Document:

[INSTRUCTIONS FOR LOAN AGREEMENT

Exhibit

10.2.3

 

LOAN

AGREEMENT

 

THIS LOAN AGREEMENT (this “Agreement”) is made and entered into as of February

12, 2002 by and between HCC INDUSTRIES Inc., a Delaware Corporation

(“Borrower”), and UNION BANK OF CALIFORNIA, N.A., a national

banking association (“Bank”).

 

SECTION 1. THE CREDIT

 

1.1                   CREDIT

FACILITIES

 

1.1.1       The Revolving Loan. Bank

will loan to Borrower an amount not to exceed Eight Million Dollars

($8,000,000) outstanding in the aggregate at any one time (the “Revolving

Loan”). The proceeds of the Revolving Loan shall be used for Borrower’s general

working capital purposes and Permitted Acquisitions (as defined in Section

5.9).  All borrowings of the Revolving

Loan must be made before January 30, 2004, at which time all unpaid principal

and interest of the Revolving Loan shall be due and payable. The Revolving Loan

shall be evidenced by Bank’s standard form of commercial promissory note (the

“Revolving Note”). Bank shall enter each amount borrowed and repaid in Bank’s

records and such entries shall be deemed correct. Omission of Bank to make any

such entries shall not discharge Borrower of its obligation to repay in full

with interest all amounts borrowed.

 

1.2                   TERMINOLOGY

 

The following words and phrases, whether

used in their singular or plural form, shall have the meanings set forth below:

 

“Capital Expenditures” means for any

period, expenditures (including without limitation, the aggregate amount of

capitalized lease obligations incurred during such period) made by Borrower and

its Subsidiaries to acquire or constructed fixed assets, plant and equipment

(including renewals, improvements, and replacements) during such period

computed in accordance with GAAP.

 

“Consolidated EBITDA” means for any period, for the twelve (12) month

period immediately preceding the date of calculation, for Borrower and its

Subsidiaries, and amount equal to Consolidated Net Income after eliminating

extraordinary gains and losses used in determining such Consolidated Net

Income, plus (i) provisions for income taxes, (ii) depreciation,

amortization, and other non-cash charges deducted in determining such

Consolidated Net Income, and (iii) interest expense deducted in determining

such Consolidated Net Income.

 

“Consolidated Net Income” means, for any period, the net income of

Borrower and its Subsidiaries for such period on a consolidated basis as

determined in accordance with GAAP.

 

“Debt Service” means that portion of long-term liabilities and capital

leases coming due within twelve (12) months following the date of calculation

plus interest expense from the twelve (12) month period immediately preceding

the date of calculation.

 

“Funded Debt” means, as of any date of

determination, for Borrower and its Subsidiaries on a consolidated basis, the

sum of (a) all obligations of Borrower for borrowed money, (b) all

obligations of Borrower evidenced by bonds, debentures, notes, or other similar

instruments and all reimbursement or other obligations of Borrower in respect

of letters of credit, bankers acceptances, interest rate protection agreements,

other hedging agreements or other derivatives, (c) all obligations of

Borrower under capital leases, and (d) all obligations or liabilities of 

 

 

others secured by a Lien on any asset of

Borrower.  Funded Debt shall not include

trade payables and accrued expenses incurred by any Person in its ordinary

course of business.

 

“GAAP” means generally accepted accounting principles

and practices consistently applied. Accounting terms used in this Agreement but

not otherwise expressly defined have the meanings given them by GAAP.

 

“Letters of Credit” means Commercial Letters of Credit

or the Standby Letters of Credit, or both, as the context may require.

 

“Lien” means any voluntary or involuntary security

interest, mortgage, pledge, claim, charge, encumbrance, title retention

agreement, or third party interest, covering all or any part of the property of

Borrower or any Guarantor.

 

“Loan” means all the credit facilities described

above.

 

“Loan Documents” means this Agreement, the Note, and all

other documents, instruments and agreements required by Bank and executed in

connection with this Agreement, the Note, the Loans, and with all other credit

facilities from time to time made available to Borrower by Bank.

