REVOLVING CREDIT AGREEMENT
BETWEEN
ELTRAX SYSTEMS, INC., NORDATA, INC. (d/b/a DATATECH), AND
CERTAIN BORROWING SUBSIDIARIES, AS THE BORROWERS
AND
STATE STREET BANK AND TRUST COMPANY, AS THE BANK
DATED AS OF
OCTOBER ___, 1996
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT (this "Agreement") is made as of October
____, 1996, by and between ELTRAX SYSTEMS, INC., a Minnesota corporation
("Eltrax") having its principal place of business at Rush Lake Business Park,
0000 Xxx Xxxxxxx 0, Xxxxx Xxxx, XX 00000, NORDATA, INC., a California
corporation doing business as DATATECH ("Datatech"), having its principal place
of business at 00000X Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx Xxxxxxxxxx, XX 00000
and certain Borrowing Subsidiaries (as defined in Section 1 hereof), which may
hereafter become parties hereto in accordance with the provisions of Section
6(u) hereof (Eltrax, Datatech and the Borrowing Subsidiaries are referred to
individually as the "Borrower" and collectively as the "Borrowers"), and STATE
STREET BANK AND TRUST COMPANY (the "Bank"), a Massachusetts trust company with
its principal office at 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000.
WHEREAS, the Borrowers desire to obtain from the Bank a $5,000,000
revolving line of credit; and
WHEREAS, the Bank is willing to make available a $5,000,000 line of credit
to the Borrowers on the terms and conditions set forth herein;
NOW, THEREFORE, the Borrowers, jointly and severally, and the Bank hereby
agree as follows:
1. DEFINITIONS:
(a) Certain capitalized terms are defined below:
ACCOUNTANTS: Coopers & Xxxxxxx, LLP, or another accounting firm of
national reputation or other certified public accountants which may hereafter be
selected by the Borrower and approved by the Bank.
ACCOUNTS: All rights of the Borrower to any payment of money for
services provided, goods sold or otherwise marketed by the Borrower, whether
evidenced by or under or in respect of a contract or instrument, and to all
proceeds in respect thereof.
ACQUISITION: The acquisition by one or more Borrowers of any Person
(whether by stock purchase, asset acquisition, merger or consolidation).
AFFILIATE: Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity that would be
considered to be an affiliate of the Borrower under Rule 144(a) of the Rules and
Regulations of the Securities and Exchange Commission, as in effect on the date
hereof, if the Borrower were issuing securities.
BORROWER: As defined in the Preamble to this Agreement.
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BORROWING BASE: An amount equal to the sum of eighty (80%) percent of
the Eligible Accounts plus the lesser of (a) $1,500,000 and (b) thirty (30%)
percent of the Eligible Inventory.
BORROWING BASE CERTIFICATE: The Borrowing Base Certificate in the form
of EXHIBIT A hereto, appropriately completed by the Borrowers as of the
applicable period.
BORROWING SUBSIDIARIES: Any direct or indirect subsidiaries of
Eltrax, Datatech or any other Borrower which hereafter became a party hereto in
accordance with the provisions of Section 6(u) hereof.
BUSINESS DAY: Any day on which banks in Boston, Massachusetts are
open for business generally.
CAPITAL EXPENDITURES: All acquisitions of machinery, equipment, land,
leaseholds, buildings, leasehold improvements and all other expenditures for
purposes which are considered to be fixed assets under GAAP. When a fixed asset
is acquired by a lease which is required to be capitalized pursuant to GAAP, the
amount required to be so capitalized shall be considered to be an expenditure in
the year such asset is first leased.
CAPITALIZED LEASES: In respect of any leases under which the Borrower
is the lessee or obligor, the discounted future rental payment obligations under
which are required to be capitalized on the balance sheet of the Borrower in
accordance with GAAP.
CHARTER DOCUMENTS: In respect of any entity, the certificate or
articles of incorporation or organization and the by-laws of such entity, or
other constitutive documents of such entity.
CLOSING DATE: The first date on which the conditions set forth in
Section 5(a) have been satisfied and any Revolving Credit Loans are to be made.
COMMITMENT: The obligation of the Bank to make Revolving Credit Loans
to the Borrowers up to an aggregate outstanding principal amount not to exceed
the Commitment Amount.
COMMITMENT AMOUNT: $5,000,000.
COMMITMENT FEE: See Section 2(d).
COMPLIANCE CERTIFICATE: The Certificate in the form of EXHIBIT B
hereto, appropriately completed by the Borrowers as of the applicable period.
CONSENT: In respect of any person or entity, any permit, license or
exemption from, approval, consent of, registration or filing with any local,
state or federal governmental or regulatory agency or authority, required under
applicable law.
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CONSOLIDATED OR CONSOLIDATING: With reference to any term defined
herein, shall mean that term as applied to the accounts of Eltrax and its
Subsidiaries, consolidated or consolidating in accordance with GAAP.
CONVERSION REQUEST: See Section 2(c).
DEFAULT: An event or act which, with the giving of notice and/or the
lapse of time, would become an Event of Default.
DRAWDOWN DATE: In respect of any Loan or advance, the date on which
such Loan or advance is made to the Borrowers.
EBITDA: For any period in respect of which the amount thereof shall
be determined, the sum of (i) the Net Income or Net Loss of any Person for such
period plus (ii) the aggregate amounts deducted by such Person in determining
Net Income or Net Loss for such period in respect of (A) interest expense, (B)
income taxes and (C) depreciation and amortization.
ELIGIBLE ACCOUNTS: Each of the Accounts owing to any Borrower which
meets the following specifications at the time it came into existence and
continues to meet the same until it is collected in full:
(i) The original stated maturity of the Account is not more than
sixty (60) days after the invoice date thereof, and the Account (regardless
of its stated maturity date) does not remain unpaid more than sixty (60)
days after such invoice date.
(ii) The Account arose from the performance of services or an
outright sale of goods by the Borrower, such goods have been shipped to the
Account debtor, and the Borrower has possession of, or has delivered to
Bank, shipping and delivery receipts evidencing such shipment.
(iii) The Account is owned solely by the Borrower, and is not
subject to any assignment, claim, lien, or security interest, other than a
valid and duly perfected security interest and lien in favor of the Bank.
(iv) The Account is not subject to set-off, credit, allowance or
adjustment by the Account debtor, except discount allowed for prompt
payment, and the Account debtor has not complained as to his liability
thereon and has not returned any of the goods from the sale from which the
Account arose.
(v) The Account arose in the ordinary course of Borrower's
business and did not arise from the performance of services or a sale of
goods to a supplier or employee of any of the Borrower.
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(vi) No notice of bankruptcy or insolvency of the Account debtor
has been received by or is known to the Borrower.
(vii) The Borrower has pledged any instrument or chattel paper
evidencing the Account to the Bank pursuant to the provisions of the
Security Agreement.
(viii) The Account does not result from goods being placed with the
Account debtor by the Borrower on a trial basis.
(ix) The Account is not a result of an inter-company transfer by
the Borrower.
(x) The Borrower does not owe any amounts to the Account debtor;
to the extent that any amounts are so owed, the Accounts of such Account
debtor in an amount equal to the amounts owed by the Borrower to the
Account debtor shall be disqualified.
(xi) The Bank has not notified the Borrower that the Bank has
determined that an Account or Account debtor is unsatisfactory for credit
reasons (which determination shall not be made unreasonably).
(xii) The Account debtor is a person or entity located in the
United States and the Account arose out of services rendered or goods
delivered in the United States.
ELIGIBLE INVENTORY: Inventory (i) which is owned, possessed and held
for sale by any Borrower within the United States but not yet shipped to
customers, (ii) as to which (with respect to Inventory located in the United
States) a valid and perfected first-priority lien in favor of the Bank has been
created and on which there is no other Lien, and (iii) which the Bank deems
neither obsolete nor unmarketable.
ENVIRONMENTAL LAWS: All federal, state, local and foreign laws, and
all regulations, notices or demand letters issued, promulgated or entered
thereunder, relating to pollution or protection of the environment and to
occupational health and safety, including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or Hazardous Substances into the environment
(including, without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, chemicals or Hazardous Substances.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended, and all rules, regulations, judgments, decrees, and orders arising
thereunder.
EVENT OF DEFAULT: Any of the events listed in Section 7 hereof.
FINANCIAL COVENANTS: The financial covenants set forth in Section
6(r) hereof.
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GAAP: Generally accepted accounting principles consistent with those
adopted by the Financial Accounting Standards Board and its predecessor,
generally, as in effect from time to time, and consistently applied.
GOVERNMENTAL AUTHORITY: Any federal, state, municipal or other
governmental department, commission, board, bureau, agency, court, tribunal or
other instrumentality, domestic or foreign, and any arbitrator.
GUARANTY: By any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guarantying any Indebtedness or
other obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guaranty" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guaranty"
used as a verb has a corresponding meaning.
HAZARDOUS SUBSTANCES: All hazardous and toxic substances, wastes or
materials, hydrocarbons (including naturally occurring or man-made petroleum and
hydrocarbons), flammable explosives, urea formaldehyde insulation, asbestos,
radioactive materials, biological substances, PCBs, pesticides, herbicides and
any other kind and/or type of pollutants, or contaminants and/or any other
similar substances or materials which, because of toxic, flammable, explosive,
corrosive, reactive, radioactive or other properties that may be hazardous to
human health or the environment, are included under or regulated by any
Environmental Laws.
INDEBTEDNESS: Of any Person at any date shall mean, (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (excluding current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices, but including any class of capital stock of such Person with fixed
payment obligations or with redemption at the option of the holder), or which is
evidenced by a note, bond, debenture or similar instrument, (ii) all obligations
of such Person under leases that should be treated as capitalized leases in
accordance with GAAP, (iii) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, and all
reimbursement obligations (contingent or otherwise) of such Person in respect of
any letters of credit issued for the account of such Person, and (iv) all
liabilities secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof.
