LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT, dated July 10, 2000 by and between XXXXXXXXXX
BANK & TRUST COMPANY, a Massachusetts banking corporation with a place of
business at 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Bank"), and
Xxxxxxx Central Holdings, Inc., a Delaware corporation, Xxxxxxx Central
National, LLC, a Georgia limited liability company, and Xxxxxxx Central
Consulting, Inc., a Georgia corporation, each with its principal place of
business at 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 (collectively
hereinafter referred to as the "Borrower").
W I T N E S S E T H:
Background. The Borrower has requested that Bank extend to the Borrower a
line of credit loan in the maximum principal amount of Six Million and 00/100
Dollars ($6,000,000.00) which the Bank is willing to do on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises herein contained, and each
party intending to be legally bound hereby, the parties agree as follows:
l. DEFINITIONS
When used herein, the terms set forth below shall be defined as follows:
1.1 "Advance(s)" means all amounts loaned to the Borrower under Section 2.1
hereof.
1.2. "Affiliate" means any shareholder or any Subsidiary of the Borrower
and any entity or corporation controlled by the Borrower, any Subsidiary of
Borrower or any shareholder of the Borrower. For purposes of this definition,
"control" shall include the ownership of more than 10% of the outstanding stock
of a corporation or of the equity or income of a partnership or joint venture.
1.3. "Agreement" is this Loan and Security Agreement, as the same may be
amended from time to time.
1.4. "Bank's Address" is 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxxx, Senior Vice President.
1.5. "Borrower's Address" is 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx
00000.
1.6. "Borrowing Limit" means an amount equal to Six Million and 00/100
Dollars ($6,000,000.00).
1.7. "Business Day" means each and every day other than Saturdays, Sundays
and days on which the Bank is closed by virtue of a national holiday or a
holiday in the Commonwealth of Massachusetts.
1.8. "Collateral" means all that property of the Borrower described in
Section 5.1 of this Agreement.
1.9. "Equipment" means all furniture, fixtures, goods, equipment, machinery
(as defined in Section 9-109(2) of the Uniform Commercial Code), all documents
of title, and, in general, all tangible personal property, goods and chattels of
the Borrower of every kind and description, including, without limitation, all
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telephone and other communications equipment, photoduplicating and photocopying
equipment, computer equipment and motor vehicles of every description, including
automobiles, trucks and airplanes, wherever located, now owned or hereafter
acquired by the Borrower, together with any and all accessions thereto and all
substitutions and replacements thereof and parts therefor, all proceeds thereof
in whatever form received, whether cash or non-cash proceeds.
1.10. "Event of Default" means each and every event specified in Section
9.1 of this Agreement.
1.11. "Fiscal Year" means the year ending December 31st.
1.12. "Guarantor" means Mestek, Inc., a Pennsylvania corporation.
1.13. "Guaranty Agreement" means the agreements dated the date hereof by
which the Guarantor has guaranteed the Obligations.
1.14. "Indebtedness" means, as to the Borrower, all items of indebtedness,
obligation or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including, without
limitation the following (but excluding accounts payable and trade payables
incurred in the ordinary course of business):
(a) All indebtedness guaranteed, directly or indirectly, in any manner
or endorsed (other than for collection or deposit in the ordinary course of
business) or discounted with recourse;
(b) All indebtedness in effect guaranteed, directly or indirectly,
through agreements, contingent or otherwise: (1) to purchase such indebtedness;
or (2) to purchase, sell or lease (as lessee or lessor) property, products,
materials or supplies or to purchase or sell services, primarily for the purpose
of enabling the Borrower to make payment of such indebtedness or to assure the
owner of the indebtedness against loss; or (3) to supply funds to or in any
other manner invest in the Borrower;
(c) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed;
(d) All indebtedness incurred as the lessee under capital lease
obligations required to be capitalized on the balance sheet of such lessee; and
(e) All indebtedness of any partnership or joint venture in which the
Borrower or any of its Subsidiaries is a general partner or joint venturer.
1.15. "Inventory" means all inventory (as defined in Section 9-109(4) of
the Uniform Commercial Code), goods, merchandise and other personal property,
wherever located, now owned or hereafter acquired by the Borrower which are held
for sale or lease, or furnished or to be furnished under any contract of service
or are raw materials, work in process, supplies or materials used or consumed in
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the Borrower's business, and all products thereof, and all substitutions,
replacements, additions or accessions thereto, all cash or non-cash proceeds of
all the foregoing including insurance proceeds.
1.16. Intentionally Omitted.
1.17. "Laws" means all applicable ordinances, statutes, rules, regulations,
orders, injunctions, writs or decrees of any government or political subdivision
or agency thereof, or any court or similar entity established by any thereof.
1.18. "Line of Credit Loan(s)" means the line of credit extended by the
Bank to the Borrower under Article 2 hereof.
1.19. "Line of Credit Note" means the promissory note of the Borrower dated
the date hereof payable to the order of the Bank in the maximum principal amount
of $6,000,000.00, in the form of Exhibit 1.19 hereto.
1.20. "Loan Account" means the account of the Borrower on the books of the
Bank in connection with Article 2 hereof in which the Bank shall record all
Advances, interest charges, expenses and other items chargeable to the Borrower
pursuant to this Agreement and any other document or instrument to be delivered
hereunder or as a supplement hereto; payments made on such Advances by the
Borrower; and other appropriate debits and credits as provided herein.
1.21. "Loan" means the Line of Credit Loan.
1.22. "Note" means the Line of Credit Note.
1.23. "Obligations" means any and all Indebtedness, obligations and
liabilities of the Borrower to the Bank of every kind and description, direct or
indirect, secured or unsecured, joint or several, absolute or contingent, due or
to become due, whether for payment or performance, now existing or hereafter
arising, regardless of how the same arise or by what instrument, agreement or
book account they may be evidenced, or whether evidenced by any instrument,
agreement or book account, including, without limitation, the loans under this
Agreement and the Line of Credit Note; all indebtedness, liabilities or
obligations owing from the Borrower to others which the Bank may have obtained
by purchase, negotiation, discount, assignment or otherwise; and all interest,
taxes, fees, charges, expenses and attorneys' fees chargeable to the Borrower or
incurred by the Bank hereunder or any other document or instrument delivered
hereunder or as a supplement hereto.
1.24. "Other Liable Party" means any other person, corporation or entity
now or hereafter liable, absolutely or contingently for the whole or any part of
the Borrower's Obligations under this Agreement or the Line of Credit Note.
1.25. "Permitted Liens" means, so long as execution thereon has been
stayed:
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(a) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business, which either are not yet due or are being contested
in good faith by appropriate proceedings, and as to which the Borrower shall
have set aside adequate reserves;
(b) Pledges or deposits made in the ordinary course of business to
secure payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old-age pensions
or other social security programs;
(c) Liens of mechanics, materialmen, warehousemen, carriers, or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable;
(d) Encumbrances consisting of zoning restrictions, easements, or
other restrictions on the use of real property, none of which materially impairs
the use of such property by the Borrower or any Subsidiary in the operation of
its business, and none of which is violated in any material respect by existing
or proposed structures or land use;
(e) Liens in favor of the Bank (it being understood that any liens in
favor of Silicon Valley Bank are being terminated pursuant to the closing of the
transactions contemplated by this Agreement);
(f) Liens in favor of Xxxx X. Xxxx, which by the terms and conditions
of the Subordination Agreement (defined herein), shall be subordinated to the
liens in favor of the Bank; and
(g) Liens in favor of equipment lessors set forth on Exhibit 1.25.
1.26. Intentionally Omitted.
1.27. "Prime Rate" means the fluctuating prime rate of interest established
by the Bank from time to time whether or not such rate shall be otherwise
published.
1.28. "Receivable(s)" means all now owned and hereafter acquired, present
and future accounts (within the meaning of Section 9-106 of the Uniform
Commercial Code), including all guaranties and security therefor and all rights
and interest of the Borrower in any goods which gave rise thereto or are
described therein or are represented thereby; all federal, state and local tax
refunds and/or abatements to which the Borrower is or may from time to time
become entitled, no matter how or when arising, including but not limited to,
any loss carryback refunds; any other obligations or indebtedness owed to the
Borrower from whatever source arising and all rights of the Borrower to receive
any payments in money or kind; and all records, documents and instruments
evidencing or relating to any of the foregoing.
1.29. Intentionally Omitted.
1.30. Intentionally Omitted.
1.31. "Subordinated Debt" means Indebtedness of Borrower which is
subordinated to all Obligations, in accordance with the terms of the
Subordination Agreements.
