$5,000,000
REVOLVING CREDIT AGREEMENT
Dated as of October 6, 1997
among
TSR CONSULTING SERVICES, INC.,
TSR INC.,
CATCH 21/ENTERPRISES INCORPORATED
AND
THE CHASE MANHATTAN BANK
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Execution Copy
REVOLVING CREDIT AGREEMENT dated as of October 6, 1997 ("the "Agreement")
among TSR CONSULTING SERVICES, INC. a New York corporation (the "Borrower"),
TSR, INC. (the "Parent") and CATCH 21/ENTERPRISES INCORPORATED (collectively
with the Parent and any other parties hereafter becoming guarantors hereunder in
accordance with Section 5.10 hereof, the "Guarantors") and THE CHASE MANHATTAN
BANK, a New York banking corporation (the "Bank").
WHEREAS, the Borrower has requested the Bank to extend credit to it on a
revolving credit basis at any time and from time to time prior to the Expiration
Date (as defined below) by making Loans to the Borrower not in excess of
$5,000,000 in the aggregate at any time outstanding, the proceeds of which shall
be used by the Borrower to finance in part the working capital requirements of
the Borrower and the Guarantors; and
WHEREAS, the Bank is willing to extend such credit to the Borrower, subject
to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing the parties hereto agree
to the following:
I. DEFINITIONS
SECTION 1.01. Definitions. As used herein, the terms defined in the
preamble shall have the same meaning when used in this Agreement and the
following words and terms shall have the following meanings:
"Account" or "Accounts" shall have the meaning set forth in the
Security Agreements.
"Adjusted Eurodollar Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (i) the Eurodollar
Rate in effect for such Interest Period and (ii) Eurodollar Reserves. For the
purposes hereof, "Eurodollar Rate" shall mean, for any Interest Period, the rate
(rounded upwards, if necessary to the next 1/16 of 1%) at which dollar deposits
approximately equal to the principal amount of the proposed Eurodollar Loan and
for a duration equal to the applicable proposed Interest Period are offered to
the Bank in immediately available funds in an Interbank Market for eurodollars
at approximately 11:00 a.m., New York City time, two Business Days prior to the
commencement of such Interest Period. For purposes hereof, the term "Eurodollar
Reserves" means a fraction (expressed as a decimal), the numerator of which is
the number one and the denominator of which is the number one minus the
applicable statutory reserve requirements for the Bank (without duplication, but
including, without limitation, basic, supplemental, marginal or emergency
reserves), from time to time in effect under Regulation D
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of the Board of Governors of the Federal Reserve System (or any successor) with
respect to eurocurrency funding currently referred to as "Eurocurrency
liabilities" in Regulation D. It is agreed that for purposes hereof any amount
bearing interest at the Eurodollar Rate shall be deemed to constitute a
"Eurocurrency liability" as defined in Regulation D and to be subject to the
reserve requirements of Regulation D, without benefit of credit or proration,
exemptions or offsets which might otherwise be available to the Bank from time
to time under Regulation D.
"Advance Rate" shall mean 75%, or such other percentage as the Bank may
determine in its reasonable discretion based upon the results of any audit
conducted by the Bank from time to time, provided that, so long as no Default or
Event of Default shall have occurred and be continuing, the Bank shall give the
Borrower 30 days' prior written notice of any change in the Advance Rate.
"Affiliate" shall mean, with respect to any Person, any corporation,
limited liability company, limited liability partnership, partnership, joint
venture, trust or unincorporated organization which, directly or indirectly,
controls or is controlled by or is under common control with such Person. For
the purposes of this definition "control" of a Person shall mean the power,
direct or indirect, to direct or cause the direction of the management or
policies of such Person whether through the ownership of voting securities, by
contract or otherwise; provided that, in any event, any Person who owns directly
or indirectly 5% or more of the securities having ordinary voting power for the
election of directors or other governing body of a corporation or 5% or more of
the partnership or other ownership interest of any Person (other than as a
limited partner of such other Person) will be deemed to control such corporation
or other Person.
"Alternate Base Rate" shall mean, for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2%. "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Bank from three Federal funds brokers of recognized standing selected by it. If
for any reason the Bank shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Federal
Funds Effective Rate for any reason, including the inability or failure of the
Bank to obtain sufficient quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to clause (b) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, as the case may be.
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"Alternate Base Rate Loan" shall mean a Loan bearing interest in accordance
with Subsection 2.08 of this Agreement.
"Assignment and Pledge Agreement" shall mean a certain Assignment and
Pledge Agreement of even date herewith, as amended from time to time, made by
the Borrower in favor of the Bank, in form and substance satisfactory to the
Bank pledging and assigning to the Bank the amounts referred to in the final
sentence of Section 2.12(a-1) hereof.
"Borrowing Base" shall mean, at any date of determination, the Advance Rate
multiplied by Eligible Accounts.
"Borrowing Base Certificate" shall mean a Borrowing Base Certificate in the
form of Exhibit B attached hereto and made a part hereof.
"Borrowing Date" shall mean, with respect to any Loan, the date on which
such Loan is disbursed to the Borrower.
"Business Day" shall mean any day not a Saturday, Sunday or legal holiday,
on which the Bank is open for business in New York City, provided, however, that
when used in connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which the Bank is not open for dealings in dollar
deposits in an Interbank Market.
"Capitalized Lease Obligation" shall mean an obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with Generally Accepted Accounting Principles, and for purposes hereof the
amount of such obligation shall be the capitalized amount thereof determined in
accordance with such principles.
"Chief Financial Officer" shall mean the Chief Financial Officer of the
Borrower.
"Closing Date" shall mean October 6, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral" shall mean and include all Accounts of the Borrower and the
Guarantors, any amounts pledged and/or assigned to the Bank pursuant to the
Assignment and Pledge Agreement and any other items of real or personal property
in which the Borrower or the Guarantors has granted or may in the future grant a
security interest in favor of the Bank to secure the obligations and liabilities
of the Borrower and the Guarantors under the Loan Documents to which each is a
party.
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"Commitment" shall have the meaning assigned to such term in Section 2.01
hereof.
"Commitment Fee" shall have the meaning set forth in Section 2.14 hereof.
"Commonly Controlled Entity" shall mean, with respect to the Borrower or
any Guarantor, an entity, whether or not incorporated, which is under common
control with such Person within the meaning of Section 4001 of ERISA or is part
of a group which includes such Person and which is treated as a single employer
under Section 414 of the Code.
"Consolidated Capital Expenditures" shall mean, for the Borrower and the
Guarantors, any expenditures (including deposits and Capitalized Lease
Obligations) for assets which it is contemplated will be used or usable in
fiscal years subsequent to the year of acquisition and which are properly
classifiable as fixed assets the cost of which may not be deducted from income
in the year of acquisition in accordance with Generally Accepted Accounting
Principles applied on a consistent basis.
"Consolidated Interest Expense" shall mean, for any period, the interest
expense of the Borrower and the Guarantors, during such period determined on a
consolidated basis in accordance with Generally Accepted Accounting Principles
consistently applied, and shall in any event include, without limitation, (i)
the amortization of debt discounts, (ii) the amortization of all fees payable in
connection with the incurrence of Indebtedness to the extent included in
interest expense, (iii) the portion of any Capitalized Lease Obligation
allocable to interest expense, (iv) all fixed or calculable dividend payments on
preferred stock, and (v) payments of interest expense in kind.
"Consolidated Tangible Net Worth" shall mean, for the Borrower and the
Guarantors, the excess of (i) the aggregate net book value of the assets (other
than patents, patent rights, trademarks, trade names, treasury stock,
franchises, copyrights, licenses, permits, goodwill, research and development
costs, customer lists, training costs and other intangible assets classified as
such in accordance with Generally Accepted Accounting Principles) after all
appropriate adjustments in accordance with Generally Accepted Accounting
Principles applied on a consistent basis (including, without limitation,
reserves for doubtful receivables, obsolescence, depreciation and amortization
and excluding the amount of any write-up or revaluation of any asset) over (ii)
Consolidated Total Unsubordinated Liabilities, in each case computed and
consolidated in accordance with Generally Accepted Accounting Principles applied
on a consistent basis.
"Consolidated Total Unsubordinated Liabilities" shall mean all items which,
in accordance with Generally Accepted Accounting Principles applied on a
consistent basis, would properly be included on the liability side of the
balance sheet (other than Subordinated Debt, capital stock, capital surplus and
retained earning), as of the date on which the amount of Consolidated Total
Unsubordinated Liabilities is to be determined, of the Borrower and the
Guarantors, computed
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and consolidated in accordance with Generally Accepted Accounting Principles
applied on a consistent basis.
"Contractual Obligation" shall mean, as to any Person, any provision of any
security issued by such Person or any agreement, instrument or other undertaking
to which such Person is a party or by which it or any of its property is bound.
"Default" shall mean any of the events specified in Article VII hereof,
whether or not any requirement for the giving of notice or the lapse of time or
both or any other condition has been satisfied.
"Eligible Accounts" shall mean all Accounts of the Borrower arising from
sales in the ordinary course of business, net of any credits, rebates or offsets
or commissions payable to third parties, which are unencumbered and as to which
each of the requirements set forth below has been fulfilled to the satisfaction
of the Bank. Each such Account is not:
(a) more than 90 days past invoice date;
(a-1) written off or otherwise deemed uncollectible by the Borrower;
(b) due from any Guarantor or any Affiliate of the Borrower or any
Guarantor;
(c) due from a foreign account debtor or any account debtor, the
principal office of which is located outside the United States of
America, except to the extent that such Account is secured by a
letter of credit in form and substance satisfactory to the Bank
in its sole discretion in favor of the Bank or in favor of the
Borrower and assigned to the Bank, in each case issued by a bank
doing business in the United States of America and satisfactory
to the Bank in its sole discretion;
(d) due from any federal, state or local government or any
department, agency or authority thereof, unless the United States
Assignment of Claims Act of 1940, as amended from time to time,
or similar state law has been complied with;
(e) for goods which have not been shipped or for which shipment is
not yet complete or for services which have not yet been rendered
in whole or in part;
(f) for consigned goods;
(g) an Account for which a credit has been issued by the Borrower;
(h) a contra Account;
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(i) due from an account debtor more than 50% of the total Accounts of
which are more than 90 days past invoice date;
(j) a Concentration Account. "Concentration Account" shall mean the
Eligible Accounts of any account debtor which represent more than
10% of all Eligible Accounts of the Borrower, provided that, in
the case of each of AT&T and IBM Corporation as account debtors,
such percentage shall be 20%, and provided further that, if the
debt rating issued to AT&T or IBM Corporation by Standard &
Poor's Corporation or Xxxxx'x Investors Service, Inc. shall be
lowered from the debt rating in effect on the date hereof for
such account debtor, such percentage may be decreased for such
account debtor at the discretion of the Bank;
(k) for goods or services which have been returned or repossessed (in
the case of goods) or rejected;
(l) subject to dispute, setoff, defense or counterclaim, provided
that the portion of the Account not so disputed or subject to
setoff, defense or counterclaim or otherwise ineligible shall be
considered an Eligible Account;
(m) an Account which is evidenced by an instrument unless such
instrument (as defined in the New York Uniform Commercial Code,
as in effect from time to time) has been delivered to and is in
the possession of the Bank;
(n) due from an account debtor which is bankrupt or insolvent; or
(o) an Account which is otherwise unacceptable to the Bank for credit
reasons of which the Bank shall have given the Borrower notice at
least 30 days in advance, provided that the 30 day notice
requirement shall not apply if a Default or Event of Default
shall have occurred and provided further that during such 30 day
notice period the Borrowing Base may not be increased as a result
of an increase in the Accounts of any account debtor with respect
to which such notice was given.
The Bank reserves the right to revise its criteria for eligibility from time to
time in its sole discretion based upon, but without limitation to, factors such
as the results of any field examinations made pursuant to or in connection with
this Agreement, provided that, so long as no Default or Event of Default shall
have occurred and be continuing, the Bank shall give the Borrower 30 days' prior
written notice of any change in the foregoing definition.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
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"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or any Guarantor would be deemed to be a
member of the same "controlled group" within the meaning of Section 414(b), (c),
(m) and (o) of the Code.
