LOAN AND SECURITY AGREEMENT
BY AND AMONG
DYNAMICS RESEARCH CORPORATION
DRC ENCODER, INC.
DRC METRIGRAPHICS, INC.
DRC SOFTWARE, INC. and
DRC TELECOM, INC.
as the Borrowers,
and
THE LENDERS PARTY HERETO
and
XXXXX BROTHERS XXXXXXXX & CO.,
as Administrative Agent
and
FAMILY BANK, FSB
as Collateral Agent
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS 2
ARTICLE 2 - AGENTED BORROWINGS 20
2-1. Designation of Agent Borrower 20
2-2. Operation of Loan Arrangement 20
2-3. Loans Directly to Borrower 21
2-4. Continuation of Authority of Lead Borrower 21
2-5. Indemnification 22
ARTICLE 3 - THE REVOLVING CREDIT 22
3-1. Establishment of Revolving Credit 22
3-2. Reductions of Commitment 23
3-3. Advances 23
3-4. Risks of Value of Accounts and Inventory 23
3-5. Procedures Under Revolving Credit 24
3-6. The Loan Account 26
3-7. The Revolving Credit Note. 27
3-8. Payment of Loan Account 27
3-9. Interest 27
3-10. Duration of Interest Periods 28
3-11. Changed Circumstances 29
3-12. Payments and Prepayments 29
3-13. Fees 30
3-14. Fees For L/C's 31
3-15. Effect of Honor of L/C's 31
3-16. Additional Provisions Relating to L/C's 31
3-17. Indemnification 34
3-18. Computation of Interest and Fees 35
3-19. Overdue Payments 36
3-20. Automatic Payment 36
3-21. Additional Costs, Etc. 36
3-22. Capital Adequacy 37
ARTICLE 4 - THE TERM LOAN 37
4-1. The Term Loan 37
4-2. Use of Proceeds 38
4-3. Term Loan Advances 38
ARTICLE 5 - GRANT OF SECURITY INTEREST 38
5-1. Grant of Security Interest 38
5-2. Extent and Duration of Security Interest 39
ARTICLE 6 - CONDITIONS PRECEDENT 39
6-1. Corporate Due Diligence 39
6-2. Opinion 40
6-3. Landlord's Waivers 40
6-4. Officers' Certificates 40
6-5. Guaranties 40
6-6. Mortgage 40
6-7. Lockbox 40
6-8. Pledge Agreements 40
6-9 Additional Documents 40
6-10. Representations and Warranties 41
6-11. No Event of Default 41
6-12. No Adverse Change 41
ARTICLE 7 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS 41
7-1. Payment and Performance of Liabilities 41
7-2. Due Organization - Corporate Authorization -
No Conflicts 41
7-3. Maintain Accounts 42
7-4. Trade Names 42
7-5. Locations 43
7-6. Title to Assets 43
7-7. Indebtedness 44
7-8. Insurance Policies 45
7-9. Licenses 46
7-10. Leases 46
7-11. Requirements of Law 46
7-12. Maintain Properties 46
7-13. Pay Taxes 47
7-14. No Margin Stock 48
7-15. ERISA 48
7-16. Hazardous Materials 48
7-17. Litigation 49
7-18. Dividends, etc. 49
7-19. Guarantees and Investments 49
7-20. New Leases 50
7-21. Mergers and Consolidations 51
7-22. Sale of Assets 51
7-23. Protection of Assets 52
7-24. Line of Business 52
7-25. Affiliate Transactions 52
7-26. Additional Assurances 52
7-27. Adequacy of Disclosure 53
7-28. Government Contracts 53
7-29. Year 2000 Compliance 54
7-30. Assignment of Claims Act 54
7-31. Capital Expenditures 54
7-32. Other Covenants 54
ARTICLE 8 - USE AND COLLECTION OF COLLATERAL 54
8-1. Adjustments and Allowances 54
8-2. Validity of Accounts 54
8-3. Notification to Account Debtors 55
ARTICLE 9 - RECEIVABLES 55
9-1. Proceeds and Collection of Accounts 55
9-2. Proceeds and Collection of Accounts
Held in Trust 56
9-3. Payment of Liabilities 56
ARTICLE 10 - LENDER AS BORROWER'S ATTORNEY-IN-FACT 56
10-1. Appointment as Attorney-In-Fact 56
10-2. No Obligation to Act 57
ARTICLE 11 - FINANCIAL AND OTHER REPORTING
REQUIREMENTS/ FINANCIAL COVENANTS 57
11-1. Maintain Records 57
11-2. Access to Records 58
11-3. Immediate Notice to Lender 58
11-4. Financial Statements, Certificates
and Information 59
11-5. Additional Financial Information 61
11-6. Audits and Appraisals 61
11-7. Consolidated Operating Cash Flow to
Total Debt Service 61
11-8. Consolidated Tangible Net Worth 62
11-9. Leverage Ratio 62
ARTICLE 12 - EVENTS OF DEFAULT 62
12-1. Failure to Pay 62
12-2. Failure to Make Other Payments 62
12-3. Failure to Perform Certain Liabilities 62
12-4. Failure to Perform Other Liabilities 62
12-5. Misrepresentation 62
12-6. Acceleration of Other Debt 63
12-7. Default Under Other Agreements 63
12-8. Business Failure 63
12-9. Judgment 64
12-10. Restraint of Business 64
12-11. Material Adverse Change 64
12-12. Trustee Process 64
12-13. Change in Ownership 64
12-14. Casualty Loss 64
12-15. Material Agreement 64
12-16. Termination of Existence 65
12-17. Termination of Guaranty 65
12-18. Challenge to Loan Documents 65
12-19. Indictment - Forfeiture 65
ARTICLE 13 - RIGHTS AND REMEDIES UPON DEFAULT 65
13-1. Termination of Commitments 65
13-2. Rights of Enforcement 66
13-3. Sale of Collateral 66
13-4. Occupation of Business Location 67
13-5. Grant of Nonexclusive License 67
13-6. Assembly of Collateral 67
13-7. Rights and Remedies 67
13-8. Distribution of Collateral Proceeds 68
ARTICLE 14 - NOTICES 68
14-1. Notice Addresses 68
14-2. Notice Given 69
ARTICLE 15 - TERM OF AGREEMENT 70
15-1. Termination of Revolving Credit 70
15-2. Effect of Termination 70
ARTICLE 16 - GENERAL 70
16-1. Protection of Collateral 70
16-2. Successors and Assigns 70
16-3. Severability 70
16-4. Amendments. Course of Dealing 70
16-5. Power of Attorney 71
16-6. Costs and Expenses 71
16-7. Copies and Facsimiles 72
16-8. Massachusetts Law 72
16-9. Consent to Jurisdiction 72
16-10. Indemnification 73
16-11. Rules of Construction 73
16-12. Intent 74
16-13. Setoff 74
16-14. Maximum Interest Rate. 75
16-15. Waivers 75
16-16. Receipt of Agreement 76
ARTICLE 17 - THE AGENT. 76
17-1. Authorization 76
17-2. Employees and Agents 76
17-3. No Liability 76
17-4. No Representations 77
17-5. Payments 77
17-6. Holders of Notes 78
17-7. Indemnity 78
17-8. Agents as Lenders 78
17-9. Resignation 78
17-10. Notification of Defaults and Events of Default 79
17-11. Duties in the Case of Enforcement 79
17-12. Delinquent Lender 80
17-13. Assignment and Participation. 81
17-14. Pledge to Federal Reserve 85
17-15. Deemed Consent or Approval. 85
17-16. Disclosure. 85
17-17. Consents, Amendments, Waivers, etc. 86
_________________________________________________________________
LOAN AND SECURITY AGREEMENT
_________________________________________________________________
February 10, 2000
THIS AGREEMENT is made between
Xxxxx Brothers Xxxxxxxx & Co., (hereinafter, the "Administrative
Agent"), a limited partnership organized under the laws of the State of
New York with offices at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
and
Family Bank, FSB, (hereinafter, the "Collateral Agent") a federal
savings bank with offices at 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx
as Agents on behalf of Xxxxx Brothers Xxxxxxxx & Co., Family Bank, FSB and the
other financial institutions which may hereafter become parties to this
Agreement (each such party a "Lender" and collectively the "Lenders")
and
Dynamics Research Corporation (hereinafter, the "Lead Borrower"), a
Massachusetts corporation, with its principal executive offices at 00
Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx, as agent for itself and
DRC Encoder, Inc. ("Encoder"), a Massachusetts corporation with its
principal executive offices at 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx;
DRC Metrigraphics, Inc. ("Metrigraphics"), a Massachusetts
corporation with its principal executive offices at 00 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxxxxxxxxxxx;
DRC Software, Inc. ("Software"), a Massachusetts corporation with
its principal executive offices at 00 Xxxxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxxx;
DRC Telecom, Inc. ("Telecom"), a Massachusetts corporation with its
principal executive offices at 00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx
(Each of the Lead Borrower, Encoder, Metrigraphics, Software and Telecom
being sometimes hereinafter referred to individually as a "Borrower" and
collectively as the "Borrowers")
in consideration of the mutual covenants contained herein and benefits to be
derived herefrom.
WITNESSETH:
ARTICLE 1 - DEFINITIONS.
As herein used, the following terms have the following meanings or are
defined in the section of the within Agreement so indicated:
"Acceptable Accounts": All Accounts created by a Borrower in the ordinary
course of business, that arise out of such Borrower's sale of goods
or rendition of services, as to which any Borrower has acquired
title and the Collateral Agent has a valid and perfected first
priority security interest under all applicable law and as to which
the Borrowers have furnished reasonably detailed information to the
Agents in a Borrowing Base Certificate, and that are and at all
times continue to be acceptable to the Agents in all respects;
provided, however, that standards of eligibility may be fixed and
revised from time to time by the Agents in their reasonable good
faith credit judgment and further provided that, except as set forth
in subsection (d) below, any lack of compliance with the Assignment
of Claims Act or any comparable provision under state law shall not
be grounds for disqualifying an Account from being an Acceptable
Account. Acceptable Accounts shall not include the following:
(a) Accounts that the Account Debtor has failed to pay within
ninety (90) days of the invoice date, provided that any
Account which is rebilled shall be aged from such Account's
original invoice date;
(b) Accounts with respect to which the Account Debtor is an
officer, director or employee, or a spouse or any relative (by
blood, adoption or marriage) within the third degree of any of
the foregoing or an agent of any Borrower;
(c) Accounts that are not payable in United States Dollars or
with respect to which the Account Debtor (i) does not maintain
its chief executive office in the United States, or (ii) is
not the United States, or any state, municipality or other
political subdivision of the United States or any state
thereof, or any department, agency, public corporation or
other political subdivision thereof, or is not organized under
the laws of the United States or any State thereof, or (iii)
is the government of any foreign country, or of any
department, agency, public corporation, or other
instrumentality thereof, unless (x) the Account is (1) payable
in United States Dollars by a "Fortune 500 Company", (2)
described in the foregoing clause (i), (ii) or (iii) and, (3)
when added with all other such Accounts described in such
clauses, represents obligations owing to Borrowers in an
aggregate amount equal to or less than $1,000,000, or (y) the
Account is supported by an irrevocable letter of credit
satisfactory to the Administrative Agent as to form,
substance, and issuer or domestic confirming bank) that has
been delivered to the Administrative Agent and is directly
drawable by Administrative Agent, or (z) the Account is
covered by credit insurance in form and amount, and by an
insurer, satisfactory to Administrative Agent;
(d) Accounts with respect to which the Account Debtor is
either (y) the United States or any department, agency or
instrumentality of the United States or (z) any state of the
United States, if the Borrower has not effected compliance
with the Assignment of Claims Act (for United States
contracts) or any comparable provisions under state law with
respect thereto (for State contracts); provided that any lack
of compliance with the Assignment of Claims Act or any
comparable provision under state law shall not be grounds for
disqualifying an Account from being an Acceptable Account, so
long as (i) the Collateral Agent has not requested compliance
with the Assignment of Claims Act or any comparable provision
under state law (and the Collateral Agent agrees to make such
request at the direction of any Lender), or (ii) after the
Collateral Agent requests the Borrowers to comply with the
Assignment of Claims Act (or any such comparable provision
under state law), either (A) the Government Contract to which
such Account relates is not a contract with respect to which
the Collateral Agent has requested such compliance or (B) the
aggregate dollar amount of Accounts as to which there is not
compliance with the Assignment of Claims Act or such
comparable provision under state law does not exceed
$250,000.00. The term "compliance with the Assignment of
Claims Act" shall mean compliance with the procedures in FAR
32.805 (published at 48 C.F.R.);
(e) Accounts to the extent that the Account Debtor is a
creditor of a Borrower, has or has asserted a right of setoff,
has disputed its liability, or has made any claim with respect
to the Account (including, without limitation, Accounts if and
to the extent that the Account Debtor has withheld, suspended
or disapproved of all or any portion thereof pursuant to any
audit, investigation or proceeding conducted by or on behalf
of the Account Debtor);
(f) Accounts with respect to which the Account Debtor is
paying pursuant to a negotiated payment plan (other than any
such plan that is in the ordinary course of such Account
Debtor's business), is subject to a bankruptcy, receivership
or other form of insolvency or liquidation proceeding, or
becomes insolvent, or goes out of business;
(g) Any Accounts owed by any Account Debtor as to which
Account Debtor fifty percent (50%) or more of whose aggregate
Accounts (in dollar amount) are not acceptable pursuant to
Section (a), above;
(h) Any portion of any Account which is subject to any (1)
return, (2) other allowance, or (3) withholding by the subject
Account Debtor as to which the Borrowers have actual
knowledge; and
(i) Accounts the collection of which the Agents, in their
reasonable good faith credit judgment, believe to be doubtful,
and notify the Lead Borrower in reasonable detail as to the
reasons why the Agents believe such Accounts to be doubtful.
"Accounts" include, without limitation, "accounts" as defined in the UCC,
and also all: accounts, accounts receivable, credit card
receivables, notes, drafts, acceptances, and other forms of
obligations and receivables and rights to payment for credit
extended and for goods sold or leased, or services rendered, whether
or not yet earned by performance; all "contract rights" as formerly
defined in the UCC; all Inventory which gave rise thereto, and all
rights associated with such Inventory, including the right of
stoppage in transit; all reclaimed, returned, rejected or
repossessed Inventory (if any) the sale of which gave rise to any
Account.
"Account Debtor": has the meaning given that term in the UCC.
"Affiliate": As applied to any Person, a spouse of such Person, any
relative (by blood, adoption or marriage) of such Person within the
third degree, any managing member, director or officer of such
Person, any corporation, association, firm or other entity of which
such Person is a managing member, director or officer and any other
Person directly or indirectly controlling, controlled by or under
direct or indirect common control with such Person.
"Agents": Collectively, the Collateral Agent and the Administrative Agent.
"Agents Rights and Remedies": is defined in Section 13-7.
"Annual Fee": is defined in Section 3-13(c).
"Availability": is defined in Section 3-1(b).
"Bankruptcy Code": Title 11, U.S.C., as amended from time to time.
"Base": shall mean, from time to time, the higher of (a) the "base rate"
announced from time to time by the Administrative Agent, or (b) the
Federal Funds Effective Rate plus one-half (.50%) percent per annum.
Any change in such Base Rate shall be effective, for purposes of
the calculation of interest due hereunder, when made effective
generally by the Administrative Agent.
"Base Margin Loan": Any Revolving Credit Loan bearing interest at the
Base Rate.
"Borrowers": is defined in the Preamble.
"Borrowing Base Certificate": is defined in Section 11-4.
"Business Day": Any day other than (a) a Saturday or Sunday; (b) a day on
which the Administrative Agent is not open to the general public to
conduct business; or (c) a day on which banks in Boston,
Massachusetts generally are not open to the general public for the
purpose of conducting commercial banking business.
"Capital Expenditures": Any payment made directly or indirectly by
Borrowers or any of their Subsidiaries for the purpose of acquiring
or constructing fixed assets, real property or equipment which in
accordance with GAAP would be added as a debit to the Consolidated
fixed asset account of the Lead Borrower and its Subsidiaries,
including without limitation amounts paid or payable under any
conditional sale or other title retention agreement or under any
lease or other periodic payment arrangement which is of such a
nature that payment obligations of a borrower thereunder would be
required by GAAP to be capitalized and shown as liabilities on the
Consolidated balance sheet of the Lead Borrower and its
Subsidiaries.
"Capital Lease": Any lease which should be capitalized in accordance with
GAAP.
"Chattel Paper": has the meaning given that term in the UCC.
"Closing Date": February 10, 2000.
"Collateral": is defined in Section 5-1.
"Commitment": as to each Lender the amount of the Revolving Credit and
Term Loan set forth on Exhibit 1.
"Commitment Fee": is defined in Section 3-13.
"Commitment Percentage: as to each Lender the percentage of the Revolving
Credit and Term Loan set forth on Exhibit 1.
"Consolidated: With reference to any term herein, shall mean that term as
applied to the accounts of the Lead Borrower and its Subsidiaries,
consolidated in accordance with GAAP.
"Consolidated Operating Cash Flow" shall mean, the sum of (i) Consolidated
Net Income before taxes, plus (ii) Consolidated Interest Expense,
plus (iii) depreciation and amortization deducted in the calculation
of Consolidated Net Income, minus (iv) income taxes paid in cash
(net of any tax refunds actually received in cash)by the Lead
Borrower and its Subsidiaries, minus (v) Capital Expenditures not
funded by interest bearing Indebtedness, all as determined in
accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean the difference between total
assets of the Lead Borrower and its Subsidiaries and total
liabilities of of the Lead Borrower and its Subsidiaries, plus all
indebtedness subordinated to the Liabilities on terms acceptable to
the Lenders less the sum of:
(a) the total net book value of all assets of the Lead
Borrower and its Subsidiaries properly classified as
intangible assets under GAAP, including items such as
goodwill, unamortized debt discount and expense, trademarks,
trade names, service marks, copyrights, patents and licenses; and
(b) all amounts representing the write-up after December 31,
1999 in the book value of any assets of the Lead Borrower and
its Subsidiaries resulting from a revaluation thereof; and
(c) the value of minority equity interests of the Lead
Borrower and its Subsidiaries in unconsolidated, affiliated entities; and
(d) the aggregate amount of all loans made by the Lead
Borrower and its Subsidiaries to any officer, employee or
shareholder thereof.
"Control": Person(s) shall be deemed to Control another Person if such
Person(s) directly or indirectly possess the power to direct
or cause the direction of the management and policies of such other
Person, whether through ownership of voting securities, by contract,
or otherwise.
"Costs of Collection" includes, without limitation, all reasonable
attorneys' fees and reasonable out-of-pocket expenses incurred by
the Agents' or the Lenders' attorneys, and all reasonable costs
incurred by the Agents or any Lender in the administration of the
Liabilities and/or the Loan Documents, including, without
limitation, reasonable costs and expenses associated with travel on
behalf of the Agents or any Lender, which costs and expenses are
directly or indirectly related to or in respect of the Agents' or
any Lenders': administration and management of the Liabilities;
negotiation, documentation, and amendment of any Loan Document; or
efforts to preserve, protect, collect, or enforce the Collateral,
the Liabilities, and/or the Agents' Rights and Remedies and/or any
of the Lenders' rights and remedies against or in respect of any
guarantor or other person liable in respect of the Liabilities
(whether or not suit is instituted in connection with such efforts).
The Costs of Collection are Liabilities and, at the Lenders' option
and upon notice to the Lead Borrower, may bear interest at the rate
which the Lenders may charge the Borrowers hereunder as if such had
been lent, advanced, and credited by the Lenders to, or for the
benefit of, the Borrowers.
"Convert, Conversion and Converted" The conversation of a loan from one
type to loans of another type.
"Deposit Account": has the meaning given that term in the UCC.
"Delinquent Lender": is defined in Section 17-12.
"Documents": has the meaning given that term in the UCC.
"Documents of Title": has the meaning given that term in the UCC.
"EBIT": For any period, the Consolidated Net Income of the Lead Borrower
and its Subsidiaries for such period adjusted by adding back thereto
amounts deducted in computing such Consolidated Net Income in
respect of each of (a) Interest Expense of the Lead Borrower and its
Subsidiaries, and (b) taxes in respect of income and profits of the
Lead Borrower and its Subsidiaries.
"Eligible Assignee". Any of (a) a commercial bank or life insurance
company organized under the laws of the United States, or any State
thereof or the District of Columbia, and having total assets in excess of
$1,000,000,000; (b) a savings and loan association or savings bank
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having a net worth of at least $100,000,000,
calculated in accordance with generally accepted accounting principles;
(c) a commercial bank organized under the laws of any other country which
is a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and having
total assets in excess of $1,000,000,000, provided that such bank is
acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; and (d)
the central bank of any country which is a member of the OECD.
"Employee Benefit Plan": as defined in ERISA.
"Encumbrance": each of the following:
(a) any security interest, mortgage, pledge,
hypothecation, lien, attachment, or charge of any kind (including
any agreement to give any of the foregoing); the interest of a
lessor under a Capital Lease; conditional sale or other title
retention agreement; sale of accounts receivable or chattel paper;
or other arrangement pursuant to which any Person is entitled to any
preference or priority with respect to the property or assets of
another Person or the income or profits of such other Person or
which constitutes an interest in property to secure an obligation;
each of the foregoing whether consensual or non-consensual and
whether arising by way of agreement, operation of law, legal process
or otherwise; and
(b) The filing of any financing statement under the UCC
or comparable law of any jurisdiction.
"Environmental Laws": each of the following: (a) any federal, state, local
or municipal law, rule, order, regulation, statute, ordinance, code,
decree or requirement which regulates or relates to, or imposes any
standard of conduct or liability on account of or in respect to
environmental protection matters, including, without limitation,
Hazardous Materials, as is now or hereafter in effect; and
(b) the common law relating to damage to Persons or property from
Hazardous Materials.
"Equipment" includes, without limitation, "equipment" as defined in the
UCC, and also all motor vehicles, rolling stock, machinery, office
equipment, plant equipment, tools, dies, molds, store fixtures,
furniture, and other goods, property, and assets which are used
and/or were purchased for use in the operation or furtherance of the
Borrower's business, and any and all accessions, additions thereto,
and substitutions therefor.
"ERISA": the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate": any Person which is under common control with any
Borrower within the meaning of Section 4001 of ERISA or is part of
a group which includes any Borrower and which would be treated as a
single employer under Section 414 of the Internal Revenue Code of
1986, as amended.
"Events of Default": is defined in Article 12.
"Facility Fee": is defined in Section 3-13(a).
"Federal Funds Effective Rate": For any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a
Business Day, the average (rounded updates, if necessary, to the
next 1/100 of 1%) of the quotations for such date for such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Fixtures": has the meaning given that term in the UCC.
"Future Commitment" is defined in Section 17-12.
"GAAP": principles which are consistent with those promulgated or adopted
by the Financial Accounting Standards Board and its predecessors (or
successors) in effect and applicable to that accounting period in
respect of which reference to GAAP is being made.
