<PAGE>
Exhibit 10.21
ALL PAYMENTS UNDER THIS AGREEMENT AND THE RIGHTS OF THE LENDERS
EACH PARTY TO
THIS AGREEMENT ARE SUBORDINATED, IN RIGHT OF PAYMENT AND COLLATERAL
SECURITY, TO
THE FULL PAYMENT IN CASH OF ALL SENIOR LIABILITIES AND THE RIGHTS
OF THE HOLDERS
OF ALL SENIOR LIABILITIES UPON THE TERMS SET FORTH IN THE
SUBORDINATION
AGREEMENT. EACH LENDER, BY BECOMING A LENDER HEREUNDER, IRREVOCABLY
AGREES TO BE
BOUND BY THE TERMS AND PROVISIONS SET FORTH HEREIN AND IN THE
SUBORDINATION
AGREEMENT. THIS AGREEMENT IS ALSO SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET
FORTH IN THE SUBORDINATION AGREEMENT.
U.S. $10,000,000
NOTE PURCHASE AGREEMENT,
dated as of March 28, 2006
among
THAYER EQUITY INVESTORS IV, L.P.,
and
SUNTRON CORPORATION,
K*TEC OPERATING CORP.,
SUNTRON GCO, L.P.,
EFTC OPERATING CORP.,
SUNTRON-IOWA, INC.,
CURRENT ELECTRONICS, INC.,
RM ELECTRONICS, INC.,
SUNTRON-KANSAS, INC.
<PAGE>
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS......................................................
1
Section 1.1
Defined
Terms............................................. 1
Section 1.2
Environmental
Definitions................................. 9
Section 1.3
Other
Definitional Provisions; Construction............... 10
Section 1.4
Reserved..................................................
11
ARTICLE II
LOANS...........................................................
11
Section 2.1
Description of
Notes and Interest......................... 11
Section 2.2
Prepayment and
Repayment of Notes......................... 12
Section 2.3
Taxes.....................................................
13
Section 2.4
Mitigation of
Obligations................................. 14
Section 2.5
Borrowing Agency
Provisions............................... 14
Section 2.6
Obligations
Joint and Several............................. 15
Section 2.7
Waiver of
Subrogation..................................... 15
Section 2.8
Contribution and
Indemnification Among the Borrowers...... 15
ARTICLE III
SUBORDINATION..................................................
16
Section 3.1
Subordination.............................................
16
Section 3.2
Reference to
Subordination Agreement...................... 16
ARTICLE IV
RESERVED........................................................
16
Section 4.1
Reserved..................................................
16
Section 4.2
Reserved..................................................
16
ARTICLE V PRECONDITIONS TO THE
LOANS....................................... 16
Section 5.1
Loans on the
Closing Date................................. 16
Section 5.2
General
Conditions........................................ 19
ARTICLE VI
SECURITY........................................................
19
Section 6.1
Security
Documents........................................ 19
Section 6.2
Reserved..................................................
19
ARTICLE VII
RESERVED.......................................................
20
Section 7.1
Reserved..................................................
20
Section 7.2
Reserved..................................................
20
ARTICLE VIII EXAMINATION OF LOAN COLLATERAL;
REPORTING..................... 20
Section 8.1
Maintenance of
Books and Records.......................... 20
Section 8.2
Access and
Inspection..................................... 20
Section 8.3
Reserved..................................................
20
Section 8.4
Reserved..................................................
20
Section 8.5
Interim
Financial Statements.............................. 20
Section 8.6
Annual
Projections........................................ 21
Section 8.7
Annual Financial
Statements............................... 21
Section 8.8
Management
Reports; Changes to Applicable Agreements...... 21
Section 8.9
Comparisons to
Financials; Certificates................... 21
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Section 8.10
Tax Returns;
Additional Information....................... 22
Section 8.11
SEC Filings and Press
Releases............................ 22
Section 8.12
Consolidating
Financial Information....................... 22
ARTICLE IX WARRANTIES AND REPRESENTATIONS AND
COVENANTS.................... 22
Section 9.1
Corporate
Status.......................................... 22
Section 9.2
Due
Authorization; Validity............................... 23
Section 9.3
No
Violation..............................................
23
Section 9.4
Use of Loan
Proceeds...................................... 23
Section 9.5
Management
Ownership of Assets; Licenses; Patents......... 23
Section 9.6
Indebtedness..............................................
23
Section 9.7
Title to
Property; No Liens............................... 24
Section 9.8
Restrictions;
Labor Disputes; Labor Contracts............. 24
Section 9.9
No Violation of
Law....................................... 24
Section 9.10
Hazardous
Substances...................................... 24
Section 9.11
Absence of
Default........................................ 25
Section 9.12
Accuracy of
Financials; No Material Changes............... 25
Section 9.13
Pension
Plans............................................. 25
Section 9.14
Taxes and Other
Charges................................... 26
Section 9.15
No
Litigation.............................................
26
Section 9.16
No Brokerage
Fee.......................................... 26
Section 9.17
Subsidiaries and
Affiliates............................... 26
Section 9.18
Capitalization;
Warrants.................................. 26
Section 9.19
Noncompetition
Agreements................................. 26
Section 9.20
Deposit and Other
Accounts................................ 26
Section 9.21
Solvency..................................................
27
Section 9.22
Full
Disclosure........................................... 27
Section 9.23
Casualties................................................
27
Section 9.24
Leases;
Bailments......................................... 27
Section 9.25
Insurance
Policies........................................ 27
Section 9.26
Consents..................................................
27
Section 9.27
Anti-Terrorism
Laws....................................... 28
Section 9.28
Updating
Representations and Warranties................... 28
ARTICLE X
COVENANTS........................................................
28
Section 10.1
Reserved..................................................
28
Section 10.2
Notice of
Litigation...................................... 28
Section 10.3
Notice of ERISA
Events.................................... 28
Section 10.4
Notice of Labor
Disputes.................................. 29
Section 10.5
Compliance with
Laws...................................... 29
Section 10.6
Notice of Violations
of Law, Tax Assessments.............. 29
Section 10.7
Notice of Violations
of Certain Agreements................ 29
Section 10.8
Notice of Customer
Defaults............................... 29
Section 10.9
Taxes and
Charges......................................... 29
Section 10.10
Indebtedness; Guaranties..................................
29
Section 10.11
Restrictions; Labor Disputes..............................
31
Section 10.12
Pension Plans.............................................
31
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ii
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Section 10.13
Solvency..................................................
31
Section 10.14
Property Insurance........................................
31
Section 10.15
Liability Insurance.......................................
32
Section 10.16
Mergers; Acquisitions.....................................
32
Section 10.17
Investments...............................................
32
Section 10.18
Distributions; Loans; Fees................................
32
Section 10.19
Redemption of Stock.......................................
33
Section 10.20
Stock Rights..............................................
33
Section 10.21
Capital Structure; Fiscal Year............................
33
Section 10.22
Affiliate Transactions....................................
33
Section 10.23
Operating Accounts........................................
33
Section 10.24
Sale of Assets............................................
33
Section 10.25
Intervention by Governmental Authority....................
34
Section 10.26
Levy Against Loan Collateral..............................
34
Section 10.27
Judgments.................................................
34
Section 10.28
Financial Covenants.......................................
34
Section 10.29
Reserved..................................................
34
Section 10.30
Tax Shelter Regulations...................................
34
Section 10.31
Limitation on Rate Hedging Agreements.....................
34
Section 10.32
Anti-Terrorism Laws.......................................
34
Section 10.33
Further Assurances........................................
