1
EXHIBIT 10.4
CREDIT AGREEMENT
dated as of
April 3, 1997
among
UNIDIGITAL ELEMENTS (NY), INC.
UNIDIGITAL/CARDINAL CORPORATION
UNIDIGITAL ELEMENTS (SF), INC.
UNIDIGITAL/▇▇▇▇▇ CORPORATION
and
THE CHASE MANHATTAN BANK,
as Lender
2
CREDIT AGREEMENT dated as of April 3,1997, among UNIDIGITAL ELEMENTS
(NY), INC. (formerly known as Linographics Corporation), a New York
corporation, UNIDIGITAL/CARDINAL CORPORATION, a Delaware corporation,
UNIDIGITAL ELEMENTS (SF), INC. (formerly known as Linographics
(Delaware) Corp.), a Delaware corporation, and UNIDIGITAL/▇▇▇▇▇
CORPORATION, a Massachusetts corporation (each, a "Borrower"), and THE
CHASE MANHATTAN BANK (the "Lender").
The parties hereto agree as follows:
ARTICLE I.
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan, refers to whether
such Loan bears interest at a rate determined by reference to the Alternate Base
Rate.
"Acquisition Transaction" has the meaning given to such term
in Section 5.08.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Loan for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Affiliate" means, 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.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
3
"Applicable Rate Margin" means, for any day, with respect to
any ABR Loan 0.25%, and with respect to any Eurodollar Loan 2.50%.
"Approved Subordinated Debt" means Indebtedness subordinated
to the Obligations of the Borrowers under this Agreement and the other Loan
Documents on terms approved in writing by the Lender in its sole discretion.
"Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Lender to be representative of the cost of
such insurance to the Lender.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitment.
"Base CD Rate" means the sum of (a) the Three-Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrower" has the meaning given thereto at the heading of
this Agreement.
"Borrowing Request" means a request by a Borrower for
Revolving Loans in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" means, for any period, the sum of all
amounts that would, in accordance with GAAP, be included as additions to
property, plant and equipment and other capital expenditures on a consolidated
statement of cash flows for
4
the Company and its consolidated Subsidiaries during such period (including the
amount of assets leased under any Capital Lease Obligation).
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Change in Control" means (a) the acquisition of ownership,
directly or indirectly, beneficially or of record, by any Person or group
(within the meaning of the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder as in effect on the date hereof)
other than ▇▇▇▇▇▇▇ ▇. ▇▇▇, of shares representing more than 20% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
the Company; (b) occupation of a majority of the seats (other than vacant seats)
on the board of directors of the Company by Persons who were neither (i)
nominated by the board of directors of the Company nor (ii) appointed by
directors so nominated; (c) the acquisition of direct or indirect Control of the
Company by any Person or group other than ▇▇▇▇▇▇▇ ▇. ▇▇▇; (d) any change in the
ownership of capital stock of the Company such that after giving effect thereto
▇▇▇▇▇▇▇ ▇. ▇▇▇ shall cease to have direct beneficial ownership of shares
representing at least 20% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Company; or (e) the ownership by
any Person other than the Company of any capital stock of a Borrower, or the
ownership by any Person other than the Company or a Borrower or Guarantor, of
any capital stock or other equity interest of any Person that is required to
become a Borrower or a Guarantor pursuant to Section 5.09.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by the Lender (or
by such Lender's holding company) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Character", when used in reference to any Loan, refers to
whether such Loan is a Revolving Loan or a Line Loan.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
5
"Collateral" means any property or rights in which, pursuant
to the Security Documents, there has been granted (or purported to have been
granted) to the Lender, a security interest.
"Commitment" means the Revolving Credit Commitment.
"Company" means Unidigital Inc., a Delaware corporation.
"Consolidated Current Assets" means, at the date of
determination, all assets of the Company and its consolidated Subsidiaries that
would, in accordance with GAAP, be classified on a consolidated balance sheet of
the Company and its consolidated Subsidiaries as current assets.
"Consolidated Current Liabilities" means, at the date of
determination, all liabilities of the Company and its consolidated Subsidiaries
that would, in accordance with GAAP, be classified on a consolidated balance
sheet of the Company and its consolidated Subsidiaries as current liabilities.
"Consolidated Debt Service Coverage Ratio" means, with respect
to the Company and its Subsidiaries (a) as at the end of any of the first three
fiscal quarters of a fiscal year, the ratio of (i) the sum of Consolidated Net
Income plus depreciation, depletion and amortization of properties (including
intangible properties) of the Company and its Subsidiaries plus Consolidated
Interest Expense for the four most recent consecutive fiscal quarters to (ii)
the sum of Consolidated Interest Expense for the four most recent consecutive
fiscal quarters plus the current portion of Consolidated Funded Indebtedness as
of the end of such fiscal quarter; and (b) as at the end of the last fiscal
quarter of a fiscal year, the ratio of (i) the sum of Consolidated Net Income
plus depreciation, depletion and amortization of properties (including
intangible properties) of the Company and its Subsidiaries, plus Consolidated
Interest Expense, reduced by the amount of Capital Expenditures of the Company
and its Subsidiaries other than such Capital Expenditures funded by borrowings
(other than the Loans); all for the four most recent consecutive fiscal quarters
to (ii) the sum of Consolidated Interest Expense for the four most recent
consecutive fiscal quarters plus the current portion of Consolidated Funded
Indebtedness as of the end of such fiscal quarter.
"Consolidated Funded Indebtedness" means, as of the date of
determination, all Indebtedness of the Company and its consolidated
Subsidiaries, determined on a consolidated basis in accordance with GAAP, that
by its terms matures more than one year after the date of calculation, and any
such Indebtedness maturing within one year from such date that is renewable or
extendable at the option of the obligor to a date more than one year from such
date.
"Consolidated Interest Expense" means, for any period the
amount of interest expense, both expensed and capitalized, of the Company and
its consolidated
6
Subsidiaries, for such period on the aggregate principal amount of their
Indebtedness, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, net income of
the Company and its consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Worth" means, as of the date of
determination, all items which in conformity with GAAP would be included under
shareholders' equity on a consolidated balance sheet of the Company and its
consolidated Subsidiaries at such date.
"Consolidated Tangible Net Worth" means, as of the date of
determination, Consolidated Net Worth after deducting therefrom (a) any surplus
resulting from the write-up of assets subsequent to August 31, 1996, (b)
goodwill, including any amounts (however designated on the balance sheet)
representing the cost of acquisitions of the Company's Subsidiaries in excess of
underlying tangible assets, (c) patents, trademarks, copyrights and other
intangible assets, (d) leasehold improvements not recoverable at the expiration
of a lease, and (e) deferred charges (including, but not limited to, unamortized
debt discount and expense, organization expenses and experimental and
development expenses, but excluding prepaid expenses).
"Consolidated Total Liabilities" means, as of the date of
determination, all liabilities of the Company and its consolidated Subsidiaries,
determined on a consolidated basis in conformity with GAAP, including
Consolidated Current Liabilities and Consolidated Funded Indebtedness.
"Consolidated Working Capital" means, as of the date of
determination, Consolidated Current Assets at such date minus Consolidated
Current Liabilities at such date.
"Control" means 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 ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Credit Party" means each Borrower and each Guarantor.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"dollars" or "$" refers to lawful money of the United States
of America.
7
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived).
"Eligible Accounts Receivable" of a Borrower shall include
only those unpaid accounts receivable of such Borrower (i) which arise out of a
bona fide sale of goods or rendition of services of the kind ordinarily sold or
rendered by the Borrower in the ordinary course of its business, (ii) which are
for a liquidated amount and are made to a Person competent to contract therefor
who is not an Affiliate or controlled by an Affiliate of such Borrower, (iii) to
the extent of the amount thereof not in dispute, (iv) which are not subject to
renegotiation or redating, (v) which are subject to a first priority fully
perfected security interest in favor of the Lender under the Security Documents,
free and clear of any Lien in favor of any Person other than the Lender, (vi) to
the extent of the amount thereof not subject to any deduction, offset,
counterclaim, freight claim, rebate, claim of payment or other condition, (vii)
which do not arise with respect to any payment due from the United States
government or any agency or instrumentality thereof, (viii) which do not
represent merchandise unshipped, and (ix) which do not arise in connection with
any scrap sale. No account receivable shall be an Eligible Account if it is more
than ninety (90) days past the original due date, the amount of such Borrower's
past due accounts receivable not being subject to reduction as a result of any
credits in favor of any account debtor. Without limiting the foregoing, an
account receivable shall not be an Eligible Account (a) if the account debtor in
respect thereof has filed a case for bankruptcy or reorganization, or if any
such case has been filed against such account debtor, or if such account debtor
has made an assignment for the benefit of creditors, or if such account debtor
has failed, suspended business operations, become insolvent, or had or suffered
a receiver or a trustee to be appointed for all or a significant portion of its
assets or affairs; (b) to the extent that such account debtor is also a supplier
to or creditor of such Borrower; (c) if the sale is to an account debtor outside
the United States, unless such account receivable is supported by a letter of
credit, or banker's acceptance or otherwise is enhanced on terms acceptable to
the Lender in its sole discretion; (d) if fifty percent (50%) or more of the
accounts receivable of such account debtor to the Borrowers are ineligible for
any other reason or reasons; (e) if such account receivable is evidenced by an
instrument (as defined in Article IX of the Uniform Commercial Code) not
properly endorsed to and in the possession of the Lender; or (f) if the Lender
believes, in its sole discretion that collection of such account receivable is
insecure or that such account receivable may not be paid by reason of the
account debtor's financial inability to pay.
"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the
8
management, release or threatened release of any Hazardous Material or to health
and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Credit Party or any
Subsidiary thereof directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with any Credit Party, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by any Credit Party or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by any Credit Party or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by any Credit Party or any of its ERISA Affiliates
of any liability with respect to the withdrawal or partial withdrawal from any
Plan or Multiemployer Plan; or (g) the receipt by any Credit Party or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from any
Credit Party or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"Eurodollar", when used in reference to any Loan, refers to
whether such Loan bears interest at a rate determined by reference to the
Adjusted LIBO Rate.
"Event of Default" has the meaning given to such term in
Article VII.
