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[LOGO] EXHIBIT 10.11
LOAN AND SECURITY AGREEMENT
SECTION 1. DEFINITIONS.
All capitalized terms which are not defined herein are defined in Rider
A attached hereto and made a part hereof ("Rider A"). Accounting terms not
specifically defined shall be construed in accordance with generally accepted
accounting principles.
SECTION 2. AMOUNT AND TERMS OF LOANS; GRANT OF SECURITY INTEREST.
Subject to the terms and conditions hereof, CIT agrees to make Loans to
Debtor from time to time, in the amount described in paragraph 2 of Rider A.
Each Loan shall be evidenced by Debtor's Note, which Note shall set forth the
repayment terms and Interest Rate for such Loan.
AS security for the prompt and complete payment and performance when
due of all the Obligations and in order to induce CIT to enter into this
Agreement and make the Loans and to extend other credit from time to time to
Debtor, whether under this Agreement or otherwise, Debtor hereby grants to CIT a
first priority security interest in all Debtor's right, title and interest in,
to and under the Collateral.
SECTION 3. CONDITIONS OF BORROWING.
CIT shall not be required to make any Loan hereunder unless on the
Closing Date thereof all legal matters with respect to, and all legal documents
executed in connection with, the contemplated transactions are satisfactory to
CIT and all of the following conditions are met to the satisfaction of CIT
(except that (a) and (b) are required in connection with the initial Loan only):
(a) CIT has received a satisfactory Secretary's Certificate certified by
Debtor's Secretary or Assistant Secretary; (b) if requested by CIT, CIT shall
have received the written opinion addressed to it of counsel for Debtor
satisfactory to CIT as matters contained in Section 4(a)-(e), (g) and (i)
hereof, and as to such other matters as CIT may reasonably request; (c) Debtor
has executed and delivered to CIT the Note evidencing, and a Supplement
describing the Equipment to be financed by, such Loan; (d) the Equipment being
financed by such Loan has been delivered to, and accepted by, Debtor and CIT has
received satisfactory evidence that the Equipment is insured in accordance with
the provisions hereof and that the Cost thereof has been, or concurrently with
the making of the Loan shall be, fully paid; (e) Intentionally Left Blank; (f)
all filings, recordings and other actions (including the obtaining of landlord
and/or mortgagee waivers) deemed necessary or desirable by CIT in order to
perfect a first (and only) priority security interest in the Equipment being
financed by such Loan have been duly effected, and all fees, taxes and other
charges relating to such filings and recordings have been paid by Debtor; (g)
the representations and warranties contained in this Agreement are true and
correct with the same effect as if made on and as of such date, and no Default
or Event of Default is in existence on such date or shall occur as a result of
such Loan; (h) in the sole judgment of CIT, there has been no material adverse
change in the financial condition, business or operations of Debtor from the
date referred to in Section 4(j) hereof; (i) CIT has received from Debtor such
other documents and information as CIT has reasonably requested; (j) CIT has
inspected and appraised the Equipment and found it satisfactory in value and
condition; and (k) CIT has received and found satisfactory Debtor's most recent
quarterly financial statement.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce CIT to enter into this Agreement and to make each
Loan, Debtor represents and warrants to CIT that: (a) Debtor is a corporation
duly organized, validly existing and in good standing under the laws of its
State of incorporation, has the necessary authority and power to own the
Equipment and its other assets and to transact the business in which it is
engaged, is duly qualified to do business in each jurisdiction where the
Equipment is located and in each other jurisdiction in which the conduct of its
business or the ownership of its assets requires such qualification, and its
chief executive office is located at the address set forth in paragraph 5 of
Rider A; (b) Debtor has
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full power, authority and legal right to execute and deliver this Agreement and
the Notes, to perform its obligations hereunder and thereunder, to borrow
hereunder and to grant the security interest created hereby; (c) this Agreement
has been (and each Note when executed and delivered shall have been) duly
authorized, executed and delivered by Debtor and constitutes (and each Note when
executed and delivered shall constitute) a legal, valid and binding obligation
of Debtor enforceable in accordance with its terms except as such rights may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally; (d) the execution, delivery and
performance by Debtor of this Agreement and the Notes do not and will not
violate any provision of any applicable law or regulation or of any judgment or
order of any court or governmental instrumentality, and will not violate any
provision of, or cause a default under, any loan, other agreement, contract or
judgment to which Debtor is a party and do not and will not require the consent,
license, approval or authorization of, or registration with, any Person; (e)
Debtor is not in default under any material agreement, contract or judgment to
which Debtor is a party; (f) Debtor has filed all tax returns that are required
