AMENDED AND RESTATED LOAN AGREEMENT
Dated as of November 21, 2000
AMERICAN MEDICAL ALERT CORP., a New York corporation, having its principal place
of business at 0000 Xxxxxx Xxxx., Xxxxxxxxx, Xxx Xxxx 00000 (the "Borrower"),
HCI ACQUISITION CORP., a New York corporation, having its principal place of
business at 0000 Xxxxxx Xxxx., Xxxxxxxxx, Xxx Xxxx 00000 ("HCI" or a
"Guarantor") and EUROPEAN AMERICAN BANK, a New York banking corporation, having
an office at 0 XXX Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Bank") hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Accounts" shall mean those accounts arising out of the sale or lease
of goods or the rendition of services by the Borrower.
"Account Debtor" shall mean the Person who is obligated on or under an
Account.
"Affiliate" means, as to any Person (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
five (5%) percent or more of any class of voting stock of, or five (5%) percent
or more of the equity interest in, such Person; or (iii) a Person five (5%)
percent or more of the voting stock of which, or five (5%) or more of the equity
interest of which, is directly or indirectly beneficially owned or held by such
Person. The term control means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Agreement" means this Amended and Restated Loan Agreement, as amended,
supplemented or modified from time to time.
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"Board of Governors" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing Base" means the sum of seventy five (75%) of the Borrower's
Eligible Accounts Receivable, plus (ii) the lesser of (x) fifty (50%) percent of
the Borrower's Eligible Inventory or (y) $800,000.00.
"Business Day" means (i) a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close and (ii) if the relevant day relates to a Eurodollar Loan, an Interest
Period, or notice with respect to a Eurodollar Loan, a day on which dealings in
Dollar deposits are carried on in the London interbank market.
"Capital Base" means the Borrower's (i) shareholder's equity plus (ii)
Subordinated Debt minus (iii) intangible assets (including amounts due from
officers or Affiliates of the Borrower).
"Capital Lease" means a lease which has been or should be, in
accordance with GAAP, capitalized on the books of the lessee.
"Collateral" means all property which is subject or is to be subject to
the Lien granted by the Security Agreement.
"Commitment" means the Bank's obligation to make Revolving Credit Loans
and Term Loans to the Borrower pursuant to the terms and conditions of this
Agreement.
"Current Assets" means, as to any Person, at any date, the aggregate
amount of all assets of such Person which would be properly classified as
current assets at such date, but excluding deferred assets, all computed in
accordance with GAAP.
"Current Liabilities" means, as to any Person, the aggregate amount of
all liabilities of such Person (including tax and other proper accruals) which
would be properly classified as current liabilities, including the outstanding
principal amount of the Notes, all computed in accordance with GAAP.
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"Debt" means, as to any Person, (i) all indebtedness or liability of
such Person for borrowed money; (ii) indebtedness of such Person for the
deferred purchase price of property or services (including trade obligations);
(iii) obligations of such Person as a lessee under Capital Leases; (iv) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (v) obligations of such Person under letters of credit issued for the
account of such Person; (vi) obligations of such Person arising under acceptance
facilities; (vii) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any other
Person, or otherwise to assure a creditor against loss; (viii) obligations
secured by any Lien on property owned by such Person whether or not the
obligations have been assumed; and (ix) all other liabilities recorded as such,
or which should be recorded as such, on such Person's financial statements in
accordance with GAAP.
"Default" means any of the events specified in Section 6.01 of this
Agreement, whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Eligible Accounts Receivable" means Accounts which are due and payable
within ninety (90) days (120 days in the case of Accounts which are due under
the Borrower's contract with NYCHRA) from the original date of invoice and are
satisfactory to the Bank in its sole, reasonable credit judgment based on
information available to the Bank. References to percentages of all Accounts are
based on dollar amount of Accounts, and not number of Accounts.
"Eligible Inventory" shall mean all unencumbered inventory of finished
goods (which shall include medical devices held for lease) from time to time on
hand satisfactory to the Bank in its sole, reasonable discretion, valued at the
lower of (a) cost, (b) market value, or (c) the valuation consistent with that
employed in the preparation of the financial statements of the Borrower referred
to in Section 5.01(b) hereof. The total amount of Eligible Inventory shall not
at any time exceed $800,000.00.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with any other Person would be treated, with such
Person, as a single employer under Section 4001 of ERISA.
"Eurocurrency Reserve Requirement means, with respect to the LIBOR Rate
for an Interest Period, the aggregate (without duplication) daily average of the
rates (expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, marginal, supplemental or
emergency reserves) under any regulation (including, but without limitation,
Regulation D) promulgated by the Board of Governors (or any successor thereto or
other governmental authority having jurisdiction over the Bank) by the Bank
against "Eurocurrency liabilities" (as such term is used in Regulation D), but
without benefit or credit for proration, exemptions or offsets that might
otherwise be available to the Bank from time to time under Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement shall
reflect any other reserves required to be maintained by the Bank against (1) any
category of liabilities that includes deposits by reference to which the LIBOR
Rate is to be determined; or (2) any category of extension of credit or other
assets that include loans bearing a LIBOR Rate. As of the date of this Agreement
there are no Eurocurrency Reserve Requirements in effect.
"Eurodollar Loan" means a Loan bearing interest at an interest rate
determined with reference to the LIBOR Rate in accordance with the provisions of
Article II hereof.
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"Fixed Rate" means an annual rate of interest equal to 1.75% in excess
of the Bank's cost of funds (determined by the Bank in its sole discretion) for
a period equal to the period of a Term Loan, determined by the Bank to be in
effect two (2) days prior to the date of such Term Loan.
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"Fixed Rate Loan" means a Term Loan bearing interest at a Fixed Rate in
accordance with the provisions of Article II hereof.
"GAAP" means Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" means those generally
accepted accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting principle or practice required to be changed by the
FASB (or other appropriate board or committee of the FASB) in order to continue
as a generally accepted accounting principle or practice may be so changed. Any
dispute or disagreement between the Borrower and the Bank relating to the
determination of Generally Accepted Accounting Principles shall, in the absence
of manifest error, be conclusively resolved for all purposes hereof by the
written opinion with respect thereto, delivered to the Bank, of the independent
accountants selected by the Borrower and approved by the Bank for the purpose of
auditing the periodic financial statements of the Borrower.
"Guarantor" or "Guarantors" means each of, or both of, as the context
requires, those Guarantors named in the preamble to this Agreement and any other
Person required to guarantee the obligations of the Borrower in accordance with
Section 5.01(l) of this Agreement.
"Guaranty" or "Guaranties" means the guaranty or guaranties executed
and delivered by the Guarantors pursuant to Section 3.01(h) and 5.01(l) of this
Agreement.
"Hazardous Materials" includes, without limit, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related materials defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
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U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation and Recovery
Act, as amended (42 U.S.C. Sections 9601 et. seq.), and in the regulations
adopted and publications promulgated pursuant thereto, or any other federal,
state or local environmental law, ordinance, rule or regulation.
"Interest Determination Date" means the date on which a Prime Rate Loan
is converted to a Eurodollar Loan and, in the case of a Eurodollar Loan, the
last day of the applicable Interest Period.
"Interest Payment Date" means (i) as to each Eurodollar Loan, the first
Business Day of each month during the applicable Interest Period and the last
day of each Interest Period, (ii) as to each Prime Rate Loan, the first Business
Day of each month, and (iii) as to each Fixed Rate Loan, the first Business Day
of each month.
"Interest Period" means as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day in the calendar month that is one, two or three months
thereafter, as the Borrower may elect (or, if there is no numerically
corresponding day, on the last Business Day of such month); provided, however,
(i) that no Interest Period shall end later than the Maturity Date, (ii) if any
Interest Period would end on a day which shall not be 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,
(iii) interest shall accrue from and including the first day of such Interest
Period to but excluding the date of payment of such interest, and (iv) no
Interest Period of particular duration may be selected by the Borrower if the
Bank determines, in its sole, good faith discretion, that Eurodollar Loans with
such maturities are not generally available.
"Investment" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current trade and customer accounts receivable for services
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rendered in the ordinary course of business and payable in accordance with
customary trade terms in the ordinary course of business) and any purchase of
(i) any security of another Person or (ii) any business or undertaking of any
Person or any commitment or option to make any such purchase, or any other
investment.
"LIBOR Rate" means the rate per annum identified as the LIBOR Rate for
a requested Interest Period as published on page 3750 of the Dow Xxxxx Telerate
service.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"Loan" or Loans" means the Term Loans and the Revolving Credit Loans or
any or all of the same as the context may require and includes Prime Rate Loans
and Eurodollar Loans, as the context may require.
"Loan Documents" means this Agreement, the Notes, the Guaranties, the
Security Agreements and any other document executed or delivered pursuant to
this Agreement.
"Material Adverse Change" means, as to any Person, (i) a material
adverse change in the financial condition, business, operations, properties or
results of operations of such Person or (ii) any event or occurrence which could
have a material adverse effect on the ability of such Person to perform its
obligations under the Loan Documents.
"Maturity Date" means May 31, 2002.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Borrower or any ERISA Affiliate.
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"Note" or "Notes" means the Term Loan Notes, the Revolving Credit Note
or any or all of the same as the context may require.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Investments" means, (i) direct obligations of the United
States of America or any governmental agency thereof, or obligations guaranteed
by the United States of America, provided that such obligations mature within
one year from the date of acquisition thereof; (ii) time certificates of deposit
having a maturity of one year or less issued by any commercial bank organized
and existing under the laws of the United States or any state thereof and having
aggregate capital and surplus in excess of $1,000,000,000.00; (iii) money market
mutual funds having assets in excess of $2,500,000,000; (iv) commercial paper
rated not less than P-1 or A-1 or their equivalent by Xxxxx'x Investor Services,
Inc. or Standard & Poor's Corporation, respectively; or (v) tax exempt
securities rated Prime 2 or better by Xxxxx'x Investor Services, Inc. or A-1 or
better by Standard & Poor's Corporation.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity or a federal, state or local government, or a political
subdivision thereof or any agency of such government or subdivision.
