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EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
executed by and between
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
as the Borrower,
AND
MELLON BANK, N.A.,
as the Lender
Dated: As of December 6, 1996
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TABLE OF CONTENTS
Page
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PREAMBLE AND RECITALS.......................................................1
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
AND CONSTRUCTION; ACCOUNTING PRINCIPLES
Section 1.01 Definitions...................................................2
Section 1.02 Rules of Interpretation and Construction.....................22
Section 1.03 Accounting Principles........................................23
ARTICLE II
AMOUNT AND TERMS FOR THE
EQUIPMENT LINE OF CREDIT/TERM LOAN FACILITY
Section 2.01 Equipment Line of Credit/Term Loan Facility..................25
Section 2.02 Interest on the Equipment Line of Credit/Term Loans..........27
Section 2.03 Fees.........................................................31
Section 2.04 Voluntary Prepayments........................................32
Section 2.05 Payments; Collection of Accounts.............................33
Section 2.06 Special Provisions Governing Eurodollar Rate Loans...........34
Section 2.07 Increased Capital............................................37
Section 2.08 Authorized Officers of the Borrower..........................37
Section 2.09 Taxes........................................................38
Section 2.10 Security for the Equipment Line of Credit/Term Loan Facility.38
Section 2.11 Yield Maintenance Calculated on Fixed Rate Loans ............38
ARTICLE III
CONDITIONS TO THE EQUIPMENT LINE OF CREDIT/TERM LOANS
Section 3.01 Conditions Precedent to the Effectiveness of this Loan
Agreement.....................................................40
Section 3.02 Conditions Precedent to All Equipment Line of Credit/Term
Loans.........................................................42
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties on the Effective Date.........44
Section 4.02 Subsequent Funding Representations and Warranties............52
ARTICLE V
REPORTING COVENANTS
Section 5.01 Statement of Accounting......................................53
Section 5.02 Reporting and Information Requirements.......................53
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01 Corporate Existence, Etc.....................................58
Section 6.02 Corporate Powers, Etc........................................58
Section 6.03 Compliance with Laws, Etc....................................58
Section 6.04 Payment of Taxes and Claims..................................58
Section 6.05 Maintenance of Properties; Insurance.........................58
Section 6.06 Inspection of Property; Books and Records; Discussion........59
Section 6.07 Litigation, Claims, Etc......................................59
Section 6.08 Labor Disputes...............................................60
Section 6.09 Maintenance of Licenses, Permits, Etc........................60
Section 6.10 Use of Proceeds..............................................60
Section 6.11 Continuation of or Change in Business........................60
Section 6.12 Additional Corporate Guarantors and/or Partnership
Guarantors...................................................60
ARTICLE VII
NEGATIVE COVENANTS
Section 7.01 Consolidated Debt............................................61
Section 7.02 Sale of Assets; Liens .......................................61
Section 7.03 Loans, Advances and Investments..............................62
Section 7.04 Restricted Junior Payments...................................63
Section 7.05 Transactions with Shareholders and Affiliates................63
Section 7.06 Restriction on Fundamental Changes...........................63
Section 7.07 ERISA........................................................63
Section 7.08 Amendment of Articles of Incorporation or By-laws............64
Section 7.09 Margin Regulations...........................................64
Section 7.10 Cancellation of Consolidated Debt; Prepayment................64
Section 7.11 Environmental Liabilities....................................64
Section 7.12 Guaranties...................................................65
Section 7.13 No Negative Pledge to Other Person...........................65
ARTICLE VIII
FINANCIAL COVENANTS
Section 8.01 Minimum Consolidated Quick Ratio.............................66
Section 8.02 Maximum Consolidated Senior Liabilities Leverage Ratio.......66
Section 8.03 Minimum Consolidated Interest Coverage Ratio.................66
Section 8.04 Maximum Consolidated Cash Flow Leverage Ratio................66
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.01 Events of Default............................................67
Section 9.02 Rights and Remedies..........................................69
Section 9.03 Application of Proceeds......................................70
Section 9.04 No Notices...................................................70
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses ...............70
Section 9.06 No Additional Waiver Implied by One Waiver...................70
Section 9.07 Failure to Exercise Rights...................................70
Section 9.08 Waiver of Jury Trial.........................................71
Section 9.09 Remedies Cumulative..........................................71
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ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses....................................................72
Section 10.02 Indemnity...................................................72
Section 10.03 Amendments and Waivers......................................73
Section 10.04 Independence of Covenants...................................73
Section 10.05 Notices.....................................................73
Section 10.06 Survival of Warranties and Agreements.......................73
Section 10.07 Marshalling; Recourse to Security; Payments Set Aside.......73
Section 10.08 Severability................................................74
Section 10.09 Governing Law...............................................74
Section 10.10 Successors and Assigns......................................74
Section 10.11 Consent to Jurisdiction and Service of Process..............74
Section 10.12 Counterparts; Effectiveness; Inconsistencies................75
Section 10.13 Entire Agreement............................................75
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EXHIBITS AND SCHEDULES
Exhibits
Exhibit "A" List of Eurodollar Affiliates
Exhibit "B" Form of Notice of Borrowing
Exhibit "C" Form of Notice of Conversion/Continuation
Exhibit "D" Form of Equipment Line of Credit/Term Loan Note
Exhibit "E" Form of Opinion Letter
Exhibit "F" Form of Officer's Certificate
Exhibit "G" Form of Security Agreement
Exhibit "H" Form of Agreement of Guaranty for Additional Corporate Guarantors
and Partnership Guarantors
Schedules
Schedule 2.01(i) List of Subsidiaries and/or Affiliates Who May Borrow
Schedule 4.01(iii) Existing Issued and Authorized Capital Stock of the
Borrower
Schedule 4.01(vii) Pending Actions, Suits, Proceedings, Governmental
Investigations or Arbitrations
Schedule 4.01(xv) Environmental Disclosure
Schedule 4.01(xvi) ERISA
Schedule 4.01 (xx) List of Joint Ventures
Schedule 4.01(xxi) Existing Insurance Policies, Programs and Claims
Schedule 4.01(xxvii) Labor Unions/Collective Bargaining Agreements
Schedule 4.01(xxxii) Location of Collateral
Schedule 6.05 Insurance Policies and Programs
Schedule 7.01(iii) Permitted Existing Consolidated Debt
Schedule 7.03 Existing Loans and Investments
Schedule 7.12(i) List of Existing Guaranties
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EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
THIS EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT (including all
amendments, modifications and supplements is hereinafter referred to as the
"Loan Agreement"), is made as of December 6, 1996, by and between
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC., a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, having
its principal office located at 0 Xxxxxx Xxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
(hereinafter referred to as the "Borrower"),
AND
MELLON BANK, N.A., a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at Mellon Bank Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (hereinafter referred to as the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower is engaged in the business of designing,
manufacturing and marketing high technology products for military and commercial
customers in the United States and abroad; and
WHEREAS, the Borrower has requested that the Lender make to the Borrower a
secured recourse equipment line of credit/term loan in the aggregate principal
amount of Five Million and 00/100 ($5,000,000.00) Dollars for the purpose of
financing the acquisition of certain machinery and equipment by the Borrower and
the "Guarantors", as such term is defined herein (hereinafter referred to as the
"Equipment Line of Credit/Term Loan Facility") and
WHEREAS, the Lender has agreed to make the Equipment Line of Credit/Term
Loan Facility available to the Borrower and the Guarantors, subject to the
terms, conditions and provisions hereinafter set forth; and
NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of the Borrower and the Lender, each
party binding itself and its successors and assigns, does hereby promise,
covenant and agree as follows:
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION AND
CONSTRUCTION, AND ACCOUNTING PRINCIPLES
Section 1.01 Definitions. The following terms, as used in this Loan
Agreement, shall have the following meanings, unless the context clearly
indicates and requires otherwise:
"Affiliate" of any Person shall mean any other Person which or who,
directly or indirectly, controls or is controlled by, or is under common control
with such Person; provided, however, natural persons and minority partners of
any said Person shall not be deemed an Affiliate for purposes of this
definition. For the purposes of the preceding sentence, "controls" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise, and in any case
shall include direct or indirect ownership (beneficially or of record) of, or
direct or indirect power to vote, fifty percent (50%) or more of the outstanding
shares of any class of capital stock of such Person (or in the case of a Person
that is not a corporation, fifty percent (50%) or more of any class of equity
interest).
"Agreement of Guaranty" shall mean that certain Agreement of Guaranty
executed by the Corporate Guarantors and the Partnership Guarantors, on a joint
and several basis, and delivered to the Lender, dated the date of this Loan
Agreement, pursuant to which the Corporate Guarantors and the Partnership
Guarantors unconditionally guaranty the prompt and complete performance of all
of the Borrower's duties, covenants and obligations under this Loan Agreement
and the Equipment Line of Credit/Term Loan Note. The term "Agreement of
Guaranty" shall also be deemed to mean and refer to all amendments,
modifications and supplements to said agreement made and/or entered into
subsequent to the Closing Date, including, without limitation, any Agreement of
Guaranty(s) in the form of Exhibit "H" attached hereto and made a part hereof
(fully executed) which are consummated for the purposes of adding any new and/or
additional Persons as guarantors, all as provided for in Section 6.12 of this
Loan Agreement.
"Applicable Interest Rate" shall mean the applicable per annum interest
rate on each of the Equipment Line of Credit/Term Loans determined pursuant to
Section 2.02(i) of this Loan Agreement.
"Authorized Officer" shall mean those officers/general partners of the
Borrower, the Corporate Guarantors and/or the Partnership Guarantors, whose
signatures and incumbency shall have been certified to the Lender pursuant to an
Officer's Certificate delivered on the Closing Date or any other form of
resolution or certification delivered to and approved by the Lender after the
Closing Date.
"Bankruptcy Code" shall mean Title 11 of the United States Bankruptcy Code
(11 U.S.C. Section 101 et seq.), as amended from time to time, or any successor
statute.
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"Benefit Plan" shall mean a defined benefit plan as defined in Section 3
(35) of ERISA (other than a Multiemployer Plan) in respect of which the
Borrower, its Subsidiaries, its Affiliates or an ERISA Affiliate is, or within
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Big-Six Accounting Firm" shall mean any of Xxxxxx Xxxxxxxx & Co., KPMG
Peat Marwick, Coopers & Xxxxxxx, Xxxxx & Young, Deloitte & Touche and Price
Waterhouse or any of their respective successors.
"Borrower" shall have the meaning ascribed and assigned to such term as
set forth in the preamble of this Loan Agreement.
"Borrowing" and/or "Borrowings" shall mean a borrowing consisting of
Equipment Line of Credit/Term Loans made on the same day by the Lender.
"Borrowing Date" shall mean with respect to any Equipment Line of
Credit/Term Loan, any Business Day specified in any Notice of Borrowing
delivered to the Lender by the Borrower in accordance with the provisions of
Section 2.01 (ii) of this Loan Agreement, as the date upon which the Borrower
requests the Lender to make an Equipment Line of Credit/Term Loan hereunder and
upon which such Equipment Line of Credit/Term Loan is made.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the Commonwealth of Pennsylvania, or is a day
upon which banking institutions located in such state are required or authorized
by law or other governmental action to close and (ii) with respect to all
notices, determinating fundings and payments in connection with the Eurodollar
Rate, any day which is a Business Day described in clause (i) above, and which
is also a day for trading by and between banks in the London interbank
eurodollar market.
"Capital Expenditures" shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities during such period)
of the Borrower, its Subsidiaries and its Affiliates during such period which
would be classified as capital expenditures in accordance with Generally
Accepted Accounting Principles (including, without limitation, expenditures for
maintenance and repairs which are capitalized, and Capitalized Leases to the
extent an asset is recorded in connection therewith in accordance with Generally
Accepted Accounting Principles).
"Capitalized Lease" and "Capitalized Leases" shall mean at any time any
lease which is, or is required under Generally Accepted Accounting Principles to
be, capitalized on the balance sheet of the lessee at such time.
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"Capitalized Lease Obligation" shall mean all monetary obligations of any
Person under any leasing or similar arrangement which, in accordance with
Generally Accepted Accounting Principles, are or would be classified as
Capitalized Leases.
"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Information System List, as the same may be amended
from time to time.
"Chattel Paper" shall mean all "chattel paper", as such term is now or
hereafter defined in the applicable Uniform Commercial Code, now or hereafter
owned by the Borrower, its Subsidiaries and/or its Affiliates, in connection
with the acquisition of any Equipment.
"Claim" shall mean any claim or demand, by any Person, of whatsoever kind
or nature for any alleged Liabilities and Costs, based in a dispute whether
involving contract, tort, implied or express warranty, strict liability,
criminal or civil statute, permit, ordinance or regulation, common law or
otherwise, the consequences of which dispute are reasonably likely to result in
a Material Adverse Effect.
"Closing Date" shall mean the date upon which this Loan Agreement is
executed by the Lender and the Borrower, and the conditions set forth in Section
3.01 of this Loan Agreement have been completed and fulfilled to the
satisfaction of the Lender.
"Code" means the Internal Revenue Code of 1986, as amended, any successor
statute of similar import, and regulations thereunder, in each case as in effect
from time to time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Collateral" shall mean all property, assets, interests and/or rights on
or in which a Lien is granted by the Borrower, the Corporate Guarantors and/or
the Partnership Guarantors to the Lender pursuant to this Loan Agreement, all
Security Agreements and/or the other Loan Documents provided for herein or
therein or delivered or to be delivered hereunder or thereunder, as this Loan
Agreement and any such other Loan Documents may be amended, supplemented,
restated, extended or otherwise modified from time to time in accordance with
the provisions hereof or thereof, including, but not limited to, all hereafter
acquired Equipment, Chattel Paper, Contracts and General Intangibles.
"Collateral Documents" shall mean the collective reference to the Security
Agreements and any other security agreements, mortgages, deeds of trust,
collateral assignments, instruments, documents, certificates or agreements
executed and delivered by, or on behalf of, the Borrower, its Subsidiaries and
its Affiliates to the Lender, at any time pursuant to or in connection with the
Equipment Line of Credit/Term Loan Facility to create, continue or evidence
Liens to secure the Obligations.
"Commitment Letter" shall mean the commitment letter dated October 8,
1996, from the Lender to the Borrower, pursuant to which the Lender offered and
the Borrower accepted the Lender's commitment to provide the Equipment Line of
Credit/Term Loan Facility.
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"Consolidated Cash and Cash Equivalents" shall mean all (i) cash and cash
equivalents and (ii) any of the following: (a) marketable direct obligations
issued or unconditionally guarantied by the United States Government or issued
by an agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one (1) year after the date of acquisition
thereof; (b) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one (1) year after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc. and not listed in Credit Watch published by Standard &
Poor's Corporation; (c) commercial paper of a corporation having a net worth of
not less than $1,000,000,000.00, other than commercial paper issued by the
Borrower, its Subsidiaries or its Affiliates, maturing no more than ninety (90)
days after the date of creation thereof and, at the time of acquisition, having
a rating of at least A-1 or P-1 from either Standard & Poor's Corporation or
Xxxxx'x Investors Service, Inc.; (d) domestic certificates of deposit or
domestic time deposits or repurchase agreements maturing within one (1) year
after the date of acquisition thereof issued by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having FDIC insurance; (e) any funds deposited or invested
by the Borrower, its Subsidiaries and/or its Affiliates of the Borrower in
accounts maintained with the Lender and/or with any other commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia having FDIC insurance; and (f) money market funds
having assets in excess of $1,000,000,000.00.
"Consolidated Cash Flow Leverage Ratio" shall mean as at any date of
determination thereof, the ratio of (i) the sum of (a) Consolidated Senior Bank
Debt plus (b) Consolidated Subordinated Debt -to- (ii) Consolidated EBITDA.
"Consolidated Current Liabilities" shall mean, as at any date of
determination, all liabilities which, in accordance with Generally Accepted
Accounting Principles, would be classified on a consolidated balance sheet of
the Borrower, its Subsidiaries and its Affiliates as current liabilities, but in
any event all borrowings under the Revolving Line of Credit Loan Agreement.
"Consolidated Debt" shall mean with respect to the Borrower, its
Subsidiaries and its Affiliates, the aggregate sum of the following items as
such items appear on a consolidated balance sheet of the Borrower, its
Subsidiaries and its Affiliates to any Person (other than each other) in
accordance with Generally Accepted Accounting Principles: (i) the unpaid
principal balance of all indebtedness or liability for money borrowed or owed by
the Borrower, its Subsidiaries and/or its Affiliates to any Person (other than
each other) from time to time (including any renewals, extensions and refundings
thereof), whether or not the indebtedness was heretofore or hereafter created,
issued, incurred, assumed or guarantied; (ii) the unpaid principal balance of
all indebtedness or liability for the deferred purchase price of property or
services incurred (including trade obligations); (iii) all obligations as lessee
under leases which have been or should be recorded as Capitalized Lease
Obligations; (iv) all current Obligations in respect of any unfunded vested
benefits under any Plan covered by Title IV of ERISA; (v) all obligations,
contingent or otherwise
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relative to the face amount of all Letters of Credit issued for the Borrower's,
its Subsidiaries' and/or Affiliates' account, whether or not drawn; (vi) all
obligations arising under bankers' acceptance facilities issued for the account
of the Borrower, its Subsidiaries and/or its Affiliates; (vii) all guaranties,
endorsements and other contingent obligations to purchase, to provide funds for
payments, to supply funds to invest in the Borrower, its Subsidiaries and/or its
Affiliates or otherwise to assure a creditor against loss (except endorsements
of negotiable instruments for deposit or collection in the ordinary course of
business shall not constitute Consolidated Debt); and (viii) all obligations
secured by any mortgage, lien, pledge, or security interest or other charge or
encumbrance on property, whether or not the obligations have been assumed.
"Consolidated EBITDA" shall mean, with respect to the Borrower, its
Subsidiaries and its Affiliates as at any date of determination for the period
of four (4) consecutive Fiscal Quarters immediately preceding said date of
determination taken together as one accounting period, the amount equal to the
sum of (i) the Consolidated Net Income for such test period plus (ii) all
interest expense on all Consolidated Debt for such test period plus (iii) all
charges against income of the Borrower, its Subsidiaries and/or its Affiliates
for federal, state and local taxes for such test period plus (iv) all
depreciation expense for such test period plus (v) all amortization expense for
such test period plus (vi) all other non-cash charges for such test period,
after eliminating therefrom any (a) extraordinary items, (b) gains and losses
from the sale of assets in connection with any sale/leaseback transaction or
arrangement and (c) results of discontinued operations, all as determined in
accordance with Generally Accepted Accounting Principles.
"Consolidated Interest Coverage Ratio" shall mean, as of any date of
determination thereof for the period of four (4) consecutive Fiscal Quarters
immediately preceding said date of determination taken together as one
accounting period, the ratio of (i) the sum of (a) Consolidated Net Income for
such test period plus (b) all interest expenses on all Consolidated Debt for
such test period minus (c) prepaid principal on Consolidated Subordinated Debt
as permitted under Sections 7.04 and 7.10 of this Agreement, during such test
period -to- (ii) all interest expenses on all Consolidated Debt for such test
period, all as calculated in accordance with Generally Accepted Accounting
Principles.
"Consolidated Net Income" shall mean, as of any date of determination for
any test period, all amounts which, in accordance with Generally Accepted
Accounting Principles, would be included under net income (after the payment of
all federal and state income taxes) on a consolidated income statement of the
Borrower, its Subsidiaries and its Affiliates for such test period.
"Consolidated Net Worth" shall mean, as at any date of determination, all
items which, in accordance with Generally Accepted Accounting Principles, would
be included under shareholders' equity on a consolidated balance sheet of the
Borrower, its Subsidiaries and its Affiliates at such date.
"Consolidated Quick Ratio" shall mean, as at any date of determination,
the ratio of (i) the sum of (a) Consolidated Cash and Cash Equivalents plus, (b)
billed accounts receivable of the
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Borrower, its Subsidiaries and its Affiliates as shown on their consolidated
balance sheet in accordance with Generally Accepted Accounting Principles -to-
(ii) Consolidated Current Liabilities.
"Consolidated Senior Bank Debt" shall mean as at any date of
determination, all Consolidated Debt which is due and owing to the Lender, any
other financial institution or any other Person, excluding, however, (i)
Consolidated Subordinated Debt, (ii) all trade and accounts payable, (iii) all
current Obligations in respect of any unfunded vested benefit under any Plan
covered by Title IV of ERISA and (iv) all guaranties, endorsements and other
contingent obligations to purchase, to provide funds for payments, to supply
funds to invest in the Borrower, its Subsidiaries and/or its Affiliates or
otherwise to assure a creditor against loss (including endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business).
"Consolidated Senior Liabilities" shall mean, as at any date of
determination, all items which, in accordance with Generally Accepted Accounting
Principles, would be included on a consolidated balance sheet of the Borrower,
its Subsidiaries and its Affiliates as Consolidated Debt, excluding, however,
Consolidated Subordinated Debt.
"Consolidated Subordinated Debt" shall mean, as at any date of
determination, any Consolidated Debt of the Borrower, its Subsidiaries and/or
its Affiliates, which in accordance with the terms of the documentation
evidencing said Consolidated Debt, is subordinated to the repayment of the
Equipment Line of Credit/Term Loan Facility, including, without limitation, (i)
the then outstanding principal balance of an original $25,000,000.00 9% Senior
Subordinated Convertible Debentures Due October 1, 2003, evidenced by that
certain Indenture dated as of September 22, 1995, executed by and between the
Borrower and The Trust Company of New Jersey and (ii) the then outstanding
principal balance of an original $25,000,000.00 8-1/2 % Convertible Subordinated
Debentures Due August 1, 1998, evidenced by that certain Indenture dated August
1, 1983, executed by and between the Borrower and Bankers Trust Company.
"Consolidated Tangible Net Worth" shall mean, as at any date of
determination, Consolidated Net Worth minus the following: (i) goodwill,
including any amounts (however designated on the balance sheet) representing the
cost of acquisitions of Subsidiaries and/or Affiliates in excess of underlying
tangible assets; (ii) patents, trademarks and copyrights; and (iii) deferred
charges (including, without limitation, unamortized debt discount and expense,
organization expenses and experimental and development expenses, but excluding
prepaid expenses).
"Contracts" shall mean all contracts, licenses, instruments, undertakings,
documents or other agreements in connection with the acquisition of any
Equipment in or under which the Borrower, its Subsidiaries and/or its Affiliates
may now or hereafter have any rights, title, or interests, including, without
limitation, (i) any claim arising thereunder from misrepresentation or breach of
warranty and (ii) all such agreements which pertain to the sale, construction,
design, manufacture or other acquisition of any Equipment, other than such
contracts, agreements which specifically prohibit their assignment as security,
provided, that notwithstanding any such
7
prohibitions, such contracts, licenses, instruments, undertakings, documents or
other agreements shall be deemed to be General Intangibles to the extent that
such prohibition is inconsistent with the provisions of the applicable Uniform
Commercial Code.
"Contractual Obligation" shall mean with respect to any Person, any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement or
instrument to which that Person is a party or by which it or any of its
properties is bound, or to which it or any of its properties is subject
(including, without limitation, any restrictive covenant affecting such Person
or any of its properties).
"Corporate Guarantors" shall mean the collective reference to (i)
Technology Applications & Service Company, a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, having
its principal office located at 000 Xxxxxxxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxx
00000; (ii) Photronics Corp., a corporation duly organized, validly existing and
in good standing under the laws of the State of New York, having its principal
office located at 000 Xxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000; (iii) Precision
Echo, Inc., a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, having its principal office located at
0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000; (iv) Ahead Technology,
Inc., a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, having its principal office located at 0000
Xxx Xxx Xxx, Xxx Xxxx, Xxxxxxxxxx 00000; (v) OMI Acquisition Corp., (also doing
business as OMI Corp.), a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, having its principal
office located at 000 Xxxxx Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000; (vi) DRS Systems
Management Corporation, a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, having its principal
office located at 000 Xxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000; (vii) Ahead
Technology Acquisition Corporation (also doing business as MEC Technology), a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, having its principal office located at 0000 Xxxxxxx
Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000; (viii) DRS/MS, Inc., a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, having its principal office located at 000 Xxxxx Xxxxx,
Xxxxxxx, Xxx Xxxxxx 00000; (ix) Ahead Wisconsin Acquisition Corporation (also
doing business as Vikron Technology), a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, having
its principal office located at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx Xxxxx,
Xxxxxxxxxx 00000; (x) Nortronics Acquisition Corporation (also doing business as
Nortronics, Inc.), a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, having its principal office
located at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000; (xi) Pacific
Technologies, Inc., a corporation organized, validly existing and in good
standing under the laws of the State of Delaware, having its principal office
located at 0 Xxxxxx Xxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 and (xii) any new or
additional Subsidiaries of the Borrower which are purchased, acquired or created
during the term of the Equipment Line of Credit/Term Loan Facility. Each of the
Corporate Guarantors may sometimes be hereinafter referred to individually as a
"Corporate Guarantor".
"Customary Permitted Liens" shall mean
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(i) Liens (other than Environmental Liens and any Lien imposed under
ERISA) for taxes, assessments or charges of any Governmental Authority or claims
not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Generally Accepted Accounting
Principles;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than any Lien
imposed under ERISA) imposed by Law, including, without limitation, Liens in
favor of any Governmental Authority securing progress payments made under
government contracts created in the ordinary course of business and for amounts
not yet due or which are being contested in good faith by appropriate
proceedings which are sufficient to prevent imminent foreclosure of such Liens,
are promptly instituted and diligently conducted and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with Generally Accepted Accounting Principles;
(iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including, without limitation,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, leases, contracts, statutory obligations and
other similar obligations or arising as a result of progress payments or
deposits under government contracts (including foreign government contracts);
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the use of real property or
impair the use thereof;
(v) Liens arising as a result of the filing of any financing
statement under the Uniform Commercial Code of a particular State or comparable
law of any jurisdiction covering consigned or leased goods which do not
constitute assets of the Borrower, its Subsidiaries and/or its Affiliates and
which consignment and/or lease is not intended as security for an obligation;
(vi) Liens arising out of and with respect to customer deposits made
in the ordinary course of the Borrower's, its Subsidiaries' and/or its
Affiliates' businesses; and
(vii) extensions, renewals or replacements of any Lien referred to
in paragraphs (i) through (vi) above, provided (a) that, in the case of
paragraphs (i) through (iii) above, the principal amount of the obligation
secured thereby is not increased and (b) that any such extension, renewal or
replacement is limited to the property originally encumbered thereby.
"Default Rate" shall mean a rate of interest equal to three percent (3.0%)
above the applicable nondefault interest rate with respect to the Equipment Line
of Credit/Term Loans.
9
"DOL" shall mean the United States Department of Labor and any successor
department or agency.
"Dollar," "Dollars" and the symbol "$" shall mean lawful money of the
United States of America.
"Environment" shall mean all air, surface water, water, vapor,
groundwater, drinking water supply or land, including land surface or
subsurface, and includes all fish, wildlife, biota and all other natural
resources.
"Environmental Approval" shall mean any Governmental Action pursuant to or
required under any Environmental Law.
"Environmental Claim" shall mean, with respect to any Person, any action,
suit, proceeding, investigation, notice, claim, complaint or demand, made by any
other Person (including but not limited to, any Governmental Authority,
citizens' group or present or former employee of such first Person) alleging,
asserting or claiming any actual or potential (i) violation of any Environmental
Law, (ii) liability under any Environmental Law or (iii) liability for
investigatory costs, cleanup costs, governmental response costs, damages to the
Environment, property damages, personal injuries, fines or penalties arising out
of, based on or resulting from the presence, or release into the Environment, of
any Environmental Concern Materials at any location, whether or not owned by
such Person; provided, however, in no event shall any voluntary action,
proceeding or investigation made or brought by the Borrower, its Subsidiaries
and/or its Affiliates from time to time in connection with their own activities
or inactivities be included in this definition.
"Environmental Cleanup Site" shall mean any location which is listed or
proposed for listing on the National Priorities List, on CERCLIS or on any
similar state list of sites requiring investigation or cleanup, or which is the
subject of any pending or threatened action, suit, proceeding or investigation
related to or arising from any alleged violation of any Environmental Law.
"Environmental Concern Materials" shall mean (i) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollution, contaminate or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in any Environmental Law), (ii)
any toxic chemical or other substance from or related to industrial, commercial
or institutional activities and (iii) asbestos, gasoline, diesel fuel, motor
oil, waste and used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon and urea-formaldehyde.