"Eurodollar Loan" shall mean a Loan bearing interest in accordance with
Section 2.10 of this Agreement.
"Eurodollar Rate" and "Eurodollar Reserves" shall have the meaning
specified in the definition of "Adjusted Eurodollar Rate".
"Event of Default" shall mean any Event of Default set forth in Article
VII.
"Executive Officer" shall mean, with respect to the Borrower or any
Guarantor, the Chairman, the President, the Chief Financial Officer, the
Secretary or any Vice-President and the respective successors, if any,
designated by the Board of Directors.
"Expiration Date" shall mean the earlier of October 6, 1999 or the date the
Commitment may otherwise be terminated in accordance herewith.
"Fees" shall mean the Commitment Fee and any other fees now or hereafter
payable hereunder.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantor Subsidiaries" shall be the collective reference to each of the
Parent's Subsidiaries which is a Guarantor.
"Guarantors" shall mean the Parent, Catch 21/Enterprises Incorporated and
any and all other Persons which shall hereafter become guarantors in accordance
with Section 5.10 hereof.
"Guaranty" shall be the collective reference to the guaranties of payment
of even date herewith, as amended from time to time, made by the Guarantors in
favor of the Bank, each in form and substance satisfactory to the Bank, and any
other guaranty hereafter made by any subsequent Guarantor pursuant to Section
5.10 hereof.
"Indebtedness" shall have the meaning set forth in Section 6.02 hereof.
"Insolvency" shall mean with respect to any Multiemployer Plan, the
condition that such plan is insolvent within the meaning of such term used in
Section 4245 of ERISA.
"Insolvent" shall mean the condition of Insolvency.
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"Interbank Market" shall mean the London interbank market or the New York
interbank market.
"Interest Margin" shall mean 1% at any time that the Funded Debt Ratio is
less than .50:1.00, 1.25% at any time that the Funded Debt Ratio is equal to or
greater than .50:1.00 but less than 1.75:1.00 and 1.5% at any time that the
Funded Debt Ratio is equal to or greater than 1.75:1.00.
The initial Interest Margin shall be 1% until the day which is ten
(10) Business Days following the receipt of the financial statements for
the fiscal quarter ending August 31, 1997 pursuant to Section 5.03(a)
hereof. Thereafter, the Interest Margin shall be determined on the day
which is ten (10) Business Days following the receipt by the Bank of the
financial statements referred to in Section 5.03(a) or (b), as the case may
be (each such date, whether such statements are received within the time
limits required therein or subsequently, a "Reset Date"), and shall apply
to all Eurodollar Loans outstanding on such Reset Date or to be made on or
after such Reset Date until, but not including, the next Reset Date.
Notwithstanding the foregoing, (a) if any financial statements are not
received by the Bank when due hereunder, the Interest Margin on all
Eurodollar Loans outstanding on such date or to be made thereafter shall be
1.5% until the Reset Date occurring ten (10) Business Days after the
receipt of such financial statements; and (b) if any Default or Event of
Default shall have occurred and be continuing, the Interest Margin shall
not be reduced.
"Funded Debt Ratio" shall mean the ratio of the consolidated
Indebtedness for borrowed money of the Borrower and the Guarantors to the
consolidated earnings (excluding extraordinary gains) before interest,
taxes, depreciation and amortization expenses of the Borrower and the
Guarantors (in each case, computed and consolidated in accordance with GAAP
applied on a basis consistent with prior periods and measured over the four
(4) fiscal quarters immediately preceding any date of determination), as
set forth on the most recent certificate delivered to the Bank pursuant to
paragraphs (c) and/or (d) of Section 5.03 hereof.
"Interest Payment Date" shall mean (a) the last Business Day of each
calendar month commencing with the calendar month immediately following the date
of any Loan, (b) the Expiration Date and (c) as to any Eurodollar Loan, the last
day of each Interest Period.
"Interest Period" means, with respect to any Eurodollar Loan, the period
commencing on the date of such Loan and ending on the numerically corresponding
day (or if there is no numerically corresponding day, the last day) of the
calendar month that is one (1), two (2), three (3) or six (6) months,
thereafter, as the Borrower may elect; provided, however, that (a) if any
Interest Period would end on a day which is not 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 (i)
such interest Period shall end on the first
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preceding Business Day and (ii) the Interest Period for any continuation of such
Eurodollar Loan shall end on the last Business Day of a calendar month, and (b)
no Interest Period may be selected for any Eurodollar Loan which ends after the
Expiration Date.
"Loan(s)" shall mean any loan by the Bank to the Borrower pursuant to
Article II hereof and shall refer to an Alternate Base Rate Loan or a Eurodollar
Loan, each of which shall be a "Type" of Loan.
"Loan Documents" shall mean collectively, the Agreement, the Note, any
agreements or documents referred to in Article IV hereof and all other
documents, certificates and instruments executed in connection therewith, as
amended from time to time.
"Material Adverse Effect" shall mean, with respect to (i) the Borrower or
(ii) the Borrower and the Guarantors taken as a whole, a material adverse effect
on (a) the business, operations, property, condition (financial or otherwise) or
prospects of such Person or group of Persons, (b) the ability of such Person or
group of Persons to perform its or their obligations under the Loan Documents,
or (c) the validity or enforceability of any of the Loan Documents against such
Person or group of Persons or the rights or remedies of the Bank hereunder or
thereunder.
"Material Contract" shall mean, with respect to any Person, any of the
following:
(i) all contracts relating to the borrowing of money by such Person
(including those relating to the deferred purchase price for property or
services, other than accounts payable arising in the ordinary course of
business) or the guaranty by such Person of the foregoing, in each case
involving a principal amount in excess of $25,000; or
(ii) all leases or subleases of real property used in the operation of
the business of such Person; or
(iii) any other contract (a) requiring payment by or to such Person of
more than $25,000 annually and (b) not terminable without payment or
penalty of any kind by such Person on notice of 45 days or less.
"Multiemployer Plan" shall mean a Plan which is a Multiemployer Plan as
defined in Section 4001(a)(3) of ERISA.
"Note" shall mean the promissory note of the Borrower delivered pursuant to
Section 2.02, as amended from time to time.
"Notice of Borrowing" shall have the meaning set forth in Section 2.01(c).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title 1 of ERISA or any successor thereto.
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"Person" shall mean any natural person, corporation, limited liability
company, limited liability partnership, business trust, joint venture,
association, company, partnership or government, or any agency or political
subdivision thereof.
"Plan" shall mean, at any particular time, any employee benefit plan which
is covered by ERISA and in respect of which the Borrower, any Guarantor or a
Commonly Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Prime Rate" shall mean the rate of interest per annum announced from time
to time by the Bank as its prime rate in effect at its principal office in New
York City; each change in the Prime Rate shall be effective on the date such
change is announced.
"Reportable Event" shall mean any of the events described in Section
4043(b) of ERISA other than those events as to which the twenty-day notice
period is waived under Subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg.
ss.2615.
"Security Agreements" shall mean each of the Security Agreements of even
date herewith, as amended from time to time, between the Borrower and each
Guarantor, respectively, and the Bank in form and substance satisfactory to the
Bank, and any other security agreements hereafter made by any subsequent
Guarantor pursuant to Section 5.10 hereof.
"Single Employer Plan" shall mean any plan which is not covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Subordinated Debt or Indebtedness" shall mean, with respect to any Person,
all Indebtedness of such Person which is subordinated in right of payment, in a
manner satisfactory to, and previously approved in writing by, the Bank, to all
Indebtedness of such Person to the Bank.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, limited liability company, limited liability partnership,
association or other business entity more than 50% of the voting stock or other
ownership interest having the right to vote of which is at the time owned or
controlled, directly or indirectly, by such Person or one or more of its
Subsidiaries or a combination thereof.
"Type" shall have the meaning specified in definition of "Loan".
"Unfunded Current Liability" of any Plan shall mean the amount, if any, by
which the present value of the accrued benefits under the Plan as of the close
of its most recent plan year exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the Code.
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SECTION 1.02. Accounting Terms. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under Generally Accepted Accounting Principles. "Generally Accepted Accounting
Principles" or "GAAP" shall mean 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
consolidated financial condition, and the consolidated results of operations and
cash flow, of the Parent, the Borrower and the Guarantor Subsidiaries, 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 or any Guarantor 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
independent accountants selected by the Borrower and approved by the Bank for
the purpose of auditing the periodic consolidated financial statements of the
Parent, the Borrower and the Guarantor Subsidiaries.
II. LOANS
SECTION 2.01. Loans. (a) Subject to the terms and conditions, and relying
upon the representations and warranties, set forth herein, the Bank agrees to
make loans (individually a "Loan" and collectively the "Loans") to the Borrower
at any time or from time to time on or after the date hereof and until the
Expiration Date, provided that no Default or Event of Default shall have
occurred and be continuing, in an aggregate principal amount not in excess of
the lesser of (i) $5,000,000 (the "Commitment") and (ii) the current Borrowing
Base as set forth on the most recent Borrowing Base Certificate. Within the
foregoing limits, the Borrower may borrow, repay or reborrow hereunder on or
after the date hereof and prior to the Expiration Date, subject to the terms,
provisions and limitations set forth herein.
(b) Loans made by the Bank on any one day shall be in any combination of
Alternate Base Rate Loans and Eurodollar Loans, provided, that (i) each
Eurodollar Loan shall be in an amount not less than $500,000 and integral
multiples of $100,000 in excess thereof and (ii) each Alternate Base Rate Loan
shall be in an amount not less than $250,000 and integral multiples of $100,000
in excess thereof unless the available Commitment is less than $250,000, in
which case an Alternate Base Rate Loan may be in the amount of the available
Commitment. The initial Loan by the Bank shall be made against delivery to the
Bank of the Note, payable to the order of the Bank, as described in Section 2.02
hereof and upon delivery of the other documentation required in Article IV
herein.
(c) Each Alternate Base Rate Loan shall be made upon written, telegraphic
or facsimile notice from the Borrower to the Bank not later than 11:00 A.M. New
York city time on the
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Business Day on which it is requested, and each Eurodollar Loan shall be made
upon written, telegraphic or facsimile notice from the Borrower to the Bank not
later than 11:00 A.M. New York city time on the day which is three (3) Business
Days prior to the first day of the Interest Period for which such Loan is
requested. Each such notice (a "Notice of Borrowing") shall specify the
requested date, amount and Type of Loan and, in the case of a Eurodollar Loan,
the requested Interest Period. A Notice of Borrowing, once given, shall be
irrevocable.
SECTION 2.02. Note. The Loans shall be evidenced by a promissory note (the
"Note"), substantially in the form attached hereto as Exhibit A, appropriately
completed, duly executed and delivered on behalf of the Borrower and payable to
the order of the Bank in the principal amount equal to the Commitment. The date
and amount of each Loan, each payment or prepayment of principal of each Loan
and, in the case of a Eurodollar Loan, the interest rate and the Interest Period
shall be recorded on the schedule attached to the Note, and the Borrower hereby
authorizes the Bank to make such recordation. The Note, the schedule or
schedules attached thereto and the books and records of the Bank shall be
presumptive evidence of the Loans, absent manifest error. The aggregate
principal amount outstanding on the Note shall be payable on the Expiration Date
and all accrued and unpaid interest thereon shall, be payable on each Interest
Payment Date.
SECTION 2.03. Interest on Loans. Each Loan shall bear interest in
accordance with Section 2.08 if it is an Alternate Base Rate Loan and Section
2.10 if it is a Eurodollar Loan.
SECTION 2.04. Intentionally omitted.
SECTION 2.05. Intentionally omitted.
SECTION 2.06. Intentionally omitted.
SECTION 2.07. Intentionally omitted.
SECTION 2.08. Interest on Alternate Base Rate Loans. The Borrower shall pay
interest on the unpaid principal amount of each Alternate Base Rate Loan from
the Borrowing Date of such Loan until the Expiration Date on each Interest
Payment Date at an interest rate per annum equal to the Alternate Base Rate.
SECTION 2.09. Intentionally omitted.
SECTION 2.10. Interest on Eurodollar Loans. The Borrower shall pay interest
on the unpaid principal amount of each Eurodollar Loan from the Borrowing Date
of such Loan until the date such principal amount is due and payable, on each
Interest Payment Date for such Loan at an interest rate per annum equal to the
Adjusted Eurodollar Rate plus the Interest Margin.