"Plan" means any employee benefit plan established, maintained, or to
which contributions have been made by the Borrower or any ERISA Affiliate.
"Prime Rate" means the fluctuating rate per annum equal to the rate of
interest publicly announced by the Bank at its principal office from time to
time as its Prime Rate, each change in the Prime Rate to be effective on the
date such change is announced to be effective.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time.
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"Regulation D" means Regulation D of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation G" means Regulation G of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation T" means Regulation T of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors, as the
same may be amended and in effect from time to time. "Reportable Event"
means any of the events set forth in Section 4043 of ERISA.
"Revolving Credit Loans" shall have the meaning assigned to such term
in Section 2.01 of this Agreement.
"Revolving Credit Note" means a promissory note of the Borrower payable
to the order of the Bank, in substantially the form of Exhibit A annexed hereto,
evidencing the aggregate indebtedness of the Borrower to the Bank resulting from
Revolving Credit Loans made by the Bank to the Borrower pursuant to this
Agreement.
"Safe Com" means, Safe Com, Inc., a wholly owned Subsidiary of the
Borrower.
"Security Agreement" means the security agreement to be executed and
delivered pursuant to Section 3.01(e) of this Agreement.
"Subordinated Debt" means Debt of any Person, the repayment of which
the obligee has agreed in writing, on terms which have been approved by the Bank
in advance in writing, shall be subordinate and junior to the rights of the Bank
with respect to Debt owing from such Person to the Bank.
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"Subsidiary" means, as to any Person, any corporation, partnership or
joint venture whether now existing or hereafter organized or acquired (i) in the
case of a corporation, of which a majority of the securities having ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) are at the time owned by
such Person and/or one or more Subsidiaries of such Person or (ii) in the case
of a partnership or joint venture, of which a majority of the partnership or
other ownership interests are at the time owned by such Person and/or one or
more Subsidiaries of such Person.
"Term Loan" shall have the meaning assigned in Section 2.08 hereof.
"Term Loan Maturity Date" shall have the meaning assigned in Section
2.07 hereof.
"Term Loan Note" means a promissory note of the Borrower payable to the
order of the Bank, in substantially the form of Exhibit B annexed hereto,
evidencing the indebtedness of the Borrower to the Bank resulting from the Term
Loan made by the Bank to the Borrower pursuant to the Agreement.
"Total Liabilities" means, as to any Person, all of the liabilities of
such Person, including all items which, in accordance with GAAP would be
included on the liability side of the balance sheet (other than capital stock,
treasury stock, capital surplus and retained earnings) computed in accordance
with GAAP.
"Total Unsubordinated Liabilities" means, as to any Person, the excess
of (i) such Person's Total Liabilities over (ii) such Person's Subordinated
Debt.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
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SECTION 1.03. Accounting Terms. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under GAAP.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. The Revolving Credit Loans. The Bank agrees, on the date
of this Agreement, on the terms and conditions of this Agreement and in reliance
upon the representations and warranties set forth in this Agreement, to lend to
the Borrower prior to the Maturity Date such amounts as the Borrower may request
from time to time (individually, a "Revolving Credit Loan" or collectively, the
"Revolving Credit Loans"), which amounts may be borrowed, repaid and reborrowed,
provided, however, that the aggregate amount of such Revolving Credit Loans
outstanding at any one time shall not exceed the lesser of (i) Two Million Five
Hundred Thousand ($2,500,000.00) Dollars, or (ii) the Borrowing Base (the
"Commitment"), or such lesser amount of the Commitment as may be reduced
pursuant to Section 2.19 hereof.
Each Revolving Credit Loan shall be a Prime Rate Loan or a Eurodollar
Loan as the Borrower may request subject to and in accordance with Section 2.02.
The Bank may at its option make any Eurodollar Loan by causing a foreign branch
or affiliate to make such Loan, provided that any exercise of such option shall
not affect the obligation of the Borrower to repay such Loan in accordance with
the terms of the Revolving Credit Note. Subject to the other provisions of this
Agreement, Revolving Credit Loans of more than one type may be outstanding at
the same time.
SECTION 2.02. Notice of Revolving Credit Loans. (a) The Borrower shall
give the Bank irrevocable written, telex, telephonic (immediately confirmed in
writing) or facsimile notice (i) at least two (2) Business Days prior to each
Revolving Credit Loan comprised in whole or in part of one or more Eurodollar
Loans (subject to Section 2.21 hereof) and (ii) prior to 11:00 a.m. on the day
of each Revolving Credit Loan consisting solely of a Prime Rate Loan. If a
notice of borrowing is received by the Bank after 11:00 a.m. on a Business Day,
such notice shall be deemed to have been given on the next succeeding Business
Day.
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(b) Each notice given pursuant to this Section 2.02 shall specify the
date of such borrowing, the amount thereof and whether such Loan is to be a
Prime Rate Loan or a Eurodollar Loan and, if such Loan or any portion thereof is
to consist of one or more Eurodollar Loans, the principal amounts thereof and
Interest Period or Interest Periods with respect thereto. If no election as to a
type of Loan is specified in such notice, such Loan (or portion thereof as to
which no election is specified) shall be a Prime Rate Loan. If no election as to
the Interest Period is specified in such notice with respect to any Eurodollar
Loan, the Borrower shall be deemed to have selected an Interest Period of one
month's duration and if a Eurodollar Loan is requested when such Loans are not
available, the Borrower shall be deemed to have requested a Prime Rate Loan.
(c) The Borrower shall have the right, on such notice to the Bank as is
required pursuant to (a) above, (x) to continue any Eurodollar Loan into a
subsequent Interest Period (subject to availability) and (y) to convert a Prime
Rate Loan into a Eurodollar Loan (subject to availability) subject to the
following:
(i) if a Default or an Event of Default shall have
occurred and be continuing at the time of any proposed
conversion or continuation only Prime Rate Loans shall be
available;
(ii) in the case of a continuation or conversion of
fewer than all Loans, the aggregate principal amount of each
Eurodollar Loan continued or into which a Loan is converted
shall be in the minimum principal amount of $10,000.00 and in
increased integral multiples of $10,000.00;
(iii) each continuation or conversion shall be
effected by each Bank applying the proceeds of the new Loan to
the Loan (or portion thereof) being continued or converted;
(iv) if the new Loan made as a result of a
continuation or conversion shall be a Eurodollar Loan, the
first Interest Period with respect thereto shall commence on
the date of continuation or conversion;
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(v) each request for a Eurodollar Loan which shall
fail to state an applicable Interest Period shall be deemed to
be a request for an Interest Period of one month's duration
and each request for a Eurodollar Loan made when such Loans
are not available shall be deemed to be a request for a Prime
Rate Loan;
(vi) in the event that the Borrower shall not give
notice to continue a Eurodollar Loan as provided above, such
Loan shall automatically be converted into a Prime Rate Loan
at the expiration of the then current Interest Period.
SECTION 2.03. Revolving Credit Note. Each Revolving Credit Loan shall
be in the minimum principal amount of $10,000.00, and in minimum multiples
$10,000.00 thereafter. The Revolving Credit Note shall be dated the date hereof
and be in the principal amount of Two Million Five Hundred Thousand and 00/100
($2,500,000.00) Dollars, and shall mature on the Maturity Date, at which time
the entire outstanding principal balance and all interest thereon shall be due
and payable. The Revolving Credit Note shall be entitled to the benefits and
subject to the provisions of this Agreement.
At the time of the making of each Revolving Credit Loan and at the time
of each payment of principal thereon, the holder of the Revolving Credit Note is
hereby authorized by the Borrower to make a notation on the schedule annexed to
the Revolving Credit Note of the date and amount, and the type and Interest
Period of the Revolving Credit Loan or payment, as the case may be. Failure to
make a notation with respect to any Revolving Credit Loan shall not limit or
otherwise affect the obligation of the Borrower hereunder or under the Revolving
Credit Note with respect to such Revolving Credit Loan, and any payment of
principal on the Revolving Credit Note by the Borrower shall not be affected by
the failure to make a notation thereof on said schedule.
SECTION 2.04. Payment of Interest on the Revolving Credit Note. (a) In
the case of a Prime Rate Loan, interest shall be payable at a rate per annum
equal to the Prime Rate. Such interest shall be payable on each Interest Payment
Date, commencing with the first Interest Payment Date after the date of such
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Prime Rate Loan and on the Revolving Credit Maturity Date. Any change in the
rate of interest on the Revolving Credit Notes due to a change in the Prime Rate
shall take effect as of the date of such change in the Prime Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a
rate per annum equal to the LIBOR Rate plus two and one half (2 1/2%) percent.
Such interest shall be payable on each Interest Payment Date, commencing with
the first Interest Payment Date after the date of such Eurodollar Loan and on
the Maturity Date. In the event Eurodollar Loans are available, the Bank shall
determine the rate of interest applicable to each requested Eurodollar Loan for
each Interest Period at 11:00 a.m., New York City time, or as soon as
practicable thereafter, two (2) Business Days prior to the commencement of such
Interest Period and shall use its best efforts to notify the Borrower of the
rate of interest so determined. Such determination shall be conclusive absent
manifest error.
SECTION 2.05. The Term Loans. The Bank agrees, on the terms and
conditions of this Agreement and in reliance upon the representations and
warranties set forth in this Agreement, to make Term Loans to the Borrower in
the aggregate principal amount of up to Two Million ($2,000,000.00) Dollars, and
the Borrower agrees to borrow such amount from the Bank by executing and
delivering to the Bank the Term Loan Notes. The Term Loans, or portions thereof,
shall be Prime Rate Loans or Fixed Rate Loans as the Borrower may request
subject to and in accordance with Section 2.06 hereof.