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1.32. "Subordination Agreements" means (i) the Subordination Agreement,
dated the date hereof, among Bank, Borrower and Xxxx X. Xxxx ("Xxxx"), whereby
the certain obligations of the Borrower to Xxxx have been subordinated to the
Obligations and (ii) the Subordination Agreement in form reasonably satisfactory
to the Bank delivered to the Bank within sixty (60) days from the date hereof
whereby the certain obligations of the Borrower to Xxxxxxx X. X'Xxxxxxx
("X'Xxxxxxx") have been subordinated to the Obligations.
1.33. "Subsidiary" means any corporation of which more than fifty (50%)
percent of the outstanding voting securities shall, at the time of
determination, be owned by the Borrower directly or indirectly through one or
more Subsidiaries.
To the extent not defined in this Section l, unless the context
otherwise requires, accounting and financial terms used in this Agreement shall
have the meanings attributed to them by generally accepted accounting principles
and practices, and all other terms contained in this Agreement shall have the
meanings attributed to them by Article 9 of the Uniform Commercial Code in force
in the Commonwealth of Massachusetts, as of the date hereof to the extent the
same are used or defined therein.
2. LINE OF CREDIT
2.1 Advances. With respect to all Advances under the Line of Credit Loan,
the Borrower shall give an authorized commercial loan officer of the Bank
written notice deliverable by telecopier of each Advance it requests hereunder
at least one (1) Business Day prior to the date on which it desires the funds,
specifying the amount (which amount shall be in even multiples of $10,000.00 and
up to a maximum of the Borrowing Limit in aggregate principal amount at any time
outstanding) and date of such proposed Advance, and the Bank shall be authorized
to make Advances hereunder upon such instructions from the Chief Executive
Officer, Chief Financial Officer, or President of Borrower. The Bank shall make
the Advance by crediting the amount thereof on the date requested in immediately
available funds to any of the regular deposit accounts of the Borrower with the
Bank or in such other manner as the Borrower shall request in writing.
2.2 Interest. Interest on the principal balance of Advances from time to
time outstanding hereunder shall be calculated with respect to each Advance made
to the Borrower by the Bank at an annual rate equal to the Prime Rate as in
effect on each day (the "Line of Credit Loan Rate") and such interest will be
due and payable to the Bank on the first Business Day of each month after the
date hereof in accordance with Section 2.4 hereof. Unless waived by the Bank,
any amount of principal (and interest to the extent permitted by law) which is
not paid within fifteen (15) days after the same becomes due shall, to the
extent permitted by law, be subject to a late charge of five percent (5.00%) of
the monthly payment. The unpaid principal balance shall bear interest after
maturity (including any accelerated maturity date) at a rate equal to five
percent (5.00%) in excess of the Line of Credit Loan Rate as in effect on each
day. Interest hereunder shall be computed daily by multiplying the product of
the principal balance outstanding hereunder and the interest rate in effect for
the period in question by a fraction, the numerator of which is the number of
days during such period and the denominator of which is 360.
2.3. Line of Credit Note. The obligation of Borrower to repay all Advances
made by the Bank under the Line of Credit Note pursuant to this Agreement shall,
except for any amounts in excess of the Borrowing Limit, be evidenced by the
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Line of Credit Note of Borrower in the maximum principal amount of $6,000,000.00
payable to the order of the Bank including all renewals, extensions,
modifications, consolidations and amendments thereto in substantially the form
of Exhibit 1.19.
The Line of Credit Note shall evidence the obligations of Borrower to pay
the Advances owed to the Bank from time to time evidenced by the Loan Account
plus interest thereon as set forth in Section 2.2 hereof. Prior to any transfer
of the Line of Credit Note, the Bank shall make a notation thereon of the amount
of principal outstanding thereunder and the date to which interest has been
paid. The Borrower may from time to time borrow, repay without penalty and
reborrow, subject to the terms and conditions hereof, all amounts borrowed
hereunder as evidenced by the Line of Credit Note.
2.4 Payments. (a) The Bank will maintain a Loan Account (which account
shall be established in conformity with the Bank's usual and customary
practices) showing the date and amount of each Advance under the Line of Credit
Loan, as well as the date and amount of each payment of principal and interest
by the Borrower with respect thereto. Prior to the end of each month, the Bank
will render to the Borrower a statement of the Borrower's Loan Account with the
Bank hereunder, which shall constitute an account stated, showing the debits, if
any, and credits to the Loan Account and the balance in the Loan Account. The
Borrower agrees to promptly review each such statement and notify the Bank in
writing of any discrepancy contained therein. The statement will also show the
interest payment due on the next payment date, calculated by assuming that the
applicable rate will not change through the end of such month.
(b) Absent an earlier demand as a result of the acceleration of the
Obligations pursuant to Section 9.2 hereof, on the first Business Day of each
month, the Bank shall debit one or more of the regular deposit accounts of the
Borrower with the Bank in an aggregate amount equal to the amount of interest
payable on such date as shown on the statement prepared by the Bank and
delivered to the Borrower. In the event that the aggregate amount of all funds
in such accounts of the Borrower is insufficient to pay the amount of such
interest, the Bank will notify Borrower of such deficiency after which the
Borrower will forthwith pay to the Bank in immediately available funds the
amount of the deficiency.
(c) In the event that amounts outstanding under the Line of Credit
Loan shall exceed the Borrowing Limit, the Borrower shall be obligated to pay to
the Bank the difference between the Borrowing Limit and such outstanding amount.
The Bank shall have the right to debit one or more of the regular deposit
accounts of the Borrower with the Bank in an aggregate amount equal to such
difference. In the event that the aggregate amount of all funds in such accounts
of the Borrower is insufficient to pay the amount of such difference, the
Borrower will forthwith pay to the Bank in immediately available funds the
amount of the deficiency.
(d) All payments and/or proceeds of Collateral received by the Bank
shall be applied first to the payment of interest, fees, expenses and other
charges then due and unpaid (in such order as the Bank may determine) and the
balance, if any, to the unpaid principal of the Line of Credit Loan. The
Borrower hereby authorizes the Bank to charge to the Loan Account or to any
deposit account maintained by the Borrower with the Bank (i) any taxes (other
than regular income taxes) and filing fees and expenses incurred by the Bank in
connection with the transactions contemplated by this Agreement, (ii) accrued
interest payable under Section 2.2 hereof, (iii) reasonable attorneys' fees and
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expenses under Section 11.9 hereof, which are properly payable hereunder, and
(iv) any amount necessary to reduce the Loan Account to the Borrowing Limit.
(e) The Borrower may at any time or from time to time prepay, without
premium or penalty, all or any part of the outstanding principal amount of the
Line of Credit Loan evidenced by the Loan Account. The principal amount of the
Line of Credit Loan evidenced by the Loan Account prepaid pursuant to the
provisions of this Section 2.4(e) may be reborrowed from time to time by the
Borrower, subject to the terms and conditions hereof.
2.5. Termination. The termination date (the "Termination Date") of this
Line of Credit facility shall be the earliest of (i) the date on which the
Obligations have been accelerated, at the Bank's option, pursuant to Section 9.2
hereof, or (ii) July 10, 2001, unless the Bank shall, in its sole discretion,
extend the term during which the Borrower may request and receive Advances by
notice mailed by registered or certified or first class mail to the address of
the Borrower as specified herein, in which event Borrower's right to request and
receive Advances shall so terminate on the date as extended, unless further
extended as herein provided, which said written extensions and terminations may
continue in like fashion as herein provided. The Borrower shall have the right
to terminate the financing arrangements hereunder at any time upon thirty (30)
days prior written notice to the Bank. On the Termination Date, all Advances and
other sums charged or to be charged to the Loan Account shall become immediately
due and payable without notice or demand. Notwithstanding termination, until all
Obligations have been fully satisfied, the Bank shall retain its security
interest in all then existing and thereafter arising Collateral, and except for
those specific covenants and conditions dealing with the making of Advances, all
terms and conditions of this Agreement shall remain in full force and effect.
2.6. Facility Fee. Upon execution of this Agreement, Borrower shall pay to
the Bank a facility fee of $30,000.00 representing one half of one percent
(.50%) of the total aggregate amount available under the Line of Credit Loan.