"Environmental Law" and "Environmental Laws" shall mean any Law, whether
now existing or subsequently enacted or amended, relating to (i) pollution or
protection of the Environment, (ii) exposure of Persons, including, but not
limited to, employees, to Environmental Concern Materials, (iii) protection of
the public health or welfare from the effects of products,
10
by-products, wastes, emissions, discharges or releases of Environmental Concern
Materials or (iv) regulation of the manufacture, generation, use or introduction
into commerce of Environmental Concern Materials including their manufacture,
formulation, packaging, labeling, distribution, treatment, transportation,
handling, storage or disposal. Without limitation, "Environmental Law" shall
include (a) any Environmental Approval and the terms and conditions thereof; (b)
the following statutes: the Clean Air Act (42 U.S.C. ss.7401 et seq.); the
Comprehensive Environmental Response Compensation and Liability Act of 1980 (42
U.S.C. ss.9601 et seq.); the Federal Water Pollution Control Act (33 U.S.C.
ss.1251 et seq.); the Hazardous Material Transportation Act (49 U.S.C. ss.1801
et seq.); the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
ss.136 et seq.); the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
ss.6901 et seq.) (including the Hazardous and Solid Waste Amendments of 1984),
the Toxic Substance Control Act (15 U.S.C. ss.2601 et seq.); the Federal
Occupational Safety & Health Act of 1970 (29 U.S.C. ss.651 et seq.) (including
ss.3101 of the Omnibus Reconciliation Act of 1990), and the regulations
promulgated thereunder and all as amended from time to time; and (c) any common
law doctrine (including, without limitation, injunctive relief and tort, such as
negligence, nuisance, trespass and strict liability) that may impose obligations
or liabilities for personal injury or property damage due to, or threatened as a
result of, the presence of or exposure to Environmental Concern Materials.
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability currently due and payable under any
Environmental Laws or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of any
Environmental Concern Materials into the Environment.
"Equipment" shall have the meaning ascribed and assigned to such term as
set forth on Schedule "A" of the Security Agreement.
"Equipment Line of Credit Period" shall mean the period commencing on the
Closing Date and ending on the Equipment Line of Credit Termination Date.
"Equipment Line of Credit/Term Loan" and "Equipment Line of Credit/Term
Loans" shall mean any advance(s) of the Equipment Line of Credit/Term Loan
Facility proceeds by the Lender to the Borrower and/or the Person(s) described
on Schedule 2.01 of this Loan Agreement, all pursuant to and in accordance with
Section 2.01 of this Loan Agreement.
"Equipment Line of Credit/Term Loan Facility" shall have the meaning
ascribed and assigned to such term as set forth in the second recital of this
Loan Agreement.
"Equipment Line of Credit/Term Loan Maturity Date" shall mean the earlier
of (i) May 31, 2004 or (ii) the date of termination of the Equipment Line of
Credit/Term Loan Facility pursuant to Section 9.02 of this Loan Agreement.
"Equipment Line of Credit/Term Loan Note" shall mean that certain
Equipment Line of Credit/Term Loan Note in substantially the form attached
hereto as Exhibit "D" with the blanks appropriately filled in, such note payable
to the order of the Lender in a face amount equal to the
11
Equipment Line of Credit/Term Loan Facility, as said note may be amended,
supplemented, restated, extended or otherwise modified from time to time.
"Equipment Line of Credit Termination Date" shall mean the earlier of (i)
June 30, 1999 or (ii) the date of termination of the Equipment Line of
Credit/Term Loan Facility pursuant to Section 9.02 of this Loan Agreement.
"Equipment Line Term Period" shall mean the period commencing on July 1,
1999 and ending on the Equipment Line of Credit/Term Loan Maturity Date, unless
otherwise prepaid earlier.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations promulgated thereunder by the United States Treasury
Department, the DOL and/or the PBGC.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower, its Subsidiaries and/or its
Affiliates would be deemed to be a "single employer" within the meaning of
Section 4001 of ERISA.
"Eurodollar Affiliate" shall mean with respect to the Lender, the
affiliate of the Lender, if any, set forth on Exhibit "A" attached to this Loan
Agreement.
"Eurodollar Interest Payment Date" shall mean, with respect to any
Eurodollar Rate Loan, the last day of each Eurodollar Interest Period applicable
to such Loan.
"Eurodollar Interest Period" shall mean one or more periods of time during
which the Borrower may select, convert to or continue a Eurodollar Rate Loan,
such funding period with respect to the Equipment Line of Credit/Term Loan
Facility, to be either a fourteen, thirty, sixty or ninety day period, subject
to availability, all as more fully subject to the provisions of Section 2.06 of
this Loan Agreement.
"Eurodollar Interest Rate Determination Date" shall mean the date on which
the Lender determines the Eurodollar Rate applicable to (i) a Borrowing or (ii)
the continuation or conversion of Eurodollar Rate Loans. The Eurodollar Interest
Rate Determination Date shall be the second Business Day prior to the first day
of the Eurodollar Interest Period applicable to such Borrowing, continuation or
conversion.
"Eurodollar Portion" of any Equipment Line of Credit/Term Loans shall mean
at any time the portion, including the whole, of such Equipment Line of
Credit/Term Loans bearing interest at any time under the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Interest
Period applicable to a Borrowing of Eurodollar Rate Loans, an interest rate per
annum determined by the Lender obtained by dividing (i) the rate of interest
determined by the Lender in good faith in accordance with its
12
usual procedures (which determination shall be conclusive) to be the average
(rounded upward to the nearest whole multiple of one one-thousandth of one
percent (1/1000 of 1%) per annum if such average is not such a multiple) of the
rates per annum at which deposits in Dollars are offered to the Lender by major
money center banks in the London interbank eurodollar market at approximately
11:00 a.m. (London time) on the Eurodollar Interest Rate Determination Date for
a period equal to such Eurodollar Interest Period and in an amount substantially
equal to the amount of the Eurodollar Rate Loan to be made by the Lender and to
be outstanding during such Eurodollar Interest Period by (ii) a percentage equal
to 100% minus the Eurodollar Reserve Percentage. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage. The "Eurodollar Rate" may also be expressed by
the following formula:
[average of the rates offered by major
money center banks in the
Eurodollar Rate = London interbank Eurodollar market as
determined by the Lender]
[1.00 - Eurodollar Reserve Percentage]
Finally, the "Eurodollar Rate" shall in all circumstances mean the rate of
interest which is customarily referred to as the "London Interbank Offered
Rate".
"Eurodollar Rate Loans" shall mean those Equipment Line of Credit/Term
Loans outstanding which bear interest at a rate determined by reference to the
Eurodollar Rate as provided for in Sections 2.02(i) and 2.06 of this Loan
Agreement.
"Eurodollar Rate Option" shall mean one of the interest rates available to
the Borrower as provided for and described in Section 2.02(i)(a)(2) and Section
2.02(i)(b)(2) of this Loan Agreement.
"Eurodollar Rate Taxes" shall have the meaning ascribed to such term in
Section 2.06(vii)(a) of this Loan Agreement.
"Eurodollar Reserve Percentage" shall mean for any date that percentage,
if any (expressed as a decimal, rounded upward to the nearest 1/100 of 1%), as
determined in good faith by the Lender (which determination shall be conclusive)
which is in effect on such date, as prescribed by the Federal Reserve Board, for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in respect of "eurocurrency liabilities" having a
term equal to the applicable Eurodollar Interest Period (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Rate Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of any bank to United States residents).
"Event of Default" or "Events of Default" shall mean any of the events of
default as defined and described in Section 9.01 of this Loan Agreement.
13
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or any governmental authority succeeding to its functions.
"Fiscal Quarter" shall mean the following three month periods of each
Fiscal Year:
April 1 - June 30
July 1 - September 30
October 1 - December 31
January 1 - March 31
"Fiscal Year" shall mean that period commencing on April 1 and ending on
March 31 of each year or such other period as the Borrower may designate and the
Lender may approve in writing.
"Fixed Rate" shall mean a per annum fixed rate of interest which interest
rate shall be determined as of the date three (3) days prior to the first day of
any applicable Fixed Rate Interest Period (based upon the Lender's then internal
cost of funds plus 150 basis points) and which interest rate shall remain fixed
throughout the applicable Fixed Rate Interest Period with respect to all or any
portion of the outstanding principal balance of the Equipment Line of
Credit/Term Loan Facility.
"Fixed Rate Interest Period" shall mean one or more periods of time during
the Equipment Line Term Period only, during which the Borrower may select,
convert to or continue a Fixed Rate Loan, such funding period(s) with respect to
the Equipment Line of Credit/Term Loan Facility to be used for such duration as
determined by the Borrower.
"Fixed Rate Loans" shall mean those Equipment Line of Credit/Term Loans
outstanding which bear interest at the Fixed Rate as provided for and described
in Section 2.02(i)(b)(3).
"Fixed Rate Option" shall mean one of the interest rates available to the
Borrower as provided for and described in Section 2.02(i)(b)(3).
"Funding Segment" shall mean with respect to an Eurodollar Rate Loan, the
entire principal amount of such Eurodollar Portion to which at the time in
question there is applicable a particular Eurodollar Interest Period beginning
on a particular day and ending on a particular day. (By definition, each such
Eurodollar Portion is at all times composed of an integral number of discrete
Funding Segments and the sum of the principal amounts of all Funding Segments of
any such Eurodollar Portion at any time equals the principal amount of such
Eurodollar Portion at such time.)
14
"General Intangibles" shall mean all "general intangibles", as such term
is now or hereafter defined in the applicable Uniform Commercial Code, other
than which relate to or are associated with any Equipment, including, all
Contracts.
"Generally Accepted Accounting Principles" shall mean generally accepted
accounting principles in the United States of America, as in effect from time to
time, as developed, modified and set forth in the opinions and pronouncements of
the Accounting Principles Board, the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, or in such other
statements by such other Person as may be in general use by significant segments
of the accounting profession, which are applicable to the circumstances as of
the date of determination, subject to the terms of Section 1.03 of this Loan
Agreement.
"Governmental Action" shall mean any approval, order, consent,
authorization, certificate, license, permit or validation of, or exemption or
other action by, or filing, recording or registration with or notice to, any
Governmental Authority.
"Governmental Authority" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Indemnified Party" and "Indemnified Parties" shall mean the Lender and
the directors, officers, trustees, employees, agents, attorneys and controlling
shareholders of the Lender.
"Independent Certified Public Accountant" shall mean KPMG Peat Marwick and
any other recognized independent certified public accounting firm selected by
the Borrower, its Subsidiaries and/or its Affiliates which accounting firm is
satisfactory to the Lender, including, without limitation, any one of the other
Big-Six Accounting Firms.
"IRS" shall mean the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Law" shall mean any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Lender" shall have the meaning ascribed and assigned to such term as set
forth in the preamble of this Loan Agreement.
"Letter of Credit" or "Letters of Credit" shall mean any standby letter of
credit issued by the Lender for the account of the Borrower pursuant to Section
2.01(vi) the Revolving Line of Credit Loan Agreement.
"Liabilities and Costs" shall mean all liabilities, obligations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, costs and reasonable expenses
15
(including, without limitation, attorneys', experts' and consulting fees and
costs of investigation and feasibility studies), fines, penalties and monetary
sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future arising out of or relating to any action,
suit, proceeding or resolution or settlement thereof.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other) or
preference, priority, security interest or other security agreement of any kind
or nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Loan Account" shall have the meaning ascribed to such term in Section
2.05(iv) hereof.
"Loan Agreement" shall have the meaning ascribed and assigned to such term
as set forth in the preamble of this Loan Agreement.
"Loan Documents" shall mean any and all agreements, documents,
certificates and instruments executed by the Borrower, the Corporate Guarantors,
the Partnership Guarantors and/or any other Person and delivered by them to the
Lender pursuant to and in connection with the Equipment Line of Credit/Term Loan
Facility, including, without limitation, this Loan Agreement, the Equipment Line
of Credit/Term Loan Note, the Swap Agreement, if any, the Agreement of Guaranty
and all Security Agreements in each case as amended, supplemented, restated,
extended or otherwise modified from time to time in accordance with the
provisions hereof or thereof.
"Margin Stock" shall have the meaning ascribed and assigned to such term
in Regulation G and Regulation U.
"Marketable Securities" shall mean any stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness
commonly known as "securities", secured or unsecured, convertible, subordinated
or otherwise, and in general any instruments commonly known as "securities" and
any certificates of interest, shares or participation in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing which can readily be bought and sold
on any nationally recognized securities exchange and would properly be
classified as marketable securities on the consolidated balance sheet of the
Borrower, its Subsidiaries and its Affiliates in accordance with Generally
Accepted Accounting Principles.
"Material Adverse Effect" shall mean a material adverse effect upon (i)
the business, financial condition, financial performance, properties or
operations of the Borrower, its Subsidiaries and its Affiliates taken as a whole
or (ii) the ability of the Borrower, the Corporate Guarantors and the
Partnership Guarantors to perform their collective obligations and duties under
the Loan Documents.
16
"Multiemployer Plan" shall mean an employee benefit plan defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by the Borrower, its Subsidiaries, its Affiliates
or an ERISA Affiliate.
"Notice of Borrowing" shall mean, with respect to a proposed Borrowing
pursuant to Section 2.01(ii) hereof, a notice substantially in the form of
Exhibit "B" attached hereto and made a part thereof.
"Notice of Conversions/Continuation" shall mean, with respect to a
proposed conversion or continuation of a Equipment Line of Credit/Term Loan
pursuant to Section 2.02(iii) hereof, a notice in the form of Exhibit "C"
attached hereto and made a part hereof.
"Obligations" shall mean all present and future indebtedness and other
liabilities of the Borrower owing to the Lender, or any Person entitled to
indemnification pursuant to Section 10.02 hereof, or any of their respective
successors, transferees or assigns, of every type and description, whether or
not evidenced by any note, guaranty or other instrument, arising under or in
connection with this Loan Agreement or any other Loan Document, whether or not
for the payment of money, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to the Borrower under this Loan Agreement, the Swap
Agreement, if any, or any other Loan Document.
"Office" when used in connection with the Lender, shall mean its principal
office located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or at
such office or offices of the Lender or branch, subsidiary or affiliate thereof
as may be designated in writing from time to time by the Lender to the Borrower.
"Officer's Certificate" shall mean a certificate of the Borrower executed
by any of the Authorized Officers of the Borrower, including, without
limitation, the president, any vice-president or the chief financial officer, in
the form of Exhibit "F" attached hereto and made a part hereof.
"Operating Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capitalized Lease.
"Partnership Guarantors" shall mean (i) Laurel Technologies Partnership
t/a Laurel Technologies, a general partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, having its
principal office located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000;
(ii) DRS Medical Systems, a general partnership duly organized, validly existing
and in good standing under the laws of the State of New Jersey, having its
principal office located at 000 Xxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 and (iii)
any new or additional Affiliates of the Borrower in which the Borrower acquires
an ownership interest of more than fifty percent (50%).
17
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any Person
succeeding to any or all of its functions and duties under ERISA.
"Permits" shall mean any permit, approval, authorization, license,
variance, or permission required from a Governmental Authority under any
applicable Requirement of Law.
"Person" or "Persons" shall mean any natural person, employee, general or
limited partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture, limited liability
company, company, trust, bank or other organization, whether or not a legal
entity or any other non-governmental entity, or any Governmental Authority.
"Plan" shall mean any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (other than a Multiemployer Plan) covered by Title IV of
ERISA by reason of Section 4021 of ERISA, of which the Borrower, its
Subsidiaries, its Affiliates or any ERISA Affiliate is or has been within the
preceding five years a "contributing sponsor" within the meaning of Section
4001(a)(13) of ERISA, or which is or has been within the preceding five years
maintained for employees of the Borrower, its Subsidiaries, its Affiliates or
any ERISA Affiliate.
"Potential Event of Default" shall mean an event, condition or situation
which, with the giving of any required notice and/or the passage of any required
grace or cure periods, or any combination of the foregoing, would constitute an
Event of Default.
"Prime Rate" or "Prime Lending Rate" shall mean the fluctuating interest
rate publicly announced by the Lender from time to time as its "prime rate "or
"prime lending rate", which per annum rate may not necessarily be the rate
actually charged by the Lender to its most creditworthy customers.
"Prime Rate Loans" shall mean all Equipment Line of Credit/Term Loans
outstanding which bear interest at a rate determined by reference to the Prime
Rate as provided for in Section 2.02(i) of this Loan Agreement.
"Prime Rate Option" shall mean one of the interest rates available to the
Borrower as provided for and described in Section 2.02(i)(a)(1) and Section
2.02(i)(b)(1) of this Loan Agreement.
"Property" shall mean any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
owned, leased or operated by the Borrower, its Subsidiaries and/or its
Affiliates.
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976,
42 U.S.C. '6901 et. seq., and any successor statute, and regulations
promulgated thereunder.
18
"Regulation D" shall mean Regulation D of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Regulation G" shall mean Regulation G of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Regulation T" shall mean Regulation T of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Regulation U" shall mean Regulation U of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Regulation X" shall mean Regulation X of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Release" shall mean release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of
Environmental Concern Materials in violation of Environmental Laws into the
indoor or outdoor Environment or into or out of any Property, including the
movement of Environmental Concern Materials through or in the air, soil, surface
water, groundwater or Property.
"Remedial Action" shall mean actions, other than voluntary actions on the
part of any Person, required to (i) clean up, remove, treat or in any other way
address Environmental Concern Materials in the indoor or outdoor environment;
(ii) prevent the Release or threat of Release or minimize the further Release of
Environmental Concern Materials so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Reportable Event" shall have the meaning ascribed to such term in Section
4043 of ERISA or regulations promulgated thereunder.
"Requirements of Law" shall mean, as to any Person, the charter and
by-laws or other organization or governing documents of such Person, and any
law, rule or regulation, Permit, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject, including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, U and X, and any certificate of occupancy, zoning
ordinance, building, environmental or land use requirement or Permit or
occupational safety or health law, rule or regulation.
"Restricted Junior Payments" shall mean (i) any dividend or other
distribution to the shareholders of the Borrower (whether direct or indirect and
whether in cash, property, Securities or otherwise) on account of any shares of
any class of capital stock (or equivalent partnership interest) of the Borrower
now or hereafter outstanding, (ii) any payment or prepayment of principal of,
19
premium, if any, or interest on, or fees in respect of, redemption, conversion,
exchange, purchase, retirement, defeasance, sinking fund or similar payment with
respect to any Consolidated Subordinated Debt after the occurrence of an Event
of Default and (iii) any prepayment in advance of anticipated and scheduled
payment dates of principal of, premium, if any, or interest on, or fees in
respect of, redemption, conversion, exchange, purchase, retirement, defeasance,
sinking fund or similar payment with respect to any Consolidated Subordinated
Debt (except for (a) prepayments in connection with the refinance of such
Consolidated Subordinated Debt in amounts and on terms and conditions equal to
or better than the existing terms and conditions and (b) prepayments of up to
$1,000,000.00 in the aggregate of outstanding principal on any said Consolidated
Subordinated Debt).
"Revolving Line of Credit Loan Agreement" shall mean that certain
Revolving Line of Credit Loan Agreement dated May 31, 1996, executed by and
between the Borrower, as the borrower, and the Lender, as the lender.
"Security Agreement" and "Security Agreements" shall mean a Security
Agreement in the form of Exhibit "G" attached hereto and made a part hereof
(fully executed), whereby the Borrower, the applicable Corporate Guarantor or
the applicable Partnership Guarantor has collaterally assigned, hypothecated,
pledged, conveyed, transferred, given and granted to the Lender, a continuing
security interest in all of the Borrower's, the applicable Corporate Guarantor's
or the applicable Partnership Guarantor's rights, title and interests in and to
all of the tangible and intangible assets and properties of the Borrower, the
applicable Corporate Guarantor or the applicable Partnership Guarantor described
therein, including, without limitation, hereafter acquired Equipment, Chattel
Paper, Contracts and General Intangibles as said Security Agreement may be
amended, modified, extended and/or supplemented from time to time.
"Securities" shall mean any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness commonly known as
"securities", secured or unsecured, convertible, subordinated or otherwise, and
in general any instruments commonly known as "securities", and any certificates
of interest, shares or participation in temporary or interim certificates for
the purchase or acquisition of, and any right to subscribe to, purchase or
acquire any of the foregoing, but shall not include any evidence of the
Obligations.
"Securities Act" shall mean the Securities Act of 1933, as amended to the
date hereof and from time to time hereafter, and any successor statute.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended to the date hereof from time to time hereafter, and any successor
statute.
"Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan under Title IV of ERISA.
"Solvent" shall mean when used with respect to any Person, that at the
time of determination:
20
(i) the fair value of its assets (at fair valuation) is in excess of
the total amount of its liabilities, including, without limitation, contingent
liabilities;
(ii) it is then able to pay its debts as they mature; and
(iii) it owns property having a value (at fair valuation) in excess
of the total amount required to pay its debts.
"Subsidiary" or "Subsidiaries" shall mean (i) a corporation a majority of
whose capital stock with voting power, under ordinary circumstances, to elect a
majority of directors is at the time, directly or indirectly, owned by the
Borrower, by the Borrower and one or more Subsidiaries of the Borrower or by one
or more Subsidiaries of the Borrower, (ii) any other Person (other than a
corporation) in which the Borrower and one or more Subsidiaries of the Borrower,
directly or indirectly, at the date of determination thereof has at least
majority ownership interest and/or (iii) any entity whose net earnings (losses)
or portions thereof would be properly included and consolidated with the net
earnings of the Borrower; provided, however, that the term Subsidiary shall not
include any entity that is not reflected on the balance sheet of the Borrower
due to inactivity and lack of material assets and liabilities.
"Swap Agreement" shall mean any interest rate swap, cap or collar
agreement(s) executed by and between the Borrower and the Lender on the Closing
Date or any time thereafter, including all schedules, providing for the transfer
or mitigation of interest rate risks either generally or under specific
contingencies, as said agreement(s) may have been and may hereafter be amended,
modified, supplemented, extended, renewed or otherwise renegotiated by and
between the Lender and the Borrower, subject to the Lender's review and approval
on a case by case basis.
"Swap Obligation" shall mean the Borrower's obligations to the Lender
arising from time to time under the Swap Agreement, including any and all
payment or reimbursement obligations of whatever nature.
"Taxes" shall have the meaning ascribed and assigned to such term as set
forth in Section 2.02(vi) of this Loan Agreement.
"Termination Event" shall mean (i) any Reportable Event with respect to
any Benefit Plan described in Section 4043 of ERISA and the regulations issued
thereunder for which the notice requirements have not been waived by the PBGC,
(ii) the withdrawal of the Borrower, any of its Subsidiaries and/or Affiliates,
or an ERISA Affiliate from a Benefit Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii) the
occurrence of an obligation arising under Section 4041 of ERISA of the Borrower,
any of its Subsidiaries and/or Affiliates or an ERISA Affiliate to provide
affected parties with a written notice of an intent to terminate a Benefit Plan
in a distress termination described in Section 4041(c) of ERISA, (iv) the
institution by the PBGC of proceedings to terminate any Benefit Plan, (v) any
event or condition which constitutes grounds under Section 4042 of ERISA for the
appointment of
21
a trustee to administer a Benefit Plan or (vi) the partial or complete
withdrawal of the Borrower, any of its Subsidiaries and/or Affiliates or any
ERISA Affiliate from a Multiemployer Plan.
Section 1.02 Rules of Interpretation and Construction. In this Loan
Agreement unless the context otherwise clearly requires:
(i) Articles and Sections mentioned by number only are the
respective Articles and Sections of this Loan Agreement as so numbered;
(ii) Words importing a particular gender mean and include every
other gender, and words importing the singular number mean and include the
plural number and vice versa;
(iii) Words importing persons mean and include firms, associations,
partnerships (including limited partnerships), societies, trusts, corporations
or other legal entities, including public or governmental bodies, as well as
natural persons;
(iv) Any headings preceding the texts of the several Articles and
Sections of this Loan Agreement, and any table of contents or marginal notes
appended to copies hereof, shall be solely for convenience of reference and
shall not affect or control the meaning, construction or interpretation of this
Loan Agreement;
(v) If any clause, provision or section of this Loan Agreement shall
be ruled invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any of the remaining
provisions thereof, unless not invalidating or rendering unenforceable the
remaining provisions shall be inequitable;
(vi) The terms "herein", "hereunder", "hereby", "hereto", "hereof"
and any similar terms as used in this Loan Agreement refer to this Loan
Agreement as a whole and not to any particular provision of this Loan Agreement;
the term "heretofore" means before the date of execution of this Loan Agreement;
and the term "hereafter" means on or after the date of execution of this Loan
Agreement;
(vii) This Loan Agreement and all matters relating hereto shall be
governed by and construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania; and
(viii) If any clause, provision or section of this Loan Agreement
shall be determined to be apparently contrary to or conflicting with any other
clause, provision or section of this Loan Agreement, then the clause, provision
or section containing the more specific provisions shall control and govern with
respect to such apparent conflict; and
(ix) References in this Loan Agreement to "determination" (and
similar terms) by the Lender include good faith and reasonable estimates by the
Lender (in the case of quantitative determinations) and good faith and
reasonable beliefs by the Lender (in the case of qualitative determinations).
22
Section 1.03 Accounting Principles.
(i) As used in this Loan Agreement "Generally Accepted Accounting
Principles" shall be established on the date a relevant computation or
determination is to be made or the date of relevant financial statements as the
case may be.
(ii) Except as otherwise provided in this Loan Agreement, all
computations and determinations as to accounting or financial matters shall be
made, and all financial statements to be delivered pursuant to this Loan
Agreement shall be prepared, in accordance with Generally Accepted Accounting
Principles (including principles of consolidation where appropriate), and all
accounting or financial terms shall have the meanings ascribed to such terms by
Generally Accepted Accounting Principles.
(iii) If any change in Generally Accepted Accounting Principles
after the date of this Loan Agreement is or shall be required to be applied to
transactions then or thereafter in existence, and a violation of one or more
provisions of this Loan Agreement shall have occurred or in the opinion of the
Borrower would likely occur which would not have occurred or be likely to occur
if no change in accounting principles had taken place, (a) the Borrower and the
Lender agree that such violation shall not be considered to constitute an Event
of Default or a Potential Event of Default for a period of thirty (30) days from
othe date the Borrower notifies the Lender of the applicability of this Section
1.03(iii); (b) the Borrower and the Lender agree in such event to negotiate in
good faith an amendment of this Loan Agreement which shall approximate to the
extent possible the economic effect of the original financial covenants after
taking into account such change in Generally Accepted Accounting Principles; and
(c) if the Borrower and the Lender are unable to negotiate such an amendment
within the thirty (30) day period described above in clause (a), the Borrower
shall have the option of (A) prepaying and terminating the Loan (pursuant to
applicable provisions hereof) or (B) submitting the drafting of such an
amendment to a firm of Independent Certified Public Accountants of nationally
recognized standing acceptable to the Borrower and the Lender, which shall
complete its draft of such amendment within thirty (30) days of submission; if
the Borrower and the Lender cannot agree, the firm shall be selected by binding
arbitration in the City of Philadelphia, Pennsylvania in accordance with the
then applicable rules of the American Arbitration Association. If the Borrower
does not exercise either such option within said period, then as used in this
Loan Agreement, "Generally Accepted Accounting Principles" shall mean generally
accepted accounting principles in effect at the relevant date. The Borrower and
the Lender agree that if the Borrower elects the option in clause (B) above,
until such firm has been selected and completes drafting such amendment, no such
violation shall constitute an Event of Default or a Potential Event of Default.
(iv) If any change in Generally Accepted Accounting Principles after
the date of this Loan Agreement is required to be applied to transactions or
conditions then or thereafter in existence, and the Lender shall assert that the
effect of such change is or shall likely be to distort materially the effect of
any of the definitions of financial terms in Article I of this Loan Agreement or
any of the covenants of the Borrower in Article VIII of this Loan Agreement
(hereinafter referred
23
to as the "Financial Provisions"), so that the intended economic effect of any
of the Financial Provisions will not in fact be accomplished, then
(a) the Lender shall notify the Borrower of such assertion,
specifying the change in Generally Accepted Accounting Principles which is
objected to, and until otherwise determined as provided below, the specified
change in Generally Accepted Accounting Principles shall not be made by the
Borrower in its financial statements for the purpose of applying the Financial
Provisions; and
(b) The Lender and the Borrower shall follow the procedures
set forth in paragraph (iii)(b) and the first sentence of paragraph (c) of
subsection (iii) of this Section 1.03. If the Borrower and the Lender are unable
to agree on an amendment as provided in said paragraph (iii)(b) and if the
Borrower does not exercise either option set forth in the first sentence of said
paragraph (iii)(c) within the specified period, then as used in this Loan
Agreement "Generally Accepted Accounting Principles" shall mean generally
accepted accounting principles in effect at the relevant date, except that the
specified change in "Generally Accepted Accounting Principles" which is objected
to by the Lender shall not be made in applying the Financial Provisions. The
Borrower and the Lender agree that if the Borrower elects the option in clause
(B) of the first sentence of said paragraph (iii)(c), until such independent
accounting firm has been selected and completes drafting such amendment, the
specified change in "Generally Accepted Accounting Principles" shall not be made
in applying the Financial Provisions.
(v) All expenses of compliance with this Section 1.03 shall be paid
for by the Borrower, except the Borrower and the Lender shall be responsible for
their own costs and expenses associated with proceedings under Section
1.03(iii)(c) hereof other than the cost and expense payable to the American
Arbitration Association and any such accounting firm which shall be divided
equally between the Lender on the one hand and the Borrower on the other.
