Exhibit 2(b)
LOAN AGREEMENT
Dated as of July 7, 1998
ALLIED DEVICES CORPORATION, a Nevada corporation, having its principal
place of business at 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 (the "RC
Borrower"), APPI, INC., a Delaware corporation, having its principal place of
business at Airport Industrial Park, 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxx 00000,
(the "TL Borrower") (the RC Borrower and the TL Borrower, individually, a
"Borrower" and collectively, the "Borrowers") and EMPIRE TYLER CORPORATION, a
Missouri corporation, having its principal place of business at 000 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxx 00000 ("Empire" or a "Guarantor") and THE CHASE
MANHATTAN BANK, as agent for the Lenders (as defined below), a New York banking
corporation, having an office at 0000 Xxxxxxx Xxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000
(the "Agent") and THE CHASE MANHATTAN BANK, a New York banking corporation,
having an office at 0000 Xxxxxxx Xxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Chase" or
a "Lender") hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACQUISITION" means the purchase of certain assets and the assumption of
certain liabilities of Atlantic, pursuant to and subject to the terms and
conditions of the Acquisition Agreement.
"ACQUISITION AGREEMENT" means that certain Asset Purchase Agreement dated
as of July 7, 1998 by and among APPI, Inc., Atlantic Precision Products, Inc.
and Xxxxxx Xxxxxx.
"ADJUSTED LIBOR RATE" means, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded, if not already a whole
multiple of 1/100th of one (.01%) percent to the nearest 1/100th of one (.01%)
percent) equal to the product of (a) the LIBOR Rate and (b) Statutory Reserves.
"AFFILIATE" means, as to any Person (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
twenty (20%) percent or more of any class of voting stock of, or twenty (20%)
percent or more of the equity interest in, such Person; or (iii) a Person twenty
(20%) percent or more of the voting stock of which, or twenty (20%) percent or
more of the equity interest of which, is
directly or indirectly beneficially owned or held by such Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"AGENT" means The Chase Manhattan Bank, or such other Lender as may succeed
to the position of Agent, as provided in this Agreement.
"AGREEMENT" means this Loan Agreement, as amended, supplemented or modified
from time to time.
"AGREEMENT WITH RESPECT TO SELLER NOTES" means the agreement dated as of
July 7, 1998 between the TL Borrower and Atlantic, pursuant to which, under
certain conditions set forth therein, the RC Borrower is obligated to issue
additional common stock to Atlantic.
"ALTERNATE BASE RATE" means, for any day, the higher of (a) the Prime Rate
(computed on the basis of the actual number of days elapsed over a year of 360
days) in effect on such day or (b) the Federal Funds Effective Rate in effect on
such day plus one-half of one (1/2%) percent (computed on the basis of the
actual number of days elapsed over a year of 360 days). For
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purposes of this Agreement, any change in the Alternate Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
on the effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively. If for any reason the Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Federal Funds Effective Rate for any reason, including,
without limitation, the inability or failure of the Agent to obtain sufficient
bids or publications in accordance with the terms thereof, the Alternate Base
Rate shall be determined without regard to clause (b) of the first sentence of
this definition, as appropriate, until the circumstances giving rise to such
inability no longer exist.
"ALTERNATE BASE RATE LOAN" means a Loan bearing interest at the Alternate
Base Rate in accordance with the provisions of Article II hereof.
"APPI EBITDA" means the "EBITDA" of the TL Borrower as such term is defined
and calculated in the Acquisition Agreement.
"APPLICABLE MARGIN" means, with respect to either Revolving Credit Loans or
the Term Loan, the amount of basis points to be added to the Adjusted LIBOR Rate
as provided in Sections 2.05 and 2.09 of this Agreement and as determined
pursuant to Section 2.16 of this Agreement.
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"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the agreement by which a Lender
assigns all or part of its Commitment and its interests in the Loans to another
Lender, as provided in Section 8.07 of this Agreement.
"ATLANTIC" means Atlantic Precision Products, Inc., a Maine corporation.
"BOARD OF GOVERNORS" means the Board of Governors of the Federal Reserve
System of the United States of America.
"BORROWING BASE" means, with respect to the Credit Parties, the sum of (i)
eighty five (85%) percent of Eligible Accounts Receivable PLUS (ii) the lesser
of (x) sixty (60%) percent of Eligible Inventory or (y) $5,000,000.00.
"BORROWING BASE CERTIFICATE" means a certificate of the Chief Executive
Officer(s) or the Chief Financial Officer(s) of each of the Credit Parties
evidencing the Borrowing Base as in effect from time to time, in substantially
the form of Exhibit C annexed hereto.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in New York City, provided that, if the relevant day relates
to a Eurodollar Loan, an Interest Period, or notice with respect to a Eurodollar
Loan, the term "Business Day" shall mean a day on which dealings in dollar
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deposits are also carried on in the London Interbank Market and banks are open
for business in London.
"CAPITAL EXPENDITURES" means, as to any Person, the aggregate amount of any
expenditures (including purchase money debt and purchase money liens) by such
Person for assets (including fixed assets acquired under Capital Leases) which
it is contemplated will be used or usable in fiscal years subsequent to the year
of acquisition.
"CAPITAL LEASE" means a lease which has been or should be, in accordance
with GAAP, capitalized on the books of the lessee.
"CASH PAYMENT" means the amount of the purchase price for the Acquisition
payable in cash by the TL Borrower on the closing date of the Acquisition.
"CHASE LEASE FACILITY" means a lease facility in the original principal
amount of $3,250,000.00, to be made available to the Borrowers by Chase Leasing
and used by the Borrowers for the purchase and/or leasing of equipment,
including the refinancing of Atlantic's indebtedness to Key Bank of Maine.
"CHASE LEASING" means Chase Equipment Leasing, Inc.
"COLLATERAL" means all property which is subject or is to be subject to the
Liens granted by the Security Agreements and the Pledge Agreement.
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"COMMITMENT" means, with respect to each Lender, the obligation of such
Lender to make Revolving Credit Loans to the RC Borrower pursuant to the terms
and subject to the conditions of this Agreement in the aggregate Dollar amount
and Pro Rata Share set forth in Schedule 1.01 annexed hereto, as modified by any
reductions in the Total Commitment or by any assignments of all or any part of
such Lender's Commitment.
"CONSOLIDATED CAPITAL EXPENDITURES" means, as to any Person, the aggregate
amount of Capital Expenditures by such Person and its Consolidated Subsidiaries.
"CONSOLIDATED CURRENT ASSETS" means, as to any Person, at any date, the
aggregate amount of all assets of such Person and its Consolidated Subsidiaries
which would be properly classified as current assets at such date, all computed
and consolidated in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as to any Person, at any date,
the aggregate amount of all liabilities of such Person and its Consolidated
Subsidiaries (including tax and other proper accruals) which would be properly
classified as current liabilities, all computed and consolidated in accordance
with GAAP.
"CONSOLIDATED CURRENT RATIO" means, as to the RC Borrower
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and its Consolidated Subsidiaries, at any date, the ratio of the RC Borrower's
(i) Consolidated Current Assets to (ii) the sum of (x) Consolidated Current
Liabilities plus (y) the outstanding principal amount of Revolving Credit Loans.
"CONSOLIDATED EBITDA" means, as to any Person, for any period, the EBITDA
of such Person and its Consolidated Subsidiaries, computed and consolidated in
accordance with GAAP.
"CONSOLIDATED FIXED CHARGE RATIO" means, as to the RC Borrower and its
Consolidated Subsidiaries, the ratio of (i) the sum of net income (excluding
extraordinary gains) PLUS interest expense PLUS income tax expense for the
period measured PLUS depreciation expense PLUS amortization of intangible assets
MINUS unfunded Capital Expenditures to (ii) the sum of the current portion of
Consolidated Funded Debt PLUS dividends paid PLUS interest expense PLUS the Earn
Out Cash Payments. The Consolidated Fixed Charge Coverage Ratio shall be tested
quarterly, measured for the four (4) fiscal quarters then ended, except for the
current portion of Consolidated Funded Debt, which shall be measured for the
next succeeding four (4) fiscal quarters.
"CONSOLIDATED FUNDED DEBT" means, as to any Person, at any date, the
aggregate of the Funded Debt of such Person and its
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Consolidated Subsidiaries, computed and consolidated in accordance with GAAP.
"CONSOLIDATED LEVERAGE RATIO" means, as to the RC Borrower and its
Consolidated Subsidiaries, the ratio of (i) Consolidated Total Liabilities to
(ii) Consolidated Net Worth.
"CONSOLIDATED NET WORTH" means, as to any Person, at any date, the excess
of such Person's (i) Consolidated Total Assets over (ii) Consolidated Total
Liabilities.
"CONSOLIDATED SENIOR FUNDED DEBT" means, as to any Person, at any date,
such Person's (i) Consolidated Funded Debt MINUS (ii) Consolidated Subordinated
Debt.
"CONSOLIDATED SENIOR FUNDED DEBT TO EBITDA RATIO" means, as to the RC
Borrower and its Consolidated Subsidiaries, the ratio of (i) Consolidated Senior
Funded Debt to (ii) Consolidated EBITDA.
"CONSOLIDATED SUBORDINATED DEBT" means, as to any Person, the aggregate of
the Subordinated Debt of such Person and its Consolidated Subsidiaries, computed
and consolidated in accordance with GAAP.
"CONSOLIDATED SUBSIDIARIES" means, as to any Person, those Subsidiaries of
such Person which are, or are required to be, consolidated with such Person in
the financial statements
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delivered pursuant to Section 5.01(b).
"CONSOLIDATED TOTAL ASSETS" means, as to any Person, at any date, the
aggregate net book value of the assets of such Person and its Consolidated
Subsidiaries after all appropriate adjustments in accordance with GAAP
(including without limitation, reserves for doubtful receivables, obsolescence,
depreciation and amortization and excluding the amount of any write-up or
revaluation of any asset), computed and consolidated in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means, as to any Person, at any date, all
of the liabilities of such Person and its Consolidated Subsidiaries, including
all items which, in accordance with GAAP would be included on the liability side
of the balance sheet (other than capital stock, treasury stock, capital surplus
and retained earnings), computed and consolidated in accordance with GAAP.
"CREDIT PARTIES" means the Borrowers and any other existing or future
operating Subsidiary of either of the Borrowers.
"DEBT" means, as to any Person, all (i) indebtedness or liability of such
Person for borrowed money; (ii) indebtedness of such Person for the deferred
purchase price of property or services (including trade obligations); (iii)
obligations of such
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Person as a lessee under Capital Leases; (iv) current liabilities of such Person
in respect of unfunded vested benefits under any Plan; (v) obligations of such
Person in respect of letters of credit issued for the account of such Person;
(vi) obligations of such Person arising under acceptance facilities; (vii)
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to purchase, to provide
funds for payment, to supply funds to invest in any other Person, or otherwise
to assure a creditor against loss; (viii) obligations secured by any Lien on
property owned by such Person whether or not the obligations have been assumed;
(ix) liabilities of such Person under interest rate protection agreements; (x)
liabilities of such Person under any preferred stock or other preferred equity
instrument which, at the option of the holder or upon the occurrence of one or
more events, is redeemable by such holder, or which, at the option of such
holder is convertible into Debt; (xi) indebtedness of any partnership of which
such Person is a general partner; (xii) the Liability Account; (xiii)
liabilities under the Put Option; and (xiv) all other liabilities recorded as
such, or which should be recorded as such, on such Person's financial statements
in accordance with GAAP.
"DEFAULT" means any of the events specified in Section 6.01
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of this Agreement, whether or not any requirement for notice or lapse of time or
any other condition has been satisfied.
"DOLLARS" AND THE SIGN "$" mean lawful money of the United States of
America.
"EARN OUT CASH PAYMENTS" means the fifty (50%) percent of each Earn Out
Payment required to be paid by the TL Borrower in cash to Atlantic pursuant to
the Acquisition Agreement.
"EARN OUT PAYMENT" means the annual payment to be made by the TL Borrower
to Atlantic pursuant to the Acquisition Agreement, which shall include such
payments to be made by the Earn Out Cash Payments and by the execution and
delivery of the Seller Notes, all of which shall be Subordinated Debt and
subject to the Subordination Agreement.
"EARN OUT PROVISION" means the provision(s) of the Acquisition Agreement
which may require the TL Borrower to make an annual payment, within 90 days of
the first three anniversaries of the closing of the Acquisition (consisting of
the Earn Out Cash Payment and Seller's Notes) to Atlantic equal to 60.2% of APPI
EBITDA for each of the three (3) twelve (12) month periods following the closing
of the Acquisition.
"EBITDA" means as to any Person, for any period, the sum of (i) net income
(excluding extraordinary gains) PLUS (ii) interest
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expense PLUS (iii) tax expense PLUS (iv) depreciation expense PLUS (v)
amortization of intangible assets MINUS (vi) interest income MINUS (vii)
non-cash income items, all measured and/or calculated for the four (4) fiscal
quarters then ended, provided, however, in calculating EBITDA for the TL
Borrower for the periods ending on September 30, 1998, December 31, 1998 and
March 31, 1999, EBITDA shall be calculated for the one, two and three quarter
periods then ended, respectively, and multiplied by 4,2 and 4/3, respectively.
"ELIGIBLE ACCOUNTS RECEIVABLE" means those aggregate accounts receivable of
the Credit Parties which (i) arise in the ordinary course of business, (ii) are
subject to a first, perfected security interest of the Agent and (iii) are
evidenced by an invoice or other documentary evidence reasonably satisfactory to
the Agent provided, however no account receivable shall be an Eligible Account
Receivable if:
(a) it arises out of a sale made by a Credit Party to an Affiliate of such
Credit Party or to a Person controlled by such an Affiliate;
(b) it is due or unpaid more than ninety (90) days after its invoice;
(c) the account receivable is from an account debtor of
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which fifty (50%) percent or more of such account debtor's accounts receivable
are otherwise ineligible hereunder;
(d) any covenant, representation or warranty contained in this Agreement
or any other Loan Document with respect to such account receivable has been
breached in any material respect;
(e) the account debtor has commenced a voluntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or made an assignment
for the benefit of creditors, or a decree or order for relief has been entered
by a court having jurisdiction in the premises in respect of the account debtor
in an involuntary case under any state or federal bankruptcy laws, as now
constituted or hereafter amended, or if any other petition or other application
for relief under any state or federal bankruptcy law has been filed against the
account debtor, or if the account debtor has failed, suspended business, ceased
to be solvent, called a meeting of its creditors, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or for all or
a significant portion of its assets of affairs;
(f) the sale to the account debtor is on a guaranteed sale,
sale-and-return, sale on approval, consignment or any other repurchase or return
basis or is evidenced by chattel paper;
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(g) the account debtor is the United States of America, any state or any
department, agency or instrumentality of the United States of America or any
state;
(h) the account debtor is not domiciled in the United States unless the
payment of such account receivable is secured by an insurance policy (naming the
Agent as loss payee) or a letter of credit from a bank, in each case,
satisfactory to the Agent;
(i) the goods giving rise to such account receivable have not been shipped
and delivered to or have been rejected by the account debtor or the services
giving rise to such receivable have not been performed by the Credit Party or
have been rejected by the account debtor or the account receivable otherwise
does not represent a final sale;
(j) the account debtor is also a creditor or supplier of the Credit Party
or has disputed liability, or has made any claim with respect to any other
account receivable due to the Credit Party, or the account receivable otherwise
is or may become subject to any right of set-off, provided, that only the amount
of such account receivable which is subject to such claim or set-off shall be
ineligible pursuant to this clause (j);
(k) the Credit Party has made any agreement with the account debtor for any
deduction therefrom, (except for discounts or
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allowances made in the ordinary course of business for prompt payment, all of
which discounts or allowances are reflected in the calculation of the face value
of each respective invoice related thereto) provided, that only the amount of
any such deduction shall be ineligible pursuant to this clause (k);
(l) any return, rejection or repossession of the merchandise has occurred;
(m) such account receivable is not payable to one of the Credit Parties;
(n) the Agent, in good faith and in the exercise of its discretion in a
reasonable manner, believes that collection of such account receivable is
insecure or that such account receivable may not be paid by reason of the
account debtor's inability to pay, or the accounts receivable of the account
debtor exceed a credit limit determined by the Agent and the Required Lenders,
in good faith and in the exercise of their discretion in a reasonable manner,
provided that only the amount of such excess shall be ineligible; or
(o) the Agent determines in its reasonable, good faith discretion, that
such account receivable, or such category of accounts receivable, is ineligible.
The Agent and the Required Lenders reserve the right, in their good faith
discretion, on
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thirty (30) days notice to the Credit Parties, based on the results of the Field
Audit to be conducted in accordance with Section 5.01(g), or otherwise in the
exercise of their reasonable, good faith discretion, to revise this definition
of "Eligible Accounts Receivable".
"ELIGIBLE INVENTORY" means the aggregate of all finished goods inventory,
work in progress and raw materials of the Credit Parties, valued at the lower of
cost or market value, determined on a last-in-first-out basis, other than (i)
inventory located at a business premises (x) not owned or leased by a Credit
Party (provided that for inventory kept at a leased location to be considered
eligible the Agent shall have received an acceptable landlord lien waiver) or
(y) not located in the United States, (ii) inventory not subject to a perfected
security interest in favor of the Agent, (iii) goods or materials which would
not be classified as inventory on a balance sheet of a Credit Party prepared in
accordance with GAAP or (iv) any other inventory which does not meet the Agent's
reasonable qualifications or conditions for Eligible Inventory. The Agent and
the Required Lenders reserve the right, on thirty (30) days notice to the Credit
Parties, in their reasonable, good faith discretion, to reclassify inventory as
ineligible inventory.
"EMPLOYMENT AGREEMENT" means the Employment Agreement
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entered into, or to be entered into, between the TL Borrower and the Seller's
Principal pursuant to the Acquisition Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof, all as in effect from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
which together with any other Person would be treated, with such Person, as a
single employer under Section 4001 of ERISA.
"EURODOLLAR LOAN" means a Loan bearing interest at a rate based on the
Adjusted LIBOR Rate in accordance with the provisions of Article II hereof.
"EVENT OF DEFAULT" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"EXISTING CREDIT FACILITY" means the Revolving Credit Agreement dated as of
September 4, 1996 between the RC Borrower and Chase, as it may have been amended
from time to time.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a
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fluctuating interest rate per annum equal, for each day during such period, to
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
(3) federal funds brokers of recognized standing selected by it.
