day immediately preceding the
quarterly payment date; provided that the Borrowers shall pay that fee on the
Issuance Date, in advance, for the forthcoming year; and provided further that
the minimum fee for any Letter of Credit shall be the greater of (i) one-half
percent (0.50%) of the face amount or (ii) $1000, irrespective of any smaller
amount or shorter expiry. The Borrowers also shall pay to the Fronting Bank any
and all customary fees (other than the Letter of Credit Fee), commissions and/or
charges of the Fronting Bank for any increase, extension, renewal, amendment or
transfer of the Letter of Credit. The Borrowers also shall pay to the Fronting
Bank any fees or other charges of any other issuer or any participant,
correspondent, confirming bank, custodian or designee of the Fronting Bank or
other issuer involved with the Letter of Credit.
(f) In addition to the payments of principal, interest and fees as
stated above, if there shall be any increase in the direct or indirect costs to
any one or more of the Banks of issuing, causing the issuance of or maintaining
a Letter of Credit, or any reduction in any amount received or to be received
with respect to a Letter of Credit by any one or more of the Banks hereunder,
due to:
(i) the introduction of or any change in any applicable law or the
interpretation or administration thereof, including (without limitation) the
imposition, modification or application of (A) any reserve, capital
adequacy, special deposit, assessment or similar requirement respecting
Letters of Credit issued by, assets held by, or deposits in or for the
account of any one or more of the Banks or other issuer(s) of a Letter of
Credit, (B) any requirement to withhold or deduct from any amount payable to
any one or more of the Banks hereunder, or payable directly or indirectly to
the issuer of a Letter of Credit, any taxes, levies, imposts, duties, fees,
deductions, withholdings or charges of a similar nature (other than federal,
state and local income and franchise taxes imposed upon any Bank), or any
interest thereon or any penalties with respect thereto, imposed, levied,
collected, assessed, withheld or deducted by any governmental authority,
including subdivisions and taxing authorities thereof, or (C) any other
restriction or condition affecting a Letter of Credit or this Agreement; or
(ii) the compliance by any one of more of the Banks or other issuer(s)
of a Letter of Credit with any regulation, guideline or request from any
central bank or other authority (whether or not having the force of law);
then the Borrowers from time to time, upon demand by the Administrator, shall
pay to the Administrator (for the benefit of each affected Bank or other issuer)
additional amounts sufficient to indemnify each such Bank or other issuer
against and reimburse each such Bank or other issuer for such increased costs
and reduced receipts. A certificate as to the amount of such increased costs and
reduced receipts submitted to the Borrowers by the Administrator (which may be
the certificate of each affected Bank or other issuer) shall be conclusive as to
the existence and amount thereof absent manifest error. If the Administrator has
not received payment for such amounts by the time it receives from the Borrowers
the next succeeding payment or prepayment of a portion of the Obligations,
whether intended by the Borrowers to be interest, principal or otherwise, the
Administrator (with the consent of the Majority Banks) may apply such payment or
prepayment first to the reduction of the amounts of such costs and receipts.
(g) The Obligations shall not otherwise be deemed to have been fully
paid or satisfied until the all of the Letters of Credit have been paid (and
repaid by the Borrowers) or surrendered for cancellation (provided that any
Letter of Credit shall be deemed for this purpose to have been canceled on the
thirtieth day following the stated expiry date, without, however, relieving the
Borrowers of any of the Obligations with respect to any such Letter of Credit
that is in the process of payment ).
(h) In addition to the payment of fees and other amounts as stated
above, after notice from the Administrator during the continuance of any Event
of Default prior to maturity, and at all times on and after the Maturity Date,
the Borrowers shall pay to the Administrator (for the benefit of all of the
Banks) a fee respecting the Letters of Credit outstanding from time to time
during such period(s) equal to three percent (3.00%) per annum of the
outstanding face amount thereof (computed on the basis of the actual number of
days elapsed and a year of 360 days), which amounts shall be payable by the
Borrowers at the same times as the regular interest payments on the Loans
required by Section 2.04 of this Agreement, subject, however, to the maximum
rate permitted by applicable law as provided in Section 2.10, hereof.
(i) Each of the payment obligations, covenants and other obligations
and agreements of the Borrowers contained in this Agreement and the other Loan
Instruments shall be paid and satisfied by the Borrowers strictly in accordance
with their terms in each case without regard to, none of the Fronting Bank, any
other issuer, the Administrator, any Bank and their respective Representatives
shall have any liability or responsibility for, and each Borrower hereby waives
any claim or defense against or in respect of each such person with respect to:
(i) any payment or other action or inaction under or with respect to any Letter
of Credit in accordance with the terms and provisions of the relevant Letter of
Credit, this Agreement or any other Loan Instrument; (ii) any payment against
presentation of any required draft or other document that does not reference, or
incompletely or incorrectly references, the existence, amount, date, number or
other aspect of the relevant Letter of Credit; (iii) any presentment or payment
under or with respect to any Letter of Credit after the expiry thereof in
reliance upon or in accordance with the UCP, applicable law (including, without
limitation, statutes, orders, regulations, decisions or directives) or customs
in effect in the place of issuance, confirmation, presentment, negotiation or
payment of the Letter of Credit; (iv) the form, validity, sufficiency,
completeness, accuracy, genuineness or legal effect of (A) any Letter of Credit,
(B) any draft or other document required or permitted under the relevant Letter
of Credit, this Agreement or any other Loan Instrument, or (C) any instrument or
document transferring or assigning the Letter of Credit, any rights or benefits
thereunder or any proceeds thereof (in whole or in part), or purporting to do
so, even if any of them should in fact prove to be in any or all respects
invalid, insufficient, ineffective, incomplete, inaccurate, fraudulent or
forged; (v) the failure of any person to surrender, obtain, forward or otherwise
deal with the Letter of Credit or any other document other than the surrender
and obtaining of any drafts or other documents specifically required by the
terms of the Letter of Credit; (vi) any failure to note the amount of any draft
on the reverse of the Letter of Credit; (vii) any and all errors, omissions,
interruptions or delays in transmission or delivery of any notice, request,
demand or other communication permitted or required to be given under this
Agreement or any other Loan Instrument, whether by mail, cable, telegraph,
telex, telecopy or otherwise, whether or not an error in processing, cipher,
translation or otherwise or an error in interpretation (of technical terms or
otherwise); (viii) any loss or delay in the delivery of any draft, document or
proceeds; (ix) the existence, character, quality, quantity, condition, packing,
value, or delivery of any goods or other property relating to any Letter of
Credit, the time, place, manner or order in which shipment may have been made,
the existence, form, validity, sufficiency or legal effect of any insurance
covering or purporting or required to cover any such goods, or any act or
omission of any insurer, shipper, warehouseman, carrier, correspondent or other
person; or (x) without limiting the foregoing, any consequences arising from
causes beyond the control of the Administrator, any other issuer, the
Administrator or any other Bank or any of their respective Representatives or
any act or omission of any of them not done or omitted in bad faith (each of
which provision, if contained in the Letter of Credit itself, may be waived by
the Fronting Bank or other issuer). If the Letter of Credit provides that
payment is to be made by a designated Representative of the Fronting Bank or
other issuer, none of the Fronting Bank, any other issuer, the Administrator,
any Bank and their respective Representatives (other than such designated
Representative) shall be responsible or otherwise liable for the failure of any
document specified in the Letter of Credit to come into the Fronting Bank's
hands or for any delay in connection therewith, and no Borrower's obligation to
reimburse the Fronting Bank, any other issuer, the Administrator or the Banks
for payments made or obligations incurred shall be affected by such failure or
delay in the receipt by the Fronting Bank of any or all of such documents
whether sent to the Fronting Bank in one or multiple mailings. In any event,
neither the Fronting Bank, the Administrator nor any Bank shall be responsible
for any error, neglect, suspension or insolvency of any of the Representatives
of the Administrator or other issuer designated to confirm or pay with respect
to any Letter of Credit. Each Borrower acknowledges and agrees that this
Agreement has been entered into and all Letters of Credit have been obtained by
the Borrowers for commercial purposes. Each Borrower agrees that it will not
raise (as a defense or otherwise), and hereby expressly waives, any immunity or
exemption from liability, jurisdiction, forum or service that may now or
hereafter be accorded to any Borrower, its Representatives or their respective
assets and properties. The preceding agreements and waivers are not intended
(and shall not be deemed or construed) to in any way qualify, condition,
diminish, restrict, limit or otherwise affect any (and is in addition to each)
other release, waiver, consent, waiver, exculpation, indemnification, permitted
action or other similar term or provision of this Agreement or any other Loan
Instrument.
Section 2.08. Payments and Applications.
(a) Until such time as either (i) the Borrower has defaulted in any
payment to any Bank for more than five Business Days, (ii) a Default Declaration
has been issued, or (iii) any Bank is in any continuing default under Article IX
hereof, whichever occurs first, all payments of principal, interest, fees and
other amounts due the Banks or the Administrator pursuant to this Agreement and
the other Loan Instruments shall be made in immediately available funds by 12:30
P.M. (New York City time) on the date payment is due directly to each Bank at
its offices at the appropriate address set forth in the Introduction or as
otherwise instructed by each Bank. During the continuance of any Event of
Default prior to maturity, and at any time after the Maturity Date, the
Administrator may direct the Borrowers to make all payments covered by this
subsection directly to the Administrator pursuant to subsection (c), below.
(b) The parties intend that payments of the Obligations that may be
directly billed by each Bank under subsection (a) of this Section may be made
through the deposit of sufficient amounts by the Borrowers into specified
accounts maintained with each Bank or any designated affiliate(s), as and when
such Obligations become due, and the debiting of such account by or at the
direction of the Bank. Accordingly, each Borrower hereby authorizes each Bank
(or such affiliate) from time to time to apply or direct the application of all
or any portion of the funds in any such account to the payment of principal and
interest on Loans and to all other Obligations of the Borrowers hereunder at
each time such payment becomes due and payable under subsection (a) above. In
debiting such account, the Obligations shall be deemed to have been paid or
repaid only to the extent of the funds actually available in that account
notwithstanding any internal procedure of the debiting Bank (or such affiliate)
to the contrary.
(c) All payments of principal, fees and amounts not directly payable
under subsections (a) and (b), above (including all payments of interest, fees
and other amounts no longer directly payable under such subsections) due the
Banks pursuant to this Agreement and the other Loan Instruments shall be made in
immediately available funds by 11:00 A.M. (New York City time) on the date
payment is due to the Administrator at its offices at 100 Jericho Quadrangle,
Jericho, New York 11753, or as otherwise instructed by the Administrator. All
advances and payments made pursuant to this Agreement and the other Loan
Instruments may be recorded by each Bank on its books and records, and such
books and records shall be conclusive as to the existence and amounts thereof.
(d) Should any payment become due and payable on other than a Business
Day, the maturity thereof shall be extended to the next succeeding Business Day,
and, in the case of any payment of principal, interest shall be payable thereon
at the rate per annum specified in this Agreement during such extension.
(e) Except as otherwise provided in this Agreement, so long as no Event
of Default is then continuing, any funds received by any of the Banks from or on
behalf of any Borrower (whether pursuant to any of the terms and provisions of
this Agreement or any other Loan Instrument) shall be applied to the following
items in the manner and order reasonably designated by the Borrowers to the
extent permitted by applicable law; provided, however, that absent such
designation or during the continuance of any such event, those funds (including
the net proceeds from any Collateral) instead shall be applied to the following
items in the following order and manner to the extent permitted by applicable
law:
(i) the payment of due and unpaid principal on the Loans;
(ii) the payment of accrued and unpaid interest on the Loans;
(iii) the payment to or reimbursement of the Administrator or the Banks
for any fees and expenses for which any of them is entitled to be
paid or reimbursed pursuant to any of the provisions of this
Agreement and the other Loan Instruments; and
(iv) the establishment or maintenance of any cash collateral required or
permitted under any Loan Instrument; and
(v) the payment in full of all other Obligations under this Agreement
and the other Loan Instruments.
(f) Any and all payments made by the Borrowers under this Agreement or
any other Loan Instrument shall be made free and clear of and without any
reduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and any and all liabilities with respect thereto,
excluding, however, such taxes as are imposed on a Bank (A) by the jurisdiction
of its organization or its lending office engaged in the Loans (or any political
subdivision thereof) with respect to the income or franchise of such Bank, or
(B) by reason of such Bank's failure to comply with the requirements of Section
10.14(d) hereof (all such non-excluded taxes, levies, imposts, deductions,
charges or withholdings being hereinafter collectively referred to as the
"Taxes"). In addition, the Borrowers shall pay, as and when due, any and all
present or future stamp or documentary taxes or other excise or property taxes,
charges or similar levies that may arise from any execution, delivery,
performance, existence or registration of this Agreement or any other Loan
Instrument or any payment made hereunder or thereunder (collectively, "Other
Taxes"). If any Borrower shall be required by applicable law to deduct any Taxes
or Other Taxes from or in respect of any sum payable to the Banks under this
Agreement or any other Loan Instrument, (i) the sum payable shall be increased
as may be necessary so that, after making all required deductions, the Banks
receive an amount equal to the sum they would have received if no such
deductions had been made, (ii) the Borrower shall make such deductions, and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. Within 30 days
after the date of any payment of Taxes or Other Taxes by the Borrowers, the
Borrowers will furnish to the Administrator the original or a certified copy of
a receipt evidencing payment or other documentation reasonably satisfactory to
the Administrator evidencing payment. The Borrowers will furnish to the
Administrator, upon the Administrator's request from time to time, an officer's
certificate stating that, to the knowledge of the signer, all Taxes and Other
Taxes that are or have become due have been paid. The Borrowers shall indemnify
and reimburse (on a joint and several basis) each Bank and the Administrator on
demand (payable within 30 days of written demand) for the full amount of Taxes
or Other Taxes paid by such Bank(s) or the Administrator (as the case may be)
and any and all claims, liabilities, losses and expenses (including, without
limitation, penalties, interest, and attorneys and other professional fees,
disbursements and expenses) of such Bank(s) or the Administrator arising
therefrom or related directly or indirectly thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted.
Section 2.09. Lost or Damaged Notes. In the event of the loss, theft or
destruction of a Note, the Borrowers shall execute and deliver an identical new
Note to the affected Bank in substitution therefor upon the Borrowers' receipt
of (i) notice from the affected Bank confirming such event and (ii) if requested
by the Borrowers, an indemnity agreement from the affected Bank in such form and
substance as may be acceptable to the affected Bank. In the event of the
mutilation of or other damage to a Note, the Borrowers shall execute and deliver
an identical new Note to the affected Bank in substitution therefor, following
which the affected Bank will return the mutilated or damaged Note to the
Borrowers.
Section 2.10. Maximum Interest Rate. It is the intention of the Banks
and the Borrowers that the interest (as defined under applicable law) on the
Loans that may be charged to, collected from or received from the Borrowers
shall not exceed the maximum rate permissible under applicable law. Accordingly,
anything in this Agreement, any Note or any other Loan Instrument to the
contrary notwithstanding, in the event any interest (as so defined) is charged
to, collected from or received from the Borrowers by the Banks pursuant hereto
or thereto in excess of such maximum lawful rate, then the excess of such
payment over that maximum shall be applied to the reduction of the outstanding
principal balance of the Loans and the other Obligations (without any prepayment
premium or penalty), and any portion of such excess payment remaining after
payment and satisfaction in full of the Obligations shall be returned by the
Banks to the Borrowers.
Section 2.11. Obligations and Communications of the Borrowers.
(a) All obligations, representations, warranties, covenants and other
agreements of any one or more of the Borrowers under this Agreement, the Notes
and the other Loan Instruments shall be joint and several liabilities of all of
the Borrowers. Any knowledge held by or imputed to any Borrower shall be deemed
to be within the knowledge of all of the Borrowers. Any certificate, notice,
request, statement or other document or communication signed or made on behalf
or in the name of any one or more of the Borrowers shall be deemed to have been
signed or made by all of the Borrowers unless expressly disclaimed in a
particular document or communication.
(b) Without limiting the generality of the joint and several nature of
the Obligations and the other obligations, representations, warranties,
covenants and other agreements of the Borrower under this Agreement and the
other Loan Instruments, each Borrower hereby makes, constitutes and appoints
Aeroflex and each of its executive officers (Vice President and above), and each
of them with full power of substitution, as that Borrower's true and lawful
attorney-in-fact with full power and authority from time to time in that
Borrower's name, place and stead to (i) pay or otherwise perform any of the
other Obligations, (ii) mortgage or grant security interests in any of the
assets and properties of that Borrower to secure any of the Obligations, (iii)
give notices and other communications under this Agreement and the other Loan
Instruments, (iv) agree to waivers, supplements, modifications, amendments,
restatements and replacements of and additions to this Agreement and the other
Loan Instruments, (v) take or authorize any other action contemplated by this
Agreement and the other Loan Instruments, and (vi) sign, execute, acknowledge,
swear to, verify, deliver, file, record and publish any one or more of the
foregoing. This Power of Attorney is hereby declared to be revocable only with
the prior written consent of the Administrator, which will not be withheld
unreasonably, with full power of substitution and coupled with an interest. This
Power of Attorney shall survive the incapacity or bankruptcy of each of the
Borrowers and shall extend to and be binding upon each Borrower's successors,
assigns, heirs and legal representatives. This Power of Attorney may be
exercised, among other ways, (i) by any one of the above-named
attorneys-in-fact, or by any substitute designated by any of those
attorneys-in-fact, and (ii) by signing for the Borrowers individually on any
document or instrument or by listing two or more of the persons, including the
Borrowers, for whom any document or instrument is being signed and signing once,
with a single signature by the attorney-in-fact or substitute being effective to
exercise the Powers of Attorney of all persons so listed. A facsimile signature
shall be effective if so affixed. Any certificate, notice, request, statement or
other document or communication signed or made by either of the above-named
attorneys-in-fact shall be deemed to have been signed or made by all of the
Borrowers pursuant to this Power of Attorney, irrespective of whether any
reference to this power or to one or more of the other Borrowers is made
therein, unless such exercise expressly disclaimed in a particular document or
communication. In the event of any conflict between the exercise of this power
and the one granted to the Administrator in Section 7.06 hereof, the one granted
to the Administrator shall prevail.
(c) Reference to a single specific Borrower or group of Borrowers,
whether by name, officer's title, letterhead or otherwise, shall not constitute
an express disclaimer of any of the foregoing.
Section 2.12. Subrogation and Contribution. Each Borrower covenants and
agrees that until the Obligations of the Borrowers under this Agreement and the
other Loan Instruments have been fully paid and satisfied:
any and all subrogation, contribution and other similar rights of the
Borrower against or in respect of (A) any other Borrower, (B) any of the
assets and properties of any other Borrower, or (C) any other co-obligor
or indemnitor of any of the Borrower's payments or obligations
under any of the Loan Instruments, whether now existing or hereafter
acquired or created, and whether resulting from any payment made by the
Borrower or otherwise (other than as waived in subsection (b) of this
Section),
(each of the above items may be referred to individually as a "Subrogation
Right", and collectively as the "Subrogation Rights"), shall be subordinate and
inferior in priority and dignity to the Obligations and shall not be entitled to
any payment or satisfaction (in whole or in part) until all of the Obligations
have been fully paid and satisfied. Until such time (if ever) as the Obligations
have been fully paid and satisfied: (A) no Borrower shall seek any payment or
exercise or enforce any right, power, privilege, remedy or interest that the
Borrower may have with respect to any Subrogation Right except with the prior
written consent Administrator (with the consent of the Requisite Banks, as and
if required) and for the benefit of all of the Banks; and (B) any payment, asset
or property delivered to or for the benefit of any Borrower in respect of any
Subrogation Right shall be accepted in trust for the benefit of all of the Banks
and shall be promptly paid or delivered to the Administrator (for the benefit of
all of the Banks) to be credited and applied to the payment and satisfaction of
the Obligations, whether contingent, matured or unmatured, or to be held by the
Administrator (for the benefit of all of the Banks) as additional collateral, as
the Administrator (with the consent of the Requisite Banks, as and if required)
may elect in its sole and absolute discretion. Each Borrower acknowledges that
pursuant to Section 7.01 of this Agreement it has assigned and granted to the
Administrator (for the benefit of all of the Banks) a continuing security
interest in and to all Subrogation Rights.
Section 2.13. Waiver of Impairment of Contribution and Other Rights.
Each Borrower acknowledges and agrees that: (a) the amounts (if any) that
potentially could be realized by the Borrower, as well as the enforceability,
practicality or value of any right, power, privilege, remedy or interest of the
Borrower, under or in respect of any Subrogation Right may be substantially
reduced or limited or completely eliminated by any one or more of the following
(either individually or in the aggregate): (i) the delay inherent in the
subordination of those rights under this Agreement, (ii) payments by any other
Borrower or others to the Administrator, any Bank or any other person, (iii) any
foreclosure, sale, lease or other disposition or realization respecting any
collateral, (iv) any action or inaction by the Administrator, any Bank or any
other person authorized or waived by or on behalf of the Borrower, whether under
this Agreement or otherwise, or contemplated, permitted or provided for under
this Agreement, any other Loan Instrument or applicable law, (v) the exercise or
enforcement by the Administrator or any Bank of any one or more of its rights,
powers privileges, remedies and interests of the Administrator or any Bank under
any Loan Instrument or applicable law, or (vi) any adverse change (however
material) in the assets, business, operations, properties, or condition
(financial or otherwise) of any other Borrower or any other person arising out
of or related directly or indirectly to any of the foregoing; (b) neither the
Administrator nor any Bank is acting as an agent, trustee or other
representative (regarding collateral or otherwise) with respect to any
Subrogation Right; (c) the Administrator or any Bank may exercise or enforce any
of its rights, powers, privileges, remedies or interests under the Loan
Instruments and applicable law without any consideration of or regard to any
Subrogation Right or any direct or indirect adverse effect thereupon (however
material); (d) the Borrower shall not be entitled to any payment or other asset
or property (or any part thereof) delivered to or otherwise realized by the
Administrator or any Bank on account of any other Obligations or to any
accounting thereof; (e) none of the foregoing (whether individually or in the
aggregate) shall (i) release, limit or otherwise affect the liability of the
Borrower to the Administrator or any Bank under this Agreement or any other Loan
Instrument, or (ii) give rise to any action, claim, counterclaim, right of
setoff or recoupment, defense, or other remedy on the part of the Borrower,
irrespective of frequency, direct or indirect effect, materiality or direct or
indirect consequences; and (f) the Borrower shall not raise any, and hereby
expressly waives and releases each and every, such action, claim, counterclaim,
right of setoff, or recoupment, defense, or other remedy.
Section 2.14. Guaranty of Payment and Expenses. Each Borrower hereby
absolutely, unconditionally and irrevocably guaranties to the Banks the full and
punctual payment and satisfaction of the Obligations of each and every other
Borrower as and when due, whether at stated maturity, by acceleration or
otherwise, and agree to pay and satisfy in full any and all expenses that may be
paid or incurred by the Administrator or any other Bank in the collection of all
or any portion of the Obligations of any Borrower or the exercise or enforcement
of any one or more of the other rights, powers, privileges, remedies and
interests of the Administrator and the Banks under this Agreement and the other
Loan Instruments, irrespective of the manner or success of any such collection,
exercise or enforcement, and whether or not such expenses constitute part of the
Obligations (collectively, the "Guaranty").
Section 2.15. Continuing Guaranty, Payment in Accordance with Terms,
Etc. Each Borrower covenants and agrees that: (a) this Guaranty is a continuing
guaranty of payment and satisfaction, and not collectibility only, whether the
Obligations are now or hereafter existing, acquired or created, and irrespective
of the fact that from time to time under the terms and provisions of the Loan
Instruments monies may be advanced, repaid and readvanced and the outstanding
balance of the Loans may be zero; (b) this Guaranty may not be revoked or
terminated by until such time as all of the Obligations shall have been fully
paid and satisfied; (c) the Obligations shall not be deemed to have been
otherwise fully paid and satisfied so long as any Loan Instrument shall have any
continuing force or effect; and (d) the Borrower's guaranty of those Obligations
will be paid and satisfied in full in accordance with the terms and provisions
of the Loan Instruments without regard to any applicable law now or hereafter in
effect in any jurisdiction, including (without limitation) any applicable law
that might in any manner affect any of those terms and provisions or any of the
rights, powers, privileges, remedies and interests of the Administrator or any
Bank with respect thereto, or that might cause or permit to be invoked any
alteration in the time, amount or manner of payment of any of the Obligations by
any Borrower or any other person (other than any Bank).
Section 2.16. Waivers of Notice, Etc. Except for notices expressly
required under this Agreement or any other Loan Instrument to such Borrower,
each Borrower hereby expressly waives: (a) notice of acceptance of this
Agreement; (b) notice of any action taken or omitted in reliance hereon; (c)
presentment; (d) demand for payment; (e) protest or notice of protest; (f)
notice of any nonpayment or other Event of Default or the occurrence or
continuance of any other default, or any other event that (with the giving of
notice or the passage of time or both) could constitute an Event of Default or a
default, under any Loan Instrument; (g) notice of any material and adverse
effect, whether individually or in the aggregate, upon the assets, business,
operations, properties or condition (financial or otherwise) of any Borrower or
any other person, or upon any part of any collateral securing the obligations of
any Borrower or any other person; (h) any statute of limitations or similar time
constraint under any applicable law, whether with respect to the Obligations; or
(i) any other proof, notice or demand of any kind whatsoever with respect to any
or all of the Obligations or promptness in making any claim or demand under this
Agreement or any other Loan Instrument. No act or omission of any kind in
connection with any of the foregoing shall in any way impair or otherwise affect
the legality, validity, binding effect or enforceability of any term or
provision of this Agreement or any other Loan Instrument or any of the
Borrower's Obligations under the Guaranty.
Section 2.17. Agreement Not Affected. Without limiting the generality
of the foregoing Sections or any other term or provision of this Agreement, each
Borrower covenants, agrees and consents that, at any time, and from time to
time: (a) the Loans may be advanced, repaid and readvanced from time to time, or
the amount of the Loans, the rate of interest thereon, any other Obligation or
the credit availability may be increased or otherwise changed; (b) the time,
manner, place and other terms and provisions of payment or performance of any
one or more of the Obligations may be extended, modified, amended, restated or
otherwise changed; (c) any partial or late payment or any payment during the
continuance of any default under any Loan Instrument may be accepted in whole or
in part or rejected; (d) any collateral securing or intending to secure anyone's
obligations under any Loan Instrument may be surrendered, repossessed,
sequestered, judicially or nonjudicially foreclosed, conveyed or assigned (by
deed in lieu of foreclosure or otherwise), sold, leased or otherwise realized
upon, dealt with or disposed of, in whole or in part, whether to the
Administrator or any Bank, its designee or otherwise; (e) any mortgage or other
security interest in any such collateral may be held without due recordation or
other perfection (whether intentionally or otherwise), may be recorded or
otherwise perfected, or may be assigned, released, subordinated or otherwise
impaired, dealt with or disposed of in whole or in part; (f) any one or more
payments, distributions and proceeds received from or in respect of such
Borrower, any other Borrower or any other person or any collateral, if not
expressly designated for or otherwise restricted to a particular obligation, may
be applied in the discretion of the Administrator or any Bank to the Obligations
or to other indebtedness or obligations (including interest) of such Borrower,
any other Borrower or any such other person owed to the Administrator or any
Bank or any of its affiliates; (g) the liability of such Borrower, any other
Borrower or any other person to pay any and all of the Obligations may be
settled, compromised, adjusted, forgiven, released or affected by any other
accommodation, in whole or in part, and payment of any and all of the
Obligations of any Borrower may be subordinated to the prior payment of any
other debts or claims of that or any other person; (h) the respective rights of
setoff of thejAdministrator, any Bank and their respective Representatives may
be exercised as provided under this Agreement, any other Loan Instrument or
applicable law against any of the deposits, assets, properties and indebtedness
subject thereto, without any demand on or notice to any Borrower, without regard
to the frequency of exercise thereof, and whether or not the relevant
obligations shall then be matured; (i) any representation, warranty, covenant or
other term or provision of any Loan Instrument, in whole or in part, may be the
subject of one or more waivers of applicability or consents to nonperformance,
noncompliance or nonobservance, whether or not constituting defaults, or may be
otherwise not exercised or enforced (whether intentionally or otherwise); (j)
any Loan Instrument, or any term or provision thereof, in whole or in part, may
be renewed, extended, supplemented, renewed, extended, modified, amended,
restated or otherwise changed in any respect by the respective parties thereto
in the manner provided therein; (k) any one or more of this Agreement and the
other Loan Instruments, or any one or more of the rights, powers, privileges,
remedies and interests of the Administrator or any Bank herein or therein, may
be sold, conveyed, assigned or otherwise transferred in whole or part (including
participations or other undivided interests) to any other person; or (l) any
other right, power, privilege, remedy or interest of the Administrator or any
Bank under this Agreement, any other Loan Instrument or applicable law may be
exercised or enforced by the Administrator or any Bank or its designee, which
exercise or enforcement may be delayed, discontinued or otherwise not pursued or
exhausted for any or no reason whatsoever, or any such right, power, privilege,
remedy or interest may be waived, omitted or otherwise not exercised or enforced
(whether intentionally or otherwise); all in such manner and order, upon such
terms and provisions and subject to such conditions as the Administrator or any
Bank may deem necessary or desirable in its sole and absolute discretion, all
without notice to or further assent from the Borrower, and all without affecting
this Agreement or any other Loan Instrument or any of such Borrower's
Obligations under the Guaranty, which obligations shall continue in full force
and effect until such time as all of the Obligations shall have been fully paid
and satisfied.
Section 2.18. Bankruptcy; Reinstatement. In the event the Administrator
or any Bank is not permitted or is otherwise unable (because of the pendency of
any bankruptcy, insolvency, receivership or other proceeding) to accelerate the
Borrower's Obligations, but otherwise would have been permitted to do so at such
time pursuant to any Loan Instrument, the Bank may demand payment in full under
the Guaranty and may exercise and enforce the other rights, powers, privileges,
remedies and interests of the Administrator or any Bank under this Agreement or
any other Loan Instrument to which the guarantying Borrower is a party as if the
Obligations had been duly accelerated, and each guarantying Borrower will not
raise, and hereby expressly waives and releases, any claim or defense with
respect to such deemed acceleration. In the event any payment of or any
application of any amount, asset or property to any of the Obligations, or any
part thereof, at any time is rescinded or must otherwise be restored or returned
by the Bank upon the insolvency, bankruptcy or reorganization of any Borrower or
any other person, whether by order of any court, by any settlement approved by
any court, or otherwise, then the terms and provisions of this Guaranty shall
continue to apply, or shall be reinstated if not then in effect, as the case may
be, with respect to the Obligations so rescinded, restored or returned, all as
though such payment or application had never been made.
Section 2.19. Transitional Matters. On the Effective Date: this
Agreement shall have amended, restated and completely replaced the Existing Loan
Agreement and the Notes shall have amended, restated and completely replaced the
Existing Notes (as more fully described in Sections 2.01, 2.02 and 2.03 hereof);
but no such action shall be deemed a repayment, satisfaction, cancellation or
novation of the Existing Obligations, which shall continue and constitute
Obligations of the Borrowers under and subject to the terms and provisions of
this Agreement and the other Loan Instruments. The Loan Instruments are
intended, and shall be deemed and construed, to be a continuation (without
interruption or recommencement) of the various terms and provisions of the
Existing Loan Instruments and the obligations arising or accruing thereunder
prior to the Effective Date, subject to any modifications made by the Loan
Instruments. For example (and without limitation): (a) all principal interest,
fees, reimbursements and other amounts heretofore owed or accruing under the
Existing Loan Instruments will continue to be owed, to accrue and to be payable
under the Loan Instruments, subject to any modifications made by the Loan
Instruments; (b) the Borrowers shall deliver all financial statements and
reports required under the Existing Loan Instruments respecting periods ending
on or before the Effective Date, and not yet delivered, which shall be deemed to
be statements and reports delivered pursuant to this Agreement; (c) any term or
provision of any Loan Instrument relating to the 1996 calendar year or fiscal
year ending June 30, 1996, shall include all of the year or fiscal year (even
though portions predated the Effective Date); and (d) any misrepresentation or
default by the Borrowers under the Existing Loan Instruments continuing as of
the Effective Date shall continue and constitute a corresponding continuing
misrepresentation or default by the Borrowers under the Loan Instruments, with
any time periods for notice, grace or the like under the Loan Instruments having
commenced to run at their inception under the Existing Loan Instruments, subject
to any modifications made by the Loan Instruments.
ARTICLE III
Representations and Warranties
To induce the Banks to enter into this Agreement and the other Loan
Instruments to which each is a party and to make and continue the Loans to the
Borrowers, the Borrowers jointly and severally represent and warrant to the
Banks that:
Section 3.01. Organization, Powers, Etc. Each Borrower: (a) is duly
organized, validly existing and in good standing under the laws of its state of
incorporation; (b) has the power and authority to carry on its business as now
conducted and to own or hold under lease the assets and properties it purports
to own or hold under lease; (c) is duly qualified, licensed or registered to
transact its business and in good standing in every jurisdiction in which
failure to be so qualified, licensed or registered would have a Material Adverse
Effect, and Schedule 3.01(c) hereto contains a complete and accurate list of all
jurisdictions in which the Borrower is so qualified, licensed or registered; (d)
has the power and authority to execute and deliver this Agreement and each of
the other Loan Instruments to which it is or will be a party and to perform all
of its obligations hereunder and thereunder; and (e) conducts its business
exclusively under the name set forth in the Introduction; and (f) has its
executive office and principal place of business at the address(es) set forth in
the Introduction.
Section 3.02. Authorization, Conflicts and Validity. The execution and
delivery by each Borrower of this Agreement and each of the other Loan
Instruments to which it is or will be a party and the performance by each
Borrower of all of its obligations hereunder and thereunder: (a) have been duly
authorized by all requisite corporate action; (b) will not violate or be in
conflict with any term or provision of (i) any applicable law (including,
without limitation, any applicable usury or similar law), (ii) any judgment,
order, writ, injunction, decree or consent of any court or other judicial
authority, or (iii) any Corporate Document; (c) will not violate, be in conflict
with, result in a breach of or constitute a default (with or without the giving
of notice or the passage of time or both) under any term or provision of any
Material Document; and (d) except as specifically contemplated by this Agreement
or any other Loan Instrument, will not result in the creation or imposition of
any lien, charge or encumbrance of any nature upon any of its assets and
properties. This Agreement and each Note are, and the other Loan Instruments to
which any Borrower is or will be a party (when executed and delivered) will be,
legal, valid and binding obligations of each signing Borrower, enforceable in
accordance with their respective terms and provisions, except as enforceability
may be limited by (1) applicable bankruptcy, insolvency, reorganization and
other laws affecting the rights or remedies of creditors generally and (2) rules
of equity affecting the enforcement of obligations generally (whether at law or
in equity).
Section 3.03. Consents, Etc. No consent, approval or authorization of,
or registration, declaration or filing with, any governmental authority or other
person (including, without limitation, the shareholders of any Borrower) is
required as a condition precedent, concurrent or subsequent to or in connection
with the due and valid execution, delivery and performance by any Borrower of
this Agreement or any other Loan Instrument to which any Borrower is or will be
a party or the legality, validity, binding effect or enforceability of any of
their respective representations, warranties, covenants and other terms and
provisions, except (i) as listed on Schedule 3.03 hereto, (ii) the approval of
the Plainview Board Authority and the recording of the amendment to the
Plainview Mortgage, (iii) the filing of the Uniform Commercial Code financing
statements executed and delivered by each Borrower in connection herewith with
the authorities listed in the Checklist of Closing Documents (as referred to in
Section 4.04(d) hereof), and (iv) the compliance under any applicable assignment
of claims statute with respect to any Contract made directly with any
governmental authority. Each franchise, license, certificate, authorization,
approval or consent from any governmental authority material to the present
conduct of the business or operations of each Borrower or any of its
subsidiaries, or required for the acquisition, ownership, improvement, operation
or maintenance by any Borrower of any material portion of the assets and
properties it now owns, operates or maintains, has been obtained and validly
granted, is in full force and effect and constitutes valid and sufficient
authorization therefor.
Section 3.04. Litigation. Except as set forth in Schedule 3.04 hereto,
there are no actions, suits, investigations or proceedings (whether or not
purportedly on behalf of any one or more of the Borrowers) pending or, to the
best knowledge of the Borrowers, threatened or contemplated at law, in equity,
in arbitration or by or before any other authority involving or affecting: (a)
any Borrower that, if adversely determined, would have a Material Adverse
Effect; (b) any alleged criminal act or activity (other than a misdemeanor) on
the part of any Borrower or any of its representatives; (c) any Material
Document (other than Collateral) or any Corporate Document; (d) any
Environmental Claim; (e) the Obligations; (f) any part of the Collateral or any
material part of the other assets or properties of any Borrower (if any); or (g)
any of the transactions contemplated in this Agreement and the other Loan
Instruments; nor, to the best knowledge of the Borrowers, is there any basis for
the institution of any such action, suit, investigation or proceeding. None of
the Borrowers is in default with respect to any judgment, order, writ,
injunction, decree or consent of any court or other judicial authority, which
default would have or has had a Material Adverse Effect.
Section 3.05. Financial Statements. The Borrowers heretofore has
provided to the Banks the consolidated balance sheet of the Borrowers as at June
30, 1995, and the related consolidated statements of earnings, shareholders'
equity, and cash flow for the fiscal year ended on that date, audited and
reported upon by Deloitte & Touche, independent certified public accountants.