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SECTION 2.11. Continuation and Conversion of Loans. The Borrower shall have
the right, at any time on three (3) Business Days' prior irrevocable written
notice to the Bank, to continue any Eurodollar Loan or portion thereof into a
subsequent Interest Period and to convert any Loan or portion thereof into a
Loan of a different Type, subject, in the case of a Eurodollar Loan, to the
selection of an Interest Period and, in the case of all Loans, to the following
conditions precedent:
(a) no portion of the outstanding principal balance of any Loans may
be continued as, or converted into, Eurodollar Loans when any Event of
Default shall have occurred and be continuing;
(b) in the case of a continuation of or conversion of less than all
the Loans, the aggregate principal amount of Loans continued or converted
shall be as provided in Section 2.01(b) hereof;
(c) each conversion shall be effected by the Bank by applying the
proceeds of the new Loan to the Loan (or portion thereof) being converted,
and accrued interest on the Loan (or portion thereof) being converted shall
be paid by the Borrower at the time of conversion; and
(d) a Eurodollar Loan may be converted to an Alternate Base Rate Loan
only on the last day of its Interest Period;
(e) each request for a Eurodollar Loan or a continuation thereof which
shall fail to state an applicable Interest Period shall be deemed to be a
request for an Interest Period of a one (1) month; and
(f) in the event that the Borrower does not give notice to continue
any Eurodollar Loan into a subsequent Interest Period, the Borrower shall
be deemed to have requested that such Loan (unless repaid) be converted to
an Alternate Base Rate Loan at the expiration of the then current Interest
Period.
SECTION 2.12. Prepayment of Loans. (a) Subject to the provisions of
Sections 2.12(b), 2.17 and 2.20 hereof, the Borrower may, upon at least one (1)
Business Day's notice in the case of an Alternate Base Rate Loan and five (5)
Business Days' notice to the Bank in the case of a Eurodollar Loan (which notice
shall be in writing and, once given, shall be irrevocable), prepay the
outstanding amount of any Loan in whole or in part with accrued interest to the
date of such prepayment on the amount prepaid; provided, however, that any
prepayment of any Eurodollar Loan shall be made on the last day of an Interest
Period for such Loan; and provided, further, that each partial prepayment of any
Loan shall be in a principal amount not less than $500,000 and
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integral multiples of $100,000 in excess thereof in the case of a Eurodollar
Loan and $100,000 in the case of Alternate Base Rate Loans.
(a-1) The Borrower shall prepay the Note on the date of delivery to the
Bank of any Borrowing Base Certificate if (or on such earlier date on which the
Chief Financial Officer shall have become aware that) the outstanding principal
balance of the Note is greater than the then current Borrowing Base (as set
forth on such Borrowing Base Certificate). Such prepayment shall be in an amount
equal to the difference between such Borrowing Base and the outstanding
principal balance of the Note on such date. Each such prepayment shall be
applied first to Alternate Base Rate Loans and thereafter to Eurodollar Loans in
the order of their maturity, provided that, so long as no Default or Event of
Default shall have occurred and be continuing, the Bank will hold the amount of
any such prepayment to be applied to Eurodollar Loans as additional Collateral
in a cash collateral account pledged to the Bank pursuant to the Assignment and
Pledge Agreement and shall apply the same on the last day of the Interest Period
for each such Eurodollar Loan.
(b) The Borrower shall reimburse the Bank on demand for any loss incurred
by it in the reemployment of the funds released by any prepayment or conversion
of any Eurodollar Loan required or permitted by any provision of this Agreement,
in each case if such Loan is prepaid or converted other than on the last day of
an Interest Period for such Loan. The Borrower further agrees to reimburse the
Bank on demand for any loss incurred by it as a result of (i) Borrower's failure
to prepay pursuant to notice given pursuant to paragraph (a) of this Section
2.12 or as required under paragraph (a-1) of this Section 2.12, (ii) Borrower's
failure to make any regularly scheduled payment of principal of any Eurodollar
Loan or (iii) in the reemployment of the funds released by any refusal by the
Borrower to accept any requested Eurodollar Loan or any requested continuation
thereof or conversion thereto.
(c) Each prepayment of any Loan shall be accompanied by accrued interest on
the amount of such prepayment to the date thereof.
SECTION 2.13. Reduction or Termination of the Commitment. The Borrower
shall have the right, upon at least five (5) Business Days' prior written notice
to the Bank, at any time to terminate or from time to time permanently to reduce
the Commitment without premium or penalty; provided, however, that (a) no
reduction of the Commitment shall be less than $500,000, (b) the Commitment may
not be reduced to the extent that following such reduction the unpaid principal
of the Note would exceed the Commitment and (c) any acceleration of the
Expiration Date shall be accompanied by the payment of any Commitment Fee then
accrued hereunder.
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SECTION 2.14. Fees. The Borrower agrees to pay to the Bank, in
consideration of its Commitment, a commitment fee ("Commitment Fee") of 1/8 of
1% per annum on the average daily unused portion of the Commitment (based on a
year of 360 days), payable quarterly commencing on the first day of the second
quarter following the Closing Date.
SECTION 2.15. Late Payments; Interest. Any amount of principal, interest or
any other amounts due hereunder which is not paid when due ("Overdue Payment"),
whether at stated maturity, by acceleration or otherwise, shall, to the extent
permitted by law, bear interest from such due date until the Overdue Payment is
paid in full, which interest shall be payable on demand, at a fluctuating
interest rate per annum equal to 2% in excess of the Alternate Base Rate. On and
after the occurrence and during the continuance of an Event of Default, the rate
of interest applicable to any Loan hereunder shall be increased to 2% above the
rate which would otherwise be applicable to such Loan, except for Overdue
Payments bearing interest as provided in the first sentence of this Section
2.15.
SECTION 2.16. Application of Payments and Computations. All computations of
the Alternate Base Rate, the Eurodollar Rate and Fees hereunder shall be made by
the Bank on the basis of a year of 360 days, for the actual number of days
(including the first day but excluding the last day) occurring in the period for
which such interest is payable.
SECTION 2.17. Funds; Manner of Payment. Each Loan and each payment and
prepayment of principal and interest on the Note shall be made in Federal or
other immediately available funds without set-off or counterclaim to the Bank.
Whenever any payment to be made hereunder or under any Note shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or Fees, as the case may be.
The Borrower hereby authorizes the Bank to charge its account #859-111636 for
all principal and interest payments and any Fees due hereunder.
SECTION 2.18. Capital Adequacy. If the Bank shall have determined that,
after the date hereof, the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change in any of the foregoing or
in the interpretation or administration of any of the foregoing by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by 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, compliance or directive
(taking into consideration the Bank's policies and the policies of the Bank's
holding company with respect to capital adequacy) by an amount
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deemed by the Bank to be material, then from time to time, upon notice to the
Borrower from the Bank, 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. Such notice shall set forth any additional amount
or amounts determined by the Bank to be payable, shall include calculations in
reasonable detail and shall, in the absence of manifest error, be presumptive
evidence of the matters stated therein and be binding upon the Borrower.
SECTION 2.19. Inability to Determine Rate. In the event, and on each
occasion, that on the day two (2) Business Days prior to the commencement of any
Interest Period for a Eurodollar Loan, the Bank shall have determined (which
determination shall, in the absence of manifest error, be conclusive and binding
upon the Borrower) that dollar deposits in the amount of the principal amount of
such Eurodollar Loan are not generally available in the Interbank Market, or
that the rate at which such dollar deposits are being offered will not
accurately reflect the cost to the Bank of making or funding the principal
amount of a Eurodollar Loan during such Interest Period, or that reasonable
means do not exist for ascertaining the Eurodollar Rate, the Bank shall, as soon
as practicable thereafter, give written, telegraphic, telephonic or facsimile
notice of such determination to the Borrower and any request by the Borrower for
a Eurodollar Loan or for conversion to or continuation of a Eurodollar Loan
shall be deemed a request for an Alternate Base Rate Loan. After such notice
shall have been given, and until the circumstances giving rise to such notice no
longer exist, each request for a Eurodollar Loan shall be deemed to be a request
for an Alternate Base Rate Loan.
SECTION 2.20. Other Events. (a) In the event that any enactment of or
change after the date hereof in applicable law, regulation, condition, directive
or interpretation thereof (including any request, guideline or policy whether or
not having the force of law and including, without limitation, Regulation D
promulgated by the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect) by any authority charged with the
administration or interpretation thereof:
(i) subjects the Bank to any tax with respect to the Eurodollar
Loans hereunder or changes the basis of taxation of payment to the Bank of
principal of or interest on any Eurodollar Loan or any commitment
hereunder or any other amounts payable hereunder (other than any tax
measured by or based upon the overall net income of the Bank or any branch
or office thereof, imposed by the United States of America or by any other
jurisdiction in which the Bank is qualified to do business or any
political subdivision or taxing authority therein); or
(ii) to the extent not included in the calculation of the Adjusted
Eurodollar Rate, imposes, modifies or deems applicable any reserve or
deposit requirements against any assets held by, deposits with or for the
account of, or loans or commitments by, an office of the Bank in
connection with payments by the Bank hereunder; or
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(iii) imposes upon the Bank or any Interbank Market any other
condition with respect to any amount paid or payable to or by the Bank in
connection with Eurodollar Loans pursuant to this Agreement;
and the result of any of the foregoing is to increase the cost to the Bank of
making, continuing or maintaining any Eurodollar Loans or maintaining the
Commitment with respect to Eurodollar Loans, or of converting (or of its
obligation to convert) any portion of the Loans into Eurodollar Loans or to
reduce the amount of any payment receivable by the Bank hereunder in respect of
Eurodollar Loans, in each case by an amount which the Bank in its reasonable
judgment deems material, then:
(A) the Bank shall promptly notify the Borrower in writing of the
happening of such event;
(B) the Bank shall promptly deliver to the Borrower a certificate
stating the change which has occurred or the reserve requirements or other
conditions which have been imposed on the Bank or the request, directive or
requirement with which it has complied, together with the date thereof, the
amount of such increased cost, reduction or payment and the way in which
such amount has been calculated; and
(C) the Borrower shall pay to the Bank, within 30 days after delivery
of the certificate referred to in clause (B) above, the amount of such
additional cost, reduction or payment.
The Bank agrees to designate a different office of the Bank as its lending
office for Eurodollar Loans if the designation would avoid or reduce any amount
payable by the Borrower to the Bank pursuant to this paragraph (a); provided,
however, that such designation need not be made if it would result in any
additional costs, expenses or risks to the Bank that are not reimbursed by the
Borrower pursuant hereto or would be in any other respect prejudicial to the
Bank. If the Bank makes a demand for compensation pursuant to this paragraph
(a), the Borrower may at any time, upon at least three (3) Business Days' prior
written or telegraphic notice to the Bank either (i) repay in full any
outstanding Eurodollar Loan together with accrued interest thereon to the date
of prepayment or (ii) convert such Loan to a Loan of a different Type, in either
case, subject to Section 2.12(b) hereof.
(b) Failure on the part of the Bank to demand compensation under paragraph
(a) above on any one occasion shall not constitute a waiver of its right to
demand such compensation on any other occasion and failure on the part of the
Bank to deliver any certificate in a timely manner shall not in any way reduce
any obligations of the Borrower to the Bank under this Section 2.20.
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SECTION 2.21. Change in Legality. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in any law or regulation or in the interpretation or application thereof
by any governmental authority charged with the administration thereof shall make
it unlawful (based on the opinion of any counsel, whether in-house, special or
general, for the Bank) for the Bank to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to any
Eurodollar Loan, then, by written notice to the Borrower by the Bank, the Bank
may:
(i) declare that such Eurodollar Loans will not thereafter be made by
the Bank hereunder, whereupon the Borrower shall be prohibited from
requesting such Loans from the Bank hereunder unless such declaration is
subsequently withdrawn; and the Bank agrees to withdraw any such
declaration if and to the extent that the making and/or maintenance by the
Bank of its Eurodollar Loans shall cease to be unlawful; and
(ii) require that all outstanding Eurodollar Loans made by it to be
converted to Alternate Base Rate Loans, whereupon all such Loans shall be
automatically converted to Alternate Base Rate Loans as of the effective
date of such notice as provided in paragraph (b) below and subject to
Section 2.12(b) hereof.