to be filed and has paid all taxes as shown on said returns and all assessments
received by it to the extent such taxes and assessments have become due other
than those which are being contested in good faith by appropriate proceedings
and as to which appropriate reserves are being maintained by Debtor in
accordance with generally accepted accounting principles and so long as such
proceedings operate during the pendency thereof to prevent the sale, forfeiture,
or loss of the Collateral, and Debtor does not have any knowledge of any actual
or proposed deficiency or additional assessment in connection therewith; (g)
there is no action, audit, investigation or proceeding pending or threatened
against or affecting Debtor or any of its assets which involves any of the
Equipment or any of the contemplated transactions hereunder or which, if
adversely determined, could have a material adverse effect on Debtor's business,
operations or financial condition; (h) on each Closing Date, Debtor shall have
good and marketable title to the Equipment being financed on such date and CIT
shall have a perfected first (and only) Lien on such Equipment; and (i) (i) the
operations of Debtor comply in all material respects with all applicable
Environmental Laws; and (ii) except as disclosed to CIT, (A) none of the
operations of Debtor are subject to any judicial or administrative proceeding
alleging the violation of any Environmental Laws; (B) none of the operations of
Debtor is the subject of an investigation to determine whether any remedial
action is needed to respond to a release of any Hazardous Material into the
environment; and (C) Debtor has no known material contingent liability in
connection with any release of any Hazardous Material into the environment: (j)
all financial statements of Debtor which have been delivered to CIT have been
prepared in accordance with generally accepted accounting principles
consistently applied, and present fairly Debtor's financial position as at, and
the results of its operations for, the periods ended on the dates set forth on
such financial statements, and there has been no material adverse change in
Debtor's financial condition, business or operations since May 31, 1995, as
reflected in such financial statements; and (k) Debtor has not changed its name
in the last five years or done business under any other name except as
previously disclosed in writing to CIT.
SECTION 5. COVENANTS.
Debtor covenants and agrees that from and after the date hereof and so
long as the Commitment or any of the Notes is outstanding:
A. It will: (1) promptly give written notice to CIT of the occurrence
of any Event of Loss; (2) observe all material requirements of any governmental
authorities relating to the conduct of its business, to the performance of its
obligations hereunder, to the use, operation or ownership of the Equipment, or
to its other properties or assets, maintain its existence as a legal entity and
obtain and keep in full force and effect all rights, franchises, licenses and
permits which are necessary to the proper conduct of its business, and pay all
fees, taxes, assessments and governmental charges or levies imposed upon any of
the Equipment; (3) at any reasonable time or times, and upon reasonable notice,
permit CIT or its authorized representative to inspect the Equipment and,
following the occurrence and during the continuation of an Event of Default, to
inspect the books and records of Debtor as they pertain to the Equipment; (4) in
accordance with generally accepted accounting principles, keep proper books of
record and account in which entries will be made of all dealings or transactions
in relation to its business and activities; (5) furnish to CIT the following
financial statements, all in reasonable detail, prepared in accordance with
generally accepted accounting principles applied on a basis consistently
maintained throughout the period involved, (a) not later than 120 days after the
end of each fiscal year, its consolidated balance sheet as at the end of such
fiscal year, and its consolidated statements of income and consolidated
statements of cash flow and all footnotes of such fiscal year together with
comparative information for the prior fiscal year, audited by a "Big Six"
certified public accounting firm; and (b) not later than 90 days after the end
of each of the first three quarterly periods of each fiscal year, its
consolidated balance
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sheet as at the end of such quarterly period and its consolidated statements of
income and consolidated statements of cash flow for such quarterly period and
for the portion of the fiscal year then ended together with comparative
information for the prior comparable period, certified by its chief financial
officer as fairly presenting the results of operations and financial position of
Debtor for the periods then ended and as of the date thereof, respectively; (6)
(i) furnish to CIT, together with the financial statements described in clauses
5(a) and 5(b) above, a statement signed by Debtor's chief financial officer
certifying that Debtor is in compliance with all financial covenants contained
in any documents evidencing a financial obligation to which Debtor is a party,
or if Debtor is not in compliance, the nature of such noncompliance or default,
and the status thereof (such statement shall set forth the actual calculations
of any financial covenants and the details of any amendments or modifications of