24
ARTICLE II
AMOUNTS AND TERMS FOR THE EQUIPMENT
LINE OF CREDIT/TERM LOAN FACILITY
Section 2.01 Equipment Line of Credit/Term Loan Facility.
(i) Availability. (a) Subject to the terms and conditions set forth
in this Loan Agreement, and provided no Potential Event of Default or Event of
Default shall have occurred and be continuing, the Lender hereby agrees to make
to the Borrower or to any other Person described on Schedule 2.01 attached
hereto as directed by the Borrower pursuant to this Loan Agreement from time to
time during the Equipment Line of Credit Period, equipment line of credit loans
(hereinafter each individually referred to as an "Equipment Line of Credit/Term
Loan" and collectively, the "Equipment Line of Credit/Term Loans"), in an amount
which shall not exceed in the aggregate at any time outstanding the
$5,000,000.00 principal amount of the Equipment Line of Credit/Term Loan
Facility. If the outstanding principal amount of the Equipment Line of
Credit/Term Loans shall intentionally or unintentionally exceed the amount of
the $5,000,000.00 principal amount of the Equipment Line of Credit/Term Loan
Facility at any time, such excess shall be (1) immediately payable by the
Borrower to the Lender, (2) deemed secured by the Collateral and (3) subject to
the terms of this Loan Agreement. No new or additional Equipment Line of
Credit/Term Loan shall be made during the Equipment Line Term Period. The
Equipment Line of Credit/Term Loans shall be evidenced by the Equipment Line of
Credit/Term Loan Note. The Lender is hereby authorized to record the dates and
amounts of each Equipment Line of Credit/Term Loan made by the Lender and the
dates and amounts of each payment or prepayment of principal thereof on
"Schedule 1" annexed to and constituting a part of the Equipment Line of
Credit/Term Loan Note, and any such recordation shall constitute prima facie
evidence of the accuracy of the information as recorded; provided, however, the
failure to make such notation with respect to any Borrowing shall not otherwise
affect the obligation of the Borrower to the Lender under this Loan Agreement or
the Equipment Line of Credit/Term Loan Note.
(b) During the Equipment Line of Credit Period, Equipment Line
of Credit/Term Loans may be voluntarily prepaid pursuant to Section 2.04 hereof
and, subject to the provisions of this Loan Agreement, any amounts so prepaid
may be reborrowed, until the Business Day next preceding the Equipment Line of
Credit Termination Date. The Lender's commitment to make Equipment Line of
Credit/Term Loans shall expire on the Equipment Line of Credit Termination Date,
and all Equipment Line of Credit/Term Loans then outstanding shall, provided no
Potential Event of Default or Event of Default exists under this Loan Agreement,
(1) be converted to a term loan and (2) commence amortizing during the Equipment
Line Term Period, all as more fully provided for in Section 2.01(v) below.
(ii) Notice of Borrowing. During the Equipment Line of Credit
Period, whenever the Borrower desires to borrow a Prime Rate Loan or an
Eurodollar Rate Loan under this Section 2.01, the Borrower shall deliver to the
Lender a Notice of Borrowing no later than 2:00 p.m. (Philadelphia, Pennsylvania
time) on the proposed Borrowing Date, in the case of a Borrowing as a
25
Prime Rate Loan, and at least two (2) Business Days in advance of the proposed
Borrowing Date in the case of a Borrowing as a Eurodollar Rate Loan. The Notice
of Borrowing shall specify (a) the Borrowing Date (which shall be a Business
Day) in respect of the Equipment Line of Credit/Term Loan, (b) the amount of the
proposed Borrowing which shall not be less than $25,000.00, (c) the intended use
of the proceeds of such Borrowing, (d) the applicable interest rate option as
described in Section 2.02(i) of this Loan Agreement, (e) the Eurodollar Interest
Period, if applicable, and (f) the location of the Equipment to be acquired with
the proceeds of the Equipment Line of Credit/Term Loan. In lieu of delivering
the above-described Notice of Borrowing, the Borrower may give the Lender
telephonic notice of any proposed Borrowing by the time required under this
Section 2.01(ii); provided, however, that such notice shall be confirmed in
writing by delivery to the Lender promptly (but in no event later than the
Borrowing Date of the requested Equipment Line of Credit/Term Loan) of a Notice
of Borrowing. Any Notice of Borrowing (or telephonic notice in lieu thereof)
pursuant to this Section 2.01(ii) shall be irrevocable. In addition, the
Borrower shall also deliver to the Lender invoices or other written
documentation evidencing the purchase price of the Equipment that the Borrower
intends to acquire with the proceeds of the requested Equipment Line of
Credit/Term Loan. The Lender will advance up to eighty percent (80%) of the
purchase price of said Equipment, or such lesser amount as requested by the
Borrower. The Lender will advance not more than $750,000.00 of the proceeds of
the Equipment Line of Credit/Term Loan Facility for "deposits" or "progress
payments" in connection with the acquisition of said Equipment. The Borrower
covenants and agrees that it shall provide, furnish and obtain for the benefit
of the Lender, within six (6) months of each advance of proceeds of the
Equipment Line of Credit/Term Loan made for "deposits" or "progress payments", a
first lien prior security interest in the Equipment being purchased with said
"deposits" and "progress payments". In furtherance of said agreement, the
Borrower shall give the Lender written evidence of the Borrower's ownership and
possession of said Equipment, together with the necessary UCC-1 Financing
Statements described in Section 3.02(ii). At such time as the Lender is
satisfied of the Borrower's ownership interest in said Equipment, said
"deposits" or "progress payments" shall no longer constitute a "deposit" or
"progress payment" for purposes of this Section 2.01(ii).
(iii) Making of Equipment Line of Credit/Term Loans. The Lender
shall make the proceeds of such Equipment Line of Credit/Term Loan available to
the Borrower at the Lender's Office, no later than 2:00 p.m. (Philadelphia,
Pennsylvania time) on such Borrowing Date and shall disburse such funds in
Dollars and in immediately available funds to an account of the Borrower
maintained with the Lender and thereafter to any substitute account, designated
in writing by the Borrower in the Notice of Borrowing.
(iv) Use of Proceeds of Equipment Line of Credit/Term Facility. The
proceeds of the Equipment Line of Credit/Term Loan Facility shall be used by the
Borrower for the sole purpose of financing a portion of the purchase price and
certain costs and expenses incurred by the Borrower, its Subsidiaries and/or it
Affliates in connection with the acquisition of certain Equipment used in their
respective businesses.
(v) Amortization of the Equipment Line of Credit/Term Loan Facility.
(a) During the Equipment Line of Credit Period, provided no Event of Default or
Potential Event of Default
26
shall have occurred and be continuing, there shall be no required principal
amortization payments on the Equipment Line of Credit/Term Loan Facility from
the Borrowing Date of an Equipment Line of Credit/Term Loan through December
31st of the year in which said Borrowing occurred. Commencing on March 31st of
the following calendar year and continuing thereafter on the first (1st) day of
each succeeding month, the Borrower shall repay to the Lender the outstanding
principal balance of each Equipment Line of Credit/Term Loan in an amount
sufficient to repay the outstanding principal balance of the Equipment Line of
Credit/Term Loan over a hypothetical sixty (60) month term.
(b) Notwithstanding any term or condition to the contrary set
forth above, the Borrower shall commence principal payments to the Lender in
monthly installments for any Borrowing made during the 1999 calendar year no
later than June 30, 1999. In the event the Borrower shall request a Borrowing on
June 30, 1999, then the Borrower shall pay to the Lender one-sixtieth (1/60th)
of the principal amount of the Borrowing on said date.
(c) Notwithstanding any term or condition to the contrary set
forth above, the Borrower may, at its sole option, elect to commence the payment
of principal amortization on any or all of the outstanding Equipment Line
Credit/Term Loans prior to March 31st of each succeeding year following the year
of each said Borrowing. The Borrower shall give the Lender written notice of
said election at least ten (10) days prior to the making of the first payment
and thereafter all succeeding payments shall continue uninterrupted on the first
day of each month for a period of fifty-nine (59) months.
(d) During the Equipment Line Term Period, subject to the
prior terms, conditions and the provisions of this Section 2.01(v) and Section
2.04, the Borrower shall continue to repay to the Lender the outstanding
principal balance of the Equipment Line of Credit/Term Loan Facility in
consecutive monthly installments in an amount sufficient to repay the entire
outstanding principal balance of the Equipment Line of Credit/Term Loan Facility
on or before the Equipment Line of Credit/Term Loan Maturity Date. The final
payment of all principal, unpaid accrued interest, fees and expenses, if any,
owing to the Lender on the Equipment Line of Credit/Term Loan Facility shall be
due and payable on the Equipment Line of Credit/Term Loan Maturity Date.
Section 2.02 Interest on the Equipment Line of Credit/Term Loans.
(i) Rate of Interest. (a) During the Equipment Line of Credit Period, all
Equipment Line of Credit/Term Loans shall bear interest computed daily on the
outstanding principal balance thereof from the date made until paid in full at
one or more of the interest rate options selected by the Borrower from among the
two (2) interest rate options set forth below. Subject to the provisions of this
Loan Agreement, the Borrower may select different options to apply
simultaneously to different portions of the Equipment Line of Credit/Term Loans
and may select different Funding Segments to apply simultaneously to different
parts of the Eurodollar Rate Portion of the Equipment Line of Credit/Term Loans.
Each selection of a rate option shall apply separately and without overlap to
the Equipment Line of Credit/Term Loans as a class. The aggregate number of
27
Funding Segments applicable to the Eurodollar Rate Portion of the Equipment Line
of Credit/Term Loans at any time shall not exceed twenty (20).
Interest Rate Options For Equipment Line of Credit/Term
Loans during the Equipment Line of Credit Period:
(1) Prime Rate: A fluctuating rate per annum for each day
equal to the Prime Rate of the Lender, in effect from time to time (such
interest rate to change immediately upon any change in the Prime Rate); or
(2) Eurodollar Rate. A fixed rate per annum for each day
during a Eurodollar Interest Period equal to the Eurodollar Rate for such
Eurodollar Interest Period plus one hundred fifty (150) basis points. The
Lender shall give prompt notice to the Borrower of the Eurodollar Rate
determined or adjusted in accordance with the provisions hereof, which
determination or adjustment shall be conclusive (absent manifest error) if
made in good faith.
(b) During the Equipment Line Term Period, all Equipment Line of
Credit/Term Loans shall bear interest computed daily on the outstanding
principal balance thereof from the date made until paid in full at one or more
of the interest rate options selected by the Borrower from among the three (3)
interest rate options set forth below. Subject to the provisions of this Loan
Agreement, the Borrower may select different options to apply simultaneously to
different portions of the Equipment Line of Credit/Term Loans and may select
different Funding Segments to apply simultaneously to different parts of the
Eurodollar Rate Portion of the Equipment Line of Credit/Term Loans. Each
selection of a rate option shall apply separately and without overlap to the
Equipment Line of Credit/Term Loans as a class. The aggregate number of Funding
Segments applicable to the Eurodollar Rate Portion of the Equipment Line of
Credit/Term Loans at any time shall not exceed twenty (20).
Interest Rate Options For Equipment Line of Credit/Term
Loans during the Equipment Line Term Period:
(1) Prime Rate: A fluctuating rate per annum for each day
equal to the Prime Rate of the Lender, in effect from time to time (such
interest rate to change immediately upon any change in the Prime Rate);
(2) Eurodollar Rate. A fixed rate per annum for each day
during a Eurodollar Interest Period equal to the Eurodollar Rate for such
Eurodollar Interest Period plus one hundred fifty (150) basis points. The
Lender shall give prompt notice to the Borrower of the Eurodollar Rate
determined or adjusted in accordance with the provisions hereof, which
determination or adjustment shall be conclusive (absent manifest error) if
made in good faith; or
28
(3) Fixed Rate: A fixed rate per annum for each day during
the Fixed Rate Interest Period equal to the Fixed Rate.
(c) Notwithstanding subparagraph (a) and (b) above, interest in
respect of any Equipment Line of Credit/Term Loans shall not exceed the maximum
rate permitted by applicable Law.
(ii) Interest Payments. Subject to Section 2.02(iv) hereof, interest
accrued on all Prime Rate Loans shall be payable by the Borrower in arrears (a)
on the first day of each Fiscal Quarter during the term of this Loan Agreement,
with the first payment commencing on January 1, 1997 and (b) at maturity.
Interest accrued on each Eurodollar Rate Loan shall be payable by the Borrower
in arrears (1) on each Eurodollar Interest Payment Date applicable to that
Eurodollar Rate Loan, (2) upon prepayment thereof in full or in part and (3) at
maturity. Interest accrued on each Fixed Rate Loan shall be payable by the
Borrower in arrears (x) on the first day of each month commencing on the first
day of each month during the Equipment Line Term Period and (y) at maturity.
(iii) Conversion or Continuation. (a) Subject to the provisions of Section
2.04, Section 2.06, and Section 2.11 hereof, the Borrower shall have the option
(1) to convert at any time all or any part of outstanding Equipment Line of
Credit/Term Loans which, in the aggregate, equal $250,000.00 or an integral
multiple of $1,000.00 in excess of that amount from Prime Rate Loans to
Eurodollar Rate Loans; or (2) to convert at any time all or any part of
outstanding Equipment Line of Credit/Term Loans from Prime Rate Loans to Fixed
Rate Loans; or (3) to convert all or any part of outstanding Equipment Line of
Credit/Term Loans which, in the aggregate, equal $250,000.00 or an integral
multiple of $1,000.00 in excess of that amount from Eurodollar Rate Loans to
Prime Rate Loans on the expiration date of any Eurodollar Interest Period
applicable thereto; or (4) to convert all or any part of outstanding Equipment
Line of Credit/Term Loans which, in the aggregate, equal $250,000.00 or an
integral multiple of $1,000.00 in excess of that amount from Eurodollar Rate
Loans to Fixed Rate Loans on the expiration date of any Eurodollar Interest
Period applicable thereto; or (5) to convert at any time all or any part of
outstanding Equipment Line of Credit/Term Loans from Fixed Rate Loans to Prime
Rate Loans; or (6) to convert at any time all or any part of outstanding
Equipment Line of Credit/Term Loans which, in the aggregate, equal $250,000.00
or an integral multiple of $1,000.00 from Fixed Rate Loans to Eurodollar Rate
Loans; or (7) upon the expiration of any Eurodollar Interest Period applicable
to a Eurodollar Rate Loan, to continue all or any portion of such Equipment Line
of Credit/Term Loans equal to $250,000.00 or an integral multiple of $1,000.00
in excess of that amount as Eurodollar Rate Loans of the same type, and the
succeeding Eurodollar Interest Period of such continued Equipment Line of
Credit/Term Loans shall commence on the expiration date of the Eurodollar
Interest Period applicable thereto; provided, however, that no outstanding
Equipment Line of Credit/Term Loan may be continued as, or be converted into, a
Eurodollar Rate Loan when any Event of Default or Potential Event of Default has
occurred and is continuing.
(b) In the event the Borrower shall elect to convert or continue an
Equipment Line of Credit/Term Loan under this Section 2.02(iii), the Borrower
shall deliver a Notice of
29
Conversion/Continuation to the Lender no later than 2:00 p.m. (Philadelphia,
Pennsylvania time) on the proposed conversion date in the case of a conversion
to a Prime Rate Loan, and no later than 2:00 p.m. (Philadelphia, Pennsylvania
time) at least two Business Days in advance of the proposed
conversion/continuation date in the case of a conversion to or a continuation of
a Eurodollar Rate Loan. A Notice of Conversion/Continuation shall specify (1)
the proposed conversion/continuation date (which shall be a Business Day), (2)
the amount of the Equipment Line of Credit/Term Loan to be converted/continued,
(3) the nature of the proposed conversion/continuation and (4) in the case of a
conversion to, or continuation of, a Eurodollar Rate Loan, the requested
Eurodollar Interest Period. In lieu of delivering the above-described Notice of
Conversion/Continuation, the Borrower may give the Lender telephonic notice of
any proposed conversion/continuation by the time required under this Section
2.02(iii); provided, however, that such notice shall be confirmed in writing by
delivery to the Lender promptly (but in no event later than the proposed
conversion/continuation date) of a Notice of Conversion/Continuation.
(c) Any Notice of Conversion/Continuation for conversion to, or
continuation of, an Equipment Line of Credit/Term Loan (or telephonic notice in
lieu thereof) shall be irrevocable and the Borrower shall be bound to convert or
continue in accordance therewith.
(iv) Default Interest. Notwithstanding the rates of interest specified in
Section 2.02(i) hereof and the payment dates specified in Section 2.02(ii)
hereof, effective immediately upon the occurrence of any Event of Default under
Section 9.01 of this Loan Agreement and for as long thereafter as any such Event
of Default shall be continuing, the principal balance of all Loans then
outstanding and, to the extent permitted by applicable Law, any interest
payments on the Loans not paid when due, shall bear interest payable upon demand
at the Default Rate.
(v) Computation of Interest. Interest on Prime Rate Loans, Eurodollar Rate
Loans and Fixed Rate Loans shall be computed on the basis of the actual number
of days elapsed in the period during which interest accrues and a year of 360
days. In computing interest on any Equipment Line of Credit/Term Loan, the date
of the making of the Equipment Line of Credit/Term Loan or the first day of a
Eurodollar Interest Period, as the case may be, shall be included and the date
of payment or the expiration date of a Eurodollar Interest Period, as the case
may be, shall be excluded; provided, however, that if an Equipment Line of
Credit/Term Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Equipment Line of Credit/Term Loan.
(vi) Changes; Legal Restrictions. Except as provided in Section 2.06(iv)
hereof with respect to certain determinations on Eurodollar Interest Rate
Determination Dates, in the event that after the date hereof (a) the adoption of
or any change in any law, treaty, rule, regulation, guideline or determination
of a court or Governmental Authority or any change in the interpretation or
application thereof by a court or Governmental Authority, or (b) compliance by
the Lender with any request or directive from any central bank or other
Governmental Authority or quasi-governmental authority:
30
(1) subjects the Lender (or its applicable lending office or
Eurodollar Affiliate) to any taxes, levies, imposts, duties, charges, fees,
deductions or withholdings of any kind which the Lender determines to be
applicable to this Loan Agreement, the Equipment Line of Credit/Term Loans, or
change in the basis of taxation of payments to the Lender of principal, fees,
interest, or any other amount payable hereunder, except for net income or
franchise taxes imposed by any jurisdiction (all such non-excepted taxes, duties
and other charges being hereinafter referred to as "Taxes"); or
(2) does or may impose, modify, or hold applicable, in the
determination of a Lender, any reserve, special deposit, compulsory loan, FDIC
insurance, capital allocation or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by,
commitments made, or other credit extended by, or any other acquisition of funds
by, the Lender or any applicable lending office or Eurodollar Affiliate of the
Lender (except, with respect to Prime Rate Loans to the extent that the reserve
and FDIC insurance requirements are reflected in the definition of "Prime Rate"
and, with respect to a Eurodollar Rate Loan, to the extent that the reserve
requirements are reflected in the definition of "Eurodollar Rate"); or
(3) does or is reasonably likely to impose on the Lender any other
condition materially more burdensome in nature, extent or consequence than those
in existence as of the Closing Date;
and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing or maintaining the Equipment Line of Credit/Term Loans, then,
in any such case, the Borrower shall promptly pay to the Lender, upon demand,
such amount or amounts (based upon an allocation thereof by the Lender to the
financing transactions contemplated by this Loan Agreement and effected by this
Section 2.02 (vi) as may be necessary to compensate the Lender for any such
additional cost incurred or reduced amount received. The Lender shall deliver to
the Borrower a written statement of the costs or reductions claimed and the
basis therefore, and the allocation made by the Lender of such costs and
reductions shall be conclusive, absent manifest error. If the Lender
subsequently recovers any amounts previously paid by the Borrower pursuant to
this Section 2.02 (vi), the Lender shall, within thirty (30) days after receipt
of such refund and to the extent permitted by applicable Law, pay to the
Borrower the amount of any such recovery.
Section 2.03. Fees.
(i) Unused Commitment Fee. The Borrower shall pay to the Lender an
unused commitment fee accruing at the rate of one-eighth of one percent (0.125%)
per annum from and after the Closing Date until the Obligations are repaid in
full and the Equipment Line of Credit/Term Loan Facility is terminated, upon the
average daily amount of the excess of the Equipment Line of Credit/Term Loan
Facility over all outstanding Equipment Line of Credit/Term Loans from time to
time. All such commitment fees payable under this Section 2.03 shall be
calculated and payable quarterly in arrears on the first Business Day in each
Fiscal Quarter beginning after the Closing Date.
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(ii) Late Charge Fee. In the event that any payment, including,
without limitation, interest or principal, required to be made by the Borrower
under the Equipment Line of Credit/Term Loan Note or under this Loan Agreement
shall not be received by the Lender within fifteen (15) days of when due, the
Lender may charge, and if so charged, the Borrower shall pay, a late charge of
($0.05) for each dollar ($1.00) of each delinquent payment for the purpose of
defraying the expense incident to the handling of such delinquent payment. In no
event shall said late charge fee be less than ten dollars ($10.00).
(iii) Payment of Fees. The fees described in this Section 2.03
represent compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit, and the obligation
of the Borrower to pay each fee described herein shall be in addition to, and
not in lieu of, the obligation of the Borrower to pay interest, other fees and
expenses otherwise described in this Loan Agreement and the Commitment Letter.
Fees shall be payable when due at the Office of the Lender in immediately
available funds. All fees shall be non-refundable when paid. All fees and
expenses specified or referred to in this Loan Agreement due and owing to the
Lender, including, without limitation, those referred to in this Section 2.03
and in Section 10.01 hereof and in the Commitment Letter, shall bear interest,
if not paid when due, at the Default Rate (but not to exceed the maximum rate
permitted by applicable Law), shall constitute Obligations. All fees described
in this Section 2.03 and the Commitment Letter which are expressed as a per
annum charge shall be calculated on the basis of the actual number of days
elapsed in a 360-day year.
Section 2.04 Voluntary Prepayments. (i) The Borrower may, at any time and
from time to time, upon the giving of at least one (1) Business Days' prior
express written notice to the Lender, voluntarily prepay any Prime Rate Loan in
whole or in part, without premium or fee, in an aggregate minimum amount of
$25,000.00 and in integral multiples of $1,000.00; provided, however, any
principal prepayment of a Prime Rate Loan shall be accompanied by the payment of
all unpaid accrued interest due and owing on said Prime Rate Loan.
(ii) The Borrower may, at any time and from time to time, upon the
giving of at least one (1) Business Days' prior express written notice to the
Lender, voluntarily prepay any Eurodollar Rate Loan in whole or in part, in an
aggregate minimum amount of $25,000.00 and in integral multiples of $1,000.00,
subject to the following: (a) any principal prepayment of a Eurodollar Rate Loan
shall be accompanied by the payment of all unpaid accrued interest due and owing
on said Eurodollar Rate Loan and (b) the Borrower shall pay to the Lender all
amounts described in Section 2.06(vi) of this Loan Agreement.
(iii) The Borrower may, at any time and from time to time,
voluntarily prepay any Fixed Rate Loan, in whole or in part, without premium or
fee, in an aggregate minimum amount of $10,000.00 subject to the indemnification
provisions of Section 2.11 of this Loan Agreement.
(iv) Notwithstanding any provision of this Section 2.04 to the
contrary, in the event that any prepayments of any Equipment Line of Credit/Term
Loans are made in connection with
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the termination of this Loan Agreement, such prepayments shall be made only upon
ten (10) Business Days' prior express written notice to the Lender.
Section 2.05 Payments; Collection of Accounts.
(i) Manner and Time of Payment. All payments of principal, interest
and fees hereunder payable to the Lender shall be made without condition or
reservation or right, in Dollars and in immediately available funds, delivered
to the Lender not later than 2:00 p.m. (Philadelphia, Pennsylvania time) on the
date due, to such account of the Lender at its Office, as the Lender may
designate. Funds received by the Lender after that time and date shall be deemed
to have been paid on the next succeeding Business Day. The Lender shall send a
monthly and/or quarterly invoice, as applicable, to the Borrower reflecting the
accrued interest due and owing and all fees due and owing hereunder. The
Borrower hereby agrees that on the Business Day that any payment of principal,
interest and fees are due, the Lender shall automatically charge a demand
deposit account of the Borrower, which account shall be maintained with the
Lender at all times throughout the term of the Equipment Line of Credit/Term
Loan Facility. The Borrower's authorization of the Lender to charge such account
having sufficient funds on deposit shall constitute payment of the amount so
authorized notwithstanding the Lender's failure to charge said account. Any
failure or delay by the Lender in submitting invoices for interest and fee
payments shall not discharge or relieve the Borrower of the obligation to make
such payments into the demand deposit account.
(ii) Apportionment of Payments. So long as there does not exist an
Event of Default, all payments of principal and interest in respect of
outstanding Equipment Line of Credit/Term Loans, all payments of the fees
described herein and in the Commitment Letter, and all payments in respect of
any other Obligation shall be allocated by the Borrower as it may be entitled
thereto as provided herein. After the occurrence and during the continuance of
an Event of Default, the Lender shall, after providing notice to the Borrower
that payments and proceeds shall be so applied, apply all payments remitted to
the Lender subject to the provisions of this Loan Agreement, (a) first, to pay
Obligations in respect of any fees, expense reimbursements or indemnities then
due and owing to the Lender from the Borrower; (b) second, to pay interest due
in respect of Equipment Line of Credit/Term Loans; (c) third, to pay or prepay
principal of Equipment Line of Credit/Term Loans and (d) fourth, to the ratable
payment of all other Obligations.
(iii) Payments on Non-Business Days. Whenever any payment to be made
by the Borrower hereunder shall be stated to be due on a day which is not a
Business Day, payments shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder and of any of the fees specified in Section 2.03 hereof, as
the case may be.
(iv) Lender's Accounting. The Lender shall maintain a loan account
(hereinafter referred to as the "Loan Account") on its books in which shall be
recorded (a) principal amount of Equipment Line of Credit/Term Loans owing to
the Lender from time to time; (b) all other appropriate debits and credits as
provided in this Loan Agreement, including, without limitation, all interest,
fees, expenses, charges and other Obligations; and (c) all payments of
Obligations made by
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the Borrower or for the Borrower's account. All entries in the Loan Account
shall be made in accordance with the Lender's customary accounting practices as
in effect from time to time. The Lender will render a statement of the Loan
Account upon the request of the Borrower. Each and every such statement shall be
deemed final, binding and conclusive upon the Borrower in all respects as to all
matters reflected therein (absent manifest error), unless the Borrower, within
ten (10) days after the date such statement is rendered, delivers to the Lender
written notice of any objection which the Borrower may have to any such
statement. In that event, only those items expressly objected to in such notice
shall be deemed to be disputed by the Borrower.
Section 2.06 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding other provisions of this Loan Agreement to the contrary, if any,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
(i) Amount of Eurodollar Rate Loans. Each Eurodollar Rate Loan shall be
for a minimum amount of $250,000.00 and in integral multiples of $1,000.00 in
excess of that amount.
(ii) Determination of Eurodollar Interest Period. By giving notice as set
forth in Sections 2.01 (ii) and 2.02(iii) hereof (with respect to a conversion
into or a continuation of Eurodollar Rate Loans), the Borrower shall have the
option, subject to the other provision of this Section 2.06, to specify an
Eurodollar Interest Period to apply to the Borrowing of Eurodollar Rate Loans
described in such notice, subject to availability. The determination of
Eurodollar Interest Periods shall be subject to the following provisions:
(a) In the case of immediately successive Eurodollar Interest
Periods applicable to a Borrowing of Eurodollar Rate Loans, each successive
Eurodollar Interest Period shall commence on the day on which the next preceding
Eurodollar Interest Period expires;
(b) If any Eurodollar Interest Period would otherwise expire on a
day which is not a Business Day, the Eurodollar Interest Period shall be
extended to expire on the next succeeding Business Day; provided, however, that
if any such Eurodollar Interest Period applicable to a Borrowing of Eurodollar
Rate Loans would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in that month, that
Eurodollar Interest Period shall expire on the immediately preceding Business
Day;
(c) The Borrower may not select a Eurodollar Interest Period for any
Equipment Line of Credit/Term Loan which terminates later than the Equipment
Line of Credit/Term Loan Maturity Date;
(d) The Borrower may not select a Eurodollar Interest Period with
respect to any portion of principal of a Eurodollar Rate Loan which extends
beyond a date on which the Borrower is required to make a scheduled payment of
any portion of principal, it being understood and agreed that any Eurodollar
Rate Loan whose Eurodollar Interest Period ends less than one month prior to
such required principal payment date shall be deemed converted to a Prime Rate
Loan as of the last
34
day of such Eurodollar Interest Period for purposes of determining whether any
portion of principal of any Eurodollar Rate Loan is required in order to make a
mandatory payment of principal; and
(e) There shall be no more than twenty (20) Eurodollar Interest
Periods under this Loan Agreement in effect at any one time under the Equipment
Line of Credit/Term Loan Facility.