35
Section 10.34
Conduct of Business.......................................
35
ARTICLE XI EVENTS OF
DEFAULT............................................... 35
Section 11.1
Events of
Default......................................... 35
Section 11.2
Cure
Periods.............................................. 38
ARTICLE XII LENDERS' RIGHTS AND
REMEDIES................................... 39
Section 12.1
Acceleration..............................................
39
Section 12.2
Fees and
Expenses......................................... 39
Section 12.3
Reserved..................................................
39
ARTICLE XIII
RESERVED......................................................
39
Section 13.1
Reserved..................................................
39
Section 13.2
Reserved..................................................
39
ARTICLE XIV AMENDMENTS; WAIVERS; ASSIGNMENTS;
PARTICIPATIONS............... 40
Section 14.1
Amendments and
Waivers.................................... 40
Section 14.2
Assignment................................................
40
Section 14.3
Reserved..................................................
41
Section 14.4
Law
Requirements.......................................... 41
ARTICLE XV
GENERAL.........................................................
41
Section 15.1
Severability..............................................
41
Section 15.2
Governing
Law............................................. 41
Section 15.3
WAIVER OF
JURISDICTION.................................... 41
Section 15.4
Survival..................................................
41
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Section 15.5
Application of
Payments; Revival of Obligations........... 42
Section 15.6
Fees and
Expenses......................................... 42
Section 15.7
Notices; Electronic
Mail.................................. 43
Section 15.8
Indemnification...........................................
44
Section 15.9
Additional Waivers by
Borrowers........................... 45
Section 15.10
Equitable Relief..........................................
45
Section 15.11
Entire Agreement..........................................
45
Section 15.12
Headings..................................................
46
Section 15.13
Cumulative Remedies.......................................
46
Section 15.14
Recourse to Directors or Officers.........................
46
Section 15.15
WAIVER OF JURY TRIAL......................................
46
Section 15.16
PATRIOT ACT NOTICE........................................
46
Section 15.17
Advertising...............................................
46
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iv
<PAGE>
EXHIBITS
Exhibit A
Form of Note
Exhibit B
[Reserved]
Exhibit C
[Reserved]
Exhibit D
[Reserved]
Exhibit E
Officer's Certificate Form
Exhibit F
[Reserved]
Exhibit G
[Reserved]
SCHEDULES
Schedule 1
[Reserved]
Schedule 2
Financial Statements
Schedule 3
Borrowers' Facilities
Schedule 7.3 Lock Box
Addresses
Schedule 9.1 List of
Jurisdictions of Incorporation and Qualification
Schedule 9.5 Licenses;
Trademarks; Patents; Copyrights
Schedule 9.7 Permitted
Liens
Schedule 9.8 Labor
Matters
Schedule 9.9 Compliance
With Laws
Schedule 9.10 Environmental
Matters
Schedule 9.13 Pension
Matters
Schedule 9.14 Tax Matters
Schedule 9.15 Litigation
Matters
Schedule 9.17 Affiliates;
Affiliate Transactions
Schedule 9.18 Stockholders
Schedule 9.20 Bank
Accounts
Schedule 9.24 Leases
Schedule 9.25
Insurance
Policies
Schedule 10.10 Existing
Indebtedness
Schedule 10.22 Other Permitted
Affiliate Transactions
Schedule 10.28 Financial
Covenants
Schedule 10.28A
Actual Fiscal Month Ends
Schedule 10.31 Rate Hedging
Agreements
v
<PAGE>
NOTE PURCHASE AGREEMENT
This
NOTE PURCHASE AGREEMENT (this "Agreement"), dated as of March
__,
2006, by and among SUNTRON CORPORATION, a Delaware corporation
("Suntron"),
K*TEC OPERATING CORP., a Delaware corporation ("K*TEC"), SUNTRON
GCO, L.P., a
Texas limited partnership ("Suntron GCO"), EFTC OPERATING CORP., a
Delaware
corporation ("EFTC"), SUNTRON-IOWA, INC., a Delaware
corporation
("Suntron-Iowa"), CURRENT ELECTRONICS, INC., an Oregon corporation
("Current"),
RM ELECTRONICS, INC., a New Hampshire corporation ("RMEI"),
SUNTRON-KANSAS,
INC., a Delaware corporation ("Suntron-Kansas"; together with
Suntron, K*TEC,
Suntron GCO, EFTC, Suntron-Iowa, Current and RMEI, each a
"Borrower" and
collectively referred to herein as the "Borrowers"), and THAYER
EQUITY INVESTORS
IV, L.P. ("Thayer", together with its permitted successors and
assigns, are
collectively referred to herein as "Lenders" or individually as a
"Lender"), is
as follows:
ARTICLE I
DEFINITIONS.
Section 1.1 Defined Terms. In addition to the other terms defined
in this
Agreement, whenever the following capitalized terms (whether or not
underscored)
are used, they shall be defined as follows:
"Adjusted Fixed Charge Coverage Ratio" means:
(a) for each Determination Date (as defined in Section 3.2.5)
before
July
3, 2006, the ratio resulting from dividing (i) an amount equal to
(A)
Borrowers' Adjusted EBITDAR (as defined in Schedule 10.28) for the
period
commencing on October 3, 2005 and ending on such Determination
Date, minus
(B)
Restructuring Costs (as defined in Schedule 10.28) deducted by
the
Borrowers in calculating the Borrowers' earnings for the same
measurement
period, by (ii) Borrowers' Fixed Charges for the same measurement
period;
and
(b) for each other Determination Date, the ratio resulting from
dividing (i) an amount equal to (A) Borrowers' 12 Month Adjusted
EBITDAR
(as
defined in Schedule 10.28), minus (B) Restructuring Costs (as
defined
in
Schedule 10.28) deducted by the Borrowers in calculating the
Borrowers'
earnings for the applicable 12 Month Period (as defined in Schedule
10.28),
by
(ii) Borrowers' Fixed Charges (as defined in Schedule 10.28) for
the
applicable 12 Month Period.
"Affiliate" means, as to any Person (the "Subject Person"), any
other
Person which, directly or indirectly, is in control of, is
controlled by, or is
under common control with, the Subject Person. For purposes of this
definition,
"control" of a Person means the power, direct or indirect, (i) to
vote 10% or
more of the securities (or other ownership interests) having voting
power for
the election of directors (or managers in the case of a limited
liability
company) of the Person or (ii) otherwise to direct or cause the
direction of the
management and policies of the Person, whether by contract or
otherwise. Without
limiting the generality of the foregoing, each of the following
will be deemed
an Affiliate of each Borrower for purposes of this Agreement: all
of each
Borrower's officers, stockholders (excluding Thayer and its
Affiliates) owning
greater than 20% of the outstanding
1
<PAGE>
Capital Stock of such Borrower, directors, Subsidiaries (including,
without
limitation, Suntron de Mexico S. De R.L. de C.V), joint venturers
and partners.
"Anti-Terrorism Laws" means any law, rule or regulation relating
to
terrorism or money laundering, including Executive Order No. 13224,
the USA
Patriot Act, the laws, rules and regulations compromising or
implementing the
Bank Secrecy Act and the laws, rules and regulations administered
by the United
States Treasury Department's Office of Foreign Asset Control (as
any of the
foregoing may from time to time be amended, renewed, extended or
replaced).
"Applicable Agreement" means any agreement, commitment, arrangement
or
instrument to which, as of any date, any Borrower is a party or by
which any
Borrower or any of such Borrower's properties is bound, including
any note,
indenture, loan agreement, mortgage, lease, or deed, the
performance or
non-performance of which could have a Material Adverse Effect.