INTEREST PAYMENT DATE: (i) As to any Prime Rate Loan, the last day of
the calendar month which includes the Drawdown Date thereof; and (ii) as to any
Libor Rate Loan in respect of which the Interest Period is (A) 3 months or less,
the last day of such Interest Period and (B)
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more than 3 months, the date that is 3 months from the first day of such
Interest Period and, in addition, the last day of such Interest Period.
INTEREST PERIOD: With respect to each Loan,
(i) Initially, the period commencing on the Drawdown Date of
such Loan and ending on the last day of one of the periods set forth below,
as selected by the Borrower at the time of the request for the Loan or in a
Conversion Request (A) for any Prime Rate Loan, the last day of the
calendar month; and (B) for any Libor Rate Loan, 1, 2, 3 or 6 months; and
(ii) Thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Loan and ending on the
last day of one of the periods set forth above, as selected by the Borrower
in a Conversion Request; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(A) if any Interest Period with respect to a Libor Rate
Loan would otherwise end on a day that is not a Libor Business Day,
that Interest Period shall be extended to the next succeeding Libor
Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Libor Business
Day;
(B) if any Interest Period with respect to a Prime Rate
Loan would end on a day that is not a Business Day, that Interest
Period shall end on the next succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided
in Section 2(c), the Borrower shall be deemed to have requested a
conversion of the affected Libor Rate Loan to a Prime Rate Loan on the
last day of the then current Interest Period with respect thereto;
(D) any Interest Period relating to any Libor Rate Loan
that begins on the last Libor Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Libor Business Day of a calendar month; and
(E) any Interest Period relating to any Libor Rate Loan
that would otherwise extend beyond the Maturity Date shall end on the
Maturity Date.
INVENTORY: All goods, merchandise and other personal property, now
owned or hereafter acquired by the Borrower, which are held for sale or are raw
materials, work in process, or materials used in the Borrower's business.
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INVESTMENTS: With respect to any Person (the "Investor"), (i) any
investment by the Investor in any other Person, whether by means of share
purchase, capital contribution, purchase or other acquisition of a partnership
or joint venture interest, loan, time deposit, demand deposit or otherwise and
(ii) any Guaranty by the Investor of any Indebtedness or other obligation of any
other Person.
LIBOR RATE: The rate of interest obtained by dividing (i) the
quotation offered to the Bank in the London interbank market for U.S. dollar
deposits of amounts in immediately available funds comparable to the principal
amount of the portion of the Loans for which the Libor Rate is being determined
with a maturity comparable to the interest period for which such Libor Rate will
apply as of approximately noon (Boston time) three (3) Business Days prior to
the commencement of such interest period by (ii) a percentage equal to 100%
minus the Libor Reserve Rate.
LIBOR RATE LOAN: All or any portion of a Loan bearing interest
calculated by reference to the Libor Rate.
LIBOR RESERVE RATE: For any day with respect to a Libor Rate Loan,
the maximum rate (expressed as a decimal) at which any lender subject thereto
would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulations
relating to such reserve requirements) against "Libor Liabilities" (as that term
is used in Regulation D), if such liabilities were outstanding. The Libor
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in the Libor Reserve Rate.
LIEN: Any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement, any lease
that should be capitalized in accordance with GAAP, and the filing of a
financing statement under the Uniform Commercial Code or comparable law of any
jurisdiction).
LOAN DOCUMENTS: This Agreement, the Revolving Credit Note, the
Security Documents, and all other agreements and instruments that are from time
to time executed in connection with this Agreement, in each case as from time to
time amended, modified or supplemented.
LOANS: The Prime Rate Loans and the Libor Rate Loans.
MATERIAL ADVERSE EFFECT: A material adverse effect on (i) the
business, operations, property, condition (financial or otherwise) or prospects
of any Borrower or of the Borrowers taken as a whole, (ii) the ability of any
Borrower to perform its Obligations to the Bank, under this Agreement, the
Revolving Credit Note, any of the other Loan Documents, or any other agreement
with the Bank, (iii) the validity or enforceability of this Agreement, the
Revolving Credit Note or any of the other Loan Documents, or the rights or
remedies of the Bank hereunder
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or thereunder, or (iv) the right of the Bank to enforce the payment of Accounts
against Account debtors in any particular state.
MATURITY DATE: October 31, 1998.
NET INCOME OR NET LOSS: For any period in respect of which the amount
thereof shall be determined, shall mean the aggregate of the consolidated net
income (or net loss) after taxes for such period (taken as a cumulative whole)
of the Borrowers and their subsidiaries, determined in accordance with GAAP,
exclusive of the write-up of any asset.
NET WORTH: For any Person, on any measurement date, the difference
between the Total Assets and Total Liabilities of such Person.
OBLIGATIONS: All indebtedness, obligations and liabilities of the
Borrower to the Bank, existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, including, without limitation, all
obligations of the Borrower arising or incurred under this Agreement or any
other Loan Document or in respect of any of the Loans or the Revolving Credit
Note or other instruments at any time evidencing any thereof.
PBGC: The Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
PERSON: Includes any individual, firm, corporation, trust or other
unincorporated organization or association or other enterprise or any government
or political subdivision, agency, department or instrumentality thereof.
PRIME RATE: The annual rate of interest announced from time to time
by the Bank at its principal office as the Bank's prime rate and as in effect
from time to time.
PRIME RATE LOAN: All or any portion of a Revolving Credit Loan
bearing interest calculated by reference to the Prime Rate.
PURCHASE MONEY INDEBTEDNESS: Indebtedness incurred to finance the
acquisition of assets or the cost of improvements on real property or
leaseholds, in each case in an amount not in excess of the lesser of (i) the
purchase price or acquisition cost of said assets or the cost of said
improvements and (ii) the fair market value of said assets or said improvements
on the date of acquisition of said assets or contract for said improvements.
RECORD: The records, including computer records, maintained by the
Bank with respect to any Loan referred to in any Revolving Credit Note.
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REQUIREMENT OF LAW: In respect of any person or entity, any law,
treaty, rule, regulation or determination of an arbitrator, court, or other
governmental authority, in each case applicable to or binding upon such person
or entity or affecting any of its property.
REVOLVING CREDIT FACILITY; See Section 2(a) hereof.
REVOLVING CREDIT LOANS: The Revolving Credit Loans made or to be made
by the pursuant to the provisions of Section 2(a) hereof.
SEC: The U.S. Securities and Exchange Commission.
SECURITY DOCUMENTS: (i) the Security Agreement between each Borrower
and the Bank substantially in the form of EXHIBIT C hereto, (ii) the Landlord's
Consent and Waiver of Lien substantially in the form of EXHIBIT D hereto, and
(iii) all documents and instruments required to be delivered pursuant to each of
the foregoing, in each case as amended and in effect from time to time.
STOCKHOLDER DISTRIBUTIONS: With respect to the Borrower or any
Subsidiary thereof, (i) any dividend or other distribution on any shares of
capital stock of any Borrower or their subsidiaries (except dividends payable
solely in shares of capital stock or rights to acquire capital stock of any
Borrower or any of its Subsidiaries, and dividends payable solely to any
Borrower), (ii) any payment on account of the purchase, redemption, retirement
or acquisition of (A) any shares of the capital stock of any Borrower or a
Subsidiary thereof or (B) any option, warrant, convertible security or other
right to acquire shares of the capital stock of any Borrower or a Subsidiary
thereof, other than, in either case, payments made solely to any Borrower, and
(iii) any required or optional payment of any principal of, or premium or
interest on, or any required or optional purchase, redemption or other
retirement or other acquisition of any Subordinated Indebtedness.
SUBORDINATED INDEBTEDNESS: Indebtedness which is expressly
subordinated and made junior to the payment and performance in full of the
Obligations, and evidenced as such by a written instrument containing
subordination provisions in form and substance approved by the Bank in writing.
SUBSIDIARY: With respect to any Person, any corporation or other
entity of which securities or other ownership interests have ordinary voting
power to elect a majority of the board of directors or other Persons performing
similar functions are at the time directly or indirectly owned by such Person.
TOTAL ASSETS: The total of all assets of a Person which, in
accordance with GAAP, would be included as assets on such Person's balance
sheet.
TOTAL LIABILITIES: The total of all liabilities and obligations of a
Person, including all Indebtedness, whether current or long-term, which in
accordance with GAAP would be included as liabilities on a balance sheet and
also including Guaranties, endorsements (other than for
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collection in the ordinary course of business) or other arrangements whereby
responsibility is assumed for the obligations of others, whether by agreement to
purchase or otherwise acquire the obligations of others, including any
agreement, contingent or otherwise, to furnish funds through the purchase of
goods, supplies or services for the purpose of payment of the obligations of
others.
TYPE: As to the Revolving Credit Loan or portion thereof its nature
as a Prime Rate Loan or a Libor Rate Loan.
WORKING CAPITAL: For any Person, Current Assets minus Current
Liabilities.
(b) ACCOUNTING TERMS. All accounting terms used and not defined in this
Agreement, and all financial calculations hereunder, shall be construed and
performed in accordance with GAAP, and all financial data required to be
delivered hereunder shall be prepared in accordance with GAAP.
2. LOAN FACILITY.
(a) REVOLVING CREDIT FACILITY.
(i) REVOLVING CREDIT LOANS. Upon the terms and subject to the
conditions of this Agreement, the Bank agrees to lend to the Borrowers such
sums that the Borrowers may request, from the date hereof until but not
including the Maturity Date, provided that the sum of the outstanding
principal amount of all Revolving Credit Loans (after giving effect to all
amounts requested) shall not exceed the lesser of (i) the Borrowing Base
and (ii) the Commitment Amount.