"FUNDED DEBT" means, as to the Borrowers, at any date, any Debt which is
(i) all indebtedness or liability for borrowed money (including the Seller's
Notes) having an original maturity of one (1) year or more (including the
current portion thereof) or which is extendable at the option of the obligor to
a date more than one year from the date of such extension, including, in any
event, all of the outstanding Revolving Credit Loans; (ii) all indebtedness or
liability for the deferred purchase price of property (excluding trade
obligations); (iii) all obligations as a lessee under Capital Leases; (iv) all
obligations to reimburse a letter of credit issuer for the amount of all draws
under letters of credit, (v) all liabilities under any preferred stock which, at
the option of the holder or upon the occurrence of one
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or more certain events, is redeemable by such holder, or which, at the option of
such holder is convertible into Debt and (vi) the Liability Account.
"FIELD AUDIT" means an examination of the accounts receivable and inventory
of the Credit Parties and all other Collateral subject to the Lien of the
Security Agreement, including the books and records relating thereto, conducted
by the Agent or its authorized representatives.
"FUNDED DEBT TO EBITDA RATIO" means, as to the RC Borrower and its
Consolidated Subsidiaries for any period, the ratio of (i) Consolidated Funded
Debt (as of the last day of such period) to (ii) Consolidated EBITDA for such
period. The Funded Debt to EBITDA Ratio shall be measured and tested at the end
of each fiscal quarter and, in the case of Consolidated EBITDA, for a period
covering the four (4) fiscal quarters then ended, provided that in calculating
EBITDA for the TL Borrower, the adjustment described in the definition of
"EBITDA" shall be made.
"GAAP" means Generally Accepted Accounting Principles.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means those generally accepted
accounting principles and practices which are recognized as such by the American
Institute of Certified Public
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Accountants acting through the Financial Accounting Standards Board ("FASB") or
through other appropriate boards or committees thereof and which are
consistently applied for all periods so as to properly reflect the financial
condition, operations and cash flows of a Person, except that any accounting
principle or practice required to be changed by the FASB (or other appropriate
board or committee of the FASB) in order to continue as a generally accepted
accounting principle or practice may be so changed. Any dispute or disagreement
between either of the Borrowers and the Agent relating to the determination of
Generally Accepted Accounting Principles shall, in the absence of manifest
error, be conclusively resolved for all purposes hereof by the written opinion
with respect thereto, delivered to the Agent, of the independent accountants
selected by the RC Borrower and approved by the Agent for the purpose of
auditing the periodic financial statements of the Borrowers.
"GUARANTOR" OR GUARANTORS" means one or more of (i) as to the Revolving
Credit Loans, all interest thereon and all fees and charges owing under this
Agreement in relation thereto, the TL Borrower and Empire and (ii) as to the
Term Loan, all interest thereon and all fees and charges owing under this
Agreement in relation thereto, the RC Borrower and Empire, and as to all other
fees, charges and other amounts owing under this Agreement and
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any other Loan Document, each of the foregoing and any other Person required to
guarantee the obligations of the Borrowers in accordance with Section 5.01(l) of
this Agreement.
"GUARANTY" OR "GUARANTIES" means the guaranty or guaranties executed and
delivered by the Guarantors pursuant to Section 3.01(h) or Section 5.01 (l) of
this Agreement.
"HAZARDOUS MATERIALS" includes, without limit, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or related materials defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery Act, as
amended (42 U.S.C. Sections 9601 et. seq.), and in the regulations adopted and
publications promulgated pursuant thereto, or any other federal, state or local
environmental law, ordinance, rule or regulation.
"INTEREST DETERMINATION DATE" means the date on which an Alternate Base
Rate Loan is converted to a Eurodollar Loan and, in the case of a Eurodollar
Loan, the last day of its Interest Period.
"INTEREST PAYMENT DATE" means (i) as to each Eurodollar Loan
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(x) with Interest Periods of one, two or three months, the last day of such
Interest Period and (y) with Interest Periods of more than three months, the
last Business Day of each calendar quarter during the applicable Interest Period
and the last day of such Interest Period and (ii) as to each Alternate Base Rate
Loan, the last Business Day of each calendar month.
"INTEREST PERIOD" means, as to any Eurodollar Loan, the period commencing
on the date of such Eurodollar Loan and ending on the numerically corresponding
day in the calendar month that is one, two, three, six, nine or twelve months
thereafter, as a Borrower may elect (or, if there is no numerically
corresponding day, on the last Business Day of such month); provided, however,
(i) with respect to a Revolving Credit Loan, no Interest Period shall end later
than the Revolving Credit Maturity Date, (ii) with respect to the Term Loan, no
Interest Period shall end later than the Term Loan Maturity Date, (iii) if any
Interest Period would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
(iv) no Interest Period representing a portion of the principal of the Term Loan
required
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to be paid in accordance with Section 2.04(a) may be selected unless the
outstanding Alternate Base Rate Loans and Eurodollar Loans for which the
relevant Interest Periods end on or prior to the date of such payment are in an
aggregate amount which will be sufficient to make such payment, (v) interest
shall accrue from and including the first day of such Interest Period to but
excluding the date of payment of such interest and (vi) no Interest Period of
particular duration may be selected by a Borrower if the Agent determines, in
its sole discretion, that Eurodollar Loans with such maturities are not
generally available.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate protection
agreement, interest rate future, interest rate option, interest rate cap or
collar or other interest rate hedge arrangement, to or under which the TL
Borrower is a party or becomes a party.
"INVESTMENT" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in
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accordance with customary trade terms in the ordinary course of business) and
any purchase of (i) any security or other equity interest of another Person or
(ii) any business or undertaking of any Person or any commitment or option to
make any such purchase, or any other transaction which is commonly considered an
investment in another Person.
"KEY BANK" means Key Bank National Association, Key Bank of Maine or any of
their Affiliates.
"LENDER" OR "LENDERS" means one or more of the lenders that are, or become,
lenders under, and parties to, this Agreement.
"LIABILITY ACCOUNT" means the liability account on the balance sheet of the
TL Borrower reflecting the liability of the TL Borrower for the Earn Out
Provision.
"LIBOR RATE" means the rate (rounded upwards, if not already a whole
multiple of 1/16th of one (1%) percent, to the next higher of 1/16th of one (1%)
percent) at which dollar deposits approximately equal in principal amount to the
requested Eurodollar Loan and for a maturity equal to the requested Interest
Period are offered in immediately available funds to the London office of the
Agent by leading banks in the London Interbank Market for Eurodollars at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period.
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"LIEN" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority, other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the UCC or comparable
law of any jurisdiction to evidence any of the foregoing.
"LOAN" OR LOANS" means the Revolving Credit Loans or the Term Loan or any
or all of the same as the context may require and includes Alternate Base Rate
Loans and Eurodollar Loans, as the context may require.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Guaranties, the
Security Agreements, the Subordination Agreement, the Pledge Agreement, the
Interest Rate Protection Agreement and any other document executed or delivered
pursuant to this Agreement.
"MATERIAL ADVERSE CHANGE" means, as to any Person, (i) a material adverse
change in the financial condition, business, operations, properties or results
of operations of such Person or
- 26 -
(ii) any event or occurrence which is reasonably likely to have a material
adverse effect on the ability of such Person to perform its obligations under
the Loan Documents.
"MULTIEMPLOYER PLAN" means a Plan described in Section 4001(a)(3) of ERISA
which covers employees of the Borrower or any ERISA Affiliate.
"NOTE" OR "NOTES" means the Revolving Credit Notes or the Term Loan Notes
or any or all of the same as the context may require.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED ACQUISITION" means an acquisition of the stock or assets
(excluding real property) of another Person (an "Acquisition") which meets the
following criteria: (i) one of the Borrowers is the acquiror, (ii) the proposed
acquiree is in the same general line of business as the Borrowers (or the assets
to be acquired are utilized in the same general line of business as the
Borrowers), (iii) the proposed acquiree is incorporated or organized in the
United States, (iv) the Acquisition is to be non-hostile in nature, (v) prior to
and immediately following the Acquisition, there shall not have occurred a
Default or an Event
- 27 -
of Default, (vi) all third party consents and approvals necessary in connection
with the Acquisition shall have been obtained and copies of which shall have
been delivered to the Agent, (vii) evidence that such stock or assets are to be
purchased free and clear of any liens or encumbrances other than any liens or
encumbrances permitted under this Agreement and, in the case of stock, free of
any restrictions other than those acceptable to the Agent and the Required
Lenders, (viii) if the proposed acquiree becomes a Subsidiary of either of the
Borrowers (x) the Agent and its counsel shall be reasonably satisfied with all
issues relating to the validity and adequacy of consideration for such
Subsidiary to guaranty the obligations of the Borrowers and to pledge all of its
assets as Collateral and (y) such Subsidiary shall immediately (a) execute and
deliver its Guaranty of the Borrowers' obligations under this Agreement and the
other Loan Documents in form and substances reasonably satisfactory to the Agent
and its counsel and (b) pledge all of its assets as Collateral to secure the
Borrowers' obligations under this Agreement and the other Loan Documents and
shall execute all such documentation required by the Agent to perfect a first
priority (subject to the Liens permitted by Section 5.02(a) hereof) security
interest in such Collateral, all to be in form and substance reasonably
satisfactory to the Agent and its counsel,
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(ix) evidence that the proposed acquiree is in compliance in all material
respects with all environmental, federal, state and local laws, rules and
regulations with respect to all real estate which is to be acquired by the
acquiror and (x) the aggregate consideration to be paid by the acquiror
(including without limitation, cash, stock, transaction costs, guarantees and
other contingent obligations, assumed liabilities, compensation to be paid to
former shareholders of the acquiree pursuant to any employment agreements,
consulting agreements or non-compete agreements, fees, earn-out provisions, any
deferred portions of the purchase price or any other costs paid in connection
with the Acquisition) (collectively, "Consideration") does not exceed
$2,000,000.00 in aggregate for all such Acquisitions during the term of this
Agreement.
In addition to all Permitted Acquisitions meeting the above criteria, the
Agent shall have received prior to the consummation of said Permitted
Acquisition, for its satisfactory review and approval, the following: (i)
copies of all documentation (including but not limited to financial information
and other information with respect to the Borrowers, the Guarantors, the
proposed acquiree and the proposed transaction, in a level of
- 29 -
detail reasonably satisfactory to the Agent, including evidence of existing and
future compliance with this Agreement) related to the Permitted Acquisition as
may be reasonably required by the Agent; (ii) (a) evidence that the Acquisition
shall not double the Consolidated Total Liabilities (including non-perpetual
preferred stock) and shall not result in a leverage ratio as measured by
Consolidated Total Liabilities (including preferred stock described in clause
(x) of the definition of "Debt") to Consolidated Total Assets ( the "Leverage
Ratio") higher than 50% (for the purposes hereof, Consolidated Total Liabilities
and Consolidated Total Assets shall be of the RC Borrower and its Consolidated
Subsidiaries); or (b) evidence that the Acquisition shall not result in a
Leverage Ratio higher than 75% and shall not cause 25% or more of the
Consolidated Total Liabilities (including preferred stock described in clause
(x) of the definition of "Debt") after the Acquisition to be derived from past
or present buyouts, acquisitions or recapitalizations (for the purposes hereof,
Consolidated Total Liabilities and Consolidated Total Assets shall be of the RC
Borrower and its Consolidated Subsidiaries); and (iii) such other information,
documentation, information (financial or otherwise) or certificates as the Agent
shall reasonably request, all in form and substance reasonably satisfactory to
the Agent.
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"PERMITTED INVESTMENTS" means, (i) direct obligations of the United States
of America or any governmental agency thereof, or obligations guaranteed by the
United States of America, provided that such obligations mature within one year
from the date of acquisition thereof; (ii) time certificates of deposit having a
maturity of one year or less issued by any commercial bank organized and
existing under the laws of the United States or any state thereof and having
aggregate capital and surplus in excess of $1,000,000,000.00; (iii) money market
mutual funds having assets in excess of $2,500,000,000; (iv) commercial paper
rated not less than P-1 or A-1 or their equivalent by Xxxxx'x Investors Service,
Inc. ("Moody's") or Standard & Poor's Corporation (S&P), respectively; (v) tax
exempt securities rated A or better by Moody's or S&P or (vi) loans or advances
made by a Borrower to the other Borrower or a Guarantor or by a Guarantor to a
Borrower or another Guarantor.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity or a federal, state or local
government, or a political subdivision thereof or any agency of such government
or subdivision.
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"PLAN" means any employee benefit plan established, maintained, or to which
contributions have been made by a Borrower or any ERISA Affiliate, including,
without limitation, any employee benefit plan of Atlantic which is assumed by
either Borrower.
"PLEDGE AGREEMENT" means the pledge agreement required to be executed and
delivered by the RC Borrower pursuant to Section 3.01(k) of this Agreement.
"PREPAYMENT EVENT" means the issuance of additional equity securities by
either of the Borrowers, provided that any such issuance of additional equity
securities shall not be considered a Prepayment Event if, at least ninety (90)
days prior to such issuance, the Borrowers provide such information regarding
the proposed issuance, and the use of the proceeds thereof, to the Agent and the
Lenders as they may request, and the Agent and the Lenders shall determine, in
their sole discretion, that the proposed issuance of such additional equity
securities shall not be a Prepayment Event. The determination of the Agent and
the Lenders shall be made and communicated to the applicable Borrower within
fifteen Business Days of the receipt by the Agent and the Lenders of all
information requested by them with respect to such issuance.
"PRIME RATE" means the rate per annum announced by the Agent
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from time to time as its prime rate in effect at its principal office on a
360-day basis; each change in the Prime Rate shall be effective on the date such
change is announced to become effective.
"PROHIBITED TRANSACTION" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from time
to time.
"PRO RATA SHARE" means, with respect to each Lender, its pro rata share of
the initial Total Commitment, as set forth in Schedule 1.01 annexed hereto as
the same may be modified by any assignment of all or any part of such Lender's
Commitment.
"PUT OPTION" means the option on the part of Atlantic to require the RC
Borrower to repurchase certain shares of its common stock pursuant to the Put
Option Agreement.
"PUT OPTION AGREEMENT" means the Option Agreement, dated as of July 7, 1998
between the RC Borrower and Atlantic, pursuant to which the Put Option is
created.
"PUT OPTION PAYMENT" means the payment required to be made by the RC
Borrower upon the exercise of the Put Option.
"REGULATION D" means Regulation D of the Board of Governors, as the same
may be amended and in effect from time to time.
"REGULATION G" means Regulation G of the Board of Governors,
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as the same may be amended and in effect from time to time.
"REGULATION T" means Regulation T of the Board of Governors, as the same
may be amended and in effect from time to time.
"REGULATION U" means Regulation U of the Board of Governors, as the same
may be amended and in effect from time to time.
"REGULATION X" means Regulation X of the Board of Governors, as the same
may be amended and in effect from time to time.
"REPORTABLE EVENT" means any of the events set forth in Section 4043 of
ERISA.
"REQUIRED LENDERS" means (i) at any time there are Loans outstanding, those
Lenders having, in the aggregate, sixty six and two-thirds (66 2/3%) percent of
such Loans and (ii) at any time there are no Loans outstanding, those Lenders
having, in the aggregate, sixty six and two-thirds (66 2/3%) percent of the
Total Commitment.
"REQUIRED PREPAYMENT AMOUNT" means the lesser of (i) one-half (1/2) of the
net proceeds made available to the RC Borrower by the Prepayment Event or (ii)
one-half (1/2) of the then outstanding principal balance of the Term Loan.
"RESTRICTED AFFILIATE" means an Affiliate of a Borrower or any Guarantor
(other than a natural Person) which is engaged in a
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line of business which is the same as, similar to or related to, that engaged in
by the Borrowers.
"REVOLVING CREDIT COMMITMENT" means $10,000,000.00.
"REVOLVING CREDIT LOANS" shall have the meaning given such term in Section
2.07 of this Agreement.
"REVOLVING CREDIT MATURITY DATE" means July 7, 2001.
"REVOLVING CREDIT NOTE" OR "REVOLVING CREDIT NOTES" means one or more, as
the context requires, of the promissory notes of the RC Borrower payable to the
order of each of the Lenders, in substantially the form of Exhibit A annexed
hereto, evidencing the aggregate indebtedness of the RC Borrower to each such
Lender resulting from Revolving Credit Loans made by such Lender to the RC
Borrower pursuant to this Agreement.
"SECURITY AGREEMENT" OR "SECURITY AGREEMENTS" means the security agreement
or security agreements to be executed and delivered pursuant to Section 3.01(i)
or Section 5.01(l) of this Agreement.
"SELLER NOTES" means the promissory notes to be executed and delivered by
the TL Borrower annually to Atlantic pursuant to the Earn Out Provision in the
amount of fifty (50%) percent of the annual Earn Out Payment in a given year.
"SELLER'S PRINCIPAL" means Xxxxxx Xxxxxx.
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"STATUTORY RESERVES" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency, or supplemental reserves)
expressed as a decimal established by the Board of Governors or any other
banking authority to which the Agent is subject with respect to the Adjusted
LIBOR Rate for Eurocurrency Liabilities (as defined in Regulation D). Such
reserve percentages shall include, without limitation, those imposed under such
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or offsets
which may be available from time to time to the Agent under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"SUBORDINATED DEBT" means Debt of any Person, the repayment of which the
obligee has agreed in writing, on terms which have been approved by the Agent
and the Lenders in advance in writing, shall be subordinate and junior to the
rights of the Agent and the Lenders with respect to Debt owing from such Person
to the
- 36 -
Agent and the Lenders, and which, for all purposes of this Agreement, shall
include the Earn Out Payments (including the Earn Out Cash Payments and the
Seller's Notes), the Liability Account and the Put Option Payment.
"SUBORDINATION AGREEMENT" means the subordination agreement to be executed
and delivered pursuant to Section 3.01(n) of this Agreement.
"SUBSIDIARY" means, as to any Person, any corporation, partnership, limited
liability company or joint venture whether now existing or hereafter organized
or acquired (i) in the case of a corporation, of which a majority of the
securities having ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a
contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership, limited
liability company, joint venture or similar entity, of which a majority of the
partnership, membership interests or other ownership interests are at the time
owned by such Person and/or one or more of its Subsidiaries.
"TERM LOAN" shall have the meaning given such term in Section 2.01 of this
Agreement.
"TERM LOAN MATURITY DATE" means the last Business Day of
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December, 2003.
"TERM LOAN NOTE" OR "TERM LOAN NOTES" means one or more, as the context
requires, of the promissory notes of the TL Borrower payable to the order of
each of the Lenders, in substantially the form of Exhibit B annexed hereto,
evidencing the indebtedness of the TL Borrower to each such Lender resulting
from the Term Loan made by such Lender to the TL Borrower pursuant to the
Agreement.
"TOTAL COMMITMENT" means the aggregate of the Commitments of each of the
Lenders and the Term Loan.
"UCC" means the Uniform Commercial Code of the State of New York, as in
effect from time to time.