9
"Excluded Taxes" means, with respect to the Lender or any
other recipient of any payment to be made by or on account of any obligation of
a Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of the Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed on any Foreign Lender by the
United States of America or any similar tax imposed by any other jurisdiction in
which a Borrower is located and (c) in the case of a Foreign Lender, any
withholding tax that is imposed by the United States of America under Section
1441 et. seq. of the Code on amounts payable to such Person at the time such
Person becomes such a Foreign Lender or is attributable to such Person's failure
to comply with Section 8.04(f).
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Lender from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the Company or of a
Borrower, as appropriate.
"Foreign Lender" means any purchaser of, participant in, or
assignee of, a Loan or a Note under Section 8.04(b) that is organized under the
laws of a jurisdiction other than that in which the borrowers are located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
10
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Guarantor" means each of (i) the Company, and (ii) each
Person who is required to become a Guarantor pursuant to Section 5.09.
"Guarantee Agreement" has the meaning given to such term in
Section 4.01(a).
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Hedging Agreement" means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of
11
credit and letters of guaranty and (j) all obligations, contingent or otherwise,
of such Person in respect of bankers' acceptances. The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Election Request" means a request by a Borrower to
convert or continue a Loan in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR
Loan, the first day of each calendar month, and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to such Loan.
"Interest Period" means, with respect to any Eurodollar Loan,
the period commencing on the date of such Loan and ending on the numerically
corresponding day in the calendar month that is one, two, or three months
thereafter, as the Borrower thereof may elect, provided, that (i) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (ii) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period and (iii) no Interest Period may
be selected for any Eurodollar Loan that would end later than the date that
repayment of the Loans of such Character is due hereunder. For purposes hereof,
the date of a Loan initially shall be the date on which such Loan is made and,
thereafter shall be the effective date of the most recent conversion or
continuation of such Loan.
"LIBO Rate" means, with respect to any Eurodollar Loan for any
Interest Period, the rate at which dollar deposits in the amounts comparable to
such Loan and for a maturity comparable to such Interest Period are offered by
the principal London office of the Lender in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case
12
of securities, any purchase option, call or similar right of a third party with
respect to such securities.
"Line Loan" means a Loan made pursuant to Section 2.04.
"Loan Documents" means this Agreement, the Notes or any other
promissory notes delivered pursuant hereto, the Security Documents, in each case
as supplemented, amended or modified from time to time, and any document,
instrument, or agreement supplementing, amending, or modifying, or waiving any
provision of, any of the foregoing.
"Loans" means the loans made by the Lender pursuant to this
Agreement, including the Revolving Loans and the Line Loans.
"Material Adverse Effect" means, in respect of any Person, a
material adverse effect on (a) the business, assets, operations, prospects or
condition, financial or otherwise, of such Person, (b) the ability of such
Person to perform any of its obligations under this Agreement or any other Loan
Document to which it is a party or (c) the rights of or benefits available to
the Lender in respect of such Person under this Agreement or any other Loan
Document.
"Material Indebtedness" means, in respect of any Person,
Indebtedness (other than the Loans), or obligations in respect of one or more
Hedging Agreements, of any one or more of such Person and its Subsidiaries in an
aggregate principal amount exceeding $500,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of any Person
or any Subsidiary in respect of any Hedging Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that such
Person would be required to pay if such Hedging Agreement were terminated at
such time.
"Maturity Date" means April 30, 2000.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Notes" shall mean any notes evidencing any of the Loans,
including but not limited to the Notes referred to in Section 4.01(d).
"Obligations" has the meaning given to such term in the
Security Documents.
13
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Perfection Certificates" means the Perfection Certificates
delivered pursuant to Section 4.01(i) or pursuant to the Security Agreement,
prepared by the Borrowers.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 5.04;
(c) pledges or deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business; and
(e) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of any Credit Party or any Subsidiary thereof;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness (other than Indebtedness owing to the Lender) or any Lien
(other than a Lien held by the Lender to secure Indebtedness owing to it) on any
Collateral.
14
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from S&P or from ▇▇▇▇▇'▇;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
less than $500,000,000; and
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and entered
into with a financial institution satisfying the criteria described in clause
(c) above.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which any Credit
Party or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledge Agreement" has the meaning given to such term in
Section 4.01(a).
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.
"Register" has the meaning given to such term in Section 8.04.
15
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Restricted Payment" means any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of a Credit Party or any Subsidiary thereof, any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such shares of capital stock of
a Credit Party or any option, warrant or other right to acquire any such shares
of capital stock of a Credit Party, or any payment of principal, interest, or
any other amount in respect of or for the purchase of any Indebtedness of any
Credit Party that is subordinated to any obligations arising under the Loan
Documents (including Approved Subordinated Debt).
"Revolving Credit Commitment" means the commitment of the
Lender to make Revolving Loans hereunder as set forth in Section 2.01, the
amount of which on the Effective Date is $4,500,000, as the same may be reduced
from time to time pursuant to this Agreement.
"Revolving Credit Exposure" means, at any time, the sum of the
outstanding principal amount of Revolving Loans at such time.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"S&P" means Standard & Poor's.
"Security Agreement" has the meaning given to such term in
Section 4.01(a).
"Security Documents" means each of the agreements,
instruments, and documents referred to in clauses (i) through (iii) of Section
4.01(a) (including, without limitation, any guarantee or security agreement
hereafter made and given to the Lender as provided in Section 5.09).
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Lender is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed
16
pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute
eurocurrency funding and to be subject to such reserve requirements without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to the Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"Subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity, whether domestic or foreign, the accounts of which
would be consolidated with those of the parent in the parent's consolidated
financial statements if such financial statements were prepared in accordance
with GAAP as of such date, as well as any other corporation, limited liability
company, partnership, association or other entity, whether domestic or foreign,
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, 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.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Lender from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Transactions" means the execution, delivery and performance
by each Credit Party of this Agreement and each other Loan Document to which
such Credit Party is a party, the creation of the security interests
contemplated by the Security Documents, the borrowing of Loans, the use of the
proceeds of Loans and the other transactions contemplated by the Loan Documents.
17
"Type", when used in reference to any Loan, refers to whether
the rate of interest on such Loan is determined by reference to the Adjusted
LIBO Rate, or the Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans. For purposes of this Agreement,
Loans may be classified and referred to by Character (e.g., a "Revolving Loan",
or a "Line Loan") or by Type (e.g., a "Eurodollar Loan" or an "ABR Loan") or by
Character and Type (e.g., a "Eurodollar Revolving Loan").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to 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". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. 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
that, if the Borrowers notify the Lender that the Borrowers request an amendment
to any provision hereof to eliminate the effect of any change occurring after
the date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Lender notifies the Borrowers that the Lender requests an
amendment to any provision hereof for such purpose), regardless of whether any
such notice is given before or after such change in GAAP or in the application
thereof, then such provision shall be interpreted on the basis of GAAP as in
effect and applied immediately before such change shall have
18
become effective until such notice shall have been withdrawn or such provision
amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitment. (A) Subject to the terms and conditions set
forth herein, the Lender agrees to make Revolving Loans to any Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in the Revolving Credit Exposure exceeding the Revolving
Credit Commitment Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrowers may borrow, prepay and reborrow
Revolving Loans.
(B) Notwithstanding anything contained elsewhere in
this Agreement, if the proceeds of any Revolving Loans are to be applied to an
Acquisition Transaction in which the overall price of the acquired property
exceeds $500,000, the making of such Revolving Loan shall require the consent of
the Lender in its sole discretion.
SECTION 2.02. Loans Generally. (A) Subject to Section 2.12, each Loan
shall be an ABR Loan or a Eurodollar Loan as the Borrower thereof may request in
accordance herewith. The Lender at its option may make any Eurodollar Loan
hereunder by causing any domestic or foreign branch or Affiliate of the Lender
to make such Loan; provided that any exercise of such option shall not affect
the obligation of the Borrowers to repay such Loan in accordance with the terms
of this Agreement.
(B) At the commencement of each Interest Period for
any Eurodollar Loan, such Loan shall be in an aggregate amount that is an
integral multiple of $100,000 and not less than $500,000. At the time that each
ABR Loan is made, such Loan shall be in an aggregate amount that is an integral
multiple of $50,000 and not less than $100,000; provided that an ABR Revolving
Loan may be in an aggregate amount that is equal to the entire unused balance of
the total Revolving Credit Commitment. Borrowings of more than one Type and
Character may be outstanding at the same time; provided that there shall not at
any time be outstanding more than a total of six (6) Eurodollar Loans or
Eurodollar Loans in an aggregate principal amount in excess of $4,000,000.
(C) Notwithstanding any other provision of this
Agreement, no Borrower shall be entitled to request, or to elect to convert or
continue, (i) any Revolving Loan if the Interest Period requested in respect
thereof would end after the Maturity Date, or (ii) to convert or continue any
Line Loan if the Interest Period requested in respect thereof would end after
January 31, 1998.
19
SECTION 2.03. Requests for Revolving Loan. To request a Revolving Loan,
the Borrower thereof shall give written notice to the Lender of such request (a)
in the case of a Eurodollar Loan, not later than 11:00 a.m., New York City time,
three Business Days before the date of the proposed Loan, or (b) in the case of
an ABR Loan, not later than 11:00 a.m., New York City time, one Business Day
before the date of the proposed Loan. Each such Borrowing Request shall be
irrevocable and shall be given by hand delivery or telecopy to in a form
approved by the Lender and signed by the Borrower thereunder. Each such
Borrowing Request shall specify the following information in compliance with
Section 2.02:
(I) the aggregate amount of the requested
Loan;
(II) the date of such Loan, which shall be a
Business Day;
(III) whether such Loan is to be an ABR Loan
or a Eurodollar Loan (or, to the extent permitted hereunder, in part an
ABR Loan and in part a Eurodollar Loan, and, in such case, the
principal amounts of each Type);
(IV) in the case of a Eurodollar Loan, the
initial Interest Period to be applicable thereto, which shall be a
period contemplated by the definition of the term "Interest Period";
(V) the location and number of the
Borrower's account to which funds are to be disbursed, which shall
comply with the requirements of Section 2.05; and
(VI) a description of the Acquisition
Transaction to be financed with the proceeds of such Loan, in detail
satisfactory to the Lender.
If no election as to the Type of Revolving Loan is specified, then the requested
Revolving Loan shall be an ABR Loan. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Loan, then the Borrower thereof
shall be deemed to have selected an Interest Period of one month's duration.