2.7. Intentionally Omitted.
3. [RESERVED]
4. CONDITIONS.
4.1. Conditions. The Bank's obligations to make the Line of Credit Loan,
the initial Advance and each subsequent Advance shall be conditioned upon the
following:
(a) Representations and Warranties. All of the representations and
warranties of the Borrower set forth in Section 6 hereof shall be true and
correct as of the date hereof and on the date of each Advance (except where
expressly indicated to be as of the date hereof); no Event of Default shall have
occurred and be continuing; and no event shall have occurred and be continuing
which with notice or lapse of time or both would be an Event of Default;
(b) Initial Advance. As a condition to the Initial Advance: (i) the
Borrower shall have duly executed or caused to have been duly executed and
delivered to the Bank, all in form satisfactory to the Bank and the Bank's
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counsel, this Agreement; the Line of Credit Note; the Guaranty Agreement; the
Subordination Agreement of Xxxx (it being understood and agreed that the
Subordination Agreement of X'Xxxxxxx shall be delivered within thirty (30) days
from the date hereof); all requested proof of corporate action and officers'
authority; the opinion of the Borrower's and Guarantor's counsel in the form and
substance satisfactory to the Bank and the Bank's counsel; certificates of good
standing and authority, consents and/or agreements of third parties, and
financial statements and schedules as the Bank has requested under its
commitment letter to the Borrower or may otherwise reasonably require; and
(c) No Material Adverse Change. There shall have been no material
adverse change in the Borrower's or the Guarantor's financial condition or
financial or business prospects from those represented in any financial
statement or other information submitted to the Bank or upon which the Bank has
relied.
(d) Subsequent Advances. As a condition to each subsequent Advance,
the Borrower shall have delivered to the Bank a certificate executed by the
Borrower's Chief Executive Officer, Chief Financial Officer or President that
there has not occurred any Event of Default hereunder or any event, which with
the giving of notice or lapse of time, would be an Event of Default hereunder.
4.2. Borrower's Confirmation. The Borrower's request to the Bank for any
Advance shall be deemed to be a representation and warranty to the Bank that the
conditions specified in Section 4.1 for such Advance have been satisfied.
5. SECURITY
5.1. Grant of Security. The Borrower hereby grants, pledges, assigns and
transfers to the Bank, to secure the payment and performance of the Obligations,
a continuing and first security interest in and lien on all of the following
described properties, assets and rights of the Borrower (hereinafter sometimes
called, collectively, the "Collateral"):
(a) all of the properties, assets, business and goodwill of the
Borrower of every kind and nature whatsoever, tangible or intangible, personal
or mixed, whether now owned or hereafter acquired or arising at any time or from
time to time hereafter, wherever located, whether in the possession of the
Borrower or in transit or in the possession of any other person or entity, and
all rights, title and interests of the Borrower of every kind and nature
whatsoever in and to the foregoing, and including, without limiting the
generality of the foregoing provisions of this clause (a), all of the properties
and assets of the Borrower identified and described below in clauses (b) through
(i) of this Section 5.1;
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(b) all Equipment, Inventory and Receivables of the Borrower;
(c) all claims, demands, judgments, rights, choses in action,
equities, credits, bank accounts, cash on hand and in banks, instruments,
documents, chattel paper, securities, bonds, shares of capital stock and other
securities of every description, investments, all insurance policies, including
the cash surrender value thereof and all proceeds, premium rebates and refunds
thereof;
(d) all contract rights of every kind and nature whatsoever, and all
claims, indemnities, rights, remedies, powers and privileges of the Borrower in,
to and under all contracts or agreements among the Borrower and any other
parties, whether now existing or hereafter created, made or entered into by the
Borrower;
(e) all deeds, leases, contracts and agreements for the use, sale or
assignment of property, whether tangible or intangible, leaseholds, mortgages,
assignments, options and licenses of every kind and description, and all
documents and instruments of title relating to or in any way connected with the
property of the Borrower, whether tangible or intangible;
(f) to the extent permitted by law, all licenses and authorizations of
the Borrower relating to the operation of the Borrower's business and/or the
Collateral and all renewals, extensions and proceeds thereof;
(g) all general intangibles within the meaning of the Uniform
Commercial Code and to the extent not included therein all files, books, records
and other writings, including, without limitation, all records and books of
account, all corporate minute books and all stock ledgers, and also including,
without limitation, all computer programs and tapes and all electronic data
processing software and all other computer software, and all information of
every description recorded or contained or stored in any of the bureaus, all
service bureau service contracts, all computer data and all concepts and ideas
on which said data is based, all developmental ideas and concepts, all papers,
drawings, blueprints, sketches and documents relating to any of the foregoing
and/or relating to the operation of the Borrower's business and/or the
Collateral; all franchises, product lines and research and development,
goodwill, royalties, all data bases, supplies and customer lists, all trade
secrets, patents, trademarks, copyrights and servicemarks and all applications
for and licenses, rights and interests to or under or in respect of any patents,
trademarks, servicemarks or copyrights; all of the Borrower's trade names or
business names;
(h) all records and documents identifying the accounts of customers or
suppliers, and all rights of every description (i) to information on, (ii) to
the use of, and (iii) to solicitation with respect to, accounts of customers or
suppliers; and
(i) all of the income, products and proceeds of, and all additions,
substitutions and accessions to, all of the properties and assets of the
Borrower identified and described in the foregoing clauses (a) through (h) of
this Section 5.1; in each and every case whether now owned or hereafter acquired
by the Borrower and howsoever its interests may arise or appear.
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5.2. Guaranty Agreement. To secure the payment and performance of the
Obligations, including, without limitation, the obligations of the Borrower
under this Agreement, the Guarantor has concurrently executed and delivered the
Guaranty Agreement.
5.3. Continuing Security Interest. The Borrower expressly intends and
confirms that the security interest granted herein remain as security for
payment and performance of the Obligations, whether now existing or which may
hereinafter be incurred by future Advances, or otherwise; and whether or not any
such Obligation is related to the transaction described in this Agreement, by
class or kind, or whether or not contemplated by the parties at the time of the
granting of this security interest. The notice of the continuing grant of this
security interest therefore shall not be required to be stated on the face of
any document representing any such Obligations, nor otherwise identify it as
being secured hereby. Any such Obligation shall be deemed to have been made
pursuant to Section 9-204(3) of the Uniform Commercial Code. The security
interest granted hereunder is granted as security only and shall not subject the
Bank to, or transfer or in any way affect or modify, any obligation or liability
of the Borrower under any of the Collateral or any transaction which gave rise
thereto. This Agreement and the security interest are in addition to and not in
substitution for any other security or rights now or hereafter held by the Bank.
6. REPRESENTATIONS AND WARRANTIES
As a material inducement to the Bank to make loan to the Borrower
hereunder, the Borrower represents and warrants to the Bank, and such
representations and warranties shall be continuing representations and
warranties during the term of this Agreement and for so long thereafter as any
Obligation shall remain outstanding (except where expressly indicated to be as
of the date hereof), as follows:
6.1 Corporation. Xxxxxxx Central Holdings, Inc. is a corporation duly
organized, validly existing, and in corporate good standing under the Laws of
the State of Delaware; each of Xxxxxxx Central Consulting, Inc. and Xxxxxxx
Central National, LLC is duly organized, validly existing and in good standing
under the Laws of the State of Georgia; the Borrower has the lawful power to own
its properties and to engage in the business it conducts; and the Borrower is
duly qualified and in good standing as a foreign corporation in all
jurisdictions whereby the business transacted by it or property owned by it
requires it to be qualified; Xxxxxxx Central Holdings, Inc. has no Subsidiaries,
except as listed on Exhibit 6.1; the Borrower has no place of business other
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than at the Borrower's Address, or except as listed on Exhibit 6.1; all
Inventory and all records pertaining to Receivables and Inventory are and shall
be at the Borrower's Address; the Borrower uses no trade names except as listed
on Exhibit 6.1 attached hereto; and the Borrower has not changed its name, done
business under any assumed or trade name or style other than its corporate name,
been the surviving corporation in a merger, acquired any business, or changed
its principal executive office within five (5) years and one (1) month prior to
the date hereof, except as indicated in Exhibit 6.1 hereto.
6.2 No Default. The Borrower and its Subsidiaries are not in default with
respect to any of their existing Indebtedness; and the making and performance of
this Agreement, the Line of Credit Note, and all other agreements and
instruments delivered pursuant to this Agreement will not (immediately, with
lapse of time, the giving of notice, or both):
(a) Violate the charter or by-law provisions of the Borrower or its
Subsidiaries, or violate any Laws or result in a default under any contract,
agreement, or instrument to which the Borrower or its Subsidiaries are parties
or by which the Borrower or its Subsidiaries or their property are bound; or
(b) Result in the creation or imposition of any security interest in,
or lien or encumbrance upon, any of the assets of the Borrower, except in favor
of the Bank.
6.3. Authority. The Borrower has the power and authority to enter into and
perform this Agreement, the Line of Credit Note, and all other agreements and
instruments delivered pursuant to this Agreement, and to incur the obligations
herein and therein provided for, and has taken all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement, the Line
of Credit Note, and all such other agreements and instruments executed in
connection therewith.
6.4. Binding Obligations. This Agreement, the Line of Credit Note, and all
other agreements and instruments delivered pursuant to this Agreement constitute
the valid and legally binding obligations of the Borrower and are enforceable
against the Borrower in accordance with their respective terms, except as
limited by applicable bankruptcy or insolvency laws and general principles of
equity.