"YEAR 2000 ISSUE" means the risk of failure of computer software, hardware
and firmware systems and equipment containing embedded computer chips to
properly receive, transmit, process, manipulate, store, retrieve, re-transmit or
in any other way utilize data and information due to the occurrence of the year
2000 or the inclusion of dates on or after January 1, 2000.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
- 38 -
SECTION 1.03. ACCOUNTING TERMS. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under GAAP.
- 39 -
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. THE TERM LOAN. The Lenders agree, severally but not
jointly, on the date of this Agreement, on the terms and conditions of this
Agreement and in reliance upon the representations and warranties set forth in
this Agreement, to lend to the TL Borrower each Lender's Pro Rata Share of the
principal amount of SIX MILLION TWO HUNDRED FIFTY THOUSAND ($6,250,000.00)
Dollars (the "Term Loan"), and the TL Borrower agrees to borrow such amount from
the Lenders by executing and delivering to the Lenders the Term Loan Notes. The
Term Loan, or portions thereof, shall be an Alternate Base Rate Loan or a
Eurodollar Loan (or a combination thereof) as the TL Borrower may request
subject to and in accordance with Section 2.02 and Section 2.14 of this
Agreement. Any Lender may at its option make any Eurodollar Loan by causing a
foreign branch or affiliate of such Lender to make such Loan, provided that any
exercise of such option shall not affect the obligation of the TL Borrower to
repay such Loan in accordance with the terms of such Lender's Term Loan Note.
SECTION 2.02. NOTICE OF INITIAL TERM LOAN DESIGNATIONS. The TL Borrower
may elect to initially designate the Term Loan
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(or a portion thereof) as an Alternate Base Rate Loan or a Eurodollar Loan by
giving the irrevocable notice required by Section 2.08 of this Agreement;
provided, however, that each Eurodollar Loan for any specific Interest Period
shall be in the minimum principal amount of $850,000.00 and in increased
integral multiples of $100,000.00, provided that in no event shall Chase be
required to offer a Eurodollar Loan in a principal amount of less than
$500,000.00.
SECTION 2.03. TERM LOAN NOTES. The Term Loan shall be evidenced by the
Term Loan Notes of the TL Borrower. Each Term Loan Note shall be dated the date
hereof (unless such Term Loan Note is issued pursuant to Section 8.07 hereof),
shall be in each Lender's Pro Rata Share of the Term Loan and shall mature on
the Term Loan Maturity Date at which time the entire outstanding principal
balance and all interest thereon shall be due and payable. The Term Loan Notes
shall be entitled to the benefits and subject to the provisions of this
Agreement.
SECTION 2.04. REPAYMENT OF TERM LOAN NOTES. (a) MANDATORY INSTALLMENT
PAYMENTS. The principal balance of the Term Loan Note shall be payable in twenty
(20) quarterly principal installments, each due on the last Business Day of each
calendar quarter beginning on the last Business Day of March, 1999 and
continuing
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on the last Business Day of each calendar quarter thereafter. Each of the first
four (4) such quarterly principal installments shall be in the amount of
$150,000.00; each of the next four (4) such quarterly principal installments
shall be in the amount of $250,000.00; each of the next eight (8) such quarterly
principal installments shall be in the amount of $312,500.00; each of the next
three (3) such quarterly principal installments shall be in the amount of
$400,000.00; and the twentieth (20th) such quarterly principal installment shall
be in an amount equal to the then outstanding principal balance of the Term Loan
Notes.
(b) MANDATORY PREPAYMENT EVENT. Within five (5) Business Days of the
occurrence of a Prepayment Event, the TL Borrower shall make a prepayment of the
Term Loan in the amount of the Required Prepayment Amount. Any mandatory
prepayment made pursuant to this Section 2.04(b) shall be applied first to all
accrued but unpaid interest on the Term Loan and then to the principal of the
Term Loan. Any such prepayments shall be applied first to Alternate Base Rate
Loans and then to Eurodollar Loans in the order of the nearest expiration of
their respective Interest Periods, provided, however, if at the time of any such
prepayment no Default or Event of Default exists, any amounts to be applied to
Eurodollar Loan shall be held by the Agent in a cash collateral account, for the
benefit of the Lenders, as
- 42 -
security for the Term Loan, and applied to such Eurodollar Loan at the earlier
of (i) a Default or an Event of Default or (ii) the expiration of the relevant
Interest Period(s).
(c) VOLUNTARY PREPAYMENTS. The TL Borrower may make voluntary prepayments
on the Term Loan Notes as permitted by Section 2.15 of this Agreement.
(d) APPLICATION OF PREPAYMENTS. All prepayments of the Term Loan (whether
made voluntarily or required by a Prepayment Event) shall be applied to
installments of the Term Loan Notes in the inverse order of maturity. All
principal payments and prepayments on the Term Loan Notes shall be made to the
Agent for the pro rata distribution to the Lenders.
SECTION 2.05. PAYMENT OF INTEREST ON THE TERM LOAN NOTES. (a) In the
case of an Alternate Base Rate Loan, interest on the Term Loan Notes shall be
payable at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal at all times to the Alternate Base Rate
plus one quarter of one (1/4%) percent. Such interest shall be payable on each
Interest Payment Date, commencing with the first Interest Payment Date after the
date of such Alternate Base Rate Loan, on each Interest Determination Date and
on the Term Loan Maturity Date. Any change in the rate of interest on the Term
Loan Notes
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due to a change in the Alternate Base Rate shall take effect as of the date of
such change in the Alternate Base Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the Adjusted LIBOR Rate plus the Applicable Margin.
Such interest shall be payable on each Interest Payment Date, commencing with
the first Interest Payment Date after the date of such Eurodollar Loan, on each
Interest Determination Date and on the Term Loan Maturity Date. In the event
Eurodollar Loans are available, the Agent shall determine the rate of interest
applicable to each requested Eurodollar Loan for the applicable Interest Period
at 11:00 a.m., New York City time, or as soon as practicable thereafter, two (2)
Business Days prior to the commencement of such Interest Period and shall notify
the TL Borrower and the Lenders of the rate of interest so determined. Such
determination shall be conclusive absent manifest error.
(c) All interest on the Term Loan Notes shall be paid to the Agent for
the pro rata distribution to the Lenders.
SECTION 2.06. USE OF PROCEEDS. The proceeds of the Term Loan shall be
used by the TL Borrower to partially fund the Cash Payment. No part of the
proceeds of the Term Loan may be used
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for any purpose that directly or indirectly violates or is inconsistent with,
the provisions of Regulation G, T, U or X.
SECTION 2.07. THE REVOLVING CREDIT LOANS. The Lenders agree, severally
but not jointly, on the date of this Agreement, on the terms and conditions of
this Agreement and in reliance upon the representations and warranties set forth
in this Agreement, to lend to the RC Borrower prior to the Revolving Credit
Maturity Date such amounts as the RC Borrower may request from time to time
(individually, a "Revolving Credit Loan" or collectively, the "Revolving Credit
Loans"), which amounts may be borrowed, repaid and reborrowed, provided,
however, that the aggregate amount of such Revolving Credit Loans outstanding at
any one time shall not exceed the lesser of (i) the Revolving Credit Commitment,
as it may be reduced from time to time pursuant to Section 2.13 of this
Agreement or (ii) the Borrowing Base, provided that each Lender's Pro Rata Share
of outstanding Revolving Credit Loan shall not exceed such Lender's Commitment.
Each Revolving Credit Loan shall be an Alternate Base Rate Loan or a
Eurodollar Loan (or a combination thereof) as the RC Borrower may request
subject to and in accordance with Section 2.08. Any Lender may at its option
make any Eurodollar Loan by causing a foreign branch or affiliate to make such
Loan, provided
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that any exercise of such option shall not affect the obligation of the RC
Borrower to repay such Loan in accordance with the terms of such Lender's
Revolving Credit Note.
SECTION 2.08. NOTICE OF REVOLVING CREDIT LOANS. (a) The RC Borrower shall
give the Agent irrevocable written, telex, telephonic (immediately confirmed in
writing) or facsimile notice (i) at least two (2) Business Days prior to each
Revolving Credit Loan comprised in whole or in part of one or more Eurodollar
Loans (subject to availability) and (ii) prior to 11:00 a.m. on the day of each
Revolving Credit Loan consisting solely of an Alternate Base Rate Loan. Such
notice shall specify the date of such borrowing, the amount thereof and whether
such Loan is to be (or what portion or portions thereof are to be) an Alternate
Base Rate Loan or a Eurodollar Loan and, if such Loan or any portion thereof is
to consist of one or more Eurodollar Loans, the principal amount or amounts
thereof and Interest Period or Interest Periods with respect thereto. If no
election as to an Interest Period is specified in such notice with respect to
any Eurodollar Loan, the RC Borrower shall be deemed to have selected an
Interest Period of one month's duration and if a Eurodollar Loan is requested
when such Loans are not available, the RC Borrower shall be deemed to have
requested an Alternate Base Rate
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Loan. Each Revolving Credit Loan shall be (i) in the case of each Alternate
Base Rate Loan, in the minimum principal amount of $250,000.00, and in increased
integral multiples of $25,000.00 (except that, if any such Alternate Base Rate
Loan so requested shall exhaust the remaining available Revolving Credit
Commitment, such Alternate Base Rate Loan may be in an amount equal to the
amount of the remaining available Revolving Credit Commitment) or (ii) in the
case of each Eurodollar Loan in the minimum principal amount of $850,000.00 and
in increased integral multiples of $100,000.00, provided that in no event shall
Chase be required to offer a Eurodollar Loan in a principal amount of less than
$500,000.00.
(b) Upon receipt of such notice, the Agent shall promptly notify each
Lender of the contents thereof and of the amount, type and other relevant
information regarding the Loan requested. Thereupon, each Lender shall, not
later than 2:00 p.m. (New York time), transfer immediately available funds equal
to such Lender's Pro Rata Share of the requested borrowing to the Agent, which,
provided the conditions of Sections 3.01 and 3.02 of this Agreement have been
met, and provided the Lenders have made such transfers, shall thereupon transfer
immediately available funds equal to the requested borrowing to the RC
Borrower's account
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with the Agent. If a notice of borrowing is received by the Agent after 11:00
a.m. on a Business Day, such notice shall be deemed to have been given on the
next succeeding Business Day. Any Lender's failure to make any requested Loan
shall not relieve any other Lender of its obligation to make such Loan, but such
other Lender shall not be liable for such failure of the first Lender.
(c) Unless the Agent shall have received notice from a Lender prior to 2:00
p.m. (New York time) on the requested date, that such Lender will not make
available to the Agent the Loan requested to be made on such date, the Agent may
assume that such Lender has made such Loan available to the Agent on such date
in accordance with Section 2.08(b) hereof and the Agent in its sole discretion
may, in reliance upon such assumption, make available to the RC Borrower on such
date a corresponding amount on behalf of such Lender. If and to the extent such
Lender shall not have so made available to the Agent the Loan requested to be
made on such date and the Agent shall have so made available to the RC Borrower
a corresponding amount on behalf of such Lender, such Lender shall, on demand,
pay to the Agent such corresponding amount together with interest thereon, at
the Federal Funds Effective Rate PLUS two (2%) percent, for each day from the
date
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such amount shall have been so made available by the Agent to the RC Borrower
until the date such amount shall have been repaid to the Agent. If such Lender
does not pay such corresponding amount promptly upon the Agent's demand
therefor, the Agent shall promptly notify the RC Borrower and the RC Borrower
shall, with reservation of rights against such Lender, not later than one (1)
Business Day following such notice, repay such corresponding amount to the Agent
together with accrued interest thereon at the applicable rate or rates provided
(i) in Section 2.10 hereof or (ii) if the RC Borrower fails to repay such
corresponding amount within three (3) Business Days after such notice, in
Section 2.25 hereof.
SECTION 2.09. REVOLVING CREDIT NOTES. Each Revolving Credit Loan shall
be evidenced by the Revolving Credit Notes of the RC Borrower. Each Lender's
Revolving Credit Note shall be dated the date hereof (unless such Revolving
Credit Note is issued pursuant to Section 8.07 hereof) and be in the principal
amount of such Lender's Pro Rata Share of the Commitment and shall mature on
the Revolving Credit Maturity Date, at which time the entire outstanding
principal balance and all interest thereon shall be due and payable. The
Revolving Credit Notes shall be entitled to the benefits and subject to the
provisions of this Agreement.
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At the time of the making of each Revolving Credit Loan and at the time of
each payment of principal thereon, each Lender is hereby authorized by the RC
Borrower to make a notation on the schedule annexed to such Lender's Revolving
Credit Note of the date and amount, and the type and Interest Period of the
Revolving Credit Loan or payment, as the case may be. Failure to make a
notation with respect to any Revolving Credit Loan shall not limit or otherwise
affect the obligation of the RC Borrower hereunder or under the Revolving Credit
Notes with respect to such Revolving Credit Loan, and any payment of principal
on the Revolving Credit Notes by the RC Borrower shall not be affected by the
failure to make a notation thereof on said schedule.
SECTION 2.10. PAYMENT OF INTEREST ON THE REVOLVING CREDIT NOTES.
(a) In the case of an Alternate Base Rate Loan, interest shall be payable
at a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) equal to the Alternate Base Rate. Such interest shall
be payable on each Interest Payment Date, commencing with the first Interest
Payment Date after the date of such Alternate Base Rate Loan, on each Interest
Determination Date and on the Revolving Credit Maturity Date. Any change in the
rate of interest on the
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Revolving Credit Notes due to a change in the Alternate Base Rate shall take
effect as of the date of such change in the Alternate Base Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the Adjusted LIBOR Rate plus the Applicable Margin.
Such interest shall be payable on each Interest Payment Date, commencing with
the first Interest Payment Date after the date of such Eurodollar Loan, on each
Interest Determination Date and on the Revolving Credit Maturity Date. In the
event Eurodollar Loans are available, the Agent shall determine the rate of
interest applicable to each requested Eurodollar Loan for each Interest Period
at 11:00 a.m., New York City time, or as soon as practicable thereafter, two (2)
Business Days prior to the commencement of such Interest Period and shall notify
the RC Borrower and the Lenders of the rate of interest so determined. Such
determination shall be conclusive absent manifest error.
SECTION 2.11. USE OF PROCEEDS. The proceeds of the Revolving Credit Loans
shall be used by the RC Borrower (i) to refinance existing indebtedness to
Chase, (ii) to finance the working capital requirements of the Borrowers, (iii)
to partially
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fund the Cash Payment and (iv) to fund all of the closing costs for the
Acquisition. No part of the proceeds of any Loan may be used for any purpose
that directly or indirectly violates or is inconsistent with, the provisions of
Regulations G, T, U or X.
SECTION 2.12. COMMITMENT FEE. The RC Borrower agrees to pay to the Agent,
for the pro rata distribution to the Lenders, from the date of this Agreement
and for so long as the Revolving Commitment remains outstanding, on the last
Business Day of each calendar quarter a commitment fee computed at the rate of
one quarter of one (1/4%) percent per annum (computed on the basis of the actual
number of days elapsed over 360 days) on the average daily unused amount of the
Revolving Credit Commitment, such commitment fee being payable for the calendar
quarter, or part thereof, preceding the payment date.
SECTION 2.13 . REDUCTION OF REVOLVING CREDIT COMMITMENT. Upon at least
three (3) Business Days' written notice to the Agent, the RC Borrower may
irrevocably elect to have the unused Revolving Credit Commitment terminated in
whole or reduced in part provided, however, that any such partial reduction
shall be in a minimum amount of $1,000,000.00, or whole multiples thereof. The
Revolving Credit Commitment, once terminated or reduced, shall not be reinstated
without the express written approval of
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the Agent and the Lenders. Any reduction of the Revolving Credit Commitment
shall be applied pro rata to the respective Commitments of the Lenders.
SECTION 2.14. CONVERSION AND CONTINUATION OF LOANS. Either of the
Borrowers shall have the right, at any time, on such notice to the Agent as is
required pursuant to Section 2.08, (i) to continue any Eurodollar Loan or
portion thereof into a subsequent Interest Period (subject to availability) or
(ii) to convert an Alternate Base Rate Loan into a Eurodollar Loan (subject to
availability), subject to the following:
(a) if a Default or an Event of Default shall have occurred and be
continuing at the time of any proposed conversion or continuation only Alternate
Base Rate Loans shall be available;
(b) in the case of a continuation or conversion of fewer than all Loans,
the aggregate principal amount of each Eurodollar Loan continued or into which a
Loan is converted shall be in the minimum principal amount of $850,000.00 and in
increased integral multiples of $100,000.00, provided that in no event shall
Chase be required to offer a Eurodollar Loan in a principal amount of less than
$500,000.00.
(c) each continuation or conversion shall be effected by each Lender
applying the proceeds of the new Loan to the Loan (or
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portion thereof) being continued or converted;
(d) if the new Loan made as a result of a continuation or conversion shall
be a Eurodollar Loan, the Interest Period with respect thereto shall commence on
the date of continuation or conversion;
(e) each request for a Eurodollar Loan which shall fail to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month and each request for a Eurodollar Loan made when such Loans
are not available shall be deemed to be a request for an Alternate Base Rate
Loan; and
(f) in the event that the Borrower shall not give notice to continue a
Eurodollar Loan as provided above, such Loan shall automatically be converted
into an Alternate Base Rate Loan at the expiration of the then current Interest
Period.
SECTION 2.15. PREPAYMENT. (a) The Borrowers shall have the right at any
time and from time to time, subject to the provisions of this Agreement, to
prepay the Term Loan or any Revolving Credit Loan which is an Alternate Base
Rate Loan, in whole or in part, without premium or penalty on the same day on
which telephonic notice is given to the Agent (immediately confirmed in writing)
of such prepayment provided, however, that each such prepayment shall be on a
Business Day and shall be in a minimum principal amount of $250,000.00 and in
increased integral
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multiples of $25,000.00.
(b) The Borrowers shall have the right at any time and from time to time,
subject to the provisions of this Agreement, to prepay the Term Loan or any
Revolving Credit Loan which is a Eurodollar Loan, in whole or in part, on three
(3) Business Days' prior irrevocable written notice to the Agent, provided,
however, that such prepayment may only be made on an Interest Determination Date
and shall be in a minimum principal amount of $250,000.00 and in increased
integral multiples of $25,000.00.
(c) The notice of prepayment under this Section 2.15 shall set forth the
prepayment date and the principal amount of the Loan being prepaid and shall be
irrevocable and shall commit the Borrower giving such notice to prepay such Loan
by the amount and on the date stated therein. All prepayments shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment. Each prepayment under this Section 2.15 shall be applied
first towards unpaid interest on the amount being prepaid and then towards the
principal in whole or partial prepayment of Loans as specified by the Borrower.
