CREDIT AGREEMENT
Dated as of September 30, 1999
Borrower
BHA GROUP HOLDINGS, INC.
Guarantors
BHA GROUP, INC.
BHA TECHNOLOGIES, INC.
Lender
BANK OF AMERICA, N.A.
$18,000,000 Revolving Line of Credit
Termination Date: October 1, 2002
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS....................................................................................
ARTICLE 2 REVOLVING LINE OF CREDIT.......................................................................
2.1 AGREEMENT TO LEND......................................................................
2.2 REVOLVING NOTE.........................................................................
ARTICLE 3 OTHER CREDIT FACILITIES........................................................................
3.1 LETTERS OF CREDIT......................................................................
3.2 CONVERSION OF REVOLVING LOANS..........................................................
ARTICLE 4
TYPES OF LOANS; DISBURSEMENTS; INTEREST; PAYMENTS........................................................
4.1 TYPES OF LOANS.........................................................................
4.2 LOAN DISBURSEMENT PROCEDURES...........................................................
4.3 INTEREST...............................................................................
4.4 OPTIONAL AND MANDATORY PAYMENTS........................................................
4.5 PAYMENTS...............................................................................
4.6 DIRECT DEBIT AND PRE-BILLING...........................................................
4.7 MINIMUM AMOUNTS........................................................................
4.8 CERTAIN REQUESTS AND NOTICES...........................................................
ARTICLE 5 GUARANTIES; FEES; COLLATERAL...................................................................
5.1 GUARANTIES.............................................................................
5.2 UNUSED COMMITMENT AND LETTER OF CREDIT FEES............................................
5.3 ADDITIONAL EURODOLLAR RATE LOAN COSTS..................................................
5.4 COLLATERAL.............................................................................
ARTICLE 6 CONDITIONS TO MAKING LOANS.....................................................................
6.1 DELIVERY OF LOAN DOCUMENTS.............................................................
6.2 PROPER PROCEEDINGS; CHARTER DOCUMENTS..................................................
6.3 LEGAL OPINIONS.........................................................................
6.4 NO ADVERSE CHANGES; REPRESENTATIONS; NO DEFAULT........................................
6.5 NO MATERIAL IMPAIRMENT.................................................................
6.6 REQUIRED CONSENTS AND APPROVALS........................................................
6.7 LEGALITY...............................................................................
6.8 GENERAL................................................................................
ARTICLE 7 REPRESENTATIONS AND WARRANTIES.................................................................
7.1 CORPORATE EXISTENCE AND STANDING.......................................................
7.2 AUTHORIZATION AND VALIDITY.............................................................
7.3 NO CONFLICT; GOVERNMENTAL CONSENT......................................................
7.4 COMPLIANCE WITH LAWS; ENVIRONMENTAL AND SAFETY MATTERS.................................
7.5 FINANCIAL STATEMENTS...................................................................
7.6 OWNERSHIP OF PROPERTIES; COLLATERAL LIENS..............................................
7.7 SUBSIDIARIES...........................................................................
7.8 LITIGATION.............................................................................
7.9 MATERIAL AGREEMENTS; LABOR MATTERS.....................................................
7.10 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.............................
7.11 TAXES..................................................................................
7.12 ACCURACY OF INFORMATION................................................................
7.13 EMPLOYEE BENEFIT PLANS.................................................................
7.14 NO UNDISCLOSED DIVIDEND RESTRICTIONS...................................................
7.15 ABSENCE OF DEFAULT OR EVENT OF DEFAULT.................................................
7.16 DISCLOSURE.............................................................................
7.17 SOLVENCY...............................................................................
7.18 MARGIN REGULATIONS.....................................................................
7.19 COPYRIGHTS, PATENTS AND OTHER RIGHTS...................................................
7.20 YEAR 2000 COMPLIANCE...................................................................
ARTICLE 8 AFFIRMATIVE COVENANTS..........................................................................
8.1 CONDUCT OF BUSINESS AND MAINTENANCE OF PROPERTIES.....................................
8.2 INSURANCE..............................................................................
8.3 COMPLIANCE WITH LAWS AND TAXES.........................................................
8.4 FINANCIAL STATEMENTS, REPORTS, ETC.....................................................
8.5 OTHER NOTICES..........................................................................
8.6 ACCESS TO PROPERTIES AND INSPECTIONS...................................................
8.7 USE OF PROCEEDS........................................................................
8.8 YEAR 2000 COMPLIANCE...................................................................
8.9 PAYMENT OF CLAIMS......................................................................
ARTICLE 9 FINANCIAL COVENANTS............................................................................
9.1 MINIMUM CONSOLIDATED TANGIBLE NET WORTH................................................
9.2 CONSOLIDATED FUNDED DEBT/EBITDA RATIO..................................................
9.3 CONSOLIDATED FIXED CHARGE COVERAGE RATIO...............................................
9.4 MINIMUM CONSOLIDATED EBITDA............................................................
9.5 CONSOLIDATED CURRENT RATIO.............................................................
ARTICLE 10 NEGATIVE COVENANTS............................................................................
10.1 INDEBTEDNESS...........................................................................
10.2 LIENS..................................................................................
10.3 SALE AND LEASE-BACK TRANSACTIONS.......................................................
10.4 MERGERS, TRANSFERS OF ASSETS, ACQUISITIONS.............................................
10.5 TRANSACTIONS WITH AFFILIATES...........................................................
10.6 SUBSIDIARY DIVIDEND RESTRICTIONS.......................................................
10.7 USE OF PROCEEDS........................................................................
10.8 LOANS, ADVANCES AND INVESTMENTS........................................................
10.9 NEGATIVE PLEDGE........................................................................
10.10 LIQUIDATION OR CHANGE IN BUSINESS......................................................
ARTICLE 11 EVENTS OF DEFAULT.............................................................................
11.1 EVENTS OF DEFAULT......................................................................
11.2 RIGHTS AND REMEDIES....................................................................
ARTICLE 12 MISCELLANEOUS.................................................................................
12.1 NOTICES................................................................................
12.2 SURVIVAL OF AGREEMENT..................................................................
12.3 BINDING EFFECT.........................................................................
12.4 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.................................................
12.5 EXPENSES; INDEMNITY....................................................................
12.6 RIGHT OF SETOFF........................................................................
12.7 APPLICABLE LAW.........................................................................
12.8 WAIVERS; AMENDMENT.....................................................................
12.9 INTEREST RATE LIMITATION...............................................................
12.10 ENTIRE AGREEMENT.......................................................................
12.11 SEVERABILITY...........................................................................
12.12 COUNTERPARTS...........................................................................
12.13 HEADINGS...............................................................................
12.14 JURISDICTION; CONSENT TO SERVICE OF PROCESS............................................
12.15 TERMS GENERALLY........................................................................
12.16 ARBITRATION............................................................................
LIST OF EXHIBITS:
Exhibit 1 - Definitions
Exhibit 2.2 - Revolving Note
Exhibit 4.8-A - Notice of Borrowing, Prepayment or Termination or
Reduction of Commitment
Exhibit 4.8-B - Notice of Continuation or Conversion
Exhibit 5.1 - Loan Guaranty
Exhibit 8.4 - Compliance Certificate
LIST OF SCHEDULES:
Schedule 7.4 - Environmental Matters
Schedule 7.7 - Subsidiaries of Borrower
Schedule 7.9 - Material Contracts
Schedule 10.1 - Existing Indebtedness
Schedule 10.2 - Existing Liens
Schedule 10.8 - Loans, Advances and Investments
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made as of the 30th day of September, 1999, by
and among BHA GROUP HOLDINGS, INC., a Delaware corporation ("BORROWER"), BHA
GROUP, INC., a Delaware corporation, and BHA TECHNOLOGIES, INC., a Delaware
corporation (each a "GUARANTOR" and together "GUARANTORS"), and BANK OF AMERICA,
N.A., a national banking association (the "BANK").
WHEREAS, Borrower has applied to the Bank for a three-year unsecured
revolving line of credit in the amount of $18,000,000; and
WHEREAS, Borrower has applied to the Bank to make available, on the
request of Borrower, letters of credit to be applied against the amount
available under the revolving line of credit; and
WHEREAS, the Bank has agreed to make such credit and loans available to
Borrower upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Certain terms used in this Agreement are defined herein. Certain other
terms are defined in Exhibit 1 attached hereto and incorporated herein by this
reference.
ARTICLE 2
REVOLVING LINE OF CREDIT
2.1 Agreement to Lend.
(1) The Bank agrees, on the terms and subject to the
conditions set forth in this Agreement, to make loans (each a "REVOLVING LOAN")
to Borrower from time to time beginning on the Closing Date and ending on the
Revolving Credit Termination Date, in such amounts as Borrower shall request as
provided in Section 4.8 hereof and to treat each draw under any Letter of Credit
as a Revolving Loan as provided in Section 3.1 below; provided, however, that
the Bank shall have no obligation to make a requested Revolving Loan if, after
the making of such Revolving Loan, (i) the aggregate unpaid principal balance of
all Revolving Loans, together with the aggregate undrawn amount under all
outstanding Letters of Credit, would exceed the Revolving Credit Commitment;
(ii) a Default or Event of Default has occurred and is continuing; or (iii) the
Loan requested is a Eurodollar Rate Loan and the requested Eurodollar Rate
election would cause more than five (5) Eurodollar Rate Loans to be outstanding.
Borrower may terminate or reduce the unused portion of
the Revolving Credit Commitment at any time by giving notice to the Bank as
provided in Section 4.8 below, provided that any partial reduction shall be in
an amount of at least $1,000,000. Revolving Loans shall be used to pay existing
indebtedness to the Bank, for working capital, for Acquisitions up to an
aggregate of $3,000,000 during the term of this Agreement, to purchase or redeem
its own stock and for other corporate purposes.
(2) If the aggregate principal indebtedness of Borrower under
the Revolving Note (as defined below), plus the aggregate undrawn amount under
all outstanding Letters of Credit, at any time exceeds the Revolving Credit
Commitment, Borrower shall immediately, without demand or notice, pay principal
under the Revolving Note so that the aggregate principal amount outstanding
thereunder, plus the aggregate undrawn amount under all outstanding Letters of
Credit, does not exceed the Revolving Credit Commitment.
2.2 Revolving Note. The Revolving Loans shall be evidenced by and
repaid in accordance with a Revolving Credit Note executed by Borrower, in the
form of Exhibit 2.2 hereto, dated as of the Closing Date, and payable to the
order of the Bank. Such note and any and all amendments, extensions,
modifications, renewals, reaffirmations, restatements, replacements and
substitutions thereof and therefor are herein referred to as the "REVOLVING
NOTE." Interest shall accrue on the unpaid principal balance of the Revolving
Note outstanding from time to time at a rate or rates determined as provided in
Section 4.3 below. The Revolving Note shall be paid in full on the Revolving
Credit Termination Date.