(b) For purposes of this Section 2.21, a notice to the Borrower by the Bank
pursuant to paragraph (a) above shall be effective on the last day of then
current Interest Period or, if required by law, on such earlier date as shall be
so required.
(c) The Bank agrees to designate a different office of the Bank as its
lending office for Eurodollar Loans if such designation will effect compliance
with the law or regulation or interpretation thereof invoking the provisions of
this Section 2.21; provided, however, that such designation need not be made if
it would result in any additional costs, expenses or risks to the Bank that are
not reimbursed by the Borrower pursuant hereto or would be in any other respect
prejudicial to the Bank.
III. REPRESENTATIONS AND WARRANTIES
Each of the Borrower and each Guarantor, as appropriate, represents and
warrants to the Bank, with respect to itself and each of its Subsidiaries, that:
SECTION 3.01. Organization, Corporate Powers, etc. It (i) is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of New York (in the case of the Borrower) or the State of Delaware (in the
case of the Guarantors), and (ii) has the power and authority to own its
properties and to carry on its business as now being conducted, (iii) is duly
qualified to do business in every jurisdiction wherein the conduct of its
business or
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the ownership of its properties is such as to require such qualification, except
where the failure to qualify would not have a Material Adverse Effect and (iv)
has the corporate power to execute, deliver and perform its obligations under
the Loan Documents to which it is a party.
SECTION 3.02. Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance of the Loan Documents to which it is a
party and, in the case of the Borrower, the borrowings hereunder (a) have been
duly authorized by all necessary corporate action, (b) will not violate (i) its
certificate of incorporation or bylaws, (ii) any provision of law or any
governmental rule or regulation applicable to it or, (iii) any order of any
court or other agency of government binding on it or any Material Contract to
which it is a party, or by which it or any of its property is bound, and (c)
will not be in conflict with, result in a breach of or constitute (with due
notice and/or lapse of time) a default under, any such Material Contract, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of its property or assets other than as contemplated
by the Loan Documents to which it is a party. Each Person executing the Loan
Documents has full authority to execute and deliver the same for it and on its
behalf.
SECTION 3.03. Financial Condition. (a) The Borrower has furnished the Bank
with the consolidated financial statements of the Parent and its Subsidiaries
for the fiscal year ended May 31, 1996, audited and certified by KPMG Peat
Marwick, LLP, the consolidated and consolidating financial statements of the
Parent and its Subsidiaries for the nine months ended February 28, 1997,
prepared by the management of the Parent and a draft of (i) the consolidated
financial statements of the Parent and its Subsidiaries for the fiscal year
ended May 31, 1997, prepared under the direction of, and certified by, the Chief
Financial Officer of the Parent, and (ii) the consolidating financial statements
of the Parent and its Subsidiaries, prepared under the direction of, and
certified by, the Chief Financial Officer of the Parent. Such financial
statements were prepared in conformity with Generally Accepted Accounting
Principles applied on a basis consistent with prior periods, and present fairly
in accordance with GAAP the financial condition of the Parent and its
Subsidiaries, including the Borrower, as of the date thereof and the results of
operations for the periods covered thereby, subject, in the case of the
financial statements dated as of February 28, 1997, to normal year-end audit
adjustments.
(b) At the date of the most recent audited balance sheet referred to above,
it had no material contingent obligation, contingent liability or liability for
taxes, or any long-term lease or unusual forward or long-term commitment,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other financial derivative, which is not reflected in
the foregoing statements or in the notes thereto, unless the same was entered
into in the ordinary course of business as currently conducted and would not
result in a Material Adverse Effect.
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(c) During the period from May 31, 1996 to and including the date hereof it
has not sold, transferred or otherwise disposed of any material part of its
business or property, nor purchased or otherwise acquired any business or
property (including any capital stock of any other Person) material in relation
to the consolidated financial condition of the Borrower and the Guarantors at
May 31, 1996.
(d) Since May 31, 1996 there has been no development or event, which has
had or could reasonably be expected to have a Material Adverse Effect. It has no
obligation or liability as of the date of this representation, contingent or
otherwise which is material in amount and which was not reflected in the
foregoing statements (and the related notes thereto), unless the same was
entered into in the ordinary course of business as currently conducted and would
not result in a Material Adverse Effect.
(e) Each of the Borrower and each Guarantor is solvent.
SECTION 3.04. Taxes. All assessed deficiencies resulting from Internal
Revenue Service examinations of its Federal income tax returns have been
discharged or reserved against. It has filed or caused to be filed all Federal,
state and local tax returns which are required to be filed, and has paid or
caused to be paid all taxes as shown on said returns or on any assessment
received by it, to the extent that such taxes have become due, except any such
taxes that are immaterial in amount or are being contested in good faith with
appropriate reserves set aside therefor.
SECTION 3.05. Title to Properties. It has good and marketable title to its
properties and assets reflected on the balance sheets referred to in Section
3.03 hereof, except for such properties and assets as have been disposed of
since the date of such balance sheets as no longer used or useful in the conduct
of its business or as have been disposed of in the ordinary course of business,
and all such properties and assets are free and clear of mortgages, pledges,
liens, charges and other encumbrances, except as required or permitted by the
provisions hereof or as disclosed in the balance sheets referred to in Section
3.03 hereof, except (a) such defects in title which would not have a Material
Adverse Effect and (b) Liens permitted under Section 6.01 hereof.
SECTION 3.06. Litigation; Compliance with Laws; Environmental Matters.
(a) There are no actions, suits or proceedings pending or, to its
knowledge, threatened against or affecting it or any material part of its
property, at law or in equity or before or by any Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which involve any of the transactions
contemplated herein or which, if adversely determined against it, would
have a Material Adverse Effect.
-20-
(b) It is not in default with respect to any judgment, writ or
injunction of any court, which default would have a Material Adverse
Effect.
(c) It is in compliance with all applicable laws, rules and
regulations of the United State of America, any foreign government, any
state or municipality thereof and any department, commission, board,
bureau, agency or instrumentality of any thereof, except to the extent that
non-compliance would not have a Material Adverse Effect.
(d) It has not failed to obtain, maintain or comply in any material
respect with any permit, license or other approval required under any
Environmental Laws (as defined below).
(e) It has not become subject to or received notice of any claim with
respect to any liability (including without limitation for damages, costs
of remediation, fines, penalties or indemnities), contingent or direct,
directly or indirectly resulting from or based upon (i) violation of any
Environmental Laws, (ii) the generation, use, handling, transportation,
storage, treatment, disposal, or release or threatened release into the
environment of, or the exposure to, any Hazardous Materials (as defined
below) or (iii) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of
the matters set forth in this paragraph (e), and (iv) knows of no basis for
any liability referred to in this paragraph (e).
(f) Definitions:
"Environmental Laws" means any law, rule, regulation, code, ordinance,
order, decree, judgment, injunction, notice or binding agreement issued,
promulgated or entered into by any federal, state or local government or
any agency or instrumentality thereof relating to pollution or protection
of the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or to
health and safety matters related to the foregoing.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
SECTION 3.07. Agreements. It is not a party to any agreement or instrument
or subject to any judgment, order, writ, injunction, decree or regulation
materially and adversely affecting its business, properties or assets,
operations or condition (financial or otherwise) or prospects, nor
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is it in default under any other agreement or instrument to which it is a party
which default would have a Material Adverse Effect.
SECTION 3.08. ERISA. No Reportable Event has occurred during the five-year
period prior to the date on which this representation is made or deemed made
with respect to any Plan, and each Plan has complied in all material respects
with the applicable provisions of ERISA and the Code. The present value of all
accrued benefits under each Single Employer Plan maintained by the Borrower, any
Guarantor or any Commonly Controlled Entity (based on those assumptions used to
fund the Plans) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits. None of the Borrower,
any Guarantor or any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan, and none of the Borrower, any Guarantor
or any Commonly Controlled Entity would become subject to any liability under
ERISA if such Person were to withdraw completely from all Multiemployer Plans as
of the valuation date most closely preceding the date on which this
representation is made or deemed made. No such Multiemployer Plan is in
reorganization or Insolvent. The present value (determined using actuarial and
other assumptions which are reasonable in respect of the benefits provided and
the employees participating) of the liability of the Borrower, each Guarantor
and each Commonly Controlled Entity for post retirement benefits to be provided
to their current and former employees under Plans which are welfare benefits
plan (as defined in Section 3(1) of ERISA) does not, in the aggregate, exceed
the assets under all such Plans allocable to such benefits.
SECTION 3.09. Proceeds of the Loan. The proceeds of the Loans shall be used
by the Borrower only for the purposes described in the preamble hereto.
SECTION 3.10. Federal Reserve Regulations. (a) It is not engaged
principally in, nor does it have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
"margin stock" (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States, as amended to the date hereof).
If requested by the Bank under appropriate circumstances and as required by law,
it, or any Subsidiary, will furnish to the Bank a statement on Federal Reserve
Form U-1.
(b) No part of the proceeds of the Loans will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to purchase
or to carry margin stock or to extend credit to others for the purpose of
purchasing or carrying margin stock, or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which violates or is
inconsistent with the provisions of the Regulations G, T, U, or X of the Board
of Governors of the Federal Reserve System.
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SECTION 3.11. Subsidiaries. Attached hereto as Schedule I is a correct and
complete list of all Subsidiaries of the Borrower and each Guarantor, showing as
to each such Subsidiary, its name, the jurisdiction of its incorporation, the
name of each owner and the percentage of outstanding shares or other ownership
interest held by each shareholder or other owner. Each such Subsidiary is a
corporation or other business entity duly incorporated or organized, as the case
may be, validly existing and in good standing under the laws of its jurisdiction
of incorporation or organization, as the case may be, and has all corporate or
other organizational powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
SECTION 3.12. Conveyed Assets. All of the assets and liabilities of
Construction Data Services, Inc. ("CDS") and TSR Health Care Services, Inc.
("Health Care"; CDS and Health Care are referred to collectively as the "Former
Subsidiaries") have been sold, transferred or otherwise conveyed to one or more
Persons other than the Borrower and the Guarantors, and neither of the Former
Subsidiaries nor any of the Borrower and the Guarantors has any liability with
respect to the Former Subsidiaries or either of them other than (a) liability
for taxes to the extent set forth in Section 3.04 hereof, (b) liability of the
Parent to CDS in an amount not in excess of $8,000,000 in respect of amounts
withdrawn from CDS by the Parent with respect to which a corresponding asset
appears on the books of CDS and (c) the obligations of Health Care to the Parent
in respect of the Parent's funding of Health Care's operating losses in an
amount not in excess of $350,000, provided that the obligations and liabilities
set forth in clauses (b) and (c) shall have no effect on the consolidated
financial position of the Parent and shall be eliminated not later than March
31, 1998 by non-cash transactions reflected in eliminating entries on the books
of the Parent, CDS and Health Care, as applicable.
SECTION 3.13. Not an Investment Company. It is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended. The
Borrower is not subject to regulation under any Federal or State statute or
regulation which limits its ability to incur Indebtedness.
SECTION 3.14. Material Adverse Effect. No change, which has resulted in or
which would be reasonably likely to have a Material Adverse Effect, has occurred
in its business, assets, operations, prospects, condition (financial or
otherwise) or ability to perform its obligations under the Loan Documents to
which it is a party since the date of the audited financial statements most
recently delivered to the Bank.
SECTION 3.15. Governmental Approval. No registration with or consent or
approval of, or other action by, any Federal, state or other governmental
authority or regulatory body is required in connection with the execution,
delivery and performance of the Loan Documents to which it is a party or the
borrowings hereunder.
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SECTION 3.16. Full Disclosure. All written information heretofore furnished
by it to the Bank for purposes of or in connection with this Agreement is, and
all such written information hereafter furnished by it to the Bank will be, true
and accurate in all material respects on the date as of which such information
is stated or certified, excluding (a) any such information constituting
opinions, forecasts, projections, assumptions, intentions, theories, estimates,
advertisements, expressions of possibility or probability or other similar
statements of a type which, at the time made, are not capable of being
characterized as true or untrue and (b) any information contained in documents
prepared by Persons other than the Borrower, the Parent or any Guarantor or any
of their respective agents. It has disclosed to the Bank in writing any and all
facts which, in its reasonable judgment have or would be reasonably likely to
cause a Material Adverse Effect.
