Exhibit 10(w)
LOAN AGREEMENT
Dated as of April 27, 1998
AMERICAN MEDICAL ALERT CORP., a New York corporation, having its
principal place of business at 0000 Xxxxxx Xxxx., Xxxxxxxxx, Xxx Xxxx 00000 (the
"Borrower") and EUROPEAN AMERICAN BANK, a New York banking corporation, having
an office at 0 XXX Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Bank") 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):
"Accounts" shall mean those accounts arising out of the sale or
lease of goods or the rendition of services by the Borrower.
"Account Debtor" shall mean the Person who is obligated on or under
an Account.
"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
five (5%) percent or more of any class of voting stock of, or five (5%) percent
or more of the equity interest in, such Person; or (iii) a Person five (5%)
percent or more of the voting stock of which, or five (5%) 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.
"Agreement" means this Loan Agreement, as amended, supplemented or
modified from time to time.
"Board of Governors" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing Base" means the sum of seventy five (75%) of the
Borrower's Eligible Accounts Receivable, plus (ii) the lesser of (x) twenty five
(25%) percent of the Borrower's Eligible Inventory or (y) $400,000.00.
"Business Day" means (i) a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to close and (ii) if the relevant day relates to a Eurodollar Loan, an
Interest Period, or notice with respect to a Eurodollar Loan, a day on which
dealings in Dollar deposits are carried on in the London interbank market.
"Capital Base" means the Borrower's (i) shareholder's equity plus
(ii) Subordinated Debt minus (iii) intangible assets (including amounts due from
officers or Affiliates of the Borrower).
"Capital Lease" means a lease which has been or should be, in
accordance with GAAP, capitalized on the books of the lessee.
"Collateral" means all property which is subject or is to be subject
to the Lien granted by the Security Agreement.
"Commitment" means the Bank's obligation to make Revolving Credit
Loans and Term Loans to the Borrower pursuant to the terms and conditions of
this Agreement.
"Current Assets" means, as to any Person, at any date, the aggregate
amount of all assets of such Person which would be properly classified as
current assets at such date, but excluding deferred assets, all computed in
accordance with GAAP.
"Current Liabilities" means, as to any Person, the aggregate amount
of all liabilities of such Person (including tax and other proper accruals)
which would be properly classified as current liabilities, including the
outstanding principal amount of the Notes, all computed in accordance with GAAP.
"Debt" means, as to any Person, (i) all 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 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 under letters of credit issued for the
account of such Person; (vi) obligations of such Person arising under acceptance
facilities; (vii) all 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; and (ix) 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 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.
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"Eligible Accounts Receivable" means Accounts which are due and
payable within ninety (90) days from the original date of invoice and are
satisfactory to the Bank in its sole credit judgment based on information
available to the Bank. References to percentages of all Accounts are based on
dollar amount of Accounts, and not number of Accounts.
"Eligible inventory" shall mean all unencumbered inventory of
finished goods from time to time on hand satisfactory to the Bank in its sole
discretion, valued at the lower of (a) cost, (b) market value, or (c) the
valuation consistent with that employed in the preparation of the financial
statements of the Borrower referred to in Section 5.01(b) hereof. The total
amount of Eligible Inventory shall not at any time exceed $400,000.00.
"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 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.
"Eurocurrency Reserve Requirement" means, with respect to the LIBOR
Rate for an Interest Period, the aggregate (without duplication) daily average
of the rates (expressed as a decimal fraction) of reserve requirements in effect
on such day (including, without limitation, basic, marginal, supplemental or
emergency reserves) under any regulation (including, but without limitation,
Regulation D) promulgated by the Board of Governors (or any successor thereto or
other governmental authority having jurisdiction over the Bank) by the Bank
against "Eurocurrency liabilities" (as such term is used in Regulation D) , but
without benefit or credit for proration, exemptions or offsets that might
otherwise be available to the Bank from time to time under Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall
reflect any other reserves required to be maintained by the Bank against (1) any
category of liabilities that includes deposits by reference to which the LIBOR
Rate is to be determined; or (2) any category of extension of credit or other
assets that include loans bearing a LIBOR Rate. As of the date of this Agreement
there are no Eurocurrency Reserve Requirements in effect.
"Eurodollar Loan" means a Loan bearing interest at an interest rate
determined with reference to the 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.
"Fixed Rate" means an annual rate of interest equal to 2 1/4% in
excess of the United States Treasury Note yield for a period equal to the period
of a Term Loan, determined by the Bank to be in effect two (2) days prior to the
date of such Term Loan.
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"Fixed Rate Loan" means a Term Loan bearing interest at a Fixed Rate
in accordance with the provisions of Article II hereof.
"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 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 the Borrower and the Bank 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 Bank, of the independent
accountants selected by the Borrower and approved by the Bank for the purpose of
auditing the periodic financial statements of the Borrower.
"Guarantor" or Guarantors" means any Person required to guarantee
the obligations of the Borrower 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 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 a Prime Rate
Loan is converted to a Eurodollar Loan and, in the case of a Eurodollar Loan,
the last day of the applicable Interest Period.
"Interest Payment Date" means (i) as to each Eurodollar Loan, the
first Business Day of each month during the applicable Interest Period and the
last day of each Interest Period, (ii) as to each Prime Rate Loan, the first
Business Day of each month, and (iii) as to each Fixed Rate Loan, the first
Business Day of each month.
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"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 or three months
thereafter, as the Borrower may elect (or, if there is no numerically
corresponding day, on the last Business Day of such month); provided, however,
(i) that no Interest Period shall end later than the Maturity Date, (ii) 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,
(iii) interest shall accrue from and including the first day of such Interest
Period to but excluding the date of payment of such interest, and (iv) no
Interest Period of particular duration may be selected by the Borrower if the
Bank determines, in its sole, good faith discretion, that Eurodollar Loans with
such maturities are not generally available.
"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 accordance with
customary trade terms in the ordinary course of business) and any purchase of
(i) any security 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
investment.
"LIBOR Rate" means the rate per annum identified as the LIBOR Rate
for a requested Interest Period as published on page 3750 of the Dow Xxxxx
Telerate service.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other) , or preference, priority, or 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 Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"Loan" or "Loans" means the Term Loans and the Revolving Credit
Loans or any or all of the same as the context may require and includes Prime
Rate Loans and Eurodollar Loans, as the context may require.
"Loan Documents" means this Agreement, the Notes, the Guaranties,
the Security Agreements 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 (ii) any event or occurrence which could
have a material adverse effect on the ability of such Person to perform its
obligations under the Loan Documents.
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"Maturity Date" means May 31, 2000.
"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 Term Loan Notes, the Revolving Credit
Note 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 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 Investor Services,
Inc. or Standard & Poor's Corporation, respectively; or (v) tax exempt
securities rated Prime 2 or better by Xxxxx'x Investor Services, Inc. or A-1 or
better by Standard & Poor's Corporation.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, 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.
"Plan" means any employee benefit plan established, maintained, or
to which contributions have been made by the Borrower or any ERISA Affiliate.
"Prime Rate" means the fluctuating rate per annum equal to the rate
of interest publicly announced by the Bank at its principal office from time to
time as its Prime Rate, each change in the Prime Rate to be effective on the
date such change is announced to be 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.
"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, as the
same may be amended and in effect from time to time.
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"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.
"Revolving Credit Loans" shall have the meaning assigned to such
term in Section 2.08 of this Agreement.
"Revolving Credit Note" means a promissory note of the Borrower
payable to the order of the Bank, in substantially the form of Exhibit A annexed
hereto, evidencing the aggregate indebtedness of the Borrower to the Bank
resulting from Revolving Credit Loans made by the Bank to the Borrower pursuant
to this Agreement.