any financial covenants), and (ii) promptly, such additional financial and other
information as CIT may from time to time reasonably request; (7) promptly, at
Debtor's expense, execute and deliver to CIT such instruments and documents, and
take such action, as CIT may from time to time reasonably request in order to
carry out the intent and purpose of this Agreement and to establish and protect
the rights, interest and remedies created, or intended to be created, in favor
of CIT hereby, including, without limitation, the execution, delivery,
recordation and filing of financing statements (hereby authorizing CIT, in such
jurisdictions where such action is authorized by law, to effect any such
recordation or filing of financing statements without Debtor's signature, and to
file as valid financing statements in the applicable financing statement
records, photocopies hereof, of the Supplements and of any other financing
statement executed in connection herewith); (8) warrant and defend its good and
marketable title to the Equipment, and CIT's perfected first (and only) priority
security interest in the Collateral, against all claims and demands whatsoever
(hereby agreeing that the Equipment shall be and at all times remain separately
identifiable personal property, and shall not become part of any real estate),
and will, at its expense, take such action as may be necessary to prevent any
other Person from acquiring any right or interest in the Equipment; (9) at
Debtor's expense, if requested by CIT in writing, attach to the Equipment a
notice satisfactory to CIT disclosing CIT's security interest in the Equipment;
(10) at Debtor's expense, maintain the Equipment in good condition and working
order (and, where applicable, in full configuration as listed on the (i)
Appraisal of Fixed Assets and Equipment, dated August 2, 1995, prepared by Asset
Reliance, Inc. for Equipment located at 0000 Xxxx Xxxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxx, and (ii) Appraisal of Fixed Assets and Equipment, dated July
28, 1995, prepared by Asset Reliance, Inc. for Equipment located at 0000 Xxxxxx
Xxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxx 00000-0000) and furnish all parts, replacements
and servicing required therefor so that the value, condition and operating
efficiency thereof will at all times be maintained, normal wear and tear
excepted, and any repairs, replacements and parts added to the Equipment in
connection with any repair or maintenance or with any improvement, change,
addition or alteration of a permanent nature shall immediately, without further
act, become part of the Equipment and subject to the security interest created
by this Agreement; and (11) obtain and maintain at all times on the Collateral,
at Debtor's expense, "All-Risk" physical damage and, if required by CIT,
liability insurance (including bodily injury and property damage) in such
amounts, against such risks, in such form and with such insurers as shall be
reasonably satisfactory to CIT; provided, however, that the amount of physical
damage insurance shall not be less than the then aggregate outstanding principal
amount of the Notes. All physical damage insurance policies shall be made
payable to CIT as its interest may appear; if liability insurance is required by
CIT, the liability insurance policies shall name CIT as an additional insured.
Debtor shall maintain and deliver to CIT the original certificates of insurance
or other documents reasonably satisfactory to CIT prior to policy expiration or
upon CIT's request, but CIT shall bear no duty or liability to ascertain the
existence or adequacy of such insurance. Each insurance policy shall, among
other things, require that the insurer give CIT at least 30 days' prior written
notice of any alteration in the terms of such policy or the cancellation thereof
and that the interests of CIT be continued insured regardless of any breach of
or violation by Debtor of any warranties, declarations or conditions contained
in such insurance policy. The insurance maintained by the Debtor shall be
primary with no other insurance maintained by CIT (if any) contributory.
B. Without the prior written consent of CIT, it will not: (1) sell,
convey, transfer, exchange, lease or otherwise relinquish possession or dispose
of any of the Collateral or attempt or offer to do any of the foregoing; (2)
create, assume or suffer to exist any Lien upon the Collateral except for the
security interest created hereby; (3) liquidate or dissolve; (4) change the form
of organization of its business; or (5) without thirty (30) days prior written
notice to CIT, change its name or its chief executive office; (6) move (or in
the case of titled vehicles, change the principal base of) any of the Equipment
from the location specified on the Supplement relating thereto without the prior
written consent of CIT; or (7) make or authorize any improvement, change,
addition or alteration to the Equipment which would impair its originally
intended function or use or its value. Notwithstanding anything set forth above,
CIT hereby agrees that Debtor may substitute as Collateral for items of
Equipment that are redundant to Debtor's needs items of equipment of similar
type and value which are in as good or better condition as the items of
Equipment that are redundant to
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Debtor's needs, which substitute equipment must be acceptable to CIT.
SECTION 6. EVENTS OF DEFAULT; REMEDIES.