"Attorneys' Fees" means the reasonable fees and actual out of
pocket costs
and expenses of all attorneys (and all paralegals and other staff
employed by
such attorneys) retained by Lenders from time to time in connection
with, or
arising out of, the matters encompassed by the reference to the
capitalized term
Attorneys' Fees in the applicable provisions of the applicable
agreement,
instrument or other document.
"Authorized Representative" shall mean any of (i) the Chief
Executive
Officer, (ii) the President, (iii) the Chief Financial Officer,
(iv) the
Treasurer, (v) the Chief Accounting Officer, (vi) the Vice
President, or (vii)
any other employee, officer or director of any Borrower which has
been so
designated by such Borrower in writing and delivered to Thayer.
"Blocked Person" means any Person (i) that is listed in the annex
to, or is
otherwise subject to the provisions of, Executive Order No. 13224;
(ii) owned or
controlled by, or acting for or on behalf of, any Person that is
listed in the
annex to, or is otherwise subject to the provisions of, Executive
Order No.
13224; (iii) with which any Lender is prohibited from dealing or
otherwise
engaging in any transaction by any Anti-Terrorism Law; (iv) that
commits,
threatens or conspires to commit or supports "terrorism" as defined
in Executive
Order No. 13224; (v) that is named as a "specially designated
national" on the
most current list published by the U.S. Treasury Department Office
of Foreign
Asset Control at its official web site or any replacement website
or other
replacement official publication of such list; or (vi) who is
affiliated or
associated with a person or entity listed above.
"Borrower Security Agreements" has the meaning given in Section
6.1.
"Borrowers' Facilities" means, collectively, those facilities
located at
the addresses set forth on Schedule 3 attached hereto, which
constitute all of
the facilities that are owned or leased by any Borrower.
"Borrower's Facility" means each of the foregoing facilities.
"Borrowing Agent" means EFTC.
2
<PAGE>
"Business Day" means any day on which commercial banks in
Minneapolis,
Minnesota are required by law to be open for business. Periods of
days referred
to in this Agreement will be counted in calendar days unless
Business Days are
expressly prescribed.
"Capital Expenditures" has the meaning given such term in Schedule
10.28.
"Capital Lease Obligations" means, with respect to any Person,
all
obligations of such Person and its Subsidiaries to pay rent or
other amounts
under a lease of (or other agreement conveying the right to use)
property to the
extent such obligations are required to be classified and accounted
for as a
capital lease on a balance sheet of such Person or its Subsidiaries
(all as
determined on a consolidated basis in accordance with GAAP
consistently applied)
and, for purposes of this Agreement, the amount of such obligations
shall be the
capitalized amount thereof.
"Capital Stock" means all shares, interests, participations, rights
to
purchase, options, warrants, general or limited partnership
interests, or
limited liability company interests or other equivalents
(regardless of how
designated) of or in a corporation, partnership, limited liability
company or
equivalent entity, whether voting or nonvoting, including common
stock,
preferred stock or any other "equity security" (as such term is
defined in Rule
3a11-l of the Rules and Regulations promulgated by the Securities
and Exchange
Commission (17 C.F.R. Section 240.3a11-l) under the Securities and
Exchange Act
of 1934, as the same shall be from time to time be amended,
renewed, extended or
replaced).
"Change in Law" means (i) the adoption of any law, rule or
regulation after
the date of this Agreement, (ii) any change in any law, rule or
regulation or in
the interpretation or application thereof by any Governmental
Authority after
the date of this Agreement or any change in the applicability of
such law, rule
or regulation, on the interpretation thereof, with respect to a
Lender, or (iii)
compliance by any Lender with any request, guideline or directive
(whether or
not having the force of law) of any Governmental Authority made or
issued after
the date of this Agreement.
"Change of Control" means any of the following (or any combination
of the
following) whether arising from any single transaction or event or
any series of
transactions or events (whether as the most recent transaction in a
series of
transactions) which, individually or in the aggregate, results
in:
(i) a change in the ownership of Suntron, such that Thayer-Blum
Funding III, LLC fails to (a) own legally and beneficially, free
and clear
of
any Liens, more than 50%, on a fully diluted basis, of the issued
and
outstanding voting and non-voting securities of, and other equity
interests
in,
Suntron or (b) have the power to direct or cause the direction of
the
management and policies of Suntron; or
(ii) a change in the ownership of Thayer-Blum Funding III, LLC,
such
that
Thayer fails to (a) own legally and beneficially, free and clear
of
any
Liens, more than 50%, on a fully diluted basis, of the issued
and
outstanding voting and non-voting securities of, and other equity
interests
in,
Thayer-Blum Funding III, LLC or (b) have the power to direct or
cause
the
direction of the management and policies of Thayer-Blum Funding
III,
LLC.
"Closing Date" means the date upon which all of the conditions
precedent to
the effectiveness of this Agreement contained in Section 5.1 are
satisfied or
waived by Thayer.
3
<PAGE>
"Controlled Group" means all members of a controlled group of
corporations
and other entities and all trades or businesses (whether or not
incorporated)
under common control which, together with Borrower, are treated as
a single
employer under Section 414(b) or 414(c) of the Internal Revenue
Code or Section
4001 of ERISA.
"Default" shall mean the
occurrence or existence of: (a) an event which,
with the giving of notice or the lapse of time, or both, would (if
not cured or
otherwise remedied during such time) constitute an Event of
Default, or (b) an
event which requires neither lapse of time nor the giving of notice
to
constitute an Event of Default.
"Dollars" and "$" means dollars in lawful currency of the United
States of
America unless otherwise indicated.
"Equipment" means equipment as defined in the UCC.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as the
same shall be from time to time be amended, renewed, extended or
replaced.
"Event of Default" has the meaning given in Section 11.
"Excluded Taxes" means, with respect to Thayer and any Lender or
any other
recipient of any payment to be made by or on account of any
obligation of any
Borrower hereunder, taxes imposed on its overall revenue or net
income, and
franchise taxes imposed on it.
"Executive Order No. 13224" means the Executive Order No. 13224
on
Terrorist Financing, effective September 24, 2001, as the same
shall be from
time to time be amended, renewed, extended or replaced.
"Financial Covenants" has the meaning given in Section 10.28.
"Financials" means those financial statements attached as Schedule
2 and
the projected consolidated financial statements (by quarter) for
the year ending
December 31, 2006 previously delivered by Borrowers to Thayer.
"Fiscal Month" has the meaning given on Schedule 10.28.
"Fiscal Quarter" has the meaning given on Schedule 10.28.
"Fiscal Year" has the meaning given on Schedule 10.28.
"Fixed Charge Coverage Ratio" has the meaning given on Schedule
10.28.
"General Intangibles" means general intangibles as defined in the
UCC.
"Governmental Authority" means any nation or government, any state
or other
political subdivision thereof, and any entity exercising executive,
legislative,
judicial, regulatory or administrative functions of, or pertaining
to,
government or any agency or instrumentality thereof (including any
central
bank).