 

“Non-Financed Capital Expenditures” means Capital

Expenditures incurred during such period not requiring the use of Funded Debt.

 

“Note” means all the promissory notes described above.

 

 “Person” means

any individual, firm, partnership, joint venture, corporation, association,

limited liability company, business enterprise trust, unincorporated

organization, government or department or agency thereof, or other entity,

whether acting in an individual, fiduciary, or other capacity.

 

“Senior Funded Debt” means Funded Debt minus

Borrower’s Subordinated debt.

 

“Subordinated Debt” means those certain 103⁄4% Senior

Subordinated Notes due May 15, 2007 issued by Borrower pursuant to the

Indenture dated May 6, 1997 by and between Borrower and Bank of New York, as

trustee, as amended from time to time, and other subordinated notes, including

but not limited to subordinated bonus notes and subordinated notes due selling

shareholders.

 

“Subsidiary” means with respect to any Person of which

more than twenty five percent (25%) of the outstanding capital stock (or

other ownership) having ordinary voting power to elect a majority of the board

of directors, managers, or other voting members of the governing body of such

entity or Person.

 

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intentionally left blank}

 

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1.3          BORROWING BASE

An amount of the Loan equal to Eight Million Dollars ($8,000,000) is a

revolving loan subject to a borrowing base (“Borrowing Base Loan”) if for any

month wherein the principal amount of the loan exceeds Four Million Dollars

($4,000,000), and is not the result of a Permitted Acquisition.  Notwithstanding any other provision of this

Agreement, Bank shall not be obligated to advance funds under the Borrowing

Base Loan, at any time that Borrower’s aggregate obligations to Bank thereunder

exceed eighty percent (80%) of Borrower’s Eligible Accounts.  If at any time Borrower’s obligations to

Bank under the referenced facilities exceed the sum so permitted, Borrower

shall immediately repay to Bank such excess.

 

1.3.1           Accounts

and Eligible Accounts. The term “Accounts” means all

presently existing and hereafter arising accounts receivable, contract rights,

chattel paper, and all other forms of obligations owing to Borrower, payable in

United States dollars, arising out of the sale or lease of goods, or the

rendition of services by Borrower, whether or not earned by performance, and

any and all credit insurance, guaranties and other security therefor, as well

as all merchandise returned to or reclaimed by Borrower, and Borrower’s books

and records relating to any of the foregoing.

 

The term “Eligible

Accounts” means those Accounts, net of finance charges, which have been validly

assigned to Bank and strictly comply with all Borrower’s representations and

warranties to Bank, but Eligible Accounts shall not include any Account:

 

(a)          With respect to which

the account debtor is an officer, shareholder, director, employee or agent of

Borrower;

 

(b)         With respect to which the

account debtor is a subsidiary of, related to, or affiliated or has common

officers or directors with Borrower;

 

(c)          Relating to goods placed

on consignment, guaranteed sale or other terms by reason of which payment by

the account debtor may be conditional;

 

(d)         With respect to which the

account debtor is not a resident of the United States or Canada;

 

(e)          With respect to which

the account debtor is a Federal, state or local governmental entity or agency,

unless Bank, in its sole discretion, has agreed to the contrary in writing and

Borrower, if necessary or desirable, has complied with the Federal Assignment

of Claims Act of 1940 or any applicable state statute or municipal ordinance of

similar purpose and effect with respect thereto;

 

(f)            With respect to which

Borrower is or may become liable to the account debtor for goods sold or

services rendered by the account debtor to Borrower;

 

(g)         With respect to which

there is asserted a defense, counterclaim, discount or setoff, whether

well-founded or otherwise, except for those discounts, allowances and returns arising

in the ordinary course of Borrower’s business;

 

(h)         With respect to which the

account debtor becomes insolvent, fails to pay its debts as they mature or goes

out of business, or which is owed by an account debtor which has become the

subject of a proceeding under any provision of the United States Bankruptcy

Code, as amended, or under any other bankruptcy or insolvency law, including

but not limited to assignments for the benefit of creditors, formal or informal

moratoriums, compositions or extensions with all or substantially all of its

creditors;

 

(i)             Owed by any account

debtor with respect to which twenty-five percent (25%) or more of the

aggregate dollar amount of its Accounts are not paid within ninety (90) days of

the invoice date;

 

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(j)             Any invoice that is

not paid by the account debtor within ninety (90) days of the invoice

date;

 

(k)          Or portion of the

Accounts owed by any single account debtor which exceeds fifteen percent

(15%) of all Borrower’s Accounts; and

 

(l)             Which Bank deems

ineligible.