"General Intangibles" includes, without limitation, "general intangibles"
as defined in the UCC; and also all: rights to payment for credit
extended; deposits; amounts due to the Borrowers; credit memoranda
in favor of the Borrowers; warranty claims; tax refunds and
abatements; insurance refunds and premium rebates; all means and
vehicles of investment or hedging, including, without limitation,
options, warrants, and futures contracts; records; customer lists;
telephone numbers; goodwill; causes of action; judgments; payments
under any settlement or other agreement; literary rights; rights to
performance; royalties; license and/or franchise fees; rights of
admission; licenses; franchises; license agreements, including all
rights of the Borrowers to enforce same; permits, certificates of
convenience and necessity, and similar rights granted by any
governmental authority; patents, patent applications, patents
pending, and other intellectual property; internet addresses and
domain names; developmental ideas and concepts; proprietary
processes; blueprints, drawings, designs, diagrams, plans, reports,
and charts; catalogs; manuals; technical data; computer software
programs (including the source and object codes therefor), computer
records, computer software, rights of access to computer record
service bureaus, service bureau computer contracts, and computer
data; tapes, disks, semi-conductors chips and printouts; trade
secrets rights, copyrights, mask work rights and interests, and
derivative works and interests; user, technical reference, and other
manuals and materials; trade names, trademarks, service marks, and
all good will relating thereto; applications for registration of the
foregoing; and all other general intangible property of the
Borrowers in the nature of intellectual property; proposals; cost
estimates, and reproductions on paper, or otherwise, of any and all
concepts or ideas, and any matter related to, or connected with, the
design, development, manufacture, sale, marketing, leasing, or use
of any or all property produced, sold, or leased, by the Borrowers
or credit extended or services performed, by the Borrowers, whether
intended for an individual customer or the general business of the
Borrowers, or used or useful in connection with research by the
Borrowers.
"Goods": has the meaning given that term in the UCC.
"Government Contract": Any contract, agreement or purchase order as to
which any Borrower and the United States government or any agency or
instrumentality thereof are parties or as to which any Borrower and
any State or Commonwealth of the United States or any agency,
instrumentality or political subdivision thereof are parties.
"Hazardous Materials:" any (a) hazardous materials, hazardous waste,
hazardous or toxic substances, petroleum products, which (as to any
of the foregoing) are defined or regulated as a hazardous material
in or under any Environmental Law and (b) oil in any physical state.
"Indebtedness": all indebtedness and obligations of or assumed by any
Person on account of or in respect to any of the following: (i) in
respect of money borrowed (including any indebtedness which is
non-recourse to the credit of such Person but which is secured by an
Encumbrance on any asset of such Person) whether or not evidenced by
a promissory note, bond, debenture or other written obligation to
pay money; (ii) for the payment, deferred for more than Thirty (30)
days, of the purchase price of goods or services (other than current
trade liabilities of such Person incurred in the ordinary course of
business and payable in accordance with customary practices); (iii)
in connection with any letter of credit or acceptance transaction
(including, without limitation, the face amount of all letters of
credit and acceptances issued for the account of such Person or
reimbursement on account of which such Person would be obligated);
(iv) in connection with the sale or discount of accounts receivable
or chattel paper of the Borrower; (v) on account of deposits or
advances; and (vi) as lessee under Capital Leases. "Indebtedness"
of any Person shall also include: (x) Indebtedness of any third
party secured by an Encumbrance on any asset of such Person, whether
or not such Indebtedness is assumed by such Person; (y) any
guaranty, endorsement, suretyship or other undertaking pursuant to
which such Person may be liable on account of any obligation of any
third party; and (z) the Indebtedness of a partnership or joint
venture in which such Person is a general partner or joint venturer.
"Indemnified Party": is defined in Section 3-17.
"Indemnified Person": is defined in Section 16-10.
"Installment Amount": is defined in Section 3-17(a).
"Instruments": has the meaning given that term in the UCC.
"Interest Expense": For any period, with respect to any Person, the
aggregate amount (determined in accordance with GAAP) of interest
paid or payable during such period by such Person in respect of all
Indebtedness for borrowed money, Capital Leases and the deferred
purchase price of property.
"Interest Period": (a) With respect to each LIBOR Loan, the period
commencing on the date of the making or continuation of or conver-
sion to such LIBOR Loan and ending one, two, three or six months
thereafter, as the Lead Borrower may elect in the applicable Notice
of Borrowing or Conversion.
(b) With respect to each Base Margin Loan, the period
commencing on the date of the making or continuation of or conver-
sion to such Base Margin Loan and ending on that date (1) as of
which the subject Base Margin Loan is converted to a LIBOR Loan, as
the Lead Borrower may elect in the applicable Notice of Borrowing or
Conversion, or (2) on which the subject Base Margin Loan is paid by
the Borrowers.
Provided that:
(i) if any Interest Period with respect to a
LIBOR Loan would otherwise end on a day that is not a LIBOR
Business Day, that Interest Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end
on the immediately preceding LIBOR Business Day;
(ii) if any Interest Period with respect to a
Base Margin Loan would end on a day that is not a Business
Day, that Interest Period shall end on the next succeeding
Business Day;
(iii) if the Lead Borrower shall fail to give
notice as provided in Section 3-10, herein, the Lead Borrower
shall be deemed to have requested a conversion of the affected
LIBOR Loan to a Base Margin Loan on the last day of the then
current Interest Period with respect thereto;
(iv) any Interest Period relating to any LIBOR
Loan that begins on the last LIBOR Business Day of a calendar
month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last LIBOR Business Day of
a calendar month;
(v) any Interest Period relating to any LIBOR
Loan that would otherwise extend beyond the Maturity Date of
the Revolving Credit Loans shall end on such Maturity Date; and
(vi) there shall be no more than three (3)
Interest Periods outstanding at any one time for LIBOR Loans.
"Interest Payment Date": With reference to:
(a) any LIBOR Loan, (i) on the first day of each month
and (ii) on the last day of each Interest Period, provided that
interest on LIBOR Loans having an Interest Period of six months
shall be payable on the last day of the third month of such Interest
Period and on the last day of the Interest Period; and
(b) any Base Margin Loan, the first day of each month
and the Termination Date.
"Inventory" includes, without limitation, "inventory" as defined in the
UCC and also all: packaging, advertising, and shipping materials
related to any of the foregoing, and all names or marks affixed or
to be affixed thereto for identifying or selling the same; Goods
held for sale or lease or furnished or to be furnished under a
contract or contracts of sale or service by the Borrowers, or used
or consumed or to be used or consumed in any Borrower's business;
Goods of said description in transit: returned, repossessed and
rejected Goods of said description; and all documents (whether or
not negotiable) which represent any of the foregoing.
"Investments": All expenditures made and all liabilities incurred
(contingently or otherwise), without duplication, for the
acquisition of stock or Indebtedness of, or for loans, advances,
capital contributions or transfers of property to, or in respect of
any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the
aggregate amount of Investments outstanding at any particular time:
(a) the amount of any Investment represented by a guaranty shall be
taken at not less than the principal amount of the obligations
guaranteed and still outstanding; (b) there shall be included as an
Investment all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by repurchase,
redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (d) there shall not be deducted in
respect of any Investment any amounts received as earnings on such
Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b)
may be deducted when paid; and (e) there shall not be deducted from
the aggregate amount of Investments any decrease in the value thereof.
"Investment Property": Has the meaning given that term in the UCC.
"L/C": any letter of credit, the issuance of which is procured by the
Lender for the account of any Borrower and any acceptance made on
account of such letter of credit.
"Lease": any lease or other agreement, no matter how styled or
structured, pursuant to which any Borrower is entitled to the use or
occupancy of any space.
"Lender" or "Lenders": are defined in Preamble.
"Liabilities" includes, without limitation, all and each of the following,
whether now existing or hereafter arising:
(a) Any and all direct and indirect liabilities, debts,
and obligations of the Borrowers to the Agents or any Lender, each
of every kind, nature, and description arising under this Agreement
or any of the Loan Documents.
(b) Each obligation to repay any loan, advance,
indebtedness, note, obligation, overdraft, or amount now or
hereafter owing by the Borrowers to any Lender (including all future
advances whether or not made pursuant to a commitment by any
Lender), whether or not any of such are liquidated, unliquidated,
primary, secondary, secured, unsecured, direct, indirect, absolute,
contingent, or of any other type, nature, or description, or by
reason of any cause of action which the Lender may hold against the
Borrowers arising under this Agreement or any of the Loan Documents.
(c) All interest, fees, and charges and other amounts
which may be charged by the Agents or the Lenders to the Borrowers
and/or which may be due from the Borrowers to any Lender from time
to time arising under this Agreement or any of the Loan Documents.
(d) All costs and expenses incurred or paid by the
Agents or the Lenders arising under this Agreement or any of the
Loan Documents (including, without limitation, Costs of Collection,
reasonable attorneys' fees, and all court and litigation costs and
expenses).
(e) Any and all covenants of the Borrowers to or with
the Agents or any Lender and any and all obligations of the
Borrowers to act or to refrain from acting, in each case, in
accordance with this Agreement or any of the Loan Documents.
"LIBOR Business Day": Any day on which commercial banks are open for
international business (including dealings in dollar deposits) in
London for such other LIBOR interbank market as may be selected by
the Administrative Agent in its sole discretion acting in good
faith.
"LIBOR Condition": the determination by the Agents, at any time after
February 10, 2001, that the Borrowers have met or exceeded the
financial projections set forth in the 2000 Bank Budget.
"LIBOR Loan": any Revolving Credit Loan bearing interest at the LIBOR
Rate.
"LIBOR Margin": two hundred (200) basis points.
"LIBOR Rate": that per annum rate which is the aggregate of the LIBOR
Offer Rate, plus the LIBOR Margin.
"LIBOR Offer Rate": that rate of interest (rounded upwards, if necessary,
to the next 1/100 of 1%) determined by the Administrative Agent to
be (i) the prevailing rate per annum at which deposits on U.S.
Dollars are offered to the Lender by first-class banks in the London
interbank market in which the Lender regularly participates at or
about 10:00 A.M. (Boston time) three (3) LIBOR Business Days before
the first day of the Interest Period, for a deposit approximately in
the amount of the subject LIBOR Loan for a period of time
approximately equal to such Interest Period, divided by (ii) one
minus the Reserve Percentage.
"Line (Unused) Fee": is defined in Section 3-13(b).
"Line Fee Percentage": shall mean .375% per annum, to be reduced to .25%
per annum if the Borrowers' year end audited financial statements
reflect that the Borrowers' financial performance meets or exceeds
the 2000 Bank Budget.
"Loan Account": is defined in Section 3-6.
"Loan Documents": this Agreement, each instrument and document executed
and/or delivered as contemplated by Article 6, below, and each other
instrument or document from time to time executed and/or delivered
in connection with the arrangements contemplated hereby, as each may
be amended from time to time.
"Material Adverse Change": Any event, matter or condition which has or
could reasonably be expected to have a material adverse effect on
(a) the business, condition (financial or otherwise), assets
(including intangible assets), properties, income or prospects of
any or all of the Borrowers, (b) the Borrowers' ability to pay and
perform all of the Liabilities owing by them to the Agents and the
Lenders in accordance with the terms thereof, and/or (c) the
Collateral (or any material portion thereof) or the security
interests of the Agents and the Lenders in the Collateral (or any
material portion thereof), or the priority of such security
interests.
"Maturity Date": As to the Revolving Credit Loans, February 10,
2003; as to the Term Loan, August 10, 2000.
"Moody's": Xxxxx'x Investor Services, Inc.
"Net Income": Income (or loss) of a Person for the period in
question (taken as a cumulative whole), after deducting therefrom
all operating expenses, reserves and other proper deductions
(including any minority interest expense), all determined in
accordance with GAAP. For purposes hereof, the Consolidated Net
Income of the Lead Borrower and its Subsidiaries (a) shall include
the Net Income of any other Persons acquired prior to the date that
it either becomes a Subsidiary of such Borrower, is merged into or
consolidated with such Borrower, or such other Person's assets are
assigned, directly or indirectly, to such Borrower, provided that,
in the case of each of the foregoing, (i) the Net Income of such
other Person shall only be so included to the extent that such Net
Income is attributable to such other Person or to such assets as are
acquired from such other Person for the relevant period, all to the
satisfaction of the Administrative Agent, and (ii) any discrepancies
in accounting treatment between such Borrower and such other Person
are conformed so as to make the foregoing determination, to the
satisfaction of the Administrative Agent.
"Net Proceeds": The gross sales price generated by the sale of any asset
or property outside the ordinary course of business, less reasonable
fees and expenses (including commissions) customarily incurred in
similar arms-length sales and transfer taxes directly attributable
to such sale less income taxes payable from such proceeds within
sixteen months after such sale.
"Permitted Liens": is defined in Section 7-6.
"Person": any natural person, and any corporation, trust, partnership,
limited liability company, joint venture, or other enterprise or entity.
"Proceeds": include, without limitation, "Proceeds" as defined in the UCC
(defined below), and each type of property described in Section 5-1,
hereof.
"Real Estate": the premises located at 00 Xxxxxxxx Xxxx, Xxxxxxx,
Xxxxxxxxxxxxx.
"Receipts": all cash, cash equivalents, checks, and credit card slips and
receipts as arise out of the sale of the Collateral.
"Receivables Collateral": refers to that portion of the Collateral which
consists of the Borrowers' Accounts, General Intangibles, Chattel
Paper, Instruments, Documents of Title, Documents, Investment
Property, letters of credit for the benefit of the Borrower, and
bankers' acceptances held by the Borrower, and any rights to payment.
"Reemployment Period": is defined in Section 3-17(a).
"Related Entity": refers to (a) any Affiliate; and (b) any corporation,
limited liability company trust, partnership, joint venture, or
other enterprise which: is a parent, brother-sister, subsidiary, or
affiliate, of any Borrower; could have such enterprise's tax returns
or financial statements consolidated with any Borrower; could be a
member of the same controlled group of corporations (within the
meaning of Section 1563(a)(1), (2) and (3) of the Internal Revenue
Code of 1986, as amended from time to time) of which any Borrower is
a member; Controls or is Controlled by the Borrower or any Affiliate
of the Borrower.
"Renewal / Conversion Notice": is defined in Section 3-10.
"Required Lenders": (a) Lenders holding the aggregate at least sixty-six
and two-thirds percent (66 2/3%) of the amounts outstanding on the
Revolving Credit Loans or, if no amounts are outstanding hereunder,
of the Commitment Percentages of the total Commitment and (b)
Lenders holding the aggregate at least sixty-six and two-thirds
percent (66 2/3%) of the amounts outstanding on the Term Loan.
"Requirement of Law": as to any Person: (a)(i) all statutes, rules,
regulations, orders, or other requirements having the force of law
and (ii) all court orders and injunctions, arbitrator's decisions,
and/or similar rulings, in each instance ((i) and (ii)) of or by any
federal, state, municipal, and other governmental authority, or
court, tribunal, panel, or other body which has or claims
jurisdiction over such Person, or any property of such Person, or of
any other Person for whose conduct such Person would be responsible;
(b) that Person's charter, certificate of incorporation, articles of
organization, and/or other organizational documents, as applicable;
and (c) that Person's by-laws and/or other instruments which deal
with corporate or similar governance, as applicable.
"Reserves": such reserves as the Lenders may establish from time to time
in their reasonable discretion to reflect impediments to the
Lenders' ability to realize on the Collateral, based on the Lenders
analysis of the overall quality and collectability of the
Collateral, acting reasonably and in good faith.
"Reserve Percentage": the decimal equivalent of the highest rate
applicable to any Lender under regulations issued from time to time
by the Board of Governors of the Federal Reserve System for
determining the maximum reserve requirement of each Lender with
respect to "Eurocurrency liabilities" as defined in such regula-
tions. The Reserve Percentage applicable to a particular LIBOR Loan
shall be based upon that in effect during the subject Interest
Period, with changes in the Reserve Percentage which take effect
during such Interest Period to take effect (and to consequently
change any interest rate determined with reference to the Reserve
Percentage) if and when such change is applicable to such loans.
"Revolving Loan Ceiling": shall mean Twenty Million Dollars ($20,000,000.00).
"Revolving Credit": is defined in Section 3-1.
"Revolving Credit Note": is defined in Section 3-7.
"S & P": Standard & Poor's Ratings Group, a division of the McGraw Hill
Companies, Inc..
"Stated Amount": the maximum amount for which an L/C may be honored.
"Subordinated Debt": (a) The existing Indebtedness of the Borrowers which
is designated as "Subordinated Debt" in Exhibit 7-7 attached
hereto, and (b) any other Indebtedness of a Borrower which matures
in its entirety and by its terms (or by the terms of the instrument
under which it is outstanding and to which appropriate reference is
made in the instrument evidencing such Subordinated Debt) is made
subordinate and junior in right of payment to the Liabilities by
provisions reasonably satisfactory in form and substance to the
Agents and their counsel.
"Subsidiary": Any partnership, corporation, limited liability
company, association, trust, or other business entity of which the
Lead Borrower shall at any time own directly or indirectly through
a Subsidiary or Subsidiaries at least a majority (by number of
votes) of the outstanding Voting Interests.
"Suspension Event": Any occurrence, circumstance, or state of facts
which (a) is an Event of Default; or (b) would become an Event of
Default if any requisite notice were given and/or any requisite
period of time were to run and such occurrence, circumstance, or
state of facts were not absolutely cured within any applicable grace
period.
"Term Loan": Is defined in Section 4-1.
"Term Loan Fee": Is defined in Section 3-13(d).
"Term Note": Is defined in Section 4-1.
"Termination Date": The earliest of (a) the Maturity Date, or (b) the
occurrence of an Event of Default under Section 12-7 hereof, or (c)
the date set by the Agents by notice to the Lead Borrower, which
notice sets the Termination Date on account of the occurrence of an
Event of Default other than as described in Section 12-7.
"Total Debt Service" shall mean the sum of (i) principal payments made on
all interest bearing indebtedness of the Lead Borrower and its
Subsidiaries, plus (ii) Capital Lease payments of the Lead Borrower
and its Subsidiaries, plus (iii) to the extent not included in the
foregoing clauses (i) and (ii), Consolidated Interest Expense of the
Lead Borrower and its Subsidiaries, all as determined in accordance
with generally accepted accounting principles.
"Total Commitment" shall mean the aggregate Commitments of the Lenders as
set forth on Exhibit I annexed hereto.
"2000 Bank Budget" The budget attached hereto as Exhibit 2.
"UCC": the Uniform Commercial Code as presently in effect in Massachusetts
(Mass. Gen. Laws, Ch. 106).
"Voting Interests": Stock or similar interests, of any class or
classes (however designated), the holders of which are at the time
entitled, as such holders, to vote for the election of a majority of
the directors (or persons performing similar functions) of the
partnership, corporation, association, trust or other business
entity involved, whether or not the right so to vote exists by
reason of the happening of a contingency.
"Year 2000 Compliant": Computer applications, imbedded microchips,
and other systems and subsystems which properly recognize and
perform their intended function without any adverse effect on
account of their respective inability to recognize certain dates
prior to, on, and after December 31, 1999 or on account of their
treating any date prior to, on, or after December 31, 1999 other
than as the specific date in question.
ARTICLE 2 - AGENTED BORROWINGS
2-1. Designation of Agent Borrower. Each Borrower hereby
designates the Lead Borrower as the agent of that Borrower to discharge the
duties and responsibilities of the Lead Borrower as provided herein.
2-2. Operation of Loan Arrangement.
(a) Except as otherwise provided in this Article, loans and
advances under the Revolving Credit shall be requested solely by the
Lead Borrower as agent for each Borrower.
(b) Confirmatory assignments of accounts and accounts
receivable and remittances on accounts and accounts receivable of
the respective Borrowers shall be provided to the Collateral Agent
or otherwise directed in accordance with the Collateral Agent's
instructions given from time to time to the Lead Borrower.
(c) Any advance which may be made by the Lenders under the
Revolving Credit and which is directed to the Lead Borrower is
received by the Lead Borrower in trust for that or those of the
Borrowers who are intended to receive such advance. The Lead
Borrower shall distribute the proceeds of any such advances solely
to the Borrowers. Each Borrower shall be directly indebted to the
Lenders for each advance distributed to that Borrower by the Lead
Borrower, together with all accrued interest thereon, as if that
amount had been advanced directly by the Lenders to that Borrower
(whether or not the subject advance was based upon the accounts of
the Borrower which actually received such distribution), in addition
to which each Borrower shall be obligated to the Lenders in that
amount on account of that Borrower's having guarantied the
Liabilities.
(d) The Agents and the Lenders shall have no responsibility
to inquire as to the distribution of loans and advances made through
the Lead Borrower as described herein.
2-3. Loans Directly to Borrower. (a) If, for any reason, and at any
time during the term of the within Agreement,
(i) any Borrower, including the Lead Borrower as agent
for the Borrowers, shall be unable to, or prohibited from carrying out the
terms and conditions of this Agreement (as determined by the Agents in the
Agents' sole and absolute discretion); or
(ii) the Administrative Agent deems it inexpedient (in
the Administrative Agent's sole and absolute discretion) to continue
making loans and advances to or for the account of any particular
Borrower, or to channel such loans and advances through the Lead Borrower,
then the Lenders may make loans and advances directly to such of the
Borrowers as the Administrative Agent determines to be expedient, which
loans or advances may be made without regard to the procedures otherwise
included in this Article 2.
(b) In the event that the Administrative Agent determines to
forgo the procedures included herein pursuant to which loans and advances are
to be channeled through the Lead Borrower, then the Administrative Agent may
designate one or more of the Borrowers to fulfill the financial and other
reporting requirements otherwise imposed herein upon the Lead Borrower.
(c) Each of the Borrowers shall remain liable to the Lenders
for the payment and performance of all Liabilities (which payment and
performance shall continue to be secured by all collateral security granted
by each of the Borrowers) notwithstanding any determination by the
Administrative Agent to cease making loans or advances to or for the benefit
of any Borrower.
2-4. Continuation of Authority of Lead Borrower. The authority of
the Lead Borrower to request loans on behalf of, and to bind, the Borrowers,
shall continue unless and until the Administrative Agent acts as provided in
Section 2-4, above, or the Administrative Agent actually receives
(a) written notice of: (i) the termination of such authority,
and (ii) the subsequent appointment of a successor Lead Borrower, which
notice is signed by the respective Presidents of each Borrower (other than
the President of the Lead Borrower being replaced) then eligible for
borrowing under the within Agreement; and
(b) written notice from such successive Lead Borrower (i)
accepting such appointment; (ii) acknowledging that such removal and
appointment has been effected by the respective Presidents of such Borrowers
eligible for borrowing under the within Agreement; and (iii) acknowledging
that from and after the date of such appointment, the newly appointed Lead
Borrower shall be bound by the terms hereof, and that as used herein, the
term "Lead Borrower" shall mean and include the newly appointed Lead Borrower.
2-5. Indemnification. The Lead Borrower and each Borrower
respectively shall indemnify, defend, and save and hold the Agents and each
Lender harmless from and against any liabilities, claims, demands, expenses,
or losses made against or suffered by the Agents or any Lender on account of,
or arising out of, the Revolving Credit, the Agents and each Lenders'
reliance upon loan requests made by the Lead Borrower, or any other action
taken by the Agents and each Lender hereunder or under any of the Loan
Documents, except for any liability, claim, demand, expense, or loss as
to which a final judicial determination is made and from which no appeal
is available (in a proceeding in which the Agents and each Lender has had
an opportunity to be heard) that an Agent or any Lender had acted in a
grossly negligent manner or in actual bad faith.
ARTICLE 3 - THE REVOLVING CREDIT
3-1. Establishment of Revolving Credit. (a) The Lenders hereby
establish a revolving line of credit (hereinafter, the "Revolving Credit") in
the Borrowers' favor pursuant to which each Lender, subject to, and in
accordance with, this Agreement, severally agrees to make loans and
advances and otherwise provide financial accommodations to and for the
account of the Borrowers, in each instance up to the amount of such
Lender's Commitment Percentage of Availability, but in no event exceeding
the maximum amount of such Lender's Commitment. The amount available
for borrowing under the Revolving Credit shall be determined
by the Lenders by reference to Availability, as determined by the Lenders
from time to time hereafter.
(b) As used herein, the term "Availability" refers at any
time to the lesser of (i) or (ii), below:
(i) up to:
(A) the Revolving Loan Ceiling
Minus
(B) The then unpaid principal balance of the Loan
Account Minus
(C) The aggregate amounts then undrawn on all
outstanding L/C's, acceptances or any other
accommodations issued or incurred, or caused to
be issued or incurred, by the Lenders for the
account and/or the benefit of any of the
Borrowers.