4
<PAGE>
"Indebtedness" means all of a Person's obligations, indebtedness
and
liabilities to any other Person, including all debts, claims and
indebtedness,
contingent, fixed or otherwise, heretofore, now and from time to
time hereafter
owing, due or payable, however evidenced, created, incurred,
acquired or owing
and however arising, whether under written or oral agreement,
operation of law
or otherwise. Indebtedness of any Borrower includes: (i) the
Obligations, (ii)
obligations or liabilities of any Person secured by a Lien on
property owned by
such Borrower, even though such Borrower has not assumed or become
liable for
the payment therefor, (iii) obligations or liabilities created or
arising under
any capital lease of real or personal property, any conditional
sales contract
or other title retention agreement with respect to property used or
acquired by
such Borrower, even though the rights and remedies of the lessor,
seller, or
lender thereunder are limited to repossession of such property, and
(iv) the net
cost (without duplication) to such Borrower under any Rate Hedging
Agreement.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
the
same shall be from time to time amended, renewed, extended or
replaced. Any
reference to a specific provision of the Internal Revenue Code will
be construed
to include any comparable provision of the Internal Revenue Code as
amended or
superseded after the date of this Agreement.
"Inventory" means inventory as defined in the UCC.
"Lenders" means each of the financial institutions that is a
signatory
hereto identified under the caption "LENDERS" on the signature
pages of this
Agreement, and each financial institution that becomes a "Lender"
after the date
hereof pursuant to Section 14.2.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation,
assignment, deposit arrangement, charge, security interest,
encumbrance, lien
(statutory or other), or any preference, priority or other security
agreement or
any preferential arrangement of any kind or nature whatsoever
(including any
conditional sale or other title retention agreement, any lease
deemed under the
UCC to be intended for security, and the authorized filing by or
against a
Person as debtor of any financing statement under the UCC or
comparable law of
any jurisdiction).
"Loan" or "Loans" means the loans made by the Lenders pursuant to
the terms
of this Agreement.
"Loan Collateral" means the all of the collateral security more
particularly described in the Security Documents and any other
security or
collateral provided from time to time by, or on behalf of,
Borrowers (or any of
them) or any other Person for the Obligations (or any portion
thereof).
"Loan Documents" means this Agreement, the Notes, the Security
Documents
and all other agreements, instruments and documents relating to the
Loans,
including mortgages, deeds of trust, security agreements, pledges,
powers of
attorney, consents, collateral assignments, locked box and cash
management
agreements, if required by Thayer, letter agreements, contracts,
notices, leases
and financing statements and all other writings, all of which must
be in form
and substance reasonably satisfactory to Thayer, which have been,
are as of the
date of this Agreement, or will in the future be signed by, or on
behalf of,
Borrowers (or any of them) and delivered to Thayer or the
Lenders.
5
<PAGE>
"Maintenance Agreement" means that certain Maintenance Agreement
bearing
even date herewith by and between Senior Agent and Thayer, as the
same may be
amended, restated, supplemented or otherwise modified from time to
time.
"Material Adverse Effect" means a material adverse effect, as
reasonably
determined by Thayer on (i) the Borrowers' (a) business, property,
assets,
operations or condition, financial or otherwise taken as a whole,
or (b) ability
to perform their payment and other Obligations under this Agreement
and any of
the other Loan Documents taken as a whole, (ii) the recoverable
value of the
Loan Collateral or the Lenders' rights or interests therein, (iii)
the
enforceability in all material respects of any of the Loan
Documents, or (iv)
the ability of the Lenders to exercise any of their rights or
remedies under the
Loan Documents or provided by law.
"Maturity Date" means the earlier to occur of (i) May 15, 2009 and
(ii) the
date on which the Obligations become due and payable pursuant to
the terms of
this Agreement, whether by acceleration or otherwise.
"Notes" has the meaning ascribed to such term in Section 2.1.
"Obligations" means the Loans owing to the Lenders or any Affiliate
of any
such Persons and all other loans, advances, debts, liabilities,
obligations,
indemnities, covenants and duties owing to the Lenders from
Borrowers (or any of
them) and their respective Subsidiaries (individually and
collectively) of any
kind, present or future, evidenced by or arising out of this
Agreement or any of
the other Loan Documents, whether for the payment of money, whether
arising out
of overdrafts on checking, deposit or other accounts or electronic
funds
transfers (whether through automatic clearing houses or otherwise)
or out of the
Lenders' non-receipt of, or inability to collect, funds or
otherwise not being
made whole in connection with depository transfer checks or other
similar
arrangements and whether direct or indirect (including acquired by
assignment),
related or unrelated, absolute or contingent, due or to become due,
now existing
or hereafter arising and however acquired, and including all
interest, charges,
expenses, fees and any other sums chargeable to Borrowers (or any
of them) and
their respective Subsidiaries (individually and collectively) in
connection with
any of the foregoing, and all Attorneys' Fees.
"Other Taxes" means any and all present or future stamp or
documentary
taxes or any other excise or property taxes, charges or similar
levies arising
from any payment made hereunder or from the execution, delivery,
filing or
enforcement of, or otherwise with respect to, this Agreement or the
other Loan
Documents.
"Pension Plan" means a "pension plan", as such term is defined in
section
3(2) of ERISA, as to which any Borrower or any corporation or other
entity,
trade or business that is, along with such Borrower, a member of a
Controlled
Group may have any liability, including any liability by reason of
having been a
substantial employer within the meaning of section 4063 of ERISA at
any time
during any preceding six year period, or by reason of being deemed
to be a
contributing sponsor under section 4069 of ERISA.
"Permitted Liens" means the first priority Liens and interests in
favor of
the Senior Agent granted or provided under the Senior Loan
Documents, the second
priority Liens and interests in favor of the Lenders granted or
provided under
the Loan Documents and, to the extent reflected on
6
<PAGE>
the applicable Borrower's books and records and not impairing the
operations of
such Borrower or any performance under, or contemplated by, the
Loan Documents:
(i) Liens arising by operation of law for taxes not yet due and
payable;
(ii) Liens of mechanics, materialmen, shippers and warehousemen
for
services or materials for which payment is not yet due;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance
and
other types of social security;
(iv) Liens, if any, specifically permitted by the Required
Lenders
from
time to time in writing;
(v) Liens on Equipment securing Indebtedness under capitalized
leases
or
purchase money Indebtedness so long as (a) the total amount of
obligations secured by the purchase money security interests or the
subject
of
capitalized leases during any period does not, together with any
other
capital expenditures made by the applicable Borrower for the
applicable
period, exceed the maximum amount permitted during such period for
capital
expenditures pursuant to Section 1 of Schedule 10.28; (b) such
purchase
money Indebtedness or capitalized lease Indebtedness will not be
secured by
any
of the Loan Collateral other than the property so acquired and
any
identifiable proceeds, (c) any Liens relating to such purchase
money
Indebtedness or capitalized lease Indebtedness will not extend to
or cover
any
property of the applicable Borrower other than the property so
acquired
and
any identifiable proceeds, and (d) the principal amount of such
capitalized lease or purchase money Indebtedness will not, at the
time of
the
incurrence thereof, exceed the value of the property so
acquired;
(vi) Liens for taxes, assessments and other similar charges to
the
extent payment thereof shall not at the time be required to be made
in
accordance with the provisions of Section 10.9;
(vii) those Liens described on Schedule 9.7; provided that those
Liens
secure only the Indebtedness which the Liens secure on the Closing
Date;
and
(viii) Liens arising from the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords, bailees and other
like
Persons ("Third Party Claims") if each of the following conditions
is met:
(a)
the validity or amount of the Third Party Claim is being contested
in
good
faith and by appropriate and lawful proceedings promptly initiated
and
diligently conducted, (b) the applicable Borrower has given prior
notice to
Thayer of the Third Party Claim, (c) such Borrower has
established
appropriate reserves (in Thayer's reasonable discretion exercised
in good
faith) for the Third Party Claim, (d) levy and execution on the
Third Party
Claim have been and continue to be stayed, (e) the Third Party
Claim does
not
prevent Thayer from having a perfected second priority security
interest in, or a second priority mortgage lien on, the Loan
Collateral
provided by such Borrower or with respect to future advances made
under
this
Agreement, (f) such Borrower's title to, and its right to use, any
of
the
Loan Collateral provided by such
7
<PAGE>
Borrower are not, in Thayer's judgment exercised in good faith,
materially
affected thereby, and (g) the amount of all Third Party Claims
against
anyone or more of the Borrowers do not exceed, as of any date,
$550,000 in
the
aggregate; and, provided, further, that the applicable Borrower
must
promptly pay each such Third Party Claim to the extent the dispute
is
finally settled in favor of the claimant thereof.