In the absence of such specification, amounts being prepaid shall be applied
first to any Alternate Base Rate Loan then outstanding and then to Eurodollar
Loans in the order of the nearest expiration of
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their respective Interest Periods. In the case of the Term Loan all partial
prepayments of Loans shall be applied to installments of principal of the Term
Loan in the inverse order of maturity.
(d) Notwithstanding anything in this Agreement or the Revolving Credit
Notes to the contrary, if at any time the outstanding Revolving Credit Loans
exceed the Borrowing Base, the RC Borrower shall immediately, without notice or
demand from the Agent, prepay so much of the outstanding Revolving Credit Loans
as exceed the Borrowing Base.
SECTION 2.16 APPLICABLE MARGIN. The Applicable Margin for the Term
Loan (the "TL Applicable Margin")and the Applicable Margin for Revolving Credit
Loans (the "RC Applicable Margin") shall each be determined on the basis of the
RC Borrower's Funded Debt to EBITDA Ratio, as calculated based on the Borrower's
consolidated financial statements for its most recent fiscal year or quarter.
The Agent shall determine the TL Applicable Margin and the RC Applicable Margin
within five (5) Business Days after it has received the financial statements of
the RC Borrower as required by Section 5.01(b)(i) or (ii), as applicable. The
Agent shall promptly notify the Borrowers and the Lenders of such determination,
which shall be conclusive, in the absence of manifest error. The TL Applicable
Margin and the RC Applicable
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Margin shall be determined as follows:
(i) The initial TL Applicable Margin shall be 275 basis points and the
initial RC Applicable Margin shall be 200 basis points, and shall be applicable
until five (5) days after delivery of the RC Borrower's consolidated financial
statements for its fiscal year ending September 30, 1998 pursuant to Section
5.01(b) hereof.
Beginning five (5) days after delivery of the RC Borrower's consolidated
financial statements for the fiscal year ending September 30, 1998, and for each
fiscal year or quarter thereafter:
(ii) If the RC Borrower's Funded Debt to EBITDA Ratio as of the end of such
fiscal year or quarter is less than 1.75 to 1.00, the TL Applicable Margin shall
be 225 basis points and the RC Applicable Margin shall be 150 basis points.
(iii) If the RC Borrower's Funded Debt to EBITDA Ratio as of the end of
such fiscal year or quarter is equal to or greater than 1.75 to 1.00 but less
than or equal to 2.50 to 1.00, the TL Applicable Margin shall be 250 basis
points and the RC Applicable Margin shall be 175 basis points.
(iv) If the RC Borrower's Funded Debt to EBITDA Ratio as of the end of such
fiscal year or quarter is greater than 2.50 to
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1.00, the TL Applicable Margin shall be 275 basis points and the RC Applicable
Margin shall be 200 basis points.
The Applicable Margin for any Eurodollar Loan shall change during the term
of such Eurodollar Loan as a result of this Section 2.16.
In the event that the RC Borrower fails to deliver any financial statements
and the related certificate on the due date therefor set forth in Section
5.01(b)(i) or (ii) hereof, unless an Event of Default is declared as a result of
such failure, the TL Applicable Margin shall be 275 basis points and the RC
Applicable Margin shall be 200 basis points until the RC Borrower delivers all
required financial statements and certificates at which time the TL Applicable
Margin and the RC Applicable Margin shall be redetermined as provided for in
this Section 2.16.
Upon the occurrence and during the continuance of a Default or an Event of
Default the TL Applicable Margin and the RC Applicable Margin may, as a result
of changes in the RC Borrower's Funded Debt to EBITDA Ratio, increase but will
not decrease.
SECTION 2.17. REIMBURSEMENT BY BORROWERS. (a) Each Borrower shall
reimburse the Agent, on behalf of a Lender, upon the Agent's demand, for any
loss, cost or expense incurred or to
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be incurred by it (in such Lender's sole determination) as a result of any
prepayment or conversion (whether voluntarily or by acceleration) of any
Eurodollar Loan other than on the last day of the Interest Period for such Loan,
or if a Borrower fails to borrow a Eurodollar Loan (or is not able to borrow
because of an Event of Default or for any other reason hereunder) after having
given the irrevocable notice of borrowing required by this Agreement. Such
reimbursement shall include, but not be limited to, any loss, cost or expense
incurred by such Lender in obtaining, liquidating or redeploying any funds used
or to be used in making or maintaining the Eurodollar Loan.
SECTION 2.18. STATUTORY RESERVES. It is understood that the cost to the
Lenders of making or maintaining Eurodollar Loans may fluctuate as a result of
the applicability of, or change in, Statutory Reserves. Each Borrower agrees to
pay to the Agent, on behalf of the Lenders from time to time, as provided in
Section 2.19 below, such amounts as shall be necessary to compensate each Lender
for the portion of the cost of making or maintaining any Eurodollar Loans made
by it resulting from any such Statutory Reserves, or change therein, it being
understood that the rates of interest applicable to Eurodollar Loans hereunder
have been determined on the basis of Statutory Reserves in effect at the
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time of determination of the Adjusted LIBOR Rate and that such rates do not
reflect costs imposed on such Lender in connection with any change to such
Statutory Reserves.
SECTION 2.19. INCREASED COSTS. If, after the date of this Agreement, the
adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(i) subjects any Lender to any tax with respect to its Commitment, the
Loans, the Notes or on any amount paid or to be paid under or pursuant to this
Agreement, the Loans or the Notes (other than any tax measured by or based upon
the overall net income of such Bank);
(ii) changes the basis of taxation of payments to a Lender of any
amounts payable hereunder (other than any tax measured by or based upon the
overall net income of such Lender);
(iii) imposes, modifies or deems applicable any reserve, capital
adequacy or deposit requirements against any assets held by, deposits with or
for the account of, or loans made by, a Lender; or
(iv) imposes on a Lender any other condition affecting its Commitment,
the Loans, the Notes or this Agreement; and the
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result of any of the foregoing is to increase the cost to such Lender of
maintaining this Agreement or the Commitment or making the Loans, or to reduce
the amount of any payment (whether of principal, interest or otherwise)
receivable by such Lender or to require such Lender to make any payment on or
calculated by reference to the gross amount of any sum received by it, in each
case by an amount which such Lender in its reasonable judgment deems material,
then and in any such case:
(a) the Lender shall promptly advise the Agent and the applicable Borrower
of such event, together with the date thereof, the amount of such increased cost
or reduction or payment and the way in which such amount has been calculated;
and
(b) the applicable Borrower shall pay to such Lender, within ten (10) days
after the advice referred to in subsection (a) hereinabove, such an amount or
amounts as will compensate such Lender for such additional cost, reduction or
payment for so long as the same shall remain in effect.
The determination of a Lender as to additional amounts payable
pursuant to this Section 2.19 shall be conclusive evidence of such amounts
absent manifest error.
SECTION 2.20. CAPITAL ADEQUACY. If any Lender shall have reasonably
determined that the applicability of any law, rule,
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regulation or guideline, or the adoption after the date hereof of any other law,
rule, regulation or guideline regarding capital adequacy, or any change in any
of the foregoing or in the interpretation or administration of any of the
foregoing by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by such
Lender (or any lending office of such Lender) or such Lender's holding company
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, if any, as a consequence of
its obligations hereunder to a level below that which such Lender or such
Lender's holding company could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies and the policies of
such Lender's holding company with respect to capital adequacy) by an amount
reasonably deemed by such Lender to be material, then from time to time the
applicable Borrower shall pay to such Lender such additional amount or amounts
as will compensate such Lender or such Lender's holding company for any such
reduction suffered.
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SECTION 2.21. CHANGE IN LEGALITY. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in law, rule, regulation, guideline or order, or in the interpretation
thereof by any governmental authority charged with the administration thereof,
shall make it unlawful for any Lender to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by written notice to the Borrowers and the Agent, such
Lender may:
(i) declare that it will not thereafter make Eurodollar Loans
hereunder, whereupon the Borrowers shall be prohibited from requesting such
Eurodollar Loans from such Lender unless such declaration is subsequently
withdrawn; and
(ii) require that, subject to the provisions of Section 2.17, all
outstanding Eurodollar Loans made by such Lender be converted to an
Alternate Base Rate Loan, whereupon all of such Eurodollar Loans shall be
automatically converted to an Alternate Base Rate Loan as of the effective
date of such notice as provided in paragraph (b) below.
(b) For purposes of this Section 2.21, a notice to the Borrowers
by a Lender pursuant to paragraph (a) above shall be effective, for the purposes
of paragraph (a) above, if lawful, and if any Eurodollar Loans shall then be
outstanding, on the
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last day of the then current Interest Period, otherwise, such notice shall be
effective on the date of receipt by the Borrowers.
SECTION 2.22. INDEMNITY. The Borrowers will indemnify the Lenders against
any loss or expense which any Lender may sustain or incur as a consequence of
any default in payment or prepayment of the principal amount of any Loan or any
part thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by notice of prepayment or otherwise), or the occurrence of
any Event of Default, including but not limited to any loss or expense sustained
or incurred in liquidating or re-employing deposits from third parties acquired
to affect or maintain such Loan or any part thereof. When claiming under this
Section 2.22, a Lender shall provide to the Borrowers a statement, signed by an
officer of such Lender, explaining the amount of any such loss or expense
(including the calculation of such amount), which statement shall, in the
absence of manifest error, be conclusive with respect to the parties hereto.
SECTION 2.23. CHANGE IN LIBOR; AVAILABILITY OF RATES. In the event, and
on each occasion, that, on the day the interest rate for any Eurodollar Loan is
to be determined, the Agent shall
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have determined (which determination, absent manifest error, shall be conclusive
and binding upon the Borrowers) that dollar deposits in the amount of the
principal amount of the requested Eurodollar Loan are not generally available in
the London Interbank Market, or that the rate at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to the Lenders of
making or maintaining the principal amount of such Eurodollar Loan during such
Interest Period, such Eurodollar Loan shall be unavailable. The Agent shall, as
soon as practicable thereafter, given written, telex or telephonic notice of
such determination of unavailability to the Borrowers. Any request by a
Borrower for an unavailable Eurodollar Loan shall be deemed to have been a
request for an Alternate Base Rate Loan. After such notice shall have been
given and until the Agent shall have notified the Borrowers that the
circumstances giving rise to such unavailability no longer exist, each
subsequent request for an unavailable Eurodollar Loan shall be deemed to be a
request for an Alternate Base Rate Loan.
SECTION 2.24. AUTHORIZATION TO DEBIT BORROWERS' ACCOUNT. The Agent is
hereby authorized to debit each Borrower's account maintained with the Agent for
(i) all scheduled payments of principal and/or interest under the Notes, (ii)
the Agent's fees and (iii) the commitment fee and all other amounts due
hereunder;
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all such debits to be made on the days such payments are due in accordance with
the terms hereof.
SECTION 2.25. LATE CHARGES, DEFAULT INTEREST. (a) If either Borrower
shall default in the payment of any principal installment of or interest on any
Loan or any other amount becoming due hereunder, the defaulting Borrower shall
pay interest, to the extent permitted by law, on such defaulted amount up to the
date of actual payment (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to two (2%) percent in excess of the highest interest rate otherwise
in effect with respect to any type of Loan then outstanding, and if no Loan is
then outstanding, at a rate equal to the Alternate Base Rate plus two (2%)
percent.
(b) Upon the occurrence and during the continuation of an Event of Default,
the Borrowers shall, at the demand of the Agent and the Required Lenders, each
pay interest on all amounts owing under the Notes and this Agreement (after as
well as before judgment) at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to two (2%) percent
in excess of the highest interest rate otherwise in effect hereunder. The
provisions of this Section 2.25 shall
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be read so as to require the Borrowers to pay the interest rates described in
either (a) or (b), but not both.
SECTION 2.26. PAYMENTS. All payments by the Borrowers hereunder or under
the Notes shall be made in Dollars in immediately available funds at the office
of the Agent by 12:00 noon, New York City time on the date on which such payment
shall be due. Interest on the Notes shall accrue from and including the date of
each Loan to but excluding the date on which such Loan is paid in full or
refinanced with a Loan of a different type.
SECTION 2.27. INTEREST ADJUSTMENTS. (a) If the provisions of this
Agreement or the Notes would at any time otherwise require payment by either of
the Borrowers to the Lenders of any amount of interest in excess of the maximum
amount then permitted by applicable law the interest payments shall be reduced
to the extent necessary so that the Lenders shall not receive interest in excess
of such maximum amount. To the extent that, pursuant to the foregoing sentence,
the Lenders shall receive interest payments hereunder or under the Notes in an
amount less than the amount otherwise provided, such deficit (hereinafter called
the "Interest Deficit") will cumulate and will be carried forward (without
interest) until the termination of this Agreement.
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Interest otherwise payable to the Lenders hereunder and under the Notes for any
subsequent period shall be increased by such maximum amount of the Interest
Deficit that may be so added without causing the Lenders to receive interest in
excess of the maximum amount then permitted by applicable law.
(b) The amount of the Interest Deficit relating to the Term Loan shall be
treated as a prepayment penalty and paid in full at the time of any optional or
voluntary prepayment by the TL Borrower of all or any part of the Term Loan.
The amount of the Interest Deficit relating to the Notes at the time of any
complete payment of the Notes at that time outstanding (other than an optional
or voluntary prepayment thereof) and the termination of the Revolving Credit
Commitment shall be cancelled and not paid.
SECTION 2.28. EXISTING CREDIT FACILITY. Upon the execution of this
Agreement, the Existing Credit Facility is terminated without notice or further
action on the part of the RC Borrower and Chase and all loans thereunder shall
be paid in full or refinanced under this Agreement, provided that any loans
thereunder bearing interest at the "LIBOR Option" (as defined in the Existing
Credit Facility) remain outstanding until the expiration of their respective
interest periods and shall be considered Revolving Credit Loans under this
Agreement.
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITIONS PRECEDENT TO THE MAKING OF THE TERM LOAN AND THE
INITIAL REVOLVING CREDIT LOAN. The obligations of the Lenders to make the Term
Loan and the initial Revolving Credit Loan contemplated by this Agreement are
subject to the condition precedent that the Agent and the Lenders shall have
received from the Borrowers and the Guarantors on or before the date of this
Agreement the following, in form and substance reasonably satisfactory to the
Agent and its counsel:
(a) The Term Loan Notes and the Revolving Credit Notes, each duly executed
by the TL Borrower and the RC Borrower, respectively, and payable to the order
of each of the Lenders.
(b) Certified (as of the date of this Agreement) copies of the resolutions
of the Board of Directors of the TL Borrower and the RC Borrower authorizing the
Term Loan and the Revolving Credit Loans, respectively, and authorizing and
approving this Agreement and the other Loan Documents to which they are a party
and the execution, delivery and performance thereof and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this
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Agreement and the other Loan Documents.
(c) Certified (as of the date of this Agreement) copies of the resolutions
of the Boards of Directors and the shareholders of each of the Guarantors,
authorizing and approving this Agreement, their Guaranties and the other Loan
Documents to which the Guarantors are a party, and the execution, delivery and
performance thereof and certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Agreement, their Guaranties and the other Loan Documents.
(d) A certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of each of the Borrowers certifying: (i) the names and true
signatures of the officer or officers of each Borrower authorized to sign this
Agreement, the Term Loan Notes, the Revolving Credit Notes and the other Loan
Documents to be delivered hereunder on behalf of the Borrowers; and (ii) a copy
of each of the Borrower's by-laws as complete and correct on the date of this
Agreement.
(e) A Certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of each of the Guarantors certifying (i) the names and true
signatures of the officer or officers of the Guarantors authorized to sign this
Agreement,
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their Guaranties and the other Loan Documents to be delivered hereunder on
behalf of the Guarantors; (ii) a copy of each of the Guarantors' by-laws as
complete and correct on the date of this Agreement; and (iii) the stock
ownership of each Guarantor.
(f) Copies of the certificate of incorporation and all amendments thereto
of each of the Borrowers and each of the Guarantors certified in each case by
the Secretary of State (or equivalent officer) of the state of incorporation of
each of the Borrowers and each of the Guarantors and a certificate of existence
and good standing with respect to each of the Borrowers and each of the
Guarantors from the Secretary of State (or equivalent officer) of the state of
incorporation of each of the Borrowers and each of the Guarantors and from the
Secretary of State (or equivalent officer) of all states in which the Borrowers
or the Guarantors are authorized to do business.
(g) An opinion of Xxxxxxx Xxxxx, P.C., counsel for the Borrowers and the
Guarantors as to certain matters referred to in Article IV hereof and as to such
other matters as the Agent or its counsel may reasonably request.
(h) From each of the Guarantors, an executed Guaranty.
(i) From each of the Borrowers and each of the Guarantors, an executed
Security Agreement granting to the Agent, for the
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benefit of the Lenders, a first priority security interest in all assets of the
Borrowers and the Guarantors (except as permitted by Section 5.02(a) hereof and
subject to the rights of Chase Leasing pursuant to an inter-creditor agreement
to be entered into between the Agent and Chase Leasing) including, but not
limited to, all personal property, machinery, equipment, fixtures, inventory,
accounts, chattel paper, licenses, patents, trademarks, copyrights and all
general intangibles, all whether now owned or hereafter acquired.
(j) From each of the Borrowers and each of the Guarantors, UCC-1 filings as
to the Agent's security interests in the Collateral.
(k) From the RC Borrower, an executed Pledge Agreement granting to the
Agent, for the benefit of the Lenders, a first priority security interest in all
of the outstanding shares of stock owned by the RC Borrower in the TL Borrower,
together with stock certificates and executed stock powers for all such shares.
(l) Intentionally Omitted.
(m) Evidence of (i) property damage insurance for all personal property of
the Borrowers and the Guarantors, (ii) liability insurance, (iii) business
interruption insurance and (iv) such other insurance coverage which is usual and
customary
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for businesses of the type engaged in by the Borrowers and the Guarantors, in
each case, naming the Agent, for the benefit of the Lenders, as loss payee or
additional insured, and with an insurance company acceptable to the Agent. The
policies shall provide for thirty (30) days notice to the Agent of cancellation
or change.
(n) From Atlantic an executed Subordination Agreement pursuant to which
Atlantic subordinates (i) the Earn Out Payments (including the Earn Out Cash
Payments and the payments to be made under the Seller's Notes) and (ii) the Put
Option Payments to all amounts owing to the Agent and the Lenders under this
Agreement, the Notes and the other Loan Documents.
(o) A pro forma consolidated and consolidating balance sheet of the RC
Borrower and its Consolidated Subsidiaries as of the date of this Agreement
(which shall include, without limitation, the TL Borrower and shall give effect
to the Acquisition), prepared and certified by the Chief Executive Officer or
the Chief Financial Officer of the RC Borrower and which shall be based upon the
financial statements of the RC Borrower and Atlantic as of March 31, 1998 and
after giving effect to the transactions contemplated by this Agreement and the
Acquisition Agreement, subject to normal year end adjustments and to the
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assumptions and qualifications stated therein, and the review of which shall be
satisfactory to the Agent in all respects.