SECTION 2.06. Notice of Term Loan Designations. (a) The Borrower shall
give the Bank irrevocable written, telex, telephonic (immediately confirmed in
writing) or facsimile notice (i) at least two (2) Business Days prior to each
Term Loan bearing interest at the Fixed Rate, and (ii) prior to 11:00 a.m. on
the day of each Term Loan consisting solely of a Prime Rate Loan. If a notice of
borrowing is received by the Bank after 11:00 a.m. on a Business Day, such
notice shall be deemed to have been given on the next succeeding Business Day.
(b) Each notice given pursuant to this Section 2.06 shall specify the
date of such borrowing and the amount thereof and whether such Loan is to be a
Prime Rate Loan or a Fixed Rate Loan. If no election as to a type of Loan is
specified in such notice, such Loan (or portion thereof as to which no election
is specified) shall be a Prime Rate Loan.
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SECTION 2.07. Term Loan Notes. Each Term Loan shall be evidenced by a
Term Loan Note of the Borrower. Each Term Loan Note shall be dated the date of
each Term Loan and shall mature sixty (60) months from the date of such Term
Loan (each, a "Term Loan Maturity Date"). At the end of such term the entire
outstanding principal balance of such Term Loan Note and all interest thereon
shall be due and payable. Each Term Loan Note shall be entitled to the benefits
and subject to the provisions of this Agreement.
SECTION 2.08. Repayment of Term Loan Notes. (a) In the event that a
Term Loan is bearing interest at the Prime Rate, the principal balance thereof
shall be payable in sixty (60) equal monthly installments of principal, each due
on the first Business Day of each month beginning on the first such day after
the date of such Term Loan and continuing on the first Business Day of each
calendar month thereafter, calculated on a straight line amortization basis. The
final such monthly principal installment shall be in an amount equal to the then
outstanding principal balance of such Term Loan Note.
(b) In the event that a Term Loan is bearing interest at the
Fixed Rate, the balance thereof shall be payable in sixty (60) equal monthly
installments of principal and interest, each due on the first Business Day of
each month beginning on the first such day after the date of such Term Loan and
continuing on the first Business Day of each calendar month thereafter,
calculated on a the basis of a 5 year, mortgage style amortization schedule. The
final such monthly principal installment shall be in an amount equal to the then
outstanding principal balance of such Term Loan Note.
SECTION 2.09. Payment of Interest on the Term Loan Notes.
(a) In the case of a Prime Rate Loan, interest shall be
payable at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Prime Rate. Such interest shall be
payable on each Interest Payment Date, commencing with the first Interest
Payment Date after the date of such Prime Rate Loan and on each Term Loan
Maturity Date. Any change in the rate of interest on each Term Loan Note due to
a change in the Prime Rate shall take effect as of the date of such change in
the Prime Rate.
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(b) In the case of a Fixed Rate Loan, interest shall be
payable at a rate per annum (computed on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Fixed Rate. Such interest shall be
payable on each Interest Payment Date, commencing with the first Interest
Payment Date after the date of such Fixed Rate Loan and on each Term Loan
Maturity Date.
SECTION 2.10. Intentionally Omitted.
SECTION 2.11. Use of Proceeds. The proceeds of the Revolving Credit
Loans shall be used by the Borrower for working capital and to finance the
purchase of certain assets of Xxxxxxx Xxxxxxxx, Inc., and the proceeds of the
Term Loans shall be used by the Borrower exclusively to finance up to seventy
five (75%) percent of the cost of equipment placed into service. No part of the
proceeds of any Loan may be used for any purpose that directly or indirectly
violates or is inconsistent with, the provisions of Regulations G, T, U or X.
SECTION 2.12. Facility Fee. The Borrower agrees to pay to the Bank:
(a) a Facility Fee for the Term Loan equal to $10,000.00, of
which $5,000.00 shall be payable on the date hereof, and $5,000.00 shall be
payable on the first anniversary of the date hereof; and
(b) a Facility Fee for the Revolving Credit Loans equal to
$6,250.00, which shall be payable on the date hereof.
SECTION 2.13. Reduction of Commitment. Upon at least three (3) Business
Days' written notice, the Borrower may irrevocably elect to have the unused
Commitment terminated in whole or reduced in part provided, however, that any
such partial reduction shall be in a minimum amount of One Hundred Thousand
($100,000.00) Dollars, or whole multiples thereof. The Commitment, once
terminated or reduced, shall not be reinstated without the express written
approval of the Bank.
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SECTION 2.14. Prepayment. (a) The Borrower shall have the right at any
time and from time to time to prepay any Prime Rate Loan, in whole or in part,
without premium or penalty on the same day on which telephonic notice is given
to the Bank (immediately confirmed in writing) of such prepayment provided,
however, that each such prepayment shall be on a Business Day and shall be in an
aggregate principal amount which is an integral multiple of $10,000.00.
(b) The Borrower shall have the right at any time and from time to
time, subject to the provisions of this Agreement, to prepay any Eurodollar
Loan, in whole or in part, on three (3) Business Days' prior irrevocable written
notice to the Bank, provided, however, that such prepayment may only be made on
an Interest Determination Date.
(c) The Borrower shall have the right at any time and from time to
time, subject to the provisions of this Agreement, to prepay any Fixed Rate Loan
in whole or in part at any time in a minimum amount of Ten Thousand ($10,000.00)
Dollars and whole multiples thereof, in each case upon at least ten (10) days
notice. Any such written notice shall be irrevocable and shall obligate the
Borrower to make such prepayment on the date noticed for prepayment. All
prepayments shall be accompanied by interest accrued on the amount prepaid
through the date of prepayment (the "Prepayment Date"). If prepayment occurs
during the 90 day period preceding the Term Loan Maturity Date of a Term Loan
Note, such Term Loan may be prepaid without penalty. If prepayment occurs at any
other time, the Borrower shall pay to the Bank as a condition to such prepayment
a prepayment premium, as liquidated damages and not as a penalty, equal to the
present value (using the Treasury Rate, as hereinafter defined, for purposes of
discounting) of: (i) the difference, if positive, between the interest rate on
the Term Loan Note being prepaid and the yield on the Prepayment Date on U.S.
Treasury Securities (the "Treasury Rate") as published in the Wall Street
Journal with the closest matching maturity to the Term Loan Maturity Date of
such Note, multiplied by (ii) the total amount of principal prepaid, divided by
(iii) 360 and multiplied by (iv) the actual number of days remaining until such
Term Loan Maturity Date. In addition, all prepayments shall be accompanied by
any and all additional administrative costs incurred by the Bank (as determined
by the Bank in its sole discretion) as a result of such prepayment. All
prepayments shall be applied in inverse order of maturity.
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(d) The notice of prepayment under this Section 2.14 shall set forth
the prepayment date and the principal amount of the Loan being prepaid and shall
be irrevocable and shall commit the Borrower to prepay such Loan by the amount
and on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2.14 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans by the Borrower. Eurodollar Loans may be prepaid
only in accordance with the provisions of paragraph (b) above. Fixed Rate Loans
may be prepaid only in accordance with the provisions of paragraph (c) above.
SECTION 2.15. Reimbursement by Borrower. The Borrower shall reimburse
the Bank upon the Bank's demand for any loss, cost or expense incurred or to be
incurred by it (in the Bank's sole, reasonable determination) as a result of any
prepayment or conversion (whether voluntarily or by acceleration) of any
Eurodollar Loan other than on the last day of the Interest Period for such Loan,
or if the Borrower fails to borrow the Eurodollar Loan (or is not able to borrow
because of an Event of Default or for any other reason hereunder) after having
given the irrevocable notice of borrowing required by this Agreement. Such
reimbursement shall include, but not be limited to, any loss, cost or expense
incurred by the Bank in obtaining, liquidating or redeploying any funds used or
to be used in making or maintaining the Eurodollar Loan.
SECTION 2.16. Eurocurrency Reserve Requirement. It is understood that
the cost to the Bank of making or maintaining Eurodollar Loans may fluctuate as
a result of the applicability of, or change in, the Eurocurrency Reserve
Requirement. The Borrower agrees to pay to the Bank from time to time, as
provided in Section 2.17 below, such amounts as shall be necessary to compensate
the Bank for the cost of making or maintaining any Eurodollar Loans made by it
resulting from any change in the Eurocurrency Reserve Requirement, it being
understood that the rates of interest applicable to Eurodollar Loans hereunder
have been determined on the basis of the Eurocurrency Reserve Requirement in
effect at the time of determination of the LIBOR Rate and that such rates do not
reflect costs imposed on the Bank in connection with any change to the
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Eurocurrency Reserve Requirement. It is agreed that for purposes of this
paragraph the Eurodollar Loans made hereunder shall be deemed to constitute
Eurocurrency Liabilities as defined in Regulation D and to be subject to the
reserve requirements of Regulation D without benefit or credit of proration,
exemptions or offsets which might otherwise be available to the Bank from time
to time under Regulation D.
SECTION 2.17. Increased Costs. If, after the date of this Agreement,
the adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(i) subjects the Bank to any tax with respect to its
Commitment, the Loans, the Notes or on any amount paid or to be paid under or
pursuant to this Agreement, the Loans or the Notes (other than any tax measured
by or based upon the overall net income of the Bank);
(ii) changes the basis of taxation of payments to the Bank of
any amounts payable hereunder (other than any tax measured by or based upon the
overall net income of the Bank);
(iii) imposes, modifies or deems applicable any reserve,
capital adequacy or deposit requirements against any assets held by, deposits
with or for the account of, or loans made by, the Bank; or
(iv) imposes on the Bank any other condition affecting its
Commitment, the Loans, the Notes or this Agreement; and the result of any of the
foregoing is to increase the cost to the Bank of maintaining this Agreement or
the Commitment or making the Loans, or to reduce the amount of any payment
(whether of principal, interest or otherwise) receivable by the Bank or to
require the Bank to make any payment on or calculated by reference to the gross
amount of any sum received by it, in each case by an amount which the Bank in
its reasonable judgment deems material, then and in any such case:
(a) the Bank shall promptly advise the Borrower of such event,
together with the date thereof, the amount of such increased cost or
reduction or payment and the way in which such amount has been
calculated; and
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(b) the Borrower shall pay to the Bank, within ten (10) days
after the advice referred to in subsection (a) hereinabove, such an
amount or amounts as will compensate the Bank for such additional cost,
reduction or payment for so long as the same shall remain in effect.