(ii) up to:
(A) Eighty percent (80%) of the face amount of
each of the Borrowers' Acceptable Accounts Minus
(B) The then aggregate of such Reserves as may be
established by the Lenders from time to time,
acting reasonably and in good faith
Minus
(C) The then unpaid principal balance of the Loan Account Minus
(D) The aggregate amounts then undrawn on all
outstanding L/C's, acceptances, or any other
accommodations issued or incurred, or caused to
be issued or incurred, by the Lenders for the
account and/or the benefit of the Borrowers.
(c) Availability shall be based upon Borrowing Certificates
furnished as provided in Xxxxxxx 00-0, xxxxx.
(x) The proceeds of borrowings under the Revolving Credit
shall be utilized solely to refinance indebtedness to the existing working
capital lenders of the Borrowers, to pay transaction costs, for working
capital purposes, and for general corporate purposes. Advances under the
Revolving Credit may not be utilized to repay the Term Loan.
3-2. Reductions of Commitment. The Total Commitment may be
voluntarily reduced, at the Borrowers' option, in minimum increments of
$1,000,000.00, with any monthly payment of interest, subject to the payment
of the Line (Unused) Fee described below.
3-3. Advances. The making of loans, advances, and credits by
the Lenders in excess of Availability is for the benefit of the Borrowers and
does not affect the obligations of the Borrowers hereunder; such loans
constitute Liabilities. The making of any such loans, advances, and
credits in excess of Availability on any one occasion shall not obligate
any Lender to make any such loans, credits, or advances on any other
occasion nor to permit such loans, credits, or advances to remain outstanding.
3-4. Risks of Value of Accounts and Inventory . The Administrative
Agent's reference to a given asset for monitoring concerning the Lenders'
making of loans, credits, and advances and the providing of financial
accommodations under the Revolving Credit shall not be deemed a
determination by the Lenders relative to the actual value of the asset
in question. All risks of the creditworthiness of all Accounts are and
remain upon the Borrowers. Reference by the Lenders to a particular Account
owed by a particular Account Debtor for guidance and/or monitoring shall
not obligate the Lenders to rely upon any other Account owed by the same
Account Debtor to be acceptable for lending or to
continue to rely upon that account. All risks of the saleability of the
Borrower's Inventory are and remain upon the Borrowers. All Collateral
secures the prompt, punctual, and faithful performance of the
liabilities whether or not relied upon by the Lenders in connection
with the making of loans, credits, and advances and the providing of
financial accommodations under the Revolving Credit.
3-5. Procedures Under Revolving Credit.
(a) The Lead Borrower may request loans and advances under
the Revolving Credit from time to time under, in each instance in accordance
with such procedures as may from time to time be acceptable to the Lenders,
including, without limitation, notice to the Administrative Agent of
any requested borrowing by 11:00 A.M. Boston, Massachusetts time on the
proposed day of the subject loans.
(b) Subject to the provisions of the within Agreement, a
loan or advance under the Revolving Credit duly and timely requested by the
Lead Borrower shall be made pursuant hereto, provided that:
(i) The Availability will not be exceeded; and
(ii) The Revolving Credit has not been suspended as
provided in Section 3-5(h).
(c) (i) A loan or advance shall be deemed to have been made
under the Revolving Credit upon the charging of the amount of such loan to
the Loan Account.
(ii) There shall not be any recourse to, nor liability
of, the Agents or the Lenders on account of any of the following:
(A) (1) Any reasonable delay in the Lenders'
making of any loan or advance requested under the Revolving Credit, and/or
(2) any decline by the Lenders to make, any loan or advance requested
under the Revolving Credit while any Suspension Event or Event of Default
has occurred and is continuing.
(B) Any delay in the proceeds of any such loan or
advance constituting collected funds.
(C) Any delay in the receipt, and/or any loss, of
funds which constitute a loan or advance under the Revolving Credit, the
wire transfer of which was properly initiated by the Administrative Agent
in accordance with wire instructions provided to the Administrative Agent
by the Lead Borrower.
(iii)The Administrative Agent may rely on any request
for a loan or advance or financial accommodation which the Administrative
Agent, in good faith, believes to have been made by a person duly
authorized to act on behalf of the Lead Borrower and may decline to make
any such requested loan or advance or to provide any such financial
accommodation pending the Administrative Agent's being furnished with
such documentation concerning that person's authority to act as may
be satisfactory to the Administrative Agent.
(d) A request by the Lead Borrower for any financial
accommodation under the Revolving Credit or of the issuance of an L/C or any
other accommodations shall be irrevocable and shall constitute certification
by the Lead Borrower and each Borrower that as of the date of such request,
each of the following is true and correct:
(i) There has been no Material Adverse Change in
the Borrowers' financial condition taken as a whole, from the most recent
financial information furnished the Lenders pursuant to this Agreement.
(ii) The Borrowers are in compliance with, and
are not in breach of, any of their covenants contained in this Agreement.
(iii)Each representation which is made herein or
in any of the Loan Documents is then true and complete as of and as if
made on the date of such request (except to the extent such representation
refers to a specific earlier date).
(iv) No Suspension Event is then extant.
(e) The Borrowers shall immediately become indebted to the
Lenders for the amount of each loan under or pursuant to this Agreement when
such loan is deemed to have been made.
(f) (i) The Lead Borrower may request that the Administrative Agent
issue L/C's for the account of any Borrower. Each such request shall be in
such manner as may from time to time be acceptable to the Administrative
Agent, and which may include, without limitation, (A) telephone notice to
such person as may be designated by the Administrative Agent or (B) written
notice.
(ii) The Administrative Agent, in the Administrative
Agent's discretion in each instance, may issue any L/C so requested by the
Lead Borrower, provided that the aggregate Stated Amount, following the
requested issuance thereof, would not exceed the Availability and provided
that the L/C (if so issued) is in form satisfactory to the Administrative
Agent .
(iii)The Borrowers and/or the Lead Borrower shall
execute such documentation to apply for and support the issuance of an L/C as
may be required by the Administrative Agent.
(g) The Administrative Agent, without the request of the
Lead Borrower, may advance under the Revolving Credit any amount which any
Borrower is obligated to pay to the Administrative Agent or for which any
Borrower or the Administrative Agent becomes obligated on account of, or in
respect to, any L/C. Such advance shall be made and even if such advance
would result in Availability's being exceeded. Such action on the part of
the Administrative Agent shall not constitute a waiver of the Lender's rights
under Section 3-6(e), below.
(h) Upon the occurrence from time to time of any Suspension Event:
(i) The Lenders may suspend the Revolving Credit immediately.
(ii) The Lenders shall not be obligated, during such
suspension, to make any loans or advance, or to provide any financial
accommodation hereunder or to seek the issuance of any L/C.
(iii)The Lenders may suspend the right of the Lead
Borrower to request any LIBOR Loan or to convert any Base Margin Loan to
a LIBOR Loan.
(i) Subject to the satisfaction of all conditions
precedent hereunder, each Lender will make available to the Administrative
Agent on the proposed date of any Revolving Credit loan by wire transfer of
immediately available funds not later than 1:00 P.M., Boston time, the
aggregate amount of its Commitment Percentage of such loan requested by
the Lead Borrower, and the Administrative Agent shall advance such amounts
to the Lead Borrower in accordance with the terms hereof.
3-6. The Loan Account. (a) An account (hereinafter, the "Loan
Account") shall be opened on the books of the Administrative Agent, in which
Loan Account a record may be kept of all loans made by the Lenders to the
Borrowers under or pursuant to the Revolving Credit and of all payments
thereon.
(b) The Administrative Agent may also keep a record (either in the
Loan Account or elsewhere, as the Administrative Agent may from time to time
elect) of all interest, fees, service charges, costs, expenses, and other
debits owed the Agents and each Lender on account of the Liabilities under
the Revolving Credit and of all credits against such amounts so owed.
(c) All credits against the Liabilities shall be conditional
upon final payment to the Administrative Agent of the items giving rise to
such credits. The amount of any item credited against the Liabilities
which is charged back against the Administrative Agent for any reason or is
not so paid shall be a Liability and shall be added to the Loan Account,
whether or not the item so charged back or not so paid is returned.
(d) Except as otherwise provided herein, all fees, service
charges, costs, and expenses for which the Borrowers are obligated hereunder
are payable on demand. In the determination of Availability, the
Administrative Agent may deem fees, service charges, accrued interest,
and other payments as having been advanced under the Revolving Credit
whether or not such amounts are then due and payable.
(e) The Administrative Agent, without the request of the Lead
Borrower, may advance under the Revolving Credit any interest, fee, service
charge, or other payment to which the Administrative Agent is entitled from
any Borrower pursuant hereto (including, without limitation, any payment of
principal and/or interest with respect to the Term Loan) and may charge
the same to the Loan Account notwithstanding that such amount so advanced
may result in Availability's being exceeded. Any amount which is added to
the principal balance of the Loan Account as provided in this Subsection
shall bear interest at the interest rate applicable from time to time to
the unpaid principal balance of the Loan Account.
(f) Any statement rendered by the Administrative Agent to the
Lead Borrower concerning the Liabilities shall be considered correct and
accepted by the Borrowers and shall be conclusively binding upon the
Borrowers unless the Lead Borrower provides the Administrative Agent with
written objection thereto within sixty (60) days from the mailing of such
statement, which written objection shall indicate, with particularity,
the reason for such objection. The Loan Account and the Administrative
Agent's books and records concerning the loan arrangement contemplated
herein and the Liabilities shall be prima facie evidence and proof of the
items described therein.
3-7. The Revolving Credit Note. The obligation to repay loans and
advances under the Revolving Credit, with interest as provided herein, shall
be evidenced by certain notes (hereinafter, collectively, the "Revolving
Credit Note") in the form of EXHIBIT 3-7, annexed hereto, executed by each
Borrower in favor of each Lender in the amount of each Lender's respective
Commitment. Neither the original nor a copy of the Revolving Credit Note
shall be required, however, to establish or prove any Liability. In the
event that a Revolving Credit Note is ever lost, mutilated, or destroyed,
the Borrowers shall execute a replacement thereof and deliver such
replacement to the subject Lender.
3-8. Payment of Loan Account. (a) The Borrowers shall repay all
or any portion of the principal balance of the Loan Account from time to time
with the proceeds from the Collateral (as to which, see Section 9-3 below)
until the termination of the Revolving Credit (as to which, see Article 15,
below).
(b) The Borrowers, without notice or demand from the
Administrative Agent, shall pay the Administrative Agent that amount, from
time to time, which is necessary so that Availability is equal to or
greater than $0.
(c) The Borrowers shall pay the Administrative Agent the net
proceeds of (a) sale of assets not in the ordinary course of business, (b)
equity offerings, (c) debt issuances, and (d) casualty and condemnation
proceeds (except to the extent utilized to replace or repair the property
subject to the casualty). Such net proceeds will be applied first to any
interest due and then principal due under Term Loan in inverse order of
maturity until the Term Loan is paid in full, and thereafter, to all
accrued interest and then principal due under the Revolving Facility.
(d The Borrowers shall repay the then entire unpaid balance
of the Loan Account upon the Termination Date.
3-9. Interest. (a) Revolving Credit Loans shall initially bear
interest at the Base Rate and, if the LIBOR Condition is satisfied,
thereafter shall bear interest, at the Lead Borrower's option in
accordance with the terms hereof, at the Base Rate or the LIBOR
Rate, as specified from time to time by the Lead Borrower in the
Renewal/Conversion Notice with respect to the subject
Revolving Credit Loan or as otherwise provided in this Agreement.
Notwithstanding any other provision of this Agreement, no LIBOR Loans will be
provided hereunder unless the LIBOR Condition is satisfied.
(b The Borrowers shall pay interest on each Revolving Credit
Loan in arrears on the applicable Interest Payment Date for that Loan.
(c Following the occurrence and during the continuance of
any Event of Default (and whether or not the Lenders exercise their rights on
account thereof), upon notice from the Administrative Agent to the Lead
Borrower, all loans and advances made under the Revolving Credit shall
bear interest at the aggregate of the Base Rate plus three percent (3%)
per annum.
3-10. Duration of Interest Periods. (a) Subject to the limitation
described herein, and provided the LIBOR Condition has been satisfied, the
Lead Borrower shall have the option to elect an Interest Period to be
applicable to a Revolving Credit Loan by giving notice of such election
(a "Renewal / Conversion Notice") in the form of EXHIBIT 3-10, annexed
hereto received no later than 10:00 Boston time One (1) Business Day
before the end of the then applicable Interest Period if such Loan is to
be converted to a Base Margin Loan and Three (3) Business Days before
(and not counting) the end of the then applicable Inter-
est Period if such Loan is to be continued as, or converted to, a LIBOR Loan;
provided, however, that (a) any Conversion of LIBOR Loans may be made only on
the last day of the respective Interest Period for such Loans, and (b) no
loan may be Converted to a LIBOR Loan when any Suspension Event or
Event of Default has occurred and is continuing. Each such Conversion
Request shall be by telephone, telecopy, telex or cable, in each case
confirmed immediately in writing in the manner specified for notices
herein, and shall, within the restrictions specified above, specify
(i) the date of such Conversion, (ii) the Loans to be Converted,
and (iii) if such Conversion is to LIBOR Loan the duration of the initial
Interest Period for such Loans. Each Conversion Request with respect to
LIBOR Loans shall be irrevocable and binding on the Borrowers.
(b If the Administrative Agent does not receive a notice of
election of, or conversion to, an Interest Period for a LIBOR Loan pursuant to
subsection (a) within the applicable time limits specified therein, the Lead
Borrower shall be deemed to have elected to convert such Loan in whole into a
Base Margin Loan on the last day of the then current Interest Period with
respect thereto.
(c The Lead Borrower shall not select, renew, or convert any
Revolving Credit Loan such that there are more than three (3) interest rates
applicable to the Revolving Credit Loans which are LIBOR Loans at any one
time.
(d LIBOR Loans shall each be in an amount of not less than
Five Hundred Thousand and no/100 Dollars ($500,000.00) and Five Hundred
Thousand and no/100 Dollars ($500,000.00) increments in excess of such
minimum.
(e) If after giving a Conversion Request, the Lead Borrower
fails to borrow or Convert any LIBOR Loan, the Lead Borrower shall indemnify
the Agents and each Lender against any loss or expense incurred by the
Agents and each Lender as a result of such failure, including, without
limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender to
fund or maintain a LIBOR Loan to be made by such Lender and the
compensation as provided for in Section 3-18, herein.
3-11. Changed Circumstances. In the event that:
(a On any day on which the rate for a LIBOR Loan would
otherwise be set, the Administrative Agent shall have determined in good
faith (which determination shall be final and conclusive) that adequate
and fair means do not exist for ascertaining either such rate; or
(b At any time the Administrative Agent shall have
determined in good faith (which determination shall be final and conclu-
sive) that:
(i the continuation of or conversion of any Revolving
Credit Loan to a LIBOR Loan has been made impracticable or unlawful
by (A) the occurrence of a contingency that materially and adversely
affects the applicable market or (B) compliance by any Lender in
good faith with any applicable law or governmental regulation,
guideline or order or interpretation or change thereof by any
governmental authority charged with the interpretation or admin-
istration thereof or with any request or directive of any such
governmental authority having the force of law; or
(ii the indices on which the interest rates for LIBOR
Loan shall no longer represent the effective cost to the Lenders for
U.S. dollar deposits in the interbank market for deposits in which
they regularly participate;
then, and in any such event, the Administrative Agent shall forthwith so
notify the Lead Borrower thereof. Until the Administrative Agent notifies
the Lead Borrower that the circumstances giving rise to such notice no
longer apply, the obligation of the Lenders to make LIBOR Loans of the
type affected by such changed circumstances or to permit the Lead Borrower
to select the affected interest rate as otherwise applicable to any
Revolving Credit Loans shall be suspended. If at the time the
Administrative Agent so notifies the Lead Borrower, the Lead Borrower has
previously given the Administrative Agent a Renewal/Conversion Notice with
respect to one or more LIBOR Loans, but such Revolving Credit Loans have
not yet gone into effect, such notification shall be deemed to be void and
the Lead Borrower may borrow Revolving Credit Loans which are Base Margin
Loans by giving a substitute Renewal/Conversion Notice. Upon the expi-
ration of the Interest Period for any LIBOR Loan which is outstanding on
the date of such notification, the amount of such LIBOR Loan shall
thereafter constitute a Base Margin Loan.
3-12. Payments and Prepayments. (a) Base Margin Loans may be
prepaid at any time and from time to time without premium or penalty.
(b) Any LIBOR Loan may be prepaid, upon not less than three
(3) Business Days' prior written notice to the Administrative Agent, without
penalty, provided that (1) each partial prepayment shall be in the principal
amount of $500,000.00 or an integral multiple thereof, (2) if such prepayment
is on any day other than the last day of the Interest Period relating thereto,
such amount prepaid shall be accompanied by any additional amounts necessary
to compensate the Lenders for any costs incurred by the Lenders in accordance
with Section 3-17, herein, including any interest or fees payable by the
Lenders to lenders of funds obtained by then in order to make or
maintain its LIBOR Loans hereunder and (3) any amount prepaid shall be
accompanied by accrued interest on the principal repaid to the date of
payment.
(c) In the event that at the time of any such prepayment
Loans are outstanding of more than one type, the amount prepaid shall be
applied first to any Base Margin Loan prior to application to any LIBOR Loans.
(d) Any premium due hereunder upon such prepayment shall be
due and payable upon any prepayment whatsoever, whether voluntary or
involuntary, to the extent permitted by law, and after acceleration of
the unpaid principal balance of the Liabilities after the occurrence and
during the continuance of an Event of Default.
3-13. Fees. (a) As compensation for the Lenders' commitment
included herein to make loans and advances to the Borrowers and as
compensation for the Lenders' maintenance of sufficient funds available
for such purpose, the Lenders shall have earned a Facility Fee
(so referred to herein) of $75,000.00 (to be shared pro rata by the Lenders),
$37,500.00 of which was previously paid and the balance of which
shall be paid upon the Closing Date.
(b In addition to any other fee by the Borrowers on account of the
Revolving Credit, the Borrowers shall pay to the Administrative Agent, for the
pro rata benefit of the Lenders, a Line (Unused) Fee (so referred to herein)
in arrears, on the first day of each quarter (and on the Termination Date).
The Line (Unused) Fee shall be equal to the Line Fee Percentage of the
average difference, during the quarter just ended (or relevant period
with respect to the payment being made on the Termination Date) between
the Revolving Loan Ceiling and the unpaid principal balance of the Loan
Account.
(c) In addition to any other fee by the Borrowers on account of the
Revolving Credit, the Borrowers shall pay the Administrative Agent, for the
pro rata benefit of the Lenders, an annual fee (the "Annual Fee") of
$10,000.00 payable upon the Closing Date and each anniversary hereof.
(d) As compensation for the Lenders' commitment included herein to
make the Term Loan to the Borrowers and as compensation for the Lenders'
maintenance of sufficient funds available for such purpose, the Lenders shall
have earned a Term Loan Fee (so referred to herein) of $10,000.00 (to be
shared pro rata by the Lenders based on the amounts outstanding and the time
outstanding for each Lender), which fee shall be paid on the Closing Date,
and an additional fee of $30,000.00 ((to be shared pro rata by the Lenders
based on the amounts outstanding and the time outstanding for each Lender))
to be paid on May 11, 2000 if any portion of the Term Loan remains
outstanding on May 11, 2000.
(e) The Borrower shall not be entitled to any credit, rebate or
repayment of any Facility Fee, Annual Fee, Term Loan Fee, or Line (Unused)
Fee previously earned by the Agents or the Lenders pursuant to this Section
notwithstanding any termination of the within Agreement or suspension or
termination of the Lender's obligation to make loans and advances hereunder.
3-14. Fees For L/C's. (a) Prior to the issuance of any L/C, the
Borrowers shall pay to the Administrative Agent, for the pro rata benefit of
the Lenders, a fee on account of such L/C based upon the Administrative
Agent's then current fee schedule for like L/C's.
(b In addition to the fee to be paid as provided in
Subsection (a), above, the Borrowers shall pay to the Administrative Agent, on
demand, all issuance, processing, negotiation, amendment, and administrative
fees and other amounts on account of, or in respect to, each L/C.
3-15. Effect of Honor of L/C's. The Borrowers shall reimburse the
Administrative Agent for the amount of any honoring of any L/C. Any such
honoring which is not so reimbursed on the Business Day when so honored shall
constitute a Revolving Credit Loan.
3-16. Additional Provisions Relating to L/C's. (a) The
obligations of the Borrowers with respect to L/Cs shall be absolute and
uncondi-tional. The obligations of the Borrowers with respect to L/Cs
shall rank pari passu with the obligations of the Borrowers to repay all
other Liabilities. The Administrative Agent's rights, powers, privileges
and immunities specified in or arising under this Agreement with respect
to L/C's are in addition to any heretofore or at any time hereafter
otherwise created or arising, whether by statute or rule of law or contract.
(b The Borrowers will
(i promptly examine the copy of any L/C (and any
amendments thereof) sent to it by the Administrative Agent;
(ii promptly examine all instruments and documents
delivered to it from time to time by the Administrative Agent; and
(iii within three (3) Business Days of receipt
thereof, provide the Administrative Agent with written notice of any
irregularity or claim of non-compliance with the instructions of such
person or entity. The Borrowers are conclusively deemed to have waived
any such claim against the Administrative Agent and its correspondents
unless such notice is so timely given.
(c The Borrowers will
(i procure promptly any necessary documentation,
permits, or licenses for the import, export or shipping of the property in
connection with which any L/C is issued;
(ii comply with all foreign and domestic governmental
requirements relating to the shipment or financing of such property; and
(iii furnish such evidence that the above requirements
have been fulfilled as the Administrative Agent reasonably may require.
(d The Borrowers will jointly and severally indemnify the
Agents and each Lender for and hold harmless against any and all claims,
loss, liability, or damage, including attorneys' reasonable fees, howsoever
arising from or in connection with the surrender or endorsement of any
xxxx of lading, warehouse receipt or documents of title at any time held
by the Administrative Agent, or any of its correspondents in connection
with any L/C.
(e As further security for the payment or performance of any
and all other obligations and liabilities hereunder, certain or contingent,
and also for the payment or performance of any and all other obligations and
liabili-ties, certain or contingent, due or to become due, now existing or
hereafter arising, which are now, or may at any time or times hereafter be
owing by the Borrowers to the Lenders, the Borrowers hereby
(i recognize and admit the Collateral Agent's security
interest in, and, after the occurrence and during the continuance of an
Event of Default, unqualified right to the possession and disposal of, any
and all shipping documents, warehouse receipts, policies or certificates
of insurance, and other documents accompanying or relative to any L/C or
Acceptance (whether or not such documents, goods, or other property have
been released to or upon the order of the Lead Borrower under a security
agreement or trust or bailee receipt) and in and to the proceeds of each
and all of the foregoing; and
(ii if any third party shall have joined in the
application for the L/C, assigns and transfers to the Collateral Agent all
right, title and interest of the Borrowers in and to all property and
interests which any Borrower may now or hereafter obtain from such third
party arising in connection with the transaction to which the L/C relates,
to the extent that same can be lawfully assigned.
(f Following the occurrence and during the continuance of
any Event of Default, the Collateral Agent or the Administrative Agent, with
power of substitution and revocation, may:
(i sign, in the name of the Collateral Agent or the
Administrative Agent, and/or the name of any Borrower, any document called
for from any Borrower and/or endorse, in the name of any Borrower, any and
all notes, checks, drafts, documents of title, Documents of Title, or
other instruments or documents in which the Collateral Agent or the
Administrative Agent may at any time have any interest in connection with
any L/C; and
(ii perform any obligation or agreement in connection
with any L/C or Acceptance which any Agent deems necessary or desirable to
protect any Agent's right, powers and remedies under this Agreement.