 

1.4          Prepayment. The Loan

may be prepaid in full or in part but only in accordance with the terms of the

Note, and any such prepayment shall be subject to any prepayment fee provided

for therein. In the event of a principal prepayment on any term indebtedness,

the amount prepaid shall be applied to the scheduled principal installments due

in the reverse order of their maturity on the Loan being prepaid.

 

1.5          Interest. The unpaid

principal balance of the Loan shall bear interest at the rate or rates provided

in the Note.

 

1.6          Commitment Fee. On

the last calendar day of the third month following the execution of this

Agreement and on the last calendar day of each three-month period thereafter,

Borrower shall pay to Bank a fee of one eight of one percent (0.125%) per year

on the unused portion of the Revolving Loan for the preceding quarter, computed

on the basis of a 360 day year for actual days elapsed.

 

1.7          Audit and Appraisal Fees. Borrower

shall pay to Bank any fees, expenses, or other out-of-pocket costs incurred in

conjunction with any audit or inspection of Borrower’s books and records, or

any appraisals, validations, or other means used to determine or examine Bank’s

collateral.

 

1.8          Balances. Borrower

shall maintain its major depository accounts with Bank until all obligations of

Borrower to Bank under the Loan Documents have been paid in full.

 

1.9          Disbursement. Bank

shall disburse the proceeds of the Loan as provided in Bank’s standard form

Authorization(s) to Disburse executed by Borrower.

 

1.10        Security. Prior to any

Loan disbursement, Borrower shall execute one or more security agreements on

Bank’s standard form, and one or more financing statements suitable for filing

in the official records of the appropriate state government and/or any other

location required by Bank, granting to Bank a first priority security interest

in such of Borrower’s property as is described in said security agreement(s).

Any exceptions to Bank’s first priority Lien are permitted only as provided in

this Agreement.

 

SECTION

2. CONDITIONS PRECEDENT

 

Bank shall not be obligated to disburse all or any portion of the Loans

unless at or prior to the time of each such disbursement, the following

conditions have been fulfilled to Bank’s satisfaction:

 

2.1          Compliance. Borrower

shall have performed and complied with all terms and conditions required by

this Agreement to be performed or complied with, and shall have executed and

delivered to Bank the Note and all other Loan Documents.

 

2.2          Guaranties. Glasseal

Products, Inc., Sealtron, Inc., Sealtron Acquisition Corp., Hermetic Seal

Corporation, HCC Machining Company, Inc. and HCC Industries International

(individually a “Guarantor” and collectively “Guarantors”) shall have executed

and delivered to Bank their respective continuing guaranties in form and amount

satisfactory to Bank.

 

2.3          Authorization to Obtain Credit. Borrower

shall have provided Bank with an executed copy of Bank’s form Authorization to

Obtain Credit, authorizing the execution, delivery and performance of this

Agreement and the other Loan Documents. Such resolutions shall also designate

the persons who are authorized to act on 

 

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Borrower’s behalf in connection with this Agreement to do the things

required of Borrower pursuant to this Agreement.

 

2.4          Termination Statements. Borrower

shall have provided Bank with termination statements executed by such secured

creditors as may be required by Bank, suitable for filing with the Secretary of

State in each state designated by Bank.

 

2.5          Continuing Compliance. At

the time any disbursement is to be made and immediately thereafter, there shall

not exist any Event of Default (as hereinafter defined) or any event,

condition, or act which with notice or lapse of time, or both, would constitute

an Event of Default.