SECTION 2.04. Uncommitted Line. (A) The Borrowers may request from time
to time during the period commencing on the Effective Date and terminating at
5:00 p.m. New York City time on January 30, 1998 that the Lender advance to it
certain loans (each, a "Line Loan") provided, however, that notwithstanding
anything contained elsewhere in this Agreement, the making of any Line Loan
shall be at the sole and absolute discretion of the Lender, notwithstanding that
the Borrowers and the Credit Parties may have satisfied each and every term and
condition thereto.
20
(B) Subject to paragraph (a), above, (i) Line Loans
shall be ABR Loans or Eurodollar Loans; and (ii) the aggregate principal amount
of Line Loans outstanding at any time shall not exceed the lesser of (x)
$3,850,000, or (y) 80% of the amount of Eligible Accounts Receivable of the
Borrowers at such time; provided, however, that for a period of at least 30
consecutive days, the outstanding principal amount of Line Loans must not exceed
$2,000,000. All Line Loans shall be due and payable, together with any accrued
and unpaid interest thereon, on January 31, 1998 or such earlier date as the
Loans shall be due and payable hereunder.
(C) Each Borrower may request a Line Loan by way of a
written notice to the Lender (i) setting forth the principal amount of the Line
Loan requested; (ii) showing the computation of Eligible Accounts Receivable;
(iii) setting forth the proposed use of the proceeds thereof; (iv) requesting
that such Line Loan be an ABR Loan or a Eurodollar Loan, and if a Eurodollar
Loan, the requested Interest Period (which must comply with all terms and
conditions of this Agreement pertaining to Eurodollar Loans and Interest Periods
in respect thereof); (v) the proposed date of such Loan, which must be at least
two Business Days after the date of receipt of such notice; and (vi) certifying
that all other conditions to the making of a Loan hereunder are satisfied.
(D) Upon the Effective Date and as a condition to the
making by the Lender of any Loans hereunder, each Borrower shall have repaid all
outstanding loans, and all accrued and unpaid interest thereon, incurred under
those certain discretionary lines of credit in the aggregate principal amount of
$2,350,000 made available by the Lender to certain of the Borrowers pursuant to
two line of credit letters, each dated November 11, 1996, between the Lender and
certain of the Borrowers, and shall also have paid any accrued and unpaid line
or other fees thereon. Such lines of credit, letters and arrangements shall be
deemed terminated as of the Effective Date upon the execution and delivery by
the Borrowers of this Agreement; provided, that, any security interests or other
Liens granted thereunder or pursuant thereto to the Lender shall survive the
Effective Date and shall supplement the security interests and other Liens
granted to the Lender under the Security Agreement and shall apply to any Loans
under this Agreement. In accordance with this Section 2.04(d), upon the
Effective Date, but subject to all terms and conditions of this Agreement, the
Borrowers may obtain Line Loans in the principal amount of the loans to be
repaid to the Lender in accordance with this Section 2.04(d) and the Lender
shall apply the proceeds of any such Line Loans thereto.
SECTION 2.05. Funding of Loans. Loans made hereunder shall be made by
crediting the amounts thereof in immediately available funds, to an account of
the Borrower thereof maintained with the Lender in New York City and (i)
designated by such Borrower in the applicable Borrowing Request, in the case of
Revolving Loans, or
21
(ii) in the case of Line Loans as designated by the Borrower in a notice under
Section 2.04.
SECTION 2.06. Interest Elections. (A) Each Revolving Loan initially
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar Loan, shall have an initial Interest Period as specified in
such Borrowing Request. Each Line Loan shall initially be of the Type agreed by
the Borrower thereof and the Bank. Thereafter, the Borrower thereof may elect to
convert such Loan to a different Type or to continue such Loan, and, in the case
of a Eurodollar Loan, may elect Interest Periods therefor, all as provided in
this Section. The Borrower thereof may elect different options with respect to
different portions of the affected Loan, in which case each such portion shall
be considered a separate Loan.
(B) To make an election pursuant to this Section, the
appropriate Borrower shall notify the Lender of such election by telephone by
the time that a Borrowing Request would be required under Section 2.03 if such
Borrower were requesting a Revolving Loan of the Type resulting from such
election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Lender of a written Interest Election
Request in a form approved by the Lender and signed by the appropriate Borrower.
(C) Each telephonic and written Interest Election
Request shall specify the following information all aspects of which must also
be in compliance with Section 2.02:
(I) the Loan to which such Interest Election
Request applies and, if different options are being elected with
respect to different portions thereof, the portions thereof to be
allocated to each resulting Loan (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Loan);
(II) the effective date of the election made
pursuant to such Interest Election Request, which shall be a Business
Day;
(III) whether the resulting Loan is to be an
ABR Loan or a Eurodollar Loan; and
(IV) if the resulting Loan is a Eurodollar
Loan, the Interest Period to be applicable thereto after giving effect
to such election, which shall be a period contemplated by the
definition of the term "Interest Period".
22
If any such Interest Election Request requests a Eurodollar Loan but does not
specify an Interest Period, then the Borrower thereof shall be deemed to have
selected an Interest Period of one month's duration.
(D) To the extent that Loans mature or are required
to be repaid in less than one month, such Loans may not be converted into or
continued as Eurodollar Loans. Any portion of a Eurodollar Loan that cannot be
converted into or continued as a Eurodollar Loan by reason of the preceding
sentence shall be automatically converted at the end of the Interest Period in
effect for such Loan into an ABR Loan.
(E) If the Borrower thereof fails to deliver a timely
Interest Election Request in accordance herewith with respect to a Eurodollar
Loan prior to the end of the Interest Period applicable thereto, then, unless
such Loan is repaid as provided herein, at the end of such Interest Period such
Loan shall be converted to an ABR Loan. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing, then, (i) no
outstanding Loan may be converted to or continued as a Eurodollar Loan and (ii)
unless repaid, each Eurodollar Loan shall be converted to an ABR Loan at the end
of the Interest Period applicable thereto.
SECTION 2.07. Termination and Reduction of Commitment. (A) Unless
previously terminated, the Revolving Credit Commitment shall terminate on the
Maturity Date.
(B) The Borrowers may at any time terminate, or from
time to time reduce, the Revolving Credit Commitment; provided that (i) each
reduction of the Revolving Credit Commitment shall be in an amount that is an
integral multiple of $100,000 and not less than $100,000 and (ii) the Borrowers
shall not terminate or reduce the Revolving Credit Commitment if, after giving
effect to any concurrent prepayment of the Revolving Loans in accordance with
Section 2.09, the Revolving Credit Exposure would exceed the Revolving Credit
Commitment.
(C) The Borrowers shall notify the Lender of any
election to terminate or reduce the Revolving Credit Commitment under paragraph
(b) of this Section at least three Business Days prior to the effective date of
such termination or reduction, specifying such election and the effective date
thereof. Any termination or reduction of the Revolving Credit Commitment shall
be permanent.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (A) The Borrowers
hereby, jointly and severally, unconditionally promise to pay to the Lender (i)
the then unpaid principal amount of Revolving Loans on the Maturity Date, and
(ii) each Line Loan on January 31, 1998; such promise of each Borrower to repay
each Loan shall apply unconditionally to each Loan irrespective of which
Borrower was the Borrower of such Loan.
23
(B) The Lender shall maintain in accordance with its
usual practice an account or accounts evidencing the indebtedness of the
Borrowers to the Lender resulting from each Loan made by the Lender, including
the amounts of principal and interest payable and paid to the Lender from time
to time hereunder.
(C) The entries made in the accounts maintained
pursuant to paragraph (b) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of the Lender to maintain such accounts or any error therein shall not
in any manner affect the (joint and several) obligation of the Borrowers to
repay the Loans in accordance with the terms of this Agreement.
SECTION 2.09. Prepayment of Loans. (A) The Borrowers shall have the
right at any time and from time to time to prepay any Loans in whole or in part,
without premium or penalty (except as provided in Section 2.14), subject to
prior notice in accordance with paragraph (b) of this Section.
(B) The Borrowers shall notify the Lender by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Loan, not later than 11:00 a.m., New York City time,
three Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Loan, not later than 11:00 a.m., New York City time, one
Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the Borrower of such Loan, the prepayment date,
whether the prepayment relates to Revolving Loans or Line Loans or both, and the
respective principal amounts of each such Loan (or portion thereof) to be
prepaid. Each partial prepayment of any Loan shall be in an amount that would be
permitted in the case of an advance of a Loan of the same Type as provided in
Section 2.02. Each prepayment of a Loan shall be applied first to ABR Loans
outstanding of the Character to be prepaid, and then to outstanding Eurodollar
Loans of that Character, subject to Section 2.14. Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.11.
SECTION 2.10. Fees. (A) The Borrowers agree, jointly and severally, to
pay to the Lender a commitment fee, which shall accrue at the rate of .25% per
annum on the daily unused amount of the Revolving Credit Commitment during the
period from and including the Effective Date to but excluding the date on which
the Revolving Credit Commitment terminates. Accrued commitment fees shall be
payable in arrears on the last day of June and December of each year and on the
Maturity Date or such earlier date on which the Revolving Credit Commitment
terminates, commencing on the first such date to occur after the date hereof.
All commitment fees shall be computed on the basis of a year of 360 days and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
24
(B) The Borrowers have paid to the Lender an
administrative fee in the amount of $11,250 on the Effective Date in connection
with the Uncommitted Line referred to in Section 2.04 and a commitment fee of
$33,750 with respect to the Revolving Credit Commitment.
(C) All fees payable hereunder shall be paid on the
dates due, in immediately available funds, to the Lender. Fees paid shall not be
refundable under any circumstances.
SECTION 2.11. Interest. (A) Each ABR Loan shall bear interest at the
Alternate Base Rate plus the Applicable Rate Margin.
(B) Each Eurodollar Loan shall bear interest at the
Adjusted LIBO Rate for the Interest Period in effect for such Loan plus the
Applicable Rate Margin.
(C) Notwithstanding the foregoing, if any principal
of or interest on any Loan or any fee or other amount payable by the Borrowers
hereunder is not paid when due, whether at stated maturity, upon acceleration or
otherwise, such overdue amount shall bear interest, after as well as before
judgment, at a rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section or (ii) in the case of any other amount, 2%
plus the rate applicable to ABR Loans as provided in paragraph (a) of this
Section.