ARTICLE 3
OTHER CREDIT FACILITIES
3.1 Letters of Credit. From time to time after the date hereof until
the Revolving Credit Termination Date, Borrower may apply to the Bank to issue
or extend the expiration date of one or more standby letters of credit for the
account of Borrower (all such letters of credit, together with all letters of
credit issued by the Bank for the account of Borrower outstanding on the date of
this Agreement and all renewals and extensions of any thereof, "LETTERS OF
CREDIT"), each of which:
(1) shall be for a stated amount which, together with the
aggregate undrawn amount then outstanding under all Letters of Credit and the
principal amount then outstanding of all Revolving Loans, does not exceed the
Revolving Credit Commitment;
(2) shall, by its terms, not exceed a term of one year and
shall expire not later than the Revolving Credit Termination Date;
(3) shall require payment by Borrower of fees as described in
Section 5.2 hereof (such fees are not, however, applicable to any Letters of
Credit outstanding prior to the date of this Agreement but they are applicable
to any renewals or extensions thereof); and
(4) shall be issued, to the extent applicable, pursuant to the
Bank's then-current standard form of application for letters of credit.
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Borrower authorizes and directs the Bank to cause the repayment of each draw
under the Letters of Credit to be made immediately by charging such repayment
against the Revolving Note as a Prime Rate Loan.
3.2 CONVERSION OF REVOLVING LOANS. Borrow may convert all or any
portion of the outstanding Revolving Loans to a loan with a fixed rate of
interest pursuant to an interest rate swap agreement or other similar agreement
that has terms and conditions acceptable to the Bank. The effective fixed rate
offered by the Bank will be based upon market conditions on the date of the
closing of any swap. Borrower may, at any time, prepay all or any portion of
such a converted loan, without premium or penalty; if Borrower prepays any such
loan, Borrower shall pay all fees and expenses associated with unwinding any
interest rate swap.
ARTICLE 4
TYPES OF LOANS; DISBURSEMENTS; INTEREST; PAYMENTS
4.1 Types of Loans. The Loans made on each Disbursement Date may,
subject to the terms and conditions of this Agreement, be Prime Rate Loans or
Eurodollar Rate Loans (each being referred to as a "type" of Loan) as specified
in the applicable request for borrowing referred to in Section 4.8 hereof, and
Borrower may convert Loans of one type into Loans of the other type or continue
Loans of one type as Loans of the same type, at any time or from time to time,
provided that if any Eurodollar Rate Loan is converted on any day other than the
last day of the Interest Period for such Loan, Borrower shall pay all applicable
fees and amounts described in Section 5.3 below.
4.2 Loan Disbursement Procedures.
(1) Loans shall be disbursed by the Bank upon request by
Borrower from time to time on or after the Closing Date, in such amounts as is
requested as provided in Section 4.8 below or as provided in Section 3.1 above,
subject to the limitations on the Bank's obligations to make Loans as set forth
in Section 2.1 hereof. Subject to the terms of this Agreement, Borrower may
borrow, repay and reborrow Revolving Loans at any time prior to the Revolving
Credit Termination Date.
Each request for a Loan shall be delivered to the Bank in writing or by
telex or facsimile transmission in the manner provided in Section 12.1 hereof,
or as otherwise agreed by the Bank, not later than 1:00 p.m., Kansas City,
Missouri time, on the date on which Borrower desires disbursement of the Loan,
which date shall be a Business Day and shall be specified in the request (a
"DISBURSEMENT DATE"). The Bank may rely and act upon any such request which is
received from a person believed by the Bank in good faith to be authorized to
make such request on behalf of Borrower. The Bank shall record in its records
all Loans made by the Bank to Borrower pursuant to this Agreement and all
payments made on the Loans.
4.3 Interest.
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(1) Borrower shall pay to the Bank interest on the unpaid
principal amount of each Revolving Loan for the period commencing on and
including the date of such Loan to but excluding the date such Loan is paid in
full, at the following rates per annum:
(i) during any period while such Loan is a Prime Rate
Loan, the Prime Rate (as in effect from time to time) less 1%; and
(ii) during any period while such Loan is a
Eurodollar Rate Loan, for each Interest Period relating thereto, the
Eurodollar Rate for such Interest Period plus the Applicable Margin in
effect on the Disbursement Date, the date of conversion or the date of
continuation, as applicable and as adjusted as provided in this
Agreement. The "APPLICABLE MARGIN" will be .85% from the date of this
Agreement to and including September 30, 2000. Thereafter, the
"APPLICABLE MARGIN" will be calculated and adjusted, as shown below, on
the first day of the month following the receipt by the Bank of each
quarterly Compliance Certificate; any change in the "APPLICABLE MARGIN"
shall be effective with respect to Interest Periods beginning on or
after each such date. The interest rate with respect to each
outstanding Eurodollar Rate Loan shall not change during any Interest
Period. On and after October 1, 2000, the Applicable Margin will be as
follows:
CONSOLIDATED APPLICABLE MARGIN ON AND AFTER
FUNDED DEBT/EBITDA RATIO 10/1/00
------------------------ -------
>3.25:1.00 1.35%
>=2.75:1.00 and <=3.25:1.00 1.15%
>=2.01:1.00 and <=2.74:1.00 1.00%
>=1.25:1.00 and <=2.00:1.00 .85%
>= .75:1.00 and <=1.24:1.00 .75%
<.75:1.00 .65%
(2) Notwithstanding the provisions of Section 4.3 (a) above,
Borrower shall pay interest at the Default Rate on any principal of any Loan and
on any interest or other amount payable by Borrower hereunder or under the Note
(i) that is not paid in full when due (whether at maturity, by acceleration or
otherwise), for the period commencing on and including the due date thereof
until the same is paid in full and (ii) upon and during the continuance of any
failure to comply with or violation of any of the financial covenants set forth
in Article 10 of this Agreement as shown on and as of the last day of a fiscal
quarter as reflected on any Compliance Certificate.
(3) Accrued interest on each Loan shall be payable (i) in the
case of a Prime Rate Loan, on the last Business Day of each calendar quarter,
and (ii) in the case of a Eurodollar Rate Loan, on the last day of each Interest
Period therefor; provided that interest payable at the Default Rate shall be
payable, to the extent applicable, from time to time on demand of the Bank.
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(4) The Bank shall, as part of its interest statements, notify
Borrower of any change in the Prime Rate and of the Eurodollar Rates in effect
and shall, on the request of Borrower at any time, notify Borrower of the
Eurodollar Rate or Rates then in effect.
(5) In the event that Borrower fails to select the type of
Loan or the duration of any Interest Period for any Eurodollar Rate Loan within
the time period and otherwise as provided in Section 4.8, such Loan (if
outstanding as a Eurodollar Rate Loan) will be automatically converted into a
Prime Rate Loan on the last day of the then current Interest Period for such
Loan or (if outstanding as a Prime Rate Loan) will remain as, or will be made
as, a Prime Rate Loan.
4.4 Optional and Mandatory Payments. Borrower shall have the right to
prepay the Loans in whole or in part at any time without premium or penalty,
subject to giving the Bank prior notice in accordance with the provisions of
Section 4.8 hereof, provided that (i) each such partial prepayment shall be in
the aggregate principal amount of not less than $100,000 with respect to Prime
Rate Loans and $500,000 with respect to Eurodollar Rate Loans, and (ii) if any
prepayment of a Eurodollar Rate Loan is made on any day other than the last day
of the Interest Period therefor, it may be prepaid only upon three (3) Business
Days prior notice to the Bank and Borrower shall pay to the Bank any applicable
fees and amounts described in Section 5.3(a) below. Amounts prepaid in respect
of Loans under this Section 4.4 may be reborrowed subject to the terms and
conditions hereof. Borrower shall make mandatory principal payments on the Loans
as provided in Section 2.1(b) above.
4.5 Payments. Except as otherwise provided herein and subject to
Section 4.8 below, all payments of principal, interest, Fees, taxes, charges,
expenses and other items payable by Borrower hereunder and under the Note shall
be made in U.S. dollars and shall be credited on the date of receipt by the Bank
if received by the Bank at its principal office in Kansas City, Missouri, in
immediately available funds, prior to 1:00 p.m., Kansas City, Missouri time, on
a Business Day. Payments made in funds which are not immediately available shall
be credited only when the funds are collected by the Bank, and payments received
(whether from Borrower in immediately available funds or through the collection
of funds which were not immediately available at the time payment was tendered
by Borrower) after 1:00 p.m. will be credited on the next Business Day. The Bank
reserves the right to apply all payments received by it from Borrower and
designated or authorized to be applied to a Note first to any Fees and other
charges then due to the Bank, then to accrued interest on such Note and then to
reduction of the principal balance of such Note, or such other order as the Bank
may determine in its sole discretion. The Bank shall also record in its records,
in accordance with customary accounting practice, all interest, Fees, taxes,
charges, expenses and other items properly chargeable to Borrower with respect
to the Loans, all payments received by the Bank for application to the
Obligations, and all other appropriate debits and credits. The Bank's records
shall constitute prima facie evidence of the amount of Obligations outstanding
from time to time.
4.6 Direct Debit and Pre-Billing.
5
(a) Borrower agrees that Bank will debit deposit account number
020100039303 or such other of Borrower's accounts with the Bank as designated in
writing by either Borrower (the "DESIGNATED ACCOUNT") on the date each payment
of principal, interest and all other Obligations, including the fees described
in Section 5.2 and fees, amounts and costs described in Section 5.3, become due
(the "DUE DATE"). If the Due Date is not a Business Day, the Designated Account
will be debited on the next Business Day.
(b) Approximately 10 days prior to each Due Date, Bank will mail to
Borrower a statement of the amounts that will be due on that Due Date (the
"BILLED AMOUNT"). The calculation will be made on the assumption that no new
extensions of credit or payments will be made between the date of the billing
statement and the Due Date and that there will be no changes in the applicable
interest rate.
(c) Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "ACCRUED AMOUNT"). If the
Billed Amount debited to the Designated Account differs from the Accrued Amount,
the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued Amount, the
Billed Amount for the following Due Date will be increased by the amount of the
discrepancy. Borrower will not be in default and an Event of Default will not
occur by reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the
Billed Amount for the following Due Date will be decreased by the amount of the
discrepancy.
Regardless of any such discrepancy, interest will continue to accrue
based on the actual amount of principal outstanding without compounding. Bank
will not pay Borrower interest on any overpayment.
(d) Borrower will maintain sufficient funds in the Designated Account
to cover each debit. If there are insufficient funds in the Designated Account
on the date Bank enters any debit authorized by this Agreement, the debit will
be reversed.
(e) Borrower may terminate this direct debit arrangement at any time by
sending written notice to Bank.
4.7 Minimum Amounts. Each borrowing or conversion of Prime Rate Loans
shall be in an amount of at least $100,000 and each borrowing, conversion or
continuation of Eurodollar Rate Loans shall be in an amount of $500,000 or a
multiple of $100,000 in excess thereof.
4.8 Certain Requests and Notices. Borrower will request borrowings and
give notice to the Bank of all terminations or reductions of Commitments,
conversions, continuations and prepayments of Loans and the duration of Interest
Periods, such requests and notices to be substantially in the form of Exhibits
4.8-A and 4.8-B hereto. Each such notice shall be irrevocable and shall be
effective only if received by the Bank not later than
6
1:00 p.m. Kansas City time (i) on the Business Day prior to the effective date
of the requested termination or reduction of a Commitment, (ii) on the same date
if it is a notice of a borrowing or prepayment of a Prime Rate Loan (except that
if such date is not a Business Date, then on the next Business Day), or (iii)
three (3) Business Days prior to the requested effective date for a borrowing or
prepayment of, conversion into or continuation as a Eurodollar Rate Loan or any
selection of Interest Period for a Eurodollar Rate Loan.
