1
EXHIBIT 10.36
CREDIT AGREEMENT
BY AND AMONG
SABRATEK CORPORATION
AND
LASALLE BANK NI
DATED: MARCH 26, 1997
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TABLE OF CONTENTS
1.0 GENERAL DEFINITIONS..................................................................................1
1.1 "Affiliate ..............................................................................1
1.2 "Ancillary Agreements ...................................................................1
1.3 "Business Day ...........................................................................1
1.4 "Change .................................................................................2
1.5 "Charges ................................................................................2
1.6 "Code ...................................................................................2
1.7 "Collateral .............................................................................2
1.8 "Default ................................................................................2
1.9 "Default Rate ...........................................................................2
1.10 "Environmental Laws .....................................................................2
1.11 "ERISA ..................................................................................2
1.12 "Event of Default .......................................................................2
1.13 "GAAP ...................................................................................3
1.14 "Hazardous Materials ....................................................................3
1.15 "Indebtedness ...........................................................................3
1.16 "L/C Fee ................................................................................3
1.17 "Letters of Credit ......................................................................3
1.18 "Liabilities ............................................................................3
1.19 "Loan Account ...........................................................................4
1.20 "Maximum Amount .........................................................................4
1.21 "Loans ..................................................................................4
1.22 "Net Income .............................................................................4
1.23 "Notes ..................................................................................4
1.24 "Operating Income .......................................................................4
1.25 "Quick Assets ...........................................................................4
1.26 "Over-Advance ...........................................................................4
1.27 "Participant ............................................................................4
1.28 "Person .................................................................................4
1.29 "Prime Rate .............................................................................5
1.30 "Release ................................................................................5
1.31 "Reportable Event .......................................................................5
1.32 "Revolving Loan .........................................................................5
1.33 "Revolving Note .........................................................................5
1.34 "Stock ..................................................................................5
1.35 "Subsidiary .............................................................................5
1.36 "Equipment Term Loan"....................................................................6
1.37 "Equipment Term Note"....................................................................6
1.38 "Total Facility".........................................................................6
(i)
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1.39 "Accounting Terms".......................................................................6
1.40 "Other Terms"............................................................................6
2.0 LOANS: GENERAL TERMS.................................................................................6
2.1 Total Facility...........................................................................6
2.1.1 Revolving Loan...............................................................6
2.1.2 Letter of Credit Facility....................................................7
2.1.3 Equipment Purchase Facility..................................................7
2.2 Advances to Constitute One Loan; Effect of Revolving Loan Termination....................9
2.2.1 One Loan.....................................................................9
2.2.2 Effect on Equipment Term Loans...............................................9
2.3 Interest Rate............................................................................9
2.3.1 Revolving Loan...............................................................9
2.3.2 Equipment Term Loan..........................................................9
2.3.3 Computation of Interest.....................................................10
2.3.4 Default Rates...............................................................10
2.4 Over-Advances...........................................................................11
2.5 Prepayment and Termination of Term Loans................................................11
2.5.1 Equipment Term Loan.........................................................11
2.6 Provisions of Agreement To Remain in Force..............................................11
2.7 Payment of Ongoing Fees.................................................................12
2.7.1 Unused Line Fee.............................................................12
2.7.2 Letter of Credit Fees.......................................................12
2.8 Change in Circumstances.................................................................12
2.8.1 Yield Protection............................................................12
2.8.2 Changes in Capital Adequacy Regulations.....................................13
2.8.3 Lender Statements: Survival of Indemnity....................................14
3.0 PAYMENTS............................................................................................14
3.1 Borrower's Loan Account.................................................................14
3.2 Payment Terms...........................................................................14
3.3 Cash Collateral Account.................................................................15
3.4 Application of Payments and Collections.................................................15
3.5 Statements..............................................................................16
4.0 WARRANTIES AND REPRESENTATIONS......................................................................16
4.1 General Warranties and Representations..................................................16
4.2 Environmental Warranties and Representations............................................19
4.3 Automatic Warranty and Reaffirmation of Warranties and Representations..................19
(ii)
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4.4 Survival of Warranties and Representations..............................................20
5.0 COVENANTS AND CONTINUING AGREEMENTS.................................................................20
5.1 Affirmative Covenants...................................................................20
5.2 Negative Covenants......................................................................23
5.3 Payment of Charges......................................................................25
5.4 Contesting Charges......................................................................25
5.5 Insurance; Payment of Premiums..........................................................25
5.6 Survival of Obligations Upon Termination of Agreement...................................26
6.0 EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON EVENTS OF DEFAULT.........................................26
6.1 Events of Default.......................................................................26
6.2 Acceleration of the Liabilities.........................................................29
6.3 Remedies................................................................................29
6.4 Notice..................................................................................30
7.0 CONDITIONS PRECEDENT TO INITIAL FUNDING AND ADDITIONAL
ADVANCES............................................................................................30
7.1 Conditions to All Advances..............................................................30
7.2 Conditions to Initial Advances under the Loans..........................................31
7.2.1 Financial Condition..............................................................31
7.2.2 Fees.............................................................................31
7.2.3 Ancillary Agreements.............................................................31
7.2.4 Financial Statements.............................................................31
7.2.5 Field Audit......................................................................31
7.2.6 Closing Certificate..............................................................32
7.2.7 Corporate Matters................................................................32
7.2.8 Opinion of Counsel...............................................................32
7.2.9 Additional Documents.............................................................32
8. MISCELLANEOUS.......................................................................................32
8.1 Modification of Agreement; Sale of Interest.............................................32
8.2 Attorneys' Fees and Expenses; Lender's Out-of-Pocket Expenses; Audit
Fees....................................................................................33
8.3 No Waiver by Lender.....................................................................34
8.4 Severability............................................................................34
8.5 Parties; Entire Agreement...............................................................34
8.6 Conflict of Terms.......................................................................34
8.7 Waivers by Borrower.....................................................................35
8.8 Governing Law...........................................................................35
(iii)
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8.9 FORUM; SERVICE OF PROCESS...............................................................35
8.10 Notice..................................................................................36
8.11 Delegation of Duties and Grant of Authority.............................................37
8.12 Transaction Expenses....................................................................37
8.13 Section Titles..........................................................................37
8.14 Release by Borrower.....................................................................37
8.15 Participations..........................................................................38
(iv)
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LIST OF EXHIBITS
EXHIBITS DESCRIPTIONS
A Form of Revolving Note
(Ref., Sec. 2.1.1.2)
B Form of Equipment Term Note
(Ref., Sec. 2.1.3.3)
LIST OF SCHEDULES
SCHEDULE DESCRIPTION
I Litigation
(Ref., Sec. 4.1.9)
(v)
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("this Agreement") is made on the 26th day of
March, 1997 by and among LaSalle Bank NI ("Lender"), and Sabratek Corporation, a
Delaware corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower desires to borrow funds and obtain other
financial accommodation from Lender, and Lender is willing to make certain loans
and provide other financial accommodation to Borrower upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of any loans or extension of credit heretofore, now or
hereafter made to or for the benefit of Borrower by Lender, the parties hereto
hereby agree as follows:
1 GENERAL DEFINITIONS
When used herein, the following terms shall have the following
meanings:
1.1 "AFFILIATE" shall mean (i) any Person which directly or
indirectly owns more than 50% of the common stock or
other equity interest of any Borrower or which is
entitled to receive 50% or more of any Borrower's
income; or (ii) any legal entity which any Borrower or
any Affiliate of any Borrower as defined under part (i)
hereof, or any of any Borrower's directors or officers,
directly or indirectly owns more than 50% of the common
stock or other equity interest; or (iii) any
Subsidiary.
1.2 "ANCILLARY AGREEMENTS" shall mean all other agreements,
instruments and documents, including, notes,
guaranties, mortgages, deeds of trusts, chattel
mortgages, pledges, powers of attorney, consents,
assignments, contracts, notices, security agreements,
leases, financing statements, subordination agreements,
trust account agreements and all other written matter
whether heretofore, now, or hereafter executed by or on
behalf of any Borrower or any other Person and/or
delivered to Lender or any Participant with respect to
this Agreement.
1.3 "BUSINESS DAY" shall mean any day other than a
Saturday, Sunday or other day on which commercial banks
in Chicago, Illinois are authorized or required to
close under the laws of the State of Illinois or the
laws of the United States.
(1)
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1.4 "CHANGE" shall have the meaning set forth in
Section 2.8.2 of this Agreement.
1.5 "CHARGES" shall mean all national, federal, state,
county, city, municipal, and/or other governmental
(including, the Pension Benefit Guaranty Corporation)
taxes, levies, assessments, charges, liens, claims or
encumbrances upon and/or relating to (i) the
Collateral, (ii) the Liabilities, (iii) any Borrower's
employees, payroll, income and/or gross receipts, (iv)
any Borrower's ownership and/or use of any of its
assets, or (v) any other aspect of any Borrower's
business.
1.6 "CODE" shall mean the Uniform Commercial Code of the
State of Illinois, as the same may be amended from time
to time.
1.7 "COLLATERAL" shall mean any and all property and
interests in property pledged, assigned, transferred or
delivered to Lender by Borrower, or in which Borrower
grants Lender a security interest, whether now or
hereafter, to secure the Liabilities.
1.8 "DEFAULT" shall mean any event or condition which, upon
occurrence or with the passage of time, or upon the
giving of notice, or both, would constitute an Event of
Default.
1.9 "DEFAULT RATE" shall have the meaning set forth in
Section 2.3.6 of this Agreement.
1.10 "ENVIRONMENTAL LAWS" shall mean the Resource
Conservation and Recovery Act of 1976, as amended, the
Hazardous Materials Transportation Act, the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended and reauthorized by
the Superfund Amendments and Reauthorization Act of
1986, any so-called "Superfund" or "Superlien" laws,
the Toxic Substances Control Act, as amended, the Clean
Air Act, the Federal Water Pollution Control Act or any
other federal, state or local statute, law, ordinance,
code, rule, regulation, order or decree regulating,
relating to, or imposing liability or standards of
conduct concerning, any hazardous, toxic or dangerous
waste, substance or material as in effect from time to
time.
1.11 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.12 "EVENT OF DEFAULT" shall mean the occurrence or
existence of any one or more of the events described in
Section l0.l of this Agreement.
(2)
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1.13 "GAAP" shall mean generally accepted accounting
principles as in effect in the United States from time
to time.
1.14 "HAZARDOUS MATERIALS" shall mean any hazardous
substance or pollutant or contaminant defined as such
in (or for the purposes of) any Environmental Law and
shall include, but shall not be limited to, petroleum,
including crude oil or any fraction thereof, natural
gas, any radioactive material and asbestos in any form
or condition.
1.15 "INDEBTEDNESS" shall mean all of a Person's
liabilities, obligations and indebtedness to any Person
of any and every kind and nature, whether primary,
secondary, direct, indirect, absolute, contingent,
fixed, or otherwise, heretofore, now or hereafter
owing, due, or payable, however evidenced, created,
incurred, acquired or owing and however arising,
whether under written or oral agreement, by operation
of law, or otherwise. Without in any way limiting the
generality of the foregoing, Indebtedness specifically
includes (i) the Liabilities, (ii) all other
indebtedness for borrowed money, the deferred purchase
price of goods or services, all guaranties,
endorsements (other than for collection or deposit in
the ordinary course of business) and all obligations
under any letter of credit or acceptance facility,
(iii) all obligations or liabilities of any Person that
are secured by any lien, claim, encumbrance, or
security interest upon property owned by Borrower, even
though Borrower has not assumed or become liable for
the payment thereof, (iv) all obligations or
liabilities created or arising under any lease of real
or personal property, or conditional sale or other
title retention agreement with respect to property used
and/or acquired by Borrower, even though the rights and
remedies of the lessor, seller and/or lender thereunder
are limited to repossession of such property, (v) all
unfunded pension fund obligations and liabilities and
(vi) deferred taxes.