(D) Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan and, in the case of (x)
Revolving Loans, upon the Maturity Date or earlier termination of the Revolving
Credit Commitment, and (y) Line Loans on January 31, 1998 or, if earlier, the
termination of the Revolving Credit Commitment; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan prior to the end of the Availability
Period), accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) in the event of
any conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(E) All interest hereunder shall be computed on the
basis of a year of 360 days, and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
applicable Alternate Base Rate, or Adjusted LIBO Rate or LIBO Rate shall be
determined by the Lender, and such determination shall be conclusive absent
manifest error.
25
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Loan:
(A) the Lender determines (which determination shall
be conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable,
for such Interest Period; or
(B) the Lender determines that the Adjusted LIBO Rate
or the LIBO Rate, as applicable, for such Interest Period will not adequately
and fairly reflect the cost to the Lender of making or maintaining its Loan for
such Interest Period;
then the Lender shall give notice thereof to the Borrowers by telephone or
telecopy as promptly as practicable thereafter and, until the Lender notifies
the Borrowers that the circumstances giving rise to such notice no longer exist,
(i) any Interest Election Request that requests the conversion of any Loan to,
or continuation of any Loan as, a Eurodollar Loan shall be ineffective, and (ii)
if any Borrowing Request requests a Eurodollar Loan, such Borrowing shall be
made as an ABR Loan.
SECTION 2.13. Increased Costs. (A) If any Change in Law shall:
(I) impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by, the Lender
(except any such reserve requirement reflected in the Adjusted LIBO
Rate); or
(II) impose on the Lender or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by the Lender;
and the result of any of the foregoing shall be to increase the cost to the
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by the Lender hereunder (whether of principal, interest or
otherwise), then the Borrowers will pay to the Lender such additional amount or
amounts as will compensate the Lender for such additional costs incurred or
reduction suffered.
(B) If the Lender determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on the Lender's capital or on the capital of the Lender's holding
company as a consequence of this Agreement or the Loans made by the Lender to a
level below that which the Lender or the Lender's holding company could have
achieved but for such Change in Law (taking into consideration the Lender's
policies and the policies of the Lender's holding company with respect to
capital adequacy), then from time to time the
26
Borrowers will pay to the Lender such additional amount or amounts as will
compensate the Lender or the Lender's holding company for any such reduction
suffered.
(C) A certificate of the Lender setting forth the
amount or amounts necessary to compensate the Lender or its holding company, as
the case may be, as specified in paragraph (a) or (b) of this Section shall be
delivered to the Borrowers and shall be conclusive absent manifest error. The
Borrowers shall pay the Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.
(D) Failure or delay on the part of the Lender to
demand compensation pursuant to this Section shall not constitute a waiver of
the Lender's right to demand such compensation.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, or (c) the failure to borrow,
convert, continue or prepay any Loan on the date specified in any notice
delivered pursuant hereto then, in any such event, the Borrowers shall
compensate the Lender for the loss, cost and expense including for redeployment
of funds, attributable to such event. In the case of a Eurodollar Loan, such
loss, cost or expense to the Lender shall be deemed to include an amount
determined by the Lender to be the excess, if any, of (i) the amount of interest
which would have accrued on the principal amount of such Loan had such event not
occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which the Lender would bid
were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of the Lender setting forth any amount or amounts that the Lender is
entitled to receive pursuant to this Section shall be delivered to the Borrowers
and shall be conclusive absent manifest error. The Borrowers shall pay the
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.15. Taxes. (A) Any and all payments by or on account of any
obligation of the Borrowers hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if
either Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under
27
this Section) the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(B) In addition, the Borrowers shall pay any Other
Taxes to the relevant Governmental Authority in accordance with applicable law.
(C) The Borrowers shall indemnify the Lender within
10 days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Lender on or with respect to any payment by or
on account of any obligation of the Borrowers hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrowers by the Lender, shall be conclusive absent
manifest error.
(D) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by a Borrower to a Governmental Authority, the
Borrowers shall deliver to the Lender the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, and a
copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Lender.
SECTION 2.16. Payments Generally. (A) Each Borrower shall make each
payment required to be made by it hereunder (whether of principal, interest,
fees, or of amounts payable under Section 2.13, 2.14, or 2.15, or otherwise) and
under any other Loan Document prior to 12:00 noon, New York City time, on the
date when due, in immediately available funds, without set-off or counterclaim.
Any amounts received after such time on any date may, in the discretion of the
Lender, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to the
Lender at its offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.
(B) If at any time insufficient funds are received by
and available to the Lender to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, and (ii) second, towards payment of
principal then due hereunder.
28
ARTICLE III
Representations and Warranties
The Borrowers jointly and severally represent and warrant to
the Lender that:
SECTION 3.01. Organization; Powers. Each Credit Party and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect in respect of such Credit Party,
is qualified to do business in, and is in good standing in, every jurisdiction
where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the corporate powers of the Credit Parties and have been duly authorized
by all necessary corporate, and, if required, stockholder action. This Agreement
and each other Loan Document has been duly executed and delivered by each Credit
Party that is a party thereto and constitutes a legal, valid and binding
obligation of such Credit Party, enforceable in accordance with its respective
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts; No Defaults. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws, or other
organizational documents of any Credit Party or any of its Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a default
under any indenture, agreement or other instrument binding upon any Credit Party
or any of its Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by any Credit Party or any of its Subsidiaries,
and (d) will not result in the creation or imposition of any Lien (except in
favor of the Lender) on any asset now owned or hereafter acquired of any Credit
Party or any of its Subsidiaries. No Credit Party is in default in any manner
under any provision of any indenture or other agreement or instrument evidencing
Indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound.
SECTION 3.04. Financial Condition; No Material Adverse Change. (A) The
Company has heretofore furnished to the Lender (i) its consolidated balance
sheet and
29
statements of income, stockholders equity and cash flows as of and for the
fiscal year ended August 31, 1996, reported on by Ernst & Young, independent
public accountants, and (ii) consolidating balance sheets of the Company and its
Subsidiaries setting forth such information separately for the Company and each
Subsidiary thereof and related consolidating statements of operations for the
Company and its Subsidiaries setting forth such information separately for the
Company and each Subsidiary thereof as of and for the fiscal year ending August
31, 1996, and including in comparative form the figures for the preceding fiscal
year, certified by its chief financial officer. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Company and of its Subsidiaries as of such
dates and for such periods in accordance with GAAP.
(B) Since November 30, 1996, there has been no
material adverse change in the business, assets, operations, prospects or
condition, financial or otherwise, of any Credit Party from that set forth in
the financial statements contained in SEC Form 10-Q filed for the Company and
its Subsidiaries for the six months then ended. Except as disclosed on Schedule
3.04 annexed hereto, the Credit Parties have no liabilities, contingent or
otherwise, not disclosed on the financial statements referred to in Section
3.04(a), including in respect of any leases of real or personal property, other
than in respect of goods and services arising in the ordinary course of
business.
SECTION 3.05. Properties. (A) Each Credit Party and its Subsidiaries
has good title (free of Liens except such as are permitted under Section 6.02)
to, or valid leasehold interests in, all its real and personal property material
to its business, except for minor defects in title that do not interfere with
its ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes. No Credit Party is a party to any
contract, agreement, lease or instrument (other than the Loan Documents) the
performance of which, either unconditionally or upon the happening of any event,
will result in or require the creation of a Lien (except in favor of the Lender)
on any of its property or assets (now owned or hereafter acquired) or otherwise
result in a violation of any Loan Documents.
(B) Each Credit Party owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by such Credit Party and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect in respect of such
Credit Party.
SECTION 3.06. Litigation and Environmental Matters. (A) Except as
disclosed on Schedule 3.06 annexed hereto, there are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of any Borrower, threatened against or affecting
any Credit Party or any of its Subsidiaries (i) as to which there is a
reasonable possibility of an adverse
30
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect in
respect of any Credit Party or (ii) that involve this Agreement or the
Transactions.
(B) Except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect in respect of any Credit Party, neither any Credit
Party nor any of its Subsidiaries (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become subject to
any Environmental Liability, (iii) has received notice of any claim with respect
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(C) Since the date of this Agreement, there has been
no change in the status of the matters disclosed on Schedule 3.06 that,
individually or in the aggregate, has resulted in, or materially increased the
likelihood of, a Material Adverse Effect in respect of any Credit Party.
SECTION 3.07. Compliance with Laws and Agreements. Each Credit Party
and its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status; Margin
Regulations. No Credit Party nor any of its Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935. No Credit Party is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation U of the Board). No part of the proceeds of
any Loan will be used, directly or indirectly and whether immediately,
incidentally or ultimately, for any purpose which entails a violation of or
which is inconsistent with, the provisions of the regulations of the Board,
including, without limitation, Regulation G, T, U or X thereof.
SECTION 3.09. Taxes. Each Credit Party and its Subsidiaries has timely
filed or caused to be filed all Tax returns and reports, which to the knowledge
of such Credit Party or its Subsidiary (after due investigation) are required to
have been filed, and has paid or caused to be paid all Taxes shown to have been
due and payable on such returns or reports, except Taxes that are being
contested in good faith by appropriate proceedings and for which such Credit
Party or such Subsidiary, as applicable, has set aside on its books adequate
reserves in accordance with GAAP.
31
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect in respect of any Credit Party. The present
value of all accumulated benefit obligations under each Plan (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed by more than $250,000 the fair market value of the assets
of such Plan, and the present value of all accumulated benefit obligations of
all underfunded Plans (based on the assumptions used for purposes of Statement
of Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$250,000 the fair market value of the assets of all such underfunded Plans.
SECTION 3.11. Subsidiaries. The direct and indirect Subsidiaries of the
Company, including, without limitation, all Subsidiaries of each Borrower, and
their respective business forms, jurisdictions of organization, addresses, and
respective equity owners, are set forth on Schedule 3.11. Except as so disclosed
on Schedule 3.11, no Credit Party has any direct or indirect Subsidiaries or
investments in, or joint ventures or partnerships with, any Person as of the
Effective Date. Except as set forth on Schedule 3.11, as of the Effective Date,
the Borrowers are the only Subsidiaries of the Company.