"Security Agreement" means the security agreement to be executed and
delivered pursuant to Section 3.01(e) of this Agreement.
"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 Bank
in advance in writing, shall be subordinate and junior to the rights of the Bank
with respect to Debt owing from such Person to the Bank.
"Subsidiary" means, as to any Person, any corporation, partnership
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 or joint venture, of which a majority of the partnership or
other ownership interests are at the time owned by such Person and/or one or
more Subsidiaries of such Person.
"Term Loan" shall have the meaning assigned in Section 2.01 hereof.
"Term Loan Note" means a promissory note of the Borrower payable to
the order of the Bank, in substantially the form of Exhibit B annexed hereto,
evidencing the indebtedness of the Borrower to the Bank resulting from the Term
Loan made by the Bank to the Borrower pursuant to the Agreement.
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"Total Liabilities" means, as to any Person, all of the liabilities
of such Person, 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 in accordance
with GAAP.
"Total Unsubordinated Liabilities" means, as to any Person, the
excess of (i) such Person's Total Liabilities over (ii) such Person's
Subordinated Debt.
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".
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.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. The Revolving Credit Loans. The Bank agrees, 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 Borrower prior to the Maturity Date such amounts as the 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 and Term Loans outstanding at any one time shall not
exceed the lesser of (i) Two Million ($2,000,000.00) Dollars, or (ii) the
Borrowing Base (the "Commitment"), or such lesser amount of the Commitment as
may be reduced pursuant to Section 2.19 hereof. In addition, for a period of
thirty (30) consecutive days during each fiscal year of the Borrower, the total
outstanding principal balance of the Revolving Credit Note shall not exceed Two
Hundred Fifty Thousand ($250,000.00) Dollars.
Each Revolving Credit Loan shall be a Prime Rate Loan or a
Eurodollar Loan as the Borrower may request subject to and in accordance with
Section 2.02. The Bank may at its option make any Eurodollar Loan by causing a
foreign branch or affiliate to make such Loan, provided that any exercise of
such option shall not affect the obligation of the Borrower to repay such Loan
in accordance with the terms of the Revolving Credit Note. Subject to the other
provisions of this Agreement, Revolving Credit Loans of more than one type may
be outstanding at the same time.
SECTION 2.02. Notice of Revolving Credit Loans. (a) The Borrower
shall give the Bank 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 Section 2.21 hereof) and (ii) prior to 11:00 a.m.
on the day of each Revolving Credit Loan consisting solely of a Prime Rate Loan.
If a notice of borrowing is received
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by the Bank after 11:00 a.m. on a Business Day, such notice shall be deemed to
have been given on the next succeeding Business Day.
(b) Each notice given pursuant to this Section 2.02 shall specify
the date of such borrowing, the amount thereof and whether such Loan is to be a
Prime 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 amounts thereof and
Interest Period or Interest Periods with respect thereto. If no election as to a
type of Loan is specified in such notice, such Loan (or portion thereof as to
which no election is specified) shall be a Prime Rate Loan. If no election as to
the Interest Period is specified in such notice with respect to any Eurodollar
Loan, the 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 Borrower shall be deemed to have requested a Prime Rate Loan.
(c) The Borrower shall have the right, on such notice to the Bank as
is required pursuant to (a) above, (x) to continue any Eurodollar Loan into a
subsequent Interest Period (subject to availability) and (y) to convert a Prime
Rate Loan into a Eurodollar Loan (subject to availability) subject to the
following:
(i) if a Default or an Event of Default shall have
occurred and be continuing at the time of any proposed conversion or
continuation only Prime Rate Loans shall be available;
(ii) 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 $10.,000.00 and in increased
integral multiples of $10,000.00;
(iii) each continuation or conversion shall be effected
by each Bank applying the proceeds of the new Loan to the Loan (or
portion thereof) being continued or converted;
(iv) if the new Loan made as a result of a continuation
or conversion shall be a Eurodollar Loan, the first Interest Period
with respect thereto shall commence on the date of continuation or
conversion;
(v) 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's duration and each
request for a Eurodollar Loan made when such Loans are not available
shall be deemed to be a request for a Prime Rate Loan;
(vi) 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 a Prime Rate Loan at the
expiration of the then current Interest Period.
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SECTION 2.03. Revolving Credit Note. Each Revolving Credit Loan
shall be in the minimum principal amount of $10,000.00, and in minimum multiples
of $10,000.00 thereafter. The Revolving Credit Note shall be dated the date,
hereof and be in the principal amount of Two Million and 00/100 ($2,000,000.00)
Dollars, and shall mature on the Maturity Date, at which time the entire
outstanding principal balance and all interest thereon shall be due and payable.
The Revolving Credit Note shall be entitled to the benefits and subject to the
provisions of this Agreement.
At the time of the making of each Revolving Credit Loan and at the
time of each payment of principal thereon, the holder of the Revolving Credit
Note is hereby authorized by the Borrower to make a notation on the schedule
annexed to the 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 Borrower hereunder or under the
Revolving Credit Note with respect to such Revolving Credit Loan, and any
payment of principal on the Revolving Credit Note by the Borrower shall not be
affected by the failure to make a notation thereof on said schedule.
SECTION 2.04. Payment of Interest on the Revolving Credit Note. (a)
In the case of a Prime Rate Loan, interest shall be payable at a rate per annum
equal to the Prime Rate. Such interest shall be payable on each Interest Payment
Date, commencing with the first Interest Payment Date after the date of such
Prime Rate Loan and on the Revolving Credit Maturity Date. Any change in the
rate of interest on the Revolving Credit Notes due to a change in the Prime Rate
shall take effect as of the date of such change in the Prime Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a
rate per annum equal to the LIBOR Rate plus two and one half (2 1/2%) percent.
Such interest shall be payable on each Interest Payment Date, commencing with
the first Interest Payment Date after the date of such Eurodollar Loan and on
the Maturity Date. In the event Eurodollar Loans are available, the Bank 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 use its best efforts to notify the Borrower of the
rate of interest so determined. Such determination shall be conclusive absent
manifest error.
SECTION 2.05. The Term Loans. The Bank agrees, on the terms and
conditions of this Agreement and in reliance upon the representations and
warranties set forth in this Agreement, to make Term Loans to the Borrower in
the aggregate principal amount of up to Five Hundred Thousand ($500,000.00)
Dollars, and the Borrower agrees to borrow such amount from the Bank by
executing and delivering to the Bank the Term Loan Notes. The Term Loans, or
portions thereof, shall be Prime Rate Loans or Fixed Rate Loans as the Borrower
may request subject to and in accordance with Section 2.06 hereof.
SECTION 2.06. Notice of Term Loan Designations. (a) The Borrower
shall give the Bank irrevocable written, telex, telephonic (immediately
confirmed in writing) or facsimile notice (i)
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at least two (2) Business Days prior to each Term Loan bearing interest at the
Fixed Rate, and (ii) prior to 11:00 a.m. on the day of each Term Loan consisting
solely of a Prime Rate Loan. If a notice of borrowing is received by the Bank
after 11:00 a.m. on a Business Day, such notice shall be deemed to have been
given on the next succeeding Business Day.
(b) Each notice given pursuant to this Section 2.06 shall specify
the date of such borrowing, the amount thereof, the term thereof, which term may
be for 36 to 60 months, and whether such Loan is to be a Prime Rate Loan or a
Fixed Rate Loan. If no election as to a type of Loan is specified in such
notice, such Loan (or portion thereof as to which no election is specified)
shall be a Prime Rate Loan. If no term is designated for any Term Loan, the
Borrower shall be deemed to have requested a term of 36 months.