1.16 "L/C FEE" shall have the meaning set forth in
Section 2.7.2 of this Agreement.
1.17 "LETTERS OF CREDIT" shall have the meaning set forth in
Section 2.1.2 of this Agreement.
1.18 "LIABILITIES" shall mean all of Borrower's liabilities,
obligations and indebtedness to Lender of any and every
kind and nature, whether primary, secondary, direct,
indirect, absolute, contingent, fixed, or otherwise,
(including, interest, charges, expenses, attorneys'
fees, liquidated damages, and other sums chargeable to
Borrower by Lender, future advances made to or for the
benefit of Borrower and obligations of performance),
whether arising under this Agreement, under any of the
Ancillary Agreements or acquired by Lender
from any other source, whether
(3)
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heretofore, now or hereafter owing, arising, due, or
payable from Borrower to Lender, however evidenced,
created, incurred, acquired or owing and however
arising, whether under written or oral agreement,
operation of law, or otherwise.
1.19 "LOAN ACCOUNT" shall have the meaning set forth in
Section 3.1 of this Agreement.
1.20 "MAXIMUM AMOUNT" shall have the meaning set forth in
Section 2.1.1 of this Agreement.
1.21 "LOANS" shall mean the Revolving Loan and the Term
Loans, collectively.
1.22 "NET INCOME" shall mean, with respect to any fiscal
period of Borrower, the excess of total revenues over
total expenses of Borrower on a consolidated basis for
such period, after provision for income taxes and after
elimination of intercompany items, determined in
accordance with GAAP applied on a consistent basis.
There shall be excluded from Net Income any
extraordinary item, and any gain resulting from either
the extinguishment of any Indebtedness or the sale,
exchange or other disposition of assets not made in the
ordinary course of business.
1.23 "NOTES" shall mean the Revolving Loan Note and the
Equipment Term Note, collectively.
1.24 "OPERATING INCOME" shall mean, with respect to any
fiscal period of Borrower, operating income as defined
in accordance with GAAP, plus interest income, less
interest expense.
1.25 "QUICK ASSETS" shall mean, as of any particular date,
all of Borrower's cash and cash equivalents, accounts
receivable, and short term and long term investments in
marketable securities, defined in conformity with GAAP.
1.26 "OVER-ADVANCE" shall have the meaning set forth in
Section 2.4 of this Agreement.
1.27 "PARTICIPANT" shall mean any Person, now or at any time
or times hereafter, participating with Lender in the
Loans made by Lender to Borrower pursuant to this
Agreement and the Ancillary Agreements.
1.28 "PERSON" shall mean any individual, sole
proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation,
institution,
(4)
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entity, party, business organization of
any other kind, or governmental agency, unit or
representative of any kind (whether national, federal,
state, county, city, municipal or otherwise, including,
any instrumentality, division, agency, body or
department thereof).
1.29 "PRIME RATE" shall mean the interest rate per annum
from time to time announced and made effective by
Lender at its office in Chicago, Illinois, as the Prime
Rate, or, as the case may be, the base, reference or
other similar rate then designated by Lender for
commercial loan reference purposes, it being understood
that such rate is a reference rate, not necessarily the
lowest interest rate charged by Lender to its
customers, and as established from time to time serves
as the basis upon which effective rates of interest are
calculated for those loans making reference thereto.
1.30 "RELEASE" shall have the same meaning as set forth in
the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 as amended and reauthorized.
1.31 "REPORTABLE EVENT" shall mean any of the events set
forth in Section 4043 of ERISA, or the regulations
thereunder.
1.32 "REVOLVING LOAN" shall have the meaning set forth in
Section 2.1.1 of this Agreement.
1.33 "REVOLVING NOTE" shall have the meaning set forth in
Section 2.1.1.2 of this Agreement.
1.34 "STOCK" shall mean all shares, options, interests,
participations or other equivalents (however
designated) of or in a corporation, whether voting or
non-voting, including, common stock, warrants,
preferred stock, convertible debentures and all
agreements, instruments and documents convertible, in
whole or in part, into any one or all of the foregoing.
1.35 "SUBSIDIARY" shall mean any corporation of which more
than 50% of the outstanding shares of Stock which have
voting power sufficient to elect a majority of the
board of directors of such corporation (irrespective of
whether or not at the time Stock of any other class or
classes shall have or might have voting power by reason
of the happening of any contingency) is at the time
directly or indirectly owned by any Borrower, by any
Borrower and one or more Affiliates or other
Subsidiaries, or by one or more Affiliates or other
Subsidiaries.
(5)
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1.36 "EQUIPMENT TERM LOAN" shall have the meaning set forth
in Section 2.1.3 of this Agreement.
1.37 "EQUIPMENT TERM NOTE" shall have the meaning set forth
in Section 2.1.3.3 of this Agreement.
1.38 "TOTAL FACILITY" shall have the meaning set forth in
Section 2.1 of this Agreement.
1.39 "ACCOUNTING TERMS". Any accounting terms used in this
Agreement which are not specifically defined shall have
the meanings customarily given them in accordance with
GAAP.
1.40 "OTHER TERMS". All other terms contained in this
Agreement which are not otherwise deemed in Section 1
or in any other section of this Agreement shall, unless
the context indicates otherwise, have the meanings
provided for by the Code to the extent the same are
used or defined therein. Wherever the term "including"
appears in this Agreement, such term shall be construed
to mean "including, without limitation," it being the
express intention of the parties hereto that any rule
of limitation applicable to any listing of items in a
contract is hereby rejected.
2.0 LOANS: GENERAL TERMS
2.1 TOTAL FACILITY. Lender shall make available for
Borrower's use from time to time during the term of
this Agreement, upon Borrower's request therefor,
certain loans and other financial accommodation not to
exceed the aggregate principal amount of Nine Million
Five Hundred Thousand Dollars ($9,500,000) ("Total
Facility"). The Total Facility shall be subject to all
of the terms and conditions of this Agreement and
Ancillary Agreements and shall consist of:
2.1.1 REVOLVING LOAN. A revolving line of credit
(the "Revolving Loan") in an aggregate
principal amount not to exceed, at any time
outstanding, Eight Million Dollars
($8,000,000) (the "Maximum Amount") minus
the aggregate undrawn face amount of
Letters of Credit outstanding at such time.
2.1.1.1 The Revolving Loan shall be
repaid in full not later than,
and no further advances under
the Revolving Loan will be
made after, April 30, 1999
(the "Termination Date"). The
Revolving Loan shall be
evidenced by a Revolving
Loan Note
(6)
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in the form attached
hereto as EXHIBIT A (the
"Revolving Note"). To the
extent payment is not already
due, Borrower may repay the
Revolving Loan in whole or in
part (without penalty or
premium) upon one business
day's prior notice to Lender
with sums repaid available to
be reborrowed consistent with
and subject to the terms and
conditions described herein
governing new advances under
the Revolving Loan. Borrower
shall pay interest on the
outstanding principal balance
of the Revolving Loan monthly
in arrears on the first day of
each month.
2.1.1.2 All requests for advances
under the Revolving Loan
and/or the Revolving Note
shall be in writing and signed
by an authorized
representative of Borrower.
Lender shall respond to such
requests within one Business
Day. Any request for advances
made after 2:00 p.m. on any
Business Day shall be treated
as being received by Lender on
the following Business Day.
2.1.2 LETTER OF CREDIT FACILITY. Lender will
issue standby letters of credit and
commercial letters of credit (collectively
the "Letters of Credit") at the request of
Borrower in an aggregate undrawn face
amount not to exceed at any time $8,000,000
minus the aggregate principal amount of the
Revolving Loan outstanding at such time.
2.1.2.1 Borrower shall immediately
reimburse Lender for any draws
under any Letter of Credit,
and any advances made by
Lender to Borrower to satisfy
such reimbursement obligation
shall constitute an additional
Revolving Loan hereunder and
shall be governed by the terms
and conditions of this
Agreement, including Section
2.1.1 hereof.
2.1.2.2 At no time shall the sum of
(a) the aggregate principal
amount of the Revolving Loan
at any time outstanding to
Borrower and (b) the aggregate
undrawn face amount of the
Letters of Credit outstanding
at such time exceed the
Maximum Amount.
2.1.3 EQUIPMENT PURCHASE FACILITY. An equipment
purchase facility (the "Equipment Purchase
Facility") consisting of term loans for
purchases of new equipment (each a
"Equipment Term Loan"), available to
Borrower upon request made from time to
time until April 30, 1999 (subject to
extension at the sole discretion of
Lender), so long as no
(7)
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Event of Default has occurred, in the aggregate
principal amount not to exceed at any one time
outstanding One Million Five Hundred Thousand
Dollars ($1,500,000).
2.1.3.1 Any Equipment Term Loan which does not
use the Equipment Purchase Facility in
full shall be in an amount of not less
than One Hundred Thousand Dollars
($100,000). No Equipment Term Loan shall
be made for an amount in excess of eighty
percent (80%) of the purchase price of
such new equipment net of shipping,
freight, insurance, taxes, installation
and other incidental costs of such new
equipment.
2.1.3.2 Each Equipment Term Loan under the
Equipment Purchase Facility shall be
repayable as follows:
2.1.3.2.1 Prior to the first to occur
of (a) the total amount
available under the
Equipment Purchase Facility
being funded to Borrower; or
(b) April 30, 1998 or, with
regard to Equipment Term
Loans funded after such
date, April 30, 1999,
Borrower shall pay interest
only on the outstanding
principal balance of all
Equipment Term Loans,
monthly in arrears on the
first day of each calendar
month.
2.1.3.2.2 Upon the first to occur of
(a) the total amount
available under the
Equipment Purchase Facility
being funded to
Borrower; or (b) April 30,
1998 or, with regard to
Equipment Term Loans funded
after such date, April 30,
1999, Borrower shall pay
monthly installments, on the
first day of each calendar
month (commencing on the
first day of the calendar
month immediately following
such event), in sixty (60)
equal monthly installments,
the final payment to include
all of the remaining
outstanding principal
balance of all Equipment
Term Loans under the
Equipment Purchase Facility.
Accrued interest shall be
due and payable with each
installment of principal.
2.1.3.3 The Equipment Purchase Facility and the
Equipment Term Loans thereunder shall be
evidenced by a Equipment Term
(8)
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Note (the "Equipment Term
Note") in the form attached
hereto as Exhibit B.
2.1.3.4 All requests under the
Equipment Purchase Facility
shall be in writing and signed
by an authorized
representative of Borrower,
shall describe with reasonable
specificity the equipment to
be purchased and shall be
accompanied by purchase orders
or invoices for the equipment
which is the subject of the
request and such other
supporting documentation as
Lender may request.
2.2 ADVANCES TO CONSTITUTE ONE LOAN; EFFECT OF REVOLVING
LOAN TERMINATION.
2.2.1 ONE LOAN. All loans and advances by Lender
to Borrower under this Agreement and the
Ancillary Agreements (whether made as a
Revolving Loan, as a Term Loan, or
otherwise), shall constitute one loan, and
all Indebtedness of Borrower to Lender
under this Agreement and the Ancillary
Agreements shall constitute one general
obligation secured by the Collateral.
2.2.2 EFFECT ON EQUIPMENT TERM LOANS. Any
provision of this Agreement or any of the
Notes to the contrary notwithstanding, if
Lender demands repayment of the Revolving
Loan upon acceleration due to the
occurrence of an Event of Default, or any
other termination thereof, all Equipment
Term Loans shall become immediately due and
payable.