Those financial statements and reports and the related notes and schedules, as
well as those related to later periods (whenever delivered), (i) were prepared
in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein, and (ii) are complete,
accurate and a fair presentation of the financial condition of the Borrowers as
of the date thereof and the results of their operations for the period covered
thereby (subject in the case of interim statements to normal year-end audit
adjustments). Since June 30, 1995, no event or events have occurred that
individually or in the aggregate would have or have had a Material Adverse
Effect.
Section 3.06. Absence of Defaults and Certain Agreements. Except as set
forth in Schedule 3.06 hereto, no act or event has occurred and is continuing
that violates, is in conflict with, results in a breach of or constitutes a
default (with or without the giving of notice or the passage of time or both)
under any term or provision of (i) this Agreement or any other Loan Instrument,
(ii) any Material Contract in any material respect for more than 30 days, or any
applicable grace period thereunder, whichever is less, (iii) any other Material
Document, or (iv) any Corporate Document.
Section 3.07. Compliance with Applicable Laws. Except as otherwise set
forth in Schedule 3.07 hereto, each Borrower is in compliance with and conforms
to all applicable laws, the noncompliance with or violation of which would have
a Material Adverse Effect.
Section 3.08. Payment of Debts and Taxes.
(a) Each Borrower: (i) has filed all required tax returns with the
appropriate taxing authorities respecting its operations, assets and properties;
and (ii) has paid or caused to be paid all taxes shown on those returns to the
extent due; except in either case to the extent that (A) extensions of time to
make such filing have been duly granted by the appropriate taxing authorities
and those extensions have not expired, or (B) payment is not yet required
pursuant to Section 5.06 hereof.
(b) Each Borrower is current in its payment of debts and performance of
monetary obligations (other than taxes) except to the extent payment or
performance is not yet required pursuant to Section 5.06 hereof.
Section 3.09. Indebtedness, Guaranties, ERISA Plans, Etc.
(a) Schedule 3.09(a) contains a complete and accurate list of all
direct and indirect indebtedness of each Borrower (whether individual, joint,
several or otherwise), including commitments, lines of credit and other credit
availabilities, identifying with respect to each the respective parties, amounts
and maturities, excluding, however, (i) the Loans, (ii) all guaranties, and
(iii) all intercompany indebtedness among the Borrowers.
(b) Schedule 3.09(b) contains a complete and accurate list
of all guaranties of each Borrower (whether individual, joint, several or
otherwise), identifying with respect to each the respective parties, amounts
and maturities, excluding, however, (i) negotiable instruments endorsed
for collection or deposit in the ordinary course of business and
(ii) all intercompany indebtedness among the Borrowers.
(c) Schedule 3.09(c) contains a complete and accurate list of all
"employee pension benefit plans" (as defined in ERISA) established, funded or
maintained by any Borrower or any ERISA Affiliate or to which any Borrower or
any ERISA Affiliate is required to contribute (as each may be supplemented,
modified, amended or restated from time to time pursuant to ERISA or the Code,
as applicable, a "Plan", and collectively, the "Plans"). Except as set forth in
that schedule: (i) each Plan is in full force and effect and has been (or is
expected to be) determined to be duly qualified under ERISA and the Code, as
applicable; (ii) no ERISA Event is currently continuing, and none has occurred
within the past five years, in any material respect; (iii) each material report,
statement or other document has been timely prepared and delivered in accordance
with, and conforms in form and substance to the requirements of, ERISA and the
Code; (iv) each Plan complies with ERISA, the Code and all other applicable laws
in all other material respects; (v) the present value of all accrued benefits
under each Plan does not, and did not as of the last annual valuation date,
exceed the value of the assets of such Plan allocable to such accrued benefits
(which benefit value shall be determined on an ongoing basis, using the Plan's
reasonable actuarial assumptions, or on a termination basis, using the
assumptions employed by the Pension Benefit Guaranty Corporation in connection
with plan terminations, as applicable); (vi) there are no actions, suits,
investigations or proceedings (whether or not purportedly on behalf of any
fiduciary, sponsor, participant or beneficiary) pending, or to the best
knowledge of the Borrowers, threatened or contemplated at law, in equity, in
arbitration or by or before any authority involving or affecting any Plan or any
assets and properties of a Plan that, if adversely determined, would have an
ERISA Effect; (vii) to the best knowledge of the Borrowers, there are no facts
or circumstances that might give rise to any material liability of or material
claim against any Borrower, any of its subsidiaries or the Collateral under
Title IV of ERISA; and (viii) none of the Plans is, and no Borrower or ERISA
Affiliate in the past established, funded, maintained, contributed or was
required to contribute to, any "multiemployer plan" (as defined in ERISA);
provided, however, that the provisions of this sentence shall be to the best
knowledge of the Borrowers with respect to any multiemployer plan administered
by a person other than any Borrower or any ERISA Affiliate. The present value of
all accrued post-retirement benefits under each "welfare benefit plan" (as
defined in ERISA) to which one or more of the Borrowers and their ERISA
Affiliates is required to contribute does not in the aggregate exceed the assets
of such plan allocable to such benefits by more than $50,000 (determined using
the actuarial and other assumptions required under FAS 106).
(d) After giving effect to the direct and indirect indebtedness and
other liabilities of the Borrower and its subsidiaries arising under this
Agreement and the other Loan Instruments, whether absolute or contingent, each
of the Borrowers: (i) is solvent (i.e., the aggregate fair value of its assets
exceeds the sum of its liabilities); (ii) has adequate working capital; and
(iii) is able to pay its debts as they mature.
Section 3.10. Assets and Collateral.
(a) The Borrowers are the holders and severally are the legal and
beneficial owners of, and have good title to: the Collateral; and all of the
other assets and properties of the Borrowers (x) reflected on the most recent
report or financial statement furnished to the Banks or (ii) subsequently
acquired; excluding, however, such assets and properties as may have been sold
or otherwise disposed of (x) in the ordinary course of business prior to the
date of this Agreement or (y) as permitted by this Agreement after the date
hereof. Each Borrower has full corporate power and authority and the
unconditional right to grant to the Administrator (for the benefit of all of the
Banks) the mortgages and other security interests respecting the Collateral
contemplated in this Agreement and the other Loan Instruments. The Administrator
(for the benefit of all of the Banks) has legal, valid, binding, enforceable and
perfected security interests in and to the Collateral pursuant to this Agreement
and the other Loan Instruments. No part of the Collateral and such other assets
and properties is subject to any security interest, mortgage, or other lien or
encumbrance or any adverse claim (other than any claim of any party to a
Contract made thereunder) of any kind whatsoever, except (A) those in favor of
the Administrator (for the benefit of all of the Banks) under the Loan
Instruments, (B) those permitted by Section 6.04 hereof (if any) and (C) those
described in Schedule 3.10(a) annexed hereto.
(b) There are no claims (other than any claim of any party to a
Contract made thereunder) of third parties that would prevent any assignee or
purchaser of all or any portion of the Collateral from receiving any payments,
distributions and proceeds with respect thereto, if any, without any defense,
counterclaim, setoff, right of recoupment, abatement or other claim or
determination whatsoever.
(c) All of the Collateral and the other material assets and properties
of each Borrower (if any) have been and currently are operated, maintained and
insured as respectively required by Sections 5.05, 5.07(a) and 5.07(b) hereof.
Each Borrower currently is, and since the Effective Date has been, insured as
required by Section 5.07(b) hereof, and for at least the five-year period ending
with the Effective Date was insured in a comparable manner. No fact,
circumstance or other event currently exists or has occurred that (i) violates
any term or provision of any insurance policy in any material respect., (ii)
would be reasonably likely to permit any insurer to cancel or refuse to renew
(upon similar terms) any such insurance policy, or (iii) would be reasonable
likely to prevent any Borrower from obtaining a similar insurance policy on
similar terms.
(d) The Borrowers have full possession and control of the Collateral
and their other assets and properties (if any), and all of the Collateral and
their other assets and properties (if any) are located (or in the case of
accounts and general intangibles are deemed to be located) at the addresses of
the Borrowers set forth in the Introduction, except (i) that certain items may
be physically located at the other locations listed in Schedule 3.10(d) hereto,
which schedule contains a complete and accurate description of each other
location and the items located there, (ii) samples in reasonable quantities (or
physically held by salesmen and other sales representatives, (iii) for items
physically held by the Administrator or its designee, and (iv) for items
physically held for the benefit and at the direction of the Borrowers by the
persons identified in that schedule.
(e) Each account receivable of each Borrower arose in the ordinary
course of business in a bona fide arm's-length transaction, has been reflected
on its books and records in accordance with GAAP consistently applied, and is
represented by a written invoice or other written document that: (i) was duly
executed and delivered and to the best knowledge of the Borrowers contains no
forgeries or unauthorized signatures; (ii) is legal, valid, binding and
enforceable against the customer in accordance with its terms and provisions;
(iii) does not violate or conflict with any provision of applicable law; (iv)
has not been amended or modified in any material respect; (v) except as set
forth in Schedule 3.10(e) hereto, fully reflects all agreements and
understandings with the customer with respect thereto; (vi) is assignable, and
has been duly assigned to the Administrator (for the benefit of all of the
Banks) in accordance with the terms and provisions hereof and thereof; and (vii)
is maintained at the office(s) of the relevant Borrower (or at such other office
as may have been specified in a notice to the Administrator) in a file and
location that would be readily identifiable by anyone examining the Borrowers'
accounts receivable. The reserves for uncollectible accounts established by the
Borrowers are adequate in the Borrowers' judgment to fully cover current and
future uncollectible accounts receivable.
(f) Schedule 3.10(f) hereto contains a complete and accurate list of
all Pledged Securities currently owned of record and/or beneficially by the
Borrowers (whether individually, jointly or otherwise), identifying with respect
to each the owner(s), issuer, type, amount(s) and certificate or other
identifying number(s), or account number(s) and name(s) and address(s) of the
relevant office(s) if held by a clearing corporation, custodian or other
financial intermediary. All of the capital stock issued by each Borrower (other
than Aeroflex) is listed on that schedule, and those Borrowers constitute all of
the direct and indirect subsidiaries of Aeroflex. There are no other outstanding
securities issued by any Borrower (other than Aeroflex) or any outstanding
warrants, options or other rights to acquire securities issued by any Borrower
(other than Aeroflex), whether from the issuer or anyone else. Each Pledged
Security is owned beneficially and of record by the Borrower indicated on that
schedule, is assignable, and has been duly assigned and transferred as
collateral to the Administrator (for the benefit of all of the Banks). Each of
the Pledged Securities was acquired from the issuer in a transaction in
compliance with and exempt from registration under the Securities Act of 1933,
as amended, and other applicable laws. None of the Pledged Securities: (i) is
subject to any warrant, option, put, call or other right to acquire, sell or
encumber it; (ii) is governed by or otherwise subject to any shareholders
agreement, voting trust or similar agreement or arrangement (other than such
call and redemption rights as may be intrinsic to such securities where issued
by a person not affiliated with the Borrowers); and (iii) is limited or
otherwise restricted in any way respecting assignability, transferability or any
voting, dividend, distribution or other ownership right (whether or not
reflected on the face of the certificate, in any Corporate Document, in any
instruction or other communication to or agreement or arrangement with any
transfer agent, clearing corporation, custodial bank or other financial
intermediary, or otherwise). Each of the Pledged Securities was duly authorized
and validly issued, is fully paid and non-assessable, and is not and will not be
subject to any preemptive or similar right or restriction. The Borrowers have
delivered stock certificates to the Administrator (for the benefit of all of the
Banks) representing all of the Pledged Securities, together with stock powers
duly endorsed in blank representing those certificates.
(g) The Borrowers have delivered to the Banks a Material Contract
Schedule dated as of December 31, 1995. That Schedule, and each other Material
Contract Schedule (whenever delivered), (x) contains a complete and accurate
list of each Material Contract as of the date of such Schedule, (y) with respect
to each such Contract accurately states the purchaser, the date of the Contract
and the Contract amount, and (z) with respect to each Material Contract
accurately states the gross profit margin, all amounts paid to date, the
delivery date(s), the approximate percentage of work completed to date, and the
estimated cost to complete. Each Contract, each other note, stock certificate or
other instrument included in the Collateral, and each other material account
receivable, agreement, document or intangible included in the Collateral: (i)
was duly executed and delivered in a written instrument or document and to the
best knowledge of the Borrowers contains no forgeries or unauthorized
signatures; (ii) is legal, valid, binding and enforceable against the signer in
accordance with its terms and provisions, except as enforceability may be
limited by (1) applicable bankruptcy, insolvency, reorganization and other laws
affecting the rights or remedies of creditors generally and (2) rules of equity
affecting the enforcement of obligations generally (whether at law or in
equity); (iii) does not violate or conflict with any provision of applicable law
in any material respect; (iv) except as set forth in Schedule 3.10(g) hereto,
fully reflects all amendments and material agreements and understandings with
the signer with respect thereto; (v) is assignable, and has been duly assigned
to the Administrator (for the benefit of all of the Banks) in accordance with
the terms and provisions hereof and thereof; and (vi) is maintained at the
relevant office(s) of the Borrower (or at such other office as may have been
specified in a notice to the Banks) in a file and location that would be readily
identifiable by anyone examining the Borrowers' books and records, except (A)
that certain items may be physically located at the other locations listed in
Schedule 3.10(d) hereto, which schedule contains a complete and accurate
description of each other location and the items located there, and (B) for
items physically held by the Administrator or its designee (for the benefit of
all of the Banks).
(h) The machinery, equipment and other fixed assets owned or leased by
each Borrower are in good working order and condition (ordinary wear and tear
and retirement excepted), all of the machinery, equipment and other fixed assets
owned or leased by each Borrower are used or usable in the current conduct of
its business, and each of the Borrowers has all of the machinery, equipment and
other fixed assets necessary for the current conduct of its business.
(i) Except as set forth in Schedule 3.10(i) hereto, to the best
knowledge of the Borrowers, the procurement, storage, containment, presence,
manufacture, distribution, removal and disposition of all inventory and
Environmental Substances and the use and operation of all assets and properties
(including, without limitation, machinery, equipment, real estate and
improvements), as now or previously existing (whenever created), as conducted by
or for any Borrower, or as contemplated, are in full compliance with and conform
to all Environmental Laws and other applicable laws in all material respects.
Without limiting the generality of the foregoing, except as set forth in
Schedule 3.10(i) hereto: (i) all permits, licenses, authorizations, consents or
approvals of authorities necessary for such activities have been obtained and
they are in full force and effect; (ii) no part of those activities, the
Collateral or the other assets or properties of any Borrower is in violation of
any Environmental Law or other applicable law in any material respect; and (iii)
no notice has been served upon any Borrower (other than a notice subsequently
withdrawn or with regard to a violation subsequently cured) from any
governmental authority or other person claiming, nor does there currently exist,
any violation of any Environmental Law or other applicable law in any material
respect in connection with any of those activities, the Collateral or the other
assets or properties of any Borrower.
(j) Schedule 3.10(j) contains a complete and accurate list of all
patents, trademarks and tradenames licensed to or owned or otherwise used by any
Borrower, which indicates for each Borrower the relevant jurisdiction and the
extent of the Borrower's interest in each such patent, trademark or tradename.
Except as set forth in Schedule 3.10(j) hereto, each of the patents, trademarks
and tradenames owned by or licensed to a Borrower: (i) is subsisting and has not
been determined to be invalid or unenforceable by any authority; (ii) to the
best knowledge of the Borrowers is valid, binding and enforceable; (iii) is not
and has not been the subject of any claim of infringement or other material
adverse claim; (iv) has been maintained and used in accordance with all
applicable laws; and (v) is licensable, and has been duly licensed, to the
Administrator (for the benefit of all of the Banks) in accordance with the terms
and provisions hereof and thereof. Each Borrower has all of the patents,
trademarks, tradenames and other intellectual property rights necessary for the
current conduct of its business.
(k) Each Mortgage contains a complete and accurate description of all
of the real estate intended to be covered thereby and (to the extent applicable)
the lot, block and section or other identifying numbers, and the Borrower
granting such Mortgage has good and marketable fee or leasehold title (as
applicable) to the real estate listed for it on that schedule. All portions of
the improvements, if any, to such real estate have been, are being or will be
constructed and completed within the perimeter of the land owned or leased by
the indicated Borrower and in accordance with: (i) all zoning ordinances and
other applicable laws; (ii) the requirements of governmental authorities having
jurisdiction, including all land use and construction licenses, permits and
approvals relating to the improvements; (iii) accepted standards of good
materials and workmanship; (iv) the plans and specifications for such work as
furnished to the authorities having jurisdiction, if any; and (v) all covenants,
conditions, restrictions and agreements of any kind or nature affecting the
improvements, including the applicable contracts and construction loan
agreements and instruments. To the best knowledge of the Borrowers there are no
material design or structural defects in any part of the improvements. The
Borrower's real estate and improvements are, or are capable of being, connected
to and serviced by water, sewage disposal, gas, electric, transportation and
communication facilities that are adequate for the intended use of the
improvements. There is no existing, or to the best knowledge of the Borrowers,
proposed or contemplated eminent domain proceeding or public improvement that
would affect the Borrower's real estate or improvements in any way, including
(without limitation) any plan that would widen, modify or realign any street,
highway, park, wetlands, preserve or other public or utility easement or other
right of access or enjoyment, whether public or private.
(l) To the best knowledge of the Borrowers, there is no existing,
proposed or contemplated plan, study or effort by any governmental authority or
other person that in any way affects or would affect the continued authorization
of the present or contemplated ownership, financing, construction, use or
operation of any part of the Collateral or the other material assets or
properties of any Borrower, or that could or will result in any tax or other
charge being levied or assessed against, or in the creation of any lien upon,
any part of the Collateral or the other material assets or properties of any
Borrower.
Section 3.11. Subsidiaries and Other Ventures. Schedule 3.11 hereto
contains a complete and accurate list of: (a) all of the subsidiaries of each
Borrower or any of its subsidiaries, including with respect to each subsidiary
(i) its state of incorporation, (ii) all jurisdictions (if any) in which the
subsidiary is qualified to do business as a foreign corporation, (iii) the name
of the owner and the number of shares of capital stock of the subsidiary owned,
specifying whether owned beneficially and/or of record, and if that is less than
all of the outstanding shares issued by the subsidiary, stating the total
outstandings, and (iv) all related funding commitments and obligations of any
Borrower and/or any subsidiary of any Borrower; and (b) all partnerships and
other ventures in which any Borrower is a member or venturer, including with
respect to each such partnership or venture (i) its jurisdiction of organization
and any other jurisdiction in which it is qualified to do business as a foreign
entity, (ii) the name of the owner and the percentage and type of interest in
such partnership or venture owned, specifying whether owned beneficially and/or
of record, (iii) all related funding commitments and obligations of any Borrower
and/or any subsidiary of any Borrower, and (iv) the names and addresses of the
other members or venturers.
Section 3.12. Relationship of the Borrowers. Aeroflex and the other
Borrowers (which are subsidiaries of Aeroflex) are engaged as an integrated
group in the business of, among other things, developing, manufacturing and
selling mechanical and electronic components systems and services to government
and industry and of providing the required services and other facilities for
those integrated operations. The Borrowers are seeking to continue the existing
facilities from the Banks in order that funds may continue to be made available
from time to time for working capital and other purposes. Each of the Borrowers
expects to derive financial and other benefit, directly or indirectly, in return
for undertaking their respective obligations under this Agreement, and the other
Loan Instruments, both individually and as a member of the integrated group.
Section 3.13. Securities, Etc. Aeroflex is authorized to issue
25,000,000 shares of common stock with a par value of $0.10 per share, of which
11,884,000 shares are currently issued and outstanding.
Section 3.14. Federal Reserve Regulations, Etc.
(a) Except as expressly permitted by Section 6.09 hereof, no part of
the proceeds of the Loans will be used to purchase or carry any "margin stock"
(as defined in Regulation G or U of the Board of Governors of the Federal
Reserve System of the United States, as applicable) ("Margin Stock") or to
extend credit to any other person for the purpose of purchasing or carrying any
Margin Stock. No Borrower is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.
(b) No Borrower is an "investment company", an "affiliated person",
"promoter" or "principal underwriter" of an "investment company", or
"controlled" by an "investment company" (as such terms are defined in the
Investment Company Act of 1940, as amended). None of the transactions
contemplated by this Agreement and the other Loan Instruments (including the
making of the Loans and the permitted use of the proceeds thereof) will violate
any provision of the Investment Company Act of 1940, as amended, and the rules
and regulations promulgated thereunder, and any corresponding or succeeding
provisions of applicable law.
(c) No Borrower is regulated by or otherwise subject to any applicable
law that directly or indirectly limits or otherwise restricts its ability to
incur, continue or guaranty indebtedness or to encumber any of its assets and
properties as security for the indebtedness of itself or othe1rs.
Section 3.15. No Misrepresentation by the Borrowers. No representation
or warranty of any Borrower made or contained in this Agreement or any other
Loan Instrument (whether with respect to any Borrower or otherwise) and no
report, statement, certificate, schedule or other document or information
furnished or to be furnished by or on behalf of any Borrower in connection with
the transactions contemplated by this Agreement and the other Loan Instruments
(whether with respect to any Borrower or otherwise) contains or will contain a
misstatement of a material fact or omits or will omit to state a material fact
required to be stated therein in order to make it, in the light of the
circumstances under which made, not misleading.
ARTICLE IV
Conditions to Lending
The obligation of the Banks to make any Loan hereunder is subject to
the following conditions precedent:
Section 4.01. Representations and Warranties.
(a) On the Effective Date, both prior to and after giving effect to any
requested Advance, Term Loan advance or Letter of Credit, the representations
and warranties of each of the Borrowers set forth in this Agreement and the
other Loan Instruments shall be true and correct in all respects on and as of
that date with the same effect as though those representations and warranties
had been made on and as of the Effective Date.
(b) On each Advance Date and Issuance Date after the Effective Date,
both prior to and after giving effect to any requested Advance, Term Loan
advance or Letter of Credit, the representations and warranties of each of the
Borrowers set forth in this Agreement and the other Loan Instruments shall be
true and correct in all material respects on and as of that Advance Date with
the same effect as though those representations and warranties had been made on
and as of that date, subject, however, in the case of the representations and
warranties set forth in Sections 3.04, 3.06(b), 3.06(c), 3.07, 3.09(a) and
3.09(b) hereof, to any updated information respecting any event(s) occurring
after the Effective Date affecting any of the representations contained in
Sections 3.04, 3.06 and 3.11 hereof and specifically disclosed in any signed
notice or bringdown, indebtedness or guaranty certificate required hereunder and
delivered to and accepted by the Administrator (with the consent of the
Requisite Banks, as and if required) on or prior to such Advance Date or
Issuance Date (which notice or certificate may be telecopied to the
Administrator if promptly confirmed by delivery of the signed original),
provided that neither such delivery nor such acceptance shall constitute a
waiver of or consent to any event so disclosed.
Section 4.02. No Default. On the Effective Date, and on each Advance
Date and Issuance Date after the Effective Date, both prior to and after giving
effect to any requested Advance, Term Loan advance or Letter of Credit, no Event
of Default or Default shall have occurred and be continuing.
Section 4.03. Borrowers' Bringdown Certificate. On the Effective Date,
the Borrowers shall have delivered to the Banks a bringdown certificate
substantially in the form of Exhibit C hereto, dated that date and signed by an
executive officer of the Borrowers, and by each request for an Advance, Term
Loan Advance or Letter of Credit, the Borrowers shall be deemed to have
delivered to the Banks such a certificate dated the Advance Date or Issuance
Date. A Bank in its discretion may accept the certificate of the Borrowers'
officer delivered (or deemed to be delivered) pursuant to this Section as
evidence of the satisfaction of the conditions precedent specified in Sections
4.01 and 4.02 hereof without in any way waiving or limiting any of the Banks'
rights, powers, privileges, remedies and interests under any term or provision
of this Agreement or any other Loan Instrument.
Section 4.04. Delivery of the Loan Instruments and Collateral. On or
before the Effective Date, the Administrator or its designee (for the benefit
of all of the Banks) shall have received delivery of: (a) the Notes
provided for in Section 2.03 hereof, duly executed by the Borrowers; (b) the
insurance policies required by Section 5.07(b) hereof; (c) the other
instruments and documents required by this Agreement or any other Loan
Instrument or listed in the final version of the Checklist of Closing
Documents delivered to the Borrowers on or before the Effective Date, which
instruments and documents shall have been duly executed by the appropriate
parties; and (d) payment of the Facility Fee and delivery of the Shares
required by Section 2.06(b) hereof; provided that the Plainview Mortgage need
not be executed by the Plainview Bond Authority prior to closing. The
Borrowers covenant and agree to obtain execution of the Plainview Mortgage by
the Plainview Bond Authority as soon as possible, but in any event within six
months of the Effective Date, so as to permit recording of the Plainview
Mortgage. Each of the foregoing instruments and documents shall be in such
form and substance as may be acceptable to the Banks and a copy of each
shall have been delivered to each Bank.
Section 4.05. Opinion of Counsel to the Borrowers, Etc. On the
Effective Date, the Banks shall have received the favorable written opinion of
counsel to the Borrowers, dated the Effective Date, addressed to the Banks and
in such form and substance as may be acceptable to the Banks relating to such
matters as the Administrator and the other Banks may deem necessary or
appropriate, which also shall provide that it may be relied upon by the
successors, assigns, participants of each Bank and by counsel to the
Administrator in rendering any opinion or advice requested from them.
Section 4.06. Supporting Documents. On or before the Effective Date,
the Borrowers shall have furnished to the Banks the following certificates and
other documents with respect to each Borrower: (a) a copy of its certificate of
incorporation and all modifications, amendments and restatements thereof,
certified as of a recent date by the Secretary of State of its state of
incorporation; (b) a copy of its by-laws, together with all modifications,
amendments and restatements thereof, certified as of a recent date by its
Secretary; (c) a certificate of the Secretary of State of its state of
incorporation, dated as of a recent date, as to its existence and good standing;
(d) a certificate of its Secretary or an Assistant Secretary, dated the
Effective Date, as to the due authorization of the negotiation, execution,
delivery and performance by it of this Agreement and each of the other Loan
Instruments to which it is or becomes a party (with the appropriate resolutions
attached) and the incumbency and signatures of its officers and directors who
are authorized to execute any instrument, agreement or other document in
connection with the transactions contemplated by this Agreement and the other
Loan Instruments; (e) copies of all shareholders' agreements and trusts
respecting securities of its issue or related rights, together with all
modifications, amendments and restatements thereof, certified as of a recent
date by its Secretary; and (f) such additional supporting documents and other
information with respect to the Collateral, the other assets or properties of
each Borrower, or the organization, operations and affairs of each of the
Borrowers and those of their respective subsidiaries, partnerships and other
ventures as any Bank may request. All certificates and other documents provided
to any Bank or the Banks pursuant to this Article shall be in such form and
substance as may be acceptable to the Administrator and the Majority Banks.
Section 4.07. Minimum Availability. On the Effective Date, both prior
to and after giving effect to any requested Advance, Term Loan advance or Letter
of Credit, there shall be not less than $2,000,000 of unused availability for
Revolving Credit Loans under this Agreement.
Section 4.08. Plainview Mortgage, Etc. The Borrowers covenant and agree
to obtain execution of the Plainview Mortgage by the Plainview Bond Authority as
soon as possible, but in any event within six months following the Effective
Date, so as to permit recording of the Plainview Mortgage. Promptly, but in any
event within ten Business Days following such execution of the Plainview
Mortgage, the Borrowers shall cause title insurance to be issued on ATLA Loan
Policy 1990 (with New York endorsement modifications) respecting the full amount
of the Plainview Mortgage, which shall include (among other things) a variable
rate mortgage endorsement, first loss endorsement and last dollar endorsement,
all in form and substance reasonably acceptable to the Majority Banks. In
addition, such title policy shall contain no exceptions other than those listed
on Schedule 4.08 hereto.
ARTICLE V
Affirmative Covenants
The Borrowers jointly and severally covenant and agree that, from the
date hereof and until the Obligations have been fully paid and satisfied, unless
the Administrator (with the consent of the Requisite Banks, as and if required)
shall consent otherwise in writing (as provided in Section 10.18 hereof):
Section 5.01. Required Notices. The Borrowers shall give, or cause
to be given, immediate written notice to the Banks of:
(a) any change in the name or the location of the executive office or
principal place of business of any Borrower;
(b) the institution or, to the best knowledge of the Borrowers, the threat
or contemplation of, or any material adverse determination or
change in, any action, suit, investigation or proceeding (whether or
not purportedly on behalf of any Borrower) at law, in equity, in
arbitration or by or before any other authority involving or
affecting (i) any Borrower that, if adversely determined, would have
a Material Adverse Effect, (ii) any alleged criminal act or activity
(other than a misdemeanor) on the part of any Borrower or
any of its representatives, (iii) any Material Document (other
than Collateral) or any Corporate Document, (iii) any Environmental
Claim, (iv) any Plan or any assets and properties of a Plan that,
if adversely determined, would have an ERISA Effect, (v) any
Material Contract or any other part of the Collateral or any
material part of the other assets or properties of any Borrower (if
any), (vi) any of the Obligations, or (vii) any of the transactions
contemplated in this Agreement and the other Loan Instruments;
(c) the occurrence of any material ERISA Event;
(d) the occurrence of any act or event that violates, is in conflict with,
results in a breach of or constitutes a default (with or without the
giving of notice or the passage of time or both) under any term or
provision of (i) this Agreement or any other Loan Instrument, (ii) any
Material Contract in any material respect for more than 30 days or any
applicable grace period thereunder, whichever is less, (iii) any other
Material Document, or (iv) any Corporate Document;
(e) any material labor dispute to which any of the Borrowers may become a
party, any strikes or walkouts relating to any of their respective
offices, plants or other facilities, or the expiration of any labor
contract;
(f) any change in location or material change in the status of the
Collateral other than as permitted in Section 7.03 or 7.04 hereof; and
immediate notice of any new Material Government Contract if the Banks
have requested claim assignments under Section 7.02(h) hereof;
(g) any attachment, confiscation, detention, levy, requisition, seizure or
other taking of any part of the Collateral or any material part of the
other assets or properties of any Borrower (if any), whether through
process of law or otherwise, the filing or other imposition of any lien
or encumbrance known to the Borrowers against any part of the
Collateral or any material part of the other assets or properties of
any Borrower (if any) (other than as expressly permitted by Section
6.04 hereof), or any destruction or other loss of or any material
damage to any part of the Collateral or any material part of the other
assets or properties of any Borrower (if any); or
(h) any other event that would have or has had a Material Adverse Effect.
Section 5.02. Accounts and Reports. The Borrowers shall maintain a
standard system of accounting in accordance with GAAP consistently applied, and
the Borrowers shall provide to each of the Banks the following:
(a) as soon as available and in any event within 90 days after the end of
each fiscal year of Aeroflex, a consolidated balance sheet of Aeroflex
and its subsidiaries as at the end of that fiscal year and the related
consolidated statements of earnings, shareholders' equity and cash
flow for such fiscal year, all with accompanying notes, in reasonable
detail and stating in comparative form the figures as at the end of
and for the previous fiscal year, prepared in accordance with GAAP
consistently applied, and audited and reported upon by KPMG Peat
Marwick LLP, or other independent certified public accountants of
recognized standing regularly retained by Aeroflex and its
subsidiaries to audit their books; (b) concurrently with the
delivery of the financial statements described in subsection (a)
above, the annual auditor's report prepared by those independent
certified public accountants and a letter to the Banks signed by
those accountants to the effect that, having read this Agreement,
nothing came to their attention during the course of their regular
examination that caused them to believe any Event of Default or
Default had occurred and had not theretofore been reported
and remedied, or if any such Event of Default or other event had
occurred and was continuing or was not previously reported, specifying
the facts with respect thereto;
(c) as soon as available, and in any event within 90 days after the end of
each fiscal year of Aeroflex, a consolidating balance sheet of Aeroflex
and its subsidiaries as at the end of that fiscal year and the
corresponding consolidating statements of earnings for such year, all
in reasonable detail, unaudited but certified by the President and the
chief financial officer of Aeroflex (i) to have been prepared in
accordance with GAAP consistently applied, and (ii) as complete,
accurate and a fair presentation of the financial condition of Aeroflex
and its subsidiaries as of such date and the results of operations for
the period covered thereby;
(d) as soon as available, and in any event within 45 days after the end of
each of the first three quarters of each fiscal year of Aeroflex, a
consolidated and consolidating balance sheet of Aeroflex and its
subsidiaries as at the end of such quarter, and the related
consolidated and consolidating statements of earnings and consolidated
statements of shareholders' equity and cash flow for the period from
the beginning of such fiscal year to the end of such quarter,
unaudited but certified by the President and the chief financial
officer of Aeroflex (i) to have been prepared in accordance with GAAP
consistently applied, and (ii) as complete, accurate and a fair
presentation of the financial condition of Aeroflex and its
subsidiaries as of such date and the results of operations for the
period covered thereby, subject to normal year-end audit adjustments;
(e) concurrently with the delivery of the documents described in
subsections (a) and (d), above, (i) a bringdown certificate
substantially in the form of Exhibit C hereto, and (ii) a certificate
substantially in the form of Exhibit D-I hereto setting forth the
calculations of and establishing (among other things) the Borrowers'
compliance with the financial covenants set forth in Section 6.01 and
6.02 of this Agreement, with each such certificate being dated as of
the last day of the relevant reporting period and signed by the
President and chief financial officer of Aeroflex (who shall have
read this Agreement and made an examination sufficient in the opinion
of the signer(s) to make informed statements therein); (f) as soon
as available, and in any event within 25 days after the end of each
calendar month, (i) an operating statement for the month just ended,
compared to budget (which may be delivered within 45 days after the
end of any fiscal quarter instead of within 25 days), (ii) a
receivables aging with respect to the month just ended, and (iii) a
Borrowing Base Certificate substantially in the form of Exhibit D-II
hereto setting forth the Borrowing Base as at the end of such month,
provided that the Borrowing Base Certificate may be requested as
frequently as weekly, with each of the foregoing being certified by
the President and the chief financial officer of Aeroflex (who shall
have read this Agreement and made an examination sufficient in the
opinion of the signers to make informed statements therein);
(g) as soon as available, and in any event within 60 days after the end of
each of the first three fiscal quarters and within 105 days after the
end of each fiscal year of the Borrowers, (i) a certificate
substantially in the same form as Schedules 3.09(a) and (b) hereto
listing all indebtedness of each Borrower (whether individual, joint,
several or otherwise), including commitments, lines of credit and
other credit availabilities, other than indebtedness excluded from the
schedule required under Section 3.09(a) hereof, and all guaranties of
each Borrower (whether individual, joint, several or otherwise) other
than guaranties excluded from the schedule required under Section
3.09(b) hereof, and (ii) upon the request of any Bank (but no more
frequently than quarterly) a reconciliation of the consolidated
balance sheet and income statement most recently submitted to the
corresponding budget and projections previously submitted, with
explanations of all significant variances, with each such certificate
being dated as of the last day of the relevant reporting period and
signed by the President and chief financial officer of ARX (who shall
have read this Agreement and made an examination sufficient in the
opinion of the signer(s) to make informed statements therein);
(h) as soon as available, and in any event within 30 days after the end of
each fiscal quarter, a Material Contract Schedule dated as of or after
the last day of such quarter, in each case certified by the President
and the chief financial officer of Aeroflex (who shall have read this
Agreement and made an examination sufficient in the opinion of the
signers to make informed statements therein);
(i) as soon as available, and in any event within 90 days after the
commencement of each fiscal year of the Borrowers, a consolidated and
consolidating annual budget and projections for the Borrowers for the
forthcoming fiscal year (projected quarterly), including consolidated
and consolidating cash flows of the Borrowers projected quarterly,
certified by the chief executive officer and chief financial officer of
Aeroflex;
(j) as soon as available, a copy of any annual management letter issued
by any accountant or auditor to Aeroflex or any of its subsidiaries;
(k) on or before each anniversary of the date of this Agreement, an
independent insurance broker's certificate stating (i) that the
insurance required by this Agreement is in effect, (ii) that all
premiums under those policies have been paid to the date of the
certificate, and (iii) the amounts and due dates of premiums due within
the following 12-month period; and, as soon as received, copies of all
insurance policies, endorsements and certificates received from time to
time by any Borrower;
(l) promptly upon request by any Bank, copies of all loan, security and
other instruments, agreements and documents respecting indebtedness of
any Borrower in excess of $100,000, including commitments, lines of
credit and other credit availabilities, and of all guaranties of any
Borrower respecting any indebtedness or other obligation of any other
person in excess of $50,000, except those to which the Administrator
(for the benefit of all of the Banks) or all of the Banks also are a
party;
(m) as soon as available, a copy of any notice or other communication
alleging any nonpayment or other material breach or default, or any
foreclosure or other action respecting any material part of its assets
and properties, received respecting any of the indebtedness of any
Borrower (other than the Obligations), or any demand or other request
for payment under any guaranty of any Borrower respecting any
indebtedness or other obligation of any other person, including any
received from any person acting on behalf of the holder or beneficiary
thereof, provided that the Borrowers shall not wait for such copies to
become available to give any notice required under the circumstances
by Section 5.01 hereof;
(n) as soon as available, and in any event not more than five Business Days
after receipt, a copy of any summons or complaint, or any other notice
of any action, suit, investigation or proceeding, involving or
affecting the Company, any of its Subsidiaries where the damages sought
exceed, or if unspecified reasonably could exceed, $100,000;
(o) as soon as available, a copy of any notice or other communication
alleging the invalidity, nonbinding effect or unenforceability of, any
material error or other material defect in, any material omission
from, or any nonpayment or other material breach or default under any
note, instrument or stock certificate included in the Collateral or
under any material accounts receivable, contract or other intangible
included in the Collateral, including (without limitation)
any Material Contract, or requesting or proposing any waiver,
modification or amendment of any of the foregoing, respecting the
time, manner or amount of payment, the amount, identity or priority of
any collateral, any of the secured party's rights and remedies
regarding any collateral, or any other material term or provision,
provided that the Borrowers shall not wait for such copies to become
available to give any notice required under the circumstances by
Section 5.01 hereof;
(p) as soon as available, and in any event not less than 30 days prior to
adoption, copies of each proposed modification, waiver, amendment or
termination of any of the terms and provisions of the certificate of
incorporation or by-laws of any Borrower or any agreement between the
shareholders of any Borrower; promptly following adoption, copies of
each of the foregoing certified as to the accuracy thereof by the
Secretary of State or the Secretary of the relevant Borrower, as
applicable; and such other supporting documents of the kind specified
in Section 4.06 hereof as the Administrator from time to time may
request;
(q) as soon as possible, if and to the extent requested by any Bank, copies
of all tax returns, informational statements and reports filed by any
Borrower with the Internal Revenue Service of the United States of
America;
(r) promptly upon the request of any Bank, copies of each notice, report,
statement or other document or communication, whether periodic or
otherwise, concerning the occurrence, existence or correction of any
ERISA Event in any material respect, any responsive communication on
the part of any Borrower or any of its ERISA Affiliates, or any
preliminary or final determination of any authority in respect thereof,
provided that the Borrowers shall not wait for such request or copies
to become available to give any notice required under the circumstances
by Section 5.01 hereof;
(s) contemporaneously with each submission or filing, a copy of any
report, registration statement, proxy statement, financial
statement, notice or other document, whether periodic or otherwise:
(i) submitted to the shareholders of any Borrower; or (ii)
submitted to or filed by any Borrower with any governmental
or self-regulatory authority (other than those items referenced in
subsections (q) and (r), above) involving or affecting (A) any
securities registration of any Borrower or its securities, (B) any
Borrower that would have a Material Adverse Effect, (C) the
Obligations, (D) any part of the Collateral or any of the other
material assets and properties of any Borrower or (E) any of
the transactions contemplated in this Agreement or the other Loan
Instruments;
(t) as soon as available, but in any event within 45 days after the
Effective Date, a pro forma consolidated and consolidating opening
balance sheet of Aeroflex and its subsidiaries reflecting the
acquisition of the business and assets of MIC, unaudited but certified
by the President and the chief financial officer of Aeroflex (i) to
have been prepared in accordance with GAAP consistently applied, and
(ii) as complete, accurate and a fair presentation of the financial
condition of Aeroflex and its subsidiaries as of such date, subject to
normal year-end audit adjustments; and
(u) as soon as available, but in any event within 60 days after the
Effective Date, a certificate containing a complete and accurate list
of all items of machinery and equipment of each Borrower having
individual book values in excess of $100,000;
together with such supplements to the aforementioned documents and additional
accounts, reports, certificates, statements, documents and information as any
Bank from time to time reasonably may request, each in such form and substance
as may be acceptable to the Administrator and the Majority Banks.