(iii) Determination of Interest Rate. As soon as practicable after 2:00
p.m. (Philadelphia, Pennsylvania time) on any Eurodollar Interest Rate
Determination Date, the Lender shall determine (which determination shall,
absent manifest error, be rebuttably presumed correct) the interest rate which
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Eurodollar Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrower.
(iv) Interest Rate Unascertainable, Inadequate or Unfair. If, with respect
to any Eurodollar Interest Period, the Lender determines that (a) deposits in
Dollars (in the applicable amounts) are not being offered in the relevant market
for such Eurodollar Interest Period, (b) adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate or (c) a contingency has occurred
which materially and adversely affects the London interbank Eurodollar market
then the Lender shall forthwith give notice thereof to the Borrower, whereupon
until the Lender notifies the Borrower that the circumstances giving rise to
such suspension no longer exist, (1) the right of the Borrower to elect to have
Equipment Line of Credit/Term Loans bear interest based upon the Eurodollar Rate
shall be suspended and (2) each outstanding Eurodollar Rate Loan shall be
converted into a Prime Rate Loan on the last day of the then current Eurodollar
Interest Period therefor, notwithstanding any prior election by the Borrower to
the contrary.
(v) Illegality. (a) In the event that on any date the Lender shall have
determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties) that the making or continuation of any
Eurodollar Rate Loan has become unlawful by compliance by the Lender in good
faith with any Law, of any Governmental Authority (whether or not having the
force of Law and whether or not failure to comply therewith would be unlawful),
then, and in any such event, the Lender shall promptly give notice (by telephone
promptly confirmed in writing) to the Borrower.
(b) Upon the giving of the notice referred to in Section 2.06(v)(a)
hereof, (1) the Borrower's right to request of the Lender and the Lender's
obligation to make Eurodollar Rate Loans shall be immediately suspended, and the
Lender shall make an Equipment Line of Credit/Term Loan, as part of any
requested Borrowing of Eurodollar Rate Loans, as a Prime Rate Loan, which Prime
Rate Loan shall, for all purposes, be considered a part of such Borrowing, and
(2) if the affected Eurodollar Rate Loan or Loans are then outstanding, the
Borrower shall immediately (or, if permitted by applicable Law, no later than
the date permitted thereby, upon at least one Business Day's written notice to
the Lender) convert each such Equipment Line of Credit/Term Loan into a Prime
Rate Loan.
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(c) In the event that the Lender determines at any time following
its giving of the notice referred to in Section 2.06(iv) and Section 2.06(v)(a)
hereof that the Lender may lawfully make Eurodollar Rate Loans of the type
referred to in such notice, the Lender shall promptly give notice (by telephone
confirmed in writing) to the Borrower of that determination, whereupon the
Borrower's right to request of the Lender, and the Lender's obligation to make,
Eurodollar Rate Loans shall be restored.
(vi) Compensation. In addition to such amounts as are required to be paid
by the Borrower pursuant to Sections 2.02(iv), 2.02(vi), 2.03 (iii), 2.04(ii),
2.06(vii), 2.07 and 2.09 hereof, the Borrower shall compensate the Lender, upon
demand, for all losses, expenses and liabilities (including, without limitation,
any loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds required by the Lender to fund or maintain the Lender's
Eurodollar Rate Loans) which losses, expenses and liabilities the Lender may
sustain (a) if for any reason a Borrowing, conversion or continuation of
Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of
Borrowing or a Notice of Conversion/Continuation or in a telephonic request for
borrowing or conversion/continuation or a successive Eurodollar Interest Period
does not commence after notice therefor is given pursuant to Section 2.02(iii)
hereof as a result of any action or inaction on the part of any Person (other
than the Lender), (b) if any prepayment of an Eurodollar Rate Loan (including,
without limitation, any prepayment pursuant to Section 2.04 hereof) occurs for
any reason on a date which is not the last day of the applicable Eurodollar
Interest Period, (c) as a consequence of any required conversion of a Eurodollar
Rate Loan to a Prime Rate Loan as a result of any of the events indicated in
Section 2.06(v) or (d) as a consequence of any other failure by the Borrower to
repay Eurodollar Rate Loans when required by the terms of this Loan Agreement.
The Lender shall deliver to the Borrower a written statement as to such losses,
expenses and liabilities which statement shall be conclusive as to such amounts
in the absence of manifest error.
(vii) Eurodollar Rate Taxes. The Borrower agrees that:
(a) the Borrower will pay, prior to the date on which penalties
attach thereto, all present and future income, stamp and other taxes, levies, or
costs and charges whatsoever imposed, assessed, levied or collected on or in
respect of an Equipment Line of Credit/Term Loan solely as a result of the
interest rate being determined by reference to the Eurodollar Rate or the
provisions of this Loan Agreement relating to the Eurodollar Rate or the
recording, registration, notarization or other formalization of any thereof or
any payments of principal, interest or other amounts made on or in respect of an
Equipment Line of Credit/Term Loan made to the Borrower when the interest rate
is determined by reference to the Eurodollar Rate (all such taxes, levies, costs
and charges being hereinafter collectively called "Eurodollar Rate Taxes");
provided, however, that Eurodollar Rate Taxes shall not include net income or
franchise taxes imposed by any jurisdiction. The Borrower shall also pay such
additional amounts equal to increases in net income or franchise taxes
attributable to payments made by the Borrower pursuant to this clause (a).
Promptly after the date on which payment of any such Eurodollar Rate Tax is due
pursuant to applicable law, the Borrower will, at the request of the Lender,
furnish to the Lender evidence, in form and substance satisfactory to the
Lender, that the Borrower has met its obligation under this Section 2.06(vii);
and
36
(b) the Borrower will indemnify the Lender against, and reimburse
the Lender on demand for, any Eurodollar Rate Taxes paid by the Lender in
respect of an Equipment Line of Credit/Term Loan made to the Borrower, as
determined by the Lender in its sole discretion. The Lender shall provide the
Borrower with (1) appropriate receipts for any payments or reimbursements made
by the Borrower pursuant to this clause (b) and (2) such information as may
reasonably be required to indicate the basis for such Eurodollar Rate Taxes;
provided, however, that if the Lender subsequently recovers, or receives a net
tax benefit with respect to, any amount of Eurodollar Rate Taxes previously paid
by the Borrower pursuant to this Section 2.06(vii)(b), the Lender shall, within
thirty (30) days after receipt of such refund, and to the extent permitted by
applicable law, pay to the Borrower the amount of any such recovery or permanent
net tax benefit.
(viii) Booking of Eurodollar Rate Loans. The Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of, any of its branch
offices, agencies or the office of an Affiliate of the Lender; provided,
however, the Lender shall not be entitled to receive any greater amount under
Section 2.02(vi) or 2.06(vii) hereof as a result of the transfer of any such
Equipment Line of Credit/Term Loan than the Lender would be entitled to
immediately prior thereto unless (a) such transfer occurred at a time when
circumstances giving rise to the claim for such greater amount did not exist and
were not reasonably foreseeable in the view of the Lender and (b) such claim
would have arisen even if such transfer had not occurred.
(ix) Affiliates Not Obligated. No Eurodollar Affiliate or other Affiliate
of the Lender shall be deemed a party to this Loan Agreement or shall have any
rights, liability or obligation under this Loan Agreement.
Section 2.07 Increased Capital. If either (i) the introduction of or any
change in or in the interpretation of any Law or regulation or (ii) compliance
by the Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) affects or would affect
the amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and the Lender determines that the amount of
such capital is increased by or based upon the existence of the Lender's
commitment to make Equipment Line of Credit/Term Loans and other commitments of
this type or upon the existence of letters of credit (or similar contingent
obligations), then, upon demand by the Lender, the Borrower shall immediately
pay to the Lender, from time to time as specified by the Lender, additional
amounts sufficient to compensate the Lender in the light of such circumstances,
to the extent that the Lender determines such increase in capital to be
allocable to the existence of the Lender's commitment to fund the Equipment Line
of Credit/Term Loan Facility. A certificate as to such amounts submitted to the
Borrower by the Lender, shall, in the absence of manifest error, be conclusive
and binding for all purposes.
Section 2.08. Authorized Officers of the Borrower. The Borrower shall
notify the Lender in writing of the names of the officers and employees
authorized to request Equipment Line of Credit/Term Loans and shall provide the
Lender with a specimen signature of each such Authorized
37
Officer. The Lender shall be entitled to rely conclusively on such officer's or
employee's authority to request such Equipment Line of Credit/Term Loans until
the Lender receives written notice to the contrary. The Lender shall have no
duty to verify the authenticity of the signature appearing on any written Notice
of Borrowing or Notice of Conversion/Continuation and, with respect to an oral
request for such an Equipment Line of Credit/Term Loan, the Lender shall have no
duty to verify the identity of any Person representing himself as one of the
officers or employees authorized to make such request on behalf of the Borrower.
The Lender shall not incur any liability to the Borrower in acting upon any
telephonic notice referred to above which the Lender believes in good faith to
have been given by a duly Authorized Officer or other Person authorized to
borrow on behalf of the Borrower or for otherwise acting in good faith under
this Section 2.08.
Section 2.09 Taxes.
(i) Payments Net of Taxes. All payments made by the Borrower under
this Loan Agreement or any other Loan Document shall be made free and clear of,
and without reduction or withholding for or on account of, any present or future
Taxes.
If any Taxes are required to be withheld or deducted from any
amounts payable to the Lender under this Loan Agreement or any other Loan
Document, the Borrower shall pay the relevant amount of such Taxes and the
amounts so payable to the Lender shall be increased to the extent necessary to
yield to the Lender (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this Loan
Agreement and the other Loan Documents. Whenever any Taxes are paid by the
Borrower with respect to payments made in connection with this Loan Agreement or
any other Loan Document, as promptly as possible thereafter, the Borrower shall
send to the Lender for its own account a certified copy of an original official
receipt received by the Borrower showing payment thereof.
(ii) Indemnity. The Borrower hereby indemnifies the Lender for the
full amount of all Taxes attributable to payments by or on behalf of the
Borrower hereunder or under any of the other Loan Documents (including any
incremental Taxes, interest or penalties that may become payable by the Lender
as a result of any failure to pay such Taxes unless such failure was the result
of the action or inaction of the Lender to notify the Borrower in writing of the
existence of such Taxes). Such indemnification shall be made within thirty (30)
days from the date the Lender makes written demand therefor.
Section 2.10. Security for the Equipment Line of Credit/Term Loan
Facility. As security for the due and punctual payment and performance of the
obligations of the Borrower under the Loan Documents, the Borrower shall
execute, or cause to be executed, and deliver to the Lender the Collateral
Documents.
Section 2.11 Yield Maintenance Calculation on Fixed Rate Loans. The
Borrower hereby agrees to indemnify the Lender against any loss or expense which
Lender may sustain or incur as a consequence of the receipt or recovery by the
Lender of all or any part of the Equipment Line
38
Credit/Term Loan Facility prior to the agreed upon term of any Fixed Rate Loan,
exclusive of the regular periodic payments of principal and interest required
hereunder.
Without limiting the effect of the foregoing, the amount to be paid by the
Borrower to the Lender in order to indemnify the Lender for any loss occasioned
by any voluntary prepayment of the Fixed Rate Loans, and as liquidated damages
therefore, shall be equal to the sum of the discounted present value of the
excess (if any) of each periodic interest payment due thereunder calculated as
follows: (i) the applicable interest rate for such Fixed Rate Loan being prepaid
over (ii) the Fixed Rate which would otherwise be applicable to a Fixed Rate
Loan being prepaid. For purposes of calculating the "discounted present value",
the Borrower and the Lender agree that the applicable United States Treasury
Securities note or xxxx of similar maturity for each periodic interest payment
shall be used.
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ARTICLE III
CONDITIONS TO THE EQUIPMENT LINE OF CREDIT/TERM LOANS
Section 3.01 Conditions Precedent to the Effectiveness of this Loan
Agreement. This Loan Agreement shall become effective on the Closing Date when
the following conditions precedent have been satisfied (unless waived by the
Lender or unless the deadline for delivery has been extended by the Lender):
(i) Certain Documents. The Lender shall have received on or before
the Closing Date all of the following, all of which, except as otherwise
specifically described below, shall be in form and substance satisfactory to the
Lender:
(a) This Loan Agreement together with all Exhibits and
Schedules attached hereto;
(b) A Notice of Borrowing pursuant to Section 2.01 hereof
dated the Closing Date executed by the Borrower;
(c) The Equipment Line of Credit/Term Loan Note;
(d) The Agreement of Guaranty;
(e) The opinion of counsel to the Borrower substantially
in the form of Exhibit "E" attached hereto;
(f) A certificate of the Secretary or Assistant Secretary of
the Borrower, its Subsidiaries and its corporate Affiliates dated the Closing
Date certifying (1) the names and true signatures of the incumbent officers of
the Borrower, its Subsidiaries and its corporate Affiliates authorized to sign
this Loan Agreement and all other Loan Documents executed by the Borrower, its
Subsidiaries and its corporate Affiliates in connection with this Loan
Agreement, (2) the By-Laws of the Borrower, its Subsidiaries and its corporate
Affiliates as in effect on the date of such certification, (3) the resolutions
of the Borrower's, its Subsidiaries' and its corporate Affiliates' respective
Boards of Directors approving and authorizing the execution, delivery and
performance of this Loan Agreement and all other Loan Documents which were
executed by the Borrower, its Subsidiaries and its corporate Affiliates in
connection herewith and (4) that there have been no changes in the Certificate
of Incorporation and By-Laws of the Borrower since the date of the most recent
certification thereof by the Office of the appropriate Secretary of State
delivered to the Lender prior to the Closing Date;
(g) The Certificate of Incorporation of the Borrower, its
Subsidiaries and/or its corporate Affiliates as amended, modified or
supplemented to the Closing Date, shall be certified to be true, correct and
complete by the appropriate Secretaries of State as of dates acceptable to the
Lender;
40
(h) Good Standing Certificate(s) certified by the appropriate
Secretaries of State relating to the Borrower, its Subsidiaries and/or its
corporate Affiliates for each of the states in which the Borrower, its
Subsidiaries and/or its corporate Affiliates are qualified to conduct business;
(i) The annual operating plan for the 1997 Fiscal Year.
(j) Evidence of the insurance required by this Loan Agreement;
(k) A contemporaneous search of UCC, real property, tax,
judgment and litigation dockets and records and other appropriate registers
shall have revealed no filings or recordings in effect with respect to the
Borrower, its Subsidiaries and its Affiliates, except such as are acceptable to
the Lender, and the Lender shall have received a copy of the search reports
received as a result of the search;
(l) The partnership agreements for each of the Partnership
Guarantors shall be certified to be true, correct and complete by the
Partnership Guarantors as of the Closing Date; and
(m) Such additional documentation as the Lender may reasonably
require.
(ii) Fees and Expenses Paid. The Borrower shall have paid to the
Lender, for its own account, all fees and expenses due and payable under this
Loan Agreement and the Commitment Letter on or before the Closing Date.
(iii) Representations and Warranties. All of the representations and
warranties of the Borrower, the Corporate Guarantors and/or the Partnership
Guarantors contained in subsections (i) through (xxxii) of Section 4.01 hereof
and in any other Loan Document (other than for changes permitted or contemplated
by this Loan Agreement and/or the Agreement of Guaranty) shall be true and
correct in all material respects on and as of the Closing Date as though made on
and as of that date (except any such representations and warranties stated to be
given on a specific date other than the Closing Date).
(iv) No Default. No Event of Default or Potential Event of Default
hereunder or under the other Loan Documents shall have occurred and be
continuing on the Closing Date.
(v) No Injunction. No Requirements of Law shall prohibit, and no
order, judgment or decree of any Governmental Authority shall and, except as set
forth on Schedule 4.01(vii) hereto, no litigation shall be pending or threatened
which in the judgment of the Lender would, enjoin, prohibit, restrain, impose or
result in the imposition of any material adverse condition upon the consummation
of the transactions contemplated hereby.
41
(vi) Consents. The Borrower, the Corporate Guarantors and/or the
Partnership Guarantors shall have received all consents and authorizations
required pursuant to any material Contractual Obligation with any other Person
and shall have obtained all consents and authorizations of, and effected all
notices to and filings with, any Governmental Authority, in each case, as may be
necessary to allow the Borrower, the Corporate Guarantors and/or the Partnership
Guarantors lawfully to execute, deliver and perform, in all material respects,
its obligations under this Loan Agreement and the other Loan Documents.
(vii) No Material Adverse Change. No adverse change deemed material
by the Lender, in its sole opinion, shall have occurred since the date of the
most recent annual audited financial report of the Borrower, its Subsidiaries
and its Affiliates delivered to the Lender through the Closing Date, as to the
condition (financial or otherwise), operations, performance or properties of the
Borrower, its Subsidiaries and its Affiliates individually or taken as a whole.
Section 3.02. Conditions Precedent to All Equipment Line of Credit/Term
Loans. The obligation of the Lender to make any Equipment Line of Credit/Term
Loan on any date, is subject to the following conditions precedent as of such
date:
(i) Notice of Borrowing. With respect to a request for an Equipment
Line of Credit/Term Loan, the Lender shall have received in accordance with the
provisions of Section 2.01(ii) hereof, on or before any Borrowing Date, an
original and duly executed Notice of Borrowing.
(ii) Security Agreement and Other Information. The Lender shall have
received from the Borrower, the Corporate Guarantor or the Partnership
Guarantor, as the case may be, in its capacity as the debtor, a fully completed
and executed Security Agreement for Equipment being acquired. In addition, the
Borrower shall furnish the Lender with (a) a copy of the sales contract,
purchase order, conditional sales agreement or other written agreement covering
the acquisition of the Equipment, (b) information as to the then current
location of the Equipment, (c) information as to "deposits" and/or "progress
payments" and (d) any other information reasonably requested by the Lender in
connection with said Equipment.
(iii) UCC-1 Financing Statements. The Lender shall have received
from the Borrower, the Corporate Guarantor or the Partnership Guarantor, as the
case may be, in its capacity as the purchaser of the Equipment being acquired,
fully executed UCC-1 Financing Statements prepared by the Borrower, the
applicable Corporate Guarantor or the applicable Partnership Guarantor, together
with the appropriate filing fees for filing said UCC-1 Financing Statement(s) in
the appropriate filing office(s) and accurately describing the Equipment to be
acquired with the proceeds of any Equipment Line of Credit/Term Loan.
(iv) Additional Matters. As of the Borrowing Date for any Equipment
Line of Credit/Term Loan:
42
(a) Representations and Warranties. All of the representations
and warranties of the Borrower contained in subsections (i) through (xxxii) of
Section 4.01 hereof and in any other Loan Document (other than representations
and warranties which expressly speak only of a different date and other than for
changes permitted or contemplated by this Loan Agreement) shall be true and
correct in all material respects;
(b) No Default. No Event of Default or Potential Event of
Default shall have occurred and be continuing or would result from the making of
the requested Equipment Line of Credit/Term Loan;
(c) No Injunction. No law or regulations shall prohibit, and
no order, judgment or decree of any Governmental Authority shall, and, except as
set forth on Schedule 4.01(vii) hereto, no litigation shall be pending or
threatened which in the reasonable judgment of the Lender would, enjoin,
prohibit, restrain, impose or result in the imposition of any material adverse
condition upon the Lender from making the Equipment Line of Credit/Term Loan
requested to be made on the Borrowing Date;
(d) No Material Adverse Change. No adverse change deemed
material by the Lender, in its reasonable opinion, shall have occurred after the
Closing Date as to the condition (financial or otherwise), operations,
performance or properties of the Borrower, its Subsidiaries and/or its
Affiliates, individually or taken as a whole; and
(e) Location of Collateral. The Notice of Borrowing shall
specify the location of the Collateral, which shall be one of the locations set
forth on Schedule 4.01 (xxviii), unless otherwise specified. In the event the
Collateral is to be located at a location other than a location set forth in
Schedule 4.01(xxviii), the Borrower, the Corporate Guarantor and/or the
Partnership Guarantor shall execute any and all amendments, modifications and/or
supplements to incorporate said new location into this Loan Agreement and the
other Loan Documents.
Each submission by the Borrower to the Lender of a Notice of
Borrowing with respect to an Equipment Line of Credit/Term Loan and the
acceptance by the Borrower of the proceeds of each such Equipment Line of
Credit/Term Loan made hereunder shall constitute a representation and warranty
by the Borrower as of the Borrowing Date in respect of such Equipment Line of
Credit/Term Loan that all the conditions contained in this Section 3.02 have
been satisfied.
43
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties on the Effective Date. In
order to induce the Lender to enter into this Loan Agreement, the Borrower
hereby represents and warrants to the Lender that the following statements are
true, correct and complete on and as of the Closing Date:
(i) Organization; Corporate Powers. The Borrower (a) is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, (b) is duly qualified to conduct business as a foreign
corporation and is in good standing under the Laws of each jurisdiction in which
it owns or leases real property or in which the nature of its business requires
it to be so qualified and (c) has all requisite power and authority to own,
operate and encumber its property and assets and to conduct its business as
presently conducted and as proposed to be conducted in connection with and
following the consummation of the transactions contemplated by the Loan
Documents.
(ii) Authority. (a) The Borrower has the requisite corporate power
and authority (1) to execute, deliver and perform each of the Loan Documents
executed by it, or to be executed by it, and (2) to file the Loan Documents
filed by it, or to be filed by it, with the appropriate Governmental Authority.
(b) The execution, delivery and performance (or filing, as the
case may be) of each of the Loan Documents to which it is a party and the
consummation of the transactions contemplated thereby, have been duly authorized
by the Board of Directors of the Borrower and no further corporate proceedings
on the part of the Borrower are necessary to consummate such transactions.
(c) Each of the Loan Documents to which the Borrower is a
party has been duly executed and delivered (or filed, as the case may be) by the
Borrower and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms.
(iii) Subsidiaries and Ownership of Capital Stock. As of the Closing
Date, the Borrower has eleven (11) Subsidiaries. In addition, the two (2)
Partnership Guarantors are Affiliates of the Borrower. Schedule 4.01(iii)
attached hereto sets forth the number of issued and authorized shares of each
class of capital stock of the Borrower. No capital stock (or any securities,
instruments, warrants, option or purchase rights, conversion or exchange rights,
calls, commitments or claims of any character convertible into or exercisable
for capital stock) of the Borrower is subject to issuance under any security,
instrument, warrant, option or purchase rights, conversion or exchange rights,
call, commitment or claim of any right, title or interest therein or thereto,
except as set forth on Schedule 4.01(iii) attached hereto. The outstanding
capital stock of the Borrower is duly authorized, validly issued, fully paid and
nonassessable and is not Margin Stock.
44
(iv) No Conflict. The execution and delivery by the Borrower, the
Corporate Guarantors and the Partnership Guarantors of each Loan Document and
the performance of each of the transactions contemplated thereby do not and will
not (a) to the best knowledge of the Borrower, constitute a tortious
interference with any Contractual Obligation of the Borrower, the Corporate
Guarantors and the Partnership Guarantors, (b) conflict with or violate the
Borrower's and/or the Corporate Guarantors' respective Certificates of
Incorporation or By-Laws, (c) conflict with or violate the Partnership
Guarantors' partnership agreements, (d) conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under any
Requirement of Law or, subject to clause (a) above, Contractual Obligation of
the Borrower, or require termination of any Contractual Obligation, the
consequences of which conflict or default or termination would have or is
reasonably likely to have a Material Adverse Effect (e) result in or require the
creation or imposition of any Lien whatsoever upon any of the properties or
assets of the Borrower, its Subsidiaries and/or its Affiliates (other than Liens
permitted pursuant to Section 7.02(ii) hereof) or (f) require any approval of
stockholders, other than as otherwise obtained.
(v) Governmental Consents. The execution, delivery and performance
of each Loan Document and the transactions contemplated thereby do not and will
not require any registration with, consent or approval of, or notice to, or
other action to, with or by any Governmental Authority, except filings, consents
or notices which have been, or will in due course, be made, obtained or given.
(vi) Governmental Regulation. The Borrower, its Subsidiaries and its
Affiliates are not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, the
Investment Company Act of 1940 or any other Law such that the Borrower's, its
Subsidiaries' and/or its Affiliates' ability to incur indebtedness is limited or
their ability to consummate the transactions contemplated hereby is materially
impaired.
(vii) Litigation; Adverse Effects. (a) Except as set forth in
Schedule 4.01(vii) attached hereto, there is no action, suit, proceeding,
governmental investigation or arbitration, at law or in equity, or before or by
any Governmental Authority, pending, or to the knowledge of the Borrower,
threatened against the Borrower, its Subsidiaries and/or its Affiliates or
threatened against any Property of the Borrower, its Subsidiaries and its
Affiliates which is reasonably likely to (1) result in any Material Adverse
Effect, (2) materially and adversely affect the ability of the Borrower, its
Subsidiaries and its Affiliates to perform their respective obligations under
the Law, any material Contractual Obligation and/or the Loan Documents or (3)
materially and adversely affect the ability of the Borrower, its Subsidiaries
and/or its Affiliates to perform their collective Obligations or the Lender's
ability to enforce such Obligations.
(b) The Borrower, its Subsidiaries and its Affiliates are not
(1) in violation of any applicable Law which violation has or is reasonably
likely to have a Material Adverse Effect or (2) subject to or in default with
respect to any final judgment, writ, injunction, decree, rule or regulation of
any court or Governmental Authority which has or is reasonably likely to have a
Material Adverse Effect. Except as set forth in Schedule 4.01(vii) attached
hereto, there is no action, suit, proceeding or investigation pending or, to the
best knowledge of the Borrower,
45
threatened against or affecting the Borrower , its Subsidiaries and/or its
Affiliates challenging the validity or the enforceability of any of the Loan
Documents.
(viii) No Material Adverse Change. No material adverse change has
occurred in (a) the condition (financial or otherwise), operations or
performance of the Borrower, its Subsidiaries and its Affiliates taken as a
whole, or the ability of the Borrower to perform its Obligations under the Loan
Documents to which it is a party.
(ix) Payment of Taxes. All tax returns and reports of the Borrower,
its Subsidiaries and its Affiliates required to be filed, have been timely filed
(or appropriate extensions of time for the filing of same have been timely
requested), and all taxes, assessments, fees and other governmental charges
thereupon and upon their respective Properties, assets, income and franchises
which are shown on such returns as being due and payable, have been paid when
due and payable, except such taxes, if any, that are reserved against in
accordance with Generally Accepted Accounting Principles, such taxes as are
being contested in good faith by appropriate proceedings or such taxes the
failure to make payment of which when due and payable would not have, in the
aggregate, a Material Adverse Effect. The Borrower has no knowledge of any
proposed tax assessment against the Borrower, the Corporate Guarantors and/or
the Partnership Guarantors that is reasonably likely to have a Material Adverse
Effect, which is not being actively contested in good faith by the Borrower, the
Corporate Guarantors and/or the Partnership Guarantors.
(x) Material Adverse Agreements. The Borrower, its Subsidiaries
and/or its Affiliates are not a party to or subject to any Contractual
Obligation or other restriction contained in their respective Certificates of
Incorporation, By-laws, partnership agreements or similar governing documents
which has or is reasonably likely to have a Material Adverse Effect.
(xi) Performance. The Borrower, its Subsidiaries and its Affiliates
are not in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation
applicable to them, and no condition exists which, with the giving of notice or
the lapse of time or both, would constitute a default under such Contractual
Obligation, in each case, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have or are not reasonably likely to
have a Material Adverse Effect.
(xii) Securities Activities. The Borrower, its Subsidiaries and its
Affiliates are not engaged principally in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
(xiii) Requirements of Law. The Borrower has no actual knowledge of
any non-compliance with respect to all Requirements of Law applicable to the
Borrower, its Subsidiaries, its Affiliates and their respective businesses, and
the Borrower, its Subsidiaries and its Affiliates are not charged with, or to
the best of the Borrower's knowledge, under investigation with respect to, any
violation of any such Requirements of Law, except where a non-compliance or
violation of all Requirements of Law would not result in a Material Adverse
Effect.
46
(xiv) Patents, Trademarks, Permits, Etc. The Borrower, its
Subsidiaries and its Affiliates own, license or otherwise have the lawful right
to use, or have all permits and other governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how and processes used in
or necessary for the conduct of their respective businesses as currently
conducted which are material to their condition (financial or otherwise),
operations and performance, taken as a whole. The use of such permits and other
governmental approvals, patents, trademarks, trade names, copyrights,
technology, know how and processes by the Borrower, its Subsidiaries and its
Affiliates does not infringe on the rights of any Person, subject to such claims
and infringements and do not, in the aggregate, give rise to any liability on
the part of the Borrower , its Subsidiaries and its Affiliates which has or is
reasonably likely to have a Material Adverse Effect.