The determination of the Bank as to additional amounts payable
pursuant to this Section 2.17 shall be conclusive evidence of such amounts
absent manifest error.
SECTION 2.18. Capital Adequacy. If the Bank shall have determined that
the applicability of any law, rule, regulation or guideline, or the adoption
after the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the interpretation
or administration of any of the foregoing by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank (or any lending office of the Bank) or the
Bank's holding company with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's capital or on the capital of the Bank's holding company, if any,
as a consequence of its obligations hereunder to a level below that which the
Bank or the Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration the Bank's policies and the
policies of the Bank's holding company with respect to capital adequacy) by an
amount deemed by the Bank to be material, then from time to time the Borrower
shall pay to the Bank such additional amount or amounts as will compensate the
Bank or the Bank's holding company for any such reduction suffered.
SECTION 2.19. Change in Legality. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in law, rule, regulation, guideline or order, or in the interpretation
thereof by any governmental authority charged with the administration thereof,
shall make it unlawful for the Bank to make or maintain any Eurodollar Loan or
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to give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by written notice to the Borrower, the Bank may:
(i) declare that Eurodollar Loans will not thereafter be made
hereunder, whereupon the Borrower shall be prohibited from requesting
such Eurodollar Loans hereunder unless such declaration is subsequently
withdrawn; and
(ii) require that, subject to the provisions of Section 2.15,
all outstanding Eurodollar Loans made by it be converted to a Prime
Rate Loan, whereupon all of such Eurodollar Loans shall be
automatically converted to a Prime Rate Loan as of the effective date
of such notice as provided in paragraph (b) below.
(b) For purposes of this Section 2.19, a notice to the
Borrower by the Bank pursuant to paragraph (a) above shall be effective, for the
purposes of paragraph (a) above, if lawful, and if any Eurodollar Loans shall
then be outstanding, on the last day of the then current Interest Period;
otherwise, such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.20. Indemnity. The Borrower will indemnify the Bank against
any loss or expense which the Bank may sustain or incur as a consequence of any
default in payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, by notice of prepayment or otherwise), or the occurrence of any
Event of Default, including but not limited to any loss or expense sustained or
incurred in liquidating or employing deposits from third parties acquired to
affect or maintain such Loan or any part thereof. When claiming under this
Section 2.20, the Bank shall provide to the Borrower a statement, signed by an
officer of the Bank, explaining the amount of any such loss or expense
(including the calculation of such amount), which statement shall, in the
absence of manifest error, be conclusive with respect to the parties hereto.
SECTION 2.21. Change in LIBOR; Availability of Rates. In the event, and
on each occasion, that, on the day the interest rate for any Eurodollar Loan is
to be determined, for a requested Eurodollar Loan, the Bank shall have
determined (which determination, absent manifest error, shall be conclusive and
binding upon the Borrower) that dollar deposits in the amount of the principal
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amount of the requested Eurodollar Loan are not generally available in the
London Interbank Market, or that the rate at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to the Bank of
making or maintaining the principal amount of such Eurodollar Loan during such
Interest Period, such Eurodollar Loan shall be unavailable, Loans based on such
rate shall be unavailable. The Bank shall, as soon as practicable thereafter,
given written, telex or telephonic notice of such determination of
unavailability to the Borrower. Any request by the Borrower for an unavailable
Eurodollar Loan shall be deemed to have been a request for a Prime Rate Loan.
After such notice shall have been given and until the Bank shall have notified
the Borrower that the circumstances giving rise to such notice no longer exist,
each subsequent request for an unavailable Eurodollar Loan shall be deemed to be
a request for a Prime Rate Loan.
SECTION 2.22. Authorization to Debit Borrower's Account. The Bank is
hereby authorized to debit the Borrower's account maintained with the Bank for
(i) all scheduled payments of principal and/or interest under the Notes, and
(ii) the commitment fee and all other amounts due hereunder; all such debits to
be made on the days such payments are due in accordance with the terms hereof.
SECTION 2.23. Late Charges, Default Interest. (a) If the Borrower shall
default in the payment of any principal installment of or interest on any Loan
or any other amount becoming due hereunder, the Borrower shall pay interest, to
the extent permitted by law, on such defaulted amount up to the date of actual
payment (after as well as before judgment) at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 360 days) equal to
three (3%) percent in excess of the interest rate otherwise in effect with
respect to the type of Loan in connection with which the required payments have
not been made.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Borrower shall pay interest on all amounts owing under the Notes
and this Agreement (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to three (3%) percent in excess of the interest rate otherwise in
effect hereunder.
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SECTION 2.24. Payments. All payments by the Borrower hereunder or under
the Notes shall be made in Dollars in immediately available funds at the office
of the Bank by 12:00 noon, New York City time on the date on which such payment
shall be due. Interest on the Notes shall accrue from and including the date of
each Loan to but excluding the date on which such Loan is paid in full or
refinanced with a Loan of a different type.
SECTION 2.25. Interest Adjustments. (a) If the provisions of this
Agreement or the Notes would at any time otherwise require payment by the
Borrower to the Bank of any amount of interest in excess of the maximum amount
then permitted by applicable law the interest payments shall be reduced to the
extent necessary so that the Bank shall not receive interest in excess of such
maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank
shall receive interest payments hereunder or under the Notes in an amount less
than the amount otherwise provided, such deficit (hereinafter called the
"Interest Deficit") will cumulate and will be carried forward (without interest)
until the termination of this Agreement. Interest otherwise payable to the Bank
hereunder and under the Notes for any subsequent period shall be increased by
such maximum amount of the Interest Deficit that may be so added without causing
the Bank to receive interest in excess of the maximum amount then permitted by
applicable law.
(b) The amount of the Interest Deficit shall be treated as a prepayment
penalty and paid in full at the time of any optional prepayment by the Borrower
to the Bank of all outstanding Loans. The amount of the Interest Deficit
relating to the Notes at the time of any complete payment of the Notes at that
time outstanding (other than an optional prepayment thereof) shall be cancelled
and not paid.
SECTION 2.26. Participations, Etc. The Bank shall have the right at any
time, with or without notice to the Borrower, to sell, assign, transfer or
negotiate all or any part of the Term Loan Notes or the Revolving Credit Note or
the Commitment or grant participations therein to one or more banks (foreign or
domestic, including an affiliate of the Bank), insurance companies or other
financial institutions, pension funds or mutual funds. The Borrower and the
Guarantors agree and consent to the Bank providing financial and other
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information regarding their business and operations to prospective purchasers or
participants and further agree that to the extent that the Bank should sell,
assign, transfer or negotiate all or any part of the Notes or the Commitment,
the Bank shall be forever released and discharged from its obligations under the
Notes, the Commitment and this Agreement to the extent same is sold, assigned,
transferred or negotiated. Nothing herein shall be read or construed as
prohibiting or otherwise limiting the ability or right of the Bank to pledge any
Note to a Federal Reserve Bank.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Initial
Revolving Credit Loan and the Initial Term Loan. The obligation of the Bank to
make the initial Revolving Credit Loan and the initial Term Loan contemplated by
this Agreement is subject to the condition precedent that the Bank shall have
received from the Borrower and the Guarantors the following, in form and
substance satisfactory to the Bank and its counsel:
(a) The Revolving Credit Note and the initial Term Loan Note, in each
case duly executed and payable to the order of the Bank.
(b) Certified (as of the date of this Agreement) copies of the
resolutions of the Board of Directors of the Borrower authorizing the Loans and
authorizing and approving this Agreement and the other Loan Documents and the
execution, delivery and performance thereof and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the other Loan Documents.
(c) Certified (as of the date of this Agreement) copies of the
resolutions of the Boards of Directors and the shareholders of each of the
Guarantors, authorizing and approving this Agreement, their Guaranties and any
other Loan Document applicable to the Guarantors, and the execution, delivery
and performance thereof and certified copies of all documents evidencing other
-24-
necessary corporate action and governmental approvals, if any, with respect to
this Agreement, their Guaranties and the other Loan Documents.
(d) A certificate of the Secretary or an Assistant Secretary (attested
to by another officer) of the Borrower certifying: the names and true signatures
of the officer or officers of the Borrower authorized to sign this Agreement,
the Term Loan Notes, the Revolving Credit Note and the other Loan Documents to
be delivered hereunder on behalf of the Borrower.
(e) A Certificate of the Secretary or an Assistant Secretary (attested
to by another officer) of each of the Guarantors certifying (i) the names and
true signatures of the officer or officers of the Guarantors authorized to sign
this Agreement, their Guaranties and any other Loan Documents to be delivered
hereunder on behalf of the Guarantors; (ii) a copy of each of the Guarantors'
by-laws as complete and correct on the date of this Agreement; and (iii) the
stock ownership of each Guarantor.
(f) Copies of the certificates of incorporation and all amendments
thereto of the Borrower and each of the Guarantors, certified in each case by
the Secretary of State (or equivalent officer) of the state of incorporation of
the Borrower and each Guarantor and a certificate of existence and good standing
with respect to the Borrower and each Guarantor from the Secretary of State (or
equivalent officer) of the state of incorporation of the Borrower and each
Guarantor and from the Secretary of State (or equivalent officer) of any state
in which the Borrower and each Guarantor is authorized to do business.
(g) An opinion of Xxxxxx Xxxxxx LLP, counsel for the Borrower and the
Guarantors in the form annexed hereto as Schedule 3.01(g).
(h) From each of the Guarantors, an executed Guaranty.
(i) From the Borrower, an executed Security Agreement giving to the
Bank a first priority security interest in all assets of the Borrower including,
but not limited to, all personal property, equipment, fixtures, inventory,
accounts, chattel paper and general intangibles all whether now owned or
hereafter acquired (the "Collateral").
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(j) From the Borrower, UCC-1 filings perfecting the Bank's security
interests in the Collateral.