2.3 INTEREST RATE. Borrower shall pay Lender interest on
the outstanding principal balance of the Liabilities at
the following rates:
2.3.1 REVOLVING LOAN. The principal amount
outstanding under the Revolving Loan will
bear interest at a varying rate equal to
the Prime Rate.
2.3.2 EQUIPMENT TERM LOANS. During the period the
Equipment Term Loans are governed by
Section 2.1.3.2.1, the principal amount
outstanding under the Equipment Purchase
Facility will bear interest at a varying
interest rate equal to the Prime Rate. Upon
the occurrence of the events set forth in
Section 2.1.3.2.2, the principal amount
outstanding under the Equipment Term Loan
will bear interest at one of the
alternative rates set forth below as
selected by Borrower on or before the date
or dates of the occurrence of such events:
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2.3.2.1 A varying rate equal to the Prime
Rate; or
2.3.2.2 A fixed rate equal to 250 basis points
per annum plus the then current
five year Treasury Xxxx yield, as
stated in the Wall Street Journal
(Midwest Edition) on the day of
funding.
2.3.3 COMPUTATION OF INTEREST. All interest shall
be computed on the basis of a year of 360
days and actual days elapsed, and shall be
payable as provided in Section 3.2 of this
Agreement. Any change in any interest rate
applicable to any of the Liabilities based on
the Prime Rate shall be effective as of the
effective date stated in the announcement by
the Lender of such change in the Prime Rate.
In addition, for purposes of calculating
interest payable on the Revolving Loan,
payments of principal thereon shall be applied
to the outstanding principal balance of the
Revolving Loan upon receipt of such payments
by Lender in immediately available funds.
2.3.4 DEFAULT RATES. Upon the occurrence and
during the continuance of an Event of
Default, Borrower shall pay Lender interest on
the outstanding Liabilities, including
principal, interest, fees and reimbursable
expenses, at a rate (the "Default Rate"),
equal to the interest rate provided in the
applicable Note, plus three percent (3%). In
no event whatsoever shall the rate of interest
paid by Borrower under this Agreement or any
of the Ancillary Agreements exceed the maximum
amount permissible under any law which a court
of competent jurisdiction shall, in a final
determination and following exhaustion of all
appeals, deem applicable hereto. In the event
that such a court determines that Lender has
received interest hereunder in excess of the
maximum rate permitted by any such law, (i)
Lender shall apply the excess amount of
interest paid by Borrower to any unpaid
principal owed by Borrower to Lender or, if
the amount of such excess exceeds the unpaid
balance of such principal, Lender shall
promptly refund such excess interest to
Borrower, and (ii) the provisions hereof shall
be deemed amended to provide for such
permissible rate. All sums paid, or agreed to
be paid, by Borrower which are, or hereafter
may be construed to be, compensation for the
use, forbearance or detention of money shall,
to the extent permitted by applicable law, be
amortized, prorated, spread and allocated
throughout the full term of all such
Indebtedness until the Indebtedness is paid in
full.
(10)
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2.4 OVER-ADVANCES. If, at any time and for any
reason, the aggregate amount of loans and
advances outstanding at any time made
pursuant to Section 2.1 hereof exceeds any
percentage or dollar limitation, either
with respect to the Total Facility or
individual facilities or sublimits therein
(an "Over-Advance"), then Borrower, upon
Lender's election and demand, immediately
shall pay to Lender, in cash, the amount of
such Over-Advance.
2.5 PREPAYMENT AND TERMINATION OF TERM LOANS.
2.5.1 EQUIPMENT TERM LOAN. Borrower may
terminate the Equipment Term Loan in
whole, but not in part, upon three
(3) Business Days' prior written
notice to Lender at any time prior to
the maturity thereof, by paying to
Lender upon such termination (a) the
then outstanding principal amount,
accrued interest, and any other
applicable charges thereon, including
attorneys' fees and (b) if Borrower
has selected the interest rate
alternative set forth in Section
2.3.2.2 hereof, Borrower shall pay to
Lender as liquidated damages for
Lender's loss of the benefit of its
bargain and not as a penalty, an
amount equal to the product of (i)
the outstanding principal amount of
the Equipment Term Note at the time
of such termination and (ii) the
percentage set forth opposite the
applicable date in the following
table:
If Terminated Prior to Percentage
---------------------- ----------
April 30, 1999 5%
April 30, 2000 4%
April 30, 2001 3%
April 30, 2002 2%
April 30, 2003 1%
2.6 PROVISIONS OF AGREEMENT TO REMAIN IN
FORCE. Notwithstanding any
termination of the Total Facility,
until all of the Liabilities shall
have been fully paid and satisfied,
Borrower shall continue to pay
interest to Lender as provided in
Section 2.3 of this Agreement, Lender
shall be entitled to retain its
security interest, if any, in the
Collateral, Borrower shall continue
to remit collection of Accounts and
proceeds of Collateral as provided in
this Agreement, and Lender shall
retain all of its rights and remedies
under this Agreement.
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2.7 PAYMENT OF ONGOING FEES.
2.7.1 UNUSED LINE FEE. For the period from the
date of this Agreement to, but not
including, the Termination Date, Borrower
shall pay to Lender an unused line fee at
the rate of one-eighth of one percent
(.0125%) per annum (computed on the basis
of a year of 360 days and actual days
elapsed) on the average daily unused
portion of the Maximum Amount during each
month, minus the aggregate average
daily undrawn face amount of Letters of
Credit outstanding during such month. Such
fee is to be payable quarterly in arrears
on the first day of the immediately
following calendar quarter, commencing on
April 1, 1997 with the final payment to be
made on the Termination Date, unless the
Revolving Loan is terminated in whole on an
earlier date, in which event the commitment
fee for the period to, but not including,
the date of such termination in whole shall
be paid on the date of such termination.
2.7.2 LETTER OF CREDIT FEES. In addition to the
fee provided for in Section 2.7.1 above,
Borrower shall pay to Lender, concurrently
with the issuance of any Letter of Credit,
a letter of credit fee (each, an "L/C Fee")
at a rate equal to (a) in the case of any
standby Letter of Credit, one percent (1%)
of the undrawn face amount thereof, or (b)
in the case of any commercial Letter of
Credit, the standard rate based upon the
then current commercial letter of credit
fee schedule of Lender. Any L/C Fee shall
include any set up and handling fees
charged by Lender. The L/C Fee for any
Letter of Credit to be issued concurrently
with the initial funding hereunder shall be
deducted from Borrower's loan proceeds at
the time of closing. The payment of any L/C
Fee shall be non-refundable to Borrower,
notwithstanding any prepayment and
termination by Borrower as provided for in
Section 2.5 of this Agreement.
2.8 CHANGE IN CIRCUMSTANCES
2.8.1 YIELD PROTECTION. If any law or any
governmental or quasi-governmental rule,
regulation, policy, guideline or directive
(whether or not having the force of law),
adopted after the date of this Agreement
and having general applicability to all
banks within the jurisdiction in which
Lender operates, or any interpretation or
application thereof by any governmental
authority charged with the interpretation
or application thereof, or the compliance
of Lender therewith,
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2.8.1.1 subjects Lender to any tax,
duty, charge or withholding on
or from payments due from the
Borrower (excluding federal
taxation of the overall net
income of Lender), or changes
the basis of taxation of
payments to Lender in respect
of its Loans, or other amounts
due it hereunder, or
2.8.1.2 imposes or increases or deems
applicable any reserve,
assessment, insurance charge,
special deposit or similar
requirement against assets of,
deposits with or for the
account of, or credit extended
by, Lender with respect to its
Loans or
2.8.1.3 imposes any other condition
the result of which is to
increase the cost to Lender of
making, funding or maintaining
the Loans or reduces any
amount received by Lender in
connection with the Loans or
requires Lender to make any
payment calculated by
reference to the amount of
Loans or interest received by
it by an amount deemed
material by Lender in its sole
discretion;
and the result of any of the foregoing is
to increase the cost to Lender of making,
renewing or maintaining the Loans or to
reduce any amount received under this
Agreement, then, within 15 days after
receipt by Borrower of written demand by
Lender pursuant to Section 2.8.3, the
Borrower shall pay Lender that portion of
such increased expense incurred or
reduction in an amount received which
Lender determines is attributable to
making, funding and maintaining the Loans
and its commitments under this Agreement.
2.8.2 CHANGES IN CAPITAL ADEQUACY REGULATIONS. If
Lender determines (i) the amount of capital
required or expected to be maintained by
Lender, or any corporation controlling such
Lender is increased as a result of a
"Change" (as defined below), and (ii) such
increase in required capital will result in
an increase in the cost to Lender of
maintaining its Loans, the Letter of Credit
or its obligation to make Loans hereunder,
then, within 15 days after receipt by
Borrower of written demand by such Lender
pursuant to Section 2.8.3, Borrower shall
pay Lender the amount necessary to
compensate Lender for any shortfall in the
rate of return on the portion of such
increased capital which Lender determines
is attributable to this Agreement, its
Loans, or its obligation to make Loans
hereunder. "Change" means (i) any change
after the date of this Agreement in the
"Risk-Based Capital Guidelines" (as deemed
below),
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20
or (ii) adoption of or change in any other
law, governmental or quasigovernmental
rule, regulation, policy, guideline,
interpretation or directive (whether or not
having the force of law) after the date of
this Agreement and having general
applicability to all banks and financial
institutions within the jurisdiction in
which such Lender operates which affects
the amount of capital required or expected
to be maintained by Lender or any
corporation controlling Lender. "Risk-Based
Capital Guidelines" means (i) the
risk-based capital guidelines in effect in
the United States on the date of this
Agreement, including transition rules, and
(ii) the corresponding capital regulations
promulgated by regulatory authorities
outside the United States implementing the
July 1988 Report of the House Committee on
Banking Regulation and Supervisory
Practices entitled "International
Convergence of Capital Measurements and
Capital Standards," including transition
rules, and any amendments to such
regulations.
2.8.3 LENDER STATEMENTS: SURVIVAL OF INDEMNITY.
Lender shall use its best efforts to
notify Borrower in writing of any Change,
law, policy, rule, guideline or directive
giving rise to such demand for
compensation not later than ninety (90)
days following the date upon which Lender
knows of such Change, law, policy, rule,
guideline or directive. Any demand for
compensation pursuant to this Agreement
shall be in writing and shall state the
amount due, if any, and shall set forth in
reasonable detail the calculations upon
which Lender determined such amount. Such
written demand shall be rebuttably
presumed correct for all purposes. The
obligations of the Borrower under this
Section 2.8, shall survive payment of the
Liabilities and termination of this
Agreement.
3.0 PAYMENTS
3.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain a loan
account ("Loan Account") on its books in which shall be
recorded (i) all loans and advances made by Lender to
Borrower pursuant to this Agreement, (ii) all payments
made by Borrower on all such loans and advances and
(iii) all other appropriate debits and credits as
provided in this Agreement, including, all fees,
charges, expenses and interest. All entries in
Borrower's Loan Account and other accounts shall be
made in accordance with Lender's customary accounting
practices as in effect from time to time.
3.2 PAYMENT TERMS. All of the Liabilities shall be payable
to Lender at the address set forth in Section 8.10 of
this Agreement. Except (a) as otherwise provided in
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21
this Agreement or in the Ancillary Agreement or (b) in
the case of acceleration of the Liabilities, principal
on the Term Loans and interest on the Liabilities shall
be payable monthly on the first day of each month.
Unless otherwise provided in this Agreement or the
Ancillary Agreements, all other payments shall be
payable within five (5) days of Lender's demand. At
Lender's sole discretion, such payment may be made by a
debit to Borrower's demand deposit account with Lender,
and fees, costs, expenses and similar charges shall
also be payable monthly by such debits.