 

SECTION

3. REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants that:

 

3.1          Business Activity. Borrower’s

principal business is a manufacturer of hermetic seals and other electrical

components.

 

3.2          Affiliates and Subsidiaries. Borrower’s

affiliates and subsidiaries (those entities in which Borrower has either a

controlling interest or a twenty-five percent (25%) or more ownership interest)

and their addresses, and the names of the persons or entities owning five

percent (5%) or more of the equity interests in Borrower, are as provided on a

schedule delivered to Bank on or before the date of this Agreement.

 

3.3          Organization and Qualification. Borrower

is duly organized and existing under the laws of the state of its organization,

is duly qualified and in good standing in any jurisdiction where such

qualification is required, and has the power and authority to carry on the

business in which it is engaged and/or proposes to engage.

 

3.4          Power and Authorization. Borrower

has the power and authority to enter into this Agreement and to execute and

deliver the Note and all other Loan Documents. This Agreement and all things

required by this Agreement and the other Loan Documents have been duly

authorized by all requisite action of Borrower.

 

3.5          Authority to Borrow. The

execution, delivery and performance of this Agreement, the Note and all other

Loan Documents are not in contravention of any of the terms of any indenture,

agreement or undertaking to which Borrower is a party or by which it or any of

its property is bound or affected.

 

3.6          Compliance with Laws. Borrower

is in compliance with all applicable laws, rules, ordinances or regulations

which materially affect the operations or financial condition of Borrower.

 

3.7          Title. Except for

assets which may have been disposed of in the ordinary course of business,

Borrower has good and marketable title to all property reflected in its

financial statements delivered to Bank and to all property acquired by Borrower

since the date of said financial statements, free and clear of all Liens,

except Liens specifically referred to in said financial statements.

 

3.8          Financial Statements. Borrower’s

financial statements, including both a balance sheet at March 31, 2001,

together with supporting schedules, and an income statement for the twelve (12)

months ended March 31, 2001, have heretofore been furnished to Bank, are true

and complete, and fairly represent Borrower’s financial condition for the

period covered thereby. Since March 31, 2001, there has been no material

adverse change in Borrower’s financial condition or operations.

 

3.9          Litigation. There is

no litigation or proceeding pending or threatened against Borrower or any of its

property which is reasonably likely to affect the financial condition, property

or business of Borrower in a materially adverse manner or result in liability

in excess of Borrower’s insurance coverage.

 

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3.10        ERISA. Borrower’s

defined benefit pension plans (as defined in the Employee Retirement Income

Security Act of 1974, as amended (“ERISA”)), meet, as of the date hereof, the

minimum funding standards of Section 302 of ERISA, and no Reportable Event or Prohibited

Transaction as defined in ERISA has occurred with respect to any such plan.

 

3.11        Regulation U. No

action has been taken or is currently planned by Borrower, or any agent acting

on its behalf, which would cause this Agreement or the Note to violate

Regulation U or any other regulation of the Board of Governors of the Federal

Reserve System, or to violate the Securities and Exchange Act of 1934, in each

case as in effect now or as the same may hereafter be in effect. Borrower is

not engaged in the business of extending credit for the purpose of purchasing

or carrying margin stock as one of its important activities and, except as may

be expressly agreed to and documented between Borrower and Bank, none of the

proceeds of the Loan will be used directly or indirectly for such purpose.

 

3.12        No Event of Default. Borrower

is not now in default in the payment of any of its material obligations, and

there exists no Event of Default, and no condition, event or act which with

notice or lapse of time, or both, would constitute an Event of Default.

 

3.13        Continuing Representations and

Warranties. The foregoing representations and warranties

shall be considered to have been made again at and as of the date of each and

every Loan disbursement and shall be true and correct as of each such date.

 

SECTION

4. AFFIRMATIVE COVENANTS

 

Until all sums payable pursuant to this Agreement, the Note and the

other Loan Documents have been paid in full, unless Bank otherwise consents in

writing, Borrower agrees that:

 

4.1          Use of Proceeds. Borrower

will use the proceeds of the Loan only as provided in Section 1 above.