SECTION 2.07. Term Loan Notes. Each Term Loan shall be evidenced by
a Term Loan Note of the Borrower. Each Term Loan Note shall be dated the date of
each Term Loan and shall have the term designated therefor in accordance with
the provisions of Section 2.06(b) hereof. At the end of such term the entire
outstanding principal balance of such Term Loan Note and all interest thereon
shall be due and payable. Each Term Loan Note shall be entitled to the benefits
and subject to the provisions of this Agreement.
SECTION 2.08. Repayment of Term Loan Notes. The principal balance of
each Term Loan Note shall be payable in equal monthly installments of principal,
each due on the first Business Day of each month beginning on the first such day
after the date of such Term Loan and continuing on the first Business Day of
each calendar month thereafter, calculated on a straight line amortization
basis. The final such monthly principal installment shall be in an amount equal
to the then outstanding principal balance of such Term Loan Note.
SECTION 2.09. Payment of Interest on the Term Loan Note. (a) In the
case of a Prime 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 Prime Rate. Such interest shall be payable on each Interest
Payment Date, commencing with the first Interest Payment Date after the date of
such Prime Rate Loan and on the maturity date of each Term Loan. Any change in
the rate of interest on each Term Loan Note due to a change in the Prime Rate
shall take effect as of the date of such change in the Prime Rate.
(b) In the case of a Fixed 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 Fixed Rate. Such interest shall be payable on
each Interest Payment Date, commencing with the first Interest Payment Date
after the date of such Fixed Rate Loan and on the maturity date of each Term
Loan.
SECTION 2.10. Intentionally Omitted.
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SECTION 2.11. Use of Proceeds. The proceeds of the Revolving Credit
Loans shall be used by the Borrower for working capital, and the proceeds of the
Term Loans shall be used by the Borrower exclusively to finance capital
expenditures. 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. Facility Fee. The Borrower agrees to pay to the Bank a
Facility Fee equal to $10,000.00, of which $5,000.00 shall be payable on the
date hereof, and $5,000.00 shall be payable on the first anniversary of the date
hereof.
SECTION 2.13. Intentionally Omitted.
SECTION 2.14. Prepayment. (a) The Borrower shall have the right at
any time and from time to time to prepay any Prime Rate Loan, in whole or in
part, without premium or penalty on the same day on which telephonic notice is
given to the Bank (immediately confirmed in writing) of such prepayment
provided, however, that each such prepayment shall be on a Business Day and
shall be in an aggregate principal amount which is an integral multiple of
$10,000.00.
(b) The Borrower shall have the right at any time and from time to
time, subject to the provisions of this Agreement, to prepay any Eurodollar
Loan, in whole or in part, on three (3) Business Days' prior irrevocable written
notice to the Bank, provided, however, that such prepayment may only be made on
an Interest Determination Date.
(c) The Borrower shall have the right at any time and from time to
time, subject to the provisions of this Agreement, to prepay any Fixed Rate Loan
in whole or in part at any time in a minimum amount of Ten Thousand ($10,000.00)
Dollars and whole multiples thereof, in each case upon at least ten (10) days
notice. Any such written notice shall be irrevocable and shall obligate the
Borrower to make such prepayment on the date noticed for prepayment. All
prepayments shall be accompanied by interest accrued on the amount prepaid
through the date of prepayment (the "Prepayment Date"). If prepayment occurs
during the 90 day period preceding the maturity date of a Term Loan Note, such
Term Loan may be prepaid without penalty. If such prepayment occurs at any other
time, the Borrower shall pay to the Bank as a condition to such prepayment a
prepayment premium, as liquidated damages and not as a penalty, the net present
value of: (i) the difference, if positive, between the interest rate then in
effect and the current yield on U.S. Treasury Securities with maturities
approximately equal to the remaining time between the Prepayment Date and the
maturity date of the Term Loan Note being prepaid (expressed as a percentage) ,
multiplied by (ii) the total amount of principal prepaid, divided by (iii) 360
and multiplied by (iv) the actual number of days remaining until the maturity
date of such Term Loan. In addition, all prepayments shall be accompanied by any
and all additional administrative costs incurred by the Bank (as determined by
the Bank in its reasonable discretion) as a result of such prepayment. All
prepayments shall be applied in inverse order of maturity.
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(d) The notice of prepayment under this Section 2.14 shall set forth
the prepayment date and the principal amount of the Loan being prepaid and shall
be irrevocable and shall commit the Borrower 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 2.14 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans by the Borrower. Eurodollar Loans may be prepaid
only in accordance with the provisions of paragraph (b) above. Fixed Rate Loans
may be prepaid only in accordance with the provisions of paragraph (c) above.
SECTION 2.15. Reimbursement by Borrower. The Borrower shall
reimburse the Bank upon the Bank's demand for any loss, cost or expense incurred
or to be incurred by it (in the Bank'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 the Borrower fails to borrow the 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 the Bank in obtaining, liquidating or redeploying any funds used or
to be used in making or maintaining the Eurodollar Loan.
SECTION 2.16. Eurocurrency Reserve Requirement. It is understood
that the cost to the Bank of making or maintaining Eurodollar Loans may
fluctuate as a result of the applicability of, or change in, the Eurocurrency
Reserve Requirement. The Borrower agrees to pay to the Bank from time to time,
as provided in Section 2.17 below, such amounts as shall be necessary to
compensate the Bank for the cost of making or maintaining any Eurodollar Loans
made by it resulting from any change in the Eurocurrency Reserve Requirement, it
being understood that the rates of interest applicable to Eurodollar Loans
hereunder have been determined on the basis of the Eurocurrency Reserve
Requirement in effect at the time of determination of the LIBOR Rate and that
such rates do not reflect costs imposed on the Bank in connection with any
change to the Eurocurrency Reserve Requirement. It is agreed that for purposes
of this paragraph the Eurodollar Loans made hereunder shall be deemed to
constitute Eurocurrency Liabilities as defined in Regulation D and to be subject
to the reserve requirements of Regulation D without benefit or credit of
proration, exemptions or offsets which might otherwise be available to the Bank
from time to time under Regulation D.
SECTION 2.17. 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 the Bank 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 the
Bank);
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(ii) changes the basis of taxation of payments to the
Bank of any amounts payable hereunder (other than any tax measured
by or based upon the overall net income of the Bank);
(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, the Bank; or
(iv) imposes on the Bank any other condition affecting
its Commitment, the Loans, the Notes or this Agreement; and the
result of any of the foregoing is to increase the cost to the Bank
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 the Bank or to require the Bank
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
the Bank in its sole judgment deems material, then and in any such
case:
(a) the Bank shall promptly advise the
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 Borrower shall pay to the Bank,
within ten (10) days after the advice referred to in
subsection (a) hereinabove, such an amount or amounts as
will compensate the Bank for such additional cost,
reduction or payment for so long as the same shall
remain in effect.
The determination of the Bank as to additional amounts payable
pursuant to this Section 2.17 shall be conclusive evidence of such amounts
absent manifest error.
SECTION 2.18. Capital Adequacy. If the Bank shall have determined
that the applicability of any law, rule, regulation or guideline, or the
adoption after the date hereof of any other law, 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 the Bank (or any lending office of the
Bank) or the Bank'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 the Bank's capital or on the capital of the bank's holding
company, if any, as a consequence of its obligations hereunder to a level below
that which the Bank or the Bank's holding company could have achieved but for
such adoption, change or compliance (taking into consideration the Bank's
policies and the policies of the Bank's holding company with respect to capital
adequacy) by an amount deemed by the Bank to be material, then from time to time
the Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank or the Bank's holding company for any such reduction
suffered.
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SECTION 2.19. 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 the Bank 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 Borrower, the Bank may:
(i) declare that Eurodollar Loans will not thereafter be
made hereunder, whereupon the Borrower shall be prohibited from
requesting such Eurodollar Loans hereunder unless such declaration
is subsequently withdrawn; and
(ii) require that, subject to the provisions of Section
2.15, all outstanding Eurodollar Loans made by it be converted to a
Prime Rate Loan, whereupon all of such Eurodollar Loans shall be
automatically converted to a Prime Rate Loan as of the effective
date of such notice as provided in paragraph (b) below.