3.3 CASH COLLATERAL ACCOUNT. Borrower shall use Lender as
its exclusive depository and disbursement bank for all
of its accounts. Borrower shall establish general
accounts with Lender in Borrower's names. Borrower and
any of its Affiliates, shareholders, directors,
officers, employees, agents or those Persons acting for
or in concert with Borrower shall, acting as Trustee
for Lender, receive any monies, checks, notes, drafts
or any other payment relating to and/or proceeds of
Collateral which come into their possession or under
their control and immediately upon receipt thereof,
shall remit the same or cause the same to be remitted
to Lender for deposit into Borrower's general accounts
with Lender. Borrower hereby agrees that, upon the
occurrence of any Event of Default, Lender shall have
the right, without the necessity or prior or
contemporaneous notice, to set-off against any portion
and/or all of the Liabilities all payments made to and
all funds deposited in Borrower's accounts of any kind,
or funds otherwise received by Lender. Borrower agrees
to pay fees, costs and expenses which Lender charges or
incurs in connection with opening, servicing, operating
and maintaining Borrower's accounts with Lender in
accordance with Lender's standard fee schedule, and
such amounts will constitute part of the Liabilities
and shall be secured by any Collateral.
3.4 APPLICATION OF PAYMENTS AND COLLECTIONS. Borrower
irrevocably waive the right to direct the application
of payments and collections received by Lender from or
on behalf of Borrower, and Borrower agrees that Lender
shall have the continuing, exclusive right to apply and
reapply any and all such payments and collections
against the Liabilities in such manner as Lender may
deem appropriate, notwithstanding any term or provision
hereof or any entry by Lender upon any of its books and
records. Unless Lender in its discretion determines
otherwise, amounts credited to the Loan Account shall
be applied to the principal balance of the Revolving
Loan, and when the outstanding principal balance of the
Revolving Loan is equal to zero (0), any amount
remaining unapplied shall be credited to Borrower's
demand deposit account with Lender. To the extent that
Borrower make a payment or payments to Lender or Lender
receives any
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payment or proceeds of the Collateral for Borrower's
benefit, which payment(s) or proceeds or any part
thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required
to be repaid to a trustee, receiver, custodian or any
other party under any bankruptcy act, state or federal
law, common law or equitable cause, then, to the
extent of such payment or proceeds received, the
Liabilities or part thereof intended to be satisfied
shall be revived and shall continue in full force and
effect, as if such payments or proceeds have not been
received by Lender.
3.5 STATEMENTS. Until such time as Lender shall have
rendered to Borrower written statements of account as
provided herein, the balance in Borrower's Loan
Account, as set forth on Lender's most recent
statement, shall be rebuttably presumptive evidence of
the amounts due and owing to Lender by Borrower. Not
less than ten (10) Business Days nor more than twenty
(20) Business Days after the final day of each calendar
month, Lender shall render to Borrower a statement
setting forth the balance of Borrower Loan Account,
including principal, interest, expenses and fees. Each
such statement shall be subject to subsequent
adjustment by Lender and Lender's right to reapply
payments in accordance with Section 3.4 of this
Agreement but shall, absent manifest errors or
omissions, be presumed correct and conclusively binding
upon Borrower and shall constitute an account stated
unless, within sixty (60) days after receipt of any
statement from Lender, Borrower shall deliver to Lender
written objection thereto specifying the error or
errors, if any, contained in such statement. Any such
objection by Borrower shall toll the sixty (60) day
period referred to in the preceding sentence during the
period reasonably required to resolve such objection.
4.0 WARRANTIES AND REPRESENTATIONS
4.1 GENERAL WARRANTIES AND REPRESENTATIONS. Borrower
warrants and represents to Lender that:
4.1.1 Borrower is a corporation duly organized
and validly existing and in good standing
under the laws of the state of its
incorporation, as represented at the
beginning of this Agreement, and is
qualified or licensed to do business in all
other countries, states and provinces where
the failure to be so qualified and/or
licensed would have a material adverse
effect on Borrower;
4.1.2 Borrower has not used, during the five (5)
year period preceding the date of this
Agreement, and does not intend to use any
other corporate or fictitious name;
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23
4.1.3 Borrower has the right and power and is
duly authorized and empowered to enter
into, execute, deliver and perform this
Agreement and the Ancillary Agreements;
4.1.4 The execution, delivery and performance by
Borrower of this Agreement and the
Ancillary Agreements shall not, by their
execution or performance, the lapse of
time, the giving of notice or otherwise,
constitute a violation of any applicable
law, rule or regulation or a breach of any
provision contained in any Borrower's
Certificate of Incorporation or By-Laws or
contained in any agreement, instrument,
indenture or other document to which any
Borrower is now a party or by which it is
bound;
4.1.5 Borrower's uses of the proceeds of any
advances and readvances made by Lender to
Borrower pursuant to this Agreement are,
and will continue to be, legal and proper
corporate uses (duly authorized by its
Board of Directors, if necessary pursuant
to applicable corporate law, rule or
regulation) and such uses are consistent
with all applicable laws and statutes, as
in effect as of the date hereof;
4.1.6 To the best of Borrower's knowledge,
Borrower has, and is current and in good
standing with respect to, all governmental
approvals, permits, certificates,
inspections, consents and franchises
necessary to conduct or to continue to
conduct its present or intended business as
heretofore conducted by it or in a manner
similar to that of the previous owner of
the business or of other Persons engaged in
the same or similar businesses and to own
or lease and operate its properties as now
owned or leased and operated by it or by
the previous owner of those properties;
4.1.7 To the best of Borrower's knowledge, none
of said approvals, permits, certificates,
consents or franchises contain any term,
provision, condition or limitation more
burdensome than such as are generally
applicable to Persons engaged in the same
or similar business as Borrower;
4.1.8 Borrower has capital sufficient to carry on
its business and transactions and all
businesses and transactions in which it is
about to engage and is solvent and able to
pay its debts as they mature, and Borrower
owns property the fair saleable value of
which is greater than the amount required
to pay Borrower's debts;
4.1.9 Except as set forth on SCHEDULE I, Borrower
has no litigation pending and no
Indebtedness (except trade payables arising
in the ordinary course of
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its business) and has not guarantied the
obligations of any other Person;
4.1.10 Borrower is not a party to any contract or
agreement or subject to any charge,
corporate restriction, judgment, decree or
order materially and adversely affecting
its business, property, assets, operations
or condition, financial or otherwise, and
Borrower is not a party to any labor
dispute; there are no strikes or walkouts
relating to any labor contracts and no such
contract is scheduled to expire prior to
the maturity of any portion of the Total
Facility;
4.1.11 Borrower has good, indefeasible and
merchantable title to and ownership of its
property free and clear of all liens,
claims, security interests and other
encumbrances other than any security
interests which may be granted to Lender
from time to time hereunder;
4.1.12 To the best of Borrower's knowledge,
Borrower is not in violation of any
applicable statute, rule, regulation or
ordinance, including those pertaining to
environmental pollution or disposal or OSHA
standards, of any governmental entity,
including, the United States of America,
any state, city, town, municipality, county
or any other jurisdiction, or any agency
thereof, in any respect materially and
adversely affecting the Borrower's
business, property, assets, operations or
condition, financial or otherwise;
4.1.13 Borrower is not in default under any
indenture, loan agreement, mortgage, lease,
trust deed, deed of trust or other similar
agreement relating to the borrowing of
monies to which it is a party or by which
it is bound;
4.1.14 The financial statements and loan
applications which Borrower has supplied
Lender prior to execution of this
Agreement, fairly present the assets,
liabilities and financial condition and
results of operations of Borrower and such
other Persons described therein as of the
dates thereof; there are no omissions or
other facts or circumstances which are
material to a complete and correct
understanding of the information set forth
therein; and there has been no material and
adverse change in the assets, liabilities
or financial or other condition of Borrower
since the dates of such documents; there
exist no equity or long term investments in
or outstanding advances to any Person
(except contractual deposits and expense
advances in each case made in the ordinary
course of business) not reflected in such
documents; there are no actions or
proceedings which are pending or, to the
best of Borrower's knowledge, threatened
against Borrower or any other Person which
might result in any material adverse
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25
change in Borrower's financial condition or
materially and adversely affect Borrower's
existing or anticipated operations, or its
existing or future assets;
4.1.15 Borrower has received no notice to the
effect that they are not in full compliance
with any of the requirements of ERISA and
the regulations promulgated thereunder and,
to the best of their knowledge there exists
no Reportable Event;
4.1.16 Borrower has filed all federal, state and
local tax returns (including, but not
limited to, income and payroll tax returns)
and other reports, or has been included in
consolidated returns or reports filed by an
Affiliate, which Borrower is required by
law, rule or regulation to file and all
Charges that are due and payable have been
paid; and
4.1.17 Borrower's execution and delivery of this
Agreement or any of the Ancillary
Agreements does not directly or indirectly
violate or result in a violation of Section
7 of the Securities Exchange Act of 1934,
as amended, or any regulations issued
pursuant thereto, including Regulation U,
G, T or X of the Board of Governors of the
Federal Reserve System (12 CFR 221, 207,
220 and 224, respectively) and Borrower
does not own or intend to purchase or carry
any "margin security," as defined in said
Regulations.
4.2 ENVIRONMENTAL WARRANTIES AND REPRESENTATIONS. Borrower
warrants and represents that (i) the operations of
Borrower have complied and currently comply with all
Environmental Laws; (ii) none of the operations of
Borrower is subject to or, to the best knowledge of
Borrower will be subject to any threatened or pending
judicial or administrative proceeding alleging the
violation of any Environmental Laws; (iii) none of the
operations of Borrower is the subject of a federal or
state investigation evaluating whether any remedial
action is needed to respond to a Release of any
Hazardous Material into the environment; (iv) Borrower
has not filed any notice under any federal or state law
indicating past or present treatment, storage or
disposal of a Hazardous Material or reporting a spill
or release of a Hazardous Material into the
environment; and (v) Borrower has no known liability in
connection with any Releases of any Hazardous Material
into the environment.
4.3 AUTOMATIC WARRANTY AND REAFFIRMATION OF WARRANTIES AND
REPRESENTATIONS. Each request for any loan or advance
made by Borrower pursuant to this Agreement or the
Ancillary Agreements shall constitute (i) an automatic
warranty
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26
and representation by Borrower to Lender that there
does not then exist a Default or an Event of Default
and (ii) a reaffirmation as of the date of said request
of all of the representations and warranties of
Borrower contained in this Agreement or the Ancillary
Agreements.
4.4 SURVIVAL OF WARRANTIES AND REPRESENTATIONS. Borrower
covenants, warrants and represents to Lender that all
representations and warranties of Borrower contained in
this Agreement and the Ancillary Agreements shall be
true at the time of Borrower's execution of this
Agreement and the Ancillary Agreements, and shall
survive the execution, delivery and acceptance thereof
by the parties thereto and the closing of the
transactions described therein or related thereto.
Borrower and Lender expressly agree that any
misrepresentation or breach of any representation or
warranty whatsoever contained in this Agreement or the
Ancillary Agreements shall be deemed material.