The following events shall each constitute an "Event of Default"
hereunder: (a) Debtor shall fail to pay any Obligation within 5 Business Days
after Debtor's receipt of notice that timely payment has not been received
(whether at the stated maturity, by acceleration or otherwise); (b) any
representation or warranty made by Debtor in this Agreement or in any document,
certificate or financial or other statement now or hereafter furnished by Debtor
in connection with this Agreement or any Loan shall at any time prove to be
untrue or misleading in any material respect as of the time when made; (c)
Debtor shall fail to observe any covenant, condition or agreement contained in
Sections 5.A(11) or 5.B hereof or in paragraph 4(b) of Rider A; (d) Debtor shall
fail to observe or perform any other covenant or condition contained in this
Agreement, and such failure shall continue unremedied for a period of 30 days
after the earlier of the date on which Debtor obtains knowledge of such failure
or the date on which notice thereof shall be given by CIT to Debtor; (e) Debtor
or any affiliate of Debtor shall default in the payment of, or other performance
under, any obligation for payment or lease (whether or not capitalized) or any
guarantee (i) to CIT, any affiliate of CIT or to Debtor's main bank, beyond the
period of grace, if any, provided with respect thereto, or (ii) to any other
Person beyond the period of grace, if any, provided with respect thereto, where
such obligation or amount guaranteed is in excess of $1,000,000.00; or (f) a
complaint in bankruptcy or for arrangement or reorganization or for relief under
any insolvency law is filed by or against Debtor (and when filed against Debtor
is in effect for 60 days) or Debtor admits its inability to pay its debts as
they mature.
If an Event of Default shall occur, CIT may, by notice of default given
to Debtor, do any one or more of the following: (a) terminate the Commitment
and/or (b) declare the Notes to be due and payable, whereupon the principal
amount of the Notes, together with accrued interest thereon and all other
amounts owing under this Agreement and the Notes, shall become immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived (and in the case of any Event of
Default specified in clause (f) of the above paragraph, such acceleration of the
Notes shall be automatic, without any notice by CIT). In addition, if an Event
of Default shall occur and be continuing, CIT may exercise all other rights and
remedies available to it, whether under this Agreement, under any other
instrument or agreement securing, evidencing or relating to the Obligations,
under the Code, or otherwise available at law or in equity. Without limiting the
generality of the foregoing, Debtor agrees that in any such event, CIT, without
demand of performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or private sale)
to or upon Debtor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived), may forthwith do any
one or more of the following: collect, receive, appropriate and realize upon the
Collateral or any part thereof, and sell, lease, assign, give an option or
options to purchase or otherwise dispose of and deliver, the Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales at such places and at such prices as it may deem best, for
cash or on credit or for future delivery without the assumption of any credit
risk. CIT shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption of Debtor, which right or equity is hereby expressly released. Debtor
further agrees, at CIT's request, to assemble (at Debtor's expense) the
Collateral and make it available to CIT at such places which CIT shall select,
whether at Debtor's premises or elsewhere. CIT shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale
(after deducting all reasonable costs and expenses of every kind incurred
therein or incidental to the care, safekeeping or otherwise of any or all of the
Collateral or in any way relating to the rights of CIT hereunder, including
reasonable attorney's fees and legal expenses) to the payment in whole or in
part of the Obligations, in such order as CIT may elect. Debtor agrees that CIT
need not give more than 10 days' notice of the time and place of any public sale
or of the time after which a private sale may take place and that such notice is
reasonable notification of such matters. Debtor shall be liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which CIT is entitled. Debtor agrees to pay
all costs of CIT, including reasonable attorneys' fees, incurred with respect to
collection of any of the Obligations and enforcement of any of CIT's rights
hereunder. To the extent permitted by law, Debtor hereby waives presentment,
demand, protest or any notice (except as expressly provided in this Section 6)
of any kind in connection with this Agreement or any Collateral.
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SECTION 7. MISCELLANEOUS.
No failure or delay by CIT in exercising any right, remedy or privilege
hereunder or under any Note shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy or privilege. No right or remedy in this Agreement is
intended to be exclusive but each shall be cumulative and in addition to any
other remedy referred to herein or otherwise available to CIT at law or in
equity; and the exercise by CIT of any one or more of such remedies shall not
preclude the simultaneous or later exercise by CIT of any or all such other
remedies. No express or implied waiver by CIT of an Event of Default shall in
any way be, or be construed to be, a waiver of any other or subsequent Event of
Default. The acceptance by CIT of any regular installment payment or any other
sum owing hereunder shall not (a) constitute a waiver of any Event of Default in
existence at the time, regardless of CIT's knowledge or lack of knowledge
thereof at the time of such acceptance, or (b) constitute a waiver of any Event
of Default unless CIT shall have agreed in writing to waive the Event of
Default.