(b) For purposes of this Section 2.19, a notice to the Borrower by
the Bank 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 last day of the then current Interest Period; otherwise,
such notice shall be effective on the date of receipt by the Borrower.
SECTION 2.20. Indemnity. The Borrower will indemnify the Bank
against any loss or expense which the Bank 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 employing deposits from third parties
acquired to affect or maintain such Loan or any part thereof. When claiming
under this Section 2.20, the Bank shall provide to the Borrower a statement,
signed by an officer of the Bank, 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 2.21. 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, for a requested Eurodollar Loan, the Bank shall have
determined (which determination, absent manifest error, shall be conclusive and
binding upon the Borrower) 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 Bank of
making or maintaining the principal amount of such Eurodollar Loan during such
Interest Period, such Eurodollar Loan shall be unavailable, Loans based on such
rate shall be unavailable. The Bank shall, as soon as practicable thereafter,
give written, telex or telephonic notice of such determination of availability
to the Borrower. Any request by the Borrower for an unavailable Eurodollar Loan
shall be deemed to have been a request for a Prime Rate
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Loan. After such notice shall have been given and until the Bank shall have
notified the Borrower that the circumstances giving rise to such notice no
longer exist, each subsequent request for an unavailable Eurodollar Loan shall
be deemed to be a request for a Prime Rate Loan.
SECTION 2.22. Authorization to Debit Borrower's Account. The Bank is
hereby authorized to debit the Borrower's account maintained with the Bank for
(i) all scheduled payments of principal and/or interest under the Notes, and
(ii) the commitment fee and all other amounts due hereunder; all such debits to
be made on the days such payments are due in accordance with the terms hereof.
SECTION 2.23. Late Charges, Default Interest. (a) If the Borrower
shall default in the payment of any principal installment of or interest on any
Loan or any other amount becoming due hereunder, the 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 three (3%) percent in excess of the interest rate otherwise in
effect with respect to the type of Loan in connection with which the required
payments have not been made.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Borrower shall 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 three (3%) percent in excess of the interest rate otherwise in
effect hereunder.
SECTION 2.24. Payments. All payments by the Borrower hereunder or
under the Notes shall be made in Dollars in immediately available funds at the
office of the Bank 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 2.25. Interest Adjustments. (a) If the provisions of this
Agreement or the Notes would at any time otherwise require payment by the
Borrower to the Bank 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 Bank shall not receive interest in excess of such
maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank
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. Interest otherwise payable to the Bank
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 Bank to receive interest in excess of the maximum amount then permitted by
applicable law.
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(b) The amount of the Interest Deficit shall be treated as a
prepayment penalty and paid in full at the time of any optional prepayment by
the Borrower to the Bank of all outstanding Loans. 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 prepayment thereof) shall be
cancelled and not paid.
SECTION 2.26. Participations, Etc. The Bank shall have the right at
any time, with or without notice to the Borrower, to sell, assign, transfer or
negotiate all or any part of the Term Loan Notes or the Revolving Credit Note or
the Commitment or grant participations therein to one or more banks (foreign or
domestic, including an affiliate of the Bank), insurance companies or other
financial institutions, pension funds or mutual funds. The Borrower and the
Guarantors agree and consent to the Bank providing financial and other
information regarding their business and operations to prospective purchasers or
participants and further agree that to the extent that the Bank should sell,
assign, transfer or negotiate all or any part of the Notes or the Commitment,
the Bank shall be forever released and discharged from its obligations under the
Notes, the Commitment and this Agreement to the extent same is sold, assigned,
transferred or negotiated. Nothing herein shall be read or construed as
prohibiting or otherwise limiting the ability or right of the Bank to pledge any
Note to a Federal Reserve Bank.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Initial
Revolving Credit Loan and the Initial Term Loan. The obligation of the Bank to
make the initial Revolving Credit Loan and the initial Term Loan contemplated by
this Agreement is subject to the condition precedent that the Bank shall have
received from the Borrower and the Guarantors the following, in form and
substance satisfactory to the Bank and its counsel:
(a) The Revolving Credit Note and the initial Term Loan Note, in
each case duly executed and payable to the order of the Bank.
(b) Certified (as of the date of this Agreement) copies of the
resolutions of the Board of Directors of the Borrower authorizing the Loans and
authorizing and approving this Agreement and the other Loan Documents 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 and the other Loan Documents.
(c) A certificate of the Secretary or an Assistant Secretary
(attested to by another officer) of the Borrower certifying: the names and true
signatures of the officer or officers of the Borrower authorized to sign this
Agreement, the Term Loan Notes, the Revolving Credit Note and the other Loan
Documents to be delivered hereunder on behalf of the Borrower.
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(d) Intentionally omitted.
(e) From the Borrower, an executed Security Agreement giving to the
Bank a first priority security interest in all assets of the Borrower including,
but not limited to, all personal property, equipment, fixtures, inventory,
accounts, chattel paper and general intangibles all whether now owned or
hereafter acquired (the "Collateral").
(f) From the Borrower, UCC-1 filings perfecting the Bank's security
interests in the Collateral.
(g) A property damage insurance policy for the Collateral in the
amount of the greater of (1) the replacement value of the Collateral or (2) the
principal amount outstanding under the Loans, naming the Bank as loss payee with
an insurance company acceptable to the Bank. The policy shall provide for thirty
(30) days notice to the Bank of cancellation or change.
(h) From the Borrower, receipt and satisfactory review by the Bank
of the Borrower's audited financial statement for the fiscal year ended December
31, 1997.
(i) From the Borrower, a Borrowing Base certificate dated the date
hereof.
(j) The Bank shall have received favorable responses to its
inquiries regarding the Borrower from each of North Fork Bank and Chase
Manhattan Bank.
(k) Intentionally omitted.
(1) All schedules, documents, certificates and other information
provided to the Bank pursuant to or in connection with this Agreement shall be
satisfactory to the Bank and its counsel in all respects.
(m) Receipt by the Bank of such other approvals, opinions or
documents as the Bank or its counsel may reasonably request.
SECTION 3.02. Conditions Precedent to All Revolving Credit Loans and
All Term Loans. The obligations of the Bank to make each Revolving Credit Loan
(including the initial Revolving Credit Loan) and each Term Loan (including the
initial Term Loan) shall be subject to the further condition precedent that on
the date of such Revolving Credit Loan or Term Loan, as the case may be:
(a) The following statements shall be true and the Bank shall have
received a certificate signed by the President or the Chief Financial Officer of
the Borrower dated the date of such Revolving Credit Loan or Term Loan, stating
that:
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(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) The Bank shall have received, in the case of a Term Loan, a Term
Loan Note duly executed and payable to the order of the Bank.
(c) The Bank shall have received such other approvals, opinions or
documents as the Bank may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. On the date hereof and
on each date that the Borrower requests a Revolving Credit Loan or a Term Loan,
the Borrower and each of the Guarantors represent and warrant as follows:
(a) on the date hereof, the only Subsidiaries of the Borrower 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 the
Borrower are owned by the Borrower free and clear of any mortgage, pledge, lien
or encumbrance. Except as set forth on Schedule 4.01(a), there are not
outstanding 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 equity interest of the Borrower or any Subsidiary of the
Borrower, nor are there outstanding any securities which are convertible into or
exchangeable for any shares of the common or capital stock of the Borrower or
any Subsidiary of the Borrower.