(k) A property damage insurance policy for the Collateral in the amount
of the greater of (1) the replacement value of the Collateral or (2) the
principal amount outstanding under the Loans, naming the Bank as loss payee with
an insurance company acceptable to the Bank. The policy shall provide for thirty
(30) days notice to the Bank of cancellation or change.
(l) From the Borrower, receipt and satisfactory review by the Bank of
the Borrower's audited financial statement for the fiscal year ended December
31, 1999.
(m) From the Borrower, a Borrowing Base certificate dated the date
hereof.
(n) All schedules, documents, certificates and other information
provided to the Bank pursuant to or in connection with this Agreement shall be
satisfactory to the Bank and its counsel in all respects.
(o) The following statements shall be true and the Bank shall have
received a certificate signed by the President or Chief Financial Officer of the
Borrower dated the date hereof, stating that:
(i) The representations and warranties contained in Article IV
of this Agreement and in the Loan Documents are true and correct in all material
respects on and as of such date; and
(ii) No Default or Event of Default has occurred and is
continuing, or would result from the making of the initial Term Loan or the
initial Revolving Credit Loan.
(p) Receipt by the Bank of such other approvals or documents as the
Bank or its counsel may reasonably request.
(q) Receipt by the Bank of its facility fee set forth in Section 2.12
hereof, and payment of the reasonable legal fees and expenses of the Bank's
counsel.
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SECTION 3.02. Conditions Precedent to All Revolving Credit Loans and
All Term Loans. The obligations of the Bank to make each Revolving Credit Loan
(including the initial Revolving Credit Loan) and each Term Loan (including the
initial Term Loan) shall be subject to the further condition precedent that on
the date of such Revolving Credit Loan or Term Loan, as the case may be:
(a) The following statements shall be true and each request for a
Revolving Credit Loan or a Term Loan shall be deemed to be a certification by
the Borrower and the Guarantors that:
(i) The representations and warranties contained in Article IV
of this Agreement and in the Loan Documents are true and correct on and as of
such date as though made on and as of such date; and
(ii) No Default or Event of Default has occurred and is
continuing, or would result from such Revolving Credit Loan or Term Loan.
(b) The Bank shall have received, in the case of a Term Loan, a Term
Loan Note duly executed and payable to the order of the Bank.
(c) The Bank shall have received such other approvals, opinions or
documents as the Bank may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. On the date hereof and on
each date that the Borrower requests a Revolving Credit Loan or a Term Loan, the
Borrower and each of the Guarantors represent and warrant as follows:
(a) Subsidiaries. On the date hereof, the only Subsidiaries of the
Borrower and the Guarantors are those set forth on Schedule 4.01(a) annexed
hereto, which Schedule accurately sets forth with respect to each such
Subsidiary, its name and address, any other addresses at which it conducts
business, its state of incorporation and each other jurisdiction in which it is
qualified to do business and the identity and share holdings of its
stockholders. Except as set forth on Schedule 4.01(a), all of the issued and
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outstanding shares of each Subsidiary which are owned by the Borrower or a
Guarantor are owned by the Borrower or such Guarantor, as the case may be, free
and clear of any mortgage, pledge, lien or encumbrance. Except as set forth on
Schedule 4.01(a), there are not outstanding any warrants, options, contracts or
commitments of any kind entitling any Person to purchase or otherwise acquire
any shares of common or capital stock or other equity interest of the Borrower,
Guarantor or any Subsidiary, nor are there outstanding any securities which are
convertible into or exchangeable for any shares of the common or capital stock
of the Borrower, any Guarantor or any Subsidiary of the Borrower or a Guarantor.
(b) Organization. The Borrower and each Guarantor is a corporation duly
incorporated, validly existing and in good standing under the laws of the state
of its formation and has the corporate power to own its assets and to transact
the business in which it is presently engaged and is duly qualified and is in
good standing in all other jurisdictions where the character or nature of its
business requires such qualification.
(c) Due Execution, etc. The execution, delivery and performance by the
Borrower and each Guarantor of this Agreement and the other Loan Documents to
which it is a party are within the Borrower's and each Guarantor's corporate
power and have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the stockholders of the
Borrower or any Guarantor; (ii) do not contravene the Borrower's or any
Guarantor's certificate of incorporation or by-laws; (iii) violate any provision
of or any law, rule, regulation, contractual restriction, order, writ, judgment,
injunction, or decree, determination or award binding on or affecting the
Borrower or any Guarantor; (iv) result in a breach of or constitute a default
under any indenture or loan or credit agreement, or any other agreement, lease
or instrument to which the Borrower or any Guarantor is a party or by which it
or its properties may be bound or affected; and (v) result in, or require, the
creation or imposition of any Lien (other than the Lien of the Loan Documents)
upon or with respect to any of the properties now owned or hereafter acquired by
the Borrower or any Guarantor.
(d) No Authorization, etc. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by the Borrower
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or any Guarantor of any Loan Document to which it is a party, except
authorizations, approvals, actions, notices or filings which have been obtained,
taken or made, as the case may be.
(e) Validity of Loan Documents. The Loan Documents when delivered
hereunder will have been duly executed and delivered on behalf of the Borrower
and each Guarantor and will be legal, valid and binding obligations of the
Borrower and each Guarantor, enforceable against the Borrower and each Guarantor
in accordance with their respective terms.
(f) Financial Statements. The financial statements of the Borrower for
the fiscal year ended December 31, 1999, copies of which have been furnished to
the Bank, fairly present in all material respects the financial condition of the
Borrower and Guarantors as at such date and the results of operations of the
Borrower and Guarantors for the period ended on such date, all in accordance
with GAAP, and since such date there has been (i) no material increase in the
liabilities of the Borrower and Guarantors (except as herein provided), and (ii)
no Material Adverse Change in the Borrower or any Guarantor.
(g) No Litigation. There is no pending or threatened action, proceeding
or investigation affecting the Borrower or any Guarantor before any court,
governmental agency or arbitrator, which may either in one case or in the
aggregate, result in a Material Adverse Change in the Borrower or any Guarantor.
(h) Tax Returns. Except as set forth on Schedule 4.01(h) hereto, the
Borrower and each Guarantor has filed all federal, state and local tax returns
required to be filed (subject to extensions granted) and has paid all taxes,
assessments and governmental charges and levies thereon to be due, including
interest and penalties.
(i) Licenses, etc. The Borrower and each Guarantor possesses all
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
or rights thereto, to conduct its business substantially as now conducted and as
presently proposed to be conducted, and neither the Borrower nor any Guarantor
is in violation of any similar rights of others.
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(j) No Burdensome Agreements. Neither the Borrower nor any Guarantor is
a party to any indenture, loan or credit agreement or any other agreement, lease
or instrument or subject to any charter or corporate restriction which could
result in a Material Adverse Change in the Borrower or any Guarantor.
(k) Margin Credit. Neither the Borrower nor any Guarantor is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation G, T, U or X), and no proceeds of
any Loan will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock or in any
other way which will cause the Borrower or any Guarantor to violate the
provisions of Regulations G, T, U or X.
(l) Securities Exchange Act. No proceeds of any Loan will be used to
acquire any security in any transaction which is subject to Sections 13 or 14 of
the Securities Exchange Act of 1934.
(m) Compliance With Laws. Except as set forth on Schedule 4.01(m)
hereto, the Borrower, each Guarantor and each Subsidiary are in all material
respects in compliance with all federal and state laws and regulations in all
jurisdictions where the failure to comply with such laws or regulations could
result in a Material Adverse Change in the Borrower, a Guarantor or any such
Subsidiary.
(n) ERISA. The Borrower, each Guarantor and each ERISA Affiliate of the
Borrower or a Guarantor are in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan; no notice
of intent to terminate a Plan has been filed nor has any Plan been terminated;
no circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan, nor has the PBGC instituted any such proceedings;
neither the Borrower, any Guarantor nor any ERISA Affiliate of the Borrower or a
Guarantor has completely or partially withdrawn under Sections 4201 or 4204 of
ERISA from a Multiemployer Plan; the Borrower, each Guarantor and each ERISA
Affiliate of the Borrower or a Guarantor have met their minimum funding
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requirements under ERISA with respect to all of their Plans and the present fair
market value of all Plan assets exceeds the present value of all vested benefits
under each Plan, as determined on the most recent valuation date of the Plan in
accordance with the provisions of ERISA for calculating the potential liability
of the Borrower, any Guarantor or any ERISA Affiliate of the Borrower or a
Guarantor to PBGC or the Plan under Title IV of ERISA; and neither the Borrower,
any Guarantor nor any ERISA Affiliate of the Borrower or a Guarantor has
incurred any liability to the PBGC under ERISA.
(o) Hazardous Material. The Borrower and each Guarantor is in
compliance with all federal, state or local laws, ordinances, rules, regulations
or policies governing Hazardous Materials and neither the Borrower nor any
Guarantor has used Hazardous Materials on, from, or affecting any property now
owned or occupied or hereafter owned or occupied by the Borrower or any
Guarantor in any manner which violates federal, state or local laws, ordinances,
rules, regulations or policies governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials, and that to the best of the Borrower's and each Guarantor's
knowledge, no prior owner of any such property or any tenant, subtenant, prior
tenant or prior subtenant have used Hazardous Materials on, from or affecting
such property in any manner which violates federal, state or local laws,
ordinances, rules, regulations, or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials.
(p) Use of Proceeds. The proceeds of the Term Loans and the Revolving
Credit Loans shall be used exclusively for the purposes set forth in Section
2.11 hereof.
(q) Title to Assets. The Borrower and each Guarantor has good and
marketable title to all of its properties and assets. The properties and assets
of the Borrower and each Guarantor are not subject to any Lien other than those
described in Section 5.02(a) hereof.
(r) Casualty. Neither the business nor the properties of the Borrower
or any Guarantor are affected by any fire, explosion, accident, strike, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), which could result in a Material Adverse
Change in the Borrower or any Guarantor.