All notices, requests and demands to or upon any party hereto shall be
deemed duly given or made when sent, if given by telecopier, when delivered, if
given by personal delivery or overnight commercial carrier, upon receipt, after
deposit in the United States mail, certified mail, return receipt requested,
addressed to such party at its address (or telecopier number) set forth in
paragraph 5 of Rider A or such other address or telecopier number as may be
hereafter designated in writing by such party to the other party hereto.
Debtor agrees, whether or not the contemplated transactions are
consummated, (A) to pay or reimburse CIT for (i) all expenses of CIT in
connection with the documentation thereof; (ii) all fees, taxes and expenses of
whatever nature incurred in connection with the creation, preservation and
protection of CIT's security interest in the Collateral, including, without
limitation, all filing and lien search fees, payment or discharge of any taxes
or Liens upon, or in respect to, the Collateral, and all other fees and expenses
in connection with protecting or maintaining the Collateral or in connection
with defending or prosecuting any actions, suits or proceedings arising out of,
or related to, the Collateral; and (iii) all costs and expenses (including
reasonable legal fees and disbursements) of CIT in connection with the
enforcement of this Agreement and the Notes, and (B) to pay, and to indemnify
and hold CIT harmless from and against any and all liabilities, obligations,
losses, damages, penalties, claims, actions, judgments, suits, out-of-pocket
costs, expenses (including reasonable legal expenses) or disbursements of any
kind or nature whatsoever arising out of or with respect to (a) this Agreement,
the Collateral or CIT's interest therein, including, without limitation, the
execution, delivery, enforcement, performance or administration of this
Agreement and the Notes and the manufacture, purchase, ownership, possession,
use, selection, operation or condition of the Collateral or any part thereof, or
(b) Debtor's violation or alleged violation of any Environmental Laws or any law
or regulation relating to Hazardous Materials (the foregoing being referred to
as the "indemnified liabilities"), provided, that Debtor shall have no
obligation hereunder with respect to indemnified liabilities arising from the
gross negligence or willful misconduct of CIT. CIT hereby agrees that the fees,
costs and expenses set forth in A(i) and (ii) above shall not exceed $2,500.00
without Debtor's prior written consent. If Debtor fails to perform or comply
with any of its agreements contained in this Agreement and CIT shall itself
perform, comply or cause performance or compliance, the expenses of CIT so
incurred, together with interest thereon at the Late Charge Rate, shall be
payable by Debtor to CIT on demand and until such payment is made shall
constitute Obligations hereunder. The agreements and indemnities contained in
this paragraph shall survive termination of this Agreement and payment of the
Notes.
This Agreement contains the complete, final and exclusive statement of
the terms of the agreement between CIT and Debtor related to the contemplated
transactions, and neither this Agreement, nor any terms hereof, may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of a change, waiver, discharge or
termination is sought.
This Agreement shall be binding upon, and inure to the benefit of,
Debtor and CIT and their respective successors and assigns, except that Debtor
may not assign or transfer its rights hereunder or any interest herein without
the prior written consent of CIT.
Headings of sections and paragraphs are for convenience only, are not
part of this Agreement and shall not be deemed to affect the meaning or
construction of any of the provisions hereof. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
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prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Debtor hereby authorizes CIT to correct patent errors and to fill in
such blanks as serial numbers and dates herein and in the Notes, Supplements and
in any document executed in connection herewith.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
DEBTOR HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION IN
CONNECTION WITH THIS AGREEMENT MAY BE INSTITUTED IN THE COURTS OF THE STATE OF
NEW YORK, IN THE COUNTY OF NEW YORK OR THE UNITED STATES COURTS FOR THE SOUTHERN
DISTRICT OF NEW YORK, AS CIT MAY ELECT, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, DEBTOR HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT, AND
TO ALL PROCEEDINGS IN SUCH COURTS. DEBTOR AND CIT ACKNOWLEDGE THAT JURY TRIALS
OFTEN ENTAIL ADDITIONAL EXPENSES AND DELAYS NOT OCCASIONED BY NONJURY TRIALS.
DEBTOR AND CIT AGREE AND STIPULATE THAT A FAIR TRIAL MAY BE HAD BEFORE A STATE
OR FEDERAL JUDGE BY MEANS OF A BENCH TRIAL WITHOUT A JURY. IN VIEW OF THE
FOREGOING, AND AS A SPECIFICALLY NEGOTIATED PROVISION OF THIS AGREEMENT, DEBTOR
AND CIT HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT, OR THE TRANSACTIONS
RELATED HERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
IN CONTRACT OR TORT OR OTHERWISE; AND DEBTOR AND CIT HEREBY AGREE AND CONSENT
THAT DEBTOR OR CIT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of August 14, 1995.