For purposes of calculating the number of Business Days, the date the
notice is received shall be included if received not later than 1:00 p.m. Kansas
City time and excluded if received after 1:00 p.m. Kansas City time.
ARTICLE 5
GUARANTIES; FEES; COLLATERAL
5.1 Guaranties. At the Closing, the Guarantors are each delivering to
Bank a Guaranty Agreement in substantially the form of Exhibit 5.1. If Borrower
or any Subsidiary acquires or creates any subsidiary after the Closing Date or
if the Bank so requests with respect to any Subsidiary, Borrower shall cause
each such newly acquired or created Subsidiary and each such other Subsidiary to
become a Guarantor by causing it to deliver to the Bank (i) a Guaranty Agreement
executed by the Subsidiary in substantially the form attached hereto as Exhibit
5.1 with such additional matters included therein as may be required by the Bank
(whether delivered at the Closing or thereafter, each, a "LOAN GUARANTY"), (ii)
if requested by Bank, an opinion of such Subsidiary's counsel, satisfactory in
form and substance to the Bank, as to the enforceability of such Loan Guaranty
and other matters required by the Bank; such opinion shall be substantially the
same as the opinion delivered with respect to the initial Guarantors on the
Closing Date, with such additional matters included therein as may be required
by the Bank and shall include, if requested by the Bank, the opinion of counsel
from the Subsidiary's jurisdictions of organization and operation, and (iii)
copies of such Subsidiary's charter documents, certified by the appropriate
public official, and of its bylaws, certified by its secretary.
5.2 Unused Commitment and Letter of Credit Fees. Borrower agrees to
pay a quarterly unused commitment fee equal to .25% of the unused Revolving
Credit Commitment; such fees shall be calculated daily. In making such
calculations, the unused Revolving Credit Commitment shall be reduced by the
undrawn amount of each outstanding Letter of Credit. Borrower shall pay the
unused Commitment fees with respect to each quarter within 15 days after the end
of such quarter.
Borrower agrees to pay an initial issuance fee on the date that each
standby Letter of Credit is issued in an amount equal to .125% of the amount of
such Letter of Credit and to pay the Bank's then standard fee for any renewals
and extensions of any Letter of Credit. Borrower also agrees to pay a fee in an
amount equal to the Applicable Margin rate per annum times the undrawn amount of
all outstanding Letters of Credit; such fee will be calculated and paid on last
business day of each fiscal quarter and shall be subject, after October 1, 2000,
to appropriate adjustment after the Bank's receipt of Borrower's Compliance
Certificate respecting such quarter.
7
All fees shall be calculated on a 360-day year basis, if applicable.
5.3 Additional Eurodollar Rate Loan Costs.
(1) Borrower shall pay to the Bank from time to time, upon
request of the Bank, (i) such amounts as the Bank may determine to be necessary
to compensate it for any Additional Eurodollar Rate Loan Costs respecting
Regulatory Changes and (ii) an administrative fee of $300 plus such amounts as
the Bank may determine to be necessary to compensate it for any loss, cost or
expense which the Bank incurs (including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or re-employment of deposits, but
excluding loss of anticipated profits) that is attributable to (A) any payment,
prepayment or conversion of a Eurodollar Rate Loan made by either Borrower for
any reason on a date other than the last day of an Interest Period for such Loan
or (B) any failure by either Borrower for any reason (including, without
limitation, the failure of any condition specified in Article 6 hereof to be
satisfied) to borrow, continue or convert a Eurodollar Rate Loan on the date
therefor specified in the request for borrowing or notice given pursuant to
Section 4.8 hereof. Such compensation may include an amount equal to the excess,
if any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of the applicable Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
determined by the Bank) which would have accrued to the Bank on such amount by
placing such amount on deposit for a comparable period with leading banks in the
interbank Eurodollar market. The covenants of Borrower set forth in this Section
5.3 shall survive the termination of this Agreement and the payment of the Loans
and all other amounts payable hereunder. The Bank will notify Borrower of any
event which will entitle the Bank to compensation pursuant to this Section 5.3
as promptly as practicable after the Bank determines to require such
compensation and will furnish Borrower with a certificate setting forth in
reasonable detail the basis and amount of such compensation.
(2) Determinations by the Bank of the effect of any Regulatory
Change on its rate of return or cost of maintaining the Eurodollar Rate Loans,
on its obligation to make Eurodollar Rate Loans or on amounts receivable by it
in respect of the Eurodollar Rate Loans and determinations of the amounts
required to compensate such Bank under this Section 5.3 shall be conclusive,
provided that such determinations are made on a reasonable basis and are set
forth in reasonable detail in the certificates referred to in Section 5.3(a)
above.
(3) Anything herein to the contrary notwithstanding, if it
becomes unlawful for the Bank to honor its obligation to make or maintain
Eurodollar Rate Loans hereunder or if, on or prior to the determination of any
Eurodollar Rate for any Interest Period, the Bank determines (which
determination shall be conclusive) that quotations of
8
interest rates for the relevant deposits referred to in the definition of
"Eurodollar Rate" in Exhibit 1 hereto are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining rates of
interest for Eurodollar Rate Loans, then the Bank shall give Borrower prompt
notice thereof, and, so long as such condition remains in effect, the Bank shall
be under no obligation to make additional Eurodollar Rate Loans, to continue
Eurodollar Rate Loans or to convert Prime Rate Loans into Eurodollar Rate Loans,
and Borrower shall, on the last day(s) of the then current Interest Period(s)
for the outstanding Eurodollar Rate Loans, either prepay such Loans or convert
such Loans into Prime Rate Loans.
5.4 COLLATERAL. The Note will be unsecured. All assets of Borrower,
Guarantors and other Subsidiaries will be subject to the negative pledge set
forth in Section 10.9 below.
ARTICLE 6
CONDITIONS TO MAKING LOANS
The Bank's obligation hereunder to make the Loans, extend credit and
enter into transactions referred to in Article 3 shall be subject to the
satisfaction of the following conditions on or prior to the Closing Date and, in
the case of the conditions set forth in Sections 6.4, 6.5, 6.6, 6.7 and 6.8, as
of each Disbursement Date and each date a Letter of Credit is issued, renewed or
extended:
6.1 Delivery of Loan Documents. Borrower and Guarantors shall have
executed, as applicable, this Agreement, the Note, the Guaranties, any UCC
financing statements relating thereto requested by the Bank and any other Loan
Documents, all of which shall be in form and substance satisfactory to the Bank
and its counsel, and delivered them to the Bank.
6.2 Proper Proceedings; Charter Documents. Borrower and each Guarantor
shall have taken all corporate proceedings necessary to authorize the Loan
Documents and the transactions contemplated hereby. Borrower and Guarantors
shall have delivered to the Bank certificates, dated the Closing Date and signed
by their respective Secretaries, satisfactory to the Bank, respecting such
proceedings and the incumbency of the officers executing the Loan Documents.
Borrower shall have and each Guarantor shall have delivered to the Bank copies
of its charter documents, including all amendments thereto, certified by the
appropriate officer, and copies of its bylaws, including all amendments thereto,
certified by the appropriate officer.
6.3 Legal Opinions. The Bank shall have received opinions from counsel
to Borrower and Guarantors, dated as of the Closing Date, satisfactory to the
Bank.
6.4 No Adverse Changes; Representations; No Default. Since the date
hereof, there shall have been no material adverse change in the business,
operations, financial condition or prospects of Borrower or any Subsidiary. The
representations and warranties contained in Article 7 hereof with respect to
Borrower and the Subsidiaries (including entities
9
becoming Subsidiaries as a result of an Acquisition) shall be true and correct
as though made on and as of the Closing Date or such Disbursement Date or such
date of issuance, renewal or extension of a Letter of Credit, as the case may
be, except that the representations and warranties set forth in the first
sentence of Section 7.4(b), Section 7.7 and the second sentence of Section 7.9
(which relate to disclosure schedules 7.4, 7.7 and 7.9) are not required by this
Section 6.4 to be made as of any Disbursement Date or date of issuance, renewal
or extension of a Letter of Credit. No Default or Event of Default shall have
occurred and be continuing. The Bank shall have received certifications of
Borrower in form satisfactory to the Bank and dated the Closing Date or the date
of the request for borrowing or for issuing, renewing or extending a Letter of
Credit, as applicable, certifying as to each matter set forth in this Section
6.4, which certifications may be included in the notice of borrowing described
in Section 4.8 hereof.
6.5 No Material Impairment. The Bank shall have determined that the
prospect of payment of the Loans has not been materially impaired.
6.6 Required Consents and Approvals. All consents, approvals and
authorizations of any Governmental Authority or any other Person with respect to
the execution and performance of the Loan Documents, the consummation of the
transactions contemplated hereby or the making of the Loans hereunder shall have
been obtained and shall be in full force and effect.
6.7 Legality. The making of any Loan shall not subject the Bank to any
penalty or special tax, shall not be prohibited by any law or governmental order
or regulations applicable to the Bank or to Borrower and shall not violate any
voluntary credit restraint program of the executive branch of the government of
the United States or any other Governmental Authority, and all necessary
consents, approvals and authorizations of any Governmental Authority to or of
such Loan shall have been obtained.
6.8 General. All instruments and legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Bank and its counsel, and the Bank
shall have received copies of all other documents, including records of
corporate proceedings and opinions of counsel, which the Bank may have requested
in connection therewith, such documents where appropriate to be certified by
proper corporate or governmental authorities, and such other conditions shall
have been fulfilled as may have been requested by the Bank.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
Borrower, with respect to itself and with respect to each of the
Subsidiaries, and each of Guarantors, with respect to itself, represent and
warrant to the Bank that:
10
7.1 Corporate Existence and Standing. Borrower is and each Subsidiary
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation and has all requisite authority to
own its property and to carry on its business in each jurisdiction where the
failure to so qualify would have a material adverse effect on its business,
properties, assets, operations or condition (financial or otherwise).
7.2 Authorization and Validity. Borrower has and each Guarantor has
the corporate power and authority and legal right to execute and deliver the
Loan Documents to which it is a party and to perform its obligations thereunder.
Such execution and delivery have been duly authorized by proper proceedings, and
the Loan Documents constitute the legal, valid and binding obligations of
Borrower and the Guarantors, enforceable against them in accordance with their
respective terms.
7.3 No Conflict; Governmental Consent. The execution, delivery and
performance of the Loan Documents will not violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on Borrower or any
Subsidiaries, any provision of their respective articles or certificate of
incorporation, by-laws or other charter document, or the provisions of any
indenture, instrument or other written or oral agreement to which Borrower or
any Subsidiary is a party or is subject or by which Borrower or any Subsidiary
or any of their property is bound, or conflict therewith or constitute a default
thereunder, or result in the creation or imposition of any Lien in, of or on any
of their property pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, approval, license, authorization or validation of,
or filing, recording or registration with, or exemption by, any Governmental
Authority is required to authorize or is required in connection with the
execution, delivery and performance of or the enforceability of any of the Loan
Documents.
7.4 Compliance with Laws; Environmental and Safety Matters.
(1) Borrower has and each Subsidiary has complied with all
applicable statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or Governmental Authority having jurisdiction over the
conduct of its businesses or the ownership of its respective properties except
to the extent that such non-compliance will not have a material adverse effect
on the financial condition or business operations of Borrower, on a consolidated
or unconsolidated basis, or of either Guarantor.