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(s) Lien Priority. The Lien on the Collateral created by the Security
Agreements constitute valid first priority perfected security interests in favor
of the Bank upon the filing of appropriate UCC financing statements.
(t) Safe Com. Safe Com, a Subsidiary of the Borrower, does not, as of
the date hereof, conduct business and owns no assets.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any amount shall remain
outstanding under any Term Loan Note or the Revolving Credit Note, or so long as
the Commitment shall remain in effect, the Borrower and the Guarantors will,
unless the Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary of the
Borrower to comply, in all material respects with all applicable laws, rules,
regulations and orders, where the failure to so comply could result in a
Material Adverse Change in the Borrower or any such Subsidiary.
(b) Reporting Requirements. Furnish to the Bank:
(i) Annual Financial Statements. (1) As soon as available and in
any event within ninety (90) days after the end of each fiscal year of the
Borrower, a copy of the audited financial statements of the Borrower for such
year, including balance sheets with related statements of income and retained
earnings and statements of cash flows, all in reasonable detail and setting
forth in comparative form the figures for the previous fiscal year, together
with an unqualified opinion, prepared by independent certified public
accountants selected by the Borrower and satisfactory to the Bank, all such
financial statements to be prepared in accordance with GAAP, and (2) As soon as
available and in any event within five (5) Business Days after filing, a copy of
the Borrower's 10-K report filed with the United States Securities and Exchange
Commission.
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(ii) Quarterly Financial Statements. (1) As soon as available
and in any event within five (5) Business Days after filing, a copy of the
Borrower's 10-Q report filed with the United States Securities and Exchange
Commission.
(iii) Management Letters. Promptly upon receipt thereof, copies
of any reports submitted to the Borrower by independent certified public
accountants in connection with the examination of the financial statements of
the Borrower made by such accountants;
(iv) Certificate of No Default. Simultaneously with the delivery
of the financial statements referred to in Section 5.01(b)(i) and (ii), a
certificate of the President or the Chief Financial Officer of the Borrower (1)
certifying that no Default or Event of Default has occurred and is continuing,
or if a Default or Event of Default has occurred and is continuing, a statement
as to the nature thereof and the action which is proposed to be taken with
respect thereto; and (2) with computations demonstrating compliance with the
covenants contained in Section 5.03.
(v) Accountants' Report. Simultaneously with the delivery of the
annual financial statements referred to in Section 5.01(b)(i), a certificate of
the independent certified public accountants who audited such statements to the
effect that, in making the examination necessary for the audit or review of such
statements, they have obtained no knowledge of any condition or event which
constitutes a Default or Event of Default, or if such accountants shall have
obtained knowledge of any such condition or event, specify in such certificate
each such condition or event of which they have knowledge and the nature and
status thereof.
(vi) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits and proceedings before any court or
governmental department, commission, board, bureau, agency, or instrumentality,
domestic or foreign, affecting the Borrower or any Subsidiary of the Borrower
which, if determined adversely to the Borrower or any such Subsidiary could
result in a Material Adverse Change in the Borrower or any such Subsidiary.
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(vii) Notice of Defaults and Events of Default. As soon as
possible and in any event within five (5) Business Days after the occurrence of
each Default or Event of Default, a written notice setting forth the details of
such Default or Event of Default and the action which is proposed to be taken by
the Borrower with respect thereto.
(viii) ERISA Reports. Promptly after the filing or receiving
thereof, copies of all reports, including annual reports, and notices which the
Borrower or any Subsidiary of the Borrower files with or receives from the PBGC,
the Internal Revenue Service or the U.S. Department of Labor under ERISA; and as
soon as possible after the Borrower or any such Subsidiary knows or has reason
to know that any Reportable Event or Prohibited Transaction has occurred with
respect to any Plan or that the PBGC or the Borrower or any such Subsidiary has
instituted or will institute proceedings under Title IV of ERISA to terminate
any Plan, the Borrower will deliver to the Bank a certificate of the President
or the Chief Financial Officer of the Borrower setting forth details as to such
Reportable Event or Prohibited Transaction or Plan termination and the action
the Borrower proposes to take with respect thereto;
(ix) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party pursuant
to the terms of any indenture, loan, or credit or similar agreement and not
otherwise required to be furnished to the Bank pursuant to any other clause of
this Section 5.01(b).
(x) Proxy Statements, Etc. Within five (5) Business Days after
the sending or filing thereof, copies of all proxy statements, financial
statements and reports which the Borrower sends to its stockholders, and copies
of all regular, periodic, and special reports, and all registration statements
which the Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange, including but not limited to Securities and Exchange
Commission Form 8-K.
(xi) Notice of Affiliates. Promptly after any Person becomes an
Affiliate of the Borrower, notice to the Bank of such Affiliate.
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(xii) Borrowing Base Certificate. As soon as available and in
any event within twenty (20) days after the end of each calendar month, a
Borrowing Base certificate in form and substance satisfactory to the Bank.
(xiii) Accounts Receivable Aging. As soon as available and in
any event within twenty (20) days after the end of each calendar month, an
accounts receivable aging in form and substance satisfactory to the Bank.
(xiv) Change in Management. As soon as available and in any
event within one (1) Business Day of any change in the Borrower's officers or
executive management, a notice setting forth such changes.
(xv) Medical Alert Units Report. As soon as available and in any
event within twenty (20) days after the end of each calendar month, medical
alert units report, in form and substance reasonably satisfactory to the Bank.
(xvi) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower, any Guarantor
or any Subsidiary of the Borrower as the Bank may from time to time reasonably
request.
(c) Taxes. Pay and discharge, and cause its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges upon it or them, its
or their income and its or their properties prior to the dates on which
penalties are attached thereto, unless and only to the extent that (i) such
taxes shall be contested in good faith and by appropriate proceedings by the
Borrower, any Guarantor or any such Subsidiary, as the case may be; (ii) there
be adequate reserves therefor in accordance with GAAP entered on the books of
the Borrower, any Guarantor or any such Subsidiary; and (iii) no enforcement
proceedings against the Borrower, any Guarantor or any such Subsidiary have been
commenced.
(d) Corporate Existence. Preserve and maintain, and cause its
Subsidiaries to preserve and maintain, their corporate existence and good
standing in the jurisdiction of their incorporation and the rights, privileges
and franchises of the Borrower and each such Subsidiary in each case where
failure to so preserve or maintain could result in a Material Adverse Change in
the Borrower or such Subsidiary.
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(e) Maintenance of Properties and Insurance. (i) Keep, and cause any
Subsidiaries to keep, the respective properties and assets (tangible or
intangible) that are useful and necessary in its business, in good working order
and condition, reasonable wear and tear excepted; (ii) maintain, and cause any
Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies or associations in such amounts and covering such risks as
are usually carried by companies engaged in similar businesses and owning
properties doing business in the same general areas in which the Borrower, any
Guarantors and any such Subsidiaries operate; and (iii) cause the Bank to be
named as loss payee on any such insurance policies.
(f) Books of Record and Account. Keep, and cause any Subsidiaries to
keep, adequate records and proper books of record and account in which complete
entries will be made in a manner to enable the preparation of financial
statements in accordance with GAAP, reflecting all financial transactions of the
Borrower, the Guarantors, and any such Subsidiaries.
(g) Visitation. At any reasonable time and upon reasonable notice, and
from time to time, permit the Bank or any agents or representatives thereof, to
examine and make copies of and abstracts from the books and records of, and
visit the properties of, the Borrower or any Guarantor and to discuss the
affairs, finances and accounts of the Borrower or any Guarantor with any of the
respective officers or directors of the Borrower or such Guarantor or the
Borrower's or such Guarantor's independent accountants.
(h) Performance and Compliance with Other Agreements. Perform and
comply, and cause any Subsidiaries to perform and comply, with each of the
provisions of each and every agreement the failure to perform or comply with
which could result in a Material Adverse Change in the Borrower, any Guarantor
or any Subsidiary.
(i) Continued Perfection of Liens and Security Interest. Record or file
or rerecord or refile the Loan Documents or a financing statement or any other
filing or recording or refiling or rerecording in each and every office where
and when necessary to preserve and perfect the security interests of the Loan
Documents.
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(j) Pension Funding. Comply with the following and cause each ERISA
Affiliate of the Borrower or any Subsidiary of the Borrower to comply with the
following:
(i) engage solely in transactions which would not subject any of
such entities to either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Internal
Revenue Code in either case in an amount in excess of $25,000.00;
(ii) make full payment when due of all amounts which, under
the provisions of any Plan or ERISA, the Borrower, any such Subsidiary
or any ERISA Affiliate of any of same is required to pay as
contributions thereto;
(iii) all applicable provisions of the Internal Revenue Code
and the regulations promulgated thereunder, including but not limited
to Section 412 thereof, and all applicable rules, regulations and
interpretations of the Accounting Principles Board and the Financial
Accounting Standards Board;
(iv) not fail to make any payments in an aggregate amount
greater than $25,000.00 to any Multiemployer Plan that the Borrower,
any such Subsidiary or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto; or
(v) not take any action regarding any Plan which could result
in the occurrence of a Prohibited Transaction.
(k) Licenses. Maintain at all times, and cause each Subsidiary to
maintain at all times, all licenses or permits necessary to the conduct of its
business or as may be required by any governmental agency or instrumentality
thereof.
(l) New Subsidiaries; Safe Com. (i) Cause any Subsidiary of the
Borrower or a Guarantor formed after the date of this Agreement to become a
Guarantor of all obligations of the Borrower to the Bank, whether incurred under
this Agreement or otherwise.
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(ii) In the event that, at any time after the date hereof, Safe
Com owns any assets or conducts any business, cause Safe Com to become a
Guarantor of all obligations of the Borrower to the Bank, whether incurred under
this Agreement or otherwise.
(m) Banking Relationship. Maintain its primary banking and depository
relationship with the Bank.