(p) The audited financial statements of Atlantic for its fiscal years ended
December 31, 1997 and December 31, 1996, the review of which shall be
satisfactory to the Agent in all respects.
(q) The consolidated and consolidating balance sheets, income statements
and cash flow projections of the RC Borrower and its Consolidated Affiliates
(including the TL Borrower) for the fiscal years ending September 30, 1998
through September 30, 2003, prepared under the supervision of the Chief
Financial Officer of the RC Borrower, the review of which shall be satisfactory
to the Agent in all respects.
(r) Evidence that there shall not have occurred a Material Adverse Change
in either of the Borrowers, any Guarantor or Atlantic or in the assets to be
acquired pursuant to the Acquisition Agreement.
(s) A summary schedule (dated within five (5) days of the date of this
Agreement) of aging of accounts receivable (by division and by account) of each
of the Borrowers, each Guarantor and Atlantic, the review of which shall be
satisfactory to the Agent in all respects.
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(t) Evidence that all material third party and governmental consents and
approvals necessary in connection with the transactions and the financings
contemplated by this Agreement and the Acquisition Agreement shall have been
obtained, including without limitation, all consents and approvals of third
parties with regard to the assets and liabilities of Atlantic to be acquired or
assumed by the TL Borrower pursuant to the Acquisition Agreement.
(u) Executed copies of (i) the Acquisition Agreement, (ii) the Put Option
Agreement and (iii) the Employment Agreement and any other employment agreements
and management consulting agreements entered into or to be entered into by
either of the Borrowers, any Guarantor, Atlantic or the Seller's Principal in
connection with the Acquisition, the review of all of which shall be reasonably
satisfactory to the Agent and its counsel in all respects.
(v) Results of all due diligence checkings with regard to each of the
Borrowers, each of the Guarantors and Atlantic, including without limitation,
trade checkings, customer checkings, bank checkings, litigation checkings,
judgment, tax and bankruptcy searches and lien searches, the review of which
shall be satisfactory to the Agent in all respects.
(w) Copies of all material loan or credit agreements of
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either Borrower, any Guarantor or, with respect to any liabilities to be assumed
by the TL Borrower, Atlantic, the review of which shall be satisfactory to the
Agent in all respects.
(x) Evidence of repayment in full of all direct and indirect obligations of
Atlantic to Key Bank which obligations are secured by any of the assets to be
acquired by the TL Borrower, including all equipment lease obligations and the
delivery of executed UCC-3 financing statements by Key Bank terminating any
security interest in any of the assets being acquired by the TL Borrower
pursuant to the Acquisition Agreement.
(y) Copies of appraisals of the equipment being acquired by the TL Borrower
pursuant to the Acquisition Agreement, such appraisals to be performed by
independent appraisers satisfactory to the Agent, evidencing a value
satisfactory to the Agent and otherwise satisfactory to the Agent in all
respects.
(z) Copies of the most recent schedule 5500 for each Plan of the Borrowers,
the Guarantors and Atlantic (if said Plan is to be assumed by the TL Borrower)
and confirmation satisfactory to the Agent that (i) the Plans are funded in
accordance with at least minimum statutory requirements, (ii) no Reportable
Event or Prohibited Transaction has occurred as to any Plan and (ii) no
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termination of, or withdrawal from any of the Plans has occurred or is
contemplated that would result in any liability on the part of either of the
Borrowers, any Guarantor or Atlantic, which liability could result in a Material
Adverse Change in either of the Borrowers, any Guarantor or Atlantic.
(aa) A schedule of all material lease agreements affecting either of the
Borrowers, the Guarantor and Atlantic (if such lease is to be assumed by the TL
Borrower) which schedule shall include, without limitation, the lessor, the
lessee, the term of the lease, the annual lease expenditure, the expiration of
the lease, and whether such lease is an operating or capital lease.
(bb) A schedule of all litigation as provided on Schedule 3.01(bb)
affecting a Borrower, a Guarantor or Atlantic, the review of which shall be
reasonably satisfactory to the Agent in all respects.
(cc) Evidence satisfactory to the Agent that (i) the purchase price for the
Acquisition (as determined on the closing date of the Acquisition) shall not
exceed $14,475,000.00 PLUS the issuance to the Seller of not more than 250,000
shares of the RC Borrower, (ii) the Cash Payment shall not exceed $7,237,500.00
and (iii) the obligation of the RC Borrower to purchase any stock which is
subject to the Put Option shall not exceed
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$1,000,000.00.
(dd) Evidence that the Acquisition shall have been consummated in
accordance with the Acquisition Agreement and in compliance with all laws and
shall be in all respects satisfactory to the Agent and its counsel.
(ee) Review by the Agent of the balance sheet of the TL Borrower as of the
closing date of, and after giving effect to, the Acquisition which review shall
(i) be satisfactory to the Agent in all material respects and (ii) evidence a
positive net worth for the TL Borrower.
(ff) The following statements shall be true and the Agent shall have
received a certificate signed by the Chief Executive officer(s) or Chief
Financial Officer(s) of each of the Borrowers and each of the Guarantors dated
the date hereof, stating that:
(i) The representations and warranties contained in Article IV of this
Agreement and in the Loan Documents are true and correct on and as of such date;
and
(ii) No Default or Event of Default has occurred and is continuing, or
would result from the making of the Term Loan or the initial Revolving Credit
Loan.
(gg) All schedules, documents, exhibits, certificates and other information
provided to the Agent or any of the Banks
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pursuant to or in connection with this Agreement shall be reasonably
satisfactory to the Agent and its counsel in all respects.
(hh) Payment of all fees and expenses of the Agent incurred in connection
with the preparation of this Agreement, and the other Loan Documents and in
connection with the transactions contemplated hereby, including the reasonable
fees and disbursements of counsel for the Agent.
(ii) All legal matters incident to this Agreement and the Loan transactions
contemplated hereby shall be reasonably satisfactory to Cullen and Xxxxxx,
counsel to the Agent.
(jj) Receipt by the Agent of such other approvals, opinions or documents as
the Agent or its counsel may reasonably request.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL REVOLVING CREDIT LOANS. The
obligations of the Lenders to make each Revolving Credit Loan (including the
initial Revolving Credit Loan) shall be subject to the further condition
precedent that on the date of such Revolving Credit Loan:
(a) The following statements shall be true and the Agent shall have
received (by hand delivery, mail or facsimile transmission) a certificate signed
by the Chief Executive Officer(s) or the Chief Financial Officer(s) of each of
the
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Borrowers and each of the Guarantors dated the date of such Revolving Credit
Loan, stating that:
(i) The representations and warranties contained in Article IV of this
Agreement and in the Loan Documents are true and correct on and as of such date
as though made on and as of such date; and
(ii) No Default or Event of Default has occurred and is continuing, or
would result from such Revolving Credit Loan.
(b) If the aggregate outstanding principal amount of Revolving Credit Loans
(after giving effect to the requested Revolving Credit Loan) is equal to or
greater than $5,000,000.00, the Agent shall have received a Borrowing Base
Certificate evidencing availability for the requested Revolving Credit Loan.
(c) The Agent shall have received such other approvals, opinions or
documents as the Agent may reasonably request.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES. On the date hereof and on
each date that the RC Borrower requests a Revolving Credit Loan each of the
Borrowers and each of the Guarantors represent and warrant as follows:
(a) SUBSIDIARIES. On the date hereof, the only Subsidiaries of a Borrower
or a Guarantor are those set forth on Schedule 4.01(a) annexed hereto, which
Schedule accurately sets forth with respect to each such Subsidiary, its name
and address, any other addresses at which it conducts business, its state of
incorporation and each other jurisdiction in which it is qualified to do
business and the identity and share holdings of its stockholders. Except as set
forth on Schedule 4.01(a), all of the issued and outstanding shares of each
Subsidiary which are owned by a Borrower or a Guarantor are owned by such
Borrower or such Guarantor free and clear of any mortgage, pledge, lien or
encumbrance. Except as set forth on Schedule 4.01(a) (or as previously disclosed
to the Agent), there are not outstanding on the date of this Agreement any
warrants, options, contracts or commitments of any kind entitling any Person to
purchase or otherwise acquire any shares of common or capital stock or other
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equity interest of a Borrower, a Guarantor or any Subsidiary of a Borrower or a
Guarantor, nor are there outstanding any securities which are convertible into
or exchangeable for any shares of the common or capital stock of a Borrower, a
Guarantor or any such Subsidiary.
(b) ORGANIZATION; GOOD STANDING. Each of the Borrowers and each of the
Guarantors is a corporation duly incorporated, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation and
each has the corporate power to own its assets and to transact the business in
which it is presently engaged and is duly qualified and is in good standing in
all other jurisdictions where the character or nature of its business requires
such qualification.
(c) DUE EXECUTION, ETC. The execution, delivery and performance by each of
the Borrowers and each of the Guarantors of the Loan Documents to which they are
a party are within the Borrowers' and the Guarantors' corporate power and have
been duly authorized by all necessary corporate action and do not and will not
(i) require any further consent or approval of the stockholders of the Borrowers
or Guarantors; (ii) do not contravene the Borrowers' or the Guarantors'
certificates of incorporation, charters or by-laws; (iii) violate any provision
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of or any law, rule, regulation, contractual restriction, order, writ, judgment,
injunction, or decree, determination or award binding on or affecting a Borrower
or any Guarantor; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement, or any other agreement, lease or
instrument to which a Borrower or any Guarantor is a party or by which it or its
properties may be bound or affected; and (v) result in, or require, the creation
or imposition of any Lien (other than the Lien of the Loan Documents) upon or
with respect to any of the properties now owned or hereafter acquired by a
Borrower or any Guarantor.
(d) NO CONSENTS REQUIRED. No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by a Borrower or any
Guarantor of any Loan Document to which it is a party, except authorizations,
approvals, actions, notices or filings which have been obtained, taken or made,
as the case may be.
(e) VALIDITY AND ENFORCEABILITY. The Loan Documents when delivered
hereunder will have been duly executed and delivered on behalf of each Borrower
and each Guarantor, as the case may be, and will be legal, valid and binding
obligations of each Borrower and each Guarantor, as the case may be, enforceable
against each
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Borrower or such Guarantor in accordance with their respective terms.
(f) FINANCIAL STATEMENTS. The audited consolidated (and unaudited
consolidating) financial statements of the RC Borrower and its Consolidated
Subsidiaries for the fiscal year ended September 30, 1997, and the unaudited
consolidated and consolidating financial statements of the RC Borrower and its
Consolidated Subsidiaries for the six (6) month interim period ended March 31,
1998, copies of which have been furnished to the Agent and the Lenders, fairly
present the financial condition of the RC Borrower and its Consolidated
Subsidiaries as at such dates and the results of operations of the RC Borrower
and its Consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP, and since September 30, 1997 there has been (i) no
material increase in the liabilities of the RC Borrower and its Consolidated
Subsidiaries and (ii) no Material Adverse Change in the RC Borrower and its
Consolidated Subsidiaries.
(g) PRO FORMA FINANCIAL STATEMENTS. (a) The pro-forma consolidated and
consolidating balance sheet of the RC Borrower and its Consolidated Subsidiaries
as of the date of this Agreement (which shall include, without limitation, the
TL
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Borrower after giving effect to the Acquisition), prepared and certified by the
Chief Executive Officer or the Chief Financial Officer of the RC Borrower based
upon the financial statements of each of the RC Borrower and Atlantic as of
March 31, 1998, fairly reflect the transactions contemplated by the Acquisition
Agreement and this Agreement, subject to normal year end adjustments and to the
assumptions and qualifications stated therein.
(b) All of the balance sheet, income statement and cash flow
projection scenarios of the RC Borrower and its Consolidated Subsidiaries for
the fiscal years ending September 30, 1998 through September 30, 2003 provided
to the Agent, have been prepared on the basis of sound financial planning
practice and the RC Borrower believes they are correct and not misleading in any
material respect.
(h) NO LITIGATION. There is no pending or, to the knowledge of the
Borrowers and the Guarantors, any threatened action, proceeding or
investigation affecting either Borrower, any Guarantor or any Subsidiary of a
Borrower or a Guarantor, before any court, governmental agency or arbitrator,
which may either in one case or in the aggregate, (i) result in a Material
Adverse Change in such Borrower, such Guarantor or any such Subsidiary,
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(ii) materially and adversely affect the Collateral or (iii) materially and
adversely affect the Acquisition.
(i) TAXES. Each Borrower, each Guarantor and each Subsidiary of a Borrower
or a Guarantor have filed all federal, state and local tax returns required to
be filed and have paid all taxes, assessments and governmental charges and
levies shown thereon to be due, including interest and penalties, except for any
such taxes being contested in good faith, for which adequate reserves are being
maintained in accordance with GAAP and for which no enforcement proceedings have
begun.
(j) LICENSES, ETC. The Borrower, each Guarantor and each Subsidiary of a
Borrower or a Guarantor possess all licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and, to the knowledge of the Borrowers and the Guarantors,
neither Borrower, nor any Guarantor nor any such Subsidiary are in violation of
any similar rights of others.
(k) BURDENSOME AGREEMENTS. Neither Borrower nor any Guarantor is a party to
any indenture, loan or credit agreement or any other agreement, lease or
instrument or subject to any charter or corporate restriction which is
reasonably likely to
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result in a Material Adverse Change in such Borrower or any Guarantor. Neither
Borrower nor any Guarantor nor any such Subsidiary is in default in any respect
in the performance, observance, or fulfillment of any of the obligations or
covenants contained in any agreement or instrument material to its business.
(l) MARGIN STOCK. Neither Borrower is engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulation G, T, U or X), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or in any other way which will cause
a Borrower to violate the provisions of Regulations G, T, U or X.
(m) COMPLIANCE WITH LAWS. Each Borrower, each Guarantor and each Subsidiary
of a Borrower or a Guarantor is in all material respects in compliance with all
federal and state laws and regulations in all jurisdictions where the failure to
comply with such laws or regulations could result in a Material Adverse Change
in such Borrower, such Guarantor or any such Subsidiary.
(n) ERISA. Each Borrower, each Guarantor, each Subsidiary of the Borrower
or a Guarantor and each ERISA Affiliate are in
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compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred and is
continuing with respect to any Plan; no notice of intent to terminate a Plan has
been filed nor has any Plan been terminated; no circumstances exist which
constitute grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administrate, a Plan, nor has
the PBGC instituted any such proceedings; neither Borrower, nor any Guarantor,
nor any Subsidiary of a Borrower or a Guarantor, nor any ERISA Affiliate has
completely or partially withdrawn under Sections 4201 or 4204 of ERISA from a
Multiemployer Plan; each Borrower, each Guarantor, each Subsidiary of a Borrower
or a Guarantor and each ERISA Affiliate have met their minimum funding
requirements under ERISA with respect to all of their Plans and the present fair
market value of all Plan assets exceeds the present value of all vested benefits
under each Plan, as determined on the most recent valuation date of the Plan in
accordance with the provisions of ERISA for calculating the potential liability
of a Borrower, a Guarantor, any such Subsidiary or any ERISA Affiliate to PBGC
or the Plan under Title IV of ERISA; and neither Borrower, nor any Guarantor,
nor any such Subsidiary, nor any ERISA Affiliate has incurred any material
liability to the PBGC under ERISA.
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(o) HAZARDOUS MATERIALS. Each Borrower, each Guarantor and each Subsidiary
of a Borrower or a Guarantor is in compliance in all material aspects with all
federal, state or local laws, ordinances, rules, regulations or policies
governing Hazardous Materials and neither Borrower, nor any Guarantor nor any
such Subsidiary has used Hazardous Materials on, from, or affecting any property
now owned or occupied by a Borrower, a Guarantor or any such Subsidiary in any
manner which violates federal, state or local laws, ordinances, rules,
regulations or policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous
Materials, and that to the Borrowers', Guarantors' and such Subsidiaries'
knowledge, no prior owner of any such property or any tenant, subtenant, prior
tenant or prior subtenant has used Hazardous Materials on, from or affecting
such property in any manner which violates in any material respect federal,
state or local laws, ordinances, rules, regulations, or policies governing the
use, storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials.
(p) USE OF PROCEEDS. The proceeds of the Term Loan and the Revolving Credit
Loans shall be used exclusively for the purposes
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set forth in Sections 2.06 and 2.11 hereof.
(q) TITLE TO ASSETS; LIENS. Each Borrower and each Guarantor has good and
marketable title to all of its properties and assets, subject only to the Liens
permitted by Section 5.02(a) of this Agreement.
(r) CASUALTY. Neither the business nor the properties of the Borrowers, the
Guarantors or any Subsidiary of a Borrower or a Guarantor are affected by any
fire, explosion, accident, strike, hail, earthquake, embargo, act of God or of
the public enemy, or other casualty (whether or not covered by insurance), which
could result in a Material Adverse Change in a Borrower, a Guarantor or any such
Subsidiary.
(s) PRIORITY OF LIENS. Except as set forth in Schedule 4.01(s) or as
permitted by Section 5.02(a) hereof, the Lien on the Collateral created by the
Security Agreements constitute valid first priority perfected security interests
in favor of the Agent, for the benefit of the Lenders.
(t) SOLVENCY. Immediately after the consummation of the Acquisition and
the closing and funding of each of the Loans (and after giving effect to the
application of the proceeds thereof): (a)(i) the fair value of the assets of the
RC Borrower and its
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Consolidated Subsidiaries, on a consolidated basis, will exceed their debts and
liabilities (subordinated, contingent or otherwise); (ii) the present fair
saleable value of the property of the RC Borrower and its Consolidated
Subsidiaries, on a consolidated basis, will be greater than the amount required
to pay the probable liability of their debts and other liabilities
(subordinated, contingent or otherwise) as such debts and other liabilities
mature; (iii) the RC Borrower and its Consolidated Subsidiaries, on a
consolidated basis, will be able to pay their debts and liabilities
(subordinated, contingent or otherwise) as such debts and liabilities mature;
and (iv) the RC Borrower and its Consolidated Subsidiaries, on a consolidated
basis, will not have unreasonably small capital to conduct the businesses in
which they are engaged; (b)(i) each Borrower and Guarantor will be able to pay
its debts and liabilities (subordinated, contingent or otherwise) as such debts
and liabilities mature; and (ii) each Borrower and Guarantor will not have
unreasonably small capital to conduct the business in which it is engaged; and
(c) each Borrower and each Guarantor shall have a positive net worth.
(u) ADVANTAGE TO GUARANTORS. The Guarantors each acknowledge they have
derived or expect to derive a financial or other advantage from the Loans
obtained by the Borrowers from the
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Lenders.