 

4.2          Payment of Obligations. Borrower

will pay and discharge promptly all taxes, assessments and other governmental

charges and claims levied or imposed upon it or its property, or any part

thereof; provided, however, that Borrower shall have the right in good faith to

contest any such taxes, assessments, charges or claims and, pending the outcome

of such contest, to delay or refuse payment thereof provided that adequately

funded reserves are established by it to pay and discharge any such taxes,

assessments, charges and claims.

 

4.3          Maintenance of Existence. Borrower

will maintain and preserve its existence, its assets, and all rights,

franchises, licenses and other authority necessary for the conduct of its

business, and will maintain and preserve its property, equipment and facilities

in good order, condition and repair. Bank may, at reasonable times, visit and

inspect any of Borrower’s properties.

 

4.4          Records. Borrower

will keep and maintain full and accurate accounts and records of its operations

in accordance with GAAP and will permit Bank, at Borrower’s expense, to have

access thereto, to make examination and photocopies thereof, and to make audits

of Borrower’s accounts and records and Bank’s collateral during regular

business hours.

 

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4.5          Information Furnished. Borrower

will furnish to Bank:

 

(a)                                  Within

Forty Five (45) days after the close of each fiscal quarter, except for

the final quarter of each fiscal year, its unaudited balance sheet as of the

close of such fiscal quarter, its unaudited income and expense statement with

year-to-date totals and supportive schedules, its statement of cash flows with

year-to-date totals, and its statement of retained earnings for that fiscal

quarter,

all prepared in accordance with GAAP.

 

(b)                                  Within

One Hundred Twenty (120) days after the close of each fiscal year, a

copy of its consolidated statement of financial condition including at least

its balance sheet as of the close of such fiscal year, its income and expense

statement, its statements of cash flows, and its retained earnings statement

for such fiscal year, examined and prepared on an audited basis by independent

certified public accountants selected by Borrower and reasonably satisfactory

to Bank, in accordance with GAAP along with any management letter provided by

such accountants.

 

(c)                                  Within

Forty Five (45) days after the close of each fiscal  quarter, a certification of

compliance with all covenants under this Agreement, executed by Borrower’s duly

authorized officer, via electronic mail, or in other form acceptable to Bank.

 

(d)                                  Prompt

written notice to Bank of any Event of Default or breach under any of the terms

or provisions of this Agreement or any other Loan Document, any litigation

which would have a material adverse effect on Borrower’s financial condition,

and any other matter which has resulted in, or is likely to result in, a

material adverse change in Borrower’s financial condition or operations.

 

(e)                                  If

the Loan is subject to a Borrowing Base, then within Twenty Five (25) days

after the close of each calendar month, a copy of Borrower’s monthly accounts

receivable aging and a Borrowing Base Certificate, executed by Borrower’s chief

financial officer or other duly authorized officer of Borrower, in form

acceptable to Bank, accurately reporting the amounts of Borrower’s Accounts,

Eligible Accounts, as the Borrowing Base may require.

 

(f)                                    Such

other financial statements and information (including without limitation,

Federal and state income tax returns for Borrower with all supportive

schedules) as Bank may reasonably request from time to time.

 

4.6                               Profitability.

Borrower will achieve a Consolidated Net Income for the preceding twelve

(12) month  period of any positive

amount as reported by the end of each fiscal quarter of Borrower.

 

4.7                               Debt

Service Coverage Ratio. Borrower will maintain a ratio of Consolidated

EBITDA, less Non-Financed Capital Expenditures and cash taxes for the twelve

(12) month period immediately preceding the date of calculation, to Debt

Service of not less than 1.10:1.00 as of the close of each fiscal

quarter through March 31, 2003 and 1.25:1.00 thereafter.

 

4.8                               Funded

Debt to EBITDA.  Borrower will

maintain a ratio of Funded Debt to Consolidated EBITDA of not more than 5.25:1.00

as of the close of each fiscal quarter through March 31, 2003, and 5.00:1.00

thereafter.