SECTION 3.12. SEC Matters. Except as set forth in Schedule 3.12 hereto,
the Company is current in all required disclosure and otherwise in compliance in
all respects with applicable federal and state securities laws and/or rules and
regulations of the Securities and Exchange Commission, and with applicable state
securities laws and/or rules and regulations of state securities authorities and
of any stock exchanges or other self regulatory organizations having
jurisdiction of the Company and/or its securities.
SECTION 3.13. Labor Matters. There are no strikes or other material
labor disputes or grievances pending or, to the knowledge of any Borrower,
threatened, against any Credit Party. Except as set forth on Schedule 3.13
hereto, no Credit Party is a party to any collective bargaining agreement.
SECTION 3.14. Solvency. After giving effect to the Transactions to
occur on the Effective Date, (i) the fair salable value of the assets of each
Credit Party and its Subsidiaries will exceed the amount that will be required
to be paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of such Credit Party and its Subsidiaries as
they mature, (ii) the assets of each Credit Party and its Subsidiaries will not
constitute unreasonably small capital to carry out their businesses as conducted
or as proposed to be conducted, including the capital needs of such Credit Party
and its Subsidiaries (taking into account the particular capital requirements of
the
32
businesses conducted by such entities and the projected capital requirements and
capital availability of such businesses) and (iii) the Credit Parties do not
intend to, or intend to permit any of their Subsidiaries to, and do not believe
that they or any of their Subsidiaries will, incur debts beyond their ability to
pay such debts as they mature (taking into account the timing and amounts of
cash to be received by them and the amounts to be payable on or in respect of
their obligations).
SECTION 3.15. Security Documents. (A) The Pledge Agreement upon
execution and delivery by the parties thereto, will create in favor of the
Lender a legal, valid and enforceable security interest in the Collateral (as
such term is defined in the Pledge Agreement) and, when such Collateral
consisting of corporate stock is delivered to the Lender together with duly
executed, undated instruments of transfer, the Pledge Agreement and the Lien
created thereunder will constitute a fully perfected first priority Lien on, and
security interest in such Collateral, in each case prior and superior in right
to any other Person.
(B) The Security Agreement, upon execution and
delivery by the parties thereto, will create in favor of the Lender, a legal,
valid and enforceable security interest in the Collateral (as such term is
defined in the Security Agreement), and when financing statements in appropriate
form are filed in the offices specified therein or in the Perfection
Certificates, the Lien created under the Security Agreement will constitute a
fully perfected Lien on, and security interest in such Collateral, in each case
prior and superior in right to any other Person.
SECTION 3.16. Lock Boxes. The Credit Parties have furnished to the
Lender true and correct copies of all agreements and other documents, if any, to
which any Credit Party is a party or by which any Credit Party is bound or
affected, establishing or pertaining to lock boxes or similar arrangements
involving the collection or processing of Accounts Receivable or otherwise
dealing with the proceeds of the sale of Inventory of any Credit Party. The
Borrowers represent and warrant that on the date hereof there are no such
arrangements.
SECTION 3.17. Restrictive Agreements. No Credit Party nor any
Subsidiary thereof is a party to any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of such
Credit Party or Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, or (b) the ability of any Credit Party or Subsidiary
to pay dividends or other distributions with respect to any shares of its
capital stock or other equity interests; other than (i) restrictions and
conditions imposed by law or by this Agreement and (ii) restrictions and
conditions existing on the date hereof identified on Schedule 3.17.
SECTION 3.18. Disclosure. The Borrowers have disclosed to the Lender
all agreements, instruments and corporate or other restrictions to which each
Credit Party or any of its Subsidiaries is subject, and all other matters known
to it, that, individually
33
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect in respect of any Credit Party. None of the reports, financial
statements, certificates or other information furnished by or on behalf of the
Borrowers or any other Credit Party to the Lender in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligation of the Lender to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived):
(A) The Lender shall have received from each party
hereto a counterpart of this Agreement signed on behalf of such party (which may
include telecopy transmission of a signed signature page of this Agreement). The
Lender shall have received (i) from the Company, a duly executed Guarantee
Agreement in the form of Exhibit 4.01-1 hereto (as it may be supplemented,
amended, or modified from time to time, the "Guarantee Agreement"); (ii) from
each Credit Party other than the Company, a duly executed counterpart of the
Security Agreement in the form of Exhibit 4.01-2 hereto (as it may be
supplemented, amended, or modified from time to time, the "Security Agreement")
together with Form UCC-1 financing statements in connection therewith in proper
form for filing in the offices therein specified, and, (iii) from the Company,
the duly executed Pledge Agreement in the form of Exhibit 4.01-3 hereto (as it
may be supplemented, amended, or modified from time to time, the "Pledge
Agreement") together with certificates representing the corporate securities
pledged thereunder together with related undated stock powers endorsed in blank.
(B) The Lender shall have received a favorable
written opinion of Messrs. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Princeton, New Jersey, counsel
for the Credit Parties, substantially in the form of Exhibit A, and covering
such other matters relating to the Credit Parties, this Agreement, the other
Loan Documents or the Transactions as the Lender shall reasonably request. The
Borrowers hereby request such counsel to deliver such opinion.
(C) The Lender shall have received (i) a copy of the
certificate of incorporation, including all amendments thereto, of each Credit
Party, certified as of a recent date by the Secretary of State of the state of
its organization, (ii) a certificate
34
as to the good standing of each Credit Party as of a recent date, from the
Secretary of State of the state of its organization; (iii) a certificate of the
Secretary or Assistant Secretary of each Credit Party, dated the Effective Date
and certifying (A) that attached thereto is a true and complete copy of the
by-laws of such Credit Party as in effect on the Effective Date and at all times
since a date prior to the date of the resolutions described in clause (B) below,
(B) that attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Credit Party authorizing the
execution, delivery and performance of the Loan Documents and (in the case of
each Borrower) the borrowings hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect as of the
Effective Date, (C) that the certificate of incorporation of such Credit Party
has not been amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (ii) above and (D) as
to the incumbency and specimen signature of each officer executing any Loan
Document or any other document delivered in connection herewith on behalf of any
Credit Party; (iv) a certificate of another officer as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (iii) above; and (v) such other documents as the Lender
or its counsel may reasonably request.
(D) The Lender shall have received a duly executed
Revolving Credit Note and a duly executed Line Loan Note, in each case in a form
satisfactory to the Lender.
(E) The Lender shall have received Perfection
Certificates with respect to each of the Borrowers dated the Effective Date and
duly executed by the Chief Financial Officer of the Borrowers.
(F) The Lender shall have received a copy of the
insurance policies satisfying the requirements of Section 5.05, each of which
shall be endorsed or otherwise amended to include a lender's loss payable
endorsement (except in the case of liability policies) and to name the Lender as
a loss payee as its interest may appear and shall provide for at least thirty
(30) days' prior written notice from such insurance company to the Lender of any
change, termination or cancellation thereof, in form and substance reasonably
satisfactory to the Lender.
(G) After giving effect to the Transactions, on the
Effective Date, the Credit Parties shall have no Indebtedness other than (i)
Indebtedness under the Loan Documents and (ii) Indebtedness permitted under
Section 6.01.
(H) The Lender shall have received copies certified
by the chief financial officer of each Credit Party of all lock box or similar
arrangements involving the collection or processing of accounts receivable or
otherwise dealing with the proceeds of the sale of inventory in effect as to
such Credit Party, and the Lender shall (i) be satisfied, in its sole
discretion, with the agreements and documents pertaining
35
thereto, and (ii) have received waivers of rights of set off, and such other
agreements as it shall deem satisfactory, in its sole discretion, from parties
to such arrangements.
(I) On the Effective Date, the Lender shall have
received a certificate of the chief executive officer of the Company containing
a description, satisfactory to the Lender in its discretion, of the structure of
ownership and voting relationships among the Company and the Borrowers and
attaching thereto true and correct copies of all agreements among shareholders
(including but not limited to any purchase, redemption, cross purchase or option
agreements) of each Credit Party.
(J) All legal matters incident to this Agreement and
the Loans hereunder shall be satisfactory to the Lender and its counsel.
(K) The Lender shall have received a certificate,
dated the Effective Date and signed by the President, a Vice President or a
Financial Officer of each Borrower, confirming compliance with the conditions
set forth in paragraphs (a) and (b) of Section 4.02.
(L) The Lender shall be satisfied that the
consummation of the Transactions will not (i) violate any applicable law,
statute, rule or regulation or (ii) conflict with, or result in a default or
event of default under any material agreement of any Credit Party or Subsidiary
thereof.
(M) The Lender shall have received evidence
satisfactory to it that there has been no material adverse change in the
business, assets, operations, prospects or conditions, financial or otherwise,
of any Credit Party since November 30, 1996.
(N) The Lender shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all expenses required to be
reimbursed or paid by the Borrowers hereunder.
SECTION 4.02. Each Credit Event. The obligation of the Lender to make
each Loan or to continue or convert any Loan, is subject to the satisfaction of
the following conditions:
(A) The representations and warranties of the
Borrowers set forth in this Agreement shall be true and correct on and as of the
date of such disbursement of a Loan or the date of such continuation or
conversion of a Loan, as applicable.
36
(B) At the time of and immediately after giving
effect to such disbursement of a Loan or such continuation or conversion of a
Loan, as applicable, no Default shall have occurred and be continuing.