Section 5.03. Access to Premises, Records and Collateral. At all
reasonable times and as often as the Administrator or any other Bank reasonably
may request, each Borrower shall permit representatives designated by the
requesting Bank to (a) have complete and unrestricted access to the premises of
each Borrower, the books and records of each Borrower and the Collateral, except
to the extent such access may be limited by applicable laws pertaining to U.S.
defense matters, (b) make copies of, or excerpts from, those books and records
and (c) discuss the Collateral or the accounts, assets, business, operations,
properties or condition, financial or otherwise, of each Borrower with their
respective officers, directors, employees, accountants and agents.
Section 5.04. Existence, Properties, Etc. (a) Each Borrower shall do or
cause to be done all things, or proceed with due diligence with any actions or
courses of action, that may be necessary (i) to maintain its due organization,
valid existence and good standing under the laws of its state of incorporation,
and (ii) to preserve and keep in full force and effect all qualifications,
licenses and registrations in those jurisdictions in which the failure to do so
would have a Material Adverse Effect; and (b) no Borrower shall do, or cause,
suffer or permit to be done (by itself or otherwise), any act impairing its
power or authority (i) to carry on its business as now conducted or (ii) to
execute or deliver this Agreement or any other Loan Instrument to which it is or
becomes a party, or to perform any of its obligations hereunder or thereunder.
Section 5.05. Compliance with Applicable Laws; Operations. Each
Borrower shall promptly and fully comply with, conform to and obey any and all
applicable laws now or hereafter in effect, other than to the extent the
non-compliance therewith or violation thereof would not be reasonably likely to
have a Material Adverse Effect. In any event, each Borrower shall procure,
store, contain, manufacture, distribute, remove and dispose of all inventory and
Environmental Substances and use and operate all assets and properties
(including, without limitation, machinery, equipment, real estate and
improvements) in full compliance with and conformity to all Environmental Laws
and other applicable laws in all material respects, including (without
limitation) all applicable permits, licenses, and other authorizations, consents
or approvals of authorities.
Section 5.06. Payment of Debts, Taxes, Etc. Each Borrower shall (a)
pay, or cause to be paid, all of its indebtedness and other liabilities and
lawful claims (whether for services, labor, materials, supplies or otherwise) as
and when due, (b) perform, or cause to be performed, all of its obligations
promptly and in accordance with the respective terms and provisions thereof, and
(c) promptly pay and discharge, or cause to be paid and discharged, all taxes,
assessments and other governmental charges and levies imposed upon any of the
Borrowers, upon their respective income or receipts or upon any of their
respective assets and properties on or before the last day on which the same may
be paid without penalty; provided, however, that it shall not constitute a
breach of this Section if any Borrower fails to perform any such obligation or
to pay any such indebtedness or other liability (except for the Obligations),
tax, assessment, or governmental or other charge, levy or claim (i) that is
being (A) delayed, in the case of trade payables (but not other obligations), in
accordance with the normal payment practices of the Borrower, but not beyond any
demand in payment therefor, or (B) contested in good faith and by proper
proceedings diligently pursued, (ii) if the effect of such failure to pay or
perform will not (X) cause or permit the acceleration of the maturity of any
other indebtedness or obligation of any Borrower (i.e., other than the one being
contested) or (Y) subject any part of the assets and properties of any Borrower
to attachment, levy or forfeiture, (iii) for which the Borrower or such
subsidiary has obtained a bond or insurance, or established a reserve, in an
amount that in the judgment of the Banks is adequate and satisfactory, and (iv)
so long as the aggregate amount of such unpaid contested items for all of the
Borrowers does not at any time exceed $500,000.
Section 5.07. Maintenance and Insurance.
(a) Each Borrower shall maintain or cause to be maintained, at its own
expense, all of its assets and properties in good working order and condition
(ordinary wear and tear and retirement excepted), making all necessary repairs
thereto and renewals and replacements thereof. Each Borrower shall perform all
servicing, repairs, overhauls, replacements, modifications, improvements and
tests, or shall cause them to be performed, (i) with personnel duly qualified
for the applicable task, (ii) in accordance and compliance with the manuals and
service bulletins of the applicable manufacturer(s) and (iii) with suitable
replacement, substitute or additional parts or components (A) in good operating
condition, (B) of equivalent or better performance, durability, utility and
value than the item replaced, (C) owned solely by the Borrower, and (D) free of
any security interest or other lien or encumbrance (other than any security
interest granted or permitted under this Agreement or any other Loan
Instrument).
(b) Each Borrower shall maintain or cause to be maintained, at its own
expense, insurance (to the extent available) in form, substance and amounts
(including deductibles) reasonably acceptable to the Majority Banks (i) adequate
to insure all assets and properties of the Borrowers, which assets and
properties are of a character usually insured by persons engaged in the same or
similar business, against loss or damage resulting from fire, flood, hurricanes
or other risks included in an extended coverage policy, (ii) against public
liability and other tort claims that may be incurred by or asserted against the
Borrower, (iii) as may be required by the other Loan Instruments or applicable
law and (iv) as may be reasonably requested by the Banks, all with adequate,
financially sound and reputable insurers, and all naming the Banks as additional
insureds and the Administrator (for the benefit of all of the Banks) as loss
payee under a standard mortgagee's endorsement as their respective interests may
appear. In the event the Administrator receives any insurance proceeds
respecting any loss, damage or destruction of any insured Collateral, the
Administrator shall hold and disburse the proceeds (or a portion thereof) in
accordance with Section 7.03(b) hereof or apply the proceeds (or any remaining
balance) to reduce the Loans as required by Sections 2.05(d) and 7.03(b) hereof.
In the event any Borrower receives any such insurance proceeds (other than
disbursements from the Administrator), the Borrower shall accept and hold those
funds in trust for the benefit of the Banks and shall promptly pay or deliver
those proceeds to the Administrator (for the benefit of all of the Banks) for
application as provided above.
(c) Each Borrower shall maintain or cause to be maintained, at its own
expense, all of its patent, trademark and trade name rights and applications,
including (without limitation) the diligent pursuit of all applications, the
payment of all maintenance, license or other fees and expenses, and the vigorous
prosecution of suits and proceedings to enforce those rights and applications
and to object or oppose the conflicting rights or applications of any other
person, except in each case where the Borrower decides in good faith that a
particular trademark or tradename is of negligible economic value to the
business of the Borrower. Each Borrower (i) shall continue to use each trademark
and tradename of the Borrower in its business and on its goods, (ii) shall use
the appropriate symbol of registration with each use of a trademark or tradename
by the Borrower, (iii) shall not reduce the quality of existing goods or
services bearing a trademark or tradename or use any existing trademark or
tradename with any other goods or services of less than comparable quality, and
(iv) shall not take, or cause suffer, suffer or permit anyone else to take, any
action that may invalidate the registration of any trademark or tradename,
except in each case where the Borrower decides in good faith that a particular
trademark or tradename is of negligible economic value to the business of the
Borrower. Each Borrower shall seek or cause to be sought, at its own expense,
(A) patent applications and patents respecting all unpatented but patentable
inventions made or obtained by the Borrower, (B) trademark applications and
registered trademarks on registrable but unregistered trademarks developed, used
or obtained by the Borrower, and (C) tradename applications and registered trade
names on registrable but unregistered tradenames developed, used or obtained by
the Borrower, except in each case where the Borrower decides in good faith that
such pursuit would not be useful to its business.
Section 5.08. Contracts and Other Collateral. Each Borrower shall in
good faith enforce and preserve on a timely basis all of its rights, powers,
privileges, remedies and interests under or with respect to each Material
Contract and each other note, stock certificate and other instrument, as well as
each other material account receivable, agreement, document and intangible,
included in the Collateral to which any Borrower is now or hereafter becomes a
party to the full extent permitted by applicable law, except as otherwise
provided in Section 7.03(a) hereof.
Section 5.09. Defense of Collateral, Etc. Each Borrower shall defend
and enforce its right, title and interest in and to each and every part of (a)
the Collateral, and (b) the other material assets or properties of the Borrower
(if any), and the Borrowers shall defend the right, title and interest of each
Bank in and to each and every part of the Collateral, each against all manner of
claims and demands on a timely basis to the full extent permitted by applicable
law. In the event any of the Collateral or any of the other material assets or
properties of any Borrower (if any) is attached or levied or any lien or other
encumbrance is imposed on any of the Collateral or such other assets or
properties (other than as permitted by Section 6.04 hereof), then (without
limiting the generality of the preceding sentence) the Borrowers shall pay,
discharge or bond the underlying obligation and cause the release of such
Collateral or other assets or properties therefrom within five days of any
attachment or levy or thirty days of the imposition of any lien or other
encumbrance, but in any case before the claimant may defeat the right of the
relevant Borrower to bond, contest or redeem.
Section 5.10. Maintenance of Borrowing Base. The Borrowers shall
maintain, or cause to be maintained, a Borrowing Base at all times that is equal
to or exceeds the sum of (i) the principal balance outstanding under the
Revolving Credit Loans and (ii) the Letters of Credit Amount. If at any time the
Borrowing Base is less than that minimum, the Borrowers shall immediately (a)
grant and deliver to the Administrator or its designee (for the benefit of all
of the Banks) additional Collateral consisting of such assets or properties as
may be acceptable to the Administrator and the Majority Banks in their sole and
absolute discretion and having an aggregate current fair market value sufficient
(when included in the calculation of the Borrowing Base) to eliminate the
Borrowing Base deficiency, or (b) repay the Revolving Credit Loans and deposit
cash collateral as contemplated in Section 2.05(b) hereof in an amount
sufficient to eliminate the Borrowing Base deficiency. The Borrowing Base
minimum imposed by this Section is a continuing test. The Administrator at any
time and from time to time may demand such payment and delivery whenever a
deficiency is determined by the Administrator. All additional Collateral pledged
to the Administrator or its designee pursuant to this subsection shall be
documented, delivered and perfected in the manner required by this Agreement and
applicable law before that deficiency may be deemed to have been reduced or
extinguished by such Collateral.
Section 5.11. Additional Subsidiary Borrowers. As soon as practical,
and in any event within thirty days following request, the Borrowers shall, at
the request of the Majority Banks, cause any subsidiary that is not a Borrower
or any newly formed or acquired corporation, venture or other person meeting the
definition of "subsidiary" to execute and deliver to the Banks an agreement, in
form and substance acceptable to the Majority Banks, in which such person agrees
to become, and assumes all of the Obligations of, a Borrower under this
Agreement and the other Loan Instruments; provided, however, that Comar shall
not become a Borrower hereunder until such time (if ever) as the Majority Banks
desire that Comar become a Borrower hereunder and the Administrator shall have
given the Borrowers notice to that effect. The Borrowers represent and warrant
to the Banks that each of HARX, Old Corp and T-Cas are inactive subsidiaries and
own no assets or properties. The Borrowers shall give the Banks prompt notice of
(a) any such formation or acquisition or (b) any change in status of any
inactive subsidiary or any acquisition by it of any asset or property.
ARTICLE VI
Negative Covenants
The Borrowers jointly and severally covenant and agree that, from the
date hereof until the Obligations have been fully paid and satisfied, unless the
Administrator (with the consent of the Requisite Banks, as and if required)
shall consent otherwise in writing (as provided in Section 10.18 hereof):
Section 6.01. Certain Financial Requirements. The Borrowers' financial
measurements used in the following covenants: (i) shall be determined in
accordance with GAAP (as of the date of calculation) consistently applied except
to the extent otherwise specified in a particular definition or provision; (ii)
shall be computed for the Borrowers and all of the respective subsidiaries (if
any) on a consolidated basis in accordance with GAAP except to the extent
otherwise specified in a particular definition or provision; and (iii) shall
refer to the corresponding items in the financial statements of the Borrowers
and all of their respective subsidiaries (if any) for the relevant periods
except to the extent otherwise specified or defined herein. (The Borrowers and
the Banks covenant and agree to reset in good faith the financial covenants set
forth in this Section, as well as the corresponding provisions of the financial
covenants compliance certificate required by Section 5.02(d) hereof, from time
to time with each material change in GAAP so as to maintain the integrity and
intent of such covenants.)
(a) The Borrowers shall not permit their Consolidated Effective Net
Worth: (i) at the Effective Date, or at any time thereafter through June 29,
1996, to be less than $15,000,000.00; (ii) at June 30, 1996, or at any time
thereafter through December 30, 1996, to be less than $18,500,000.00; (iii) at
December 31, 1996, or at any time thereafter through June 29, 1997, to be less
than $20,000,000.00; and (iv) at June 30, 1997, and at the end of each
subsequent fiscal year of the Borrowers, or at any time after the end of such
fiscal year through the next succeeding June 29, to be less than the sum of
$4,600,000 plus the Borrowers' actual Consolidated Effective Net Worth as at the
end of the immediately preceding fiscal year (for example, at June 30, 1998, or
at any time thereafter through June 29, 1999, the sum of $4,600,000 plus the
Borrowers' actual Consolidated Effective Net Worth as at June 30, 1997).
(b) The Borrowers shall not cause, suffer or permit their Consolidated
Effective Leverage Ratio to exceed: (i) 4.00:1 at the Effective Date, or at any
time thereafter through June 29, 1996; (ii) 2.50:1 at June 30, 1996, or at any
time thereafter through June 29, 1997; (iii) 1.80:1 at June 30, 1997, or at any
time thereafter through June 29, 1998; and (iii) 1.30:1 at June 30, 1998, or at
any time thereafter.
(c) The Borrowers shall not permit their Consolidated Funded Debt Ratio
for any fiscal year or other period of four consecutive fiscal quarters to be
more than: (i) 3.50:1 at June 30, 1996, or at any time thereafter through June
29, 1997; (iii) 2.75:1 at June 30, 1997, or at any time thereafter through June
29, 1998; and (iii) 2.10:1 at June 30, 1998, or at any time thereafter.
(d) The Borrowers shall not permit their Consolidated Debt Service
Ratio for any fiscal year or any other period of four consecutive fiscal
quarters to be less than: (i) 1.30:1 at June 30, 1996; (ii) 1.00:1 at July 1,
1996, or at any time thereafter through March 30, 1997; (iii) 1.25:1 at March
31, 1997, or at any time thereafter through June 29, 1997; and (iii) 1.50:1 at
June 30, 1997, or at any time thereafter.
(e) The Borrowers shall not permit their Consolidated Quick Ratio to be
less than 1.30:1 at any time.
(f) The Borrowers shall not permit their consolidated income before
taxes to be less than $6,000,000.00 for any fiscal year, as determined in
accordance with GAAP.
(g) The Borrowers shall not directly or indirectly make, incur or
permit their consolidated capital expenditures in any fiscal year to exceed
$7,500,000.00, all as determined on a consolidated basis in accordance with
GAAP.
(h) No Borrower shall cause or permit any change of its fiscal year
from June 30 of each year without the prior written consent of the Banks, which
will not be withheld unreasonably.
Section 6.02. Indebtedness, Etc.
(a) No Borrower shall directly or indirectly create, incur, assume,
permit to exist, increase, renew or extend any indebtedness on its part,
including commitments, lines of credit and other credit availabilities, or apply
for or offer or agree to do any of the foregoing, except that the Borrowers may
incur or permit to exist: (i) indebtedness owed to the Administrator or the
Banks under any of the Loan Instruments; (ii) indebtedness incurred as permitted
as Other Debt under subsection (b) of this Section, provided that the Borrowers
may continue such indebtedness, but without any increase, once incurred as so
permitted; (iii) loans or advances from one Borrower to another Borrower; (iv)
the indebtedness outstanding under the Debentures, the Plainview Bond Documents
and the Equipment Finance Documents, including any renewal or extension thereof,
but excluding any increase therein; (v) any indebtedness incurred under any new
Subordinated Debt Documents approved by the Majority Banks as provided in
Section 6.13 hereof so long as (A) the net proceeds thereof are applied as
provided in Section 2.05(f) hereof and (B) no Event of Default or Default then
exists or would result therefrom, with the various financial measurements and
covenants set forth in Section 6.01 of this Agreement being recalculated on a
pro forma basis (from the then most recent quarterly or subsequent pro forma
calculations) to include the effects of the proposed subordinated indebtedness,
provided that the Borrowers may continue such indebtedness, but without any
increase, once incurred as so permitted; and (vi) the existing indebtedness
listed in Schedule 3.09(a) hereto, including any renewal or extension thereof,
but excluding any increase therein or the continuation of any indebtedness being
retired with the proceeds of the Loans.
(b) No Borrower shall directly or indirectly create, incur, assume,
permit to exist, increase, renew or extend any Other Debt, except for: (i) Other
Debt so long as no Event of Default or Default then exists or would result
therefrom, with the various financial measurements and covenants set forth in
Section 6.01 of this Agreement being recalculated on a pro forma basis (from the
then most recent quarterly or subsequent pro forma calculations) to include the
effects of the proposed Other Debt, and so long as the aggregate amount of all
such Other Debt (with the amount of each item equal to the principal amount of
any indebtedness, the imputed principal amount of any lease treated as
indebtedness under GAAP or the aggregate rental payments for the initial term of
any other lease (discounted to present value), as applicable) incurred during
any fiscal year does not exceed $5,000,000, provided that the Borrowers may
continue such obligations within those limits, but without any increase, once
incurred as so permitted; (ii) leases of assets or properties from one Borrower
to another Borrower; and (iii) the leases under the Equipment Finance Documents
and the existing operating leases listed in Schedule 6.02(b) hereto, including
any renewal or extension thereof, but excluding any increase therein or the
continuation of any indebtedness or obligation being retired or extinguished
with the proceeds of the Loans.
(c) No Borrower shall prepay or acquire, in whole or in part, any of
its indebtedness, except (i) indebtedness owed to the Administrator or the Banks
under any of the Loan Instruments, (ii) loans or advances owed by one Borrower
to another Borrower, (iii) the Permitted Puerto Rican Indebtedness, or (iv) as
permitted by agreement or consent of the Majority Banks.
Section 6.03. Guaranties. No Borrower shall directly or indirectly
make, create, incur, assume, permit to exist, increase, renew or extend any
guaranty on its part of any indebtedness or other obligation of any other
person, or offer or agree to do so, except for: (a) any guaranty of indebtedness
or other obligations owed to the Administrator or the Banks under any of the
Loan Instruments; (b) those guaranties listed in Schedule 3.09(b) hereto,
excluding, however, any increase therein or renewal or extension thereof; (c)
the guaranties under the Equipment Finance Documents, including any renewal or
extension thereof, but excluding any increase in the guarantied obligations; (d)
the endorsement of negotiable instruments for collection or deposit in the
ordinary course of each Borrower's business; or (e) any guaranty of the
indebtedness or other obligations of any Borrower if the guarantor thereof would
have been permitted to have incurred the indebtedness or other obligation
directly and transferred the proceeds or other assets and properties to such
Borrower under this Agreement and the other Loan Instruments.
Section 6.04. Liens and Encumbrances. No Borrower shall directly or
indirectly: (a) make, create, incur, assume or permit to exist any assignment,
pledge, mortgage, security interest or other lien or encumbrance of any nature
in, to or against any part of the Collateral or the other assets or properties
of the Borrower (if any); (b) purchase or otherwise acquire any asset or
property of any character subject to any of the foregoing encumbrances
(including any conditional sale contract or other title retention agreement);
(c) assign, pledge or in any way transfer, restrict or encumber its right to
receive any income or other distribution or proceeds from any part of the
Collateral or the other assets or properties of the Borrower (if any); (d) enter
into any sale-leaseback financing respecting any part of the Collateral or the
other assets or properties of the Borrower (if any); (e) covenant or agree with
any other person to a "negative pledge" respecting any part of the Collateral or
the other assets or properties of the Borrower (if any) (i.e., that it will not
do any of the foregoing or any of the actions described in Section 6.05 hereof);
or (f) offer or agree to or cause or assist the inception or continuation of any
of the foregoing; provided, however, that the foregoing restrictions shall not
prohibit the following to the extent otherwise not prohibited by this Agreement:
(i) liens for taxes, assessments or other governmental charges, levies or
claims, liens of carriers, warehousemen, mechanics, laborers and materialmen
incurred in the ordinary course of business, and liens incurred in the ordinary
course of business in connection with worker's compensation, unemployment
insurance, statutory obligations or social security legislation, or for any
purpose at the time required by law as a condition precedent to the transaction
of business or the exercise of any of the privileges or licenses of any of the
Borrowers, in each case so long as the underlying obligations are not then
required to be paid under Section 5.06 hereof and any reserve has been
established and any bond or insurance has been obtained as required by that
Section;
(ii) liens incurred in respect of judgments and awards discharged within 30
days from the making thereof;
(iii) in the case of real estate other than Collateral, easements,
rights-of-way, restrictions, covenants or other agreements of record and other
similar charges or encumbrances not interfering with the ordinary conduct of the
business of the Borrower or its Subsidiaries;
(iv) in the case of personal assets and properties other than Collateral,
liens and encumbrances incurred or deposits made in the ordinary course of
business to secure the performance of tenders, bids, leases (other than
capitalized leases), contracts (other than for indebtedness), and similar
obligations arising as a result of progress payments under government contracts;
(v) the security interests (including leases treated as security interests)
in equipment purchased or property leased with Other Debt permitted by Section
6.02(b) hereof so long as they respectively secure only the corresponding
purchase money indebtedness or capitalized lease obligations;
(vi) the security interests and other liens and encumbrances (if any)
granted from time to time to the Administrator (for the benefit of all of the
Banks);
(vii) the currently existing security interests in the Permitted Puerto
Rican Investments securing the Permitted Puerto Rican Indebtedness, but those
liens or pledges shall not be increased, renewed or extended; and
(viii) currently existing liens and encumbrances that are disclosed in
Schedule 3.10(a) hereto, including any renewals or extensions thereof, but those
liens or pledges shall not be increased or extended to other indebtedness unless
otherwise permitted by the terms and provisions of this Agreement.
Section 6.05. Sale or Disposition of Collateral, Etc. No Borrower shall
directly or indirectly: (a) sell, lease, sublease, transfer, exchange, abandon
or otherwise dispose of, surrender management, physical possession or control
of, physically alter or relocate all or any portion of the Collateral, or offer
or agree to do so, other than as expressly permitted by Sections 7.03 and 7.04
hereof; (b) cause, suffer or permit any supplement, modification or amendment
to, or any waiver of any term or provision or any termination of, any Contract,
any other note, stock certificate or other instrument included in the
Collateral, or any other material account receivable, agreement, document or
intangible included in the Collateral, other than as expressly permitted by
Sections 7.03 and 7.04 hereof; (c) sell, lease, sublease, transfer, exchange or
otherwise dispose of any material part of its other assets or properties
(individually or in a series of transactions), except for any sale of assets or
properties other than any Collateral (whether in a single transaction or a
series of related transactions) so long as (i) the consideration for such
permitted sale is not less than fair market value, and (ii) at least 90% of such
consideration is paid in cash; (d) enter into any shareholders agreement, voting
trust or similar agreement or arrangement or any other restriction or limitation
in any way respecting assignability, transferability or any voting, dividend,
distribution or other ownership right with respect to any of the Pledged
Securities (whether on the face of any certificate, in any Corporate Document,
in any instruction or other communication to or agreement or arrangement with
any transfer agent, clearing corporation, custodial bank or other financial
intermediary, or otherwise), or cause, suffer or permit any such restriction or
limitation to be imposed upon or continue with respect to any of the Pledged
Securities; or (e) offer or agree to or cause or assist the inception or
continuation of any of the foregoing.
Section 6.06. Investments, Loans, Advances, Etc. No Borrower shall
directly or indirectly purchase or otherwise acquire or hold any investment or
make any investment in or for the benefit of any other person, or offer or agree
to do so, except for: (a) securities received in connection with past
contributions to or investments in the subsidiaries and ventures listed in
Schedule 3.11 hereto, and loans and advances (and any repayment thereof) by a
Borrower to any other Borrower; (b) the continuation of the existing investments
listed on Schedule 6.06(b) hereto; (c) the Permitted Investments, provided that
the aggregate deposits and other investments with banks and other financial
institutions do not at any time exceed the amounts permitted by subsection (g)
or (i) of this Section; (d) any guaranty permitted under Section 6.03 hereof;
(e) any collateral account established under this Agreement or any other Loan
Instrument; (f) loans or advances of salary to any officer or employee of any
Borrower in the ordinary course of its business that in the aggregate for all
employees does not at any time exceed $250,000; (g) normal business banking
accounts in (i) any federally insured U.S. commercial bank so long as the
amounts on deposit with all such institutions do not exceed $25,000 for Aeroflex
or Laboratories, $100,000 for Systems, $150,000 for Vibrations, $25,000 for
International, $250,000 for MIC and $100,000 for Lintek, (ii) with respect to
the deposits of International any commercial bank organized under the laws of
Puerto Rico and approved by the Majority Banks, or (iii) any Bank; (h) the
payroll accounts maintained by the Borrowers in the ordinary course of business
so long as the aggregate amount of all such accounts does not exceed $1,000,000
at any time during the period June 20 to August 20 of each year or $300,000 at
any other time, provided that such payroll accounts are maintained with a
commercial bank in which Permitted Investments may otherwise be made at the
time; (i) deposits with the Trustee and/or Paying Administrator under the
Indenture to the extent payments thereof are then required and permitted to be
made under the Indenture by Aeroflex; (j) the continuation of the Permitted
Puerto Rican Investments, including any renewal or replacement, but without any
increase therein; and (k) other investments not exceeding $25,000 in the
aggregate for all of the Borrowers at any one time in persons not affiliated
with any Borrower.
Section 6.07. Certain Fundamental Changes. No Borrower shall, and no
Borrower shall cause, suffer or permit any of its subsidiaries to, directly or
indirectly effect, enter into or offer or agree to: (a) any issuance, sale,
transfer, pledge or other disposition or encumbrance of any securities issued by
itself or any of its subsidiaries or the issuance of any option, warrant or
other right to acquire any such securities, except that Aeroflex may issue
capital stock (i) pursuant to the Plans, pursuant to any conversion of the
Debentures as provided in to the Indenture, or pursuant to the exercise of the
warrants described in the Placement Memorandum, and (ii) in any public offering
registered, or any arm's-length private placement exempt from registration,
under the Securities Act; (b) any capital reorganization or reclassification of
its capital stock or other equity interests or those of any of its subsidiaries;
(c) any transaction in which its equity interests or those of any of its
subsidiaries prior to the transaction would be changed into or exchanged for
different securities, whether of that or any other person, or for any other
assets or properties; (d) any sale, lease, assignment, conveyance, spin-off or
other transfer or disposition of all or any material part of its business or
assets and properties or those of any of its subsidiaries; (e) any merger,
consolidation, dissolution, liquidation or winding up; (f) the acquisition or
establishment of any subsidiary or joint venture; (g) the acquisition of all or
substantially all of the assets and properties of any other person or any
discrete division or other business unit thereof, whether by itself or with any
of its subsidiaries; or (h) any material change in the character of its business
or that of any of its subsidiaries as conducted on the date of this Agreement or
any adverse change in the method by which that business is conducted.
Section 6.08. Distributions to Shareholders. No Borrower shall directly
or indirectly: (a) declare or make any dividend, payment or other distribution
of cash, assets or property with respect to any equity securities issued by any
Borrower, whether now or hereafter outstanding, other than such payments or
other distributions as may be made to a Borrower from any of its subsidiaries;
(b) redeem, purchase or otherwise acquire any securities issued by any Borrower
or any option or other right to acquire any such securities; (c) covenant or
otherwise arrange with any person (other than with the Banks in any Loan
Instrument or with the Trustee under Section 4.06 of the Indenture) to directly
or indirectly limit or otherwise restrict any dividend, advance or other payment
on distribution (whether of cash or otherwise); or (d) offer or agree to do any
of the foregoing.
Section 6.09. Use of Loans.
(a) No Borrower shall directly or indirectly use any portion of the
Loans, or cause, assist, suffer or permit the use of any portion of the Loans,
in whole or in part, other than use of the Loans for the continuation of the
existing indebtedness that arose under the Existing Loan Instruments and use of
the Revolving Credit Loans for the funding of the working capital needs and
other general corporate purposes of the Borrowers.
(b) No part of the proceeds of the Loans shall be used directly or
indirectly to finance any hostile acquisition.
(c) No part of the proceeds of the Loans shall be used directly or
indirectly to purchase or carry any Margin Stock or for any purpose that
violates, or that is inconsistent with, the provisions of Regulation G, U or X
of the Board of Governors of the Federal Reserve System. If requested by the
Administrator, and in any event prior to using any proceeds of the Loans to
purchase or carry Margin Stock, each Borrower will provide to the Administrator
duly completed and executed statements on Federal Reserve Form U-1 and any other
statement necessary or desirable under such regulations.
Section 6.10. ERISA Plans. Except for the Plans, no Borrower shall, and
no Borrower shall cause, suffer or permit any of its ERISA Affiliates to,
directly or indirectly establish, maintain, participate in, contribute to or
permit to exist any "employee pension benefit plan" (as defined in ERISA) for
any employees of any Borrower or any ERISA Affiliate; provided, however, that
any Borrower or any ERISA Affiliate from time to time may establish any such
plan in accordance with applicable law (including ERISA and the Code) with the
prior written consent of the Banks (which consent will not be unreasonably
withheld). The Borrowers shall use their best efforts to obtain or continue the
qualification of each Plan under ERISA and the Code, as applicable, shall
prepare and deliver each material report, statement or other document required
by ERISA and the Code within the periods specified therein and conforming in
form and substance to the provisions thereof, and shall administer each Plan in
all material respects in accordance with ERISA, the Code and all other
applicable laws, as applicable; and shall use their best efforts to cause their
respective ERISA Affiliates to do each of the foregoing. In any event, no
Borrower shall, and no Borrower shall cause, suffer or permit any of its ERISA
Affiliates to: (i) incur, continue or fail to correct any ERISA Event in any
material respect; (ii) fail to file with the appropriate authority any required
notice or report as and when due; (iii) fail to respond in a timely fashion to
any notice or other communication respecting any Plan from any authority; (iv)
materially increase or modify any funding obligation or other liability of any
one or more of the Borrowers or any ERISA Affiliate (individually or in the
aggregate) under any Plan (whether through amendment or termination) without the
prior written consent of the Administrator (which will not be withheld
unreasonably); (v) permit the present value of all accrued benefits under each
Plan to exceed the value of the assets of such Plan allocable to such accrued
benefits (which benefit value shall be determined on an ongoing basis, using the
Plan's reasonable actuarial assumptions, or on a termination basis, using the
assumptions employed by the Pension Benefit Guaranty Corporation in connection
with plan terminations, as applicable); or (vi) permit the present value of all
accrued post-retirement benefits under each "welfare benefit plan" (as defined
in ERISA) to which one or more of the Borrowers and their ERISA Affiliates is
required to contribute in the aggregate to exceed the assets of such plan
allocable to such benefits by more than $50,000 (determined by using the
actuarial and other assumptions required under FAS 106).
Section 6.11. Transactions with Affiliates. No Borrower shall directly
or indirectly enter into any transaction (including, without limitation, the
lease, purchase, sale or exchange of any asset or property, the making of any
advance or loan or the entering into of any agreement or arrangement for any
payment in respect of any fee, charge or other expense for services performed or
to be performed or any allocation of administrative salaries, expenses and other
general overhead) with any affiliate (other than a Borrower) of any Borrower
other than in the ordinary course and pursuant to the reasonable requirements of
the business of the transacting party and upon fair and reasonable terms and
provisions no less favorable to the transacting party than it could have
obtained in a comparable arm's-length transaction with a person who is not an
affiliate (other than a Borrower) of any Borrower; provided that the foregoing
restriction shall not apply to (i) the payment of reasonable and customary
regular fees to directors of any of the Borrowers who are not employees of any
of them, (ii) loans and advances to officers of the Borrowers approved by the
Board of Directors of the relevant Borrower and permitted by Section 6.06
hereof, (iii) reasonable employment arrangements and benefit programs approved
by the Board of Directors of the relevant Borrower, (iv) the grant of reasonable
stock options or similar rights to employees and directors of any of the
Borrowers pursuant to plans approved by the Board of Directors, (v) any
intercompany indebtedness permitted by Sections 6.02 and 6.06 hereof, (vi) any
transfer of assets to another Borrower permitted by Section 6.05 or 6.07 hereof,
and (vii) any merger, consolidation or liquidation of any subsidiary permitted
by Section 6.07 hereof.
Section 6.12. Modification of the Plainview Bond Documents. No Borrower
shall directly or indirectly agree to, or cause, suffer or permit, any
supplement to or any waiver (of its rights), modification, amendment or
restatement of any term or provision of any Plainview Bond Document, or enter
into any new Plainview Bond Document, or offer or agree to do any of the
foregoing, without the prior written consent of the Majority Banks. The
inclusion of supplements, modifications, amendments, restatements and the like
in the various definitions of the Plainview Bond Documents is not intended, and
shall not be deemed or construed, to be permission for or acceptance of any of
the foregoing by the Majority Banks.
Section 6.13. Modification of the Subordinated Debt Documents, Etc. No
Borrower shall directly or indirectly agree to, or cause, suffer or permit, any
supplement to or any waiver (of its rights), modification, amendment or
restatement of any term or provision of any Debenture, the Indenture, or any
other Subordinated Debt Document from the drafts approved by the Banks, or enter
into any new Subordinated Debt Document, or offer or agree to do any of the
foregoing, without the prior written consent of the Majority Banks; provided
that the Majority Banks shall not unreasonably withhold their consent respecting
any new Subordinated Debt Documents for new indebtedness. The inclusion of
supplements, modifications, restatements and the like in the various definitions
of the Subordinated Debt Documents is not intended, and shall not be deemed or
construed, to be permission for or acceptance of any of the foregoing by the
Majority Banks. In any event, no Borrower shall cause, suffer or permit: (a) any
of the obligations of any Borrower under any Subordinated Debt Document to be
(i) secured by any asset or property of any Borrower or (ii) less than fully
subordinated (in the judgment of the Majority Banks) to the prior payment and
satisfaction of the Obligations; or (b) any payment to be made or action to be
taken under any Subordinated Debt Document (i) during the continuance of any
Event of Default following notice thereof to the Trustee, subject to a minimum
"standstill" period of 150 days respecting payment defaults and 120 days
respecting other defaults, and (ii) without notice of any proposed action, suit
or proceeding to the Banks.