 

4.9                               Senior

Funded Debt to EBITDA.  Borrower

will maintain a ratio of Senior Funded Debt to Consolidated EBITDA of not more

than 1.00:1.00 as of the close of each fiscal quarter.

 

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4.10                        Insurance.

Borrower will keep all of its insurable property, whether real, personal or

mixed, insured by companies approved by Bank, against fire and such other

risks, and in such amounts as is customarily obtained by companies conducting

similar business with respect to like properties. Borrower will furnish to Bank

statements of its insurance coverage, will promptly upon Bank’s request furnish

other or additional insurance deemed necessary by Bank to the extent that such

insurance may be available, and hereby assigns to Bank, as security for

Borrower’s obligations to Bank, the proceeds of any such insurance. Prior to

any Loan disbursement, Bank will be named loss payee under all policies

insuring the collateral. Borrower will maintain adequate worker’s compensation

insurance and adequate insurance against liability for damage to persons or

property. All policies shall require at least ten (10) days’ written notice to

Bank before alteration or cancellation.

 

4.11                        Additional

Requirements. Upon Bank’s demand, Borrower will promptly take such further

action and execute all such additional documents and instruments in connection

with this Agreement and the other Loan Documents as Bank in its reasonable

discretion deems necessary, and promptly supply Bank with such other

information concerning its affairs as Bank may request from time to time.

 

4.12                        Litigation

and Attorneys’ Fees. Upon Bank’s demand, Borrower will promptly pay to Bank

reasonable attorneys’ fees, including the reasonable estimate of the allocated

costs and expenses of in-house legal counsel and staff, and all costs and other

expenses paid or incurred by Bank in collecting, modifying or compromising the

Loan or in enforcing or exercising its rights or remedies created by, connected

with or provided for in this Agreement and the other Loan Documents. If any

judicial action, arbitration or other proceeding is commenced, only the

prevailing party shall be entitled to attorneys’ fees and court costs.

 

4.13                        Bank

Expenses. Upon Bank’s request, Borrower will pay or reimburse Bank for all

costs, expenses and fees incurred by Bank in preparing and documenting this

Agreement and the Loan, and all amendments and modifications to any Loan

Documents, including but not limited to all filing and recording fees, costs of

appraisals, insurance and attorneys’ fees, including the reasonable estimate of

the allocated costs and expenses of in-house legal counsel and staff.  Bank will advise Borrower of any expense

prior to any such expenses being incurred.

 

SECTION

5. NEGATIVE COVENANTS

 

Until all sums payable pursuant to this Agreement, the Note and the

other Loan Documents have been paid in full, unless Bank otherwise consents in

writing, Borrower agrees that:

 

5.1                               Liens.

Borrower will not create, assume or suffer to exist any Lien on any of its

property, whether real, personal or mixed, now owned or hereafter acquired, or

upon the income or profits thereof, except (a) Liens in favor of Bank, (b)

Liens for taxes not delinquent and taxes and other items being contested in

good faith, (c) minor encumbrances and easements on real property which do not

affect its market value, (d) existing Liens on Borrower’s personal property and

real property, including refinancing of existing indebtedness, and (e) future

purchase money security interests encumbering only the personal property

purchased.

 

5.2                               Borrowings.

Borrower will not sell, discount or otherwise transfer any account

receivable or any note, draft or other evidence of indebtedness, except to Bank

or except to a financial institution at face value for deposit or collection

purposes only, and without any fees other than the financial institution’s

normal fees for such services. Borrower will not borrow any money, become

contingently liable to borrow money, or enter any agreement to directly or

indirectly obtain borrowed money, except pursuant to agreements with Bank or except

for purchase money indebtedness.

 

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5.3                               Sale

of Assets, Liquidation or Merger. Borrower will not liquidate, dissolve or

enter into any consolidation, merger, partnership or other combination, or

convey, sell or lease all or the greater part of its assets or business, or

purchase or lease all or the greater part of the assets or business of another.