(ii) NOTICES. The Borrower shall notify the Bank in writing not
later than 10:00 a.m. (Boston time) on the date of the Revolving Credit
Loan being requested, if the Revolving Credit Loan is to be a Prime Rate
Loan, or at least three (3) Business Days prior to the date such Revolving
Credit Loan being requested, if the Revolving Credit Loan is to be a Libor
Rate Loan, of the Drawdown Date (which must be a Business Day) and the
principal amount of such Loan and the requested Type of Loan. Subject to
the foregoing, so long as the Commitment is then in effect and the
conditions set forth in Sections 5(a) and (b), as applicable, hereof have
been met, the Bank shall advance the amount requested to Eltrax's account
at the Bank in immediately available funds not later than the close of
business on such Drawdown Date.
(iii) REVOLVING CREDIT NOTE. The Revolving Credit Loans shall be
evidenced by a promissory note of the Borrowers in substantially the form
of EXHIBIT E hereto (the "Revolving Credit Note"), dated as of the date
hereof and completed with appropriate insertions, which Revolving Credit
Note shall be due and payable in full on the Maturity Date. The Borrowers
irrevocably authorize the Bank to make or cause to be made, at the time of
receipt of any advance on or payment of principal under the Revolving
Credit Note, an appropriate notation on the Bank's Record reflecting the
advance or receipt of
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such payment. The outstanding amount of the Revolving Credit Loans set forth on
the Bank's Record shall be prima facie evidence of the principal amount thereof
owing and unpaid to the Bank, but the failure to record, or any error in so
recording, any such amount on the Bank's Record shall not limit or otherwise
affect the obligations of the Borrowers hereunder or under the Revolving Credit
Note to make payments of principal of or interest on the Revolving Credit Note
when due.
(iv) PAYMENT ON MATURITY DATE. The Borrowers hereby agree to
pay the Bank on the Maturity Date the entire unpaid principal of and
interest on all Revolving Credit Loans.
(v) PREPAYMENT AND REPAYMENT. On and subject to the payments of
the amounts due, if any, under the provisions of Section 2(k) of this
Agreement, the Borrowers may repay or prepay the outstanding principal of
all or any part of any Revolving Credit Loan, by 10:00 a.m. (Boston time),
in the case of a Prime Rate Loan, or upon written notice given by 10:00
a.m. (Boston time) at least three (3) Business Days, in the case of a Libor
Rate Loan, prior to the date of such prepayment, of the amount to be
prepaid and the date of such prepayment. The Borrowers shall be entitled
to reborrow before the Maturity Date such repaid or prepaid amounts, upon
the terms and subject to the conditions of this Agreement.
(vi) EXCESS ADVANCES. If at any time the outstanding principal
amount of the Revolving Credit Loans shall exceed the Borrowing Base, the
Borrower shall immediately pay the amount of such excess to the Bank for
application to the Revolving Credit Loans.
(vii) USE OF PROCEEDS. The proceeds of the Revolving Credit Loans
will be used to provide working capital and funds for Acquisitions, to the
extent permitted pursuant to Section 6(n) hereof, to the Borrowers. No
part of such proceeds will be used for the purpose of purchasing or
carrying any "margin securities" as such term is defined in Regulation U of
the Board of Governors of the Federal Reserve System.
(b) INTEREST ON LOANS.
(i) To the extent that for any Interest Period, all or any
portion of a Revolving Credit Loan is a Prime Rate Loan, such Loan or
portion thereof, as applicable, shall bear interest during such
Interest Period at the Prime Rate plus one-half of one percent (1/2%)
per annum.
(ii) To the extent that for any Interest Period, all or any
portion of a Revolving Credit Loan is a Libor Rate Loan, such Loan or
portion thereof, as applicable, shall bear interest during such
Interest Period at a rate of 275 basis points above the Libor Rate
determined for such Interest Period.
(iii) The Borrower promises and agrees to pay interest on
each Loan in arrears on each Interest Payment Date at the rate applicable
to such Interest Period.
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(c) CONVERSION OPTIONS.
(i) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type, provided that (A) with respect
to any such conversion of a Loan from a Libor Rate Loan to a Prime Rate
Loan, the Borrower shall give the Bank at least three (3) Business Days'
prior written notice of such election (each a "Conversion Request"); and
such conversion shall only be made on the last day of the Interest Period
with respect thereto; and (B) with respect to such conversion of a Prime
Rate Loan to a Libor Rate Loan, the Borrower shall give the Bank at least
three (3) Business Days' prior written notice of such election and no Prime
Rate Loan may be converted into a Libor Rate Loan when any Default or Event
of Default has occurred and is continuing. All or any part of any
outstanding Prime Rate Loan may be converted to a Libor Rate Loan as
provided herein. In no event shall the aggregate outstanding principal
balance of all Libor Rate Loans exceed $2,500,000. All or any part of a
Libor Rate Loan may be converted to a Prime Rate Loan as provided herein.
Each Conversion Request relating to the conversion of a Prime Rate Loan to
a Libor Rate Loan shall be irrevocable by the Borrower.
(ii) Any Loans of any Type may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the notice provisions contained in Section 2(c)(i); PROVIDED
that no Libor Rate Loan may be continued as such when any Default or Event
of Default has occurred and is continuing, but shall be automatically
converted to a Prime Rate Loan on the last day of the first Interest Period
relating thereto ending during the continuance of any Default or Event of
Default of which the officers of the Bank active upon the Borrower's
account have actual knowledge.
(iii) In the event that the Borrowers do not notify the Bank of
their election hereunder with respect to any Loan, such Loan shall be
automatically converted to a Prime Rate Loan at the end of the applicable
Interest Period.
(d) FEES AND PAYMENTS.
(i) COMMITMENT FEE. At all times prior to termination of the
Commitment, the Borrowers shall pay to the Bank, a Commitment Fee of three-
eighths of one percent (3/8%) per annum of the difference between the amount of
the Commitment Amount and the sum of the daily average principal amount of the
Revolving Credit Loans outstanding from time to time. The Commitment Fee shall
be calculated quarterly in arrears commencing on December 31, 1996 (for the
period from the date hereof through December 31, 1996) and thereafter on the
last day of each calendar quarter and on any other date the Commitment is
terminated. The Commitment Fee shall be due and payable on the last day of each
quarter.
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(ii) PAYMENTS. All payments of principal, interest, Commitment
Fee and any other amounts due hereunder or under any of the other Loan
Documents shall be made to the Bank at its principal office at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or at such other location that the
Bank may from time to time designate, in each case in immediately available
funds.
(iii) NO SET OFF, ETC. All payments by the Borrowers hereunder
and under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes,
levies, imposes, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof
or taxing or other authority therein unless the Borrowers are compelled by
law to make such deduction or withholding. If any such obligation is
imposed upon the Borrowers with respect to any amount payable by it
hereunder or under any of the other Loan Documents, the Borrowers will pay
to the Bank, on the date on which such amount is due and payable hereunder
or under such other Loan Document, such additional amount in Dollars as
shall be necessary to enable the Bank to receive the same net amount which
the Bank would have received on such due date had no such obligation been
imposed upon the Borrowers. The Borrowers will deliver promptly to the
Bank certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
(e) COMPUTATIONS. All computations of interest on the Loans and of other
fees to the extent applicable shall be based on a 360-day year and paid for the
actual number of days elapsed. Except as otherwise provided in the definition
of the term "Interest Period" with respect to Libor Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and interest shall accrue during such
extension. The outstanding amount of the Loans as reflected on the Bank's
Record from time to time shall be considered correct and binding on the
Borrowers unless within ten (10) Business Days after receipt by the Bank from
the Borrowers of any notice of such outstanding amount, the Bank shall notify
the Borrowers to the contrary.
(f) INABILITY TO DETERMINE LIBOR RATE. In the event, prior to the
commencement of any Interest Period relating to any Libor Rate Loan, the Bank
shall determine that adequate and reasonable methods do not exist for
ascertaining the Libor Rate that would otherwise determine the rate of interest
to be applicable to any Libor Rate Loan during any Interest Period, the Bank
shall forthwith give notice of such determination (which shall be conclusive and
binding on the Borrowers) to the Borrowers. In such event (i) any Conversion
Notice with respect to Libor Rate Loans shall be automatically withdrawn and
shall be deemed a request for Prime Rate Loans, (ii) each Libor Rate Loan will
automatically, on the last day of the then current Interest Period thereof,
become a Prime Rate Loan, and (iii) the obligations of the Bank to make Libor
Rate Loans shall be suspended until the Bank determines that the circumstances
giving rise to such suspension no longer exist, whereupon the Bank shall so
notify the Borrowers.
14
(g) ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for the Bank to make or maintain
Libor Rate Loans, the Bank shall forthwith give notice of such circumstances to
the Borrower and thereupon (a) the commitment of the Bank to make Libor Rate
Loans or convert Loans of another Type to Libor Rate Loans shall forthwith be
suspended and (b) the Libor Rate Loans then outstanding shall be converted
automatically to Prime Rate Loans on the last day of each Interest Period
applicable to such Libor Rate Loans or within such earlier period as may be
required by law. The Borrowers hereby agree promptly to pay the Bank, upon
demand by the Bank, any additional amounts necessary to compensate the Bank for
any costs incurred by the Bank in making any conversion in accordance with this
Section 2(g), including any interest or fees payable by the Bank to lenders of
funds obtained by it in order to make or maintain its Libor Rate Loans
hereunder.
(h) ADDITIONAL COSTS, ETC. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to the Bank by
any central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall:
(i) Subject the Bank to any tax, levy, impost, duty, charge,
fee, deduction or withholding of any nature with respect to this Agreement,
the other Loan Documents, the Commitment or the Loans (other than taxes
based upon or measured by the income or profits of the Bank); or
(ii) Materially change the basis of taxation (except for changes
in taxes on income or profits) of payments to the Bank of the principal of
or the interest on any Loans or any other amounts payable to the Bank under
this Agreement or the other Loan Documents; or
(iii) Impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or commitments of an
office of the Bank; or
(iv) Impose on the Bank any other conditions or requirements with
respect to this Agreement, the other Loan Documents, the Loans, the
Commitment, or any class of loans or commitments of which any of the Loans
or the Commitment forms a part;
and the result of any of the foregoing is:
(A) to increase the cost to the Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or the
Commitment; or
15
(B) to reduce the amount of principal, interest or other amount
payable to the Bank hereunder on account of the Commitment or any of
the Loans; or
(C) to require the Bank to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by the Bank from
the Borrowers hereunder,
then, and in each such case, the Borrowers will, upon demand made by the
Bank at any time and from time to time and as often as the occasion
therefor may arise, pay to the Bank such additional amounts as will be
sufficient to compensate the Bank for such additional cost, reduction,
payment or foregone interest or other sum. The Bank shall use reasonable
efforts to provide the Borrowers with prompt notice of any such additional
amounts which are or will become due hereunder.