(n) Pledge Agreement. In the event that the Borrower makes a loan or
loans to ________________, the principal of Xxxxxxx Xxxxxxxx, Inc., deliver to
the Bank as additional Collateral, the original note(s) evidencing such loan(s),
together with a pledge agreement applicable to such note(s) in form and
substance reasonably satisfactory to the Bank, together with such other
instruments, documents and agreements as the Bank may reasonably request in
connection with such loan(s).
SECTION 5.02. Negative Covenants. So long as any amount shall remain
outstanding under any Term Loan Note or the Revolving Credit Note, or so long as
the Commitment shall remain in effect, neither the Borrower nor any Guarantor
will, without the written consent of the Bank:
(a) Liens, Etc. Create, incur, assume or suffer to exist, any Lien,
upon or with respect to any of its properties, now owned or hereafter acquired,
except:
(i) Liens in favor of the Bank;
(ii) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if due and payable if they are
being contested in good faith by appropriate proceedings and for which
appropriate reserves are maintained;
(iii) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due or which are being contested in good faith by appropriate proceedings
and for which appropriate reserves have been established;
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(iv) Liens under workers' compensation, unemployment
insurance, Social Security, or similar legislation;
(v) Liens, deposits, or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(vi) Liens described in Schedule 5.02(a), provided that no
such Liens shall be renewed, extended or refinanced;
(vii) Judgment and other similar Liens arising in connection
with court proceedings (other than those described in Section 6.01(g)), provided
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(viii) Easements, rights-of-way, restrictions, and other
similar encumbrances which, in the aggregate, do not materially interfere with
the Borrower's occupation, use and enjoyment of the property or assets
encumbered thereby in the normal course of its business or materially impair the
value of the property subject thereto;
(ix) Purchase money Liens on any property hereafter acquired
or the assumption of any Lien on property existing at the time of such
acquisition, or a Lien incurred in connection with any conditional sale or other
title retention agreement or a Capital Lease, provided that:
(1) Any property subject to any of the foregoing is acquired
by the Borrower in the ordinary course of its respective business and the Lien
on any such property is created contemporaneously with such acquisition;
(2) The obligation secured by any Lien so created, assumed,
or existing shall not exceed one hundred (100%) percent of lesser of cost or
fair market value of the property acquired as of the time of the Borrower
acquiring the same;
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(3) Each such Lien shall attach only to the property so
acquired and fixed improvements thereon;
(4) The Debt secured by all such Liens shall not exceed
$100,000.00 at any time outstanding in the aggregate; and
(5) The obligation secured by such Lien is permitted by the
provisions of Section 5.02(b) and the related expenditure is permitted by the
provisions of Section 5.03(c).
(b) Debt. Create, incur, assume, or suffer to exist, any Debt, except:
(i) Debt of the Borrower under this Agreement or the Notes or
any other Debt of the Borrower or the Guarantors owing to the Bank;
(ii) Debt described in Schedule 5.02(b), provided that no such
Debt shall be renewed, extended or refinanced;
(iii) Subordinated Debt;
(iv) Accounts payable to trade creditors for goods or services
which are not aged more than ninety (90) days from billing date and current
operating liabilities (other than for borrowed money) which are not more than
ninety (90) days past due, in each case incurred in the ordinary course of
business and paid within the specified time, unless contested in good faith and
by appropriate proceedings;
(v) Debt of the Borrower secured by purchase money Liens
permitted by Section 5.02(a)(ix).
(c) Lease Obligations. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except (i) Capital Leases permitted by Section 5.02(a), or (ii) leases existing
on the date of this Agreement and any extensions or renewals thereof and other
leases entered into after the date of this Agreement (other than Capital Leases)
which do not in the aggregate require the Borrower to make payments (including
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taxes, insurance, maintenance, and similar expenses which the Borrower is
required to pay under the terms of any lease) in any fiscal year of the Borrower
in excess of $250,000.00.
(d) Merger. Merge into, or consolidate with or into, or have merged
into it, any Person; and, for the purpose of this subsection (d), the
acquisition or sale by the Borrower by lease, purchase or otherwise, of all, or
substantially all, of the common stock or the assets of any Person or of it
shall be deemed a merger of such Person with the Borrower. Notwithstanding the
foregoing, (i) the Borrower and/or HCI shall be permitted to acquire the assets
of Xxxxxxx Xxxxxxxx, Inc, and (ii) the Borrower and any Guarantor shall be
permitted to merge with each other.
(e) Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise
dispose of any of its assets, (including a saleleaseback transaction) with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business; and (ii) the sale or other disposition of assets no longer used or
useful in the conduct of its business.
(f) Investments, Etc. Make any Investment other than Permitted
Investments and the acquisitions set forth on Schedule 5.02(f) hereof.
(g) Transactions With Affiliates. Except in the ordinary course of
business and pursuant to the reasonable requirements of the Borrower's or a
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Borrower or the Subsidiary than would be obtained in a comparable arm's
length transaction with a Person not an Affiliate, enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate.
(h) Intentionally omitted.
(i) Guarantees. Guaranty, or in any other way become directly or
contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the endorsement of negotiable instruments
for deposit in the ordinary course of business; or (ii) guarantees existing on
the date hereof and set forth in Schedule 5.02(i) annexed hereto.
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(j) Change of Business. Materially alter the nature of its business
except as provided in Schedule 5.02(j) hereof.
(k) Fiscal Year. Change the ending date of its fiscal year from
December 31.
(l) Intentionally Omitted.
(m) Accounting Policies. Change any accounting policies, except as
permitted by GAAP.
(n) Change of Tax Status. Change its tax reporting status as a
sub-chapter C corporation.
(o) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such,
whether in cash, assets, or in obligations of the Borrower; or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock; or make any other distribution by reduction of capital or otherwise in
respect of any share of its capital stock. Notwithstanding the foregoing, (i)
the Borrower shall be permitted to pay dividends on its capital stock for each
fiscal year in an amount not exceeding the lesser of (x) $300,000.00, or (y)
five ($.05) cents per share, and (ii) for any fiscal year during which Borrower
is an electing S corporation for federal income tax purposes, it may declare and
pay cash dividends out of its net income for the current or preceding fiscal
year, provided however that no such dividend may be paid which would result in
the Borrower failing to meet the requirements of Section 5.03 hereof.
(p) Hazardous Material. The Borrower, each Guarantor and each
Subsidiary of the Borrower shall not cause or permit any property owned or
occupied by the Borrower, any Guarantor or any such Subsidiary to be used to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in compliance with all
applicable federal, state and local laws or regulations nor shall the Borrower,
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any Guarantor or any such Subsidiary cause or permit, as a result of any
intentional or unintentional act or omission on the part of the Borrower, any
Guarantor or any such Subsidiary or any tenant or subtenant, a release of
Hazardous Materials onto any property owned or occupied by the Borrower, any
Guarantor or any such Subsidiary or onto any other property. The Borrower, each
Guarantor and each such Subsidiary shall not fail to comply with all applicable
federal, state and local laws, ordinances, rules and regulations, whenever and
by whomever triggered, and shall not fail to obtain and comply with, any and all
approvals, registrations or permits required thereunder. The Borrower and the
Guarantors shall execute any documentation required by the Bank in connection
with the representations, warranties and covenants contained in this paragraph
and Section 4.01 of this Agreement.
(q) Treasury Stock Purchases. Purchase treasury stock of the Borrower
in the aggregate amount of greater than $250,000.00 during any fiscal year.
(r) Loans or Advances to Employees. Make loans or other advances to the
Borrower's employees, officers or management in excess of $25,000.00 in the
aggregate during any fiscal year.
(s) Loans to ______________. Make loans to _________________, the
principal of Xxxxxxx Xxxxxxxx, Inc. in excess of $175,000.00 in the aggregate in
connection with said acquisition.
SECTION 5.03. Financial Requirements. So long as any amount shall
remain outstanding under any Term Loan Note or the Revolving Credit Note or so
long as the Commitment shall remain in effect:
(a) Leverage Ratio. The Borrower will maintain at all times a ratio of
Total Unsubordinated Liabilities to Capital Base of not greater than 0.75 to
1.0, to be tested quarterly as of the last day of each fiscal quarter.
(b) Capital Base. The Borrower shall maintain at all times a minimum
Capital Base of at least $9,000,000.00, to be tested quarterly as of the last
day of each fiscal quarter.
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(c) Debt Service Coverage Ratio. The Borrower shall maintain at all
times a minimum Debt Service Coverage Ratio, the ratio of (i) for the 12 months
then ended, net income plus depreciation and amortization expense plus interest
expense to (ii) the current portion of long term Debt plus interest expense for
the 12 months then ended (each calculated in accordance with GAAP) of at least
1.20 to 1.0, to be tested quarterly as of the last day of each fiscal quarter.