(xv) Environmental Matters. Except as disclosed in Schedule 4.01(xv)
attached hereto and except where the failure to comply with the provisions of
clauses (a) through (k) below does not result in a Material Adverse Effect, (a)
the operations of the Borrower, its Subsidiaries and its Affiliates comply in
all substantial respects with all applicable environmental, health and safety
Requirements of Law; (b) the Borrower, its Subsidiaries and its Affiliates have
obtained all environmental, health and safety Permits necessary for their
respective operations, and all such Permits are in good standing, and the
Borrower, its Subsidiaries and its Affiliates are in material compliance with
all terms and conditions of such Permits; (c) the Borrower's, its Subsidiaries'
and its Affiliates' respective present Properties and operations, and to the
best of the Borrower's knowledge, the Borrower's, its Subsidiaries' and its
Affiliates' respective past Properties and operations, are not the subject of
any order from or agreement with any Governmental Authority or private party or
any judicial or administrative proceeding or investigations respecting any
environmental, health or safety Requirements of Law, and are not the subject of
any Remedial Action or other Liabilities and Costs arising from the Release or
threatened Release of an Environmental Concern Material into the Environment;
(d) the Borrower, its Subsidiaries and its Affiliates have not filed any notice
under any Requirement of Law indicating past or present treatment, storage or
disposal of an Environmental Concern Material in violation of any Environmental
Law; (e) the Borrower, its Subsidiaries and its Affiliates have not filed any
notice under any applicable Requirement of Law reporting a Release of an
Environmental Concern Material into the Environment in violation of any
Environmental Law; (f) there is not now, nor has there ever been, on or in the
Property of the Borrower, its Subsidiaries and/or its Affiliates in violation of
any Environmental Law: (1) any generation, treatment, recycling, storage or
disposal of any Environmental Concern Material, (2) any underground storage
tanks or surface impoundments, (3) any asbestos-containing material, or (4) any
polychlorinated biphenyls (PCB's) used in hydraulic oils, electrical
transformers or other equipment; (g) the Borrower, its Subsidiaries and/or its
Affiliates has not received any notice or claim to the effect that it is or may
be liable to any Person as a result of the Release or threatened Release of a
Environmental Concern Material into the Environment, or as a result of exposure
to asbestos or to cotton dust, which may result in any liability; (h) after due
inquiry, no Environmental Lien has attached to any Property of the Borrower, its
Subsidiaries and/or its Affiliates; (i) the Borrower, its Subsidiaries and its
Affiliates have not entered into any negotiations or agreements with any Person
(including, without limitation, the prior owner(s) of any Property owned or
leased by the Borrower, its Subsidiaries and/or its
47
Affiliates) relating to any Remedial Action or environmentally related Claim;
(j) the Borrower, its Subsidiaries and its Affiliates have no material
contingent liability in connection with any Release or threatened Release of any
Environmental Concern Material into the Environment; and (k) none of the
products that the Borrower, its Subsidiaries and/or its Affiliates manufacture,
distribute or sell, or, to the best of the Borrower's knowledge, ever has
manufactured, distributed or sold, contains an asbestos-containing material.
(xvi) ERISA. As of the Closing Date, the Borrower, its Subsidiaries,
its Affiliates and any ERISA Affiliate do not maintain or contribute to any Plan
other than a Plan listed on Schedule 4.01(xvi) attached hereto. Except as
otherwise provided on Schedule 4.01(xvii), each Plan which is intended to be a
qualified plan has been determined by the IRS to be qualified under Section
401(a), and each trust related to any such Plan has been so determined to be
exempt from federal income tax under Section 501(a) of the Code prior to its
amendment by the Tax Reform Act of 1986, and such Plan and trust are being
operated in all material respects in compliance with and will be timely amended
in accordance with the Tax Reform Act of 1986 and the Omnibus Budget
Reconciliation Act of 1987 as interpreted by the regulations promulgated
thereunder. Except as otherwise provided on Schedule 4.01(xvi) attached hereto,
the Borrower, its Subsidiaries, its Affiliates and any ERISA Affiliate do not
maintain or contribute to any employee welfare benefit plan within the meaning
of Section 3(1) of ERISA which provides lifetime benefits to retirees other than
as may be required by the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and interpreted by regulations promulgated thereunder. The
Borrower, its Subsidiaries, its Affiliates and all of their ERISA Affiliates are
in compliance in all material respects with the responsibilities, obligations or
duties imposed on them by ERISA or regulations promulgated thereunder with
respect to all Plans. No material accumulated funding deficiency (as defined in
Section 302(a)(2) of ERISA and Section 412(a) of the Code) exists in respect to
any Benefit Plan. The Borrower, its Subsidiaries, its Affiliates any ERISA
Affiliate and any fiduciary of any Plan (a) have not engaged in a nonexempt
"prohibited transaction" described in Section 406 of ERISA or Section 4975 of
the Code or (b) have not taken any action which would constitute or result in a
Termination Event with respect to any Plan such that actions under (a) or (b) or
both would result in a material obligation to pay money. The Borrower, its
Subsidiaries, its Affiliates and any ERISA Affiliate have not incurred any
material liability to the PBGC which remains outstanding other than the
liability to pay the PBGC insurance premiums for the current year. Schedule B to
the most recent annual report filed with the IRS with respect to each Benefit
Plan (which has been furnished to the Lender) is complete and accurate in all
material respects. Except as provided on Schedule 4.01(xvi) attached hereto,
since the date of each such Schedule B, there has been no material adverse
change in the funding status or financial condition of the Benefit Plan relating
to such Schedule B which would result in a Material Adverse Effect. The
Borrower, its Subsidiaries, its Affiliates and any ERISA Affiliate have not
failed to make a required installment under subsection (m) of Section 412 of the
Code or any other payment required under Section 412 of the Code on or before
the due date for such installment or other payment which would in the aggregate
have a Material Adverse Effect. The Borrower, its Subsidiaries, its Affiliates
and any ERISA Affiliate are not required to provide security to a Plan under
Section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the plan year. The Borrower, its Subsidiaries,
its Affiliates and any ERISA Affiliate are not contributing and have not ever
48
contributed to or been obligated to contribute to any Multiemployer Plan, and no
employees or former employees of the Borrower, its Subsidiaries, its Affiliates
or any ERISA Affiliate have been covered by any Multiemployer Plan in respect of
their employment by the Borrower or any ERISA Affiliate, and, accordingly, the
representations and warranties in this paragraph (xvi) do not apply to
Multiemployer Plans.
(xvii) Solvency. The Borrower, its Subsidiaries and its Affiliates
taken as a whole are Solvent after giving effect to the transactions
contemplated by this Loan Agreement and the other Loan Documents, the payment
and accrual of all costs payable on the Closing Date with respect to any of the
foregoing, and all obligations, if any, under any Plan or the equivalent for
unfunded past service liability and any other unfunded medical (including
post-retirement) and death benefits.
(xviii) Notes Qualification. As of the date on which this
representation and warranty is made, the offering and issuance of the Equipment
Line of Credit/Term Loan Note is exempt from registration under Section 5 of the
Securities Act or has been registered pursuant to a registration statement filed
pursuant to the Securities Act and, if so registered, is qualified under the
Trust Indenture Act of 1939, as amended.
(xix) Assets and Properties. Substantially all of the assets and
properties owned by, leased to or used by the Borrower, its Subsidiaries and its
Affiliates (a) are in good operating condition and repair, (ordinary wear and
tear excepted), (b) are free and clear of any known defects (except such defects
as do not substantially interfere with the continued use thereof in the conduct
of normal operations) and (c) are able to serve the function for which they are
currently being used, in each case where the failure of such asset to meet such
requirements would not have or is not reasonably likely to have a Material
Adverse Effect.
(xx) Joint Venture; Partnership. Except as set forth in Schedule
4.01 (xx) attached hereto, as of the Closing Date the Borrower, its Subsidiaries
and its Affiliates are not engaged in any joint venture or partnership with any
other Person.
(xxi) Insurance. The Borrower, its Subsidiaries and its Affiliates
maintain with financially sound and reputable insurers not related to or
affiliated with the Borrower, its Subsidiaries and its Affiliates, insurance
with respect to its properties and businesses, insured against such liabilities,
casualties and contingencies and in such types and amounts as is customary in
the case of corporations engaged in the same or a similar business or having
similar properties similarly situated. Schedule 4.01(xxi) attached hereto sets
forth a list of all insurance currently maintained by or in respect of the
Borrower, its Subsidiaries and its Affiliates setting forth the identity of the
insurance carrier, the type of coverage, the amount of coverage and the
deductible. There are no claims, actions, suits, proceedings against, arising
under or based upon any of such insurance policies except as set forth in
Schedule 4.01(xxi) attached hereto.
(xxii) Title to Property. The Borrower, its Subsidiaries and its
Affiliates have good and marketable title in fee simple to all respective
Property owned or purported to be owned by
49
them, including, without limitation to all property reflected in the most recent
consolidated balance sheet referred to in Section 4.01(xxiii) hereof or
submitted pursuant to Article V (except as sold or otherwise disposed of in the
ordinary course of business after the date of such balance sheet), in each case
free and clear of all Liens, other than Liens permitted under the terms of
Section 7.02 of this Loan Agreement..
(xxiii) Audited Financial Statements. The Borrower has heretofore
furnished to the Lender consolidated and consolidating balance sheet of the
Borrower, its Subsidiaries and its Affiliates dated as of March 31, 1996, and
the related statements of income, cash flows and changes in stockholders' equity
for the 1995 Fiscal Year then ended, as examined and reported on by its
Independent Certified Public Accountant, who delivered an unqualified opinion in
respect thereof, all as set forth in the Form 10-K. Such financial statements
(including the notes thereto) present fairly the financial condition of the
Borrower, its Subsidiaries and its Affiliates as of the end of such Fiscal Year
and the results of its operations and its cash flows for the Fiscal Year then
ended, all in conformity with Generally Accepted Accounting Principles.
(xxiv) Interim Financial Statements. The Borrower has heretofore
furnished to the Lender interim balance sheets of the Borrower, its Subsidiaries
and its Affiliates as of the end of its first and second Fiscal Quarters of the
Fiscal Year beginning April 1, 1996, together with the related statements of
income and cash flows for the applicable fiscal periods ending on each such
date, all as set forth in the Form 10-Q. Such financial statements present
fairly the financial condition of the Borrower, its Subsidiaries and its
Affiliates as of the end of such Fiscal Quarters and the results of its
operations and its cash flows for the fiscal periods then ended, all in
conformity with Generally Accepted Accounting Principles (except to the extent
set forth in the notes to said financial statements), subject to normal and
recurring year-end audit adjustments.
(xxv) Absence of Undisclosed Liabilities. The Borrower, its
Subsidiaries and its Affiliates have no liability or obligation of any nature
whatever (whether absolute, accrued, contingent or otherwise, whether or not
due), forward or long-term commitments or unrealized or anticipated losses from
unfavorable commitments, except (a) as disclosed in the financial statements
referred to in Sections 4.01(xxiii) and (xxiv) hereof, (b) matters that,
individually or in the aggregate could not have a Material Adverse Effect and
(c) Contractual Obligations incurred in the ordinary course of the Borrower's,
its Subsidiaries' and its Affiliates' business.
(xxvi) Margin Regulations. No part of the proceeds of the Equipment
Line of Credit/Term Loan Facility will be used for the purpose of buying or
carrying any Margin Stock, as such term is used in Regulations G and U of the
Federal Reserve Board, as amended from time to time, or to extend credit to
others for the purpose of buying or carrying any Margin Stock. The Borrower, its
Subsidiaries and its Affiliates are not engaged in the business of extending
credit to others for the purpose of buying or carrying Margin Stock. Neither the
making of any Equipment Line of Credit/Term Loan nor any use of proceeds of any
such Equipment Line of Credit/Term Loan will violate or conflict with the
provisions of Regulation G, T, U or X of the Federal Reserve Board, as amended
from time to time.
50
(xxvii) Labor Matters. Except as set forth on Schedule 4.01(xxvii)
attached hereto, the Borrower, its Subsidiaries and its Affiliates is not a
party to any labor union or collective bargaining agreements. The Borrower, its
Subsidiaries and its Affiliates is in compliance with all applicable laws
respecting employment and employment practices, including, without limitation,
laws, regulations, and judicial and administrative decisions relating to wages,
hours, conditions of work, collective bargaining, health and safety, payment of
social security, payroll, withholding and other taxes, worker's compensation,
insurance requirements, as well as requirements of ERISA and the Consolidated
Omnibus Budget Reconciliation Act, except to the extent that noncompliance would
not have a Material Adverse Effect. There is no (a) unfair labor practice
complaint pending or, to the best knowledge of the Borrower, threatened against
the Borrower before the National Labor Relations Board or any court nor any
pending or, to the best knowledge of the Borrower, threatened sexual harassment,
or wrongful discharge claim, (b) labor strike, dispute, slowdown, or stoppage
pending or, to the best knowledge of the Borrower, threatened against the
Borrower, or (c) representation petition, respecting the employees of the
Borrower filed or threatened to be filed with the National Labor Relations
Board.
(xxviii) Brokerage Commissions. No other Person is entitled to
receive from the Borrower, its Subsidiaries and/or its Affiliates any brokerage
commission, finder's fee or similar fee or payment in connection with the
consummation of the transactions contemplated by this Loan Agreement. No
brokerage or other fee, commission or compensation is to be paid by the Lender
by reason of any act, alleged act or omission of the Borrower, its Subsidiaries
and/or its Affiliates with respect to the transactions contemplated hereby.
(xxix) Books and Records. The Borrower maintains its books and
records relative to its assets, properties and business transactions at the
Borrower's principal corporate offices located at 0 Xxxxxx Xxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000; provided, however, with respect to the books and records of the
Borrower's division commonly known as "DRS Military Systems", its books and
records are maintained at 000 Xxxxx Xxxxx, Xxxxxxx Xxx Xxxxxx 00000.
(xxx) Business Name. The only name by which the Borrower is known or
under which the Borrower is conducting its business is "Diagnostic/Retrieval
Systems, Inc." or "DRS".
(xxxi) Pledge of Collateral. The Borrower, its Subsidiaries and its
Affliates at all times shall have good title to the Collateral pledged by it and
all such Collateral shall be free and clear of all Liens, except as specifically
permitted or contemplated by the terms and provisions of this Loan Agreement and
the Collateral Documents relating to such Collateral.
(xxxii) Location of Collateral. None of the Collateral to be pledged
to the Lender as collateral security pursuant to this Loan Agreement, the
Collateral Documents or any other Loan Documents, shall be located in or on any
site or property other than as set forth on Schedule 4.01(xxxii), unless (a) the
Lender has received prior written notice of the Borrower's, Corporate
Guarantor's and/or Partnership Guarantor's intention to move or relocate
collateral to any other site or property and (b) the Lender shall have received
from the Borrower, the Corporate Guarantor or the Partnership Guarantor, as the
case may be, fully executed UCC-1 Financing Statements
51
prepared by the Borrower, the applicable Corporate Guarantor or the applicable
Partnership Guarantor, together with the appropriate filing fees for filing said
UCC-1 Financing Statement in the appropriate filing office(s).
Section 4.02. Subsequent Funding Representations and Warranties. In order
to induce the Lender to enter into this Loan Agreement and to make the Equipment
Line of Credit/Term Loans, the Borrower hereby represents and warrants to the
Lender that the statements set forth in sections (i) through (xxxii) of Section
4.01 hereof (except (i) to the extent that such statements (a) are made
expressly only as of the Closing Date or (b) other than for changes permitted or
contemplated by this Loan Agreement), are true, correct and complete in all
material respects on and as of the Borrowing Date in respect of each Borrowing
after the Closing Date.
52
ARTICLE V
REPORTING COVENANTS
On and after the Closing Date and so long as the Borrower shall have any
Obligation hereunder, unless the Lender shall give its prior express written
consent to the effect otherwise, then:
Section 5.01. Statement of Accounting. The Borrower shall make and keep
books, records and accounts which, in reasonable detail, accurately and fairly
reflect its transactions and dispositions of its assets and shall maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization, (ii) transactions are recorded as necessary
(a) to permit preparation of financial statements in conformity with Generally
Accepted Accounting Principles and any other accounting principles applicable
thereto and (b) to maintain accountability for assets and (iii) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Section 5.02 Reporting and Information Requirements. The Borrower shall
deliver or cause to be delivered to the Lender the following financial
statements, data, reports and information, at the Borrower's own cost and
expense:
(i) Annual Audited Consolidated and Consolidating Financial
Statements of the Borrower, its Subsidiaries and its Affiliates. As soon as
available, but in any event within ninety (90) days after the close of each
Fiscal Year of the Borrower, "audited" consolidated statements of income,
retained earnings and a statement of cash flows for the Borrower, its
Subsidiaries and its Affiliates for such Fiscal Year and a consolidated balance
sheet for the Borrower, its Subsidiaries and its Affiliates as of the close of
such Fiscal Year, and notes to each, all as set forth in the Form 10-K filed
with the United States Securities and Exchange Commission. Such consolidated
financial statements shall be accompanied by an opinion of the Independent
Certified Public Accountant, which opinion shall be free of exceptions or
qualifications which is of "going concern" or like nature or which relates to a
more limited scope of examination. Such opinion shall in any event contain a
written statement of such accountants substantially to the effect that (a) such
accountants examined the financial statements in accordance with Generally
Accepted Auditing Standards and accordingly made such tests of accounting
records and such other auditing procedures as such accountants considered
necessary under the circumstances and (b) in the opinion of such accountants
such financial statements present fairly the financial position and cash flows
of the Borrower, its Subsidiaries and its Affiliates as of the end of such
Fiscal Year, and the results of the Borrower's, its Subsidiaries' and its
Affiliates' operations and the changes in their financial position for such
Fiscal Year, in conformity with Generally Accepted Accounting Principles applied
on a basis consistent with that of the preceding Fiscal Year. In addition to the
delivery of the annual "audited" consolidated financial statements, the Borrower
shall also deliver to the Lender, at the same time, an "unaudited" management
prepared consolidating statement of income for the Borrower, its Subsidiaries
and its Affiliates for such Fiscal Year and a consolidating balance
53
sheet for the Borrower, its Subsidiaries and its Affiliates as of the close of
such Fiscal Year, all prepared and certified to the Lender by the Borrower's
chief accounting officer in her capacity as an Authorized Officer.
(ii) Annual Operating Plan. As soon as available, but in any event
within ninety (90) days after the close of each Fiscal Year of the Borrower, a
copy of the Borrower's, its Subsidiaries' and its Affiliates' annual operating
plan for the then current Fiscal Year.
(iii) Quarterly Consolidated and Consolidating Financial Statements
of the Borrower, its Subsidiaries and its Affiliates. As soon as available, but
in any event within forty-five (45) days after the close of each of the first
three Fiscal Quarters of each Fiscal Year of the Borrower, "unaudited"
consolidated statements of income and a statement of cash flows for the
Borrower, its Subsidiaries and its Affiliates for such Fiscal Quarter and for
the period from the beginning of such Fiscal Year to the end of such Fiscal
Quarter, and an "unaudited" balance sheet of the Borrower, its Subsidiaries and
its Affiliates as of the close of such Fiscal Quarter, all as set forth in the
Form 10-Q filed with the United States Securities and Exchange Commission. In
addition to the delivery of the quarterly consolidated financial statements, the
Borrower shall also deliver to the Lender, at the same time, an "unaudited"
management prepared consolidating statement of income for the Borrower, its
Subsidiaries and its Affiliates for such Fiscal Quarter and for the period from
the beginning of such Fiscal Year to the end of such Fiscal Quarter and an
"unaudited" consolidating balance sheet of the Borrower, its Subsidiaries and
its Affiliates as of the close of such Fiscal Quarter, all as certified by the
chief accounting officer of the Borrower in her capacity as an Authorized
Officer as presenting fairly the financial position of the Borrower, its
Subsidiaries and its Affiliates as of the end of such dates and fiscal periods
and the results of the Borrower's, its Subsidiaries' and its Affiliates'
operations and the changes in the Borrower's, its Subsidiaries' and its
Affiliates' financial position and cash flows for such fiscal periods, in
conformity with Generally Accepted Accounting Principles applied in a manner
consistent with that of the most recent audited financial statements furnished
to the Lender, subject to normal and recurring year-end audit adjustments.
(iv) Contract Backlog Report. As soon as available, but in any event
within forty-five (45) days after the close of each Fiscal Quarter of each
Fiscal Year of the Borrower, a contract backlog report for the Borrower, its
Subsidiaries and its Affiliates signed by an Authorized Officer of the Borrower.
(v) Compliance Certificates. Together with each delivery of any
financial statement pursuant to this Section 5.02(i) and Section 5.02(iii)
above, an Officer's Certificate of the Borrower substantially in the form of
Exhibit "F" attached hereto, (a) stating that the officer signatory thereto in
his capacity as an Authorized Officer has reviewed the terms of this Loan
Agreement and the principal Loan Documents, and has made, or caused to be made
under his supervision, a review in reasonable detail of the transactions and
condition of the Borrower, its Subsidiaries and its Affiliates, taken as a
whole, during the accounting period covered by such financial statements, and
that such review has not disclosed the existence during or at the end of such
accounting period, and that the signer does not have knowledge of the existence
as at the date
54
of the Officer's Certificate, of any condition or event which constitutes an
Event of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence thereof
and what action the Borrower has taken, is taking and proposes to take with
respect thereto; and (b) demonstrating in reasonable detail compliance during
and at the end of such accounting periods with the covenants contained in
Article VIII of this Loan Agreement.
(vi) Quarterly Accounts Receivable Aging Reports, Etc. As soon as
available, but in any event within forty-five (45) days after the close of each
Fiscal Quarter of each Fiscal Year of the Borrower, a quarterly accounts
receivable aging report in summary form only, setting forth the amounts due and
owing to each of the Borrower, its Subsidiaries and its Affiliates,
respectively, as of the close of the preceding Fiscal Quarter.
(vii) Other Reports and Information. Promptly upon their becoming
available to the Borrower, a copy of (a) all reports, financial statements and
other information distributed generally by the Borrower, its Subsidiaries and/or
its Affiliates to their respective stockholders, partners, bondholders or the
financial community and (b) all accountants' management letters pertaining to,
all other reports submitted by accountants in connection with any audit of, and
all other material reports, if any, from outside accountants with respect to,
the Borrower, its Subsidiaries and/or its Affiliates.
(viii) Further Information. The Borrower shall promptly furnish to
the Lender such business, financial or other information concerning the
Borrower, its Subsidiaries and its Affiliates in such form as the Lender may
reasonably request from time to time.
(ix) Notice of Event of Default. Promptly upon becoming aware of any
Event of Default or Potential Event of Default, the Borrower shall give the
Lender written notice thereof, together with a written statement of the
President or chief accounting officer of the Borrower in her capacity as an
Authorized Officer setting forth the details thereof and any action with respect
thereto taken or contemplated to be taken by the Borrower.
(x) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Borrower shall give the Lender written notice concerning any
material adverse change in the business, assets, operations or financial
condition of the Borrower, its Subsidiaries and/or its Affiliates taken as a
whole, including, without limitation, any loss from casualty or theft in excess
of $500,000.00 whether or not insured, affecting any Property of the Borrower,
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by the Borrower.
(xi) Notice of Material Proceedings. Promptly upon becoming aware
thereof, the Borrower shall give the Lender written notice of the commencement,
existence or threat of any action, suit, proceeding, governmental investigation
or arbitration against or affecting the Borrower, its Subsidiaries and/or its
Affiliates (including without limitation, litigation, arbitration or
administration proceedings) which, if adversely decided, would have a Material
Adverse Effect on
55
the business, assets, operations or financial condition of the Borrower, its
Subsidiaries and/or its Affiliates taken as a whole or on the ability of the
Borrower, its Subsidiaries and/or its Affiliates to perform their obligations
under this Loan Agreement or the other Loan Documents.
(xii) Notice of Pension-Related Events. The Borrower shall give the
Lender the following:
(a) As soon as possible, and in any event within ten (10) days
after the Borrower, its Subsidiaries, its Affiliates or an ERISA Affiliate knows
or has reason to know that a Termination Event has occurred, a written statement
of the chief accounting officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower, its Subsidiaries, its
Affiliates. or an ERISA Affiliate has taken, is taking or proposes to take with
respect thereto, and when known, any action taken or threatened by the IRS, the
DOL or PBGC with respect thereto;
(b) As soon as possible, and in any event within fifteen (15)
days, after the Borrower, its Subsidiaries, its Affiliates or an ERISA Affiliate
knows or has reason to know that a non-exempt prohibited transaction (as defined
in Section 406 of ERISA and Section 4975 of the Code) has occurred, a statement
of the chief accounting officer of the Borrower describing such transaction;
(c) Within ten (10) days after the filing thereof with the
DOL, IRS or PBGC, copies of each annual report, filed with respect to each
Benefit Plan;
(d) Within ten (10) days after the filing thereof with the
IRS, a copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by the Borrower, its Subsidiaries, its
Affiliates, or an ERISA Affiliate with respect to such request;
(e) Within thirty (30) days after a written request from the
Lender, information describing an amendment of any existing Benefit Plan which
will result in a material increase in the benefits under such Benefit Plan or a
notification of any such increase, or the establishment of any new Plan or the
commencement of contributions to any Plan to which the Borrower, its
Subsidiaries, its Affiliates or an ERISA Affiliate was not previously
contributing in a material amount;
(f) Promptly upon, and in any event within fifteen (15)
Business Days after, receipt by the Borrower, its Subsidiaries, its Affiliates
or an ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or to
have a trustee appointed to administer a Benefit Plan, copies of each such
notice;
(g) Promptly upon, and in any event within ten (10) Business
Days after, receipt by the Borrower, its Subsidiaries, its Affiliates or an
ERISA Affiliate of an unfavorable determination letter from the IRS regarding
the qualification of a Plan under Section 401(a) of the Code;
56
(h) Promptly upon, and in any event within fifteen (15)
Business Days after, receipt by the Borrower, its Subsidiaries, its Affiliates
or an ERISA Affiliate of a notice from a Multiemployer Plan regarding the
imposition of withdrawal liability; and
(i) Promptly upon, and in any event within fifteen (15)
Business Days after, the Borrower, its Subsidiaries, its Affiliates or any ERISA
Affiliate fails to make a required installment under subsection (m) of Section
412 of the Code or any other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or payment, a
notification of such failure provided that such installment payment is an amount
which is material.
(xiii) Notice of Other Material Defaults. Promptly upon becoming
aware of any material default by the Borrower, its Subsidiaries and/or its
Affiliates under any Contractual Obligation to which the Borrower, its
Subsidiaries and/or its Affiliates or by which the Borrower, its Subsidiaries
and/or its Affiliates or their respective properties may be bound (the result of
which could reasonably be expected to have a Material Adverse Effect), the
Borrower shall give the Lender written notice thereof, together with a written
statement of the President or chief accounting officer of the Borrower in her
capacity as an Authorized Officer setting forth the details thereof and any
action with respect thereto taken or contemplated to be taken by the Borrower,
its Subsidiaries and/or its Affiliates.
(xiv) Notice of Material Claims. The Borrower shall promptly notify
the Lender of all written claims, complaints, orders, citations or notices,
whether formal or informal, received by the Borrower, its Subsidiaries or its
Affiliates from a Governmental Authority or other Person relating to any Law,
including, without limitation, any Environmental Law or health and safety law,
which could reasonably be expected to have a Material Adverse Effect. Such
notices shall include, among other information, the name of the party who filed
the claim, the potential amount of the claim, and the nature of the claim.
57
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all of the Obligations, unless the Lender shall give
its prior express written consent to the effect otherwise, then:
Section 6.01 Corporate Existence, etc. The Borrower, its Subsidiaries and
its Affiliates shall at all times maintain their respective status as a
corporation and/or partnership, as applicable, duly organized, validly existing
and in good standing under the laws of their respective jurisdiction of
incorporation and/or formation and preserve and keep in full force and effect
their rights and franchises unless the failure to maintain such rights and
franchises would not have a Material Adverse Effect.
Section 6.02 Corporate Powers, etc. The Borrower, its Subsidiaries and its
Affiliates shall qualify and remain qualified to conduct business in each
jurisdiction in which the nature of their respective businesses or the ownership
of their respective properties or both requires it to be so qualified, unless
the failure to maintain so qualified would not have a Material Adverse Effect.
The Borrower, its Subsidiaries and its Affiliates shall transact business in
their own names and trade names and shall invoice all accounts in their own
respective names and trade names.
Section 6.03 Compliance with Laws, etc. The Borrower, its Subsidiaries and
its Affiliates shall comply with all Requirements of Law, and all restrictive
covenants affecting the Borrower, its Subsidiaries and its Affiliates or the
business, properties, assets or operations of the Borrower, its Subsidiaries and
its Affiliates except to the extent non-compliance with this Section 6.03 would
not result in a Material Adverse Effect.
Section 6.04 Payment of Taxes and Claims. The Borrower, its Subsidiaries
and its Affiliates shall pay or cause to be paid (i) all taxes, assessments and
other governmental charges imposed upon them or on any of their respective
properties or assets or in respect of any of their respective franchises,
business, income or property before any penalty or interest accrues thereon and
(ii) all Claims (including, without limitation, claims for labor, services,
materials and supplies) for sums material in the aggregate to the Borrower, its
Subsidiaries and its Affiliates which have become due and payable and which by
Law have or may become a Lien (other than a Customary Permitted Lien) upon the
Borrower's, its Subsidiaries' and/or its Affiliates' Property, prior to time
when any penalty or fine shall be incurred with respect thereto; provided,
however, that no such taxes, assessments and governmental charges referred to in
clause (i) above or Claims referred to in clause (ii) above need be paid if
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if adequate reserves shall have been set aside therefor
in accordance with Generally Accepted Accounting Principles.