(i) CAPITAL ADEQUACY. If any present or future law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) or the interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required or expected to
be maintained by the Bank or any corporation controlling the Bank and the Bank
determines that the amount of capital required to be maintained by it is
increased by or based upon the existence of the Loan made or deemed to be made
pursuant hereto, then the Bank may notify the Borrowers of such fact, and the
Borrowers shall pay to the Bank from time to time on demand, as an additional
fee payable hereunder, such amount as the Bank shall determine in good faith and
certify in a notice to the Borrowers to be an amount that will adequately
compensate the Bank in light of these circumstances for its increased costs of
maintaining such capital. The Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis.
(j) CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Section 2(h) or 2(i) and a brief explanation of such amounts
which are due, submitted by the Bank to the Borrowers, shall be prima facie
evidence that such amounts are due and owing.
(k) INDEMNITY. The Borrowers agree to indemnify the Bank and to hold the
Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that the Bank may sustain or incur as a consequence of:
(i) default by the Borrowers in payment of the principal amount of or any
interest on any Libor Rate Loans as and when due and payable, including any such
loss or expense arising from interest or fees payable by the Bank to lenders of
funds obtained by it in order to maintain its Libor Rate Loans, (ii) default by
the Borrowers in making a borrowing or conversion after the Borrowers have given
(or are deemed to have given) a Conversion Request, or (iii) the making of any
payment of a Libor Rate Loan or the making of any conversion of any such Libor
Rate Loan to a Prime Rate Loan on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or fees
payable by the Bank to lenders of funds obtained by it in order to maintain any
such Loans. There shall be no prepayment penalty or premium with respect to any
Prime Rate Loans.
16
(l) TERMINATION OF COMMITMENT. The Borrowers may elect to permanently
terminate the Commitment upon written notice to the Bank given by 10:00 a.m.
(Boston time) at least three (3) Business Days prior to the date of such
termination, and by making on such termination date payment in full to the Bank
of all amounts due and payable under and on account of the Obligations,
including but not limited to all principal, accrued interest, accrued facility
fees and any other amounts due hereunder including, but not limited to, amounts
due under the provisions of Section 2(j) hereof. The Borrower shall not be
entitled to reinstate the Commitment following such termination.
(m) APPOINTMENT OF ELTRAX AS AGENT OF BORROWERS. Each of the Borrowers
hereby authorizes and appoints Eltrax as its agent for purposes of giving and
receiving all notices and making all borrowing requests, interest rate
determinations, conversion requests, prepayment and repayments, and other
actions on behalf of or required of the Borrowers under this Agreement,
including, without limitation, with respect to all matters set forth in this
Section 2. The Bank may conclusively rely on all such requests, determinations
and notifications made by Eltrax with respect to each of the Borrowers.
3. INTEREST AFTER DEFAULT; LATE FEE. While an Event of Default is
continuing, amounts payable under any of the Loan Documents shall bear interest
(compounded monthly and payable on demand in respect of overdue amounts) at a
rate per annum which is equal to two percent (2%) above the rate otherwise in
effect for such amounts, until such amount is paid in full or (as the case may
be) such Event of Default has been waived in writing by the Bank (after as well
as before judgment).
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The Borrowers hereby
represent, warrant and covenant to the Bank that:
(a) CORPORATE EXISTENCE. Each Borrower and each of its Subsidiaries is a
corporation duly incorporated and validly existing under the laws of the
jurisdiction of its incorporation, and is duly licensed or qualified as a
foreign corporation in all states wherein the nature of its property owned or
business transacted by it makes such licensing or qualification necessary,
except where the failure to be licensed or to so qualify could not have a
Material Adverse Effect. The Bank acknowledges that Datatech is presently not
qualified to do business in the State of Washington, and Datatech covenants that
it will so qualify within 15 days from the effective date of this Agreement. In
addition, each Borrower and each of its Subsidiaries holds all licenses, permits
and approvals from Governmental Authorities necessary or appropriate for the
conduct of their businesses as currently conducted or currently contemplated to
be conducted in the future. All such licenses, permits and approvals are in
full force and effect and no action has been taken or threatened to be taken to
dissolve, cancel or restrict any such license, permit or approval.
(b) NO VIOLATION. Neither the execution, delivery or performance of this
Agreement or any other Loan Document, nor the consummation of the transactions
herein or therein contemplated, will contravene any provision of law, statute,
rule or regulation to which any Borrower or any of its Subsidiaries is subject
or any judgment, decree, franchise, order, license or
17
permit applicable to any Borrower or any of its Subsidiaries, or will conflict
or will be inconsistent with or will result in any breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien (other than the lien created by the Security Documents) upon any of the
property or assets of any Borrower or any of its Subsidiaries pursuant to the
terms of any contractual obligation of any Borrower or any of its Subsidiaries,
or violate any provision of the corporate charter or by-laws of the Borrower or
any of its Subsidiaries.
(c) CORPORATE AUTHORITY AND POWER. The execution, delivery and
performance of this Agreement and the other Loan Documents are within the
corporate powers of the Borrowers and have been duly authorized by all necessary
corporate action.
(d) ENFORCEABILITY. This Agreement and each other Loan Document
constitutes a valid and binding obligation of the Borrowers enforceable against
the Borrowers in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and except
as enforceability may be subject to general principles of equity, whether such
principles are applied in a court of equity or at law.
(e) GOVERNMENTAL APPROVALS. No order, permission, consent, approval,
license, authorization, registration or validation of, or filing with, or
exemption by, any Governmental Authority is required to authorize, or is
required in connection with, the execution, delivery and performance by the
Borrowers of this Agreement or any other Loan Document, or the taking of any
action contemplated hereby or thereby, except for the filing of UCC-1 financing
statements in the appropriate Uniform Commercial Code filing offices.
(f) FINANCIAL STATEMENTS.
(i) The Borrowers have heretofore furnished the Bank with
complete and correct copies of the audited consolidated balance sheet
of the Borrowers as of June 30, 1996 (the "Financial Statement Date"),
and the related audited consolidated statements of income and of cash
flows for the fiscal year of the Borrowers ended on such date,
examined by the Accountants. Such financial statements (including in
each case the related schedules and notes) fairly present the
consolidated financial condition of the Borrowers as of the Financial
Statement Date, and the consolidated results of their operations and
cash flows for the fiscal year then ended.
(ii) None of the Borrowers nor any of their Subsidiaries has
any material liabilities, contingent or otherwise, including
liabilities for taxes or any unusual forward or long-term commitments
or any Guaranty, which are not disclosed by or included in the
financial statements referred to above or in the notes thereto, and
there are no unrealized or anticipated losses from any unfavorable
commitments of the Borrowers or any of their Subsidiaries which may
have a Material Adverse Effect. During the period from the Financial
Statement
18
Date to the date hereof: (x) there has been no sale, transfer or
other disposition by the Borrowers or any of their Subsidiaries of any
material part of their business or property and no purchase or other
acquisition of any business or property (including any capital stock
of any Person) material in relation to the consolidated financial
condition of the Borrowers and their subsidiaries at the Financial
Statement Date; and (y) none of the Borrowers nor any of their
Subsidiaries has made, or agreed or committed itself to make any
Stockholder Distribution.
(iii) All financial statements (including in each case the
related schedules and notes) referred to above have been prepared in
accordance with GAAP applied consistently throughout the periods
involved (except as approved by the Accountants and as disclosed
therein).
(g) NO CHANGE. Since the Financial Statement Date there has been no
development or event, nor any prospective development or event, which has had or
could have a Material Adverse Effect.
(h) LITIGATION. There are no actions, suits or proceedings pending or
threatened against or affecting the Borrowers or any of their Subsidiaries
before any Governmental Authority, which in any one case or in the aggregate, if
determined adversely to any interests of the Borrower or any Subsidiary, would
have a Material Adverse Effect.
(i) COMPLIANCE WITH OTHER INSTRUMENTS; COMPLIANCE WITH LAW.
(i) None of the Borrowers nor any of their Subsidiaries is in default
under (A) any contractual obligation, where such default could have a
Material Adverse Effect, or (B) the terms of any agreements relating to any
Indebtedness of any Borrower or any such Subsidiary.
(ii) None of the Borrowers nor any of their Subsidiaries is in
default with respect to any applicable statute, rule, writ, injunction,
decree, order or regulation of any Governmental Authority having
jurisdiction over the Borrowers or any of their Subsidiaries which could
have a Material Adverse Effect.
(j) SUBSIDIARIES. Except as set forth on Schedule 4(j) hereto, no
Borrower has any Subsidiaries on the date hereof.
(k) SUBSIDIARY TRANSACTIONS. Except as set forth on Schedule 4(k) hereto,
no Subsidiary of any Borrower engages, directly or indirectly in any transaction
with any Affiliate of that Borrower.
(l) INVESTMENT COMPANY STATUS; LIMITS ON ABILITY TO INCUR INDEBTEDNESS.
None of the Borrowers nor any of their Subsidiaries is an "investment company"
or a company "controlled by" an investment company within the meaning of the
Investment Company Act of
19
1940, as amended. No Borrower is subject to regulation under any Federal or
State statute or regulation which limits its ability to incur Indebtedness.