5.0 COVENANTS AND CONTINUING AGREEMENTS
5.1 AFFIRMATIVE COVENANTS. Borrower covenants that it
shall:
5.1.1 Comply with the following financial
covenants at all relevant times during the
term of this Agreement:
5.1.1.1 Maintain at all times a ratio
of Quick Assets to the Maximum
Amount of the Revolving Loan
facility of not less than 1.7
to 1.0;
5.1.1.2 Maintain Operating Income of
not less than $1.00, measured
on a year-to-date basis at the
end of each fiscal quarter of
Borrower; and
5.1.1.3 Maintain Net Income of not
less than $1.00, measured at
the end of each fiscal year of
Borrower;
In the event Borrower shall fail at any time to
maintain the ratio of Quick Assets to the Maximum
Amount as set forth in Section 5.1.1.1 above, Borrower
shall giant to Lender a continuing, first priority
security interest in all assets of Borrower to secure
the Liabilities, but such failure shall not constitute
a Default or an Event of Default. In connection with
this provision Borrower shall deliver to Lender at the
time of closing fully executed Uniform Commercial Code
financing statements, and hereby authorizes Lender to
file said financing statements with the relevant
official offices upon the failure of Borrower to
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maintain the financial ratio set forth in Section
5.1.1.1 above.
5.1.2 Furnish Lender with the following information:
5.1.2.1 As soon as available, but not later than
forty-five (45) days after the end of
each fiscal quarter, a copy of Borrower's
quarterly 10-Q Report filed with the
Securities and Exchange Commission, and
accompanied by a certificate of the chief
financial officer of Borrower stating (i)
that such financial statements have been
prepared on a consistent basis and
reflect all adjustments (other than
year-end and audit adjustments) necessary
to fairly present the financial condition
of the Borrower for the periods
indicated, (ii) whether he has knowledge
of any Default or Event of Default
hereunder and, if so, stating in
reasonable detail the facts with respect
thereto, and (iii) calculating Borrower's
compliance with the financial covenants
set forth in Section 5.1.1 hereof.
5.1.2.2 As soon as available, but not later than
ninety (90) days after the end of each
fiscal year of Borrower, a copy of the
annual audited financial statements
reviewed by independent certified public
accountants selected by Borrower and
reasonably acceptable to Lender, which
annual financial statements shall include
the balance sheet of Borrower on a
consolidated basis as at the end of such
fiscal year, the related statements of
income, retained earnings and cash flows,
and notes of Borrower for the fiscal year
then ended, and appropriate notes to
same, all in reasonable detail and
consistent with the form and detail
reasonably requested by Lender, and all
prepared in accordance with GAAP,
together with a certificate of the chief
financial officer of Borrower stating
that such financial statements have been
prepared in accordance with GAAP,
consistently applied, and whether or not
he has knowledge of any failure of
Borrower to comply with the financial
covenants set forth in Section 5.1.1
hereof; and, if so, stating in reasonable
detail the facts with respect thereto;
5.1.2.3 As soon as available, but not later than
five (5) days after filing, copies of all
financial information, proxy materials
and other information and reports, if
any, filed by Borrower with the
Securities and Exchange Commission.
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5.1.2.4 As soon as available, but not later than
five (5) days after Borrower's receipt
thereof, a copy of any "management
letter" received from Borrower's
certified public accountant.
5.1.2.5 Such other data and information
(financial and other) as Lender, from
time to time, may reasonably request,
bearing upon or related to Borrower's
financial condition and/or results of
operations;
5.1.3 Maintain product liability insurance in the
amount of $7,000,000 per occurrence, as presently
maintained by Borrower;
5.1.4 At its sole cost and expense, keep and maintain
Borrower's property insured for its full
insurable value against loss or damage by fire,
theft, explosion, sprinklers and all other
hazards and risks ordinarily insured against by
other owners or users of such properties in
similar businesses, and notify Lender promptly of
any event or occurrence causing a material loss
or decline in value of its property and the
estimated (or actual, if available) amount of
such loss or decline;
5.1.5 Notify Lender in writing, promptly upon, but in
no event later than five (5) Business Days after
an officer of Borrower obtains knowledge
thereof, of the occurrence of any event which
constitutes a Default or an Event of Default,
together with a detailed statement by a
responsible officer of Borrower of the steps
being taken by Borrower to cure the effect of
such event;
5.1.6 Notify Lender in writing, promptly upon any
Borrower's learning of any litigation affecting
any Borrower, whether or not the claim is
considered by Borrower to be covered by
insurance, and of the institution of any suit or
administrative proceeding which may materially
and adversely affect the property operations,
financial condition or business of Borrower;
5.1.7 Use Lender as its exclusive depository and
disbursement bank for all of its deposit,
investment, trust and other accounts and cash
management services;
5.1.8 Notify Lender in writing within thirty (30) days
of any of the following:
5.1.8.1 the receipt by Borrower of any notice
from a governmental entity alleging the
occurrence of a Reportable Event with
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respect to any pension plan governed by
ERISA (such notice shall contain the
statement of the chief financial officer
of Borrower setting forth details as to
such Reportable Event and the action which
Borrower proposes to take with respect
thereto and a copy, as soon as available,
of the notice of such Reportable Event to
the Pension Benefit Guaranty Corporation);
5.1.8.2 the commencement of proceedings to
terminate any such plan;
5.1.8.3 the appointment of a trustee by an
appropriate United States District Court
to administer any such plan, or
5.1.8.4 the institution of any proceedings by the
Pension Benefit Guaranty Corporation to
terminate any such plan or to appoint a
trustee to administer any such plan; and
5.1.9 Comply in all material respects with all applicable
laws, rules, regulations, and orders unless contested
in good faith and by appropriate proceedings otherwise
permitted by law or this Agreement, and with respect to
which appropriate reserves are maintained.
5.2 NEGATIVE COVENANTS. Borrower covenants that it shall not:
5.2.1 Merge or consolidate with or acquire any Person or
acquire substantially all the assets of any Person
unless Borrower is the surviving entity in such
transaction, and no Default or Event of Default has
occurred and is continuing or would occur after giving
effect to such transaction;
5.2.2 Other than in the ordinary course of its business, make
any investment in the securities of any Person without
fifteen (15) days prior written notice to Lender;
5.2.3 Declare or pay (or cause to be declared or paid)
dividends upon the Stock, or make (or cause to be made)
any distribution of any Borrower's property or assets
or make (or cause to be made) any loans, advances
and/or extensions of credit to any Person, including,
any Affiliate, officer or employee of any Borrower;
5.2.4 Make (or cause to be made) any loans or other advances
of money (other than salary) to officers, directors,
shareholders or Affiliates of any Borrower; provided
that any Borrower may make reasonable advances of
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money to its employees in payment of reasonable
expenses incurred by such employees in the ordinary
course of business;
5.2.5 Redeem, retire, purchase or otherwise acquire, directly
or indirectly, the Stock of Borrower, or make (or cause
to be made) any material change in Borrower's capital
structure or in any of its business objectives,
purposes and operations which might reasonably be
expected to adversely affect the repayment of the
Liabilities;
5.2.6 Enter into, or be a party to, any transaction with any
Affiliate or shareholder of Borrower, except in the
ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and
reasonable terms which are fully disclosed to Lender
and are no less favorable to Borrower than would obtain
in a comparable arm's length transaction with a Person
not an Affiliate or shareholder of Borrower;
5.2.7 Enter into any transaction which materially and
adversely affects Borrower's ability to repay
Indebtedness for borrowed money;
5.2.8 Guaranty or otherwise, in any way, become liable with
respect to the obligations or liabilities of any Person
except by endorsement of instruments or items of
payment for deposit to the general account of Borrower
or for delivery to Lender on account of the
Liabilities;
5.2.9 Except as otherwise expressly permitted herein or in
the Ancillary Agreements, pledge, mortgage, grant a
security interest in or, encumber, assign, sell, lease
or otherwise dispose of or transfer, whether by sale,
merger, consolidation, liquidation, dissolution, or
other transactions not in Borrower's ordinary course of
business, any of Borrower's assets; provided, however,
Borrower may lease personal property or undertake
purchase money indebtedness to purchase personal
property so long as any lien granted is limited to the
specific personal property so acquired, the aggregate
of said leases and indebtedness does not exceed
$100,000 at any time outstanding, and the transaction
does not otherwise violate any other provision hereof;
5.2.10 Incur any Indebtedness for borrowed money (other than
the Liabilities) from any Person;
5.2.11 Change its name, business structure or identity, or add
any new fictitious name;
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5.2.12 Engage in any line of business materially different
from that previously engaged in by Borrower;
5.2.13 Change or relocate its chief executive office or
principal place of business; and
5.3 PAYMENT OF CHARGES. Subject to the provisions of Section 5.4 of
this Agreement, Borrower shall pay promptly when due all of the
Charges. In the event Borrower, at any time or times hereafter,
shall fail to pay the Charges or to promptly obtain the
satisfaction of such Charges under circumstances where said Section
5.4 does not relieve Borrower from doing so, Borrower shall so
advise Lender thereof in writing and Lender may, without waiving or
releasing any obligation or liability of Borrower hereunder or any
Default or Event of Default, in its sole and absolute discretion,
at any time or times thereafter, make such payment or any part
thereof, (but shall not be obligated so to do) or obtain such
satisfaction and take any other action with respect thereto which
Lender deems advisable. All sums so paid by Lender and any
expenses, including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, shall be payable, upon
demand, by Borrower to Lender and shall be additional Liabilities
hereunder secured by the Collateral.
5.4 CONTESTING CHARGES. Notwithstanding anything to the contrary
herein, Borrower may dispute any Charges without prior payment
thereof, even if such non-payment may cause a lien to attach to any
Borrower's assets, provided that Borrower shall give Lender notice
of such dispute and shall be diligently contesting the same in good
faith, with due diligence and by an appropriate proceeding and
there is no danger of a loss or forfeiture of any of Borrower's
assets, and provided further that, if the same are in excess of
Twenty-Five Thousand Dollars ($25,000) in the aggregate at any time
or times hereafter, Borrower shall give Lender such additional
collateral and assurances as Lender, in its sole discretion, deems
necessary under the circumstances.
5.5 INSURANCE: PAYMENT OF PREMIUMS. All policies of insurance required
hereunder shall be in form and with insurers recognized as adequate
by prudent business persons and all such policies shall be in such
amounts as may be satisfactory to Lender. Borrower shall deliver to
Lender the original (or certified copy) of each policy of insurance
and evidence of payment of all premiums therefor. [Such policies of
insurance shall contain an endorsement, in form and substance
acceptable to Lender, naming Lender as additional insured or loss
payee. Such endorsement shall provide that the insurance companies
will give Lender at least thirty (30) days' prior notice before any
such policy shall be altered or canceled
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and that no act or default of Borrower or any other Person shall
affect the right of Lender to recover under such policy in case of
loss or damage.] If Borrower shall fail to obtain or maintain any
of the policies required by this Agreement or to pay any premium
relating thereto, then Lender, without waiving or releasing any
obligation or default by Borrower hereunder, may (but shall be
under no obligation to do so) obtain and maintain such policies of
insurance and pay such premium and take any other action with
respect thereto which Lender deems advisable. All sums so disbursed
by Lender, including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, shall be payable, on
demand, by Borrower to Lender and shall be additional Liabilities
hereunder secured by the Collateral.
5.6 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF AGREEMENT. Except as
otherwise expressly provided for in this Agreement and in the
Ancillary Agreements, no termination or cancellation (regardless of
cause or procedure) of this Agreement or the Ancillary Agreements
shall in any way affect or impair the powers, obligations, duties,
rights, and liabilities of Borrower or Lender in any way or respect
relating to any transaction or event occurring prior to such
termination or cancellation, any Collateral, or any of the
undertakings, agreements, covenants, warranties and representations
of Borrower or Lender contained in this Agreement or the Ancillary
Agreements. All such undertakings, agreements, covenants,
warranties and representations shall survive such termination or
cancellation.