"Person" means any individual, sole proprietorship, partnership,
joint
venture, trust, unincorporated organization, association, limited
liability
company, corporation, institution, entity, party or Governmental
Authority.
"Rate Hedging Obligations" of a Person means any and all
Indebtedness of
such Person, whether absolute or contingent and howsoever and
whensoever
created, arising, evidenced or acquired (including all renewals,
extensions and
modifications thereof and substitutions therefor), under (i) any
and all
agreements, devices or arrangements ("Rate Hedging Agreements")
designed to
protect at least one of the parties thereto from the fluctuations
of interest
rates, commodity prices, exchange rates or forward rates applicable
to such
party's assets, liabilities or exchange transactions, including
dollar-denominated or cross-currency interest rate exchange
agreements, forward
currency exchange agreements, interest rate cap or collar
protection agreements,
forward rate currency or interest rate options, swaps, puts and
warrants, and
(ii) any and all cancellations, buy backs, reversals, terminations
or
assignments of any of the foregoing.
"Receivables" means accounts as defined in the UCC.
"Reportable Event" means an event described in Section 4043 of
ERISA and
the regulations issued thereunder (other than a Reportable Event
not subject to
the provision for 30 day notice to the Pension Benefit Guaranty
Corporation
under such regulations).
"Required Lenders" means, at any time, Lenders holding at least
66.67% of
the sum of the Loans then outstanding.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as
amended, and the rules and regulations promulgated thereunder.
"Security Documents" means the Borrower Security Agreements, the
Trademark
Security Agreement and any other agreements, instruments or
documents executed
and delivered from time to time by, or on behalf of, Borrowers (or
any of them)
or any other Person as collateral security for the Obligations.
"Senior Agent" means U.S. Bank National Association, in its
capacity as
agent under the Senior Credit Agreement and the other Senior Loan
Documents or
its permitted successor or assignee.
"Senior Credit Agreement" means that certain Financing Agreement of
even
date hereof, by and among Senior Agent and the Borrowers, as the
same may be
amended, restated, renewed supplemented or otherwise modified from
time to time.
"Senior Debt" means the "Senior Liabilities," as defined in the
Subordination Agreement.
8
<PAGE>
"Senior Loan Documents" means the "Loan Documents" as such term is
defined
in the Senior Credit Agreement.
"Solvent" means, with respect to any Person, that the Person is
not
insolvent as defined or construed under any and all applicable
laws. In
computing the amount of contingent liabilities at any time, it is
intended that
they be computed at the amount that, in light of all the facts and
circumstances
existing at the time, represents the amount that can reasonably be
expected to
become an actual or matured liability.
"Subsidiary" means, with respect to a particular Borrower, any
Person as to
which such Borrower owns, directly or indirectly, at least 50% of
the
outstanding shares of Capital Stock or other interests having
ordinary voting
power for the election of directors, officers, managers, trustees
or other
controlling Persons or an equivalent controlling interest in
Thayer's judgment.
"Subordination Agreement" mean the Subordination Agreement executed
by
Thayer in favor of the Senior Agent dated as of the date of this
Agreement, as
the same may be amended, restated, renewed, supplemented or
otherwise modified
from time to time.
"Taxes" means any and all present or future taxes, levies, imposts,
duties,
deductions, charges or withholdings imposed by any Governmental
Authority.
"Trademark Security Agreement" has the meaning given in Section
6.1.
"12
Month Period" has the meaning given on Schedule 10.28.
"UCC" or "Uniform Commercial Code" shall mean the Uniform
Commercial Code,
as enacted in the State of Minnesota, as the same may be from time
to time
amended, renewed, extended or replaced; provided, however, that if
by reason of
mandatory provisions of law, the perfection or the effect of
perfection or
non-perfection on the security interest in any item or portion of
the Loan
Collateral is governed by the Uniform Commercial Code as in effect
in a
jurisdiction other than the State of Minnesota, "UCC" shall mean
the Uniform
Commercial Code as in effect in such other jurisdiction for
purposes of
provisions hereof relating to such perfection or effect of
perfection or
non-perfection.
"USA
Patriot Act" means the Uniting and Strengthening America by
Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001,
Public Law 1 07 D 56, as the same shall be from time to time be
amended,
renewed, extended or replaced.
Section 1.2 Environmental Definitions.
"Environmental Activity" means any any Release, generation,
abatement,
transportation or disposal of any Hazardous Substance from or on
any Borrower's
property or Use of any Borrower's property which is regulated by or
for which
standards of conduct or liability are imposed by any Environmental
Requirements.
"Environmental Law" means the Comprehensive Environmental
Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. Section 9601
et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 et
seq.,
9
<PAGE>
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.,
the Federal
Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the
Clean Water
Act, 33 U.S.C. Section 1321 et seq., the Clean Air Act, 42 U.S.C.
Section 7401
et seq., the Occupational Safety and Health Act of 1970, 29 U.S.C.
Section 651
et seq., regulations promulgated thereunder, and any other federal,
state,
county, municipal, local or other statute, law, ordinance or
regulation, or any
common law (including common law that may impose strict liability)
regarding
human health, the environment, natural resources, or Hazardous
Substances, all
as may be from time to time be amended, renewed, extended or
replaced.
"Environmental Liability" means any Indebtedness, or duty of
payment or any
amount owed by or payable from, any Borrower, due to any
Environmental Activity
or violation of Environmental Law, whether the foregoing described
liability now
exists or arises in the future.
"Environmental Requirements" means all present and future laws,
including
Environmental Laws, authorizations, approvals, judgments,
injunctions, decrees,
orders or agreements relating to Hazardous Substances or
Environmental Activity.
"Hazardous Substances" means, at any time, (i) any "hazardous
substance" as
defined in Section 101(14) of CERCLA (42 U.S.C. Section 9601(14)),
(ii) any
"solid waste," "hazardous waste," or "infectious waste," as such
terms are
defined in any Environmental Law at such time; (iii) asbestos,
urea-formaldehyde, polychlorinated biphenyls ("PCBs"), nuclear fuel
or material,
chemical waste, radioactive material, explosives, known
carcinogens, petroleum
products and by-products and pollutants, contaminants, chemicals,
materials or
substances which are regulated by, Environmental Law.
"Release" means spilling, leaking, pumping, paving, emitting,
emptying,
discharging, injecting, escaping, contaminating, leaching,
disposing, releasing
or dumping into the environment.
"Use" includes, but is not limited to, use, ownership,
development,
construction, maintenance, management, operation or occupancy.
Section 1.3 Other Definitional Provisions; Construction. Unless
otherwise
specified,
(i) All terms defined in this Agreement, whether or not defined
in
this
Article 1, have the defined meanings provided in this Agreement
when
used
in this Agreement, in any other of the Loan Documents, or any
other
certificate, instrument or other document made or delivered
pursuant to
this
Agreement or any other Loan Document, unless otherwise defined
therein.