(d) Current Ratio. The Borrower shall maintain at all times a ratio of
Current Assets to Current Liabilities of at least 1.40 to 1.0.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of principal of, or
interest on, any Term Loan Note or the Revolving Credit Note when due or any
fees or other amounts owed in connection with this Agreement; or
(b) Any representation or warranty made by the Borrower or any
Guarantor herein or in the Loan Documents or which is contained in any
certificate, document, opinion, or financial or other statement furnished at any
time under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made; or
(c) The Borrower or any Guarantor shall fail to perform or observe any
term, covenant, or agreement contained in Section 5.01 of this Agreement within
five (5) days of the date required for such performance; or
(d) The Borrower or any Guarantor shall fail to perform or observe any
other term, covenant, or agreement contained in this Agreement in any other Loan
Document (other than the Notes) on its part to be performed or observed beyond
any applicable grace or cure period; or
(e) The Borrower, any Guarantor, or any Subsidiary of the Borrower
shall fail to pay any Debt (excluding Debt evidenced by any Term Loan Note or
the Revolving Credit Note) of the Borrower, any Guarantor or any such Subsidiary
(as the case may be), or any interest or premium thereon, when due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
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such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other default under
any agreement or instrument relating to any such Debt, or any other event shall
occur and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or
(f) The Borrower, any Guarantor or any Subsidiary of the Borrower shall
generally not pay its Debts as such Debts become due, or shall admit in writing
its inability to pay its Debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Borrower, any Guarantor or any such Subsidiary seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its Debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property and if instituted against the Borrower, any Guarantor or any
such Subsidiary shall remain undismissed for a period of 60 days; or the
Borrower, any Guarantor or any such Subsidiary shall take any action to
authorize any of the actions set forth above in this subsection (e); or
(g) Any judgment or order or combination of judgments or orders for the
payment of money, in excess of $50,000.00 in the aggregate, which sum shall not
be subject to full, complete and effective insurance coverage, shall be rendered
against the Borrower, any Guarantor or any Subsidiary of the Borrower and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 60 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
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(h) Any Guarantor shall fail to perform or observe any term or
provision of its Guaranty or any representation or warranty made by any
Guarantor (or any of its officers or partners) in connection with such
Guarantor's Guaranty shall prove to have been incorrect in any material respect
when made; or
(i) Any of the following events occur or exist with respect to the
Borrower, any Subsidiary of the Borrower, or any ERISA Affiliate: (i) any
Prohibited Transaction involving any Plan; (ii) any Reportable Event with
respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution of the PBGC
of any such proceedings; (v) complete or partial withdrawal under Section 4201
or 4204 of ERISA from a Multiemployer Plan or the reorganization insolvency, or
termination of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, could in the
opinion of the Bank subject the Borrower, any such Subsidiary or any ERISA
Affiliate to any tax, penalty, or other liability to a Plan, a Multiemployer
Plan, the PBGC, or otherwise (or any combination thereof) which in the aggregate
exceeds or may exceed $50,000.00; or
(j) This Agreement or any other Loan Document, at any time after its
execution and delivery and for any reason, ceases to be in full force and effect
or shall be declared to be null and void, or the validity or enforceability of
any document or instrument delivered pursuant to this Agreement shall be
contested by the Borrower, any Guarantor or any party to such document or
instrument or the Borrower, any Guarantor or any party to such document or
instrument shall deny that it has any or further liability or obligation under
any such document or instrument; or
(k) An event of default specified in any Loan Document other than this
Agreement shall have occurred and be continuing.
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SECTION 6.02. Remedies on Default. Upon the occurrence and continuance
of an Event of Default the Bank may by written notice to the Borrower, (i)
terminate the Commitment, (ii) declare the Term Loan Notes, the Revolving Credit
Note, all interest thereon and all other amounts payable under this Agreement to
be forthwith due and payable, whereupon the Commitment shall be terminated, the
Term Loan Notes, the Revolving Credit Note, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower and (ii) proceed to enforce its rights whether by suit in
equity or by action at law, whether for specific performance of any covenant or
agreement contained in this Agreement or any Loan Document, or in aid of the
exercise of any power granted in either this Agreement or any Loan Document or
proceed to obtain judgment or any other relief whatsoever appropriate to the
enforcement of its rights, or proceed to enforce any other legal or equitable
right which the Bank may have by reason of the occurrence of any Event of
Default hereunder or under any Loan Document, provided, however, upon the
occurrence of an Event of Default referred to in Section 6.01(e), the Commitment
shall be immediately terminated, the Term Loan Notes, the Revolving Credit Note,
all interest thereon and all other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
Any amounts collected pursuant to action taken under this Section 6.02 shall be
applied to the payment of, first, any costs incurred by the Bank in taking such
action, including but without limitation attorneys fees and expenses, second, to
payment of the accrued interest on the Term Loan Notes and the Revolving Credit
Note, and third, to payment of the unpaid principal of the Term Loan Notes and
the Revolving Credit Note.
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or reserved
to the Bank hereunder or in any Loan Document is intended to be exclusive of any
other available remedy, but each and every such remedy shall be cumulative and
in addition to every other remedy given under this Agreement or any Loan
Document or now or hereafter existing at law or in equity. No delay or omission
to exercise any right or power accruing upon any Event of Default shall impair
any such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as may be
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deemed expedient. In order to entitle the Bank to exercise any remedy reserved
to it in this Article VI, it shall not be necessary to give any notice, other
than such notice as may be herein expressly required in this Agreement or in any
Loan Document.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment, modification, termination
or waiver of any provision of any Loan Document to which the Borrower or any
Guarantor is a party, nor consent to any departure by the Borrower or any
Guarantor from any provision of any Loan Document to which it is a party, shall
in any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 7.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and mailed, telegraphed, sent by facsimile or delivered, if to the Borrower or
any Guarantor, at the address of the Borrower set forth at the beginning of this
Agreement and if to the Bank, at the address of the Bank set forth at the
beginning of this Agreement to the attention of Xxxxxxx Xxxxxxxxxx, V.P., or, as
to each party, at such other address as shall be designated by such party in a
written notice complying as to delivery with the terms of this Section 7.02 to
the other parties. Any notice shall be conclusively deemed to have been received
by a party hereto and to be effective on the day on which delivered to such
party in the manner set forth above if hand delivered or sent by Federal Express
or other reputable courier of national reputation, or if sent by registered or
certified mail, on the third business day after the day on which mailed in the
United States, addressed to such party.
SECTION 7.03. No Waiver, Remedies. No failure on the part of the Bank
to exercise, and no delay in exercising, any right, power or remedy under any
Loan Document, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any remedies
provided by law.
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SECTION 7.04. Costs, Expenses and Taxes. The Borrower agrees to pay on
demand all costs and expenses of the Bank in connection with the preparation,
execution, delivery and administration of this Agreement, the Notes and any
other Loan Documents, including, without limitation, the reasonable fees and
expenses of counsel for the Bank with respect thereto and with respect to
advising the Bank as to its rights and responsibilities under this Agreement,
and all costs and expenses, if any (including reasonable counsel fees and
expenses), in connection with the enforcement of this Agreement, the Notes and
any other Loan Documents. The Borrower and the Guarantors shall at all times
protect, indemnify, defend and save harmless the Bank from and against any and
all claims, actions, suits and other legal proceedings, and liabilities,
obligations, losses, damages, penalties, judgments, costs, expenses or
disbursements which the Bank may, at any time, sustain or incur by reason of or
in consequence of or arising out of the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby. The Borrower and
the Guarantors acknowledge that it is the intention of the parties hereto that
this Agreement shall be construed and applied to protect and indemnify the Bank
against any and all risks involved in the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, all of
which risks are hereby assumed by the Borrower and the Guarantors, including,
without limitation, any and all risks of the acts or omissions, whether rightful
or wrongful, of any present or future de jure or de facto government or
governmental authority, provided that the Borrower and the Guarantors shall not
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Bank's gross negligence or willful misconduct. The provisions of this
Section 7.04 shall survive the payment of the Notes and the termination of this
Agreement.
SECTION 7.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank or
any affiliate of the Bank to or for the credit or the account of the Borrower or
any Guarantor against any and all of the obligations of the Borrower or any
Guarantor now or hereafter existing under this Agreement and the Term Loan Notes
and the Revolving Credit Note irrespective of whether or not the Bank shall have
made any demand under this Agreement or the Term Loan Notes, or the Revolving
Credit Note and although such obligations may be unmatured. The rights of the
Bank under this Section are in addition to all other rights and remedies
(including, without limitation, other rights of set-off) which the Bank may
have.
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SECTION 7.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Guarantors and the Bank
and thereafter it shall be binding upon and inure to the benefit of the
Borrower, the Guarantors and the Bank and their respective successors and
assigns, except that neither the Borrower nor any Guarantor shall have any right
to assign its rights hereunder or any interest herein without the prior written
consent of the Bank.
SECTION 7.07. Further Assurances. The Borrower and each Guarantor agree
at any time and from time to time at its expense, upon request of the Bank or
its counsel, to promptly execute, deliver, or obtain or cause to be executed,
delivered or obtained any and all further instruments and documents and to take
or cause to be taken all such other action the Bank may deem desirable in
obtaining the full benefits of, this Agreement or any other Loan Document.
SECTION 7.08. Section Headings, Severability, Entire Agreement. Section
and subsection headings have been inserted herein for convenience only and shall
not be construed as part of this Agreement. Every provision of this Agreement
and each Loan Document is intended to be severable; if any term or provision of
this Agreement, any Loan Document, or any other document delivered in connection
herewith shall be invalid, illegal or unenforceable for any reason whatsoever,
the validity, legality and enforceability of the remaining provisions hereof or
thereof shall not in any way be affected or impaired thereby. All exhibits and
schedules to this Agreement shall be annexed hereto and shall be deemed to be
part of this Agreement. This Agreement and the exhibits and schedules attached
hereto embody the entire Agreement and understanding between the Borrower, the
Guarantors and the Bank and supersede all prior agreements and understandings
relating to the subject matter hereof.
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SECTION 7.09. Governing Law. This Agreement, the Term Loan Notes, the
Revolving Credit Note and all other Loan Documents shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 7.10. Waiver of Jury Trial. The Borrower, each Guarantor and
the Bank waive all rights to trial by jury on any cause of action directly or
indirectly involving the terms, covenants or conditions of this Agreement or any
Loan Document.
SECTION 7.11. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
SECTION 7.12. Amended and Restated Agreement. This Agreement amends and
replaces that certain Loan Agreement dated as of April 28, 1998 between the
Borrower and the Bank, which agreement has heretofore been amended pursuant to a
First Amendment dated as of June 7, 1999 and a Second Amendment dated as of
August 18, 2000 (as so amended, the "Prior Agreement"). In the event of any
conflict between this Agreement and the Prior Agreement, the provisions of this
Agreement shall govern.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AMERICAN MEDICAL ALERT CORP.
By: /s/ Xxxx Rhian
----------------------------------------
Xxxx Rhian
Vice President - Operations
HCI ACQUISITION CORP.
By: /s/ Xxxx Rhian
----------------------------------------
Xxxx Rhian
Secretary
EUROPEAN AMERICAN BANK
By: /s/ Xxxxxxx Xxxxxxxxxx
----------------------------------------
Xxxxxxx Xxxxxxxxxx
Vice President
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