(2) Borrower and the Subsidiaries have each, except as
disclosed in Schedule 7.4 hereto and to Borrower's and Guarantors' actual
knowledge, complied with all federal, national, state, local and other statutes,
ordinances, orders, judgments, rulings and regulations relating to environmental
pollution, environmental regulation or control, or employee health or safety,
except to the extent that such non-compliance will not have a material adverse
effect on their respective financial conditions or business operations; they
have not received any written notice of any failure so to comply except as
disclosed in Schedule 7.4 hereto; and their facilities do not treat, store or
dispose of any hazardous wastes, hazardous substances, hazardous materials,
toxic substances, toxic pollutants or substances ("HAZARDOUS MATERIALS")
similarly denominated, as those terms or similar terms are used in
00
XXXX, XXXXXX, the Hazardous Materials Transportation Act, the Toxic Substances
Control Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and
Health Act or any other state, local or federal applicable law, ordinance, rule
or regulation relating to environmental pollution, environmental regulation or
control or employee health and safety ("ENVIRONMENTAL LAWS") in a quantity or
manner that requires a permit, registration, or another notification or
authorization from a Governmental Authority except for the treatment, storage,
or disposal of Hazardous Materials in a quantity or manner which, if in
non-compliance with Environmental Laws, would not have a material adverse effect
on their respective financial conditions or business operations except as
disclosed in Schedule 7.4 hereto. The conduct of the business and the condition
of the property of Borrower and each of the Subsidiaries do not violate any
Environmental Laws or any judicial interpretation thereof relating primarily to
the environment or Hazardous Materials. Neither Borrower nor any Subsidiary is
aware of any events, conditions or circumstances involving environmental
pollution or contamination or employee health or safety that could reasonably be
expected to result in material liability on the part of Borrower or any
Subsidiary.
7.5 Financial Statements. Borrower has heretofore furnished to the
Bank its (a) consolidated balance sheet and related consolidated statements of
earnings and cash flows as of and for the fiscal year ended September 30, 1998,
and (b) an unaudited consolidated balance sheet and unaudited statements of
earnings and cash flows as of and for quarter ended June 30, 1999. Such
financial statements fairly state the consolidated financial condition and
results of operations of Borrower and the Subsidiaries as of such dates and for
such periods. Neither Borrower nor any of the Subsidiaries had on said date any
material (on a consolidated basis) contingent liabilities, material (on a
consolidated basis) liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said balance
sheet or the notes thereto as at said date. Such financial statements were
prepared in accordance with GAAP applied on a consistent basis. Since June 30,
1999, no material adverse change has occurred in the business, properties,
financial condition, prospects or results of operations of Borrower (on a
consolidated or unconsolidated basis) or of either Guarantor.
7.6 Ownership of Properties; Collateral Liens. Borrower has and each
Subsidiary has good title, free and clear of all Liens (other than those
permitted by Section 10.2 hereof), to all of the properties and assets reflected
in its financial statements as owned by it, and its interest in all other
properties and assets in or to which it has an interest as a lessee, licensee or
otherwise is free and clear of all Liens (other than those permitted under
Section 10.2 hereof).
7.7 Subsidiaries. Neither Borrower nor any Subsidiary has any
subsidiaries except as disclosed in Schedule 7.7. Except as described in
Schedule 7.7, all of the issued and outstanding shares of capital stock or other
ownership interests of each Subsidiary, have been duly authorized and issued to
Borrower or to a Subsidiary and are fully paid and non-assessable, free and
clear of all liens, restrictions and rights.
12
7.8 Litigation. All litigation, arbitration, mediation, governmental
investigations, proceedings or inquiries before any Governmental Authority,
arbitrator or mediator that are pending or, to the knowledge of any of its
officers, threatened against or affecting Borrower or any Subsidiary (other than
those covered by insurance, but only to the extent so covered) are not
reasonably expected to exceed, in the aggregate, $750,000.
7.9 Material Agreements; Labor Matters. Any agreement or instrument of
either Borrower or any Subsidiary that has or is likely to have a material
effect on the assets, prospects, business, operations, financial condition,
liabilities or capitalization of Borrower or Guarantor as a separate company or
of Borrower on a consolidated basis is referred to in this Section 7.9 as a
"MATERIAL CONTRACT." As of the date hereof, all of the Material Contracts are
listed on Schedule 7.9 hereto. Neither Borrower nor any Guarantor is in default
under any Material Contract in any manner that could materially and adversely
affect its assets, prospects, business, operations, financial condition,
liabilities or capitalization of or in any manner that could jeopardize its
right to require the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Material Contract. There
are no strikes or walkouts relating to any labor contracts with Borrower or any
Subsidiary pending or threatened, and no labor contracts are scheduled to expire
during the term of this Agreement, and no efforts are being made by any
employees to form a union or collectively bargain with Borrower or any
Subsidiary.
7.10 Investment Company Act; Public Utility Holding Company Act.
Neither Borrower nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company," a "subsidiary company"
of a "holding company" or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.11 Taxes. Borrower has and each Subsidiary has filed all United
States federal tax returns and all other tax returns which, to Borrower's or
either Guarantor's actual knowledge, are required to be filed and paid all taxes
due pursuant to said returns or pursuant to any assessment received by it,
including without limitation all federal and state withholding taxes and all
taxes required to be paid pursuant to applicable law, except such taxes, if any,
as are being contested in good faith, by appropriate proceedings and as to which
adequate charges, accruals and reserves have been set aside. No tax Liens have
been filed, and no claims are being asserted with respect to any such taxes,
except such tax Liens and claims that will not have a material adverse effect,
individually or in the aggregate, on the assets, business, operations or
financial condition of Borrower or either Guarantor, on a consolidated or
unconsolidated basis. The charges, accruals and reserves on the books of
Borrower, on a consolidated basis, in respect of any taxes or other governmental
charges are adequate.
7.12 Accuracy of Information. No information, exhibit or report
furnished by Borrower or any Subsidiary to the Bank in connection with the
negotiation of the Loan Documents contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading.
13
7.13 Employee Benefit Plans. Neither Borrower nor any Subsidiary
maintains, sponsors or contributes to any Defined Benefit Pension Plan.
7.14 No Undisclosed Dividend Restrictions. Except for limitations on
the payment of dividends under applicable corporate statutes, neither Borrower
nor any Subsidiary is subject to any agreement, covenant or understanding that
limits or restricts its ability to declare or pay dividends.
7.15 Absence of Default or Event of Default. No Default and no Event of
Default has occurred and is continuing.
7.16 Disclosure. The pro forma financial information contained in
financial statements delivered to the Bank will be based upon good faith
estimates and assumptions believed by Borrower to be reasonable at the time
made. There is no fact known to Borrower (other than matters of a general
economic nature) that has had or could reasonably be expected to have a material
adverse effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to the Bank for use in
connection with the transactions contemplated by this Agreement.
7.17 Solvency. Based upon its financial and accounting records,
Borrower has and each Subsidiary has assets of a value that exceeds the amount
of its liabilities (excluding, for purposes of this representation, all
intercompany loans from liabilities). Borrower reasonably anticipates that it
and each of its Subsidiaries will be able to meet their respective debts as they
mature. Borrower and each Subsidiary have adequate capital to conduct the
business in which it is engaged.
7.18 Margin Regulations. Neither the making of the Loans hereunder, nor
the use of the proceeds thereof, will violate or be inconsistent with the
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System. No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or to extend credit to others for the purpose of purchasing or carrying
Margin Stock (as defined in said Regulation U).
7.19 Copyrights, Patents and Other Rights. Borrower possesses and each
Subsidiary possesses all licenses, patents, patent rights and patent licenses,
trademarks, trademark rights and licenses, trade names, copyrights and all other
intellectual property rights which are required or desirable to conduct its
business as presently conducted; to the best of its knowledge, such rights do
not infringe on or conflict with the rights of any other Person; and Borrower
has and each Subsidiary has, and is current and in good standing with respect
to, all governmental approvals, permits and certificates required to conduct its
businesses as heretofore conducted.
7.20 Year 2000 Compliance. Borrower has (a) initiated a review and
assessment of all areas within its and each of its Subsidiaries' business and
operations (including those affected by material suppliers and vendors) that
could be adversely affected by the risk that computer applications used by
Borrower or any Subsidiary or any of such suppliers and
14
vendors may be unable to recognize and properly perform date-sensitive functions
involving certain dates prior to and any date after December 31, 1999 (the "YEAR
2000 PROBLEM"), (b) developed a plan and time line for addressing the Year 2000
Problem on a timely basis, and (c) implemented that plan in accordance with that
timetable. Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are material to its or any
of its Subsidiaries' business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "YEAR 2000 COMPLIANT"), except to the extent that a failure
to do so could not reasonably be expected to have material adverse effect on the
financial condition or operations of Borrower, on a consolidated or
unconsolidated basis, or of either Guarantor.
ARTICLE 8
AFFIRMATIVE COVENANTS
Unless the Bank shall otherwise consent in writing, Borrower agrees
that it will, and will cause each of the Subsidiaries to, and each Guarantor
agrees that it will:
8.1 Conduct of Business and Maintenance of Properties. Carry on and
conduct its business in substantially the same manner and in substantially the
same fields of enterprise as it is presently conducted and do all things
necessary to remain duly incorporated, validly existing and in good standing in
its jurisdiction of organization and maintain all requisite authority to conduct
its business in each jurisdiction in which its business is conducted; maintain,
preserve, protect and keep its properties in good repair, working order and
condition; and comply in all material respects with all agreements and
instruments to which it is a party.
8.2 Insurance. Maintain with financially sound and reputable insurance
companies insurance on all its property, covering such liabilities and such
risks (including business interruption risks) and in such amounts as is
consistent with sound business practice and reasonably satisfactory to the Bank
and furnish to the Bank upon request full information as to the insurance
carried.
8.3 Compliance with Laws and Taxes. Comply with any and all laws,
statutes, rules, regulations orders, judgments, decrees and awards, a violation
of which, in any respect, may materially and adversely affect its business,
assets, operations or condition, financial or otherwise, including, without
limitation, those regarding the collection, payment and deposit of employees'
income, unemployment, and Social Security taxes and those regarding
environmental matters; pay when due all taxes, assessments and governmental
charges and levies upon it or its income, profits or property, except those
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been set aside; make a timely payment or
deposit of all FICA payments and withholding taxes required of it under
applicable law; and, upon request, furnish to the Bank evidence satisfactory to
the Bank that such payments have been made.
15
8.4 Financial Statements, Reports, etc. Maintain a system of accounting
established and administered in accordance with GAAP and furnish to the Bank:
(1) Annual and Consolidating Financial Statements. Within 120
days after the close of its fiscal year, audited financial statements, prepared
in accordance with GAAP, including a balance sheet and statements of
stockholders' equity, income and cash flows, prepared on a consolidated basis
and setting forth in comparative form the corresponding figures for the
preceding fiscal year, all in reasonable detail, accompanied by an unqualified
opinion thereon or an unqualified opinion with explanatory language added to the
auditors' standard report of independent certified public accountants
satisfactory to the Bank, which opinion shall state that the financial
statements fairly present the financial condition and results of operations and
cash flows of Borrower and its consolidated Subsidiaries as of the end of and
for such fiscal year in conformity with GAAP, and a certificate of such
accountants stating that, in making the examination necessary for their opinion,
they obtained no knowledge, except as specifically stated, of any Default or
Event of Default continuing as of the date of such certificate; such financial
statements shall also include an unaudited balance sheet and income statement on
a consolidating basis.