(g None of the Agents, the Administrative Agent's corre-
spondents or any advising, negotiating, or paying bank with respect to any
L/C, shall be responsible in any way for:
(i performance by any beneficiary under any L/C of
that beneficiary's or payee's obligations to any Borrower; or
(ii the form, sufficiency, correctness, genuineness,
authority of any person signing, falsification, or the legal effect of,
any documents called for under any L/C if (with respect to the foregoing)
such documents on their face appear to be in order.
(h The Administrative Agent may honor, as complying with the
terms of any L/C and of any drawing thereunder, any drafts or other documents
otherwise in order, but signed or issued by an administrator, executor,
conserva-tor, trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, liquidator, receiver, or other legal representative
of the party authorized under such L/C or Acceptance to draw or issue such
drafts or other documents.
(i Unless otherwise agreed to, in the particular instance,
the Borrowers hereby authorize the Administrative Agent to (i) select an
advising bank, if any; (ii) select a paying bank, if any; and (iii) select a
negotiating
bank.
(j All directions, correspondence, and funds transfers
relating to any L/C are at the risk of the Borrowers. The Administrative
Agent shall have discharged its obligations under any L/C which, or the
drawing under which, includes payment instructions, by the initiation of
the method of payment called for in, and in accordance with, such
instructions (or by any other commercially reasonable and comparable method).
The Administrative Agent does not assume any responsibility for any
inaccuracy, interruption, error, or delay in transmission or delivery by
post, telegraph or cable, or for any inaccuracy of translation.
(k The Administrative Agent's rights, powers, privileges and
immunities specified in or arising under this Agreement are in addition to
any heretofore or at any time hereafter otherwise created or arising,
whether by statute or rule of law or contract.
(l Except to the extent otherwise expressly provided here-
under or agreed to in writing by the Administrative Agent, and the Borrowers,
the L/C will be governed by the Uniform Customs and Practice for Documentary
Credits, International Chamber of Commerce, Publication No. 500, and any
subsequent revi-sions thereof.
(m If any change in any law, executive order or regulation,
or any directive of any administrative or governmental authority (whether or
not having the force of law), or in the interpretation thereof by any
court or administrative or governmental authority charged with the
administration thereof, shall either:
(i impose, modify or deem applicable any reserve,
special deposit or similar requirements against L/C's heretofore or here-
after caused to be issued by the Administrative Agent or with respect to
which the Administrative Agent has an obligation to lend to fund drawings
thereunder; or
(ii impose on any Lender any other condition or re-
quirements relating to any such L/C's; and the result of any event
referred to in clause (i) or (ii), above, shall be to increase the cost
to such Lender of issuing or maintaining any L/C, then, upon
demand by such Lender and delivery by such Lender to the Borrowers of
a cer-tificate of an officer of such Lender describing such change in law,
executive order, regulation, directive, or interpretation thereof, its
effect on the Lender, and the basis for determining such increased costs
and their allocation, the Borrowers within five (5) Business Days after
receipt of such notice shall pay to such Lender, from time to time as
specified by the Lender, such amounts as shall be sufficient to compensate
the Lender for such increased cost. The Lender's determination of
costs incurred under clause (m) (i) or (ii) above, shall be conclusive
and binding on the Borrowers in the absence of manifest error.
(n The obligations of the Borrowers under this Agreement
with respect to L/C's are absolute, unconditional, and irrevocable and shall
be performed strictly in accordance with the terms hereof under all
circumstances, whatsoever including, without limitation, the following:
(i Any lack of validity or enforceability or
restriction, restraint, or stay in the enforcement of the within
Agreement, any L/C, or any other agreement or instrument relating thereto.
(ii Any amendment or waiver of, or consent to the
departure from, all or any of the above.
(iii The existence of any claim, set-off, defense, or
other right which the Borrowers may have at any time against the
beneficiary of the L/C.
3-17. Indemnification. Each Borrower jointly and severally agrees
to indemnify the Agents and each Lender and to hold the Agents and each
Lender (each an "Indemnified Party") harmless from and against any loss,
cost or expense (including loss of anticipated profits) that an Indemnified
Party may sustain or incur as a consequence of (a) default by the
Borrowers in payment of the principal amount of or any interest on any
LIBOR Loans as and when due and payable, including any such loss or expense
arising from interest or fees payable by an Indemnified Party to lenders
of funds obtained by it in order to maintain its LIBOR Loans, (b) default
by the Borrowers in making a borrowing or conversion
after the Lead Borrower has given (or is deemed to have given) a Conversion
Request, or (c) the making of any payment of any LIBOR Loan or the making of
any conversion of any such Loan to a Base Margin Loan on a day that is not the
last day of the applicable Interest Period with respect thereto, whether due
to voluntary prepayment, payment realized from the Collateral or any guarantor
after the occurrence of an Event of Default, or otherwise, including
interest or fees payable by an Indemnified Party to lenders of funds
obtained by it in order to maintain any such Loans. Such loss shall
include, without limitation, an amount calculated as follows:
(a First, the Indemnified Party shall determine the amount
by which (i) the total amount of interest which would have otherwise accrued
hereunder on each installment of principal so paid or not borrowed, during
the period beginning on the date of such payment or failure to borrow and
ending on the date such installment would have been due (the "Reemployment
Period"), exceeds (ii) the total amount of interest which would accrue,
during the Reemployment Period, on any readily marketable bond or other
obligation of the United States of America designated by the Indemnified
Party in its sole discretion at or about the time of such payment, such bond
or other obligation of the United States of America to be in an amount
equal (as nearly as may be) to the amount of principal so paid or not
borrowed and to have a maturity comparable to the Reemployment Period,
and the interest to accrue thereon to take account of amortization of any
discount from par or accretion of premium above par at which the same is
selling at the time of designation. Each sum amount is hereafter referred
to as an "Installment Amount".
(b Second, each Installment Amount shall be treated as
payable as of the date on which the related principal installment would have
been payable by the Borrowers had such principal installment not been
prepaid or not borrowed.
(c Third, the amount to be paid on each such date shall be
the present value of the Installment Amount determined by discounting the
amount thereof from the date on which such Installment Amount is to be
treated as payable, at the same annual interest rate as that payable upon
the bond or other obligation of the United States of America designated as
aforesaid by the Indemnified Party.
3-18. Computation of Interest and Fees. Interest and all fees
payable hereunder shall be computed daily on the basis of a year of 360 days
and paid for the actual number of days for which due. If the due date for any
payment of principal is extended by operation of law, interest shall be
payable for such extended time. If any payment required by this Agreement
becomes due on a day that is not a Business Day, such payment may be made on
the next suc-ceeding Business Day, and such extension shall be included in
computing interest in connection with such payment.
3-19. Overdue Payments. Overdue amounts payable hereunder shall
bear interest from and including the due date thereof until paid, payable on
demand, at a rate per annum equal to the Base Rate plus 3% per annum.
3-20. Automatic Payment. The Borrowers authorize the
Administrative Agent to automatically debit the Borrowers' demand deposit
accounts with the Administrative Agent on the Interest Payment Date or such
other dates when due for all interest, fees, costs, commissions, service
charges and expenses due to the Lenders.
3-21. Additional Costs, Etc. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent court
or by any governmental or other regulatory body or official charged with
the administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made
upon or otherwise issued to any Lender by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Lender to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Agreement, the
other Loan Documents, or the Loans (other than taxes based upon or
measured by the income or profits of the Lender), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Lender of the principal of or
the interest on any Loans or any other amounts payable to the Lender under
this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Agreement) any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar requirements
(whether or not having the force of law) against assets held by, or deposits
in or for the account of, or loans by, or commitments of an office of the
Lender, or
(d) impose on any Lender any other conditions or requirements with
respect to this Agreement, the other Loan Documents, the Loan, or any class of
loans or commitments of which any Loan forms a part;
and the result of any of the foregoing is
(i) to increase the cost to any Lender of making, funding, issuing,
renewing, extending or maintaining any of the Loans, or
(ii) to reduce the amount of principal, interest or other amount
payable to any Lender hereunder on account of any of the Loans, or
(iii) to require any Lender to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment or
foregone interest or other sum is calculated by reference to the gross amount
of any sum receivable or deemed received by such Lender from the Borrowers
hereunder,
then, and in each such case, the Borrowers will, upon demand made by such
Lender at any time and from time to time and as often as the occasion
therefor may arise, pay to such Lender such additional amounts as will be
sufficient to compensate such Lender for such additional cost, reduction,
payment or foregone interest or other sum.
3-22. Capital Adequacy. If the Administrative Agent shall have
determined that the adoption of any applicable law, rule, regulation,
guideline, directive or request (whether or not having force of law)
regarding capital requirements, or the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance
by the Lenders with any of the foregoing imposes or increases a
requirement by any Lender to allocate capital resources
to the Loans made, or to be made, hereunder, which has or would have the
effect of reducing the return on such Lender's capital to a level below
that which such Lender could have achieved (taking into consideration such
Lender's then existing policies with respect to capital adequacy and
assuming full utilization of such Lender's capital) but for such adoption,
change or compliance, by any amount deemed by the Administrative Agent to be
material: (i) such Lender shall promptly after its determination of such
occurrence give notice thereof to the Lead Borrower; and (ii) the Borrowers
shall pay to such Lender as an additional fee from time-to-time on demand
such amount as the Lender certifies to be the amount
that will compensate it for such reduction. In determining such amounts,
such Lender may use any reasonable averaging and attribution methods.
ARTICLE 4 - THE TERM LOAN.
4-1. The Term Loan. Subject to, and in accordance with, the
within Agreement, and upon satisfaction of all conditions precedent set forth
in Article 6, below, the Lenders shall provide a term loan facility in the
aggregate maximum principal sum of $7,500,000.00 (the "Term Loan") to the
Borrowers in exchange for, and repayable with interest as provided in
the Borrower's Promissory Notes (hereinafter, collectively, the "Term Note")
substantially in the form of EXHIBIT 4-1, annexed hereto.
4-2. Use of Proceeds. The Borrowers shall use the proceeds of the
Term Loan solely for the repayment of Indebtedness of the Borrowers to
certain existing creditors.
4-3. Term Loan Advances. (a) Advances under the Term Loan shall be
limited to the amount of $5,000,000.00 to be advanced at closing by Xxxxx
Brothers Xxxxxxxx & Co., with the balance of $2,500,000.00 available under
the Term Loan to be advanced by Family Bank, FSB, upon satisfaction of the
following conditions:
(i Receipt of an appraisal showing the value of the Real Estate,
as adjusted by the Agents, of no less than $11,550,000.00.
(ii Confirmation by the Agents that no Event of Default is then in
existence.
(iii Receipt of satisfactory reliance letter from the Lead
Borrower's environmental consultants and a satisfactory review of
the Massachusetts Department of Environmental Protection file for
the Real Estate.
(b) In the event the appraisal reveals that the value of the Real
Estate, as determined by Agents, is less than $11,550,000.00, the maximum
amount available to be advanced under the Term Loan shall be reduced to 65%
of such value.
(c) No Term Loan Advances shall be made after July 1, 2000
ARTICLE 5 - GRANT OF SECURITY INTEREST
5-1. Grant of Security Interest. To secure the Borrowers' prompt,
punctual, and faithful performance of all and each of the Borrowers'
Liabilities, the Borrowers hereby grant to the Collateral Agent, for
the benefit of the Lenders a continuing security interest in and to,
and assigns to the Collateral Agent, for the benefit of the Lenders, the
following, and each item thereof, whether now owned or now due, or in
which any Borrower has an interest, or hereafter acquired, arising, or to
become due, or in which any Borrower obtains an interest, and all products,
Proceeds, substitutions, and accessions of or to any of the following
(all of which, together with any other property in which the
Collateral Agent and Lenders may in the future be granted a security
interest, is referred to herein as the "Collateral"):
(a All Accounts.
(b All Inventory.
(c All General Intangibles.
(d All Equipment.
(e All Goods.
(f All Fixtures.
(g All Chattel Paper.
(h All books, records, and information relating to the Collateral
and/or to the operation of the Borrower's business, and all rights
of access to such books, records, and information, and all property
in which such books, records, and information are stored, recorded,
and maintained.
(i All Instruments, Documents of Title, Documents, policies and
certificates of insurance, Investment Property, deposits, deposit
accounts, impressed accounts, compensating balances, money, cash, or
other property;
(j All insurance proceeds, refunds, and premium rebates,
including, without limitation, proceeds of fire and credit
insurance, whether any of such proceeds, refunds, and premium
rebates arise out of any of the foregoing or otherwise.
(k All liens, guaranties, rights, remedies, and privileges
pertaining to any of the foregoing including the right of stoppage
in transit.
5-2. Extent and Duration of Security Interest. The within grant of a
security interest is in addition to, and supplemental of, any security
interest previously granted by the Borrowers to the Collateral Agent and
shall continue in full force and effect applicable to all Liabilities
until all Liabilities have been indefeasibly paid and/or satisfied in full.
ARTICLE 6 - CONDITIONS PRECEDENT.
Precedent to the effectiveness of this Agreement, the establishment of the
financing arrangements contemplated hereby, and the making of the first loan
under the Revolving Credit, the documents respectively described in Sections
6-1 through and including 6-9 each in form and substance satisfactory to the
Agents shall have been delivered to the Agents, and the conditions
respectively described in Sections 6-10 through and including 6-12,
shall have been satisfied:
6-1. Corporate Due Diligence. (a) Certificates of corporate good
standing issued by the respective Secretary of State of the Borrowers' state
of incorporation.
(b Within two (2) weeks of the Closing Date, Certificates of due
qualification, in good standing, issued by the Secretary of State of each
State in which the nature of the Borrowers' business conducted or assets
owned could require such qualification.
(c A Certificate of each Borrower's Assistant Clerk of the due
adoption, continued effectiveness, and setting forth the texts of, each
corporate resolution adopted in connection with the establishment of the loan
arrangement contemplated by the Loan Documents and attesting to the true
signatures of each Person authorized as a signatory to any of the Loan
Documents.
6-2. Opinion. An opinion of counsel to the Borrowers in form and
substance satisfactory to the Agents.
6-3. Landlord's Waivers. Waivers (each in form reasonably
satisfactory to the Agent) by each of the Borrowers' landlords in Wilmington,
Massachusetts and Newton, Massachusetts.
6-4. Officers' Certificates. A Certificate executed by the President
and the Treasurer of each Borrower and stating that the representations and
warranties made by such Borrower to the Lender in the Loan Documents are true
and complete as of the date of such Certificate, and that no event has
occurred which is or which, solely with the giving of notice or passage of
time (or both) would be an Event of Default.
6-5. Guaranties. The Administrative Agent shall have received
unlimited guaranties in form and substance acceptable to the Administrative
Agent wherein each Borrower shall unconditionally guaranty all Liabilities
of the other Borrowers to the Agents and each Lender.
6-6. Mortgage. A Mortgage, Security Agreement and Assignment
securing the Liabilities on the Real Estate, together with all appropriate
real estate due diligence as requested by the Agents.
6-7. Lockbox. The lockbox and agency agreements required under
Section 7-3 below.
6-8. Pledge Agreements. Pledge Agreements from each Borrower
granting the Collateral Agent a lien and security interest in certain
securities and other Investment Property owed by such Borrower.
6-9 Additional Documents. Such additional instruments and documents
as the Agents or their counsel reasonably may require or request.
6-10. Representations and Warranties. Each of the representations
made by or on behalf of any Borrower in this Agreement or in any of the other
Loan Documents or in any other report, statement, document, or paper provided
by any or on behalf of any Borrower shall be true and complete as of the date
as of which such representation or warranty was made.
6-11. No Event of Default. No event shall have occurred, or failed
to occur, which occurrence or which failure constitutes, or which, solely
with the passage of time or the giving of notice (or both) would constitute,
an Event of Default.
6-12. No Adverse Change. Except as noted on EXHIBIT 6-12, no event
shall have occurred or failed to occur, which occurrence or failure had or
could reasonably be expected to have a materially adverse effect upon the
Borrowers' financial condition, operating results, or cash flows from the
Borrowers' financial condition at December 31, 1999.
ARTICLE 7 - GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
To induce the Lenders to establish the loan arrangement contemplated herein
and to make loans and advances and to provide financial accommodations under
the Revolving Credit (each of which loans shall be deemed to have been made
in reliance thereupon) and to make the Term Loan, the Borrowers, in addition
to all other representations, warranties, and covenants made by the Borrowers
in any other Loan Document, make those representations, warranties, and
covenants included in this Agreement.
7-1. Payment and Performance of Liabilities. The Borrowers shall pay
each Liability when due (or when demanded if payable on demand) and shall
promptly, punctually, and faithfully perform each other Liability.
7-2. Due Organization - Corporate Authorization - No Conflicts. (a)
Each Borrower presently is and shall hereafter remain in good standing as a
corporation in the State referenced in the Preamble hereto and is and shall
hereafter remain duly qualified and in good standing in every other State in
which, by reason of the nature or location of such Borrower's assets or
operation of such Borrower's business, such qualification may be necessary,
except for such States in which failure to be so qualified and in good
standing would not result in a Material Adverse Change.
(b) Each Related Entity is listed on EXHIBIT 7-2, annexed hereto.
Each Related Entity is and shall hereafter remain in good standing in the
State in which incorporated and is and shall hereafter remain duly qualified
in each other State in which, by reason of that entity's assets or the
operation of such entity's business, such qualification may be necessary,
except for such States in which failure to be so qualified and in good
standing would not result in a Material Adverse Change. The Borrowers shall
provide the Administrative Agent with prior written notice of any entity's
becoming or ceasing to be a Related Entity.
(c) Each Borrower has all requisite corporate power and authority
to execute and deliver to the Administrative Agent all and singular the Loan
Documents to which such Borrower is a party and has and will hereafter retain
all requisite corporate power to perform all and singular the Liabilities.
(d) The execution and delivery by each Borrower of each Loan
Document to which it is a party; each Borrower's consummation of the
transactions contemplated by such Loan Documents (including, without
limitation, the creation of security and mortgage interests by such
Borrower as contemplated hereby); and each Borrower's performance under
those of the Loan Documents to which it is a party; the borrowings hereunder;
and the use of the proceeds thereof:
(i) Have been duly authorized by all necessary corporate action.
(ii) Do not, and will not, contravene in any material respect
any provision of any Requirement of Law or obligation of such Borrower.
(iii) Will not result in the creation or imposition of, or
the obligation to create or impose, any Encumbrance upon any assets of any
Borrower pursuant to any Requirement of Law or obligation, except pursuant
to the Loan Documents.
(e) The Loan Documents have been duly executed and delivered by
each Borrower party thereto and are the legal, valid and binding obligations
of each Borrower party thereto, enforceable against each Borrower party
thereto in accordance with their respective terms.
7-3. Maintain Accounts. To permit the Lenders to monitor the
Borrowers' financial performance and condition, each Borrower shall maintain
all of such Borrower's depository accounts with the Agents or depository
institutions acceptable to the Agents, which institutions have entered into
satisfactory lockbox and agency account agreements with such Borrower and
the Administrative Agent. Any amounts received by such third party
institutions shall be transferred on a daily basis to an account established
and controlled by the Administrative Agent to be applied in accordance
with the terms hereof.
7-4. Trade Names. (a) EXHIBIT 7-4, annexed hereto, is a listing of:
(i) All names under which each Borrower ever conducted its business.
(ii) All entities and/or persons with whom any Borrower ever consolidated
or merged, or from whom any Borrower ever acquired in a single transaction
or in a series of related transactions substantially all of such entity's or
person's assets.
(b) Except (i) upon not less than twenty-one (21) days prior
written notice given the Administrative Agent, and (ii) in compliance with
all other provisions of this Agreement, no Borrower will undertake or commit
to undertake any action such that the results of that action, if undertaken
prior to the date of this Agreement, would have been reflected on EXHIBIT 7-4.
(c) The conduct by any Borrower of such Borrower's business does not
infringe on the patents, industrial designs, trademarks, trade names, trade
styles, brand names, service marks, logos, copyrights, trade secrets, know-
how, confidential information, or other intellectual or proprietary property
of any third Person.
(d) Each Borrower owns and possesses, or has the right to use all patents,
industrial designs, trademarks, trade names, trade styles, brand names,
service marks, logos, copyrights, trade secrets, know-how, confidential
information, and other intellectual or proprietary property of any third
Person necessary for such Borrower's conduct of its business.
7-5. Locations. The Collateral, and the books, records, and papers
of the Borrowers pertaining thereto, are kept and maintained solely at the
chief executive offices of the Borrowers stated in the Preamble of this
Agreement, and at those locations which are listed on EXHIBIT 7-5, annexed
hereto, which EXHIBIT includes all service bureaus with which any such
records are maintained and the names and addresses of each of the Borrower's
landlords. Except (i) to accomplish sales of Inventory in the ordinary
course of business or (ii) to utilize such of the Collateral as is removed
from such locations in the ordinary course of business (such as motor
vehicles), the Borrower shall not remove any Collateral
from said chief executive offices or those locations listed on EXHIBIT 7-5.
7-6. Title to Assets. Each Borrower is, and shall hereafter remain,
the owner of the all of its present and future assets free and clear of all
Encumbrances, other than the following ("Permitted Liens"):
(a) the mortgages and security interests (including Capital
Leases) referred to in EXHIBIT 7-6 attached hereto, or any renewal, extension
or refunding of any such mortgage or security interest in an amount not
exceeding the amount thereof remaining unpaid immediately prior to such
renewal, extension or refunding;
(b) liens for taxes and other amounts not yet delinquent or being
contested in good faith as provided in Section 7-13; liens in connection with
workmen's compensation, unemployment insurance or other social security
obligations; liens securing the performance of bids, tenders, contracts,
leases, statutory obligations, surety and appeal bonds, liens to secure
progress or partial payments and other liens of like nature arising in the
ordinary course of business; mechanics', workmen's, materialmen's or other
like liens arising in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good faith;
and other liens or encumbrances incidental to the conduct of the business
of any Borrower or any Subsidiary or to the ownership of their respective
properties or assets, which were not incurred in connection with the
borrowing of money or the obtaining of credit and which do not, individually
or in the aggregate, materially detract from the value of the properties
or assets of the Borrowers and their Subsidiaries or materially
affect the use thereof in the operation of their business;
(c) Encumbrances in the nature of (i) zoning restrictions, (ii)
easements, (iii) restrictions of record on the use of real property, (iv)
landlords' and lessors' encumbrances on rented premises and (v) restrictions
on transfers or assignments of leases, which in each case do not, individually
or in the aggregate, materially detract from the value of the encumbered
property or impair the use thereof in the business of any Borrower or any
Subsidiary;
(d) Liens in respect of judgments or awards, to the extent that
such judgments or awards are permitted by Section 7-7(j).
(e) Restrictions under federal and state securities laws on the
transfer of securities;
(f) Restrictions under foreign trade regulations, other
governmental rules and regulations, and subcontracts on the transfer or
licensing of certain assets of the Borrowers and their Subsidiaries; and
(g) Liens and security interests granted to the Agents and the
Lenders under the Loan Documents.