6.0 EVENTS OF DEFAULT: RIGHTS AND REMEDIES ON EVENTS OF DEFAULT
6.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default:
6.1.1 Borrower fails to pay the Liabilities within five (5)
days of the date such Liabilities are due and payable
or declared due and payable; or Borrower is in default
in the payment of any Indebtedness for borrowed money
exceeding $100,000 in the aggregate, after any
applicable grace period; or
6.1.2 Borrower fails or neglect to perform, keep or observe
any other term, provision, condition or covenant
contained in this Agreement (other than Section
5.1.1.1) or in the Ancillary Agreements, which is
required to be performed, kept or observed by Borrower
and the same is not cured to Lender's satisfaction
within ten (10) days after Lender gives Borrower
written notice identifying such default; or
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6.1.3 A default shall occur by any Borrower under any
agreement, document or instrument, other than this
Agreement or any of the Ancillary Agreements, now or
hereafter existing, to which Borrower is a party, but
only if that default has a material effect upon the
operation of Borrower's business;
6.1.4 An event of default shall occur and be continuing after
any applicable cure period under any mortgage,
assignment of rents and leases, assignment of
beneficial interest in land trust or any other security
document entered into between Lender and any Person
which secures the Liabilities;
6.1.5 Any statement, warranty, representation, report,
financial statement, or certificate made or delivered
by any Borrower, or any of its officers, employees or
agents, to Lender shall not have been true and correct
in any material respect when made; or
6.1.6 There shall occur any material uninsured damage to, or
loss, theft, or destruction of, any Collateral in which
Borrower shall have granted to Lender a security
interest hereunder; or
6.1.7 Any of Borrower's assets are attached, seized, levied
upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors and
the same is not cured within thirty (30) days
thereafter; an application is made by any Person other
than Borrower for the appointment of a receiver,
trustee, or custodian for any of Borrower's assets and
the same is not dismissed within thirty (30) days after
the application therefor; or
6.1.8 An application is made by any Borrower for the
appointment of a receiver, trustee or custodian for any
of Borrower's assets; a petition under any section or
chapter of the Bankruptcy Code or any similar law or
regulation is filed by any Borrower; any Borrower makes
an assignment for the benefit of its creditors or any
case or proceeding is filed by any Borrower for its
dissolution, liquidation, or termination; any Borrower
ceases to conduct its business as now conducted or is
enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its
business affairs; or
6.1.9 A petition under any section or chapter of the
Bankruptcy Code or any similar law or regulation is
filed against any Borrower and is not
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dismissed within thirty (30) days after filing; or any
case or proceeding is filed against any Borrower for
its dissolution, liquidation or termination and such
case and proceeding is not dismissed within thirty (30)
days; or
6.1.10 A notice of lien, levy or assessment is filed of record
with respect to all or any substantial portion of any
Borrower's assets by the United States, or any
department, agency or instrumentality thereof, or by
any state, county, municipal or other governmental
agency, including, the Pension Benefit Guaranty
Corporation, or any taxes or debts owing to any of the
foregoing becomes a lien or encumbrance upon or any of
Borrower's assets and such lien or encumbrance is not
released within thirty (30) days after its creation; or
6.1.11 Judgment in an amount exceeding $100,000 is rendered
against any Borrower, and becomes final and
nonappealable, for any amount and Borrower fails to pay
such judgment within sixty (60) days of the due date
thereof; or
6.1.12 Any Borrower becomes insolvent or fails generally to
pay its debts as they become due; or
6.1.13 Any of the following events shall occur or exist with
respect to Borrower or an Affiliate of any Borrower
under ERISA:
6.1.13.1 the happening of a Reportable Event with
respect to any pension plan governed by ERISA;
6.1.13.2 the termination of any pension plan, or the
withdrawal from a multi-employer pension plan
governed by ERISA;
6.1.13.3 the appointment of a trustee by an appropriate
United States District Court to administer any
pension plan;
6.1.13.4 the institution of any proceedings by the
Pension Benefit Guaranty Corporation to
terminate any pension plan (other than a
multi-employer plan) or to appoint a trustee
to administer any such plan, or
6.1.13.5 a Prohibited Transaction, as defined in ERISA,
shall occur; and in each such case, Lender
determines that such event or condition could
subject Borrower to a tax, penalty or other
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liability which would materially,
adversely affect the financial
condition of Borrower taken as a
whole; or
6.1.14 There is a substantial change in the
existing or prospective business,
properties, operations or condition,
financial or otherwise, of Borrower which
Lender in good faith determines to be
materially adverse.
6.2 ACCELERATION OF THE LIABILITIES. Upon and after the
occurrence and during the continuance of an Event of
Default, all of the Liabilities may, at the option of
Lender and without demand, notice, or legal process of
any kind, be declared, and immediately shall become,
due and payable.
6.3 REMEDIES. Upon and after the occurrence and during the
continuance of an Event of Default, if Borrower shall
have granted to Lender a security interest in all
assets of Borrower hereunder, Lender shall have the
following rights and remedies:
6.3.1 All of the rights and remedies of a secured
party under the Code or other applicable
law, all of which rights and remedies shall
be cumulative, and none exclusive, to the
extent permitted by law, in addition to any
other rights and remedies contained in this
Agreement and in all of the Ancillary
Agreements;
6.3.2 The right to (i) peacefully enter upon the
premises of Borrower or any other place or
places where any Collateral is located and
kept, without any obligation to pay rent to
Borrower (if Borrower own the place or
places where any Collateral is kept),
through self-help and without judicial
process or first obtaining a final judgment
or giving Borrower notice and opportunity
for a hearing on the validity of Lender's
claim, and remove any Collateral from such
premises and places to the premises of
Lender or any agent of Lender, for such
time as Lender may require to collect or
liquidate any Collateral, and/or (ii)
require Borrower to assemble and deliver
any Collateral to Lender at a place to be
designated by Lender;
6.3.3 The right to sell or to otherwise dispose
of all or any Collateral in its then
condition, or after any further
manufacturing or processing thereof (if
applicable), at public or private sale or
sales, with such notice as provided in
Section 8.10 of this Agreement, in lots or
in bulk, for cash or on credit, all as
Lender, in its sole and absolute
discretion, may deem advisable. At any such
sale or sales of the Collateral, the
Collateral need
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not be in view of those present and
attending the sale, nor at the same
location at which the sale is being
conducted. Lender shall have the right to
conduct such sales on any Borrower's
premises or elsewhere and shall have the
right to use any Borrower's premises
without charge for such sales for such
time or times as Lender may see fit.
Lender is hereby granted a license or
other right to use, without charge, any
Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets,
trade names, trademarks and advertising
maker, or any property of a similar
nature, as it pertains to the Collateral,
in advertising for sale and selling any
Collateral and any Borrower's rights under
all licenses and all franchise agreements
shall inure to Lender's benefit. Lender
may purchase all or any part of the
Collateral at public or, if permitted by
law, private sale and, in lieu of actual
payment of such purchase price, may set
off the amount of such price against the
Liabilities. The proceeds realized from
the sale of any Collateral shall be
applied first to the reasonable costs,
expenses and attorneys' and paralegal fees
and expenses incurred by Lender for
collection and for acquisition,
completion, protection, removal, storage,
sale and delivery of the Collateral;
second to interest due upon any of the
Liabilities; and third to the principal of
the Liabilities. If any deficiency shall
arise, Borrower shall remain liable to
Lender therefor.
6.4 NOTICE. Any notice required to be given by Lender of a
sale, lease, other disposition of the Collateral or any
other intended action by Lender, which is deposited in
the United States mail, postage prepaid and duly
addressed to Borrower, at the address set forth in
Section 8.10 of this Agreement, ten (10) days prior to
such proposed action, shall constitute commercially
reasonable and fair notice thereof to Borrower.
7.0 CONDITIONS PRECEDENT TO INITIAL FUNDING AND ADDITIONAL ADVANCES
7.1 CONDITIONS TO ALL ADVANCES. In addition to those
conditions set forth in Section 7.2 regarding the
initial advances and funding of the Loans, and
notwithstanding other provisions in this Agreement
concerning the making and the funding of the Loans,
Lender's obligations under this Agreement, including
Lender's obligations (if any) to make or consider any
and all requests for advances under the Revolving Loan
shall constitute a representation to Lender that each
of the following conditions have been met or satisfied
as of the date of the request:
7.1.1 All of the warranties and representations
of Borrower contained herein
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shall be true and correct;
7.1.2 No material adverse change in the financial
condition of Borrower has occurred since
the date of this Agreement;
7.1.3 No Default or Event of Default currently
exists and the granting of the request by
the Lender will not give rise to a Default
or an Event of Default;
7.1.4 No litigation is pending or threatened
against any Borrower which, if adversely
determined, would have a material adverse
effect on the financial operations of
Borrower taken as a whole; and
7.1.5 Borrower has provided Lender with all
certificates, financial statements and
other information and documentation which
Lender has requested pursuant to the terms
of this Agreement.
7.2 CONDITIONS TO INITIAL ADVANCES UNDER THE LOANS. In
addition to those conditions set forth in other
portions of this Agreement, Lender's obligation to
perform any of its obligations under this Agreement or
the Ancillary Agreements, including its obligation to
advance any funds to Borrower, is conditioned upon the
following:
7.2.1 FINANCIAL CONDITION. No material adverse
change in the business, property, assets,
operations or condition, financial or
other, of Borrower shall have occurred
since September 30, 1996.
7.2.2 FEES. Borrower shall have paid the closing
fee, recording fees, attorneys' fees and
all other costs, fees and expenses which it
owes Lender in connection with the
negotiation, execution and origination of
the transactions contemplated herein, which
sum shall not exceed $5,000 in the
aggregate, plus attorneys fees.
7.2.3 ANCILLARY AGREEMENTS. Borrower and other
necessary parties shall have executed all
Ancillary Agreements, including the Notes
and, with respect to any Letters of Credit,
Lender's customary letter of credit
application form, properly completed, which
Lender shall reasonably require.
7.2.4 FINANCIAL STATEMENTS. Borrower shall have
delivered to Lender a copy of Borrower's
fourth quarter financial statements.
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7.2.5 FIELD AUDIT. Lender shall have completed a
field audit of Borrower and the results of
such field audit shall be satisfactory to
Lender.
7.2.6 CLOSING CERTIFICATE. The president of
Borrower shall have provided Lender with a
certificate stating, in form acceptable to
Lender, that:
7.2.6.1 As of the date of the
transactions contemplated by
this Agreement, no Default or
Event of Default has occurred;
7.2.6.2 No litigation, investigation,
or proceeding, except as
disclosed in this Agreement,
is pending or threatened;
7.2.6.3 The representations and
warranties contained in this
Agreement are true and
correct;
7.2.6.4 The Borrower is in compliance
with all of the terms and
provisions of this Agreement;
and
7.2.6.5 Each of the conditions
described in this Section 7
have been complied with and/or
satisfied.
7.2.7 CORPORATE MATTERS. Borrower shall have
provided Lender with their respective
certified Articles or Certificates of
Incorporation, By-Laws, Certificates of
Good Standing and resolutions acceptable in
form and in substance to Lender.
7.2.8 OPINION OF COUNSEL. Borrower's counsel
shall have provided Lender with an opinion
letter concerning the validity and
enforceability of all provisions of this
Agreement and the Ancillary Agreements
which is acceptable in form and in
substance to Lender.
7.2.9 ADDITIONAL DOCUMENTS. Borrower shall have
provided Lender with such other
certificates and documents as Lender shall
require.