(b) The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of New York and 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) The execution, delivery and performance by the Borrower of the
Loan Documents to which it is a party are within the Borrower's corporate power
and have been duly authorized by all necessary corporate action and do not and
will not (i) require any consent or approval of the stockholders of the
Borrower; (ii) do not contravene the Borrower's certificate of incorporation,
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charter or by-laws; (iii) violate any provision of or any law, rule, regulation,
contractual restriction, order, writ, judgment, injunction, or decree,
determination or award binding on or affecting the Borrower; (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 the 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 the Borrower or any Guarantor.
(d) 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 the 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) The Loan Documents when delivered hereunder will have been duly
executed and delivered on behalf of the Borrower and each Guarantor, as the case
may be, and will be legal, valid and binding obligations of the Borrower and
each Guarantor, as the case may be, enforceable against the Borrower or such
Guarantor in accordance with their respective terms.
(f) The financial statements of the Borrower for the fiscal year
ended December 31, 1997, copies of which have been furnished to the Bank, fairly
present the financial condition of the Borrower as at such date and the results
of operations of the Borrower for the period ended on such date, all in
accordance with GAAP, and since such date there has been (i) no material
increase in the liabilities of the Borrower, and (ii) no Material Adverse Change
in the Borrower.
(g) There is no pending or threatened action, proceeding or
investigation affecting the Borrower or any Subsidiary of the Borrower before
any court, governmental agency or arbitrator, which either in one case or in the
aggregate, result in a Material Adverse Change in the Borrower or any such
Subsidiary.
(h) The Borrower and each Subsidiary of the Borrower have filed all
federal, state and local tax returns required to be filed and have paid all
taxes, assessments and governmental charges and levies thereon to be due,
including interest and penalties.
(i) The Borrower and each Subsidiary of the Borrower 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 neither the Borrower
nor any such Subsidiary are in violation of any similar rights of others.
(j) Neither the 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 could result in a
Material Adverse Change in the Borrower or any Guarantor.
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(k) The Borrower is not 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 the
Borrower to violate the provisions of Regulations G, T, U or X.
(l) No proceeds of any Loan will be used to acquire any security in
any transaction which is subject to Sections 13 or 14 of the Securities Exchange
Act of 1934.
(m) The Borrower and each Subsidiary of the Borrower are 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 the Borrower or any such
Subsidiary.
(n) The Borrower, each Subsidiary of the Borrower and each ERISA
Affiliate are in 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 the Borrower, any Subsidiary of the Borrower, nor any ERISA Affiliate
has completely or partially withdrawn under Sections 4201 or 4204 of ERISA from
a Multiemployer Plan; the Borrower, each Subsidiary of the Borrower 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 the Borrower, any
such Subsidiary or any ERISA Affiliate to PBGC or the Plan under Title IV of
ERISA; and neither the Borrower, any such Subsidiary nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
(o) The Borrower and each Subsidiary of the Borrower are in
compliance with all federal, state or local laws, ordinances, rules, regulations
or policies governing Hazardous Materials and neither the Borrower nor any such
Subsidiary has used Hazardous Materials on, from, or affecting any property now
owned or occupied or hereafter owned or occupied by the Borrower 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 best of the Borrower's and such
Subsidiaries, knowledge, no prior owner of any such property or any tenant,
subtenant, prior tenant or prior subtenant have used Hazardous Materials on,
from or affecting such property 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.
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(p) The proceeds of the Term Loans and the Revolving Credit Loans
shall be used exclusively for the purposes set forth in Section 2.11 hereof.
(q) The properties and assets of the Borrower are not subject to any
Lien other than those described in Section 5.02(a) hereof.
(r) Neither the business nor the properties of the Borrower or any
Subsidiary of the Borrower 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 the Borrower or any such Subsidiary.
(s) The Lien on the Collateral created by the Security Agreements
constitute valid first priority perfected security interests in favor of the
Bank.
(t) Any reprogramming or other corrective modifications required to
permit the proper functioning, in and following the year 2000, of (i) the
Borrower's or any Subsidiary's computer systems, and (ii) equipment containing
embedded microchips (including systems and equipment supplied by others or with
which the Borrower's or any Subsidiary's computer systems interface) and the
testing of all such systems and equipment, as so reprogrammed, will be completed
by January 1, 1999. The cost to the Borrower and any Subsidiaries of such
reprogramming, modifications and testing and of the reasonably foreseeable
consequences of year 2000 to the Borrower and any Subsidiaries (including,
without limitation, reprogramming errors and the failure of others' systems or
equipment) will not result in an Event of Default or result in a Material
Adverse Change in the Borrower or any Subsidiary. Except for such of the
reprogramming and modifications referred to in the preceding sentence as may be
necessary, the computer and management information systems of the Borrower and
any Subsidiaries are, and with ordinary course upgrading and maintenance, will
continue for the term of this Agreement to be, sufficient to permit the Borrower
and any Subsidiaries to conduct their respective businesses without any material
adverse effect thereto.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any amount shall
remain outstanding under any Term Loan Note or the Revolving Credit Note, or so
long as the Commitment shall remain in effect, the Borrower and the Guarantors
will, unless the Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary of
the Borrower 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 the Borrower or any such Subsidiary.
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(b) Reporting Requirements. Furnish to the Bank: (i) Annual
Financial Statements. (1) As soon as available and in any event within ninety
(90) days after the end of each fiscal year of the Borrower, a copy of the
audited financial statements of the Borrower for such year, including balance
sheets with related statements of income and retained earnings and statements of
cash flows, all in reasonable detail and setting forth in comparative form the
figures for the previous fiscal year, together with an unqualified opinion,
prepared by independent certified public accountants selected by the Borrower
and satisfactory to the Bank, all such financial statements to be prepared in
accordance with GAAP, and (2) As soon as available and in any event within five
(5) days after filing, a copy of the Borrower's 10-K report filed with the
United States Securities and Exchange Commission.
(ii) Quarterly Financial Statements. (1) As soon as
available and in any event within five (5) days after filing, a copy of the
Borrower's 10-Q report filed with the United States Securities and Exchange
Commission.
(iii) Management Letters. Promptly upon receipt thereof,
copies of any reports submitted to the Borrower by independent certified public
accountants in connection with the examination of the financial statements of
the Borrower made by such accountants;
(iv) Certificate of No Default. Simultaneously with the
delivery of the financial statements referred to in Section 5.01(b)(i) and (ii),
a certificate of the President or the Chief Financial officer of the 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; and (2) with computations demonstrating compliance
with the covenants contained in Section 5.03.
(v) Accountants' Report. Simultaneously with the
delivery of the annual financial statements referred to in Section 5.01(b)(i), a
certificate of the independent certified public accountants who audited such
statements to the effect that, in making the examination necessary for the audit
or review of such statements, they have obtained no knowledge of any condition
or event which constitutes a Default or Event of Default, or if such accountants
shall have obtained knowledge of any such condition or event, specify in such
certificate each such condition or event of which they have knowledge and the
nature and status thereof.
(vi) 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 the Borrower or any Subsidiary
of the Borrower which, if determined adversely to the Borrower or any such
Subsidiary could result in a Material Adverse Change in the Borrower or any such
Subsidiary.
(vii) Notice of Defaults and Events of Default. As soon
as possible and in any event within five (5) days after the occurrence of each
Default or Event of Default, a written notice setting
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forth the details of such Default or Event of Default and the action which is
proposed to be taken by the Borrower with respect thereto.
(viii) ERISA Reports. Promptly after the filing or
receiving thereof, copies of all reports, including annual reports, and notices
which the Borrower or any Subsidiary of the Borrower 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 the Borrower 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 the Borrower or any such
Subsidiary has instituted or will institute proceedings under Title IV of ERISA
to terminate any Plan, the Borrower will deliver to the Bank a certificate of
the President or the Chief Financial Officer of the Borrower setting forth
details as to such Reportable Event or Prohibited Transaction or Plan
termination and the action the Borrower proposes to take with respect thereto;
(ix) 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 Bank pursuant to any
other clause of this Section 5.01(b).