(v) CREDIT AGREEMENTS. Schedule 4.01(v) is a complete and correct list of
all credit agreements, indentures, purchase agreements, guaranties, Capital
Leases, and other investments, agreements and arrangements presently in effect
providing for or relating to extensions of credit (including agreements and
arrangements for the issuance of letters of credit or for acceptance financing)
in respect of which a Borrower or a Guarantor is in any manner directly or
contingently obligated, and the maximum principal or face amounts of the credit
in question, outstanding or to be outstanding, are correctly stated, and all
Liens of any nature given or agreed to be given as security therefor are
correctly described or indicated in such Schedule. Neither Borrower nor any
Guarantor is in default with respect to its obligations under any agreements
described herein.
(w) YEAR 2000 ISSUE. Any reprogramming required to permit the proper
functioning, in and following the year 2000, of (i) the Borrower's and the
Guarantors' computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which a Borrower's
or a Guarantor's systems interface) and the testing of all such systems and
equipment, as so reprogrammed, will be completed by
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January 1, 1999. The cost to the Borrowers and the Guarantors of such
reprogramming and testing and of the reasonably foreseeable consequences of year
2000 to the Borrowers and the Guarantors (including, without limitation,
reprogramming errors and the failure of others' systems or equipment) will not
result in a Default or a Material Adverse Change or any material adverse change
in the prospects of a Borrower or a Guarantor. Except for such of the
reprogramming referred to in the preceding sentence as may be necessary, the
computer and management information systems of the Borrowers and the Guarantors
are and, with ordinary course upgrading and maintenance, will continue for the
term of this Agreement to be, sufficient to permit each Borrower and each
Guarantor to conduct its business without Material Adverse Change or any
material adverse change in the prospects of a Borrower or a Guarantor.
(x) THE ACQUISITION. The RC Borrower has heretofore delivered to the
Agent a true, correct and complete copy of the Acquisition Agreement. The
Borrowers have, concurrently with the execution and delivery of this Agreement,
consummated the Acquisition pursuant to the Acquisition Agreement, and the
Acquisition Agreement sets forth the entire agreement among the parties thereto
with respect to the subject matter thereof. Except as set forth in Schedule
4.01(x), no party to the Acquisition Agreement
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has waived the fulfillment of any material condition precedent set forth therein
to the consummation of the Acquisition, no party has failed to perform any of
its obligations thereunder or under any instrument or document executed and
delivered in connection therewith, and nothing has come to the attention of
either of the Borrowers which would cause either of them to believe that any of
the representations or warranties of Atlantic contained in the Acquisition
Agreement were false or misleading when made or when reaffirmed on the date
hereof. No consent or approval, authorization or declaration of any
governmental authority, bureau or agency is or will be required in connection
with the Acquisition. Neither the execution and delivery of the Acquisition
Agreement, nor the performance of the Borrowers' obligations thereunder, will
violate any provision of law or will conflict with or result in a breach of, or
create (with or without the giving of notice or lapse of time, or both) a
default under, any agreement to which either Borrower or any Guarantor is a
party or by which it is bound or any of its properties is affected. The TL
Borrower has acquired by virtue of the consummation of the Acquisition and now
has valid, legal and marketable title to the Atlantic assets to be acquired
pursuant to the Acquisition Agreement, free and clear of any Lien, except for
the Liens created and granted by the Loan Documents and as permitted by Section
5.02(a) of this Agreement.
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ARTICLE V
COVENANTS OF THE BORROWERS AND THE
GUARANTORS
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any amount shall remain
outstanding under the Term Loan Notes, or the Revolving Credit Notes, or so long
as the Revolving Credit Commitment shall remain in effect, the Borrowers and the
Guarantors will, unless the Agent and the Required Lenders shall otherwise
consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply, and cause each Subsidiary of a
Borrower or a Guarantor to comply, in all material respects with all applicable
laws, rules, regulations and orders, where the failure to so comply could result
in a Material Adverse Change in Borrower, a Guarantor or any such Subsidiary.
(b) REPORTING REQUIREMENTS. Furnish to the Agent and the Banks: (i) ANNUAL
FINANCIAL STATEMENTS. As soon as available and in any event within one hundred
twenty (120) days after the end of each fiscal year of the RC Borrower, a copy
of the audited consolidated financial statements of the RC Borrower and its
Consolidated Subsidiaries for such year, including balance sheets with related
statements of income and retained earnings and
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statements of cash flows, and consolidating statements and schedules all in
reasonable detail and setting forth in comparative form the figures for the
previous fiscal year, together with an unqualified opinion on such consolidated
statements, prepared by independent certified public accountants selected by the
RC Borrower and satisfactory to the Agent and the Required Lenders, all such
financial statements to be prepared in accordance with GAAP.
(ii) QUARTERLY FINANCIAL STATEMENTS. (1) As soon as available and in any
event within sixty (60) days after the end of each of the first three fiscal
quarters of each fiscal year of the RC Borrower, a copy of the consolidated and
consolidating financial statements of the RC Borrower and its Consolidated
Subsidiaries for such quarter, including a balance sheet with related statements
of income and retained earnings and a statement of cash flows, all in reasonable
detail and setting forth in comparative form the figures for the comparable
quarter for the previous fiscal year, prepared under the supervision of, and
certified by, the Chief Executive Officer or the Chief Financial Officer of the
RC Borrower all such financial statements to be prepared in accordance with
GAAP.
(iii) MANAGEMENT LETTERS. Promptly upon receipt thereof, copies of any
reports submitted to a Borrower or Guarantor by
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independent certified public accountants in connection with the examination of
the financial statements of the Borrowers and the Guarantors made by such
accountants.
(iv) CERTIFICATE OF NO DEFAULT; APPLICABLE MARGIN. Simultaneously with the
delivery of the financial statements referred to in Section 5.01(b)(i) and (ii),
a certificate of the Chief Executive Officer or the Chief Financial Officer of
the RC Borrower (1) certifying that no Default or Event of Default has occurred
and is continuing, or if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto; (2) with computations demonstrating
compliance with the covenants contained in Section 5.03; and (3) with
computations evidencing the Funded Debt to EBITDA Ratio.
(v) INVENTORY REPORT. Beginning with the month ended September 30, 1999 and
for each month thereafter, within fifteen (15) days of the end of each month, an
inventory report, by location, including finished goods, actual work in progress
and raw materials, provided, however, that the Borrowers shall use their best
efforts to provide such report to the Agent for the month ended June 30, 1999
and each month thereafter.
(vi) BORROWING BASE CERTIFICATE. Simultaneously with the
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delivery of the financial statements referred to in Sections 5.01(b)(i) and
(ii), a Borrowing Base Certificate, together with a summary (by division of each
Credit Party and by account) accounts receivable aging schedule. In addition,
at such times as the principal amount of Revolving Credit Loans is equal to or
in excess of $5,000,000.00, the Borrowing Base Certificate and accounts
receivable aging schedule shall be delivered monthly, within fifteen (15) days
of the end of each calendar month.
(vii) REPORT ON EARN OUT PROVISION. (a) Not later than September 20th of
each year, but in any event at least ten (10) days prior to any Earn Out Payment
being made, a certificate of the Chief Executive Officer or the Chief Financial
Officer of the RC Borrower, stating that, and based on a review of the
Borrower's and the Guarantors' activities during the period from the prior June
30th until the date of such certificate and the revenues, margins, and
extraordinary items, if any, of the Borrowers and the Guarantors during such
period, (x) no breach of any covenant set forth in Section 5.01 or 5.02 has
occurred and (y) to the best of such officer's knowledge, no breach of any
covenant set forth in Section 5.03 has occurred and no other Default or Event of
Default has occurred, or will occur, whether as a result of the Earn Out
Payment, or otherwise, (b) not later
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than the date on which the Earn Out Payment is made, copies of the reports and
calculations provided to Atlantic pursuant to the Acquisition Agreement
supporting the calculation of the Earn Out Payment and (c) on the date any of
the Seller Notes is delivered to the payee thereof a copy of such note.
(viii) NOTICE OF LITIGATION. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting a Borrower, a Guarantor or any Subsidiary of a Borrower or a
Guarantor which, (1) relates to any Loan Documents or (2) if determined
adversely to such Borrower, such Guarantor or any such Subsidiary could result
in a Material Adverse Change in the Borrower, any Corporate Guarantor or any
such Subsidiary.
(ix) NOTICE OF DEFAULTS AND EVENTS OF DEFAULT. As soon as possible and in
any event within five (5) Business Days after either Borrower has knowledge of a
Default or Event of Default, a written notice setting forth the details of such
Default or Event of Default and the action which is proposed to be taken by the
Borrowers with respect thereto.
(x) ERISA REPORTS. Promptly after the filing or receiving
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thereof, copies of all reports, including annual reports, and notices which a
Borrower, a Guarantor or any Subsidiary of a Borrower or a Guarantor files with
or receives from the PBGC, the Internal Revenue Service or the U.S. Department
of Labor under ERISA; and as soon as possible after a Borrower, a Guarantor or
any such Subsidiary knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that the PBGC or
a Borrower, a Guarantor or any such Subsidiary has instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, the RC Borrower will
deliver to the Agent and the Lenders a certificate of the Chief Executive
Officer or the Chief Financial Officer of the RC Borrower setting forth details
as to such Reportable Event or Prohibited Transaction or Plan termination and
the action the RC Borrower proposes to take with respect thereto;
(xi) ENVIRONMENTAL NOTICES. Promptly after the receipt thereof, a copy of
any claim, summons, charge or other notice to a Borrower, a Guarantor or any
Subsidiary of a Borrower or a Guarantor regarding compliance (or failure to
comply) with any federal, state or local laws governing Hazardous Materials.
(xii) MATERIAL ADVERSE CHANGE. Promptly, upon the occurrence thereof,
notice of a Material Adverse Change in a Borrower, a
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Guarantor or any Subsidiary of a Borrower or a Guarantor.
(xiii) REPORTS TO OTHER CREDITORS. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other party pursuant to the
terms of any indenture, loan, or credit or similar agreement and not otherwise
required to be furnished to the Agent and the Lenders pursuant to any other
clause of this Section 5.01(b).
(xiv) PROXY STATEMENTS, ETC. Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements and reports which a
Borrower or a Guarantor sends to its public stockholders, if any, and copies of
all regular, periodic, and special reports, and all final registration
statements which a Borrower or a Guarantor files with the Securities and
Exchange Commission or any governmental authority which may be substituted
therefor, or with any national securities exchange.
(xv) NOTICE OF AFFILIATES. Promptly after any Person becomes an Affiliate
of a Borrower or a Guarantor, notice to the Agent and the Banks of such
Affiliate.
(xvi) GENERAL INFORMATION. Such other information respecting the
condition or operations, financial or otherwise, of a Borrower, a Guarantor or
any Subsidiary of a Borrower or a Guarantor as the Agent or any Lender may from
time to time
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reasonably request.
(c) TAXES. Pay and discharge, and cause its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges upon it or them, its
or their income and its or their properties prior to the dates on which
penalties are attached thereto, unless and only to the extent that (i) such
taxes shall be contested in good faith and by appropriate proceedings by a
Borrower, a Guarantor or any such Subsidiary, as the case may be; (ii) there be
adequate reserves therefor in accordance with GAAP entered on the books of such
Borrower, such Guarantor or any such Subsidiary; and (iii) no enforcement
proceedings against such Borrower, such Guarantor or any such Subsidiary have
been commenced.
(d) CORPORATE EXISTENCE. Preserve and maintain, and cause its Subsidiaries
to preserve and maintain, their corporate existence and good standing in the
jurisdiction of their incorporation and the rights, privileges and franchises of
each Borrower, each Guarantor and each such Subsidiary in each case where
failure to so preserve or maintain could result in a Material Adverse Change in
such Borrower, such Guarantor or such Subsidiary.
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(e) MAINTENANCE OF PROPERTIES AND INSURANCE. (i) Keep, and cause any
Subsidiaries to keep, the respective properties and assets (tangible or
intangible) that are necessary in its business, in good working order and
condition, reasonable wear and tear excepted; (ii) maintain, and cause any
Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in similar businesses and owning
properties doing business in the same general areas in which each Borrower, each
Guarantor and any such Subsidiary operates; and (iii) cause the Agent, for the
benefit of the Lenders, to be named as loss payee and/or additional insured on
any such insurance policies.
(f) BOOKS OF RECORD AND ACCOUNT. Keep, and cause any Subsidiaries to keep,
adequate records and proper books of record and account in which complete
entries will be made in a manner to enable the preparation of financial
statements in accordance with GAAP, reflecting all financial transactions of the
Borrowers, the Guarantors, and any such Subsidiaries.
(g) VISITATION; FIELD EXAMINATION. (a) At any reasonable time, and from
time to time, permit the Agent or any agents or representatives thereof, to
examine and make copies of and abstracts from the books and records of, and
visit the properties
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of, a Borrower or a Guarantor and to discuss the affairs, finances and accounts
of a Borrower or a Guarantor with any of the respective officers or directors of
such Borrower or such Guarantor or such Borrower's or such Guarantor's
independent accountants.
(b) At reasonable times and on reasonable notice, permit the Agent to
conduct a Field Audit, the reasonable cost of which, along with all other
reasonable collateral monitoring expenses will be paid by the Borrowers.
Provided no Default or Event of Default has occurred, only one (1) such Field
Audit shall be performed each calendar year. The first such Field Audit shall
be performed after January 15, 1999.
(h) PERFORMANCE AND COMPLIANCE WITH OTHER AGREEMENTS. Perform and comply,
and cause any Subsidiary of a Borrower or a Guarantor to perform and comply,
with each of the provisions of each and every agreement the failure to perform
or comply with which could result in a Material Adverse Change in a Borrower, a
Guarantor or any such Subsidiary.
(i) CONTINUED PERFECTION OF LIENS AND SECURITY INTEREST. At the request of
the Agent, record or file or rerecord or refile the Loan Documents or a
financing statement or any other filing or recording or refiling or rerecording
in each and every office
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where and when necessary to preserve and perfect the security interests of the
Loan Documents.
(j) PENSION FUNDING. Comply with the following and cause each ERISA
Affiliate of a Borrower, a Guarantor or any Subsidiary of a Borrower or a
Guarantor to comply with the following:
(i) engage solely in transactions which would not subject any of such
entities to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in
either case in an amount in excess of $100,000.00;
(ii) make full payment when due of all amounts which, under the
provisions of any Plan or ERISA, a Borrower, a Guarantor, any such
Subsidiary or any ERISA Affiliate of any of same is required to pay as
contributions thereto;
(iii) all applicable provisions of the Internal Revenue Code and the
regulations promulgated thereunder, including but not limited to Section
412 thereof, and all applicable rules, regulations and interpretations of
the Accounting Principles Board and the Financial Accounting Standards
Board;
(iv) not fail to make any payments in an aggregate amount greater than
$100,000.00 to any Multiemployer Plan
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that a Borrower, a Guarantor, any such Subsidiary or any ERISA Affiliate
may be required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(v) not take any action regarding any Plan which could result in the
occurrence of a Prohibited Transaction.
(k) LICENSES. Maintain at all times, and cause each Subsidiary of a
Borrower or a Guarantor to maintain at all times, all licenses or permits
necessary to the conduct of its business or as may be required by any
governmental agency or instrumentality thereof.
(l) NEW SUBSIDIARIES AND RESTRICTED AFFILIATES. Promptly cause any
Subsidiary or Restricted Affiliate of a Borrower or a Guarantor formed after the
date of this Agreement (i) to become a Guarantor of all obligations of the
Borrowers to the Agent and the Lenders, whether incurred under this Agreement or
otherwise and to secure its obligations as a Guarantor by granting to the Agent,
for the benefit of the Lenders, a first priority security interest in all
personal property of such Subsidiary or Restricted Affiliate and (ii) become a
party to this Agreement.
(m) AGENT'S ADMINISTRATIVE FEE. Pay to the Agent the annual
administrative fee of $2,500.00
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(n) INTEREST RATE PROTECTION AGREEMENT. Within forty five (45) days
of the date of this Agreement, the TL Borrower shall enter into the Interest
Rate Protection Agreement in a notional amount of $3,000,000.00 on terms and
conditions, and with a tenor, satisfactory to the Agent.
(o) BORROWING BASE AVAILABILITY. At any time when (i) the aggregate
outstanding Revolving Credit Loans equal or exceed $5,000,000.00 (before or
after giving effect to any requested Loan) and (ii) an Earn Out Payment is to be
made, the RC Borrower shall maintain availability under the Borrowing Base of at
least $250,000.00.
(p) LANDLORD LIEN WAIVERS AND MORTGAGEE WAIVERS. Not later than (i)
thirty (30) days after the date of this Agreement, deliver landlord lien
waivers, in form and substance reasonably satisfactory to the Agent and its
counsel, from the landlords of the TL Borrower's locations in Maine and a
mortgagee waiver from Key Bank, (ii) sixty (60) days after the date of this
Agreement, deliver landlord lien waivers, in form and substance reasonably
satisfactory to the Agent and its counsel, from the landlords of any other
locations (other than the location described in clause (iii) in which any of the
Collateral is kept, and (iii) ninety (90) days after the date of this Agreement,
deliver a landlord lien waiver, in form and substance reasonably satisfactory to
the
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Agent and its counsel from the landlord of the 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxx
Xxxx location.
SECTION 5.02. NEGATIVE COVENANTS. So long as any amount shall remain
outstanding under the Term Loan Notes or the Revolving Credit Notes, or so long
as the Revolving Credit Commitment shall remain in effect, neither of the
Borrowers nor any Guarantor will, without the written consent of the Agent and
the Required Lenders:
(a) LIENS, ETC. Create, incur, assume or suffer to exist, any Lien, upon
or with respect to any of its properties, now owned or hereafter acquired,
except:
(i) Liens in favor of the Agent, for the benefit of the Lenders;
(ii) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(iii) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due or which are
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being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established or which have been bonded in full;
(iv) Liens under workers' compensation, unemployment insurance, Social
Security, or similar legislation;
(v) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(vi) Liens described in Schedule 5.02(a), provided that no such Liens
shall be renewed, extended or refinanced;
(vii) Judgment and other similar Liens arising in connection with
court proceedings (other than those described in Section 6.01(f)), provided the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(viii) Easements, rights-of-way, restrictions, zoning restrictions
and other similar encumbrances which, in the aggregate, do not materially
interfere with a Borrower's or a
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Guarantor's occupation and use of the property or assets encumbered thereby in
the normal course of its business or materially impair the value of the property
for the purposes of the Borrowers and/or the Guarantors conducting their
business;
(ix) Provided no Default or Event of Default then exists, purchase
money Liens on any property hereafter acquired or the assumption of any Lien on
property existing at the time of such acquisition, or a Lien incurred in
connection with any conditional sale or other title retention agreement or a
Capital Lease, provided that:
(1) Any property subject to any of the foregoing is acquired by
a Borrower or a Guarantor in the ordinary course of its respective business and
the Lien on any such property is created contemporaneously with such
acquisition;
(2) The obligation secured by any Lien so created, assumed, or
existing shall not exceed one hundred (100%) percent of the cost of the property
acquired as of the time of a Borrower or a Guarantor acquiring the same;and
(3) Each such Lien shall attach only to the property so acquired
and fixed improvements thereon; and
(x) Liens securing the Chase Lease Facility.