SECTION 3.17. Binding Effect. This Agreement and each other Loan Document
to which it is a party constitute legal and valid obligations, binding upon it,
enforceable against it in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
SECTION 3.18. Trademarks and Licenses, etc. It owns, is licensed or
otherwise has the right to use, to the best of its knowledge, all of the
trademarks, service marks, trade names, franchises, authorizations and other
rights that are reasonably necessary for the operation of its businesses,
without conflict with the rights of any other Person which would have a Material
Adverse Effect. To the best of its knowledge, no slogan or other advertising
device or product, in use, or contemplated to be used by it infringes upon any
rights held by any other Person; no claim or litigation regarding any of the
foregoing is pending or, to its knowledge, threatened which is reasonably
expected to have a Material Adverse Effect.
IV. CONDITIONS OF LENDING
The obligation of the Bank to lend hereunder is subject to the following
conditions precedent:
SECTION 4.01. Representations and Warranties; No Default. On the Closing
Date and at the time of the initial and each subsequent borrowing hereunder, (a)
the representations and warranties set forth in Article III hereof, in the
Guaranties, the Security Agreements and the Assignment and Pledge Agreement
shall be true and correct in all material respects; (b) no Default or Event of
Default shall have occurred and be continuing or would result after giving
effect to the Loan Documents (in the case of the Closing Date) or the Loan
requested (in the case of each borrowing); (c) the Borrower and each Guarantor
shall have delivered to the Bank a certificate dated the Closing Date or the
date of such borrowing, as the case may be, and signed by an Executive Officer
of each of them, stating that: (i) the representations and warranties set
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forth in Article III hereof, in the Guaranties, the Security Agreements and the
Assignment and Pledge Agreement are true and correct in all material respects on
and as of the Borrowing Date with the same effect as though such representations
and warranties had been made on and as of such date (except to the extent any
such representation or warranty specifically relates to an earlier date); and
(ii) no Default or Event of Default has occurred and is continuing or will
result after giving effect to the Loan requested; (d) the Borrower shall have
delivered a duly completed Borrowing Base Certificate, dated the Borrowing Date
and signed by the Chief Financial Officer of the Borrower; (e) after giving
effect to the Loan to be made on such date, the outstanding principal balance of
the Note will not exceed the Borrowing Base set forth in the Borrowing Base
Certificate delivered to the Bank pursuant to clause (d) above); and (f) the
Bank shall have received a Notice of Borrowing.
SECTION 4.02. Opinion of Counsel. On or prior to the Closing Date, the Bank
shall have received the legal opinion of Bachner, Tally, Xxxxxxx & Xxxxxx LLP,
counsel to the Borrower and the Guarantors, substantially in the form of Exhibit
C attached hereto and covering such other matters incident to the transactions
contemplated by this Agreement as the Bank may reasonably require.
SECTION 4.03. Note; Guaranties; Security Agreements; Assignment and Pledge
Agreement. On or prior to the Closing Date, the Bank shall have received the
Note, duly executed by the Borrower, the Guaranties, duly executed by the
Guarantors, the Security Agreements, duly executed by the Borrower and the
Guarantors and the Assignment and Pledge Agreement, duly executed by the
Borrower.
SECTION 4.04. Schedule of Operating Leases; Copies of Agreements. On or
prior to the Closing Date, the Bank shall have received (subject to its
satisfactory review) (a) a schedule of all operating leases to which the
Borrower or any Guarantor is a party, setting forth with respect to each such
lease the names of the lessor and lessee, the beginning and ending dates, the
annual costs and the item leased and (b) a copy of each shareholder or voting
agreement, each consulting agreement, each employment agreement and each other
material agreement, instrument or other document to which the Borrower or any
Guarantor is a party or by which (as, for example, in the case of a shareholder
agreement) such Person or its assets could be affected, which could have a
material effect on such Person's cash flow and/or profitability.
SECTION 4.05. UCC Financing Statements. On or prior to the Closing Date,
the Bank shall have received UCC-1 financing statements covering the Collateral,
duly executed by the Borrower and the Guarantors, which shall be filed by the
Bank at the expense of the Borrower.
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SECTION 4.06. Insurance Certificate. (a) On or prior to the Closing Date,
the Bank shall have received (subject to its satisfactory review) an insurance
certificate with respect to the Collateral and naming the Bank as an additional
insured (with respect to liability insurance) and loss payee (with respect to
casualty insurance).
(b) On or prior to the Closing Date, the Bank shall have received evidence
of the insurance required under Section 5.01 hereof.
SECTION 4.07. Intentionally Omitted.
SECTION 4.08. Supporting Documents. On or prior to the Closing Date, the
Bank shall have received (a) a certificate of good standing for the Borrower and
each Guarantor from the Secretary of State of the State of Delaware or New York,
as applicable, dated as of a recent date; (b) a certificate of the Secretary or
an Assistant Secretary of the Borrower and each Guarantor dated the Closing Date
and certifying (i) that attached thereto is a true and complete copy of the
Certificate of Incorporation and the By-laws of such Person as in effect on the
Closing Date; (ii) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of such Person authorizing the
execution, delivery and performance of the Loan Documents to which it is a
party; and (iii) the incumbency and specimen signature of each officer of the
Borrower and each Guarantor executing any Loan Document, and a certification by
another officer of the Borrower and each Guarantor as to the incumbency and
signature of the Secretary or Assistant Secretary of such Person; (c) a
Borrowing Base Certificate dated the Closing Date and setting forth calculations
made as of the last day of (i) the second preceding month if the Closing Date is
on or before the fourteenth day of the month or (ii) the immediately preceding
month if the Closing Date is on or after the fifteenth day of the month; (d) a
detailed aging of Accounts (by Account) for the Borrower and each Guarantor
dated as of the last Business Day of the calendar month next preceding the
Closing Date, which shall be satisfactory to the Bank in its sole discretion;
(e) a draft of (i) the consolidated financial statements of the Parent and its
Subsidiaries for the fiscal year ended May 31, 1997, prepared under the
direction of, and certified by, the Chief Financial Officer of the Parent, and
(ii) the consolidating financial statements of the Parent and its Subsidiaries
for the fiscal year ended May 31, 1997, prepared under the direction of, and
certified by, the Chief Financial Officer of the Parent and its Subsidiaries,
which shall be satisfactory to the Bank in its sole discretion; and (f) such
other documents or information as the Bank may reasonably request.
SECTION 4.09. Collateral Unencumbered. On or prior to the Closing Date, the
Bank shall have received satisfactory proof that the Collateral is free and
clear of all liens, claims, security interests and other encumbrances except
Liens as such term is defined in Section 6.01 hereof.
SECTION 4.10. Payment of Fees, Costs and Expenses. On the Closing Date, the
Borrower shall have paid all fees then due and payable and all costs and
expenses of the Bank
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(including reasonable fees and all disbursements of counsel) in connection with
the negotiation, preparation, execution and delivery of this Agreement and the
other Loan Documents and the transactions contemplated hereby and thereby.
SECTION 4.11. Legal Matters. All documents and legal and corporate
proceedings in connection with this Agreement and the other Loan Documents and
the transactions contemplated hereby and thereby shall be satisfactory in form
and substance to the Bank and its counsel, and counsel to the Bank shall have
received copies of all documents which it may have reasonably requested in
connection herewith and therewith.
V. AFFIRMATIVE COVENANTS
Each of the Borrower and each Guarantor, as the case may be, covenants and
agrees with the Bank that, so long as this Agreement shall remain in effect or
any of the principal of or interest on the Note, any Fees or any other amounts
at any time due and payable hereunder or under any of the other Loan Documents
remain unpaid, it will, and will cause each of its Subsidiaries to:
SECTION 5.01. Corporate Existence, Properties, Insurance, etc. Except as
permitted in Sections 5.02 and 6.04, do or cause to be done all things necessary
to preserve and keep in full force and effect its existence as a corporation,
its rights and franchises and comply, in all material respects, with all laws
applicable to it; at all times maintain, preserve and protect all franchises,
trade names licenses, patents, trademarks and copyrights used or useful in the
conduct of its business and preserve all material property used or useful in the
conduct of its business and keep the same in good repair, working order and
condition, reasonable wear and tear excluded, and from time to time make, or
cause to be made, all needful and proper repairs, renewals, replacements,
betterments and improvements thereto so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
at all times keep its insurable properties adequately insured and maintain (i)
insurance to such extent and against such risks, including fire and business
interruption, as is customary with companies in the same or similar business
operating in the same or similar markets and naming the Bank as loss payee, (ii)
workers' compensation insurance in the amount required by applicable law, (iii)
public liability insurance in the amount customary with companies in the same or
similar business operating in the same or similar markets against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by it
and (iv) such other insurance as may be required by law; provided that not later
than thirty days after the renewal, replacement or modification of any of the
foregoing insurance policies, the Borrower shall deliver to the Bank a detailed
schedule setting forth for each such policy: (a) the amount of such policy, (b)
the risks insured against by such policy, (c) the name of the insurer and each
insured party under such policy, (d) the policy number of such policy, and (e)
such other information as any Bank may reasonably request. In addition, the
Borrower shall
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deliver to the Bank written notice of any cancellation of any of the insurance
policies required by this Section 5.01 within seven (7) Business Days after the
Borrower receives notification of such cancellation.
SECTION 5.02. Payment of Indebtedness, Taxes, etc. (a) Pay all indebtedness
and obligations as and when due and payable and (b) pay and discharge or cause
to be paid and discharged promptly all taxes, assessments and governmental
charges or levies imposed upon it or upon its income and profits, or upon any of
its property, real, personal or mixed, or upon any part thereof, before the same
shall become in default, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might become a lien or charge upon such
properties or any part thereof; provided, however, that neither it nor any of
its Subsidiaries shall be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings,
and there shall have been set aside on its books adequate reserves with respect
to any such tax, assessment, charge, levy or claim so contested; and further
provided that, subject to the foregoing proviso, it will and will cause its
Subsidiaries to pay or cause to be paid all such taxes, assessments, charges,
levies or claims upon the commencement of proceedings to foreclose any lien
which has attached as security therefor.