(2) Quarterly Reporting. Within 45 days after the end of each
of the first three fiscal quarters and within 120 days after the end of the last
fiscal quarter, (i) financial statements for Borrower and its Subsidiaries for
the quarter or fiscal year, as applicable, then ended, including a balance sheet
and statements of stockholders' equity, income and cash flows for such quarter
and for the period from the beginning of the respective fiscal year to the end
of such quarter, prepared on a consolidated basis and, with respect to each
balance sheet and income statement, a consolidating basis, and setting forth in
each case in comparative form the corresponding figures for the corresponding
period in the preceding fiscal year, accompanied by (ii) a certificate of the
chief financial officer or treasurer of Borrower stating that said financial
statements fairly present the financial condition and results of operations of
Borrower and its consolidated Subsidiaries in accordance with, as to the
financial statements referred to in clause (i) above, GAAP consistently applied,
as of the end of and for such period (subject to normal year-end adjustments and
to the absence of footnote disclosures) and that, to the best of such officer's
knowledge, no Default or Event of Default has occurred under this Agreement or,
if any Default or Event of Default exists, stating the nature and status
thereof.
(3) Compliance Certificate. Together with each set of
financial statements required under paragraphs (a) and (b) of this Section 8.4,
a compliance certificate of Borrower in substantially the form of Exhibit 8.4 (a
"COMPLIANCE CERTIFICATE"), signed on its behalf by the chief financial officer
or treasurer of Borrower, showing the calculations necessary to determine
compliance with all financial covenants contained in Article 9 of this Agreement
and stating that all of the representations and warranties set forth in Article
7 hereof (including those referring to the Schedules to the Agreement) with
respect to Borrower and the Subsidiaries, including Subsidiaries that are
Acquired Companies, shall be true and correct as though made on and as of the
date of the Compliance Certificate, except for matters specifically updated or
described in the Compliance Certificate, and (ii) that no
16
Default or Event of Default exists or, if any Default or Event of Default
exists, stating the nature and status thereof.
(4) SEC and Other Filings. Promptly upon their becoming
publicly available, copies of all registration statements and annual, periodic
or other regular reports, final proxy statements and such other similar
information as shall be filed by either Borrower or any Subsidiary with the
Securities and Exchange Commission (the "SEC"), any national securities exchange
or (to the extent not duplicative) any other similar U.S. or foreign
Governmental Authority and, promptly upon the mailing thereof to the
shareholders of either Borrower generally, copies of all notices, financial
statements, reports and proxy statements so mailed.
(5) Litigation. Prompt notice of all legal, arbitration or
mediation proceedings and of all proceedings by or before any Governmental
Authority affecting Borrower or any Subsidiary which, if adversely determined,
might result in a monetary loss in an amount in excess of $750,000 individually
or in excess of $750,000 in the aggregate for all such proceedings and of the
issuance by any Governmental Authority of any injunction, order or other
restraint prohibiting, or having the effect of prohibiting or delaying, any
action on the part of Borrower or any Subsidiary, which injunction, order or
restraint might materially and adversely affect the business, properties or
affairs of Borrower or of either Guarantor (on a consolidated or unconsolidated
basis) or the institution of any proceedings seeking any such injunction, order
or other restraint.
(6) Management Letters. Promptly upon receipt by Borrower, a
copy of any management letter sent by Borrower's independent certified public
accountants, and promptly upon completion of any response report, a copy of such
response report.
(7) Reportable Events. If at any time after the Closing Date,
Borrower or any Subsidiary adopts, sponsors or contributes to any Defined
Benefit Pension Plan, as soon as possible and in any event within ten (10) days
after Borrower or any Subsidiary knows that any Reportable Event has occurred
with respect to any such Defined Benefit Pension Plan, a statement, signed by an
authorized officer of Borrower, describing said Reportable Event and the action
which such Borrower or such Subsidiary proposes to take with respect thereto.
(8) Environmental Notices. As soon as possible and in any
event within 10 days after receipt, a copy of (i) any notice or claim to the
effect that Borrower or any Subsidiary is or may be liable to any person as a
result of the release by such Borrower, such Subsidiary or any other person of
any toxic or hazardous waste or substance into the environment or that all or
any of its properties is subject to an Environmental Lien and (ii) any notice
alleging any violation of any federal, state or local environmental, health or
safety law or regulation by Borrower or any Subsidiary received after the
Closing Date.
(9) Other Information. Such other information (including
consolidating financial reports and other financial information) as the Bank may
from time to time reasonably request.
17
On request of the Bank, Borrower shall deliver a letter to Borrower's
accountants (i) authorizing them to comply with the provisions of this
paragraph, (ii) directing them to send to the Bank true, correct, and exact
copies of any and all financial statements and reports which are prepared as a
result of any audit or other review of operations, finances or internal controls
of Borrower or any Subsidiary (specifically including any reports dealing with
improper accounting or financial practices, defalcation, financial
irregularities, financial reporting errors or misstatements or fraud), and (iii)
authorizing the Bank to rely on financial statements of Borrower issued by such
accountants, which letter shall be acknowledged and consented to in writing by
such accountants.
8.5 Other Notices. Give prompt notice in writing to the Bank of the
occurrence of any Default or Event of Default and of any other development,
financial or otherwise, which might materially and adversely affect its
business, properties or affairs of Borrower or any Subsidiaries or the ability
of Borrower or any Guarantor to repay the Obligations.
8.6 Access to Properties and Inspections. Permit the Bank to make
reasonable inspections of the properties, corporate books and financial records
of Borrower and each Subsidiary, to make reasonable examinations and copies of
their respective books of account and other financial records and to discuss
their respective affairs, finances and accounts with, and to be advised as to
the same by, their officers, auditors, accountants and attorneys at such
reasonable times and intervals as the Bank may designate. All of the Bank's
reasonable expenses incurred for travel in connection with such audits and
inspections shall be paid for by Borrower.
8.7 Use of Proceeds. Use the proceeds of the Revolving Loans to pay
indebtedness to the Bank existing on the date of this Agreement, to provide
working capital, to make Acquisitions in an amount up to an aggregate $3,000,000
over the term of this Agreement and for other corporate purposes.
8.8 Year 2000 Compliance. Promptly notify the Bank in the event that
it discovers or determines that any computer application (including those of any
of its suppliers or vendors that could affect the business or operations of
Borrower or any of its Subsidiaries) will not be Year 2000 Compliant (as defined
in Section 7.20 above) on a timely basis, except to the extent that such failure
could not reasonably be expected to have a material adverse effect on the
financial condition or operations of Borrower or any Subsidiary.
8.9 Payment of Claims. Promptly pay when due all lawful claims,
whether for labor, materials or otherwise.
ARTICLE 9
FINANCIAL COVENANTS
Borrower will, so long as this Agreement shall remain in effect or any
Obligations shall be unpaid:
18
9.1 Minimum Consolidated Tangible Net Worth. Maintain as of the end of
each fiscal quarter a Consolidated Tangible Net Worth of at least $40,000,000 up
to December 31, 2001 and of at least $44,000,000 on December 31, 2001 and
thereafter. "CONSOLIDATED TANGIBLE NET WORTH" means, at any date, (i) the
aggregate book value of all assets (after deducting all applicable reserves and
excluding any reappraisal or write-up of assets) which, under GAAP, would appear
as assets on the consolidated balance sheet of borrower and its consolidated
Subsidiaries, but excluding all patents, franchises and operating rights,
research and development expenditures, treasury stock, goodwill, all other
intangibles, and the net amount owed to Borrower or any of its Subsidiaries by
any Affiliates, employees or shareholders and minus (ii) the aggregate amount of
liabilities of Borrower and its consolidated Subsidiaries, all on a consolidated
basis as determined in accordance with GAAP.
9.2 Consolidated Funded Debt/EBITDA Ratio. Maintain as of the last day
of each fiscal quarter a Consolidated Funded Debt/EBITDA Ratio no greater than
4.00 to 1.00 to and including September 30, 2001, and no greater than 3.75 to
1.00 on December 31, 2001 and thereafter, determined in accordance with GAAP.
"CONSOLIDATED FUNDED DEBT/EBITDA RATIO" means the ratio of (i) the aggregate
outstanding principal amount of Funded Debt of Borrower and its consolidated
Subsidiaries as of the last day of the fiscal quarter date to (ii) EBITDA of
Borrower and its consolidated Subsidiaries for the four quarters ending on such
date. "FUNDED DEBT" means, without duplication, all long term and current
Indebtedness as described in subsections (i) and (iii) of the definition of
"Indebtedness" in Exhibit 1 hereto (including any such Indebtedness to
non-consolidated Subsidiaries, shareholders and other Affiliates). "EBITDA"
means, for any period, the earnings before interest, taxes, depreciation and
amortization for such period, plus expected, nonrecurring expenses in an amount
not to exceed $2,400,000 related to the Georgia project taken during fiscal year
ending September 30, 1999, and expected, nonrecurring charges in an amount not
to exceed $1,500,000 related to the international restructuring of BHA Group,
Inc. taken during fiscal year ending September 30, 1999; non-recurring charges
must be reported on a quarter-by-quarter basis, and no non-recurring expenses or
charges of any type may be added to EBITDA for any four-quarter period other
than the fiscal year ending Sept. 30, 1999.
9.3 Consolidated Fixed Charge Coverage Ratio. Maintain as of the last
day of each fiscal quarter a Fixed Charge Coverage Ratio of at least 1.50 to
1.00, determined on a consolidated basis in accordance with GAAP. "FIXED CHARGE
COVERAGE RATIO" means, as of the last day of any fiscal quarter, the ratio of
(i) EBITDA for the four fiscal quarters ending on such day, to (ii) the sum of
interest expense, tax expense, scheduled principal payments and dividends paid
during such four fiscal quarters.
9.4 Minimum Consolidated EBITDA. Maintain as of September 30, 2000 and
September 30, 2001, a Consolidated EBITDA of at least $10,000,000 for the fiscal
year ending on such dates. "CONSOLIDATED EBITDA" means EBITDA of Borrower and
its consolidated Subsidiaries for each such period, determined on a consolidated
basis in accordance with GAAP.
19
9.5 Consolidated Current Ratio. Maintain as of the last day of each
fiscal quarter a Consolidated Current Ratio of at least 2.00 to 1.00.
"CONSOLIDATED CURRENT RATIO" means the ratio of Borrower's current assets to
current liabilities, determined on a consolidated basis in accordance with GAAP.
ARTICLE 10
NEGATIVE COVENANTS
So long as this Agreement shall remain in effect or any of the
Obligations shall be unpaid, unless the Bank shall otherwise consent in writing,
each Borrower agrees that it will and will cause each of its Subsidiaries to,
and each Guarantor agrees that it will:
10.1 Indebtedness. Not incur, create or suffer to exist any
Indebtedness (other than to the Bank), except (a) trade payables incurred in the
ordinary course of business; (b) Indebtedness existing on the date of this
Agreement and disclosed in Schedule 10.1 hereto; and (c) in addition to the
Indebtedness described in Sections 10.1(a) and (b), Indebtedness on a
consolidated basis not exceeding, at any time outstanding, an aggregate
principal amount of $100,000.