6.5. Litigation. There is no pending order, notice, claim, litigation,
proceedings or investigation against or affecting the Borrower and its
Subsidiaries, whether or not covered by insurance, that would involve the
payment of $75,000.00 or more if adversely determined.
6.6. Liens. The Borrower and its Subsidiaries have good and marketable
title to all of their assets, subject to no security interest, encumbrance or
lien, or claim of any third person, except for liens which are being terminated
pursuant to this Agreement and Permitted Liens.
6.7. Indebtedness. Except as set forth in Exhibit 6.7 attached hereto, the
Borrower and its Subsidiaries have no material Indebtedness of any nature,
including, but without limitation, liabilities for taxes and any interest or
penalties relating thereto, except to the extent as disclosed in or permitted by
this Agreement; the Borrower does not know and has no reasonable ground to know
of any basis for the assertion against it or any of its Subsidiaries of any
material Indebtedness of any nature not so disclosed in or permitted by this
Agreement.
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6.8. Taxes. The Borrower and its Subsidiaries have filed all federal, state
and local tax returns and other reports the Borrower and its Subsidiaries are
required by applicable Laws to file prior to the date hereof and which are
material to the conduct of their respective businesses, have paid or caused to
be paid all taxes, assessments and other governmental charges that are due and
payable prior to the date hereof, and have made adequate provision for the
payment of such taxes, assessments or other charges accruing but not yet
payable; and the Borrower has no knowledge of any deficiency or additional
assessment in a materially important amount in connection with any taxes,
assessments or charges not provided for on its books or the books of its
Subsidiaries.
6.9. Compliance. The Borrower and its Subsidiaries have complied in all
material respects with all applicable Laws with respect to: (i) any
restrictions, specifications, or other requirements pertaining to products that
the Borrower or its Subsidiaries produces or sells or to the services each
performs; (ii) the conduct of the business of the Borrower and its Subsidiaries
including all applicable local, state and Federal Laws pertaining to
environmental protection and the storage and disposal of hazardous wastes; and
(iii) the use, maintenance, and operation of the real and personal properties
owned or leased by the Borrower or its Subsidiaries in the conduct of their
respective businesses. Each consent, approval or authorization of, or filing,
registration or qualification with, any entity or authority which is required to
be obtained or effected by the Borrower or its Subsidiaries in connection with
the execution and delivery of this Agreement and or the undertaking or
performance of any obligation hereunder or thereunder has been duly obtained or
effected.
6.10. Contracts. To the best of the Borrower's knowledge, (i) all parties
to all material leases, contracts and other commitments to which the Borrower is
a party have complied in all material respects with the provisions of such
material leases, contracts and other commitments; (ii) no party is in default
under any of the provisions of such material leases, contracts and other
commitments and no event has occurred which, but for the giving of notice or the
passage of time, or both, would constitute a default; and (iii) the Borrower is
not a party to any agreement or subject to any charter or corporate restrictions
which materially and adversely affects its business, property, assets or
operations.
6.11. ERISA. All Employee Benefit Plans, as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), of the Borrower
meet the minimum funding standards of Section 302 of ERISA to the extent
applicable, and no Reportable Event or Prohibited Transaction, as defined in
ERISA, has occurred with respect to any such Plan.
6.12. Patents and Franchises. The Borrower and each of its Subsidiaries
owns or has a valid right to use the patents, patent rights or licenses,
trademarks, trademark applications, trademark rights and trade names or trade
name rights or franchises now being used or necessary to conduct its business,
and the conduct of its business as now operated does not conflict with valid
patents, patent rights or licenses, trademarks, trade name rights or franchises
of others in any manner that could materially adversely affect in any manner the
business or assets or condition, financial or otherwise, of the Borrower.
6.13. Hazardous Waste. No oil, asbestos, hazardous waste or other hazardous
materials are or to the best of the Borrower's knowledge have been present on
any premises occupied by the Borrower, except in compliance with applicable
Laws. The Borrower has received no notice of a violation of environmental law or
regulation from the United States Environmental Protection Agency or any local
12
agency having jurisdiction over environmental laws or hazardous substances with
respect to the premises currently occupied by the Borrower and any of its
Subsidiaries.
6.14. Representations. No representation or warranty by the Borrower
contained herein or in any certificate or other document furnished by the
Borrower pursuant hereto contains any untrue statement of material fact or omits
to state a material fact necessary to make such representation or warranty not
misleading in light of the circumstances under which it was made.
6.15. Subsidiaries. Each Subsidiary of the Borrower, the jurisdiction in
which each such Subsidiary is incorporated, the principal office of each such
Subsidiary and the capital stock in each such Subsidiary owned by the Borrower
are as set forth in Exhibit 6.15 hereto; each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and, except as set forth in Exhibit 6.15
hereto, those other jurisdictions where the conduct of its business or the
operation of its properties requires qualification; and each Subsidiary has the
corporate power and authority to own its properties and assets and to conduct
its business as heretofore conducted.
6.16. Financial Statements. The historical audited financial statements
furnished to the Bank by the Borrower have been prepared in accordance with
generally accepted accounting principles consistently applied and they fairly
present in all material respects the financial position of Borrower as of the
dates thereof and the results of operations of Borrower for the periods included
therein; and, since the respective dates of the financial statements there has
been no material adverse change in the financial condition of the Borrower and
its Subsidiaries and there has been no transaction other than in the ordinary
course of business of the Borrower and its Subsidiaries.
6.17. Equipment. The Equipment is in the possession of the Borrower at the
Borrower's Address or at the locations listed on Exhibit 6.1; none of the
Equipment constitutes a fixture as such term is defined by applicable law,
unless the Bank has received disclaimers and waivers necessary to make the
security interest in the Equipment valid against the Borrower and other persons
holding an interest in such real estate.
6.18. Investment Company. The Borrower is not an "investment company" or a
company "controlled" by an "investment company", as such terms are defined in
the Investment Company Act of 1940, as amended.
6.19. Year 2000 Compliance. The Borrower represents and warrants to the
Bank (which representation and warranty shall survive the making of the Loan)
that the Borrower has taken all necessary action to assess, evaluate and correct
all of the hardware, software, embedded microchips and other processing
capabilities is uses, directly or indirectly, to ensure that it will be able to
function accurately and without interruption or ambiguity using date information
from and after January 1,2000.
7. NEGATIVE COVENANTS
The Borrower agrees that during the term of this Agreement and so long
thereafter as any Obligations remain outstanding, the Borrower will not without
the prior written consent of the Bank:
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7.1. Changes. Make any fundamental change in its business activities or
enter into any merger or consolidation or effect any reorganization or
recapitalizations.
7.2. Liens. Mortgage, pledge, grant or permit to exist a security interest
in or lien or encumbrance upon any of its assets or property, real or personal,
tangible or intangible, now owned or hereafter acquired, except Permitted Liens.
7.3. Guarantees. Assume, indorse, guarantee or otherwise become liable for
or upon the obligations of any person, partnership, corporation or other entity,
other than endorsements of commercial paper for collection or deposit in the
ordinary course of business and guaranties in favor of the Bank.
7.4. Indebtedness. Incur, create, assume or permit to exist any
Indebtedness or liability except: (i) Indebtedness to the Bank; (ii) now
existing Indebtedness secured by Permitted Liens; and (iii) accounts payable and
trade payables incurred in the ordinary course of business; (iv) subordinated
debt on terms acceptable to the Bank; and (v) indebtedness existing on the date
hereof and set forth on Exhibit 6.7.
7.5. Capital Stock. Redeem, sell, purchase or retire any of the capital
stock or equity securities of the Borrower, or declare or pay any dividends
(other than stock dividends), or make any other payment or distribution upon any
of the capital stock of the Borrower, except to former shareholders and
noteholders of CareCentric Solutions, Inc.
7.6. Loans. Make any investment in, or make any loan or advance to, any
person, partnership or corporation, including officers, shareholders or
directors of the Borrower, except for extensions of credit to its customers on
commercially reasonable terms and conditions and in accordance with industry
standards or loans to Borrower's employees from 401(k) employee benefit plan
funds for which Borrower is deemed by law to be the lender.
7.7. Investments. Purchase or otherwise invest in or hold securities,
non-operating real estate or other nonoperating assets, except direct
obligations of the United States of America or certificates of deposit or
equivalent securities issued by the Bank.
7.8. Disposition of Property. Enter into any sale leaseback transaction, or
sell, lease, transfer or otherwise dispose of all or any Collateral, except
sales of Inventory in the ordinary course of business and except for obsolete
Equipment which is immediately replaced with new Equipment of equal or greater
value.