SECTION 5.03. Financial Statements, Reports, etc. Furnish to the Bank:
(a) as soon as available, but in any event not later than 105 days
after the end of each fiscal year of the Borrower, (i) audited consolidated
financial statements of the Parent, the Borrower and the Guarantor
Subsidiaries (and in the case of the fiscal year ended May 31, 1997,
Construction Data Services, Inc. and TSR Health Care Services, Inc.),
including, without limitation, consolidated balance sheets and statements
of income, cash flow and retained earnings, certified by KPMG Peat Marwick
LLP or other independent certified public accountants of recognized
standing selected by the Parent and reasonably acceptable to the Bank (the
"Auditor") and accompanied by an unqualified opinion of the Auditor, and
(ii) unaudited consolidating financial statements of the Parent, the
Borrower and the Guarantor Subsidiaries (and in the case of the fiscal year
ended May 31, 1997, Construction Data Services, Inc. and TSR Health Care
Services, Inc.), prepared under the direction of, and certified by, the
Chief Financial Officer of the Parent, the Borrower and the Guarantor
Subsidiaries (and in the case of the fiscal year ended May 31, 1997,
Construction Data Services, Inc. and TSR Health Care Services, Inc.), in
the case of each of clauses (i) and (ii), showing the results of operations
for such fiscal year and the financial condition at the close of such year
and setting forth in each case in comparative form the corresponding
figures for the preceding fiscal period, all in reasonable detail, prepared
in accordance with GAAP applied on a basis consistently maintained
throughout the period involved and consistent with prior periods;
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(b) as soon as available, but in any event not later than 60 days
after the end of each quarter of each fiscal year of the Borrower, the
consolidated and consolidating financial statements of the Parent, the
Borrower and the Guarantor Subsidiaries (and in the case of each of the
quarters ending November 30, 1997 and February 28, 1998, Construction Data
Services, Inc. and TSR Health Care Services, Inc.), including, without
limitation, consolidated and consolidating balance sheets and statements of
income, cash flow and retained earnings, prepared under the direction of,
and certified by, the Chief Financial Officer of the Parent, the Borrower
and the Guarantor Subsidiaries (and in the case of each of the quarters
ending November 30, 1997 and February 28, 1998, Construction Data Services,
Inc. and TSR Health Care Services, Inc.), showing the results of operations
for the period from the beginning of such fiscal year through the end of
such quarter and the financial condition at the close of such quarter and
setting forth in each case in comparative form the corresponding figures
for the preceding fiscal period, all in reasonable detail, prepared in
accordance with GAAP applied on a basis consistently maintained throughout
the period involved and consistent with prior periods (subject to normal
year-end audit adjustment);
(c) with each delivery of financial statements required by (a) above,
a certificate signed by the Auditor, as to whether or not, as at the close
of such preceding fiscal year the Borrower and the Guarantors were, to the
knowledge of the Auditor, in compliance with the financial covenants set
forth in this Agreement, showing computation of the Funded Debt Ratio and
the financial ratios set forth in Article VI hereof, and stating that, in
making the examination necessary therefor, no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(d) with each delivery of financial statements required by (a) and (b)
above, a certificate signed by the Chief Financial Officer as to whether or
not, as at the close of such preceding period and at all times during such
preceding period, the Borrower and the Guarantors were in compliance with
all the provisions in this Agreement, showing computation of the Funded
Debt Ratio and the financial ratios set forth in Article VI hereof and
stating that, in making the examination necessary therefor, no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(e) promptly after receipt thereof, a copy of each management letter,
if any, prepared by the Auditor;
(f) within 15 calendar days after the end of each month, a Borrowing
Base Certificate dated as of the close of business on the last Business Day
of such month, certified by the Chief Financial Officer of the Borrower;
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(g) within 15 calendar days after the end of each month, a current and
detailed aging of Accounts for the Borrower and the Guarantors as of the
last Business Day of such month;
(h) promptly after the same become publicly available, copies of (i)
all periodic and other reports, proxy statements and other materials filed
by the Borrower, the Parent or any other Guarantor with the Securities and
Exchange Commission or distributed to the shareholders of the Parent, and
(ii) all periodic and other reports, proxy statements and other materials
filed by the Borrower, the Parent or any other Guarantor with any other
federal, state or local government or any agency or instrumentality of any
such government if the same relates to a matter which could have a Material
Adverse Effect; and
(i) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower and
the Guarantors and any of their respective Subsidiaries as the Bank may
reasonably request.
SECTION 5.04. Access to Premises and Records. Maintain financial records in
accordance with Generally Accepted Accounting Principles and permit
representatives of the Bank to have access to such financial and Collateral
records and its premises and the premises of any of its Subsidiaries at
reasonable times during normal business hours and upon request, to make such
excerpts from such records, to discuss its affairs, finances and condition with
its officers, employees, accountants, auditors and attorneys, and to conduct a
field audit at least once in each year, the costs of which shall be paid by the
Borrower if a Default or Event of Default shall have occurred and be continuing.
SECTION 5.05. Notice of Adverse Change. Promptly, but not later than five
(5) Business Days after any change or information shall have come to the
attention of any Executive Officer of the Borrower or any Guarantor, notify the
Bank in writing of (a) any change in the business or the operations of the
Borrower or such Guarantor or any Subsidiary of the Borrower or any Guarantor
which, in the good faith judgment of such officer, would be reasonably likely to
have a Material Adverse Effect, and (b) any information which indicates that any
financial statements which are the subject of any representation contained in
this Agreement, or which are furnished to the Bank pursuant to this Agreement,
fail, to any material extent, to present fairly the financial condition and
results of operations purported to be presented therein in accordance with GAAP,
disclosing the nature of such failure.
SECTION 5.06. Notice of Default. Promptly, in the event any Executive
Officer of the Borrower or any Guarantor knows of any Default or Event of
Default, or knows of an event of default under any Material Contract to which
the Borrower or any Guarantor is a party, furnish
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to the Bank a written statement as to such occurrence, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken with
respect thereto.
SECTION 5.07. Litigation Notice. Give the Bank prompt written notice of any
action, suit or proceeding at law or in equity or by or before any governmental
instrumentality or other agency (i) which, if adversely determined against it on
the basis of the allegations and information set forth in the complaint or other
notice of such action, suit or proceedings would be reasonably likely to have a
Material Adverse Effect, (ii) in which the amount in controversy is $100,000 or
more and is not covered by insurance or (iii) in which injunctive or similar
relief is sought.
SECTION 5.08. ERISA. (a) Comply, in all material respects with the
provisions of ERISA applicable to any Plan maintained by the Borrower or any
Guarantor; (b) as soon as possible and, in any event, within 10 days after the
Borrower or any Guarantor knows any of the following, deliver to the Bank a
certificate of the appropriate Chief Financial Officer setting forth details as
to such occurrence and such action, if any, which such Person or ERISA Affiliate
is required or proposes to take, together with any notices required or proposed
to be given to or filed with or by such Person, any ERISA Affiliate, the PBGC, a
Plan participant or the Plan Administrator with respect thereto: that a
Reportable Event has occurred or is expected to occur, that an accumulated
funding deficiency has been incurred or an application may be or has been made
to the Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code with respect to a Plan,
that a Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA, that a Plan has an Unfunded Current Liability
giving rise to a lien under ERISA, that proceedings may be or have been
instituted to terminate a Plan, that a proceeding has been instituted pursuant
to Section 515 of ERISA to collect a delinquent contribution to a Plan, or that
such Person or any ERISA Affiliate will or may incur any liability (including
any contingent or secondary liability) to or on account of the termination of or
withdrawal from a Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA. In
addition to any certificates or notices delivered to the Bank pursuant to the
second sentence hereof, copies of annual reports and any other notices received
by the Borrower or any Guarantor required to be delivered to the Bank hereunder
shall be delivered to the Bank no later than 30 days after the later of the date
such report or notice has been filed with the Internal Revenue Service or the
PBGC, given to Plan participants or received by such Person.
SECTION 5.09. Compliance with Contractual Obligations and Requirements of
Law; Applicable Laws. Comply, in all material respects, with all contractual
obligations and requirements of applicable law (including without limitation
Environmental Laws as defined in Section 3.06(f) hereof), the breach of which
would be reasonably likely to have a Material Adverse Effect.
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SECTION 5.10. Subsidiaries.
(a) Give the Bank prompt written notice of the creation, establishment or
acquisition, in any manner, of any Subsidiary not existing on the date hereof
and, within fifteen (15) Business Days after such organization, cause each such
Subsidiary (a) to execute a Guaranty and thus to become a Guarantor hereunder,
(b) to execute a Security Agreement and Uniform Commercial Code financing
statements and thus to create and perfect a first priority security interest in
and lien on such Person's Accounts in favor of the Bank, (c) to execute and
deliver to the Bank any and all other documents, instruments and agreements
which the Bank or its counsel may deem necessary or appropriate in connection
with becoming a Guarantor and granting a security interest in its Accounts and
(d) to comply with all of the terms and conditions of this Agreement applicable
to Guarantors. Each such Subsidiary shall be treated as a Guarantor for all
purposes.
(b) On or before March 31, 1998, provide to the Bank evidence of the
dissolution of Construction Data Services, Inc. and TSR Health Care Services,
Inc.
SECTION 5.11. Use of Proceeds. Use the proceeds of all Loans as provided in
the first recital of this Agreement.
VI. NEGATIVE COVENANTS
Each of the Borrower and each Guarantor, as the case may be, covenants and
agrees with the Bank that, so long as this Agreement shall remain in effect or
any of the principal of or interest on the Note, any Fees or any other amounts
at any time due and payable hereunder or under any of the other Loan Documents
remain unpaid, it will not, nor will it permit any Subsidiary, directly or
indirectly, to:
SECTION 6.01. Liens. Incur, create, assume or suffer to exist any mortgage,
pledge, lien, charge or other encumbrance or restriction of any nature
whatsoever (including conditional sales or other title retention agreements)
(each a "Lien") on any of its assets now or hereafter owned, other than:
(a) Liens existing on the date hereof as set forth on Schedule II
attached hereto which Liens are not to be renewed, extended or refinanced;
(b) deposits under workers' compensation, unemployment insurance or
other forms of governmental insurance or benefit and social security laws,
or to secure the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases or to secure statutory
obligations or surety, appeal bonds or discharge of xxxx xxxxx, or to
secure indemnity, performance or other similar bonds in the ordinary course
of business;
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(c) statutory Liens of landlords and other Liens imposed by law, such
as carriers', warehousemen's or mechanic's liens, incurred in good faith in
the ordinary course of business and deposits made or bonds filed in the
ordinary course of business to obtain the release of such Liens;
(d) Liens for taxes, assessments and other governmental charges or
levies not yet due, or Liens for taxes contested as permitted by Section
5.02;
(e) Liens to secure Indebtedness permitted under Section 6.02(d)
hereof, provided that no Default or Event of Default shall have occurred
and be continuing or shall occur as a result of the granting of such Lien
and that no asset other than the asset financed secures such Indebtedness;
(f) judgment Liens arising in connection with court proceedings,
provided that the execution or other enforcement thereof is fully bonded or
otherwise effectively stayed within 30 days after the entry thereof and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings; and
(g) any other Liens granted to the Bank.
SECTION 6.02. Indebtedness. Incur, create, assume or suffer to exist or
otherwise become liable in respect of any indebtedness or liability for borrowed
money or for the deferred purchase price of property or services, or similar
obligations, or any obligation evidenced by one or more notes, bonds, debentures
or similar instruments, or obligations in respect of a capital lease or
acceptance facility or net liabilities in respect of a hedging agreement or with
respect to any letter of credit issued for its account, or accept any deposits
or advances or progress payments under contracts (collectively, "Indebtedness"),
other than:
(a) Indebtedness outstanding as of the Closing Date and as set forth
on Schedule III, which Indebtedness may not be extended, refinanced or
renewed;
(b) the Indebtedness to the Bank outstanding as of the Closing Date or
hereafter incurred;
(c) Indebtedness owed by the Borrower to any Guarantor, which
Indebtedness is not evidenced by any promissory notes or other evidences of
debt on the date hereof but shall, if the Bank shall so request, be
evidenced by one or more promissory notes, each of which shall be pledged,
assigned and delivered to the Bank, in a manner satisfactory to the Bank in
its sole discretion, as additional Collateral for the Loans;
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(c-1) Indebtedness owed by any Guarantor to the Borrower or another
Guarantor, which Indebtedness was incurred to fund operating expenses
incurred by the obligor of such Indebtedness for the benefit (at least in
part) of the obligee thereof, and which Indebtedness is not evidenced by
any promissory notes or other evidences of debt on the date hereof but
shall, if the Bank shall so request, be evidenced by one or more promissory
notes, each of which shall be pledged, assigned and delivered to the Bank,
in a manner satisfactory to the Bank in its sole discretion, as additional
Collateral for the Loans;
(c-2) Indebtedness (other than Indebtedness permitted by subparagraph
(c-1) above) owed by the Guarantors to the Borrower in an aggregate
principal amount (for all such in Idebtedness taken as a whole for all
Guarantors taken together) not in excess of the Commitment at any time
outstanding, which Indebtedness is not evidenced by any promissory notes or
other evidences of debt on the date hereof but shall, if the Bank shall so
request, be evidenced by one or more promissory notes, each of which shall
be pledged, assigned and delivered to the Bank, in a manner satisfactory to
the Bank in its sole discretion, as additional Collateral for the Loans;
(d) Indebtedness for the acquisition by purchase or capital lease of
fixed or capital assets (excluding real property) secured by Liens
permitted by Section 6.01(e) hereof, provided that such Indebtedness shall
not exceed 100% of the purchase price or the lease payments, as the case
may be, of the asset so acquired and securing such Indebtedness; and
(e) trade payables incurred in the ordinary course of business and
paid pursuant to their terms; and
(f) Subordinated Debt.