CIT: DEBTOR:
THE CIT GROUP/EQUIPMENT MEGATEST CORPORATION
FINANCING, INC., A DELAWARE CO
A NEW YORK CORPORATION
By: /s/ XXXXXX XXXXX By: /s/ XXXX X. XXXXX, XX
--------------------------- ---------------------------
Title: Senior Vice President Title: VP Finance & CFO
----------------------- ------------------------
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[LOGO]
RIDER A TO
LOAN AND SECURITY AGREEMENT
DATED AUGUST 14, 1995
BETWEEN THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT") AND
MEGATEST CORPORATION ("DEBTOR").
1. DEFINITIONS. As used in the Loan and Security Agreement, the following
terms shall have the following defined meanings (applicable to both singular
and plural forms), unless the context otherwise requires:
"Agreement": "hereof", "hereto", "hereunder" and words of similar
meaning: the Loan and Security Agreement of even date herewith between Debtor
and CIT including this Rider A and any other rider, schedule and exhibit
executed by Debtor and CIT in connection herewith, as from time to time
amended, modified or supplemented.
"Business Day": a day other than a Saturday, Sunday or legal holiday
under the laws of the State of New York.
"Closing Date": each date on which a Loan is made.
"Code": the Uniform Commercial Code as from time to time in effect
in any applicable jurisdiction.
"Collateral": the Equipment and the Proceeds thereof.
"Commitment": CIT's obligation to make Loans in the aggregate
principal amount stated in paragraph 2 of this Rider A.
"Cost": with respect to any item of Equipment, the orderly
liquidation value of such Equipment, which orderly liquidation value shall be
set forth in the applicable Supplement.
"Default": any event which with notice, lapse of time, or both would
constitute an Event of Default.
"Equipment": any and all items of property which are listed on
Supplements, together with all now owned or hereafter acquired accessories,
parts, repairs, replacements, substitutions, attachments, modifications,
additions, improvements, upgrades and accessions of a permanent nature, to or
upon such items of property.
"Environmental Laws": the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, any
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act, or
any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect.
"Event of Default": as set forth in Section 6 of the Agreement.
"Event of Loss": with respect to any item of Equipment, (i) the actual
or constructive loss or loss of use thereof, due to theft, destruction, damage
beyond repair or to an extent which makes repair uneconomical, or (ii) the
condemnation, confiscation or seizure thereof, or requisition of title thereto,
or use thereof, by any Person.
"Hazardous Materials": any pollutant or contaminant defined as such in
(or for the purposes of) any Environmental Laws including, but not limited to,
petroleum, any radioactive material, and asbestos in any form or condition.
"Installment Payment Date": with respect to any Note, each date on
which a regular installment of principal is due.
"Interest Rate": as set forth in paragraph 3 of this Rider A.
"Late Charge Rate": a rate per annum equal to 3% over the applicable
Interest Rate, but not to exceed the highest rate permitted by applicable law.
"Liens": liens, mortgages, security interests, financing statements or
other encumbrances of any kind whatsoever.
"Loan": each loan made pursuant to the Agreement.
"Note": each promissory note executed and delivered by Debtor pursuant
hereto, satisfactory in form and substance to CIT.
"Obligations": all indebtedness, obligations, liabilities and
performance of Debtor to CIT, now existing or hereafter incurred under, arising
out of, or in connection with, the Agreement or any Note; and any and all other
present and future indebtedness, obligations, liabilities and performance of any
kind whatsoever of Debtor to CIT, whether direct or indirect, joint or several,
absolute or contingent, liquidated or unliquidated, secured or unsecured,
matured or unmatured and whether originally contracted with CIT or otherwise
acquired by CIT.
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"Person": an individual, partnership, corporation, trust,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
"Proceeds": the meaning assigned to it in the Code, and in any event,
including, without limitation, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Debtor from time to time with respect
to any of the Equipment; (ii) any and all payments made, or due and payable from
time to time, in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Equipment by any Person; (iii)
any and all accounts arising out of, or chattel paper evidencing a lease of, any
of the Equipment; and (iv) any and all other rents or profits or other amounts
from time to time paid or payable in connection with any of the Equipment.
"Prohibited Transaction": a transaction in which: (i) Debtor enters
into any transaction of merger or consolidation where after giving effect to
such merger or consolidation its tangible net worth does not equal or exceed
that which existed prior to such merger or consolidation; or (ii) Debtor sells,
transfers or otherwise disposes of all or any substantial part of its assets;
or (iii) any Person, or group of Persons acting together, becomes or agrees to
become the beneficial owner (directly or indirectly) of 50% or more of Debtor's
shares of voting stock (excluding current shareholders as of the date of this
Agreement owning 50% or more of Debtor's shares of voting stock).