7-7. Indebtedness. The Borrowers do not and shall not hereafter have
any Indebtedness with the exceptions of:
(a) Indebtedness to the Agents and the Lenders hereunder;
(b) Indebtedness existing as of the Closing Date of any wholly-
owned Subsidiary to a Borrower or any other wholly-owned Subsidiary and of
a Borrower to any wholly-owned Subsidiary; provided, however, that (i) all
moneys due from a Borrower to any Subsidiary which is not a Borrower will be
expressly constituted as a Subordinated Debt and (ii) no Borrower shall repay
any such moneys due to any Subsidiary at any time unless no Event of Default
exists and no event which, with the giving of notice or lapse of time or
both, would constitute an Event of Default exists or will exist after such
repayment;
(c) Current liabilities of a Borrower or any Subsidiary (other than
for borrowed money) incurred in the ordinary course of its business and in
accordance with customary trade practices;
(d) Existing Indebtedness of a Borrower or any Subsidiary referred
to in EXHIBIT 7-7 attached hereto, and renewals and extensions thereof,
provided that (i) the aggregate principal amount of such Indebtedness is not
at any time increased, (ii) no material terms applicable to such Indebtedness
shall be more favorable to the renewal or extension lenders than the terms
that are applicable to the holders of such Indebtedness on the date hereof
and (iii) the interest rate applicable to such Indebtedness shall be a market
interest rate as of the time of such renewal or extension;
(e) Indebtedness of a Borrower or any Subsidiary secured by
Permitted Liens;
(f) Indebtedness of a Borrower or any Subsidiary in respect of
guarantees to the extent the underlying Indebtedness is permitted by this
Section 7-7; and
(g) Subordinated Debt;
(h) Unfunded pension and benefit Liabilities so long as each
Borrower is in compliance with Section 7-15, provided that the Lead
Borrower's accrued pension liability shall not exceed $5,000,000 as
determined in accordance with GAAP;
(i) To the extent payment thereof shall not at the time be
required by Section 7-13, Indebtedness in respect of taxes, assessments,
governmental changes and claims for labor, material and supplies;
(j) Indebtedness in respect of judgments or awards (i) which have
been in force for less than the applicable appeal period or (ii) in respect
to which any Borrower or any Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review, and in each case such
Borrower or such Subsidiary shall have taken appropriate reserves therefor
in accordance with GAAP;
(k) Indebtedness incurred to refinance the Term Loan, the terms
and conditions of which Indebtedness shall be subject to the reasonable
approval of the Agents; and
(l) Indebtedness in respect of deferred taxes arising in the
ordinary course of business.
7-8. Insurance Policies. (a) EXHIBIT 7-8, annexed hereto, is a
schedule of all insurance policies owned by any Borrower or under which any
Borrower is the named insured. Each of such policies is in full force and
effect. Neither any Borrower nor, to the knowledge of the Borrowers, the
issuer of any such policy is in default or violation of any such policy.
(b) Each Borrower will maintain or cause to be maintained on all
insurable properties now or hereafter owned by such Borrower or any
Subsidiary insurance against loss or damage by fire or other casualty to
the extent customary with respect to like properties of companies conducting
similar businesses and will maintain or cause to be maintained public
liability and workmen's compensation insurance insuring such Borrower and
its Subsidiaries to the extent customary with respect to companies
conducting similar businesses and, upon request, will furnish to the
Collateral Agent satisfactory evidence of the same. All insurance carried
by any Borrower shall name the Collateral Agent as additional insured
and as additional loss payee and shall provide for a minimum
of thirty (30) days' written notice of cancellation to the Collateral Agent.
In the event of the failure by any Borrower to maintain insurance as required
herein, the Collateral Agent, at its option, may obtain such insurance at the
cost and expense of the Borrowers. Each Borrower shall furnish to the
Collateral Agent certificates or other evidence reasonably satisfactory to
the Collateral Agent regarding compliance by such Borrower with the
foregoing insurance provisions.
(c) Each Borrower shall advise the Collateral Agent of each claim
made by such Borrower under any policy of insurance which covers the
Collateral and will permit the Collateral Agent, at the Collateral Agent's
option in each instance, to the exclusion of such Borrower, to conduct the
adjustment of each such claim while any Event of Default is then in
existence. Each Borrower hereby appoints the Collateral Agent as such
Borrower's attorney in fact to obtain, adjust, settle, and cancel any
insurance described in this section and to endorse
in favor of the Collateral Agent any and all drafts and other instruments
with respect to such insurance, in each case during the continuance of any
Event of Default. Such appointment, being coupled with an interest, is
irrevocable until this Agreement is terminated by a written instrument
executed by a duly authorized officer of the Collateral Agent. The
Collateral Agent shall not be liable on account of any exercise pursuant to
said power except for any exercise in actual willful misconduct and bad
faith. The Collateral Agent may apply any proceeds of such insurance
against the Liabilities, whether or not such have
matured, in such order of application as the Collateral Agent may determine.
7-9. Licenses. EXHIBIT 7-9, annexed hereto, is a schedule of all
material license, distributor, franchise, and similar agreements issued to,
or to which any Borrower is a party. Each of such agreements is in full
force and effect. Neither any Borrower nor, to the knowledge of the
Borrowers, any other party to any such agreement is in material default or
violation of any such agreement and no Borrower has received any notice or
threat of cancellation of any such agreement.
7-10. Leases. EXHIBIT 7-10, annexed hereto, is a schedule of all
presently effective Leases and Capital Leases. Each of such Leases and
Capital Leases is in full force and effect. Neither any Borrower nor, to
the knowledge of the Borrowers, any other party to any such Lease or
Capital Lease is in material default or violation of any such Lease or
Capital Lease and no Borrower has received any notice or threat of
cancellation of any such Lease or Capital Lease. Each Borrower hereby
authorizes the Administrative Agent at any time and from time to time to
contact any of the Borrowers' landlords in order to confirm
each Borrower's continued compliance with the terms and conditions of any
Lease between such Borrower and that landlord and to discuss such issues,
concerning such Borrower's occupancy under such Lease, as the Administrative
Agent may determine.
7-11. Requirements of Law. Except as set forth on EXHIBIT 7-11, each
Borrower is in material compliance with, and shall hereafter comply with and
use its assets in material compliance with, all Requirements of Law. No
Borrower has received any notice of any material violation of any Requirement
of Law which material violation has not been cured or otherwise remedied.
7-12. Maintain Properties. Each Borrower shall:
(a) Keep the Collateral in good order and repair (ordinary reasonable
wear and tear and insured casualty excepted).
(b) Not suffer or cause the waste or destruction of any material part
of the Collateral.
(c) Not use any of the Collateral in violation of any policy of
insurance thereon.
(d) Not sell, lease, or otherwise dispose of any of the Collateral,
other than the following:
(i) The sale of Inventory in the ordinary course of business.
(ii) The disposal of Equipment which is obsolete, worn out, or
damaged beyond repair, which Equipment is replaced to the extent necessary to
preserve or improve the operating efficiency of the Borrower.
(iii) The turning over to the Collateral Agent of all Receipts as
provided herein.
(iv) Other sales and dispositions for fair market value that, when
aggregated with all other sales and dispositions pursuant to this clause (iv),
is in exchange for up to $100,000 of gross sales proceeds received by a
Borrower, provided that no Borrower shall dispose of any portion of its
books and records, regardless of whether a particular asset of property
constitutes Collateral, without the prior consent of the Agents. The
Agents' consent shall be requested no less than ten (10) days prior to the
scheduled closing date of a proposed sale. The Net Proceeds of any sale
consented to by the Agents shall be used solely to reduce the outstanding
balance of the Revolving Credit Loans.
(v) Sales, leases and other dispositions of assets permitted by
Section 7-22.
7-13. Pay Taxes. (a) Except as set forth in EXHIBIT 7-13, to the best
of the Borrower's knowledge, there are no examinations of or with respect to
any Borrower presently being conducted by the Internal Revenue Service or any
state taxing authority.
(b) Except as set forth in EXHIBIT 7-13, each Borrower has, and hereafter
shall: pay, as they become due and payable, all taxes and unemployment
contributions and other charges of any kind or nature levied, assessed or
claimed against such Borrower or the Collateral by any person or entity whose
claim could result in an Encumbrance upon any asset of such Borrower or by
any governmental authority; properly exercise any trust responsibilities
imposed upon such Borrower by reason of withholding from employees' pay;
timely make all contributions and other payments as may be required pursuant
to any Employee Benefit Plan now or hereafter established by such Borrower;
and timely file all tax and other returns and other reports with each
governmental authority to whom each Borrower is obligated to so file,
provided that neither any Borrower nor any Subsidiary shall be required to
pay any such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such Borrower or such Subsidiary, as the case may
be, shall have set aside on its books such reserves, if any, with respect
thereto as are required by GAAP and deemed appropriate by such Borrower
and its independent public accountants.
(c) Except as set forth in EXHIBIT 7-13, subject to the Borrowers'
rights under subsection (b) above, in the event of the failure by any Borrower
to comply with subsection (b) above, the Administrative Agent, at its option,
may, but shall not be obligated to, pay any taxes, unemployment contributions,
and any and all other charges levied or assessed upon such Borrower or the
Collateral by any person or entity or governmental authority, and make any
contributions or other payments on account of any Borrower's Employee Benefit
Plan as the Administrative Agent, in the Administrative Agent's reasonable
discretion, may deem necessary or desirable, to protect, maintain, preserve,
collect, or realize upon any or all of the Collateral or the value thereof or
any right or remedy pertaining thereto, provided, however, the Administrative
Agent's making of any such payment shall not constitute a cure or waiver of
any Event of Default occasioned by such Borrower's failure to have made
such payment.
7-14. No Margin Stock. No Borrower is engaged in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulations U.T. and X. of the Board of Governors of
the Federal Reserve System of the United States). No part of the proceeds of
any borrowing from the Lender will be used at any time to purchase or carry
any such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.
7-15. ERISA. Neither any Borrower nor any ERISA Affiliate shall:
(a) Violate or fail to be in material compliance with any
Borrower's Employee Benefit Plan.
(b) Fail timely to file all material reports and filings required
by ERISA to be filed by any Borrower.
(c) Engage in any "prohibited transactions" or "reportable events"
(respectively as described in ERISA).
(d) Engage in, or commit, any act such that a material tax or
penalty could be imposed upon any Borrower on account thereof pursuant to
ERISA.
(e) Accumulate any material funding deficiency within the meaning
of ERISA, except to the extent permitted by Section 7-7(h).
(f) Terminate any Employee Benefit Plan such that a lien could be
asserted against any material assets of any Borrower on account thereof
pursuant to ERISA.
(g) Be a member of, contribute to, or have any material obligation
under any Employee Benefit Plan which is a multiemployer plan within the
meaning of Section 4001(a) of ERISA.
7-16. Hazardous Materials. (a) Except as set forth on EXHIBIT 7-16,
no Borrower has: (i) been legally responsible for any release or threat of
release of any Hazardous Material or (ii) received notification of any
release or threat of release of any Hazardous Material from any site or
vessel occupied or operated by any Borrower and/or of the incurrence of
any expense or loss in connection with the assessment, containment, or
removal of any release or threat of release of any Hazardous Material from
any such site or vessel.
(b) Each Borrower shall: (i) dispose of any Hazardous Material only
in compliance with all Environmental Laws and (ii) not store on any site or
vessel occupied or operated by any Borrower and not transport or arrange for
the transport of any Hazardous Material, except if such storage or transport
is in the ordinary course of any Borrower's business and is in compliance
with all Environmental Laws.
(c) Each Borrower shall provide the Administrative Agent with
written notice upon such Borrower's obtaining knowledge of any incurrence of
any expense or loss by any governmental authority or other Person in
connection with the assessment, containment, or removal of any Hazardous
Material, for which expense or loss any Borrower may be liable.
7-17. Litigation. Except as set forth on EXHIBIT 7-17, there is not
presently pending or threatened by or against any Borrower any suit, action,
proceeding, or investigation which, if determined adversely to such Borrower,
would result in a Material Adverse Change upon the Borrowers' financial
condition, taken as a whole, or ability to conduct their business as such
business is presently conducted or is contemplated to be conducted in the
foreseeable future.
7-18. Dividends, etc.. None of the Borrowers will pay any cash
dividend or make any other distribution in respect of any class of such
Borrower's capital stock, except for distributions by any Borrower to the
Lead Borrower.
7-19. Guarantees and Investments. None of the Borrowers will, nor will
any Borrower permit any Subsidiary to, make or permit to remain outstanding
any loan or advance to, or guarantee or endorse (except as a result of
endorsing negotiable instruments for deposit or collection in the ordinary
course of business) or otherwise assume or remain liable with respect to
any obligation of, or make or own any investment in, or acquire (except in
the ordinary course of business) the properties or assets of, any Person,
except:
(a) Extensions of credit by a Borrower or any Subsidiary in the
ordinary course of business in accordance with customary trade practices
(including the acceptance of promissory notes in respect of delinquent
Accounts);
(b) The presently outstanding investments, loans and advances, if
any, and the presently existing guarantees, if any, of any Borrower and its
Subsidiaries all to the extent set forth on EXHIBIT 7-19 attached hereto and
any renewal, extension or refunding thereof, provided that (i) the aggregate
principal amount thereof is not at any time increased, (ii) no material terms
applicable thereto shall be more favorable to the renewal or extension
borrower or recipient, as the case may be, than the terms that are applicable
to the borrower or recipient, as the case may be, on the date hereof and
(iii) the interest rate (if any) applicable thereto shall be a market
interest rate as of the time of such renewal or extension;
(c) Direct obligations of the United States of America or any
department or agency thereof maturing not more than one year from the date
of acquisition thereof;
(d) Certificates of deposit, repurchase agreements, time deposits
(including sweep accounts), demand deposits, bankers' acceptances, money
market deposits or other similar types of investments maturing not more than
one year from the date of acquisition thereof and evidencing direct
obligations of any Lender or any lender within the United States of America
having capital surplus and undivided profits in excess of $50,000,000;
(e) Investments in commercial paper maturing within ninety (90)
days from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from Xxxxx'x or S&P;
(f) Any mutual fund or other pooled investment vehicle which
invests principally in obligations described in subparagraphs (c), (d) or (e)
above and having, at the date of investment in such fund or vehicle, one of
the two highest credit ratings from Xxxxx'x or S&P;
(g) Equity investments by any Borrower's wholly-owned Subsidiaries
in any other wholly-owned Subsidiary and of a Borrower in any of its wholly-
owned Subsidiaries;
(h) Revolving Credit Loans and Term Loan;
(i) Guarantees by a Borrower of Indebtedness and other obligations
incurred by Subsidiaries to the extent permitted by Section 7-7;
(j) Capital Expenditures to the extent permitted by Section 7-31; and
(k) Guarantees by any Borrower of the Liabilities.
7-20. New Leases. None of the Borrowers will, nor will any Borrower
permit any Subsidiary to, enter into any Capital Lease, except as permitted
below or as otherwise permitted under Sections 7-7 and 7-8. Each Borrower
will not, and will not permit any Subsidiary to, enter into any new lease
(including any new Capital Leases, but excluding renewals of any existing
leases) as lessee if, immediately after giving effect thereto, the aggregate
rental obligations (excluding payments required to be made by the lessee in
respect of taxes and insurance whether or not denominated as rent, and
excluding payments incurred in connection with a renewal of any existing
lease) of all of the Borrowers and their respective Subsidiaries for the
period from the Closing Date through the Maturity Date under all such
leases then in effect shall exceed $2,000,000 in the aggregate in any fiscal
year after the Closing Date; provided, however, that to the extent rental
obligations under any lease are reimbursable by such Borrower's
customer pursuant to a binding contract between such Borrower and such
customer, such rental obligations shall be excluded from the foregoing
provision of this sentence. Upon the reasonable request of the Agents, the
Lead Borrower will obtain a landlord's waiver reasonably acceptable to the
Agents on any existing or new leased location occupied by any Borrower.
7-21. Mergers and Consolidations. None of the Borrowers will, nor
will any Borrower permit any Subsidiary to, enter into any merger or
consolidation, except the following:
(a) Any wholly-owned Subsidiary of a Borrower may merge or be
liquidated into a Borrower or any other wholly-owned Subsidiary of a Borrower
so long as after giving effect to any such merger to which a Borrower is a
party such Borrower shall be the surviving or resulting Person; and
(b) Mergers constituting investments permitted by Section 7-19(g)
so long as after giving effect to any such merger to which a Borrower is a
party such Borrower shall be the surviving or resulting Person.
7-22. Sale of Assets. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, sell, lease or otherwise dispose of all or
any substantial part of its properties or assets, except the following, each
of which may be effected with the prior written consent of the Agents, such
consent not to be unreasonably withheld:
(a) Each Borrower and its Subsidiaries may, subject to Section 7-
12(d)(iv), sell or otherwise dispose of (i) inventory in the ordinary course
of business; (ii) assets that are no longer used or useful in the Business
of the applicable Borrower or Subsidiary, (iii) capital stock of Software and
Telecom; provided, however, that, in the case of the foregoing clause (iii),
immediately before and after giving effect thereto no Event of Default exists
and no event exists which, with the giving of notice or passage of time or
both, would constitute an Event of Default;
(b) The Lead Borrower may sell, lease or otherwise transfer any of
its properties or assets to any other Borrower, provided that (i) the
Borrowers provide a notice thereof to the Administrative Agent prior to each
such transfer (which notice shall include a description and a good faith
estimate of the fair market value of the property or assets being so
transferred and, to the extent applicable, the revenues that were generated
by such property or assets in the immediately preceding fiscal year of the
Lead Borrower), (ii) such transfers relate solely to a transfer by the Lead
Borrower of its encoder line of business to Encoder, its metrigraphics line
of business to Metrigraphics, and (iii) immediately before and after giving
effect thereto no Event of Default exists; and
(c) Each Borrower and its Subsidiaries may license products and
intangible assets for fair market value in the ordinary course of business.
7-23. Protection of Assets. Upon the occurrence and during the
continuance of any Event of Default, the Administrative Agent, at the
Administrative Agent's discretion, and from time to time, may discharge any
tax or Encumbrance on any of the Collateral, or take any other action that
the Administrative Agent may deem necessary or desirable to repair, insure,
maintain, preserve, collect, or realize upon any of the Collateral. The
Administrative Agent shall not have any obligation to undertake any of the
foregoing and shall have no liability on account of any action so undertaken
except where there is a specific finding in a judicial proceeding (in
which the Administrative Agent has had an opportunity to be heard), from
which finding no further appeal is available, that Administrative Agent
had acted in actual bad faith or in a grossly negligent manner. Each
Borrower shall pay to the Administrative Agent, on demand, or the
Administrative Agent, in its discretion, may add to the Loan Account, all
amounts paid or incurred by the Administrative Agent pursuant to
this section. The obligation of the Borrowers to pay such amounts is a
Liability.
7-24. Line of Business. The Borrowers shall not engage in any
business other than the business in which they are currently engaged or a
business reasonably related thereto.
7-25. Affiliate Transactions. The Borrowers shall not make any
payment, nor give any value to any Related Entity except for goods and
services actually purchased by a Borrower from, or sold by a Borrower to,
such Related Entity for a price which shall
(a) be competitive and fully deductible as an "ordinary and necessary
business expense" and/or fully depreciable under the Internal Revenue Code
of 1986 and the Treasury Regulations, each as amended; and
(b) not differ from that which would have been charged in an arms length
transaction.
7-26. Additional Assurances. (a) No Borrower is the owner of, nor has
it any interest in, any property or asset which, immediately upon the
satisfaction of the conditions precedent to the effectiveness of the loan
arrangement contemplated hereby (Article 6), will be not be subject to a
perfected security interest in favor of the Collateral Agent (subject only to
Permitted Liens) to secure the Liabilities and will not hereafter acquire any
asset or any interest in property which is not, immediately upon such
acquisition, subject to such a perfected security interest in favor of the
Collateral Agent to secure the Liabilities (subject only to Permitted Liens).
(b) Each Borrower shall execute and deliver to the Agents such
instruments, documents, and papers, and shall do all such things from time to
time hereafter as the Agents may request to carry into effect the provisions
and intent of this Agreement; to protect and perfect the Collateral Agent's
security interest in the Collateral; and to comply with all applicable
statutes and laws; and to facilitate the collection of the Receivables
Collateral. Each Borrower shall execute all such instruments as may be
required by the Agents with respect to the recordation and/or perfection of
the security interests created herein. A carbon, photographic, or other
reproduction of this Agreement or of any financing statement or other
instrument executed pursuant to this Section shall be sufficient for filing
to perfect the security interests granted herein.
7-27. Adequacy of Disclosure. (a) All annual and quarterly financial
statements of the Borrowers furnished to the Lenders by the Borrowers for any
period ending on or after December 31, 1998 have been prepared in accordance
with GAAP consistently applied and present fairly the condition of the
Borrower at the date(s) thereof and the results of operations and cash
flows for the period(s) covered, except that quarterly financial statements
remain subject to year-end adjustments and the addition of notes. There
has been no change in the financial condition, results of operations, or
cash flows of the Borrowers since the date(s) of such financial statements,
other than changes in the ordinary course of business, which changes
have not been materially adverse, either singularly or in the aggregate.
(b) The Borrowers do not have any contingent obligations or obligation
under any Lease or Capital Lease which is not noted in the Borrowers'
financial statements furnished to the Lenders or has been otherwise
disclosed in writing to the Lenders prior to the execution of the within
Agreement.
(c) To the best of the Borrower's knowledge, no document, instrument,
agreement, or paper now or hereafter given the Lenders by or on behalf of the
Borrowers or any guarantor of the Liabilities in connection with the Lenders'
execution of the within Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein not misleading.
Except as set forth on EXHIBIT 6-12, there is no fact known to any Borrower
which has resulted in, or which, in the foreseeable future could result in,
a Material Adverse Change on the financial condition of any Borrower or any
such guarantor which has not been disclosed in writing to the Lenders.
7-28. Government Contracts. Each Government Contract is valid,
binding and in full force and effect, and, other than as set forth on EXHIBITS
6-12 or 7-28, there is no event which has occurred or exists, which constitutes
or which with notice, the happening of any event and/or the passage of time,
would constitute, a default or breach under any Government Contract or would
cause the acceleration of any obligation of any party thereto or give rise
to any right of termination or cancellation thereof. Except as set forth on
EXHIBITS 6-12 or 7-28, the Borrowers have no reason to believe that the
parties to the Government Contracts will not fulfill their obligations
thereunder in all material respects.
7-29. Year 2000 Compliance. The Borrowers will not suffer or permit
their operations thereafter to cease to be Year 2000 Compliant in any manner
which might have more than a de minimus effect on their operations.
7-30. Assignment of Claims Act. The Borrowers jointly and severally
agree to take any action and to execute and deliver all documentation
reasonably requested by the Agents and the Lenders in order to allow the
Collateral Agent to (i) provide notice of its security interest in and
right to payment under all Government Contracts (other than Government
Contracts which are classified or otherwise prohibit assignment), and (ii)
otherwise comply in all respects with the requirements of the Assignment of
Claims Act. In connection therewith, the Borrowers shall promptly notify
the Agents of any new Government Contract entered
into by the Borrower after the Closing Date and provide a detailed description
of such contractual arrangement sufficient to allow the Agents and Lenders to
comply in all respects with the requirements of the Assignment of Claims Act.
7-31. Capital Expenditures. None of the Borrowers will, nor will any
Borrower permit any Subsidiary to, make any Capital Expenditures during any
fiscal year of the Lead Borrower unless the aggregate amount of all Capital
Expenditures committed to be made by all Borrowers and their respective
Subsidiaries in such fiscal year does not exceed $5,000,000.00.
7-32. Other Covenants. No Borrower shall indirectly do or cause to
be done any act which, if done directly by such Borrower, would breach any
covenant contained in this Agreement.
ARTICLE 8 - USE AND COLLECTION OF COLLATERAL.
8-1. Adjustments and Allowances. The Borrowers may grant such
allowances or other adjustments to the Borrowers' Account Debtors as the
Borrowers may reasonably deem to accord with sound business practice,
provided, however (a) the Borrowers shall furnish the Administrative Agent
with those reports described in Section 11-4 below, with respect to any
such adjustments or allowances and (b) the authority granted the Borrowers
pursuant to this Section may be limited or terminated by the Administrative
Agent at any time in the Administrative Agent's discretion.