7.9. Margin Stock. Directly or indirectly use or apply all or any portion
of the proceeds of any loans by the Bank to purchase or carry any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, or any regulations, interpretations or rulings thereunder, as
amended.
7.10. Diversion of Business. Divert to any Affiliate any business or
opportunity for business of a type normally conducted or capable of being
conducted by the Borrower, unless for transactions in the ordinary course of
business, upon fair and reasonable terms that are no less favorable to Borrower
then would be obtained in an arms-length transaction with a non-Affiliate.
14
7.11. Representations. Furnish the Bank any certificate or other document
that contains any untrue statement of material fact or that omits any material
fact necessary to make the statements contained in such certificate or other
document not misleading in light of the circumstances under which it was
furnished.
7.12. Other Agreements. Enter into any other contract, agreement or
transaction which materially and adversely affects the Borrower's business,
property, assets, operations, condition (financial or otherwise), the Collateral
(the consent to which shall not be unreasonably withheld by the Bank), or enter
into any other contract, agreement or transaction which materially and adversely
affects the Borrower's ability to repay the Obligations or perform its
obligations under this Agreement.
8. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees with the Bank that it will, during
the term of this Agreement and so long thereafter as any Obligations remain
outstanding:
8.1. Use of Loan Proceeds. The proceeds of the Loan will be used by the
Borrower solely for general working capital purposes.
8.2. Financial Statements. Furnish the Bank:
(a) On a monthly basis, with internally prepared financial statements,
including monthly accounts receivable aging reports;
(b) Within ninety (90) days after the last day of each Fiscal Year of
the Borrower, a financial statement, including a balance sheet, a related
statement of income and liabilities, including contingent liabilities, a source
and use of funds statement and a statement of changes in financial position of
the Borrower and its Subsidiaries, if any, each prepared and audited in
reasonable detail and in accordance with generally accepted accounting
principles consistently applied, and audited by a certified public accountant
acceptable to the Bank, and to be accompanied by a copy of any report rendered
to management in connection with such report, by detailed schedules of expenses
and income, and by a certification executed under the pains and penalties of
perjury by the Borrower's Chief Financial Officer that, to the best of his
knowledge, there had occurred no Event of Default or any event, which with the
giving of notice or lapse of time, would be an Event of Default or, if the
contrary had appeared from their examination, to state facts found by them
(including without limitation any Reportable Event or Prohibited Transaction
under ERISA affecting the Borrower or any employee benefit plan of the
Borrower);
(c) Within thirty (30) days of the due date, including any extensions
timely filed, for all annual state and federal tax returns of the Borrower, a
copy of such annual state and federal tax returns of the Borrower for such
Fiscal Year; and
(d) Promptly and in form reasonably satisfactory to the Bank, such
other financial information as the Bank may reasonably request from time to
time.
8.3. Insurance. Maintain casualty insurance coverage on the physical assets
of the Borrower and other insurance against other risks, including public
liability and product liability insurance in such amounts and of such types as
15
are ordinarily carried by similar businesses, but in no event shall casualty
insurance coverage be in an amount less than the replacement value of the
physical assets of the Borrower. In the event of acquisition of additional
assets or incurrence of additional risks of any nature, the Borrower shall cause
such insurance coverage to be increased or amended in such manner and to such
extent as prudent business judgment would dictate. In the case of all policies
insuring property in which the Bank shall have a security interest of any kind
whatsoever, all insurance policies shall provide that the loss payable
thereunder shall be payable to the Borrower and the Bank, as their respective
interests may appear. Borrower shall provide an insurance certificate to the
Bank annually specifying such coverage. Said policies shall contain provisions
that no such insurance may be canceled or decreased without thirty (30) days
prior written notice to the Bank.
8.4. Access to Collateral. Permit the Bank, through its authorized
attorneys, accountants and representatives, to examine the Collateral and the
books, accounts, records, computer tapes and discs, ledgers and assets of every
kind and description of the Borrower and its Subsidiaries at all reasonable
times, and at the Borrower's expense, at least annually, but no more frequently
than quarterly, except in the Event of Default in which event the Bank's access
shall be unlimited, permit the Bank to audit such records and to send a request
to account debtors for verifications of Receivables.
8.5. Notices. Promptly notify the Bank of any condition or event which
constitutes, or would constitute with the passage of time or giving of notice or
both, an Event of Default; notify the Bank at least ten (10) days prior to the
filing by the Borrower or any of its Subsidiaries of a petition for relief under
any bankruptcy or insolvency law; and promptly inform the Bank of any events or
changes in the business, properties or condition, financial or otherwise of the
Borrower, which individually or cumulatively when viewed in light of prior
financial statements, may result in a material adverse change in the financial
condition of the Borrower.
8.6. Corporate Qualification. Maintain in good standing its corporate
existence in its state of incorporation and its status as a foreign corporation
qualified to do business in those jurisdictions where the Borrower and its
Subsidiaries are or may later be qualified, except for changes based upon
Borrower or its Subsidiaries no longer transacting business in certain
jurisdictions, in which event Borrower shall notify the Bank within thirty (30)
days of the expirations of such qualification.
8.7. ERISA. If the Borrower or any Subsidiary shall now or hereafter
maintain an employee benefit plan covered by Section 402l(a) of ERISA, relating
to plan termination insurance, the Borrower shall: (a) furnish the Bank a copy
of each annual report, together with any schedules or other attachments thereto,
required to be filed with the Secretary of Labor or any other governmental
official pursuant to ERISA; (b) furnish the Bank a copy of any notice of a
reportable event required to be furnished to the Pension Benefit Guaranty
Corporation ("PBGC") or other governmental agency; (c) notify the Bank of the
filing of the notice with the PBGC pursuant to Section 4041 of ERISA that the
plan is to be terminated; and (d) notify the Bank of the institution of any
proceedings by the PBGC under Section 4042 of ERISA promptly after the filing of
such reports or notices or institution of such proceedings.
8.8. Governmental Contracts. Notify the Bank immediately if any Receivables
in any instance in excess of $25,000.00, arise out of contracts between Borrower
and the United States or any department, agency or instrumentality thereof and,
16
after request by the Bank, execute any instruments and take any steps to perfect
the assignment of the rights of the Borrower to the Bank as required under the
Federal Assignment of Claims Act or any similar act or regulation.
8.9. Names and Addresses. Notify the Bank within fifteen (15) days prior to
(i) the use of any new "trade names"; or (ii) any change in the address of the
chief executive office and/or chief place of business of the Borrower or the
location of any Collateral or of any records pertaining to the Receivables.
8.10. Receivables. At such regular intervals as the Bank may hereafter
reasonably determine (but not more often than monthly), the Borrower shall
provide the Bank, at its request, with the following information and documents
concerning Receivables: confirmatory assignment schedules; copies of all
invoices relating to the Receivable; evidence of shipment or delivery of
Inventory; and, such further information and/or schedules as the Bank may
reasonably require, all in form satisfactory to the Bank.
8.11. Records. Keep complete and accurate books and records with respect to
the business of the Borrower and its Subsidiaries and the Collateral, consistent
with good business practice including current stock, cost and sales records of
Inventory, accurately itemizing and describing the kinds and types and
quantities of Inventory, and the cost and selling price thereof.
8.12. Additional Assurances. At any time and from time to time upon request
of the Bank, (i) execute and deliver to the Bank, in form and substance
satisfactory to the Bank, any financing statements (including a copy of an
executed financing statement or this Agreement, which shall be sufficient as a
financing statement) and instruments of assignment as the Bank shall deem
necessary or desirable to perfect, preserve or enforce the Bank's security
interest hereunder, (ii) cause any chattel paper included in the Receivables to
be delivered to the Bank or its designated agent, and (iii) cause an appropriate
legend referring to the Bank's security interest hereunder to be placed on such
chattel paper and ledgers and records relating to the Receivables.
8.13. Indemnification. Indemnify and hold the Bank harmless from any claim
or claims for injury or damage to persons or property which may arise in or on
or about the premises of the Borrower.
8.14. [RESERVED]
8.15. Laws. Comply in all material respects with all applicable Laws and
regulations, whether now in effect or hereafter enacted or promulgated by any
governmental authority having jurisdiction over the Borrower, the Borrower's
Subsidiaries, or their operations or assets.
8.16. Taxes. Pay or deposit promptly when due all sales, use, excise, real
and personal property, income, withholding, corporate, franchise and other
taxes, assessments and governmental charges upon or relating to its ownership or
use of any of the Collateral or its income, or the operation of its business or
otherwise, for which the Borrower is or may be liable, unless the Borrower is
contesting the payment of such taxes in good faith diligently pursued and has
set aside an adequate reserve on its books therefor.
8.17. Banking. Maintain its principal checking and business accounts at the
Bank and use the Bank as its principal depository.