10.2 Liens. Not create, incur, or suffer to exist any other Lien in, of
or on any of their respective properties (now owned or hereafter acquired) or on
any income or revenues or rights in respect of any thereof, except:
(1) Liens in favor of the Bank;
(2) Liens for taxes, assessments or governmental charges or
levies, if the same shall not at the time be delinquent or thereafter can be
paid without penalty, or are being contested in good faith and by appropriate
proceedings;
(3) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar Liens arising in the ordinary course of
business, that secure payment of obligations not more than 60 days past due
except for such Liens as are being contested in good faith by appropriate
proceedings;
(4) Liens arising out of pledges or deposits under laws
relating to worker's compensation, unemployment insurance, old age pensions, or
other social security or retirement benefits, or under similar laws;
(5) Liens existing on the date of this Agreement and disclosed
in Schedule 10.2 hereto;
(f) Liens securing Indebtedness permitted in Section 10.1(c)
above; and
20
(g) Options to purchase stock of Borrower under stock-based
compensation plans or arrangements in favor of employees of Borrower or of any
Subsidiary and non-employee directors of Borrower.
10.3 Sale and Lease-Back Transactions. Not enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose or purposes as the
property being sold or transferred, provided that Borrower or any Subsidiary may
enter into any sale and lease-back transaction if (a) at the time of such
transaction no Default or Event of Default shall have occurred and be
continuing, (b) the proceeds from the sale of the subject property shall be at
least equal to its fair market value and (c) the subject property shall have
been acquired such Borrower or such Subsidiary after the date of this Agreement
and held by it for not more than one year.
10.4 Mergers, Transfers of Assets, Acquisitions. Not merge into or
consolidate with any other person, or permit any other person to merge into or
consolidate with it; sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) any assets or any capital stock of
any Subsidiary or be a party to any Acquisition of another Person or of all of
substantially all another Person's assets, other than:
(a) sales of inventory in the ordinary course of business;
(b) the disposition of obsolete or worn-out fixed assets or
other property no longer required by or useful to it in connection with the
operation of its business;
(c) sales, assignments, transfers or other dispositions of
assets (other than stock of Subsidiaries) for cash consideration, but only so
long as the aggregate fair market value of the assets so disposed of does not
exceed $10,000,000 in the aggregate during the term of this Agreement;
(d) any Acquisition by Borrower, so long as not less than 15
days prior to the consummation of any Acquisition, Borrower shall provide to the
Bank, if the Bank so requests, the following information: pro forma financial
statements and projections and a pro forma Compliance Certificate, demonstrating
that Borrower will be, after giving effect to the Acquisition, in compliance
with each of the financial covenants set forth in Article 9 of this Agreement.
For purposes of such pro forma financial statements and pro forma compliance
certificate, to calculate the Borrower's compliance with the financial covenants
set forth in Article 9 hereof, after an acquisition of 100% of the stock or
assets of a company (an "ACQUIRED COMPANY"), the EBITDA of the Acquired Company,
based upon pro forma numbers acceptable to the Bank, from its last four rolling
quarters may be included to the extent that such numbers reflect cash flow from
assets fully transferred to Borrower as a result of the acquisition of the
Acquired Company, with adjustments for any transactions not in the ordinary
course of business. If Borrower acquires less than 100% of the stock or assets
of an Acquired Company, the Bank shall make a good faith determination of what
portion of such Acquired Company's EBITDA to include in the proforma financial
statements;
21
(e) any merger or consolidation of Borrower and any
Subsidiary, provided that Borrower is the surviving corporation thereof, or of
any Subsidiary with another Subsidiary or any sale or other transfer of assets
by a Subsidiary to Borrower.
10.5 Transactions with Affiliates. Not sell or transfer any property or
assets to, or purchase or acquire any property or assets from, or otherwise
engage in any other transactions with, any of its Affiliates (other than any
Subsidiary as provided in Section 10.4 above), except that Borrower or a
Subsidiary may engage in any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to
it than could be obtained on an arm's-length basis from unrelated third parties.
10.6 Subsidiary Dividend Restrictions. Not permit any Subsidiary to be
bound by or enter into any agreement, amendment, covenant, understanding or
revision to any agreement which prohibits or restricts the ability of any
Subsidiary to declare and pay dividends or make any other distribution to
Borrower.
10.7 Use of Proceeds. Not use any of the proceeds of the Loans (a) for
any purpose that entails a violation of, or that is inconsistent with, the
provisions of the regulations of the Board of Governors of the Federal Reserve
System, including without limitation Regulations G, T, U and X or (b) to make
any acquisition for which the board of directors of the target company has not
given its consent or approval.
10.8 Loans, Advances and Investments. Not make any loans, advances or
extensions of credit to, or investments (whether acquisitions of stock or
securities or otherwise) in, or acquire any assets of, any Persons, including,
without limitation, any Affiliates of Borrower or any of its partners,
shareholders, officers or employees (collectively, "INVESTMENTS"), other than:
(a) expenses advanced in the ordinary course of business.
(b) investments in short-term obligations issued or fully
guaranteed by the U.S. Government and funds comprised of such obligations;
(c) certificates of deposit and other time deposits with, and
any other Investment purchased through any Bank;
(d) commercial paper rated A-1 by Standard & Poor's
Corporation or P-1 by Xxxxx'x Investors Service, Inc.;
(e) existing Investments listed on Schedule 10.8 hereto;
(f) Investments made to acquire Acquisitions permitted under
Section 10.4(d) above;
22
(g) Investments of Borrower in or to any one or more
Subsidiaries in an aggregate amount not in excess of $3,000,000 at any time
outstanding (in addition to those existing at the date of this Agreement and
listed on Schedule 10.8 hereto).
10.9 Negative Pledge. Not permit or allow any Subsidiary to permit, to
exist any Lien on any of its property, except as permitted under Section 10.2
above; on the request of the Bank, Borrower will and each Guarantor will execute
acknowledgments or other forms of notice of such negative pledge, and the Bank
may record or file the same in the appropriate filing offices.
10.10 Liquidation or Change in Business. Not liquidate, dissolve,
discontinue business, materially change its general business purpose or the
character of its business, engage in any type of business not reasonably related
to its business as conducted on the Closing Date or take any action with a view
towards the same.
ARTICLE 11
EVENTS OF DEFAULT
11.1 Events of Default. Each of the following events shall constitute
an Event of Default under this Agreement:
(1) Misrepresentation. Any representation or warranty made or
deemed made by or on behalf of Borrower or any Subsidiary to the Bank under or
in connection with this Agreement, any Loan, or any certificate or information
delivered in connection with this Agreement or any other Loan Document shall be
materially false on the date as of which made;
(2) Nonpayment. Borrower shall fail to pay any principal of
the Note, any interest upon the Note, any reimbursement obligation respecting
any Letter of Credit or any Fee or other Obligations within five (5) days after
the same becomes due;
(3) Non-Performance of Other Covenants. Borrower shall fail to
perform or comply with any of the terms or provisions of Article 8 of this
Agreement and such failure is not cured within fifteen (15) days or Borrower
shall fail to perform or comply with or violates any covenant set forth in
Article 9, Article 10 or any other covenant, term or provision hereof;
(4) Other Indebtedness. The failure of Borrower or any
Subsidiary to make any payment of principal or interest within five (5) days
after the same becomes due on any Indebtedness to the Bank or any of the Bank's
affiliates or subsidiaries (other than Indebtedness relating to the Loans) or
with respect to any Indebtedness to Commerce Bank, N.A. or to any other Person
or Persons or any default occurs under any agreement which evidences, secures or
relates to, any such Indebtedness;
23
(5) Insolvency. Borrower or any Subsidiary shall (i) have an
order for relief entered with respect to it under the federal Bankruptcy Code,
(ii) not pay, or admit in writing its inability to pay, its debts generally as
they become due, (iii) make an assignment for the benefit of creditors, (iv)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
substantial part of its property, (v) institute any proceeding seeking an order
for relief under the federal Bankruptcy Code or under any other laws relating to
bankruptcy, insolvency, dissolution, winding up, liquidation or reorganization
or relief of debtors, (vi) take any corporate action to authorize or effect any
of the foregoing actions set forth in this paragraph (e), or (vii) fail to
contest in good faith any appointment or proceeding described in paragraph (f)
of this Section 11.1;
(6) Appointment of Receivers. Without the application,
approval or consent of Borrower or Subsidiary, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for Borrower or any Subsidiary
or any substantial part of its property, or a proceeding described in clause (v)
of paragraph (e) of this Section 11.1 shall be instituted against either
Borrower or any Subsidiary;
(7) Judgment. Borrower or any Subsidiary shall fail within 45
days to pay, bond or otherwise discharge any judgment or order for the payment
of money in excess of $750,000 that is not stayed on appeal or otherwise being
appropriately contested in good faith;
(8) ERISA. Any Reportable Event shall occur in connection with
any Defined Benefit Pension Plan adopted or sponsored by Borrower or any
Subsidiary or to which Borrower or any Subsidiary makes contributions, which
occurrence may have a materially adverse effect on such entity's business or
financial condition;
(9) Material Adverse Change. Upon the occurrence of any event
or condition which the Bank, in its sole discretion, determines is a material
adverse change in the business or financial condition of Borrower on an
unconsolidated or on a consolidated basis or which materially and adversely
affects its ability to perform its obligations to Bank; or
(10) Ownership or Management Change. Any transfer of Control
of Borrower or any 50% or more change in the ownership of Borrower shall occur
or the employment of Borrower's chief executive officer and the employment of
its chief operating officer terminate, for any reason, at the same time or
during any one month period.
11.2 Rights and Remedies. Upon the occurrence of each and every Event
of Default (other than an event with respect to Borrower or any Subsidiary
described in paragraph (e) or (f) of Section 11.1 above), and at any time
thereafter during the continuance of such event, the Bank may, by notice to
Borrower, take either or both of the following actions, at the same or different
times: (i) terminate forthwith the Commitment and (ii) declare the Loans then
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with all
accrued interest thereon and all other Obligations shall become forthwith due
and payable, without
24
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by Borrower, anything contained herein or in any other
Loan Document to the contrary notwithstanding; and in any event with respect to
either Borrower or any Subsidiary described in paragraph (e) or (f) of Section
11.1 above, the Commitments shall automatically terminate and the principal of
the Loans then outstanding, together with all accrued interest thereon and all
other Obligations 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 Borrower, anything contained herein or in any other
Loan Document to the contrary notwithstanding.
Upon the occurrence and during the continuance of any Event of Default,
the Bank may also exercise any or all of its rights and remedies, whether
existing under this Agreement, other Loan Documents, applicable law or
otherwise.
ARTICLE 12
MISCELLANEOUS
12.1 Notices. Notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed or sent by telecopy or other telegraphic communications equipment of the
sending party, as follows:
(1) if to either Borrower or a Subsidiary, to it at 0000 Xxxx
00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx, 00000, Attention: Xxxxxxx X. Xxxxx
(Facsimile: 816-353-1873).