(b) DEBT. Create, incur, assume, or suffer to exist, any
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Debt, except:
(i) Debt of the Borrowers or the Guarantors under this Agreement, the
Notes or any other Loan Document;
(ii) Debt described in Schedule 5.02(b), provided that no such Debt
shall be renewed, extended or refinanced;
(iii) Subordinated Debt;
(iv) Seller Notes;
(v) Accounts payable to trade creditors for goods or services and
current operating liabilities (other than for borrowed money), in each case
incurred in the ordinary course of business and not more than ninety (90) days
past due, unless contested in good faith and by appropriate proceedings;
(vi) Debt of a Borrower to the other Borrower or a Guarantor, or Debt
of a Guarantor to a Borrower or another Guarantor;
(vii) Debt of the TL Borrower as reflected in the Liability Account,
with adjustment as provided in the Acquisition Agreement;
(viii) Debt of the TL Borrower under the Interest Rate Protection
Agreement;
(ix) Debt of a Borrower or a Guarantor secured by purchase money Liens
permitted by Section 5.02(a)(ix); and
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(x) Debt incurred pursuant to the Chase Lease Facility.
(c) MERGER. Merge into, or consolidate with or into, or have merged into
it, any Person; and, for the purpose of this subsection (c), the acquisition or
sale by a Borrower or a Guarantor by lease, purchase or otherwise, of all, or
substantially all, of the common stock or the assets of any Person or of it
shall be deemed a merger of such Person with such Borrower or such Guarantor,
provided that, as long as no Default or Event of Default exists or would result
therefrom, (i) a Borrower or Guarantor may engage in a Permitted Acquisition and
(ii) any of the Borrowers and any of the Guarantors may merge with one another,
but further provided that if the RC Borrower or the TL Borrower is a party to
any such merger, it shall be the surviving entity and if the RC Borrower and the
TL Borrower are parties to such merger, the RC Borrower shall be the surviving
entity.
(d) SALE OF ASSETS, ETC. Sell, assign, transfer, lease or otherwise
dispose of any of its assets, (including a saleleaseback transaction) with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business; (ii) the sale or other disposition of assets no longer used or useful
in the conduct of its business; and (iii) the sale of
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assets valued at less than $50,000.00, in the aggregate, each year during the
term of this Agreement.
(e) INVESTMENTS, ETC. Make any Investment other than Permitted
Investments.
(f) TRANSACTIONS WITH AFFILIATES. Except in the ordinary course of
business and pursuant to the reasonable requirements of a Borrower's, a
Guarantor's or a Subsidiary's business and upon fair and reasonable terms no
less favorable to such Borrower, such Guarantor or such Subsidiary than would be
obtained in a comparable arm's length transaction with a Person not an
Affiliate, enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate.
(g) PREPAYMENT OF OUTSTANDING DEBT. Pay, in whole or in part, any
outstanding Debt (other than Debt owing to the Lenders) of a Borrower or any
Guarantor, which by its terms is not then due and payable.
(h) GUARANTEES. Guaranty, or in any other way become directly or
contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the Guaranties, (ii) the endorsement of
negotiable
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instruments for deposit in the ordinary course of business, (iii) guarantees
existing on the date hereof and set forth in Schedule 5.02(i) annexed hereto or
(iv) guaranties by a Borrower or any Guarantor of the Debt of another Borrower
or Guarantor, as long as the Debt being guaranteed is permitted by the
provisions of Section 5.02(b) of this Agreement.
(i) CHANGE OF BUSINESS. Materially alter the nature of its business.
(j) FISCAL YEAR. Change the ending date of the RC Borrower's fiscal year
from September 30.
(k) INTENTIONALLY OMITTED.
(l) ACCOUNTING POLICIES. Change any accounting policies, except as
permitted by GAAP.
(m) CHANGE OF TAX STATUS. Change its tax reporting status as a sub-chapter
c corporation.
(n) DIVIDENDS, ETC. Declare or pay any dividends, purchase, redeem, retire
or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such,
whether in cash, assets, or in obligations of a Borrower or a Guarantor; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of
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any shares of its capital stock; or make any other distribution by reduction of
capital or otherwise in respect of any share of its capital stock, provided ,
however, that as long as no Default or Event of Default exists or would result
therefrom (i) the RC Borrower may repurchase common stock in amounts not in
excess of $500,000.00 during the term of this Agreement, (ii) the Put Option
Payment may be made, subject to the terms of the Subordination Agreement, (iii)
each of the Borrowers and each of the Guarantors may pay dividends to its parent
company and (iv) the RC Borrower may pay dividends on preferred stock (other
than preferred stock described in clause (x) of the definition of "Debt") if the
terms and conditions of such preferred stock have been previously satisfactorily
reviewed by the Agent and the Lenders.
(o) CHANGE IN OWNERSHIP. (a) Permit any Person or "group" (within the
meaning of Section 13(d)-3 under the Securities Exchange Act of 1934 and the
rules of the Securities and Exchange Commission as in effect on the date hereof)
other than Xxxx Xxxxxxxxx, Xxxxxx Xxx Xxxxxx, and Xxxxxxxxx Xxxxx (or members
of their immediate families) (the"Controlling Shareholders") to own more of the
then outstanding voting securities of the RC Borrower than the Controlling
Shareholders. (b) Permit any nominees other than nominees nominated by the
Controlling Shareholders to hold a
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majority of the seats on the board of directors of the RC Borrower.
(p) MANAGEMENT. Fail to retain Xxxx Xxxxxxxxx as the Chief Executive
Officer of the RC Borrower, provided that if this covenant is breached because
of the death or disability of Xxxx Xxxxxxxxx, the Borrowers shall have ninety
(90) days to present a management succession plan to the Agent and the Lenders,
which, if reasonably satisfactory to the Agent and the Lenders, shall cure any
such breach of this covenant.
(q) HAZARDOUS MATERIAL. Each Borrower, each Guarantor and each Subsidiary
of a Borrower or a Guarantor shall not cause or permit any property owned or
occupied by a Borrower, a Guarantor or any such Subsidiary to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in material compliance
with all applicable federal, state and local laws or regulations nor shall a
Borrower, a Guarantor or any such Subsidiary cause or permit, as a result of any
intentional or unintentional act or omission on the part of such Borrower, such
Guarantor or any such Subsidiary or any tenant or subtenant, a release of
Hazardous Materials onto any property owned or occupied by such Borrower, such
Guarantor or any such Subsidiary
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or onto any other property except in material compliance with all applicable
federal, state and local laws or regulations. Each Borrower, each Guarantor and
each such Subsidiary shall not fail to materially comply with all applicable
federal, state and local laws, ordinances, rules and regulations, whenever and
by whomever triggered, and shall not fail to obtain and materially comply with,
any and all approvals, registrations or permits required thereunder. The
Borrowers and the Guarantors shall execute any documentation required by the
Agent in connection with the representations, warranties and covenants contained
in this paragraph and Section 4.01 of this Agreement.
SECTION 5.03. FINANCIAL REQUIREMENTS. So long as any amount shall remain
outstanding under the Term Loan Notes or the Revolving Credit Notes or so long
as the Revolving Credit Commitment shall remain in effect:
(a) CONSOLIDATED FIXED CHARGE RATIO. The RC Borrower will maintain at all
times a Consolidated Fixed Charge Ratio of not less than:
Period Ratio
------ -----
Closing until September 29, 2002 1.10 to 1.00
September 30, 2002 and thereafter 1.25 to 1.00
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(b) CONSOLIDATED SENIOR FUNDED DEBT TO EBITDA RATIO. The RC Borrower will
maintain at all times a Consolidated Senior Funded Debt to EBITDA Ratio of not
greater than:
Period Ratio
------ -----
Closing until September 29,1999 3.00 to 1.00
September 30,1999 until
September 29,2000 2.25 to 1.00
September 30,2000 until
September 29,2001 1.75 to 1.00
September 30,2001 until
September 29, 2002 1.40 to 1.00
September 30, 2002 and thereafter 1.25 to 1.00
(c) CONSOLIDATED CURRENT RATIO. The RC Borrower will maintain at all times
a Consolidated Current Ratio of not less than 1.25 to 1.00.
(d) CONSOLIDATED LEVERAGE RATIO. The RC Borrower will maintain at all
times a Consolidated Leverage Ratio of not greater than:
Period Consolidated Leverage Ratio
------ ---------------------------
Closing until September 29,1999 3.00 to 1.00
September 30,1999
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until September 29,2000 2.25 to 1.00
September 30,2000
until September 29,2001 1.50 to 1.00
September 30,2001 and thereafter 1.00 to 1.00
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ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events ("Events
of Default") shall occur and be continuing:
(a) A Borrower shall fail to pay (i) any installment of principal
of the Term Loan Notes or the Revolving Credit Notes when due or (ii) any
interest on the Term Loan Notes or the Revolving Credit Notes or any fees or
other amounts owed in connection with this Agreement within three (3) days of
the date any such interest, fees or other amounts are due hereunder; or
(b) Any representation or warranty made by a Borrower or a
Guarantor herein or in the Loan Documents or which is contained in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(c) A Borrower or a Guarantor shall (i) fail to perform or
observe any term, covenant or agreement contained in Sections 5.01
(a),(c),(d),(e),(f),(h),(j) and (k) within thirty (30) days after such
performance or observance is required, or (ii) fail to perform or observe any
other term, covenant, or agreement contained in this Agreement in any other Loan
Document (other than the Notes) on its part to be performed or observed; or
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(d) A Borrower, a Guarantor, or any Subsidiary of a Borrower or a
Guarantor shall fail to pay any Debt or Debts in the aggregate principal amount
of $100,000.00 or more (excluding Debt evidenced by the Term Loan Notes or the
Revolving Credit Notes) of such Borrower, such Guarantor or any such Subsidiary
(as the case may be), or any installment thereof, or any interest or premium
thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt or Debts; or any other default under any agreement or
instrument relating to any such Debt or Debts, or any other event shall occur
and shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt or
Debts; or any such Debt or Debts shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or
(e) A Borrower, a Guarantor or any Subsidiary of a Borrower or a
Guarantor shall generally not pay its Debts as such
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Debts become due, or shall admit in writing its inability to pay its Debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against a Borrower, a Guarantor or any
such Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its Debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property and if instituted
against a Borrower, a Guarantor or any such Subsidiary shall remain undismissed
for a period of 90 days; or a Borrower, a Guarantor or any such Subsidiary shall
take any action to authorize any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order or combination of judgments or orders
for the payment of money, in excess of $100,000.00 in the aggregate, which sum
shall not be subject to full, complete, effective and acknowledged insurance
coverage, shall be rendered against a Borrower, a Guarantor or any Subsidiary of
a Borrower or a Guarantor and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be any
period of 30 consecutive days during
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which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(g) Any Guarantor shall fail, after applicable grace or cure
periods, if any, to perform or observe any term or provision of its Guaranty or
any representation or warranty made by any Guarantor (or any of its officers or
partners) in connection with such Guarantor's Guaranty shall prove to have been
incorrect in any material respect when made; or
(h) Any of the following events occur or exist with respect to a
Borrower, a Guarantor, any Subsidiary of a Borrower or a Guarantor, or any ERISA
Affiliate: (i) any Prohibited Transaction involving any Plan; (ii) any
Reportable Event with respect to any Plan; (iii) the filing under Section 4041
of ERISA of a notice of intent to terminate any Plan or the termination of any
Plan; (iv) any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the termination
of, or for the appointment of a trustee to administer, any Plan, or the
institution of the PBGC of any such proceedings; (v) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization insolvency, or termination of any Multiemployer Plan; and in each
case above, such event or condition, together
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with all other events or conditions, if any, could in the opinion of the Agent
subject such Borrower, such Guarantor, any such Subsidiary or any ERISA
Affiliate to any tax, penalty, or other liability to a Plan, a Multiemployer
Plan, the PBGC, or otherwise (or any combination thereof) which in the aggregate
exceeds or may exceed $100,000.00; or
(i) This Agreement or any other Loan Document, at any time after
its execution and delivery and for any reason, ceases to be in full force and
effect or shall be declared to be null and void, or the validity or
enforceability of any document or instrument delivered pursuant to this
Agreement shall be contested by a Borrower, a Guarantor or any party to such
document or instrument or a Borrower, a Guarantor or any party to such document
or instrument shall deny that it has any or further liability or obligation
under any such document or instrument; or
(j) An event of default specified in any Loan Document other than
this Agreement shall have occurred and be continuing.
SECTION 6.02. REMEDIES ON DEFAULT. Upon the occurrence and continuance of
an Event of Default the Agent may, and at the request of the Required Lenders
shall, by notice to the Borrowers, take any or all of the following actions, (i)
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terminate the Revolving Credit Commitment, (ii) declare the Term Loan Notes, the
Revolving Credit Notes, all interest thereon and all other amounts payable under
this Agreement to be forthwith due and payable, whereupon the Revolving Credit
Commitment shall be terminated, the Term Loan Notes, the Revolving Credit Notes,
all such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrowers and (iii) proceed to
enforce its and the Lenders' rights whether by suit in equity or by action at
law, whether for specific performance of any covenant or agreement contained in
this Agreement or any Loan Document, or in aid of the exercise of any power
granted in either this Agreement or any Loan Document or proceed to obtain
judgment or any other relief whatsoever appropriate to the enforcement of its
and the Lenders' rights, or proceed to enforce any other legal or equitable
right which the Agent or the Lenders may have by reason of the occurrence of any
Event of Default hereunder or under any Loan Document, provided, however, upon
the occurrence of an Event of Default referred to in Section 6.01(e), the
Revolving Credit Commitment shall be immediately terminated, the Term Loan
Notes, the Revolving Credit Notes, all interest thereon and all other amounts
payable under this Agreement shall be immediately due and
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payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrowers. Any amounts collected
pursuant to action taken under this Section 6.02 shall be applied to the payment
of, first, any costs incurred by the Agent in taking such action, including but
without limitation attorneys fees and expenses, second, to payment of the
accrued interest on the Term Loan Notes and the Revolving Credit Notes and
third, to payment of the unpaid principal of the Term Loan Notes and the
Revolving Credit Notes.
SECTION 6.03. LOCK BOX ARRANGEMENT. If any Event of Default shall occur,
the Agent may, in addition to any and all other remedies afforded to the Agent
under this Agreement and the other Loan Documents, in its sole and absolute
discretion, require the Borrowers to commence a lock-box account arrangement
with the Agent on terms and conditions satisfactory to the Agent in all
respects.
SECTION 6.04. REMEDIES CUMULATIVE. No remedy conferred upon or reserved
to the Agent or the Lenders hereunder or in any other Loan Document is intended
to be exclusive of any other available remedy, but each and every such remedy
shall be cumulative and in addition to every other remedy given under this
Agreement or any other Loan Document or now or hereafter existing
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at law or in equity. No delay or omission to exercise any right or power
accruing upon any Event of Default shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order
to entitle the Agent or any Lender to exercise any remedy reserved to it in this
Agreement, it shall not be necessary to give any notice, other than such notice
as may be herein expressly required in this Agreement or in any other Loan
Document.
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ARTICLE VII
THE AGENT; RELATIONS AMONG LENDERS AND BORROWER
SECTION 7.01. APPOINTMENT, POWERS AND IMMUNITIES OF AGENT. Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under any other Loan Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Loan
Document, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Loan Document, and shall not by reason of
this Agreement be a trustee or fiduciary for any Lender. The Agent shall not be
responsible to the Lenders for any recitals, statements, representations or
warranties made by the Borrowers or the Guarantors, or any officer or official
of the Borrowers or Guarantors, or any of them, or any other Person contained in
this Agreement or any other Loan Document, or in any certificate or other
document or instrument referred to or provided for in, or received by any of
them under, this Agreement or any other Loan Document, or for the value,
legality, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan
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Document or any other document or instrument referred to or provided for herein
or therein, except as explicitly provided herein, or for the failure by the
Borrowers, the Guarantors, or any of them to perform any of their or its
respective obligations hereunder or thereunder. The Agent may employ agents and
attorneys-in-fact and shall not be responsible, except as to money or securities
received by it or its authorized agents, for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Except as
otherwise explicitly provided herein, neither the Agent nor any of its
directors, officers, employees or agents shall be liable or responsible to any
Lender for any action taken or omitted to be taken by it or them hereunder or
under any other Loan Document or in connection herewith or therewith, except for
its or their own gross negligence or wilful misconduct. The Borrowers shall pay
any fee agreed to by the Borrowers and the Agent with respect to the Agent's
services hereunder.
SECTION 7.02. RELIANCE BY AGENT. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person
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or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent with reasonable care. The
Agent may deem and treat each Lender as the holder of the Loans made by it for
all purposes hereof unless and until a notice of the permitted transfer thereof
satisfactory to the Agent and signed by such Lender shall have been furnished to
the Agent but the Agent shall not be required to deal with any Person who has
acquired a participation in any Loan from a Lender. As to any matters not
expressly provided for by this Agreement or any other Loan Document, the Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions signed by the Required Lenders, and
such instructions of the Required Lenders and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and any other holder of
all or any portion of any Loan.
SECTION 7.03. DEFAULTS. The Agent shall not be deemed to have knowledge of
the occurrence of a Default or Event of Default (other than the non-payment of
principal of or interest on the Loans or the non-payment of fees due hereunder)
unless the Agent has actual knowledge of such Default or Event of Default or has
received notice from a Lender or a Borrower specifying such
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Default or Event of Default and stating that such notice is a "Notice of
Default." In the event that the Agent receives such a notice of, or otherwise
has actual knowledge of the occurrence of, a Default or Event of Default, the
Agent shall give prompt notice thereof to the Lenders (and shall give each
Lender prompt notice of each such non-payment). The Agent shall (subject to
Section 7.08 and Section 8.01 hereof) take such action with respect to such
Default or Event of Default which is continuing as shall be directed by the
Required Lenders; provided that, unless and until the Agent shall have received
such directions, the Agent may take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of the Lenders; and provided further that the
Agent shall not be required to take any such action which it determines to be
contrary to law.