Section 6.05. Maintenance of Properties; Insurance. The Borrower, its
Subsidiaries and its Affiliates shall maintain or cause to be maintained in good
repair, working order and condition,
58
excepting ordinary wear and tear, all of their respective Properties material to
their operations and will make or cause to be made all appropriate repairs,
renewals and replacements thereof, consistent with past practice. The Borrower,
its Subsidiaries and its Affiliates shall maintain or cause to be maintained
with financially sound and reputable insurers reasonably acceptable to the
Lender, the insurance policies and programs listed on Schedule 6.05 attached
hereto or substantially similar programs or policies and amounts or other
programs, policies and amounts acceptable to the Lender and containing loss
payable clauses in favor of the Borrower, its Subsidiary or its Affliate, as
applicable, and the Lender as their respective interests may appear. Not later
than thirty (30) days later than the renewal, replacement or material
modification of any policy or program, the Borrower shall deliver or cause to be
delivered to the Lender a certificate of insurance setting forth for each such
policy or program: (i) the amount of such policy, (ii) the risks insured against
by such policy, (iii) the name of the insurer and each insured party under such
policy, and (iv) the policy number of such policy.
Section 6.06. Inspection of Property; Books and Records; Discussions.
Except for information and records which the Borrower may not under applicable
Law disseminate or disclose to the Lender, the Borrower shall permit any
authorized representative(s) designated by the Lender to visit, to conduct a
field audit or to otherwise inspect any of the Borrower's, its Subsidiaries'
and/or its Affiliates' respective Properties, including their financial and
accounting records, and to make copies and take extracts therefrom, and to
discuss the Borrower's, its Subsidiaries' and/or its Affiliates' respective
affairs, finances and accounts with the Lender's officers, employees,
representatives or independent certified public accountants, upon reasonable
notice and during normal business hours. All information furnished to the Lender
shall be received and maintained by the Lender in strict confidence and in
accordance with applicable Law, and the Lender shall not disseminate said
information to any Person except where required by and in accordance with
applicable Law or where contemplated by the Loan Documents. The Lender agrees
that it shall not take any action or omit to take any action which would cause
or result in the violation of Law (including without limitation, any export
control law) by the Borrower, its Subsidiaries and its Affiliates. Each such
visitation and inspection by or on behalf of the Lender after the occurrence and
during the continuance of an Event of Default shall be at the Borrower's own
cost and expense. The Borrower shall, and shall cause its Subsidiaries and its
Affiliates, to keep proper books and records and account in accordance with
sound and accepted accounting practices, consistently applied (and all
Requirements of Law).
Section 6.07. Litigation, Claims, etc. The Borrower shall provide the
Lender with (i) a litigation status report with respect to any suit at law or in
equity asserted against it of the type referred to in Schedule 4.01(vii)
attached hereto, in form and substance satisfactory to the Lender, promptly
after the close of each calendar quarter; (ii) notice of any suit at law or in
equity or claim brought or asserted against the Borrower, its Subsidiaries
and/or its Affiliates promptly after learning thereof with respect to any suit
or claim involving money or property valued in excess of $500,000.00 or any such
suits or claims which in the aggregate involve money or property valued in
excess of $500,000.00; and (iii) prompt notice of any investigation or
proceeding before or by any Governmental Authority, the effect of which is
reasonably likely to have a Material Adverse Effect.
59
Section 6.08 Labor Disputes. The Borrower shall notify the Lender in
writing, promptly, but in any event within two (2) Business Days after learning
thereof, of any material labor dispute to which the Borrower, its Subsidiaries
and/or its Affiliates may become a party, any strikes or walkouts relating to
any of their Properties and the expiration of any labor contract to which they
are a party or by which they are bound.
Section 6.09 Maintenance of Licenses, Permits, etc. The Borrower (i) shall
maintain in full force and effect, and shall cause each of its Subsidiaries and
Affiliates, to maintain in full force and effect, all licenses, permits,
governmental approvals, franchises, authorizations or other rights necessary for
the operation of the Borrower's, its Subsidiaries' and/or its Affiliates'
businesses, except where the failure to obtain any of the foregoing would not
have or is not reasonably likely to have a Material Adverse Effect and (ii)
shall notify the Lender in writing, promptly after learning thereof, of the
suspension, cancellation, revocation or discontinuance of or of any pending or
threatened action or proceeding seeking to suspend, cancel, revoke or
discontinue any such license, permit, governmental approval, franchise
authorization or right, where the result thereof could reasonably be expected to
have a Material Adverse Effect.
Section 6.10 Use of Proceeds. The Borrower shall not use the proceeds of
any Loans hereunder directly or indirectly for any unlawful purpose, in any
manner inconsistent with Section 2.01(iv) hereof, or inconsistent with any other
provision of any Loan Document.
Section 6.11 Continuation of or Change in Business. The Borrower, its
Subsidiaries and its Affiliates shall continue to engage in their collective
businesses substantially as conducted and operated during the present and
preceding Fiscal Year, and the Borrower, its Subsidiaries and its Affiliates
shall not engage in any other material business other than the business of high
technology products and services for military and commercial customers in the
United States and abroad.
Section 6.12 Additional Corporate Guarantors and/or Partnership
Guarantors. The Borrower shall cause any Subsidiaries and/or Affiliates which
are acquired or formed after the Closing Date to execute the Agreement of
Guaranty, which is attached hereto as Exhibit "H".
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ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all of the Obligations, unless the Lender shall give
its prior written consent to the effect otherwise, then:
Section 7.01. Consolidated Debt. The Borrower, its Subsidiaries and its
Affiliates shall not directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to, any Consolidated
Debt, except for:
(i) the Obligations;
(ii) accounts payable owing to and letters of credit in favor of
trade creditors arising from current liabilities for goods and services
purchased in the normal course of the Borrower's, its Subsidiaries' and/or its
Affiliates' respective businesses;
(iii) the permitted existing Consolidated Debt as described on
Schedule 7.01 (iii) attached hereto, and extensions, renewals, replacements and
refinancing thereof, not exceeding the principal amount outstanding on the date
of such extension, renewal, replacement or refinancing, provided that the terms
are no less advantageous to the Borrower, its Subsidiaries and/or its Affiliates
than the predecessor obligation;
(iv) Consolidated Debt in respect of loans, advances or guarantees
permitted by Section 7.03 hereof; and
(v) Consolidated Debt in connection with purchase money Liens
permitted by Section 7.02 (ii) (e) hereof; and
(vi) Consolidated Debt in the form of term loans only, having in the
aggregate an outstanding principal balance of not more than $5,000,000.00, which
Consolidated Debt was created or acquired by the Borrower, its Subsidiaries
and/or its Affiliates in connection with the acquisition (whether a stock
acquisition or asset acquisition) of any Subsidiary, Affiliate or any other
Person.
Section 7.02. Sales of Assets; Liens.
(i) Sales. The Borrower, its Subsidiaries and its Affiliates shall
not sell, assign, transfer, lease, convey, abandon or otherwise dispose of,
voluntarily or involuntarily, any Properties, whether now owned or hereafter
acquired, or any income or profits therefrom, except such sales, assignments,
transfer, leases, conveyances, etc., which do not result in a Material Adverse
Effect.
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(ii) Liens. The Borrower, its Subsidiaries and its Affiliates shall
not directly or indirectly create, incur, assume or permit to exist any Lien on
or with respect to any of their respective Properties except:
(a) Liens securing the Obligations, if any such liens are
granted to the Lender in the future;
(b) any interest or title of a lessor or secured by a lessor's
interest under any lease permitted by this Loan Agreement;
(c) Liens existing on the date of this Loan Agreement securing
any of the existing Consolidated Debt described on Schedule 7.01(iii) attached
hereto (but said Liens may not be increased in principal amount);
(d) Customary Permitted Liens;
(e) purchase money Liens securing Consolidated Debt (including
the interest of a lessee under a Capitalized Lease) in the aggregate principal
amount outstanding at any time not to exceed $1,000,000.00; and
(f) Liens securing Consolidated Debt permitted under Section
7.01 (vi) above.
Section 7.03. Loans, Advances and Investments. The Borrower, its
Subsidiaries and its Affiliates shall not, at any time make or suffer to exist
or remain outstanding, any loan or advance to, or purchase, acquire or own
(beneficially or of record) any stock, bonds, notes or securities of, or any
partnership interest (whether general or limited) in, or any other interest in,
or make any capital contribution to or other investment in, any other Person, or
agree, become or remain liable (contingent or otherwise) to do any of the
foregoing, except:
(i) Loans and investments existing on the date hereof and listed in
Schedule 7.03 attached hereto and extensions, renewals and refinancing thereof
on terms no less favorable than those existing immediately before such
extension, renewal or refinancing);
(ii) Accounts receivable owing to the Borrower, its Subsidiaries and
its Affiliates arising from sales of inventory under usual and customary terms
in the ordinary course of business and loans and advances extended by the
Borrower, its Subsidiaries and/or its Affiliate to subcontractors or suppliers
(excluding subcontractors or suppliers who are Subsidiaries or Affiliates) under
usual and customary terms in the ordinary course of business;
(iii) Loans from the Borrower, a Subsidiary or an Affiliate to
either the Borrower, another Subsidiary or another Affiliate;
62
(iv) Loans or advances not to exceed $250,000.00 in the aggregate at
any time outstanding made to officers, partners or other employees of the
Borrower; its Subsidiaries and/or its Affiliates;
(v) Investments in Cash or Cash Equivalents;
(vi) Investments in all existing and any new Subsidiaries or
Affiliates; and
(vii) Loans not to exceed $2,000,000.00 in the aggregate at any time
outstanding to Persons whom the Borrower, its Subsidiaries and/or its Affiliates
have identified to the Lender in writing are targets of a proposed or
contemplated acquisition by the Borrower, its Subsidiaries and/or its
Affiliates.
Section 7.04. Restricted Junior Payments. The Borrower, its Subsidiaries
and its Affiliates shall not declare or make any Restricted Junior Payment.
Section 7.05. Transactions with Subsidiaries and Affiliates. The Borrower,
its Subsidiaries and its Affiliates shall not directly or indirectly enter into
or permit to exist any transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Subsidiary or Affiliate, on terms that are less favorable than those that
might be obtained in an arm's length transaction at the time from Persons who
are not such a Subsidiary or Affiliate. Nothing contained in this Section 7.05
shall prohibit any transaction expressly permitted by Section 7.03 hereof.
Section 7.06. Restriction on Fundamental Changes. The Borrower, its
Subsidiaries and its Affiliates shall not enter into any merger or
consolidation, or liquidate, windup or dissolve (or suffer any liquidation or
dissolution), or convey, lease, sell, transfer or otherwise dispose of, in one
transaction or series of transactions, all or any substantial part of their
respective businesses, properties or assets, whether now or hereafter acquired
except (i) as permitted by Section 7.02(i) hereof and (ii) mergers of any
Subsidiary or Affiliate into (a) the Borrower or (b) another Subsidiary or
Affiliate.
Section 7.07. ERISA. The Borrower, its Subsidiaries and its Affiliates
shall not, and the Borrower shall not permit any of its ERISA Affiliates to, do
any of the following to the extent that such act or failure to act would result
in the aggregate, after taking into account any other such acts or failure to
act, in an obligation to pay a sum of money that is material to the business of
the Borrower, its Subsidiaries and its Affiliates:
(i) Engage, or permit an ERISA Affiliate to engage, in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code for which a class exemption is not available or a private exemption has not
been obtained from the DOL;
(ii) Permit to exist any accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived;
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(iii) Fail, or permit an ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Plan;
(iv) Terminate, or permit an ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of the Borrower, its
Subsidiaries, its Affiliates or an ERISA Affiliate under Title IV of ERISA; or
(v) Fail, or permit any ERISA Affiliate to fail, to pay any required
installment under section (m) of Section 412 of the Code or any other payment
required under Section 412 of the Code on or before the due date for such
installment or other payment.
Section 7.08 Amendment of Articles of Incorporation or By-Laws. The
Borrower, its Subsidiaries and its Affiliates shall not materially amend, modify
or supplement their respective articles of incorporation, by-laws or partnership
agreements, except upon at least ten (10) days' prior express written notice to
the Lender.
Section 7.09 Margin Regulations. No portion of the proceeds of any credit
extended under this Loan Agreement shall be used in any manner which might cause
the extension of credit or the application of such proceeds to violate
Regulation G, Regulation U or Regulation X or any other regulation of the
Federal Reserve Board or to violate the Securities Exchange Act or the
Securities Act, in each case as in effect on the date or dates of such Borrowing
and such use of proceeds.
Section 7.10 Cancellation of Consolidated Debt; Prepayment. The Borrower,
its Subsidiaries and its Affiliates shall not cancel any Claim or Consolidated
Debt (except for adequate consideration and in the ordinary course of their
respective businesses) and shall not prepay any long-term Consolidated
Subordinated Debt; provided, however, that the foregoing shall not prohibit the
prepayment of the Obligations and the refinance of any Consolidated Subordinated
Debt (i) in amounts and on terms and conditions equal to or better than the
existing terms and conditions and (ii) in an aggregate amount of up to
$1,000,000.00 at any time.
Section 7.11 Environmental Liabilities. The Borrower, its Subsidiaries and
its Affiliates shall not become subject to any Liabilities and Costs which the
Lender deems has or is likely to have a Material Adverse Effect arising out of
or related to (i) the Release or threatened Release at any location of any
Environmental Concern Material into the Environment, or any Remedial Action in
response thereto, or (ii) any violation of any Environmental, health or safety
Requirement of Law; provided, however, that this covenant shall not be violated
so long as (a) the Borrower, its Subsidiaries and its Affiliates shall have
notified the Lender of the assertion of such liability or required expenditures
promptly upon receiving written notice of such assertion, (b) the Borrower shall
have continued to furnish the Lender with such information concerning such
asserted liability or required expenditure as the Lender shall have reasonably
requested, or as otherwise provided herein, (c) the Borrower, its Subsidiaries
and its Affiliates shall be diligently pursuing indemnification for such
liability or required expenditures from any Person which has an obligation to
provide such indemnification, and (d) the Lender is satisfied that the
imposition of such liability
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during the pendency of the Borrower's, its Subsidiaries' or its Affiliates'
pursuit of indemnification will not materially impair the Borrower's, its
Subsidiaries' or its Affiliates' ability to perform its financial obligations
under this Loan Agreement.
Section 7.12 Guaranties. The Borrower, its Subsidiaries and its Affiliates
shall not assume, guaranty, endorse or otherwise be or become directly or
contingently responsible or liable, for obligations or liabilities of any
Person, except for:
(i) guaranties existing on the Closing Date as described on Schedule
7.12(i) attached hereto;
(ii) guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(iii) guaranties of direct obligations of either the Borrower, its
Subsidiaries and/or its Affiliates.
Section 7.13 No Negative Pledges to Other Person. The Borrower, its
Subsidiaries and its Affiliates shall not grant to another Person a covenant
commonly referred to as a "negative pledge" with respect to their respective
assets and properties.
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ARTICLE VIII
FINANCIAL COVENANTS
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all the Obligations, unless the Lender shall give its
prior written consent to the effect otherwise:
Section 8.01 Minimum Consolidated Quick Ratio. The Borrower shall have on
the last day of each Fiscal Quarter and each Fiscal Year (which covenant shall
be tested at the end of the periods covered by the quarterly and annual
consolidated and consolidating financial statements which are to be provided to
the Lender pursuant to Section 5.02 of this Loan Agreement) a Consolidated Quick
Ratio, equal to or greater than 1.0 to 1.0 .
Section 8.02 Maximum Consolidated Senior Liabilities Leverage Ratio. The
Borrower shall have on the last day of each Fiscal Quarter and each Fiscal Year
(which covenant shall be tested at the end of the periods covered by the
quarterly and annual financial statements which are to be provided to the Lender
pursuant to Section 5.02 of this Loan Agreement) a ratio of (i) Consolidated
Senior Liabilities (excluding all contingent liabilities under Generally
Accepted Accounting Principles)-to- (ii) the sum of (a) Consolidated Tangible
Net Worth plus (b) Consolidated Subordinated Debt, equal to or less than 1.0 to
1.0
Section 8.03 Minimum Consolidated Interest Coverage Ratio. The Borrower
shall have on the last day of each Fiscal Quarter and each Fiscal Year (which
covenant shall be tested at the end of the periods covered by the quarterly and
annual consolidated and consolidating financial statements which are to be
provided to the Lender pursuant to Section 5.02 of this Loan Agreement) a
Consolidated Interest Coverage Ratio equal to or greater than 1.75 to 1.0.
Section 8.04 Maximum Consolidated Cash Flow Leverage Ratio. The Borrower
shall have on the last day of each Fiscal Quarter and each Fiscal Year (which
covenant shall be tested at the end of the periods covered by the quarterly and
annual consolidated and consolidating financial statements which are to be
provided to the Lender pursuant to Section 5.02 of this Loan Agreement) a
Consolidated Cash Flow Leverage Ratio equal to or less than 3.5 to 1.0.
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ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.01 Events of Default. The occurrence of any of the following
events with the passing of any applicable notice and cure periods shall
constitute an "Event of Default" under this Loan Agreement (hereinafter referred
to as an "Event of Default"):
(i) Any representation or warranty made by the Borrower, the
Partnership Guarantors, the Corporate Guarantors or any other Person in any of
the Loan Documents furnished in connection with the Equipment Line of
Credit/Term Loan Facility, shall prove to have been false, incorrect or
misleading in any substantial and material respect on the date as of which made;
(ii) The Borrower shall have failed to make any payment of any
installment of interest on any of the Equipment Line of Credit/Term Loan Note
and/or under this Loan Agreement on their respective due dates;
(iii) The Borrower shall have failed to make any payment of
principal on any of the Equipment Line of Credit/Term Loan Note and/or under
this Loan Agreement on their respective due dates;
(iv) The Borrower, the Partnership Guarantors and/or the Corporate
Guarantors shall have failed to duly observe or perform any covenant, condition
or agreement with respect to the payment of moneys on the part of the Borrower,
the Partnership Guarantors and/or the Corporate Guarantors to be observed or
performed pursuant to the terms of the Loan Documents, other than the payment of
principal and interest which shall be governed by Section 9.01(ii) and (iii)
above, and such default shall have remained uncured for a period of thirty (30)
days after written notice thereof to the Borrower, the Partnership Guarantors
and/or the Corporate Guarantors by the Lender;
(v) The Borrower, the Partnership Guarantors and/or the Corporate
Guarantors shall have failed to duly observe or perform any covenant, condition
or agreement on the part of the Borrower, the Partnership Guarantors and/or the
Corporate Guarantors to be observed or performed pursuant to the terms of the
Loan Documents other than the payment of moneys which shall be governed by
Section 9.01 (ii), (iii) and (iv) above, and such default shall have remained
uncured for a period of thirty (30) days after written notice thereof to the
Borrower, the Partnership Guarantors and/or the Corporate Guarantors by the
Lender;
(vi) The Borrower, the Partnership Guarantors and/or the Corporate
Guarantors shall have applied for or consented to the appointment of a
custodian, receiver, trustee or liquidator of all or a substantial part of their
respective assets; a custodian shall have been appointed with or without consent
of the Borrower, the Partnership Guarantors and/or the Corporate Guarantors; the
Borrower, the Partnership Guarantors and/or the Corporate Guarantors shall
generally not be paying their respective Debts as they become due; the Borrower,
the Partnership Guarantors and/or
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the Corporate Guarantors shall have made a general assignment for the benefit of
their respective creditors; the Borrower, the Partnership Guarantors and/or the
Corporate Guarantors, shall have filed a voluntary petition in bankruptcy, or a
petition or an answer seeking reorganization or an arrangement with their
respective creditors, or shall have taken advantage of any insolvency law, or
shall have filed an answer admitting the material allegations of a petition in
bankruptcy, reorganization or insolvency proceeding; or a petition in bankruptcy
shall have been filed against the Borrower, the Partnership Guarantors and/or
the Corporate Guarantors and shall not have been dismissed for a period of sixty
(60) consecutive days, or an Order for Relief shall have been entered against
the Borrower, the Partnership Guarantors and/or the Corporate Guarantors under
the Bankruptcy Code; or an order, judgment or decree shall have been entered
without the application, approval or consent of the Borrower, the Partnership
Guarantors and/or the Corporate Guarantors by any court of competent
jurisdiction appointing a receiver, trustee, custodian or liquidator of the
Borrower, the Partnership Guarantors and/or the Corporate Guarantors of a
substantial part of their respective assets and such order, judgment or decree
shall have continued unstayed and in effect for any period of sixty (60)
consecutive days;
(vii) A writ of execution or attachment or any similar process shall
be issued or levied against all or any part of or interest in any of the
Properties of the Borrower, the Partnership Guarantors and/or the Corporate
Guarantors or any judgment involving monetary damages shall be entered against
the Borrower, the Partnership Guarantors and/or the Corporate Guarantors which
shall become a lien on the Borrower's, the Partnership Guarantors' and/or the
Corporate Guarantors' Properties or any portion thereof or interest therein and
such execution, attachment or similar process is not released, bonded,
satisfied, vacated or stayed within thirty (30) days after its entry or levy,
and said writ of execution, attachment, levy or judgment shall involve monetary
damages aggregating more than $500,000.00;
(viii) Seizure or foreclosure of any of the Properties of the
Borrower, the Partnership Guarantors and/or the Corporate Guarantors pursuant to
process of law or by respect of legal self-help, involving monetary damages
aggregating more than $500,000.00, unless said seizure or foreclosure is stayed
or bonded within thirty (30) days after the occurrence of same;
(ix) The voluntary permanent closing of business or ceasing of
operations of the Borrower, the Partnership Guarantors and/or the Corporate
Guarantors, the result of which would have a Material Adverse Effect;
(x) Default by the Borrower, the Partnership Guarantors and/or the
Corporate Guarantors in any of the terms or conditions of any agreement
(excluding the Loan Documents) covering the payment of borrowed money from the
Lender and/or any other creditor (which with respect to any other creditor shall
be in an amount involving not less than $500,000.00), which default has been
declared by the Lender or said other creditor, and said Debt with respect to any
other creditor has been accelerated;
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(xi) The occurrence of a material adverse change in the business,
financial condition, financial performance, properties or operations of the
Borrower, the Partnership Guarantors and the Corporate Guarantors taken as a
whole; and
(xii) The occurrence of a Reportable Event, the result of which
would have a Material Adverse Effect.
Section 9.02 Rights and Remedies.
(i) Acceleration. Upon the occurrence and during the continuance of
any Event of Default described in the foregoing Section 9.01(vi) hereof, the
Equipment Line of Credit/Term Loan Facility shall automatically and immediately
terminate and the unpaid principal amount of and any and all accrued interest on
the Equipment Line of Credit/Term Loans shall automatically become immediately
due and payable, with all additional interest from time to time accrued thereon
and without presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration), all
of which are hereby expressly waived by the Borrower, and the obligation of the
Lender to make any Equipment Line of Credit/Term Loans shall thereupon
terminate. Upon the occurrence and during the continuance of any other Event of
Default described in Section 9.01 above, the Lender may by written notice to the
Borrower, (a) declare that the Equipment Line of Credit/Term Loan Facility is
terminated, whereupon the obligation of the Lender to make any Equipment Line of
Credit/Term Loans shall immediately terminate and/or (b) declare the unpaid
principal amount of and any and all accrued and unpaid interest on the Equipment
Line of Credit/Term Loans to be, and the same shall thereupon be, immediately
due and payable with all additional interest from time to time accrued thereon
and without presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration), all
of which are hereby expressly waived by the Borrower.
(ii) Rights Under Loan Documents and the Collateral Documents. Upon
the occurrence and during the continuance of any Event of Default, the Lender
may take any lawful action against the Borrower to collect the payments then due
and thereafter to become due under the Loan Documents, including any rights in
law or equity and any rights provided for in the Collateral Documents.
(iii) Setoff. Upon the occurrence and during the continuance of any
Event of Default, without prior notice or other action (any such notice being
expressly waived by the Borrower; however the Lender shall give the Borrower
notice within three (3) days after the Lender has set off any amounts) the
Lender may setoff any money owed by the Lender in any capacity to the Borrower
or any Property of the Borrower in the possession of the Lender against any of
the monetary obligations of the Borrower to the Lender under the Loan Documents,
and the Lender shall be deemed to have exercised such right of setoff and to
have made a charge against any such money or property immediately, even though
the actual book entries may be made at some time subsequent thereto.
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Section 9.03 Application of Proceeds. (i) All payments and proceeds
received under Section 9.02 of this Loan Agreement shall be applied in the
following order of priority:
(a) First, to the payment of all reasonable fees, costs and
expenses (including reasonable attorney's fees and expenses) incurred by the
Lender and/or its agents or representatives in connection with the realization
of such payments or proceeds;
(b) Next, to the payment in full of all unpaid principal,
accrued interest and other sums, if any, due and owing under the Equipment Line
of Credit/Term Facility;
(c) Next, the balance, if any, or such payments, proceeds, or
amounts to the Borrower, or, if otherwise determined by a court of competent
jurisdiction, to whomever may be entitled thereto.
(ii) If the amount of the proceeds received in Section 9.03(i) above
shall be insufficient to satisfy in full the amounts referred to in clauses (a)
and (b) above, then the Borrower shall remain and be liable for any such
deficiency.
Section 9.04 No Notices. In order to entitle the Lender to exercise any
remedy available to it under Section 9.02 of this Loan Agreement, it shall not
be necessary for the Lender to give any notice, other than such notice as may be
required expressly in this Loan Agreement or by applicable law.
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses. Upon the
occurrence and during the continuance of an Event of Default, as a result of
which the Lender shall require and employ attorneys or incur other expenses for
the collection of payments due or to become due or the enforcement or
performance or observance of any obligation or agreement on the part of the
Borrower contained herein, the Borrower shall, on demand, pay to the Lender, the
reasonable fees of such attorneys and such other expenses so incurred by them.
Section 9.06 No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Loan Agreement should be breached by any party and
thereafter waived by the other parties, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 9.07 Failure to Exercise Rights. Nothing herein contained shall
impose upon the Lender any obligation to enforce any terms, covenants or
conditions contained in this Loan Agreement and the other Loan Documents.
Failure of the Lender, in any one or more instances, to insist upon strict
performance by the Borrower of any terms, covenants or conditions of this Loan
Agreement and the other Loan Documents, shall not be considered or taken as a
waiver or relinquishment by the Lender of its right to insist upon and to
enforce in the future, by injunction or other appropriate legal or equitable
remedy, strict compliance by the Borrower with all the terms, covenants and
conditions of this Loan Agreement and the other Loan Documents. The consent of
70
the Lender to any act or omission by the Borrower shall not be construed to be a
consent to any other or subsequent act or omission or to waive the requirement
for the Lender's consent to be obtained in any future or other instance.
Section 9.08 Waiver Of Jury Trial. THE BORROWER AND THE LENDER HEREBY
WAIVE ANY AND ALL RIGHTS THAT THEY MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF
THE UNITED STATES OF AMERICA OR ANY STATE, TO A TRIAL BY JURY OF ANY AND ALL
ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING BETWEEN
THE BORROWER, THE LENDER OR THEIR SUCCESSORS AND ASSIGNS, OUT OF OR IN ANY WAY
CONNECTED WITH THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. IT IS INTENDED
THAT SAID WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, AND/OR
COUNTERCLAIMS IN ANY ACTION OR PROCEEDING. THE BORROWER AND THE LENDER RECOGNIZE
THAT ANY DISPUTE ARISING IN CONNECTION WITH THE EQUIPMENT LINE OF CREDIT/TERM
LOAN FACILITY IS LIKELY TO BE COMPLEX AND CONSEQUENTLY THEY WISH TO STREAMLINE
AND MINIMIZE THE COST OF THE DISPUTE RESOLUTION PROCESS BY AGREEING TO WAIVE
THEIR RIGHTS TO A JURY TRIAL.
Section 9.09 Remedies Cumulative. No remedy herein conferred upon or
reserved to the Lender is intended to be exclusive of any other remedy or
remedies; but each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder, or now or hereafter existing at
law or in equity or by statute. No express or implied waiver by the Lender of
any Event of Default hereunder shall in any way be, or construed to be, a waiver
of any future or subsequent Event of Default. No delay or omission to exercise
any right or power accruing upon any Event of Default continuing as aforesaid,
shall impair any such right or power or shall be construed to be a waiver of any
such Event of Default, or acquiescence therein; and every such right and power
may be exercised from time to time and as often as may be deemed expedient.
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ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses.