(2) if to the Bank, to it at 10th & Baltimore, P. O. Xxx
000000, Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: Xxxxx Xxxxxxxx (Facsimile:
816/979-7561) (if by hand delivery or overnight courier service then the post
office box is eliminated and the zip code is 64105) with a required copy to
Xxxxxx X. Xxxxxx, Xxxxxxx & Xxxx X.X., 0000 Xxxxx Xxxxxxxxx, Xxxxxx Xxxx,
Xxxxxxxx 00000 (Facsimile: 816/292-2001);
or to such other address or telecopy number as any party may direct by notice
given as provided in this Section 12.1. All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt if delivered by hand
or overnight courier service or sent by telecopy or other telegraphic
communications equipment of the sender, if received on or before 5:00 p.m.,
local time of the recipient, on a Business Day, or on the next Business Day if
received after 5:00 p.m. on a Business Day or on a day that is not a Business
Day, or on the date five (5) Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 12.1 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 12.1.
12.2 Survival of Agreement. All covenants, agreements, representations
and warranties made by Borrower herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall
25
be considered to have been relied upon by the Bank and shall survive the making
by the Bank of the Loans and the execution and delivery to the Bank of the
Notes, regardless of any investigation made by the Bank or on its behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any other Obligations are outstanding.
12.3 Binding Effect. This Agreement shall become effective when it
shall have been executed by Borrower, Guarantors and the Bank and thereafter
shall be binding upon and inure to the benefit of Borrower, Guarantors, the Bank
and their respective successors and permitted assigns, except that Borrower and
Guarantors shall not have the right to assign or delegate any of their
respective rights or duties hereunder or any interest herein without the prior
consent of the Bank.
12.4 Successors and Assigns; Participations. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and permitted assigns of such party. The Bank may assign
or delegate to one or more of its Affiliates all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion of the
Loans and the Note). The Bank may sell participations to one or more of its
Affiliates in all or a portion of its rights and obligations under this
Agreement (including all or a portion of the Loans and the Notes). The Bank may,
in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 12.4, disclose to the assignee or
participant or proposed assignee or participant any information relating to
Borrower and any Subsidiaries furnished to the Bank by or on behalf of Borrower
or any Subsidiaries.
12.5 Expenses; Indemnity.
(1) Borrower agree to pay all out-of-pocket expenses incurred
by the Bank in connection with the preparation of this Agreement and the other
Loan Documents or in connection with any amendments, modifications or waivers of
the provisions hereof or thereof (whether or not the transactions hereby
contemplated shall be consummated) or incurred by the Bank in connection with
the enforcement or protection of its rights in connection with this Agreement
and the other Loan Documents or in connection with the Loans made or the Note
issued hereunder, including, but not limited to, all appraisal fees (equipment
or otherwise), filing fees and search fees, the fees, charges and disbursements
of Xxxxxxx & Xxxx X.X., counsel for the Bank, and, in connection with any such
amendment, modification or waiver or any such enforcement or protection, the
fees, charges and disbursements of any other counsel for the Bank. Borrower
further agrees that it shall indemnify the Bank from and hold it harmless
against any documentary taxes, assessments or charges made by any Governmental
Authority by reason of the Loans or this Agreement or any of the other Loan
Documents.
(2) Borrower agree to indemnify the Bank and its directors,
officers, employees and agents (each such person being called an "INDEMNITEE")
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or
26
asserted against any Indemnitee arising out of, in any way connected with, or as
a result of (i) the execution or delivery of this Agreement or any other Loan
Document or any agreement or instrument contemplated thereby, the performance by
the parties thereto of their respective obligations thereunder or the
consummation of the transactions contemplated thereby, (ii) the making of any
loans or the use of the proceeds of the Loans or (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (i) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
negligence or wilful misconduct of such Indemnitee and (ii) have not, in whole
or in part, arisen out of or resulted from any act, or omission to act, of
either Borrower or any of their Affiliates.
(3) The provisions of this Section 12.5 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document or any investigation made
by or on behalf of the Bank. All amounts due under this Section 12.5 shall be
payable on written demand therefor.
12.6 Right of Setoff. If an Event of Default shall have occurred and be
continuing, the Bank is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Bank to or for the credit or the
account of Borrower or either Guarantor against any and all of the Obligations,
irrespective of whether or not the Bank shall have made any demand under this
Agreement or such other Loan Document and notwithstanding that such Obligations
may be unmatured. The rights of the Bank under this Section 12.6 are in addition
to other rights and remedies (including other rights of setoff) which the Bank
may have.
12.7 Applicable Law. This Agreement and the other loan documents shall
be governed by and construed and enforced under and in accordance with the laws
of the State of Missouri applicable to contracts made and to be performed wholly
within said state, without giving effect to choice of law or conflict of law
principles.
12.8 Waivers; Amendment. No failure or delay of the Bank in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Bank hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have. No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by Borrower or either Guarantor therefrom
shall in any event be effective unless the same shall be contained in a written
instrument signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on Borrower in
27
any case shall entitle Borrower or any Subsidiary to any other or further notice
or demand in similar or other circumstances.
12.9 Interest Rate Limitation. Notwithstanding anything herein or in
the Note to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest under applicable law
(collectively the "CHARGES"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by the Bank, shall exceed the maximum lawful rate (the
"MAXIMUM RATE") which may be contracted for, charged, taken, received or
reserved by the Bank in accordance with applicable law, the rate of interest
payable under the Note, together with all Charges payable to the Bank, shall be
limited to the Maximum Rate.
12.10 Entire Agreement. This Agreement and the other Loan Documents
constitute the entire contract between the parties relative to the subject
matter hereof. Any previous agreement among the parties with respect to the
subject matter hereof is superseded by this Agreement and the other Loan
Documents. Nothing in this Agreement or in the other Loan Documents, expressed
or implied, is intended to confer upon any party other than the parties hereto
and thereto any rights, remedies, obligations or liabilities under or by reason
of this Agreement or the other Loan Documents.
12.11 Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby. The parties shall endeavor in
good faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close as
possible to that of the invalid, illegal or unenforceable provisions.
12.12 Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall constitute but one
contract, and shall become effective as provided in Section 12.3.
12.13 Headings. Section headings and the Table of Contents used herein
are for convenience of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
12.14 Jurisdiction; Consent to Service of Process.
(1) Borrower and each Guarantor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any Missouri state court or the federal court for the Western
District of Missouri, any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents or for recognition or enforcement of any judgment, and each of the
parties hereto
28
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such Missouri state or,
to the extent permitted by law, in such federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that the Bank may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against Borrower or any
Subsidiary or its properties in the courts of any jurisdiction.
(2) Borrower and each Subsidiary hereby irrevocably and
unconditionally waive, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this agreement or
the other Loan Documents in any Missouri state court or federal court for the
Western District of Missouri. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(3) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 12.1. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
12.15 Terms Generally. The definitions contained in this Agreement and
in Exhibit 1 hereto shall apply equally to both the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words "INCLUDE,"
"INCLUDES" and "INCLUDING" shall be deemed to be followed by the phrase "WITHOUT
LIMITATION." All references herein to Articles, Sections, Exhibits and Schedules
shall be deemed references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require. Except
as otherwise expressly provided herein, all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time, provided, however, that, for purposes of determining compliance with any
covenant set forth in Article 9, such terms shall be construed in accordance
with GAAP as in effect on the date of this Agreement applied on a basis
consistent with the application used in preparing the Borrower' financial
statements referred to in Article 9. 1.1
12.16 ARBITRATION. EXCEPT AS SET OUT BELOW, ANY CONTROVERSY OR CLAIM
BETWEEN OR AMONG THE PARTIES HERETO, INCLUDING BUT NOT LIMITED TO THOSE ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY RELATED DOCUMENTS, INCLUDING ANY
CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT (COLLECTIVELY "CLAIM"), SHALL BE
DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION ACT
(OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH
29
BELOW. IN THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL.
JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. ANY PARTY TO THIS AGREEMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CLAIM IN ANY COURT
HAVING JURISDICTION OVER SUCH ACTION. THE INSTITUTION AND MAINTENANCE OF AN
ACTION FOR ANY JUDICIAL RELIEF SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE PLAINTIFF, TO SUBMIT THE CLAIM TO ARBITRATION IF ANY OTHER
PARTY CONTESTS SUCH ACTION FOR JUDICIAL RELIEF.
(a) SPECIAL RULES. ANY ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF
BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS AGREEMENT, OR IF THERE
IS REAL OR PERSONAL PROPERTY COLLATERAL, IN THE COUNTY WHERE SUCH REAL OR
PERSONAL PROPERTY IS LOCATED, AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN
ARBITRATOR; IF J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE
ARBITRATION, THEN THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR
ARBITRATION; FURTHER, THE ARBITRATION SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS. ANY DISPUTE CONCERNING THIS ARBITRATION PROVISION OR WHETHER A CLAIM IS
ARBITRABLE SHALL BE DETERMINED BY THE ARBITRATOR. THE ARBITRATOR SHALL HAVE THE
POWER TO AWARD LEGAL FEES PURSUANT TO THE TERMS OF THIS AGREEMENT.
(b) RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE DEEMED
TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS AGREEMENT; OR (II)) BE A
WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12 U.S.C. SEC. 91 OR ANY
SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE RIGHT OF ANY PARTY HERETO
(A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED TO) SETOFF, OR (B)
TO FORECLOSE AGAINST OR SELL ANY REAL OR PERSONAL PROPERTY OR COLLATERAL, OR (C)
TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH AS (BUT NOT
LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT OF A
RECEIVER, ANY PARTY MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE OR SELL
COLLATERAL OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
AGREEMENT. NONE OF THESE ACTIONS SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY
PARTY, INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CLAIM OCCASIONING RESORT TO SUCH REMEDIES OR PROCEDURES.
30
(c) WAIVER OF CERTAIN DAMAGES. THE PARTIES HERETO WAIVE ANY RIGHT OR REMEDY
EITHER MAY HAVE AGAINST THE OTHER TO RECOVER PUNITIVE OR EXEMPLARY DAMAGES
ARISING OUT OF ANY CLAIM WHETHER THE CLAIM IS RESOLVED BY ARBITRATION OR BY
JUDICIAL ACTION.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT
OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING
PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO
PROTECT YOU (BORROWERS) AND US (CREDITOR) FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS
THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN
US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT.
THIS DOCUMENT, TOGETHER WITH OTHER WRITTEN AGREEMENTS BETWEEN
BORROWERS AND BANK OF AMERICA, N.A., IS THE FINAL EXPRESSION
OF THE CREDIT AGREEMENT BETWEEN SUCH PARTIES. THIS DOCUMENT
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR OR
CONTEMPORANEOUS ORAL CREDIT AGREEMENTS OR PRIOR WRITTEN
CREDIT AGREEMENTS BETWEEN SUCH PARTIES RELATING TO THE
SUBJECT MATTER HEREOF. ANY ADDITIONAL TERMS OF THE CREDIT
AGREEMENT BETWEEN SUCH PARTIES ARE SET FORTH BELOW.
THERE ARE NO SUCH ORAL AGREEMENTS BETWEEN SUCH PARTIES.
IN WITNESS WHEREOF, the parties have executed this Agreement on the 6th
day of October, 1999, by their duly authorized officers, effective for all
purposes as of September 30, 1999.
[SEAL] _____________________________, ________
ATTEST:
[SEAL]
By:_______________________________
______________,__________ ATTEST:
By: ___________________________
[SEAL] ______________,__________
ATTEST:
By:_______________________________
31
BHA GROUP HOLDINGS, INC.