Each request for a Loan, and each disbursement continuation or conversion of any
Loan, shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitment has expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, the Borrowers covenant and agree, jointly and severally, with
the Lender that:
SECTION 5.01. Financial Statements and Other Information. The Borrowers
will furnish or cause to be furnished to the Lender:
(A) within 120 days after the end of each fiscal year
of the Company, (i) its audited consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on by Ernst & Young or other
independent public accountants satisfactory to the Lender (without a "going
concern" or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Company and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, and (ii) consolidating balance sheets setting forth such information
separately for the Company and for each Borrower as of the end of such fiscal
year and consolidating statements of operations setting forth such information
separately for the Company and for each Borrower for such fiscal year, such
consolidating balance sheet and consolidating financial statements to be
certified by the Chief Financial Officer of the Company as fairly presenting the
financial condition and results of operations of the Company and each Borrower
as of the end of, and for, such fiscal period in accordance with GAAP;
(B) within 60 days after the end of each of the first
three fiscal quarters of each fiscal year of the Company, (i) its consolidated
balance sheet and related statements of operations, stockholders' equity and
cash flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all
37
certified by one of its Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Company and
its consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes, and (ii) consolidating balance sheets of the Company and
of each Borrower setting forth such information separately for the Company and
for each Borrower and related consolidating statements of operation of the
Company and of each Borrower setting forth such information separately for the
Company and each Borrower as of the end of and for such quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or in the case of
the balance sheets, as of the end of) the previous fiscal year, all of which
shall be certified by the Chief Financial Officer of the Company as fairly
presenting the financial condition and results of operations therein shown in
accordance with GAAP consistently applied subject to normal year-end adjustments
and the absence of footnotes;
(C) concurrently with any delivery of financial
statements under clause (a) or (b) above, a certificate of a Financial Officer
of the Company (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 6.06 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section
3.04(a) and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(D) concurrently with any delivery of financial
statements under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained knowledge
during the course of their examination of such financial statements of any
Default (which certificate may be limited to the extent required by accounting
rules or guidelines), and promptly after receipt by the Company, a copy of each
management letter (if prepared) of such accounting firm (together with any
response thereto prepared by the Company);
(E) promptly (i) after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by the Company or any Subsidiary thereof with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed by the Company to its shareholders generally, as the case may be;
and (ii) copies of any documents and information furnished to any other
Government Authority (except if in the ordinary course of business), including
the Internal Revenue Service;
38
(F) within twenty (20) days after the end of each
calendar month, (i) accounts receivables aging schedules of each Borrower,
certified to be true, complete and correct in all material respects by the
president, secretary or chief financial officer of the Company, in form and
substance satisfactory to the Lender;
(G) within five (5) days after the occurrence of any
transaction of the type referred to in Section 6.01(c), notice thereof
describing the same in reasonable detail;
(H) promptly, a copy of any amendment or waiver of
any provision of any agreement or instrument referred to in Section 6.09;
(I) at least 30 days before the end of the Company's
fiscal year, a revised budgeted operating statement and cash flow projection for
the ensuing fiscal year; and
(J) promptly following any request therefor, such
other information regarding the operations, business affairs and financial
condition of each Credit Party or any Subsidiary thereof, or compliance with the
terms of this Agreement or the other Loan Documents, as the Lender may
reasonably request.
SECTION 5.02. Notices of Certain Events. The Borrowers will furnish to
the Lender written notice not more than three (3) days after the following:
(A) the occurrence of any Default;
(B) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting any Credit Party or any Affiliate thereof that, if adversely
determined, could reasonably be expected to result in a Material Adverse Effect
in respect of such Credit Party;
(C) the occurrence of any ERISA Event that, alone or
together with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of any Credit Party and its Subsidiaries in an
aggregate amount exceeding $250,000; and
(D) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect in respect of any
Credit Party.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of a Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
39
SECTION 5.03. Existence; Conduct of Business. Except as otherwise
expressly permitted under Section 6.03, each Credit Party will, and will cause
each of its Subsidiaries to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business.
SECTION 5.04. Payment of Obligations. Each Credit Party will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect in
respect of such Credit Party before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) such Credit Party or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP, (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect in respect of such
Credit Party, and (d) the same shall be paid or discharged or fully and
adequately bonded before it might become a Lien upon any property or asset of
such Credit Party or Subsidiary.
SECTION 5.05. Maintenance of Properties; Insurance. Each Credit Party
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations, including,
without limitation, insurance against fire, and public liability insurance
against such risks and in such amounts, and having such deductible amounts as
are customary, with companies in the same or similar businesses and which is no
less than may be required by law, which insurance policies shall name the Lender
as loss payee as its interest may appear and shall provide for at least thirty
(30) days' prior written notice from such insurance company to the Lender of any
change, termination or cancellation thereof.
SECTION 5.06. Books and Records; Inspection Rights; Lock Boxes. (A)
Each Credit Party will, and will cause each of its Subsidiaries to, keep proper
books of record and account in which full, true and correct entries are made of
all dealings and transactions in relation to its business and activities. Each
Credit Party will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, and to verify the status of any Collateral, all at
such reasonable times and as often as reasonably requested.
(B) Prior to the amendment or modification of any
arrangement referred to in Section 3.16, or the establishment after the
Effective Date of any such
40
arrangement, the Lender shall have been furnished with copies of such proposed
amendment or modification, or agreements establishing such arrangement and
shall, in its sole discretion, have consented thereto. In connection with the
foregoing, the Credit Parties shall cause the receipt by the Lender of waivers
of rights of set off and other documentation satisfactory to the Lender, in its
sole discretion, from the parties to such arrangements as amended, modified, or
established.
SECTION 5.07. Compliance with Laws; Environmental Laws. (A) Each Credit
Party will, and will cause each of its Subsidiaries to, comply with all laws,
rules, regulations and orders of any Governmental Authority applicable to it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect in respect of such Credit Party.
(B) Without limiting the preceding paragraph, each
Credit Party will, and will cause each of its Subsidiaries to (i) comply in all
material respects with, and use reasonable best efforts to require compliance in
all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws; and (ii) conduct and complete (or cause to be
conducted and completed) all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws and in
a timely fashion comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws except
to the extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect in respect of any Credit Party;
SECTION 5.08. Use of Proceeds. The proceeds of the Line Loans will be
used only to fund working capital. The proceeds of the Revolving Loans will be
used only for acquisitions of the assets, business, or capital stock (or other
equity interests) of other Persons ("Acquisition Transactions"). No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations G, T, U and X.
SECTION 5.09. Subsidiaries Bound as Borrowers or Guarantors. If any
Person after the date hereof becomes (whether upon its formation, by acquisition
of stock or other interests therein, or otherwise) a Subsidiary of any Credit
Party (a "New Subsidiary"), the Borrowers shall promptly furnish notice in
writing of such facts to the Lender, and if the Lender shall so elect, (i) cause
such New Subsidiary to become a Borrower hereunder, or a Guarantor, pursuant to
an instrument in form, scope, and substance satisfactory to the Lender, (ii)
deliver or cause to be delivered, to the Lender subject to the Lien in favor of
the Lender under the Pledge Agreement, any certificates representing shares of
stock or other interests of the New Subsidiary owned by a Credit Party (or
Subsidiary thereof), together with appropriate instruments of transfer required
under the Pledge Agreement, (iii) execute and deliver to the Lender an amendment
to
41
the Pledge Agreement, reflecting the Lien and security interest of the Lender in
the stock or other equity interests of such New Subsidiary in a manner
satisfactory to the Lender (including any consents of third parties in respect
thereof as the Lender shall require); and (iv) cause such New Subsidiary
otherwise to become a party to the Security Documents pursuant to one or more
instruments or agreements satisfactory in form and substance to the Lender, the
effect of which shall be to secure the Obligations by a first priority Lien on
and security interest of the Lender in the personal property of such New
Subsidiary.
SECTION 5.10. Further Assurances. (A) Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including, without limitation, filing Uniform Commercial Code
and other financing statements and the establishment of and deposit of
Collateral into custody accounts) that may be required under applicable law, or
that the Lender may request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority of the Liens and security interests
created or intended to be created by the Security Documents, it being understood
that it is the intent of the parties that the Obligations shall be secured by,
among other things, all the personal property of each Borrower and each
Guarantor (other than the Company), including any such personal property
acquired subsequent to the Effective Date. Such security interests and Liens
will be created under the Security Documents and other security agreements, and
other instruments and documents in form and substance satisfactory to the
Lender, and the Borrowers shall deliver or cause to be delivered to the Lender
all such instruments and documents (including legal opinions, and lien searches)
as the Lender shall reasonably request to evidence compliance with this Section
5.10. The Borrowers agree to provide such evidence as the Lender shall
reasonably request as to the perfection and priority status of each such
security interest and Lien.
ARTICLE VI
Negative Covenants
Until the Commitment has expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full the Borrowers covenant and agree, jointly and severally, with the
Lender that:
SECTION 6.01. Indebtedness. No Credit Party will, nor will it permit
any of its Subsidiaries to, create, incur, assume or permit to exist any
Indebtedness, except:
(A) Indebtedness created hereunder or under the other
Loan Documents, and other Indebtedness to the Lender;
42
(B) Indebtedness existing on the date hereof and set
forth in Schedule 6.01, but not any extensions, increases, renewals,
refinancing, or replacements of any such Indebtedness;
(C) Indebtedness of a Borrower or any Subsidiary
thereof incurred to finance the acquisition, construction or improvement of any
fixed or capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof; provided that (i) such
Indebtedness is incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement and (ii) the aggregate
principal amount of Indebtedness incurred as permitted by this clause (c) shall
not exceed $3,000,000 in the aggregate for the Company and its Subsidiaries for
any fiscal year of the Company.
(D) liabilities under operating leases of equipment
not in excess of (i) $2,500,000 in the aggregate for the Company and its
Subsidiaries for the fiscal year ending August 31, 1997, and (ii) $2,000,000 in
the aggregate for the Company and its Subsidiaries for any fiscal year of the
Company and its Subsidiaries thereafter;
(E) Approved Subordinated Debt;
(F) Consolidated Total Liabilities not exceeding
$23,000,000 in the aggregate at any time outstanding;
(G) Open account Indebtedness (not evidenced by any
separate writing) due from (i) one Borrower to another Borrower; (ii) the
Company to a Borrower; or (iii) a Borrower to the Company; and
(h) Indebtedness of a corporation which is acquired
and becomes a Subsidiary after the date hereof, provided that (i) such
Indebtedness existed at the time such corporation became a Subsidiary and was
not created in anticipation of the acquisition, and (ii) immediately after
giving effect to the acquisition of such corporation by any Credit Party or any
Subsidiary thereof no Default or Event of Default shall have occurred and be
continuing (whether or not the same shall occur as a result of the inclusion of
such corporation as a Subsidiary of the Credit Party for all purposes of this
Agreement or otherwise).