(i) Generally. The Borrower agrees upon demand to pay, or reimburse
the Lender for, all the Lender's reasonable external legal costs and expenses
(but not internal legal costs and expenses) and all internal and external audit,
appraisal, valuation and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of Xxxx Xxxxx Xxxx &
XxXxxx and any other external attorneys retained by the Lender, auditors,
accountants, appraisers, insurance and environmental advisers, and other
consultants) incurred by the Lender in connection with (a) any amendment waiver
or consents required or requested by the Borrower hereunder and (b) the
protection, collection or enforcement of any of the Obligations.
(ii) After Default. The Borrower further agrees to pay, or reimburse
the Lender for all reasonable out-of-pocket costs and expenses, including,
without limitation, reasonable external attorneys' fees and disbursements, and
costs of settlement incurred by the Lender after the occurrence and during the
continuance of an Event of Default (a) in enforcing any Obligation or exercising
or enforcing any other right or remedy available by reason of such Event of
Default, (b) in connection with any refinancing or restructuring of the credit
arrangements provided under this Loan Agreement in the nature of a "work-out" or
in any insolvency or bankruptcy proceeding, (c) in commencing, defending or
intervening in any litigation or in filing a petition, complaint, answer, motion
or other pleadings in any legal proceeding relating to the Borrower and related
to or arising out of the transactions contemplated thereby or by any of the Loan
Documents and (d) in taking any other action in or with respect to any suit or
proceeding (whether in bankruptcy or otherwise).
Section 10.02 Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless the Indemnified Parties from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for the Indemnified Parties in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Parties
shall be designated a party thereto), imposed on, incurred by or asserted
against the Indemnified Parties (whether direct, indirect or consequential and
whether based on any Federal or state Laws or other statutory regulations,
including, without limitation, securities and commercial laws and regulations,
under common law or at equitable cause, or on contract or otherwise, including
any liability and costs under Federal, state or local environmental, health or
safety laws, regulations, or common law principles, arising from or in
connection with the past, present or future environmental condition of the
Property, the presence of asbestos-containing materials at the Property, or the
Release or threatened Release of any Environmental Concern Material into the
Environment from the Property) in any manner relating to the conduct of the
business of the Borrower, its Subsidiaries and/or its Affiliates or the use or
intended use of the proceeds of the Loans hereunder (collectively, the
"Indemnified Matters");
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provided, however, that the Borrower shall not have any obligation to an
Indemnified Party hereunder with respect to (a) matters for which such
Indemnified Party has been compensated pursuant to or for which an exemption is
provided in Section 2.06 and Section 2.07 hereof or any other provision of this
Loan Agreement and (b) Indemnified Matters caused by or resulting from the
willful misconduct or gross negligence of that Indemnified Party, as determined
by a court of competent jurisdiction. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnified Parties.
Section 10.03 Amendments and Waivers. No amendment or modification of any
provision of this Loan Agreement shall be effective without the written
agreement of the Lender and the Borrower, and no termination or waiver of any
provision of this Loan Agreement, or consent to any departure by the Borrower
therefrom, shall in any event be effective without the written concurrence of
the Lender, which the Lender shall have the right to grant or withhold at its
sole discretion.
Section 10.04 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
expressly permitted by any of such covenants, the fact that it would be
implicitly permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of an Event of Default or
Potential Event of Default if such action is taken or condition exists.
Section 10.05 Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or sent by
over-night courier service or United States mail and shall be deemed to have
been given when delivered in person or by over-night courier service, upon
receipt of a telecopy or telex during normal business hours or four (4) Business
Days after deposit in the United States mail (registered or certified, with
postage prepaid and properly addressed). Notices to the Lender pursuant to
Article II hereof shall not be effective until received by the Lender. For the
purposes hereof, the addresses of the parties hereto (until notice of a change
thereof is delivered as provided in this Section 10.05) shall be as set forth
below each party's name on the signature pages hereof, or, as to each party, at
such other address as may be designated by such party in a written notice to the
other party.
Section 10.06 Survival of Warranties and Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement and the other Loan Documents.
Section 10.07 Marshalling; Recourse to Security; Payments Set Aside. The
Lender shall not be under any obligation to xxxxxxxx any assets in favor of the
Borrower or any other person or against or in payment of any or all of the
obligations. Recourse to security shall not be required at any time. To the
extent that the Borrower makes a payment or payments to the Lender, or the
73
Lender enforces its rights and remedies under the Loan Documents or exercises
its right of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
right and remedies therefor (to the extent permissible and practicable under the
law and the circumstances), shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
Section 10.08 Severability. In case any provision in or obligation under
this Loan Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 10.09 Governing Law. This Loan Agreement shall be governed by, and
shall be construed and enforced in accordance with, the laws of the Commonwealth
of Pennsylvania.
Section 10.10 Successors and Assigns. This Loan Agreement and the other
Loan Documents shall be binding upon the parties hereto and their respective
successors and assigns. The Borrower's duties and Obligations hereunder, may not
be assigned without the prior express written consent of the Lender. The Lender
shall not sell, transfer or otherwise assign its interest in the Equipment Line
of Credit/Term Loan Facility to any other Person without the prior express
written consent of the Borrower, except (i) where required by applicable banking
Law or a change in banking policy at the Lender resulting in the Lender no
longer making loans to customers similar to the Borrower and (ii) where the
Lender has been acquired or merged into or with another institutional lender.
Section 10.11 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS LOAN AGREEMENT AND
THE EQUIPMENT LINE OF CREDIT/TERM LOAN NOTE MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF PENNSYLVANIA, AND
BY EXECUTION AND DELIVERY OF THIS LOAN AGREEMENT, THE BORROWER ACCEPTS, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS LOAN
AGREEMENT AND THE EQUIPMENT LINE OF CREDIT/TERM LOAN NOTE FROM WHICH NO APPEAL
HAS BEEN TAKEN OR IS AVAILABLE. THE BORROWER DESIGNATES AND APPOINTS XXXXXXX
XXXXXXX, A PROFESSIONAL CORPORATION AS ITS AGENT TO RECEIVE ON ITS BEHALF
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
74
BEING HEREBY ACKNOWLEDGED BY SUCH PERSON TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS
NOTICE ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF, SUCH SERVICE TO BECOME
EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. THE BORROWER AND THE LENDER
IRREVOCABLY WAIVE ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION
SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
Section 10.12 Counterparts; Effectiveness; Inconsistencies. This Loan
Agreement and any amendments, waivers, consents, or supplements may be executed
in counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Loan Agreement and each of the other Loan Documents shall
be construed to the extent reasonable to be consistent one with the other, but
to the extent that the terms and conditions of this Loan Agreement are actually
inconsistent with the terms and conditions of any other Loan Documents, this
Loan Agreement shall govern.
Section 10.13 Entire Agreement. This Loan Agreement, taken together with
all of the other Loan Documents and all certificates and other documents
delivered by the Borrower or any other Person to the Lender, embody the entire
agreement and supersede all prior agreements, written and oral, relating to the
subject matter hereof.
75
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed and delivered by their proper and duly authorized corporate officers
as appropriate, and the Borrower has caused its corporate seal to be hereunto
affixed and attested pursuant to the resolution of its Board of Directors, all
on the day and year first hereinabove written.
[SEAL] DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
ATTEST: a Delaware corporation, as the Borrower
/s/ XXXXX X. XXXXX By: /s/ XXXX X. XXXXXX
----------------------------- ----------------------------------
Xxxxx X. Xxxxx Xxxx X. Xxxxxx
Secretary President & CEO
Notice Address:
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxx
Controller, Treasurer and Secretary
With a copy to:
Xxxxxxx Xxxxxxx, A Professional Corporation
0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxxx Xxxx, Esq.
MELLON BANK, N.A.,
as the Lender
By: /s/ G. XXXXXXX XXXXXXXX
----------------------------------
G. Xxxxxxx Xxxxxxxx
Senior Vice President
76
Notice Address:
Xxxxxxx Xxxxx Xxx - Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxx
Vice President
With a copy to:
Xxxx Xxxxx Xxxx & XxXxxx
Princeton Xxxxxxxxx Village
000 Xxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn: Xxxxxx X. Xxxx, Xx., Esq.
77
EXHIBIT "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
List of Eurodollar Affiliates
None
78
EXHIBIT "B"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Form of Notice of Borrowing
To: Mellon Bank, N.A. (hereinafter referred to as the "Lender") in its capacity
as lender under that certain Equipment Line of Credit/Term Loan Agreement dated
as of December 6, 1996 (hereinafter referred to as the "Loan Agreement") entered
into by and between Diagnostic/Retrieval Systems, Inc. (hereinafter referred to
as the "Borrower") and the Lender. Terms defined in the Loan Agreement and not
otherwise expressly defined herein are used herein as therein defined.
Pursuant to Section 2.01(ii) of the Loan Agreement, this Notice of
Borrowing in respect of an Equipment Line of Credit/Term Loan (hereinafter
referred to as the "Notice") represents the request of the Borrower to borrow an
Equipment Line of Credit/Term Loan on __________, 19__ (hereinafter referred to
as the "Borrowing Date") from the Lender in aggregate principal amount of
$________ as a [Prime Rate Loan] [Eurodollar Rate Loan]. In the event the
Borrowing is a Eurodollar Rate Loan then the Borrower requests the following
Eurodollar Interest Period: [14] [30] [60] or [90] days. Proceeds of such
Equipment Line of Credit/Term Loan are to be deposited on the Borrowing Date in
the account maintained by the Borrower with the Lender, Account No. ______, in
immediately available funds [and immediately thereafter such proceeds shall be
wire-transferred to an account maintained with _____, Account Number: ______].
The Equipment acquired with the proceeds of the Equipment Line of
Credit/Term Loan will be located at __________________________. The Borrower
hereby represents and warrants that said location is one of the locations set
forth on Schedule 4.01 (xxviii) or in the event that said location is not set
forth on Schedule 4.01 (xxviii), Schedule 4.01 (xxviii) shall be deemed amended
and modified hereby to include said location.
The Borrower hereby certifies that (i) the representations and warranties
of the Borrower set forth in Sections 4.01 and Section 4.02 of the Loan
Agreement and in any other Loan Document (except (a) representations and
warranties which expressly speak only as of a different date, and (b)
representations and warranties that are subject to change as permitted or
contemplated by the Loan Documents) are true and correct in all material
respects as of the Borrowing Date; (ii) no Event of Default or Potential Event
of Default has occurred and is continuing under the Loan Agreement or any other
Loan Document or will result from this proposed Borrowing; and (iii) the
Borrower shall have performed in all material respects all agreements contained
in and satisfied all conditions under Section 3.02 of the Loan Agreement and the
other Loan Documents required to be performed by it on or prior to the Borrowing
Date.
79
The Borrower hereby represents and warrants and agrees that the proceeds
of the Equipment Line of Credit/Term Loan requested by this Notice shall be used
for the sole purpose of financing the purchase price and certain costs and
expenses incurred by the Borrower in connection with the acquisition of certain
Equipment used in the business of designing and manufacturing high technology
products.
Dated: __________, 19__
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
a Delaware corporation
By:__________________________________
Name:
Title:
80
EXHIBIT "C"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Form of Notice of Conversion/Continuation
To: Mellon Bank, N.A. (hereinafter referred to as the "Lender") in its capacity
as lender under that certain Equipment Line of Credit/Term Loan Agreement dated
as of December 6, 1996 (hereinafter referred to as the "Loan Agreement") entered
into by and between Diagnostic/Retrieval Systems, Inc. (hereinafter referred to
as the "Borrower") and the Lender. Terms defined in the Loan Agreement and not
otherwise defined herein are used herein as therein
defined.
Pursuant to Section 2.02(iii) of the Loan Agreement, this Notice of
Conversion/Continuation (hereinafter referred to as the "Notice") represents the
Borrower's election to [insert one of the following"]:
* convert an aggregate principal amount of $____________ of Equipment Line of
Credit/Term Loans which are Prime Rate Loans to Eurodollar Rate Loans on
__________, 19__. [The initial Eurodollar Interest Period for such Eurodollar
Rate Loans is required to be a [fourteen] [thirty ] [sixty] or [ninety] day
periods.]
** convert an aggregate principal amount of $_______ of Equipment Line of
Credit/Term Loans which are Prime Rate Loans to Fixed Rate Loans on ______,
19___.
*** convert an aggregate principal amount of $ of Equipment Line of Credit/Term
Loans which are Eurodollar Rate Loans with a current Eurodollar Interest Period
ending on _______, 19__, to Prime Rate Loans [on ________, 19__[.]***
-----------
* Use if converting Prime Rate Loans to Eurodollar Rate Loans.
** Use if converting Prime Rate Loans to Fixed Rate Loans.
*** Use if converting Eurodollar Rate Loans to Prime Rate Loans.
81
**** convert an aggregate principal amount of $________ of Equipment Line of
Credit/Term Loans which are Eurodollar Rate Loans with a current Eurodollar
Interest Period ending on ____, 19__, to Fixed Rate Loans on ______, 19__.
***** convert an aggregate principal amount of $______ of Equipment Line of
Credit/Term Loans which are Fixed Rate Loans to Prime Rate Loans on ______,
19__.
****** convert an aggregate principal amount of $______ of Equipment Line of
Credit/Term Loans which are Fixed Rate Loans to Eurodollar Rate Loans on
_______, 19__. The initial Eurodollar Interest Period for such Eurodollar Rate
Loans is required to be a [fourteen] [thirty] [sixty] or [ninety] day periods.]
******* and continue as Eurodollar Rate Loans an aggregate principal amount of
$______ of Eurodollar Rate Loans with a current Eurodollar Interest Period
ending ______, 19__. The succeeding Eurodollar Interest Period is requested to
be a [fourteen], [thirty], [sixty] or [ninety] day periods.
The Borrower hereby certifies that no Event of Default or Potential Event of
Default has occurred and is continuing under the Loan Agreement.
Dated: ___________________, 19
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
a Delaware corporation
By:________________________________
Name:
Title:
-----------
**** Use if converting Eurodollar Rate Loans to Fixed Rate Loans.
***** Use if converting Fixed Rate Loans to Prime Rate Loans.
****** Use if converting Fixed Rate Loans to Eurodollar Rate Loans.
******* Use if continuing as Eurodollar Rate Loans.
82
EXHIBIT "D"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT BY AND
BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND MELLON BANK, N.A.,
DATED AS OF DECEMBER 6, 1996
Equipment Line of Credit/Term Loan Note
$5,000,000.00 Philadelphia, Pennsylvania
As of December 6, 1996
FOR VALUE RECEIVED, the undersigned, DIAGNOSTIC/RETRIEVAL SYSTEMS,
INC., a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware (hereinafter referred to as the "Borrower"),
promises to pay to the order of MELLON BANK, N.A. (hereinafter referred to as
the "Lender") on or before the Equipment Line of Credit/Term Loan Maturity Date,
the lesser of (i) the principal sum of FIVE MILLION AND 00/100 ($5,000,000.00)
DOLLARS or (ii) the aggregate unpaid principal amount of all Equipment Line of
Credit/Term Loans made by the Lender to the Borrower pursuant to the Loan
Agreement. The Borrower further promises to pay to the order of the Lender
interest on the unpaid principal amount of the Equipment Line of Credit/Term
Loans from the date outstanding at the interest rate per annum determined
pursuant to Section 2.02 of, or as otherwise provided in, the Loan Agreement
payable on the dates set forth in Section 2.02(ii) of, or as otherwise provided
in, the Loan Agreement.
All payments of principal and interest hereunder shall be due and
payable to the Lender not later than 2:00 p.m. (Philadelphia, Pennsylvania
time), on the day when due, all as more fully set forth in Section 2.05 of the
Loan Agreement. Such payments shall be made in U.S. Dollars in immediately
available funds without setoff, counterclaim (other than a compulsory
counterclaim) or other deduction of any nature.
Except as otherwise provided in the Loan Agreement, if any payment of
principal or interest hereunder shall become due on a day which is not a
Business Day, such payment shall be made on the next following Business Day and
such extension of time shall be included in computing interest in connection
with such payment.
This Equipment Line of Credit/Term Loan Note is the "Equipment Line of
Credit/Term Loan Note" referred to in, and is entitled to the benefits of the
Equipment Line of Credit/Term Loan Agreement dated as of December 6, 1996,
executed by and between the Borrower and the Lender (as the same may be amended,
modified or supplemented from time to time, hereinafter referred to as the "Loan
Agreement"), which among other things provides for the acceleration of the
maturity hereof upon the occurrence of certain events and for prepayments in
certain circumstances and
83
upon certain terms and conditions. Terms defined in the Loan Agreement shall
have the same meanings herein.
The holder of this Equipment Line of Credit/Term Loan Note is
authorized to endorse on the Schedule 1 attached hereto and made a part hereof
or on a continuation thereof which shall be attached hereto and made a part
hereof (hereinafter referred to as the "Grid") the date and amount of each
Equipment Line of Credit/Term Loan made pursuant to Section 2.01 of the Loan
Agreement, and the date and amount of each payment or prepayment of principal
thereof, which endorsement shall constitute prima facie evidence of the accuracy
of the information endorsed; provided, however, that the failure to make any
such endorsement shall not affect the obligations of the Borrower in respect of
such Equipment Line of Credit/Term Loan.
The Borrower hereby expressly waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Equipment Line of
Credit/Term Note and the Loan Agreement.
This Equipment Line of Credit/Term Note shall be governed by, construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Borrower has caused this Equipment Line of
Credit/Term Loan Note to be executed and delivered by its proper and duly
Authorized Officer and has caused its corporate seal to be hereunto affixed and
attested, pursuant to the resolution of its Board of Directors, all on the day
and year first hereinabove written.
[SEAL] DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
ATTEST: a Delaware corporation
By: /s/ XXXX X. XXXXXX
--------------------------------
Name: /s/ Xxxxx X. Xxxxx Name: Xxxx X. Xxxxxx
Secretary Title: President and CEO
84
SCHEDULE 1 TO EQUIPMENT LINE OF CREDIT/TERM LOAN NOTE
LOANS AND PAYMENTS OF EQUIPMENT LINE OF CREDIT/TERM LOANS
------------------------------------------------------------------------------
UNPAID
AMOUNT OF PRINCIPAL
AMOUNT OF PRINCIPAL BALANCE OF NOTATION
DATE LOANS REPAID LOANS MADE BY
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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85
EXHIBIT "E"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Form of Opinion Letter
See attached
86
EXHIBIT "F"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Form of Officer's Certificate
This Officer's Certificate of Diagnostic/Retrieval Systems, Inc. (hereinafter
referred to as the "Certificate") is delivered to you pursuant to Section
5.02(vii) of the Equipment Line of Credit/Term Loan Agreement dated as of
December 6, 1996 (as may be amended from time to time (hereinafter referred to
as the "Loan Agreement"), by and between Diagnostic/Retrieval Systems, Inc.
(hereinafter referred to as the "Borrower"), and Mellon Bank, N.A. (hereinafter
referred to as the "Lender"). Terms defined in the Loan Agreement and not
otherwise defined herein are used herein as therein defined.
1. I am the duly elected, qualified and acting [Chief Financial Officer],
[President] or [Chief Accounting Officer] of the Borrower.
2. I have reviewed and am familiar with the contents of this Certificate. I
am providing this certificate solely in my capacity as an officer of the
Borrower. The matters set forth herein are true to the best of my knowledge,
after diligent inquiry, but I express no personal opinion as to any conclusions
of law or other legal matters.
3. I have reviewed the terms of the Loan Agreement and the principal Loan
Documents and have made, or caused to be made, under our supervision, a review
in reasonable detail of the transactions and condition of the Borrower, its
Subsidiaries and its Affiliates during the accounting period covered by the
attached financial statements and computations attached hereto as Exhibit "F-1"
("Financial Statements"). Such review did not disclose the existence during or
at the end of the accounting period covered by the attached Financial
Statements, and I have no knowledge of the existence as of the date of this
Certificate, of any condition or event which constitutes an Event of Default or
Potential Event of Default, except as set forth below:*
4. I hereby certify in my capacity as [President or Chief Financial Officer
or Chief Accounting Officer] and in my capacity as an Authorized Officer that
the Financial Statements attached hereto present fairly the financial position
of the Borrower, its Subsidiaries and its Affiliates as of the end of such
fiscal period and the results of its operations and the changes in its financial
position and cash flows for such fiscal period, all in conformity with Generally
Accepted Accounting Principles applied in a manner consistent with that of the
most recent audited financial statements furnished to the Lender, subject to
normal and recurring year-end audit adjustments.
IN WITNESS WHEREOF, I execute this Certificate this ___ day of _______, 19__.
87
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
a Delaware corporation
By:________________________________
Name:
Title:
----------
* Describe here (or in a separate attachment to this Certificate) the
exceptions, if any, to Paragraph 3 by listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
the Borrower has taken, is taking and proposes to take with respect to each such
condition or event.
88
EXHIBIT "F-1"
FORM OF COMPLIANCE CERTIFICATE
----------------------
This Officer's Certificate of Diagnostic/Retrieval Systems, Inc.
(hereinafter referred to as the "Certificate") is delivered to you pursuant to
Section 5.02(iv) of the Equipment Line of Credit/Term Loan Agreement dated as of
December 6, 1996 (as may be amended from time to time, hereinafter referred to
as the "Loan Agreement") by and between Diagnostic/Retrieval Systems, Inc.
(hereinafter referred to as the "Borrower"), and Mellon Bank, N.A., (hereinafter
referred to as the "Lender"). Terms defined in the Loan Agreement and not
otherwise defined herein are used herein as therein defined. The Borrower hereby
delivers to the Lender, together with the financial statements being delivered
pursuant to Section 5.02(i) and (iii) of the Loan Agreement, this Certificate
for the accounting period from ___________, 19__ to __________, 19__*. For
purposes hereof, section and subsection references herein relate to sections and
subsections, respectively, of the Loan Agreement, and amounts or ratios refer to
the maximum or minimum amounts or ratios required under the relevant sections of
the Loan Agreement.
I. NEGATIVE COVENANTS
A. CONSOLIDATED DEBT (Section 7.01(vi))
B. LIENS (Section 7.02(ii)(e))
Amount of Purchase Money Liens $________________
Permitted Amount $1,000,000.00 at anytime outstanding
-------------
* Insert dates representing the fiscal period covered by this Certificate.
89
C. LOANS, ADVANCES AND INVESTMENTS (Section 7.03)
1. Subsection 7.03(iv)
Aggregate demand advances to officers and employees
outstanding at any time during the period covered by this Certificate:
Outstanding $[___________________]
Aggregated maximum $250,000.00 at any
permitted to time outstanding
officers/employees
D. RESTRICTED JUNIOR PAYMENTS (Section 7.04)
Actual Amount $__________________
Permitted Amount [$________________]
II. FINANCIAL COVENANTS
A. MINIMUM CONSOLIDATED QUICK RATIO (Section 8.01)
Consolidated Quick Ratio, as determined at the end of the period covered by this
Certificate:
Actual Consolidated Quick Ratio _____ to 1.0
Minimum Required Current Ratio 1.0 to 1.0
B. MAXIMUM CONSOLIDATED SENIOR LIABILITIES LEVERAGE RATIO (Section 8.02)
Consolidated Leverage Ratio, as determined at the end of the period covered by
this Certificate:
Actual Consolidated Senior Liabilities (exclusive of
contingent liabilities) $_____________
Actual Consolidated Tangible Net Worth $_____________
Actual Consolidated Subordinated Debt $_____________
Actual Consolidated Leverage Ratio ______ to 1.0
Maximum Permitted Consolidated Leverage Ratio 1.0 to 1.0
C. MINIMUM CONSOLIDATED INTEREST COVERAGE RATIO (Section 8.03)
Consolidated Interest Coverage Ratio, as determined at the end of the period
covered by this Certificate:
Actual Consolidated Net Income $_____________
Actual Interest Expense $_____________
90
Actual Prepaid Subordinated Debt $_____________
Actual Consolidated Interest Coverage Ratio _____ to 1.0
Minimum Required Consolidated Interest Ratio 1.75 to 1.0
D. MAXIMUM CONSOLIDATED CASH FLOW LEVERAGE RATIO (Section 8.04)
Consolidated Cash Flow Leverage Ratio, as determined at the end of the
period covered by this Certificate:
Actual Consolidated Senior Bank Debt $_____________
Actual Consolidated Subordinated Debt $_____________
Actual EBITDA $_____________
Actual Consolidated Cash Flow Leverage Ratio ____ to 1.0
Maximum Permitted Consolidated
Cash Flow Leverage Ratio 3.5 to 1.0
91
I hereby certify, in my capacity as an Authorized Officer of the
Borrower, that the information set forth above is accurate as of ________, 19__,
to the best of my knowledge after diligent inquiry.
Dated: _____________, 19__
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
a Delaware corporation
By:_____________________________________
Name:
Title:
92
EXHIBIT "G"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Form of Security Agreement
[WHERE THE DEBTOR IS THE BORROWER]
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (including all amendments, modifications and
supplements hereinafter referred to as the "Security Agreement") is made this
___ day of __________________, 19___, by and between
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC., a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, having
its principal office located at 0 Xxxxxx Xxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
(hereinafter referred to as the "Debtor"),
AND
MELLON BANK, N.A., a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at Mellon Bank Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (hereinafter referred to as the "Bank").
W I T N E S S E T H :
WHEREAS, the Debtor has requested that the Bank make a secured recourse
equipment line of credit/term loan to the Borrower in the aggregate principal
amount of Five Million and 00/100 ($5,000,000.00) Dollars, for the purpose of
financing the acquisition of certain machinery and equipment by the Debtor and
the other "Guarantors", as such term is defined herein (hereinafter referred to
as the "Equipment Line of Credit/Term Loan Facility"); and
WHEREAS, the Bank agreed to make the Equipment Line of Credit/Term Loan
Facility to the Debtor, subject to the terms, conditions and provisions provided
for in a certain Equipment Line of Credit/Term Loan Agreement dated as of
December 6, 1996, executed by and between the Debtor and the Bank (hereinafter
referred to as the "Loan Agreement"); and
WHEREAS, all words and terms not defined herein shall have the respective
meanings and be construed herein as provided for in the Loan Agreement; and
93
WHEREAS, as an inducement to the Bank to make the Equipment Line of
Credit/Term Loan Facility to the Debtor, the Bank has required that the Debtor
enter into and execute this Security Agreement hereby granting and conveying to
the Bank a security interest in all of the personal property described on
Schedule "A" attached hereto and made a part hereof.
WHEREAS, the Debtor conducts its business at a certain facilities set
forth on Schedule "B" attached hereto and made a part hereof (hereinafter
referred to collectively as the "Premises"); and
NOW, THEREFORE, IN CONSIDERATION OF THE EQUIPMENT LINE OF CREDIT/TERM LOAN
FACILITY MADE TO THE BORROWER AND WITH KNOWLEDGE THAT THE BANK WOULD NOT MAKE
THE EQUIPMENT LINE OF CREDIT/TERM LOAN FACILITY BUT FOR THE PROMISES OF THE
DEBTOR HEREUNDER, THE DEBTOR AND THE BANK, HEREBY AGREE AS FOLLOWS:
1. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due by the Debtor of all obligations and
liabilities under the Loan Agreement and all other Loan Documents executed in
connection with the Equipment Line of Credit/Term Loan Facility including,
without limitation, the following: (i) all indebtedness of the Debtor owed to
the Bank arising on or after the date hereof under Loan Agreement, both
principal and interest, and any extensions, renewals, refundings, substitutions
of or for such indebtedness in whole or in part, (ii) all indebtedness of the
Debtor owed to the Bank for reasonable fees and expenses contemplated by the
Loan Agreement, (iii) all obligations of the Debtor to the Bank arising under
the other Loan Documents, (iv) all other indebtedness, obligations and
liabilities of the Debtor owed to the Bank now or hereafter existing, in
connection with the Loan Agreement or the other Loan Documents whether or not
contemplated by the Bank and/or the Debtor at the date hereof and whether direct
or indirect, matured or contingent, joint or several or otherwise, (v) all
future advances made by the Bank for the protection or preservation of the
Collateral, including, without limitation, reasonable advances for storage and
transportation charges, taxes, insurance, repairs and the like when and as the
same become due whether at maturity or by declaration, acceleration or
otherwise, or if not due when payment thereof shall be demanded by the Bank and
(vi) any and all costs and expenses, including costs and expenses of collection,
paid or incurred by the Bank in connection with the collection of the amounts
referred to in the preceding clauses (i), (ii), (iii), (iv) or (v), in
connection with the enforcement or realization upon any or all of the collateral
or the Bank's security interest therein or in connection with the taking of any
other action permitted by this Security Agreement (hereinafter referred to as
the "Obligations"), the Debtor hereby collaterally assigns, mortgages,
hypothecates, conveys, transfers and grants to the Bank a continuing security
interest in all of the Debtor's future rights, title and interests in and to the
personal property described on Schedule "A" attached hereto and made a part
hereof, wherever said personal property may be located, including, without
limitation, those addresses set forth on Schedule "B" attached hereto and made a
part hereof, as it may hereinafter be amended and modified from time to time
(hereinafter referred to as the "Collateral").
94
2. Payment. The Debtor shall pay and perform all of the Obligations
secured by this Security Agreement strictly in accordance with their terms.