8.0 MISCELLANEOUS
8.1 MODIFICATION OF AGREEMENT: SALE OF INTEREST. This
Agreement and the Ancillary Agreements may not be
modified, altered or amended, except by an agreement in
writing signed by Borrower and Lender. Borrower may not
sell, assign or transfer this Agreement, or the
Ancillary Agreements or any portion hereof or thereof,
including, Borrower's right, title, interest, remedies,
powers, and/or
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duties hereunder or thereunder. Borrower hereby consent
to Lender's participation, sale, assignment, transfer
or other disposition, at any time or times hereafter,
of this Agreement, or the Ancillary Agreements, or of
any portion hereof or thereof, including, Lender's
right, title, interest, remedies, powers, and/or duties
hereunder or thereunder.
8.2 ATTORNEYS' FEES AND EXPENSES; LENDER'S OUT-OF-POCKET
EXPENSES; AUDIT FEES. If, at any time or times, whether
prior or subsequent to the date hereof, and regardless
of the existence of a Default or an Event of Default,
Lender employs counsel for advice or other
representation or incurs legal and/or other costs and
expenses in connection with:
8.2.1 The preparation, negotiation and execution
of this Agreement, all Ancillary
Agreements, any amendment or modification
of this Agreement or the Ancillary
Agreements or any sale or attempted sale
of any interest herein to a Participant;
or
8.2.2 Any litigation, contest, dispute, suit,
proceeding or action (whether instituted by
Lender, any Borrower or any other Person)
in any way relating to any Collateral, this
Agreement, the Ancillary Agreements or any
Borrower's affairs; or
8.2.3 Any attempt to enforce any rights of Lender
or any Participant against any Borrower or
any other Person which may be obligated to
Lender by virtue of this Agreement or the
Ancillary Agreements; or
8.2.4 Any attempt to inspect, verify, protect,
collect, see, liquidate or otherwise
dispose of any Collateral; or
8.2.5 Any audit of any Collateral;
then, in any of the foregoing events, the fees arising
from such services and all reasonably incurred
expenses, costs and charges in any way or respect
arising in connection with or relating to any of the
events or actions described in this Section 8.2 shall
be payable, on demand, by Borrower to Lender and shall
be additional Liabilities hereunder; provided,
however, that the fees, costs and expenses in
connection with the preparation, negotiation and
execution of this Agreement and the initial field
audit shall not exceed $5,000 plus attorneys fees, and
with respect to subsequent field audits will not
exceed $1,500 per audit. Without limiting the
generality of the foregoing, such expenses, costs,
charges and fees may include legal fees, costs and
expenses; paralegals' fees, costs and
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expenses; accountants' and expert witness' fees, costs
and expenses; court costs, fees and expenses;
photocopying and duplicating expenses; court reporter
fees, costs and expenses; long distance telephone
charges; air express charges; telegram charges;
secretarial overtime charges; and expenses for travel,
lodging and food paid or incurred in connection with
the performance of such legal services.
8.3 NO WAIVER BY LENDER. Lender's failure, at any time or
times hereafter, to require strict performance by
Borrower of any provision of this Agreement shall not
constitute a waiver, or affect or diminish any right of
Lender thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by
Lender of a Default or Event of Default by Borrower
under this Agreement or the Ancillary Agreements shall
not suspend, constitute a waiver of or affect any other
Default or Event of Default by Borrower under this
Agreement or Ancillary Agreements, whether the same is
prior or subsequent thereto and whether of the same or
of a different type. None of the undertakings,
agreements, warranties and covenants of Borrower
contained in this Agreement or the Ancillary Agreements
and no Default or Event of Default by the Borrower
under this Agreement or the Ancillary Agreements shall
be deemed to have been suspended or waived by Lender,
unless such suspension or waiver is by an instrument in
writing signed by an officer of Lender and directed to
Borrower specifying such suspension or waiver.
8.4 SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such
provision or the remaining provisions of this
Agreement.
8.5 PARTIES; ENTIRE AGREEMENT. This Agreement and the
Ancillary Agreements shall be binding upon and inure to
the benefit of the successors and assigns of Borrower
and Lender. Borrower's successors and assigns shall
include, without limitation, a trustee, receiver or
debtor-in-possession of or for Borrower. Nothing
contained in this Section 8.5 shall be deemed to modify
Section 12.2 of this Agreement. This Agreement is the
complete statement of the agreement by and between
Borrower and the Lender and supersedes all prior
negotiations, understandings and representations
between them with respect to the subject matter of this
Agreement.
8.6 CONFLICT OF TERMS. The provisions of the Ancillary
Agreements are incorporated in this Agreement by this
reference thereto. Except as otherwise provided in this
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Agreement and except as otherwise provided in the
Ancillary Agreements by specific reference to the
applicable provision of this Agreement, if any
provision contained in this Agreement is in conflict
with, or inconsistent with, any provision in the
Ancillary Agreements, the provision contained in this
Agreement shall govern and control.
8.7 WAIVERS BY BORROWER. Except as otherwise provided for
in this Agreement, Borrower waives (i) presentment,
demand and protest, notice of protest, notice of
presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or
all commercial paper, contract rights, documents,
instruments, chattel paper and guaranties at any time
held by Lender on which Borrower may in any way be
liable and hereby ratify and confirm whatever Lender
may do in this regard; (ii) all rights to notice and a
hearing prior to Lender's taking possession or control
of, or to Lender's replevy, attachment or levy upon,
any Collateral or any bond or security which might be
required by any court prior to allowing Lender to
exercise any of Lender's remedies; and (iii) the
benefit of all valuation, appraisement, extension and
exemption laws. Borrower acknowledges that they have
been advised by counsel of its choice with respect to
this Agreement and the transactions evidenced by this
Agreement.
8.8 GOVERNING LAW. This Agreement shall be interpreted, and
the rights and liabilities of the parties hereto
determined, in accordance with the internal laws (as
opposed to conflicts of law provision) of the State of
Illinois.
8.9 FORUM: SERVICE OF PROCESS. AS PART OF THE CONSIDERATION
FOR NEW VALUE THIS DAY RECEIVED, BORROWER HEREBY
CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN XXXX COUNTY, ILLINOIS AND
WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
BORROWER, AND CONSENT THAT ALL SUCH SERVICE OF PROCESS
BE MADE BY MESSENGER OR REGISTERED MAIL DIRECTED TO
BORROWER AT THE ADDRESS STATED IN SECTION 8.10 OF THIS
AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON THE EARLIER OF DATE OF DELIVERY IF SENT
BY MESSENGER OR THREE (3) DAYS AFTER THE SAME SHALL
HAVE BEEN POSTED TO BORROWER'S ADDRESS AS SET FORTH
BELOW. BORROWER WAIVES TRIAL BY JURY AND WAIVE ANY
OBJECTION WHICH BORROWER MAY HAVE BASED ON IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING INSTITUTED HEREUNDER OR RELATED IN ANY WAY
TO THIS AGREEMENT OR THE ANCILLARY AGREEMENTS AND
CONSENT TO
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THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT. NOTHING CONTAINED IN
THIS SECTION 8.9 SHALL AFFECT THE RIGHT OF LENDER TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF LENDER TO BRING ANY ACTION
OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE
COURTS OF ANY OTHER JURISDICTION.
8.10 NOTICE. Except as otherwise provided herein, any notice
required hereunder shall be in writing and shall be
deemed to have been validly served, given or delivered
(i) three (3) business days after deposit in the United
States mails, with proper postage prepaid, certified or
registered mail, (ii) upon receipt when personally
delivered or delivered by reputable overnight courier,
or (iii) when sent by confirmed facsimile transmission,
in each case addressed to the party to be notified as
follows:
If to Lender, at:
LaSalle Bank NI
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telefax: (000) 000-0000
with a copy (which copy shall not constitute notice)
to:
Xxxxx & Xxxxxxx
Xxx XXX Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Telefax: (000) 000-0000
If to Borrower, at
Sabratek Corporation
0000 Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxxx,
Vice President
Telefax: (000) 000-0000
(36)
43
with a copy (which copy shall not constitute notice)
to:
Xxxx & Xxxxxxx
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Telefax: (000) 000-0000
or to such other address as each party may designate
for itself by like notice.
8.11 DELEGATION OF DUTIES AND GRANT OF AUTHORITY. Lender may
perform any of its duties under this Agreement or
under the Ancillary Agreements by or through agents or
attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such
duties. In such capacity, such agent or
attorney-in-fact shall have the right to undertake,
exercise and enforce, on behalf of Lender, all duties,
rights, demands and acts of discretion of Lender
provided for in, or in any way related to, this
Agreement or the Ancillary Agreements and to receive
all payments, notices and requests from Borrower on
behalf of and for the account of Lender that are
provided for in, or in any way related to, this
Agreement or the Ancillary Agreements to "Lender"
shall be deemed to mean a reference to such agent or
attorney in fact, as agent for Lender, as well as a
reference to Lender.
8.12 TRANSACTION EXPENSES. In addition to the payment of the
attorneys' fees referred to in Section 8.2 of this
Agreement, Borrower agrees to pay all of Lender's
expenses, not to exceed $5,000 plus attorneys fees,
incurred in connection with the preparation,
negotiation, execution and implementation of this
Agreement and the Ancillary Agreements, including audit
fees and document search fees. Lender shall deduct
these expenses from Borrower's loan proceeds at the
time of closing. Payment of such expenses shall not be
credited to any of the Liabilities.
8.13 SECTION TITLES. The section titles and Table of
Contents contained in this Agreement are and shall be
without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between
the parties hereto.
8.14 RELEASE BY BORROWER. In connection with any repayment
of all of the Liabilities to Lender, Borrower agrees to
give to Lender a release of all claims Borrower may
have against Lender, the form, substance and content of
which release shall be satisfactory to Lender in its
sole discretion.
(37)
44
8.15 PARTICIPATIONS. Lender shall be permitted to sell a
participation in the Total Facilities hereunder on
terms satisfactory to such parties. Borrower shall
cooperate with any credit investigations and reviews
undertaken by such Participant.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the day and year specified at the beginning hereof.
SABRATEK CORPORATION
By: /s/ Xxxxx Xxxxxxxxx
-----------------------
Its: V.P. Finance
---------------------
LASALLE BANK NI
By: [SIG]
----------------------
Its: Vice President
---------------------
(38)
45
EXHIBIT A
REVOLVING NOTE
$8,000,000.00 March 26, 0000
Xxxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, Sabratek Corporation, a Delaware corporation
("Borrower"), unconditionally promises to pay to the order of LaSalle Bank NI
("Lender"), at its offices at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, or
at such other place or places as Lender may from time to time designate in
writing, an amount not to exceed the principal sum of EIGHT MILLION DOLLARS
($8,000,000.00), together with interest payable on the principal balance from
time to time remaining unpaid. Notwithstanding anything to the contrary
contained herein, all unpaid principal, interest and other costs, charges or
amounts owing hereunder shall be due and shall be paid on April 30, 1999.
Principal and interest payments shall be due and payable as set
forth in that certain Credit Agreement dated March 26, 1997 by and among
Borrower and Lender (the "Loan Agreement"), at Lender's offices or wherever
Lender shall direct in writing. All terms of the Loan Agreement are hereby
incorporated herein. The Loan Agreement, among other things, contains provisions
for default, acceleration of amounts owing in certain circumstances, and
requests for advances under this instrument. Capitalized terms used herein and
not otherwise defined shall have the meanings given them in the Loan Agreement.
Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be at a varying rate per annum equal to
the Prime Rate. Upon and during the continuance of an Event of Default, interest
shall be at a varying rate per annum equal to three percent (3%) plus the Prime
Rate. The "Prime Rate" shall mean the interest rate per annum from time to time
announced and made effective by Lender at its office in Chicago, Illinois, as
the Prime Rate, or, as the case may be, the base, reference or other similar
rate then designated by Lender for commercial loan reference purposes, it being
understood that such rate is a reference rate, not necessarily the lowest
interest rate charged by Lender or others to their respective customers, and as
established from time to time serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto.