(ii) As used in this Agreement, in any other of the Loan Documents,
or
in
any other certificate, instrument or document made or delivered
pursuant
hereto or thereto,
accounting terms relating to Borrowers not defined in
this
Agreement have the respective meanings given to them in
accordance
with
generally accepted accounting principles in the United States
of
America as in effect at the time any determination is made or
financial
statement or information is required or furnished under this
Agreement
("GAAP").
(iii) References to the Uniform Commercial Code, or UCC, mean
as
enacted in the particular jurisdiction(s) encompassed by the
reference.
10
<PAGE>
(iv) The definition of any agreement, document or instrument
includes
all
schedules, attachments and exhibits thereto and all renewals,
extensions, supplements, modifications, restatements and amendments
thereof
but
only to the extent such renewals, extensions, supplements,
modifications, restatements or amendments thereof are not
prohibited by the
terms of any Loan Document. All references to statutes include (a)
all
rules and regulations promulgated thereunder, (b) any amendments,
renewals,
extensions or replacements of such statutes, rules or
regulations
promulgated thereunder, and (c) any successor statutes, rules
and
regulations, including any comparable provision of the applicable
statute,
ordinance, UCC, regulation or other law as the same shall be from
time to
time
be amended, renewed, extended or replaced after the date of
this
Agreement.
(v)
"Hereunder," "herein," "hereto," "this Agreement" and words of
similar import refer to this entire document; "including" is used
by way of
illustration and not by way of limitation, unless the context
clearly
indicates the contrary; the singular includes the plural and
conversely;
and
any action required to be taken by a Person is to be taken
promptly,
unless the context clearly indicates the contrary.
(vi) All of the uncapitalized terms contained in the Loan
Documents
which are now or hereafter defined under the UCC will, unless
defined in
the
Loan Documents or the context indicates otherwise, have the
meanings
now
or hereafter provided for in the UCC.
(vii) The term "good faith" means honesty in fact in the conduct
or
transaction concerned.
(viii) All Exhibits and Schedules attached to this Agreement
are
incorporated into, made and form an integral part of, this
Agreement for
all
purposes.
(ix) The existence of references to any Borrower's Subsidiaries
throughout this Agreement is for a matter of convenience only.
Any
references to Subsidiaries of any Borrower set forth herein shall
not in
any
way be construed as consent by the Lenders to the
establishment,
maintenance or acquisition of any Subsidiary.
(x) Whenever the sense of this Agreement or any of the other
Loan
Documents so require, the masculine or feminine gender will be
substituted
for,
or be deemed to include, the neuter, the feminine gender will
be
substituted for the masculine, or the masculine will be deemed to
include
the
feminine, and the neuter gender will be substituted for, or be
deemed
to
include, the masculine or, as applicable, feminine gender.
Section 1.4 Reserved.
ARTICLE II
LOANS.
Section 2.1 Description of Notes and Interest. The Borrowers will
authorize
the issuance and sale of an aggregate original principal amount of
$10,000,000
of 16.0% Senior Subordinated Notes due May 15, 2009 (the "Notes")
to be dated
the Closing Date, to bear interest (computed on the basis of a year
of 360 days
and twelve 30-day months) from such date at the rate of 16.0%
per
11
<PAGE>
annum, payable in cash monthly in arrears on the last Business Day
of each
quarter (commencing June 30, 2006) and at maturity and to be
substantially in
the form attached hereto as Exhibit A. At the option of the
Borrowers, all
interest due on the Notes payable quarterly or otherwise (excluding
interest due
on the Maturity Date, which shall be paid in cash) may be paid
through an
increase in the principal amount of the Notes, which increase shall
be evidenced
by an amended and restated Note to the extent requested by the
Lenders, but in
no event more frequently than annually. During the continuance of
an Event of
Default, the Notes will bear a default rate of interest (computed
on the basis
of 360 days and twelve 30-day months) from the date of such
occurrence of an
Event of Default at the rate of 2.0% per annum in excess of the
then prevailing
interest rate (the "Default Rate"). The Default Rate shall be
payable in cash on
demand and on the Maturity Date, in full in cash; provided that,
prior to the
Maturity Date at the option of the Borrowers, interest due on the
Notes at the
Default Rate may be paid through an increase in the principal
amount of the
Notes. The Notes may not be prepaid or redeemed by the Borrower
except on the
terms and conditions and in the amounts and with the premium, as
set forth in
Section 2.2 of this Agreement.
Section 2.2 Prepayment and Repayment of Notes.
(a)
Optional Redemption; Redemption Premium. Upon compliance with
Section
2.3, the Borrowers shall have the right to prepay all (or any part
in an amount
not less than $500,000) of the Notes then outstanding by payment of
the price
set forth below in Table 2.2(a) (expressed as a percentage of the
principal
amount of the Notes then outstanding) together with accrued
interest on the
principal amount of the Notes then outstanding to the date of such
prepayment:
Table 2.2(a)
<TABLE>
<CAPTION>
IF PREPAYMENT IS MADE
DURING THE 12-MONTH PERIOD
BEGINNING MARCH __, IN THE YEAR PRICE
------------------------------- -----
<S>
<C>
2006
103.0%
2007
103.0%
2008
103.0%
2009
102.0%
2010
101.0%
2011 and thereafter
100.0%
</TABLE>
Notwithstanding anything to the contrary contained in this Section
2.2(a), if
the Borrowers prepay all of the Obligations in full, in cash,
within ninety (90)
days following the Closing Date, no prepayment or redemption
premium shall be
due pursuant to this Section 2.2(a).
(b)
Prepayment of Notes upon Change of Control. The Borrowers shall
prepay
all of the Notes then outstanding together with accrued interest
thereon, upon a
"Change of Control" (as defined in the Senior Credit Agreement) at
the price
equal to one hundred two percent (102.0%) of the principal amount
of the Notes
then outstanding on the date of such prepayment. All prepayments on
the Notes
pursuant to this Section 2.2(b) shall be made in cash.
(c)
Prepayment of Notes upon Repayment of Senior Debt. Upon payment
in
full, in cash, of all Senior Debt and the termination of all
commitments to lend
under the Senior Credit
12
<PAGE>
Agreement, the Borrowers shall prepay all of the Notes then
outstanding at the
price set forth in the Table 2.2(a), together with accrued and
unpaid interest
on the Notes to the date of such prepayment. All prepayments on the
Notes
pursuant to this Section 2.2(c) shall be made in cash.
(d)
Prepayment of Notes Upon an Event of Default.
(i) If an Event of Default described in Sections 11.1(e) or (f)
has
occurred, then the aggregate principal amount of the Notes then
outstanding, together with all interest accrued (including any
Default Rate
interest) pursuant to the terms of the Notes and unpaid as of the
date of
such
Event of Default, shall automatically become immediately due
and
payable.
(ii) If an Event of Default (other than an Event of Default
described
in
Sections 11.1(e) or (f)) has occurred and is continuing, the
Required
Lenders may at any time at their option, by notice or notices to
the
Borrowers and to the other Lenders, declare that the aggregate
principal
amount of the Notes then outstanding, together with all interest
accrued
(including any Default Rate interest) pursuant to the terms of the
Notes
and
unpaid as of the date of such Event of Default, shall
automatically
become immediately due and payable.
(iii) Upon any Notes becoming due and payable under this
Section
2.2(d), whether automatically or by declaration, such Notes will
forthwith
mature and the entire aggregate principal amount of such Notes
then
outstanding, together with all interest accrued pursuant to the
terms of
the
Notes and unpaid as of the date of such Event of Default (such
interest
to
accrue at the Default Rate with respect to any overdue payment),
shall
all
be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are
hereby
waived.