"Supplement": each supplement executed and delivered by Debtor
pursuant hereto, satisfactory in form and substance to CIT.
"Treasury Rate": with respect to any Loan made hereunder, the rate per
annum equal to the yield to maturity for the U.S. Treasury Security having a
remaining term to maturity closest to 4 years as at (and shall be fixed as of)
the close of business on the 3rd Business Day prior to the making of such Loan
as reported on page 5 ("U.S. Treasury and Money Markets") of the information
ordinarily provided by Telerate Systems Incorporated.
2. LOAN AND COMMITMENT. The aggregate principal amount of all Loans shall
not exceed $5,000,000.00. Each Loan shall be in a principal amount of not
less than $250,000.00. CIT's Commitment shall terminate on September 30, 1995.
3. INTEREST RATE. The interest rate per annum on the unpaid principal amount
of each Loan shall be equal to the Treasury Rate plus 3.32%.
4. PREPAYMENT. (a) Should any item of Equipment suffer an Event of Loss, Debtor
shall either (i) make a prepayment on the corresponding Note within 30 days
thereafter, or (ii) substitute as Collateral for the item of Equipment which was
subject to an Event of Loss an item of equipment of similar type and value which
is in as good or better condition as the item which suffered an Event of Loss,
and is acceptable to CIT. The amount to be prepaid shall be (i) the unpaid
principal amount of such Note multiplied by a fraction the numerator of which is
the Cost of the item of Equipment which suffered the Event of Loss and the
denominator of which is the original Cost of all Equipment less the Cost of each
item of Equipment which previously suffered an Event of Loss or for which a
prepayment has otherwise previously been made (the "Prepaid Principal Amount"),
and (ii) all other amounts then due and owing hereunder and under the Notes.
(b) Not less than twenty (20) Business Days prior to the date the
proposed Prohibited Transaction is expected to be consummated, Debtor shall give
CIT written notice of the proposed Prohibited Transaction. In the event CIT does
not consent to the Prohibited Transaction and the Prohibited Transaction is
nonetheless to be consummated, Debtor shall, on or prior to the date the
Prohibited Transaction is to be consummated, prepay the outstanding principal
under all Notes together with (1) all interest accrued thereon, and (2) all
other amounts then due and owing hereunder and under the Notes.
(c) On any Installment Payment Date occurring on or after the 13th
Installment Payment Date with respect to the Note executed hereunder, Debtor
may, at its option, on at least 30 days' prior written notice to CIT, prepay
all, or any part of, the outstanding principal under all Notes executed
hereunder together with (i) interest accrued thereon to the date of prepayment,
and (ii) all other amounts then due and owing hereunder or under the Notes. In
addition, upon any prepayment pursuant to this paragraph 4(c), Debtor shall pay
to CIT a prepayment fee in an amount equal to 3% of the principal being prepaid
at month 13 and declining rateably thereafter over the remaining Loan term.
(d) Except as provided in (a), (b) or (c) of this paragraph 4, the Notes
may not be prepaid in whole or in part.
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5. ADDRESSES FOR NOTICE PURPOSES AND DEBTOR'S CHIEF EXECUTIVE OFFICE.
CIT: DEBTOR:
THE CIT GROUP/EQUIPMENT FINANCING, INC. MEGATEST CORPORATION
Address: Address:
1211 Avenue of the Americas 0000 Xxxxxx Xxxx Xxxxx
00xx Xxxxx Xxx Xxxx, Xxxxxxxxxx 00000-0000
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No. (000) 000-0000 Telecopier No. (000) 000-0000
Attention: Senior Vice President/Credit Attention: Vice President - Finance
6. COMMITMENT FEE. CIT acknowledges receipt from Debtor of a commitment fee in
the amount of $10,000.00 (the "Commitment Fee"). CIT agrees to refund to Debtor
after the expiration of the commitment period hereunder and completion by CIT of
all follow-up matters related to the transactions contemplated hereby, as the
refundable portion of the Commitment Fee, the amount determined in accordance
with the following formula:
Refund = $10,000.00 Aggregate principal amount of all Loans made
X hereunder - not to exceed $5,000,000.00
--------------------------------------------
$5,000,000.00
Such refund shall be net, however, of any out-of-pocket fees, costs,
disbursements and expenses incurred by CIT (not to exceed $2,500.00) in
connection with the transactions contemplated hereby. Debtor agrees that the
difference, if any, between the amount of the Commitment Fee and the amount
determined in accordance with the foregoing formula shall be retained by CIT. In
the event no Loan is made hereunder, CIT shall retain the entire Commitment Fee.