(x) Proxy Statements, Etc. Within five (5) days after
the sending or filing thereof, copies of all proxy statements, financial
statements and reports which the Borrower sends to its stockholders, and copies
of all regular, periodic, and special reports, and all registration statements
which the Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange, including but not limited to Securities and Exchange
Commission Form 8-K.
(xi) Notice of Affiliates. Promptly after any Person
becomes an Affiliate of the Borrower, notice to the Bank of such Affiliate.
(xii) Borrowing Base Certificate. As soon as available
and in any event within twenty (20) days after the end of each calendar month, a
Borrowing Base certificate in form and substance satisfactory to the Bank.
(xiii) Accounts Receivable Aging. As soon as available
and in any event within twenty (20) days after the end of each calendar month,
an accounts receivable aging in form and substance satisfactory to the Bank.
(xiv) Change in Management. As soon as available and in
any event within one (1) day of any change in the Borrower's officers or
executive management, a notice setting forth such changes.
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(xv) General Information. Such other information
respecting the condition or operations, financial or otherwise, of the Borrower,
any Guarantor or any Subsidiary of the Borrower as the Bank may from time to
time 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 the
Borrower,.any 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
the Borrower, any Guarantor or any such Subsidiary; and (iii) no enforcement
proceedings against the Borrower, any 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 the Borrower and each such Subsidiary in each case where
failure to so preserve or maintain could result in a Material Adverse Change in
the Borrower or such Subsidiary.
(e) Maintenance of Properties and Insurance. (i) Keep, and cause any
Subsidiaries to keep, the respective properties and assets (tangible or
intangible) that are useful and 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 the Borrower, any
Guarantors and any such Subsidiaries operate; and (iii) cause the Bank to be
named as loss payee 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
Borrower, the Guarantors, and any such Subsidiaries.
(g) Visitation. At any reasonable time, and from time to time,
permit the Bank or any agents or representatives thereof, to examine and make
copies of and abstracts from the books and records of, and visit the properties
of, the Borrower or any Guarantor and to discuss the affairs, finances and
accounts of the Borrower or any Guarantor with any of the respective officers or
directors of the Borrower or such Guarantor or the Borrower's or such
Guarantor's independent accountants.
(h) Performance and Compliance with Other Agreements. Perform and
comply, and cause any Subsidiaries to perform and comply, with each of the
provisions of each and every agreement the
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failure to perform or comply with which could result in a Material Adverse
Change in the Borrower, any Guarantor or any Subsidiary.
(i) Continued Perfection of Liens and Security Interest. 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
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 the Borrower or any Subsidiary of the Borrower 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 $25,000.00;
(ii) make full payment when due of all amounts which,
under the provisions of any Plan or ERISA, the Borrower, 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 $25,000.00 to any Multiemployer Plan that the
Borrower, 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 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 Affiliates. Cause any Affiliate of the Borrower formed after
the date of this Agreement to become a Guarantor of all obligations of the
Borrower to the Bank, whether incurred under this Agreement or otherwise.
(m) Banking Relationship. Maintain its primary banking and
depository relationship with the Bank.
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SECTION 5.02. Negative Covenants. So long as any amount shall remain
outstanding under any Term Loan Note or the Revolving Credit Note, or so long as
the Commitment shall remain in effect, the Borrower will not, without the
written consent of the Bank:
(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 Bank;
(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 being
contested in good faith by appropriate proceedings and for which
appropriate reserves have been established;
(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, and other
similar encumbrances which, in the aggregate, do not materially
interfere with the Borrower's occupation, use and enjoyment of the
property or assets encumbered thereby in the normal course of its
business or materially impair the value of the property subject
thereto;
(ix) 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
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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 the Borrower 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 lesser of cost or fair market value of the property
acquired as of the time of the Borrower acquiring the same;
(3) Each such Lien shall attach only to the
property so acquired and fixed improvements thereon;
(4) The Debt secured by all such Liens shall
not exceed $100,000.00 at any time outstanding in the aggregate; and
(5) The obligation secured by such Lien is
permitted by the provisions of Section 5.02 (b) and the related
expenditure is permitted by the provisions of Section 5.03(c).
(b) Debt. Create, incur, assume, or suffer to exist, any Debt,
except:
(i) Debt of the Borrower under this Agreement or the
Notes or any other Debt of the Borrower or the Guarantors owing to
the Bank;
(ii) Debt described in Schedule 5.02(b), provided that
no such Debt shall be renewed, extended or refinanced;
(iii) Subordinated Debt;
(iv) Accounts payable to trade creditors for goods or
services which are not aged more than ninety (90) days from billing
date and current operating liabilities (other than for borrowed
money) which are not more than ninety (90) days past due, in each
case incurred in the ordinary course of business and paid within the
specified time, unless contested in good faith and by appropriate
proceedings;
(v) Debt of the Borrower secured by purchase money Liens
permitted by Section 5.02(a)(ix).
(c) Lease obligations. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except (i) Capital Leases permitted by Section 5.02(a), or (ii) leases existing
on the date of this Agreement and any extensions or renewals thereof and other
leases entered into after the date of this Agreement (other than Capital Leases)
which do
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not in the aggregate require the Borrower to make payments (including taxes,
insurance, maintenance, and similar expenses which the Borrower is required to
pay under the terms of any lease) in any fiscal year of the Borrower in excess
of $250,000.00.
(d) Merger. Merge into, or consolidate with or into, or have merged
into it, any Person; and, for the purpose of this subsection (d), the
acquisition or sale by the Borrower 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 the Borrower.
(e) Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise
dispose of any of its assets, (including a sale leaseback transaction) with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business; and (ii) the sale or other disposition of assets no longer used or
useful in the conduct of its business.
(f) Investments, Etc. Make any Investment other than Permitted
Investments.
(g) Transactions With Affiliates. Except in the ordinary course of
business and pursuant to the reasonable requirements of the Borrower's or a
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or the 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.
(h) Intentionally omitted.
(i) 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 endorsement of negotiable instruments
for deposit in the ordinary course of business; or (ii) guarantees existing on
the date hereof and set forth in Schedule 5.02(i) annexed hereto.
(j) Change of Business. Materially alter the nature of its business.
(k) Fiscal Year. Change the ending date of its fiscal year from
December 31.
(1) Intentionally Omitted.
(m) Accounting Policies. Change any accounting policies, except as
permitted by GAAP.
(n) Change of Tax Status. Change its tax reporting status as a
sub-chapter C corporation.
(o) 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
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assets to its stockholders as such, whether in cash, assets, or in obligations
of the Borrower; 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 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.
Notwithstanding the foregoing, (i) the Borrower shall be permitted to pay
dividends on its capital stock for each fiscal year in an amount not exceeding
the lesser of (x) $300,000.00, or (y) five ($.05) cents per share, and (ii) for
any fiscal year during which Borrower is an electing S corporation for federal
income tax purposes, it may declare and pay cash dividends out of its net income
for the current or preceding fiscal year, provided however that no such dividend
may be paid which would result in the Borrower failing to meet the requirements
of Section 5.03 hereof.
(p) Hazardous Material. The Borrower, each Guarantor and each
Subsidiary of the Borrower shall not cause or permit any property owned or
occupied by the Borrower, any 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 compliance with all
applicable federal, state and local laws or regulations nor shall the Borrower,
any Guarantor or any such Subsidiary cause or permit, as a result of any
intentional or unintentional act or omission on the part of the Borrower, any
Guarantor or any such Subsidiary or any tenant or subtenant, a release of
Hazardous Materials onto any property owned or occupied by the Borrower, any
Guarantor or any such Subsidiary or onto any other property. The Borrower, each
Guarantor and each such Subsidiary shall not fail to 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 comply with, any and all
approvals, registrations or permits required thereunder. The Borrower and the
Guarantors shall execute any documentation required by the Bank in connection
with the representations, warranties and covenants contained in this paragraph
and Section 4.01 of this Agreement.