Section 6.14. Modification of the Equipment Finance Documents. No
Borrower shall directly or indirectly agree to, or cause, suffer or permit, any
supplement to or any waiver (of its rights), modification, amendment or
restatement of any term or provision of any Equipment Finance Document, or enter
into any new Equipment Finance Document (other than as permitted under Section
6.05(c)(i)(A) hereof), or offer or agree to do any of the foregoing, without the
prior written consent of the Majority Banks. The inclusion of supplements,
modifications, amendments, restatements and the like in the various definitions
of the Equipment Finance Documents is not intended, and shall not be deemed or
construed, to be permission for or acceptance of any of the foregoing by the
Majority Banks.
Section 6.15. Modification of the Purchase Documents. No Borrower shall
directly or indirectly agree to, or cause, suffer or permit, any supplement to
or any waiver (of its rights), modification, amendment or restatement of any
term or provision of any Purchase Document, or enter into any new Purchase
Document (other than as approved by the Majority Banks in connection with the
closing of the Purchase Agreement), or offer or agree to do any of the
foregoing, without the prior written consent of the Majority Banks. The
inclusion of supplements, modifications, amendments, restatements and the like
in the various definitions of the Purchase Documents is not intended, and shall
not be deemed or construed, to be permission for or acceptance of any of the
foregoing by the Majority Banks.
ARTICLE VII
Collateral
Section 7.01. Continuation and Grant of Security Interests.
(a) Pursuant to the Existing Loan Agreement, the Borrowers granted to
the Administrator (for the benefit of all of the Banks) pledges, assignments,
conveyances, mortgages and other security interests in and to (among other
things) the Existing Collateral in order to secure the timely and full payment
of the Existing Obligations,, which obligations include the outstanding loans
respectively described in Sections 2.01 and 2.02 of this Agreement and continue
as part of the Obligations as described in Sections 2.01, 2.02, 2.03 and 2.12
hereof. The Borrowers hereby restate, reaffirm and continue those grants of the
Existing Collateral pursuant to subsection (b) of this Section, and the
Administrator (for the benefit of all of the Banks) shall retain its interests
in the Existing Collateral in order to secure the timely and full payment and
satisfaction of the Obligations in accordance with the respective terms and
provisions of this Agreement and the other Loan Instruments. To the extent the
Collateral described in subsection (b) of this Section includes assets and
properties not included in the Existing Collateral, each Borrower intends to
grant, and pursuant to subsection (b) of the Section grants, to the
Administrator (for the benefit of all of the Banks) a continuing security
interest in and to those assets and properties.
(b) Each Borrower hereby pledges, assigns, conveys, mortgages,
transfers and delivers to the Administrator (for the benefit of all of the
Banks), and grants to the Administrator (for the benefit of all of the Banks) a
continuing security interest in and to, all of assets and properties of the
Borrower (other than real estate not constituting the Property), including
(without limitation) the following:
(i) any and all accounts receivable of the Borrower, and any and all
Contracts or other orders, agreements or arrangements from or with any
other person to purchase or procure inventory, goods or services from
the Borrower;
(ii) any and all inventory of the Borrower, wherever located, including any
and all raw materials, work-in-progress and finished goods;
(iii)any and all of the real estate of the Borrower described in any
Mortgage, any and all fixtures and improvements thereto, and any and
all interests therein;
(iv) any and all tangible personal assets and properties of the Borrower,
wherever located, including (without limitation) any and all
accessions, accessories, additions, equipment, fixtures, furnishings,
machinery, parts, replacements, supplies, tools and vehicles, whether
or not located upon or affixed to any of the foregoing items;
(v) any and all Pledged Securities and any and all securities issued by
each of the other Borrowers (other than Aeroflex) and by each other
subsidiary of the Borrower, any and all other interests of the
Borrower in other corporations, partnerships and ventures, any and all
dividends and other distributions with respect thereto (whether cash,
stock or otherwise) and splits thereof, and any and all options,
warrants and other rights to acquire securities issued by any of the
foregoing persons (whether from the issuer or otherwise); provided,
however, that the voting capital stock issued by Comar shall not
become Collateral hereunder until such time (if ever) the
Administrator has given the Borrowers notice that the Majority Banks
desire that (A) Comar become a Borrower hereunder (as contemplated in
Section 5.11 hereof) or (B) such stock issued by Comar be included in
the Collateral hereunder;
(vi) any and all patents, trademarks, tradenames, copyrights and other
intellectual properties of the Borrowers, including (without
limitation) any and all applications and pending items, any and all
license royalties, any and all reissues, divisions, continuations,
renewals and extensions thereof (whether in whole or in part), and any
and all rights corresponding to any of the foregoing throughout the
world, and in the case of trademarks and copyrights the good will of
the business to which each of them relates (without, however, in any
way limiting the licenses granted under Section 7.02(f) hereof); and
(vii)any and all securities issued by VTX Electronics Corp., the
warrants from DEL Electronics Corp., and any and all FNMA, GNMA
and other securities (other than the voting capital stock of
Comar to the extent excluded by clause (v), above) owned by the
Borrowers;
(viii)any and all cash, cash equivalents and other instruments;
(ix) the Purchase Agreement and other Purchase Documents;
(x) any and all advances, indebtedness and other amounts (including
interest) directly or indirectly owed to the Borrower by any other
Borrower or other co-obligor, surety or pledgor, and any and all
Subrogation Rights;
(xi) any and all accounts, instruments, chattel paper, documents of title
and trust receipts (and the goods covered thereby, wherever located),
contract rights, warranties, casualty and other insurance policies and
rights, litigation claims and rights, trade names, other general
intangibles, computer programming data, and other books and records of
the Borrower, in each case arising from or with respect to all or any
part of the foregoing; and
(xii)any and all deposits of the Borrower (whether general or special, time
or demand, provisional or final, or individual or joint) maintained
with any Bank, any of its affiliates, custodians, participants or
designees; any and all indebtedness and other amounts at any time
owing by any Bank, any of its affiliates or participants to or for the
credit, account or benefit of the Borrower; and any and all assets and
properties of the Borrower in the possession, custody or control of
any Bank, any of the affiliates, custodians, participants or designees
of any Bank, including (without limitation) other monies, certificates
of deposit, securities, instruments of debt or credit, documents of
title and trust receipts (and the goods covered thereby, wherever
located), and other instruments and documents;
in each case whether now existing or hereafter acquired or created, whether
owned beneficially or of record and whether owned individually, jointly or
otherwise, together with the products and proceeds thereof, all payments and
other distributions with respect thereto, any and all other rights, powers,
privileges, remedies and interests of the Borrower therein, thereto or
thereunder, and any and all renewals, substitutions, modifications and
extensions of any and all of the foregoing (the foregoing items will be referred
to collectively, together with the Existing Collateral, as the "Collateral"), as
security for the timely and full payment and satisfaction of the Obligations as
and when due; provided, however, that the Plainview Mortgage by its terms serves
as Collateral for only those Obligations arising under the Term Note. However,
items released from time to time from the lien of this Agreement and the other
Loan Instruments pursuant to Section 7.04 hereof or in writing by the
Administrator (with the consent of the Requisite Banks, as and if required)
shall no longer be considered to be "Collateral" hereunder.
Section 7.02. Collateral Documentation.
(a) The Borrowers shall deliver to the Administrator or its designee
(for the benefit of all of the Banks) on or before the Effective Date, and
thereafter concurrently with any asset or property becoming Collateral: such
assignments, pledges, deeds, mortgages, financing statements, attornments,
estoppels, waivers, consents, recognitions, bailments and other instruments,
documents and agreements as the Administrator or its counsel may deem necessary
or appropriate to evidence, confirm, effect or perfect any mortgage or other
security interest granted or required to be granted under this Agreement or any
other Loan Instrument, each in such form and substance as may be acceptable to
the Administrator and the Majority Banks; and, at the request of the
Administrator, an accompanying opinion of counsel respecting the Borrowers and
such additional Collateral to the same effect as the opinion required by Section
4.05 of this Agreement, in such form and substance and from such counsel as may
be acceptable to the Banks.
(b) Each Borrower hereby irrevocably authorizes the Administrator in
its discretion: (i) to file without the signature of the Borrower any and all
financing statements, modifications and continuations in respect of the
Collateral and the transactions contemplated by this Agreement and the other
Loan Instruments; (ii) to sign any such statement, modification or continuation
on behalf of the Borrower if the Administrator deems such signature necessary or
desirable under applicable law; and (iii) to file a carbon, photographic or
other reproduction of any financing statement or modification if the
Administrator deems such filing necessary or desirable under applicable law;
provided that so long as no Event of Default is then continuing, the
Administrator shall accord the Borrower an opportunity to review and sign any
proposed financing statement or modification (but not continuation), with the
Administrator exercising its authority hereof to sign on behalf of the Borrower
if the Borrower has not signed within a reasonable period of time (not to exceed
30 days); and provided further that the failure to send any such copy for review
or signature shall not affect the validity or enforceability of any such
signature and filing by the Administrator. The Borrowers shall promptly
reimburse the Administrator for all costs and expenses incurred in connection
with the preparation and filing of any such document. The Administrator shall
send a copy of any such filing to the Borrowers; provided, however, that the
failure to send that copy shall not affect the validity or enforceability of any
such filing. The Administrator shall not be liable for any mistake in or failure
to file any financing statement, modification or continuation.
(c) The Administrator may request that material items of Collateral be
legended or otherwise marked from time to time to reflect the Administrator's
security interests therein (for the benefit of all of the Banks), and the
Borrowers shall promptly mark each requested item in a prominent location with
such legend as the Administrator may direct, which may be affixed directly or on
a permanently attached plaque of customary size. The Borrowers shall not, and
shall not cause, suffer or permit anyone else to, alter, cover, deface or remove
any such legend without the prior written consent of the Administrator, except
that such legend may be removed from items released from time to time from the
lien of this Agreement and the other Loan Instruments as provided herein.
(d) The Borrowers shall enter into one or more cash management
agreements with the Administrator, which agreements shall be in such form and
substance as may be acceptable to the Administrator. The payments under all
accounts receivable shall be deposited in or periodically transferred to the
Borrowers' account with the Administrator (other than the deposits permitted
with other financial institutions under Section 6.06(e)(i) hereof), from which
the Borrowers from time to time may make transfers or withdrawals subject to the
rights, powers, privileges, remedies and interests of the Banks under this
Agreement, the other Loan Instruments and applicable law during the continuance
of any Event of Default. Nothing contained in this subsection, however, shall be
deemed to alter or amend the Obligations of the Borrowers, and neither the
assignment of the accounts receivable nor any receipt of any payments thereunder
shall be deemed to constitute a payment with respect to any of the Obligations
absent an exercise by the Administrator of its rights to make any such
application under this Agreement.
(e) The Banks at any time and from time to time may conduct an audit or
field examination of or otherwise verify or examine the sales and accounts
receivable, inventory and equipment of the Borrowers in any manner such Bank may
deem necessary or desirable; provided, however, that absent the continuance of
any Default or Event of Default (i) the Banks will limit their audits to one per
year, and (ii) the Borrowers shall be obligated to pay or reimburse such Bank(s)
for the costs and expenses of such audit or field examination (1) once each by
the Administrator and Chemical preceding the Effective Date and (2) once by the
Administrator every other year following the Effective Date, based upon when
such costs and expenses were predominately incurred rather than when actually
paid or reimbursed, and subject in each case to minor fluctuations in timing. If
requested by the Administrator, the Borrower promptly shall deliver to the
Administrator or its designee any and all sales slips, orders, invoices and
other documents evidencing the accounts receivable, and shall make deliveries of
subsequent materials at least as frequently as requested. However, irrespective
of any examination by or pledge or delivery to any Bank, no Bank (including the
Administrator) shall have any obligation or liability with respect to any
account receivable of any Borrower, including (without limitation) any
obligation or liability (A) to perform any obligation of any Borrower, (B) for
the enforceability or collectibility of the account receivable or the existence
or sufficiency of any documentation, (C) for the credit worthiness of any
account party, (D) for the sufficiency or reconciliation of any payment
received, or (E) to make any inquiry or demand, make or file any claim, or take
any other action to collect or otherwise enforce any account receivable.
(f) Each Borrower hereby grants to the Administrator (for the benefit
of all of the Banks) a royalty-free exclusive license, to use and assign for use
in connection with any exercise or enforcement by the Administrator or the Banks
of any of its or their rights, powers, privileges, remedies and interests under
this Agreement or any other Loan Instrument, in and to any and all patents,
trademarks, trade names, copyrights and other intellectual properties of such
Borrower, including (without limitation) any and all applications and pending
items, any and all licenses held by such Borrower in and to such kinds of
properties, any and all reissues, divisions, continuations and extensions
thereof (whether in whole or in part) and any and all rights corresponding to
any of the foregoing throughout the world.
(g) In the event any Borrower in its discretion, or as a result of its
negotiations with the Banks after the date hereof, has agreed to grant a
Mortgage on additional real estate, the indicated Borrower shall execute and
deliver a mortgage, in form and substance acceptable to the Banks, naming the
Administrator as mortgagee (for the benefit of all of the Banks) securing the
Obligations (or such portion thereof as may be identified therein) and
encumbering all or such portion of the real estate of that Borrower as the Banks
specified in such request, together with such title insurance, surveys,
environmental reports, flood certificates, and other instruments and documents
as the Banks may request. Promptly following each specific request to the Banks
hereunder, any Borrower under a mortgage shall procure (at its own cost and
expense, but not more frequently than annually) an appraisal of the mortgaged
property from a certified appraiser of recognized national standing acceptable
to the Banks.
(h) Promptly following each specific written request of the Banks
hereunder, the indicated Borrower shall execute and deliver assignments of its
claims under any requested Material Government Contracts in form and substance
suitable for submission to the appropriate federal authority and acceptable to
the Banks, assigning all or such portion of the payments under such Material
Government Contract(s) as the Banks specified in such request.
Section 7.03. Rights of the Borrowers to the Collateral, Etc. Subject
to the terms and provisions of this Agreement and until such time as the
Administrator (with the consent of the Requisite Banks, as and if required)
shall give notice to the Borrowers to the contrary during the continuance of any
Event of Default and after (or in combination with) any Default Declaration,
without regard to whether any other action has been taken by the Administrator
or the Banks under this Agreement or any other Loan Instrument:
(a) Each Borrower shall have the full power and authority in the
ordinary course of business (i) to use any item of Collateral (other than
instruments, securities and other general intangibles in the possession of any
Bank or its designee for the benefit of all of the Banks), (ii) to maintain,
repair, replace and retire equipment in accordance with Section 5.07(a) hereof,
(iii) to temporarily deliver work-in-progress to one or more subcontractors for
processing, and to relocate finished goods inventory to one or more public
warehouses from which the Borrower has obtained recognition and access
agreements in form and substance reasonably acceptable to the Banks, (iv) to
sell or lease any inventory, (v) to sell or otherwise voluntarily dispose of any
equipment or goods (other than inventory) or any obsolete or defective inventory
for fair value (if any) if the sale or other disposition will not materially and
adversely affect the business or operations of the Borrower (which sale or other
disposition need not be repetitive to be in the normal course), which although
permitted is nevertheless subject to the mandatory prepayment provisions of
Section 2.05(e) hereof, (vi) to modify or amend any Contract or other agreement
or document included in the Collateral, (vii) to reduce any payment or otherwise
settle any dispute under any Contract or other material account receivable,
agreement, document or intangible included in the Collateral if the Borrower
determines in good faith that it is in the Borrower's best interest to do so,
(viii) to license or sublicense any patent, trademark, trade name or other
technological or intellectual property if the Borrower determines in good faith
that it is in the Borrower's best interest to do so, (ix) to diligently service
and collect the proceeds of any accounts receivable, which may include such
discounts and reductions as may be usual and customary, (x) to use the cash
proceeds from such inventory and accounts receivable, and (xi) to deposit and
withdraw funds and other cash equivalents constituting Collateral under Section
7.01(b)(ix) hereof; provided, however, that such power shall not be exercised to
the extent it would conflict with or prejudice the continued perfection of any
security interest in any item of the Collateral (other than through such sales,
use of cash proceeds or withdrawals).
(b) In the event of any sale or other voluntary disposition of any
Collateral or other asset or property (other than inventory) in any transaction
permitted by subsection (a) of this Section or any other provision of this
Agreement or other Loan Instrument, or in the event of any damage, destruction
or other loss of any insured Collateral or other asset or property or any
condemnation of any Collateral or other asset or property or other involuntary
disposition so long as it does not constitute a default under Section 8.01(l) of
this Agreement, in each case whether in whole or in part, the affected Borrower
shall have the right to apply the amounts received therefrom (whether payments,
proceeds or otherwise) to the repair, rebuilding or replacement of those assets
or the acquisition of additional assets if, and only if: (i) the affected
Borrower in its discretion has elected to repair, rebuild or replace those
assets or acquire additional assets of at least equivalent value and business
utility; (ii) the affected Borrower has sufficient additional funds with which
to do so (if the amounts received and to be received are not sufficient to do
so); and (iii) if the affected Borrower does so, those assets would constitute
(or continue to constitute) Collateral (unless repairing, rebuilding or
replacing any asset or property not constituting Collateral) and the Borrowers'
representations and warranties pertaining to that Collateral or other asset or
property in this Agreement and the other Loan Instruments would (upon
completion) be true and correct. If those amounts are to be applied to such
repair, rebuilding, replacement or acquisition and are received by any Bank,
then the receiving Bank shall promptly remit those amounts to the affected
Borrower for such use (which nevertheless will be subject to the mandatory
prepayment provisions of Section 2.05(e) of this Agreement if the assets are not
actually repaired, rebuilt, replaced or acquired within the period required by
that subsection); provided that if such amounts exceed $100,000, the
Administrator (at the request of any Bank in its discretion) shall hold such
proceeds as received and disburse them to the affected Borrower for such
purposes upon delivery to the Banks of satisfactory evidence of (x) full payment
to the requisite third parties, (y) good title and the absence of competing
security interests and other encumbrances and adverse claims, and (z) the
satisfaction of such other conditions as may be required by the Loan Instruments
or reasonably requested by the Banks. In the event any Borrower receives any
such payments or proceeds (other than disbursements from the Administrator or
remittances from any such receiving Bank), the Borrower shall accept and hold
those funds in trust for the benefit of the Banks and shall promptly pay or
deliver those proceeds to the Administrator for application as provided above.
(c) The Borrowers shall have the right to sell any equipment in any
sale-leaseback transaction (i.e., in a transaction where a Borrower will
immediately lease the equipment back) so long as: (i) no Default or Event is
then continuing or would result therefrom; (ii) the aggregate amount of such
transactions do not exceed $5,000,000.00 in the aggregate in any fiscal year;
(iii) the consideration for such permitted sale is not less than fair market
value; (iv) such consideration is paid in cash; and (v) the Borrowers pay to the
Banks the amount required under Section 2.05(f) with respect to the incurrence
of the Other Debt in such transaction.
(d) The Borrowers shall have the right to sell any Permitted
Investments, Permitted Puerto Rican Investments, or securities issued by VTX or
DEL Warrants so long as: (i) no Default or Event is then continuing or would
result therefrom; (ii) the consideration for such permitted sale is not less
than fair market value; (iii) at least 90% of such consideration is paid in
cash; and (iv) the Borrowers pay to the Banks the amount required under Section
2.05(e) with respect to such sale (or, in the case of the sale of Permitted
Puerto Rican Investments, repay Permitted Puerto Rican Indebtedness with the
proceeds thereof).
(e) In instances not involving a permitted sale or disposition, the
Borrowers shall have the full power and authority to relocate any item of
Collateral, except for Collateral held by any Bank or its designee (for the
benefit of all of the Banks), so long as (i) the new location is within the
continental United States and Puerto Rico, (ii) the relocation will be made at
the sole cost and expense of the Borrowers, which shall bear all risk of loss
and any and all other liabilities related thereto, (iii) the Borrowers give the
Banks at least thirty (30) days' prior written notice of any proposed
relocation, (iv) prior to relocation the Borrowers execute and deliver to the
Administrator such financing statements and other instruments and documents as
the Administrator or its counsel may deem necessary or desirable, (v) prior to
relocation the Borrowers provide evidence satisfactory to the Banks that all
insurance will be applicable in the new location to the extent required by this
Agreement and the other Loan Instruments, and (vi) immediately following the
relocation as proposed, the representations and warranties set forth in this
Agreement (as and if updated by way of supplements to the schedules, statements,
reports, certificates or notices required hereunder and previously delivered to
and accepted by the Administrator) shall be true and correct in all material
respects on and as of that date with the same effect as though those
representations and warranties had been made on and as of that date; provided,
however, that no Borrower will make any relocation to which the Banks give
notice of their objection.
(f) The Borrowers shall be entitled to exercise any and all voting,
waiver or consensual rights and powers relating or pertaining to the Collateral
or any part thereof for any purpose not inconsistent with the terms of this
Agreement; provided, however, that no Borrower shall be permitted to exercise or
refrain from exercising any such right or power if it would have a material and
adverse effect on the value of the Collateral or any part thereof.
(g) The Borrowers shall be entitled to receive and retain any and all
dividends, other distributions of profit and interest payable in cash on the
securities constituting part of the Collateral. However, any and all stock or
liquidating dividends, returns of capital or other distributions of cash or
other assets or properties made on, in respect of, upon, in redemption of, in
exchange for or in payment of principal of any such Collateral (whether
resulting from a subdivision, combination or reclassification of the outstanding
capital stock of any issuer thereof, any merger, consolidation, acquisition or
other exchange of assets or securities to which any such issuer may be a party,
any conversion, call or redemption, or otherwise) shall be and become part of
the Collateral pledged under this Agreement, and, if received by any Borrower,
shall be delivered immediately to the Administrator or its designee (accompanied
by the documentation required under this Agreement) to be held as Collateral
pursuant to this Agreement.
Section 7.04. Releases. The Administrator from time to time shall
release portions of the Collateral from the liens and security interests granted
under this Agreement and the other Loan Instruments, shall execute and deliver
the documentation reasonably required to effect each such release (in such form
and substance as may be acceptable to the Administrator and the Majority Banks),
and shall return the applicable instruments and other documents to the Borrowers
or their designee, all upon the terms and subject to the conditions of the
subsections of this Section, subject to receipt of evidence and documentation in
each case, in such form and substance as may be acceptable to the Administrator
and the Majority Banks, that those terms and conditions have been satisfied;
provided that no Event of Default or Default shall have occurred and is then
continuing or would occur as a result of the requested release, unless, after
giving effect to the consummation of the transaction for which the release was
requested and the application of the net cash proceeds thereof, if any, toward
the prepayment of the Obligations, the default or other event shall cease to
exist. Any and all actions under this Section shall be without any recourse to
or representation or warranty by the Administrator or the Banks and shall be at
the sole cost and expense of the Borrower.
(a) In the event any debtor under any indenture, agreement, note,
instrument or account receivable pledged to the Administrator (for the benefit
of all of the Banks) pursuant to this Agreement shall have paid all amounts due
thereunder in full and shall have complied with all other terms and conditions
thereof, then, subject to receipt by the Administrator of any payment or
prepayment from the Borrowers required by this Agreement, those items shall be
deemed to have been automatically released as Collateral from the security
interests created by this Agreement, and if requested the Administrator will
return the applicable instruments and other documents to the Borrowers or their
designee.
(b) In the event any items of parts or equipment shall have been
replaced or removed and sold or otherwise disposed of by any Borrower in the
ordinary course of maintenance pursuant to Section 5.07(a) hereof, then, subject
to receipt by the Administrator of any payment or prepayment from the Borrowers
required by this Agreement, those items shall have been deemed to have been
automatically released as Collateral from the security interests created by this
Agreement.
Section 7.05. Litigation Respecting Collateral.
(a) In the event that any action, suit or other proceeding (whether or
not purportedly on behalf of any Borrower) at law, in equity, in arbitration or
before any other authority involving or affecting the Collateral (a
"Proceeding") is contemplated by any Borrower or is otherwise commenced by or
against any party hereto, the Borrowers shall give the Banks immediate notice
thereof. Within twenty Business Days after its receipt of such notice, the
Administrator (with the consent of the Majority Banks) shall notify the
Borrowers that either (i) the Administrator will join in the Proceeding, (ii) a
specified designee of the Administrator or the Banks will join in the
Proceeding, or (iii) the Borrowers may prosecute the Proceeding without the
participation of any Bank or its designee, which Proceeding in any event shall
be conducted in accordance with the provisions of subsection (b) of this
Section. In the event the Banks fail to respond to the Borrowers' notice of the
Proceeding within that period, the Banks shall be deemed to have elected
alternative (iii) above, without, however, waiving any other right, power,
privilege, remedy or interest of the Banks under this Agreement, the other Loan
Instruments and applicable law.
(b) If any Borrower elect to commence a Proceeding or a Proceeding has
otherwise commenced by or against any party hereto, the Borrowers shall cause
the same to be prosecuted (A) in such a manner that all the rights of the Banks
are preserved and protected to the fullest extent reasonably possible and (B)
with counsel to that Borrower that is acceptable to the Administrator and the
Majority Banks and represents both that Borrower and the Banks. Subject to
compliance by the Borrowers with the foregoing, (x) the Administrator shall join
in the Proceeding and take any other action reasonably requested by counsel to
that Borrower to facilitate the prosecution thereof, all at the sole cost and
expense of the Borrowers, and (y) the Proceeding may be prosecuted by that
Borrower in such manner as that Borrower and its counsel reasonably deem
appropriate. In any event, if the Administrator or any other Bank determines at
any time during the pendency of a Proceeding (after consultation with its
counsel) that the interests of one or more of the Banks are at variance with the
interests of any Borrower, the Administrator (with the consent of the Majority
Banks) may appoint its own counsel (at the expense of the Borrowers) to
represent the Banks in the Proceeding, and the Borrowers and their counsel shall
cooperate with the Banks and their counsel to the fullest extent possible in
that Proceeding.
Section 7.06. Power of Attorney. With respect to the various assets and
properties included or required to be included in the Collateral hereunder, each
Borrower hereby irrevocably makes, constitutes and appoints the Administrator
and the Administrator's executive officers (Vice President or above), and each
of them, with full power of substitution, as the Borrower's true and lawful
attorney-in-fact, with full power and authority from time to time in the
Borrower's name, place and stead to: (a) take possession of and execute or
endorse (to any Bank or otherwise) any one or more contracts, mortgages, deeds,
pledges, assignments, instruments and other documents, and any one or more
notes, checks, drafts, bills of exchange, money orders or other documents
received in payment for or on account of those assets and properties; (b)
receive, open and dispose of all of the Borrower's mail and other deliveries
respecting the Collateral and request postal authorities and others to change
the Borrower's delivery address(es) to such address(es) as the Administrator may
deem necessary or desirable; (c) demand, collect and receive any monies due on
account of those assets and properties and give receipts and acquittances in
connection therewith; (d) negotiate and compromise any claim, and commence,
prosecute, defend, settle or withdraw any claims, suits or proceedings,
pertaining to or arising out of those assets and properties; (e) pay any
indebtedness or other liability or perform any other obligation required to be
paid or performed under this Agreement or any other Loan Instrument by the
Borrower or any other person (other than the Administrator); (f) prepare and
execute on behalf of the Borrower any mortgage, financing statement or other
evidence of a security interest contemplated by this Agreement, or any
modification, refiling, continuation or extension thereof; (g) take any other
action contemplated by this Agreement or any other Loan Instrument; and (h)
sign, execute, acknowledge, swear to, verify, deliver, file, record and publish
any one or more of the foregoing; provided, however, that the above-named
attorneys-in-fact may exercise the powers set forth in this Section only
following the written notice of the Administrator or the Banks pursuant to
Section 7.07(a) of this Agreement and during the continuance of the subject
Event of Default, whether or not any reference to this Power of Attorney is made
in that notice, and without regard to whether any other action has been taken by
the Administrator or the Banks under this Agreement or any other Loan
Instrument. This Power of Attorney is hereby declared to be irrevocable, with
full power of substitution and coupled with an interest. This Power of Attorney
shall survive the dissolution, reorganization or bankruptcy of any Borrower and
shall extend to and be binding upon each Borrower's successors, assigns, heirs
and legal representatives. This Power of Attorney may be exercised (i) by any
one of the above-named attorneys-in-fact, or by any substitute designated by any
of those attorneys-in-fact, and (ii) by signing for any Borrower individually on
any document or instrument, or by listing two or more of the persons (including
the Borrowers) for whom any document or instrument is being signed and signing
once, with a single signature by the attorney-in-fact or substitute being
effective to exercise the Powers of Attorney of all persons so listed. A
facsimile signature shall be effective if so affixed. The Administrator shall
not be liable for any failure to collect or enforce the payment of any of those
assets and properties.
Section 7.07. Rights of the Banks to the Collateral, Deficiencies,
Etc.
(a) If any Event of Default shall have occurred and is then continuing
and a Default Declaration has been issued, the Administrator (with the consent
of the Requisite Banks, as and if required) may take (and/or may cause one or
more of its designees to take) any or all of the following actions, after giving
the Borrowers prior written notice, or in the case of clauses (v), (vi) or (ix)
after giving the Borrowers at least three (3) Business Days' written notice
(which notice period each Borrower acknowledges and agrees to be adequate and
reasonable, and which notice may be combined with a Default Declaration) to the
Borrowers, with a single such notice being sufficient to entitle the
Administrator from time to time thereafter to take any one or more of the
actions described below):
(i) prohibit any Borrower from taking any action otherwise permitted by
this Agreement and the other Loan Instruments;
(ii) notify each of the mortgagors, obligors, lessees, issuers, custodians
and other parties with respect to or interested in any item of the
Collateral of the interest of the Administrator or Banks therein or of
any action proposed to be taken with respect thereto, and direct one or
more of those parties to make all payments, distributions and proceeds
otherwise payable to any Borrower with respect thereto directly to the
Administrator (for the benefit of all of the Banks) or its order until
notified by the Administrator that all the Obligations have been fully
paid and satisfied;
(iii)receive and retain all payments, distributions and proceeds of any
kind with respect to any and all of the Collateral;
(iv) direct the Borrowers or any other holder of Collateral to assemble and
deliver such Collateral to the Administrator or its designee at such
time(s) and place(s) as the Administrator from time to time may
specify, all without any risk or expense to the Administrator or any
Bank; or enter any premises where any item of Collateral may be located
(to the extent permitted by applicable law with respect to classified
areas), with or without permission or process of law but without breach
of the peace, and seize and remove such Collateral or remain upon such
premises and use or dispose of such Collateral as contemplated under
this Agreement and the other Loan Instruments;
(v) request the judicial appointment of a receiver respecting the
Collateral (excluding funds in the possession of any Bank or its
designee and such other Collateral as the Administrator (with the
consent of the Requisite Banks, as and if required) may specify in its
request) in any action, suit or proceeding in which claims are
asserted against the Collateral by the Administrator or its
designee, irrespective of the solvency of any Borrower or any other
person or the adequacy of any collateral, and without notice to or the
approval of any Borrower, which receiver shall have the power to
manufacture, operate, sell, lease or rent such items of Collateral
pending the sale of all of the Collateral and to collect the rent,
issues and profits therefrom, together with such other powers as may
have been requested by the Administrator (with the consent of the
Requisite Banks, as and if required), and shall apply the amounts
received (net of all proper charges and expenses) to the Obligations
as provided in this Agreement;
(vi) take any action with respect to the offer, sale, lease or other
disposition, and delivery of the whole of, or from time to time any one
or more items of, the Collateral, including, without limitation: (A) to
sell, assign, lease or otherwise dispose of the whole of, or from time
to time any part of, the Collateral, or offer or agree to do so, in any
established market or at any broker's board, private sale or public
auction or sale (with or without demand on any Borrower or any
advertisement or other notice of the time, place or terms of sale) for
cash, credit or any other asset or property, for immediate or future
delivery, and for such consideration and upon such terms and subject to
such conditions as the Administrator (with the consent of the Requisite
Banks, as and if required) in its sole and absolute discretion may
determine, and any Bank (with the consent of the Majority Banks) may
purchase (the consideration for which may consist in whole or in part
of cancellation of indebtedness) or any other person may purchase the
whole or any one or more items of the Collateral, and all items
purchased shall be free and clear of any and all rights, powers,
privileges, remedies and interests of the Borrowers (whether
individual, joint, several or otherwise), which each Borrower has
expressly waived pursuant to Section 7.09 hereof; (B) to postpone or
adjourn any such auction, sale or other disposition, to cause the same
to be postponed or adjourned from time to time to a subsequent time and
place, or to abandon or cause the abandonment of the same, all without
any advertisement or other notice thereof; and (C) to carry out any
agreement to sell any item or items of the Collateral in accordance
with the terms and provisions of such agreement, notwithstanding that,
after the Administrator shall have entered into such an agreement, all
the Obligations may have been paid and satisfied in full;
(vii)exercise any voting, consent, enforcement or other right, power,
privilege, remedy or interest of any Borrower pertaining to any
item of Collateral to the same extent as if the Administrator
were the outright owner thereof (for the benefit of all of the
Banks), provided that the Administrator shall not be entitled to
exercise any of the voting rights of any Borrower pertaining to
any equity interest in another person unless and until the
Administrator has given specific written notice to the Borrowers,
apart from the notice first referred to in this subsection, of
the Administrator's election to exercise one or more, or all,
such voting rights;
(viii) take possession of and thereafter deal with or use from time to
time all or any part of the Collateral in all respects as if the
Administrator were the outright owner thereof (for the benefit of
all the Banks), which shall include (without limitation) the
right to manufacture, operate, sell, lease or rent items of
Collateral, as well as to sell parts of the Collateral pending
the sale of all of the Collateral, and to collect the rent,
issues and profits therefrom;
(ix) transfer or cause the transfer of the ownership of all or any part of
the Collateral (with the consent of the Majority Banks) to its own
name, the name of any other Bank or any designee and have such transfer
recorded in any jurisdiction(s) and publicized in any manner deemed
appropriate by the Administrator; and
(x) in addition to, and not by way of limitation of, any of the rights
specified above, exercise or enforce any and all rights, powers,
privileges, remedies and interests afforded to the Administrator or the
Banks under this Agreement, the other Loan Instruments and any and all
provisions of applicable law (including, without limitation, the
Uniform Commercial Code), whether as a secured party or mortgagee in
possession of collateral or otherwise.
(b) The Administrator shall collect the cash proceeds received from any
sale or other disposition or from any other source contemplated by subsection
(a) above, and, after deducting all costs and expenses incurred by the
Administrator and any person designated by the Administrator to take any of the
actions enumerated in subsection (a) above in connection with such collection
and sale or disposition (including attorneys' disbursements, expenses and fees),
the Administrator shall apply the same in accordance with the terms and
provisions of this Agreement unless the Administrator (with the consent of the
Majority Banks) shall elect to retain the same as additional or substitute
Collateral to the extent such retention is permitted by this Agreement or any
other Loan Instrument. In the event any funds remain after satisfaction in full
of the Obligations, then the remainder shall be returned to the Borrowers,
subject, however, to any other rights or interests any one or more of the Banks
may have therein under any other instrument, agreement or document or applicable
law.
(c) If the amount of all proceeds received with respect to and in
liquidation of the Collateral that shall be applied to payment of the
Obligations shall be insufficient to pay and satisfy all of the Obligations in
full, the Borrowers acknowledge and agree that they shall remain jointly and
severally liable for any deficiency, together with interest thereon and costs of
collection thereof (including attorneys' disbursements, expenses and fees), in
accordance with the terms and provisions of this Agreement and the other Loan
Instruments.
Section 7.08. Performance by the Administrator. In the event any
Borrower fails to pay or otherwise perform or satisfy any of its obligations to
others or under or in respect of any of the Collateral or any other material
asset or property of the Borrower as required by this Agreement or any other
Loan Instrument, the Administrator (with the consent of the Majority Banks, time
permitting) shall have the right in its sole and absolute discretion) (but shall
be under no duty or obligation) to make any such payment or cause the
performance or satisfaction of any other such obligation, including (without
limitation) the payment of any tax, claim or insurance premium, the maintenance
or defense of any part of the Collateral or the purchase or discharge of any
lien on any part of the Collateral. The Administrator will endeavor to give the
Borrowers prior notice (which may be by telephone or telecopy) of any such
payment or action; provided, however, that the failure to give such notice shall
not affect the validity of the payment or action or the Borrowers' reimbursement
obligations with respect thereto. The Borrowers shall pay or reimburse on demand
any and all amounts advanced or expenses incurred by the Administrator or its
designee under this subsection, which shall constitute additional Loans under
(and secured by) this Agreement and shall bear interest at the rate applicable
to the Loans. No payment made or action taken by the Administrator, any other
Bank or its designee shall be deemed or construed to be a waiver, cure or
satisfaction of the underlying default, which default shall be deemed to be
continuing until such time (if ever) as the Borrowers have, prior to the
Maturity Date, (i) resumed the payment, performance and satisfaction required by
this Agreement and the other Loan Instruments and (ii) repaid all Loans advanced
for such payments and actions, together with interest thereon, and paid all
others to whom the Administrator has requested direct payment respecting such
payments and actions.
Section 7.09. Certain Acknowledgments and Waivers by the Borrowers.