(e)
Payment in Full on Maturity Date. On the Maturity Date, (i) all
Loans
and all other Obligations (including, without limitation, all
accrued and unpaid
interest, fees, expenses and premiums) will automatically and
immediately become
due and payable, and (ii) the Lenders' obligations under this
Agreement and the
other Loan Documents will automatically and immediately terminate,
without
notice or demand, which each Borrower hereby expressly waives. On
the Maturity
Date, Borrowers will jointly and severally pay in full, in cash all
of the
Obligations.
Section 2.3 Taxes.
2.3.1 Gross-Up. Any and all payments by or on account of any
obligation of Borrowers hereunder shall be made free and clear of
and without
deduction for any Indemnified Taxes or Other Taxes; provided that
if Borrowers
(or any of them) shall be required to deduct any Indemnified Taxes
or Other
Taxes from such payments, then (i) the sum payable shall be
increased as
necessary so that after making all required deductions (including
deductions
applicable to additional sums payable under this Section) each
Lenders receives
an amount equal to the sum it would have received had no such
deductions been
made, (ii) each Borrower shall make such deductions and (iii) such
Borrower
shall pay the full amount deducted to the relevant Governmental
Authority in
accordance with applicable law.
13
<PAGE>
2.3.2 Other Taxes. In addition, each Borrower shall pay any
Other
Taxes to the relevant Governmental Authority in accordance with
applicable law.
2.3.3 Indemnity for Taxes. Each Borrower shall indemnify each
Lender
within thirty (30) Business Days after written demand therefor, for
the full
amount of any Indemnified Taxes or Other Taxes paid by such Lender
on or with
respect to any payment by or on account of any obligation of
Borrowers hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on
or
attributable to amounts payable under this Section) and any
penalties, interest
and reasonable expenses arising therefrom or with respect thereto,
whether or
not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or
asserted by the relevant Governmental Authority. A certificate as
to the amount
of such payment or liability delivered to Borrowing Agent by a
Lender shall be
conclusive absent material error.
2.3.4 Evidence of Payment. As soon as practicable after any payment
of
Indemnified Taxes or Other Taxes by any Borrower to a Governmental
Authority,
but only if requested by a Lender, such Borrower shall deliver to
such Lender
the original or a certified copy of a receipt issued by such
Governmental
Authority evidencing such payment, a copy of the return reporting
such payment
or other evidence of such payment reasonably satisfactory to such
Lender.
2.3.5 Survival. The Obligations described under this Section 2.3
shall
survive any termination of this Agreement.
Section 2.4 Mitigation of Obligations. If Borrowers are required to
pay any
additional amount to any Lender or any Governmental Authority for
the account of
any Lender pursuant to Section 2.3, then such Lender shall use
reasonable
efforts to designate a different lending office for funding or
booking its Loans
or to assign its rights and obligations hereunder to another of its
offices,
branches or affiliates, if, in the reasonable judgment of such
Lender, such
designation or assignment (i) would eliminate or reduce amounts
payable pursuant
to Section 2.3, in the future and (ii) would not subject such
Lender to any
unreimbursed cost or expense and would not otherwise be
materially
disadvantageous to such Lender. Each Borrower hereby agrees to pay
all
reasonable costs and expenses incurred by any Lender in connection
with any such
designation or assignment.
Section 2.5 Borrowing Agency Provisions. Each Borrower hereby
irrevocably
designates the Borrowing Agent to be its attorney and agent and in
such capacity
to borrow, sign and endorse notes, and execute and deliver all
instruments,
documents, writings and further assurances now or hereafter
required hereunder,
on behalf of such Borrower, and hereby authorizes the Lenders to
pay over or
credit all Loan proceeds hereunder in accordance with the request
of the
Borrowing Agent. Although they are separate legal entities that
observe all
corporate and organizational formalities consistent with such
separateness, the
Borrowers are part of one consolidated organization constituting a
single
economic and business enterprise and share an identity of interests
such that
any benefit received by any Borrower benefits the other Borrowers.
The handling
of this credit facility as a co-borrowing facility in the manner
set forth in
this Agreement is solely as an accommodation to the Borrowers and
at their
request. The Lenders shall not incur liability to any Borrower or
any other
Person as a result thereof. To induce the Lenders to do so and in
consideration
thereof, each Borrower hereby indemnifies each Lender and holds
each Lender
harmless from and against any and all liabilities, expenses,
losses, damages and
claims of damage or injury asserted against any Lender by any
Person arising
from or incurred by reason of
14
<PAGE>
the handling of the financing arrangements of the Borrowers as
provided herein,
reliance by any Lender on any request or instruction from the
Borrowing Agent or
any other action taken by any Lender with respect to this Section
2.5, except
due to willful misconduct or gross negligence of such Lender.
Section 2.6
Obligations Joint and Several. All obligations of the Borrowers
hereunder and under the other Loan Documents shall be joint and
several. Each
Borrower hereby agrees to make payment upon the maturity of the
Obligations,
whether by acceleration or otherwise, and such obligation and
liability on the
part of each Borrower shall in no way be impaired or otherwise
affected by any
act or omission of any Lender (other than acts or omissions
resulting from the
gross negligence or willful misconduct of such Lender) including,
without
limitation any extension, renewal or forbearance granted by any
Lender to any
Borrower, any failure of any Lender to pursue or preserve its
rights against any
Borrower or the release by any Lender of any collateral now or
hereafter given
as security for all or any part of such obligations.
Section 2.7 Waiver of Subrogation. Subject only to the provisions
of
Section 2.8 below, each Borrower expressly waives any and all
rights of
subrogation, reimbursement, indemnity, exoneration, contribution or
any other
claim which such Borrower may now or hereafter have against any
other Borrower
or any other person directly or contingently liable for the
Obligations, or
against or with respect to any other Borrower's property
(including, without
limitation, any property which is collateral for the Obligations),
arising from
the existence or performance of this Agreement, until repayment in
full of the
Obligations. In addition, each Borrower hereby expressly waives:
(a) notice of
the acceptance by Thayer or any Lender of this Agreement; (b)
notice of the
existence or creation or non-payment of all or any of the
Obligations
(excluding, however, any notices expressly provided for in this
Agreement or any
of the other Loan Documents); (c) presentment, demand, notice of
dishonor,
protest, and all other notices whatsoever (excluding, however, any
notices
expressly provided for in this Agreement or any of the other Loan
Documents);
(d) all diligence in collection or protection of or realization
upon the
Obligations or any thereof, any obligation hereunder, or any
security for or
guaranty of any of the foregoing; and (e) any event or conduct or
action of any
other Borrower, Thayer, any Lender or any other party that might
otherwise
constitute a legal or equitable discharge of a surety or guarantor
but for this
provision, other than payment in full of the Obligations (except
that portion of
the Obligations, if any, arising under any agreement other than
this Agreement
if such other agreement provides for the payment of interest at a
rate specified
therein).
Section 2.8 Contribution and Indemnification Among the Borrowers.