Borrower warrants and represents to Lender that Borrower has used
and will continue to use the loans and advances represented by this Note solely
for proper business purposes, and consistent with all applicable laws and
statues. Borrower further warrants and represents to Lender and covenants with
Lender that Borrower is not in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U
issued by the Board of Governors of the Federal Reserve System), and no part of
the loan represented by this Note has been or will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
Upon and after the occurrence and during the continuance of an
Event of Default under
A-1
46
the Loan Agreement (a) at the option of Lender, the entire unpaid amount of all
the Liabilities shall become immediately due and payable without demand, notice
or legal process of any kind; and (b) Lender may, at its option, without demand,
notice or legal process of any kind, exercise any and all rights and remedies
granted to it by the Loan Agreement or by any Ancillary Agreement or any other
rights and remedies available to it under the Code or other law of the State of
Illinois.
Upon and after the occurrence of and during the continuance of an
Event of Default, Borrower waives the benefit of any law that would otherwise
restrict or limit Lender in the exercise of its right, which is hereby
acknowledged, to set off at any time hereafter any indebtedness owing from
Lender to Borrower. Borrower does hereby assign and transfer to Lender any and
all cash, negotiable instruments, documents of title, chattel paper, securities,
certificates of deposit, deposit accounts, other cash equivalents and other
assets of Borrower in the possession or control of Lender for any purpose,
including application to the satisfaction of any or all of the Liabilities.
Borrower waives presentment, demand and protest, notice of protest
and notice of presentment. Any failure of Lender to exercise any right available
hereunder or otherwise shall not be construed as a waiver of the right to
exercise the same or as a waiver of any other right at any other time.
Borrower agrees to pay all out-of-pocket expenses, including, but
not limited to, reasonable attorneys' fees, court costs, storage costs, rental
charges, transportation charges and similar expenses paid or incurred in
enforcing any of Lender's rights hereunder or in connection with any of the
collateral securing this Note, promptly on demand of Lender or other person
incurring the same.
Lender may at any time transfer this Note and Lender's rights in
any collateral securing this Note, and Lender thereafter shall be relieved from
all liability with respect to such collateral for any damage occurring after
such transfer.
This Note shall be governed and construed in accordance with the
internal laws of the State of Illinois and shall be binding upon Borrower and
their respective legal representatives, successors and assigns. If this Note
contains any blanks when executed by Borrower, Lender is hereby authorized,
without notice to Borrower, to complete any such blanks according to the terms
upon which the loan is granted. Wherever possible, each provision of this Note
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note shall be prohibited by or
invalid under such law, such provision shall be severable, and be ineffective to
the extent of such prohibition or invalidity, without invalidating the remaining
provisions of this Note.
TO INDUCE LENDER TO ACCEPT THIS NOTE, BORROWER IRREVOCABLY AGREES
THAT, SUBJECT TO LENDER'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS
IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS NOTE,
SHALL BE LITIGATED IN COURTS HAVING SITES WITHIN THE COUNTY OF XXXX, STATE OF
ILLINOIS. BORROWER HEREBY
A-2
47
CONSENTS AND SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT
LOCATED WITHIN SAID COUNTY AND STATE, AND CONSENT TO LENDER CHANGING VENUE TO
THIS FORUM IN THE EVENT LITIGATION CONCERNING THIS INSTRUMENT IS PENDING IN
ANOTHER FORUM. BORROWER HEREBY WAIVES (I) ANY RIGHT TO A TRIAL BY JURY
CONCERNING ANY MATTER RELATING TO THIS NOTE, THE LOAN AGREEMENT, THE ANCILLARY
DOCUMENTS AND ANY SECURITY DOCUMENT, AND (II) ANY RIGHTS BORROWER MAY HAVE TO
TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY
LENDER IN ACCORDANCE WITH THIS PARAGRAPH.
SABRATEK CORPORATION
By:___________________
Its:__________________
A-3
48
EXHIBIT B
EQUIPMENT TERM NOTE
$1,500,000 March 26, 0000
Xxxxxxx, Xxxxxxxx
Sabratek Corporation, a Delaware corporation ("Borrower"), FOR
VALUE RECEIVED, unconditionally promises to pay to the order of LaSalle Bank NI
("Lender"), at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, or at such
other place as the holder of this Equipment Term Note may designate in writing,
the principal sum owed by Borrower to Lender pursuant to the Equipment Term Loan
evidenced by this Note. Such Equipment Term Loan is part of the Equipment
Purchase Facility referenced in Section 2.1.3 of that certain Credit Agreement
dated March 26, 1997 (as the same may at any time be amended or modified and in
effect, the "Loan Agreement"), between Borrower and Lender. The Equipment Term
Loan evidenced by this Note shall be repaid in full not later than [April 30,
2004].
Borrower promises to pay interest on the outstanding principal
amount hereunder until paid, pursuant to the terms of the Loan Agreement and at
the rates per annum and on the dates specified in the Loan Agreement. The
principal amount due hereunder shall be repaid as set forth in the Loan
Agreement. Payments of principal and interest hereunder are to be made in lawful
money of the United States of America and in immediately available funds.
Capitalized terms used in this Note that are not specifically
defined herein but are defined in the Loan Agreement shall have the meanings in
this Note given to them in the Loan Agreement. Lender is authorized to
record, on a schedule annexed hereto, or on other appropriate records of
Lender, the date, type and amount of each Equipment Term Loan under the
Equipment Purchase Facility, any continuation thereof, any conversion of all or
a portion thereof to a different type of Equipment Term Loan, and the date and
amount of each payment or prepayment of principal thereof, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure of lender to make such
recordation (or any error in such recordation) shall not affect the obligations
of Borrower hereunder or under the Loan Agreement in respect of such Equipment
Term Loans.
This Note is the note described in Section 2.1.3.3 of the Loan
Agreement, and is subject to the terms and provisions of the Loan Agreement.
Reference is hereby made to the Loan Agreement for a statement of the terms and
conditions under which the Equipment Term Loan was made and is to be repaid,
including prepayment rights and obligations of Borrower, nature, extent and
rights in any collateral security, and a statement of the terms and conditions
under which the due date of this Note may be accelerated.
Borrower hereby waives presentment, demand, protest and notice of
presentment, demand, nonpayment and protest. Any failure of Lender to exercise
any right available hereunder or otherwise shall not be construed as a waiver of
the right to exercise the same or as a waiver of any other right at any other
time.
B-1
49
Payments received by Lender from Borrower on this Note shall be
applied to the Liabilities as provided in the Loan Agreement.
Lender may at any time transfer this Note and Lender's rights in
any collateral securing this Note, and Lender thereafter shall be relieved from
all liability with respect to such collateral for any damage occurring after
such transfer.
This Note shall be interpreted and the rights and liabilities of
the parties shall be determined in accordance with the laws of the State of
Illinois. Whenever possible each provision of this Note shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note. Whenever in this Note reference is made to Lender, such reference
shall be deemed to include, as applicable, a reference to Lender's successors
and assigns. The provisions of this Note shall be binding upon Borrower and its
successors and assigns, and shall inure to the benefit of Lender and its
successors and assigns.
In addition to and not in limitation of the foregoing and the
provisions of the Loan Agreement, the undersigned further agrees, subject only
to the limitations imposed by applicable law, to pay all expenses incurred by
the holder of this Note in endeavoring to collect any amounts payable hereunder
which are not paid when due, whether by acceleration or otherwise.
TO INDUCE LENDER TO ACCEPT THIS NOTE, BORROWER IRREVOCABLY AGREES
THAT, SUBJECT TO LENDER'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR
PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED
TO THIS NOTE, SHALL BE LITIGATED IN COURTS HAVING SITES WITHIN THE COUNTY OF
XXXX, STATE OF ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMIT TO THE
JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCALLY WITHIN SAID COUNTY
AND STATE, AND CONSENT TO LENDER CHANGING VENUE TO THIS FORUM IN THE
EVENT LITIGATION CONCERNING THIS INSTRUMENT IS PENDING IN ANOTHER FORUM.
BORROWER HEREBY WAIVES (I) ANY RIGHT TO A TRIAL BY JURY CONCERNING ANY MATTER
RELATING TO THIS NOTE, THE LOAN AGREEMENT, THE ANCILLARY DOCUMENTS AND ANY
SECURITY DOCUMENT, AND (II) ANY RIGHTS BORROWER MAY HAVE TO TRANSFER OR CHANGE
THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY LENDER IN ACCORDANCE
WITH THIS PARAGRAPH.
SABRATEK CORPORATION
By:___________________
Its:__________________
B-2
50
Schedule I
to Credit Agreement Dated as of March 26, 1997
1. Litigation:
(a) On February 5, 1997, XXXX Deltec filed a complaint in
the U.S. District Court for the District of Minnesota
(Xxxx Deltec, Inc. vs. Sabratek Corporation) alleging
that Borrower's manufacture, use and/or sale of the
MediVIEW software in conjunction with its infusion
pumps infringes a patent previously issued to XXXX
Deltec. The Borrower is being represented by Fitch,
Even, Tabin & Xxxxxxxx of Chicago.
(b) The Borrower is a party to a lawsuit filed by a former
employee (Garrison v. Sabratek Corporation) seeking
payment of certain compensation. The Borrower is being
represented by Jenner & Block.
2. Indebtedness:
(a) In connection with a training program, the Borrower is
indebted to the State of Illinois in the approximate
amount of $4,000.
(b) The Borrower is a party to a number of conditional sale
agreements providing for the lease of certain fixed
assets, computer hardware, office and production
equipment. The lessors are: Acclaim Leasing (Advanta),
Comdisco and Funding Services, Inc. (assigned to GE
Capital). Attached hereto as Attachment A is a list of
each such lease.
(c) The Borrower formerly financed receivables with
Sterling Business Credit, a division of Standard
Factors Corp. Although Borrower's financing with
Sterling has been terminated, and Sterling has
delivered copies of U.C.C.-3 termination statements
terminating Sterling's interest in Borrower's assets,
Sterling's Forms U.C.C.-3 have apparently not been
filed and Sterling's security interests continue to
appear of record.
51
ATTACHMENT A
ORIGINATION MATURITY
LEASE COMPANY LEASE NO. DATE # MONTHS DATE
------------------------------------------------------------------------------------------------------------
Fixed Assets
1 Comdisco 18-SL31268-00 Sep-94 36 Sep-97
2 Comdisco 18-SL31268-01 Mar-95 36 Feb-98
3 Comdisco 18-SL31268-02 Apr-95 36 Mar-98
Computer Hardware:
4 Funding Services, Inc. 24078017 Feb-93 36 Jan-96
5 Funding Services, Inc. 7123440 Apr-93 36 Mar-96
6 Funding Services, Inc. HI LS 8400 May-93 36 Mar-96
7 Funding Services, Inc. 7141461 Dec-93 36 Nov-96
8 Funding Services, Inc. 342410-077 Jun-94 36 May-97
9 Funding Services, Inc. 10411 Oct-94 36 Sep-97
10 Funding Services, Inc. 11994 Dec-94 36 Nov-97
11 Funding Services, Inc. 7162111 Dec-94 36 Nov-97
12 Funding Services, Inc. 7163597 Jan-95 36 Dec-97
13 Acclaim Leasing, Inc. 10187967001 Feb-95 36 Jan-98
14 Acclaim Leasing, Inc. 10187967002 Mar-95 36 Feb-98
Office Furniture:
15 Funding Services, Inc. 7123275 Apr-93 52 Jul-97
Production Equipment:
16 Funding Services, Inc. 0007671-000 Jul-94 36 Jun-97
17 Funding Services, Inc. 7126927 May-93 36 Apr-96