8-2. Validity of Accounts. (a) The amount of each Acceptable Account
shown on the books, records, and invoices of each Borrower represented as
owing by each Account Debtor is and will be, to the best of Borrower's
knowledge, the correct amount actually owing by such Account Debtor and
shall have been fully earned by performance by such Borrower.
(b) The Collateral Agent, from time to time in its reasonable
discretion (at the expense of the Borrowers in each instance), in accordance
with the Collateral Agent's usual procedures and customary commercial
practices, may verify the validity, amount, and all other matters with
respect to the Receivables Collateral directly with Account Debtors
(including without limitation, by forwarding balance verification requests
to the Borrowers' Account Debtors), and with the Borrowers' accountants,
collection agents, and computer service bureaus (each of which is hereby
authorized and directed to cooperate in full with the Collateral Agent and
to provide the Collateral Agent with such information and materials as the
Collateral Agent may request).
(c) The Borrowers have no knowledge of any material impairment
of the validity or collectibility of any of the Acceptable Accounts and shall
notify the Collateral Agent of any such fact immediately after any Borrower
becomes aware of any such impairment.
(d) Except in the ordinary course of business, no Borrower shall post any
bond to secure such Borrower's performance under any agreement to which such
Borrower is a party nor cause any surety, guarantor, or other third party
obligee to become liable to perform any obligation of any Borrower (other
than to the Collateral Agent) in the event of any Borrower's failure so
to perform.
8-3. Notification to Account Debtors. The Administrative Agent shall
have the right at any time in its reasonable discretion to notify any of any
Borrower's Account Debtors to make payment directly to the Collateral Agent
and to collect all amounts due on account of the Collateral.
ARTICLE 9 - RECEIVABLES.
9-1. Proceeds and Collection of Accounts. (a) It is recognized and
intended that all Receipts constitute Collateral and proceeds of Collateral.
A portion of the Receivables Collateral consists of Receipts.
(b) Whether or not any Liabilities are then outstanding, each Borrower
shall cause each of the Borrower's Account Debtors to forward all Receipts
proceeds of the Receivables Collateral directly to a lock box, blocked
account, or similar recipient designated by the Administrative Agent and
over which the Administrative Agent has sole access and control.
(c) All Receipts and collections of the Receivables Collateral which,
notwithstanding the provisions of Subsection 9-1(b) are received by any
Borrower or come under the control of any Borrower shall be held in trust
by such Borrower for the Lenders; shall not be commingled with any of such
Borrower's other funds; and shall be deposited and/or transferred only
to such lock box, blocked account, or similar recipient designated by the
Administrative Agent pursuant to Subsection 9-1(b), above, or as otherwise
instructed by the Administrative Agent.
9-2. Proceeds and Collection of Accounts Held in Trust. In the event
that, notwithstanding the provisions of this Article, any Borrower receives
or otherwise has dominion and control of any Receipts, or any proceeds or
collections of any Collateral, such Receipts, proceeds, and collections shall
be held in trust by such Borrower for the Lenders and shall not be commingled
with any of such Borrower's other funds or deposited in any account of the
Borrower other than as instructed by the Administrative Agent.
9-3. Payment of Liabilities. On each Business Day, the Administrative
Agent shall apply, towards the unpaid principal balance of the Loan Account,
the aggregate of cash Receipts and Receivables Collateral received by the
Administrative Agent as provided in Section 9-1 above, and shall apply non-
cash amounts after allowing for collection for such items in the
ordinary course.
ARTICLE 10 - LENDER AS BORROWER'S ATTORNEY-IN-FACT.
10-1. Appointment as Attorney-In-Fact. Upon the occurrence and during
the continuance of any Event of Default, each Borrower hereby irrevocably
constitutes and appoints each Agent as each Borrower's true and lawful
attorney, with full power of substitution, to convert the Collateral into
cash at the sole risk, cost, and expense of the Borrowers, but for the
sole benefit of the Agents and the Lender. The rights and powers granted
the Agents by the within appointment include but are not limited to the
right and power to:
(a) Prosecute, defend, compromise, or release any action relating
to the Collateral.
(b) Sign change of address forms to change the address to which
each Borrower's mail is to be sent to such address as either Agent shall
designate; receive and open each Borrower's mail; remove any Receivables
Collateral and Proceeds of Collateral therefrom and turn over the balance of
such mail either to the Borrower or to any trustee in bankruptcy, receiver,
assignee for the benefit of creditors of each Borrower, or other legal
representative of each Borrower whom the subject Agent determines to be the
appropriate person to whom to so turn over such mail.
(c) Endorse the name of any Borrower in favor of the Agents upon
any and all checks, drafts, notes, acceptances, or other items or
instruments; sign and endorse the name of any Borrower on, and receive as
secured party, any of the Collateral, any invoices, schedules of Collateral,
freight or express receipts, or bills of lading, storage receipts, warehouse
receipts, or other documents of title respectively relating to the
Collateral.
(d) Sign the name of any Borrower on any notice to the Borrower's
Account Debtors or verification of the Receivables Collateral; sign the
Borrower's name on any Proof of Claim in Bankruptcy against Account Debtors,
and on notices of lien, claims of mechanic's liens, or assignments or
releases of mechanic's liens securing the Accounts.
(e) Take all such action as may be necessary to obtain the payment
of any letter of credit and/or banker's acceptance of which any Borrower is
a beneficiary.
(f) Repair, manufacture, assemble, complete, package, deliver,
alter or supply goods, if any, necessary to fulfill in whole or in part the
purchase order of any customer of any Borrower.
(g) Use, license or transfer any or all General Intangibles of any
Borrower.
(h) Whether or not an Event of Default shall have occurred, sign
and file or record any financing or other statements in order to perfect or
protect the Collateral Agent's security interest in the Collateral.
10-2. No Obligation to Act. The Agents shall not be obligated to do
any of the acts or to exercise any of the powers authorized by Section 10-1
herein, but if either Agent elects to do any such act or to exercise any of
such powers, it shall not be accountable for more than it actually receives
as a result of such exercise of power, and shall not be responsible to any
Borrower for any act or omission consistent with its rights and powers under
the Loan Documents, to act except for any act or omission to act as to which
there is a final determination made in a judicial proceeding (in which
proceeding the Agents have had an opportunity to be heard) which
determination includes a specific finding that the subject act or omission
to act had been grossly negligent or in actual bad faith.
ARTICLE 11 - FINANCIAL AND OTHER REPORTING REQUIREMENTS/ FINANCIAL COVENANTS.
11-1. Maintain Records. Each Borrower shall:
(a) Keep proper books of account, in which full, true, and accurate
entries shall be made of all of each Borrower's transactions, all in
accordance with GAAP applied consistently with prior periods to fairly
reflect the financial condition of each Borrower at the close of, and its
results of operations for, the quarterly and annual periods or reporting.
(b) Keep accurate current records of the Collateral in accordance
with such Borrower's normal business practices.
(c) Retain independent certified public accountants who are
reasonably satisfactory to the Agents and instruct such accountants to fully
cooperate with, and be available to, the Agents to discuss such Borrower's
financial performance, financial condition, operating results, controls, and
such other matters, within the scope of the retention of such accountants,
as may be raised by the Agents.
(d) Not change such Borrower's fiscal year.
(e) Not change such Borrower's taxpayer identification number.
11-2. Access to Records. (a) Each Borrower shall, upon reasonable
advance notice, accord the Agents and the Agents' representatives with access
from time to time as the Lender and such representatives may require to all
properties owned by or over which any Borrower has control, except to the
extent such information is classified. The Agents, and the Agents'
representatives, shall have the right, and each Borrower will permit the
Agents and such representatives from time to time as the Agents and such
representatives may request, to examine, inspect, copy, and make extracts
from any and all of any Borrower's books, records, electronically stored
data, papers, and files, except to the extent such information is classified.
Each Borrower shall make the Borrowers' copying facilities available to
the Agents for reasonable copying of documents.
(b) Each Borrower hereby authorizes the Agents and the Agents'
representatives to:
(i) Inspect, copy, duplicate, review, cause to be reduced to
hard copy, run off, draw off, and otherwise use any and all computer or
electronically stored information or data which relates to any Borrower
(except to the extent such information is classified), which information or
data is in the possession of any Borrower or any service bureau, contractor,
accountant, or other person, and directs any such service bureau, contractor,
accountant, or other person fully to cooperate with the Agents and the
Agents' representatives with respect thereto.
(ii) Consistent with the customary practices of the
Collateral Agent and usual commercial finance practices, verify at any time
the Collateral or any portion thereof, including verification with Account
Debtors, and/or with each Borrower's computer billing companies, collection
agencies, and accountants and to sign the name of any Borrower on any notice
to any Borrower's Account Debtors or verification of the Collateral.
11-3. Immediate Notice to Lender. The Lead Borrower shall provide the
Administrative Agent with written notice immediately upon the occurrence of
any of the following events, which written notice shall be with reasonable
particularity as to the facts and circumstances in respect of which such
notice is being given:
(a) Any change in any Borrower's executive officers, officers,
directors, or key employees.
(b) Any material change to the terms of any material
contract to which any Borrower is a party.
(c) Any Material Adverse Change in the business, operations, or
financial affairs of any Borrower.
(d) The occurrence of any Event of Default.
(e) Any litigation which, if determined adversely to any Borrower,
might result in a Material Adverse Change on the financial condition of any
Borrower.
(f) The distribution of any materials to the shareholders of any
Borrower (qua such shareholders), which notice shall be accompanied by a copy
of such filings.
(g) The filing of any materials by any Borrower with the Securities
and Exchange Commission (including all Form 10Q's and 10K's), which notice
shall be accompanied by a copy of such materials.
11-4. Financial Statements, Certificates and Information. Each
Borrower will furnish or cause to be furnished to each Lender:
(a) Within ninety (90) days after the end of each fiscal year of
the Lead Borrower, (i) the consolidated and consolidating balance sheets of
the Lead Borrower and its Subsidiaries as at the end of such year and (ii)
the related consolidated and consolidating statements of income and surplus
and cash flow for such year, setting forth in comparative form with respect
to such consolidated financial statements figures for the previous fiscal
year, all in reasonable detail, together with the opinion thereon of
independent public accountants selected by the Lead Borrower and reasonably
satisfactory to the Lenders, which opinion shall be in form generally
recognized as unqualified and shall state that the financial statements have
been prepared in accordance with generally accepted accounting principals
applied on a basis consistent with that of the preceding fiscal year (except
for changes, if any, which shall be specified and approved in such opinion)
and that the audit by such accountants in connection with such financial
statements referred to above only to the extent that the same are required
to be prepared by GAAP or by the Securities and Exchange Commission or by any
other applicable regulatory authority;
(b) Within twenty (20) days after the end of each calendar month,
(i) the unaudited consolidated and consolidating balance sheets of the Lead
Borrower and its Subsidiaries as at the end of such period, (ii) the related
unaudited consolidated and consolidating statements of income and surplus and
cash flows for such period and for the period from the beginning of the
current fiscal year to the end of such period, all in reasonable detail and
signed by the chief financial officer or treasurer of the Lead Borrower,
together with an accounts payable aging;
(c) Within forty-five (45) days after the end of each of the first
three quarterly accounting periods in each fiscal year of the Lead Borrower,
(i) the unaudited consolidated and consolidating balance sheets of the Lead
Borrower and its Subsidiaries as at the end of such period, (ii) the related
unaudited consolidated and consolidating statements of income and surplus and
cash flows for such period and for the period from the beginning of the
current fiscal year to the end of such period, all in reasonable detail and
signed by the chief financial officer or treasurer of the Lead Borrower;
provided, however, that the Borrowers shall be required to furnish the
consolidating financial statements only to the extent that the same are
required to be prepared by GAAP or by the Securities and Exchange Commission
or by any other applicable regulatory authority, (iii) a compliance
certificate substantially in the form of EXHIBIT 11-4CC attached hereto, in
each case (A) as of the last Business Day of the immediately preceding
quarter, and (B) signed by the chief financial officer or treasurer of the
Lead Borrower;
(d) Together with the financial statements delivered pursuant to
subparagraph (c) above, a detailed list of each Borrower's backlog of
revenue-generating government contracts showing services to be provided by
each Borrower in connection therewith as of the date of such financial
statements;
(e) On or before the Closing Date and the 15th day of each month
thereafter, or such other time intervals as the Agents may in their
discretion reasonably require, a Borrowing Base Certificate in the form of
EXHIBIT 11-4, (i) as of the last Business Day of the immediately preceding
month, and (ii) signed by the chief financial officer or treasurer of the
Lead Borrower;
(f) Together with the Monthly Reports delivered pursuant to
paragraph (e) above, a report in the form reasonably satisfactory to the
Agent, detailing all of the Borrowers' billed and unbilled accounts
receivable;
(g) Promptly after the same become publicly available, copies of
all periodic and other reports, proxy statements and other materials filed
by the Lead Borrower with the Securities and Exchange Commission, or any
governmental authority succeeding to any of or all of the functions of said
Commission, or with any national securities exchange, or distributed to is
shareholders generally, as the case may be (with the exhibits relating
thereto to be provided, at the Lead Borrower's expense, upon the request of
the Agents);
(h) Promptly upon their becoming available, copies of any periodic
or special reports filed by any Borrower or any Subsidiary with any federal,
state or local governmental agency or authority, if such reports indicate any
material change in the business, operations, affairs, or condition (financial
or otherwise) of the Borrowers and the Subsidiaries, taken as whole, or if
copies thereof are requested by Lenders, and copies of any materially adverse
notices and communications from any federal, state or local governmental
agency or authority which specifically relate to a Borrower or any
Subsidiary;
(i) Forthwith upon any officer of any Borrower obtaining knowledge
of any condition or event which constitutes an Event of Default or which,
after notice or lapse of time or both, would constitute an Event of Default,
a certificates given by such officer specifying in reasonable detail the
nature and period of existence thereof and what action any Borrower has taken
or proposes to take with respect thereto;
(j) Prior to the end of each fiscal year, an annual budget for the
next proceeding fiscal year; and
(k) To the extent not prohibited by applicable law, such other
information regarding the business, affairs and condition of the borrowers
and their respective Subsidiaries as such Lender may from time to time
reasonably request. To the extent not prohibited by applicable law, each
Borrower will permit each Lender to inspect the books and any of the
properties or assets of such Borrower and its Subsidiaries at such reasonable
times as such Lender may from time to time request. All costs and expenses
of any Lender in connection with or relating to any request made under this
Section 11-4 shall, if no Event of Default has occurred and is continuing,
be paid by the Lender making such request and, upon the occurrence and during
the continuance of an Event of Default, be paid by the Borrowers.
11-5. Additional Financial Information. In addition to the foregoing,
the Borrowers promptly shall provide the Agents with such other and
additional information (except to the extent such information is classified)
concerning the Borrowers, the Collateral, the operation of the Borrowers'
business, and the Borrowers' financial condition, including original
counterparts of financial reports and statements, as either Agent may
from time to time reasonably request from any Borrower, including, without
limitation, such information with respect to the status of the pending
United States government audit of the Borrowers' Government Contracts.
11-6. Audits and Appraisals. (a) The Agents may from time to time
conduct commercial finance audits of the Borrower's books and records (in
each event, at the Borrowers' expense, but not to exceed $3,000.00 per exam),
such exams to be conducted (a) quarterly during the first year of this
Agreement, (b) annually after the first year of the term of this Agreement,
and (c) at the discretion of the Agents at any time while an Event of
Default is existing.
(b) (i) The Agents, at the expense of the Borrowers, may
participate in and/or observe each physical count and/or inventory of so much
of the Collateral as consists of Inventory which is undertaken on behalf of
the Borrowers.
(ii) Upon the Agent's reasonable request from time to time, but no
more frequently than annually unless an Event of Default is existing, the
Borrower's shall permit the Agents to obtain appraisals of the Borrowers'
assets (in all events, at the Borrowers' expense) conducted by such
appraisers as are satisfactory to the Agents.
(c) The Agents, at the expense of the Borrowers, may order
environmental assessments of the Real Estate at such times as the Agents may
reasonably determine.
11-7. Consolidated Operating Cash Flow to Total Debt Service. The
Borrowers shall at all times maintain a ratio of Consolidated Operating Cash
Flow to Total Debt Service, of greater than (a) 1.2 to 1.0 for any quarter
(calculated on a cumulative basis for fiscal year 2000) ending on or
prior to December 31, 2000, and (b) 1.35 to 1.0 for each quarter end
thereafter, calculated on a rolling four (4) quarter basis.
11-8. Consolidated Tangible Net Worth. The Borrowers shall not at any
time permit their Consolidated Tangible Net Worth to be less than the sum of
(a) $23,700, 000.00 (which amount shall be adjusted upon completion of the
December 31, 1999 fiscal year end financial statements, provided it shall be
an Event of Default if such adjustment results in a reduction in excess of
$500,000.00) plus (b) an aggregate of fifty percent (50%) of the Borrowers'
Net Income during each fiscal quarter after the Closing Date, which ratio
shall be tested as of the end of each fiscal quarter.
11-9. Leverage Ratio. The Borrowers will not at any time permit their
ratio of Indebtedness to Consolidated Tangible Net Worth to be less than 2.50
to 1.0, which ratio shall be tested as of the end of each quarter.
ARTICLE 12 - EVENTS OF DEFAULT.
Upon the occurrence and during the continuance of any one or more of the
following events (herein, "Events of Default"), any and all Liabilities of the
Borrowers to the Agent and the Lenders shall become immediately due and
payable, at the option of the Agents, and without demand or notice expect
as expressly set forth in this Agreement or required by applicable law.
Upon the occurrence of any Event of Default described in Section 12-8 any
and all Liabilities shall become due and payable without any further act
on the part of the Agents. The occurrence and continuance of any Event of
Default shall also constitute, without notice or demand, a default under
all other agreements between any Agent, any Lender and any Borrower
related to or in connection with the Liabilities.
12-1. Failure to Pay. The failure by the Borrowers to pay any
principal and/or interest amount under the Revolving Credit or the Term Loan
as and when due.
12-2. Failure to Make Other Payments. The failure by the Borrowers to
pay when due any other Liabilities within three (3) Business Days of when
due.
12-3. Failure to Perform Certain Liabilities. The failure by the
Borrowers to promptly, punctually and faithfully perform, discharge, or
comply with any Liability set forth under Sections 7-2, 7-6, 7-7, 7-8,
7-12(b), 7-12(d), 7-18, 7-19, 7-20, 7-21, 7-22, 11-7, 11-8 and 11-9.
12-4. Failure to Perform Other Liabilities. Any Borrower shall
default in the performance of or compliance with any term, condition,
covenant or agreement (other than those listed in Section 12-3) to be
performed or observed by it under this Agreement or under any other
Loan Document and such default shall continue for a period of ten (10)
days or more.
12-5. Misrepresentation. The determination by the Agents that any
representation or warranty now, or hereafter made by any Borrower to the
Agents, in any document, instrument, agreement, or paper was not true or
accurate in all material respects when given or when deemed to have been
given.
12-6. Acceleration of Other Debt. Any Borrower or any Subsidiary
shall default in (i) the payment of any Indebtedness in respect of borrowed
money (other than the Liabilities), any Capital Lease or the deferred
purchase price of any property (which in each case shall not include the
Borrowers' accounts payable incurred in the ordinary course of the
Borrowers' business) and such default (A) shall continue after giving
effect to any applicable grace periods and (B) shall be in respect of an
aggregate amount of principal (whether or not due) and accrued interest
exceeding $250,000; or (ii) the performance or compliance with any term
of any agreement or instrument relating to such Indebtedness and such
default (A) shall continue, without having been duly cured, waived or
consented to, beyond the period of grace, if any, specified in such agreement
or instrument, and (B) shall permit the acceleration of such
Indebtedness prior to its stated maturity.
12-7. Default Under Other Agreements. The occurrence of any event of
default under any Loan Document, whether such Loan Document now exists or
hereafter arises (notwithstanding that the Lender may not have exercised its
rights upon default under any such Loan Document).
12-8. Business Failure. Any act by, against, or relating to any
Borrower, or its property or assets, which act constitutes the application for,
consent to, or sufferance of the appointment of a receiver, trustee, or other
person, pursuant to court action or otherwise, over all, or any part of any
Borrower's property; the granting of any trust mortgage or execution of an
assignment for the benefit of the creditors of any Borrower, or the
occurrence of any other voluntary or involuntary liquidation or extension
of debt agreement for any Borrower; the failure by any Borrower to
generally pay the debts of such Borrower as they mature; adjudication of
bankruptcy or insolvency relative to any Borrower; the entry of an order
for relief or similar order with respect to any Borrower in any proceeding
pursuant to the Bankruptcy Code or any other federal bankruptcy law; the
filing of any complaint, application, or petition by or against any
Borrower initiating any matter in which such Borrower is or may be
granted any relief from the debts of such Borrower pursuant to the Bankruptcy
Code or any other insolvency statute or procedure, provided the Borrowers
shall have thirty (30) days in which to dismiss any such involuntary
proceeding; the calling or sufferance of a meeting of creditors of any
Borrower; the meeting by any Borrower with a formal or informal creditors'
committee; the offering by or entering into by any Borrower of any
composition, extension, or any other arrangement seeking relief from or
extension of the debts of such Borrower, or the initiation of any other
judicial or non- judicial proceeding or agreement by,
against, or including any Borrower which seeks or intends to accomplish a
reorganization or arrangement with creditors.
12-9. Judgment. A final judgment which, with other outstanding final
judgments against any or all of the Borrowers and its Subsidiaries, exceeds
an aggregate of $250,000 shall be rendered against any Borrower or any
Subsidiary and if, within sixty (60) days after entry thereof, such judgment
shall not have been discharged or execution thereof stayed pending appeal,
or if, within sixty (60) days after the expiration of any such stay, such
judgment shall not have been discharged, or if any such judgment shall not
be discharged forthwith upon the commencement of proceedings to foreclose
any lien, attachment or charge which may attach as security therefor and
before any of the property or assets of any Borrower or any Subsidiary
shall have been seized in satisfaction thereof.
12-10. Restraint of Business. The entry of any court order which
enjoins, restrains or in any way prevents any Borrower from conducting all or
any material part of its business affairs in the ordinary course.
12-11. Material Adverse Change. There shall have occurred a Material
Adverse Change (other than an event or condition to the extent disclosed on
Exhibit 6-12 or 7-28) that, to the extent curable, is not cured within ten (10)
days following the date on which any Borrower has notice (actual or
constructive) thereof.
12-12. Trustee Process. The service of any process upon any Lender
seeking to attach by trustee process any funds of any Borrower on deposit
with
any Lender.
12-13. Change in Ownership. (a) Any change in the identity of any
person currently acting as chief financial officer, chief executive officer,
or general counsel of any Borrower, unless the subject Borrower shall
engage a replacement officer reasonably acceptable to the Agents within
sixty (60) days of such officer's departure and/or (b) any Person shall
acquire 35 % or more of the capital stock of the Lead Borrower and/or (c)
the failure of the Lead Borrower to own 100% of the capital stock of each
of the other Borrowers.
12-14. Casualty Loss. The occurrence of any uninsured loss, theft,
damage or destruction to or of any of the Collateral in excess of
$100,000.00.
12-15. Material Agreement. The default by any Borrower, or termination
as a result of any such default, under any material license, distributor,
franchise or similar agreement used or useful in the operation of the
Borrowers' business, including, without limitation, any license issued
by any applicable licensing authority.
12-16. Termination of Existence. Except as expressly permitted
hereunder, the termination of existence, dissolution, winding up, or
liquidation of any Borrower.