By: ___________________________
______________,__________
BHA GROUP, INC.
By: ___________________________
______________,__________
BHA TECHNOLOGIES, INC.
By: ___________________________
______________,__________
BANK OF AMERICA, N.A., a national banking
association
By: ___________________________
______________,__________
32
EXHIBIT 1
DEFINITIONS
For purposes of said Credit Agreement, the following terms shall have
the meanings specified below:
"Acquired Company" is defined in Section 10.4(d) of the Agreement.
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated after the date of this Agreement, by which Borrower or
any Subsidiary (in one transaction or as the most recent transaction in a series
of transactions) (i) acquires any going business or all or substantially all of
the assets of any Person (including, in the case of a corporation, any division
thereof), whether through purchase of assets, merger or otherwise, (ii) directly
or indirectly acquires control of at least a majority (in number of votes) of
the securities of a corporation which have voting power for the election of
directors, or (iii) directly or indirectly acquires control of a majority
ownership interest in any partnership or joint venture.
"Additional Eurodollar Rate Loan Costs" shall mean any costs or
expenses resulting from any Regulatory Change (i) which imposes, modifies or
deems applicable any reserve, special deposit, minimum capital, capital ratio or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, the Bank or any Commitment of the
Bank and (ii) which is attributable to the Bank's making or maintaining any
Eurodollar Rate Loans or its obligation to make any Eurodollar Rate Loans
hereunder.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified and in any case shall include, when used with respect to either
Borrower or any Subsidiary, any joint venture in which such Borrower or such
Subsidiary holds an equity interest.
"Agreement" or "Credit Agreement" shall mean this Agreement, together
with all exhibits and schedules hereto, as it may be amended from time to time.
"Applicable Margin" is defined in Section 4.3 of the Agreement.
"Assets" shall mean all assets which, under GAAP, would appear as
assets on the balance sheet of Borrower.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of Missouri) on which banks in
the State of Missouri are open for business.
"Capital Expenditures" shall mean, without duplication, (i)
expenditures (whether paid in cash or accrued as a liability) for fixed assets,
tooling, plant and equipment (including without limitation the incurrence of
Capital Lease Obligations), and (ii) any other
33
expenditures that would be classified as capital expenditures under GAAP.
Capital Expenditures shall not include the amount of consideration paid or any
monetary obligation incurred in respect of the purchase price for any
Acquisition.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP; and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986.
"Charges" is defined in Section 12.9 of the Agreement.
"Closing Date" shall mean October 6, 1999.
"Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"Commitment" shall mean the Revolving Credit Commitment.
"Compliance Certificate" is defined in Section 8.4(c) of the Agreement.
"Consolidated EBITDA," "Consolidated Current Ratio," "Consolidated
Fixed Charge Coverage," "Consolidated Funded Debt/EBITDA Ratio" and
"Consolidated Tangible Net Worth" are defined in Article 9 of the Agreement.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with either Borrower or any Subsidiary, are
treated as a single employer under Section 414(b) or 414(c) of the Code.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Default Rate" shall mean the Prime Rate plus 2% per annum.
34
"Defined Benefit Pension Plan" shall mean any employee pension benefit
plan that is covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code as to which Borrower or any Subsidiary
may have any liability.
"Disbursement Date" is defined in Section 4.2 of the Agreement.
"dollars" or "$" shall mean lawful money of the United States of
America.
"EBITDA" is defined in Section 9.2 of the Agreement.
"Environmental Laws" is defined in Section 7.4(b) of the Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurodollar Rate" shall mean, at any date, with respect to any
applicable Interest Period, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in U.S. Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such Interest Period.
"Eurodollar Rate Loan" shall mean a Loan that accrues interest at a
Eurodollar Rate.
"Event of Default" is defined in Article 11 of the Agreement.
"Fees" shall mean the unused commitment and Letter of Credit fees
payable under Article 5 of the Agreement.
"Funded Debt" is defined in Section 9.2 of the Agreement.
"GAAP" shall mean generally accepted accounting principles, applied on
a consistent basis.
"Governmental Authority" shall mean any federal, state, local or
foreign court or governmental agency, board, authority, instrumentality or
regulatory body.
"Guarantee" or "Guaranty" of a person shall mean any agreement by which
such person assumes, guarantees, endorses, contingently agrees to purchase or
provide funds for the payment of, or otherwise becomes liable upon, the
obligation of any other person, or agrees to maintain the net worth or working
capital or other financial condition of any other person or otherwise assures
any creditor of such other person against loss, including, without limitation,
any comfort letter, operating agreement or take-or-pay contract and shall
include, without limitation, the contingent liability of such person in
connection with any application for a letter of credit. The term "Guarantee"
used as a verb has a corresponding meaning.
35
"Guarantor" shall mean each maker of a Loan Guaranty.
"Hazardous Materials" is defined in Section 7.4(b) of the Agreement.
"Indebtedness" shall mean, as to any Person, on a consolidated basis
with such Person's Subsidiaries (unless otherwise specified), without
duplication: (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or similar instruments (including all indebtedness
to stockholders, howsoever evidenced), (ii) all obligations of such Person for
the deferred purchase price of property or services, except trade accounts
payable and accrued liabilities arising in the ordinary course of business which
are not overdue by more than 60 days or which are being contested in good faith
by appropriate proceedings, (iii) all Capital Lease Obligations of such Person,
(iv) all Indebtedness of others secured by a Lien on any properties, assets or
revenues of such Person to the extent of the value of the property subject to
such Lien, (v) all Indebtedness of others Guaranteed by such Person and (vi) all
obligations of such Person, contingent or otherwise, in respect of any letters
of credit or bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any partnership in which such Person is a general partner.
"Interest Period" shall mean, with respect to any Eurodollar Rate Loan,
each period commencing on the date such Loan is made or is converted from a
Prime Rate Loan type or the last day of the next preceding Interest Period for
such Loan, and ending on the numerically corresponding day in the first, second
or third calendar month thereafter, as Borrower may select, except that each
Interest Period which commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (i) any
Interest Period for any Loan which would otherwise extend beyond the Revolving
Credit Termination Date shall end on such Date; (ii) each Interest Period that
would otherwise end on a day which is not a Business Day shall end on the
immediately succeeding Business Day (or, if such next succeeding Business Day
falls in the next succeeding calendar month, on the immediately preceding
Business Day); and (iii) Borrower shall select the duration of Interest Periods
in such a way so that notwithstanding clauses (i) and (ii) above, no Interest
Period shall have a duration of less than one month (and, if any Eurodollar Rate
Loans would otherwise have an Interest Period of a shorter duration, they shall
be Prime Rate Loans for the relevant period).
"Investments" is defined in Section 10.8 of the Agreement.
"Letters of Credit" is defined in Section 3.1 of the Agreement.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset,
and (c) in the case of securities, any purchase option, call, restriction on
right to sell or similar right of a third party with respect to such securities.
36
"Loan" shall mean any Revolving Loan or any advance under the Credit
Agreement, and "Loans" shall mean all Revolving Loans and advances thereunder
collectively.
"Loan Documents" shall mean, collectively, the Agreement, the Note, any
Loan Guaranties and all other documents, agreements and instruments executed by
either Borrower or any Subsidiary in favor of the Bank in connection with the
transactions contemplated by the Agreement.
"Loan Guaranty" is defined in Section 5.1 of the Agreement.
"Material Contracts" is defined in Section 7.9 of the Agreement.
"Net Income" shall mean, for any period, all operating and
non-operating revenue, less all operating and non-operating expenses, including
taxes, depreciation, amortization and interest expenses, all as determined in
accordance with GAAP. In calculating Net Income, there shall be excluded
extraordinary gains and losses (as determined in accordance with GAAP), any
revenues and expenses from disposition of capital assets and insurance policies
and condemnation awards and gifts, donations, grants, pledges, devises,
legacies, requests and contributions which are specifically designated or
restricted as to use by their terms.
"Note" shall mean the Revolving Note.
"Obligations" shall mean all unpaid principal of and accrued and unpaid
interest on the Note, all accrued and unpaid Fees, and all other obligations and
liabilities of Borrower to the Bank now existing or hereafter arising under the
Loan Documents, including, without limitation, all renewals, replacements,
extensions and modifications thereof and thereto and any and all draws under any
and all Letters of Credit and any other letters of credit issued by Bank for the
account of Borrower or any Subsidiary.
"PBGC" shall mean the Pension Benefit Guarantee Corporation referred to
and defined in ERISA.
"Person" or "person" shall mean any natural person, corporation,
business trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
"Prime Rate" shall mean, at any date, the rate of interest per annum
then most recently established by the Bank as its "prime rate," it being
understood and agreed that such rate is set by the Bank as a general reference
rate of interest, taking into account such factors as the Bank may deem
appropriate, that it is not necessarily the lowest or best rate actually charged
to any customer or a favored rate, that it may not correspond with future
increases or decreases in interest rates charged by other lenders or market
rates in general, and that the Bank may make various business or other loans at
rates of interest having no relationship to such rate.
"Prime Rate Loan" shall mean a Loan that accrues interest at the Prime
Rate.
37
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time.
"Regulation G, T, U or X" shall mean Regulation G, T, U or X,
respectively, of the Board of Governors of the Federal Reserve System as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Regulatory Change" shall mean, with respect to either Bank, any change
after the date of this Agreement in United States federal or state law or
regulations, or the entry, adoption, or making after such date of any order,
interpretation, directive, or request of or under any United States federal or
state law or regulations (whether or not having the force of law) by any court
or governmental or monetary authority charged with the interpretation or
administration thereof, applying to a class of banks including such Bank.
"Reportable Event" shall mean any reportable event, as defined in
Section 4043 of ERISA and the regulations issued under such Section, with
respect to a Defined Benefit Pension Plan, excluding, however, such events as to
which the PBGC by regulation has waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such event;
provided that a failure to meet the minimum funding standard of Section 412 of
the Code and of Section 302 of ERISA involving an amount aggregating $50,000 or
more shall be a Reportable Event regardless of the issuance of any waiver in
accordance with Section 412(d) of the Code.
"Revolving Credit Commitment" shall mean Eighteen Million Dollars
($18,000,000) or such amount reduced as provided in Section 2.1(a) of the
Agreement.
"Revolving Credit Termination Date" shall mean October 1, 2002 or such
other date as may be agreed to by Bank and Borrower from time to time.
"Revolving Loan" is defined in Section 2.1 of the Agreement.
"Revolving Note" is defined in Section 2.2 of the Agreement.
"Subordinated Debt" shall mean Indebtedness subordinated in right of
payment to the Indebtedness to the Bank on terms and conditions satisfactory to
the Bank.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the voting power or more than 50% of
the general partnership interests are, at the time any determination is being
made, owned, controlled or held by the parent, or (b) which is, at the time any
determination is made, otherwise Controlled by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"Subsidiary" shall mean any subsidiary of Borrower, direct or indirect,
now existing or hereafter acquired or created.
38
"Telerate Page 3750" shall mean the British Bankers Association Libor
Rates (determined at 11:00 a.m. London, England time) that are published by
Bridge Information Systems, Inc.
"Year 2000 Compliant" and "Year 2000 Problem" are defined in Section
7.20 of the Agreement.
39