SECTION 6.02. Liens. No Credit Party will, nor will it permit any
Subsidiary thereof to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
43
(A) Liens arising under the Loan Documents and other
Liens in favor of the Lender;
(B) Permitted Encumbrances;
(C) any Lien on any property or asset of the Borrower
or any Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or asset of
any Credit Party or any Subsidiary thereof and (ii) such Lien shall secure only
those obligations which it secures on the date hereof, which shall not be
extended, increased, renewed, refinanced, or replaced;
(D) any Lien existing on any property or asset prior
to the permitted acquisition thereof by the Borrower or any Subsidiary or
existing on any property or asset of any Person that becomes a Subsidiary after
the date hereof prior to the time such Person becomes a Subsidiary; provided
that (i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such
Lien shall not apply to any other property or assets of the Borrower or any
Subsidiary and (iii) such Lien shall secure only those obligations which it
secures on the date of such acquisition or the date such Person becomes a
Subsidiary, as the case may be and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof; and
(E) Liens on fixed or capital assets acquired,
constructed or improved; provided that (i) such security interests secure
Indebtedness permitted by clause (c) of Section 6.01, (ii) such security
interests and the Indebtedness secured thereby are incurred prior to or within
90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 85% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Borrower or any Subsidiary.
SECTION 6.03. Certain Changes; Prohibited Transactions. (A) No Credit
Party will, nor will it permit any Subsidiary thereof to (i) liquidate or
dissolve, or merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it (except that any Borrower may
merge into another Borrower, provided, however, that the Lender shall receive
appropriate prior written notice of such merger if the filing by the Lender of
financing statements against the surviving Borrower in any new locations would
be required as a result of such merger to continue the perfection of any Lien of
the Lender), or (ii) (except with respect to transactions described in (x) and
solely between the Borrowers) sell, transfer, lease or otherwise dispose of (in
one transaction or in a series of transactions): (x) assets in an amount such
that after giving effect thereto the aggregate of all such sales, transfers,
leases, or other dispositions by all Credit Parties in any fiscal year of the
Company (A)
44
shall have equalled or exceeded 5% of Consolidated Tangible Net Worth (as of the
most recent quarterly financial statements furnished hereunder), or (B) involve
assets that generated 5% or more of the consolidated revenues of the Company and
its Subsidiaries (during such fiscal period); or (y) any stock of any of its
Subsidiaries; (in the case of both clauses (i) and (ii), as to all such assets,
including stock, whether now owned or hereafter acquired). Transactions
otherwise prohibited by this Section 6.03(a) shall be permitted to the extent
that all of the parties to any of such transactions consist solely of
Subsidiaries (x) not incorporated in any jurisdiction within the United States
or its possessions, (y) which are, directly or indirectly, wholly owned
Subsidiaries of the Company (but not of any of the Borrowers) and (z) are not
Credit Parties.
(B) No Credit Party will, nor will it permit any of
its Subsidiaries to (i) change its accounting policies in any way that could
have a material effect on the presentation of financial reports, (ii) alter in
any material respect the nature of the business of such Credit Party or
Subsidiary thereof from that conducted on the Effective Date (or, if subsequent
thereto, the date such Person became a Credit Party or Subsidiary thereof), or
(iii) change the fiscal year of any Credit Party or any Subsidiary thereof from
the fiscal year in effect on the Effective Date (or such later date on which
such Person became a Credit Party or Subsidiary thereof); provided that such
accounting policies may change to accord with a change in GAAP; provided further
that in the event of any such change, all financial reports required hereunder
that are thereby affected shall, following such change, be presented in two
formats, one of which shall reflect such change and the other of which shall
reflect the original accounting policy.
(C) No Credit Party or Subsidiary thereof will sell,
assign, discount or otherwise dispose of notes, accounts receivable or other
rights to receive payment, with or without recourse, except for collections and
credits (to the extent permitted under the Security Documents) in the ordinary
course of business.
(D) No Credit Party or any Subsidiary thereof will
enter into any arrangement, directly or indirectly, with any Person whereby it
shall sell or transfer any property, real or personal, and used or useful in its
business, whether now owned or hereafter acquired, and thereafter rent or lease
such property or other property that it intends to use for substantially the
same purpose or purposes as the property being sold or transferred.
(E) Subject to Article VII(k), notwithstanding
anything contained herein to the contrary, the Company shall not be prohibited
from issuing and selling its equity securities (to the extent the same would not
constitute Indebtedness) in a private or public offering.
45
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. No Credit Party will, nor will it permit any of its Subsidiaries
to, purchase, hold or acquire (including pursuant to any merger with any Person
that was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee (except pursuant to the Guarantee Agreements)
any obligations of, or make or permit to exist any investment or any other
interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:
(A) Permitted Investments;
(B) investments existing on the date hereof in the
capital stock of its Subsidiaries;
(C) permitted Acquisition Transactions, provided that
the Chief Financial Officer of the Company certifies to the Lender that the fair
market value of the acquired stock, assets, or business is equal to or greater
than the investment therein, and provided further that the aggregate of all such
investments does not, without the consent of the Lender, exceed $5,500,000 in
any fiscal year of the Company (provided, however, that only cash payments made,
the principal amount of any Indebtedness issued, and the value of any stock
issued, during a fiscal year by the Company and its Subsidiaries shall be
counted toward such $5,500,000 limit on "investments"); and
(D) the loans and investments listed on Schedule
6.04, provided that the same shall not be increased or the repayment or return
thereof deferred.
SECTION 6.05. Restricted Payments. (a) No Credit Party will, nor will
it permit any of its Subsidiaries to, pay, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, other than cash dividends,
from an indirect Subsidiary of the Company to a Subsidiary of the Company or
from a Subsidiary of the Company to the Company.
(b) No Credit Party will, nor will it permit any of
its Subsidiaries to, if a Default or an Event Default has occurred and is
continuing, make any payment to ▇▇▇▇▇ (as hereinafter defined) or its successors
or assigns under or in respect of: (i) the Asset Purchase Agreement (the "APA")
executed or to be executed hereafter among Unidigital/▇▇▇▇▇ Corporation ("UBC"),
▇▇▇▇▇ Image Group, Inc., a Massachusetts corporation ("▇▇▇▇▇"), and certain
other Persons, (ii) the $150,000 promissory note to be given by UBC to ▇▇▇▇▇
pursuant to the APA (the "▇▇▇▇▇ Note"), or the Guaranty to be given by the
Company to ▇▇▇▇▇ and certain other Persons pursuant to the APA (the "▇▇▇▇▇
Guaranty"); nor will any Credit Party or any of its
46
Subsidiaries prepay to ▇▇▇▇▇ or its successors or assigns any amounts owing to
▇▇▇▇▇ under the APA, the ▇▇▇▇▇ Note or the ▇▇▇▇▇ Guaranty, whether or not a
Default or an Event of Default has occurred and is continuing. Nothing in this
Section 6.05(b) shall apply to payments under an employment agreement between
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, for the compensation thereunder as heretofore
disclosed to the Lender.
SECTION 6.06. Certain Financial Covenants.
(A) The Company and its Subsidiaries shall not make
or permit to be made Capital Expenditures exceeding, in the aggregate, during
any fiscal year of the Company, $2,500,000 (the "permitted amount"); provided,
however, that up to 25 percent of any such permitted amount, if not expended in
the fiscal year for which it was such a permitted amount, may be carried forward
and added to the permitted amount for the immediately succeeding fiscal year
(but shall not be carried forward directly or indirectly to any subsequent
fiscal year and, accordingly, any Capital Expenditures incurred in such
succeeding fiscal year shall be charged first against the permitted amount for
such fiscal year without regard to any such carryforward amount).
(B) The Company and its Subsidiaries shall not:
(I) Permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities to be less than 1.10 to 1.00
at the end of any fiscal quarter of the Company during the fiscal year
of the Company ending August 31, 1997, or 1.25 to 1.00 at the end of
any fiscal quarter of the Company thereafter;
(II) Permit Consolidated Net Worth to be
less than $7,900,000 at the end of any fiscal year of the Company;
(III) Permit the Consolidated Debt Service
Coverage Ratio to be less than 1.25 to 1.00 at the end of any fiscal
year of the Company; or
(IV) Permit Consolidated Net Income to be
less than zero for any fiscal year of the Company or for any two
consecutive fiscal quarters of the Company.
SECTION 6.07. Transactions with Affiliates. No Credit Party will, nor
will it permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) as may otherwise be expressly permitted in this Agreement
or (b) in the ordinary course of business at prices and on terms and conditions
not less favorable to such Credit Party or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties.
47
SECTION 6.08. Restrictive Agreements. No Credit Party will, nor will it
permit any of its Subsidiaries to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of such Credit Party or Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Credit Party or Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or other equity
interests; provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by law or by this Agreement, and (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof identified on
Schedule 3.17 (but shall apply to any extension or renewal of, or any amendment
or modification expanding the scope of, any such restriction or condition).