12-17. Termination of Guaranty. The termination, or attempted
termination, of any guaranty by any guarantor of the Liabilities.
12-18. Challenge to Loan Documents.
(a) Any challenge by or on behalf of any Borrower or any guarantor
of the Liabilities to the validity of any Loan Document or the applicability
or enforceability of any Loan Document strictly in accordance with the subject
Loan Document's terms or which seeks to void, avoid, limit, or otherwise
adversely affect any security interest created by or in any Loan Document
or any payment made pursuant thereto.
(b) Any determination by any court or any other judicial or
government authority that any Loan Document is not enforceable strictly in
accordance with the subject Loan Document's terms or which voids, avoids,
limits, or otherwise adversely affects any security interest created by
any Loan Document or any payment made pursuant thereto.
12-19. Indictment - Forfeiture. Except as set forth on EXHIBITS 6-12
and 7-28, The indictment of, or institution of any legal process or
proceeding against, any Borrower, under any federal, state, municipal,
and other civil or criminal statute, rule, regulation, order, or
other requirement having the force of law where the relief, penalties,
or remedies sought or available include the forfeiture of any property of
such Borrower and/or the imposition of any stay or
other order, the effect of which could be to restrain in any material way the
conduct by such Borrower of its business in the ordinary course.
ARTICLE 13 - RIGHTS AND REMEDIES UPON DEFAULT
In addition to all of the rights, remedies, powers, privileges, and
discretions which the Agent and/or the Lenders are provided prior to the
occurrence of an Event of Default, the Agents shall have the following rights
and remedies upon the occurrence and during the continuance of any Event of
Default.
13-1. Termination of Commitments. The Agents may, and if directed by
the Required Lenders, shall, by written notice to the Lead Borrower, (i)
declare the principal of and accrued interest in respect of the Liabilities
to be forthwith due and payable, whereupon the principal of and
accrued interest in respect of the Liabilities, and all other
amounts then due hereunder, shall become forthwith due and
payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by each Borrower,
and/or (ii) terminate the Commitment of the Lenders, whereupon the Total
Commitment of the Lenders (and the Commitment of each individual Lender) to
make Loans hereunder shall forthwith terminate without any other notice of any
kind; and with respect to any event described in Section 12-8 above, the
Commitments shall automatically terminate and the principal of the
Liabilities then outstanding, together with accrued interest thereon
and all other amounts then due hereunder, shall automatically become due
and payable, without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived by each of the
Borrowers, anything contained herein or in any other Loan Document to the
contrary notwithstanding. Without limiting any provision of this
Agreement or of any Loan Document, an Event of Default under
this Agreement shall also constitute an event of default under each of the
Loan Documents.
13-2. Rights of Enforcement. The Agents shall have all of the rights
and remedies of a secured party upon default under the UCC, in addition to
which the Lender shall have all and each of the following rights and remedies:
(a) To collect the Receivables Collateral with or without the
taking of possession of any of the Collateral.
(b) To apply the Receivables Collateral or the proceeds of the
Collateral towards (but not necessarily in complete satisfaction of)
the Liabilities.
(c) To take possession of all or any portion of the Collateral.
(d) To sell, lease, or otherwise dispose of any or all of the
Collateral, in its then condition or following such preparation or
processing as the Agents deem advisable and with or without the
taking of possession of any of the Collateral.
(e) To exercise all or any of the rights, remedies, powers,
privileges, and discretions under all or any of the Loan Documents.
13-3. Sale of Collateral. (a) Any sale or other disposition of the
Collateral may be at public or private sale upon such terms and in such
manner as the Agents deem advisable, having due regard to compliance with any
statute or regulation which might affect, limit, or apply to the Agents'
disposition of the Collateral.
(b) Unless the Collateral is perishable or threatens to decline
speedily in value, or is of a type customarily sold on a recognized market (in
which event the Agents shall provide the Lead Borrower (on behalf of the
Borrowers) with such notice as may be practicable under the circumstances),
the Agents shall give the Lead Borrower at least ten (10) days prior written
notice of the date, time, and place of any proposed public sale, and of the
date after which any private sale or other disposition of the Collateral may
be made. The Borrowers agree that such written notice shall satisfy all
requirements for notice to each of the Borrowers which are imposed
under the UCC or other applicable law with respect to the Lender's
exercise of the Lender's rights and remedies upon default.
(c) The Agents may purchase the Collateral, or any portion of it at
any sale held under this Article.
13-4. Occupation of Business Location. In connection with the Agents'
exercise of their rights under this Article, the Agents may enter upon,
occupy, and use any premises owned or occupied by any Borrower, and may
exclude the Borrowers from such premises or portion thereof as may have
been so entered upon, occupied, or used by the Agents. The Agents shall
not be required to remove any of the Collateral from any such premises
upon the Agents' taking possession thereof, and may render any Collateral
unusable to the Borrowers. In no event shall the Agents be liable to the
Borrowers for use or occupancy by the Agents of any premises pursuant
to this Article, nor for any charge (such as wages for
the Borrowers' employees and utilities) incurred in connection with the Agents'
exercise of the Agents' Rights and Remedies.
13-5. Grant of Nonexclusive License. The Borrowers hereby grant to the
Collateral Agent a royalty free nonexclusive irrevocable license to use,
apply, and affix any trademark, trade name, logo, or the like in which
the Borrowers now or hereafter have rights, such license being with
respect to the Agents' exercise of the rights hereunder including, without
limitation, in connection with any completion of the manufacture of
Inventory or sale or other disposition of Inventory.
13-6. Assembly of Collateral. The Agents may require the Borrowers to
assemble the Collateral and make it available to the Agents at the Borrowers'
sole risk and expense at a place or places which are reasonably convenient to
the Agents.
13-7. Rights and Remedies. The rights, remedies, powers, privileges,
and discretions of the Agents hereunder (herein, the "Agents' Rights and
Remedies") shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have. No delay or omission by the Agents in
exercising or enforcing any of the Agents' Rights and Remedies shall operate
as, or constitute, a waiver thereof. No waiver by the Agents of any
Event of Default or of any default under any other agreement shall operate
as a waiver of any other default hereunder or under any other agreement.
No single or partial exercise of any of the Agents' Rights or Remedies,
and no express or implied agreement or transaction of whatever
nature entered into between the Agents and any person,
at any time, shall preclude the other or further exercise of the Agents'
Rights and Remedies. No waiver by the Agents of any of the Agents' Rights
and Remedies on any one occasion shall be deemed a waiver on any
subsequent occasion, nor shall it be deemed a continuing waiver. All of
the Agents' Rights and Remedies and all of the Agents' rights, remedies,
powers, privileges, and discretions under any other agreement or
transaction are cumulative, and not alternative or exclusive, and may be
exercised by the Agents at such time or times and in such
order of preference as the Agents in their sole discretion may determine.
The Agents' Rights and Remedies may be exercised without resort or regard
to any other source of satisfaction of the Liabilities.
13-8. Distribution of Collateral Proceeds. In the event that,
following the occurrence and during the continuance of any Event of Default,
the Agents or any Lender, as the case may be, receives any monies in
connection with the enforcement of any the Loan Documents, or otherwise
with respect to the realization upon any of the Collateral, such monies
shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agents for or in respect of, all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agents in connection with the collection of such monies
by the Agents, for the exercise, protection or enforcement by the Agents
of all or any of the rights, remedies, powers and privileges of the
Agents under this Agreement or any of the other Loan Documents or in
respect of the Collateral or in support of any provision of adequate
indemnity to the Agents against any taxes or liens which
by law shall have, or may have, priority over the rights of the Agents to
such monies;
(b) Second, pro rata to each of the Lenders to all other Liabilities;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the Agents of
all of the Liabilities, to the payment of any obligations required to be paid
pursuant to 9-504(1)(c) of the Uniform Commercial Code of the Commonwealth
of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrowers
or to such other Persons as are entitled thereto.
ARTICLE 14 - NOTICES.
14-1. Notice Addresses. All notices, demands, and other
communications made in respect of this Agreement (other than a request for a
loan or advance or other financial accommodation under the Revolving Credit)
shall be made to the following addresses, each of which may be changed
upon seven (7) days written notice to all others given by certified mail,
return receipt requested:
If to the Administrative
Agent: Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxx
Fax; 000 000-0000
If to the Collateral Agent: Family Bank FSB
Seven New England Executive Park
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Mr. C. Xxx Xxxxxxxxxx
Fax: 000 000-0000
With a copy to: Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
Fax: 000 000-0000
If to any Borrower: Dynamics Research Corporation
00 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Fax: 000-000-0000
With a copy to: Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esquire
Fax: 000 000-0000
14-2. Notice Given. (a) Notices shall be deemed given at the sooner
of when actually received or (i) if by mail: Three (3) days following deposit
in the United States mail, postage prepaid; (ii) By overnight express delivery:
the Business Day following the day when sent; (iii) By hand: If delivered
on a Business Day after 9:00 AM and no later than Three (3) hours prior
to the close of customary business hours of the recipient, when delivered
(otherwise, at the opening of the then next Business Day); and (iv)
By Facsimile transmission: If sent on a Business Day after 9:00 AM and
no later than Three (3) hours prior to the close of customary business
hours of the recipient, one (1) hour after being sent (otherwise, at the
opening of the then next Business Day).
(b) Rejection or refusal to accept delivery and inability to
deliver because of a changed address or Facsimile Number for which no due
notice was given shall each be deemed receipt of the notice sent.
ARTICLE 15 - TERM OF AGREEMENT.
15-1. Termination of Revolving Credit. The Revolving Credit shall be
terminated upon the Termination Date.
15-2. Effect of Termination. Upon the Termination Date, the Borrower
shall pay the Administrative Agent the then principal balance of the Loan
Account and all accrued and unpaid interest thereon (whether or not then due).
Following such payment, all provisions of this Agreement, other than those
contained in Article 3 which place an obligation on the Lenders to make
any loans or advances or to provide financial accommodations under the
Revolving Credit or to issue L/Cs shall remain in full force and effect until
all Liabilities (including the Revolving Credit and the Term Loan)
shall have been paid in full. The release by the Agents of the security
interests granted by the Borrowers hereunder shall be made upon the
indefeasible payment in full of all Liabilities.
ARTICLE 16 - GENERAL.
16-1. Protection of Collateral. The Agents shall have no duty as to
the collection or protection of the Collateral beyond the safe custody of
such of the Collateral as may come into the possession of the Agents and shall
have no duty as to the preservation of rights against prior parties or any
other rights pertaining thereto.
16-2. Successors and Assigns. This Agreement shall be binding upon the
Borrowers and the Borrowers' representatives, successors, and assigns and
shall enure to the benefit of the Agents, the Lenders and their respective
successors and assigns provided, however, no trustee or other fiduciary
appointed with respect to the Borrowers shall have any rights hereunder.
In the event that any Lender assigns or transfers its rights under this
Agreement, subject to Article 17 below, the assignee shall thereupon
succeed such Lender to and become vested with all rights, powers,
privileges, and duties of such Lender hereunder and such
Lender shall thereupon be discharged and relieved from its duties and
obligations hereunder.
16-3. Severability. Any determination that any provision of this
Agreement or any application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity, legality, or
enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provision of this Agreement.
16-4. Amendments. Course of Dealing. (a) This Agreement and the other
Loan Documents incorporate all discussions and negotiations among the
Borrowers, Agents and the Lenders, either express or implied, concerning
the matters included herein and in such other instruments, any custom,
usage, or course of dealings to the contrary notwithstanding. No such
discussions, negotiations, custom, usage, or course of dealings shall
limit, modify, or otherwise affect the provisions thereof. No failure by
the Agents to give notice to any Borrower of the Borrowers' having failed
to observe and comply with any warranty or covenant included in any Loan
Document shall constitute a waiver of such warranty or covenant or the
amendment of the subject Loan Document. No change made by the
Agents in the manner by which Availability is determined (any of which
changes may be made by the Agents in their discretion) shall obligate the
Agents to continue to determine Availability in that manner.
(b) The Borrowers may undertake any action otherwise prohibited
hereby, and may omit to take any action otherwise required hereby, upon and
with the express prior written consent of the Required Lenders. No consent,
modification, amendment, or waiver of any provision of any Loan Document
shall be effective unless executed in writing by or on behalf of the party
to be charged with such modification, amendment, or waiver (and if such
party is a Lender, then by a duly authorized officer thereof). Any
modification, amendment, or waiver provided by the Required Lenders shall
be in reliance upon all representations and warranties theretofore made to
the Lenders by or on behalf of the Borrowers (and any guarantor, endorser,
or surety of the Liabilities) and consequently may be rescinded by the
Lenders in the event that any of such representations or warranties was
not true and complete in all material respects when given.
16-5. Power of Attorney. In connection with all powers of attorney
included in this Agreement, the Borrowers hereby grant unto the Agents full
power to do any and all things necessary or appropriate in connection with
the exercise of such powers as fully and effectually as the Borrowers
might or could do, hereby ratifying all that said attorney shall do or
cause to be done by virtue of this Agreement. No power of attorney set
forth in this Agreement shall be affected by any disability or incapacity
suffered by the Borrowers and each shall survive the same. All powers
conferred upon the Agents by this Agreement, being coupled with an
interest, shall be irrevocable until this Agreement is terminated
by a written instrument executed by a duly authorized officer of the Agents.
16-6. Costs and Expenses. The Borrowers shall pay on demand all Costs
of Collection and all reasonable expenses of the Agents and Lenders in
connection with the preparation, execution, and delivery of this Agreement
and of any other Loan Documents, whether now existing or hereafter arising,
including, without limitation, all appraisal, inspection and other reports
conducted in connection with the underwriting of this Agreement and the
loans contemplated hereby, and all other reasonable expenses which may be
incurred by the Lenders in preparing or amending this Agreement and
all other agreements, instruments, and documents related thereto, or
otherwise incurred with respect to the Liabilities. The Borrowers
specifically authorize the Administrative Agent to pay all such
fees and expenses and in the Lenders' discretion, to add such fees and
expenses to the Loan Account.
16-7. Copies and Facsimiles. This Agreement and all documents which
relate thereto, which have been or may be hereinafter furnished to the
Lenders may be reproduced by the Lenders by any photographic, microfilm,
xerographic, digital imaging, or other process, and the Lenders may
destroy any document so reproduced. Any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence
and whether or not such reproduction was made in the
regular course of business). Any facsimile which bears proof of transmission
shall be binding on the party which or on whose behalf such transmission was
initiated and likewise shall be so admissible in evidence as if the original
of such facsimile had been delivered to the party which or on whose behalf
such transmission was received.
16-8. Massachusetts Law. This Agreement and all rights and obligations
hereunder, including matters of construction, validity, and performance,
shall be governed by the laws of The Commonwealth of Massachusetts.
16-9. Consent to Jurisdiction. (a) The Borrowers agree that any legal
action, proceeding, case, or controversy against the Borrowers with respect to
any Loan Document may be brought in the Superior Court of Suffolk County
Massachusetts or in the United States District Court, District of
Massachusetts, sitting in Boston, Massachusetts, as the Agents may
elect in the Agents' sole discretion. By execution
and delivery of this Agreement, each Borrower, for
itself and in respect of its property, accepts, submits, and consents
generally and unconditionally, to the jurisdiction of the aforesaid courts.
(b) Each Borrower WAIVES personal service of any and all process
upon it, and irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by certified mail, postage prepaid, to the Lead Borrower
at the Lead Borrower's address for notices as specified herein, such
service to become effective five (5) Business Days after such mailing.
(c) Each Borrower WAIVES, at the option of the Agents, any
objection based on forum non conveniens and any objection to venue of any
action or proceeding instituted under any of the Loan Documents and
consents to the granting of such legal or equitable remedy as is deemed
appropriate by the Court.
(d) Nothing herein shall affect the right of the Agents to bring
legal actions or proceedings in any other competent jurisdiction.
(e) Each Borrower agrees that any action commenced by any Borrower
asserting any claim or counterclaim arising under or in connection with this
Agreement or any other Loan Document shall be brought in the Superior Court
of Suffolk County Massachusetts or in the United States District Court,
District of Massachusetts, sitting in Boston, Massachusetts, and that s
uch Courts shall have exclusive jurisdiction with respect to any such action,
with the exception of any counterclaim brought in action commenced by
the Agents or any Lender in a different forum, which counterclaim may
be brought in such alternate forum.
16-10. Indemnification. Each Borrower shall jointly and severally
indemnify, defend, and hold the Lender and any employee, officer, or agent of
the Agents and the Lenders (each, an "Indemnified Person") harmless of and
from any claim brought or threatened against any Indemnified Person by
any Borrower, any guarantor or endorser of the Liabilities, or any other
Person (as well as from attorneys' reasonable fees and expenses in
connection therewith) on account of the Lender's relationship with the
Borrowers or any other guarantor or endorser of the Liabilities (each of
which may be defended, compromised, settled, or pursued by the Indemnified
Person with counsel of the Agents' selection, but at
the expense of the Borrowers) other than any claim as to which a final
determination is made in a judicial proceeding (in which the Lender and any
other Indemnified Person has had an opportunity to be heard), which
determination includes a specific finding that the Indemnified Person
seeking indemnification had acted in a grossly negligent manner or in
actual bad faith. This indemnification shall survive payment of the
Liabilities and/or any termination, release, or discharge executed by the
Agents in favor of the Borrowers.
16-11. Rules of Construction. (a) The following rules of
construction shall be applied in the interpretation, construction, and
enforcement of this Agreement and of the other Loan Documents:
(i) Words in the singular include the plural and words in the
plural include the singular.
(ii) Headings (indicated by being underlined) and the Table
of Contents are solely for convenience of reference and do not constitute a
part of the instrument in which included and do not affect such instrument's
meaning, construction, or effect.
(iii) The words "includes" and "including" are not limiting.
(iv) The words "may not" are prohibitive and not permissive.
(v) The word "or" is not exclusive.
(vi) Terms which are defined in one section of an instrument
are used with such definition throughout the instrument in which so defined.
(vii) The symbol "$" refers to United States Dollars.
(viii) References to "herein", "hereof", and "within" are to
this entire Loan Agreement and not merely the provision in which such
reference is included.
(ix) Except as otherwise specifically provided, all
references to time are to Boston time.
(x) In the determination of any notice, grace, or other period of
time prescribed or allowed hereunder, unless otherwise provided (A) the day
of the act, event, or default from which the designated period of time begins
to run shall not be included and the last day of the period so computed shall
be included unless such last day is not a Business Day, in which event the
last day of the relevant period shall be the then next Business Day and (B)
the period so computed shall end at 5:00 PM on the relevant Business Day.
(b) The Loan Documents shall be construed and interpreted in a
harmonious manner, provided, however, in the event of any inconsistency
between the provisions of the within Agreement and any other Loan Document,
the provisions of the within Agreement shall govern and control.
16-12. Intent. It is intended that
(a) This Agreement take effect as a sealed instrument.
(b) The Agents' or the Required Lenders' consent or the Lenders'
consent to any action of the Borrowers which is prohibited unless such
consent is given may be given or refused by the applicable parties in its
sole discretion.
16-13. Setoff. Regardless of the adequacy of any collateral, during
the continuance of any Event of Default, any deposits (general or specific,
time or demand, provisional or final, regardless of currency, maturity, or
the branch of where such deposits are held) or other sums credited by or
due from any of the Lenders to the Borrowers and any securities or
other property of the Borrowers in the possession of such Lender may be
applied to or set off against the payment of Liabilities and any and
all other liabilities, direct, or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of the
Borrowers to such Lender. Each of the Lenders agrees with each other Lender
that (a) if an amount to be set off is to be applied to Indebtedness of the
Borrowers to such Lender, other than Liabilities evidenced by the Notes
held by such Lender, such amount shall be applied ratably to such other
Indebtedness and to the Liabilities evidenced by all such Notes held by
such Lender, and (b) if such Lender shall receive from the Borrowers,
whether by voluntary payment, exercise of the right of setoff, counterclaim,
cross action, enforcement of the claim evidenced by the Notes held by
such Lender by proceedings against the Borrowers
at law or in equity or by proof thereof in bankruptcy, reorganization,
liquidation, receivership or similar proceedings, or otherwise, and shall
retain and apply to the payment of the Note or Notes held by such Lender
any amount in excess of its ratable portion of the payments received
by all of the Lenders with respect to the Notes held by all of the Lenders,
such Lender will make such disposition and arrangements with the other
Lenders with respect to such excess, either by way of distribution, pro
tanto assignment of claims, subrogation or otherwise as shall result in
each Lender receiving in respect of the Notes held by it its proportionate
payment as contemplated by this Agreement; provided that if all or any
part of such excess payment is thereafter recovered from such
Lender, such disposition and arrangements shall be rescinded and the amount
restored to the extent of such recovery, but without interest.
16-14. Maximum Interest Rate. Regardless of any provision of any Loan
Document, the Lenders shall never be entitled to contract for, charge,
receive, collect, or apply as interest on any Liability, any amount in
excess of the maximum rate imposed by applicable law. Any payment which
is made which, if treated as interest on a Liability would result in such
interest's exceeding such maximum rate shall be held, to the extent of
such excess, as additional collateral for the Liabilities as if such excess
were "Collateral."
16-15. Waivers. (a) Each Borrower (and all guarantors, endorsers, and
sureties of the Liabilities) make each of the waivers included in subsection
(b), below, knowingly, voluntarily, and intentionally, and understands that
the Agents and each Lender, in entering into the financial arrangements
contemplated hereby and in providing loans and other financial accommodations
to or for the account of each Borrower as provided herein, whether not
or in the future, is relying on such waivers.
(b) EACH BORROWER, AND EACH SUCH GUARANTOR, ENDORSER, AND SURETY
RESPECTIVELY WAIVES THE FOLLOWING:
(i) Except as otherwise specifically required hereby, notice
of non-payment, demand, presentment, protest and all forms of demand and
notice, both with respect to the Liabilities and the Collateral.
(ii) Except as otherwise specifically required hereby, the
right to notice and/or hearing prior to the Agents' exercising of the Agents'
rights upon default.
(iii) THE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE OR
CONTROVERSY IN WHICH THE LENDER IS OR BECOMES A PARTY (WHETHER SUCH CASE OR
CONTROVERSY IS INITIATED BY OR AGAINST, THE AGENTS, THE LENDERS OR IN WHICH
ANY AGENT OR LENDER IS JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY
ARISES OUT OF OR IS IN RESPECT OF, ANY RELATIONSHIP AMONGST OR BETWEEN ANY
BORROWER OR ANY OTHER PERSON, THE AGENTS AND THE LENDER (AND THE AGENTS AND
EACH LENDER LIKEWISE WAIVES THE RIGHT TO A JURY IN ANY TRIAL OF ANY SUCH CASE
OR CONTROVERSY).
(iv) Any defense, counterclaim, set-off, recoupment, or other
basis on which the amount of any Liability, as stated on the books and
records of the Administrative Agent, could be reduced or claimed to be paid
otherwise than in accordance with the tenor of and written terms of such
Liability.
(v) Any claim to consequential, special, or punitive damages.
16-16. Receipt of Agreement. Each Borrower acknowledges receipt of a
completed copy of this Agreement.
ARTICLE 17 - THE AGENT.