SECTION 6.03. Guarantees. Guarantee, endorse, become surety for, or
otherwise in any way become or be responsible for the obligations of any Person
whether by agreement to purchase the Indebtedness of any other Person, whether
for working capital maintenance, or whether by agreement for the furnishing of
funds, directly or indirectly, through the purchase of goods, supplies or
services for the purpose of discharging the Indebtedness of any other Person or
otherwise, or enter into or be a party to any contract for the purchase of
merchandise, materials, supplies or other property if such contract provides
that payment for such merchandise, materials, supplies or other property shall
be made regardless of whether delivery of such merchandise, supplies or other
property is ever made or tendered except (a) endorsements of negotiable
instruments for collection or deposit in the ordinary course of business, (b)
guaranties as set forth on Schedule IV attached hereto, which may not be
extended or renewed, (c) guaranties by the Borrower or any Guarantor of
Indebtedness permitted by Section 6.02 hereof, (d) guaranties by
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the Parent of operating leases permitted by Section 6.16 hereof, (e) the
Guaranties and (f) other guaranties in favor of the Bank.
SECTION 6.04. Sale of Assets, Consolidation or Merger, Sale and Leaseback.
(a) Sell, lease transfer or otherwise dispose of all or a substantial portion of
its properties or assets, including without limitation the capital stock of any
of its Subsidiaries, in one or a series of transactions; (b) consolidate or
merge into any other corporation, or permit another corporation to merge into
it, or acquire all or substantially all of the business, property or assets of
any Person, except that any Subsidiary may merge with another Subsidiary so long
as the surviving Subsidiary is a Guarantor Subsidiary and any Subsidiary may
merge with Borrower so long as the Borrower is the surviving entity; (c)
liquidate, wind up or dissolve or suffer any liquidation, winding up or
dissolution of all or a substantial part of its business; or (d) enter into any
arrangement, directly or indirectly, with any Person whereby it or any of its
Subsidiaries shall sell or transfer property, real or personal, whether now
owned or hereafter acquired, if it or any of its Subsidiaries, at the time of
such sale or disposition intends to lease or otherwise acquire the right to use
or possess (except by purchase) such property or like property for a
substantially similar purpose.
SECTION 6.05. Sale of Notes. Sell, transfer, discount or otherwise dispose
of notes, Accounts or other rights to receive payment with or without recourse,
except (a) for the purpose of collection in the ordinary course of business, (b)
pursuant to the Security Agreements and (c) with respect to Accounts, (i)
customary trade allowances consistent with historic practices of the Borrower
and the Guarantors and (ii) compromises of Accounts in the ordinary course of
business, provided that such compromises shall not exceed $50,000 for all
Accounts of the Borrower, the Parent and the Guarantor Subsidiaries taken
together in the aggregate in any one calendar month.
SECTION 6.06. Investments. Purchase or hold beneficially any stock, other
securities, or evidences of Indebtedness of, purchase or acquire all or a
substantial part of the assets of, make or permit to exist any loans or advances
to or make or permit to exist any investment or acquire any interest whatsoever
in, any other Person, except:
(a) direct obligations of the United States of America or obligations
guaranteed by the United States of America, provided that such obligations
mature within one year from the date of acquisition thereof; or
(b) money market mutual funds having assets in excess of
$2,500,000,000; or
(c) dollar denominated time certificates of deposit 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; or
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(d) commercial paper rated not less than A-1 or P-1 or their
equivalent by Xxxxx'x Investor Services, Inc. or Standard & Poor's
Corporation, respectively; or
(e) loans permitted under Section 6.02(c) hereof; or
(f) commission, travel and similar advances to officers and employees
not in excess of $200,000 in the aggregate outstanding at any one time and
made in the ordinary course of business as currently conducted; or
(g) trade credit extended on customary terms in the ordinary course of
business as currently conducted; or
(h) investments in equity securities traded on a national securities
exchange not to exceed $350,000 (based on cost of acquisition) during the
term of this Agreement; or
(i) investments in Subsidiaries subject to compliance with Section
5.10 hereof.
SECTION 6.07. Change in Business. Materially change or alter the nature of
its business from the business currently engaged in.
SECTION 6.08. Consolidated Tangible Net Worth. Permit Consolidated Tangible
Net Worth to be less than the amounts set forth below at any time during the
periods indicated:
Period Amount
------ ------
Closing Date to May 30, 1998 $9,000,000
May 31, 1998 to May 30, 1999 Actual Consolidated Tangible Net Worth
at May 31, 1997 + $750,000
May 31, 1999 and thereafter Actual Consolidated Tangible Net
Worth at May 31, 1998 + $750,000
SECTION 6.09. Debt to Worth Ratio. Permit the ratio of Consolidated Total
Unsubordinated Liabilities to Consolidated Tangible Net Worth to be greater than
1.0:1.0 at any time.
SECTION 6.10. Interest Coverage Ratio. Permit the ratio of (a) consolidated
net income after taxes (excluding extraordinary gains) of the Borrower and the
Guarantors plus consolidated depreciation and amortization expenses of the
Borrower and the Guarantors plus Consolidated Interest Expense minus
consolidated cash dividends of the Borrower and the Guarantors minus the
aggregate cost of stock redemptions, retirements and repurchases for cash by the
Borrower and the Guarantors and minus unfunded Consolidated Capital Expenditures
of
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the Borrower and the Guarantors to (b) Consolidated Interest Expense, each of
the foregoing calculated for the four (4) fiscal quarters next preceding any
date of determination, to be less than 2.5:1.0 at any time.
SECTION 6.11. Capital Expenditures. In the case of the Borrower and the
Guarantors, permit Consolidated Capital Expenditures in any fiscal year of the
Borrower to exceed $500,000.
SECTION 6.12. Intentionally Omitted.
SECTION 6.13. Dividends. Declare or pay any cash dividend on its capital
stock or make any other distribution (in cash or otherwise) with respect to its
capital stock or redeem, retire, purchase or otherwise acquire, directly or
indirectly, for value or set apart any sum for the redemption, retirement,
purchase or other acquisition of, directly or indirectly, any share of its
capital stock or warrants or options therefor, except that the Borrower or any
Guarantor may pay cash dividends and may redeem, retire or repurchase its stock
for cash so long as no Default or Event of Default shall have occurred and be
continuing or would occur as a result of such action.
SECTION 6.14. Subordinated Debt. Make any optional prepayment of, or
purchase, redeem or otherwise acquire, or amend any provision in respect of the
subordination or the terms of payment of any Subordinated Debt.
SECTION 6.15. Other Prepayments. Make any payment of principal of any
Indebtedness, with a maturity of more than one year, for borrowed money (except
the Note) or for the deferred purchase price of property or services, except at
the stated maturity of such Indebtedness or as required by applicable mandatory
prepayment provisions (subject to any applicable subordination provisions).
SECTION 6.16. Leases. In the case of the Borrower and the Guarantors,
create, incur or assume any obligations for the rental, hire or lease of real or
personal property under operating leases except operating leases entered into in
the ordinary course of business the aggregate liability under which is not in
excess of $400,000 in any fiscal year of the Borrower.
SECTION 6.17. Accounting Policies and Procedures. Permit any change in the
accounting policies and procedures of the Borrower or the Guarantors, other than
as required by Generally Accepted Accounting Principles, including a change in
the Borrower's or any Guarantor's fiscal year or tax status, without the prior
consent of the Bank.
SECTION 6.18. Transactions with Affiliates. Sell, lease or otherwise
transfer any property or assets or services to, or purchase, lease or otherwise
acquire any property or assets or services from, or otherwise engage in any
other transactions with, any of its Affiliates, except in the ordinary course
of, and pursuant to the reasonable requirements of, the Borrower's or any
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Guarantor's, business at prices and on terms and conditions not less favorable
to the Borrower or such Guarantor or any Subsidiary of the Borrower or any
Guarantor than could be obtained in an arm's-length transaction with an
unrelated third party.
VII. EVENTS OF DEFAULT
SECTION 7.01. Events of Default. In the case of the happening of any of the
following events ("Events of Default"):
(a) default shall occur (i) in the payment of the principal of the
Note when due; (ii) in the payment of interest on the Note or any Fees or
any other amount due hereunder or under any of the other Loan Documents
within five (5) days after such interest, Fees or other amount becomes due
in accordance herewith;
(b) any representation or warranty herein or in any other Loan
Document, in any certificate or report furnished in connection herewith or
in any amendment to this Agreement, shall prove to be false or misleading
in any material respect when made or given or deemed made or given;
(c) default (including default in payment) shall occur in respect of
any Indebtedness (the outstanding principal balance of which, individually
or in the aggregate, is $100,000 or more) of the Borrower or any Guarantor
or any of their respective Subsidiaries (other than the Note) or any
agreement or obligation related thereto (collectively, the "Obligations"),
if the effect of such default, after giving effect to any applicable grace
period, is to accelerate or to permit the acceleration of the maturity of
such Obligation by the holder or obligee thereof (or a trustee on behalf of
such holder or obligee) or such Obligation shall become due prior to the
stated maturity thereof;
(d) the Borrower, the Parent or any Guarantor shall default (other
than pursuant to paragraphs (a) or (b) above) in the due observance or
performance of any covenant or agreement to be performed pursuant to any of
Sections 5.03, 5.04, 5.05, 5.06, 5.07 and 5.11 or Article VI this
Agreement;
(e) the Borrower, the Parent or any Guarantor shall default in the due
observance or performance of any other covenant or agreement to be
performed pursuant to this Agreement and such default shall continue
unremedied for a period of fifteen (15) days after the occurrence thereof;
(f) (i) the Borrower or any Guarantor shall default in the due
observance or performance of any covenant or agreement to be performed by
it pursuant to any Loan
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Document (other than this Agreement) which default is not cured within any
applicable grace period or (ii) any Loan Document (other than this
Agreement) shall cease to be in full force and effect or shall be declared
(by a Person other than the Bank) to be null and void, or the validity or
enforceability thereof shall be contested (by a Person other than the Bank)
or any party thereto shall deny that it has any further liability to the
Bank with respect thereto or any lien granted under any Security Agreement
or the Assignment and Pledge Agreement shall cease to be a valid and first
priority lien in favor of the Bank except as otherwise permitted by such
agreement;
(g) the Borrower, any Guarantor or any of their respective
Subsidiaries shall (i) voluntarily commence any case, proceeding or other
action or file any petition seeking relief under Title 11 of the United
States Code or any other existing or future Federal domestic or foreign
bankruptcy, insolvency or similar law, (ii) consent to the institution of,
or fail to controvert in a timely and appropriate manner, any such
proceeding or the filing of any such petition, (iii) apply for or consent
to the employment of a receiver, trustee, custodian, sequestrator or
similar official for the Borrower, any Guarantor or any of their respective
Subsidiaries or for a substantial part of their property, (iv) file an
answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(h) an involuntary case, proceeding or other action shall be commenced
or an involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower, any Guarantor
or any of their respective Subsidiaries or of a substantial part of its
property, under Title 11 of the United States Code or any other existing or
future Federal, domestic or foreign bankruptcy, insolvency or similar law,
(ii) the appointment of a receiver, trustee, custodian, sequestrator or
similar official for the Borrower, any Guarantor or any of their respective
Subsidiaries or for a substantial part of their property, or (iii) the
winding-up or liquidation of the Borrower, any Guarantor or any of their
respective Subsidiaries; and, in the case of each of clauses (i), (ii) and
(iii), such proceeding or petition shall continue undismissed for 60 days
or an order or decree approving or ordering any of the foregoing shall
continue unstayed and in effect for 60 days;
(i) there shall be commenced against the Borrower, any Guarantor or
any of their respective Subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged or stayed or bonded pending appeal within sixty
(60) days from the entry thereof;
-39-
(j) final judgments or orders for the payment of money in excess of
$100,000 individually or in the aggregate shall be rendered against the
Borrower, any Guarantor or any of their respective Subsidiaries which is
not otherwise covered by insurance from a licensed and reputable insurance
company which has not disavowed coverage and the same shall remain
undischarged, unsatisfied or unbonded for a period of 30 days during which
execution shall not be effectively stayed;
(k) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan, or
any lien shall arise on the assets of the Borrower, any Guarantor or any
Commonly Controlled Entity in favor of the PBGC or a Plan, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence
to have a trustee appointed, or a trustee shall be appointed, to administer
or to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Bank, likely to result in the termination of such
Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower, any
Guarantor or any Commonly Controlled Entity shall incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of,
a Multiemployer Plan or (vi) any other event or condition shall occur or
exist, with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or
conditions, if any, would subject the Borrower or any Guarantor to a tax,
penalty or other liabilities, which, in the aggregate are material in
relation to the business, operations, property or financial or other
condition of the Borrower or any Guarantor;
(l) the Borrower or any Guarantor shall become liable at any time for
remediation and/or environmental compliance expenses and/or fines,
penalties or other charges which, in the aggregate, are in excess of
$100,000;
(m) the Parent shall at any time and for any reason cease to own or
control 100% of the outstanding capital stock of the Borrower or 80% of the
outstanding capital stock of Catch/21 Enterprises, Inc.;
(n) the occurrence of any event or condition which results in any
Person or group (as such term is defined in Rule 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended from time to time) other than a
Person or group that is actively involved in the day to day management of
the Parent on the date of this Agreement (i) acquiring beneficial ownership
of 30% or more of any outstanding class of capital stock of the Parent
having ordinary voting power in the election of directors of the Parent or
(ii) obtaining the power (whether or not exercised) to elect a majority of
the Parent's directors;
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then, at any time thereafter during the continuance of any such event, the
Bank may, by written notice to the Borrower (i) terminate the Commitment
and (ii) declare the Note and the Loan to be forthwith due and payable,
both as to principal and interest, without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Note to the contrary notwithstanding,
provided, however, that if an event specified in Section 7.01(g) or (h)
hereof shall have occurred, the Commitment shall automatically and
immediately terminate and the Note and Loan shall immediately and
automatically become due and payable, and the Bank in each instance shall
have the right to exercise its rights under the Loan Documents and such
other rights as are permitted by law.