SECTION 7.04. RIGHTS OF AGENT AS A LENDER. With respect to the Loans made
by it, any Person which is the Agent in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include
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any Person which is the Agent in its capacity as a Lender. The Agent or any
Lender and their respective Affiliates may (without having to account therefor
to any other Lender except as otherwise expressly provided in this Agreement)
accept deposits from, lend money to (on a secured or unsecured basis), and
generally engage in any kind of banking, trust or other business with, the
Borrowers, the Guarantors or any of them (and any of their Affiliates); PROVIDED
that no payment or lien priority (other than purchase money liens on equipment
being financed by such Lender) shall be given to the Agent or to any Lender for
any other transaction without the express written approval of all of the other
Lenders. In the case of Chase, it may do so as if it were not acting as the
Agent, and the Agent may accept fees and other consideration from the Borrowers,
the Guarantors or any of them for services in connection with this Agreement or
otherwise without having to account for the same to the Lenders. Although the
Agent or a Lender or any of their respective Affiliates may in the course of
such relationships and relationships with other Persons acquire information
about the Borrowers, the Guarantors, their Affiliates and such other Persons,
neither the Agent nor such Lender shall have any duty to the other Lenders or
the Agent to disclose such information to the other Lenders or the Agent except
as otherwise provided herein with respect to the
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occurrence of an Event of Default.
SECTION 7.05. INDEMNIFICATION OF AGENT. The Lenders agree to indemnify the
Agent and its directors, officers, employees, agents and Affiliates (the
"Indemnitees") (to the extent not reimbursed under Section 8.04 hereof or under
the applicable provisions of any other Loan Document, but without limiting the
obligations of the Borrowers and Guarantors under Section 8.04 hereof or such
provisions), ratably in accordance with their Pro Rata Shares of the Total
Commitment (without giving effect to any participation in all or any portion of
the Total Commitment sold by them to any other Person), for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Indemnitees in any way relating
to or arising out of this Agreement, any other Loan Document or any other
documents contemplated by or referred to herein or the transactions contemplated
hereby or thereby (including, without limitation, the costs and expenses which
the Borrowers and Guarantors are obligated to pay under Section 8.04 hereof or
under the applicable provisions of any other Loan Document but excluding,
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unless a Default or Event of Default has occurred, normal administrative costs
and expenses incidental to the performance of its agency duties hereunder) or
the enforcement of any of the terms hereof or thereof or of any such other
documents or instruments; provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or wilful
misconduct of the an Indemnitee.
SECTION 7.06. DOCUMENTS. It is the responsibility of the Borrowers to
forward to each Lender, on or before the due dates set forth herein, a copy of
each report, notice (other than notices of borrowings and payments) or other
document required by this Agreement or any other Loan Document to be delivered
to the Agent. The Agent is not responsible for forwarding such information to
the Lenders.
SECTION 7.07. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees
that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers, the Guarantors and
their Subsidiaries and decision to enter into this Agreement and that it will,
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independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any other Loan Document. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Borrowers or Guarantors of this Agreement or any other Loan Document or any
other document referred to or provided for herein or therein or to inspect the
properties or books of the Borrowers, the Guarantors or any Subsidiary of either
Borrower or any Guarantor. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to any other
Lender to provide any Lender with any credit or other information concerning the
affairs, financial condition or business of the Borrowers, the Guarantors or any
Subsidiary (or any of their Affiliates) which may come into the possession of
the Agent or of its Affiliates. The Agent shall not be required to file this
Agreement, any other Loan Document or any document or instrument referred to
herein or therein, or record or give notice of this Agreement, any other Loan
Document or any document or instrument referred to herein or therein, to any
Person.
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SECTION 7.08. FAILURE OF AGENT TO ACT. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Lenders under Section 7.05 hereof in respect of any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
SECTION 7.09. RESIGNATION OF AGENT. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrowers. Upon
any such resignation, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall be a
lender which has an office in New York, New York. The Required Lenders or the
retiring Agent, as the case may be, shall upon the appointment of a Successor
Agent promptly so notify the
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Borrowers, the Guarantors and the other Lenders. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation as Agent, the provisions of this Article 7 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent.
SECTION 7.10. AMENDMENTS CONCERNING AGENCY FUNCTION. The Agent shall not
be bound by any waiver, amendment, supplement or modification of this Agreement
or any other Loan Document which affects its rights or duties hereunder or
thereunder unless it shall have given its prior written consent thereto.
SECTION 7.11. LIABILITY OF AGENT. The Agent shall not have any liabilities
or responsibilities to the Borrowers, the Guarantors or any of them on account
of the failure of any Lender to perform its obligations hereunder or to any
Lender on account of the failure of the Borrowers, the Guarantors or any of them
to perform their or its obligations hereunder or under any other Loan Document.
Nothing herein shall be read to relieve any obligation that the Agent may have
to the Borrower as a Lender
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hereunder.
SECTION 7.12. TRANSFER OF AGENCY FUNCTION. Without the consent of the
Borrowers, the Guarantors or any Lender, the Agent may at any time or from time
to time transfer its functions as Agent hereunder to any of its offices located
in the New York metropolitan area, provided that the Agent shall promptly notify
the Borrowers, the Guarantors and the Lenders thereof.
SECTION 7.13. WITHHOLDING TAXES. Each Lender represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to the Agent such forms, certifications,
statements and other documents as the Agent may request from time to time to
evidence such Lender's exemption from the withholding of any tax imposed by any
jurisdiction or to enable the Agent to comply with any applicable laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
any Lender is not created or organized under the laws of the United States of
America or any state thereof, in the event that the payment of interest by the
Borrowers is treated for U.S. income tax purposes as derived in whole or in part
from sources from within the United States, such Lender will furnish to the
Agent Form 4224 or Form 1001 of the Internal Revenue Service, or such other
forms,
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certifications, statements or documents, duly executed and completed by such
Lender as evidence of such Lender's exemption from the withholding of United
States tax with respect thereto. The Agent shall not be obligated to make any
payments hereunder to such Lender in respect of any Loan until such Lender shall
have furnished to the Agent the requested form, certification, statement or
document.
SECTION 7.14. SEVERAL OBLIGATIONS AND RIGHTS OF LENDERS. The failure of
any Lender to make any Loan to be made by it on the date specified therefor
shall not relieve any other Lender of its obligation to make its Loan on such
date, but no Lender shall be responsible for the failure of any other Lender to
make a Loan to be made by such other Lender.
SECTION 7.15. PRO RATA TREATMENT OF LOANS, ETC. Except to the extent
otherwise provided, each prepayment and payment of principal of or interest on
Loans of a particular type and a particular Interest Period, if any, shall be
made to the Agent for the account of the Lenders holding Loans of such type and
Interest Period, if any, pro rata in accordance with the respective unpaid
principal amounts for such Loans of such Interest Period held by such Lenders.
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SECTION 7.16. SHARING OF PAYMENTS AMONG LENDERS. If a Lender shall obtain
payment of any principal of or interest on any Loan any fee due hereunder, made
by it through the exercise of any right of setoff, banker's lien, counterclaim,
or any other means, it shall share such payment with the other Lenders and the
amount of such payment shall be applied to reduce the Loans of all the Lenders
pro rata in accordance with the unpaid principal on the Loans held by each of
them, and make such other adjustments from time to time as shall be equitable to
the end that all the Lenders shall share the benefit of such payment (net of any
expenses which may be incurred by such Lender in obtaining or preserving such
benefit) pro rata in accordance with the unpaid principal and interest on the
Loans held by each of them. To such end the Lenders shall make appropriate
adjustments among themselves if such payment is rescinded or must otherwise be
restored. The Borrowers agree that any Lender so purchasing a participation (or
direct interest) in the Loans made by the other Lenders may exercise all rights
of set off, banker's lien, counterclaim or similar rights with respect to such
participation (or direct interest). Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness of the
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Borrowers. Notwithstanding the foregoing or any other provision of this
Agreement, no right or remedy of any Lender relating to any assets of the
Borrowers (including real property, improvements or fixtures) not covered by
this Agreement or the other Loan Documents shall in any way be affected by this
Agreement or otherwise with respect to any other indebtedness of the Borrowers
to any of the Lenders.
SECTION 7.17. NONRECEIPT OF FUNDS BY AGENT; PAYMENTS TO LENDERS. (a)
Unless the Agent shall have received notice from a Borrower prior to the date on
which any payment is due to the Lenders hereunder that such Borrower will not
make such payment in full, the Agent may assume that such Borrower has made such
payment in full to the Agent on such date and the Agent in its sole discretion
may, but shall not be obligated to, in reliance upon such assumption, cause to
be distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent that a Borrower shall not have so
made such payment in full to the Agent, such Lender agrees to repay to the Agent
on demand such amount and if for any reason the Agent does not receive such
amount from such Lender on the day of such demand, if such demand is made before
2:00 p.m. on such day, or on the next Business Day if demand is made after 2:00
p.m. on
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such day, such Lender shall repay to the Agent forthwith on demand such amount
distributed to such Lender together with interest thereon, for each day from the
date such amount is distributed to such Lender until the date such Lender repays
such amount to the Agent, at the customary rate set by the Agent for the
correction of errors among lenders for three (3) Business Days and thereafter at
the Prime Rate.
(b) If the Agent shall fail to pay any amounts owing by the Agent to a
Lender as promptly as may be required by this Agreement, the Agent shall pay to
such Lender, on its demand, interest on such delinquent amount at the customary
rate set by the Agent for the correction of errors among lenders for three (3)
Business Days and thereafter at the Prime Rate.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. AMENDMENTS, ETC. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be amended or modified only
by an instrument in writing signed by the Borrowers, the Guarantors, the Agent
and the Required Lenders, and any provision of this Agreement may be waived by
the Borrowers (if such provision requires performance by the Agent or the
Lenders) or by the Agent acting with the consent of the Required Lenders (if
such provision requires performance by either of the Borrowers); PROVIDED that
no amendment, modification or waiver shall, unless by an instrument signed by
all of the Lenders or by the Agent acting with the consent of all of the
Lenders: (a) increase or extend the term of the Total Commitment or the Loans,
(b) extend the date fixed for the payment of principal of or interest on any
Loan, (c) reduce the amount of any payment of principal thereof or the rate at
which interest is payable thereon or any fee payable hereunder, (d) alter the
terms of this Section 8.01, (e) amend the definition of the term "Required
Lenders", (f) change the fees payable to any Lender except as otherwise provided
herein, (g) permit either of the Borrowers to transfer or assign any of its
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obligations hereunder or under the other Loan Documents, (h) amend the
provisions of Article 7 hereof, (i) give any payment priority to any Person
(including any of the Lenders) over amounts due in connection with the Loans,
(j) release any Guarantors or Collateral (other than as permitted by a Security
Agreement) or (k) amend any provision of this Agreement or any other Loan
Document which requires the action of all Lenders. No failure on the part of
the Agent or any Lender to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof or preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.02. NOTICES, ETC. All notices and other communications provided
for hereunder shall be in writing (including telegraphic communication) and
mailed, telegraphed, sent by facsimile or delivered, if to a Borrower or a
Guarantor, at the address of such Borrower or Guarantor, as the case may be, set
forth at the beginning of this Agreement and if to the Agent or any of the
Lenders, at the addresses of the Agent and the Lenders set forth at the
beginning of this Agreement to the attention of Allied Devices Corporation
Account Officer, or, as to each party, at such other address as shall be
designated by such party in a written notice complying as to delivery with the
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terms of this Section 8.02 to the other parties. All such notices and
communications shall be effective two (2) days after mailing or when telegraphed
or delivered, except that notices to the Agent shall not be effective until
received by the Agent or such Lender.
SECTION 8.03. NO WAIVER, REMEDIES. No failure on the part of the Agent or
any Lender to exercise, and no delay in exercising, any right, power or remedy
under any Loan Document, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.04. COSTS, EXPENSES AND TAXES. The Borrowers agree jointly and
severally, to pay on demand all reasonable costs and expenses of the Agent in
connection with the preparation, execution, delivery and administration of this
Agreement, the Term Loan Notes, the Revolving Credit Notes and any other Loan
Documents, including, without limitation, the reasonable fees and expenses of
counsel for the Agent with respect thereto and with respect to advising the
Agent as to its
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rights and responsibilities under this Agreement, and all reasonable costs and
expenses, if any (including reasonable counsel fees and expenses), of the Agent
and the Lenders in connection with the enforcement of this Agreement, the Term
Loan Notes, the Revolving Credit Notes and any other Loan Documents. The
Borrowers, jointly and severally, shall at all times protect, indemnify, defend
and save harmless the Agent and the Lenders from and against any and all claims,
actions, suits and other legal proceedings, and liabilities, obligations,
losses, damages, penalties, judgments, costs, expenses or disbursements which
the Agent or any of the Lenders may, at any time, sustain or incur by reason of
or in consequence of or arising out of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby unless
any such liabilities result from the gross negligence or willful misconduct of
the Agent or any Lender. The Borrowers acknowledge that it is the intention of
the parties hereto that this Agreement shall be construed and applied to protect
and indemnify the Agent and the Lenders against any and all risks involved in
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, all of which risks are hereby assumed by the
Borrowers, including, without limitation, any and all risks of the acts or
omissions, whether rightful or wrongful,
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of any present or future DE JURE or DE FACTO government or governmental
authority, provided that the Borrowers shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Agent's or any
Lender's gross negligence or willful misconduct. The provisions of this Section
8.04 shall survive the payment of the Notes and the termination of this
Agreement.
SECTION 8.05. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender, or any Affiliate of such Lender to or for the credit or the account of
the Borrowers or the Guarantors against any and all of the obligations of the
Borrowers or the Guarantors now or hereafter existing under this Agreement and
the Term Loan Notes and the Revolving Credit Notes, irrespective of whether or
not the Agent shall have made any demand under this Agreement or the Term Loan
Notes or the Revolving Credit Notes and although such obligations may be
unmatured. The rights of the Agent and
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the Lenders under this Section are in addition to all other rights and remedies
(including, without limitation, other rights of set-off) which they may have.
The Agent shall endeavor to give the Borrowers prompt notice after any such set
off, but any failure to give such notice shall not invalidate such set off.
SECTION 8.06. BINDING EFFECT. This Agreement shall become effective when
it shall have been executed by the Borrowers, the Guarantors, the Agent and the
Lenders and thereafter it shall be binding upon and inure to the benefit of the
Borrowers, the Guarantors, the Agent and the Lenders and their respective
successors and assigns, except that neither Borrower nor any Guarantor shall
have any right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Required Lenders.
SECTION 8.07. SUCCESSORS AND ASSIGNS. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that neither of the
Borrowers may assign or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of all Lenders.
(b) Any Lender may at any time grant to one or more lenders or other
institutions (each a "Participant") participating
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interests in its Commitment or any or all of its Loans. In the event of any
such grant by a Lender of a participating interest to a Participant, whether or
not upon notice to the Borrowers and the Agent, such Lender shall remain
responsible for the performance of its obligations hereunder, and the Borrowers
and the Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which any Lender may grant such a participating interest
shall provide that such Lender shall retain the sole right and responsibility
to enforce the obligations of the Borrowers hereunder including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement. The Borrowers agree that each Participant shall, to
the extent provided in its participation agreement, be entitled to the benefits
of this Article VIII hereof with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement only to the extent of
a participating interest granted in accordance with this subsection (b).
(c) (i) Any Lender may at any time assign to one or more lenders or other
institutions (each an "Assignee") all, or a
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proportionate part (equivalent to an initial Revolving Credit Commitment of not
less than $2,000,000.00 and a proportionate amount of the then outstanding
principal amount of the Term Loan) of all, of its rights and obligations under
this Agreement and the Notes, and such Assignee shall assume such rights and
obligations, pursuant to an Assignment and Assumption Agreement in substantially
the form of Exhibit D hereto executed by such Assignee and such transferor
Lender, with the subscribed consent of the Agent, which shall not be
unreasonably withheld and with, so long as no Default or Event of Default has
occurred and is continuing, (and subject to) the subscribed consent of the
Borrowers, which shall not be unreasonably withheld. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor
Lender of an amount equal to the purchase price agreed between such transferor
bank and such Assignee, such Assignee shall be a Lender party to this Agreement
and shall have all the rights and obligations of a Lender with a Commitment as
set forth in such instrument of assumption, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required.
(ii) Upon the consummation of any assignment pursuant
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to this subsection (c), the transferor Lender, the Agent and the Borrowers shall
make appropriate arrangements so that, if required, new Notes are issued to the
Assignee (at no cost to the Borrowers). In connection with any such assignment,
the transferor Lender shall pay to the Agent an administrative fee for
processing such assignment in the amount of $3,500.00. If an Assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrowers and the Agent certification as to exemption
from deduction or withholding of any United States federal income taxes in
accordance with Section 7.13 hereof.
(d) Any Lender may at any time assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank. No such
assignment shall release the transferor Lender from its obligations hereunder.
SECTION 8.08. FURTHER ASSURANCES. Each Borrower and each Guarantor agree
at any time and from time to time at its expense, upon request of the Agent or
its counsel, to promptly execute, deliver, or obtain or cause to be executed,
delivered or obtained any and all further instruments and documents and to take
or cause to be taken all such other action the Agent may deem desirable in
obtaining the full benefits of, this Agreement or any other Loan Document.
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SECTION 8.09. SECTION HEADINGS, SEVERABILITY, ENTIRE AGREEMENT. Section
and subsection headings have been inserted herein for convenience only and shall
not be construed as part of this Agreement. Every provision of this Agreement
and each Loan Document is intended to be severable; if any term or provision of
this Agreement, any Loan Document, or any other document delivered in connection
herewith shall be invalid, illegal or unenforceable for any reason whatsoever,
the validity, legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired thereby. All exhibits and
schedules to this Agreement shall be annexed hereto and shall be deemed to be
part of this Agreement. This Agreement and the exhibits and schedules attached
hereto embody the entire Agreement and understanding among the Borrowers, the
Guarantors, the Agent and the Lender and supersede all prior agreements and
understandings relating to the subject matter hereof.
SECTION 8.10. GOVERNING LAW. This Agreement, the Term Loan Notes, the
Revolving Credit Notes and all other Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to principles of conflict of laws.
SECTION 8.11. WAIVER OF JURY TRIAL. Each Borrower, each
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Guarantor, the Agent and the Lenders waive all rights to trial by jury on any
cause of action directly or indirectly involving the terms, covenants or
conditions of this Agreement or any Loan Document.
SECTION 8.12. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
ALLIED DEVICES CORPORATION
By
-----------------------------
Xxxx X. Xxxxxxx
Chief Financial Officer
APPI, INC.
By
-----------------------------
Xxxx X. Xxxxxxx
Chief Financial Officer
EMPIRE TYLER CORPORATION
By
-----------------------------
Xxxx X. Xxxxxxx
Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Agent
By
-----------------------------
Xxxxxx Xxxxxxxxxx
Vice President
THE CHASE MANHATTAN BANK
By
-----------------------------
Xxxxxx Xxxxxxxxxx
Vice President
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