(q) Treasury Stock Purchases. Purchase treasury stock of the
Borrower in the aggregate amount of greater than $250,000.00 during any fiscal
year.
(r) Loans or Advances to Employees. Make loans or other advances to
the Borrower's employees, officers or management in excess of $25,000.00 in the
aggregate during any fiscal year.
SECTION 5.03. Financial Requirements. So long as any amount shall
remain outstanding under any Term Loan Note or the Revolving Credit Note or so
long as the Commitment shall remain in effect:
(a) Leverage Ratio. The Borrower will maintain at all times a ratio
of Total Unsubordinated Liabilities to Capital Base of not greater than 0.75 to
1.0, to be tested quarterly as of the last day of each fiscal quarter.
(b) Capital Base. The Borrower shall maintain at all times a minimum
Capital Base of at least $6,000,000.00, to be tested quarterly as of the last
day of each fiscal quarter.
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(c) Debt Service Coverage Ratio. The Borrower shall maintain at all
times a minimum Debt Service Coverage Ratio, the ratio of (i) net income plus
depreciation and amortization expense plus interest expense to (ii) the current
portion of long term Debt plus interest expense (each calculated in accordance
with GAAP) of at least 1.20 to 1.0, to be tested quarterly as of the last day of
each fiscal quarter.
(d) Current Ratio. The Borrower shall maintain at all times a ratio
of Current Assets to Current Liabilities of at least 1.40 to 1.0.
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) The Borrower shall fail to pay any installment of principal of,
or interest on, any Term Loan Note or the Revolving Credit Note when due or any
fees or other amounts owed in connection with this Agreement; or
(b) Any representation or warranty made by the Borrower or any
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) The Borrower or any Guarantor shall fail to perform or observe
any 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
(d) The Borrower, any Guarantor, or any Subsidiary of the Borrower
shall fail to pay any Debt (excluding Debt evidenced by any Term Loan Note or
the Revolving Credit Note) of the Borrower, any Guarantor or any such Subsidiary
(as the case may be), 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 any other default under
any agreement or instrument relating to any such Debt, 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 any
such Debt 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) The Borrower, any Guarantor or any Subsidiary of the Borrower
shall generally not pay its Debts as such Debts become due, or shall admit in
writing its inability to pay its Debts
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generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower, any 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 the Borrower, any Guarantor or any such Subsidiary shall remain
undismissed for a period of 30 days; or the Borrower, any 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 $50,000.00 in the aggregate, which sum shall
not be subject to full, complete and effective insurance coverage, shall be
rendered against the Borrower, any Guarantor or any Subsidiary of the Borrower
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 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 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 the
Borrower, any Subsidiary of the Borrower, 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 with all other events or conditions, if any, could in the
opinion of the Bank subject the Borrower, 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 $50,000.00; 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 the Borrower, any Guarantor or any party to such document or
instrument or the Borrower, any 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
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(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 Bank may by notice to the Borrower, (i)
terminate the Commitment, (ii) declare the Term Loan Notes, the Revolving Credit
Note, all interest thereon and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon the Commitment shall be terminated, the
Term Loan Notes, the Revolving Credit Note, 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 Borrower and (ii) proceed to enforce its 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 rights, or proceed to enforce any other legal or equitable
right which the Bank 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 Commitment
shall be immediately terminated, the Term Loan Notes, the Revolving Credit Note,
all interest thereon and all other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
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 Bank 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
Note , and third, to payment of the unpaid principal of the Term Loan Notes and
the Revolving Credit Note.
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or
reserved to the Bank hereunder or in any 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 Loan Document or now or hereafter existing 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 Bank to exercise any remedy
reserved to it in this Article VI, 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 Loan Document.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment, modification,
termination or waiver of any provision of any Loan Document to which the
Borrower or any Guarantor is a party, nor consent to any departure by the
Borrower or any Guarantor from any provision of any Loan Document to which it is
a party, shall in any event be effective unless the same shall be in writing and
signed by the Bank, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 7.02. 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 the Borrower or
any Guarantor, at the address of the Borrower set forth at the beginning of this
Agreement and if to the Bank, at the address of the Bank set forth at the
beginning of this Agreement to the attention of Xxxxxx Xxxxxxx, V.P., 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 terms of this Section 7.02 to
the other parties. All such notices and communications shall be effective when
mailed, telegraphed or delivered, except that notices to the Bank shall not be
effective until received by the Bank.
SECTION 7.03. No Waiver, Remedies. No failure on the part of the
Bank 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 7.04. Costs, Expenses and Taxes. The Borrower agrees to pay
on demand all costs and expenses of the Bank in connection with (including
counsel fees and expenses) the enforcement of this Agreement, the Term Loan
Notes, the Revolving Credit Note and any other Loan Documents. The Borrower
shall at all times protect, indemnify, defend and save harmless the Bank 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 Bank 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. The
Borrower acknowledges that it is the intention of the parties hereto that this
Agreement shall be construed and applied to protect and indemnify the Bank
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 Borrower, including, without limitation,
any and all risks of the acts or omissions, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority,
provided that the Borrower shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Bank's gross negligence or
willful misconduct. The
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provisions of this Section 7.04 shall survive the payment of the Notes and the
termination of this Agreement.
SECTION 7.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Bank 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 the Bank or
any affiliate of the Bank to or for the credit or the account of the Borrower or
any Guarantor against any and all of the obligations of the Borrower or any
Guarantor now or hereafter existing under this Agreement and the Term Loan Notes
and the Revolving Credit Note irrespective of whether or not the Bank shall have
made any demand under this Agreement or the Term Loan Notes, or the Revolving
Credit Note and although such obligations may be unmatured. The rights of the
Bank under this Section are in addition to all other rights and remedies
(including, without limitation, other rights of set-off) which the Bank may
have.
SECTION 7.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Guarantors and the Bank
and thereafter it shall be binding upon and inure to the benefit of the
Borrower, the Guarantors and the Bank and their respective successors and
assigns, except that neither the Borrower nor any Guarantor shall have any right
to assign its rights hereunder or any interest herein without the prior written
consent of the Bank.
SECTION 7.07. Further Assurances. The Borrower and each Guarantor
agree at any time and from time to time at its expense, upon request of the Bank
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 Bank may deem desirable in
obtaining the full benefits of this Agreement or any other Loan Document.
SECTION 7.08. 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 between the Borrower, the Guarantors and the Bank and supersede
all prior agreements and understandings relating to the subject matter hereof.
SECTION 7.09. Governing Law. This Agreement, the Term Loan Notes,
the Revolving Credit Note and all other Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of New York.
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SECTION 7.10. Waiver of Jury Trial. The Borrower, each Guarantor and
the Bank 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 7.11. 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.
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.
AMERICAN MEDICAL ALERT CORP.
By /s/ Xxxxxx X. Xxxxxx By /s/ Xxxxx X. Xxxxxx
-------------------------- -----------------------
Name: Xxxxxx X. Xxxxxx Name: Xxxxx X. Xxxxxx
Title: President Title: Chief Financial Officer
EUROPEAN AMERICAN BANK
By /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
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SCHEDULE 4.01(a)
----------------
STATE OF INCORPORATION IDENTITY AND
AND EACH STATE PERCENTAGE OF
SUBSIDIARY'S NAME IN WHICH IT IS QUALIFIED OWNERSHIP OF
AND ADDRESS TO DO BUSINESS EACH SHAREHOLDER
---------------------- ----------------------------- ---------------------
None.