(a) Each Borrower acknowledges and agrees that the rights, powers,
privileges, remedies and interests conferred upon the Administrator or the Banks
in respect of the Collateral by this Agreement, the other Loan Instruments and
applicable law are purely discretionary and shall not, and shall not be deemed
or construed to, impose upon the Administrator or any other Bank any duty or
other obligation (A) to sell, foreclose or otherwise realize upon any
Collateral, (B) to protect or preserve any of the Collateral, (C) to perform or
satisfy any obligation respecting the Collateral or any Borrower, (D) to
mitigate or otherwise reduce any damage or other loss, or (E) to otherwise
exercise or enforce any such right, power, privilege, remedy or interest. Any
sale, foreclosure or other realization upon the Collateral, or any other
exercise or enforcement of any such right, power, privilege, remedy or interest,
if undertaken by the Administrator or any other Bank in its discretion (with the
consent of the Requisite Banks, as and if required), may be delayed,
discontinued or otherwise not pursued or exhausted for any reason whatsoever
(whether intentionally or otherwise). Without limiting the generality of the
foregoing, to the extent waiver is not limited under applicable law, each
Borrower hereby expressly waives each and every claim or defense, and agrees
that it will not assert or pursue (by action, suit, counterclaim or otherwise)
any claim or defense, respecting (i) any settlement or compromise with any
obligor or other third party under any account receivable, note, instrument,
agreement, document or general intangible included in the Collateral,
irrespective of any reduction in the potential proceeds therefrom, (ii) the
selection or order of disposition of any Collateral (which may be at random or
in any order(s) the Administrator (with the consent of the Requisite Banks, as
and if required) may select in its sole and absolute discretion), (iii) the
private sale of any Collateral, whether or not any public market exists, (iv)
the choice or timing of any sale date (which the Administrator (with the consent
of the Requisite Banks, as and if required) may select in its sole and absolute
discretion), irrespective of whether greater sale proceeds would be realizable
on a different sale date, (v) the adequacy of the sale price of any Collateral,
(vi) any insufficiency of the proceeds to fully satisfy the Obligations, (vii)
any sale of Collateral to the first person to receive an offer or make a bid,
(viii) the selection of any purchaser of any Collateral, or (ix) any default by
any purchaser of any Collateral. Neither the Administrator, nor any other Bank
nor any of their respective representatives shall incur any liability in
connection with any sale of or other action taken respecting any Collateral in
accordance with the provisions of this Agreement, any other Loan Instrument or
applicable law.
(b) Each Borrower hereby expressly waives the applicability of any and
all applicable laws respecting collateral or its disposition that are or may be
in conflict with the terms and provisions of this Agreement and the other Loan
Instruments now or at any time in the future to the extent waiver is not limited
under applicable law, including (without limitation) those pertaining to notice
(other than notices required by this Agreement or any other Loan Instrument),
appraisal, valuation, stay, extension, moratorium, marshalling of assets,
exemption and equity of redemption; provided, however, that the preceding
provision is not intended to confer upon any Bank any right, power, privilege,
remedy or interest not permissible under applicable law notwithstanding the
foregoing waivers.
Section 7.10. Termination of Security Interests. The security interests
granted to the Administrator (for the benefit of all of the Banks) hereunder
shall terminate when the Obligations shall have been fully paid and satisfied.
Upon such complete payment and satisfaction: the Administrator shall reassign,
release and/or deliver to the Borrowers all Collateral then held by or at the
direction of the Administrator (for the benefit of all of the Banks) under the
Loan Instruments; and, if requested by the Borrowers, the Administrator shall
execute and deliver to the Borrowers for filing in each office in which any
financing statement, mortgage, or lease, or assignment thereof, relating to the
Collateral, or any part thereof, shall have been filed, a termination statement
under the Uniform Commercial Code or an appropriate satisfaction, release,
reconveyance or reassignment releasing the Administrator's interest therein, and
any other instrument or document that the Borrowers deem reasonably necessary to
evidence the termination of the Administrator's security interest, each in such
form and substance as may be acceptable to the Administrator. Any and all
actions under this Section shall be without any recourse to or representation or
warranty by any Bank (including the Administrator) and shall be at the sole cost
and expense of the Borrowers.
ARTICLE VIII
Defaults and Remedies
Section 8.01. Events of Default. Each of the following events shall
constitute a default under this Agreement (each an "Event of Default"):
(a) any representation or warranty made in this Agreement or any other Loan
Instrument shall prove to have been false or misleading in any material
respect when made (or deemed made);
(b) any report, statement, certificate, schedule or other document or
information furnished (whether prior to, on or after the Effective
Date) in connection with this Agreement or any of the other Loan
Instruments shall prove to have been false or misleading in any
material respect when furnished (or deemed furnished);
(c) any default, whether in whole or in part, shall occur in the payment of
the principal of, the interest on or any other amount respecting: (i)
the Loans or any of the other Obligations; (ii) any other indebtedness
of any Borrower to any Bank or any of its affiliates; or (iii) any
other indebtedness guarantied by any Borrower to any Bank or any of its
affiliates;
(d) any default, whether in whole or in part, shall occur in the due
observance or performance of any covenant, term or provision to be
performed under Article VI of this Agreement (other than under Section
6.10 or 6.11 hereof), and such default shall continue for a period of
five (5) days after the earlier of notice thereof to or knowledge
thereof by any Borrower; provided, however, that if such default is
capable of being cured and if that Borrower shall have commenced to
cure such default within such period and shall proceed continuously in
good faith and with due diligence to cure such default, then such
period instead shall be fifteen (15) days;
(e) any default, whether in whole or in part, shall occur in the due
observance or performance of any other covenant, term or provision to
be performed under this Agreement and the other Loan Instruments by
any Borrower or any other party thereto (other than any Bank), which
default is not described in any other subsection of this Section, and
such default shall continue for a period of ten (10) days after the
earlier of notice thereof to or knowledge thereof by any Borrower;
provided, however, that if such default is capable of being cured and
if that Borrower or such other party shall have commenced to cure such
default within such period and shall proceed continuously in good
faith and with due diligence to cure such default, then such period
instead shall be thirty (30) days;
(f) any default, whether in whole or in part, shall occur under Article 20
of any Mortgage; any "event of default", whether in whole or in part,
shall occur under (and as defined in) the Plainview Bond Documents;
any "Event of Default", whether in whole or in part, shall occur
under (and as defined in) the Indenture or any other Subordinated Debt
Document; or any principal payment (in whole or in part) under any
Subordinated Debt Document shall be accelerated or otherwise become
due or prepayable (whether directly or through any trust deposit)
prior to the scheduled payment date (including, without limitation,
the imposition or inception of any obligation to make any payment of
"Accelerated Redemption Obligations" under (and as defined in)
Section 3.07 of the Indenture or make any deposit under Section 4.10
of the Indenture);
(g) any default, whether in whole or in part, shall occur in the due
observance or performance of any term or provision of any
instrument(s) or agreement(s) (other than a Loan Instrument)
respecting any indebtedness of any one or more of the Borrowers if
such indebtedness is in excess of $500,000 in the aggregate or arises
under any Equipment Finance Document, or any guaranty of the
indebtedness or other obligations of any other person(s) guarantied by
any one or more of the Borrowers if such indebtedness is in excess of
$500,000 in the aggregate or arises under any Equipment Finance
Document, that shall cause or permit acceleration of any such
indebtedness or demand for payment under any such indebtedness or
guaranty, which default is not described in any other subsection of
this Section, unless payment shall be made or action shall be taken
in an amount or manner sufficient to cure it within ten (10) days
after the earlier of notice of such default to or knowledge thereof
by any Borrower, or such lesser period as may be provided thereunder,
provided that such payment or action would not result in a breach of
any term or provision of this Agreement and the other Loan
Instruments; provided, however, that if such default is capable of
being cured and if the relevant Borrower shall have commenced to cure
such default within such period and shall proceed continuously in good
faith and with due diligence to cure such default, then such period
instead shall be thirty (30) days or such lesser period as may be
provided thereunder;
(h) any Borrower shall (i) fail or be unable to pay its debts generally as
they become due, (ii) conceal, remove or transfer any of its assets
and properties in violation or evasion of any bankruptcy, fraudulent
conveyance or similar applicable law, (iii) make a general assignment
for the benefit of its creditors, (iv) apply for or consent to the
appointment of a receiver, trustee, assignee, custodian, sequestrator,
liquidator or similar official for itself or any of its assets and
properties, (v) commence a voluntary case for relief as a debtor under
the United States Bankruptcy Code, (vi) file with or otherwise submit
to any governmental authority any petition, answer or other document
seeking (A) reorganization, (B) an arrangement with creditors or (C)
to take advantage of any other present or future applicable law
respecting bankruptcy, reorganization, insolvency, readjustment of
debts, relief of debtors, dissolution or liquidation,(vii) file or
otherwise submit any answer or other document admitting or failing to
contest the material allegations of a petition or other document filed
or otherwise submitted against it in any proceeding under any such
applicable law, (viii) be adjudicated a bankrupt or insolvent, or (ix)
take any action for the purpose of effecting any of the foregoing;
(i) any case, proceeding or other action shall be commenced against any
Borrower for the purpose of effecting, or an order, judgment or decree
shall be entered by any court of competent jurisdiction approving (in
whole or in part), anything specified in subsection (h) of this
Section, or any receiver, trustee, assignee, custodian, sequestrator,
liquidator or other official shall be appointed with respect to any
Borrower, or shall be appointed to take or shall otherwise acquire
possession or control of all or a substantial part of the assets and
properties of any Borrower, and any of the foregoing shall continue
unstayed and in effect for any period of 30 days;
(j) one or more final judgments for the payment of money in excess of an
aggregate of $250,000 shall be rendered against any Borrower and the
same shall remain undischarged for a period of 30 days during which
levy and execution shall not be effectively stayed or contested in good
faith;
(k) any action, suit, investigation or proceeding involving or affecting
any Plan or any assets of properties of any Plan shall be adversely
determined; any fiduciary or sponsor of, or participant in, any Plan
shall take or commit any of the actions specified in subsection (h) of
this Section in respect of the Plan or all or substantially all of its
assets and properties; or any action, suit or proceeding shall
otherwise be commenced against any Plan or any of its fiduciaries,
sponsors or participants for the purpose of effecting, or any order,
judgment or decree shall be entered by any court of competent
jurisdiction approving (in whole or in part), anything specified in
subsection (h) of this Section in respect of any Plan or all or
substantially all of its assets and properties, or any receiver,
trustee, assignor, custodian, sequestrator, liquidator or other
official shall be appointed with respect to the Plan or all or a
substantial part of its assets and properties, or shall be appointed
to take or shall otherwise acquire possession or control of all or a
substantial part of the assets and properties of any Plan, and any of
the foregoing shall continue unstayed and in effect for any period of
30 days; provided that any such event (individually or in the
aggregate with any other such event(s)) would have or has had (in the
reasonable judgment of the Administrator and the Majority Banks) an
ERISA Effect;
(l) any loss, destruction, termination, foreclosure or other material
impairment, deterioration or diminution, in whole or in part, shall
occur with respect to all or any part of the Collateral (other than
fully insured casualty losses to the extent the Administrator has a
perfected first priority security interest in and actually receives all
insurance proceeds with respect thereto to the extent required by this
Agreement and the other Loan Instruments), or the Administrator's
perfected security interest therein, or any Borrower shall do or fail
to do or resist, or cause, suffer or permit anyone else to do, anything
that would so affect any such collateral or security interest;
(m) any Loan Instrument (in whole or in part) at any time and for any
reason whatsoever (i) shall cease to be in full force and effect, (ii)
shall be declared null and void, (iii) shall be contested or otherwise
challenged as to its validity or enforceability by any of the Borrowers
or (iv) shall be the subject of any denial by any of the Borrowers of
any liability or obligation of such party thereunder;
(n) any of the Borrowers shall be or become the subject of or a party to
any criminal conviction in any material respect (other than a
misdemeanor);
(o) change shall occur in the control of Aeroflex or any other Borrower,
whether by a change in ownership or otherwise; or
(p) there shall occur any event or events that (individually or in the
aggregate with any other event(s)) would have or has had a Material
Adverse Effect as determined by the Administrator and the Majority
Banks in the exercise of their reasonable judgment.
Section 8.02. Remedies upon Default. Upon the occurrence or at any time
thereafter during the continuance of any Event of Default and the issuance of a
Default Declaration, the Administrator (with the consent of the Requisite Banks,
as and if required), upon notice to the Borrowers (which may be combined with
the Default Declaration), shall be entitled, without limiting the ability to do
so at other times (each Borrower hereby acknowledging that all Letter of Credit
Advances and interest thereon and certain other Obligations are payable on
demand as provided in Article II hereof notwithstanding anything in this Section
or in Section 8.01 to the contrary): (a) to terminate the Commitment; (b) to
declare the Loans and all other Obligations to be immediately due and payable,
whether principal, interest or otherwise, without presentment, demand, protest
or other notice of any kind (all of which are hereby expressly waived by each
Borrower), notwithstanding anything contained in this Agreement, any Note or any
of the other Loan Instruments to the contrary; (c) to exercise or enforce any
one or more of the rights, powers, privileges, remedies and interests of the
Administrator or the Banks under this Agreement, each Note, the other Loan
Instruments and applicable law; and (d) to demand the immediate deposit of cash
Collateral in a non-interest-bearing demand deposit account with the
Administrator or such other institution as the Administrator may designate in an
amount equal to the aggregate unadvanced face amounts of the Letters of Credit
then outstanding in order to further secure repayment of all advances under the
Letters of Credit, together with interest thereon, and all of the other
Obligations in full, which deposits shall remain Collateral until the all of the
Letters of Credit have been paid (and repaid by the Borrowers) or surrendered
for cancellation (provided that any Letter of Credit shall be deemed for this
purpose to have been canceled on the thirtieth day following the stated expiry
date, without, however, relieving the Borrowers of any of the Obligations with
respect to any such Letter of Credit that is in the process of payment) and all
of the other Obligations have been fully paid and satisfied, and which
obligation to deposit is itself secured by the Collateral pursuant to this
Agreement and the other Loan Instruments; provided, however, that in the event
of the occurrence of any of the Events of Default respecting any Borrower set
forth in subsections (h) and (i) of Section 8.01, then simultaneously with that
event, and without the necessity of any notice or other action by the
Administrator or the other Banks, (i) the Commitment shall be terminated, (ii)
the Loans and all of the other Obligations shall be accelerated and immediately
due and payable as stated above, and (iii) the Borrowers shall be required to
make the deposit of the additional cash Collateral further securing the Letters
of Credit and the other Obligations as provided above. If the Borrowers have not
delivered the cash Collateral specified above within five (5) Business Days
after it was due, at any time and from time to time thereafter the Banks in
their sole and absolute discretion may (but shall not be obligated to) advance
to the Borrowers all or any portion of the required cash Collateral, by credit
to any of the Borrowers' accounts with the Administrator or otherwise; and
amounts advanced by the Banks pursuant to this option and outstanding from time
to time shall be due and payable, together with interest and additional interest
thereon at the rates provided in Section 2.04 of this Agreement, ON DEMAND, and
shall otherwise constitute "Letter of Credit Advances" for all purposes under
this Agreement and the other Loan Instruments.
Section 8.03. Enforcement, Etc. The Administrator (with the consent of
the Requisite Banks, as and if required), in its or their sole discretion, may
proceed to exercise or enforce any right, power, privilege, remedy or interest
that the Administrator or the Banks may have under this Agreement, any other
Loan Instrument or applicable law: at law, in equity, in rem or in any other
forum available under applicable law; without notice except as otherwise
expressly provided herein; without pursuing, exhausting or otherwise exercising
or enforcing any other right, power, privilege, remedy or interest that the
Administrator or the Banks may have against or in respect of any Borrower, the
Collateral, or any other co-obligor, guarantor, surety, pledgor, collateral or
other person or thing; without regard to any act or omission of the
Administrator, any other Bank or any other person; and without delivery to any
Borrower or any other person or production in any action, suit or proceeding of
any consent or approval of one or more of the Banks required under this
Agreement or any other Loan Instrument (without, however, in any way limiting
the rights and remedies of any Bank thereunder against the Administrator or any
other Bank), and no Borrower will raise, and each Borrower hereby waives, any
objection or defense respecting the need for any such delivery or production.
The Administrator (with the consent of the Requisite Banks, as and if required)
may institute one or more proceedings (which may be separate proceedings) with
respect to this Agreement and each of the other Loan Instruments in such order
and at such times as may be selected in its or their sole and absolute
discretion. This Agreement and the other Loan Instruments may be enforced
without possession of any Note or its production in any action, suit or
proceeding. This Agreement and the other Loan Instruments may be enforced with
respect to any Borrower without the presence or participation of any other
Borrower, or any other co-obligor (joint or several), guarantor, pledgor or
surety, whether through lack of jurisdiction, venue or service or otherwise, and
no Borrower will raise, and each Borrower waives, any objection or defense
respecting the need for any such presence or participation.
Section 8.04. Equitable Relief. Each Borrower acknowledges and agrees
that it may be impossible to measure in money the damage to the Banks in the
event of a breach of or default under any of the terms and provisions of
Sections 6.04, 6.05, 6.07, 6.08, 6.09, 7.03, 7.05, 7.07(a) and 8.02(d) of this
Agreement, and that, in the event of any such breach or default, the
Administrator, in addition to all other rights, powers, privileges and remedies
that the Administrator or the Banks may have, shall be entitled to injunctive
relief, specific performance or such other equitable relief as the Administrator
(with the consent of the Requisite Banks, as and if required), may request to
exercise or otherwise enforce any of the terms and provisions of those Sections
and to enjoin or otherwise restrain any act prohibited thereby, and no Borrower
will raise, and each Borrower waives, any objection or defense that there is an
adequate remedy available at law.
Section 8.05. Consent to Jurisdiction, Waiver of Personal Service, Etc.
Each Borrower hereby consents and agrees that the Supreme Court of the State of
New York for the County of Nassau and the United States District Court for the
Eastern District of New York each shall have personal jurisdiction and proper
venue with respect to any dispute between the Administrator (or the Banks) and
the Borrower under the Loan Instruments; provided that the foregoing consent
shall not deprive the Administrator (on behalf of the Banks) of the right in its
discretion to voluntarily commence or participate in any action, suit or
proceeding in any other court having jurisdiction and venue over any Borrower.
In any dispute with the Administrator or any other Bank, no Borrower will raise,
and each Borrower hereby expressly waives, any objection or defense to any such
jurisdiction as an inconvenient forum. Without in any way limiting the preceding
consents to jurisdiction and venue in any way, the parties intend (among other
things) to thereby avail themselves of the benefit of Section 5-1402 of the
General Obligations Law of the State of New York. Each Borrower hereby waives
personal service of any summons, complaint or other process, which may be
delivered by any of the means permitted for notices under Section 10.01 hereof.
In addition (and without limitation of any such delivery), each Borrower has
executed and delivered to the Administrator a Designation of Administrator for
Service appointing Blau, Kramer, Wactlar & Liberman, P.C., as the Borrower's
agent for service in the State of New York, which each Borrower hereby
irrevocably authorizes the Administrator to date with such date (if undated) and
file with the appropriate authority at such time as the Administrator (with the
consent of the Requisite Banks, as and if required), in their discretion may
elect. Within thirty (30) days after service of process, each Borrower agrees to
appear or answer any summons or complaint of the Banks, or the Administrator (on
behalf of the Banks), and should that Borrower fail to appear or answer within
said thirty-day period, that Borrower shall be deemed in default under that
action and judgment may be entered in favor of the Banks against that Borrower
for the relief demanded in any complaint so served.
Section 8.06. Waiver of Jury Trial. In any action, suit or proceeding
in any jurisdiction brought by the Administrator or the Banks against the
Borrower under the Loan Instruments, or by any Borrower against any one or more
of the Administrator and the other Banks, each Borrower waives trial by jury.
Section 8.07. Waiver of Setoff, Special Damages, Etc.
(a) Each Borrower hereby expressly waives, and agrees that it will not
exercise, any and all rights of setoff, recoupment, abatement or reduction
respecting any payment due under this Agreement or any other Loan Instrument
(whether as scheduled or required, upon acceleration or as sought in any action,
suit or proceeding by any Bank) or any other agreement, facility or relationship
with the Administrator or any Bank that may now or hereafter be accorded to the
Borrower under applicable law or otherwise. To the extent not required as a
compulsory counterclaim in any related ongoing proceeding, each Borrower (i)
shall pursue separate exercise and enforcement of any right, power, privilege,
remedy or interest retained (and not waived) by the Borrower under this
Agreement, the other Loan Instruments, any other agreement, facility or
relationship with the Administrator or any Bank and applicable law, and (ii)
shall not seek to exercise or enforce any such right, power, privilege, remedy
or interest in any proceeding instituted by the Administrator or any of the
other Banks under or in respect of any Loan Instrument, whether through joinder,
consolidation, setoff, recoupment, abatement, reduction, counterclaim, defense
or otherwise.
(b) In any dispute with the Administrator or any other Bank, each
Borrower covenants and agrees that it will not seek, recover or retain any, and
each Borrower each hereby expressly waives any and all, special, exemplary,
punitive and/or consequential damages (whether through action, suit,
counterclaim or otherwise) to the extent waiver is not limited under applicable
law.
Section 8.08. No Fiduciary Relationship, Etc. Each Borrower
acknowledges and agrees that its sole relationship with the Administrator and
Banks is that of debtor and creditor, respectively, and that no term or
provision of this Agreement or any other Loan Instrument is intended to create,
nor shall any such term or provision be deemed or construed to have created, any
joint venture, partnership, trust, agency or other fiduciary relationship with
any Borrower. Each Borrower acknowledges and agrees that the Borrowers have
independently and fully reviewed and evaluated the Loan Instruments, the
transactions contemplated thereunder and the potential effects of such
transactions on the assets, business, operations, properties and condition
(financial or otherwise) of each of the Borrowers, which review and evaluation
was made (i) together with counsel and (to the extent deemed prudent by the
Borrowers) financial and other advisors to the Borrowers, and (ii) without any
reliance upon any oral or written advice, analysis or assurance of any kind
whatsoever from the Administrator or any other Bank.
ARTICLE IX
The Administrator and the Banks
Section 9.01. Appointment of Administrator. Upon the terms and
provisions and subject to the conditions contained in this Agreement, the Banks
hereby appoint NatWest to act as Administrator under this Agreement and the
other Loan Instruments, and NatWest hereby accepts such appointment.
Section 9.02. Undivided Interest and Committed Share, Etc.
(a) Upon the terms and provisions and subject to the conditions
contained in this Article, the Banks agree that each has an undivided interest
in the Loans and other Obligations under this Agreement and the obligations of
the Borrowers and the other parties (other than the Banks) under the other Loan
Instruments (collectively, the "Loan Obligations"), any asset or property
securing the Loan Obligations, whether through pledge, attachment or otherwise
(the "Loan Collateral"), and the rights, powers, privileges, remedies and
interests of the Banks in and to this Agreement and other Loan Instruments, as
well as the risks, liabilities and expenses related thereto, such that each Bank
shall have and be committed to an undivided fractional interest therein and in
the Commitment, Revolving Credit Loans and related items and/or in the Term Loan
and related items equal to the respective maximum principal amounts and
percentages set forth on Exhibit E hereto, as the same may be recomputed from
time to time to reflect departing or additional Banks pursuant to this Agreement
(which undivided fractional interest will be referred to as such Bank's
"Committed Share" of the Commitment or the Term Loans, as applicable). In order
to arrive at the Committed Shares set forth on Exhibit E hereto, Chemical is
hereby purchasing from NatWest, and NatWest is hereby selling to Chemical, as if
pursuant to an Assignment and Assumption Agreement in the form of Exhibit G
hereto, an assignment of the Loans, Commitment and Loan Instruments in an amount
equal to the difference between Chemical's Committed Shares of the Loans under
the Existing Loan Agreement and such Committed Shares of the Loans under this
Agreement. Chemical shall wire the purchase price therefore (equal to the
principal balances of the Loans and any accrued interest and fees so purchased)
to NatWest on the Effective Date.
(b) With respect to payments made to the Administrator (generally
following the circumstances described in Section 2.07(a) hereof), the
Administrator will mark its books and records to reflect the respective
interests of the Banks, all payments received from and made to each Bank
from time to time pursuant to this Agreement may be recorded by the
Administrator, and such records shall be presumptively correct as to the
existence and amounts thereof absent manifest error.
(c) "Pro Rata Share" at a particular time for a particular Bank shall
mean a share of the referenced item proportional to the percentage obtained by
dividing (A) that portion of the principal balance then outstanding under the
referenced Loans attributable to principal amounts received by one or more of
the Borrowers from that Bank (or its predecessor) under this Agreement or any
other Loan Instrument (including those made under the Existing Loan Agreement
and other Existing Loan Instruments) and not theretofore repaid, by (B) the
aggregate principal balance then outstanding under the referenced Loans;
provided that if there is no principal balance then outstanding under the
referenced Loans (or deemed outstanding as provided in this subsection) and with
respect to each outstanding Letter of Credit, a Bank's Pro Rata Share shall be
equal to its Committed Share of the Term Loans with respect to the Term Loans
and to its Committed Share of the Commitment (i.e., the Revolving Credit Loans)
with respect to the Revolving Credit Loans and the Letters of Credit.
(d) "Majority Banks" at a particular time shall mean the Banks (which
may include the Administrator) then having an aggregate Pro Rata Share of more
than 80.00%.
Section 9.03. Notice of Intent Not to Advance; Letters of Credit.
(a) In the event a Bank determines that it will not make its Committed
Share of any Advance requested by the Borrowers, such Bank shall immediately
notify the other Banks by telephone and telecopy of a signed notice, and shall
promptly confirm such notice by delivery to each of the other Banks of an
original copy of such signed notice, which notice shall specify the Bank's
reasons (if any) for such decision. No Bank, however, may refuse to make any
payment under its Letter of Credit Participation (as hereinafter defined), which
each Bank acknowledges and agrees will result in additional Advances of
Revolving Credit Loans.
(b) By the issuance or extension of any Letter of Credit, the Fronting
Bank hereby sells and grants (and continues, in the case of each existing Letter
of Credit) to each Bank, and each Bank hereby unconditionally purchases and
acquires (and continues, in the case of each existing Letter of Credit) from the
Fronting Bank, without any further action on the part of the Fronting Bank or
acquiring Bank, a participation in such Letter of Credit equal to such Bank's
Committed Share of the face amount of such Letter of Credit (each a "Letter of
Credit Participation"), effective upon the issuance or extension of such Letter
of Credit (or on the Effective Date in the case of each existing Letter of
Credit). In consideration and in furtherance of the foregoing, each Bank hereby
absolutely and unconditionally agrees to pay to the Administrator, on behalf of
each Fronting Bank, in accordance with subsection (c) below, such Bank's Pro
Rata Share of each unreimbursed Letter of Credit Advance made by the Fronting
Bank; provided, however, that the Banks shall not be obligated to make any such
payment with respect to any wrongful payment or disbursement made under any
Letter of Credit as a result of the gross negligence or wilful misconduct of the
Fronting Bank.
(c) If the Fronting Bank (other than the Administrator) has directly billed
the Borrowers for a Letter of Credit Advance as permitted by Section 9.05 (a)
hereof and has not received from the Borrowers the payment required by Section
2.07(d) hereof by 11:00 A.M. (New York City time) on the day such payment is
due, the Fronting Bank will promptly notify the Administrator of the Letter of
Credit Advance and such non-receipt of payment. If the Borrowers have not
previously requested an Advance and complied with the related conditions in
order to fund such payment, the Administrator will promptly notify each Bank of
such Letter of Credit Advance and its Pro Rata Share thereof. Each such
unreimbursed payment made in accordance with Section 2.07(d) hereof shall for
all purposes hereunder be deemed to be an Advance of a Revolving Credit Loan.
Each Bank will pay to the Administrator, by not later than 4:00 p.m. (New York
City time) on such date (or, if the Banks shall have received such notice later
than 2:00 p.m. (New York City time) on such date, then by not later than 10:00
a.m. (New York City time) on the immediately following Business Day), an amount
equal to such Bank's Pro Rata Share of such Letter of Credit Advance (it being
understood and agreed that such amount shall constitute funding of an Advance of
a Revolving Credit Loan by each such Bank), and the Administrator will promptly
pay such amount to the Fronting Bank. If any Bank shall not have made its Pro
Rata Share of such Letter of Credit Advance available to the Fronting Bank as
provided above, such Bank agrees to pay interest on such amount, for each day
from and including the date such amount is required to be paid in accordance
with this subsection to but excluding the date an amount equal to such amount is
paid to the Administrator for prompt payment to the Fronting Bank at the Federal
Funds Rate for the first such day and at the rate applicable to Loans under
Section 2.04(a) hereof for each day thereafter.
(d) Each Bank acknowledges and agrees that each Letter of Credit
Participation and its payment and other obligations with respect thereto: (i) is
absolute and unconditional; (ii) shall remain and continue in full force and
effect without regard (A) to any waiver, modification, extension, renewal,
amendment or restatement of any other term or provision of any Letter of Credit,
(B) to any act or circumstance respecting any Letter of Credit consented to or
waived by any Borrower under Section 2.07 hereto, (C) to any full, partial or
non-exercise of any of the rights, powers, privileges, remedies and interests of
the Fronting Bank respecting any Letter of Credit or under any related
application, any Loan Instrument or applicable law, against any person or with
respect to any collateral, (D) to any release or subordination of any
obligations or collateral, (E) to any statute of limitations or similar time
constraint under any applicable law, (F) to any investigation, analysis or
evaluation by any Bank or its designees of the assets, business, operations,
properties or condition (financial or otherwise) of any Borrower, the Guarantor
or any other person, (G) to any Default or Event of Default, whenever occurring
or continuing, (H) to any act or omission on the part of the Fronting Bank, the
Administrator, any Bank or any other person, or (I) to any other event that
otherwise might constitute a legal or equitable counterclaim, defense or
discharge of a participant or surety; (iii) shall not be subject to any defense,
counterclaim, set off, right of recoupment, abatement, reduction or other claim
or determination that such Bank may have against the Administrator, any other
Bank, any Borrower or any other person; (iv) shall not be diminished or
qualified by the death, disability, dissolution, reorganization, insolvency,
bankruptcy, custodianship or receivership of the Fronting Bank, the
participating Bank, any Borrower, any other co-obligor, guarantor, surety or
pledgor or any other person, or the inability of any of them to pay its debts or
perform or otherwise satisfy its obligations as they become due for any reason
whatsoever; and (v) shall not be affected by any other circumstance whatsoever.
Section 9.04. Collection and Distribution.
(a) Except as otherwise provided in this Article, each Bank shall be
entitled from time to time to a share of all payments of principal, interest,
commitment and other fees and other amounts received in respect of the Loan
Obligations, as well as the net proceeds from all Loan Collateral, which share
for a particular Bank at any particular time shall be: (i) its Pro Rata Share of
all principal payments on the Revolving Credit Loans, Term Loan or other Loans
to which any voluntary or mandatory payments or prepayments are to be applied;
(ii) its Pro Rata Share of interest paid on the Revolving Credit Loans, Term
Loan or other Loans to which the payments relate, which shall be adjusted to
reflect any rate differentials among the Banks so as to approximate the amounts
that would have resulted from direct billings; (iii) its Committed Share of the
Commitment Fee and other fees respecting Loans in which it shares; (iv) its Pro
Rata Share of all net proceeds and other amounts received from the Loan
Collateral following acceleration of the Loans; and (v) its Pro Rata Share of
all other amounts received in respect of the Loan Obligations.
(b) Notwithstanding the provisions of subsection (a), above, no other
Bank shall be entitled to any share of: (i) any amount that may be directly
billed in accordance with Section 9.05 hereof, subject to the terms and
provisions of such Section; (ii) any payment, reimbursement or other indemnity
to the Administrator or any other indemnified person under this Agreement or any
other Loan Instrument with respect to any claims, liabilities, losses or
expenses not theretofore funded by the claiming Bank(s); (iii) any
administrative or other fees payable to the Administrator in accordance with
Section 2.06 or 10.14(b) of this Agreement; (iv) any payment under or other
right respecting any Independent Transaction (as defined in Section 9.17(b)
hereof); (v) any payment to any Fronting Bank of any and all customary fees
(other than the Letter of Credit Fee), commissions and/or charges of the
Fronting Bank for any increase, extension, renewal, amendment or transfer of any
of its Letter of Credit and any fees or other charges of any other issuer or any
participant, correspondent, confirming bank, custodian or designee of the
Fronting Bank or other issuer involved with the Letter of Credit; or (vi) any
exercise by a Bank or its affiliates of their respective rights of setoff or
banker's lien with respect to an Independent Transaction against any general
deposits, assets and properties (other than Loan Collateral) of any Borrower or
any other person. Furthermore, except as otherwise provided in this Article, any
payment received in respect of the Borrowers' obligation (if any) to reimburse
the Banks for certain increased costs and reduced receipts under Section 2.04 of
this Agreement, as well as any net proceeds from Loan Collateral to be applied
to such Loan Obligations, shall be shared by the Banks in proportion to their
respective increased costs and reduced receipts.
(c) Except as otherwise provided in this Article, the Administrator
shall receive all payments of principal and other distributable amounts in
respect of the Loan Obligations, all net proceeds realized from the Loan
Collateral and all amounts received by the Banks and delivered to the
Administrator pursuant to the provisions of this Article, and the Administrator
shall hold each such amount in an account for the benefit of all of the Banks
until distributed as hereinafter provided. As soon as practicable after each
such receipt, the Administrator shall determine the respective amounts to be
distributed and promptly thereafter shall credit to itself the amount to which
it is entitled and wire the amounts to which the other Banks are entitled to
them in accordance with the instructions annexed as Exhibit F hereto, or in
accordance with such subsequent written instruction (in substantially the same
form) as a Bank from time to time may deliver to the Administrator.
(d) Unless the Administrator shall have received notice from the
Borrowers prior to the date on which any payment is due to the Banks hereunder
that the Borrowers will not make such payment in full, the Administrator may
assume that the Borrowers have made such payment in full to the Administrator on
such date, and the Administrator may, in reliance upon such assumption, cause to
be distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent the Borrowers shall not have so made such
payment in full to the Administrator, each Bank shall repay to the Administrator
forthwith on demand such amount distributed to such Bank together with interest
thereon, for each day from the date such amount is distributed to such Bank
until the date such Bank repays such amount to the Administrator, at the Federal
Funds Rate.
(e) Each Bank agrees that if it shall receive or otherwise obtain any
Excess Amount in any Payment Event (as such terms are hereinafter defined), such
Bank (the "Receiving Bank"): (i) shall (except as otherwise permitted by this
Article) receive and hold such Excess Amount in trust for the benefit of all of
the Banks and promptly deliver such Excess Amount to the Administrator; and (ii)
shall in all other cases be deemed (simultaneously with such Payment Event) to
have purchased from each other Bank (a "Selling Bank") at face value, and shall
promptly pay to each Selling Bank the purchase price for, a participation in the
Revolving Credit Loans, Term Loans or Letter of Credit, as applicable, in the
amount(s) necessary so that the Pro Rata Shares of the Receiving Bank and each
Selling Bank with respect thereto (taking into account such participations as if
they were assignments) are maintained at the same percentage after such Payment
Event as they were before such Payment Event. If any such participation shall be
purchased pursuant to this subsection by a Receiving Bank and a Selling Bank
shall thereafter recover, receive or otherwise obtain from or in respect of any
Borrower any Excess Amount when compared to the Receiving Bank, such
participation shall be deemed to have been repurchased by the Selling Bank at
face value to the extent of such later Excess Amount allocable to the Receiving
Bank, without interest, and if the Excess Amount so recovered, received or
otherwise obtained by such Selling Bank exceeds the amount necessary to restore
the Banks' respective Pro Rata Shares, then such excess itself shall be treated
as an Excess Amount under this subsection. Each Borrower expressly consents to
the foregoing arrangements and agrees that any Bank holding a participation in a
Revolving Credit Loan, Term Loan or Letter of Credit deemed to have been so
purchased may exercise any and all rights of banker's lien, set off or
counterclaim with respect to any and all moneys owing by such Borrower to such
Bank by reason thereof as fully as if such Bank had made a Revolving Credit Loan
or Term Loan or issued a Letter of Credit, as applicable, directly to such
Borrower in the amount of such participation. "Excess Amount" shall mean the
amount by which: (A) any payment or amount received or otherwise obtained by any
Bank in respect of any Revolving Credit Loans, Term Loans or Letter of Credit,
whether voluntary, involuntary, through the exercise of any right of set-off,
banker's lien, counterclaim or otherwise, or pursuant to any secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim received by such Bank under any
applicable bankruptcy, insolvency or other similar law or otherwise (any of
which may be referred to as a "Payment Event"); exceeds (B) the portion of such
payment or amount that would have maintained such Bank's Pro Rata Share of the
Revolving Credit Loans, Term Loans or Letters of Credit at the same percentage
after such Payment Event as it was before such Payment Event; provided, however,
that Excess Amount shall not include any amount that a Bank (1) is expressly
permitted to collect and retain hereunder, (2) receives from the assignment of
or sale of a participation in any Revolving Credit Loans, Term Loans or Letter
of Credit to anyone other than any Borrower or its affiliates, or (3) receives
or otherwise obtains in any Independent Transaction.
Section 9.05. Direct Billing, Fixed Rates, Additional Interest, Etc.