Each
Borrower is obligated to repay the Obligations as joint and several
obligors
under this Agreement. To the extent that any Borrower shall, under
this
Agreement as a joint and several obligor, repay any of the
Obligations
constituting Loans made to another Borrower (an "Accommodation
Payment"), then
the Borrower making such Accommodation Payment shall be entitled to
contribution
and indemnification from, and be reimbursed by, each of the other
Borrowers in
an amount, for each of such other Borrowers, equal to a fraction of
such
Accommodation Payment, the numerator of which fraction is such
other Borrower's
"Allocable Amount" (as defined below) and the denominator of which
the sum of
the Allocable Amounts of all of the Borrowers. As of any date of
determination,
the "Allocable Amount" of each Borrower shall be equal to the
maximum amount of
liability for Accommodation Payments which could be asserted
against such
Borrower hereunder
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without (a) rendering such Borrower "insolvent" within the meaning
of Section
101(31) of Title 11 of the United States Code entitled "Bankruptcy"
(the
"Bankruptcy Code"), Section 2 of the Uniform Fraudulent Transfer
Act (the
"UFTA"), or Section 2 of the Uniform Fraudulent Conveyance Act
("UFCA"), (b)
leaving such Borrower with unreasonably small capital or assets,
within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the
UFTA, or Section
4 of the UFCA, or (c) leaving such Borrower unable to pay its debts
as they
become due within the meaning of Section 548 of the Bankruptcy
Code, Section 4
of the UFTA, or Section 5 of the UFCA. All rights and claims of
contribution,
indemnification and reimbursement under this Section 2.8 shall be
subordinate in
right of payment to the prior payment in full of the
Obligations.
ARTICLE III
SUBORDINATION
Section 3.1 Subordination. The Lenders acknowledge and agree that
their
rights and remedies hereunder with respect to the Obligations
(including,
without limitation, all of the payment and prepayment terms
reflected in Article
II above) are subject to the terms and provisions of the
Subordination
Agreement.
Section 3.2 Reference to Subordination Agreement. Without limiting
the
subordination referred to in Section 3.1, the Lenders acknowledge
and agree
that:
ALL
PAYMENTS UNDER THIS AGREEMENT AND THE RIGHTS OF THE LENDERS EACH
PARTY
TO
THIS AGREEMENT ARE SUBORDINATED, IN RIGHT OF PAYMENT AND
COLLATERAL
SECURITY, TO THE FULL PAYMENT IN CASH OF ALL SENIOR LIABILITIES AND
THE
RIGHTS OF THE HOLDERS OF ALL SENIOR LIABILITIES UPON THE TERMS SET
FORTH IN
THE
SUBORDINATION AGREEMENT. EACH LENDER, BY BECOMING A LENDER
HEREUNDER,
IRREVOCABLY AGREES TO BE BOUND BY THE TERMS AND PROVISIONS SET
FORTH HEREIN
AND
IN THE SUBORDINATION AGREEMENT. THIS AGREEMENT IS ALSO SUBJECT TO
THE
RESTRICTIONS ON TRANSFER SET FORTH IN THE SUBORDINATION
AGREEMENT.
ARTICLE IV
RESERVED.
Section 4.1 Reserved.
Section 4.2 Reserved.
ARTICLE V
PRECONDITIONS TO THE LOANS.
Section 5.1 Loans on the Closing Date. Notwithstanding any
provision
contained in this Agreement to the contrary, the Lenders shall have
no
obligation to make the Loans under this Agreement unless the
Lenders shall have
first received:
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(i) this Agreement and the Notes, each duly executed by each
Borrower;
(ii) the other Loan Documents, each duly executed and delivered by
the
applicable Borrower and the other Persons party thereto;
(iii) a copy of resolutions of the Board of Directors or
general
partner of each Borrower, duly adopted, which (a) authorize the
execution,
delivery and performance by each Borrower of this Agreement, the
Notes and
the
other Loan Documents to which such Borrower is a party, and (b)
the
granting of a second priority security interest in substantially
all of the
assets of such Borrower in favor of Thayer, in each case certified
by the
Secretary of such Borrower;
(iv) a copy of the Certificate or Articles of Incorporation or
Organization (as applicable) of each Borrower, including any
amendments
thereto, certified by the Secretary of State of the State in which
such
Borrower is organized;
(v) a copy of the Operating Agreement, Partnership Agreement or
By-Laws of each Borrower, including any amendments thereto,
certified by
the
Secretary of such Borrower;
(vi) an incumbency certificate, executed by the Secretary of
each
Borrower, which shall identify by name and title and bear the
true,
original signatures of all of the officers of such Borrower
executing any
of
the Loan Documents to which such Borrower is a party;
(vii) certificates of corporate good standing of each Borrower
issued
by
the Secretaries of each state in which such Borrower is qualified
to do
business;
(viii) an opinion of counsel of Greenberg Traurig, LLP, outside
counsel to Borrowers, in form and substance reasonably satisfactory
to
Thayer and Thayer's counsel;
(ix) reserved;
(x) reserved;
(xi) evidence of the proper filing of financing statements
perfecting
second priority security interests in favor of Thayer in all of the
Loan
Collateral;
(xii) termination statements for all financing statements filed
of
record against any Borrower other than financing statements
relating to
Permitted Liens;
(xiii) evidence satisfactory to Thayer of the insurance required
by
this
Agreement and the other Loan Documents, together with endorsements
in
form
and substance reasonably satisfactory to Thayer, duly executed by
the
insurance company;
(xiv) copies of all financial statements and other Exhibits and
Schedules required by this Agreement and the other Loan
Documents;
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(xv) a letter of direction from Borrowing Agent with respect to
the
disbursement of the proceeds of the Loans under this Agreement;
(xvi) such mortgagee, bailee, landlord or warehousemen's waivers
as
Thayer may deem necessary regarding locations at which any Loan
Collateral
is
or will be stored or otherwise located;
(xvii) a pay-off letter from Citicorp USA, Inc. in form and
substance
satisfactory to Thayer;
(xviii) reserved;
(xix) a true and correct copy of each Applicable Agreement;
(xx) evidence that the actual out-of-pocket costs, expenses and
fees
(including attorneys' fees) paid or incurred by Thayer in
connection with
the
preparation, negotiation and closing of this Agreement and the
other
Loan
Documents have been (or shall be simultaneously) paid in full;
(xxi) reserved;
(xxii) all Exhibits and Schedules to the Loan Documents shall
have
been
completed in form and substance satisfactory to the Thayer and
shall
contain no material facts or information which Thayer, in its
reasonable
judgment, determines to be unacceptable;
(xxiii) reserved;
(xxiv) evidence of each Borrower's capital structure and
material
accounts and terms and conditions of all Indebtedness of each
Borrower,
reasonably acceptable to Thayer;
(xxv) reserved;
(xxvi) evidence that the Senior Agent is prepared, but for the
funding
under this Agreement, to extend Senior Debt to the Borrowers in
an
aggregate credit facility amount not less than $50,000,000, subject
to the
terms and conditions of such credit facility, which terms and
conditions
shall be satisfactory to Thayer;
(xxvii) evidence that the sale-leaseback transaction with respect
to
Suntron GCO's facility in Sugarland, Texas has been completed, and
that
non-escrowed sales proceeds therefrom have been received by and
are
available to the Borrowers in an amount not less than
$15,000,000;
(xxviii) reserved;
(xxix) reserved; and
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(xxx) such other agreements, documents, instruments and
certificates
as
Lenders may reasonably request.
Section 5.2 General Conditions. In addition to any other
provisions
contained in this Agreement, the making of any Loan under this
Agreement will be
subject to the continued existence or fulfillment to the
satisfaction of the
Lenders of each of the following conditions throughout the term of
this
Agreement:
(i) No Event of Default has occurred and is continuing;
(ii) No law or regulation prohibits, and no order, judgment or
decree
of
any arbitrator or Governmental Authority enjoins or restrains
the
Lenders, from making the requested advance;
(iii) Each Borrower's representations and warranties contained in
this
Agreement and the other Loan Documents to which it is a party are
complete
and
correct a