 

5.4                               Loans,

Advances and Guaranties. Borrower will not, except in the ordinary course

of business as currently conducted, make any loans or advances, become a

guarantor or surety, or pledge its credit or properties.

 

5.5                               Investments.

Borrower will not purchase the debt or equity of another except for savings

accounts and certificates of deposit of Bank, direct U.S. Government

obligations, and commercial paper issued by corporations with the top ratings

of Moody’s or Standard & Poor’s, provided that all such permitted

investments shall mature within one year of purchase.

 

5.6                               Redemption

of Stock. Borrower will not redeem or retire any share of its capital stock

for value.

 

5.7                               Affiliate

Transactions. Borrower will not transfer any property to any affiliate,

except for value received in the normal course of business and for an amount,

including any management or service fee(s), as would be conducted and charged

with an unrelated or unaffiliated entity. Borrower will not pay any management

fee or fee for services to any affiliate without Bank’s prior written consent.

 

5.8                               Capital

Expenditures. Borrower will not make Capital Expenditures in excess of Four

Million Dollars ($4,000,000) in any fiscal year. Each such expenditure shall be

required for Borrower to continue its business as currently conducted. In

aggregating such expenditures to determine compliance with the above

limitation, Borrower shall include the current expense portion of all leases,

whether or not capitalized, and the current portion of any debt used to finance

capital expenditures.

 

5.9                               Permitted

Acquisitions.   Borrower may acquire

all or substantially all of the assets of a Person or a unit or division of a

Person constituting a business, provided that (a) the purchase price of such

acquisition or acquisitions is less than Eight Million Dollars ($8,000,000) in

any fiscal year, (b) no Events of Default shall have occurred and be continuing

on the date such acquisition is consummated, before or after giving effect

thereto, (c) the Person or business acquired is principally engaged in the same

line of business (or a business reasonably incidental thereto), (d) after

giving effect to the consummation of such acquisition, Borrower shall be in pro

forma compliance with the covenants set forth in Sections 4.5, 4.6, 4.7,

4.8, and 4.9 for the most recent full fiscal quarter immediately preceding such

consummation date.

 

SECTION

6. EVENTS OF DEFAULT

 

The occurrence of any of the following events (“Events of Default”)

shall terminate any obligation of Bank to make or continue the Loan and shall

automatically, unless otherwise provided under the Note, make all sums of

interest and principal and any other amounts owing under the Loan immediately

due and payable, without notice of default, presentment or demand for payment,

protest or notice of nonpayment or dishonor, or any other notices or demands:

 

6.1                               Borrower

shall default in the due and punctual payment of the principal of or the

interest on the Note or on any amounts owing under any of the Loan Documents;

 

6.2                               Any

default shall occur under the Note;

 

6.3                               Borrower

shall default in the due performance or observance of any covenant or condition

of the Loan Documents;

 

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6.4                               Any

guaranty or subordination agreement required hereunder shall be breached or

becomes ineffective, or any Guarantor or subordinating creditor shall die,

disavow or attempt to revoke or terminate such guaranty or subordination

agreement; or

 

6.5                               There

shall be a change in ownership or control of ten percent (10%) or more of the

equity interests in Borrower or any Guarantor.

 

SECTION

7. GENERAL PROVISIONS

 

7.1                               Additional

Remedies. The rights, powers and remedies given to Bank hereunder shall be

cumulative and not alternative and shall be in addition to all rights, powers

and remedies given to Bank by law against Borrower or any other person or entity

including but not limited to Bank’s rights of setoff and banker’s lien.

 

7.2                               Nonwaiver.

Any forbearance or failure or delay by Bank in exercising any right, power

or remedy hereunder shall not be deemed a waiver thereof and any single or

partial exercise of any right, power or remedy shall not preclude the further

exercise thereof. No waiver shall be effective unless it is in writing and

signed by an officer of Bank.

 

7.3                               Inurement.

The benefits of this Agreement and the other Loan Documents shall inure to

the successors and assigns of Bank and the permitted successors and assigns of

Borrower, but any attempted assignment by Borrower without Bank’s prior written

consent shall be null and void.