(a) Except as otherwise provided herein, so long as it has not received
notice from the Administrator to the contrary (as contemplated in Section
2.07(a) hereof or in the proviso below), each Bank may directly bill, receive
and retain payment of: (i) the interest due it under Sections 2.04(a), (b) and
(c) hereof with respect to its Pro Rata Share of the Loans (based upon its own
Base Rate or Fixed Rate); (ii) any compensation due it respecting increased
costs, reduced receipts and capital adequacy under Sections 2.04(d) and (f)
hereof; (iii) any principal amount due it as a Fronting Bank respecting any
Letter of Credit Advance (other than to the extent converted into an actual or
deemed Revolving Credit Loan), and any and all customary fees (other than the
Letter of Credit Fee), commissions and/or charges of the Fronting Bank for any
increase, extension, renewal, amendment or transfer of the Letter of Credit and
any fees or other charges of any other issuer or any participant, correspondent,
confirming bank, custodian or designee of the Fronting Bank or other issuer
involved with the Letter of Credit; and (iv) any expense reimbursement due it
under Section 10.03 hereof; provided, however, that the Administrator shall also
have the right in its discretion from time to time to elect (by written notice)
to bill and receive any one or more of the foregoing items on behalf of any Bank
other than Chemical or NatWest. If a Bank has not received payment of any amount
billed directly under this provision as and when due under the Loan Agreement,
the Bank shall give prompt notice thereof to the other Banks, as well as prompt
notice of any payment subsequently received.
(b) In the event any Bank receives less than full payment of any
directly billed amount, and after communication with the Borrowers any amount
remains unpaid, the Bank shall promptly notify the Administrator and the other
Banks. If the Banks did not suffer such payment shortfalls ratably, the
Administrator shall immediately give notice to the Banks to cease direct billing
and collection (as contemplated in Section 2.07(a) hereof and subsection (c)
below), and the Banks shall deliver all such disproportionate payments to the
Administrator for redistribution to the Banks in accordance with the sharing
provisions of this Agreement.
(c) If a Bank has received notice from the Administrator that it may no
longer receive and retain direct payments from the Borrowers as contemplated in
subsection (a) of this Section, the Bank thereafter shall (i) direct the
Borrowers to make all payments to the Administrator, (ii) receive and hold any
payment or other amount received from or for the benefit of the Borrowers
(whether as a result of past bills or otherwise) in trust for the benefit of all
of the Banks and (iii) promptly deliver all such amounts to the Administrator.
Unless the Administrator directs otherwise, the Banks shall continue to render
bills and statements to the Borrowers as contemplated in subsection (a) of this
Section, which shall contain the direction to make all payments to the
Administrator, and shall concurrently send a copy of such bills to the
Administrator. If a Bank has been receiving payments from the Borrowers through
account debits, then unless the Administrator directs otherwise, the Bank shall
continue to debit the accounts of the Borrowers for such payments but shall hold
in trust and promptly deliver the proceeds to the Administrator as provided
above.
(d) Any Bank in its discretion may elect to impose or waive the
additional interest due to it on any late payment as provided in Section 2.04(c)
hereof.
(e) No Bank may unilaterally impose the additional interest during a
default as provided by Section 2.04(d) of this Agreement. The Administrator
shall be responsible for the imposition of such additional interest, which
imposition prior to the Maturity Date shall require the prior written consent
(which may be sent by telecopy) of the Majority Banks. The imposition of such
additional interest may be rescinded or waived with the approval (which may be
sent by telecopy) of the Majority Banks. The Administrator also may rescind or
waive any such additional interest if the underlying default is cured within ten
Business Days of the date it became a default (after the expiration of all
applicable grace periods).
Section 9.06. Voting Rights, Etc.
(a) Except as otherwise provided in this Agreement or any other Loan
Instrument, the prior written consent of each affected Bank shall be required
for any action that would (i) modify the calculation, decrease the amount,
extend the Revolving Credit Period, extend the due date or waive any nonpayment
of any payment of principal, interest or fees under any Loan Instrument, (ii)
release or subordinate any interest under any Loan Instrument in any material
part of the Loan Collateral other than (A) in accordance with Section 9.07(b) of
this Agreement, (B) in connection with any disposition pursuant to Section 9.09
of this Agreement, or (C) as otherwise required, contemplated or permitted by
this Agreement or any other Loan Instrument, (iii) release any Borrower or any
guarantor, surety or pledgor from personal liability under any Loan Instrument,
(iv) waive any conditions precedent to an Advance under Article IV of this
Agreement (without, however, in any way limiting the ability of the Majority
Banks to waive or consent to any matter within their power or the ability of the
Administrator in its discretion to waive any of the technical conditions
precedent imposed by Article II of this Agreement), or (v) alter any Bank's
Committed Share or the manner of determining any Bank's Pro Rata Share.
(b) Except as otherwise provided in this Agreement or any other Loan
Instrument, the prior written consent of the Majority Banks shall be required
for any action that would (A) waive any Event of Default, (B) waive or consent
to any departure from any other term or provision of this Agreement or any Note,
or (C) otherwise amend or restate this Agreement, any Note or any other Loan
Instrument signed by the Banks; provided that the Administrator in its
discretion nevertheless from time to time (i) may waive (in whole or in part)
any of the technical conditions precedent to any Advance or Fixed Rate election
imposed by Article II hereof and (ii) may grant temporary waivers or consents
respecting the late delivery of notices, financial statements and similar
documents and consent to non-substantive changes in the form thereof.
(c) Except as otherwise provided in this Agreement or any other Loan
Instrument, the Administrator shall have the right (but shall be under no duty
or obligation) to make any and all decisions with respect to the terms and
provisions of the Loan Instruments other than those requiring the approval of
the affected Banks or the Majority Banks, including (without limitation) the
right to give any notice, to otherwise communicate with any Borrower or any
guarantor, surety or pledgor under any Loan Instrument and to waive or consent
to any departure from any of those terms or provisions, all without notice to or
consent from any Bank.
(d) Each Bank shall be bound by such notices, consents, waivers,
releases, supplements, modifications, amendments, restatements and other
agreements and communications as so made by the Administrator or the Majority
Banks, or by the Administrator with the consent of the Requisite Banks, as and
if required to the same extent as if each Bank had been a party thereto. A
separate consent from a Bank shall not be required for any document signed by
it.
Section 9.07. Powers and Duties of the Administrator, Etc.
(a) With the consent of the Requisite Banks (if any) specified in this
Agreement or any other Loan Instrument, the Administrator from time to time in
its discretion may exercise or otherwise enforce any right, power, privilege,
remedy or interest under this Agreement and the other Loan Instruments and
applicable law, and shall perform all duties specifically required of it by the
terms of this Article, in all cases together with such rights, powers,
privileges and remedies as are incidental thereto, and all in accordance with
the usual practices employed by the Administrator in the servicing of loans of a
similar nature for its own account. The other Loan Instruments may be executed
and delivered by the Administrator in the name of the Banks, the Administrator
or a nominee, each Note may be made payable severally to the Banks or solely to
the order of the Administrator or its nominee, and the originals (or original
counterparts) of each Note, one set of this Agreement and the other Loan
Instruments, and all other documents, reports and communications respecting the
Loan Instruments delivered to or from any Borrower or any other guarantor,
surety or pledgor shall be held by the Administrator for the benefit of all of
the Banks in accordance with the terms and provisions of this Article, which
items may be held by the Administrator or its designee and from time to time
warehoused or disposed of in accordance with the usual practices employed by the
Administrator.
(b) To the extent possession of the Loan Collateral may be required or
permitted under any of the Loan Instruments, the Administrator shall hold such
Loan Collateral as collateral Administrator for the Banks, including (without
limitation) any deposits with the Administrator of the Borrower, any of their
respective subsidiaries, or any other guarantor, surety or pledgor under any
Loan Instrument, or in instances where a Bank (other than the Administrator)
holds funds constituting Loan Collateral in local operating or other accounts of
any such person(s), that Bank shall act as collateral administrator for the
Banks; provided that the deposits and other accounts of any such person(s) need
not be blocked or otherwise restricted as to access unless (i) specifically
required with respect to a specified account by this Agreement or any other Loan
Instrument or (ii) directed by the Majority Banks. The Administrator also may be
designated as the secured party for the purpose of any Uniform Commercial Code,
mortgage or other filing. Each such collateral agency shall be for the limited
purpose of perfecting the Banks' security interest in the Loan Collateral for
the benefit of the Banks and shall be subject to the rights of the Banks and the
pledgors under the relevant Loan Instruments. Except as otherwise provided in
this Agreement or any other Loan Instrument, the Administrator shall have the
right (but shall be under no duty or obligation) to administer the Loan
Collateral and the security interests with respect thereto in such manner as the
Administrator may deem necessary or desirable. The Administrator, without notice
to or consent from any Bank, from time to time may execute and deliver releases,
subordinations, satisfactions, assignments, reassignments and similar
instruments and documents in respect of any Loan Collateral and take any other
action that may be necessary or desirable in connection therewith so long as
such instruments, documents or actions are required, contemplated or permitted
by the terms and provisions of the relevant Loan Instrument(s).
(c) Without limiting its right to do so in its discretion, the
Administrator shall be fully justified in failing or refusing to take or
continue any action under this Agreement or any other Loan Instrument unless the
Administrator first shall be reimbursed or otherwise indemnified to its
reasonable satisfaction (which may include the deposit of funds) by the Banks
(other than itself) in accordance with their respective Committed Shares against
any and all liabilities and expenses that the Administrator reasonably estimates
may be incurred by the Administrator by reason of taking or continuing to take
any such action.
Section 9.08. Notices and Knowledge of Events of Default, Etc.
(a) Each Bank shall give prompt notice to the other Banks of the
occurrence and continuance of any Event of Default, unless it reasonably
believes that notice was sent directly to the other Banks, to the extent any
officer of that Bank active with respect to any Borrower's account: (i) obtains
actual knowledge of any such event; or (ii) receives specific notice of any such
event from any Borrower or any other person. Each Bank shall be entitled to
assume that no Event of Default or other event that, with or without the giving
of notice or the passage of time or both, would constitute an Event of Default
has occurred and is continuing, unless: (A) the officers of that Bank active
with respect to any Borrower's account have obtained actual knowledge of such an
event; or (B) notice has been given to that Bank by any Borrower or another Bank
specifically stating its belief that such an event has occurred and is
continuing and specifying the nature thereof.
(b) At any time after the occurrence and during the continuance of any
Event of Default, the Administrator may (but shall be under no duty or
obligation to), or upon the written consent or direction of the Majority Banks
the Administrator shall, give the Borrowers a written Default Declaration
expressly declaring that an Event of Default has occurred and is continuing,
giving a copy of such notice to the other Banks; provided that the failure to
send such copy to any Bank shall not affect the validity of any such notice of
declaration of an Event of Default. The Administrator and each of the other
Banks (individually or collectively) also may communicate with the Borrowers and
the other Banks respecting any Event of Default or potential resolution, which
shall not be deemed or construed to be a Default Declaration (which may only be
made by Default Declaration respecting an Event of Default). If any Event of
Default shall have occurred and continued after notice to the Administrator for
more then three (3) Business Days respecting any payment default or for more
than ten (10) Business Days respecting any other default requiring the approval
of the Majority Banks or all of the Banks for waiver, then the Majority Banks
may direct the Administrator to send the written notice of declaration of an
Event of Default to the Borrowers by giving the Administrator a signed notice of
their request, or by giving the Administrator notice of their request by
telecopy of a signed notice and promptly confirming their request by delivery of
the original signed notice (which may be in counterparts).
(c) At any time during the continuance of any Event of Default declared
pursuant to subsection (b), above, whether or not the Administrator or the
Majority Banks shall have declared a default, accelerated the maturity of any of
the Loan Obligations or taken any other action with respect thereto, all amounts
received by a Bank from or with respect to the Loan Obligations, whether through
payment, the exercise of any right of setoff in respect of any Loan Obligation
or Loan Collateral, or otherwise, shall be received in trust by that Bank for
the benefit of all of the Banks and promptly delivered to the Administrator.
(d) At any time during the continuance of any Event of Default declared
in any Default Declaration, any Bank shall have the absolute and unconditional
right (but shall be under no duty or obligation) to purchase at any time the
entire interest of any or more of the other Banks in the Loan Obligations, Loan
Collateral and Loan Instruments and under this Agreement and the other Loan
Instruments, exercisable by written notice to the other Bank(s), and effective
upon payment to each such Bank of its Pro Rata Share of the Loans, together with
interest thereon, following which such Bank(s) shall have no further right,
interest or obligation in the Loan Obligations, Loan Collateral and Loan
Instruments. The Committed Share and Pro Rata Share of the purchasing Bank shall
be adjusted to reflect any such repurchase. No Bank shall have any liability or
obligation to indemnify or reimburse the Administrator for any such purchase or
any part thereof.
Section 9.09. Administration During Certain Events of Default.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Administrator shall consult with the Banks to determine a course of
action with respect to that Event of Default acceptable to the Majority Banks.
Once determined, the Administrator shall use reasonable efforts to pursue that
course of action in a manner consistent with and otherwise permissible under
this Agreement, the other Loan Instruments and applicable law, subject, however,
to the limitations imposed hereunder and thereunder and the other terms and
provisions of this Agreement.
(b) Subject to the foregoing and the other terms and provisions of this
Agreement and the other Loan Instruments, the Administrator in its discretion
from time to time may (but shall be under no duty or obligation to), or at the
written direction of the Majority Banks the Administrator shall, use reasonable
efforts to effect the offer, sale, lease or other disposition and delivery of
the whole or any part of the Loan Collateral, whether as a secured party in
possession of collateral or otherwise, and may otherwise exercise and enforce
any and all rights, powers, privileges, remedies and interests afforded to it
under this Agreement, the other Loan Instruments and any and all provisions of
applicable law.
(c) The Administrator shall receive the proceeds or other amounts
realized from any judgment or other judicial award, any settlement (with the
consent of the Requisite Banks, as and if required), or any sale or other
disposition of any Loan Collateral and, after deducting all costs and expenses
incurred in connection therewith (including attorneys' disbursements, expenses
and fees), the Administrator shall distribute the remainder in accordance with
Section 9.04 of this Agreement.
Section 9.10. Reports and Information. Each Bank shall send to the
other Banks copies of any correspondence sent or received to or from the
Borrowers with respect to any Event of Default (other than items that would have
or appear to have been sent directly to the other Banks). At the request of the
Administrator, each Bank promptly shall send to the Administrator copies of all
notices of debiting any accounts and other correspondence delivered by a Bank to
any Borrower or any guarantor, surety or pledgor under this Agreement or any
other Loan Instrument. Upon the specific request and at the expense of a Bank,
the Administrator shall furnish to that Bank copies of any report or other
documents received by the Administrator and not separately delivered by the
Borrowers to that Bank. Each Bank acknowledges and agrees that: (a) any report
or other information that the Administrator in its sole discretion elects to
prepare will be prepared by the personnel of the Administrator from information
made available by the Borrowers, which personnel are not acting as auditors and
who are not verifying the information so supplied; (b) any report, document or
other information provided by the Administrator to any Bank, whether in writing
or orally, and whether pursuant to this Article or otherwise, shall be without
representation or warranty by or any recourse whatsoever to the Administrator
with respect to its authenticity, validity, accuracy, completeness, contents or
conformity to any requirements of this Agreement and the other Loan Instruments;
and (c) all reports, documents and other information shall be provided and
received strictly on a confidential basis for the exclusive use of each Bank,
and no Bank shall make any such information available to any other person,
except (i) in connection with any assignment or participation permitted under
Section 10.14 hereof, (ii) for bank auditors and bank regulatory authorities,
(iii) the accountants and attorneys of the disclosing Bank, or (iv) as otherwise
required by applicable law.
Section 9.11. Bank's Representations, Warranties and Covenants. Each Bank
hereby represents, warrants and covenants to the other Banks, solely for their
benefit, that such Bank: (a) has the power and authority to execute, deliver and
perform, and has duly authorized its execution, delivery and performance, of
this Agreement and the other Loan Instruments to which it is a party, and will
not restrict or otherwise impair that power, authority or authorization; (b) is
a sophisticated and knowledgeable institution, both generally and with respect
to transactions of this type; (c) has received, (i) copies of this Agreement,
the Notes and such other Loan Instruments as the Bank deemed necessary or
prudent, and (ii) such financial and other information from the Borrowers
relating to the Borrowers and each guarantor, surety or pledgor (if any) as it
deemed necessary or prudent, has had an opportunity to review and evaluate, and
in fact has independently reviewed and evaluated such documents and information,
and will continue to independently review and evaluate such of the foregoing as
it deems necessary or prudent, all in order to make its own credit determination
and other decisions; (d) has made, and will continue to make, that independent
review, evaluation and credit determination and other decisions under this
Agreement and the other Loan Instruments (i) without any reliance upon any oral
or written representation, warranty, advice or analysis of any kind whatsoever
from the Administrator or any other person (other than the Borrowers), however
obtained, and (ii) without any regard to any decision or adverse circumstance or
change respecting any other banking, trust, lending or other relationship that
it may have with any Borrower or any of their respective affiliates; (e) has
made its loans and acquired its interests, and will continue to make its loans
and hold its interests, under this Agreement and the other Loan Instruments for
its own account; (f) has no present intent to, and will not at any time in whole
or in part, sell, convey, assign, transfer, further participate or otherwise
dispose of those loans or interests or any part thereof, other than assignments
and participations expressly permitted by Section 10.14 hereof; and (g) has
executed and delivered this Agreement and the other Loan Instruments to which it
is a party, has made its loans, acquired its interests and made its commitments
and other agreements under this Agreement and the other Loan Instruments, and
will continue to hold those interests and perform those commitments and
agreements in accordance with all applicable laws, including (without
limitation) any legal lending limits applicable to it.
Section 9.12. Credit Waivers and Exculpations. None of the
Administrator and the other Banks has, and none of them shall be deemed or
construed to have, made any representation or warranty, offered any advice or
analysis, made any assumption of any liability or responsibility or made any
guaranty, whether orally or otherwise, and whether express or implied, to any
other Bank with respect to: (a) any recital, statement, representation or
warranty made by any Borrower, any of their respective affiliates or any
guarantor, surety or pledgor under any Loan Instrument, any certificate
delivered by any officer of any such person(s), or any report, document or other
information delivered from time to time by any such person(s) or furnished on
their behalf; (b) the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, any Note or any other Loan
Instrument; (c) the existing or future financial condition of any Borrower, any
of their respective affiliates or any guarantor, surety or pledgor under any
Loan Instrument; (d) the existence or value of any Loan Collateral, or the
validity, sufficiency, priority or effectiveness of any lien, mortgage, pledge
or other security interest intended to be created under or by any Loan
Instrument; (e) the performance by any Borrower or any of their respective
affiliates, or by any guarantor, surety or pledgor, of, or the willingness,
ability or likelihood of any of them to perform, their respective obligations
under this Agreement or any other Loan Instrument; or (f) the validity,
enforceability or collectibility of any of the Loan Obligations.
Section 9.13. Reliance on Documents and Experts. The Administrator
shall be entitled to rely upon any notice, consent, certificate, affidavit,
statement, paper, document, writing or other communication (which may be by
telegram, cable, telex, telecopier or telephone) reasonably believed by it to be
genuine and to have been signed, sent or made by the proper person or persons,
and upon opinions and advice of legal counsel (including counsel for any
Borrower), independent public accountants and other experts selected by the
Administrator or the Banks.
Section 9.14. Status and Liability of the Administrator, Etc. The
Administrator shall be considered an independent contractor with respect to the
Banks, and no term or provision of this Agreement or any other Loan Instrument
is intended to create, nor shall any such term or provision be deemed or
construed to have created, any general common law agency, joint venture,
partnership or debtor-creditor relationship between or among the Administrator
and the Banks or any investment contract or other security. The Administrator
may exercise or otherwise enforce any of its rights, powers, privileges,
remedies and interests under this Agreement, the other Loan Instruments and
applicable law or perform any of its duties under this Agreement and the other
Loan Instruments by or through its directors, officers, employees, attorneys,
agents or designees. The Administrator and its designees, and their respective
directors, officers, employees, attorneys and Administrators, shall not incur
any liability (other than for a person's own acts or omissions breaching a duty
owed to the injured Bank and amounting to gross negligence or willful misconduct
as finally determined pursuant to applicable law by a governmental authority
having jurisdiction) for acts and omissions arising out of or related directly
or indirectly to this Agreement, any Note, any other Loan Instrument, any part
of the Loan Collateral, any of the Loans or the application of any proceeds
thereof, or any Environmental Claim; and each Bank hereby expressly waives any
and all claims and actions (other to the extent occasioned by a person's own
acts or omissions breaching a duty owed to the injured Bank and amounting to
gross negligence or willful misconduct as finally determined pursuant to
applicable law by a governmental authority having jurisdiction) against the
Administrator or its designees, and their respective directors, officers,
employees, attorneys and agents, arising out of or related directly or
indirectly to any and all of the foregoing acts, omissions and circumstances.
Section 9.15. Bank's Risk of Loss; Expenses; Indemnification.
(a) Each Bank hereby acknowledges and agrees that it has assumed all
risk of loss to the extent of its Pro Rata Share of the Loans and all risk of
further expense and liability ratably in accordance with its Committed Share of
the Loans as of the date of the expense or the date on which the event giving
rise to the liability occurred, as the case may be.
(b) The Banks shall use reasonable efforts to obtain prompt
reimbursement from the Borrowers, or from the proceeds of the Loan Collateral,
if any, realized in connection with any sale or other disposition, to the extent
such reimbursement is required by this Agreement and the other Loan Instruments,
for all costs and expenses incurred by the Administrator in connection with the
preparation, execution and closing of this Agreement and the other Loan
Instruments, all waivers, releases, discharges, satisfactions, modifications and
amendments thereof and consents with respect thereto, all payments made and
actions taken thereunder in the name or on behalf of any Borrower, any of their
respective affiliates or any guarantor, surety or pledgor under any Loan
Instrument, all periodic collateral audits and other evaluations and the ongoing
monitoring of the accounts receivable, inventory and other Loan Collateral
(including, without limitation, the per diem fees and expenses of the
Administrator and its designees in performing such audits and other
evaluations), all annual and other appraisals of the real estate included in the
Loan Collateral, and the administration, enforcement, protection and
adjudication of this Agreement and the other Loan Instruments and the rights,
powers, privileges, remedies and other interests of the Banks thereunder and
under applicable law, and the acquisition, operation, development, improvement
or disposition of any Loan Collateral, including (without limitation) insurance
premiums, mortgage recording, documentary, transfer, intangible, note or other
similar taxes or revenue stamps, filing and recording expenses, and the
disbursements, expenses and fees of counsel to the Administrator and the other
Banks, including Parker Chapin Flattau & Klimpl, and the disbursements, expenses
and fees of any local or special counsel retained by any of them. In the event
such reimbursement is not obtained by the Administrator within a reasonable time
after demand for such reimbursement from the Borrowers, each Bank promptly upon
demand shall pay to the Administrator a portion of such unreimbursed fees, costs
and expenses proportional to its Committed Share(s) of the Loans. The Banks, or
the Administrator, as the case may be, promptly shall distribute to each Bank a
reimbursement proportional to such payments received from the Bank in respect of
any such fee, cost and expense subsequently reimbursed by the Borrowers.
(c) To the extent not promptly reimbursed or otherwise indemnified by
the Borrowers, the Administrator and its designees, and their respective
directors, officers, employees, attorneys and agents, shall be indemnified,
reimbursed and held harmless by the Banks, and (at the request of the
Administrator) defended at the expense of the Banks with counsel selected by the
Administrator, promptly upon request and ratably in accordance with their
respective Committed Shares of the Loans as of the date the event giving rise to
the claim occurred, from and against any and all claims, liabilities, losses and
expenses of any kind or nature whatsoever that may be imposed on, incurred by or
asserted against any of them, or any of their respective directors, officers,
employees, attorneys and agents, arising out of or related directly or
indirectly to this Agreement, any Note, any of the other Loan Instruments, any
part of the Loan Collateral, any of the Loans or the application of any proceeds
thereof, or any Environmental Claim,, except such as are occasioned by the
indemnified person's own acts or omissions breaching a duty owed to a Bank and
amounting to gross negligence or willful misconduct as finally determined
pursuant to applicable law by a governmental authority having jurisdiction;
provided, however, that nothing herein shall be deemed to relieve the
Administrator from bearing its Committed Share of the Loans as a Bank of any of
the foregoing liabilities.
Section 9.16. Invalidation of Distributions. In the event any amount
paid or otherwise distributed to or received by any of the Banks in respect of
the Obligations or otherwise (a) must be returned or refunded to any Borrower by
the Administrator or any other Bank pursuant this Agreement or any other Loan
Instrument (including, without limitation, the return of any amount due to
miscalculation or other mistake or the return of any prepaid Letter of Credit
Fees upon the early termination of any Letter of Credit), or (b) is invalidated,
declared to be fraudulent or preferential or must otherwise be restored or
returned by the Administrator or any other Bank upon the early termination of
any Letter of Credit) or upon the insolvency, bankruptcy or reorganization of
any Borrower, any of their respective affiliates, any guarantor, surety or
pledgor under any other Loan Instrument, or any other person, whether by order
of any court, by any settlement approved by any court, or otherwise, each Bank
shall contribute back to the Administrator an amount such that each Bank will be
affected by that invalidation, declaration, restoration, refund, or return
ratably in accordance with its Pro Rata Share(s) of the relevant Loans as of the
date of the subject payment, distribution or receipt.
Section 9.17. No Waiver of Rights, Independent Transactions, Etc.
(a) With respect to its Pro Rata Share of the Loans the Administrator
shall have the same rights, powers, privileges, remedies and interests under
this Agreement and the other Loan Instruments as the other Banks, and may
exercise the same as though it were not the Administrator. Accordingly, the
terms "Bank" or "Banks" as used in this Agreement or any other Loan Instrument
shall not be deemed to exclude any Bank because it is or may have been the
Administrator hereunder.
(b) Except as any term or provision of this Agreement or any other Loan
Instrument may be breached thereby: each Bank also may accept deposits from,
lend money to (on a secured or unsecured basis) and generally engage in any kind
of banking, trust, lending or other business with any Borrower, any of their
respective affiliates or any guarantor, surety or pledgor under any Loan
Instrument (each an "Independent Transaction"); and from time to time a Bank or
its affiliates may accept and retain, without any obligation to report or
otherwise account to any other Bank, any and all payments and other amounts
received from or in respect of any such person(s) under any Independent
Transaction and any and all payments, distributions and proceeds received
respecting any collateral (other than Loan Collateral) securing or intending to
secure any of the obligations under any Independent Transaction. Any payment or
other amount received by the Administrator from or in respect of any Borrower,
any of their respective affiliates or any guarantor, surety or pledgor under any
Loan Instrument that is not designated or reasonably ascertainable from the
circumstances as being applicable to the Loan Obligations may be arbitrarily
applied by the Administrator in its discretion to the Loan Obligations or to any
of the obligations of any such person(s) under any Independent Transaction with
it. Neither the Administrator nor any other Bank shall be deemed by the
execution of this Agreement or any other Loan Instrument to have waived any
right, power, privilege, remedy or interest under, or other term or provision
of, any Independent Transaction, except that to the extent the execution,
delivery or performance of this Agreement or any other Loan Instrument by any
party thereto may violate or constitute a default under any term or provision of
any Independent Transaction of any Bank, that violation or default shall be
deemed to have been permanently waived by that Bank's execution of this
Agreement.
Section 9.18. Communications with the Borrowers. Except as otherwise
provided in this Agreement or any other Loan Instrument, no Bank shall give any
notice or waiver to or otherwise communicate on behalf of all of the Banks
directly with any Borrower, any of their respective affiliates, or any
guarantor, surety or pledgor under any Loan Instrument without the prior written
consent of the Administrator or the Majority Banks, as the case may be. A Bank
may request that a particular demand, notice, waiver or other communication be
given to any such person(s) as required or permitted pursuant to this Agreement
or any other Loan Instrument by giving the Administrator and the other Banks a
signed notice of its request, or by giving the Administrator and the other Banks
notice of its request both by telephone and or telecopy of a signed notice and
promptly confirming its request by delivery of the original signed notice, which
notice shall specify the desired communication and contents and the reasons
therefore. The Administrator in its discretion may, or at the request of the
Majority Banks shall, give such communication(s) to such person(s) (subject to
the satisfaction of the requirements of Section 9.06 hereof respecting certain
waivers and other items); provided, however, that if the Administrator fails to
give any such communication(s) to any such person(s) within a reasonable period
of time after being so required by the requisite number of Banks, the Bank(s) so
desiring such communication(s) be given may give it directly to such person(s).
Section 9.19. Delinquent Banks. Any Bank that fails to deliver funds to
or reimburse or otherwise indemnify the Administrator or other indemnified
person as, when, and to the full extent required under this Article shall be
deemed delinquent under this Article until such time as that obligation is
satisfied in full (a Bank that is so delinquent will be referred to in this
Section as a "Delinquent Bank"). A Delinquent Bank shall be deemed to have
assigned any and all payments thereafter due to it in respect of the Loan
Obligations, whether on account of principal, interest, fees or otherwise, as
well as the proceeds of all Loan Collateral, to the nondelinquent Banks, and the
Delinquent Bank hereby authorizes the Administrator to distribute those assigned
amounts to the nondelinquent Banks in proportion to their respective Pro Rata
Shares, except that amounts assigned on account of a Delinquent Bank's failure
to reimburse or otherwise indemnify may instead in the discretion of the
Administrator be allocated and distributed to the nondelinquent Banks or
directly to any other indemnified person in such amounts as the Administrator
deems appropriate to reflect the respective assumptions of liability of the
Banks under this Article. A Delinquent Bank shall be deemed to have satisfied in
full any such delinquency when and if, as a result of the distribution of the
assigned amounts, the Banks' respective Pro Rata Shares shall have returned to
those in effect immediately prior to the delinquency, and refunds and direct
payments respecting reimbursements and indemnification shall have been made in
an amount equal to that not paid by the Delinquent Bank with respect thereto.
This assignment and authorization shall be deemed to be a power coupled with an
interest, shall be absolute and irrevocable and shall be effective during any
period of delinquency. A Delinquent Bank's approval shall not be required for
any reason whatsoever under this Agreement, any other Loan Instrument or
applicable law, including (without limitation) any required or permitted
approval, consent or vote, and any requirement for joint action, unanimity or
majority or other approval may be satisfied by the nondelinquent Banks with
their respective Pro Rata Shares recomputed by excluding the Pro Rata Share of
each Delinquent Bank. A Delinquent Bank may not make any assignment or sell any
participation pursuant to Section 10.14 hereof.
Section 9.20. No Third Party Rights. The representations, warranties
and other terms and provisions of Sections 9.02-9.20 of this Article are for the
exclusive benefit of the Banks. Accordingly, without limiting the generality of
the foregoing, no Borrower, affiliate, other guarantor, surety or pledgor, or
other person shall be entitled to rely upon, or to raise as a defense, the
failure of the Administrator or any other Bank to comply with those terms and
provisions, shall have any right or claim against the Administrator or any other
Bank by reason of any of those terms and provisions or shall be entitled to
enforce any of those terms and provisions against the Administrator or any other
Bank.
Section 9.21. Resignation and Successor Administrator.
(a) The Administrator may resign at any time by giving written notice
to the Banks and the Borrowers. Upon such resignation, the Majority Banks shall
have the right to designate a successor Administrator with the consent of the
Borrowers, which shall not be unreasonably withheld. In the event no one has
been approved (or accepted the appointment) as successor Administrator within
thirty days of the Administrator's notice of resignation, the Administrator in
its discretion may (on behalf of all of the Banks) appoint an Eligible Assignee
(but only if organized under the laws of the United States or any state thereof)
as successor Administrator. Upon the acceptance of any appointment as
Administrator hereunder, the successor Administrator shall thereupon succeed to
and become vested with all of the rights, powers, privileges, interest and
duties of the resigning Administrator, and the resigning Administrator shall be
discharged from its duties and obligations as "Administrator" under this
Agreement and the other Loan Instruments. After resigning as Administrator, the
terms and provisions of this Agreement and the other Loan Instruments shall
nevertheless inure to the resigned Administrator's benefit as to any actions
taken or omitted while it was Administrator.
(b) If the successor Administrator is not otherwise a Bank at the time
it accepts appointment as successor Administrator under this Agreement, then
contemporaneously with such appointment the successor Administrator shall
purchase from the other Banks an aggregate interest in the Loans equal to a
Committed Share and Pro Rata Share of $5,000,000. Each Bank shall be obligated
to sell a pro rata portion of such Loans to the successor Administrator
(although two or more Banks by mutual agreement may redistribute among
themselves their collective pro rata obligation). The successor Administrator
shall pay to each selling Bank an acquisition price equal to the applicable
percentage of the seller's Pro Rata Share of (i) the principal balance of the
Loans then outstanding under this Agreement and other Loan Instruments and (ii)
all shared interest, fees and other amounts accrued but unpaid through the
closing of the acquisition. A Bank shall not be relieved of its pro rata
obligation hereunder by virtue of having sold all or any portion of its interest
to one or more participants. The purchase and sale required hereby shall be
effected by an Assignment and Assumption Agreement in the form of Exhibit G
hereto.
Section 9.22. Delegation of Duties by Administrator. The Administrator
from time to time may delegate in whole or in part any one or more of its
rights, powers, privileges, remedies and duties under this Agreement and the
other Loan Instruments to another Bank, with its consent, which delegation may
be general or specific and may be subject to such conditions and limitations as
may be specified, and which delegation may be terminated at any time by the
Administrator. Any such delegation or termination shall be effective upon
written notice from the Administrator to the parties hereto. Any Bank to whom
such a delegation has been made may elect at any time to terminate that
delegation by written notice to the parties hereto, effective upon their receipt
of that notice. Any Bank to whom such a delegation has been made shall be deemed
to be the "Administrator" hereunder, and individually may exercise the
Administrator's rights, powers, privileges and remedies and shall perform its
duties under this Agreement and the other Loan Instruments, to the extent and
for the duration of that delegation with the same binding effect as exercise or
performance by the delegating Administrator; and provided further that (A) such
successor pays to such foreign person an acquisition price equal to the sum of
the seller's Pro Rata Share of (1) the principal balance of the Loans then
outstanding under this Agreement and other Loan Instruments, and (2) all shared
interest fees and other amounts accrued but unpaid through the date of the
closing of such sale, and (B) the Borrowers pay to such foreign person all
amounts (if any) required under Section 2.04(d) hereof under the circumstances.
ARTICLE X
Miscellaneous
Section 10.01. Notice. Except as otherwise expressly provided, any
notice, request, demand or other communication permitted or required to be given
under this Agreement or any other Loan Instrument shall be in writing, shall be
sent by one of the following means to the addressee at the address set forth
below (or at such other address as shall be designated hereunder by notice to
the other parties and persons receiving copies, effective upon actual receipt)
and shall be deemed conclusively to have been given: (i) on the first Business
Day following the day timely deposited with Federal Express (or other equivalent
national overnight courier) or United States Express Mail, with the cost of
delivery prepaid or for the account of the sender; (ii) on the fifth Business
Day following the day duly sent by certified or registered United States mail,
postage prepaid and return receipt requested; or (iii) when otherwise actually
received by the addressee on a Business Day (or on the next Business Day if
received after the close of normal business hours or on any non-Business Day).
If a certificate, signed notice or other signed item is expressly required by
another provision of this Agreement or any other Loan Instrument, a manually
signed original must be delivered by the party giving it; any other notice,
request, demand or other communication instead may be sent by telecopy, with the
cost of transmission prepaid or for the account of the sender, and shall (except
as otherwise specified in this Agreement or any other Loan Instrument) be deemed
conclusively to have been given on the first Business Day following the day duly
sent. Copies of notices required below may be sent by regular first-class mail,
postage prepaid, to such persons, but any failure or delay in sending copies
shall not affect the validity of any such notice, request, demand or other
communication so given to a party. The addresses of the parties and those
persons receiving copies are as follows:
(a) If to the Administrator, at the following address:
NatWest Bank N.A.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Mr. Christopher Mendelsohn, Vice President
Telephone: (516) 349-2065
Telecopy: (516) 349-2098/2087
With a copy of notices under Section 5.02 to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Lawrence David Swift, Esq.
Telephone: (212) 704-6147
Telecopy: (212) 704-6288
(b) If to the Banks, at the following addresses:
Chemical Bank
7600 Jericho Turnpike, Suite 306
Woodbury, New York 11797
Attention: Ms. Barbara G. Bertschi, Vice President
Telephone: (516) 677-4509
Telephone: (516) 364-3307
NatWest Bank N.A.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Mr. Christopher Mendelsohn, Vice President
Telephone: (516) 349-2065
Telecopy: (516) 349-2098/2087
(c) If to the Borrowers, at the following address:
c/o Aeroflex Incorporated (f/k/a ARX, Inc.)
35 South Service Road
Plainview, New York 11803
Attention: Mr. Michael Gorin, President
Telephone: (516) 694-6700
Telecopy: (516) 694-4823
With a copy of notices under Section 7.07(a) or 8.02 to:
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Edward I. Kramer, Esq.