17
9. EVENTS OF DEFAULT AND ACCELERATION
9.1. Events of Default. The occurrence of any one or more of the following
events shall constitute an Event of Default hereunder:
(a) Nonpayment of any installment of principal and/or interest and/or
any other sum due under the Line of Credit Note, this Agreement or any other
Obligations when the same shall become due and payable and such nonpayment shall
have continued for more than five (5) days;
(b) The Borrower shall fail to observe or perform any other covenant
or agreement to be observed or performed by the Borrower hereunder or under any
agreement, note or instrument heretofore, now or hereafter executed by the
Borrower in favor of or assigned to the Bank and such failure shall continue for
thirty (30) days after (i) notice of such failure from the Bank or (ii) the Bank
is notified of such failure or should have been notified pursuant to Section 8.5
hereof, whichever is earlier;
(c) The cancellation, lapse, or termination of any insurance coverage
required to be maintained by the Borrower under this Agreement;
(d) A default under any document, agreement or instrument now or
hereafter evidencing or securing any other Obligation or Indebtedness of the
Borrower now existing or hereafter arising in an amount of $75,000.00 or more;
(e) A default under any document, agreement or instrument evidencing
any obligation or indebtedness secured in whole or in part by any or all of the
Collateral;
(f) Breach of, or the proving false or misleading in any material
respect of any representation or warranty now or hereafter made to the Bank by,
on behalf of, or for the benefit of the Borrower or the Guarantor, or contained
in:
(i) this Agreement, the Line of Credit Note, the Guaranty
Agreement, and the Subordination Agreements;
(ii) any loan application, statement, financial statement,
certificate or other document, agreement or instrument furnished, signed or
executed in connection herewith by, on behalf of, or for the benefit of the
Borrower;
(g) (i) The insolvency or inability of the Borrower, the Guarantor, or
any other person, corporation or entity now or hereafter liable, absolutely or
contingently, for the whole or any part of the Note (hereinafter referred to as
"Other Liable Party") to pay its respective debts as they mature, or the
appointment of a receiver, trustee, custodian or other fiduciary, for, or for
any of the property of, or an assignment for the benefit of creditors by, or the
making of or entering into a trust mortgage or deed or other instrument or
similar import for the benefit of creditors by the Borrower, the Guarantor, or
any Other Liable Party; or the convening of a meeting of the creditors, or the
selection of a committee representing the creditors of the Borrower, the
Guarantor, or any Other Liable Party; or
18
(ii) The filing of a petition, complaint, motion or other
pleading seeking any relief under any receivership, insolvency, or debtor relief
law, or seeking any readjustment of indebtedness, reorganization, composition,
extension of any similar type of relief, or the filing of a petition, complaint,
or motion under any chapter of the Federal Bankruptcy Code, as the same now
exists or may hereafter be amended (the "Code"), by the Borrower, the Guarantor
or any Other Liable Party; or
(iii) The filing of a petition, complaint, motion or other
pleading seeking any relief under any receivership, insolvency, or debtor relief
law, or under any chapter of the Code, or seeking any readjustment of
indebtedness, reorganization, composition, extension or any similar type of
relief, or the entry of any order for relief under any chapter of the Code,
against the Borrower, the Guarantor or any Other Liable Party;
Provided, however, that if the Borrower shall immediately notify the Bank
in writing of the filing of any petition, complaint, motion or other pleading
against the Borrower, the Guarantor or any Other Liable Party referred to in the
above paragraph (iii), and shall provide evidence satisfactory to the Bank that
the Borrower, the Guarantor or such Other Liable Party, as the case may be, has
in good faith and within ten (10) days after the filing of any such petition,
complaint, motion or other pleading filed an answer thereto contesting same,
then there shall be no Event of Default under the above subparagraph (iii) until
the earliest of (1) the entry of an order for relief or a judgment under any
proceedings referred to in such subparagraph (iii), the appointment of a
receiver in any such proceeding or (3) the expiration of a period of sixty (60)
days at the end of which such petition, complaint, motion or other pleading
remains undismissed; or
(iv) The entry of any judgment against, or the attachment or
garnishment of any of the property, goods or credits of, the Borrower, the
Guarantor or any Other Liable Party which remains unpaid, unstayed, undismissed
or unbonded for a period of thirty (30) days; or if any foreclosure is
instituted (by judicial proceedings, by publication of notice pursuant to a
power of sale or otherwise) against the Borrower under any mortgage or security
agreement given by the Borrower and remains undismissed or not terminated for a
period of thirty (30) days; or
(v) The dissolution, liquidation or termination of existence of
the Borrower, the Guarantor or any Other Liable Party (including death or
disability, if the Borrower, the Guarantor or any Other Liable Party is an
individual);
(h) Any material adverse change in the financial condition of the
Borrower, the Guarantor or any Other Liable Party;
(i) The occurrence of any event or circumstance with respect to the
Guarantor or any Other Liable Party such that the Bank reasonably deems itself
insecure;
(j) A change of control of the Borrower;
(k) The Guaranty Agreement shall cease to be in full force and effect
or the Guarantor shall so assert in writing or a default shall occur under the
Guaranty Agreement; or
19
(l) The failure of the Borrower to deliver the Subordination Agreement
of X'Xxxxxxx in form reasonably satisfactory to the Bank within sixty (60) days
from the date hereof.
9.2. Acceleration. Immediately and without notice upon the occurrence of an
Event of Default specified in Section 9.1, at the option of the Bank, all
Obligations, whether hereunder or otherwise, shall immediately become due and
payable without presentment, demand, protest or notice of any kind, all of which
are hereby expressly waived by the Borrower and the Guarantor. The Bank's
failure to exercise such option shall not constitute a waiver of the right to
exercise it at any other time.
10. RIGHTS AND REMEDIES
10.1. Remedies. Upon an Event of Default and at any time thereafter during
the continuance of such Event of Default, the Bank shall have the right, in
addition to its remedies under the Uniform Commercial Code as in force in the
Commonwealth of Massachusetts, and the Bank and any officer or agent of the Bank
is hereby constituted and appointed as true and lawful attorney-in-fact of the
Borrower with power, exercisable only after an Event of Default has occurred and
is continuing, to: (i) notify or require the Borrower to notify any and all
account debtors that the Receivables have been assigned to the Bank and/or that
the Bank has a security interest in the Receivables; (ii) endorse the name of
the Borrower upon any notes, checks, acceptances, drafts, money orders or other
instruments of payment (including payments to Borrower made under any policy of
insurance or any tax refund) or Receivables that may come into possession of the
Bank in full or part payment of any amount owing to the Bank; (iii) sign and
endorse the name of the Borrower upon any invoice, freight or express xxxx, xxxx
of lading, storage or warehouse receipt, draft against an account debtor,
assignment, verification and notice in connection with any Collateral and any
instrument or document relating thereto or to rights of the Borrower therein;
(iv) send requests for verifications of Receivables to account debtors; and (v)
sell, assign, xxx for, collect or compromise payment of all or any part of the
Collateral in the name of the Borrower or in its own name, or make any other
disposition of Collateral, or any part thereof, which disposition may be for
cash, credit or any combination thereof, and the Bank may purchase all or any
part of the Collateral at public or, if permitted by law, private sale, and in
lieu of actual payment of such purchase price, may set-off the amount of such
price against the Obligations; the Borrower granting to the Bank, as the
attorney-in-fact of the Borrower, full power of substitution and full power to
do any and all things necessary to be done in and about the premises as fully
and effectually as the Borrower might or could do but for this appointment, and
hereby ratifying all that said attorney-in-fact shall lawfully do or cause to be
done by virtue hereof and consistent with the provisions hereof. Neither the
Bank nor its agents shall be liable for any acts or omissions or for any error
of judgment or mistake of fact or law in its capacity as such attorney-in-fact
other than for acts of willful misconduct or gross negligence. This power of
attorney is coupled with an interest and shall be irrevocable during the term of
this Agreement and so long as any Obligations shall remain outstanding.
10.2. Set-off. The Bank shall have a right to set-off, without notice to
the Borrower, any and all deposits or other sums at any time or times credited
by or due from the Bank to the Borrower.
10.3. Remedies Cumulative. The Bank shall have with respect to the
Collateral, in addition to any other rights and remedies contained in this
Agreement, and any other agreements, guarantees, notes, instruments and
documents, now or at any time or times hereafter executed by the Borrower and
delivered to the Bank, all of the rights and remedies of a secured party under
the Uniform Commercial Code in force in the Commonwealth of Massachusetts, all
20
of which rights and remedies shall be cumulative, and none exclusive, to the
extent permitted by law.