(m) TITLE TO PROPERTY. Each Borrower and each of its Subsidiaries has good
and marketable title to all of its properties and assets, in each case including
the properties and assets reflected in the consolidated balance sheet of the
Borrowers as of the Financial Statement Date, except properties and assets
disposed of since that date in the ordinary course of business, and none of such
properties or assets is subject to (i) any Lien except for Liens described on
Schedule 6(p) hereof, or (ii) a defect in title or other claim other than
defects and claims that, in the aggregate, would have no Material Adverse
Effect. Each Borrower and each of its Subsidiaries enjoys peaceful and
undisturbed possession under all leases necessary in any material respect for
the operation of its properties and assets, none of which contains any unusual
or burdensome provisions which might materially affect or impair such properties
or assets. All such leases are valid and subsisting and are in full force and
effect.
(n) ERISA PLANS. Each of the Borrowers has provided the Bank with a list
of each "employee benefit plan," "employee pension benefit plan," "defined
benefit plan," or "multiemployer plan," which any Borrower or any Subsidiary
thereof has established or maintained or to which any Borrower or any of its
Subsidiaries is required to contribute (collectively, the "Plans"). Each such
Plan is in compliance in all material respects with all applicable provisions of
ERISA and the Code, and the rules and regulations thereunder, except where
failure to so comply would not have a Material Adverse Effect. There have been
no "prohibited transactions" under ERISA with respect to the Plans which would
result in any material liability to any Borrower or any Subsidiary thereof under
ERISA or the Code. As used in the Loan Documents, the terms "employee benefit
plan," "employee pension benefit plan," "defined benefit plan," and
"multiemployer plan" shall have the respective meanings assigned to such terms
in Section 3 of ERISA. None of the Borrowers nor any Subsidiaries thereof has
incurred any material "accumulated funding deficiency" within the meaning of
ERISA or incurred any material liability to the PBGC in connection with a Plan
(or other class of benefit which the PBGC has elected to insure) established or
maintained by any of the Borrowers or any Subsidiary thereof.
(o) TAXES. Except as set forth on Schedule 4(o) hereto, all tax returns
of the Borrowers and their Subsidiaries required to be filed have been
filed, all taxes, fees and other governmental charges (other than
those being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have
been established and, in the case of ad valorem taxes or betterment
assessments, no proceedings to foreclose any lien with respect thereto
have been commenced and, in all other cases, no notice of lien has
been filed or other action taken to perfect or enforce such lien)
shown thereon which are payable have been paid. The charges and
reserves on the books of the Borrowers and their Subsidiaries in
respect of all income and other taxes are adequate, and the Borrower
knows of no additional assessment or any basis therefor. The Federal
income tax returns of the Borrowers and their subsidiaries have not
been audited within the last three years, all prior audits have been
20
closed, and there are no unpaid assessments, penalties or other
charges arising from such prior audits.
(p) ENVIRONMENTAL MATTERS.
(i) The Borrowers and each of their Subsidiaries have obtained
all Governmental Approvals that are required with respect to the operation
of their business under any Environmental Law.
(ii) The Borrowers and each of their Subsidiaries are in
compliance with all terms and conditions of all required Governmental
Approvals and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in all applicable
Environmental Laws.
(iii) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter pending or threatened against any Borrower or any
Subsidiary thereof relating in any way to the Environmental Laws, and there
is no Lien of any private entity or Governmental Authority against any
property of any Borrower or any Subsidiary thereof relating in any way to
the Environmental Laws.
(iv) There has been no claim, complaint, notice, or request for
information received by any Borrower or any of its Subsidiaries with
respect to any site listed on the National Priority List promulgated
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act ("CERCLA") 42 USC 9601 et seq. or any state list of sites
requiring investigation or cleanup with respect to contamination by
Hazardous Substances.
(v) To the best of the Borrowers' knowledge, after reasonable
investigation, there has been no release or threat of release of any
Hazardous Substance at any property owned or leased or occupied by any
Borrower or any of its Subsidiaries which would likely result in liability
being imposed upon such Borrower or such Subsidiary thereof.
(q) SOLVENCY. Each of the Borrowers has assets (both tangible and
intangible) having a fair saleable value in excess of the amount required to pay
the probable liability on its respective existing debts (whether matured or
unmatured, liquidated or unliquidated, fixed or contingent); each of the
Borrowers has access to adequate capital for the conduct of its business and the
discharge of its debts incurred in connection therewith as such debts mature;
and no Borrower is insolvent nor was it insolvent, immediately prior to the
consummation of the initial Revolving Credit Loan.
5. CONDITIONS PRECEDENT.
(a) CONDITIONS TO THE LOANS. The obligations of the Bank to make the
first Revolving Credit Loan is subject to the satisfaction of all of the
following conditions:
21
(i) LOAN DOCUMENTS. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto and, shall be
in full force and effect and shall be in form and substance satisfactory to
the Bank. The Bank shall have received a fully executed copy of each such
document.
(ii) CERTIFIED COPIES OF ORGANIZATION DOCUMENTS. The Bank shall
have received from each Borrower a copy, certified as of a recent date by
the appropriate officer of the state in which each Borrower is organized to
be true and complete, of the corporate charter and any other organization
documents of each Borrower as in effect on such date of certification.
(iii) BY-LAWS; RESOLUTIONS. All action on the part of the
Borrowers necessary for the valid execution, delivery and performance by
the Borrowers of this Agreement and the other Loan Documents to which the
Borrowers are or are to become parties shall have been duly and effectively
taken, and evidence thereof satisfactory to the Bank shall have been
provided to the Bank. The Bank shall have received from each Borrower true
copies of its by-laws and the resolutions adopted by its board of directors
authorizing the transactions described herein, each certified by its
secretary as of a recent date to be true and complete.
(iv) INCUMBENCY CERTIFICATE; AUTHORIZED SIGNERS. The Bank shall
have received from each Borrower an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrower and
giving the name and bearing a specimen signature of each individual who
shall be authorized: (A) to sign in the name and on behalf of such
Borrower, each of the Loan Documents to which the Borrower is or is to
become a party; and (B) to give notices and to take other action on behalf
of such Borrower under the Loan Documents.
(v) VALIDITY OF LIENS. The Security Documents shall be
effective to create in favor of the Bank a legal, valid and enforceable
first (except for Permitted Liens entitled to priority under applicable
law) security interest in the Collateral (as defined therein). All
filings, recordings, deliveries of instruments and other actions necessary
or desirable in the opinion of the Bank to protect and preserve such
security interests shall have been duly effected. The Bank shall have
received evidence thereof in form and substance satisfactory to the Bank.
With respect to Collateral which is evidenced by certificates of title, the
Bank shall have received certificates of title to all, or such lesser
number acceptable to the Bank, of such certificated equipment owned by the
Borrowers, with any third-party liens evidenced on such certificates of
title duly released by the lien holders identified on such certificates of
title, and shall have also received such other documentation and signatures
as are required to have the lien of the Banks created pursuant to the
Security Documents recorded thereon.
(vi) INSURANCE. The Bank shall have received insurance binders
or certificates of insurance coverage with respect to all insurance
policies maintained by the Borrowers
22
with such binders or certificates indicating, with respect to each such
policy, that the Bank has been named as a named insured or a loss payee,
for the benefit of the Bank, that the insurer has waived its subrogation
rights against the Bank and that such policy may not be terminated without
thirty (30) days' prior written notice to the Bank.
(vii) OPINION OF COUNSEL CONCERNING ORGANIZATION AND LOAN
DOCUMENTS. The Bank shall have received favorable opinions addressed to
the Bank from Xxxxxxxxxxx, Xxxxx & Xxxxxxxx of Minneapolis, Minnesota and
from Xxxxx & Streza of Irvine, California, dated as of the date of this
Agreement, and covering such matters and in form and substance as are
satisfactory to the Bank.
(viii) REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrowers contained in this
Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Agreement shall be true as
of the date of such Loan and no Default or Event of Default shall have
occurred and be continuing. The Bank shall have received a Closing
Certificate to such effect signed by an authorized officer of each Borrower
to such effect.
(ix) NO LEGAL IMPEDIMENT. No change shall have occurred in any
law or regulations thereunder or interpretations thereof that in the
reasonable opinion of the Bank would make it illegal for the Bank to make
such Loan.
(x) SOLVENCY. The Bank shall have received a certificate as to
the solvency of each Borrower in substantially the form of EXHIBIT F hereto
signed by the Chief Executive Officer of each Borrower.
(xi) OTHER DOCUMENTS. The Bank shall have received all other
documents and assurances which it requires or which it may reasonably
request in connection with the transactions contemplated by this Agreement.
(xii) PROCEEDINGS AND DOCUMENTS. All proceedings in connection
with the transactions contemplated by this Agreement, the other Loan
Documents and all other documents incident thereto shall be satisfactory in
substance and in form to the Bank and its counsel, and the Bank and such
counsel shall have received all information and such counterpart originals
or certified or other copies of such documents as the Bank may reasonably
request.
(b) CONDITIONS OF MAKING SUBSEQUENT REVOLVING CREDIT LOANS. The
obligation of the Bank to make any Revolving Credit Loan on any Drawdown Date
subsequent to the Closing Date is subject to the satisfaction of the following
conditions precedent on or before the date of each such subsequent Loan:
(i) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Borrower contained in this Agreement, the other Loan
Documents or in any document or instrument delivered pursuant to or in
connection with this Agreement
23
shall be true as of the date as of which they were made and shall also be
true at and as of the time of the making of such Loan, with the same effect
as if made at and as of that time (except to the extent of changes
resulting from transactions contemplated or permitted by this Agreement and
the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and
except to the extent that such representations and warranties relate
expressly to an earlier date).
(ii) PERFORMANCE. The Borrowers shall have performed and
complied with all terms and conditions herein required to be performed or
complied with by it prior to or on such Drawdown Date and on such Drawdown
Date no Default or Event of Default shall have occurred or be continuing
and there shall exist no condition which would, with either or both the
giving of notice or the lapse of time, result in an Event of Default upon
consummation of the subsequent Loan to be made on such Drawdown Date.
Each request by the Borrowers for a Revolving Credit Loan shall constitute
certification by the Borrowers that the conditions specified in this Section
5(b) have been or will be duly satisfied on the date of such loan advance.
6. COVENANTS OF THE BORROWERS. Each of the Borrowers covenants and
agrees with the Bank as follows:
(a) MAINTENANCE OF EXISTENCE. The Borrowers will, and will cause each of
their subsidiaries to, maintain their existence and comply with all applicable
statutes, rules and regulations and to remain duly qualified as a foreign
corporation, licensed and in good standing in each jurisdiction where such
qualification or licensing is required by the nature of its business, the
character and location of its property, business or customers, or the ownership
or leasing of its property, except where such noncompliance or failure to so
qualify would not have a Material Adverse Effect, and the Borrowers will, and
will cause each of their Subsidiaries to, maintain their properties in good
operating condition, and continue to conduct their business as presently
conducted.
(b) TAXES AND OTHER LIENS. The Borrowers will, and will cause each of
their Subsidiaries to, pay when due all taxes, assessments, governmental charges
or levies, or claims for labor, supplies, rent and other obligations made
against it which, if unpaid, might become a lien or charge against the Borrowers
or such Subsidiaries or on their property, except liabilities being contested in
good faith and by proper proceedings, as to which adequate reserves with respect
thereto are maintained on the books of the Borrowers or their Subsidiaries, as
the case may be, in accordance with GAAP.
(c) INSURANCE. The Borrowers will, and will cause each of their
Subsidiaries to, maintain with financially sound and reputable insurance
companies, (i) insurance on its properties, (ii) public liability insurance
against claims for personal injury or death as a result of the use of any
products sold by it and (iii) insurance coverage against other business risks,
in each case, in at least such amounts and against at least such risks (and with
such risk retention) as are usually and prudently insured against in the same
general area by companies of established repute engaged in
24
the same or a similar business; and the Borrowers will furnish to the Bank, upon
its written request, full information as to the insurance so carried. All such
insurance shall name the Bank as a loss payee and as an additional insured as
its interests may appear and shall provide that no termination, cancellation or
material reduction in the amount of coverage or a material modification of the
extent of coverage shall be effective until at least 30 days after receipt by
the Bank of notice thereof.
(d) FINANCIAL STATEMENTS, ETC. The Borrowers will furnish to the Bank:
(i) Within twenty-five (25) days after the end of each calendar
month (including the last month of the fiscal year), the unaudited
consolidated and consolidating balance sheet and income statement of the
Borrowers and their Subsidiaries as at the end of, and for, such month,
accompanied by a certificate of the Chief Executive Officer of Eltrax,
which certificate shall state that said consolidated and consolidating
financial statements fairly present the consolidated and consolidating
financial condition of the Borrowers and their Subsidiaries as of the end
of such month, and the consolidated and consolidating results of their
operations for such month, in each case in accordance with GAAP (except for
the absence of footnotes) consistently applied (subject to normal year-end
audit adjustments);
(ii) Within ninety (90) days after the last day of each fiscal
year of the Borrowers, the audited consolidated and consolidating balance
sheet, income statement and statement of cash flows of the Borrowers and
their Subsidiaries as at and for the fiscal year then ended, certified by
the Accountants (the scope and substance of such report to be satisfactory
to the Bank), together with a certificate by the Accountants that in the
preparation of such audit nothing came to the attention of the Accountants
to indicate that the Borrowers were not in compliance with the terms of
this Agreement and the other Loan Documents;
(iii) Within ten (10) days after the end of each fiscal month of
the Borrowers, (A) a list and aging of the Accounts for the Borrowers and
each of their subsidiaries as of the end of such month in such form as the
Bank may prescribe, all in reasonable detail; (B) a Borrowing Base
Certificate and a Compliance Certificate as of the end of such month, each
signed by the Chief Executive Officer of Eltrax; and (C) a physical
inventory count of Datatech;
(iv) Promptly upon the mailing thereof to the shareholders of
Eltrax generally, copies of all financial statements, reports, proxy
statements and other materials;
(v) Promptly upon receipt by the Borrowers, copies of the annual
management letter provided by the Accountants;
(vi) Promptly upon the filing thereof by Eltrax with the SEC (and
in any event within ten (10) days of such filing), copies of all
registration statements and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents if such forms no longer exist);
25
(vii) Promptly upon becoming aware of any litigation or other
proceeding against any Borrower or any Subsidiary thereof that may have a
Material Adverse Effect, notice thereof and the action the Borrower is
taking or proposes to take with respect thereto;
(viii) Within thirty (30) days after the beginning of each fiscal
year of the Borrowers, a copy of the consolidated operating budget,
including, without limitation, projections of the anticipated cash flow of
the Borrowers and their Subsidiaries for such fiscal year, such budget to
be accompanied by a certificate of the Chief Executive Officer of Eltrax
specifying the assumptions on which such budget was prepared, stating that
such officer has no reason to question the reasonableness of any material
assumption on which such budget was prepared and providing such other
details as the Bank may reasonably request; and
(ix) Promptly following the request of the Bank, such further
information concerning the business, affairs and financial condition or
operations of the Borrowers and their subsidiaries as the Bank may
reasonably request.
(x) With respect to any acquisition by the Borrowers, which
acquisition contemplates the use of any proceeds of this Loan, promptly
upon the execution of a letter of intent or similar instrument, a copy of
such letter of intent or similar instrument shall be delivered to the Bank,
and the Borrower shall provide the Bank with any other information
regarding such acquisition that the Bank may reasonably request.
(e) NOTICE OF DEFAULT. As soon as practicable, and in any event, within
three (3) Business Days of becoming aware of the existence of any condition or
event which constitutes a Default, the Borrowers will provide the Bank with
written notice specifying the nature and period of existence thereof and what
action the Borrowers are taking or proposes to take with respect thereto.
(f) NOTICES REGARDING ENVIRONMENTAL MATTERS.
(i) The Borrowers and each of their Subsidiaries shall comply with
all terms and conditions of all applicable Governmental Approvals and with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and time tables contained in all
applicable Environmental Laws.
(ii) Each Borrower shall promptly notify the Bank should the Borrower
become aware of:
(A) any spill, release, or threat of release of any Hazardous
Substance at or from any property owned, occupied or leased by such
Borrower or any Subsidiary thereof or by any Person for whose conduct
such Borrower or any
26
Subsidiary thereof is responsible, to the extent the Borrower is
required by Environmental Laws to report such to any Governmental
Authority;
(B) any action or notice with respect to a civil, criminal or
administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending
or threatened against the Borrower or any Subsidiary thereof relating
in any way to the Environmental Laws, or any Lien of any Governmental
Authority or any other Person against any property owned, occupied or
leased by such Borrower or any Subsidiary thereof relating in any way
to the Environmental Laws;
(C) any claim made or threatened by any Person against such
Borrower or any Subsidiary thereof or any property of such Borrower or
any Subsidiary thereof relating to damage, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Substance
pertaining to such property or the business or operations of the
Borrower or such Subsidiary; and
(D) any occurrence or condition on any real property adjoining
or in the vicinity of any property owned or leased by such Borrower or
any Subsidiary thereof and known to the officers or supervisory
personnel of such Borrower or any Subsidiary thereof or other
employees having responsibility for the compliance by such Borrower or
any Subsidiary thereof with Environmental Laws, without any
independent investigation, which does cause, or could cause, such
property, or any part thereof, to contain Hazardous Substances in
violation of any Environmental Laws, or which does cause, or could
cause, such property to be subject to any restrictions on the
ownership, occupancy, transferability or use thereof such the Borrower
or any Subsidiary thereof.
(iii) Each Borrower will, and will cause each of its Subsidiaries
to, at its own cost and expense, and within such period as may be required
by applicable law or regulation, initiate all remedial actions and
thereafter diligently prosecute such action as shall be required by law for
the cleanup of such property, including all removal, containment and
remedial actions in accordance with all applicable Environmental Laws (and
in all events in a manner reasonably satisfactory to the Bank), and shall
further pay or cause to be paid, at no expense to the Bank, all cleanup,
administrative, and enforcement costs of applicable Government Authorities
which may be asserted against such property.
(g) ERISA INFORMATION.
(i) The Borrowers will not permit any pension plan maintained by any
Borrower or by any member of a "controlled group" (ERISA 210(c) or ERISA
210(d)) of which any Borrower is a member to: (a) engage in any
"prohibited transaction" (ERISA 2003(c)); (b) fail to report to the Bank a
"reportable event" (ERISA 4043) within 30 days after its occurrence or as
to any reportable event as to which the 30-day notice period requirement of
Section 4043(b) of Title IV of ERISA has been waived by the PBGC,
27
within 30 days of such time as any Borrower is requested to notify the PBGC
of such reportable event; (c) incur any "accumulated funding deficiency"
(ERISA 302); (d) terminate its existence at any time in a manner which
could result in the imposition of a Lien on the property of the Borrower or
any Subsidiary thereof; or (e) fail to report to the Bank any "complete
withdrawal" or "partial withdrawal" by the Borrower or an affiliate from a
"multiemployer plan" (ERISA 4203, 4205, and 4001, respectively). The
quoted terms are defined in the respective sections of ERISA cited above.
(ii) As soon as possible and in any event within thirty (30) days
after any Borrower knows or has reason to know that any event which would
constitute a reportable event under Section 4043(b) of Title IV of ERISA
with respect to any employee pension or other benefit plan of such Borrower
or any Subsidiary thereof subject to such Title has occurred, or that the
PBGC or such Borrower or any Subsidiary thereof has instituted or will
institute proceedings under such Title to terminate such Plan, deliver to
the Bank a certificate of the chief financial officer of such Borrower
setting forth details as to such reportable event and the action which such
Borrower or such Subsidiary proposes to take with respect thereto, together
with a copy of any notice of such reportable event which may be required to
be filed with the PBGC, or any notice delivered by the PBGC evidencing its
intent to institute such proceedings, or any notice to the PBGC that the
Plan is to be terminated, as the case may be. Notwithstanding the
foregoing sentence, no Borrower shall have any obligation to notify the
Bank as described above as to any reportable event as to which the thirty
(30) day notice requirement of 4043(b) of Title IV of ERISA has been waived
by the PBGC, until such time as such Borrower or a Subsidiary thereof is
required to notify the PBGC of such reportable event. For purposes of this
covenant, the Borrower shall be deemed to have all knowledge or knowledge
of all facts attributable to the plan administrator under such Title IV,
but only to the extent, in the case of any multiemployer plan, it can
reasonably obtain such information. In addition, upon request of the Bank,
the Borrower shall furnish the Bank (or cause, or in the case of a
multiemployer plan, exert their best efforts to cause, the plan
administrator to furnish the Bank) with the Annual Report for each plan
covered by such Title IV and filed with the Internal Revenue Service.
(h) INSPECTION. The Borrowers will, upon the request of the Bank, permit
a representative of the Bank (including, without limitation, any field examiner
or auditor retained by the Bank) to inspect and make copies of the Borrowers'
books and records, and to discuss their affairs, finances and accounts with
their officers and accountants, all at such reasonable times and as often as the
Bank may reasonably request and, in each case, cause each of their subsidiaries
to do so.
(i) EXPENSES; INDEMNIFICATION.
(i) The Borrowers will pay on demand: (A) the reasonable fees and
disbursements of counsel to the Bank in connection with the preparation of
this Agreement and the preparation or review of each agreement, opinion,
certificate and other document referred to in or delivered pursuant hereto;
(B) all out-of-pocket costs and
28
expenses of the Bank in connection with the administration of this
Agreement and the other Loan Documents, and any waiver or amendment of any
provision hereof or thereof, including without limitation, the reasonable
fees and disbursements of counsel for the Bank, travel expenses and
expenses of any field examiner or auditor retained by the Bank as
contemplated in Section 6(h); and (C) if any Event of Default occurs, all
costs and expenses incurred by the Bank, including the reasonable fees and
disbursements of counsel to the Bank, and of any appraisers, environmental
engineers or consultants, or investment banking firms retained by the Bank
in connection with such Event of Default or collection, bankruptcy,
insolvency and other enforcement proceedings related thereto. The
Borrowers agree to pay, indemnify and hold the Bank harmless from, any and
all recording and filing fees, and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise or other taxes, if
any, which may be payable or determined to be payable in connection with
the execution and delivery of or the consummation or administration of any
of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement or the other Loan Documents, or any documents delivered pursuant
hereto or thereto.
(ii) The Borrowers will indemnify the Bank and its officers and
directors and hold the Bank and its officers and directors harmless from
and against any and all liabilities, losses, damages, costs and expenses of
any kind (including, without limitation, the reasonable fees and
disbursements of counsel for the Bank in connection with any investigative,
administrative or judicial proceeding, whether or not the Bank shall be
designated a party thereto) which may be incurred by the Bank, relating to
or arising out of this Agreement or any other Loan Document, or the
existence of any Hazardous Substance on, in, or under any property owned,
leased or occupied by the Borrowers or any of its Subsidiaries, or any
violation of any applicable Environmental Laws for which any Borrower or
any of their subsidiaries has any liability or which occurs upon any
property owned, leased or occupied by any Borrower or any of their
subsidiaries, or the imposition of any Lien under any Environmental Laws,
provided that the Bank shall not have the right to be indemnified hereunder
for its own gross negligence or willful misconduct as determined by a court
of competent jurisdiction.
(iii) The agreements in this Section 6(j) shall survive
termination of this Agreement and the repayment of the Loans, and all other
amounts payable under this Agreement and the other Loan Documents.
(k) FURTHER ASSURANCES. The Borrowers will, and will cause each of their
subsidiaries to, execute and deliver to the Bank any writings and do all things
necessary, effectual or reasonably requested by the Bank to carry into effect
the provisions and intent of this Agreement or any other Loan Documents.
(l) TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 6(1)
hereto, the Borrowers will not, and will not permit any of their subsidiaries
to, directly or indirectly, pay any funds to or for the account of, make any
Investment in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, or engage in any transaction in connection with any
joint
29
enterprise or other joint arrangement with, any Affiliate of the Borrowers
unless such transaction is otherwise permitted under this Agreement, is in the
ordinary course of the Borrowers' or their Subsidiary's business, and is upon
fair and reasonable terms no less favorable to the Borrower or such Subsidiary
as those that could be obtained in a comparable arm's length transaction with a
Person not an Affiliate; or make loans or advances to their respective officers,
directors or employees other than reasonable travel expenses incurred in the
ordinary course of business.
(m) CONSOLIDATION OR MERGER. The Borrowers will not, and will not permit
any of their Subsidiaries to, merge or consolidate with or into any other Person
unless it obtains the prior written consent of the Bank; provided that any
Subsidiary may merge into any Borrower or any wholly-owned Subsidiary of any
Borrower.
(n) ACQUISITION.
(i) If any of the Borrowers intends to make an Acquisition without
the use of any funds derived from the Bank, such Borrower does not need to
obtain approval from the Bank for such Acquisition provided that it provides the
Bank with pro forma consolidated and consolidating financial information which
demonstrates that, after giving affect to the proposed Acquisition (based on
historical earnings minus deferred expense deductions), the Borrowers, including
the Acquisition entity, will continue to have positive net income on both a
consolidated and consolidating basis.
(ii) If any of the Borrowers intends to make an Acquisition with
funds, any portion of which is borrowed from the Bank, such Borrower must comply
with the following:
(A) The Borrower must provide the Bank with such relevant
financial information on the proposed Acquisition as may be requested
by the Bank;
(B) The proposed Acquisition must be of an entity which
primarily does business in the data communications field; and
(C) The cash component of the purchase price shall not exceed
$2,000,000 or twenty-five percent (25%) of the total cost of the
Acquisition.
(o) DISPOSITION OF ASSETS. The Borrowers will not, and will not permit
any of their subsidiaries to, convey, sell, lease, transfer or otherwise dispose
of any of their property, business or assets (including, without limitation,
Accounts and leasehold assets), whether now owned or hereafter acquired, except:
(i) Obsolete or worn out property disposed of in the ordinary course
of business;
(ii) The sale or other disposition of the Health Card division of
Eltrax;
(iii) The sale of Inventory in the ordinary course of business.
30
(p) INDEBTEDNESS. The Borrowers will not, and will not permit any of
their subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness payable to the Bank;
(ii) Existing Indebtedness, if any, listed on Schedule 6(p)
hereto;
(iii) Purchase Money Indebtedness in an amount not to exceed
$50,000 at any one time outstanding; provided that, giving effect to the
incurrence of such Purchase Money Indebtedness and to the receipt and
application of the proceeds thereof, no Default shall have occurred and be
continuing; and
(iv) Subordinated Indebtedness, subordinated on terms
satisfactory to the Bank in its sole discretion to all Obligations of the
Borrowers to the Bank.
(q) LIENS. The Borrowers will not, and will not permit any of their
Subsidiaries to, create, incur, assume or suffer to exist any Lien on any of
their properties or assets, except:
(i) Liens for taxes not delinquent or being contested in good
faith and by proper proceedings, as to which adequate reserves with respect
thereto are maintained on the books of the Borrowers or their Subsidiaries,
as the case may be, in accordance with GAAP;
(ii) Carriers', warehousemen's, mechanics', materialmen's or
similar liens imposed by law incurred in the ordinary course of business in
respect of obligations not overdue, or being contested in good faith and by
proper proceedings and as to which adequate reserves with respect thereto
are maintained on the books of the Borrowers or their Subsidiaries, as the
case may be, in accordance with GAAP;
(iii) Pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security legislation;
(iv) Security deposits made to secure the performance of leases,
licenses and statutory obligations incurred in the ordinary course of business;
(v) Liens in favor of the Bank;
(vi) Liens incurred by the Borrowers on general office equipment
and automobile leases for certain officers of the Borrowers;
(vii) Existing Liens, if any, listed on Schedule 6(q) hereto;
provided that no such Lien is spread to cover any additional property after
the date hereof, and that the amount of the Indebtedness secured thereby is
not increased; and
31
(viii) Purchase Money Security Interests securing Purchase Money
Indebtedness permitted under Section 6(p) above.
(r) INVESTMENTS. The Borrowers will not, and will not permit any of their
Subsidiaries to, make, maintain or acquire any Investment in any Person other
than:
(i) Marketable obligations issued or guarantied by the United
States of America having a maturity of one year or less from the date of
purchase;
(ii) Certificates of deposit, Eurodollar time deposits,
commercial paper or any other obligations of the Bank or of any other bank
or trust company organized or licensed to conduct a banking business under
the laws of the United States or any State thereof and which has (or which
is a Subsidiary of a bank holding company which has) publicly traded debt
securities rated A or higher by Standard & Poor's Corporation or A-2 or
higher by Xxxxx'x Investors Service, Inc.);
(iii) Stock or obligations issued to the Borrowers or any
Subsidiaries thereof in settlement of claims against others by reason of an
event of bankruptcy or a composition or the readjustment of debt or a
reorganization of any debtor of the Borrower or such Subsidiary;
(iv) Commercial paper with maturities of not more than ninety (90)
days having the highest rating then given by Xxxxx'x Investors Services,
Inc. or Standard & Poor's Corporation;
(v) Repurchase obligations with a term of not more than seven
days for underlying securities of the types described in subparagraph (i)
above entered into with the Bank or any of the banks referred to in
subparagraph (ii) above; and
(vi) Investments in new Subsidiaries in conjunction with
acquisitions permitted under Sections 6(o) or 6(v) hereof.
(s) FINANCIAL COVENANTS. The Borrowers shall comply with the following
Financial Covenants, measured on a consolidated basis:
(i) MINIMUM CURRENT RATIO. The Borrowers shall not permit the
ratio of their Current Assets to Current Liabilities to be less than
1.00:1.00 at any time.
(ii) MAXIMUM INDEBTEDNESS TO NET WORTH. The Borrowers shall not
permit the ratio of their Indebtedness to Net Worth to be greater than
1.5:1.0 at any time.
(iii) POSITIVE EBITDA. The Borrowers will maintain a positive
EBITDA at all times, which is to be measured at the end of each month, for
that month. EBITDA shall
32
be measured for all of the Borrowers but shall specifically exclude EBITDA
of the "Health Card" division of Eltrax.
(iv) MAXIMUM CAPITAL EXPENDITURE. The Borrowers shall not permit
their Capital Expenditures to exceed $200,000 during the fiscal year ending
December 1997.
(t) STOCKHOLDER DISTRIBUTIONS. The Borrowers shall not make any
Stockholder Distributions unless both before and after giving effect thereto the
Borrowers remain in compliance with the Financial Covenants set forth in Section
6(s) hereof.
(u) DEPOSITORY ACCOUNTS. The Borrowers will maintain its primary
operating deposit accounts at the offices of the Bank.
(v) BORROWER SUBSIDIARIES. Unless otherwise agreed to by the Bank, the
Borrowers shall, immediately upon any Investment in a new Subsidiary permitted
under this Agreement, revise SCHEDULE 4(j) hereto to reflect the formation or
acquisition of each new Subsidiary and shall cause each new Subsidiary in which
any Borrower invests immediately upon such Investment, to execute and deliver to
the Bank, an Instrument of Adherence (Credit Agreement), in substantially the
form of EXHIBIT G attached hereto (an "Instrument of Adherence") together with a
legal opinion and other documents and instruments necessary to demonstrate the
due authorization, execution and delivery by such new Subsidiary of such
Instrument of Adherence (Credit Agreement), including (i) resolutions of the
board of Directors or equivalent body of such new Subsidiary and the charter and
by-laws (or the equivalent thereof) of such new Subsidiary, certified by an
officer of such new Subsidiary, (ii) a good standing certificate of such new
Subsidiary in its jurisdiction of incorporation, (iii) a certificate of the
secretary or an assistant secretary of such new Subsidiary certifying the names
and true signatures of the officers of such new Subsidiary authorized to sign
the Instrument of Adherence (Credit Agreement), and a Security Agreement and
related Perfection Certificate in the form of EXHIBIT C hereto, and (iv) such
other documents as the Bank may reasonably request. Upon delivery of the
aforementioned documents, such new Subsidiary shall become a Borrowing
Subsidiary and a Borrower hereunder and, except as otherwise agreed to by the
Bank, shall comply with and be bound by all of the terms and conditions of the
Loan Documents as a Borrower thereunder, and the Borrowers shall cause such new
Subsidiary to take all actions which it would have been required to make or take
had it been a Borrowing Subsidiary and a Borrower on the Closing Date, including
making all representations and warranties as a Borrower under each of the Loan
Documents.
7. EVENTS OF DEFAULT; ACCELERATION. If any of the following events
("Events of Default") shall occur:
(a) The Borrowers shall fail to pay when due and payable any principal of
or interest on the Loans or any other sum due under any of the Loan Documents
when the same becomes due;
(b) The Borrowers shall fail to perform any term, covenant or agreement
contained in Section 6 hereof;
33
(c) The Borrowers or any Subsidiaries shall fail to perform any other
term, covenant or agreement contained in this Agreement or any of the other Loan
Documents, which failure continues for more than thirty (30) days;
(d) Any representation or warranty of the Borrowers in the Loan Documents
or in any certificate or notice given in connection therewith shall have been
false or misleading in any material respect at the time made or deemed to have
been made;
(e) Any Borrower or any of its Subsidiaries (i) shall be in default under
any agreement or agreements evidencing Indebtedness (A) owing to the Bank or are
affiliated with the Bank or (B) to any other person owing in excess of $50,000
in aggregate principal amount, which default shall give the holder thereof the
right to accelerate such indebtedness, or (ii) shall fail to pay any such
Indebtedness when due, or within any applicable period of grace;
(f) Any of the Loan Documents shall cease to be in full force and effect;
(g) Any Borrower or any of its Subsidiaries (i) shall make an assignment
for the benefit of creditors, (ii) shall be adjudicated bankrupt or insolvent,
(iii) shall seek the appointment of, or be the subject of an order appointing, a
trustee, liquidate or receiver as to all or part of its assets, (iv) shall
commence, approve or consent to, any case or proceeding under any bankruptcy,
reorganization or similar law and, in the case of an involuntary case or
proceeding, such case or proceeding is not dismissed within forty-five (45) days
following the commencement thereof, or (v) shall be the subject of an order for
relief in an involuntary case under federal bankruptcy law;
(h) Any Borrower or any of its Subsidiaries shall admit in writing its
inability to pay or generally fails to pay its debts as they mature or become
due; or
(i) There shall remain undercharged for more than ten (10) days any final
judgment or execution action against any Borrower or any of its Subsidiaries
that, together with other outstanding claims and execution actions against the
Borrower and such Subsidiary exceeds $50,000 in the aggregate;
THEN, or at any time thereafter:
(1) In the case of any Event of Default under paragraph (g) or (h)
concerning any Borrower, the Commitment shall automatically terminate, and the
entire unpaid principal amount of the Loans, all interest accrued and unpaid
thereof, and all other amounts payable hereunder and under the other Loan
Documents shall automatically become forthwith due and payable, without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrowers; and
(2) In the case of any Event of Default other than (g) and (h), the Bank
may, by written notice to the Borrower, terminate the Commitment and/or declare
the unpaid principal amount of the Loans, all interest accrued and unpaid
thereof, and all other amounts payable
34
hereunder and under the other Loan Documents to be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrowers.
No remedy herein conferred upon the Bank is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and in addition to
every other remedy hereunder, now or hereafter existing at law or in equity or
otherwise.
8. SECURITY. The Obligations shall be secured by a blanket valid and
perfected first-priority security interest (subject only to Liens permitted
hereunder and entitled to priority under applicable law) in all of the
Borrowers' personal property pursuant to the terms of the Security Documents.
9. SETOFF. Regardless of the adequacy of any collateral for the
Obligations, any deposits or other sums credited by or due from the Bank to any
Borrower may be applied to or set off against any principal, interest and any
other amounts due from the Borrowers to the Bank at any time without notice to
such Borrower, or compliance with any other procedure imposed by statute or
otherwise, all of which are hereby expressly waived by the Borrowers.
10. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrowers may not assign or otherwise
transfer any of their rights under this Agreement without the prior written
consent of the Bank. All covenants, agreements and obligations of the Borrowers
under this Agreement and each other Loan Document are joint and several in all
respects.
11. MISCELLANEOUS. Any communication to be made hereunder shall (a) be
made in writing, but unless otherwise stated, may be made by telex, facsimile
transmission or letter, and (b) be made or delivered to the address of the party
receiving notice which is identified with its signature below (unless such party
has by three (3) days' written notice specified another address), and shall be
deemed made or delivered, when dispatched, left at that address, or three (3)
days after being mailed, postage prepaid, to such address. This Agreement may
not be amended or waived except by a written instrument signed by the Borrowers
and the Bank, and any such amendment or waiver shall be effective only for the
specific purpose given. No failure or delay by the Bank to exercise any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other right, power or
privilege. The provisions of this Agreement are severable and if any one
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, such invalidity or unenforceability shall affect only such
provision in such jurisdiction. This Agreement, together with all Exhibits and
Schedules hereto, expresses the entire understanding of the parties with respect
to the transactions contemplated hereby. This Agreement and any amendment
hereby may be executed in several counterparts, each of which shall be an
original, and all of which shall constitute one agreement. In proving this
Agreement, it shall not be necessary to produce more than one such counterpart
executed by the party to be charged. THIS AGREEMENT AND THE NOTE ARE CONTRACTS
UNDER THE LAWS OF THE COMMONWEALTH OF
35
MASSACHUSETTS AND SHALL BE CONSTRUED IN ACCORDANCE THEREWITH AND GOVERNED
THEREBY (OTHER THAN THE CONFLICTS OF LAW PROVISIONS). THE BORROWERS AGREE THAT
ANY SUIT FOR THE ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN THE
COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING
THEREIN. THE BORROWERS, AS AN INDUCEMENT TO THE BANK TO ENTER INTO THIS
AGREEMENT, HEREBY WAIVE THEIR RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION
ARISING IN CONNECTION WITH ANY LOAN DOCUMENT.
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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first above written.
ELTRAX SYSTEMS, INC.
By:_____________________________
Name: Xxxx X. Xxxxxxx, III
Title: President
Address:
NORDATA, INC. (d/b/a DATATECH)
By:_____________________________
Name: Clunet X. Xxxxx
Title: Secretary
Address:
Tel: ( ) ________
Fax: ( ) ________
STATE STREET BANK AND TRUST
COMPANY
By:_____________________________
Name:___________________________
Title:__________________________
Address: 000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxxx
Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
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List of Exhibits and Schedules:
Exhibit A - Form of Borrowers Base Certificate
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Security Agreement
Exhibit D - Form of Landlord Consent and Waiver of Lien
Exhibit E - Form of Revolving Credit Note
Exhibit F - Solvency Certificate
Exhibit G - Instrument of Adherence ("Credit Agreement")
Schedule 4(j) - Subsidiaries
Schedule 4(k) - Subsidiary Transactions with Affiliates of Borrowers
Schedule 4(o) - Taxes
Schedule 6(l) - Borrowers' Transactions with Affiliates
Schedule 6(o) - Indebtedness
Schedule 6(r) - Liens
38