Telephone: (516) 822-4820
Telecopy: (516) 822-4824
Section 10.02. Banks' Right of Setoff, Etc. Upon the occurrence and
during the continuance of any Event of Default, each Bank hereby is authorized
at any time and from time to time, without notice to the Borrowers (any such
notice being hereby expressly waived by each Borrower), to set off and apply,
directly or through any of its affiliates, custodians, participants and
designees, any and all deposits (whether general or special, time or demand,
provisional or final, or individual or joint) and other assets and properties at
any time held in the possession, custody or control of such Bank or any of its
affiliates, custodians, participants and designees, and any indebtedness at any
time owing by such Bank or any of its affiliates or participants, to or for the
credit, account or benefit of any Borrower against any and all of the
Obligations now or hereafter existing under this Agreement or the other Loan
Instruments, whether or not the Administrator or the Banks shall have declared a
default, accelerated the obligations or made any demand or taken any other
action under this Agreement or any other Loan Instrument, and although such
obligations may be contingent or unmatured. Each Borrower acknowledges that
pursuant to Section 7.01 hereof it granted to the Administrator (for the benefit
of all of the Banks) a senior security interest in and to, among other things,
all such deposits, assets, properties and indebtedness in the possession of each
of the affiliates, custodians, participants and designees of each Bank, and each
Borrower hereby authorizes each such person to so set off and apply such amounts
at such times and in such manner as the Administrator may direct pursuant to
this Section, in each case to the fullest extent possible as if the person
making the setoff were a direct creditor of such Borrower in the full amount of
the Obligations. The debiting Bank shall notify the Borrowers after any such
setoff and application; provided, however, that the failure to give such notice
shall not affect the validity of such setoff and application. In debiting any
such account, the Obligations shall be deemed to have been paid or repaid only
to the extent of the funds actually available in that account notwithstanding
any internal procedure of the debiting Bank or any of its affiliates,
custodians, participants and designees to the contrary. The rights of the
Administrator and the other Banks under this Section are in addition to and
without limitation of any other rights, powers, privileges, remedies and other
interests (including, without limitation, other rights of setoff and security
interests) that the Administrator or the other Banks may have under this
Agreement, the other Loan Instruments and applicable law.
Section 10.03. Expenses of the Administrator and the Banks. The
Borrowers shall pay or reimburse on demand any and all costs and expenses
incurred by the Administrator or any other Bank, whether directly or indirectly,
in connection with the preparation, execution and delivery of the commitment,
the preparation, execution and closing of this Agreement and the other Loan
Instruments, all waivers, releases, discharges, satisfactions, modifications and
amendments thereof and consents with respect thereto, all payments made and
actions taken thereunder in the name or on behalf of any Borrower or any
guarantor, surety or pledgor under any Loan Instrument, all periodic collateral
audits and other evaluations and the ongoing monitoring of the accounts
receivable, inventory and other Loan Collateral (including, without limitation,
the per diem fees and expenses of the Administrator and its designees in
performing such audits and other evaluations), all annual and other appraisals
of the real estate included in the Loan Collateral, and the administration,
maintenance, enforcement and adjudication of this Agreement, the other Loan
Instruments and the rights, powers, privileges, remedies and other interests of
the Administrator or the Banks thereunder and under applicable law, including
(without limitation) insurance premiums, searches respecting financing
statements, unpaid taxes and other liens, appraisers' and surveyors' fees and
expenses, title examination and insurance premiums, surety bond premiums,
mortgage recording, documentary, transfer, intangible, note or other similar
taxes and revenue stamps, filing and recording expenses and charges, and the
disbursements, expenses and fees of counsel to the Administrator or any other
Bank, including Parker Chapin Flattau & Klimpl, and the disbursements, expenses
and fees of any local or special counsel retained by any of them; provided that
the Banks agree that absent the continuation of an Event of Default the
Borrowers shall not be required to pay for more than one field audit per year.
Section 10.04. Further Assurances. Each Borrower agrees to do such
further acts and things and to execute and deliver such statements, assignments,
agreements, instruments and other documents as the Majority Banks or
Administrator from time to time reasonably may request in connection with the
administration, maintenance, enforcement or adjudication of this Agreement and
the other Loan Instruments in order (a) to evidence, confirm, perfect or protect
any lien or security interest granted or required to have been granted under
this Agreement and the other Loan Instruments, (b) to give the Administrator,
the Banks or their respective designees confirmation and assurance of their
rights, powers, privileges, remedies and interests under this Agreement, the
other Loan Instruments and applicable law, (c) to better enable the
Administrator, the Banks or their respective designees to exercise any such
right, power, privilege or remedy, or (d) to otherwise effectuate the purpose
and the terms and provisions of this Agreement and the other Loan Instruments,
each in such form and substance as may be acceptable to the Administrator and
the Majority Banks.
Section 10.05. Reliance, Exculpation and Indemnification.
(a) The Administrator and each of the other Banks shall be entitled to
rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or other communication (which to the extent permitted
hereunder may be by telecopy or telephone) reasonably believed by such Bank to
be genuine and to have been signed, sent or made by the proper person or
persons, and upon opinions and advice of legal counsel (including counsel for
any Borrower), independent public accountants and other experts selected by the
Administrator. Each Bank shall be entitled to rely, and in entering into this
Agreement and the other Loan Instruments in fact has relied, upon the
representations, warranties and other information respecting each Borrower
contained in this Agreement and the other Loan Instruments notwithstanding any
investigation, analysis or evaluation that may have been made or from time to
time may be made by any Bank or its designees of all or any part of the assets,
business, operations, properties or condition (financial or otherwise) of any
Borrower or any other person.
(b) The Administrator and each of the other Banks and their respective
participants and designees, and their respective directors, officers, employees,
attorneys and agents, shall not incur any liability (other than to the extent
occasioned by a person's own acts or omissions breaching a duty owed to the
Borrowers and amounting to gross negligence or willful misconduct as finally
determined pursuant to applicable law by a governmental authority having
jurisdiction) for acts and omissions arising out of or related directly or
indirectly to this Agreement, any other Loan Instrument, any part of Collateral,
any of the Loans or the application of any proceeds thereof, or any
Environmental Claim; and each Borrower hereby expressly waives any and all
claims and actions (other than to the extent occasioned by a person's own acts
or omissions breaching a duty owed to the Borrowers and amounting to gross
negligence or willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction) against the Administrator
and each of the other Banks and their respective participants and designees, and
their respective directors, officers, employees, attorneys and agents, arising
out of or related directly or indirectly to any and all of the foregoing acts,
omissions and circumstances.
(c) The Administrator and each of the other Banks and their respective
participants and designees, and their respective directors, officers, employees,
attorneys and agents, each shall be indemnified, reimbursed and held harmless by
the Borrowers, and (at the request of such Bank) defended at the expense of the
Borrowers with counsel selected by such Bank, from and against any and all
claims, liabilities, losses and expenses (including, without limitation, the
disbursements, expenses and fees of their respective attorneys) that may be
imposed upon, incurred by, or asserted against any of them, or any of their
respective directors, officers, employees, attorneys and agents, arising out of
or related directly or indirectly to this Agreement, any other Loan Instrument,
any part of Collateral, any of the Loans or the application of any proceeds
thereof, or any Environmental Claim, except to the extent occasioned by the
indemnified person's own acts or omissions breaching a duty owed to the
Borrowers and amounting to gross negligence or willful misconduct as finally
determined pursuant to applicable law by a governmental authority having
jurisdiction.
Section 10.06. Interpretation. The parties acknowledge and agree that:
each party and its counsel have reviewed and negotiated the terms and provisions
of this Agreement (excluding schedules) and have contributed to its revision;
the normal rule of construction, to the effect that any ambiguities are resolved
against the drafting party, shall not be employed in the interpretation of it;
and its terms and provisions shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
Section 10.07. Section and Other Headings. The table of contents and
section and other headings contained in this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
Section 10.08. Provisions of the Notes and Security Documents. The
Notes and the various mortgages, assignments and other instruments and documents
creating or evidencing the Administrator's interest in the Collateral (for the
benefit of all of the Banks) are each subject to the covenants and other terms
and provisions contained in this Agreement to the same extent and effect as if
fully set forth therein; and in the event that any term or provision of those
instruments and documents conflicts or is inconsistent with any term or
provision of this Agreement, the term or provision of this Agreement shall
control and be given effect.
Section 10.09. Governing Law. This Agreement and the other Loan
Instruments: have been executed and delivered in the State of New York; and
shall be governed by and construed in accordance with the applicable laws
pertaining in the State of New York (other than those that would defer to the
substantive laws of another jurisdiction). Without in any way limiting the
preceding choice of law, the parties intend (among other things) to thereby
avail themselves of the benefit of Section 5-1401 of the General Obligations Law
of the State of New York.
Section 10.10. Severability. In the event that any term or provision of
this Agreement or any other Loan Instrument shall be finally determined to be
superseded, invalid, illegal or otherwise unenforceable pursuant to applicable
law by a governmental authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability (a) by or before that authority of the remaining terms and
provisions of this Agreement and the other Loan Instruments, which shall be
enforced as if the unenforceable term or provision were deleted, or (b) by or
before any other authority of any of the terms and provisions of this Agreement
and the other Loan Instruments.
Section 10.11. Survival of Representations, Etc.
(a) Each of the representations, warranties, covenants and other
agreements of each Borrower contained in this Agreement and the other Loan
Instruments: (i) shall be absolute and unconditional; (ii) shall survive the
execution and delivery of this Agreement and the other Loan Instruments, and the
advance, repayment and readvance of any or all of the monies to be lent
thereunder; (iii) shall remain and continue in full force and effect without
regard (A) to any waiver, modification, extension, renewal, consolidation,
spreading, amendment or restatement of any other term or provision of any Loan
Instrument, (B) to any full, partial or non-exercise of any of the rights,
powers, privileges, remedies and interests of the Administrator or the Banks
under any Loan Instrument or applicable law, against any person or with respect
to any collateral, (C) to any release or subordination of any obligations or
collateral, (D) to any statute of limitations or similar time constraint under
any applicable law, (E) to any investigation, analysis or evaluation by any Bank
or its designees of the assets, business, operations, properties or condition
(financial or otherwise) of any Borrower or any other person, (F) to any act or
omission on the part of the Administrator, any Bank or any other person, or (G)
to any other event that otherwise might constitute a legal or equitable
counterclaim, defense or discharge of a borrower, surety or pledgor; (iv) shall
not be subject to any defense, counterclaim, setoff, right of recoupment,
abatement, reduction or other claim or determination that any Borrower may have
against any other Borrower, the Administrator, any Bank or any other person; (v)
shall not be diminished or qualified by the death, disability, dissolution,
reorganization, insolvency, bankruptcy, custodianship or receivership of any
Borrower, any other co-obligor, guarantor, surety or pledgor or any other
person, or the inability of any of them to pay its debts or perform or otherwise
satisfy its obligations as they become due for any reason whatsoever; and (vi)
shall remain and continue in full force and effect until all of the Obligations
have been fully paid and satisfied and thereafter with respect to events
occurring prior to such payment and satisfaction.
(b) Without limiting the generality of subsection (a) of this Section
or any other term or provision of this Agreement, each Borrower covenants,
agrees and consents that, at any time, and from time to time: (i) any collateral
securing or intended to secure anyone's obligations under any Loan Instrument
may be sold, conveyed, assigned or otherwise realized upon, dealt with or
disposed of in whole or in part as respectively contemplated thereunder; (ii)
any mortgage or other security interest in any such collateral may be held
without due recordation or other perfection (whether intentionally or
otherwise), may be recorded or otherwise perfected, or may be assigned,
released, subordinated or otherwise impaired, dealt with or disposed of in whole
or in part; (iii) the liability of any other Borrower, any other co-obligor,
guarantor, surety or pledgor or any other person to pay any and all of the
Obligations may be settled, compromised or released, in whole or in part, or
subordinated to the prior payment of any other debts or claims of that or any
other person; (iv) any one or more of this Agreement and the other Loan
Instruments, or any one or more of the rights, powers, privileges, remedies and
interests of any Bank herein or therein, may be sold, conveyed, assigned or
otherwise transferred by such Bank in whole or in part (including participations
or other undivided interests) to any other person; or (v) any other right,
power, privilege, remedy or interest of the Administrator or the Banks under
this Agreement, any other Loan Instrument or applicable law may be exercised or
enforced by the Administrator (with the consent of the Requisite Banks, as and
if required), the Banks or their respective designees, which exercise or
enforcement may be delayed, discontinued or otherwise not pursued or exhausted
for any or no reason whatsoever, or any such right, power, privilege, remedy or
interest may be waived, omitted or otherwise not exercised or enforced (whether
intentionally or otherwise); all in such manner and order, upon such terms and
provisions and subject to such conditions as the Administrator (with the consent
of the Requisite Banks, as and if required) or the Banks may deem necessary or
desirable in its or their sole and absolute discretion, all without notice to or
further assent from any Borrower except as otherwise expressly provided in this
Agreement, and all without affecting this Agreement and the other Loan
Instruments or any of the obligations hereunder or thereunder. As between the
Administrator and the Banks, however, the preceding provisions are not intended
and shall not be deemed or construed as modifying the relative rights and
obligations of the Administrator and the Banks under this Agreement or any other
Loan Instrument.
Section 10.12. Counterparts. This Agreement or any other Loan
Instrument may be executed in two or more counterpart copies of the entire
document or of signature pages to the document, each of which may be executed by
one or more of the parties hereto or thereto, but all of which, when taken
together, shall constitute a single agreement binding upon all of the parties
hereto or thereto (as the case may be).
Section 10.13. Effective Date. This Agreement shall be effective on the
date (the "Effective Date") as of which (a) this Agreement shall be executed by
all the parties hereto and delivered to the Administrator and (b) all the
conditions precedent required to have been satisfied on or before the Effective
Date pursuant to Article IV hereof shall have been satisfied or waived (whether
temporarily or otherwise) in writing by the Administrator (with the consent of
the Requisite Banks, as and if required). The Administrator shall notify the
Borrowers of the Effective Date if other than the date of the closing of this
Agreement; provided, however, that the failure to give such notice shall not
alter the Effective Date.
Section 10.14. Successors and Assigns; Assignment.
(a) Whenever in this Agreement or any other Loan Instrument reference
is made to any party, such reference shall be deemed to include the successors,
assigns, heirs and legal representatives of such party, and, without limiting
the generality of the foregoing, all representations, warranties, covenants and
other agreements made by or on behalf of each Borrower in this Agreement and the
other Loan Instruments shall inure to the benefit of the successors and assigns
of the Banks; provided, however, that nothing herein shall be deemed to
authorize or permit any Borrower to assign any of its rights or obligations
under this Agreement or any other Loan Instrument to any other person (whether
or not an affiliate of that Borrower), and each Borrower covenants and agrees
that it shall not make any such assignment.
(b) Subject to the terms and provisions of this Agreement, each Bank
(an "Assignor") from time to time may assign to any Eligible Assignee (an
"Assignee") an undivided constant portion of the rights, powers, privileges,
remedies and interests, together with the same portion of the duties,
obligations and liabilities, of the Assignor under this Agreement and the other
Loan Instruments, in any case without notice to or the consent of any Borrower;
provided that the Administrator shall retain and exercise various administrative
functions and continue to hold the various security interests granted under this
Agreement and the other Loan Instruments in the manner and to the extent
contemplated by this Agreement and the other Loan Instruments. The Assignor will
enter into an Assignment and Assumption Agreement (an "Assignment Agreement") in
the form of Exhibit G hereto with any such Assignee. Upon the execution and
delivery of an Assignment Agreement by an Assignee, the satisfaction of any
conditions required in the Assignment Agreement, the execution and delivery of
any tax forms required by subsection (d) of this Section, and the delivery of
the Assignment Agreement to the Administrator: (i) the Assignee (and its
successors and assigns) shall succeed to the stipulated portion of the
Assignor's rights, powers, privileges, remedies and interests, and shall be
bound by and liable for the same portion of the Assignor's specific agreements,
duties, obligations and liabilities, under this Agreement and other Loan
Instruments, including (without limitation) the assigned portion of the
Commitment; (ii) the Assignee shall be a "Bank" for all purposes under and with
respect to this Agreement and the other Loan Instruments, entitled to all of the
general rights, powers, privileges, remedies and other interests and subject to
all of the general agreements, duties, obligations and liabilities of a Bank
hereunder and thereunder; and (iii) the Assignor shall be and hereby is forever
acquitted and released by each Borrower from the assigned portion of its
agreements, duties, obligations and liabilities under this Agreement and the
other Loan Instruments and all related acts and omissions. Each Borrower agrees
to execute and deliver such amendments to or restatements of this Agreement and
the other Loan Instruments as may be reasonably required to reflect any such
assignment. The Assignor shall give a copy of any Assignment Agreement to the
Borrowers; provided that any failure or delay in giving any such copy shall not
affect the validity of any such assignment.
(c) Except for an assignment required to be effected under Section 9.21
hereof, no assignment described in subsection (b) of this Section shall be
effected: (i) for a Committed Share and Pro Rata Share of less than $4,000,000,
unless constituting the entire then-remaining interest of the Assignor; (ii) if
the Assignor is a Delinquent Bank; or (iii) without the prior written consent of
the other Banks.
(d) Any Eligible Assignee (other than one organized under the laws of
the United States or any state thereof) that is exempt from United States
federal withholding tax or subject to a reduced rate by treaty shall, on or
before the date it becomes a Bank hereunder, complete, execute and deliver to
the Administrator and the Borrower (one original to each) Internal Revenue
Service Form 1001 or 4224, as applicable, and Form W-8 or W-9, as applicable, or
any successor form, and such other form(s), certificate(s) and document(s) as
may be required under the Code to establish such Eligible Assignee's entitlement
to such exemption or reduced rate. If any such Eligible Assignee is not entitled
to any such exemption or reduced rate, the Bank proposing to assign to such
Eligible Assignee shall give the Administrator and the Borrowers notice of that
determination promptly but in any event not less than three Business Days prior
to the date it executes and delivers its Assignment Agreement. Any such Eligible
Assignee that becomes a Bank shall, from time to time, complete, execute and
deliver such updates or extensions to or renewals or replacements of those
forms, certificates and documents as may be necessary to reflect any change in
circumstance or applicable law or to continue any such exemption or reduced
rate.
(e) Subject to the terms and provisions of this Agreement, each Bank
and its participants (other than a Delinquent Bank) from time to time may sell
to one or more other financial institutions or institutional investors Eligible
Assignees a participation interest in all or an undivided portion of its rights,
powers, privileges, remedies and interests under this Agreement and the other
Loan Instruments, in any case without any notice to or consent of any Borrower;
provided that the selling Bank shall give the Administrator written notice of
each such sale, specifying the purchaser and share purchased; and provided
further that no Bank shall permit its direct or indirect participant to further
assign or participate its interests hereunder without prior written notice to
the Administrator. However, the sale or other transfer of a participation shall
not reduce, shift or otherwise affect any of the agreements, duties, obligations
or liabilities of the selling Bank under this Agreement or any other Loan
Instrument, which shall continue in full force and effect and remain the sole
responsibility of the selling Bank, and each such selling Bank agrees that it
will not raise (and hereby expressly waives) any defense relating to any such
participation. Furthermore, no Bank shall grant to any participant the right to
approve any supplement to, modification, amendment, restatement or waiver of or
departure from this Agreement or any other Loan Instrument other than with
respect to (i) any reduction in the principal of the Loans or in the calculation
of interest thereon (other than default interest), or any postponement of any
date fixed for any payment of principal or interest on the Loans (other than
default interest), to the extent the participant has an interest in such Loans,
or (ii) release all or substantially all of the Loan Collateral other than as
contemplated by the terms and provisions of this Agreement and other Loan
Instruments. The Administrator and other Banks and parties may continue to deal
directly and exclusively with any such selling Bank.
(f) Each Bank and its participants from time to time may furnish and
disclose financial statements, documents and other information pertaining to the
Borrowers to any potential assignee or participant. Each Borrower covenants and
agrees to furnish copies of financial statements, reports and other documents
required under this Agreement directly to such potential assignees and
participants as any Bank from time to time may request.
(g) Each Borrower acknowledges and agrees that any Bank's source of
funds may derive in part from its participants. Accordingly, references in
Sections 1.01 and 2.04 and the other terms and provisions of this Agreement and
the other Loan Instruments to rates, determinations, reserve and capital
adequacy requirements, expenses, increased costs, reduced receipts and the like
as they pertain to any Bank shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to such Bank directly if such Bank, rather than the
participant, had held the interest participated).
Section 10.15. Limits on the Administrator's Ability to Act, Etc.
Notwithstanding anything in this Agreement or any other Loan Instrument to the
contrary, each Borrower acknowledges and agrees that Article IX hereof and other
terms and provisions of this Agreement and the other Loan Instruments generally
limit the authority of the Administrator to act without the consent of certain
or all of the other Banks. Each Borrower acknowledges and agrees that the
Administrator shall have no duty or obligation under this Agreement, any other
Loan Instrument or applicable law to act in disregard or contravention of those
terms and provisions.
Section 10.16. No Third Party Rights. The representations, warranties
and other terms and provisions of this Agreement and the other Loan Instruments
are for the exclusive benefit of the parties hereto, and, except as otherwise
expressly provided herein or therein, no other person, including creditors of
any party hereto, shall have any right or claim against any party by reason of
any of those terms and provisions or be entitled to enforce any of those terms
and provisions against any party.
Section 10.17. No Waiver by Action, Etc. Any waiver or consent
respecting any representation, warranty, covenant or other term or provision of
this Agreement or any other Loan Instrument shall be effective only in the
specific instance and for the specific purpose for which given and shall not be
deemed, regardless of frequency given, to be a further or continuing waiver or
consent. The failure or delay of a party at any time or times to require
performance of, or to exercise its rights with respect to, any representation,
warranty, covenant or other term or provision of this Agreement or other Loan
Instrument in no manner (except as otherwise expressly provided herein) shall
affect its right at a later time to enforce any such provision. No notice to or
demand on any Borrower in any case shall entitle such party to any other or
further notice or demand in the same, similar or other circumstances. The
acceptance by the Administrator or any Bank of (a) any partial or late payment
shall not constitute a satisfaction or waiver of the full amount then due or the
resulting Event of Default or (b) any payment during the continuance of an Event
of Default shall not constitute a waiver or cure thereof; and the Administrator
or any Bank may accept or reject any such payment without affecting any of its
rights, powers, privileges, remedies and other interests under this Agreement,
the other Loan Instruments and applicable law. All rights, powers, privileges,
remedies and other interests of the Administrator or the Banks hereunder are
cumulative and not alternatives, and they are in addition to and shall not limit
(except as otherwise expressly provided herein) any other right, power,
privilege, remedy or other interest of the Administrator or the Banks under this
Agreement, any other Loan Instrument or applicable law.
[End of Page]
<PAGE>
Section 10.18. Modification, Amendment, Etc. Except to the extent that
the approval or signatures of all of the Banks is not required as provided below
or in any other term or provision of this Agreement or any other Loan
Instrument, each and every supplement or amendment to or modification or
restatement of this Agreement or any other Loan Instrument shall be in writing
and signed by the parties hereto or thereto, respectively, and each and every
waiver of, or consent to any departure from, any representation, warranty,
covenant or other term or provision of this Agreement or any other Loan
Instrument shall be in writing and signed by the affected parties hereto or
thereto, respectively; provided, however, that (a) the Administrator (with the
consent of the Requisite Banks, as and if required) may sign all waivers and
consents on behalf of all of the Banks, and (b) the Requisite Banks may approve
and sign (or authorize the Administrator to sign) on behalf of all of the Banks
certain waivers, supplements, modifications, amendments and restatements of this
Agreement and the other Loan Instruments in accordance with Article IX hereof
and the other applicable terms and provisions of this Agreement and the other
Loan Instruments.
Section 10.19. Entire Agreement. This Agreement and the other Loan
Instruments contain the entire agreement of the parties and supersede all other
representations, warranties, agreements and understandings, oral or otherwise,
among the parties with respect to the matters contained herein and therein.
In Witness Whereof, the parties hereto have executed and delivered this
Agreement as of the date first written above.
Aeroflex Incorporated (f/k/a ARX, Inc.)
By:
Michael Gorin, President
Aeroflex Laboratories Incorporated
By:
Michael Gorin, Vice President
Aeroflex International Inc.
By:
Michael Gorin, Vice President
Aeroflex Lintek Corp.
By:
Michael Gorin, Vice President
Aeroflex Systems Corp.
By:
Michael Gorin, Vice President
Aeroflex Acquisition Corp.
By:
Michael Gorin, President
[Signatures Continued]
<PAGE>
Comstron International, S.A.R.L.
By:
Michael Gorin, Vice President
MIC Technology Corporation
By:
Michael Gorin, President
MIC Technology S.A.R.L.
By:
Michael Gorin, Vice President
Vibration Mountings and Controls, Inc.
By:
Michael Gorin, Vice President
Chemical Bank
By:
Barbara G. Bertschi, Vice President
NatWest Bank N.A.
By:
Christopher Mendelsohn, Vice President
NatWest Bank N.A.,
as Administrator
By: Christopher Mendelsohn, Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of Aeroflex Incorporated (f/k/a ARX, Inc.), the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Laboratories Incorporated, the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex International Inc., the corporation described in
and which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Lintek Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Systems Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of Aeroflex Acquisition Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this _____ day of May, 1994, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Comstron International, S.A.R.L., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of MIC Technology Corporation, the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of MIC Technology S.A.R.L.., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Vibration Mountings and Controls, Inc., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Barbara G.
Bertschi, to me known, who being by me duly sworn, did depose and say that she
resides at 2 Burkhardt Avenue, Bethpage, New York 11714; that she is a Vice
President of Chemical Bank, the New York banking corporation described in and
which executed the above instrument; and that she signed her name thereto by
order of the board of directors of said association.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Christopher
Mendelsohn, to me known, who, being by me duly sworn, did depose and say: that
he resides at 31 Nathan Hale Drive, #29B, Huntington, New York 11743;; that he
is an Vice President of NatWest Bank N.A. (f/k/a National Westminster Bank USA),
the national banking association described in and which executed the above
instrument; and that he signed his name thereto by order of the board of
directors of said association.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Christopher
Mendelsohn, to me known, who, being by me duly sworn, did depose and say: that
he resides at Nathan Hale Drive, #29B, Huntington, New York 11743; ; that he is
a Vice President of NatWest Bank N.A. (f/k/a National Westminster Bank USA), the
national banking association described in and which executed the above
instrument as Administrator; and that he signed his name thereto by order of the
board of directors of said association.
<PAGE>
EXHIBIT A
to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIRD AMENDED AND RESTATED REVOLVING PROMISSORY NOTE
$ Jericho, New York
Dated as of March 15, 1996
FOR VALUE RECEIVED, Aeroflex Incorporated (f/k/a ARX, Inc.), Aeroflex
Laboratories Incorporated, Aeroflex International Inc., Aeroflex Lintek Corp.,
Aeroflex Systems Corp., Aeroflex Acquisition Corp., Comstron International,
S.A.R.L., MIC Technology Corporation, MIC Technology S.A.R.L. and Vibration
Mountings and Controls, Inc. (individually, a "Borrower", and collectively, the
"Borrowers"), jointly and severally promise to pay to the order of [NAME OF
BANK], at [BANK ADDRESS], or at such other place as may be designated in writing
by the holder of this Note, the principal sum of
DOLLARS ($__________), or so much thereof as may be advanced and outstanding,
with interest thereon, to be computed on each advance from the date of its
disbursement, all as provided in that certain Third Amended and Restated Loan
and Security Agreement dated as of March 15, 1996, among the Borrowers,
NatWest Bank N.A., as Administrator (the "Administrator"), the holder of this
Note and the other Banks identified therein (as the same may be supplemented,
modified, amended or restated from time to time in the manner provided
therein, the "Loan Agreement"). Capitalized terms used and not otherwise
defined in this Note shall have the meanings respectively assigned to them in
the Loan Agreement.
This Note is one of the Revolving Credit Notes and one of the Notes
referred to in the Loan Agreement. Principal and interest shall be due and
payable as provided in the Loan Agreement, and all of the terms and provisions
of the Loan Agreement, including (without limitation) provision for prepayment
and acceleration of maturity, are incorporated herein by reference and made a
part hereof. This Note is secured by certain collateral pledged by the Borrowers
to the Administrator pursuant to the Loan Agreement.
This Note is one of the Revolving Credit Notes issued by the Borrowers
in order to amend, extend and completely replace the Existing Revolving Credit
Notes to evidence the indebtedness outstanding under the Existing Revolving
Credit Notes and to be a substitute and replacement for the Existing Revolving
Credit Notes, but the Revolving Credit Notes are not intended and shall not be
deemed or construed to be a payment, satisfaction, cancellation or violation of
such indebtedness.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived by each Borrower. This Note is made and delivered in
the State of New York, where all advances and repayments shall be made, and
shall be construed in accordance with and governed by the applicable laws
pertaining in such State. This Note may not be changed or terminated orally, and
in any event may not be changed without the written consent of the holder
hereof.
Aeroflex Incorporated (f/k/a ARX, Inc.)
By:
Michael Gorin, President
Aeroflex Laboratories Incorporated
By:
Michael Gorin, Vice President
Aeroflex International Inc.
By:
Michael Gorin, Vice President
[Signatures Continued]
<PAGE>
Aeroflex Lintek Corp.
By:
Michael Gorin, Vice President
Aeroflex Systems Corp.
By:
Michael Gorin, Vice President
Aeroflex Acquisition Corp.
By:
Michael Gorin, President
Comstron International, S.A.R.L.
By:
Michael Gorin, Vice President
MIC Technology Corporation
By:
Michael Gorin, President
MIC Technology S.A.R.L.
By:
Michael Gorin, Vice President
Vibration Mountings and Controls, Inc.
By:
Michael Gorin, Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of Aeroflex Incorporated (f/k/a ARX, Inc.), the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Laboratories Incorporated, the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex International Inc., the corporation described in
and which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Lintek Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Systems Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of Aeroflex Acquisition Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this _____ day of May, 1994, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Comstron International, S.A.R.L., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of MIC Technology Corporation, the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of MIC Technology S.A.R.L.., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Vibration Mountings and Controls, Inc., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
EXHIBIT B
to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIRD AMENDED AND RESTATED TERM PROMISSORY NOTE
$ Jericho, New York
Dated as of March 15, 1996
FOR VALUE RECEIVED, Aeroflex Incorporated (f/k/a ARX, Inc.), Aeroflex
Laboratories Incorporated, Aeroflex International Inc., Aeroflex Lintek Corp.,
Aeroflex Systems Corp., Aeroflex Acquisition Corp., Comstron International,
S.A.R.L., MIC Technology Corporation, MIC Technology S.A.R.L., and Vibration
Mountings and Controls, Inc. (individually, a "Borrower", and collectively, the
"Borrowers"), jointly and severally promise to pay to the order of [NAME OF
BANK], at [BANK ADDRESS],or at such other place as may be designated in writing
by the holder of this Note, the principal sum of DOLLARS ($__________), or so
much thereof as may be advanced and outstanding, with interest thereon, to be
computed on each advance from the date of its disbursement, all as provided in
that certain Third Amended and Restated Loan and Security Agreement dated as of
March 15, 1996, among the Borrowers, NatWest Bank N.A., as Administrator (the
"Administrator"), the holder of this Note and the other Banks identified therein
(as the same may be supplemented, modified, amended or restated from time to
time in the manner provided therein, the "Loan Agreement"). Capitalized terms
used and not otherwise defined in this Note shall have the meanings respectively
assigned to them in the Loan Agreement.
This Note is one of the Term Notes and one of the Notes referred to in
the Loan Agreement. Principal and interest shall be due and payable as provided
in the Loan Agreement, and all of the terms and provisions of the Loan
Agreement, including (without limitation) provision for prepayment and
acceleration of maturity, are incorporated herein by reference and made a part
hereof. This Note is secured by certain collateral pledged by the Borrowers to
the Administrator pursuant to the Loan Agreement.
This Note is one of the Term Notes issued by the Borrowers in order to
amend, extend and completely replace the Existing Term Notes to evidence the
indebtedness outstanding under the Existing Term Notes, and to be a substitute
and replacement for the Existing Term Notes, but the Term Notes are not intended
and shall not be deemed or construed to be a payment, satisfaction, cancellation
or violation of such indebtedness.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived by each Borrower. This Note is made and delivered in
the State of New York, where all advances and repayments shall be made, and
shall be construed in accordance with and governed by the applicable laws
pertaining in such State. This Note may not be changed or terminated orally, and
in any event may not be changed without the written consent of the holder
hereof.
Aeroflex Incorporated (f/k/a ARX, Inc.)
By:
Michael Gorin, President
Aeroflex Laboratories Incorporated
By:
Michael Gorin, Vice President
Aeroflex International Inc.
By:
Michael Gorin, Vice President
[Signatures Continued]
<PAGE>
Aeroflex Lintek Corp.
By:
Michael Gorin, Vice President
Aeroflex Systems Corp.
By:
Michael Gorin, Vice President
Aeroflex Acquisition Corp.
By:
Michael Gorin, President
Comstron International, S.A.R.L.
By:
Michael Gorin, Vice President
MIC Technology Corporation
By:
Michael Gorin, President
MIC Technology S.A.R.L.
By:
Michael Gorin, Vice President
Vibration Mountings and Controls, Inc.
By:
Michael Gorin, Vice President
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of Aeroflex Incorporated (f/k/a ARX, Inc.), the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Laboratories Incorporated, the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex International Inc., the corporation described in
and which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Lintek Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Aeroflex Systems Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of Aeroflex Acquisition Corp., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this _____ day of May, 1994, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Comstron International, S.A.R.L., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of MIC Technology Corporation, the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the President of MIC Technology S.A.R.L.., the corporation described in and
which executed the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this ____ day of March, 1996, before me personally came Michael
Gorin, to me known, who, being by me duly sworn, did depose and say: that he
resides at 112B East Long Beach Road, Nissequogue, New York 11780; that he is
the Vice President of Vibration Mountings and Controls, Inc., the corporation
described in and which executed the above instrument; and that he signed his
name thereto by order of the board of directors of said corporation.
<PAGE>
EXHIBIT C
to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
OFFICER'S BRINGDOWN CERTIFICATE
respecting
AEROFLEX INCORPORATED (f/k/a ARX, Inc.),
AEROFLEX LABORATORIES INCORPORATED,
AEROFLEX INTERNATIONAL INC.,
AEROFLEX LINTEK CORP.,
AEROFLEX ACQUISITION CORP.,
AEROFLEX SYSTEMS CORP.,
COMSTRON INTERNATIONAL, S.A.R.L.,
MIC TECHNOLOGY CORPORATION,
MIC TECHNOLOGY S.A.R.L.,
and
VIBRATION MOUNTINGS AND CONTROLS, INC.,
[MONTH and DATE], 19
Pursuant to the Third Amended and Restated Loan and Security Agreement
dated as of March 15, 1996 (as the same may be supplemented, modified, amended
or restated from time to time in the manner provided therein, the "Loan
Agreement"), I, [Print Name] , the [Print Title] of Aeroflex Incorporated (f/k/a
ARX, Inc.), and the [Print Title] of Aeroflex Laboratories Incorporated,
Aeroflex International Inc., Aeroflex Lintek Corp., Aeroflex Systems Corp.,
Aeroflex Acquisition Corp., Comstron International, S.A.R.L., MIC Technology
Corporation, MIC Technology S.A.R.L., and Vibration Mountings and Controls, Inc.
(individually, a "Borrower", and collectively, the "Borrowers"), hereby certify
to NatWest Bank N.A., as Administrator (the "Administrator"), and to each of the
Banks, as of the date hereof that[, except as set forth on Schedule I hereto]:
(a) [both prior and after giving effect to any requested Advance [Term Loan
Advance or Letter of Credit issuance] in connection herewith,] the
representations and warranties of each of the Borrowers set forth in the Loan
Agreement and other Loan Instruments (as to any Advance Date [and Letter of
Credit Issuance Date] are true and correct in all material respects with the
same effect as though those representations and warranties had been made on and
as of the date hereof, subject, however, to any updated information respecting
any event(s) occurring after the Effective Date affecting any of the
representations contained in Sections 3.04, 3.06 and 3.11 hereof and
specifically disclosed in any signed notice or bringdown, indebtedness or
guaranty certificate required hereunder and delivered to and accepted by the
Administrator (with the consent of the Requisite Banks, as and if required) on
or prior to the date hereof, although it is acknowledged and agreed that neither
such delivery nor such acceptance shall constitute a waiver of or consent to any
event so disclosed;
(b) [both prior and after giving effect to any requested Advance [Term Loan
Advance or Letter of Credit issuance] in connection herewith,] no Event of
Default or Default has occurred and is continuing, excluding, however, those
events subject to an express written waiver or consent from the Administrator
(with the consent of the Requisite Banks, as and if required), if any;
(c) the information set forth in the Secretary's or Officer's Certificate
most recently delivered to the Administrator or the Banks respecting (among
other things) the authorizing resolutions, organizational and governing
documents and the incumbency of the officers of each of the Borrowers is true
and complete in all material respects as if those certificates had been
delivered on and as of the date hereof;
(d) there are no actions, suits or proceedings pending or, to the best
knowledge of the undersigned, threatened or contemplated by any person for the
liquidation or dissolution of any Borrower or otherwise threatening their
respective existences or challenging or calling into question the power or
authority of any Borrower to execute or deliver any Loan Instrument to which it
is or will be a party or to perform any of its obligations thereunder; and
(e) the Obligations of the Borrowers under the Loan Agreement, Note and
other Loan Instruments (i) are not subject as of the date of this Certificate to
any defense, counterclaim, setoff, right of recoupment, abatement, reduction or
other claim or determination against the Administrator, any Bank or any other
person and (ii) remain and are currently in full force and effect, enforceable
against them in accordance with their respective terms and provisions.