 

7.4                               Applicable

Law. This Agreement and the other Loan Documents shall be governed by and

construed according to the laws of the State of California.

 

7.5                               Severability.

Should any one or more provisions of this Agreement or any other Loan

Document be determined to be illegal or unenforceable, all other provisions of

such document shall nevertheless be effective.

 

7.6                               Controlling

Document. In the event of any inconsistency between the terms of this

Agreement and any other Loan Document, the terms of the other Loan Document

shall prevail.

 

7.7                               Construction.

The section and subsection headings herein are for convenient reference

only and shall not limit or otherwise affect the interpretation of this

Agreement.

 

7.8                               Amendments.

This Agreement may be amended only in writing signed by all parties hereto.

 

7.9                               Counterparts.

Borrower and Bank may execute one or more counterparts to this Agreement,

each of which shall be deemed an original, but all such counterparts when taken

together, shall constitute one and the same agreement.

 

7.10                        Notices. Any notices or other communications

provided for or allowed hereunder shall be effective only when given by one of

the following methods and addressed to the parties at their respective

addresses and shall be considered to have been validly given (a) upon delivery,

if delivered personally, (b) upon receipt, if mailed, first class postage

prepaid, with the United States Postal Service, (c) on the next business day,

if sent by overnight courier service of recognized standing, or (d) upon

telephoned confirmation of receipt, if telecopied. The addresses to which

notices or demands are to be given may be changed from time to time by notice

delivered as provided above.

 

7.11                        Integration

Clause. Except for the other Loan Documents, this Agreement constitutes the

entire agreement between Bank and Borrower regarding the Loan, and all prior

oral or written communications between Borrower and Bank shall be of no further

effect or evidentiary value.

 

10

 

THIS AGREEMENT is executed on behalf of the parties by their duly

authorized representative(s) as of the date first above written.

 

	

  BORROWER

  	

   

  	

  BANK

  
	

  HCC

  Industries Inc.

  	

   

  	

  Union

  Bank of California, N.A.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  BY:

  	

   

  	

   

  	

  BY:

  	

   

  
	

   

  	

   

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

  Printed Name:

  	

    Kjell

  Gronvold

  
	

   

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  	

  Title:

  	

   

  	

    Vice President

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  BY:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Printed Name:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Title:

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Address:

  	

   

  	

  Address:

  
	

   

  	

   

  	

   

  
	

  4232 Temple City Blvd.

  	

   

  	

  17800 Castlelton Street, Suite 500

  
	

  Rosemead, CA 91770

  	

   

  	

  City of Industry, CA  91748

  
	

  Attention: Chris Bateman

  	

   

  	

  Attention: 

  Kjell Gronvold

  
	

   

  	

   

  	

   

  
	

  Telephone: (626) 443-8931

  	

   

  	

  Telephone: (626) 810-6561

  
	

  Telecopier: (626) 582-1186

  	

   

  	

  Telecopier: (626) 810-6558

  
									

 

11Exhibit

4.12

 

[Arthur Andersen LLP letterhead]
 
 June 27, 2002
 
 Office of the Chief Accountant
 Securities and Exchange Commission
 450 Fifth Street, N.W.
 Washington, D.C. 20549
 
 Dear Sir/Madam:
 
The representations made in this letter are based solely on discussions with and representations from the engagement partner on the audits of the financial statements of this registrant for the two most recent fiscal years.  That individual is no longer with Arthur Andersen LLP.  We have read paragraphs 1 through 6 (as it relates to Arthur Andersen) of Item 4 included in the Form 8-K dated June 27, 2002 of Affinity Group Holding, Inc. filed with the Securities and Exchange Commission and have found no basis for disagreement with the statements contained therein.
 
 Very truly yours,
 
 /s/ Arthur Andersen LLP
 
 Arthur Andersen LLP
 
 cc:  Mark J. Boggess, Sr. Vice President and
       Chief Financial Officer, Affinity Group Holding, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00040-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00040-of-00352.parquet"}]]