10.4. The Borrower's Waiver. In the event the Bank seeks to take possession
of any or all of the Collateral by court process, the Borrower hereby
irrevocably waives any bonds and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such
possession, and waives any demand for possession prior to the commencement of
any suit or action to recover with respect thereto.
10.5. Miscellaneous. Any notice required to be given by the Bank of a sale
or other disposition or other intended action by the Bank with respect to any
disposition of any of the Collateral, or otherwise, made to the Borrower in
accordance with the terms of this Agreement at least ten (10) days prior to such
proposed action, shall constitute fair and reasonable notice to the Borrower of
any such action. The net proceeds realized by the Bank upon any such sale or
other disposition, after deduction of the expenses of retaking, holding,
preparing for sale, selling or the like and reasonable attorneys' fees and any
other expenses incurred by the Bank, shall be applied toward satisfaction of the
Obligations hereunder. The Bank shall account to the Borrower for any surplus
realized upon such sale or other disposition and the Borrower shall remain
liable for any deficiency. The commencement of any action, legal or equitable,
shall not affect the security interest of the Bank in the Collateral until the
Obligations hereunder or any judgment therefor are fully paid.
10.6. Insurance. If the Borrower shall at any time or times hereafter fail
to obtain and maintain any of the policies of insurance required under Section
8.3 hereof, or fail to pay any premium in whole or in part relating to any such
policies, the Bank may, but shall not be obligated to, obtain and/or cause such
insurance to be maintained, including, at the Bank's option, the coverage
provided by all or any of the policies of the Borrower and pay all or any part
of the premium thereunder, without waiving any Event of Default by the Borrower,
and any sums so disbursed by the Bank shall be additional Obligations of the
Borrower to the Bank payable on demand. Upon the occurrence and the continuation
of an Event of Default, the Bank shall have the right to settle and compromise
any and all claims affecting the Collateral and arising under any of the
policies required to be maintained by the Borrower hereunder, to demand, receive
and receipt for all monies payable thereunder, and to execute in the name of the
Borrower or the Bank or both any proof of loss, notice or other instruments in
connection with such policies or any loss thereunder.
11. GENERAL PROVISIONS
11.l. No Waiver. The failure of the Bank at any time or times hereunder to
require strict performance by the Borrower of any of the provisions, warranties,
terms and conditions contained in this Agreement or in any other agreement,
guaranty, note, instrument or document now or at any time or times hereafter
executed by the Borrower and delivered to the Bank shall not waive, affect or
diminish any right of the Bank at any time or times hereafter to demand strict
performance thereof; and no rights of the Bank hereunder shall be deemed to have
been waived by any act or knowledge of the Bank, its agents, officers or
employees, unless such waiver is contained in an instrument in writing signed by
an officer of the Bank and directed to the Borrower specifying such waiver.
Except to extent expressly set forth in writing, no waiver by the Bank of any of
its rights shall operate as a waiver of any other of its rights or any of its
rights on a future occasion.
21
11.2. Notices. Any demand or notice required or permitted to be given
hereunder shall be deemed effective (i) when deposited in the United States
mail, and, except as otherwise provided in Section 2.5 hereof, sent by certified
mail, return receipt requested, postage prepaid, or (ii) within one (1) business
day after delivery to a nationally recognized courier service, in either case
addressed to the Bank at the Bank's Address or to the Borrower at the Borrower's
Address (and if to the Borrower with a copy to Xxxxxxx X. Xxxxx, Esq., Arnall
Golden & Xxxxxxx, LLP, 2800 One Atlantic Center, 0000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000-0000, telecopier number (000) 000-0000), as applicable,
or to such other address as may be provided by the party to be notified on ten
(10) days' prior notice to the other party.
11.3. Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the transactions contemplated herein
and such understanding shall not be modified except in writing signed by or on
behalf of the parties hereto.
11.4. Interest Rate Limitation. Anything to the contrary herein or in the
Line of Credit Note notwithstanding, in no event shall the amount of interest
payable with respect to the outstanding principal balance of the Obligations,
together with all other charges which are required to be treated as interest
under applicable usury Laws, exceed the amount of interest allowable by such
Laws. Any change in the applicable Laws or the maximum rate thereunder shall be
effective as to the determination of the amount of allowable interest as of the
effective date of such change. In the event that any sum is collected in excess
of the applicable allowable rate, the excess amount collected shall be applied
to reduce the principal debt.
11.5. Construction of Agreement. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable Laws; should any portion of this Agreement be declared invalid for
any reason in any jurisdiction, such declaration shall have no effect upon the
remaining portions of this Agreement, furthermore, the entirety of this
Agreement shall continue in full force and effect in all other jurisdictions and
said remaining portions of this Agreement shall continue in full force and
effect in the subject jurisdiction as if this Agreement had been executed with
the invalid portions thereof deleted.
11.6. Assignment. The provisions of this Agreement shall be binding upon
and shall inure to the benefit of the successors and assigns of the Bank and the
Borrower, provided, however, the Borrower may not assign any of its rights or
delegate any of its obligations hereunder without the prior written consent to
the Bank. The Bank, may from time to time, without notice to the Borrower, sell,
assign, transfer or otherwise dispose of all or any part of the Obligations
and/or the security therefor. In such event, each and every immediate and
successive purchaser, assignee, transferee or holder of all or any part of the
Obligations and/or such security shall have the right to enforce this Agreement,
by legal action or otherwise, for its own benefit as fully as if such purchaser,
assignee, transferee or holder were herein by name specifically given such
right.
11.7. Governing Law. This Agreement is and shall be deemed to be a contract
entered into and made pursuant to the laws of the Commonwealth of Massachusetts
and shall in all respects be governed, construed, applied and enforced in
accordance with the Laws of said State applicable to contracts executed,
delivered and to be performed therein.
22
11.8. Legal Actions. The Borrower, to the extent it may lawfully do so, as
to any legal action or proceeding arising out of or based upon this Agreement,
(i) hereby submits to the jurisdiction of, and waives all objections to venue
in, the federal or state courts sitting within the Commonwealth of Massachusetts
and any court from which an appeal might be taken from such courts, and (ii)
WAIVES TRIAL BY JURY.
11.9. Attorney's Fees. If, prior hereto and/or at any time or times
hereafter, the Bank shall employ counsel in connection with the preparation of
this Agreement, the execution and consummation of the transactions contemplated
by this Agreement, the preparation and review of amendments to this Agreement or
of waivers or consents incident to this Agreement, or to enforce any of the
Bank's rights with respect to the Obligations, all of the reasonable attorneys'
fees arising from such services, and any expenses, costs or charges relating
thereto, shall be payable by the Borrower upon the Bank's demand.
11.10. Joint and Several Liability. All obligations of Xxxxxxx Central
Holdings, Inc., Xxxxxxx Central National, LLC, and Xxxxxxx Central Consulting,
Inc. hereunder shall be joint and several. Xxxxxxx Central Holdings, Inc.,
Xxxxxxx Central National, LLC, and Xxxxxxx Central Consulting, Inc. acknowledge
that the Loan and any advances hereunder shall inure to the benefit of all of
them. The Obligations shall be deemed to include all joint or individual
indebtedness or obligations, contingent or otherwise, of each of Xxxxxxx Central
Holdings, Inc., Xxxxxxx Central National, LLC, and Xxxxxxx Central Consulting,
Inc. owed to the Bank, which Obligations shall all be secured by the Collateral
described herein.
[THIS SPACE INTENTIONALLY LEFT BLANK]
23
IN WITNESS WHEREOF, the Borrower and the Bank have executed this Loan and
Security Agreement, as a sealed instrument, on the date first above written.
WITNESS: Xxxxxxx Central Holdings, Inc.
_________________________ _______________________________________
By: R. Xxxxx Xxxxx, President
Xxxxxxx Central Consulting, Inc.