THE PROVISIONS SET FORTH IN THIS RIDER A ARE INCORPORATED IN AND MADE A PART OF
THE LOAN AND SECURITY AGREEMENT BETWEEN CIT AND DEBTOR DATED AS OF AUGUST 14,
1995.
CIT: DEBTOR:
THE CIT GROUP/EQUIPMENT MEGATEST CORPORATION,
FINANCING, INC., A NEW YORK CORPORATION A DELAWARE CORPORATION
By: /s/ XXXXXX XXXXX By: /s/ XXXX X. XXXXX, XX
------------------------------ -------------------------
Title: Senior Vice President Title: VP Finance & CFO
--------------------------- ----------------------
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10
PROMISSORY NOTE
$5,000,000.00 August 15, 1995
FOR VALUE RECEIVED, MEGATEST CORPORATION ("Debtor") promises to pay to
the order of THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT"), at such address as
CIT may designate, in lawful money of the United States, the principal sum of
FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00) together with interest in like
money on the principal sum remaining unpaid from time to time from the date of
this Note until due and payable (whether as stated, by acceleration or
otherwise) at the rate of nine and .4735/100 percent (9.4735%) per annum, said
principal and interest to be paid in forty-eight (48) consecutive monthly
installments, commencing on September 15, 1995 with the following installments
on the same day of each month thereafter until payment in full of this Note.
Each such installment shall be a level payment of principal and interest in the
amount of $125,552.42. Each such installment shall be applied first to the
payment of any unpaid interest on the principal sum and then to payment of
principal. Interest shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Any amount not paid when due under this Note
shall bear late charges thereon, calculated at the Late Charge Rate, from the
due date thereof until such amount shall be paid in full. Any payment received
after the maturity of any installment of principal shall be applied first to the
payment of unpaid late charges, second to the payment of any unpaid interest on
said principal, and third to the payment of principal.
This Note is one of the Notes referred to in the Loan and Security
Agreement dated as of August 14, 1995 between Debtor and CIT (herein, as the
same may from time to time be amended, supplemented or otherwise modified,
called the "Agreement"), is secured as provided in the Agreement, and is subject
to prepayment only as provided therein, and the holder hereof is entitled to the
benefits thereof.
Terms defined in the Agreement shall have the same meaning when used in
this Note, unless the context shall otherwise require.
Except as provided in the Agreement, Debtor hereby waives presentment,
demand of payment, notice of dishonor, and any and all other notices or demands
in connection with the delivery, acceptance, performance, default or enforcement
of this Note and hereby consents to any extensions of time, renewals, releases
of any party to this Note, waivers or modifications that may be granted or
consented to by the holder of this Note.
Upon the occurrence of any one or more of the Events of Default
specified in the Agreement, the amounts then remaining unpaid on this Note,
together with any interest accrued, may be declared to be (or, with respect to
certain Events of Default, automatically shall become) immediately due and
payable as provided therein.
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges and all
costs and expenses of such action, including reasonable attorneys' fees. In
accordance with the provisions of the Agreement, Debtor and CIT waive trial by
jury in any litigation relating to or in connection with this Note in which they
shall be adverse parties, and
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11
Debtor hereby waives the right to interpose any setoff, counterclaim or defense
of any nature or description whatsoever.
Debtor agrees that its liabilities hereunder are absolute and
unconditional without regard to the liability of any other party, and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right.
If at any time this transaction would be usurious under applicable law,
then regardless of any provision contained in the Agreement, in this Note or in
any other agreement made in connection with this transaction, it is agreed that
(a) the total of all consideration which constitutes interest under applicable
law that is contracted for, charged or received upon the Agreement, this Note or
any such other agreement shall under no circumstances exceed the maximum rate of
interest authorized by applicable law and any excess shall be credited to Debtor
and (b) if CIT elects to accelerate the maturity of, or if CIT permits Debtor to
prepay the indebtedness described in, this Note, any amounts which because of
such action would constitute interest may never include more than the maximum
rate of interest authorized by applicable law and any excess interest, if any,
shall be credited to Debtor automatically as of the date of acceleration or
prepayment.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
MEGATEST CORPORATION
By: /s/ XXXX X. XXXXX XX
--------------------------
Title: VP Finance & CFO
-----------------------
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