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SCHEDULE 5.02(a)
----------------
Creditor Amount Property Subject to Lien
-------- ------ ------------------------
NBD Equipment Financing, Inc. $127,000 Computer Equipment
NBD Equipment Financing, Inc. $ 80,000 Dictaphone and imaging systems
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SCHEDULE 5.02(b)
----------------
Creditor Amount
-------- ------
Same as Schedule 5.02(a)
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SCHEDULE 5.02(i)
----------------
Description of All Guaranties:
None.
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EXHIBIT A
REVOLVING CREDIT NOTE
$2,000,000.00 Uniondale, New York
April 27, 1998
FOR VALUE RECEIVED, on May 31, 2000, AMERICAN MEDICAL ALERT CORP., a New
York corporation, having its principal place of business at 0000 Xxxxxx Xxxx.,
Xxxxxxxxx, Xxx Xxxx 00000 (the "Borrower"), promises to pay to the order of
EUROPEAN AMERICAN BANK ("Bank") at its office located at 0 XXX Xxxxx, Xxxxxxxxx,
Xxx Xxxx 00000, the principal sum of the lesser of: (a) Two Million
($2,000,000.00) Dollars; or (b) the aggregate unpaid principal amount of all
Revolving Credit Loans made by Bank to Borrower pursuant to the Agreement (as
defined below).
Borrower shall pay interest on the unpaid principal balance of this
Note from time to time outstanding, at said office, at the rates of interest, at
the times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in
lawful money of the United States of America in immediately available funds.
Except as otherwise provided in the Agreement, if a payment becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day, and interest shall be payable
thereon at the rate herein specified during such extension.
Borrower hereby authorizes Bank to enter from time to time the
amount of each Loan to Borrower and the amount of each payment on a Loan on the
schedule annexed hereto and made a part hereof. Failure of Bank to record such
information on such schedule shall not in any way effect the obligation of
Borrower to pay any amount due under this Note.
This Note is the Revolving Credit Note referred to in that certain
Loan Agreement among Borrower and Bank of even date herewith (the "Agreement"),
as such Agreement may be further amended from time to time, and is subject to
prepayment and its maturity is subject to acceleration upon the terms contained
in said Agreement. All capitalized terms used in this Note and not defined
herein shall have the meanings given them in the Agreement.
If any action or proceeding be commenced to collect this Note or
enforce any of its provisions, Borrower further agrees to pay all costs and
expenses of such action or proceeding and attorneys' fees and expenses and
further expressly waives any and every right to interpose any counterclaim in
any such action or proceeding. Borrower hereby submits to the jurisdiction of
the Supreme Court of the State of New York and agrees with Bank that personal
jurisdiction over Borrower shall rest with the Supreme Court of the State of New
York for purposes of any action on or related to this Note, the liabilities, or
the enforcement of either or all of the same. Borrower hereby waives personal
service by manual delivery and agrees that service of process may be made
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by post-paid certified mail directed to the Borrower at the Borrower's address
set forth above or at such other address as may be designated in writing by the
Borrower to Bank in accordance with Section 7.02 of the Agreement, and that upon
mailing of such process such service be effective with the same effect as though
personally served. Borrower hereby expressly waives any and every right to a
trial by jury in any action on or related to this Note, the liabilities or the
enforcement of either or all of the same.
Bank may transfer this Note and may deliver the security or any part
thereof to the transferee or transferees, who shall thereupon become vested with
all the powers and rights above given to Bank in respect thereto, and Bank shall
thereafter be forever relieved and fully discharged from any liability or
responsibility in the matter. The failure of any holder of this Note to insist
upon strict performance of each and/or all of the terms and conditions hereof
shall not be construed or deemed to be a waiver of any such term or condition.
Borrower and all endorsers and guarantors hereof waive presentment
and demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the
laws of the State of New York.
AMERICAN MEDICAL ALERT CORP.
By: /s/ Xxxxx X. Xxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chief Financial Officer
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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Schedule of Revolving Credit Loans
----------------------------------
Unpaid Name of
Amount of Principal Principal Person Making
Date Amount of Loan Paid or Prepaid Balance Notation
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EXHIBIT B
TERM LOAN NOTE
$____________ Uniondale, New York
_____________, 199_
FOR VALUE RECEIVED, AMERICAN MEDICAL ALERT CORP., a New York
corporation, having its principal place of business at 0000 Xxxxxx Xxxx.,
Xxxxxxxxx, Xxx Xxxx 00000 (the "Borrower") promises to pay to the order of
EUROPEAN AMERICAN BANK ("Bank") at its office located at 0 XXX Xxxxx, Xxxxxxxxx,
Xxx Xxxx 00000, the principal sum of _____________ ($__________) DOLLARS in
__________ (___) monthly principal installments, each of the first __________
(___) such installments being in the principal amount of _____________
($__________) DOLLARS, commencing on the first Business Day of ___________,
199_, and continuing monthly thereafter until ___________, 199_, when any
remaining principal amount shall be due and payable.
The Borrower shall pay interest on the unpaid balance of this
Note from time to time outstanding at said office, at the rates of interest, at
the times and for the periods as set forth in the Agreement (as defined below).
All payments including prepayments on this Term Loan Note
shall be made in lawful money of the United States of America in immediately
available funds. Except as otherwise provided in the Agreement, if a payment
becomes due and payable on a day other than a Business Day, the maturity thereof
shall be extended to the next succeeding Business Day, and interest shall be
payable thereon at the rate herein specified during such extension.
This Term Loan Note is a term loan note referred to in that
certain Loan Agreement among Borrower, certain Guarantors and Bank of even date
herewith (the "Agreement"), as such Agreement may be further amended from time
to time, and is subject to prepayment and its maturity is subject to
acceleration upon the terms contained in said Agreement. All capitalized terms
used in this Term Loan Note and not defined herein shall have the meanings given
them in the Agreement.
If any action or proceeding be commenced to collect this Term
Loan Note or enforce any of its provisions, Borrower further agrees to pay all
costs and expenses of such action or proceeding and attorneys, fees and expenses
and further expressly waives any and every right to interpose any counterclaim
in any such action or proceeding. Borrower hereby submits to the jurisdiction of
the Supreme Court of the State of New York and agrees with Bank that personal
jurisdiction over Borrower shall rest with the Supreme Court of the State of New
York for purposes o any action on or related to this Term Loan Note, the
liabilities, or the enforcement of either or all of the same. Borrower hereby
waives personal service by manual delivery and agrees that service of process
may be made by post-paid certified mail directed to Borrower at Borrower's
address designated in the Agreement or at such other address as may be
designated in writing by Borrower
-44-
to Bank in accordance with Section 7.02 of the Agreement, and that upon mailing
of such process such service be effective with the same effect as though
personally served. Borrower hereby expressly waives any and every right to a
trial by jury in any action on or related to this Term Loan Note, the
liabilities or the enforcement of either or all of the same.
Bank may transfer this Term Loan Note and may deliver the
security or any part thereof to the transferee or transferees, who shall
thereupon become vested with all the powers and rights above given to Bank in
respect thereto, and Bank shall thereafter be forever relieved and fully
discharged from any liability or responsibility in the matter. The failure of
any holder of this Term Loan Note to insist upon strict performance of each
and/or all of the terms and conditions hereof shall not be construed or deemed
to be a waiver of any such term or condition.
Borrower and all endorsers and Guarantors hereof waive
presentment and demand for payment, notice of non-payment, protest, and notice
of protest.
This Term Loan Note shall be construed in accordance with and
governed by the laws of the State of New York.
AMERICAN MEDICAL ALERT CORP.
By:
--------------------------------
Name:
Title:
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