VIII. MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other communications
provided for hereunder shall be in writing and shall be deemed to have been duly
given or made upon receipt, if delivered by hand or facsimile at the address set
forth below, or if sent by certified mail, three days after the day on which
mailed, or, in the case of an overnight courier service, one (1) Business Day
after timely delivery to such courier service for next-Business-Day delivery, in
each case to the address or facsimile number set forth below, or to such other
address of which any party hereto shall notify the other parties in a notice
complying as to delivery with the provisions of this Section 8.01:
(a) if to the Bank, at
The Chase Manhattan Bank
000 Xxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Account Officer - TSR Consulting Services, Inc.
Fax: 000-000-0000
(b) if to the Borrower or any Guarantor, at
c/o TSR, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxx X. Xxxxxxx, Vice President, Finance and
Secretary
with a copy to
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Bachner, Tally, Xxxxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx L'Hernault, Esq.
Fax: 000-000-0000
SECTION 8.02. Survival of Agreement; Successors and Assigns. (a) All
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by the Bank of
the Loans herein contemplated and the execution and delivery to the Bank of the
Note evidencing such Loans and shall continue in full force and effect so long
as the Note is outstanding and unpaid or the Commitment is outstanding.
(b) Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; all covenants, promises and agreements by or on behalf of the Borrower
and the Guarantors which are contained in this Agreement shall bind and inure to
the benefit of the respective successors and assigns of the Bank and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with this Agreement or any of
the other Loan Documents. The Bank shall not have any obligation to any Person
not a party to this Agreement or any of the other Loan Documents.
SECTION 8.03. Expenses of the Bank; Indemnification.
(a) The Borrower and the Guarantors will pay all reasonable out-of-pocket
costs and expenses incurred by the Bank in connection with the preparation,
development and execution of the Loan Documents and any amendment, supplement or
modification to this Agreement, the Note and the other Loan Documents including,
without limitation, the fees and disbursements of counsel to the Bank (including
without limitation allocation of the cost of in-house counsel to the Bank
whether or not the transactions hereby contemplated shall be consummated), the
making of the Loans hereunder, the costs and expenses incurred in connection
with the enforcement or preservation of any rights of the Bank under this
Agreement, the Note and the other Loan Documents or in connection with the
Loans, including without limitation the fees and disbursements of counsel to the
Bank (including without limitation allocation of the cost of in-house counsel
to the Bank for services which do not duplicate services rendered by other
counsel to the Bank).
(b) Each of the Borrower and each Guarantor agrees to indemnify the Bank
and its directors, officers, employees and agents (the "Indemnified Parties")
against, and to hold the Bank and each Indemnified Party harmless from, any and
all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurr ed by or asserted against the Bank
or any Indemnified Party arising out of, in any way connected with, or as a
result of (i) the use of any of the proceeds of the Loans, (ii) this Agreement
or any other Loan Documents,
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(iii) the performance by the parties hereto and thereto of their respective
obligations hereunder and thereunder (including but not limited to the making of
the Commitment) and consummation of the transactions contemplated hereby and
thereby, (iv) breach of any representation or warranty or (v) any claim,
litigation, investigation or proceedings relating to any of the foregoing,
whether or not the Bank or any Indemnified Party is a party thereto; provided,
however, that such indemnity shall not, as to the Bank or any Indemnified Party,
apply to any such losses, claims, damages, liabilities or related expenses to
the extent that they result from the gross negligence or willful misconduct of
the Bank or any Indemnified Party.
(c) The provisions of this Section 8.03 shall remain operative and in full
force and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Documents, or any investigation made by or on behalf
of the Bank. All amounts due under this Section 8.03 shall be payable on written
demand therefor explaining in reasonable detail the nature of such claim and the
basis for calculating such amount.
SECTION 8.04. Applicable Law. This Agreement, the Note and the other Loan
Documents (other than those containing a contrary express choice of law) shall
be governed and construed by and interpreted in accordance with the internal
laws of the State of New York.
SECTION 8.05. Waiver of Rights by the Bank; Waiver of Jury Trial, etc. (a)
Neither any failure nor any delay on the part of the Bank in exercising any
right, power or privilege hereunder or under any other Loan Documents shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any other right, power or privilege.
Except as prohibited by law, each party hereto hereby waives any right it may
have to claim or recover in any litigation referred to in this Section any
special, exemplary, punitive or consequential damages or any damages other than,
or in addition to, actual damages. Each party hereto (i) certifies that no
representative, agent or attorney of the Bank has represented, expressly or
otherwise, that the Bank would not, in the event of litigation, seek to enforce
the foregoing waivers and (ii) acknowledges that it has been induced to enter
into this Agreement and/or the Loan Documents to which it is a party by, among
other things, the mutual waivers and certifications herein.
(b) EACH OF THE BORROWER, EACH GUARANTOR AND THE BANK HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM OR ACTION IN ANY WAY, INVOLVING OR ARISING, DIRECTLY
OR INDIRECTLY, OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
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SECTION 8.06. Acknowledgments. Each of the Borrower and each Guarantor
hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Note and the other Loan Documents to which
it is a party;
(b) the Bank does not have any fiduciary relationship with it and the
relationship between the Bank, on one hand, and the Borrower, on the other
hand, is solely that of debtor and creditor; and
(c) no joint venture exists among the Borrower, the Guarantors and the
Bank.
SECTION 8.07. Consent to Jurisdiction. (a) Each of the Borrower and each
Guarantor hereby irrevocably submits to the non-exclusive jurisdiction of any
United States Federal or New York State court sitting in New York City in any
action or proceedings arising out of or relating to any Loan Documents and
hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court and irrevocably waives
any objection it may now or hereafter have as to the venue of any such action or
proceeding brought in such a court or the fact that such court is an
inconvenient forum.
(b) Each of the Borrower and each Guarantor irrevocably and unconditionally
consents to the service or process in any such action or proceeding in any of
the aforesaid courts by the mailing of copies of such process to them by
certified or registered mail at its address specified in Subsection 8.01.
SECTION 8.08. Extension of Maturity. Except as otherwise expressly provided
herein, whenever a payment to be made hereunder shall fall due and payable on
any day other than a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall be included in
computing interest.
SECTION 8.09. Modification of Agreement. No modification, amendment or
waiver of any provision of this Agreement, the Note or any other Loan Document,
nor consent to any departure by the Borrower, any Guarantor or any of their
respective Subsidiaries therefrom shall in any event be effective unless the
same shall be in writing and signed by the Bank, the Borrower and each other
party to be charged and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on the Borrower, the Guarantors or any of their respective Subsidiaries
in any case shall entitle the Borrower, the Guarantors or any of their
respective Subsidiaries, as the case may be, to any other or further notice or
demand in the same, similar or other circumstance.
-44-
SECTION 8.10. Participations and Assignments. (a) Neither the Borrower nor
the Guarantors may assign or transfer any of their interests under this
Agreement, the Note or any other Loan Documents without the prior written
consent of the Bank.
(b) The Bank reserves the right to grant participations in or to sell and
assign its rights, duties or obligations with respect to the Loans or the
Commitment to such banks or other institutional lenders as it may choose,
including, without limitation, any Federal Reserve Bank in accordance with
applicable law and without the consent of the Borrower or the Guarantors, which
consent is deemed to be granted.
SECTION 8.11. Reinstatement; Certain Payments. If claim is ever made upon
the Bank for repayment or recovery of any amount or amounts received by the Bank
in payment or on account of any of the obligations under this Agreement, the
Bank shall give prompt notice of such claim to the Borrower, and if the Bank
repays all or part of said amount by reason of (a) any judgment, decree or order
of any court or administrative body having jurisdiction over the Bank or any of
its property, or (b) any settlement or compromise of any such claim effected by
the Bank with any such claimant, then and in such event each of the Borrower and
each Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it notwithstanding the cancellation of the
Note, any Guaranty or any other instrument evidencing the obligations under this
Agreement or the Guaranties or the termination of this Agreement, and each of
the Borrower and each Guarantor shall be and remain liable to the Bank hereunder
for the amount so repaid or recovered to the same extent as if such amount had
never originally been received by the Bank.
SECTION 8.12. Right of Setoff. In addition to any rights and remedies of
the Bank provided by law, the Bank and each of its Affiliates, including without
limitation Chase Securities, Inc., is hereby authorized at any time and from
time to time, without prior notice to the Borrower or any Guarantor (any such
notice being expressly waived by the Borrower and the Guarantors) 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 the obligations of the Borrower (including its obligations as guarantor) or
any Guarantor now or hereafter existing under this Agreement, the Note, and any
of the other Loan Documents to which such Person is a party and pursuant to
which such Person is obligated to the Bank, irrespective of whether or not the
Bank shall have made any demand under such Loan Document and although such
obligations may be in any currency, direct or indirect, absolute or contingent,
matured or unmatured. The Bank agrees to promptly notify the Borrower or the
appropriate Guarantor after any such setoff and application made by the Bank or
such Affiliate, but the failure to give such notice shall not affect the
validity of such setoff and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Bank may have.
-45-
SECTION 8.13. Severability. In case any one or more of the provisions
contained in this Agreement or in the Note should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.
SECTION 8.14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument.
SECTION 8.15. Entire Agreement; Cumulative Remedies.
(a) This Agreement and the other Loan Documents constitute the entire
agreement among the parties hereto and thereto as to the subject matter hereof
and thereof and supersede any previous agreement, oral or written, as to such
subject matter.
(b) The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 8.16. Headings. Section headings used herein are for convenience of
reference only and are not to affect the construction of or be taken into
consideration in interpreting this Agreement.
SECTION 8.17. Exhibits and Schedules. Exhibits A, B and C and Schedules I
through IV shall constitute integral parts of this Agreement.
IN WITNESS WHEREOF, the Borrower, the Guarantors and the Bank have caused
this Agreement to be duly executed by their duly authorized officers, as of the
day and year first above written.
TSR CONSULTING SERVICES, INC.
By: /s/ XXXX X. XXXXXXX
-------------------------------------
Xxxx X. Xxxxxxx
Vice President
TSR, INC.
By: /s/ XXXX X. XXXXXXX
--------------------------------------
Xxxx X. Xxxxxxx
Vice President, Finance
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CATCH 21/ENTERPRISES, INCORPORATED
By: /s/ XXXX X. XXXXXXX
--------------------------------------
Xxxx X. Xxxxxxx
Vice President
THE CHASE MANHATTAN BANK
By: /s/ XXXXXXX X. XXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxx
Vice President
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