17-1. Authorization. The Agents are authorized to take such action
on behalf of each of the Lenders and to exercise all such powers as are
hereunder and under any of the other Loan Documents and any related
documents delegated to the Agents, together with such powers as are
reasonably incident thereto, provided that no duties or responsibilities
not expressly assumed herein or therein shall be implied to have been
assumed by the Agents. The relationship between the Agents and the
Lenders is and shall be that of agent and principal
only, and nothing contained in this Agreement or any of the other Loan
Documents shall be construed to constitute either Agent as a trustee or
fiduciary for any Lender. The Borrowers acknowledge that in certain
instances any action to be taken by the Agents may only be taken upon
approval of the Required Lenders or all the Lenders. Any rights and
powers granted to both Agents may be exercised by either Agent, acting
singly, with the consent of the other Agent. Further, any rights and
powers granted to either Agent may be exercised by the other
Agent, with the consent of the Agent to whom such rights and/or powers were
initially granted. Without limiting the foregoing, the Administrative Agent
acknowledges and agrees that if (a) the Agents determine to require more
frequent Borrowing Base Certificates than the monthly certificates initially
required hereunder, or (b) Availability shall be less than $2,000,000.00 for
thirty (30) consecutive days , or (c) the Agents so agree, the Collateral
Agent shall assume the obligations of the Administrative Agent hereunder
with respect to the collection of the Receivables Collateral, the
application of same to the Liabilities, the monitoring of Availability
hereunder, and all other powers and rights incidental thereto.
17-2. Employees and Agents. Each Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Agreement and the other Loan Documents. Each
Agent may utilize the services of such Persons as said Agent in its sole
discretion may reasonably determine, and all reasonable fees and
expenses of any such Persons shall be paid by the Borrower.
17-3. No Liability. Neither the Agents nor any of their shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken,
in good faith by them hereunder or under any of the other Loan Documents,
or in connection herewith or therewith, or be responsible for the
consequences of any oversight or error of judgment whatsoever, except
that the Agents or such other Person, as the case may be, may be liable
for losses due to its willful misconduct or gross negligence.
17-4. No Representations. The Agents shall not be responsible for the
execution or validity or enforceability of this Agreement, the Notes, any of
the other Loan Documents or any instrument at any time constituting,
or intended to constitute, collateral security for the Notes, or for
the value of any such collateral security or for the validity,
enforceability or collectibility of any such amounts owing with respect
to the Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by or on behalf
of the Borrowers or any of their Subsidiaries, or be bound to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
covenants or agreements herein or in any instrument at any time constituting,
or intended to constitute, collateral security for the Notes. The
Agents shall not be bound to ascertain whether any notice, consent,
waiver or request delivered to it by the Borrowers or any holder of any
of the Notes shall have been duly authorized or is true, accurate and
complete. The Agents have not made nor do they now make
any representations or warranties, express or implied, nor do they assume any
liability to the Lenders, with respect to the credit worthiness or financial
condition of the Borrowers or any Subsidiaries. Each Lender acknowledges
that it has, independently and without reliance upon the Agents or any other
Lender, and based upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement.
17-5. Payments.
(a) A payment by the Borrowers to the Administrative Agent
hereunder or any of the other Loan Documents for the account of any Lender
shall constitute a payment to such Lender. The Administrative Agent agrees
promptly to distribute to each Lender such Lender's Commitment Percentage
of payments received by the Administrative Agent for the account of the
Lenders except as otherwise expressly provided herein or in any of the
other Loan Documents. Notwithstanding the foregoing, the Administrative
Agent and the Lenders will settle on a daily basis the loans to be
made and payments received hereunder, such that amounts to be transferred
between each Lender and the Administrative Agent shall be on a "net basis".
(b) The Borrowers acknowledge that each Lender's responsibilities
hereunder are several and that each Lender shall only be responsible to fund
up to each Lender's Commitment Percentage. The Borrowers agree to release and
hold harmless any nondelinquent Lenders from any claims, damages or costs
arising on account of any failure of a Delinquent Lender to comply with
the requirements of this Agreement.
(c) If in the opinion of the Administrative Agent the distribution
of any amount received by it in such capacity hereunder, under the Notes or
under any of the other Loan Documents might involve it in liability, it may
refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction (provided that
such action by the Administrative Agent shall not create an
independent default by the Borrowers). If a court of competent
jurisdiction shall adjudge that any amount received and distributed
by the Administrative Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the
Administrative Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as shall
be determined by such court.
17-6. Holders of Notes. Each Agent may deem and treat the payee of
any Note as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name
by such payee or by a subsequent holder, assignee or transferee.
17-7. Indemnity. The Lenders ratably agree hereby to indemnify and
hold harmless the Agents from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs, out of pocket
expenses (including any expenses for which the Agent has not been
reimbursed by the Borrowers as required by Section 16-6), and
liabilities of every nature and character arising out of or
related to this Agreement, the Notes, or any of the
other Loan Documents or the transactions contemplated or evidenced hereby or
thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agents' willful
misconduct or gross negligence.
17-8. Agents as Lenders. In their individual capacity, Family Bank,
FSB and Xxxxx Brothers Xxxxxxxx & Co. shall have the same obligations and the
same rights, powers and privileges in respect to their respective Commitments
and the Loans made by them, and as the holder of any of the Notes as they
would have were they not also an Agent.
17-9. Resignation. Either Agent may resign at any time by giving
sixty (60) days' prior written notice thereof to the Lenders and the
Borrowers. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Agent. Unless an Event of
Default shall have occurred and be continuing, such successor Agent
shall be reasonably acceptable to the Borrowers
in their reasonable discretion (with the remaining Agent being hereby approved
by the Borrowers as a successor Agent). If no successor Agent shall have been
so appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, after
consultation with the Lenders, appoint a successor Agent, which shall be a
Lender or which meets the requirements of subjection (a) of the definition
of an Eligible Assignee, and unless an Event of Default shall have occurred
and be continuing, such successor Agent being reasonably acceptable
to the Borrowers in its reasonable discretion. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall
be discharged from its duties and obligations hereunder. After any
retiring Agent's resignation, the provisions of this Agreement and the
other Loan Documents shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent. In addition, if at any time either Agent shall no
longer act as a Lender hereunder (subject to the provisions of Section
17-13 below), unless same results from a merger or other consolidation
of the two Agents, the Required Lenders shall have the right to appoint
a successor Agent subject to the provisions of this Section 17-9.
17-10. Notification of Suspension Events and Events of Default. Each
Lender hereby agrees that, upon learning of the existence of a Suspension
Event or an Event of Default, it shall promptly notify the Administrative
Agent thereof. The Administrative Agent hereby agrees that upon receipt of
any notice under this Section17-10 it shall promptly notify in writing
the other Lenders of the existence of such Suspension Event or Event of
Default.
17-11. Duties in the Case of Enforcement. In case that one or more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Liabilities shall have occurred, the Agents shall, if (a)
so requested by the Required Lenders and (b) the Required Lenders have provided
to the Agents such additional indemnities and assurances against expenses and
liabilities as the Agents may reasonably request, proceed to enforce the
provisions of the Loan Documents authorizing the sale or other disposition of
all or any part of the Collateral and exercise all or any such other legal and
equitable and other rights or remedies as it may have in respect of such
Collateral. The Required Lenders may direct the Agents in writing as to the
method and the extent of any such sale or other disposition, the Lenders
hereby agreeing to indemnify and hold the Agents harmless from all liabilities
incurred in respect of all actions taken or omitted in accordance with such
directions, provided that the Agents need not comply with any such direction
to the extent that the Agents reasonably believe their compliance with
such direction to be unlawful or, upon the advice of counsel, would be
found to be commercially unreasonable in any applicable jurisdiction.
The Agents may, in their discretion but without obligation, in the
absence of direction from the Required Lenders, take such interim
actions as they believe necessary to preserve the rights of the
Lenders hereunder and in and to any Collateral securing the Liabilities,
including but not limited to petitioning a court for injunctive relief,
appointment of a receiver or preservation of the proceeds of any Collateral.
Each of the Lenders acknowledges and agrees that no individual Lender may
separately enforce or exercise any of the provisions of any of the Loan
Documents, including without limitation the Notes, other than through the
Agents.
17-12. Delinquent Lender. If for any reason any Lender shall fail or
refuse to abide by its obligations under the Agreement, including without
limitation its obligation to make available to the Administrative Agent its
pro rata share of the Loan, expenses or setoff (a "Delinquent Lender") and
such failure is not cured within ten (10) days of receipt from the
Administrative Agent of written notice thereof, then, in addition to
the rights and remedies that may be available to Administrative
Agent, other Lenders, the Borrowers or any other party at law
or in equity, and not at limitation thereof, (i) such Delinquent
Lender's right to participate in the administration of, or decision-
making rights related to, the Loan, this Agreement or the other Loan Documents
shall be suspended during the pendency of such failure or refusal, and (ii) a
Delinquent Lender shall be deemed to have assigned any and all payments due to
it from the Borrowers, whether on account of the outstanding Loan, interest,
fees or otherwise, to the remaining non-delinquent Lenders for application
to, and reduction of, their proportionate shares of the outstanding Loan
until, as a result of application of such assigned payments the Lenders'
respective pro rata shares of the outstanding Loan shall have returned
to those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency. The
Delinquent Lender's decision-making and participation
rights to payments as set forth in clauses (i) and (ii) hereinabove shall be
restored only upon the payment by the Delinquent Lender of its pro rata share
of the Loan or expenses as to which it is delinquent, together with interest
thereon at the Default Rate from the date when originally due until the
date upon which any such amounts are actually paid.
The non-delinquent Lenders shall also have the right, but not the obligation,
in their respective, sole and absolute discretion, to acquire for no cash
consideration, (pro rata, based on the respective Commitments of those Lenders
electing to exercise such right) the Delinquent Lender's Commitment to fund
any future Loan (the "Future Commitment"). Upon any such purchase of the pro
rata share of any Delinquent Lender's Future Commitment, the Delinquent
Lender's share in any future Loan and its rights under the Loan
Documents with respect thereto shall terminate on the date of purchase,
and the Delinquent Lender shall promptly execute all documents reasonably
requested to surrender and transfer such interest, including,
if so requested, an Assignment and Acceptance. Each
Delinquent Lender shall indemnify Agent and each non-delinquent Lender from
and against any and all loss, damage or expenses, including but not limited to
reasonable attorneys' fees and funds advanced by Administrative Agent or by
any non-delinquent Lender, on account of an Delinquent Lender's failure to
timely fund its pro rata share of a Loan Advance or to otherwise perform
its obligations under the Loan Documents.
17-13. Assignment and Participation.
(a) Conditions to Assignment by Lenders. Except as provided
herein, each Lender may assign to one or more Eligible Assignees (or to any
third party after the occurrence of an Event of Default and while same is
continuing) all or a portion of its interests, rights and obligations under
this Agreement (including all or a portion of its Commitment Percentage
and Commitment and the same portion of the Loans at the time owing to
it and the Notes held by it), upon satisfaction of the following conditions:
(a) each of the Agents and the Borrowers shall have given its prior
written consent to such assignment (provided that, in the case of the
Borrowers, such consent will not be unreasonably withheld and shall
not be required if an Event of Default shall have occurred and
be continuing), (b) each such assignment shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and obligations under
this Agreement, (c) prior to the occurrence of an Event of Default, each
assignment shall be in an amount that is at least Five Million Dollars
($5,000,000.00) and is a whole multiple of One Million Dollars ($1,000,000.00),
and (d) the parties of such assignment shall execute and deliver to the
Administrative Agent, for recording in the Register, an Assignment and
Acceptance, substantially in the form of Exhibit AA hereto (an "Assignment and
Acceptance"), together with any Notes subject to such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof,
(x) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder, and (y) the assigning Lender shall,
to the extent provided in such assignment and upon
payment to the Administrative Agent of the registration fee referred to in
Section 17-13(c), be released from its obligations under this Agreement.
(b) Certain Representations and Warranties: Limitations, Covenants.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other
parties hereto as follows:
(i) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free and
clear of any adverse claim, the assigning Lender makes no representation or
warranty, express or implied, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection
with this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or mortgage;
(ii) the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrowers and its affiliates, related entities or subsidiaries or any
other person primarily or secondarily liable in respect of any of the
Liabilities, or the performance or observance by the Borrowers or any other
person primarily secondarily liable in respect of any of the Liabilities or
any of their obligations under this Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto
or thereto;
(iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the most recent financial statement
provided by the Borrowers as required by the terms of this Agreement,
together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance
upon the assigning Lender, the Agents or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement;
(v) such assignee represents and warrants that (to the extent
required herein) it is an Eligible Assignee;
(vi) such assignee appoints and authorizes the Agents to take
such action as agent on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to the Agents by the
terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
(vii) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this Agreement
are required to be performed by it as a Lender; and
(viii) such assignee represents and warrants that it is
legally authorized to enter into such Assignment and Acceptance.
(c) Register. The Administrative Agent shall maintain a copy of
each Assignment and Acceptance delivered to it and a register or similar list
(the "Register") for the recordation of the names and addresses of the
Lenders and the Commitment Percentage of, and principal amount of the
Loans owing to the Lenders from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrowers,
the Agents and the Lenders may treat each person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement.
The Register shall be available for inspection by the Borrowers and the
Lenders at any reasonable time and from time to time upon reasonable
prior notice. Upon each such recordation, the assigning
Lender agrees to pay to the Administrative Agent a registration fee in the sum
of Three Thousand Five Hundred Dollars ($3,500.00).
(d) New Notes. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject
to such assignment, the Administrative Agent shall (a) record the information
contained therein in the Register, and (b) give prompt notice thereof to the
Borrowers and the Lenders (other than the assigning Lender). Within five (5)
Business Days after receipt of such notice, the Borrowers, at their own
expense, shall execute and deliver to the Administrative Agent, in exchange
for each surrendered Note, a new Note to the order of such assignee in an
amount equal to the amount assumed by such assignee pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained some
portion of its obligations hereunder, a new Note to the order of the
assigning Lender in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the
surrendered Notes, shall be in an aggregate principal amount
equal to the aggregate principal amount of the surrendered Notes, shall be
dated the effective date of such Assignment and Acceptance and shall
otherwise be substantially in the form of the assigned Notes.
(e) Participations. Each Lender may sell participations to one or
more banks or other financial institutions in all or a portion of such
Lender's rights and obligations under this Agreement and the other Loan
Documents; provided that (a) each such participation shall be in a minimum
amount of Five Million Dollars ($5,000,000.00), (b) prior to the occurrence
of an Event of Default each participant shall meet the requirements of an
Eligible Assignee, (c) any such sale or participation shall not affect
the rights and duties of the selling Lender hereunder to the Borrowers,
and (d) the only rights granted to the participant pursuant to
such participation shall be rights against the assigning
Lender, and neither the Agents nor any other Lender shall have any obligation,
duty or liability to any such participant of any other Lender.
(f) Foreign Lender. If any Lender is not incorporated or organized
under the law of the United States of America or a state thereof, such Lender
shall deliver to the Lead Borrower and the Administrative Agent the
following:
(i) Two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor form, as the case may be,
certifying in each case that such Lender is entitled to receive payments
under this Credit Agreement and the Revolving Credit Note without deduction
or withholding of any United States federal income taxes; provided, however,
that if such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver Form 1001 or 4224, such Lender
shall deliver to the Lead Borrower and the Administrative Agent a certificate
to such effect; and
(ii) A duly completed Internal Revenue Service Form W-8 or W-
9 or successor form, as the case may be, to establish an exemption from
United States backup withholding tax.
Each such Lender that delivers to the Lead Borrower and the Administrative
Agent a Form 1001 or 4224 and Form W-8 or W-9 pursuant to this Section 17-12
further undertakes to deliver to the Lead Borrower and the Administrative
Agent two further copies of Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable form, or other manner of
certification, as the case may be, on or before the date
that any such form expires or becomes obsolete or after the occurrence of
any event requiring a change in the most recent form previously
delivered by it to the Lead Borrower and the Administrative Agent. Such Forms
1001 or 4224 shall certify that such Lender is entitled to receive payments
under this Credit Agreement without deduction or withholding of any United
States federal income taxes. The foregoing documents need not be delivered
in the event any change in treaty, law or regulation or official
interpretation thereof has occurred which renders all such forms inapplicable
or which would prevent such Lender from delivering any such form with
respect to it, or such Lender advises the Lead Borrower that it is not
capable of receiving payments without any deduction or withholding of
United States federal income tax and, in the case of
a Form W-8 or W-9, establishing an exemption from United States backup
withholding tax. Until such time as the Lead Borrower and the Administrative
Agent have received such forms indicating that payments hereunder are not
subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Borrowers shall withhold
taxes from such payments at the applicable statutory rate without regard
to the provisions of Article 3 above.
17-14. Pledge to Federal Reserve. Any Lender may at any time pledge
all or any portion of its rights under the Loan Documents including any
portion of the Notes to any of the twelve (12) Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.
No such pledge or enforcement thereof shall release such Lender from its
obligations under any of the Loan Documents.
17-15. Deemed Consent or Approval. With respect to any requested
amendment, waiver, consent or other action which requires the approval of the
Required Lenders or all of the Lenders, as the case may be, in accordance
with the terms of this Agreement, or if either Agent is required hereunder to
seek, or desires to seek, the approval of the Required Lenders or all of the
Lenders, as the case may be, prior to undertaking a particular action or
course of conduct, the Agent in each such case shall provide each Lender
with written notice of any such request for amendment, waiver or consent
or any other requested or proposed action or course of conduct, accompanied
by such detailed background information and explanations as may be
reasonably necessary to determine whether to approve or
disapprove such amendment, waiver, consent or other action
or course of conduct. The subject Agent may (but shall not be
required to) include in any such notice, printed in capital letters or
boldface type, a legend substantially to the following effect;
"THIS COMMUNICATION REQUIRES IMMEDIATE RESPONSE. FAILURE TO RESPOND WITHIN
TEN (10) BUSINESS DAYS FROM THE RECEIPT OF THIS COMMUNICATION SHALL
CONSTITUTE A DEEMED APPROVAL BY THE ADDRESSEE OF THE ACTION REQUESTED BY THE
BORROWERS OR THE COURSE OF CONDUCT PROPOSED BY THE AGENT AND RECITED ABOVE."
and regardless of whether or not the foregoing legend is included by the
Agent in its communication, a Lender shall be deemed to have approved or
consented to such action or course of conduct for all purposes
hereunder if such Lender fails to object to such action or course of
conduct by written notice to the applicable Agent within ten (10)
Business Days of such Lender's receipt of such notice.
17-16. Disclosure. The Borrowers agree that in addition to
disclosures made in accordance with standard banking practices and orders
issued by a court of law any Lender may disclose information obtained by
such Lender pursuant to this Agreement including, without limitation,
all budgets and financial statements to assignees or participants
hereunder without any notice to the Borrowers and other potential
assignees or participants after prior notice to the Borrowers.
The Agents and the Lenders shall use their best efforts to
maintain the confidentiality of any financial information or records
furnished to the Agents and the Lenders provided, however, such
information and records may be disclosed (i) to the Agents' and the
Lenders' directors, officers, employees and representatives, (ii)
to the Agents' and the Lenders' independent third party
auditors and its directors, officers, employees and representatives, (iii) to
all federal and state bank examiners and to all parties to whom the Agents and
the Lenders are required to disclose such information and records under any
present or future federal and/or state banking law or regulation, as
determined by the Agents and the Lenders, (iv) in accordance with any
subpoena or court order which the Agents and the Lenders in good faith
believe requires such disclosure, and (v) as the Agents and Lenders deem
necessary in connection with any exercise of the Agents'
and/or Lenders' rights and remedies under the Loan Documents.
17-17. Consents, Amendments, Waivers, etc. a) Except as otherwise
expressly set forth in any particular provision of this Agreement, any consent
or approval required or permitted by this Agreement to be given by the Agents
or the Lenders may be given, and any term of this Agreement or of any other
instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Borrowers of any terms of this Agreement
or such other instrument or the continuance of any
Suspension Event or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the Agents or the Required Lenders, as applicable, in their
discretion. Each such consent, amendment or waiver shall be in writing. No
waiver shall extend to or affect any obligation not expressly waived or impair
any right consequent thereon. No course of dealing or delay or omission on
the part of the Agents or any Lender in exercising any right shall operate as
a waiver thereof or otherwise be prejudicial thereto. No Advance made by the
Agents hereunder during the continuance of any Suspension Event or Event of
Default shall constitute a waiver thereof. No notice to or demand upon the
Borrowers shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
(b) Notwithstanding anything to the contrary contained in this
Agreement, any provisions of this Agreement pertaining to the administration
of the Loan by the Lenders may be amended by an instrument in writing signed
by the Agents and the Required Lenders with no additional consent
required from the Borrowers.
(c) Notwithstanding the foregoing, the unanimous written approval of
all the Lenders (other than a Delinquent Lender) shall be required with
respect to any proposed amendment, waiver, discharge, termination,
or consent which:
(i) has the effect of except as provided herein (a) extending
the Maturity Date or the date of any amortization payment of any Note, (b)
reducing the interest rate, extending the time of payment, or changing the
manner of calculation, of interest or fees thereon, (c) increasing or
reducing the principal amount thereof, or (d) otherwise postponing or
forgiving any indebtedness thereunder,
(ii) releases or discharges any material portion of the
Collateral other than in accordance with the express provisions of the Loan
Documents,
(iii) changes the definition of Required Lenders or reduces
the percentages specified in the definition of Required Lenders,
(iv) except as otherwise provided in this Agreement, change
the amount of any Lender's Commitment or Commitment Percentage,
(v) releases or waives any guaranty of the Liabilities or
indemnifications provided in the Loan Documents, or
(vi) amends, modifies or waives any provisions of this paragraph.
(d) Without the consent of the subject Agent, no such action shall
amend, modify or waive any provision of any Loan Document which relates to
the rights or obligations of the specific Agent.
{REMAINDER OF PAGE LEFT INTENTIONALLY BLANK}
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS LOAN AND SECURITY
AGREEMENT AS AN INSTRUMENT UNDER SEAL AS OF THE DATE FIRST WRITTEN ABOVE.
DYNAMICS RESEARCH CORPORATION
("Lead Borrower")
By /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President and CEO
DRC ENCODER, INC.
("Borrower")
By /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President and CEO
DRC METRIGRAPHICS, INC.
("Borrower")
By /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President and CEO
DRC SOFTWARE, INC.
("Borrower")
By /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President and CEO
DRC TELECOM, INC.
("Borrower")
By /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President and CEO
XXXXX BROTHERS XXXXXXXX & CO.
("Administrative Agent and Lender")
By /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Vice President
FAMILY BANK, FSB
("Collateral Agent and Lender")
By /s/ C. Xxx Xxxxxxxxxx
Name: C. Xxx Xxxxxxxxxx
Title: Vice President
EXHIBITS
The following Exhibits to this Loan and Security Agreement are respectively
described in the section indicated.
EXHIBIT 1 Commitments/Commitment Percentages Article 1
EXHIBIT 2 2000 Bank Budget Article 1
EXHIBIT 3-7: Revolving Credit Note 3-7
EXHIBIT 3-10: Renewal/Conversion Notice 3-10
EXHIBIT 4-1: Term Note 4-1
EXHIBIT 6-12: Material Changes 6-12
EXHIBIT 7-2: Related Entity 7-2(b)
EXHIBIT 7-4: Trade Names; legal status; etc. 7-4
EXHIBIT 7-5: Locations 7-5
EXHIBIT 7-6: Permitted Liens 7-6
EXHIBIT 7-7: Indebtedness 7-7
EXHIBIT 7-8: Insurance Policies 7-8
EXHIBIT 7-9: Licenses, Distributor Franchise Agreement 7-9
EXHIBIT 7-10: Leases 7-10
EXHIBIT 7-11 Legal Requirements 7-11
EXHIBIT 7-13 Taxes 7-13
EXHIBIT 7-16 Hazardous Materials 7-16
EXHIBIT 7-17 Litigation 7-17
EXHIBIT 7-19 Guaranties and Investments 7-19
EXHIBIT 7-28 Government Contracts 7-28
EXHIBIT 11-4: Borrowing Base Certificate 10-4
EXHIBIT 11-4CC: Compliance Certificate 10-4
EXHIBIT AA: Assignment and Acceptance 17-13