Capitalized terms and non-capitalized words and phrases used and not
otherwise defined in this Certificate shall have the meanings respectively
assigned to them in the Loan Agreement. This Certificate may be relied upon by
the successors, assigns and participants of each Bank and by counsel to the
Administrator in giving any opinion or advice requested of such counsel.
(SIGNATURE)
DATE SIGNED:____________ ___, 19__
<PAGE>
EXHIBIT D-I
to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
FINANCIAL COVENANTS COMPLIANCE CERTIFICATE
respecting
AEROFLEX INCORPORATED (f/k/a ARX, Inc.),
AEROFLEX LABORATORIES INCORPORATED,
AEROFLEX INTERNATIONAL INC.,
AEROFLEX LINTEK CORP.,
AEROFLEX ACQUISITION CORP.,
AEROFLEX SYSTEMS CORP.,
COMSTRON INTERNATIONAL, S.A.R.L.,
MIC TECHNOLOGY CORPORATION,
MIC TECHNOLOGY S.A.R.L.,
and
VIBRATION MOUNTINGS AND CONTROLS, INC.,
[MONTH and DATE], 19
Pursuant to the Third Amended and Restated Loan and Security Agreement
dated as of March 15, 1996 (as the same may be supplemented, modified, amended
or restated from time to time in the manner provided therein, the "Loan
Agreement"), I, [Print Name] , the [Print Title] of Aeroflex Incorporated (f/k/a
ARX, Inc.), Aeroflex Laboratories Incorporated, Aeroflex International Inc.,
Aeroflex Lintek Corp., Aeroflex Systems Corp., Aeroflex Acquisition Corp.,
Comstron International, S.A.R.L., MIC Technology Corporation, MIC Technology
S.A.R.L., and Vibration Mountings and Controls, Inc. (individually, a
"Borrower", and collectively, the "Borrowers"), hereby certify to NatWest Bank
N.A., as Administrator (the "Administrator"), and to each of the Banks, as of
the date hereof that:
(a) The Consolidated Effective Net Worth of the Borrowers as at __________
__, 19__ (the "Reporting Date"), was not less than the minimum required
for such date by Section 6.01(a) of the Loan Agreement, with compliance
calculated as follows:
(i) Aggregate amount of all tangible assets and properties
(A) Aggregate amount of all assets and properties$________
(B) Minus the sum of:
patents $________
goodwill $________
other intangible assets $________
Total Intangible Assets [$________]
(C) Aggregate amount of all tangible assets and properties$_______
(item (A) minus item (B), above)
(ii) Minus: Consolidated Total Liabilities [$________]
(iii) Tangible Net Worth $________
(item (i) minus item (ii), above)
(iv) Plus: Consolidated Subordinated Indebtedness $________
(v) Plus: 50% of the increase in goodwill since the Effective
$---------
Date attributable to the payments made or accrued
under the Earnout Agreement
(vi) Consolidated Effective Net Worth $________
(item (iii) plus items (iv) and (v), above)
(b) The Consolidated Effective Leverage Ratio as at the Reporting Date was
not more than the maximum for such date permitted by Section 6.01(b) of
the Loan Agreement with compliance calculated as follows:
(i) Consolidated Unsubordinated Liabilities:
(A) Total Liabilities $_________
(B) Minus: Consolidated Subordinated Indebtedness[$_______]
(C) Consolidated Unsubordinated Liabilities $_________
(item (i) minus item (ii), above)
(ii) Consolidated Effective Net Worth $_________
(from part (a)(vi), above)
(iii) Consolidated Effective Leverage Ratio
(the ratio of item (i)(C) to item (ii), above)
(c) The Consolidated Funded Debt Ratio for the fiscal year or other period
of four consecutive fiscal quarters ended on the Reporting Datedid not
exceed the maximum permitted for such date by Section 6.01(c) of the
Loan Agreement, with compliance calculated as follows:
(i) Consolidated Senior Funded Indebtedness:
(A) Indebtedness payable in one year or more $_________
(including current portions)
(B) Minus: Consolidated Subordinated Indebtedness [$_______]
included in item (A), above
(C) Minus: any indebtedness included in item (A), above,[$_______]
secured fully and only by cash and cash equivalents
(D) Consolidated Senior Funded Indebtedness $_________
(item (A) minus item (B), and then minus item (C), above)
(ii) Consolidated Available Earnings:
(A) Net Income (or Loss) for such period $_________
(B) Minus: Extraordinary or unusual gain(s) $_________
included in determining item (A), above
(C) Plus: Extraordinary or unusual loss(es) $_________
included in determining item (A), above
(D) Plus: Consolidated Interest Expense $_________
included in determining item (A), above
(E) Plus: Total federal, state, local and foreign income$_________
and franchise taxes accrued and/or paid during
such period and deducted in computing (A), above
(F) Consolidated EBIT (item (A) minus item (B), then$ plus
items (C), (D), and (E), above)
(G) Plus: Consolidated Depreciation and$_________
Amortization included in determining item (F), above
(H) Minus: Aggregate Capital Expenditures for such period$_________
(I) Consolidated Available Earnings $_________
(item (F) plus item (G), and then minus item (H), above)
(iii) Consolidated Funded Debt Ratio (the ratio of :1
item (i)(D) to item (ii)(I), above)
(d) The Consolidated Debt Service Ratio of the Borrowers for the fiscal
year or other period of four consecutive fiscal quarters ended on the
Reporting Date was not less than the minimum for such period required
by Section 6.01(d) of the Loan Agreement, with compliance calculated as
follows:
(i) Adjusted Consolidated Available Earnings
(A) Consolidated Available Earnings $________
(from part (c)(ii)(I), above)
(B) Plus: Capital Expenditures financed through Other Debt $________
(which expenditures are reflected in item (c)(ii)(H), above)
(C) Adjusted Consolidated Available Earnings $________
(item (A) minus item (B) above)
(ii) Consolidated Debt Service:
(A) Consolidated Interest Expense for such period $________
(B) Plus: Long-Term Indebtedness $________
payable during twelve-month period
(C) Minus: the principal balance of the
Revolving Credit Loans $________
(only during final twelve months of the
Revolving Credit Period) to the extent included
in item (B), above
(D) Minus: the principal balance of indebtedness secured
fully and only by cash and cash equivalents to the $_________
extent included in item (B), above
(E) Plus: interest expense re discontinued business
operations $_________
(F) Plus: indebtedness payable during the next succeeding$_________
twelve-month period re discontinued business operations
(G) Consolidated Debt Service $ (the sum of items (A), (B), (E)
and (F), then minus items (C) and (D), above)
(iii) Consolidated Debt Service Ratio :1
(the ratio of item (i)(C) to item (ii)(G), above)
(e) The Consolidated Quick Ratio of the Borrowers at the Reporting Date was
not less than the minimum required for such date by Section 6.01(e) of
the Loan Agreement, with compliance calculated as follows:
(i) Consolidated Quick Assets (consisting of the following)
(A) cash $_________
(B) marketable securities $_________
(C) accounts receivable $_________
(D) Minus: current assets listed above that are encumbered$_________
by security interests other under the Loan Agreement
(E) Consolidated Quick Assets $________
(the sum of items (A), (B) and (C), minus item (D), above)
(ii) Consolidated Current Liabilities
(excluding the current portion of long-term debt)$
(iii)Consolidated Quick Ratio (the ratio of item (i) :1
to item (ii), above)
(f) The consolidated income before taxes of the Borrowers for the fiscal
year ended on the Reporting Date was not less than the minimum required
for the fiscal year by Section 6.01(f) of the Loan Agreement
($6,000,000.00), with compliance calculated as follows:
(i) Net Income (or Loss) for such period $_________
(same as item (c)(ii)(A), above)
(ii) Plus: Total federal, state, local and foreign income $_________
and franchise taxes accrued and/or paid during
such period and deducted in computing (i), above
(same as item (c)(ii)(E), above)
(iii) Consolidated income before taxes (item (i) plus item (ii),
above) $_________
(g) The Consolidated Capital Expenditures of the Borrowers for the period
commencing with the beginning of the fiscal year and ended on the
Reporting Date did not exceed the maximum permitted for the fiscal year
by Section 6.01(g) of the Loan Agreement, with compliance calculated as
follows:
(i) Consolidated Capital Expenditures $_________
(h) The Applicable Pricing Level for the forthcoming fiscal quarter is
calculated as follows:
(i) Consolidated Effective Leverage Ratio :1
(from item (b)(iiii), above)
(ii) Applicable Pricing Level Level _____ (the numerically lowest
pricing level where item (i) does not exceed the specified
maximum in the definition of Applicable Pricing Level)
(i) The Excess Cash Flow for the twelve month period ending on March 31,
____, is determined as follows:
(i) the amount of the change (positive for an increase
or negative for a decrease) in the cash and cash
equivalents of the Borrowers from the beginning
of period of such determination to its end $_________
(ii) the amount of the change (positive for a decrease or
negative for an increase) in the Revolving Credit Loans
(other than any decrease due to a mandatory prepayment) $_________
(iii) one-half of the amount of any increase in Other Debt
from the beginning of period of such determination to its end$________
(iv) Excess Cash Flow (item (i) plus item (ii) minus item (iii),
above) $________
(j) The Other Debt incurred by the Borrowers pursuant to Section 6.02(b)(i)
of the Loan Agreement during the period commencing with the beginning
of the fiscal year and ended on the Reporting Date did not exceed the
maximum amount for the fiscal year permitted by that section, with
compliance calculated as follows:
(i) purchase money indebtedness $_________
(ii) refinancings secured by equipment, etc. $_________
(iii)leases, whether or not constituting indebtedness under GAAP$_________
(excluding, however, leases (i) of real property or (ii) having
aggregate rental payments for the initial term (discounted to present
value) of less than $100,000 for any lease (with multiple equipment
schedules constituting a single lease) or series of related leases)
(iv) total Other Debt $_________
(the sum of items (i), (ii) and (iii), above)
(k) The Borrowers mandatory prepayment of the Loans under Section 2.05 (e)
is calculated as follows:
(i) net proceeds received by any of the Borrowers since the beginning
of the fiscal year in connection with:
(A) any voluntary sale, lease, transfer, assignment, liquidation, or
other disposition of any investment or property, plant or
equipment (whether or not) Collateral $_________
(B) any involuntary transfer, assignment, discontinuation,
liquidation, condemnation, destruction or other disposition of
any Collateral or other business, asset or property $_________
(C) total disposition proceeds $_________
(ii) Annual Threshold Amount $100,000
(iii) Excluded Dispositions since the beginning of the fiscal year
(A) sales of equipment in any sale-leaseback transaction
permitted under Section 7.03(c) of the Loan Agreement$_________
(B) dispositions of any Collateral or other asset or property
specified in Section 7.03(b) of the Loan Agreement if the
conditions of that subsection are satisfied and the repair,
rebuilding, replacement or acquisition contemplated by that
subsection are completed within the specified time $________
(C) dispositions of any Permitted Puerto Rican Investments$________
to the extent applied to the repayment of Permitted Puerto Rican
Investments
(D) Total Excluded Disposition Amount $________
(iv) Mandatory Prepayments previously made since the beginning of the
fiscal year $________
(v) Mandatory Prepayment currently due $________
(item (i)(C) minus the sum of items (ii), (iii) and (iv), above)
The preceeding calculations are summarized from the Loan Agreement; in
the event of any conflict, the actual provisions of the Loan Agreement shall
control.
Capitalized terms and noncapitalized words and phrases used and not
otherwise defined in this Certificate shall have the meanings respectively
assigned to them in the Loan Agreement, except that certain terms refer to the
applicable captions or headings of the Borrowers' financial statements and
reports. This Certificate may be relied upon by the successors, assigns and
participants of each Bank and by counsel to the Administrator in giving any
opinion or advice requested of such counsel.
(SIGNATURE)
DATE SIGNED:____________ ___, 19__
<PAGE>
EXHIBIT D-II
to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
BORROWING BASE CERTIFICATE
respecting
AEROFLEX INCORPORATED (f/k/a ARX, Inc.),
AEROFLEX LABORATORIES INCORPORATED,
AEROFLEX INTERNATIONAL INC.,
AEROFLEX LINTEK CORP.,
AEROFLEX ACQUISITION CORP.,
AEROFLEX SYSTEMS CORP.,
COMSTRON INTERNATIONAL, S.A.R.L.,
MIC TECHNOLOGY CORPORATION,
MIC TECHNOLOGY S.A.R.L.,
and
VIBRATION MOUNTINGS AND CONTROLS, INC.,
[MONTH and DATE], 1991
Pursuant to the Third Amended and Restated Loan and Security Agreement
dated as of March 15, 1996 (as the same may be supplemented, modified, amended
or restated from time to time in the manner provided therein, the "Loan
Agreement"), I, [Print Name] , the [Print Title] of Aeroflex Incorporated (f/k/a
ARX, Inc.), Aeroflex Laboratories Incorporated, Aeroflex International Inc.,
Aeroflex Lintek Corp., Aeroflex Systems Corp., Aeroflex Acquisition Corp.,
Comstron International, S.A.R.L., MIC Technology Corporation, MIC Technology
S.A.R.L., and Vibration Mountings and Controls, Inc. (individually, a
"Borrower", and collectively, the "Borrowers"), hereby certify to NatWest Bank
N.A., as Administrator (the "Administrator"), and to each of the Banks, as of
the date hereof that:
(l) Determination of Discounted Eligible ReceivablesAmount
(i) Accounts Receivable Amount (gross book value) $________
(ii) Ineligible Receivable Amounts
(The following categories are summarized from the Loan Agreement; the
actual provisions of the Loan Agreement shall control.) If a receivable
would be includible in more than one category below, include it in the
first appropriate category only (i.e., do not count the same one more
than once)
(A) 30 day invoices more than 120 days past due $________
(B) 30 day invoices more than 60 days past due $________
(C) invoice permits payment more than 92 days after invoice
date $________
(other than Eligible Extended Payment Invoices)
(D) receivables of customers where more than 50% of the receivables
of the customer and its affiliates are past due beyond the
permitted 60 or 120 day periods, as applicable $________
(E) no final or progress invoice issued $________
(F) delivery or agreed upon progress stage not completed $________
(G) invoice is conditional, permits returns, or restricts
collection rights or assignments in any respect $________
(H) payment permitted in other than United States Dollars $________
(I) payment permitted outside the United States $________
(J) obligation evidenced by chattel paper, note or other
instrument $________
(unless duly endorsed and delivered to the Administrator)
(K) invoiced items have been rejected, returned or disputed$________
(L) customer has attempted to renegotiate the
invoiced price $________
(other than claiming mistake or in accord with
customary credit and collection practices of such Borrower)
(M) receivable where customer has asserted any right of reduction,
setoff, recoupment, counterclaim or defense $________
(N) receivables in which the Administrator does not have a $________
perfected first priority security interest (other than those
owed by the U.S. Government for which no Assignments
of Claims have been requested pursuant to the Loan Agreement)
(O) receivables subject to any financing statement, lien or other
encumbrance other than in favor of the Administrator $________
(P) receivables from any governmental authority other than the United
States of America or a department or division thereof $________
(Q) receivables from customer located outside the United
States $________
(R) receivables from customer not meeting established
credit standards of such Borrower $________
(S) receivables from any customer that is insolvent or
bankrupt $________
(or has taken or is the subject of any of the actions
specified in Section 8.01(h) of the Loan Agreement)
(T) receivables not conforming to the representations $________
and warranties respecting Collateral in general
or accounts receivable in particular
(U) receivables excluded by notice from the Administrator $________
(V) TOTAL INELIGIBLE RECEIVABLES AMOUNT $________
(sum of items (A) - (U), above)
(iii) Eligible Receivables Amount (item (i) minus item
(ii)(V), above) $________
(iv) Discount Factor 0.85
(v) Discounted Eligible Receivables Amount included in
Borrowing Base $________
(item (iii) times item (iv), above)
(m) Determination of Discounted Eligible Inventory Amount
(i) Inventory (net book value) (consisting of eligible classes of finished
goods inventory and raw materials) (i.e., the gross value of such
inventory, determined at the lower of cost or market, less any and all
reserves for obsolescence, damage, theft and the like)
(A) Finished Goods Inventory $________
(B) Raw Materials $________
(C) Total Eligible Inventory (item (A) plus item (B), above)$_______
(ii) Ineligible Inventory Amounts
(The following categories are summarized from the Loan Agreement; the
actual provisions of the Loan Agreement shall control.) If an item
would be includible in more than one category below, include it in the
first appropriate category only (i.e., do not count the same one more
than once)
(A) inventory not in good condition or of
merchantable quality $_______
(B) inventory is defective or does not meet the established
specs $_______
(C) inventory is obsolete or infrequently sold $_______
(D) inventory in the possession or control of any
non-Borrower $_______
(E) inventory located at any location not identified in Loan$_______
Agreement Schedule 3.10(d) (or otherwise approved)
(F) inventory located on any leased premises without landlord
access agreement $______
(G) inventory located at any location outside the United
States $______
(H) inventory in which the Administrator does not have a
perfected first priority security interest $______
(I) inventory subject to any financing statement, lien or other
encumbrance other than in favor of the Administrator $______
(J) inventory subject to any other person's claim of ownership
or other interest $______
(K) inventory not conforming to the representations and warranties
respecting Collateral in general or inventory in particular
$______
(L) inventory excluded by notice from the Administrator $______
(M) TOTAL INELIGIBLE INVENTORY AMOUNT $______
(sum of items (A) - (L), above)
(iii) Eligible Inventory Amount (item (i)(C) minus item (ii)(M),
above) $______
(iv) Amount of Eligible Gold Inventory included in item (iii), above$______
(v) Eligible (Non-Gold) Inventory Amount $______
(item (iii) minus item (iv), above)
(vi) Discount Factor
(prior to July 25, 1996, 0.40, and on and after
July 25, 1996, 0.25) ______
(vii)Discounted Eligible Inventory Amount included in Borrowing
Base $______
(item (v) times item (vi), above)
(n) Eligible Gold Inventory
(i) Eligible Gold Inventory Amount (from item (b)(iv), above) $______
(ii) Discount Factor 0.85
(iii)Discounted Eligible Gold Inventory Amount included in
Borrowing Base $______
(item (i) times item (ii), above)
(o) Gross Discounted Borrowing Base $______
(item (a)(v) plus item (b)(vii) plus item (c)(iii), above)
(p) Borrowing Base Reductions
(applicable only until such time as payment of the Earn-out Amount, if any,
and the Excess Cash Flow Initial Payment, if any, have been made)
(i) Earn-out Accrual $______
(ii) Excess Cash Flow Initial Payment accrued $______
(iii)Borrowing Base Reduction Amount $______
(the greater of item (i) or item (ii), but not more than
$4,000,000)
(q) Borrowing Base (item (d) minus item (e), above) $______
(r) Outstandings
(i) Revolving Credit Loans outstanding $______
(ii) Letters of Credit (unadvan ced face amount) outstanding $______
(iii) Total Useage $______
(s) Determination of Remaining Availability, if any
(i) Gross Availability (smaller of the Commitment (from the Loan $______
Agreement) or the Borrowing Base from item (f), above)
(ii) Total Useage (from item (g)(iii), above) $______
(iii) REMAINING AVAILABILITY $______
(item (i) minus item (ii), above, if (i) is larger than (ii))
(iv) PAYMENT OR ADDITIONAL COLLATERAL DUE $________
(item (ii) minus item (i), above, if (ii) is larger than (i))
Capitalized terms and noncapitalized words and phrases used and not
otherwise defined in this Certificate shall have the meanings respectively
assigned to them in the Loan Agreement, except that certain terms refer to the
applicable captions or headings of the Borrowers' financial statements and
reports. This Certificate may be relied upon by the successors, assigns and
participants of each Bank and by counsel to the Administrator in giving any
opinion or advice requested of such counsel.
(SIGNATURE)
DATE SIGNED:____________ ___, 19__
<PAGE>
EXHIBIT E
to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT with
AEROFLEX INCORPORATED (f/k/a ARX, Inc.), AND CERTAIN SUBSIDIARIES
RESPECTIVE COMMITTED SHARES ON EFFECTIVE DATE
Set forth below are the respective maximum principal amounts of the
Commitment and/or the Term Loan committed by each referenced Bank, and the
corresponding percentage of the aggregate maximum principal amount so committed.
These amounts and percentages are as of the Effective Date only. Capitalized
terms used herein are used as defined in the Loan Agreement.
<TABLE>
<CAPTION>
Percentage of Aggregate
Maximum Principal Maximum Principal
Bank Amount Committed Amount Committed*
---- ----------------- ------------------------
<S> <C> <C> <C>
Commitment and Revolving
Credit Loans:
Chemical Bank $ 8,800,000 40.00%
NatWest Bank N.A. $13,200,000 60.00%
------------ -------
Total Commitment for
Revolving Credit Loans: $22,000,000 100.00%
Term Loan:
Chemical Bank $ 6,400,000 40.00%
NatWest Bank N.A. $ 9,600,000 60.00%
----------- -------
Total Term Loan $16,000,000 100.00%
* Rounded to the nearest basis point for the convenience of this Exhibit. (The
Administrator reserves the right to calculate these percentages to further
decimal places.)
</TABLE>
<PAGE>
EXHIBIT F
to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
with
AEROFLEX INCORPORATED (f/k/a ARX, Inc.),
AND CERTAIN SUBSIDIARIES
Wire Transfer Instructions
[PLEASE PROVIDE]
<PAGE>
EXHIBIT G
to
THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
with
AEROFLEX INCORPORATED (f/k/a ARX, Inc.),
AND CERTAIN SUBSIDIARIES
------------------------------------
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Agreement, dated as of __________ __, 19__, is by and between
[Name of Purchaser], a [national banking association] having an address at
_________________________ (the "Purchaser"), and [Name of Seller], a [national
banking association] having an address at _______________________________ (the
"Seller").
Recitals
Aeroflex Incorporated, a Delaware corporation formerly known as ARX,
Inc., and currently having an address at 35 South Service Road, Plainview, New
York 11803 ("Aeroflex"), Aeroflex Laboratories Incorporated, a Delaware
corporation currently having an address at 35 South Service Road, Plainview, New
York 11803 ("Laboratories"), Aeroflex International Inc., a Delaware corporation
currently having an address at State Road No. 155 KM 58.6, Caguas West
Industrial Park, Caguas, Puerto Rico 00625 ("International"), Aeroflex Lintek
Corp., an Ohio corporation currently having an address at 35 South Service Road,
Plainview, New York 11803 ("Lintek"), Aeroflex Systems Corp., a Delaware
corporation currently having an address at 1749 Old Meadow Road, McLean,
Virginia 22102 ("Systems"), Aeroflex Acquisition Corp., a Texas corporation
currently having an address at 35 South Service Road, Plainview, New York 11803
("Acquisition"), Comstron International, S.A.R.L., a French corporation
currently having an address at 4 Centre Administratif Des #7, MARES, 78990,
Elancourt, France ("Comstron"), MIC Technology Corporation, a Texas corporation
currently having an address at 797 Turnpike Street, North Andover, Massachusetts
01845 ("MIC"), MIC Technology S.A.R.L. (a\k\a S.A.R.L. MIC Technology and
S.A.R.L. MIC Technologie), a French corporation currently having an address at
15, Rue Boudeville, 31100 Toulouse, France ("MICSARL") and Vibration Mountings
and Controls, Inc., a New York corporation currently having an address at 113
Main Street, Box 37, Bloomingdale, New Jersey 07403 ("Vibrations"), (Aeroflex,
Laboratories, International, Lintek, Systems, Acquisition, Comstron, MIC,
MICSARL and Vibrations may be referred to individually, a "Borrower", and
collectively, the "Borrowers"), and the Seller (among others) are parties to a
Third Amended and Restated Loan and Security Agreement dated as of March 15,
1996, [as amended by a First Amendment dated as of __________ 19__, a Second
Amendment dated as of __________ __, 19__, ETC. (as amended,] (the "Loan
Agreement"), under which the Seller is a "Bank" and NatWest Bank N.A. is the
current "Administrator". Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings respectively assigned to them in the Loan
Agreement, as applicable.
The Purchaser has agreed to purchase $___________ (approximately ____%)
of the Seller's interest in the Loan Agreement, the other Loan Instruments and
the Loans outstanding thereunder, as well as to assume the same percentage of
the Seller's duties, liabilities and obligations with respect thereto, and the
Seller has agreed to sell such interest to the Purchaser without any
representation or warranty (except as otherwise expressly provided) by or
recourse to the Seller. The Purchaser has agreed to pay the Seller an
acquisition price equal to that percentage of the Seller's Pro Rata Share of (i)
the principal balance of the Loans then outstanding under the Loan Agreement and
other Loan Instruments and (ii) all shared interest, fees and other amounts
accrued but unpaid through the closing of the acquisition.
The parties have entered into this Agreement in order to reflect the
terms of that acquisition, and the assumption of the stipulated portion of the
Seller's obligations under the Loan Agreement and other Loan Instruments by the
Purchaser, all upon the terms and provisions and subject to the conditions
hereinafter set forth.
Agreement
In consideration of the foregoing, the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged), the parties hereto hereby agree as
follows:
Section 1. Assignment and Assumption. Upon the terms and provisions and
subject to the conditions contained in this Agreement, effective as of the
Effective Date (as defined in Section 3 hereof):
(a) The Seller hereby sells, assigns, transfers and conveys to the
Purchaser, and the Purchaser hereby purchases and accepts, that interest in and
to the Seller's entire right, title and interest as a Bank in and to the Loan
Agreement and the other Loan Instruments corresponding to a $_________ Committed
Share (approximately _____% of the total Commitment) [and a $____________ share
of the Term Loan (approximately _____% of the total Term Loan(s)] (the
"Stipulated Portion"), together with the Stipulated Portion of the Seller's Pro
Rata Share of all principal amounts outstanding thereunder on the Effective Date
and all interest, fees and other amounts accrued but unpaid thereunder through
and accruing thereunder after the Effective Date (collectively, the "Monetary
Obligations"), and all collateral securing the Monetary Obligations and all
guaranties thereof.
(b) The Purchaser hereby expressly assumes and agrees to be bound by
and liable for: (i) the Stipulated Portion of the Seller's specific agreements,
duties, obligations and liabilities under the Loan Agreement and the other Loan
Instruments, including (without limitation) the Stipulated Portion of the
Seller's Committed Share of the Commitment; (ii) all of the general agreements,
duties, obligations and liabilities of, and all other terms and provisions
applicable to, a "Bank" under the Loan Agreement and the other Loan Instruments,
in all cases as if the Purchaser had become an express signatory thereto on the
Effective Date; and (iii) all attendant risks, including (without limitation)
those pertaining to the enforceability of the Loan Instruments, the
collectibility of the Monetary Obligations, and the existence, perfection and
sufficiency of any [Loan] Collateral.
(c) The Banks, the Borrowers and the other parties to the Loan
Instruments are intended beneficiaries of the Purchaser's assumptions under this
Agreement and may rely upon those assumptions as if the Purchaser had signed the
relevant Loan Instruments as a "Bank" on the Effective Date.
Section 2. Purchase Price. (a) In consideration of the assignment
contemplated by this Agreement, the Purchaser shall pay to the Seller the sum of
____________________ DOLLARS and _______________CENTS ($____________) (the
"Purchase Price") in immediately available funds on the Effective Date, which
amount consists of the Stipulated Portion of the Seller's Pro Rata Share of (i)
the aggregate principal amount of the Loans outstanding under the Loan Agreement
and other Loan Instruments on the Effective Date and (ii) all shared interest,
fees and other amounts accrued under the Loan Agreement and other Loan
Instruments through the Effective Date. [The Seller hereby assigns to the
Purchaser, and waives any right to any payment for, any additional interest that
may have been due it as a result of any continuing default under the Loan
Agreement having occurred prior to the Effective Date.]
(b) All payments under this Agreement shall be made free and clear of,
and without any deduction for, any present or future taxes, levies, imposts,
deductions, charges or withholdings, and shall not be subject to any
counterclaim, setoff, right of recoupment, abatement or other reduction. If an
obligor is prohibited by law from paying such sums free and clear of any such
deductions or withholdings, then the sum payable shall be increased as necessary
so that, after making all required deductions and withholdings, the Seller
receives an amount equal to the sum it would have received had no such deduction
or withholding been made.
Section 3. Conditions to Effectiveness. As a condition precedent to the
effectiveness of this Agreement: (a) the parties shall have executed this
Agreement; (b) the Seller shall have received the full payment of the Purchase
Price from the Purchaser under Section 2(a) hereof (exclusive of any
post-closing recalculations); (c) the consent of the Borrowers shall have been
obtained to the extent required under Section 10.14 or 9.21 of the Loan
Agreement; and (d) the Administrator shall have received (i) an executed
original copy of this Agreement, which shall permit the Administrator to record
the assignment as of the date received (which the Administrator may rely upon as
being the Effective Date unless given concurrent written notice by the Purchaser
or Seller to the contrary) and reflect the adjusted Committed Shares and Pro
Rata Shares and other interests of the Purchaser and Seller under the Loan
Agreement and other Loan Instruments, (ii) the documents specified in Section
10.14(d) of the Loan Agreement, (iii) payment of the Administrator's customary
processing and recording fees[, and (iv) the Note[s] issued by the Borrowers to
the Seller to exchange for new notes to the Purchaser [and Seller] in
denominations reflecting the assignment under this Agreement, which exchange
will be effected by the Administrator after the Effective Date, who will forward
the new Note[s] to Purchaser [and Seller] [and return the old Note[s] to the
Borrowers for cancellation]. This Agreement shall take effect when all of the
preceding conditions have been fully satisfied (the "Effective Date").
Section 4. Purchaser's Representations and Warranties. The Purchaser
hereby represents and warrants to the Seller that the Purchaser: (a) has the
power and authority to execute, deliver and perform this Agreement, and has duly
authorized its execution, delivery and performance; (b) is a sophisticated and
knowledgeable financial institution, both generally and with respect to
transactions of this type; (c) is an Eligible Assignee; (d) has received
[directly from the Borrowers], had an opportunity to review and evaluate, and in
fact has independently reviewed and evaluated (i) copies of the Loan Agreement
and all other Loan Instruments and (ii) such financial and other information
relating to each of the Borrowers, all other relevant persons and all collateral
as it deemed necessary or prudent; (e) has made that independent review,
evaluation and credit determination, as well as its other decisions pertaining
to or under this Agreement and the assignment and assumption contemplated
hereby, without any reliance upon any oral or written representation, warranty,
advice or analysis of any kind whatsoever from the Seller, however obtained; (f)
has acquired the interests of the Seller hereunder for its own account; and (g)
has executed and delivered this Agreement and acquired its interests hereunder
in accordance with all applicable laws, including (without limitation) any legal
lending limitation applicable to it.
Section 5. Seller's Limited Representations and Warranties. The Seller
hereby represents and warrants to the Purchaser that: (a) the Seller has the
power and authority to execute, deliver and perform this Agreement, and has duly
authorized its execution, delivery and performance; (b) the assignment affected
by this Agreement satisfies the terms of Section 10.14 of the Loan Agreement;
(c) as of the date hereof the Seller is not [to its knowledge] a Delinquent
Bank; (d) the Seller is the legal and beneficial owner of the interests being
assigned by it under this Agreement and those interests have not been assigned
or pledged to anyone else; and (e) as of the date of this Agreement (without
giving effect to this or any other assignment not yet effective) the Seller's
share of the total Commitment is $____________, which represents a Committed
Share of approximately _____%, [and] share of the total principal balance(s)
outstanding under the [Revolving Credit] Loans is $____________, which
represents a Pro Rata Share of such Loans approximately _____% [and share of the
total principal balance outstanding under the Term Loan(s) is $____________,
which represents a Pro Rata Share of such Loans of approximately _____%].
Section 6. No Recourse to Seller; Investment Waivers and Exculpation.
The Purchaser acknowledges and agrees that the Seller's assignments and
Purchaser's assumptions made under this Agreement are without any
representation, warranty or covenant by or any recourse to the Seller of any
kind whatsoever (except for the limited representation and warranties set forth
in Section 5 hereof). Without limiting the generality of the foregoing, the
Purchaser acknowledges that the Seller has not, and the Purchaser agrees that
the Seller shall not be deemed or construed to have, made any representation or
warranty (except for the Seller's limited representations and warranties
expressly set forth in Section 5, above), offered any advice or analysis,
assumed any liability or responsibility or made any guaranty or other agreement,
whether orally or otherwise, and whether express or implied, to the Purchaser
with respect to: (a) any recital, statement, representation or warranty made by
any of the Borrowers or any other person, any certificate delivered by any
officer of any of the Borrowers or any other person, or any report, document or
other information delivered from time to time by any of the Borrowers or any
other person, or furnished on their behalf; (b) the value, validity,
effectiveness, genuineness, enforceability or sufficiency of the Loan Agreement
or any of the other Loan Instruments; (c) the existing or future financial
condition of any of the Borrowers or any other person; (d) the existence or
value of any collateral, or the validity, sufficiency, priority or effectiveness
of any lien, mortgage, pledge or other security interest created or intended to
be created under or by any Loan Instruments; (e) the performance by any of the
Borrowers or any other person of, or the willingness, ability or likelihood of
any of the Borrowers or any other person to perform, their respective
obligations under the Loan Agreement and the other Loan Instruments; or (f) the
validity, enforceability or collectibility of any of the Monetary Obligations
and other obligations of any of the Borrowers under the Loan Agreement and other
Loan Instruments.
Section 7. Further Assurances. The Seller agrees to do such further
acts and things and to execute and deliver such further statements, assignments,
agreements, instruments and other documents as the Purchaser from time to time
reasonably may request in order to evidence, confirm or perfect the assignments
made pursuant to this Agreement, which shall be without any representation,
warranty or covenant by or recourse to the Seller of any kind whatsoever, shall
be consistent with the terms and provisions of this Agreement and shall
otherwise be in such form and substance as may be acceptable to the Seller in
its sole and absolute discretion, and in each case shall be at the sole cost and
expense of the Purchaser.
Section 8. Notice. Except as otherwise expressly provided, any notice,
request, demand or other communication permitted or required to be given under
this Agreement shall be in writing, shall be sent by one of the following means
to the addressee at the address set forth above (or at such other address as
shall be designated hereunder by notice to the other parties, effective upon
actual receipt) and shall be deemed conclusively to have been given: (i) on the
first Business Day following the day timely deposited with Federal Express (or
other equivalent national overnight courier) or United States Express Mail, with
the cost of delivery prepaid or for the account of the sender; (ii) on the fifth
Business Day following the day duly sent by certified or registered United
States mail, postage prepaid and return receipt requested; or (iii) when
otherwise actually received by the addressee on a Business Day (or on the next
Business Day if received after the close of normal business hours on any
non-Business Day). If a certificate, signed notice or other signed item is
expressly required by another provision of this Agreement, a manually signed
original must be delivered by the party giving it; any other notice, request,
demand or other communication instead may be sent by telecopy, with the cost of
transmission prepaid or for the account of the sender, and shall (except as
otherwise provided in this Agreement) be deemed conclusively to have been given
on the first Business Day following the day duly sent.
Section 9. Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
Section 10. Governing Law. This Agreement has been executed and
delivered, and shall be governed by and construed in accordance with the
applicable laws pertaining, in the State of New York.
Section 11. Counterparts. This Agreement may be executed in two or more
counterpart copies of the entire document or of the signature pages to the
document, each of which may be executed by one or more of the parties hereto,
but all of which, when taken together, shall constitute but one agreement
binding upon all of the parties hereto.
Section 12. Successors and Assigns; Assignment. Whenever in this
Agreement reference is made to any party, such reference shall be deemed to
include the successors, assigns, heirs and legal representatives of such party,
and, without limiting the generality of the foregoing, all representations,
warranties, covenants and other agreements made by or on behalf of any party in
this Agreement shall inure to the benefit of the successors and assigns of the
other parties.
[End of Page]
<PAGE>
Section 13. Modification, Amendment, Etc. Each and every modification
and amendment of this Agreement shall be in writing and signed by all of the
parties hereto, and each and every waiver of, or consent to any departure from,
any representation, warranty, covenant or other term or provision of this
Agreement shall be in writing and signed by each adversely affected party
hereto.
Section 14. Entire Agreement. This Agreement contains the entire
agreement of the parties and supersedes all other representations, warranties,
agreements and understandings, oral or otherwise, among the parties with respect
to the matters contained herein.
In Witness Whereof, the parties hereto have executed and delivered this
Agreement as of the date first written above.
[Name of Purchaser]
By:
[Name of Seller]
By:
<PAGE>
FORM OF BANK ACKNOWLEDGMENT WITHOUT SEAL]
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this day of __________, 19__, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say:
that he (OR SHE) resides at (INCLUDE THE STREET AND STREET NUMBER, IF ANY, AND
ZIP CODE) ; that he (OR SHE) is a Vice President of [Name of Purchaser], the
[national banking association] described in and which executed the above
instrument; and that he (OR SHE) signed his (OR HER) name thereto by order of
the board of directors of said association.
[FORM OF BANK ACKNOWLEDGMENT WITHOUT SEAL]
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this _____ day of __________, 19__, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say:
that he (OR SHE) resides at (INCLUDE THE STREET AND STREET NUMBER, IF ANY, AND
ZIP CODE) ; that he (OR SHE) is a Vice President of [Name of Seller], the
[national banking association] described in and which executed the above
instrument; and that he (OR SHE) signed his (OR HER) name thereto by order of
the board of directors of said association.