SECTION 6.09. Amendment of Certain Documents. Permit the termination
of, or any amendment, waiver or modification to, the Certificate of
Incorporation or By-Laws, of any Credit Party or Subsidiary thereof except for
amendments, modifications or waivers that are not adverse in any respect to the
Lender or any of its security interests or other Liens.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(A) the Borrowers shall fail to pay any principal of
any Loan when and as the same shall become due and payable in accordance with
the terms hereof, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;
(B) the Borrowers shall fail to pay any interest on
any Loan or any fee or any other amount (other than an amount referred to in
clause (a) of this Article) payable under this Agreement, when and as the same
shall become due and payable in accordance with the terms hereof;
(C) any representation or warranty made or deemed
made by or on behalf of any Credit Party or any Subsidiary thereof in or in
connection with this Agreement or any other Loan Document, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any other Loan Document, shall prove to have
been incorrect in any material respect when made or deemed made;
(D) any Credit Party shall fail to observe or perform
any other covenant, condition or agreement contained herein or in any other Loan
Document and
48
such default shall continue unremedied for a period of 30 days (excluding from
such grace period (i) any covenant, condition or agreement to which clauses (e)
through (m) below relate in any manner, and (ii) Section 7 of the Pledge
Agreement, Sections 2.02, 2.06 and 2.07(a) of the Security Agreement and Section
2.01 of the Guarantee, as to all of which any failure to observe or perform the
same shall not be the subject of any grace period);
(E) any Credit Party or any Subsidiary thereof shall
fail to make any payment (whether of principal or interest and regardless of
amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable or any event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or agent
on its or their behalf to cause any Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity;
(F) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed seeking (i) liquidation, reorganization
or other relief in respect of any Credit Party or any Subsidiary thereof or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Credit Party or any Subsidiary thereof
or for a substantial part of its assets, and, in any such case, such proceeding
or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(G) any Credit Party or any Subsidiary thereof shall
(i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for such Credit Party
or any Subsidiary thereof or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;
(H) any Credit Party or any Subsidiary thereof shall
become unable, admit in writing or fail generally to pay its debts as they
become due;
(I) one or more judgments for the payment of money in
an aggregate amount in excess of $50,000 (which shall not have fully paid or
been fully
49
covered by insurance as to which the carrier shall not have disclaimed or
reserved coverage or liability in any manner) shall be rendered against any
Credit Party and/or any Subsidiary thereof and the same shall not have been
vacated, stayed or bonded pending appeal within 30 days after the entry thereof,
or any action shall be legally taken by a judgment creditor to attach or levy
upon any assets of any Credit Party or any Subsidiary thereof to enforce any
such judgment;
(J) an ERISA Event shall have occurred that, in the
opinion of the Lender, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in liability of any Credit
Party in an aggregate amount exceeding (i) $250,000 in any year or (ii) $250,000
for all periods; or
(K) a Change in Control shall occur;
(L) the current management of the Company shall cease
to be actively involved in the management of the Company's operations on a full
time day to day basis; or
(M) (i) any security interest in favor of the Lender
created or purported to be created under any Security Document shall no longer
provide the lien or priority contemplated by such Security Document or any party
having granted any such security interest (or any successor thereto or
representative thereof) shall make any claim or assertion to such effect, or
(ii) any Credit Party (or any successor thereto or representative thereof) shall
claim or assert that this Agreement or any other Loan Document, or any right or
remedy of the Lender hereunder or under any other Loan Document, shall not be
enforceable in accordance with its terms;
then, and in every such event (other than an event described in clause (f) or
(g) of this Article), and at any time thereafter during the continuance of such
event, the Lender may, by notice to the Borrowers, take any of the following
actions, at the same or different times: (i) terminate the Commitment, and
thereupon the Commitment shall terminate immediately, (ii) declare the Loans
then outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers, and (iii) exercise or cause the
exercise of any remedies available hereunder or any other Loan Document or
otherwise; and in case of any event described in clause (f) or (g) of this
Article, the Commitment shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrowers accrued hereunder, shall automatically become
due and payable, without
50
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(A) if to the Borrowers or to any Borrower, to the
Borrowers c/o the Company at ▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention of the Chairman (Telecopy No. 212-727-3151);
(B) if to the Lender, to it at its address at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice
President (Telecopy No. 212-332-4369).
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. 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, by courier, or given by telecopy, or five (5) days after
mailing postage prepaid (first class) with the United States mail.
SECTION 8.02. Waivers; Amendments. (A) No failure or delay by the
Lender in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a 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 Lender hereunder or under any other Loan Document are cumulative and are not
exclusive of any rights or remedies that it would otherwise have. No waiver of
any provision of this Agreement or any other Loan Document or consent to any
departure by the Borrowers or any other Credit Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Lender may have had notice or knowledge of
such Default at the time.
51
(B) Neither this Agreement or any of the other Loan
Documents nor any provision hereof or thereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Credit Party or Parties party thereto and the Lender.
SECTION 8.03. Expenses; Indemnity; Damage Waiver. (A) The Borrowers
shall pay (i) all reasonable out-of-pocket expenses incurred by the Lender and
its Affiliates, including the reasonable fees, charges and disbursements of
counsel for such Persons, in the preparation and administration of this
Agreement and the other Loan Documents, or of any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket
expenses incurred by the Lender, including the fees, charges and disbursements
of any counsel, in connection with the enforcement or preservation of any rights
under this Agreement or the other Loan Documents, including its rights under
this Section, or in connection with the Loans made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.
(B) The Borrowers shall indemnify the Lender, and
each Related Party of the Lender (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement, any other Loan Document, or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby or thereby, (ii) any Loan or the use of the proceeds
therefrom; (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by any Credit Party or any
of its Subsidiaries, or any Environmental Liability related in any way to any
Credit Party or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
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 are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(C) To the extent permitted by applicable law, the
Borrowers shall not assert, and each Borrower hereby waives, any claim against
any Indemnitee, on any theory of liability, for special, indirect, consequential
or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result
52
of, this Agreement, any other Loan Document, or any agreement or instrument
contemplated hereby or thereby, the Transactions, any Loan or the use of the
proceeds thereof.
(D) All amounts due under this Section shall be
payable promptly after written demand therefor.
SECTION 8.04. Successors and Assigns; Assignment of Loans; Sale of
Participations.
(A) Whenever in this Agreement any of the parties
hereto is referred to, such reference shall be deemed to include the successors
and assigns of such party; and all covenants, promises and agreements by or on
behalf of any Borrower, any other Credit Party, or the Lender that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and assigns. No Credit Party may assign or transfer any of its rights
or obligations hereunder without the written consent of the Lender.
(B) The Lender reserves the right to sell, assign, or
participate the Loans and the Commitment hereunder to any financial
institution(s) without limitation, provided that no such participation, but only
an assignment to another financial institution, shall relieve the Lender of its
obligations hereunder and the Lender shall remain as the agent for any such
assignees or participants. Without limiting the foregoing, each assignee and
participant shall be entitled to the benefits of this Agreement and the other
Loan Documents, and the obligations of the Credit Parties hereunder and under
the other Loan Documents shall survive, without being impaired in any way
regardless of any assignments and participations hereunder.
(C) Notwithstanding any other provision hereof, the
Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section, disclose to the assignee
or participant or proposed assignee or participant, any information relating to
any Credit Party furnished to the Lender by or on behalf of any Credit Party in
connection with this Agreement.
(D) Within five (5) Business Days after notice
thereof by the Lender to the Borrowers, the Borrowers shall execute and deliver
to the Lender in exchange for the surrendered Note or Notes of the assignor a
new Note or Notes to the order of such assignee in an amount equal to its
assigned portion pursuant to such assignment and, with respect to the assignor
in an amount equal to the portion retained by it hereunder. Such new Note or
Notes shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such assignment and shall otherwise be in substantially the form of the
surrendered Note or Notes. Cancelled Notes shall be returned promptly to the
Borrowers.
53
(E) The Lender shall maintain at its address referred
to in Section 8.01 hereof a copy of each agreement of assignment delivered to it
and a register for the recordation of the names and addresses of the assignees
and principal amounts of the Loans owing to each assignee from time to time (the
"Register"). The entries in the Register shall be conclusive, in the absence of
manifest error. The Register shall be available for inspection by the Borrowers
at any reasonable time and from time to time upon reasonable prior notice.
(F) Any purchaser, participant or assignee under
Section 8.04(b) which is a Foreign Lender that is entitled to an exemption from,
or reduction of, withholding tax under the law of the jurisdiction in which the
Borrowers are located, or under any treaty to which such jurisdiction is a
party, with respect to payments under this Agreement, shall deliver to the
Lender (with a copy to the Borrowers), at the time or times prescribed by
applicable law, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by the Lender or the Borrowers as will
permit such payments to be made to such Foreign Lender without withholding or at
a reduced rate.
SECTION 8.05. Survival. All covenants, agreements, representations and
warranties made by the Borrowers herein and by the Borrowers and the other
Credit Parties in the other Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement or any
other Loan Documents shall be considered to have been relied upon by the Lender
and shall survive the execution and delivery of this Agreement and the making of
any Loans, regardless of any investigation made by the Lender or on its behalf
and notwithstanding that the Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid and for so long as the
Commitment has not expired or terminated. The provisions of Sections 2.13, 2.14,
2.15 and 8.03 shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitment or the termination of
this Agreement or any provision hereof.
SECTION 8.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents, and any separate letter agreements with respect to fees payable
to the Lender constitute the entire contract among the parties thereto relating
to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall
54
become effective when it shall have been executed by the Lender and when the
Lender shall have received counterparts hereof which, when taken together, bear
the signatures of each of the other parties hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 8.07. Severability. Any provision of this Agreement or any
other Loan Document held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof; and the
invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.
SECTION 8.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, the Lender and each of its Affiliates 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 obligations at any time
owing by the Lender or any Affiliate thereof to or for the credit or the account
of any Borrower against any of and all the obligations of the Borrowers now or
hereafter existing under this Agreement or any other Loan Document, irrespective
of whether or not the Lender shall have made any demand under this Agreement or
such other Loan Document and although such obligations may be unmatured. The
rights of the Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which the Lender may have. The
Lender agrees promptly to notify the appropriate Borrower after any such set-off
and as to the application thereof; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and/or application
thereof.
SECTION 8.09. Governing Law; Jurisdiction; Consent to Service of
Process. (A) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(B) Each Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York 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.
55
Nothing in this Agreement shall affect any right that the Lender may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against any Borrower or its properties in the courts of any
jurisdiction.
(C) Each Borrower hereby irrevocably and
unconditionally waives, 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 court referred to in paragraph (b) of this
Section. 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.
(D) Each party to this Agreement irrevocably consents
to service of process in the manner provided for notices in Section 8.01.
Nothing in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION.
SECTION 8.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 8.12. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender in accordance with applicable law, the
rate of interest payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be
56
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to the Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate to the date
of repayment, shall have been received by the Lender.
ARTICLE IX
Multiple Borrowers
Each Borrower agrees that the representations and warranties made by,
and the liabilities, obligations, and covenants of and applicable to any of the
Borrowers under this Agreement, shall in every case (whether or not specifically
so stated in each such case herein) be joint and several. Every notice by or to
any Borrower shall be deemed also to constitute notice by and to the other
Borrowers, every act or omission by any Borrower also shall be binding upon the
other Borrowers, and the Lender is fully authorized by each Borrower to act and
rely also upon the representations and warranties, covenants, notices, acts, and
omissions of each other Borrower.
57
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
UNIDIGITAL ELEMENTS (NY), INC.
By: ________________________________
Name:
Title:
UNIDIGITAL/CARDINAL CORPORATION
By: ________________________________
Name:
Title:
UNIDIGITAL ELEMENTS (SF), INC.
By: ________________________________
Name:
Title:
UNIDIGITAL/▇▇▇▇▇ CORPORATION
By: ________________________________
Name:
Title:
▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
as Lender,
By: ________________________________
Name:
Title:
