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Exhibit 10.27
LOAN AND SECURITY AGREEMENT
DATED AS OF MAY 25, 2001
AMONG
TRANSACT TECHNOLOGIES INCORPORATED
AS BORROWER
AND
LASALLE BUSINESS CREDIT, INC.,
AS A LENDER AND AS AGENT
AND
THE INSTITUTIONS FROM TIME TO TIME
A PARTY HERETO
AS LENDERS
$13,500,000
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TABLE OF CONTENTS
Page
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1. DEFINITIONS............................................................. 1
2. REVOLVING LOANS......................................................... 21
3. ADDITIONAL LOANS........................................................ 22
4. LETTER OF CREDIT........................................................ 22
5. MANDATORY PREPAYMENTS................................................... 26
6. INTEREST, FEES AND CHARGES.............................................. 27
7. LOAN ADMINISTRATION..................................................... 29
8. GRANT OF SECURITY INTEREST TO AGENT..................................... 35
8A. CONCERNING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE............. 36
9. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS THEREIN. 37
10. POSSESSION OF COLLATERAL AND RELATED MATTERS............................ 37
11. COLLECTIONS............................................................. 37
12. SCHEDULES AND REPORTS................................................... 40
13. TERM.................................................................... 43
14. REPRESENTATIONS AND WARRANTIES.......................................... 43
15. COVENANTS............................................................... 49
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16. CONDITIONS PRECEDENT.................................................... 59
17. DEFAULT................................................................. 63
18. REMEDIES UPON AN EVENT OF DEFAULT....................................... 65
19. INDEMNIFICATION......................................................... 66
20. REGARDING AGENT......................................................... 67
21. NOTICES................................................................. 70
22. CHOICE OF GOVERNING LAW AND CONSTRUCTION................................ 70
23. FORUM SELECTION AND SERVICE OF PROCESS.................................. 71
24. MODIFICATION AND BENEFIT OF AGREEMENT................................... 71
25. PARTICIPATIONS AND ASSIGNMENT........................................... 73
26. HEADINGS OF SUBDIVISIONS................................................ 74
27. POWER OF ATTORNEY....................................................... 74
28. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY.................... 74
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THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of this 25th
day of May, 2001, by and among LASALLE BUSINESS CREDIT, INC., a Delaware
corporation ("LaSalle"), with its principal office at 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, the financial institutions which from time to time
become a party hereto (collectively, the "Lenders" and individually, a
"Lender"), LaSalle as agent for Lenders (in such capacity, "Agent") and TRANSACT
TECHNOLOGIES INCORPORATED, a Delaware corporation, with its principal office at
0 Xxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxxxx 00000 ("Borrower").
WITNESSETH:
WHEREAS, from time to time Borrower may request Agent and
Lenders to make loans and advances to and extend certain credit accommodations
to Borrower, and the parties wish to provide for the terms and conditions upon
which such loans, advances and credit accommodations shall be made;
NOW, THEREFORE, in consideration of any loans, advances and
credit accommodations (including any loans by renewal or extension) hereafter
made to Borrower by Agent and the Lenders, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Borrower, the parties agree as follows:
1. DEFINITIONS.
(a) General Definitions
"ACCOUNT DEBTOR" shall mean the Person who is obligated on or
under an Account.
"ACCOUNTS" shall have the meaning given to the term "accounts"
in the UCC and shall in event include, without limitation, all of Borrower's
presently existing and hereafter arising accounts, accounts receivable, contract
rights, instruments, documents, chattel paper, and all other forms of
obligations owing to Borrower arising out of the sale or lease of goods or the
rendition of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guarantees, letters of credit and other security
therefor, as well as all merchandise returned to or reclaimed by Borrower, and
all products and proceeds of the foregoing.
"ACCOUNTS ADVANCE RATE" shall have the meaning set forth in
paragraph 2(b)(A) hereof.
"ACCOUNTS TRIAL BALANCE" shall have the meaning set forth in
paragraph 12(c) hereof.
"ADVANCE RATES" shall mean collectively, the Accounts Advance
Rate and the Inventory Advance Rate.
"AFFILIATE" means any Person: (a) directly or indirectly
controlling, controlled by, or under common control with, Borrower; (b) directly
or indirectly owning or holding five percent (5%) or more of
any equity interest in Borrower; or (c) five percent (5%) or more of
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whose voting stock or other equity interest having ordinary voting power for the
election of directors or the power to direct or cause the direction of
management, is directly or indirectly owned or held by Borrower; or (d) which
has a senior executive officer who is also a senior executive officer of
Borrower. For purposes of this definition, "control" (including with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with") means the possession directly or indirectly of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities or other equity interest, or by contract or
otherwise.
"AGENT" shall have the meaning set forth in the introductory
paragraph hereof.
"APPLICABLE MARGIN" shall mean the percentage set forth below
for the applicable Type and Kind of Loan calculated based on Borrower achieving
the financial test set forth below:
APPLICABLE MARGIN
Revolving Loans Term Loans Equipment Loans
--------------- ---------- ---------------
Level Prime LIBOR Prime LIBOR Prime LIBOR
----- ----- ----- ----- ----- ----- -----
1 0% 2.50% .50% 3.00% .50% 3.00%
2 (.25)% 2.25% .25% 2.75% .25% 2.75%
The Applicable Margin shall be set at Level 1 on the Closing
Date and shall not be subject to decrease prior to the receipt by Agent of the
annual financial statements of Borrower as required under paragraph 12(d) hereof
for the Fiscal Year ending December 31, 2001 (the "2001 Annual Financial
Statements"). If (a) Borrower's EBITDA for the Fiscal Year ending December 31,
2001 as calculated using the financial information from the 2001 Annual
Financial Statements, is equal to or greater than $2,650,000, (b) the 2001
Annual Financial Statements have been delivered in accordance with the
requirements set forth in paragraph 12(d) hereof and (c) no Default or Event of
Default has occurred and is continuing on the date the 2001 Annual Financial
Statements are delivered, the Applicable Margin shall be adjusted to Level 2. If
any of the foregoing conditions are not satisfied, the Applicable Margin shall
permanently remain at Level 1. If the Applicable Margin is adjusted to Level 2
in accordance with this paragraph, such change shall be effective thirty (30)
days after Agent receives the 2001 Annual Financial Statements.
"AUTHORITY" shall have the meaning set forth in paragraph
15(s)(iv) hereof.
"BANK" shall mean LaSalle Bank National Association.
"BANKRUPTCY CODE" shall mean the Bankruptcy Reform Act of
1978, as amended, including amendments made by The Bankruptcy Reform Act of
1994, as codified in Title 11 of the United States Code.
"BENEFIT PLAN" shall mean an employee pension benefit plan of
Borrower or an ERISA Affiliate, as defined in Section 3(2) of ERISA, which is
subject to Title IV of ERISA.
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"BORROWER" shall have the meaning set forth in the
introductory paragraph hereof.
"BORROWER ON A CONSOLIDATED BASIS" shall mean the
consolidation in accordance with GAAP of the accounts or other items of Borrower
and its wholly-owned Subsidiaries.
"BORROWING BASE" shall have the meaning specified in paragraph
2(b)(A) hereof.
"BORROWING BASE CERTIFICATE" shall mean a certificate duly
executed by an officer of Borrower appropriately completed and in substantially
the form of Exhibit C hereto.
"BREAKAGE COSTS" shall have the meaning specified in paragraph
7(c)(iv) hereof.
"BUSINESS DAY" shall mean with respect to all Loans, any day
other than a Saturday, Sunday, or such other day as banks in Illinois are
authorized or required to be closed for business; provided, however, that with
respect to LIBOR Rate Loans, the term "Business Day" shall also exclude any day
that banks in London, England are authorized or required to be closed for
business.
"CAPITAL ADEQUACY CHARGE" shall have the meaning specified in
paragraph 6(h) hereof.
"CAPITAL ADEQUACY DEMAND" shall have the meaning specified in
paragraph 6(h) hereof.
"CAPITAL EXPENDITURES" shall mean, with respect to any period,
the aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including expenditures for capitalized lease obligations) by
Borrower on a consolidated basis during such period that are required by GAAP to
be included in or reflected by the property, plant or equipment or similar fixed
asset accounts (or in intangible accounts subject to amortization) in the
balance sheet of Borrower.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601
et seq.
"CHANGE OF CONTROL" shall mean either:
(a) the failure by Xxxx Xxxxxxxx, Xxxxxxx X. Xxxx or
a Permitted Replacement Officer (as defined in this subparagraph (a)) to remain
active in the management of Borrower's operations on a daily basis; provided
that, in the event that either Xxxx Xxxxxxxx, Xxxxxxx X. Xxxx or any Permitted
Replacement Officer shall cease to remain active in the management of Borrower's
operations on a daily basis (a "Management Change"), it shall not be deemed to
be a Change of Control if Borrower shall give prompt written notice thereof to
Agent, and Borrower shall replace such Person within ninety (90) days of the
date such Management Change with a Person reasonably acceptable to Agent (any
such Person, a "Permitted Replacement Officer") who will be active in the
management of Borrower's operations on a daily basis; or
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(b) if Persons who are directors of Borrower as of
the Closing Date (the "Incumbent Board") shall cease to constitute at least a
majority of the members of the Board of Directors of Borrower at any time
provided that, any Person becoming a director subsequent to the Closing Date
whose election, or nomination for election by Borrower or shareholders, is
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election or removal of the directors of
Borrower, as contemplated in Rule 14a-11 of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended) shall, for purposes of this
Agreement, be considered as though such Person were a member of the Incumbent
Board of Borrower.; or
(c) the stockholders of Borrower or the Board of
Directors of Borrower shall approve a plan or proposal for the acquisition of,
merger, liquidation or dissolution of Borrower, or a sale, transfer or other
assignment of the assets of Borrower the result of which more than 25% of its
assets shall have been sold, assigned or transferred in one or a series of
related transactions;
(d) if a Person or group of Persons acting in concert
(other than the direct or indirect beneficial owners of the capital stock of
Borrower as of the Closing Date) shall, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or otherwise, have
become the direct or indirect beneficial owner (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended from time to time) of
securities of Borrower representing 15% or more of the combined voting power of
the outstanding voting securities for the election of directors or shall have
the right to elect a majority of the board of directors of Borrower, or
(e) there shall have been a Series B Preferred Change
of Control.
"CHATTEL PAPER" shall have the meaning given to the term
"chattel paper" in the UCC and in any event shall include, without limitation, a
writing or writings which evidence both a monetary obligation and a security
interest in or a lease of specific goods.
"CLOSING DATE" shall mean the date upon which the initial Loan
is made.
"CLOSING DOCUMENT LIST" shall have the meaning specified in
paragraph 16(a)(i) hereof.
"COLLATERAL" shall mean all of the personal property of
Borrower as described in paragraph 8 hereof and all other real or personal
property of any Obligor or any other Person now or hereafter pledged to Agent
for its benefit and for the ratable benefit of Lenders to secure, either
directly or indirectly, repayment of any of the Liabilities.
"COMMERCIAL TORT CLAIM" shall have the meaning given to the
term "commercial tort claim" in the UCC and in any event shall include, without
limitation, a claim arising in tort with respect to which: (A) the claimant is
an organization; or (B) the claimant is an individual and the claim: (i) arose
in the course of the claimant's business or profession; and (ii) does not
include damages arising out of personal injury to or the death of an individual.
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"COMMITMENT PERCENTAGE" of any Lender shall mean the
percentage set forth below such Lender's name on the signature page hereof as
same may be adjusted upon any assignment by a Lender pursuant to paragraph 25
hereof.
"COMMITMENT TRANSFER SUPPLEMENT" shall mean a document in the
form of Exhibit 25(b) attached hereto and made part hereof, properly completed
and otherwise in form and substance satisfactory to Agent by which a Purchasing
Lender purchases and assumes a portion of the obligation of Lenders to make
Loans under this Agreement.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in
paragraph 28(f) hereof.
"CONNECTICUT STATE RESERVE" shall mean (a) at all times
Borrower has any liability, whether contingent or mature or liquidated or not
liquidated or due or not yet due, to the State of Connecticut, Department of
Economic and Community Development, the aggregate amount of all such
liabilities, which as of the Closing Date is $230,000 as such reserve may be
adjusted from time to time and (b) at all other times, zero.
"CONTINUATION" shall have the meaning specified in paragraph
7(c)(i) hereof.
"CONTRACT YEAR" shall mean each period of twelve (12)
consecutive months commencing on the Closing Date and on each anniversary
thereafter.
"CONTROLLED GROUP" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with Borrower, are treated as a single
employer under Section 414 of the IRC.
"CONVERSION" shall have the meaning specified in paragraph
7(c)(ii) hereof.
"CUSTOMER LISTS" shall mean the written customer lists of
Borrower delivered to Agent on or before the Closing Date, as same shall be
updated pursuant to paragraph 12(h) hereof.
"CUSTOMS" shall have the meaning set forth in paragraph 4(f)
hereof.
"DEFAULT" shall mean any event, condition or default which
with the giving of notice, the lapse of time or both would be an Event of
Default.
"DEFAULTING LENDER" shall have the meaning set forth in
paragraph 7(h) hereof.
"DEFAULTING LENDER CURE PERIOD" shall have the meaning
specified in paragraph 7(m) hereof.
"DEPOSIT ACCOUNT" shall have the meaning given to the term
"deposit account" in the UCC and in any event shall include, without limitation,
a demand, time, savings, passbook or similar account maintained with a bank.
"DESIGNATED LENDER" shall have the meaning set forth in
paragraph 7(m) hereof.
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"DIVIDEND CERTIFICATION" shall mean a certificate delivered to
the Agent signed by Borrower's chief financial officer certifying (and setting
forth such officer's calculation) that if the proposed payment of the Preferred
B Dividend Payment was made as of the last day of the fiscal period for which
Agent has received financial statements (each such day, a "Covenant Testing
Date"), such Preferred B Dividend Payment would not have caused a breach of the
financial covenants set forth in paragraph 15(p) hereof tested as of such
Covenant Testing Date.
"DOCUMENTS" shall mean the term "documents" as such term is
defined under Article 9 of the UCC.
"DOLLAR" and the sign "$" shall mean lawful money of the
United States.
"EBITDA" shall mean, with respect to any applicable fiscal
period, the following for Borrower on a consolidated basis, each calculated for
such period: net income before taxes for such period (excluding pre-tax gains or
losses on the sale of assets (other than the sales of Inventory in the ordinary
course of business) and excluding other pre-tax extraordinary gains) plus
interest expense, depreciation, amortization and other non-cash charges deducted
in determining net income for such period, minus interest income calculated in
determining net income for such period minus the Wallingford Restructuring
Charges up to a maximum of (a) $3,360,000 during the Fiscal Year ending December
31, 2001 and (b) $0 during any other Fiscal Year.
"ELIGIBLE ACCOUNT" shall mean an Account owing to Borrower
which is acceptable to Agent in its reasonable discretion for lending purposes.
Agent shall, in general, consider an Account to be an Eligible Account if it
meets, and so long as it continues to meet, the following requirements:
(i) it is genuine and in all respects is what it
purports to be;
(ii) it is owned by Borrower and Borrower has the
right to subject it to a security interest
in favor of Agent;
(iii) it arises from (A) the performance of
services by Borrower and such services have
been fully performed and acknowledged and
accepted by the Account Debtor thereunder or
(B) the sale or lease of Goods by Borrower,
and such Goods have been completed in
accordance with the Account Debtor's
specifications (if any) and delivered to and
not rejected by the Account Debtor, and such
Account Debtor has not returned, offered to
return or given notice of its intention to
return any of the Goods which are the
subject of such Account, and Borrower has
possession of, or has delivered to Agent at
Agent's request, shipping and delivery
receipts evidencing delivery of such Goods;
(iv) it is evidenced by an invoice rendered to
the Account Debtor thereunder, does not
remain unpaid more than sixty (60) days
after the stated due date thereof and does
not remain unpaid
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more than ninety (90) days past the stated
invoice date thereof; provided, however,
that if more than fifty percent (50%) of the
aggregate dollar amount of invoices owing by
a particular Account Debtor remain unpaid
for more than (A) sixty (60) days past the
respective stated due dates thereof or (B)
ninety (90) days past the respective invoice
dates thereof, then all Accounts owing to
Borrower by that Account Debtor shall be
deemed ineligible.
(v) it is not subject to any prior assignment,
claim, lien, security interest or
encumbrance whatsoever, other than Liens in
favor of Agent;
(vi) it is a valid, legally enforceable and
unconditional obligation of the Account
Debtor thereunder, and is not subject to
setoff, counterclaim, credit, allowance or
adjustment by such Account Debtor, or to any
claim asserted by such Account Debtor
denying liability thereunder in whole or in
part;
(vii) it does not arise out of a contract or order
which fails in any material respect to
comply with the requirements of applicable
law;
(viii) the Account Debtor thereunder is not a
director, officer, employee or agent of
Borrower, or a Subsidiary, Parent or
Affiliate of Borrower;
(ix) it is not an Account with respect to which
the Account Debtor is the United States of
America or any state or local government, or
any department, agency or instrumentality
thereof, unless Borrower assigns its right
to payment of such Account to Agent pursuant
to, and in full compliance with, the
Assignment of Claims Act of 1940, as amended
or any comparable state or local law;
(x) it is not an Account with respect to which
the Account Debtor is located in a state
which requires Borrower, as a precondition
to commencing or maintaining an action in
the courts of that state, either to (A)
receive a certificate of authority to do
business and be in good standing in such
state, or (B) file a notice of business
activities report or similar report with
such state's taxing authority, unless (x)
Borrower has taken one of the actions
described in clauses (A) or (B), (y) the
failure to take one of the actions described
in either clause (A) or (B) may be cured
retroactively by Borrower at its election,
or (z) Borrower has proven, to Agent's
satisfaction, that it is exempt from any
such requirements under any such state's
laws;
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(xi) it is an Account which arises out of a sale
made in the ordinary course of Borrower's
business;
(xii) the Account Debtor (other than with respect
to the Account Debtors listed on Exhibit B
hereto) is a resident or citizen of, and is
located within, the United States of
America;
(xiii) it is not an Account with respect to which
the Account Debtor's obligation to pay is
conditional upon the Account Debtor's
approval of the Goods or services or is
otherwise subject to any repurchase
obligation or return right, as with sales
made on a xxxx-and-hold, guaranteed sale,
sale on approval, sale or return or
consignment basis;
(xiv) it is not an Account (A) with respect to
which any representation or warranty
contained in this Agreement is untrue or (B)
which violates any of the covenants of
Borrower contained in this Agreement;
(xv) it is not an Account which, when added to a
particular Account Debtor's other
indebtedness to Borrower, exceeds the lesser
of (A) fifteen percent (15%) of the
aggregate of Borrower's Accounts or (B) a
credit limit determined by Agent in its
reasonable credit judgment for that Account
Debtor as set forth on Exhibit E attached
hereto; provided, however, that Accounts
excluded from Eligible Accounts solely by
reason of this subparagraph (xv) shall be
Eligible Accounts to the extent of such
credit limit; provided, further, that
Exhibit E may be amended by Agent from time
to time to change limits for existing
Account Debtors and reflect credit limits
for new Account Debtors;
(xvi) it is not an Account with respect to which
the prospect of payment or performance by
the Account Debtor is or will be impaired,
as determined by Agent in its commercially
reasonable discretion;
(xvii) it is not an Account arising from progress
xxxxxxxx, invoices for deposits, samples or
tooling;
(xviii) it is not an Account with respect to which
the sale is on an installment basis, lease
or other payment plan basis which extends
the payment terms with respect to such
Account beyond (A) sixty (60) days after the
stated due date thereof or (B) ninety (90)
days past the stated invoice date thereof;
and
(xix) it is not that portion of an Account
representing late fees, service charges or
interest.
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"ELIGIBLE INVENTORY" shall mean Inventory consisting of raw
materials or held for sale by Borrower, normally and currently saleable in the
ordinary course of Borrower's business, and which at all times pertinent hereto
is of good and merchantable quality, free from defects, as to which Inventory
Agent has a perfected first priority security interest and which Inventory is
subject to no other Lien other than Liens in favor of Agent, and which is
located at the locations set forth in Exhibit A of this Agreement and is not in
transit, as that Exhibit may, from time to time, be amended or supplemented in
accordance with the terms of this Agreement, and as to which Borrower has
satisfied all terms, conditions, warranties and representations of this
Agreement and the Other Agreements; but Eligible Inventory shall not include any
of the following: (a) catalogs, packages, shipping materials, supplies consumed
in Borrower's business, shrink wrap and other promotional materials of any kind;
(b) returned items; (c) work-in-process; (d) damaged, defective or recalled
items; (e) obsolete items; (f) items used as demonstrators, prototypes or
salesmen's samples; (g) items of Inventory which have been consigned to Borrower
or as to which a Person claims a security interest, prior assignment claim or
encumbrance whatsoever other than Liens in favor of Agent; (h) items of
Inventory which have been consigned by Borrower to a consignee; (i) Inventory
located on premises leased by Borrower from a landlord with whom Agent has not
entered into a landlord's waiver on terms satisfactory to Agent; (j) Inventory
located on premises not controlled by Borrower with respect to which Agent has
not received a third party waiver letter executed by the Person who controls
such premises in form and substance acceptable in all respects to Agent; (k)
Inventory which in the reasonable judgment of Agent is considered to be slow
moving or otherwise not merchantable; (l) Inventory located outside the United
States of America; and (m) Inventory which is subject to a license agreement
(other than Inventory subject to the Hewlett Packard Contract and the RDM
Contract) unless Agent shall have entered into a licensor consent letter with
the licensor in form and substance satisfactory to Agent ; and (n) any Inventory
that Agent has reasonably determined is not acceptable due to age, type,
category or quantity.
"ENVIRONMENTAL COMPLAINT" shall have the meaning set forth in
paragraph 15(s)(iv) hereof.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"EQUIPMENT" shall have the meaning given to the term
"equipment" in the UCC and shall include, without limitation, the machinery and
equipment of Borrower, including without limitation processing equipment, data
processing and computer equipment with software and peripheral equipment, and
all engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, molds, dies, attachments,
accessories, automotive equipment, trailers, trucks, motor vehicles, tanks,
cylinders and other equipment of every kind and nature, and fixtures, all
whether now owned or hereafter acquired, and wheresoever situated, together with
all additions and accessions thereto, replacements therefor, all parts therefor,
and all manuals, drawings, instructions, warranties, and rights with respect
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thereto, and all products and proceeds of the foregoing, and condemnation awards
and insurance proceeds with respect thereto.
"EQUIPMENT LOAN COMMITMENT" shall mean the sum of $1,000,000.
"EQUIPMENT LOANS" shall have the meaning set forth in
paragraph 3(b) hereof.
"EQUIPMENT NOTE" shall mean the promissory note(s) in the
aggregate original principal amount of the Equipment Loan Commitment executed by
Borrower to the order of Agent for its benefit and for the ratable benefit of
Lenders or to each Lender, as applicable, and dated as of the Closing Date,
together with all replacements and substitutions thereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and all references to sections thereof shall include such
sections and any predecessor and successor provisions thereto.
"ERISA AFFILIATE" shall mean any member of a controlled group
of entities as determined under Section 414(b),(c),(m), or (o) of the IRC, of
which Borrower is a member.
"EVENT OF DEFAULT" shall have the meaning specified in
paragraph 17 hereof.
"EXCESS AVAILABILITY" shall mean, as of any date of
determination by Agent, the excess, if any, of (i) the lesser of (a) the
Revolving Loan Commitment and (b) the Borrowing Base over (ii) the outstanding
Revolving Loans, in each case as of the close of business on such date. For
purposes of calculating Excess Availability of Borrower and the amount of the
Borrowing Base relating thereto, Agent may, in the exercise of its sole
discretion, establish a reserve in an aggregate amount based on the sum of (a)
Borrower's outstanding trade payables which are past due beyond Borrower's
normal trade terms in any material respect, plus (b) any taxes due and unpaid to
any taxing authority, plus (c) transaction fees incurred by Borrower in
connection with the consummation of the transactions contemplated by this
Agreement which are due and remain unpaid, in each case as of such date of
determination, to the extent thereof.
"EXHIBIT A" shall mean the exhibit entitled Exhibit A -
Business and Collateral Locations which is attached hereto and made a part
hereof.
"EXHIBIT D" shall mean the exhibit entitled Exhibit
D-Officer's Certificate which is attached hereto and made a part hereof.
"FINANCIAL CONDITION CERTIFICATE" shall mean the Financial
Condition Certificate dated as of the Closing Date made by Xxxxxxx X. Xxxx as
Chief Financial Officer of Borrower to Agent and Lenders.
"FINISHED GOODS ADVANCE RATE" shall mean fifty percent (50%).
"FISCAL YEAR" shall mean with respect to Borrower, the twelve
(12) month accounting period of Borrower commencing January 1st of each calendar
year and ending December 31st of such calendar year.
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"FIXED CHARGE COVERAGE RATIO" shall mean and include, with
respect to any applicable fiscal period, the ratio of (a) EBITDA, minus
non-financed Capital Expenditures made during such period minus cash taxes
actually paid during such period to (b) the sum of (i) principal payments of
long-term debt paid or scheduled to be paid during such period plus (ii)
capitalized leases paid or scheduled to be paid during such period plus (iii)
interest expense of Borrower for such period plus (iv) the dollar value of
dividends on the Series B Preferred Stock paid in cash or in kind during such
period.
"GAAP" shall mean generally accepted accounting principles and
policies in the United States as in effect from time to time.
"GENERAL INTANGIBLES" shall have the meaning given to the term
"general intangibles" in the UCC and in any event shall include, without
limitation, all of Borrower's present and future general intangibles and other
personal property, any and all rights of Borrower to all choses or things in
action, tax refund claims, credits, claims, claims against carriers and
shippers, guarantee claims, contract rights, security interests, security rights
and any rights to indemnification, demands, goodwill, licenses, franchise
agreements, subscription costs, patents, patent applications, design rights,
trade names, trademarks, trademark applications, copyrights, registrations,
rights to royalties, blueprints, drawings, customer lists, purchase orders,
computer programs, computer discs, computer tapes, literature, reports,
catalogs, methods, sales literature, video tapes, confidential information and
trade secrets, consulting agreements, employment agreements, leasehold interests
in real and personal property, insurance policies, deposits with insurers
relating to worker's compensation liabilities, Deposit Accounts and tax refunds,
other than Equipment, Inventory, Investment Property and Accounts, as well as
Borrower's books and records relating to any of the foregoing, and all products
and proceeds of the foregoing.
"GENERAL RESERVE" shall mean (a) $250,000 during the first
Contract Year and (b) $0 at all times after the first Contract Year.
"GTECH CONTRACT" shall mean the Amended and Restated GTECH
Purchase Agreement dated July 14, 1999 between Borrower and GTECH Corporation.
"GOODS" shall have the meaning given to the term "goods" in
the UCC and in any event shall include, without limitation, all of Borrower's
tangible assets and tangible properties which are moveable at the time the
security interest attaches or which are fixtures.
"GUARANTOR AND GUARANTORS" shall mean, individually and
collectively, XxxxxXxx.xxx, TransAct UK and TransAct Barbados and any other
Person which executes and becomes obligated under a Guaranty.
"GUARANTY" shall mean individually and collectively each
Guaranty executed by a Guarantor in favor of Agent and Lenders.
"HAZARDOUS DISCHARGE" shall have the meaning set forth in
paragraph 15(s)(iv) hereof.
"HAZARDOUS SUBSTANCE" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation,
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polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, Hazardous Wastes, hazardous or Toxic Substances or related materials
as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49
U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable Environmental Law and in
the regulations adopted pursuant thereto.
"HAZARDOUS WASTES" shall mean all waste materials subject to
regulation under CERCLA, RCRA or applicable state law, and any other applicable
Federal and state laws now in force or hereafter enacted relating to hazardous
waste disposal.
"HEALTH-CARE-INSURANCE RECEIVABLE" shall have the meaning
given to the term "health-care-insurance-receivable" in the UCC and in any event
shall include, without limitation, an interest in or claim under a policy of
insurance which is a right to payment of a monetary obligation for health-care
goods or services provided.
"HEWLETT PACKARD CONTRACT" shall mean collectively, (a) the
Non-Exclusive License Agreement dated March 3, 1999 between Borrower and
Hewlett-Packard Company ("HP"), (b) the Transaction Inkjet Printer Development
Agreement dated March 3, 1999 between Borrower and HP and (c) the Inkjet
Products OEM Sales Agreement dated March 1, 2000 between Borrower and HP, as
each is in effect on the Closing Date.
"INDEMNIFIED PARTY" shall have the meaning specified in
paragraph 19 hereof.
"INSTRUMENTS" shall have the meaning given to the term
"instruments" in the UCC and in any event shall include, without limitation, a
negotiable instrument or a certificated security or any other writing which
evidences a right to the payment of money.
"INTEREST PERIOD" shall mean for any LIBOR Rate Loan the
period commencing on the date of the borrowing thereof and ending one, two,
three or six months thereafter, provided, however, that Borrower may not select
any Interest Period that ends after the Term. Whenever the last day of an
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day; provided, that if such extension would cause the last
day of such Interest Period to occur in the next following calendar month, the
last day of such Interest Period shall occur on the next preceding Business Day.
"INVENTORY" shall have the meaning given to the term
"inventory" in the UCC and in any event shall include, without limitation, all
present and future inventory in which Borrower has any interest, including, but
not limited to, goods held by Borrower for sale or lease or to be furnished
under a contract of service and all of Borrower's present and future raw
materials, work in process, finished goods, supplies and packing and shipping
materials, wherever located, any and all merchandise returned to or reclaimed by
Borrower, and any documents of title representing any of the above.
"INVENTORY ADVANCE RATE" shall mean the collective reference
to the Finished Goods Advance Rate and the Raw Materials Advance Rate.
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"INVESTMENT PROPERTY" shall have the meaning given to the term
"investment property" in the UCC, and in any event shall include, without
limitation, all of Borrower's now owned or hereafter acquired securities,
whether certificated or uncertificated, securities entitlements, securities
accounts, commodity and futures contracts and commodity and futures accounts.
"IRC" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"ISP 98" shall mean the International Standby Practices which
applies to standby letters of credit, prepared by the Institute of International
Banking Law and Practice, and any amendments or revision thereof.
"KIND" shall mean, with respect to any Loan, whether such Loan
is a Revolving Loan, a Term Loan or an Equipment Loan.
"L/C ISSUER" shall mean the Bank or such other bank as may be
selected by Agent in its sole discretion.
"LENDER DEFAULT" shall have the meaning set forth in paragraph
7(h) hereof.
"LENDER(S)" shall have the meaning set forth in the
introductory paragraph hereof.
"LETTER OF CREDIT FEE" shall have the meaning set forth in
paragraph 6(d) hereof.
"LETTER OF CREDIT OBLIGATIONS" shall mean, as of any date of
determination, the sum of (i) the aggregate undrawn amount of all Letters of
Credit and (ii) the aggregate unreimbursed amount of all drawn Letters of
Credit.
"LETTER-OF-CREDIT RIGHT" shall have the meaning given to the
term "letter-of-credit-right" in the UCC and in any event shall include, without
limitation, a right to payment or performance under a letter of credit, whether
or not the beneficiary has demanded or is at the time entitled to demand payment
or performance.
"LETTERS OF CREDIT" shall mean those documentary letters of
credit and stand-by letters of credit issued for Borrower's account in
accordance with the terms of paragraph 4 hereof.
"LIABILITIES" shall mean all Loans and any and all other
obligations, liabilities and indebtedness of Borrower to Agent and/or Lenders or
to any parent, affiliate or subsidiary of Agent and/or Lenders of any and every
kind and nature, howsoever created, arising or evidenced and howsoever owned,
held or acquired, and any and all other Loans, obligations, liabilities and
indebtedness of Borrower to Agent and/or Lenders of any kind and nature,
howsoever created, arising or evidenced under this Agreement and/or the Other
Agreements, in each case whether now or hereafter existing, whether now due or
to become due, whether primary, secondary, direct, indirect, absolute,
contingent or otherwise (including, without limitation, obligations of
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performance), whether several, joint or joint and several, and whether arising
or existing under written or oral agreement or by operation of law.
"LICENSE AGREEMENT" shall mean each license agreement now or
hereafter entered into by Borrower as licensee, with respect to any trademarks,
patents or other intellectual property.
"LIBOR RATE" shall mean, with respect to the Interest Period
applicable to the borrowing of a LIBOR Rate Loan, the rate obtained (rounded
upwards to the nearest 1/100 of 1%) by dividing (i) the rate of interest per
annum offered to Bank in the London interbank foreign currency deposits market
as of approximately 9:00 A.M. (Chicago time) two (2) Business Days prior to the
commencement of such Interest Period for U.S. dollar deposits of amounts in
immediately available funds comparable to the principal amount of the LIBOR Rate
Loan for which the LIBOR Rate is being determined with maturities comparable to
the Interest Period for which such LIBOR Rate will apply, by (ii) a percentage
equal to 1 minus the stated reserve (expressed as a decimal), if any, required
to be maintained against "Eurocurrency liabilities" as specified in Regulation D
of the Board of Governors of the Federal Reserve System as from time to time
shall be in effect (or against any other category of liabilities, which includes
deposits, by reference to which the interest rate on LIBOR Rate Loans is
determined or any category of extensions of credit on other assets, which
includes loans by a non-U.S. office of Bank to U.S. Residents). In the absence
of manifest error, each determination by Bank of the applicable LIBOR Rate shall
be deemed conclusive.
"LIBOR RATE EQUIPMENT LOAN" shall mean that portion of any
Equipment Loan that bears interest at the LIBOR Rate.
"LIBOR RATE LOAN" shall mean a Revolving Loan, portion of the
Term Loan or an Equipment Loan that bears interest based on the LIBOR Rate.
"LIBOR RATE REVOLVING LOAN" shall mean a Revolving Loan that
bears interest based on the LIBOR Rate.
"LIBOR RATE TERM LOAN" shall mean that portion of the Term
Loan that bears interest based on the LIBOR Rate.
"LOAN" OR "LOANS" shall mean any and all Revolving Loans, the
Term Loan and any and all Equipment Loans made by Agent and Lenders to Borrower
pursuant to paragraphs 2 and 3 hereof and all other loans, advances and
financial accommodations made by Agent and Lenders to or on behalf of Borrower
hereunder.
"LOCK BOX" and "BLOCKED ACCOUNT" shall have the meanings
specified in paragraph 11 hereof.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse change
in, or a material adverse effect upon, any of the business, property, assets,
operations, condition (financial or otherwise) or prospects of Borrower, related
to any event, act, condition or occurrence of whatever nature (including any
adverse determination in any litigation, arbitration or governmental
investigation or proceeding), whether singly or in conjunction with any other
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event or events, act or acts, condition or conditions, occurrence or
occurrences, whether or not related.
"MAXIMUM TERM LOAN AMOUNT" shall mean an amount equal to
$500,000.
"MULTIEMPLOYER PLAN" shall mean a plan described in Section
4001(a)(3) of ERISA which covers employees of Borrower or any ERISA Affiliate.
"NON-DEFAULTING LENDER" shall have the meaning specified in
paragraph 7(i) hereof.
"NON-TAKEOVER COMMON STOCKHOLDER" shall mean a Beneficial
Owner (as such term is defined in the Series A Rights Agreement) of shares of
Borrower's common stock who holds Series A Rights and transferees of the Series
A Rights held by such Beneficial Owner, provided that such Beneficial Owner or
transferee is not (a) an Acquiring Person or an Affiliate or Associate (as
"Acquiring Person", "Affiliate" and "Associate" are defined in the Series A
Rights Agreement) of such Acquiring Person or (b) a transferee of such Acquiring
Person which is subject to the same restrictions of an Acquiring Person under
the terms of the Series A Rights Agreement.
"NOTE" shall mean individually and collectively, the Revolving
Note, the Term Note and the Equipment Note.
"OBLIGOR" shall mean Borrower and each Person who is or shall
become primarily or secondarily liable for any of the Liabilities (including,
without limitation any Person who provides security to Agent for any Liability),
provided, however, that such term shall not include any Account Debtor.
"OKIDATA CONTRACT" shall mean the OEM Purchase Agreement dated
May 9, 1996 between Borrower and Okidata Division of Okidata America, Inc. as
the same has been amended pursuant to a letter agreement dated August 23, 1999
and a letter agreement dated May 1, 2001.
"ORGANIZATIONAL DOCUMENTS" shall mean, collectively, as the
case may be, articles of incorporation, certificate of incorporation,
certificate of partnership, certificate of limited partnership, certificate of
formation, by-laws, operating agreement, partnership agreement, limited
partnership agreement and/or any other agreement, certificate, document and/or
instrument associated with the organization and/or governance of the applicable
entity or the conduct of its business.
"OTHER AGREEMENTS" shall mean all agreements, instruments and
documents including, without limitation, guaranties, mortgages, trust deeds,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements and all other writings heretofore, now
or from time to time hereafter executed by or on behalf of Borrower or any other
Person and delivered to Agent or any Lender or to any parent, affiliate or
subsidiary of Agent or any Lender in connection with the Liabilities or the
transactions contemplated hereby.
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"PARENT" shall mean any Person now or at any time or times
hereafter owning or controlling (alone or with any other Person) at least a
majority of the issued and outstanding stock or equity interest of Borrower or
any Subsidiary and if Borrower is a Partnership, the general partner of
Borrower.
"PARTICIPANT" shall mean each Person who shall be granted the
right by any Lender to participate in any of the Loans.
"PAYMENT INTANGIBLE" shall have the meaning given to the term
"payment intangible" in the UCC and in any event shall include, without
limitation, a General Intangible under which the Account Debtor's principle
obligation is a monetary obligation.
"PAYMENT OFFICE" shall mean initially 000 Xxxxx XxXxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, thereafter, such other office of Agent, if any,
which Agent may designate by notice to Borrower to be the Payment Office.
"PERMITTED LIENS" shall mean (i) statutory liens of landlords,
carriers, warehousemen, processors, mechanics, materialmen or suppliers incurred
in the ordinary course of business and securing amounts not yet due or declared
to be due by the claimant thereunder, (ii) liens or security interests in favor
of Agent, (iii) zoning restrictions and easements, rights of way, licenses,
covenants and other restrictions affecting the use of real property that do not
individually or in the aggregate have a Material Adverse Effect on Borrower's
ability to use such real property for its intended purpose in connection with
Borrower's business, (iv) liens securing the payment of taxes or other
governmental charges not yet delinquent or being contested in good faith and by
appropriate proceedings, (v) liens incurred or deposits made in the ordinary
course of Borrower's business in connection with capitalized leases or purchase
money security interests for purchase of, and applying only to, Equipment
included in the permitted borrowings under paragraph 14(q)(ii) or permitted as
Capital Expenditures under paragraph 15(p)(iii) and if any such transaction
individually or together with other such transactions exceeds $100,000 in the
aggregate, the documents relating to such liens shall be in form and substance
reasonably acceptable to Agent, (vi) liens securing indebtedness owing by any
Subsidiary to Borrower to the extent such indebtedness is permitted under
paragraph 14(q), or to any other Subsidiary of Borrower, (vii) deposits to
secure performance of bids, trade contracts, leases and statutory obligations
(to the extent not excepted elsewhere herein); (viii) liens specifically
permitted by Agent in writing as set forth on Schedule 1(a) attached hereto;
(ix) any lien arising out of the refinancing, extension, renewal or refunding of
any indebtedness secured by any lien permitted by any of the foregoing sections
(v), (vi) and (viii) provided that (a) such indebtedness is not secured by any
additional assets, and (b) the amount of such indebtedness is not increased; (x)
pledges or deposits in connection with worker's compensation, unemployment
insurance and other social security legislation; (xi) grants of security and
rights of setoff in Deposit Accounts, securities and other properties held at
banks or financial institutions to secure the payment or reimbursement under
overdraft, acceptance and other facilities, and (xii) rights of setoff, banker's
lien and other similar rights arising solely by operation of law.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor agency.
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"PERSON" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party or foreign or
United States government (whether federal, state, county, city, municipal or
otherwise), including, without limitation, any instrumentality, division,
agency, body or department thereof.
"PREFERRED B DIVIDEND PAYMENT" shall have the meaning
specified in paragraph 15(j) hereof.
"PREFERRED STOCK" shall mean, collectively, the Series A
Preferred Stock and the Series B Preferred Stock.
"PRIME RATE" shall mean the publicly announced prime rate of
the Bank, in effect from time to time. The Prime Rate is not intended to be the
lowest or most favorable rate of the Bank in effect at any time.
"PRIME RATE EQUIPMENT LOAN" shall mean any Equipment Loan that
bears interest based on the Prime Rate.
"PRIME RATE LOAN" shall mean a Revolving Loan, portion of the
Term Loan or any Equipment Loan that bears interest based on the Prime Rate.
"PRIME RATE REVOLVING LOAN" shall mean a Revolving Loan that
bears interest based on the Prime Rate.
"PRIME RATE TERM LOAN" shall mean that portion of the Term
Loan that bears interest based on the Prime Rate.
"PRO FORMA BALANCE SHEET" shall have the meaning specified
paragraph 14(a)(i) hereof.
"PROHIBITED TRANSACTION" shall mean a prohibited transaction
described in Section 406 of ERISA or Section 4975 of the IRC.
"PURCHASING LENDER" shall have the meaning specified in
paragraph 25(b) hereof.
"RAW MATERIALS ADVANCE RATE" shall mean (a) fifty percent
(50%) at all times during the first Contract Year, (b) forty-five percent (45%)
at all times during the second Contract Year and (c) forty percent (40%) at all
times during or after the third Contract Year.
"RCRA" shall mean the Resource Conservation and Recovery Act
42 U.S.C.Sections 6901 et seq., as same may be amended from time to time.
"RDM CONTRACT" shall mean the Software License Agreement dated
December 9, 1996 between Research, Development, and Manufacturing Corporation
and Borrower, as in effect on the Closing Date
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"REAL PROPERTY" shall mean all of Borrower's right, title and
interest in and to the owned and leased premises identified on Schedule 1(b)
hereto.
"RELEASE" shall have the meaning set forth in paragraph
14(bb)(iii) hereof.
"REPORTABLE EVENT" shall mean a reportable event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder for which the
30-day notice of such event has not been waived pursuant to such regulations.
"REQUIRED LENDERS" shall mean Lenders holding at least fifty
one percent (51%) of the Loans, or if no Loans are outstanding, Lenders holding
at least fifty one percent (51%) of the Commitment Percentages.
"REVOLVING LOANS" shall have the meaning specified in
paragraph 2 hereof.
"REVOLVING LOAN COMMITMENT" shall mean the sum of $12,000,000.
"REVOLVING NOTE" shall mean the promissory note(s) in the
aggregate original principal amount of the Revolving Loan Commitment, executed
by Borrower to the order of Agent for its benefit and for the benefit of
Lenders, or to each Lender, as applicable, dated as of the Closing Date,
together with all replacements and substitutions thereof.
"SERIES A PREFERRED STOCK" shall mean Borrower's Series A
Preferred Stock as evidenced on the Closing Date by (a) the Certificate of
Designation of Borrower filed on December 2, 1997 with the Delaware Secretary of
State and (b) the Series A Rights Agreement.
"SERIES A RIGHT" shall have the meaning given to the term
"Right" in the Series A Rights Agreement.
"SERIES A RIGHTS AGREEMENT" shall mean the Amended and
Restated Rights Agreement dated as of February 16, 1999 between Borrower and
American Stock Transfer & Trust Company as in effect on the Closing Date.
"SERIES B PREFERRED CHANGE OF CONTROL" shall mean a "Change of
Control" as such term is defined in the Certificate of Designation of Borrower
filed on April 6, 2000 with the Delaware Secretary of State.
"SERIES B PREFERRED STOCK" shall mean Borrower's Series B
Preferred Stock as evidenced on the Closing Date by (a) the Certificate of
Designation of Borrower filed on April 6, 2000 with the Delaware Secretary of
State and (b) the Preferred Stock Purchase Agreement dated as of March 20, 2000
between the Borrower, Advance Capital Partners, L.P. and Advance Capital
Offshore Partners, L.P.
"SETTLEMENT DATE" shall mean the Closing Date and thereafter
every Wednesday of each Week unless such day is not a Business Day in which case
it shall be the next succeeding Business Day.
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"SUBSIDIARY" shall mean any corporation of which more than
fifty percent (50%) of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time, directly or indirectly, owned by Borrower or
any partnership, limited liability company, entity or joint venture of which
more than fifty percent (50%) of the outstanding equity interests are at the
time, directly or indirectly, owned by Borrower or any partnership of which
Borrower is general partner.
"SUPPORTING OBLIGATION" shall have the meaning given to the
term "supporting obligation" in the UCC and in any event shall include, without
limitation, a Letter-of-Credit Right or secondary obligation that supports the
payment or performance of an Account, Chattel Paper, a Document, a General
Intangible, an Instrument or Investment Property.
"TANGIBLE NET WORTH" shall mean with respect to any
applicable fiscal period, the following for Borrower on a consolidated basis,
each calculated for such period: an amount equal to (A) shareholders' equity
(including retained earnings) less (B) the sum of (i) the book value of all
intangible assets, plus (ii) prepaid expenses, determined by Agent on a
consistent basis and plus (iii) any Preferred B Dividend Payment paid in cash or
in kind during such fiscal period up to an amount not exceeding (x) $70,000 in
the aggregate during any fiscal quarter and (y) $280,000 in the aggregate during
any Fiscal Year, plus (C) the amount of any debt subordinated to Agent on terms
and conditions acceptable to Agent in its sole judgment, all as determined in
accordance with GAAP, consistently applied.
"TERM" shall have the meaning specified in paragraph 13
hereof.
"TERMINATION EVENT" shall mean (i) a Reportable Event with
respect to any Benefit Plan or Multiemployer Plan; (ii) the withdrawal of
Borrower or any member of the Controlled Group from a Benefit Plan or
Multiemployer Plan during a plan year in which such entity was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (iii) the providing of
notice of intent to terminate a Plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan or Multiemployer Plan; (v) any event or condition (a)
which might reasonably constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan
or Multiemployer Plan, or (b) that may reasonably result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial or
complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of
Borrower or any member of the Controlled Group from a Multiemployer Plan.
"TERM LOAN" shall have the meaning specified in paragraph 3(a)
hereof.
"TERM NOTE" shall mean the promissory note(s) in the aggregate
original principal amount equal to the Maximum Term Loan Amount, executed by
Borrower to the order of Agent for its benefit and for the ratable benefit of
Lenders or to each Lender, as applicable, and dated as of the Closing Date,
together with all replacements and substitutions thereof.
"TOTAL CREDIT FACILITY" shall mean the sum of $13,500,000.
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"TOXIC SUBSTANCE" shall mean and include any material present
on the Real Property which has been shown to have significant adverse effect on
human health or which is subject to regulation under the Toxic Substances
Control Act (TSCA), 15 U.S.C. Sections 2601 et seq., applicable state law,
or any other applicable Federal or state laws relating to toxic substances.
"Toxic Substance" includes but is not limited to asbestos, polychlorinated
biphenyls (PCBs) and lead-based paints.
"TRANSACT BARBADOS" shall mean TransAct Technologies
International Ltd., a corporation incorporated under the laws of Barbados.
"XXXXXXXX.XXX" shall mean XxxxxXxx.xxx, Inc., a Delaware
corporation.
"TRANSACT UK" shall mean TransAct Technologies Limited, a
corporation incorporated under the laws of the United Kingdom.
"TRANSACTIONS" shall mean the transactions contemplated by and
under this Agreement.
"TRANSFEREE" shall have the meaning set forth in paragraph
25(a) hereof.
"TYPE" shall mean, with respect to (i) any Revolving Loan,
whether such Revolving Loan is a LIBOR Rate Revolving Loan or a Prime Rate
Revolving Loan, (ii) the Term Loan, whether any portion thereof is a LIBOR Rate
Term Loan or a Prime Rate Term Loan and (iii) any Equipment Loan, whether such
Equipment Loan is a LIBOR Rate Equipment Loan or a Prime Rate Equipment Loan.
"UCC" shall mean the Uniform Commercial Code as in effect on
the date hereof in the State of New York, as amended from time to time, and any
successor statute.
"WALLINGFORD RESTRUCTURING CHARGES" the restructuring charges
incurred by Borrower in connection with the closing of Borrower's plant in
Wallingford, Connecticut.
"WEEK" shall mean the time period commencing with a Wednesday
and ending on the following Tuesday.
(b) Accounting Terms and Definitions. Unless otherwise defined
or specified herein, all accounting terms used in this Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all material
respects with the financial statements delivered by Borrower to Agent on or
before the Closing Date or as otherwise agreed to by Agent. All accounting
determinations for purposes of determining compliance with the financial
covenants contained in paragraph 15(p) shall be made in accordance with GAAP as
in effect on the Closing Date and applied on a basis consistent in all material
respects with the audited financial statements of Borrower delivered to Agent by
Borrower on or before the Closing Date. The financial statements required to be
delivered hereunder from and after the Closing Date, and all financial records,
shall be maintained in accordance with GAAP. If GAAP shall change from the basis
used in preparing the audited financial statements delivered to Agent by
Borrower on or before the Closing Date, the certificates required to be
delivered pursuant to paragraph 12 demonstrating compliance with the covenants
contained herein shall include, at the election of
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Borrower or upon the request of Agent, calculations setting forth the
adjustments necessary to demonstrate how Borrower is in compliance with the
financial covenants based upon GAAP as in effect on the Closing Date.
2. REVOLVING LOANS. Subject to the terms and conditions of this
Agreement and the Other Agreements, during the Term, absent the existence of a
Default or Event of Default:
(a) Revolving Loan Commitment. Each Lender, severally and not
jointly, shall make such revolving loans and advances (the "Revolving Loans") to
Borrower in aggregate amounts outstanding at any time equal to such Lender's
Commitment Percentage as Borrower shall from time to time request, in accordance
with the terms of paragraph 2(b) hereof. The aggregate unpaid principal amount
of all Revolving Loans outstanding at any one time made to Borrower shall not
exceed the lesser of (A) the Borrowing Base and (B) the Revolving Loan
Commitment, minus the outstanding Letter of Credit Obligations. All Revolving
Loans shall be repaid in full upon the earlier to occur of (i) the end of the
Term and (ii) the acceleration of the Liabilities pursuant to paragraph 18 of
this Agreement. If at any time the outstanding principal balance of the
Revolving Loans made to Borrower exceeds (A) the Borrowing Base or (B) the
Revolving Loan Commitment, minus the outstanding Letter of Credit Obligations,
Borrower shall immediately, and without the necessity of a demand by Agent, pay
to Agent such amount as may be necessary to eliminate such excess, and Agent
shall apply such payment pro rata according to the Commitment Percentage of each
Lender against the outstanding principal balance of the Revolving Loans. In
addition, if at any time the sum of (i) the outstanding principal balance of the
Loans and (ii) the outstanding Letter of Credit Obligations exceeds the Total
Credit Facility, Borrower shall immediately and without the necessity of a
demand by Agent pay to Agent such amount as may be necessary to eliminate such
excess, and Agent shall apply such payment against the outstanding principal
balance of the Loans in such order as Agent shall determine in its sole
discretion. Borrower hereby authorizes Agent to charge any of Borrower's
accounts to make any payments of principal or interest required by this
Agreement. All Revolving Loans shall, in Agent's sole discretion, be evidenced
by one or more Revolving Notes in substantially the form attached hereto as
Exhibit 2(a). However, if such Revolving Loans are not so evidenced, such
Revolving Loans may be evidenced solely by entries upon the books and records
maintained by Agent.
(b) Borrowing Limits. Each Lender, severally and not jointly,
shall make Revolving Loans to Borrower up to its Commitment Percentage of the
lesser of clause (A) or (B) below, the amount calculated pursuant to clause (A)
below being the "Borrowing Base":
A. an amount equal to the sum of (i) eighty-five
percent (85%) (the "Accounts Advance Rate") of the face amount
of Eligible Accounts, plus (ii) the lesser of (x) $5,500,000
or (y) the sum of (I) the Finished Goods Advance Rate of the
value of Eligible Inventory consisting of finished goods
calculated on the basis of the lower of cost or market value
on a first in, first out basis plus (II) the Raw Materials
Advance Rate of the value of Eligible Inventory consisting of
raw materials calculated on the basis of the lower of cost or
market value on a first in, first out basis minus (iii) the
General Reserve (v) the Connecticut State Reserve minus (vi)
such other reserves as Agent may establish from time to time
in the
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exercise of its commercially reasonable discretion minus (vii)
the outstanding amount of all Letter of Credit Obligations; or
B. the Revolving Loan Commitment, minus the
outstanding amount of all Letter of Credit Obligations.
3. ADDITIONAL LOANS.
(a) Term Loan. On the Closing Date, each Lender, severally and
not jointly, shall make a term loan (the "Term Loan") to Borrower in an amount
equal to its Commitment Percentage of the Maximum Term Loan Amount. Principal
payable on account of the Term Loan shall be payable in successive monthly
installments payable, (i) on the first day of each month, the first of which
installments shall be due and payable on the first day of the month immediately
following the 30th day after the Closing Date and (ii) in equal and level
payments of $8,333.33 each month during the Term, provided, however, that the
entire unpaid principal balance of the Term Loan shall be due and payable in
full upon the expiration of the Term. Notwithstanding anything hereinabove to
the contrary, the entire unpaid principal balance of the Term Loan, and any
accrued and unpaid interest thereon, shall be immediately due and payable upon
the earlier to occur of (i) the last day of the Term and (ii) the acceleration
of the Liabilities pursuant to paragraph 18 of this Agreement. The Term Loan
shall be evidenced by one or more Term Notes in substantially the form attached
hereto as Exhibit 3(a).
(b) Equipment Loans. So long as no Default or Event of Default
has occurred and is continuing under this Agreement and subject to the
fulfillment of all conditions precedent to any Loan under paragraph 16 hereof,
each Lender, severally and not jointly, agrees to make available loans up to its
Commitment Percentage of the Equipment Loan Commitment for financing Capital
Expenditures permitted by paragraph 15(p)(iii) hereof by Borrower for the
acquisition of Equipment (excluding expenditures with respect to computers,
maintenance or repairs, leasehold improvements, software, furniture and real
estate fixtures)(each an "Equipment Loan") used in its business; provided,
however, that each such Equipment Loan shall not exceed up to eighty percent
(80%) of the net invoice cost (which shall be exclusive of shipping, handling,
installation and all other "soft" costs) of any new Equipment to be purchased by
Borrower. Equipment Loans (i) shall be in amounts not less than $100,000, (ii)
shall only be made to Borrower during the first two Contract Years, (iii) shall
amortize on the basis of a sixty (60) month schedule and (iv) shall be payable
in equal monthly installments commencing on the first day of the month
immediately succeeding the month in which such Equipment Loan is made and on the
corresponding day of each month thereafter with the balance payable on the
expiration of the Term. The Equipment Loans shall be evidenced by one or more
Equipment Notes in substantially the form of Exhibit 3(b) attached hereto and
made a part hereof.
Notwithstanding anything hereinabove to the contrary, the
entire unpaid principal balance of Equipment Loans and any accrued and unpaid
interest thereon, shall be immediately due and payable upon the earlier to occur
of (i) the last day of the Term and (ii) the acceleration of the Liabilities
pursuant to paragraph 18 of this Agreement.
4. LETTER OF CREDIT. (a) Subject to the terms and conditions hereof,
Agent shall (a) from time to time issue or cause the L/C Issuer to issue Letters
of Credit for the account
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of Borrower; provided, however, that Agent will not be required to issue or
cause to be issued any Letters of Credit to the extent that the issuance of such
Letters of Credit would then cause the sum of (i) the outstanding Revolving
Loans plus (ii) the Letter of Credit Obligations (with the requested Letter of
Credit being deemed to be outstanding for purposes of this calculation) to
exceed the lesser of (x) the Revolving Loan Commitment or (y) the Borrowing Base
in effect prior to the issuance of the requested Letter of Credit. The maximum
amount of outstanding Letters of Credit shall not exceed Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate at any time. Each disbursement or
payment by the L/C Issuer or Agent related to Letters of Credit shall be deemed
to be a Revolving Loan and shall bear interest as a Prime Rate Revolving Loan.
Letters of Credit that have not been drawn upon shall not bear interest.
(b) Borrower may from time to time upon notice not later than
12:00 Noon, Chicago time, at least three (3) Business Days in advance, request
Agent to assist Borrower in establishing or opening a Letter of Credit by
delivering to Agent at the Payment Office, the L/C Issuer's standard form of
letter of credit application (the "Letter of Credit Application") completed to
the satisfaction of the L/C Issuer; and, such other certificates, documents and
other papers and information as Agent may reasonably request.
(c) Each Letter of Credit shall, among other things, (i)
provide for the payment of sight drafts when presented for honor thereunder in
accordance with the terms thereof and when accompanied by the documents
described therein and (ii) have an expiry date not later than twelve (12) months
after such Letter of Credit's date of issuance and in no event later than the
last day of the Term. Each Letter of Credit Application and each Letter of
Credit shall be subject to (x) the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500,
and any amendments or revision thereof in connection with any documentary letter
of Credit and (y) ISP 98 in connection with any standby Letter of Credit, or
with respect to any Letter of Credit Application or Letter of Credit, any other
rules, regulations and customs prevailing at the place where any such Letter of
Credit Application is made or where any such Letter of Credit is available or
the drafts are drawn or negotiated and, to the extent not inconsistent
therewith, the laws of the State of New York.
(d) In connection with the issuance of any Letter of Credit,
Borrower shall indemnify, save and hold Agent, each Lender and each L/C Issuer
harmless from any loss, cost, expense or liability, including, without
limitation, payments made by Agent, any Lender or any L/C Issuer, and expenses
and reasonable attorneys' fees incurred by Agent, any Lender or any L/C Issuer
arising out of, or in connection with, any Letter of Credit to be issued for the
account of Borrower. Borrower shall be bound by the L/C Issuer's regulations and
good faith interpretations of any Letter of Credit issued or created for
Borrower's account, although this interpretation may be different from
Borrower's own; and, neither Agent nor any Lender, any L/C Issuer, nor any of
its correspondents shall be liable for any error, negligence, or mistakes,
whether of omission or commission, in following Borrower's instructions or those
contained in any Letter of Credit or of any modifications, amendments or
supplements thereto or in issuing or paying any Letter of Credit, except for
Agent's or any Lender's or such correspondents' gross (not mere) negligence or
willful misconduct.
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(e) Borrower shall authorize and direct the L/C Issuer to name
Borrower as the "Account Party" therein and to deliver to Agent all instruments,
documents, and other writings and property received by the L/C Issuer pursuant
to the Letter of Credit and to accept and rely upon Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit and the application therefor.
(f) In connection with all Letters of Credit issued or caused
to be issued by Agent under this Agreement, Borrower hereby appoints Agent, or
its designee, as its attorney, with full power and authority (i) to sign and/or
endorse Borrower's name upon any warehouse or other receipts, letter of credit
applications and acceptances; (ii) to sign Borrower's name on bills of lading;
(iii) to clear Inventory through the United States of America Customs Department
("Customs") in the name of Borrower or Agent or Agent's designee, and to sign
and deliver to Customs officials powers of attorney in the name of Borrower for
such purpose; (iv) to complete in the name of Agent, or Agent's designee, any
order, sale or transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof; (v) to clear and resolve any
questions of non-compliance of documents; (vi) to give any instructions as to
acceptance or rejection of any documents or goods; (vii) to execute any and all
applications for steamship or airways guarantees, indemnities or delivery
orders; (viii) to grant any extensions of the maturity of, time of payment for,
or time of presentation of, any drafts, acceptances, or documents; and (ix) to
agree to any amendments, renewals, extensions, modifications, changes or
cancellation of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances; all in Agent's sole name, and the L/C
Issuer shall be entitled to comply with and honor any and all such documents or
instruments executed by or received solely from Agent; all without notice to or
consent from Borrower. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's gross (not mere) negligence or willful
misconduct. This power, being coupled with an interest, is irrevocable as long
as any Letters of Credit remain outstanding.
(g) Neither Agent nor any Lender shall be responsible for: the
existence, character, quality, quantity, condition, packing, value or delivery
of the goods purporting to be represented by any documents; any differences or
variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; the validity,
sufficiency or genuineness of any documents or of any endorsements thereon, even
if such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent, or forged; the time, place, manner or order in which
shipment is made; partial or incomplete shipment, or failure or omission to ship
any or all of the goods referred to in the Letters of Credit or documents; any
deviation from instructions, delay, default, or fraud by the shipper and/or any
one else in connection with the Collateral or the shipping thereof; or any
breach of contract between the shipper or vendors and Borrower.
(h) Any necessary import, export or other licenses or
certificates for the import or handling of the Collateral will have been
promptly procured; all foreign and domestic governmental laws and regulations in
regard to the shipment and importation of the Collateral or the financing
thereof will have been promptly and fully complied with; any certificates in
that regard that Agent may at any time reasonably request will be promptly
furnished. In this connection, Borrower warrants and represents that all
shipments made under any such Letters of Credit are in accordance with the
governmental laws and regulations of the countries in which
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the shipments originate and terminate, and are not prohibited by any such law
and regulations. Borrower assumes all risk, liability and responsibility for,
and agrees to pay and discharge all present and future local, state, federal or
foreign taxes, duties, or levies. Any embargo, restriction, laws, customs or
regulations of any country, state, city or other political subdivision where the
Collateral is or may be located or wherein payments are to be made or wherein
drafts may be drawn, negotiated, accepted, or paid shall be solely at Borrower's
risk, liability and responsibility.
(i) Each Lender shall to the extent of the percentage amount
equal to the product of such Lender's Commitment Percentage times the aggregate
amount of all disbursements made with respect to the Letters of Credit be deemed
to have irrevocably purchased an undivided participation in each Revolving Loan
made as a consequence of such disbursement. In the event that at the time a
disbursement is made the unpaid balance of Revolving Loans exceeds or would
exceed, with the making of such disbursement, the lesser of the Revolving Loan
Commitment or the Borrowing Base, and such disbursement is not reimbursed by
Borrower within two (2) Business Days, Agent shall promptly notify each Lender
and upon Agent's demand each Lender shall pay to Agent such Lender's
proportionate share of such unreimbursed disbursement together with such
Lender's proportionate share of Agent's unreimbursed costs and expenses relating
to such unreimbursed disbursement. Upon receipt by Agent of a repayment from
Borrower of any amount disbursed by Agent for which Agent had already been
reimbursed by the Lenders, Agent shall deliver to each of the Lenders that
Lender's pro rata share of such repayment. Each Lender's participation
commitment shall continue until the last to occur of any of the following
events: (A) Agent ceases to be obligated to issue or cause the issuance of
Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains
outstanding and uncancelled or (C) all Persons (other than Borrower) have been
fully reimbursed for all payments made under or relating to Letters of Credit.
(j) The obligations of a Lender to make payments to the Agent
for the account of the Agent or the L/C Issuer with respect to a Letter of
Credit shall be irrevocable, without any qualification or exception whatsoever
and shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the Other Agreements;
(ii) the existence of any claim, setoff, defense or
other right which Borrower may have at any time against a beneficiary named in
such Letter of Credit or any transferee of such Letter of Credit (or any Person
for which any such transferee may be acting), the Agent, L/C Issuer, any Lender,
or any other person, whether in connection with this Agreement, such Letter of
Credit, the transactions contemplated herein or any related transactions
(including any underlying transactions between Borrower or any other party and
the beneficiary named in such Letter of Credit);
(iii) any draft, certificate or any other document
presented under such Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
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(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of this Agreement or any of
the Other Agreements;
(v) any failure by the Agent to provide any notices
required pursuant to this Agreement relating to such Letter of Credit;
(vi) any payment by the L/C Issuer under any of the
Letters of Credit against presentation of a draft or certificate which does not
comply with the terms of such Letter of Credit (if, in the good faith opinion of
the L/C Issuer, such prepayment is deemed to be appropriate); or
(vii) the occurrence of any Default or Event of
Default,
provided, however, that after paying in full its reimbursement obligation
hereunder, nothing herein shall adversely affect the right of Borrower or any
Lender, as the case may be, to commence any proceeding against such L/C Issuer
for any wrongful disbursement made by such L/C Issuer under a Letter of Credit
as a result of acts or omissions constituting gross (not mere) negligence or
willful misconduct on the part of such L/C issuer.
5. MANDATORY PREPAYMENTS.
(a) Sale, Damage, Destruction, etc. If Borrower sells any
Equipment, or if any of the Collateral is damaged, destroyed or taken by
condemnation, Borrower shall pay to Agent for its benefit and for the ratable
benefit of Lenders, unless otherwise specifically provided herein or otherwise
agreed to by Agent, as and when received by Borrower and as a mandatory
prepayment of the Loans, to be applied first against the last maturing
installments of principal of the Term Loan in the inverse order thereof, second
against the last maturing installments of principal of the Equipment Loans in
the inverse order thereof and then to the Revolving Loans, subject to Borrower's
ability to reborrow Revolving Loans in accordance with the terms hereof (or, at
Agent's option, such of the other Liabilities of Borrower as Agent may elect), a
sum equal to the proceeds received by Borrower from (i) such sale or (ii) such
damage, destruction or condemnation, provided, however, that without Agent's
consent, unless and until an Event of Default has occurred and is continuing:
(i) obsolete or worn out Equipment may be sold
or otherwise disposed of by Borrower and the
proceeds thereof may be retained by
Borrower, so long as the fair market value
of any such Equipment sold or otherwise
disposed of in any single transaction is
less than $25,000, and the fair market
value, in the aggregate, of all such
Equipment sold or otherwise disposed of by
Borrower during any twelve-month period is
less than $50,000; and
(ii) proceeds of Collateral arising from the
damage, destruction or condemnation thereof
may be retained by Borrower and used by
Borrower to repair, restore or replace such
Collateral, as the case may be, so long as
the fair market value of any such Collateral
damaged, destroyed or condemned in any
single
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incident is less than $25,000 and the fair
market value, in the aggregate, of all such
Collateral owned by Borrower and damaged,
destroyed or condemned during any
twelve-month period is less than $50,000.
6. INTEREST, FEES AND CHARGES.
(a) Rates of Interest. Interest accrued on the Loans shall be
due on the earliest of (i) in the case of a LIBOR Rate Loan, the first day of
each month (for the immediately preceding month), computed through the last
calendar day of the preceding month and at the end of the Interest Period
applicable thereto and in the case of a Prime Rate Loan, the first day of each
month (for the immediately preceding month), computed through the last calendar
day of the preceding month, (ii) the occurrence of an Event of Default in
consequence of which Agent elects to accelerate the maturity and payment of the
Liabilities, or (iii) termination of this Agreement pursuant to paragraph 13
hereof. Interest shall accrue on (1) the unpaid principal amount of the
Revolving Loans made to Borrower outstanding at the end of each day at (A) with
respect to Prime Rate Revolving Loans, a fluctuating rate per annum equal to the
Applicable Margin above the Prime Rate or (B) with respect to LIBOR Rate
Revolving Loans, a fixed rate per annum equal to the Applicable Margin above the
LIBOR Rate, (2) the unpaid principal balance of the Term Loan outstanding at the
end of each day at (A) with respect to Prime Rate Term Loans, a fluctuating rate
per annum equal to the Applicable Margin above the Prime Rate or (B) with
respect to LIBOR Rate Term Loans, a fixed rate per annum equal to the Applicable
Margin above the LIBOR Rate and (3) the unpaid principal amount of the Equipment
Loans made to Borrower outstanding at the end of each day at (A) with respect to
Prime Rate Equipment Loans, a fixed rate per annum equal to the Applicable
Margin above the Prime Rate or (B) with respect to LIBOR Rate Equipment Loans, a
fixed rate per annum equal to the Applicable Margin above the LIBOR Rate. The
rate of interest payable on Prime Rate Loans shall increase or decrease by an
amount equal to any increase or decrease in the Prime Rate, effective as of the
opening of business on the day that any such change in the Prime Rate occurs.
Upon and after the occurrence of an Event of Default, and during the
continuation thereof, the principal amount of all Loans shall bear interest on
demand at a rate per annum equal to the rate of interest then in effect under
this paragraph 6(a) plus two percent (2%).
(b) Computation of Interest and Fees. Interest and collection
charges hereunder shall be calculated daily and shall be computed on the actual
number of days elapsed over a year consisting of three hundred and sixty (360)
days. When computing interest charges hereunder, interest shall not be
compounded on a daily basis. For the purpose of computing interest hereunder,
all items of payment received by Agent shall be deemed applied by Agent on
account of the Liabilities (subject to final payment of such items) on the
second Business Day after receipt by Agent of good funds in Agent's account
located in Chicago, Illinois.
(c) Maximum Interest. It is the intent of the parties that the
rate of interest and the other charges to Borrower under this Agreement shall be
lawful; therefore, if for any reason the interest or other charges payable under
this Agreement are found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Agent may lawfully charge Borrower,
then the obligation to pay interest and other charges shall automatically be
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reduced to such limit and, if any amount in excess of such limit shall have been
paid, then such amount shall be refunded to Borrower.
(d) Letter of Credit Fees. Borrower shall remit to Agent for
its own account a letter of credit fee equal to one and three quarters percent
(1.75%) per annum (the "Letter of Credit Fee") on the aggregate undrawn face
amount of all outstanding Letters of Credit issued for the account of Borrower,
which fee shall be payable monthly in arrears on each day that interest is
payable hereunder. Borrower shall also pay on demand the normal and customary
administrative charges for issuance, amendment, negotiation, renewal or
extension of any Letter of Credit imposed by the L/C Issuer. Upon the occurrence
and during the continuance of an Event of Default, all Letter of Credit Fees
shall be payable on demand at a rate equal to three and three quarters percent
(3.75%) per annum on the aggregate undrawn face amount thereof.
(e) Closing Fee. Borrower shall pay to Agent for its own
account a closing fee of sixty-five thousand dollars ($65,000), which fee shall
be deemed fully earned, non refundable and due on the Closing Date.
(f) Unused Line Fee. Borrower shall pay to Agent for the
ratable benefit of Lenders at the end of each month, in arrears, and on the last
day of the Term an Unused Line Fee equal to one quarter of one percent (0.25%)
per annum on the daily average amount by which the Revolving Loan Commitment and
Equipment Loan Commitment exceeds the sum of (i) the outstanding principal
balance of the Revolving Loans, (ii) the outstanding principal balance of the
Equipment Loans and (iii) the outstanding Letter of Credit Obligations. The
Unused Line Fee shall accrue from the Closing Date until the last day of the
Term.
(g) Collateral Management Fee. Borrower shall pay to Agent for
its own account an annual collateral management fee of $15,000 per annum payable
on the Closing Date and on each date which is ten (10) days prior to any
anniversary of the Closing Date, subject to the earlier termination of this
Agreement, which fee shall be deemed earned in full on the Closing Date and on
each anniversary thereafter and shall not be subject to rebate or proration for
any reason.
(h) Capital Adequacy Charge. If Agent or any Lender shall have
determined that the adoption of any law, rule or regulation regarding capital
adequacy, or any change therein or in the interpretation or application thereof,
or compliance by Agent or any Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any central bank
or governmental authority enacted after the Closing Date, does or shall have the
effect of reducing the rate of return on Agent's or any Lender's capital as a
consequence of its obligations hereunder to a level below that which Agent could
have achieved but for such adoption, change or compliance (taking into
consideration Agent's or such Lender's policies with respect to capital
adequacy) by a material amount, then from time to time, after submission by
Agent to Borrower of a written demand therefor ("Capital Adequacy Demand")
together with the certificate described below, Borrower shall pay to Agent or
such Lender such additional amount or amounts ("Capital Adequacy Charge") as
will compensate Agent or such Lender for such reduction, such Capital Adequacy
Demand to be made with reasonable promptness following such determination. A
certificate of Agent claiming entitlement to payment as set forth above shall be
conclusive in the absence of manifest error. Such certificate shall set forth
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the nature of the occurrence giving rise to such reduction, the amount of the
Capital Adequacy Charge to be paid to Agent or such Lender, and the method by
which such amount was determined. In determining such amount, Agent or such
Lender may use any reasonable averaging and attribution method, applied on a
non-discriminatory basis.
7. LOAN ADMINISTRATION.
(a) Loan Requests. (1) A request for a Revolving Loan shall be
made or shall be deemed to be made, each in the following manner: (i) Borrower
shall give Agent same day notice, no later than 10:30 A.M. (Chicago time) of
such day, of its intention to borrow, a Prime Rate Revolving Loan, and at least
three (3) Business Days prior notice of its intention to borrow a LIBOR Rate
Revolving Loan, in which notice Borrower shall specify the amount of the
proposed borrowing and the proposed borrowing date, provided, however, that no
such request may be made at a time when there exists a Default or an Event of
Default; and (ii) the coming due of any amount required to be paid under this
Agreement or any Note, whether on account of interest or for any other
Liability, shall be deemed irrevocably to be a request for a Prime Rate
Revolving Loan on the due date thereof in the amount required to pay such
interest or other Liability. As an accommodation to Borrower, Agent may permit
telephone requests for Revolving Loans and electronic transmittal of
instructions, authorizations, agreements or reports to Agent by Borrower. Unless
Borrower specifically directs Agent in writing not to accept or act upon
telephonic or electronic communications from Borrower, neither Agent nor any
Lender shall have any liability to Borrower for any loss or damage suffered by
Borrower as a result of Agent's honoring of any requests, execution of any
instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been
sent to Agent by Borrower and Agent shall have no duty to verify the origin of
any such communication or the authority of the Person sending it. Each notice of
borrowing shall be irrevocable by and binding on Borrower, and if such notice
requests the borrowing of a LIBOR Rate Revolving Loan, such notice shall state
the Interest Period with respect thereto. Borrower, at its option, may choose
Prime Rate Revolving Loans or LIBOR Rate Revolving Loans, provided that any
LIBOR Rate Revolving Loan shall be in a minimum amount of $500,000 or an
integral multiple of $100,000 in excess thereof, and provided further that the
right of Borrower to choose any LIBOR Rate Loan is subject to the provisions of
paragraph 7(c) hereof.
(2) All requests for Equipment Loans must be received
in writing by Agent no later than 10:30 A.M. (Chicago time), five (5) Business
Days prior to the date on which such Equipment Loans are required. Agent shall
receive from Borrower, invoices and any other documentation relating to the
purchase of such assets, in detail satisfactory to Agent in its sole discretion.
Borrower shall not request and no Lender shall be obligated to make an Equipment
Loan at any time following the second Contract Year. The request for an
Equipment Loan shall be in writing substantially in the form of Exhibit 7(a)(2)
attached hereto which specifies: (1) the proposed date of funding (which shall
be a Business Day); (2) the amount of Equipment Loans requested (such amount not
to be less than $100,000) and the Type of Loan requested; (3) whether or not a
Default has occurred and is continuing; (4) that no Event of Default has
occurred and is continuing; (5) that the amount of the Equipment Loan then
requested does not exceed the permitted amount; (6) the calculations supporting
such conclusion; and (7) payment instructions for the funding of the Equipment
Loan. The right of Borrower to choose any LIBOR Rate Equipment Loan is subject
to the provisions of paragraph 7(c) hereof.
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(b) Disbursement. Borrower hereby irrevocably authorizes Agent
to disburse the proceeds of each Revolving Loan requested by Borrower, or deemed
to be requested by Borrower, as follows: (i) the proceeds of each Revolving Loan
requested under paragraph 7(a)(1)(i) shall be disbursed by Agent in lawful money
of the United States of America in immediately available funds, in the case of
the initial borrowing, in accordance with the terms of the written disbursement
letter from Borrower, and in the case of each subsequent borrowing, by wire
transfer to such bank account as may be agreed upon by Borrower and Agent from
time to time, or elsewhere if pursuant to a written direction from Borrower; and
(ii) the proceeds of each Revolving Loan requested under paragraph 7(a)(1)(ii)
shall be disbursed by Agent by way of direct payment of the relevant interest or
other Liability. Each borrowing of Revolving Loans shall be advanced according
to the Commitment Percentages of the Lenders. The Term Loan shall be advanced
according to the Commitment Percentages of the Lenders. Each borrowing of
Equipment Loans shall be advanced according to the Commitment Percentages of
Lenders.
(c) Notice of Continuation and Notice of Conversion.
(i) Subject to the provisions of clause (iii) hereof,
Borrower may elect to maintain any borrowing by it consisting
of the same Kind of LIBOR Rate Loans, or any portion thereof,
as a LIBOR Rate Loan by selecting a new Interest Period for
such borrowing, which new Interest Period shall commence on
the last day of the then existing Interest Period. Each
selection of a new Interest Period (a "Continuation") shall be
made on three (3) Business Days prior notice, given by
Borrower to Agent not later than 9:30 A.M. (Chicago time) on
the third Business Day preceding the date of any proposed
Continuation. If Borrower elects to maintain more than one
borrowing consisting of LIBOR Rate Loans of the same Kind by
combining such borrowings into one borrowing and selecting a
new Interest Period pursuant to this clause, each of the
borrowings so combined shall consist of Loans of the same Kind
having Interest Periods ending on the same date. If Borrower
shall fail to select a new Interest Period for any borrowing
by it consisting of LIBOR Rate Loans of the same Kind in
accordance with this clause, such LIBOR Rate Loans will
automatically convert into Prime Rate Loans.
(ii) Subject to the provisions of clause (iii)
hereof, Borrower may on three (3) Business Days prior notice
given to Agent convert the entire amount of or a portion of
all Loans of the same Kind and Type into Loans of the same
Kind and another Type (a "Conversion"); provided that no
Default or Event of Default shall have occurred and be
continuing, and provided further that any Conversion of any
LIBOR Rate Loans into Prime Rate Loans may only be made on the
last day of the Interest Period for such LIBOR Rate Loans, and
upon Conversion of any Prime Rate Loans into LIBOR Rate Loans,
Borrower shall pay accrued interest to the date of Conversion
on the principal amount converted on the first day of the
following month. Each such notice shall be given not later
than 9:30 A.M. (Chicago time) on the third Business Day
preceding the date of any proposed Conversion. Each Conversion
shall be in an aggregate amount of not less than $500,000 or
an integral multiple of $100,000 in excess thereof. Borrower
may elect to convert the entire amount of or a portion of all
Loans made to Borrower of the same Kind and Type comprising
more than one borrowing into
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Loans of the same Kind and another Type by combining such
borrowings into one borrowing consisting of Loans of the same
Kind and another Type; provided, however, that if the
borrowings so combined consist of LIBOR Rate Loans, such LIBOR
Rate Loans shall have Interest Periods ending on the same
date.
(iii) Notwithstanding anything contained in clauses
(i) and (ii) above to the contrary:
A. if Agent is unable to determine the LIBOR
Rate for LIBOR Rate Loans comprising any requested
borrowing, Continuation or Conversion, the right of
Borrower to select or maintain LIBOR Rate Loans for
such borrowing or any subsequent borrowing shall be
suspended until Agent shall notify Borrower that the
circumstances causing such suspension no longer
exist, and each Loan comprising such borrowing shall
be automatically converted into a Prime Rate Loan;
B. if at any time Agent shall notify
Borrower that the LIBOR Rate for Loans comprising
such borrowing by Borrower will not adequately
reflect the cost to Agent of making such Loans, the
right of Borrower to select, maintain, continue or
convert to LIBOR Rate Loans for such borrowing shall
be suspended until Agent shall notify Borrower that
the circumstances causing such suspension no longer
exist, and each Loan comprising such borrowing shall
be automatically converted into a Prime Rate Loan;
C. there shall not be outstanding at any one
time more than an aggregate of five (5) LIBOR Rate
Loans;
D. any LIBOR Rate Loan shall be in a minimum
amount of $500,000 or an integral multiple of
$100,000 in excess thereof; and
E. interest shall be calculated and paid by
Borrower on the full amount of each LIBOR Rate Loan
borrowed by Borrower at the commencement of the
applicable Interest Period, regardless of any
reductions in the principal amount of such LIBOR Rate
Loan which occur during such Interest Period, and
Borrower shall not be credited for any part of such
interest until such interest is actually paid by
Borrower. To the extent the aggregate repayments of
principal on Revolving Loans received by Agent during
the pendency of an Interest Period applicable to a
then outstanding LIBOR Rate Revolving Loan exceed the
aggregate unpaid principal amount of all Prime Rate
Revolving Loans outstanding during such Interest
Period, Agent shall, to the extent of such excess,
credit to a special suspense account the amount of
such repayments received during such Interest Period,
and at the expiration of such Interest Period, Agent
shall apply all such amounts credited to such account
against the unpaid principal balance of the LIBOR
Rate Revolving Loans
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then outstanding. Borrower shall not earn interest on
any credit balance which may be deemed to exist in
favor of Borrower by virtue of this clause (E).
F. there shall not be outstanding at any
time LIBOR Rate Loans with an outstanding aggregate
principal amount exceeding eighty percent (80%) of
the outstanding principal amount of all Loans.
G. Without the consent of Agent, no LIBOR
Rate Loans may be requested or maintained by Borrower
or advanced or maintained by Agent and Lenders at any
time after and during a continuation of an Event of
Default.
(iv) Each notice of Continuation or Conversion shall
be irrevocable and binding on Borrower. In the case of (w) any
borrowing of a Loan, Continuation, or Conversion that the
related notice of borrowing, notice of Continuation or notice
of Conversion specifies is to be comprised of LIBOR Rate
Loans, or (x) any payment of principal of, or Conversion or
Continuation of, any LIBOR Rate Loan made other than on the
last day of the Interest Period for such Loan as a result of a
payment, prepayment, Conversion or Continuation of such Loan
or acceleration of the maturity of any of the Liabilities
pursuant to paragraph 18 hereof, or for any other reason, then
in any such case, upon Agent's demand, Borrower shall pay to
Lenders and indemnify Lenders from and against the following
(collectively "Breakage Costs"): (y) any loss, cost or expense
incurred by Lenders as a result of any failure to fulfill, on
or before the date for such borrowing, Continuation or
Conversion, the applicable conditions set forth in paragraph
16(b) hereof, and (z) any additional losses, costs or expenses
which Agent or any Lender may reasonably incur as a result of
such payment, including, without limitation in each such case,
any loss (excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or redeployment
of deposits or other funds acquired by Agent or any Lender to
fund the Loan to be made as part of such borrowing,
Continuation or Conversion.
(d) Each payment (including each prepayment) by Borrower on
account of the principal of and interest on the Revolving Note, Term Note or
Equipment Note shall be applied to the Revolving Loans, Term Loans and Equipment
Loans, as applicable, pro rata according to the Commitment Percentages of the
Lenders. Except as expressly provided herein, all payments (including
prepayments) to be made by Borrower on account of principal, interest and fees
shall be made without set-off or counterclaim and shall be made to Agent on
behalf of the Lenders to the Payment Office, in each case on or prior to 1:00
P.M. (Chicago time), in Dollars and in immediately available funds.
(e) (i) Notwithstanding anything to the contrary contained in
Sections (b), (c) and (d) hereof, commencing with the first Business Day
following the Closing Date, each borrowing of Revolving Loans shall be advanced
by Agent and each payment by Borrower on account of Revolving Loans shall be
applied first to those Revolving Loans made by Agent. On or before 1:00 P.M.
(Chicago time) on each Settlement Date commencing with the first
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Settlement Date following the Closing Date, Agent and Lenders shall make certain
payments as follows: (I) if the aggregate amount of new Revolving Loans made by
Agent during the preceding Week exceeds the aggregate amount of repayments
applied to outstanding Revolving Loans during such preceding Week, then each
Lender shall provide Agent with funds in an amount equal to its Commitment
Percentage of the difference between (w) such Revolving Loans and (x) such
repayments and (II) if the aggregate amount of repayments applied to outstanding
Revolving Loans during such Week exceeds the aggregate amount of new Revolving
Loans made during such Week, then Agent shall provide each Lender with its
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Loans.
(ii) Each Lender shall be entitled to earn interest at
the interest rate provided in paragraph 6(a) on outstanding Loans which it has
funded.
(iii) Promptly following each Settlement Date, Agent
shall submit to each Lender a certificate with respect to payments received and
Loans made during the Week immediately preceding such Settlement Date. Such
certificate of Agent shall be conclusive in the absence of manifest error.
(f) If any Lender or Participant (a "benefited Lender") shall
at any time receive any payment of all or part of its Loans, or interest
thereon, or receive any Collateral in respect thereof (whether voluntarily or
involuntarily or by set-off) in a greater proportion than any such payment to
and Collateral received by any other Lender, if any, in respect of such other
Lender's Loans, or interest thereon, and such greater proportionate payment or
receipt of Collateral is not expressly permitted hereunder, such benefited
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Loans, or shall provide such other Lender with the benefits of
any such Collateral, or the proceeds thereof, as shall be necessary to cause
such benefited Lender to share the excess payment or benefits of such Collateral
or proceeds ratably with each of the Lenders; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from such
benefited Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. Each
Lender so purchasing a portion of another Lender's Loans may exercise all rights
of payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
(g) Unless Agent shall have been notified by telephone,
confirmed in writing, by any Lender that such Lender will not make the amount
which would constitute its Commitment Percentage of the Loans available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly notify
Borrower of its receipt of any such notice from a Lender. If such amount is made
available to Agent on a date after a Settlement Date, such Lender shall pay to
Agent on demand an amount equal to the product of (i) the daily average federal
funds rate (computed on the basis of a year of 360 days) during such period as
quoted by Agent, times (ii) such amount, times (iii) the number of days from and
including such Settlement Date to the date on which such amount becomes
immediately available to Agent. A certificate of Agent submitted to any Lender
with respect to any amounts owing under this paragraph 7(g) shall be conclusive,
in the absence of manifest error. If such amount is not in fact made available
to Agent by such Lender within
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three (3) Business Days after such Settlement Date, Agent shall be entitled to
recover such an amount, with interest thereon at the rate per annum then
applicable to Revolving Loans hereunder, on demand from Borrower; provided,
however, that Agent's right to such recovery shall not prejudice or otherwise
adversely affect Borrower's rights (if any) against such Lender.
(h) Notwithstanding anything to the contrary contained herein,
in the event any Lender (x) has refused (which refusal constitutes a breach by
such Lender of its obligations under this Agreement) to make available its
Commitment Percentage of any Loan or (y) notifies either Agent or Borrower that
it does not intend to make available its Commitment Percentage of any Loan (if
the actual refusal would constitute a breach by such Lender of its obligations
under this Agreement) (each, a "Lender Default"), all rights and obligations
hereunder of such Lender (a "Defaulting Lender") as to which a Lender Default is
in effect and of the other parties hereto shall be modified to the extent of the
express provisions of this paragraph 7(h) while such Lender Default remains in
effect.
(i) Revolving Loans and Equipment Loans shall be allocated pro
rata among Lenders (the "Non-Defaulting Lenders") which are not Defaulting
Lenders in accordance with their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any Revolving Loans
or any Equipment Loan required to be advanced by any Lender shall be increased
as a result of such Lender Default. Amounts received in respect of principal of
Loans shall be applied to reduce Loans of each Lender pro rata based on the
aggregate of the outstanding Loans of all Lenders at the time of such
application; provided, that, such amount shall not be applied to any Loans of a
Defaulting Lender at any time when, and to the extent that, the aggregate amount
of Loans of any Lender that is not a Defaulting Lender exceeds such Lender's
Commitment Percentage of all Loans then outstanding.
(j) A Defaulting Lender shall not be entitled to (i) give
instructions to Agent or to approve, disapprove, consent to or vote on any
matters relating to this Agreement or the Other Agreements or (ii) receive or
earn unused line fees which are due and payable during the continuation of a
Lender Default. All amendments, waivers and other modifications of this
Agreement and the Other Agreement may be made without regard to a Defaulting
Lender and, solely for purposes of the definition of "Required Lenders", a
Defaulting Lender shall be deemed not to be a Lender and not to have Loans
outstanding.
(k) Other than as expressly set forth in this paragraph 7(k),
the rights and obligations of a Defaulting Lender (including the obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this paragraph 7(k) shall be deemed to release any Defaulting Lender from its
obligations under this Agreement or the Other Agreements, shall alter such
obligations, shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which Borrower, Agent or any Lender may
have against any Defaulting Lender as a result of any default by such Defaulting
Lender hereunder.
(l) In the event a Defaulting Lender retroactively cures, to
the satisfaction of Agent, the breach which caused such Lender to become a
Defaulting Lender, such Defaulting Lender shall no longer be a Defaulting Lender
and shall be treated as a Lender under this Agreement.
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(m) In the event a Defaulting Lender fails to retroactively
cure, to the satisfaction of Agent and Borrower, the breach which caused a
Lender to become a Defaulting Lender within five (5) Business Days of the
occurrence of such default (the "Defaulting Lender Cure Period"), then Agent
may, but shall not be obligated to, require such Defaulting Lender to assign its
interest in the Loans to Agent or to another financial institution designated by
Agent (the "Designated Lender") for a purchase price equal to the outstanding
principal amount of all Loans made by such Defaulting Lender plus accrued and
unpaid interest and fees (other than any unused line fees due during the
continuance of such Lender Default) due to such Defaulting Lender, which
interest and fees shall be paid to the Defaulting Lender when collected from
Borrower. In the event Agent so elects to require any Defaulting Lender to
assign its interest to Agent or to the Designated Lender, as applicable, Agent
will notify such Defaulting Lender at any time after the expiration of the
Defaulting Lender Cure Period, and such Defaulting Lender shall assign its
interest to Agent or the Designated Lender, as applicable, no later than five
(5) days following receipt of such notice pursuant to a Commitment Transfer
Supplement executed by such Defaulting Lender, Agent or the Designated Lender,
as applicable, and Agent. Upon (i) the execution of the Commitment Transfer
Supplement, (ii) payment of the purchase price set forth above, (iii)
recordation of the assignment in the Register by Agent pursuant to paragraph
25(c) hereof, and (iv) if so requested by Agent or the Designated Lender (as
applicable), receipt by such Person of replacement Notes, Agent or the
Designated Lender (as applicable) shall increase its Commitment Percentage
hereunder or shall become a Lender hereunder, as applicable, and the Defaulting
Lender shall cease to be a Lender hereunder except with respect to
indemnification provisions set forth herein.
8. GRANT OF SECURITY INTEREST TO AGENT. As security for the payment of
all Loans now or in the future made by Agent and Lenders to Borrower hereunder
and for the payment or other satisfaction of all other Liabilities, Borrower
hereby assigns and grants to Agent for its benefit and for the ratable benefit
of Lenders a continuing security interest in all of the personal property of
Borrower, whether now or hereafter owned, existing, acquired or arising and
wherever now or hereafter located including without limitation: (a) all Accounts
(whether or not Eligible Accounts including, without limitation,
Health-Care-Insurance Receivables) and all Goods whose sale, lease or other
disposition by Borrower has given rise to Accounts and have been returned to or
repossessed or stopped in transit by Borrower; (b) all Chattel Paper,
Instruments (including without limitation, promissory notes), Documents and
General Intangibles (including, without limitation, Payment Intangibles); (c)
all Inventory (whether or not Eligible Inventory); (d) all Goods (other than
Inventory) including, without limitation, Equipment, vehicles and fixtures; (e)
all deposits and cash and any other property of Borrower now or hereafter in the
possession, custody or control of Agent, any Lender or any agent or any parent,
affiliate or subsidiary of Agent or such Lender or any participant with Agent or
such Lender in the Loans for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise); (f) all Investment
Property; (g) all Customer Lists; (h) all Real Property; (i) all Deposit
Accounts; (j) all Supporting Obligations; (k) all Letter of Credit Rights; (l)
any Commercial Tort Claims; and (m) all additions and accessions to,
substitutions for, and replacements, products and proceeds of the foregoing
property, including, without limitation, proceeds of all insurance policies
insuring the foregoing property, and all of Borrower's books and records
relating to any of the foregoing and to Borrower's business.
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8A. CONCERNING REVISED ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE . The
parties acknowledge and agree to the following provisions in anticipation of the
possible application, in one or more jurisdictions to the transactions
contemplated hereby, of revised Article 9 of the Uniform Commercial Code in the
form or substantially in the form approved by the American Law Institute and the
National Conference of Commissioners on Uniform State Law and contained in the
1999 official text of revised Article 9 ("Revised Article 9").
(a) Attachment. In applying the law of any jurisdiction in which
Revised Article 9 is in effect, the Collateral shall include all assets of
Borrower, whether or not within the scope of Revised Article 9. The Collateral
shall include, without limitation, the following categories of assets as defined
in Revised Article 9: Goods (including Inventory, Equipment and any accessions
thereto), Instruments (including promissory notes), Documents, Accounts
(including Health-Care-Insurance Receivables), Chattel Paper (whether tangible
or electronic), Deposit Accounts, Letter-of-Credit Rights (whether or not the
letter of credit is evidenced by a writing), Commercial Tort Claims, securities
and all other Investment Property, General Intangibles (including Payment
Intangibles and software), Supporting Obligations and any and all proceeds of
any of the foregoing, wherever located, whether now owned or hereafter acquired.
If Borrower shall at any time, whether or not Revised Article 9 is in effect in
any particular jurisdiction, acquire a Commercial Tort Claim, Borrower shall
immediately notify Agent in a writing signed by Borrower of the brief details
thereof and grant to Agent in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement, with such writing to
be in form and substance satisfactory to Agent.
(b) Perfection by Filing. Agent may at any time and from time to time,
pursuant to the provisions of paragraph 9 hereof, file financing statements,
continuation statements and amendments thereto that describe the Collateral as
all assets of Borrower or words of similar effect and which contain any other
information required by Part 5 of Revised Article 9 for the sufficiency or
filing office acceptance of any financing statement, continuation statement or
amendment, including whether Borrower is an organization, the type of
organization and any organization identification number issued to Borrower.
Borrower agrees to furnish any such information to Agent promptly upon Agent's
request therefor. Any such financing statements, continuation statements and/or
amendments may be signed by Agent on behalf of Borrower, as provided in this
Agreement, and may be filed at any time in any jurisdiction whether or not
Revised Article 9 is then in effect in that jurisdiction.
(c) Other Perfection, etc. Borrower shall at any time and from time to
time, whether or not Revised Article 9 is in effect in any particular
jurisdiction, take such steps as Agent may request (a) for Agent to obtain an
acknowledgement, in form and substance satisfactory to Agent, of each bailee
having possession of any Collateral that such bailee holds such Collateral for
the benefit of Agent, (b) for Agent to obtain "control" of any Investment
Property, Deposit Accounts, Letter-of-Credit Rights or electronic Chattel Paper
(with corresponding provisions in Rev. Sections 9-104, 9-105, 9-106 and
9-107 relating to what constitutes "control" for such items of Collateral), with
any agreements establishing control to be in form and substance satisfactory to
Agent, and (c) to insure the continued perfection and priority of Agent's
security interest in any
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of the Collateral and the preservation of its rights therein, whether in
anticipation and following the effectiveness of Revised Article 9 in any
jurisdiction.
(d) Savings Clause. Nothing contained in this paragraph 8A shall be
construed to narrow the scope of Agent's security interest in any of the
Collateral or the perfection or priority thereof or to impair or otherwise limit
any of the rights, powers, privileges or remedies of Agent or any Lender
hereunder except (and then only to the extent) mandated by Revised Article 9, to
the extent then applicable.
9. PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN. Borrower shall, at Agent's request, at any time and from time to time,
execute and deliver to Agent such financing statements, documents and other
agreements and instruments (and pay the cost of filing or recording the same in
all public offices deemed reasonably necessary or desirable by Agent) and do
such other acts and things as Agent may deem necessary or desirable in order to
establish and maintain a valid, attached and perfected security interest in the
Collateral in favor of Agent for its benefit and for the ratable benefit of
Lenders (free and clear of all other liens, claims and rights of third parties
whatsoever, whether voluntarily or involuntarily created, except Permitted
Liens) to secure payment of the Liabilities, and in order to facilitate the
collection of the Collateral. Borrower irrevocably hereby makes, constitutes and
appoints Agent (and all Persons designated by Agent for that purpose) as
Borrower's true and lawful attorney and agent-in-fact to execute and/or file
such financing statements, documents and other agreements and instruments and do
such other acts and things as may be necessary to preserve and perfect Agent's
security interest in the Collateral. Borrower further agrees that a carbon,
photographic, photostatic or other reproduction of this Agreement or of a
financing statement shall be sufficient as a financing statement.
10. POSSESSION OF COLLATERAL AND RELATED MATTERS. Until an Event of
Default has occurred, Borrower shall have the right, except as otherwise
provided for in this Agreement, in the ordinary course of Borrower's business,
to (a) sell, lease or furnish under contracts of service any of Borrower's
Inventory normally held by Borrower for any such purpose, and (b) use and
consume any raw materials, work in process or other materials normally held by
Borrower for such purpose, provided, however, that a sale in the ordinary course
of business shall not include any transfer or sale in satisfaction, partial or
complete, of a debt owed by Borrower.
11. COLLECTIONS.
(a) Establishment of Lockbox and Blocked Account. Following
the occurrence of an Event of Default, immediately upon the request of Agent,
Borrower shall direct all of its Account Debtors to make all payments on the
Accounts directly to a post office box ("Lock Box") with a financial institution
acceptable to, and in the name and under exclusive control of Agent. On or prior
to the Closing Date, Borrower shall establish two accounts (collectively,
"Blocked Account") in Agent's name for the benefit of Borrower with financial
institutions acceptable to Agent, into which all payments received by Borrower,
or if applicable, in the Lock Box shall be deposited, and into which Borrower
will immediately deposit all payments received by Borrower for Inventory or
services sold, leased or rendered by Borrower
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and received by Borrower in the identical form in which such payments were
received, whether by cash or check. If Borrower, any Affiliate or Subsidiary of
Borrower, or any shareholder, officer, director, employee or agent of Borrower
or any Affiliate or Subsidiary, or any other Person acting for or in concert
with Borrower shall receive any monies, checks, notes, drafts or other payments
relating to or as proceeds of Accounts or other Collateral, Borrower and each
such Person shall receive all such items in trust for, and as the sole and
exclusive property of, Agent for its benefit and for the ratable benefit of
Lenders and, immediately upon receipt thereof, shall remit the same (or cause
the same to be remitted) in kind to the Blocked Account or, if applicable, the
Lock Box. Each financial institution with which a Lock Box or Blocked Account is
established shall acknowledge and agree, in a manner satisfactory to Agent for
its benefit and for the ratable benefit of Lenders, that the amounts on deposit
in such Lock Box and such Blocked Account are the sole and exclusive property of
Agent, that such financial institution has no right to setoff against such Lock
Box or Blocked Account or against any other account maintained by such financial
institution into which the contents of such Blocked Account are transferred, and
that such financial institution shall wire, or otherwise transfer in immediately
available funds in a manner satisfactory to Agent, funds deposited in the
Blocked Account on a daily basis as such funds are collected. Borrower agrees
that all payments made to the Blocked Account established by Borrower or
otherwise received by Agent, whether in respect of the Accounts of Borrower or
as proceeds of other Collateral of Borrower or otherwise, will be applied on
account of the Revolving Loans and also on account of such other due and payable
Liabilities of Borrower as Agent shall determine in accordance with the terms of
this Agreement. Borrower agrees to pay all fees, costs and expenses which
Borrower incurs in connection with opening and maintaining a Lock Box and
Blocked Account. All of such fees, costs and expenses which remain unpaid by
Borrower pursuant to any Lock Box or Blocked Account Agreement with Borrower, to
the extent same shall have been paid by Agent hereunder, shall constitute
Revolving Loans hereunder, shall be payable to Agent for its benefit and for the
ratable benefit of Lenders by Borrower upon demand, and, until paid, shall bear
interest at the highest rate then applicable to Revolving Loans hereunder. All
checks, drafts, instruments and other items of payment or proceeds of Collateral
delivered to Agent in kind shall be endorsed by Borrower to Agent, and, if that
endorsement of any such item shall not be made for any reason, Agent is hereby
irrevocably authorized to endorse the same on Borrower's behalf. For the purpose
of this paragraph, Borrower irrevocably hereby makes, constitutes and appoints
Agent (and all Persons designated by Agent for that purpose) as Borrower's true
and lawful attorney and agent-in-fact (i) to endorse Borrower's name upon said
items of payment and/or proceeds of Collateral of Borrower and upon any Chattel
Paper, document, instrument, invoice or similar document or agreement relating
to any Account of Borrower or goods pertaining thereto; (ii) to take control in
any manner of any item of payment or proceeds thereof; (iii) to have access to
any lock box or postal box into which any of Borrower's mail is deposited; and
(iv) open and process all mail addressed to Borrower and deposited therein,
provided, however, that Agent shall not exercise any such powers described in
clauses (ii) and (iv) unless and until an Event of Default has occurred.
(b) Collection of Accounts. Agent may, at any time and from
time to time after the occurrence and during the continuation of an Event of
Default, whether before or after notification to any Account Debtor and whether
before or after the maturity of any of the Liabilities, (i) enforce collection
of any of Borrower's Accounts, other amounts owed to Borrower or contract rights
by suit or otherwise; (ii) exercise all of Borrower's rights and
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remedies with respect to proceedings brought to collect any Accounts or other
amounts owed to Borrower; (iii) surrender, release or exchange all or any part
of any Accounts of Borrower or other amounts owed to Borrower, or compromise or
extend or renew for any period (whether or not longer than the original period)
any indebtedness thereunder; (iv) sell or assign any Account of Borrower or
other amounts owed to Borrower upon such terms, for such amount and at such time
or times as Agent deems advisable; (v) prepare, file and sign Borrower's name on
any proof of claim in bankruptcy or other similar document against any Account
Debtor indebted on an Account of Borrower or other Person obligated to Borrower;
and (vi) do all other acts and things which are necessary, in Agent's sole
discretion, to fulfill Borrower's obligations under this Agreement and to allow
Agent to collect the Accounts or other amounts owed to Borrower. In addition to
any other provision hereof, Agent may at any time on or after the occurrence and
during the continuation of an Event of Default, at Borrower's expense, notify
any parties obligated on any of the Accounts of Borrower to make payment
directly to Agent of any amounts due or to become due thereunder.
(c) Application of Proceeds. Agent shall, within two (2)
Business Days after receipt by Agent at its office in Chicago, Illinois of cash
or other immediately available funds from collections of items of payment and
proceeds of any Collateral, apply the whole or any part of such collections or
proceeds against the Liabilities in such order as Agent shall determine in its
sole discretion provided, that, so long as no Event of Default has occurred and
is then continuing, Agent shall not, except as otherwise expressly provided by
the terms of this Agreement, apply any such collections as a prepayment of the
principal amount of the Term Loan or principal amount of the Equipment Loans.
(d) Acceptance of Assignment. In its sole credit judgment,
without waiving or releasing any obligation, liability or duty of Borrower under
this Agreement or the Other Agreements or any Event of Default, at any time or
times hereafter, Agent may (but shall not be obligated to) pay, acquire or
accept an assignment of any security interest, lien, encumbrance or claim
asserted by any Person in, upon or against the Collateral. All sums paid by
Agent in respect thereof and all costs, fees and expenses (including without
limitation reasonable attorney fees, all court costs and all other charges
relating thereto) incurred by Agent shall constitute Revolving Loans, payable by
Borrower to Agent on demand and, until paid, shall bear interest at the highest
rate then applicable to Revolving Loans hereunder.
(e) Delivery of Documents and Instruments. Immediately upon
Borrower's receipt of any portion of the Collateral evidenced by an agreement,
instrument or document including, without limitation, any Chattel Paper,
Borrower shall deliver the original thereof to Agent together with an
appropriate endorsement or other specific evidence of assignment thereof to
Agent (in form and substance acceptable to Agent). If an endorsement or
assignment of any such items shall not be made for any reason, Agent is hereby
irrevocably authorized, as Borrower's attorney and agent-in-fact, to endorse or
assign the same on Borrower's behalf.
12. SCHEDULES AND REPORTS.
Borrower shall furnish or cause to be furnished to Agent the following:
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(a) Borrower shall provide Agent with a written report on the
first Business Day of each week, or at the request of Agent, on a more frequent
basis, reflecting the activity of Borrower with respect to sales, collections of
Accounts and credits issued by Borrower for the immediately preceding (i) week
or (ii) period, as determined by Agent. Such report shall be in a form and with
such specificity as is satisfactory to Agent and shall contain such additional
information as Agent may reasonably require concerning Accounts and Inventory
included, described or referred to in such report and any other documents in
connection therewith requested by Agent, including without limitation but only
if specifically requested by Agent, copies of all invoices prepared in
connection with such Accounts.
(b) (i) As soon as practicable and in any event within thirty
(30) days following the end of each calendar month, (x) statements of income and
statements of cash flow of Borrower on a consolidated basis and on a
consolidating basis for each such month and for the period from the beginning of
the then current Fiscal Year to the end of such month, (y) balance sheets of
Borrower on a consolidated basis and on a consolidating basis as of the end of
such month, and (z) with respect to such statements of income and balance
sheets, in comparative form, figures for the corresponding periods in the
preceding Fiscal Year, all in reasonable detail and certified by the chief
financial officer of Borrower that such statements fairly present the financial
condition of Borrower on a consolidated basis in accordance with GAAP, subject
to changes resulting from normal and recurring year-end adjustments that
individually and in the aggregate are not material to the business of Borrower
and its Subsidiaries and the absence of footnotes, together with, if applicable,
detailed computations of Borrower's compliance with the covenants set forth in
this Agreement.
(ii) As soon as practicable and in any event within
forty-five (45) days following the end of each fiscal quarter, (x) statements of
income and statements of cash flow of Borrower on a consolidated basis and on a
consolidating basis for each such fiscal quarter and for the period from the
beginning of the then current Fiscal Year to the end of such fiscal quarter, (y)
balance sheets of Borrower on a consolidated basis and a consolidating basis as
of the end of such fiscal quarter, and (z) with respect to such statements of
income and balance sheets, in comparative form, figures for the corresponding
periods in the preceding Fiscal Year, all in reasonable detail and certified by
the chief financial officer of Borrower that such statements fairly present the
financial condition of Borrower on a consolidated basis in accordance with GAAP,
subject to changes resulting from normal and recurring year-end adjustments that
individually and in the aggregate are not material to the business of Borrower
and its Subsidiaries and the absence of footnotes, together with detailed
computations of Borrower's compliance with the covenants set forth in this
Agreement.
(c) As soon as practicable and in any event (1) on the first
Business Day of each week or at the request of Agent on a more frequent basis, a
Borrowing Base Certificate (which shall be calculated as of the immediately
preceding (i) week or (ii) period as determined by Agent and which shall not be
binding upon Agent or restrictive of Agent's rights under this Agreement), and
(2) within ten (10) days following the end of each calendar month and at such
other times as may be requested by Agent from time to time, (i) a schedule
identifying by age each Account of Borrower together with copies of the invoices
when requested by Agent (with evidence of shipment attached) pertaining to each
such Account and a schedule identifying by age each account payable of Borrower,
(ii) a detailed aged trial balance of Borrower's Accounts
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("Accounts Trial Balance") in form and substance satisfactory to Agent in its
reasonable discretion, including, without limitation, the names and, upon the
request of Agent, addresses of all Account Debtors of Borrower, (iii) a summary
and detail of accounts payable (such Accounts and accounts payable divided into
such time intervals as Agent may require in its reasonable discretion),
including a listing of any held checks, (iv) such additional schedules,
certificates, reports and information with respect to the Collateral as Agent
may from time to time require; (v) a copy of any statement received by Borrower
in connection with the Lockbox and/or the Blocked Account; (vi) an assignment of
any or all items of Collateral to Agent and (vii) the general ledger inventory
account balance, a perpetual inventory report and Agent's standard form of
Inventory report then in effect, for Borrower by each category of Inventory,
together with, upon the request of Agent, a description of the change in each
category of Inventory, in each case, for such immediately preceding month (or
other applicable period). Agent, through its officers, employees or agents,
shall have the right, at any time and from time to time in Agent's name, in the
name of a nominee of Agent or in Borrower's name, to verify the validity, amount
or any other matter relating to any of Borrower's Accounts, by mail, telephone,
telegraph or otherwise. Borrower shall reimburse Agent, on demand, for all
reasonable costs, fees and expenses incurred by Agent in this regard. Borrower
shall immediately notify Agent of any event causing loss or depreciation in
value of Borrower's Inventory (other than normal depreciation occurring in the
ordinary course of business).
(d) As soon as practicable and in any event within ninety (90)
days after the end of each Fiscal Year commencing with the Fiscal Year ending
December 31, 2001 (i) statements of income of Borrower on a consolidated basis
and on a consolidating basis for such Fiscal Year, and a balance sheet of
Borrower on a consolidated basis and on a consolidating basis as of the end of
such Fiscal, and (ii) statements of cash flow of Borrower on a consolidated
basis and on a consolidating basis for such Fiscal Year, all setting forth in
comparative form, corresponding figures for the period covered by the preceding
annual audit and as of the end of the preceding Fiscal Year, such statements to
be presented in accordance with Borrower's and its Subsidiaries' normal method
of accounting for Inventory and (if Borrower and its Subsidiaries use the LIFO
method) on a pre-tax FIFO basis, all in reasonable detail and in accordance with
GAAP and examined and reported on by independent certified public accountants of
recognized national standing selected by Borrower and satisfactory to Agent,
whose opinion shall be unqualified and shall be in accordance GAAP, in form and
substance satisfactory to Agent.
(e) As soon as practicable and in any event not later than
thirty (30) days after the beginning of each Fiscal Year commencing with the
Fiscal Year commencing January 1, 2002 projected balance sheets, statements of
income and cash flow for Borrower on a consolidated basis and a consolidating
basis, for each of the twelve (12) months during such Fiscal Year, which shall
include the assumptions used therein, together with appropriate supporting
details as requested by Agent (hereinafter referred to as "Projections").
(f) As soon as practicable and in any event within ten (10)
days of delivery to Borrower, a copy of any letter issued by Borrower's or its
Subsidiaries' independent public accountants or other management consultants
with respect to Borrower's or any of its Subsidiaries' financial or accounting
systems or controls, including all so-called "management letters".
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(g) In conjunction with the delivery of the annual
presentation of projections or budgets referred to in subparagraph (e) above, a
letter, which is substantially in the same form as the executive summary section
of the annual business plan of Borrower for the Fiscal Year ending December 31,
2001 previously delivered to Agent and is otherwise in form reasonably
acceptable to Agent, signed by the president or a vice president of Borrower and
by the treasurer or chief financial officer of Borrower, describing, comparing
and analyzing, in detail, all changes and developments between the anticipated
financial results included in such projections or budgets and the historical
financial statements of Borrower on a consolidated basis.
(h) As Agent may request, a complete and accurate update of
the Customer Lists.
(i) As soon as practicable and in any event within (i) ninety
(90) days after the end of each Fiscal Year, a true and complete copy of
Borrower's form 10-K for such Fiscal Year, (ii) forty-five (45) days after the
end of each fiscal quarter, a true and complete copy of Borrower's form 10-Q for
such fiscal quarter, (iii) one (1) day after filing by Borrower or any of its
Subsidiaries of any other document or instrument with the Securities and
Exchange Commission, a true and complete copy of such document or instrument and
(iv) one (1) day after receipt by Borrower or any of its Subsidiaries of any
document or instrument from the Securities and Exchange Commission, a true and
complete copy of such document or instrument.
(j) With reasonable promptness, such other business or
financial data, reports, appraisals and projections as Agent may reasonably
request.
All financial statements delivered to Agent pursuant to the
requirements of this paragraph 12 (except where otherwise expressly indicated)
shall be prepared in accordance with GAAP as provided in this Agreement.
Together with each delivery of financial statements required by subparagraphs
(b) and (d) above, Borrower shall deliver to Agent an officer's certificate in
the form attached hereto as Exhibit D, which shall include a calculation of
financial covenants in the schedule attached to such Officer's Certificate in
form satisfactory to Agent. Together with each delivery of annual financial
statements required by subparagraph (d) above, Borrower shall deliver to Agent a
certificate of the accountants who performed the audit in connection with such
statements stating that nothing came to such accountants' attention that caused
them to believe that Borrower failed to comply with the terms, covenants,
provisions, or conditions of paragraph 15(p) hereof insofar as they relate to
financial matters.
(k) All schedules, certificates, reports and assignments and
other items delivered by Borrower to Agent hereunder shall be executed by an
authorized representative of Borrower and shall be in such form and contain such
information as Agent shall reasonably request. Borrower shall deliver from time
to time such other schedules and reports pertaining to the Collateral of
Borrower as Agent may reasonably request.
13. TERM.
(a) This Agreement shall be in effect from the date hereof
until May 24, 2004 (the "TERM") unless the due date of the Liabilities is
accelerated pursuant to paragraph 18 hereof, in which case this Agreement shall
terminate on the date thereafter that the Liabilities are
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paid in full, provided, however, that the security interests and liens created
under this Agreement and the Other Agreements shall survive such termination
until the date upon which payment and satisfaction in full of the Liabilities
shall have occurred. At such time as Borrower has repaid all of the Liabilities
and this Agreement has terminated, Borrower shall deliver to Agent a release, in
form and substance reasonably satisfactory to Agent, of all obligations and
liabilities of Agent, Lenders and their officers, directors, employees, agents,
parents, subsidiaries and affiliates to Borrower, and if Borrower is obtaining
new financing from another lender, Borrower shall deliver such lender's
indemnification of Agent and each Lender, in form and substance reasonably
satisfactory to Agent, for checks which Agent has credited to Borrower's
account, but which subsequently are dishonored for any reason.
(b) If, for any reason, this Agreement is terminated prior to
the end of the Term and Borrower prepays all or any portion of the Liabilities
(which prepayment by Borrower must be upon ninety (90) days' prior written
notice to Agent), Borrower agrees to pay to Agent for its benefit and for the
ratable benefit of Lenders, as a prepayment fee, in addition to the payment of
all other Liabilities owing by Borrower, an amount equal to (x) one percent (1%)
of the Total Credit Facility if this Agreement is terminated during the first
Contract Year and (y) one-half of one percent (0.5%) of the Total Credit
Facility if this Agreement is terminated during the second Contract Year. No
prepayment fee shall be payable if (a) this Agreement is terminated at any time
during or after the third Contract Year prior to the expiration of the Term or
(b) any portion of the principal amount of the Term Loan or any Equipment Loan
is repaid prior to the due date of such principal amount (provided, that, any
such prepayment shall be applied first against the last maturing installments of
principal of the applicable Loan in the inverse order thereof) and in connection
with such prepayment this Agreement is not terminated. In light of the extreme
difficulty of accurately calculating actual damages arising out of any early
termination and prepayment, Agent, Lenders and Borrower have agreed that the
prepayment fee provided for above is a reasonable estimate of actual damages
that would be incurred by Agent and Lenders.
14. REPRESENTATIONS AND WARRANTIES. Borrower hereby makes the following
representations, warranties and covenants:
(a) (i) Borrower has furnished to Agent a pro forma balance
sheet of Borrower on a consolidated basis which has been based on the actual
balance sheet of Borrower as of March 31, 2001 with changes specifically
resulting from the Transactions reflected thereon ("Pro Forma Balance Sheet"), a
copy of which is attached as Exhibit A to the Financial Condition Certificate.
The Pro Forma Balance Sheet is accurate, complete and correct and fairly
reflects the financial condition of Borrower on a consolidated basis as of the
Closing Date after giving effect to the Transactions, and has been prepared in
accordance with GAAP, consistently applied, provided that changes since March
31, 2001 other than specifically resulting from the Transactions are not
reflected on the Pro Forma Balance Sheet. The Pro Forma Balance Sheet has been
certified by the President and Chief Financial Officer of Borrower as accurate,
complete and correct and fairly reflecting of the financial condition of the
Borrower on a consolidated basis on the Closing Date after giving effect to the
Transactions and as prepared in accordance with GAAP, consistently applied,
provided that changes since March 31, 2001 other than specifically resulting
from the Transactions are not reflected on the Pro Forma Balance Sheet.
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(ii) Borrower has furnished to Agent (1) projected
balance sheets, income statements and cash flow projections of Borrower on a
consolidated basis for the period beginning April 1, 2001 and ending December
31, 2001 which are part of Exhibit B to the Financial Condition Certificate, (2)
projected balance sheets, income statements and cash flow projections of
Borrower on a consolidated basis reflected annually for the Fiscal Years ending
December 31, 2002 which are part of Exhibit B to the Financial Condition
Certificate, and (3) an availability schedule for the period ending April 30,
2001 in form and substance satisfactory to Agent. The financial statements
described in clauses (1) and (2) of the first sentence of this subparagraph were
prepared by or under the directions of the Controller of Borrower and reflect,
as of the Closing Date, the good faith estimates of Borrower on a consolidated
basis of the information projected therein, based on the assumptions
accompanying such projections.
(b) the office where Borrower keeps its books, records and
accounts (or copies thereof) concerning the Collateral, Borrower's chief
executive office, principal place of business and all of Borrower's other places
of business, locations of Collateral and post office boxes are as set forth in
Exhibit A; Borrower shall promptly (but in no event less than thirty (30) days
prior thereto) advise Agent in writing of the proposed opening of any new place
of business, the closing of any existing place of business, any change in the
location of Borrower's books, records and accounts (or copies thereof) or the
opening or closing of any post office box of Borrower;
(c) the Collateral, including without limitation the Equipment
(except any part thereof which prior to the date of this Agreement Borrower
shall have advised Agent in writing consists of Collateral normally used in more
than one state) is and shall be kept, or, in the case of vehicles, based, only
at the addresses set forth on the first page of this Agreement or on Exhibit A,
and at other locations within the continental United States of which Agent has
been advised by Borrower pursuant to thirty (30) days prior written notice;
(d) Borrower shall immediately give written notice to Agent of
any use of any such Goods in any state or county other than a state or county in
which Borrower has previously advised Agent in writing that such Goods shall be
used as of the Closing Date, such states or counties being set forth on Exhibit
14(d) hereto, and such Goods shall not, unless Agent shall otherwise consent in
writing, be used outside of the continental United States;
(e) no security agreement, financing statement or analogous
instrument exists or shall exist with respect to any of the Collateral other
than any security agreement, financing statement or analogous instrument
evidencing Permitted Liens;
(f) each Account or item of Inventory which Borrower shall,
expressly or by implication, request Agent to classify as an Eligible Account or
as Eligible Inventory, respectively, shall, as of the time when such request is
made, conform in all respects to the requirements of such classification as set
forth in the respective definitions of Eligible Account and Eligible Inventory
and as otherwise established by Agent from time to time, and Borrower shall
promptly notify Agent in writing if any such Eligible Account or Eligible
Inventory shall subsequently become ineligible;
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(g) Borrower is and shall at all times during the Term be the
lawful owner of all Collateral now purportedly owned or hereafter purportedly
acquired by Borrower, free from all liens, claims, security interests and
encumbrances whatsoever, whether voluntarily or involuntarily created and
whether or not perfected, other than the Permitted Liens;
(h) Borrower has the right and power and is duly authorized
and empowered to enter into, execute and deliver this Agreement and the Other
Agreements and perform its obligations hereunder and thereunder; Borrower's
execution, delivery and performance of this Agreement and the Other Agreements
does not and shall not conflict with the provisions of any statute, regulation,
ordinance or rule of law, or any agreement, contract or other document which may
now or hereafter be binding on Borrower, or Borrower's Organizational Documents,
and Borrower's execution, delivery and performance of this Agreement and the
Other Agreements shall not result in the imposition of any lien or other
encumbrance upon any of Borrower's property under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument by which Borrower or any of its property may be bound or affected,
other than in favor of Agent;
(i) there are no actions or proceedings which are pending or,
to the best of Borrower's knowledge, threatened against Borrower which are
reasonably likely to have a Material Adverse Effect and Borrower shall, promptly
upon becoming aware of any such pending or threatened action or proceeding, give
written notice thereof to Agent;
(j) Borrower has obtained and shall maintain all consents,
franchises, certificates, licenses, authorizations, approvals and permits, the
lack of which would have a Material Adverse Effect, and Borrower is and shall
remain in compliance in all material respects with all applicable federal,
state, local and foreign statutes, orders, regulations, rules and ordinances
(including, without limitation, statutes, orders, regulations, rules and
ordinances relating to taxes, employer and employee contributions and similar
items, securities, employee retirement and welfare benefits, employee health and
safety or environmental matters), the failure to comply with which would be
reasonably likely to have a Material Adverse Effect;
(k) all written information now, heretofore or hereafter
furnished by Borrower to Agent is and shall be true and correct in all material
respects as of the date with respect to which such information was or is
furnished (except for financial projections, including, without limitation, the
projected financial statements described in paragraph 14(a)(ii) which have been
prepared in good faith based upon assumptions accompanying such projections);
(l) Borrower is not conducting, permitting or suffering to be
conducted, nor shall it conduct, permit or suffer to be conducted, any
activities pursuant to or in connection with which any of the Collateral is now,
or will (while any Liabilities remain outstanding) be owned by any Affiliate;
(m) Borrower's name has always been as set forth on the first
page of this Agreement and Borrower uses no tradenames, assumed names,
fictitious names or division names in the operation of its business, except as
otherwise disclosed in writing to Agent; Borrower shall notify Agent in writing
at least thirty (30) days prior to the change of its name or
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the use of any tradenames, assumed names, fictitious names or division names not
previously disclosed to Agent in writing;
(n) with respect to Borrower's Equipment: (i) Borrower has
good and indefeasible and marketable title to and ownership of all Equipment;
including, without limitation, the Equipment described or listed on the
appraisal schedule of Equipment prepared by Xxxxxx Xxxx Co., Inc. and dated
March, 2001 (the "Appraisal"), delivered to Agent prior to the date of this
Agreement; (ii) Borrower shall keep and maintain the Equipment in good operating
condition and repair and shall make all necessary replacements thereof and
renewals thereto so that the value and operating efficiency thereof shall at all
times be preserved and maintained, ordinary wear and tear excepted; (iii)
Borrower shall not permit any such items to become a fixture to real estate or
an accession to other personal property; (iv) from time to time Borrower may
sell, exchange or otherwise dispose of obsolete, unused or worn out Equipment,
but only to the extent provided in paragraph 5(a)(i) hereof; and (v) Borrower,
immediately on demand by Agent, shall deliver to Agent any and all evidence of
ownership of, including, without limitation, certificates of title and
applications of title to, any of the Equipment;
(o) this Agreement and the Other Agreements to which Borrower
is a party are the legal, valid and binding obligations of Borrower and are
enforceable against Borrower in accordance with their respective terms, except
to the extent that such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the rights of
creditors generally;
(p) Borrower is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business, now owns
property having a value both at fair valuation and at present fair saleable
value greater than the amount required to pay its debts, and will not be
rendered insolvent by the execution and delivery of this Agreement or any of the
Other Agreements or by completion of the transactions contemplated hereunder or
thereunder;
(q) Borrower is not now obligated, whether directly or
indirectly, for any loans or other indebtedness for borrowed money other than
(i) the Liabilities; (ii) indebtedness disclosed to Agent on Schedule 14(q);
(iii) unsecured indebtedness to trade creditors arising in the ordinary course
of Borrower's business; and (iv) unsecured indebtedness arising from the
endorsement of drafts and other instruments for collection, in the ordinary
course of Borrower's business;
(r) Borrower does not own any margin securities, and none of
the proceeds of the Loans hereunder shall be used for the purpose of purchasing
or carrying any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulation U of the Board of Governors of
the Federal Reserve System as in effect from time to time;
(s) except as otherwise disclosed on Schedule 14(s), Borrower
has no Parents, Subsidiaries or divisions, nor is Borrower engaged in any joint
venture or partnership with any other Person;
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(t) Borrower is duly organized, validly existing and in good
standing in its state of organization and Borrower is duly qualified and in good
standing in all states where the nature and extent of the business transacted by
it or the ownership of its assets makes such qualification necessary, except for
such other states in which the failure to so qualify would not have a Material
Adverse Effect, and Borrower has delivered to Agent true and complete copies of
its Organizational Documents as in effect on the Closing Date;
(u) Borrower is not in default under any material contract,
lease or commitment to which it is a party or by which it is bound, nor does
Borrower know of any dispute regarding any contract, lease or commitment which
is material to the continued financial success and well-being of Borrower;
(v) there are no controversies pending or threatened between
Borrower and any of its employees, other than employee grievances arising in the
ordinary course of business which are not, in the aggregate, material to the
continued financial success and well-being of Borrower, and Borrower is in
compliance in all material respects with all federal and state laws respecting
employment and employment terms, conditions and practices, except where the
failure to so comply would not have a Material Adverse Effect;
(w) Borrower possesses, and shall continue to possess,
adequate licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, tradestyles and tradenames to continue to
conduct its business as heretofore conducted by it;
(x) INTENTIONALLY OMITTED;
(y) The proceeds of the Loans (other than the Equipment Loans)
shall be used to pay indebtedness of Borrower due to Xxxxxxx Bank in a maximum
aggregate amount of $5,550,000, and (iii) for Borrower's general working capital
purposes.
(z) Except as set forth on Schedule 14(z), no Benefit Plan was
in violation in any material respect of any of the provisions of ERISA or any of
the qualification requirements of Section 401(a) of the IRC within the
immediately preceding five year period, no non-exempt Prohibited Transaction or
Reportable Event has occurred with respect to any Benefit Plan, no Benefit Plan
has been the subject of a waiver of the minimum funding standard under Section
412 of the IRC, no Benefit Plan has experienced an accumulated funding
deficiency under Section 412 of the IRC, no Lien has been imposed upon the
Borrower or any ERISA Affiliate of Borrower under Section 412(n) of the IRC, no
Benefit Plan has been amended in such a way that the security requirements of
Section 401(a)(29) of the IRC apply, no notice of intent to terminate a Benefit
Plan has been distributed to affected parties or filed with the PBGC under
Section 4041 of ERISA, and no Benefit Plan has been terminated under Section
4041(e) of ERISA, the PBGC has not instituted proceedings to terminate, or
appoint a trustee to administer, a Benefit Plan and no event has occurred or
condition exists which might reasonably constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Benefit Plan, neither Borrower nor any ERISA Affiliate of Borrower would be
liable for any amount in the aggregate pursuant to Sections 4062, 4063 or 4064
of ERISA if all Benefit Plans terminated as of the most recent valuation dates
of such Benefit Plans which would reasonably result in a Material Adverse
Effect; neither Borrower nor any ERISA Affiliate of
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Borrower maintains any employee welfare benefit plan, as defined in Section 3(1)
of ERISA, which provides any benefits to an employee or the employee's
dependents with respect to claims incurred after the employee separates from
service other than is required by applicable law; and neither Borrower nor any
ERISA Affiliate of Borrower has incurred or expects to incur any withdrawal
liability to any Multiemployer Plan and after the Closing Date, none of the
above-described events shall occur which are reasonably likely to result in
Material Adverse Effect;
(aa) On the Closing Date, Borrower has no material liabilities
(accrued, absolute, contingent, unliquidated or otherwise, including, without
limitation, any tax, warranty or product liabilities) which are, or indebtedness
which is, not fully reflected or provided for in accordance with GAAP on the Pro
Forma Balance Sheet as of March 31, 2001, and the Borrower does not know of any
basis for the assertion against Borrower of any material liabilities of Borrower
which are not adequately reflected or reserved against on the Pro Forma Balance
Sheet;
(bb) Except as set forth on Schedule 14(bb) attached hereto,
(i) Borrower has duly complied with, and its facilities,
business, assets, property, leaseholds and Equipment are in compliance in all
material respects with, the provisions of the Federal Occupational Safety and
Health Act, the Environmental Protection Act, RCRA and all other Environmental
Laws; there have been no outstanding citations, notices or orders of
non-compliance issued to Borrower or relating to its business, assets, property,
leaseholds or Equipment under any such laws, rules or regulations;
(ii) Borrower has been issued all required federal,
state and local licenses, certificates or permits relating to all applicable
Environmental Laws;
(iii) (1) There are no visible signs of releases,
spills, discharges, leaks or disposal (collectively referred to as "Releases")
of Hazardous Substances at, upon, under or within any Real Property; (2) there
are no underground storage tanks or polychlorinated biphenyls on the Real
Property which Borrower has used or for which Borrower may have any
responsibility or liability; (3) the Real Property has never been used by
Borrower, or to Borrower's knowledge, by any other Person as a treatment,
storage or disposal facility of Hazardous Waste; and (4) no Hazardous Substances
are present on the Real Property or any premises leased by Borrower, except for
such quantities as are handled in accordance with all applicable manufacturer's
instructions and governmental regulations and in proper storage containers and
as are necessary for the operation of the commercial business of Borrower or of
its tenants and except for Hazardous Substances whose presence is unknown to
Borrower and for which Borrower has or would have no liability or
responsibility;
(cc) Borrower is not involved in any labor dispute, there are
no strikes or walkouts or union organization of Borrower's employees threatened
or in existence and no labor contract is scheduled to expire during the Term
other than as set forth on Schedule 14(cc) attached hereto; and
(dd) Upon and after the Closing Date, Borrower does not
propose to engage in any business other than the manufacturing and marketing of
transaction based printers, related
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spare parts, repair services and consumables and activities necessary to conduct
such business. On the Closing Date, Borrower will own and possess all of the
rights and consents necessary for the conduct of the business of Borrower.
Borrower represents, warrants and covenants to Agent and each
Lender that all representations, warranties and covenants of Borrower contained
in this Agreement (whether appearing in paragraphs 14 or 15 hereof or elsewhere)
shall be true at the time of Borrower's execution of this Agreement, shall
survive the execution, delivery and acceptance hereof by the parties hereto and
the closing of the transactions described herein or related hereto, shall remain
true until the repayment in full of all of the Liabilities and termination of
this Agreement, and shall (other than the representation set forth in clause
(aa) above) be remade by Borrower at the time each Revolving Loan and each
Equipment Loan is made and each Letter of Credit is issued pursuant to this
Agreement.
15. COVENANTS. Until payment or satisfaction in full of all Liabilities
and termination of this Agreement, unless Borrower obtains Agent's prior written
consent waiving or modifying any of Borrower's covenants hereunder in any
specific instance, Borrower agrees as follows:
(a) Borrower shall at all times keep accurate and complete
books, records and accounts with respect to all of Borrower's business
activities, in accordance with sound accounting practices and generally accepted
accounting principles consistently applied, and shall keep such books, records
and accounts, and any copies thereof, only at the addresses indicated for such
purpose on Exhibit A;
(b) Agent, or any Persons designated by it, shall have the
right, at any time, in the exercise of its commercially reasonable credit
judgment, to call at Borrower's places of business at any reasonable times, and,
without hindrance or delay, to inspect the Collateral and to inspect, audit,
check and make extracts from Borrower's books, records, journals, orders,
receipts and any correspondence and other data relating to Borrower's business,
the Collateral or any transactions between the parties hereto, and shall have
the right to make such verification concerning Borrower's business as Agent may
consider reasonable under the circumstances. Borrower shall furnish to Agent
such information relevant to Agent's rights under this Agreement as Agent shall
at any time and from time to time reasonably request. Borrower authorizes Agent
to discuss the affairs, finances and business of Borrower with any officers or
directors of Borrower, any Guarantor, and/or any Subsidiary of Borrower or with
those employees of any of the foregoing with whom Agent has determined in its
commercially reasonable judgment to be necessary or desirable to converse, and
to discuss the financial condition of Borrower with Borrower's independent
public accountants. Any such discussions shall be without liability to Agent or
to such accountants. Borrower shall pay to or reimburse Agent for all reasonable
fees, costs, and out-of-pocket expenses incurred by Agent in the exercise of its
rights hereunder (in addition to the fees payable by Borrower pursuant to
paragraph 6(g) in connection with Agent's examination of Borrower's books and
records and Collateral) and all of such costs, fees and expenses shall
constitute Revolving Loans hereunder, shall be payable on demand and, until
paid, shall bear interest at the highest rate then applicable to Revolving Loans
hereunder;
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(c) (i) Borrower shall: keep the Collateral properly housed
and shall keep the Collateral insured against such risks and in such amounts as
are customarily insured against by Persons engaged in businesses similar to that
of Borrower with such companies, in such amounts and under policies in such form
as shall be reasonably satisfactory to Agent. If requested by Agent, originals
or certified copies of such policies of insurance have been or shall be
delivered to Agent on the Closing Date, together with evidence of payment of all
premiums therefor (or evidence of payment of all installments due on or before
the Closing Date pursuant to any payment plan), and shall contain an
endorsement, in form and substance acceptable to Agent, showing loss under such
insurance policies payable to Agent. Such endorsement, or an independent
instrument furnished to Agent, shall provide that the insurance company shall
give Agent at least thirty (30) days prior written notice before any such policy
of insurance is altered or cancelled and that no act, whether willful or
negligent, or default of Borrower or any other Person shall affect the right of
Agent to recover under such policy of insurance in case of loss or damage.
Borrower hereby directs all insurers under such policies of insurance to pay all
proceeds payable thereunder directly to Agent for its benefit and for the
ratable benefit of Lenders as their respective interests may appear. Borrower
irrevocably, makes, constitutes and appoints Agent (and all officers, employees
or agents designated by Agent) as Borrower's true and lawful attorney (and
agent-in-fact) for the purpose of making, settling and adjusting claims under
such policies of insurance, endorsing the name of Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and making all determinations and decisions with respect to such
policies of insurance, provided, however, that Agent shall exercise such rights
only upon the occurrence of an Event of Default;
(ii) Borrower shall maintain, at its expense, such public liability and
third party property damage insurance as is customary for Persons
engaged in businesses similar to that of Borrower with such companies
and in such amounts, with such deductibles and under policies in such
form as shall be reasonably satisfactory to Agent and at Agent's
request, originals or certified copies of such policies have been or
shall be delivered to Agent on the Closing Date, together with evidence
of payment of all premiums therefor (or evidence of payment of all
installments due on or before the Closing Date pursuant to any payment
plan); each such policy shall contain an endorsement showing Agent as
additional insured thereunder and providing that the insurance company
shall give Agent at least thirty (30) days prior written notice before
any such policy shall be altered or cancelled; and
(iii) If Borrower at any time or times hereafter shall fail to obtain or
maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, then Agent, without
waiving or releasing any obligation or default by Borrower hereunder,
may (but shall be under no obligation to) obtain and maintain such
policies of insurance and pay such premiums and take such other actions
with respect thereto as Agent deems advisable. All sums disbursed by
Agent in connection with any such actions, including, without
limitation, court costs, expenses, other charges relating thereto and
reasonable attorneys' fees, shall constitute Revolving Loans hereunder
and, until paid, shall bear interest at the highest rate then
applicable to Revolving Loans hereunder.
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(d) Borrower shall not use the Collateral, or any part
thereof, in any unlawful business or for any unlawful purpose or use or maintain
any of the Collateral in any manner that does or could result in material damage
to the environment or a violation of any applicable Environmental Laws; Borrower
shall keep the Collateral in commercially reasonable condition, repair and
order, ordinary wear and tear excepted; Borrower shall not permit the
Collateral, or any part thereof, to be levied upon under execution, attachment,
distraint or other legal process; Borrower shall not sell, lease, grant a
security interest in or otherwise dispose of any of the Collateral except as
expressly permitted by this Agreement; and Borrower shall not secrete or abandon
any of the Collateral, or remove or permit removal of any of the Collateral from
any of the locations listed on Exhibit A or in any written notice to Agent
pursuant to paragraph 14 hereof, except for the removal of Inventory sold in the
ordinary course of Borrower's business as permitted herein;
(e) all monies and other property obtained by Borrower from
Agent pursuant to this Agreement will be used solely for the purposes set forth
herein;
(f) Borrower shall, at the request of Agent, indicate on its
records concerning the Collateral a notation, in form satisfactory to Agent, of
the security interest of Agent hereunder, and Borrower shall not maintain
duplicates or copies of such records at any address other than Borrower's
principal place of business set forth on the first page of this Agreement;
provided, however, that Borrower, in the ordinary course of its business, may
furnish copies of such records to its accountants, attorneys and other agents or
advisors as it may determine to be necessary or desirable, in the exercise of
its commercially reasonable judgment;
(g) Borrower shall file all required tax returns and pay all
of its taxes when due, including, without limitation, taxes imposed by federal,
state or municipal agencies, and shall cause any liens for taxes to be promptly
released; provided, that Borrower shall have the right to contest the payment of
such taxes in good faith by appropriate proceedings so long as (i) the amount so
contested is shown on Borrower's financial statements, (ii) the contesting of
any such payment does not give rise to a lien for taxes, (iii) upon the
occurrence of an Event of Default, Borrower keeps on deposit with Agent (such
deposit to be held without interest) an amount of money which, in the sole
judgment of Agent, is sufficient to pay such taxes and any interest or penalties
that may accrue thereon, and (iv) if Borrower fails to prosecute such contest
with reasonable diligence, Agent may apply the money so deposited in payment of
such taxes. If Borrower fails to pay any such taxes and in the absence of any
such contest by Borrower, Agent may (but shall be under no obligation to)
advance and pay any sums required to pay any such taxes and/or to secure the
release of any lien therefor, and any sums so advanced by Agent shall constitute
Revolving Loans hereunder, shall be payable by Borrower to Agent on demand, and,
until paid, shall bear interest at the highest rate then applicable to Revolving
Loans hereunder;
(h) Borrower shall not (i) incur, create, assume or suffer to
exist any indebtedness other than (A) indebtedness arising under this Agreement,
(B) unsecured indebtedness owing in the ordinary course of business to trade
suppliers arising on or after the Closing Date, (C) any other indebtedness
described in paragraphs 14(q)(ii), (iii) and (iv) hereof and (D) indebtedness
not exceeding $250,000 in the aggregate at any time incurred for Capital
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Expenditures permitted under paragraph 15(p)(iii) hereof; or (ii) assume,
guarantee or endorse, or otherwise become liable in connection with, the
obligations of any Person, except by endorsement of instruments for deposit or
collection or similar transactions in the ordinary course of business;
(i) Borrower shall not enter into any merger or consolidation,
or sell, lease or otherwise dispose of all or substantially all of its assets;
Borrower shall not create or acquire any new Subsidiary or Affiliate or issue
any shares of, or warrants or other rights to receive or purchase any shares of,
any class of its stock provided, that, to the extent such issuance would not
constitute a Change of Control, Borrower may, in the ordinary course of business
consistent with past practice, issue any shares of, or warrants or other rights
to receive or purchase any shares of its common stock to (i) Borrower's
employees in accordance with any employee stock option plan created by Borrower
including, without limitation, those listed on Schedule 15(i) provided all such
plans taken as a whole (x) shall not cause a breach of any of the documents or
agreements evidencing the Preferred Stock or (y) shall not provide for
distribution of more than twenty-five percent (25%) of Borrower's common stock
on a fully diluted basis in accordance with such plans and (ii) any of
Borrower's vendors in lieu of payment for Goods sold or services provided to
Borrower by such vendor provided that all shares issued pursuant to such
arrangements shall constitute, in the aggregate, less than one percent (1%) of
Borrower's common stock on a fully diluted basis; Borrower shall not enter into
any transaction outside the ordinary course of Borrower's business not expressly
permitted by the terms of this Agreement;
(j) Borrower shall not (i) declare or pay any dividend or
other distribution (whether in cash or in kind) on, purchase, redeem or retire
any shares of any class of its stock, or make any payment on account of, or set
apart assets for the repurchase, redemption, defeasance or retirement of, any
class of its stock, equity or other interest (ii) make any optional payment or
prepayment on or redemption (including without limitation by making payments to
a sinking fund or analogous fund) or repurchase of any indebtedness for borrowed
money other than indebtedness pursuant to this Agreement; (iii) pay any
management or similar fees to any Person; or (iv) make any loan to any Person
(except advances to Borrower's employees in the ordinary course of business
consistent with past practices provided that all such advances (with the
exception of the $330,000 (plus any interest accrued thereon) advance to Xxxx X.
Xxxxxxxx existing on the Closing Date) shall not exceed $10,000 outstanding in
the aggregate at any time).
Notwithstanding the foregoing limitations of this subparagraph
(j) Borrower may:
(1) pay cash dividends (each such payment, a "Preferred B
Dividend Payment") on up to 4,000 shares of the Series B Preferred Stock in an
aggregate amount not to exceed $70,000 per fiscal quarter and $280,000 per
Fiscal Year so long as (A) no Default or Event of Default has occurred or would
occur after giving effect to such Preferred B Dividend Payment, (B) such
dividends are paid in the year in which such dividends accrued (except that
dividends accrued in the last fiscal quarter of any year may be paid on or
within ten (10) Business Days following January 1 of the immediately following
Fiscal Year and (C) Borrower shall have delivered a Dividend Certification. The
determination of whether a Default or Event of Default would occur as a result
of such Preferred B Dividend Payment shall be made on a pro forma basis based
upon the financial statements of Borrower most recently delivered to Agent prior
to the date of such Preferred B Dividend Payment as if such Preferred B Dividend
Payment had
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been made on the last day of such fiscal period covered by such financial
statements. Nothing contained herein shall be deemed to infer that any breach of
a financial covenant or other provision of this Agreement subsequent to the
payment of a Preferred B Dividend Payment would not constitute a Default or
Event of Default.
(2) issue additional shares of Series B Preferred Stock to
holders of the Series B Preferred Stock in a principal amount not to exceed the
amount of a scheduled Preferred B Dividend Payment if (A) due to the limitations
set forth in this subparagraph (j), Borrower is not permitted to make such
scheduled Preferred B Dividend Payment or (B) Borrower, in its commercially
reasonable judgment, determines to pay such scheduled Preferred B Dividend
Payment in kind by the issuance of additional shares of Series B Preferred
Stock.
(3) in accordance with the Series A Rights Agreement, (A)
redeem the Series A Rights at a redemption price of $0.0001 per Series A Right
and (B) issue shares of Series A Preferred Stock or common stock of Borrower in
connection with the exercise of any Series A Right provided, that, any such
issuance of Series A Preferred Stock or common stock of Borrower shall (x) be
made only to Persons who are Non-Takeover Common Stockholders of record
immediately prior to such issuance, except that prior to the fifth occurrence of
a Section 11(a) (ii) Event or a Section 13 Event (as such terms are defined in
the Series A Rights Agreement), any such issuance may be made to any Person who
is a holder of a Series A Right and (y) not cause a Change of Control.
(k) Borrower shall not make any investment in any Person,
whether in cash, securities or other property of any kind, other than direct
obligations of the United States;
(l) Borrower shall not (i) change its jurisdiction of
organization, (ii) amend its Organizational Documents, any shareholder's or
similar agreement or (iii) change its Fiscal Year;
(m) Borrower shall not enter into or maintain any transaction
or agreement with its Affiliates, except in the ordinary course of business in a
manner and to an extent consistent with past practices of Borrower and necessary
or desirable for the prudent operation of its business and upon fair and
reasonable terms no less favorable to Borrower than would be obtained by
Borrower in a comparable arms-length transaction with a Person who is not an
Affiliate of Borrower;
(n) INTENTIONALLY OMITTED;
(o) Borrower shall not (i) (x) maintain, or permit any member
of the Controlled Group to maintain, or (y) become obligated to contribute, or
permit any member of the Controlled Group to become obligated to contribute, to
any Benefit Plan, other than those Plans disclosed on Schedule 14(z), (ii)
engage, or permit any member of the Controlled Group to engage, in any
non-exempt "prohibited transaction", as that term is defined in section 406 of
ERISA and Section 4975 of the IRC, (iii) incur, or permit any member of the
Controlled Group to incur, any "accumulated funding deficiency", as that term is
defined in Section 302 of ERISA or Section 412 of the IRC, (iv) terminate, or
permit any member of the Controlled Group to terminate, any Benefit Plan could
result in any material liability of Borrower or any member of
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the Controlled Group or the imposition of a lien on the property of Borrower or
any member of the Controlled Group pursuant to Section 4068 of ERISA, (v)
assume, or permit any member of the Controlled Group to assume, any obligation
to contribute to any Multiemployer Plan not disclosed on Schedule 14(z), (vi)
incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (vii) fail promptly to notify Agent of the
occurrence of any Termination Event, (viii) fail to comply, in all material
respects, or permit a member of the Controlled Group to fail to comply, in all
material respects, with the requirements of ERISA or IRC or other applicable
laws in respect of any Benefit Plan, (ix) fail to meet, or permit any member of
the Controlled Group to fail to meet, all minimum funding requirements under
ERISA or IRC or postpone or delay or allow any member of the Controlled Group to
postpone or delay any funding requirement with respect of any Benefit Plan
except as permitted by applicable laws, in each event (i) through (ix) which
would be reasonably likely to result in a Material Adverse Effect;
(p) Borrower on a consolidated basis shall maintain and keep
in full force and effect each of the financial covenants set forth below. The
calculation and determination of each such financial covenant, and all
accounting terms contained therein, shall be so calculated and construed in
accordance with GAAP, applied on a basis consistent with the financial
statements of Borrower delivered on or before the Closing Date:
(i) Tangible Net Worth. Borrower on a consolidated basis shall
maintain as of the end of each fiscal quarter a Tangible Net Worth of not less
than the amount set forth below shown opposite such fiscal quarter:
FISCAL QUARTER ENDED TANGIBLE NET WORTH
September 31, 2001 $10,300,000
December 31, 2001 $10,300,000
March 31, 2002 $10,100,000
June 30, 2002 $10,200,000
September 30, 2002 $10,900,000
December 31, 2002 $11,100,000
March 31, 2003 and each fiscal quarter The sum of (A) $11,100,000 plus (B)
thereafter (each such quarter, the "current an aggregate amount equal to eighty five percent (85%)
quarter") of the cumulative net income after taxes of Borrower on
a consolidated basis for the period commencing
on January 1, 2003 through and including the last
day of the current quarter, provided, however,
that such cumulative amount shall not be
reduced by the amount of any net loss before taxes
of Borrower on a consolidated basis for any preceding
fiscal quarter.
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(ii) Fixed Charge Coverage Ratio. Borrower on a consolidated
basis shall maintain as of the end of each fiscal quarter a Fixed Charge
Coverage Ratio of not less than the ratio set forth below shown opposite such
fiscal quarter with respect to the four (4) fiscal quarters then ended.
FISCAL QUARTER ENDED FIXED CHARGE COVERAGE RATIO
December 31, 2001 1.0 to 1.0
March 31, 2002 1.0 to 1.0
June 30, 2002 1.0 to 1.15
September 30, 2002 1.0 to 1.15
December 31, 2002 1.0 to 1.15
March 31, 2003 1.0 to 1.15
June 30, 2003 1.0 to 1.15
September 30, 2003 1.0 to 1.15
December 31, 2003 and each fiscal quarter 1.0 to 1.15
thereafter
(iii) Capital Expenditures. Borrower on a
consolidated basis shall not make Capital
Expenditures of an aggregate amount of more
than (x) two million two hundred thousand
dollars ($2,200,000) during the Fiscal Year
ending December 31, 2001 and two million
five hundred thousand dollars ($2,500,000)
during any Fiscal Year thereafter.
(iv) Minimum Consolidated EBITDA. Borrower on a
consolidated basis shall maintain EBITDA of
not less than the amounts set forth below
shown opposite such fiscal quarter with
respect to the four fiscal quarters then
ended provided that such covenant test on
September 30, 2001 shall be calculated with
respect to the three fiscal quarters then
ended:
FISCAL QUARTER ENDED MINIMUM CONSOLIDATED EBITDA
September 30, 2001 $ 475,000
December 31, 2001 $ 2,000,000
March 31, 2002 $ 2,500,000
June 30, 2002 $ 2,800,000
September 30, 2002 $ 3,100,000
December 31, 2002 $ 3,100,000
March 31, 2003 $ 3,100,000
June 30, 2003 $ 3,100,000
September 30, 2003 $ 3,100,000
December 31, 2003 and each fiscal quarter $ 3,100,000
thereafter
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(q) Borrower shall reimburse Agent for all costs and expenses
including, without limitation, legal expenses and reasonable attorneys' fees
(both in-house and outside counsel), incurred by Agent in connection with the
documentation and consummation of this transaction (provided, that, if the
attorneys fees for legal services rendered (but not disbursements billed) by
Agent's counsel in connection with the initial documentation and consummation of
this transaction on or before the Closing Date (the "Closing Legal Services
Fees") exceed $25,000, Agent shall pay for the first $15,000 in excess of
$25,000 and Borrower shall reimburse Agent for the first $25,000 of Closing
Legal Services Fees and for all Closing Legal Services Fees exceeding $40,000
provided, further, that, Borrower remain obligated to Agent for all costs and
expenses which do not constitute Closing Legal Services Fees) and any other
transactions between Borrower and Agent, including, without limitation, UCC and
other public record searches, lien filings, Federal Express or similar express
or messenger delivery, appraisal costs, surveys, title insurance and
environmental audit or review costs, and in seeking to collect, protect or
enforce any rights in or to the Collateral or incurred by Agent in seeking to
collect any Liabilities and to administer and enforce any of Agent's rights
under this Agreement. Borrower shall also pay all normal service charges with
respect to accounts maintained by Agent for the benefit of Borrower. All such
costs, expenses and charges shall constitute Revolving Loans hereunder, shall be
payable by Borrower to Agent on demand, and, until paid, shall bear interest at
the highest rate then applicable to Revolving Loans hereunder;
(r) Borrower shall promptly notify Agent in writing of the
occurrence of a (i) Default or an Event of Default; (ii) any event, development
or circumstance whereby any financial statements furnished to Agent fail in any
material respect to present fairly, in accordance with GAAP consistently
applied, the financial condition or operating results of Borrower as of the date
of such statements or whereby any reports furnished to Agent fail in any
material respect to present fairly the financial condition or operating results
of Borrower as of the date of such reports; (v) any accumulated retirement plan
funding deficiency which, if such deficiency continued for two plan years and
was not corrected as provided in Section 4971 of IRC, could subject Borrower to
a tax imposed by Section 4971 of IRC; (vi) each and every default by Borrower
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (vii) any other development in the business or affairs of Borrower which
could reasonably be expected to have a Material Adverse Effect; in each case
describing the nature thereof and the action Borrower proposes to take with
respect thereto;
(s) (i) Borrower shall ensure that the Real Property remains
in compliance with all Environmental Laws to the extent that Borrower would have
liability or responsibility for non-compliance and shall not place or permit to
be placed any Hazardous Substances on any Real Property except as not prohibited
by applicable law or appropriate governmental authorities;
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(ii) Borrower shall establish and maintain a system to
assure and monitor continued compliance with all applicable Environmental Laws
which system shall include periodic reviews of such compliance;
(iii) Borrower shall (i) employ in connection with the
use of the Real Property appropriate technology necessary to maintain compliance
with any applicable Environmental Laws and (ii) dispose of any and all Hazardous
Waste generated at the Real Property only at facilities and with carriers that
maintain valid permits under RCRA and any other applicable Environmental Laws.
Borrower shall use its best efforts to obtain certificates of disposal, such as
hazardous waste manifest receipts, from all treatment, transport, storage or
disposal facilities or operators employed by Borrower in connection with the
transport or disposal of any Hazardous Waste generated at the Real Property;
(iv) In the event Borrower obtains, gives or receives
notice of any Release or threat of Release of a reportable quantity of any
Hazardous Substances at the Real Property (any such event being hereinafter
referred to as a "Hazardous Discharge") or receives any notice of violation,
request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property,
demand letter or complaint, order, citation, or other written notice with regard
to any Hazardous Discharge or violation of Environmental Laws affecting the Real
Property or Borrower's interest therein (any of the foregoing is referred to
herein as an "Environmental Complaint") from any Person, including any state
agency responsible in whole or in part for environmental matters in the state in
which the Real Property is located or the United States Environmental Protection
Agency (any such person or entity hereinafter the "Authority"), then Borrower
shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and circumstances of which Borrower is aware giving rise to the
Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in the Real Property
and is not intended to create nor shall it create any obligation upon Agent or
any Lender with respect thereto;
(v) Borrower shall promptly forward to Agent copies of
any request for information, notification of potential liability, demand letter
relating to potential responsibility with respect to the investigation or
cleanup of Hazardous Substances at any other site owned, operated or used by
Borrower to dispose of Hazardous Substances and shall continue to forward copies
of correspondence between Borrower and the Authority regarding such claims to
Agent until the claim is settled. Borrower shall promptly forward to Agent
copies of all documents and reports concerning a Hazardous Discharge at the Real
Property that Borrower is required to file under any Environmental Laws. Such
information is to be provided solely to allow Agent to protect Agent's security
interest in the Real Property and the Collateral;
(vi) Borrower shall respond promptly to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any lien. If Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or Borrower shall fail to comply
with any of the requirements of any Environmental Laws, Agent on behalf of
Lenders may, but without the obligation to do so, for the sole purpose of
protecting Agent's
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interest in Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize third parties to enter onto the Real Property) and take
such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise
deal with any such Hazardous Discharge or Environmental Complaint. All
reasonable costs and expenses incurred by Agent and Lenders (or such third
parties) in the exercise of any such rights, including any sums paid in
connection with any judicial or administrative investigation or proceedings,
fines and penalties, together with interest thereon from the date expended at
the Default Rate for Prime Rate Revolving Loans shall be paid upon demand by
Borrower, and until paid shall be added to and become a part of the Liabilities
secured by the liens created by the terms of this Agreement or any other
agreement between Agent, any Lender and Borrower;
(vii) Promptly upon the written request of Agent from
time to time, Borrower shall provide Agent, at Borrower's expense, with an
environmental site assessment or environmental audit report prepared by an
environmental engineering firm acceptable in the reasonable opinion of Agent, to
assess with a reasonable degree of certainty the existence of a Hazardous
Discharge and the potential costs in connection with abatement, cleanup and
removal of any Hazardous Substances found on, under, at or within the Real
Property to the extent Borrower is responsible or liable for such abatement,
clean-up and removal. Any report or investigation of such Hazardous Discharge
proposed and acceptable to an appropriate Authority that is charged to oversee
the clean-up of such Hazardous Discharge shall be acceptable to Agent. If such
estimates, individually or in the aggregate, exceed $100,000, Agent shall have
the right to require Borrower to post a bond, letter of credit or other security
reasonably satisfactory to Agent to secure payment of these costs and expenses;
(viii) Borrower shall defend and indemnify Agent and
Lenders and hold Agent, Lenders and their respective employees, agents,
directors and officers harmless from and against all loss, liability, damage and
expense, claims, costs, fines and penalties, including attorney's fees, suffered
or incurred by Agent or Lenders under or on account of any Environmental Laws,
including, without limitation, the assertion of any lien thereunder, with
respect to any Hazardous Discharge, the presence of any Hazardous Substances
affecting the Real Property, whether or not the same originates or emerges from
the Real Property or any contiguous real estate, including any loss of value of
the Real Property as a result of the foregoing except to the extent such loss,
liability, damage and expense is attributable to any Hazardous Discharge
resulting from actions on the part of Agent or any Lender. Borrower's
obligations under this paragraph 15(s)(viii) shall arise upon the discovery of
the presence of any Hazardous Substances at the Real Property, whether or not
any federal, state, or local environmental agency has taken or threatened any
action in connection with the presence of any Hazardous Substances. Borrower's
obligation and the indemnifications hereunder shall survive the termination of
this Agreement; and
(ix) For purposes of paragraphs 14(bb) and 15(s), all
references to Real Property shall be deemed to include all of Borrower's right,
title and interest in and to its owned and leased premises.
(t) Neither Borrower or any Affiliate of Borrower shall use
any portion of the proceeds of the Loans, either directly or indirectly, for the
purpose of (i) purchasing any
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securities underwritten or privately placed by ABN AMRO Securities (USA) Inc.
("AASI"), an affiliate of Agent, (ii) purchasing from AASI any securities in
which AASI makes a market, or (iii) refinancing or making payments of principal,
interest or dividends on any securities issued by Borrower or any Affiliate, and
underwritten, privately placed or dealt in by AASI.
(u) Borrower shall not, directly or indirectly, create any
Subsidiary.
(v) Borrower shall not transfer, sell or assign any of its
assets to any Subsidiary provided, that, during each Fiscal Year, Borrower may
sell Inventory consisting of finished goods or spare parts to TransAct UK having
an aggregate fair market value of no more than $500,000.
(w) No Subsidiary of Borrower (other than TransAct UK)
currently or shall in the future (x) engage in any business of a material
nature, (y) own assets having an aggregate value in excess of $10,000 or (z)
have liabilities in excess of $10,000 in the aggregate other than to Agent and
Lenders pursuant to a Guaranty. In addition, TransAct UK shall not currently or
shall not in the future (i) own assets having an aggregate value in excess of
$500,000 or (ii) have indebtedness for borrowed money or any liability other
than (A) in the ordinary course of business and (B) to Agent and Lenders
pursuant to a Guaranty
16. CONDITIONS PRECEDENT.
(a) The obligation of Agent and each Lender to fund the Term
Loan, to fund the initial Revolving Loan on the Closing Date, to fund the
initial Equipment Loan and to co-sign as applicant for the initial Letter of
Credit on the Closing Date is subject to the satisfaction or waiver on or before
the Closing Date of the following conditions precedent:
(i) Agent shall have received each of the
agreements, opinions, reports, approvals,
consents, certificates and other documents
set forth on the closing document list
attached hereto as Schedule A (the "Closing
Document List").
(ii) Since December 31, 2000, no event shall have
occurred which has had or could reasonably
be expected to have a Material Adverse
Effect, as determined by Agent in its sole
discretion.
(iii) Agent shall have received payment in full of
all fees and expenses set forth herein or in
any Other Agreement payable to it by
Borrower on or before the Closing Date.
(iv) Agent shall have determined that immediately
after giving effect to (A) the making of the
initial Loans requested to be made on the
Closing Date and (B) the issuance of the
initial Letters of Credit, if any, requested
to be made on the Closing Date and (C) the
payment or reimbursement by Borrower of
Agent for all closing costs and expenses
incurred in connection with the transactions
contemplated hereby, on a pro forma basis
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the Excess Availability of Borrower shall
not be less than One Million Dollars
($1,000,000).
(v) Agent shall have received a certificate from
Borrower's chief executive officer or chief
financial officer, pursuant to which such
officer shall certify that in calculating
the Excess Availability described in clause
(iv) above, the outstanding trade payables
of Borrower were and are current and not
past due in any material respect.
(vi) The Obligors shall have executed and
delivered to Agent all documents which Agent
determines are reasonably necessary to
consummate the transactions contemplated
hereby.
(vii) Agent shall have received duly executed
agreements establishing the Blocked Accounts
with financial institutions acceptable to
Agent for the collection or servicing of the
Accounts and proceeds of the Collateral.
(viii) Agent shall have completed Collateral
examinations and received appraisals, the
results of which shall be satisfactory in
form and substance to the Agent, of the
Accounts, Inventory, General Intangibles,
Investment Property and Equipment of
Borrower and all books and records in
connection therewith.
(ix) Agent shall have received and be satisfied
with the audited financial statements of
Borrower for the Fiscal Year ended December
31, 2000.
(x) There shall exist no default in any
obligations or in compliance with any
applicable legal requirement of Borrower
(other than those disclosed to Agent in
writing on or prior to the date hereof).
(xi) Agent shall be satisfied with its due
diligence review of the business and
financial affairs of Borrower and its
management and its pre-closing audit of
Borrower.
(xii) Agent shall have received the executed legal
opinion of Xxxxxxx & Xxxxxxx LLP in form and
substance satisfactory to Agent which shall
cover such matters incident to the
transactions contemplated by this Agreement,
the Notes, and related agreements as Agent
may reasonably require (including, without
limitation, enforceability and perfection
issues with respect to the Collateral) and
Borrower hereby authorizes and directs such
counsel to deliver such opinions to Agent
and Lenders.
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(xiii) Agent shall have received landlord,
processor or warehouseman agreements
satisfactory to Agent with respect to all
premises leased by Borrower or controlled by
any of its processors, suppliers or
customers at which books and records,
Inventory and Equipment are located.
(xiv) Agent shall have received licensor consent
letters satisfactory to Agent with respect
to the trademarks licensed to Borrower
pursuant to a license agreement.
(xv) Agent shall have received in form and
substance satisfactory to Agent, summaries
of Borrower's casualty insurance policies,
together with loss payable endorsements on
Agent's standard form of loss payee
endorsement naming Agent as lender loss
payee, summaries of Borrower's liability
insurance policies, together with
endorsements naming Agent as a co-insured.
(xvi) Each document (including, without
limitation, any Uniform Commercial Code
financing statement and filings with the
United State Patent and Trademark Office or
any similar state authority) required by
this Agreement, any Other Agreement or under
law or reasonably requested by the Agent to
be filed, registered or recorded in order to
create, in favor of Agent, a perfected
security interest in or lien upon the
Collateral shall have been properly filed,
registered or recorded in each jurisdiction
in which the filing, registration or
recordation thereof is so required or
requested, and Agent shall have received an
acknowledgment copy, or other evidence
satisfactory to it, of each such filing,
registration or recordation and satisfactory
evidence of the payment of any necessary
fee, tax or expense relating thereto.
(xvii) No litigation, investigation or proceeding
before or by any arbitrator or governmental
body shall be continuing or threatened
against Borrower or against the officers or
directors of Borrower (A) in connection with
this Agreement or the Other Agreements or
any of the Transactions and which, in the
reasonable opinion of Agent, is deemed
material or (B) which if adversely
determined, could, in the reasonable opinion
of Agent, have a Material Adverse Effect on
Borrower; and (ii) no injunction, writ,
restraining order or other order of any
nature materially adverse to Borrower or the
conduct of its business or inconsistent with
the due consummation of the transactions
contemplated by this Agreement or the Other
Agreements shall have been issued by any
governmental body.
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(xviii) Agent shall have received all environmental
studies and reports prepared by independent
environmental engineering firms regarding
the Real Property, the results of which
shall be satisfactory to Agent in all
respects.
(xix) Agent shall have reviewed all material
contracts of Borrower, if applicable,
including, without limitation, the GTECH
Contract, the Hewlett Packard Contract, the
Okidata Contract, leases, union contracts,
labor contracts, other vendor supply
contracts, other customer contracts, license
agreements and distributorship agreements
and such contracts and agreements shall be
satisfactory in all respects to Agent.
(xx) Borrower and each Guarantor shall be in
material compliance with all applicable laws
and regulations.
(xxi) No Default or Event of Default shall exist.
(xxii) All corporate and other proceedings, and all
documents, instruments and other legal
matters in connection with the transactions
contemplated by this Agreement shall be
satisfactory in form and substance to Agent,
Lenders and their counsel.
(xxiii) Agent shall have received and reviewed the
Pro Forma Balance Sheet and projections of
the Borrower on a consolidated basis for the
Fiscal Year ending December 31, 2001,
together with financial projections for the
Fiscal Years ending December 31, 2002,
calculated on an annual basis, and such
balance sheet and projections shall be in
form and substance satisfactory to the
Agent.
(xxiv) Agent shall have received approval from its
credit committee for all of the
Transactions.
(b) The obligation of Agent or any Lender to make any
requested Loan, or to issue or cause the issuance of any requested Letter of
Credit whether on or at any time after the Closing Date, is subject to the
satisfaction of the conditions precedent set forth below. Each such request
shall constitute a representation and warranty that such conditions are
satisfied:
(i) All representations and warranties contained
in this Agreement and the Other Agreements
shall be true and correct on and as of the
date of such request, as if then made, other
than representations and warranties that
relate solely to an earlier date;
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(ii) No Default or Event of Default shall have
occurred, or would result from the making of
the requested Loan or the issuance of the
requested Letter of Credit, which has not
been waived in writing by Agent; and
(iii) Since December 31, 2000, no event has
occurred which has had or could reasonably
be expected to have a Material Adverse
Effect.
17. DEFAULT. The occurrence of any one or more of the following events
shall constitute an "EVENT OF DEFAULT" hereunder:
(a) the failure of any Obligor to pay when due, declared due,
or demanded by Agent in accordance with the terms hereof, any of the
Liabilities; or
(b) (i) the failure of any Obligor to perform, keep or observe
any of the covenants, conditions, promises, agreements or obligations of such
Obligor under this Agreement; or (ii) the failure of any Obligor to perform,
keep or observe any of the covenants, conditions, promises, agreements or
obligations of such Obligor under any of the Other Agreements provided that if
such failure (A) is susceptible to cure, (B) does not constitute a Default or
Event of Default under any other clause of this paragraph 17 or any other
paragraph of this Agreement and (C) does not or is reasonably likely not to have
a Material Adverse Effect in Agent's commercially reasonable judgment, such
failure shall not constitute an Event of Default until such failure continues
for a period of five (5) Business Days following the earlier of the date on
which any Obligor is notified of such failure by Agent or the date upon which
any officer of any Obligor first became aware of the occurrence of such failure;
or
(c) (i) the making or furnishing by any Obligor to Agent or
any Lender of any representation, warranty, certificate, schedule, report or
other communication within or in connection with this Agreement or the Other
Agreements or in connection with any other agreement between such Obligor and
Agent or such Lender, which is untrue or misleading in any material respect, or
(ii) the failure of any Obligor to perform, keep or observe any of the
covenants, conditions, promises, agreements of such Obligor under any other
agreement with any Person if such failure has or is reasonably likely to have a
Material Adverse Effect; or
(d) the creation (whether voluntary or involuntary) of, or any
attempt to create, any lien or other encumbrance upon any of the Collateral,
other than the Permitted Liens, or the making or any attempt to make any levy,
seizure or attachment thereof; or
(e) the commencement of any proceedings (i) in bankruptcy by
or against any Obligor, (ii) for the liquidation or reorganization of any
Obligor, (iii) alleging that such Obligor is insolvent or unable to pay its
debts as they mature, or (iv) for the readjustment or arrangement of any
Obligor's debts, whether under the United States Bankruptcy Code or under any
other law, whether state or federal, now or hereafter existing for the relief of
debtors, or the commencement of any analogous statutory or non-statutory
proceedings involving any Obligor; provided, however, that if such commencement
of proceedings against such Obligor is
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involuntary, such action shall not constitute an Event of Default unless such
proceedings are not dismissed within forty-five (45) days after the commencement
of such proceedings; or
(f) the appointment of a receiver or trustee for any Obligor,
for any of the Collateral or for any substantial part of any Obligor's assets or
the institution of any proceedings for the dissolution, or the full or partial
liquidation, or the merger or consolidation, of any Obligor which is a
corporation or a partnership; provided, however, that if such appointment or
commencement of proceedings against such Obligor is involuntary, such action
shall not constitute an Event of Default unless such appointment is not revoked
or such proceedings are not dismissed within forty-five (45) days after the
commencement of such proceedings; or
(g) the entry of any judgment or order in excess of $100,000
against any Obligor which remains unsatisfied or undischarged and in effect for
thirty (30) days after such entry without a stay of enforcement or execution; or
(h) the occurrence of a default or event of default under, or
the revocation or termination of, any agreement, instrument or document executed
and delivered by any Person to Agent pursuant to which such Person has
guaranteed to Agent for its benefit and for the ratable benefit of Lenders the
payment of all or any of the Liabilities or has granted Agent for its benefit
and for the ratable benefit of Lenders a security interest in or lien upon some
or all of such Person's real and/or personal property to secure the payment of
all or any of the Liabilities; or
(i) the occurrence of a default or event of default under any
other agreement or instrument evidencing indebtedness for borrowed money in
excess of $100,000 executed or delivered by any Obligor or pursuant to which
agreement or instrument Obligor or its properties is or may be bound; or
(j) the occurrence of any event or condition which has or is
reasonably likely to have a Material Adverse Effect; or
(k) the occurrence of a Change of Control; or
(l) if any Reportable Event shall have occurred or any Benefit
Plan shall be terminated within the meaning of Title IV of ERISA, or a trustee
shall be appointed by the appropriate United States District Court to administer
any Benefit Plan, the PBGC shall institute proceedings to terminate any Benefit
Plan, or there shall be a withdrawal from any Multiemployer Plan, and there
shall be a Material Adverse Effect in the case of any event described in this
paragraph 17(l); or
(m) the occurrence of any event specified in any Obligor's
Organizational Documents that may result in such Obligor's dissolution or
liquidation or any Obligor shall file a certificate of dissolution or shall be
liquidated, dissolved or wound-up or shall commence or have commenced against it
any action or proceeding for dissolution, winding up or liquidation; or
(n) the operations of any of Borrower's manufacturing
facilities are interrupted at any time for more than five (5) consecutive
Business Days, unless Borrower shall (i) be entitled to receive for such period
of interruption, proceeds of business interruption
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insurance sufficient to assure that its per diem cash needs during such period
is at least equal to its average per diem cash needs for the consecutive three
month period immediately preceding the initial date of interruption and (ii)
receive such proceeds in the amount described in clause (i) preceding not later
than thirty (30) days following the initial date of any such interruption;
provided, however, that notwithstanding the provisions of clauses (i) and (ii)
of this paragraph 17(n), an Event of Default shall be deemed to have occurred if
Borrower shall be receiving the proceeds of business interruption insurance for
a period of thirty (30) consecutive days; or
(o) there shall have occurred or there shall exist any other
event or circumstance pursuant to which, but for the provisions of this
Agreement, Borrower would have the obligation to redeem or repurchase the Series
B Preferred Stock, or Series A Preferred Stock of Borrower; or
(p) the failure by Borrower to, within sixty (60) days
following the Closing Date, renew the Okidata Contract for at least one (1) year
on terms which are substantially similar to the terms of the Okidata Contract as
in effect on the Closing Date; or
(q) (x) a default or event of default shall have occurred
under either the Okidata Contract or GTECH Contract which permits the other
party to such agreement to terminate such agreement provided that no Event of
Default shall occur if such default or event of default is susceptible to cure
and such default or event of default is cured within thirty (30) days; or (y)
any such contract shall be terminated or materially amended, restated, modified
or supplemented in a manner that is adverse to Borrower, as determined by Agent
in its reasonable discretion.
Notwithstanding anything contained in this paragraph 17 or
contained in any other provision of this Agreement or the Other Agreements to
the contrary, in the event of the institution of any proceeding or appointment
described in paragraph 17(e) or paragraph 17(f) hereof against Borrower, Agent
and Lenders shall not be obligated to make advances to Borrower during the
thirty (30) day grace period provided in paragraph 17(e) or paragraph 17(f).
18. REMEDIES UPON AN EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default described in
paragraph 17(e) hereof, all of the Liabilities shall immediately and
automatically become due and payable, without notice of any kind. Upon the
occurrence of any other Event of Default, all of the Liabilities may, at the
option of Agent at the direction of Required Lenders, and without demand, notice
or legal process of any kind, be declared, and immediately shall become, due and
payable.
(b) Upon the occurrence of an Event of Default, Agent may
exercise from time to time any rights and remedies available to it under the UCC
and under any other applicable law in addition to, and not in lieu of, any
rights and remedies expressly granted in this Agreement or in any of the Other
Agreements and all of Agent's rights and remedies shall be cumulative and
non-exclusive to the extent permitted by law. In particular, but not by way of
limitation of the foregoing, Agent may, without notice, demand or legal process
of any kind, take possession of any or all of the Collateral (in addition to
Collateral of which it already has possession), wherever it may be found, and
for that purpose may pursue the same wherever it
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may be found, and may enter into any of Borrower's premises where any of the
Collateral may be, and search for, take possession of, remove, keep and store
any of the Collateral until the same shall be sold or otherwise disposed of, and
Agent shall have the right to store the same at any of Borrower's premises
without cost to Agent. At Agent's request, Borrower shall, at Borrower's
expense, assemble the Collateral and make it available to Agent at one or more
places to be designated by Agent and reasonably convenient to Agent and
Borrower. Borrower recognizes that if Borrower fails to perform, observe or
discharge any of its Liabilities under this Agreement or the Other Agreements,
no remedy at law will provide adequate relief to Agent or Lenders, and Borrower
agrees that Agent and Lenders shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages. Any notification of intended disposition of any of the Collateral
required by law will be deemed reasonably and properly given if given at least
ten (10) calendar days before such disposition. Agent shall have no duty to
repair or clean the Collateral prior to any disposition thereof. In connection
with any disposition of the Collateral, Agent may disclaim warranties of title,
possession, quiet enjoyment and any other type of warranty. Any proceeds of any
disposition by Agent of any of the Collateral may be applied by Agent to the
payment of expenses in connection with the Collateral including, without
limitation, legal expenses and reasonable attorneys' fees (both in-house and
outside counsel) and any balance of such proceeds may be applied by Agent toward
the payment of such of the Liabilities, and in such order of application, as
Agent may from time to time elect.
19. INDEMNIFICATION. Borrower agrees to defend (with counsel reasonably
satisfactory to Agent), protect, indemnify and hold harmless Agent and each
Lender, each affiliate or subsidiary of Agent or such Lender, and each of their
respective officers, directors, employees, attorneys and agents (each an
"Indemnified Party") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature (including, without limitation, the
disbursements and the reasonable fees of counsel for each Indemnified Party in
connection with any investigative, administrative or judicial proceeding,
whether or not the Indemnified Party shall be designated a party thereto and any
fees associated with a broker or similar Person), which may be imposed on,
incurred by, or asserted against, any Indemnified Party (whether direct,
indirect or consequential and whether based on any federal, state or local laws
or regulations including, without limitation, securities, Environmental Laws and
commercial laws and regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising out of this
Agreement or any Other Agreement, or any act, event or transaction related or
attendant thereto, the making and the management of the Loans or any Letters of
Credit or the use or intended use of the proceeds of the Loans or any Letters of
Credit; provided, however, that Borrower shall not have any obligation hereunder
to any Indemnified Party with respect to matters caused by or resulting from the
willful misconduct or gross negligence of such Indemnified Party. To the extent
that the undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Borrower
shall satisfy such undertaking to the maximum extent permitted by applicable
law. Any liability, obligation, loss, damage, penalty, cost or expense covered
by this indemnity shall be paid to each Indemnified Party on demand, and,
failing prompt payment, shall, together with interest thereon at the highest
rate then applicable to Revolving Loans hereunder from the date incurred by each
Indemnified Party until paid by Borrower, be added to the Liabilities of
Borrower and be secured by the Collateral. The provisions of this paragraph 19
shall survive the satisfaction and payment of the other Liabilities and the
termination of this Agreement.
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20. REGARDING AGENT.
(a) Appointment. Each Lender hereby designates LaSalle to act
as Agent for such Lender under this Agreement and the Other Agreements. Each
Lender hereby irrevocably authorizes Agent to take such action on its behalf
under the provisions of this Agreement and the Other Agreements and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of Agent by the terms hereof and thereof
and such other powers as are reasonably incidental thereto and Agent shall hold
all Collateral, payments of principal and interest, fees (except the fees set
forth in subparagraphs 6(d), 6(e) and 6(g)), charges and collections (without
giving effect to any collection days) received pursuant to this Agreement, for
the ratable benefit of Lenders. Agent may perform any of its duties hereunder by
or through its agents or employees. As to any matters not expressly provided for
by this Agreement, Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding;
provided, however, that Agent shall not be required to take any action which
exposes Agent to liability or which is contrary to this Agreement or the Other
Agreements or applicable law unless Agent is furnished with an indemnification
reasonably satisfactory to Agent with respect thereto.
(b) Nature of Duties. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Other Agreements. Neither Agent nor any of its officers, directors, employees or
agents shall be (i) liable for any action taken or omitted by them as such
hereunder or in connection herewith, unless caused by their gross (not mere)
negligence or willful misconduct, or (ii) responsible in any manner for any
recitals, statements, representations or warranties made by Borrower or any
officer thereof contained in this Agreement, or in any Other Agreement or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any Other
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, or any Other Agreement or for any failure of
Borrower to perform its obligations hereunder. Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any Other Agreement, or to inspect the properties, books or records
of Borrower. The duties of Agent as respects the Loans to Borrower shall be
mechanical and administrative in nature; Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to
impose upon Agent any obligations in respect of this Agreement except as
expressly set forth herein.
(c) Lack of Reliance on Agent and Resignation.
(i) Independently and without reliance upon
Agent or any other Lender, each Lender has
made and shall continue to make (A) its own
independent investigation of the financial
condition and affairs of Borrower in
connection with the making and the
continuance of the Loans hereunder and the
taking or not taking of any action in
connection herewith, and (B) its own
appraisal
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of the creditworthiness of Borrower. Agent
shall have no duty or responsibility, either
initially or on a continuing basis, to
provide any Lender with any credit or other
information with respect thereto, whether
coming into its possession before making of
the Loans or at any time or times thereafter
except as shall be provided by Borrower
pursuant to the terms hereof. Agent shall
not be responsible to any Lender for any
recitals, statements, information,
representations or warranties herein or in
any agreement, document, certificate or a
statement delivered in connection with or
for the execution, effectiveness,
genuineness, validity, enforceability,
collectability or sufficiency of this
Agreement or any Other Agreement, or of the
financial condition of Borrower, or be
required to make any inquiry concerning
either the performance or observance of any
of the terms, provisions or conditions of
this Agreement, the Notes, the Other
Agreements or the financial condition of
Borrower, or the existence of any Event of
Default or any Default.
(ii) Agent may resign on sixty (60) days' written
notice to each of Lenders and Borrower and
upon such resignation, the Required Lenders
will promptly designate a successor Agent
reasonably satisfactory to Borrower.
(iii) Any such successor Agent shall succeed to
the rights, powers and duties of Agent, and
the term "Agent" shall mean such successor
agent effective upon its appointment, and
the former Agent's rights, powers and duties
as Agent shall be terminated, without any
other or further act or deed on the part of
such former Agent. After any Agent's
resignation as Agent, the provisions of this
paragraph 20, shall inure to its benefit as
to any actions taken or omitted to be taken
by it while it was Agent under this
Agreement.
(d) Certain Rights of Agent. If Agent shall request
instructions from Lenders with respect to any act or action (including failure
to act) in connection with this Agreement or any Other Agreement, Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from the Required Lenders; and Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
(e) Reliance. Agent shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram, order
or other document or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper person or entity, and, with
respect to all legal matters pertaining to this Agreement and the Other
Agreements and its
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duties hereunder, upon advice of counsel selected by it. Agent may employ agents
and attorneys-in-fact and shall not be liable for the default or misconduct of
any such agents or attorneys-in-fact selected by Agent with reasonable care.
(f) Notice of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder or under the Other Agreements, unless Agent has received notice from a
Lender or Borrower referring to this Agreement or the Other Agreements,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that Agent receives such a notice, Agent shall
give notice thereof to Lenders. Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
(g) Indemnification. To the extent Agent is not reimbursed and
indemnified by Borrower, each Lender will reimburse and indemnify Agent in
proportion to its respective portion of the Loans (or, if no Loans are
outstanding, according to its Commitment Percentage), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by or asserted against Agent in performing its
duties hereunder, or in any way relating to or arising out of this Agreement or
any Other Agreement; provided that, Lenders shall not be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.
(h) Agent in its Individual Capacity. With respect to the
obligation of Agent to lend under this Agreement, the Loans made by it shall
have the same rights and powers hereunder as any other Lender and as if it were
not performing the duties as Agent specified herein; and the term "Lender" or
any similar term shall, unless the context clearly otherwise indicates, include
Agent in its individual capacity as a Lender. Agent may engage in business with
Borrower as if it were not performing the duties specified herein, and may
accept fees and other consideration from Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.
(i) Delivery of Documents. To the extent Agent receives
documents and written information from Borrower pursuant to paragraphs 12(c),
(d), (e), (f) or (g) of this Agreement, Agent will promptly furnish such
documents and information to Lenders.
(j) Borrower's Undertaking to Agent. Without prejudice to its
obligations to the Lenders under the other provisions of this Agreement,
Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to time due and payable by it for the account of
Agent or the Lenders or any of them pursuant to this Agreement to the extent not
already paid. Any payment made pursuant to any such demand shall pro tanto
satisfy Borrower's obligations to make payments for the account of the Lenders
or the relevant one or more of them pursuant to this Agreement.
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21. NOTICES. All written notices and other written communications with
respect to this Agreement shall be sent by ordinary, certified or overnight
mail, by telecopy or delivered by reputable courier or in person to: LaSalle
Business Credit, Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
District Credit Manager,
with a copy to:
Xxxxxxxxxx Xxxxxxx PC
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
LaSalle Business Credit, Inc.
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and in the case of Borrower shall be sent to Borrower at its principal place of
business as set forth on the first page of this Agreement, and in the case of
any Lender shall be sent to such Lender at its address set forth on the
signature page hereto or in a Commitment Transfer Supplement or at such other
address as may be designated by any party from time to time in a notice
complying as to delivery with the terms of this paragraph to the other parties.
Any notice, if mailed or delivered via reputable courier or by hand delivery and
properly addressed with postage or delivery costs prepaid, shall be deemed given
when received; any notice, if transmitted by telecopy, shall be deemed given
when transmitted, provided receipt is confirmed.
22. CHOICE OF GOVERNING LAW AND CONSTRUCTION. This Agreement and the
Other Agreements are submitted by Borrower to Agent for Agent's acceptance or
rejection at Agent's principal place of business as an offer by Borrower to
borrow monies from Agent and Lenders now and from time to time hereafter, and
shall not be binding upon Agent or any Lender or become effective until accepted
by Agent on behalf of Lenders, in writing, at said place of business. If so
accepted by Agent on behalf of Lenders, this Agreement and the Other Agreements
shall be deemed to have been made at said place of business. THIS AGREEMENT AND
THE OTHER AGREEMENTS SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF
THE STATE OF NEW YORK AS TO INTERPRETATION, ENFORCEMENT, VALIDITY, CONSTRUCTION,
EFFECT, AND IN ALL OTHER RESPECTS, INCLUDING, WITHOUT LIMITATION, THE LEGALITY
OF THE INTEREST RATE AND OTHER CHARGES, BUT EXCLUDING PERFECTION OF THE SECURITY
INTERESTS IN THE COLLATERAL, WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS
OF THE RELEVANT JURISDICTION. If any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such
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prohibition or invalidity, without invalidating the remainder of such provision
or remaining provisions of this Agreement.
23. FORUM SELECTION AND SERVICE OF PROCESS. To induce Agent on behalf
of Lenders to accept this Agreement, Borrower irrevocably agrees that, subject
to Agent's sole and absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY,
MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT, THE
OTHER AGREEMENTS OR THE COLLATERAL SHALL BE LITIGATED IN COURTS HAVING SITUS
WITHIN XXX XXXX XX XXX XXXX, XXXXX XX XXX XXXX. BORROWER HEREBY CONSENTS AND
SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS LOCATED WITHIN
SAID CITY AND STATE. Borrower hereby irrevocably appoints and designates the
Secretary of State of New York, whose address is Albany, New York (or any other
person having and maintaining a place of business in such state whom Borrower
may from time to time hereafter designate upon ten (10) days prior written
notice to Agent and who Agent has agreed in writing in its sole discretion is
satisfactory and who has executed an agreement in form and substance
satisfactory to Agent agreeing to act as such attorney and agent), as Borrower's
true and lawful attorney and duly authorized agent for acceptance of service of
legal process. Borrower agrees that service of such process upon such person
shall constitute personal service of such process upon Borrower. BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST BORROWER BY AGENT OR ANY LENDER IN ACCORDANCE WITH THIS
PARAGRAPH.
24. MODIFICATION AND BENEFIT OF AGREEMENT.
(a) This Agreement and the Other Agreements may not be
modified, altered or amended except by an agreement in writing signed by
Borrower, Agent and Required Lenders as provided in subparagraph (b) below.
Borrower may not sell, assign or transfer this Agreement, or the Other
Agreements or any portion thereof including, without limitation, Borrower's
rights, titles, interest, remedies, powers or duties thereunder.
(b) The Required Lenders, Agent with the consent in writing of
the Required Lenders, and Borrower may, subject to the provisions of this
paragraph 24(b), from time to time enter into written supplemental agreements to
this Agreement, the Notes or the Other Agreements executed by Borrower, for the
purpose of adding or deleting any provisions or otherwise changing, varying or
waiving in any manner the rights of Lenders, Agent or Borrower thereunder or the
conditions, provisions or terms thereof of waiving any Event of Default
thereunder, but only to the extent specified in such written agreements;
provided, however, that no such supplemental agreement shall, without the
consent of all the Lenders and with respect to clause (v) below, the consent of
Agent:
(i) increase the Commitment Percentage of any
Lender.
(ii) extend the maturity of any Note or the due
date for any amount payable hereunder, or
increase any of the Advance Rates, or
decrease the rate of interest or reduce any
principal payment due on the Loans or fee
payable by Borrower to Lenders
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pursuant to this Agreement (it being
understood and agreed, however, that any
vote to rescind any acceleration of the
Liabilities made pursuant to paragraph 18
hereof shall only require the vote of the
Required Lenders).
(iii) alter the definition of the term Required
Lenders or alter, amend or modify this
paragraph 24(b).
(iv) release any Collateral during any calendar
year having an aggregate value in excess of
$100,000, other than Collateral which is
permitted to be sold or otherwise disposed
of pursuant to paragraph 5(a) hereof.
(v) change the rights and duties of Agent.
(vi) permit any Revolving Loan to be made if
after giving effect thereto the total of
Revolving Loans outstanding hereunder would
exceed one hundred and ten percent (110%) of
the Borrowing Base for more than sixty (60)
consecutive Business Days.
Any such supplemental agreement shall apply equally to each of the
Lenders and shall be binding upon Borrower, the Lenders and Agent and all future
holders of the Liabilities. In the case of any waiver, Borrower, Agent and
Lenders shall be restored to their former positions and rights, and any Event of
Default waived shall be deemed to be cured and not continuing, but no waiver of
a specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.
Notwithstanding the foregoing, Agent may at its discretion and without
the consent of the Required Lenders, voluntarily permit the outstanding
Revolving Loans at any time to exceed the Borrowing Base by up to one hundred
and ten percent (110%) of the Borrowing Base for up to sixty (60) consecutive
Business Days. For purposes of the preceding sentence, the discretion granted to
Agent hereunder shall not preclude involuntary overadvances that may result from
time to time due to the fact that the Borrowing Base was unintentionally
exceeded for any reason, including, but not limited to, Collateral previously
deemed to be either "Eligible Accounts" or "Eligible Inventory", as applicable,
becomes ineligible, collections of Accounts applied to reduce outstanding
Revolving Loans are thereafter returned for insufficient funds or overadvances
are made to protect or preserve the Collateral. In the event Agent involuntarily
permits the outstanding Revolving Loans to exceed the Borrowing Base by more
than ten percent (10%), Agent shall decrease such excess in as expeditious a
manner as practicable under the circumstances and not inconsistent with the
reason for such excess. Revolving Loans made after Agent has determined the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding sentence.
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In the event that Agent requests the consent of a Lender pursuant to
this paragraph 24 and such consent is denied, then Agent may, at its option,
require such Lender to assign its interest in the Loans to Agent or to a
Designated Lender for a price equal to the then outstanding principal amount
thereof plus accrued and unpaid interest and fees (including prepayment fees, if
any) due such Lender, which interest and fees shall be paid upon consummation of
such assignment. In the event Agent elects to require any Lender to assign its
interest to Agent or to the Designated Lender, Agent will so notify such Lender
in writing within forty five (45) days following such Lender's denial, and such
Lender will assign its interest to Agent or the Designated Lender, as
applicable, no later than five (5) days following receipt of such notice
pursuant to a Commitment Transfer Supplement executed by such Lender, Agent or
the Designated Lender, as appropriate, and Agent.
25. PARTICIPATIONS AND ASSIGNMENT.
(a) Borrower acknowledges that in the regular course of
commercial banking business one or more Lenders may at any time and from time to
time sell participating interests in the Loans to other financial institutions
(each such transferee or purchaser of a participating interest, a "Transferee").
Each Transferee may exercise all rights of payment (including without limitation
rights of set-off) with respect to the portion of such Loans held by it or other
Liabilities payable hereunder as fully as if such Transferee were the direct
holder thereof provided that Borrower shall not be required to pay to any
Transferee more than the amount which it would have been required to pay to the
Lender which granted an interest in its Loans or other Liabilities payable
hereunder to such Transferee had such Lender retained such interest in the Loans
hereunder or other Liabilities payable hereunder and in no event shall Borrower
be required to pay any such amount arising from the same circumstances and with
respect to the same Loans or other Liabilities payable hereunder to both such
Lender and such Transferee. Borrower hereby grants to any Transferee a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Transferee as security for the Transferee's
interest in the Loans.
(b) Any Lender may with the consent of Agent which shall not
be unreasonably withheld or delayed sell, assign or transfer all or any part of
its rights under this Agreement and the Other Agreements to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Loans hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement in the form of Exhibit 25(b) attached hereto,
executed by a Purchasing Lender, the transferor Lender, and Agent and delivered
to Agent for recording. Upon such execution, delivery, acceptance and recording,
from and after the transfer effective date determined pursuant to such
Commitment Transfer Supplement, (i) a Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender hereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose. Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to
the extent, necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment Percentages arising from the purchase by
such Purchasing
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Lender of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Other Agreements. Borrower hereby consents
to the addition of such Purchasing Lender and the resulting adjustment of the
Commitment Percentages arising from the purchase by such Purchasing Lender of
all or a portion of the rights and obligations of such transferor Lender under
this Agreement and the Other Agreements. Borrower shall execute and deliver such
further documents and do such further acts and things in order to effectuate the
foregoing.
(c) Agent shall maintain at its address a copy of each
Commitment Transfer Supplement delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Loans owing to each Lender
from time to time. The entries in the Register shall be conclusive, in the
absence of manifest error, and Borrower, Agent and Lenders may treat each Person
whose name is recorded in the Register as the owner of the Loans recorded
therein for the purposes of this Agreement. The Register shall be available for
inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice. Agent shall receive a fee in the amount of
$3,500 payable by the Purchasing Lender upon the transfer or assignment to such
Purchasing Lender.
(d) Borrower authorizes each Lender to disclose to any
Transferee or Purchasing Lender and any prospective Transferee or Purchasing
Lender any and all financial information in such Lender's possession concerning
Borrower which has been delivered to such Lender by or on behalf of Borrower
pursuant to this Agreement or in connection with such Lender's credit evaluation
of Borrower.
26. HEADINGS OF SUBDIVISIONS. The headings of subdivisions in this
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Agreement.
27. POWER OF ATTORNEY. Borrower acknowledges and agrees that its
appointment of Agent as its attorney-in-fact for the purposes specified in this
Agreement is an appointment coupled with an interest and shall be irrevocable
until all of the Liabilities are paid in full and this Agreement is terminated.
28. WAIVER OF JURY TRIAL; OTHER WAIVERS; CONFIDENTIALITY.
(a) AGENT, EACH LENDER AND BORROWER HEREBY WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY
TO THIS AGREEMENT, ANY OF THE OTHER AGREEMENTS, THE LIABILITIES, THE COLLATERAL,
ANY ALLEGED TORTIOUS CONDUCT OF BORROWER, AGENT OR LENDERS OR WHICH, IN ANY WAY,
DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES TO THE RELATIONSHIP AMONG
BORROWER, AGENT AND/OR LENDERS. IN NO EVENT SHALL AGENT OR ANY LENDER BE LIABLE
FOR LOST PROFITS OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.
(b) BORROWER HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF
ANY KIND PRIOR TO THE EXERCISE BY AGENT OF ITS RIGHTS
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TO REPOSSESS THE COLLATERAL OF BORROWER WITHOUT JUDICIAL PROCESS OR TO REPLEVY,
ATTACH OR LEVY UPON SUCH COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.
(c) Borrower hereby waives demand, presentment, protest and
notice of nonpayment, and further waives the benefit of all valuation, appraisal
and exemption laws.
(d) BORROWER ACKNOWLEDGES THAT THE LOANS EVIDENCED BY THE
NOTES ARE FOR COMMERCIAL PURPOSES AND WAIVES ANY RIGHT TO NOTICE AND HEARING
UNDER SECTIONS 52-278A THROUGH 52-278N OF THE CONNECTICUT GENERAL STATUTES AS
NOW OR HEREAFTER AMENDED AND AUTHORIZES THE ATTORNEY OF THE BANK, OR ANY
SUCCESSOR THERETO, TO ISSUE A WRIT OF PREJUDGMENT REMEDY WITHOUT COURT ORDER.
FURTHER, BORROWER HEREBY WAIVES, TO THE EXTENT PERMITTED BY LAW, THE BENEFITS OF
ALL VALUATION, APPRAISEMENTS, HOMESTEAD, EXEMPTION, STAY, REDEMPTION AND
MORATORIUM LAWS NOW IN FORCE OR WHICH MAY HEREAFTER BECOME LAWS. BORROWER
ACKNOWLEDGES THAT IT MAKES THESE WAIVERS AND THE WAIVERS CONTAINED IN THIS
AGREEMENT KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF THESE WAIVERS WITH ITS ATTORNEYS.
(e) Agent's or any Lender's failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement or any of the Other Agreements shall not waive, affect or diminish any
right of Agent or any Lender, thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by Agent or any Lender, of an
Event of Default under this Agreement or any default under any of the Other
Agreements shall not suspend, waive or affect any other Event of Default under
this Agreement or any other default under any of the Other Agreements, whether
the same is prior or subsequent thereto and whether of the same or of a
different kind or character. No delay on the part of Agent or any Lender in the
exercise of any right or remedy under this Agreement or any Other Agreement
shall preclude other or further exercise thereof or the exercise of any right or
remedy. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the Other
Agreements and no Event of Default under this Agreement or default under any of
the Other Agreements shall be deemed to have been suspended or waived by Agent
or any Lender unless such suspension or waiver is in writing in compliance with
Paragraph 24(b) hereof.
(f) Borrower has furnished and will furnish to Agent certain
information concerning Borrower which Borrower has advised is non-public,
proprietary or confidential in nature ("Confidential Information"). Agent
confirms to the Borrower that it is Agent's policy and practice to maintain in
confidence all Confidential Information which is provided to it under agreements
providing for the extension of credit and which is identified to it as such, and
that it will protect the confidentiality of Confidential Information submitted
to it with respect to Borrower under this Agreement, commensurate with its
efforts to maintain the confidentiality of its own Confidential Information,
provided, however, that (i) nothing contained herein shall prevent Agent from
disclosing Confidential Information (A) to its affiliates and their respective
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directors, officers, and employees and to any legal counsel, auditors,
appraisers, consultants or other persons retained by it or its affiliates as
professional advisors, on the condition that such information not be further
disclosed except in compliance with this paragraph 28(f); (B) under color of
legal authority, including, without limitation, to any regulatory authority
having jurisdiction over it or its operations or to, or under the authority of,
any court deemed by it to be of competent jurisdiction; (C) to any actual or
potential Transferee or Purchasing Lender in Agent's rights and obligations
under this Agreement to the extent such actual or potential Transferee or
Purchasing Lender has agreed to maintain such information in confidence on the
basis set forth in this paragraph 28(f); and (D) as necessary in connection with
the exercise of its remedies under this Agreement or any of the Other
Agreements; (ii) the terms of this paragraph 28(f) shall be inapplicable to any
information furnished to it which is in possession prior to the delivery to it
of such information by Borrower or any other authorized Person, or otherwise has
been obtained by it on a non-confidential basis, or which was or becomes
available to the public or otherwise part of the public domain (other than as a
result of Agent's failure or any prospective participant's or assignee's failure
to abide hereby), or which was not non-public, proprietary or confidential when
Borrower or any other authorized Person delivered it to Agent; and (iii) the
determination by Agent as to the application of any of the circumstances
described in the foregoing clauses (i) and (ii) will be conclusive and binding
if made in good faith.
(g) Notwithstanding subparagraph (f) above, Borrower consents
to Agent publishing a tombstone or similar advertising material relating to the
financing transaction contemplated by this Agreement but only after such time as
Borrower has publicly announced the consummation of such financing transaction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the 25th day of May, 2001.
LASALLE BUSINESS CREDIT, INC.,
AS A LENDER AND AS AGENT
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
Commitment Percentage: 100%
TRANSACT TECHNOLOGIES INCORPORATED
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President
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