_________________________ _______________________________________
By: R. Xxxxx Xxxxx, Vice President
Xxxxxxx Central National, LLC
By: SC Holding, Inc., a Georgia corporation,
its sole member and manager
_________________________ ___________________________________
By: R. Xxxxx Xxxxx, President
Xxxxxxxxxx Bank & Trust Company
_________________________ _______________________________________
By: Xxxxxxx X. Xxxxxxxx,
Senior Vice President
24
STATE OF GEORGIA
_______________,ss July 10, 2000
Then personally appeared R. Xxxxx Xxxxx, as President of Xxxxxxx
Central Holdings, Inc., as Vice President of Xxxxxxx Central Consulting, Inc.,
and as President of SC Holding, Inc, sole member and manager of Xxxxxxx Central
National, LLC, as aforesaid, and acknowledged the foregoing instrument by him
executed to be his free act and deed and the free act and deed of Xxxxxxx
Central Holdings, Inc, Xxxxxxx Central Consulting, Inc., and SC Holding, Inc.,
as sole member and Manager of Xxxxxxx Central National, LLC, before me
_____________________________________
Notary Public:
My Commission Expires:
EXHIBIT INDEX
Exhibit 1.19 Line of Credit Note
Exhibit 1.25 Equipment Leases
Exhibit 6.1 Names, Tradenames and Addresses
Exhibit 6.15 Subsidiaries
Exhibit 6.7 Indebtedness
Exhibit 1.19
------------
LINE OF CREDIT NOTE
-------------------
$6,000,000.00 Boston, Massachusetts
July 10, 2000
FOR VALUE RECEIVED, Xxxxxxx Central Holdings, Inc., a Delaware corporation,
Xxxxxxx Central National, LLC, a Georgia limited liability company, and Xxxxxxx
Central Consulting, Inc., a Georgia corporation, each having a principal place
of business at 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxx, Xxxxxxx 00000 (hereinafter
collectively referred to as the "Borrower"), promises to pay to the order of
XXXXXXXXXX BANK & TRUST COMPANY, a Massachusetts banking corporation (together
with any subsequent holders of this Note, the "Bank"), at its office at 00
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, or at such other place as the
Bank may from time to time designate in writing, the principal sum of Six
Million and 00/100 Dollars ($6,000,000.00), or such lesser principal amount as
shall have been advanced to the Borrower and be outstanding, as provided in the
Loan and Security Agreement of even date herewith, together with interest, in
arrears, from the date hereof on the unpaid principal balance from time to time
outstanding at a rate per annum equal to the rate announced by the Bank as its
"prime rate" of interest (the "Prime Rate"). Such interest rate shall change on
the effective date of each change in the Prime Rate.
Interest only shall be payable monthly on the first business day (as
provided in the Loan and Security Agreement) of each month, computed on the
daily average outstanding principal balance of this Note as of the end of the
preceding month, and shall be payable each and every month so long as any
amounts remain outstanding hereunder.
All outstanding principal and accrued and unpaid interest thereon shall be
paid to the Bank on the termination date as set forth in Section 2.5 of the Loan
and Security Agreement, except in the Event of Default (as set forth in the Loan
and Security Agreement), in which event all outstanding principal and accrued
and unpaid interest thereon shall be immediately due and payable after the
expirations of any applicable grace periods set forth in the Loan and Security
Agreement.
This Note may be prepaid in the manner set forth in the Loan and Security
Agreement.
All payments hereunder shall be payable in lawful money of the United
States which shall be legal tender for public and private debts at the time of
payment. Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed, including any time extended by reason of
Saturdays, Sundays and Holidays.
The Borrower will pay on demand all costs and expenses, including
reasonable attorney's fees, incurred or paid by the Bank in enforcing or
collecting any of the obligations of the Borrower hereunder or under any of the
Loan Documents as hereinafter defined.
This Note, is executed pursuant to, and is subject to all of the terms and
conditions of a Loan and Security Agreement dated of even date herewith (as
amended from time to time, the "Loan and Security Agreement") between the
Borrower and the Bank and is secured, inter alia, by: (i) the Loan and Security
Agreement and Financing Statements from the Borrower with respect to the assets
described therein; (ii) Guaranty of Mestek, Inc. dated as of the date hereof;
and (iii) various other documents, agreements and instruments (collectively
referred to as the "Loan Documents").
All deposits or other sums at any time credited by or due from the Bank to
the Borrower or to any endorser or guarantor of the within Note, and all cash,
securities, instruments, or other property of the Borrower or of such endorser
or guarantor in the possession of the Bank (whether for safekeeping, or
otherwise), shall at all times constitute security for the within Note and for
any and all liabilities of the Borrower to the Bank including, without
limitation, the liability evidenced hereby, and may be applied or set off by the
Bank against such liabilities at any time whether or not such liabilities are
then due or other collateral is then available to the Bank.
All notices required or permitted to be given hereunder shall be in writing
and shall be effective when mailed, postage prepaid, by registered or certified
mail, addressed in the case of the Borrower to it at 0000 Xxxxxx Xxxxx Xxxx,
Xxxxxxx, Xxxxxxx 00000, and in the case of the Bank to it at 00 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx, 00000, Attention: Xxxxxxx X. Xxxxxxxx, Senior Vice
President, or to such other address as either the Borrower or the Bank may from
time to time specify by like notice.
All of the provisions of this Note shall be binding upon and inure to the
benefit of the Borrower and the Bank and their respective successors and
assigns. This Note shall have the effect of an instrument executed under seal
and shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
The Borrower and every endorser and guarantor hereof hereby consents to any
extension of time of payment hereof, release of all or any part of the security
for the payment hereof, or release of any party liable for this obligation, and
waives presentment for payment, demand, protest and notice of dishonor. Any such
extension or release may be made without notice to the Borrower and without
discharging its liability.
All obligations of Xxxxxxx Central Holdings, Inc., Xxxxxxx Central
National, LLC, and Xxxxxxx Central Consulting, Inc. hereunder shall be joint and
several. Xxxxxxx Central Holdings, Inc., Xxxxxxx Central National, LLC, and
Xxxxxxx Central Consulting, Inc. acknowledge that any advances hereunder shall
inure to the benefit of all of them.
2
THE BORROWER AGREES NOT TO SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED UPON, OR ARISING OUT OF
ANY RELATED INSTRUMENTS, ANY COLLATERAL OR THE DEALINGS OR THE RELATIONSHIP
BETWEEN OR AMONG BORROWER AND THE BANK. THE BORROWER SHALL NOT SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY
DISCUSSED BY THE BANK AND THE BORROWER; AND THESE PROVISIONS SHALL BE SUBJECT TO
NO EXCEPTIONS. THE BORROWER ACKNOWLEDGES THAT THE BANK HAS NOT MADE ANY
REPRESENTATIONS THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED
IN ALL INSTANCES.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by its
corporate officer, hereunto duly authorized, under seal, on the date first above
written.
WITNESS: Xxxxxxx Central Holdings, Inc.
__________________________ ________________________________________
By: R. Xxxxx Xxxxx, its President
Xxxxxxx Central Consulting, Inc.
__________________________ ________________________________________
By: R. Xxxxx Xxxxx, its Vice President
Xxxxxxx Central National, LLC
By: SC Holding, Inc., a Georgia corporation,
its sole member and Manager
___________________________ ____________________________________
By: R. Xxxxx Xxxxx, President
3
STATE OF GEORGIA
_______________,ss July 10, 2000
Then personally appeared R. Xxxxx Xxxxx, as President of Xxxxxxx Central
Holdings, Inc., as Vice President of Xxxxxxx Central Consulting, Inc., and as
President of SC Holding, Inc, sole member and manager of Xxxxxxx Central
National, LLC, as aforesaid, and acknowledged the foregoing instrument by him
executed to be his free act and deed and the free act and deed of Xxxxxxx
Central Holdings, Inc, Xxxxxxx Central Consulting, Inc., and SC Holding, Inc.,
as sole member and Manager of Xxxxxxx Central National, LLC, before me
____________________________________
Notary Public:
My Commission Expires:
Exhibit 1.25
------------
Equipment Leases
----------------
Exhibit 6.1
-----------
Names and Tradenames
--------------------
Addresses
---------
Atlanta, Georgia
Pompano Beach, Florida
Duluth, Georgia
Hamden, Connecticut
East Brunswick, New Jersey
Westborough, Massachusetts
Pittsburgh, Pennsylvania
Pleasanton, California
Stafford, Texas
Exhibit 6.15
------------
Subsidiaries
------------
1. Xxxxxxx Central National, LLC, a Georgia limited liability company
2. Xxxxxxx Central Consulting, Inc., a Georgia corporation
3. SC Holding, Inc., a Georgia corporation
4. Script Systems, Inc., a New Jersey corporation
5. Xxxxxxx Central, Inc., a Georgia corporation
Exhibit 6.7
-----------
Indebtedness
------------
1. $6,000,000 loan from Xxxx X. Xxxx extended on June 12, 2000
2. Loan from Silicon Valley Bank, to be paid off at Closing
3. Loan from Mestek, Inc. on May 5, 2000, to be paid off at Closing
4. Indebtedness to IBM described in Form 10-Q of Xxxxxxx Central Holdings,
Inc. ("SCHI") filed with the SEC for the period ended March 31, 2000
5. Promissory Note dated November 19, 1999 in the principal amount of $250,000
from SCHI to Xxxxx X. Xxxxx, to be paid off at Closing
6. Promissory Note dated November 19, 1999 in the principal amount of $500,000
from SCHI to Xxxxxxx X. X'Xxxxxxx, including potential future conversion of
this loan into a debt instrument convertible into preferred stock of SCHI
on similar terms to the note held by Xxxx X. Xxxx referred to in #1 above