3. Representations and Warranties. The Debtor represents and warrants to
the Bank that (i) it shall be the sole owner of each item of the Collateral and
it shall at all times have good and marketable title thereto, free of all other
security interests, liens, encumbrances and claims or rights of others, except
any Liens permitted under the Loan Agreement; (ii) it has the full corporate
power and authority to execute this Security Agreement, to perform its
obligations hereunder and to subject the Collateral to be acquired by it to the
security interest created hereby; (iii) no dispute, right of set-off,
counterclaim or defenses shall exist with respect to any part of the Collateral;
(iv) the security interest granted to the Bank pursuant to this Security
Agreement, is a continuing security interest and no notice of the creation or
existence of the renewal, extension or modification of the Loan Agreement or any
other Loan Documents need be given to the Debtor for the security interest to
remain perfected; and (v) no security agreement, financing statement, or lien
instrument covering all or any part of the Collateral shall be on file in any
public filing or recording office, and, once filed, the filing of the UCC-1
Financing Statements covering the security interest created hereby shall
continue in effect, subject to renewal requirements, if any, until released as
provided for in Paragraph 23 below;
4. Covenants. Except as more fully and accurately set forth in the Loan
Agreement, which Loan Agreement, in the event of any inconsistency herewith,
shall control, the Debtor covenants and agrees (i) to deliver to the Bank at
such intervals as the Bank may require, such documents, lists, descriptions,
certificates, and other information as may be necessary or proper to keep the
Bank fully informed with respect to the description of the Collateral, (ii) from
time to time to promptly execute and deliver to the Bank, at the sole expense of
the Debtor, all such other assignments, certificates, supplemental documents,
and financing statements, and do all other acts or things, as the latter may
request in order to more fully evidence and perfect the security interest herein
created; (iii) to punctually and properly perform all of the Debtor's covenants,
duties, and liabilities under any other security agreement, mortgage, deed of
trust, collateral pledge agreement or contract of any kind now or hereafter
existing as security for or in connection with payment of the Equipment Line of
Credit/Term Loan Facility, or any part thereof; (iv) to give written notice to
the Bank of the removal of the Debtor's principal place of business, from a
county or state where it is now located, which notice shall be given not less
than thirty (30) days before such removal; (v) to promptly notify the Bank of
any change in any fact or circumstances other than the removal referred to in
clause (iv) of this Paragraph 4, which requires the advance notice provided for
therein warranted or represented by the Debtor in this Security Agreement or in
any other Loan Document furnished by the Debtor to the Bank in connection with
the Collateral or the Equipment Line of Credit/Term Loan Facility; (vi) to
promptly notify the Bank of any claim, action, or proceeding affecting title to
the Collateral, or any part thereof, or the security interest herein, and, at
the request of the Bank, to appear in and defend, at the Debtor's expense, any
such action or proceeding; (vii) to promptly, after being requested by the Bank,
pay to the Bank the amount of all (a) amounts actually incurred by the Bank as
court costs hereunder, (b) attorneys fees assessed by a court and incurred by
the Bank in enforcing this Security Agreement and (c) lawful fees for filing,
recording or releasing this Security Agreement in any public office; and (viii)
to do all things necessary or appropriate to enable the Bank to fully
95
exercise its rights under this Paragraph 4. In addition, the Debtor covenants
and agrees that (A) during the continuance of an Event of Default, upon notice
from the Bank, each Person obligated to make any payment to the Debtor with
respect to the Collateral, or any part thereof, is hereby authorized and
directed by the Debtor to make payment directly to the Bank; (B) the Debtor
shall promptly collect all sums payable in respect to the Collateral; (C) all
proceeds of the Collateral received by the Debtor, whether in the form of cash,
checks, or otherwise, shall be segregated from all other funds of the Debtor and
be held in trust for the Bank, and each item of such proceeds, immediately upon
receipt thereof by the Debtor, shall become part of the Collateral, subject to
the provisions of Paragraph 23 of this Security Agreement; and (D) the Debtor
shall have absolutely no dominion or control over any payment received in
respect of the Collateral, or any part thereof, except to deliver such payment
immediately to the Bank, properly endorsed, so that the Bank may collect and
apply the proceeds in accordance with the terms hereof. The Debtor covenants and
agrees that, without the prior express written consent of the Bank, the Debtor
shall not except as permitted by the Loan Agreement (1) sell, assign, or
transfer any of the Collateral to any person, firm, or corporation (except the
Bank), (2) create in favor of anyone, except the Bank, any other security
interest in the Collateral, or in any part thereof, or otherwise encumber or
permit the same to become subject to any lien, attachment, execution,
sequestration, or other legal or equitable process; (3) remove, or permit to be
removed, the Debtor's records concerning Collateral from the Premises; or (4)
modify, or permit the modification of, or substitute, or permit another Contract
to be substituted for, any Contract.
5. Additional Covenants Concerning the Collateral. Except as more fully
and accurately set forth in the Loan Agreement, the Debtor further covenants and
agrees (i) to retain at all times possession of the Collateral during the
existence of this Security Agreement and not to sell, exchange, assign, loan,
deliver, lease, mortgage or otherwise dispose of same without the prior express
written consent of the Bank, except as may be permitted herein and in the Loan
Agreement; (ii) to keep the Collateral located at the site(s) and location(s)
described on Schedule "B" attached hereto and made a part hereof, and not to
remove same from said location (except as permitted in the Loan Agreement and
subparagraph (iii) below) without the prior express written consent of the Bank,
unless the Collateral is replaced with items of equal or greater utility and
value (which shall then be included as Collateral); (iii) at its own cost and
expense (a) to maintain, preserve and keep the Collateral in a manner consistent
with the standard operating practices applicable to a business similar to the
Debtor, in good and substantial repair, working order and condition, ordinary
wear and tear excepted, (b) as reasonably necessary, from time to time to make
or cause to be made, all necessary and proper repairs, replacements, renewals,
improvements and betterments thereto, and (c) as reasonably necessary, from time
to time, to make such substitutions, additions, modifications and improvements
as may be necessary and as shall not impair the structural integrity, operating
efficiency and economic value of the Collateral; (iv) the Debtor will comply, in
all material respects, with all acts, rules, regulations, orders, decrees and
directions of any Governmental Authority, applicable to the Collateral or any
part thereof or to, the operation of the Debtor's business; provided, however,
that the Debtor may contest any act, regulation, order, decree or direction in
any reasonable manner which shall not in the sole opinion of the Bank adversely
affect the Bank's rights or the first priority of its security interest in the
Collateral; (v) to pay and discharge promptly all taxes, assessments,
governmental charges or levies, or other charges or liens imposed upon it or in
respect of any of the Collateral,
96
existing at any time, whether before or after the making of the Equipment Line
of Credit/Term Loan Facility, except for those taxes, assessments, governmental
charges or levies or other charges or liens then being contested in good faith
by the Debtor by appropriate proceedings (provided that such contest shall not
result in a lien being placed on the Collateral or any part thereof or result in
the Collateral being subject to loss or forfeiture) and for which the Debtor has
maintained adequate reserves or accrued the estimated liability on the balance
sheet of the Debtor for the payment of same and (vi) to carry insurance on the
Collateral in amounts, types and with insurance companies reasonably acceptable
to the Bank. All such policies of insurance referred to subparagraph (vi) shall
contain loss payable clauses in favor of the Debtor and the Bank as their
respective interests may appear, and such policies or certificates evidencing
the same shall be deposited with the Bank. The Debtor hereby assigns and sets
over unto the Bank all moneys which may become payable on account of such
insurance referred to subparagraph (vi), including without limitation, any
return of unearned premiums which may be due upon cancellation of any such
insurance, and directs the insurers to pay the Bank any amount so due. The Bank,
its officers, employees and authorized agents are hereby irrevocably appointed
attorney-in-fact of the Debtor to endorse any draft or check which may be
payable to the Debtor in order to collect the proceeds of such insurance or any
return of unearned premiums. Such proceeds shall be applied to the payment or
prepayment of the Obligations related to such Collateral. Any balance of
insurance proceeds remaining in the possession of the Bank after payment in full
of the Obligations related to such Collateral, provided no Event of Default has
occurred and is continuing, shall be paid to the Debtor on demand. If an Event
of Default has occurred and is continuing, then the Debtor shall have no right
to or claim against the balance of said insurance proceeds. All alterations,
replacements, renewals or additions made pursuant to clause (iii) of this
Paragraph 5 shall become and constitute a part of the Collateral. The Debtor
shall not remove, demolish, materially alter, discontinue the use of, sell,
transfer, assign, hypothecate or otherwise dispose of to any Person other than a
Subsidiary or an Affiliate, any of the Collateral, other than in the ordinary or
usual course of the Debtor's business or as may be permitted in the Loan
Agreement. All Collateral which has been substituted for any removed, replaced
or disposed of Collateral shall be of a value and quality at least equal to that
of the removed, replaced or disposed of Collateral, and shall be subject to the
liens of the security interest granted to the Bank hereunder.
6. Actions of the Bank. Except as more fully and accurately set forth in
the Loan Agreement, which in the event of any inconsistency herewith, shall
control, should any covenant, duty, or agreement of the Debtor fail to be
performed in accordance with its terms hereunder, the Bank may perform or
attempt to perform such covenant, duty or agreement on behalf of the Debtor, and
any reasonable amount expended by the Bank in such performance or attempted
performance together with interest thereon at the rate then provided for in
respect of the Equipment Line of Credit/Term Loan Facility as provided for in
the Loan Agreement, shall become a part of the Obligations secured by this
Security Agreement, and, at the request of the Bank, the Debtor covenants and
agrees to promptly pay such amount to the Bank at its office in Philadelphia,
Pennsylvania; provided, that the Bank does not assume and shall never have any
liability for the performance of any duties of the Debtor under or in connection
with the Collateral, or any part thereof, or under any transaction, agreement,
or contract out of which the Collateral, or any part thereof, may arise.
97
7. Repayment of the Bank. The Debtor covenants and agrees that the Bank
may from time to time, without giving notice and without impairing or affecting
the security interest created by this Security Agreement (i) acquire a security
interest in any property in addition to the Collateral, or release any such
interest so acquired, or permit any substitution or exchange for such property;
(ii) acquire the primary or secondary liability of any party or parties with
respect to all or any part of the Equipment Line of Credit/Term Loan Facility or
release, modify or compromise the same or any part thereof; (iii) modify, extend
or renew for any period any part of the Equipment Line of Credit/Term Loan
Facility; and (iv) resort to the Collateral for payment of the Equipment Line of
Credit/Term Loan Facility whether or not the Bank shall have resorted to any
other collateral or proceeded against any other party primarily or secondarily
liable on the Equipment Line of Credit/Term Loan Facility or any of them.
8. Bank's Appointment as Attorney-in-Fact. (i) The Debtor hereby
irrevocably constitutes and appoints the Bank and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Debtor and in
the name of the Debtor or in its own name, from time to time in the Bank's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement and, without limiting the generality of the
foregoing, hereby gives the Bank the power and right, on behalf of the Debtor,
without notice to or assent by the Debtor to do the following:
(a) upon the occurrence and continuance of an Event of Default as such
term is defined in the Loan Agreement, to ask, demand, collect, receive and give
acquittances and receipts for any and all moneys due and to become due under any
contract and, in the name of the Debtor or its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any contract or account
and to file any claim or to take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Bank for the purpose of
collecting any and all such moneys due under any contract or account whenever
payable;
(b) to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral, to effect
any repairs or any insurance called for by the terms of this Security Agreement
and to pay all or any part of the premiums therefor and the costs thereof;
(c) upon the occurrence and continuance of any Event of Default, (1) to
receive payment of and receipt for any and all moneys, claims and other amounts
due and to become due at any time in respect of or arising out of any
Collateral; (2) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any part thereof and to enforce any other right in respect of any
part Collateral; (3) to defend any suit, action or proceeding brought against
the Debtor with respect to any Collateral; (4) to settle, compromise or adjust
any suit, action or proceeding described above and, in connection therewith, to
give such discharges or releases as the Debtor may deem appropriate;
98
(5) generally to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Bank were the absolute owner thereof for all purposes, and to do, at the Bank's
option and the Debtor's expense, at any time, or from time to time, all acts and
things which the Bank reasonably deems necessary to protect, preserve or realize
upon the Collateral and the Bank's security interest therein, in order to effect
the intent of this Security Agreement, all as fully and effectively as the
Debtor might do; and (6) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with accounts and other
documents relating to any such Collateral.
(d) to take such action as the Bank reasonably deems appropriate to
maintain, repair, protect and insure the Collateral, to attach, perfect,
continue, preserve and protect the Bank's security interest in the Collateral
and to perform, keep, observe and render true and correct any and all covenants,
agreements, representations and warranties of the Debtor hereunder;
(e) to inspect, audit and verify the Collateral, including reviewing
all of the Debtor's books and records and copying and making excerpts
therefrom;
The Debtor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(ii) The powers conferred on the Bank hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon it to exercise
any such powers. The Bank shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to the Debtor
for any act or failure to act, except for its own, his or her gross negligence
or willful misconduct.
(iii) The Debtor also authorizes the Bank, at any time and from time to
time when there exists any uncured Event of Default, to execute, in connection
with the sale of any Collateral, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
9. Events of Default. The Debtor shall be in default under this
Security Agreement if an Event of Default under the Loan Agreement shall have
occurred.
10. Remedies, Rights Upon Default. (i) If an Event of Default shall
occur and be continuing:
(a) All payments received by the Debtor under or in connection with any of
the Collateral shall be held by the Debtor in trust for the Bank, shall be
segregated from other funds of the Debtor and shall forthwith upon receipt by
the Debtor, be turned over to the Bank, in the same form as received by the
Debtor (duly endorsed by the Debtor to the Bank, if required); and
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(b) Any and all such payments so received by the Bank (whether from the
Debtor or otherwise) shall, in the sole discretion of the Bank, be held by the
Bank as collateral security for, and/or then or at any time thereafter applied
in whole or in part by the Bank, against all or any part of the Obligations in
such order as the Bank shall elect. Any balance of such payments held by the
Bank and remaining after payment in full of all of the Obligations shall be paid
over to the Debtor or to whomsoever may be lawfully entitled to receive the
same.
(ii) If any Event of Default shall occur and be continuing, the Bank may
exercise in addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the obligations, all rights and remedies of a secured party under
the applicable Uniform Commercial Code. Without limiting the generality of the
foregoing, the Debtor expressly agrees that in any such event the Bank, without
demand of performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or private sale)
to or upon the Debtor or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived), may forthwith
collect, receive appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange broker's board or at any of the Bank's
offices or elsewhere at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Bank shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of said Collateral so sold, free of any right or equity of redemption in the
Debtor, which right or equity is hereby expressly released. The Debtor further
agrees, at the Bank's written request, to assemble the Collateral and make it
available to the Bank at the Debtor's Premises. The Bank shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safekeeping or otherwise of any or
all of the Collateral or in any way relating to the rights of the Bank
hereunder, including reasonable attorneys' fees and legal expenses, to the
payment in whole or in part of the Obligations, in such order as the Bank may
elect, the Debtor remaining liable for any deficiency remaining unpaid after
such application, and only after so paying over such net proceeds and after the
payment by the Bank of any other amount required by any provision of law,
including Section 9-504(l)(c) of the applicable Uniform Commercial Code, (or any
successor or substitute provision) need the Bank account for the surplus, if
any, to the Debtor. To the extent permitted by applicable law, the Debtor waives
all claims, damages, and demands against the Bank arising out of the
repossession, retention or sale of the Collateral, except for the gross
negligence or willful misconduct of the Bank. The Debtor agrees that the Bank
shall give at least twenty (20) days' notice (which notification shall be deemed
given when mailed, postage prepaid, addressed to the Debtor at its address set
forth in Paragraph 16 hereof) of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. The Debtor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which the Bank is entitled, the Debtor also
being liable for the reasonable fees of any attorneys employed by the Bank to
collect such deficiency.
100
(iii) The Debtor also agrees to pay all reasonable costs of the Bank,
including attorneys' fees, incurred with respect to the collection of any of the
Obligations and the enforcement of any of the Bank's rights hereunder.
(iv) The Debtor hereby waives presentment, demand, protest or any notice
(to the extent permitted by applicable law) of any kind in connection with this
Security Agreement or any Collateral.
11. Limitation on the Bank's Duty in Respect of Collateral. Beyond the
safe custody thereof and any other duties imposed by applicable Law, the Bank
shall not have any duty as to any Collateral in its possession or control or in
the possession or control of any agent or nominee of it as to the preservation
of rights against prior parties or any other rights pertaining thereto.
12. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. No Waiver of Rights; Cumulative Remedies. Nothing herein contained and
no act done or omitted by the Bank pursuant to the powers and rights granted it
herein shall be deemed to be a waiver by the Bank of its rights and remedies
under the Equipment Line of Credit/Term Loan Note and the Loan Agreement, but
this Security Agreement is made and accepted without prejudice to any of the
rights and remedies possessed by the Bank under the terms thereof. The right of
the Bank to collect said indebtedness and to enforce any other security therefor
held by it may be exercised by the Bank either prior to, simultaneously with, or
subsequent to any action taken by it hereunder. The Bank shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by the
Bank, and then only to the extent therein set forth. A waiver by the Bank of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Bank would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of the
Bank, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law.
14. Successors and Assigns. This Security Agreement and all obligations of
the Debtor hereunder shall be binding upon the successors and assigns of the
Debtor, and shall, together with the rights and remedies of the Bank hereunder,
inure to the benefit of the Bank and its successors and assigns.
101
15. Further Indemnification. The Debtor agrees to pay, and to save the
Bank harmless from, any and all liabilities with respect to, or resulting from
any delay by the Debtor in paying, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by this
Security Agreement.
16. Notices. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, sent by confirmed telecopy transmission or sent by
over-night courier service or United States mail (registered or certified, with
postage prepaid and properly addressed) and shall be deemed to have been given
when delivered in person or by overnight courier service, upon receipt of a
telecopy or telex during normal business hours or four (4) Business Days after
deposit in the United States mail (registered or certified, with postage prepaid
and properly addressed). All notices shall be sent to the applicable party at
the following addresses or in accordance with the last unrevoked written
direction from such party to the other parties hereto:
If to the Debtor: Diagnostic/Retrieval Systems, Inc.
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xx. Xxxxx X. Xxxxx
Controller, Treasurer
and Secretary
With a Xxxxxxx Xxxxxxx, A Professional Corporation
copy to: 0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxx Xxxxxxxx Xxxx, Esq.
If to the Bank: Mellon Bank, X.X.
Xxxxxx Bank Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn.: Loan Administration Dept.
With a Xxxx Xxxxx Xxxx and XxXxxx
copy to: 000 Xxxx Xxxxxx
Princeton Xxxxxxxxx Village
Princeton, New Jersey 08540
Attn.: Xxxxxx X. Xxxx, Xx., Esq.
and
Mellon Financial Services
Raritan Xxxxx Xxx
Xxxxxxx Xxxxxx
000
Xxxxxx, Xxx Xxxxxx 00000
Attn.: Xx. Xxxxx Xxxxxx
Vice President
17. Law Applicable. The Uniform Commercial Code of the State or States
having jurisdiction with respect to all or any portion of the Collateral from
time to time shall govern the attachment, perfection and the effect of
attachment and perfection of the Bank's security interest in the Collateral, and
the rights, duties, and obligations of the Bank and the Debtor with respect
thereto. This Security Agreement shall be deemed to be a contract under the laws
of the Commonwealth of Pennsylvania and the execution and delivery thereof and,
to the extent not inconsistent with the preceding sentence, the terms and
provisions hereof shall be governed by and construed in accordance with the laws
of the said Commonwealth.
18. Counterparts. This Security Agreement may be executed by one or more
parties to this Security Agreement in any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
19. Further Assurances. The Debtor agrees that at any time and from time
to time upon the written request of the Bank, the Debtor will execute and
deliver such further documents and do such further acts and things as the Bank
may reasonably request in order to effect the purposes of this Security
Agreement.
20. Obligations Absolute. The obligations of the Debtor under this
Security Agreement shall be absolute and unconditional, and shall remain in full
force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by any circumstance or occurrence
whatsoever, including without limitation: (i) any renewal, amendment or
modification of or addition or supplement to or deletion from the Obligations,
or any assignment or transfer thereof; (ii) any waiver, extension, indulgence or
other action or inaction under or in respect or any of the Obligations of this
Security Agreement; (iii) any furnishing of additional security to the Bank or
its assignee or any acceptance thereof or any release of any security by the
Bank or its assignee; (iv) any limitation on any parties' liability or
obligations under any of the obligations or any invalidity or inability, in
whole or in part, of any of the obligations; or (v) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Debtor, any partnership or any other Person or any
action taken with respect to this Bank by any trustee or custodian or receiver
or by any court in any such proceeding, whether or not the Debtor shall have
notice or knowledge of any of the foregoing.
21. Modifications in Writing. This Security Agreement may not be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
22. Security for the Equipment Line of Credit/Term Loan Facility.
Notwithstanding any other term, covenant or condition contained in this Security
Agreement, the Debtor and the Bank hereby agree that the Collateral shall secure
only the Obligations and that the Collateral is
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not offered as security in connection with any other indebtedness due and owing
from the Debtor to the Bank.
23. Release of the Collateral. (i) Provided no Event of Default is
existing under this Security Agreement, the Loan Agreement or any other Loan
Documents, and the Equipment Line of Credit/Term Loan referred to in the
applicable Notice of Borrowing is repaid in full pursuant to Article II, Section
2.01(v) of the Loan Agreement, the Bank agrees to deliver to the Debtor releases
of the Collateral acquired with said Equipment Line of Credit/Term Loan for
consideration; provided, however, the Bank shall have received from the Debtor
fully executed UCC-3 Termination Statement(s) prepared by the Borrower, together
with the appropriate filing fees for filing said UCC-3 Termination Statement(s)
in the appropriate filing office(s) and accurately describing the Collateral to
be released from the lien of this Security Agreement.
(ii) Provided no Event of Default is existing under this Security
Agreement, the Loan Agreement or any other Loan Documents, in the event the
Equipment Line of Credit/Term Loan referred to in the applicable Notice of
Borrowing is repaid in full pursuant to Article II, Section 2.04 of the Loan
Agreement for whatever reason and from whatever source of monies, the Bank
agrees to deliver to the Debtor releases of the Collateral acquired with said
repaid Equipment Line of Credit/Term Loan for consideration; provided, however,
the Bank shall have received from the Debtor fully executed UCC-3 Termination
Statement(s) prepared by the Borrower, together with the appropriate filing fees
for filing said UCC-3 Termination Statement(s) in the appropriate filing
office(s) and accurately describing the Collateral to be released from the lien
of this Security Agreement.
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IN WITNESS WHEREOF, the Bank and the Debtor have caused this Security
Agreement to be signed by their appropriate authorized corporate officers and
their corporate seals to be hereunto affixed and attested, pursuant to the
resolution of their Boards of Directors, all as of the day and year first above
written.
[SEAL] DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
ATTEST: a Delaware corporation, as the Debtor
_______________________________ By:_______________________________
Xxxxx X. Xxxxx Xxxx X. Xxxxxx
Secretary President and CEO
MELLON BANK, N.A.,
as the Bank
By:_______________________________
Name:
Title:
SCHEDULE "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN SECURITY AGREEMENT, EXECUTED BY
AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND MELLON BANK, N.A. DATED
_____________________, 19_____
All present and future rights, title and interests of the Debtor in and
to:
(i) any Equipment acquired with any portion of the proceeds of the
Equipment Line of Credit/Term Loan Facility;
(ii) Chattel Paper;
(iii) Contracts;
(iv) General Intangibles; and
(v) to the extent not otherwise included, all Proceeds and products
of any or all of the foregoing.
As used in this Security Agreement the above-referenced terms shall have
the following meanings, unless the context otherwise requires:
"Equipment" shall mean all "equipment", as such term is now or hereafter
defined in the applicable Uniform Commercial Code, now or hereafter owned by the
Debtor, and shall also mean and include all personal property, including that
constituting machinery, equipment, plant, furnishings, fixtures and other fixed
assets now owned or hereafter acquired by the Debtor,
105
including, without limitation, all items of machinery and equipment of any kind,
nature, and description whether affixed to real property or not, including
automobiles, trucks and vehicles of every description, trailers, handling and
delivery equipment, fixtures and office furniture, as well as all additions to,
substitutions for, replacements of or accessions to any of the items recited as
aforesaid and all attachments, components, parts (including spare parts) and
accessories whether installed thereon or affixed thereto and all fuel for any
thereof.
Supplementing the foregoing and without limiting the generality of the
foregoing the Equipment shall and is hereby declared to include, without being
limited to, all screens, awnings, storm windows and doors, window shades,
blinds, drapery and curtain rods, brackets, electric and other signs, dynamos,
generators, engines, ducts, switchboards, controls, motors, belting, gas and
electric fixtures, bulbs, wiring, conduits and other gas and electric equipment,
apparatus, machinery, fittings, appliances and appurtenances, elevators,
escalators, power and machinery plants for running and operation of elevators
and escalators, fire prevention and extinguishing apparatus, bathtubs, sinks,
water closets, basins, faucets, tanks, burners, furnaces, heaters, air
conditioners, boilers, pipes, pumps, radiators, fans and other power, heating,
plumbing, hot water, sanitary, drainage and ventilating apparatus and equipment,
air conditioning and cooling systems and equipment, watercooling and condensing
apparatus and equipment, apparatus for exclusion and extermination of vermin and
insects, vacuum and other cleaning systems, dust removal apparatus, lifting and
housekeeping machinery, apparatus and equipment, call systems and other
communications systems, ash and fuel conveyors incinerators, incinerating
fixtures and equipment, laundry machinery, apparatus and equipment, laundry
disposal equipment, cleaning and pressing apparatus and equipment, valet shop
equipment, store fixtures and equipment, murals, mirrors attached to walls,
doors and other facilities, wall-to-wall carpets, linoleum, inlaid floor
coverings, wall beds, radio and television apparatus and equipment, electronic
apparatus and equipment, trees, shrubs, plants, planter and flower boxes,
blackboards, bulletin boards, stanchions, easels, platforms, bars, bar
equipment, beverage equipment, dining room and restaurant equipment, kitchen
cabinets, gas electric and other stoves, ovens and ranges, fireless cookers,
dishwashers, glasswashers, refrigerators, ice boxes, compressors, coils, water
coolers and other refrigerating and cooking apparatus and equipment, medicine
chests, commodes, hospital equipment, cornices, mantels, paneling, partitions,
drafting tables, drawing boards, drawing cases, safes, cabinets, lockers,
shelving, printing equipment and apparatus, public address systems, spotlight
equipment, and all other articles, equipment, appliances, implements, devices
and accessories or things whatsoever (including any and all accessions to,
proceeds of replacements of and substitutions for the equipment), used or to be
used, or placed or to be placed, in the rooms, halls, lounges, offices, lobbies,
lavatories, basement cellars, vaults and other portions of the real property,
whether herein enumerated or not, and whether or not affixed to the real
property, and which are used or useful in the operation and maintenance thereof
or in the business conducted therein.
"Chattel Paper" shall mean all "chattel paper", as such term is now or
hereafter defined in the applicable Uniform Commercial Code, now or hereafter
owned by the Debtor, relating to any Equipment being acquired with any portion
of the proceeds of the Equipment Line of Credit/Term Loan Facility.
106
"Contracts" shall mean all contracts, licenses, instruments, undertakings,
documents or other agreements in or under which the Borrower may now or
hereafter have any rights, title or interests, including, without limitation,
(i) any claim arising thereunder from misrepresentation or breach of warranty,
and (ii) all such agreements which pertain to the lease, sale, construction,
design, manufacture or other disposition of any Equipment being acquired with
any portion of the proceeds of the Equipment Line of Credit/Term Loan Facility,
other than such contracts, instruments, undertakings, documents or other
agreements which specifically prohibit their assignment as security, provided,
that notwithstanding any such prohibition such contracts, instruments,
undertakings, documents or other agreements shall be deemed to be Contracts to
the extent that such prohibition is inconsistent with the provisions of the
applicable Uniform Commercial Code.
"General Intangibles" shall mean all "general intangibles", as such term
is now or hereafter defined in the applicable Uniform Commercial Code relating
to any Equipment.
107
SCHEDULE "B"
ATTACHED TO AND MADE A PART OF THAT CERTAIN SECURITY AGREEMENT, EXECUTED BY
AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND MELLON BANK, N.A. DATED
_________________, 19____
Location of Collateral
108
[WHERE THE DEBTOR IS NOT THE BORROWER]
---
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (including all amendments, modifications and
supplements hereinafter referred to as the "Security Agreement") is made this
___ day of __________________, 19___, by and between
____________________________________________, a ____________________ duly
organized, validly existing and in good standing under the laws of the State of
_______________, having its principal office located at
________________________________________ (hereinafter referred to as the
"Debtor"),
AND
MELLON BANK, N.A., a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at Mellon Bank Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (hereinafter referred to as the "Bank").
W I T N E S S E T H :
WHEREAS, Diagnostic/Retrieval Systems, Inc., a Delaware corporation
(hereinafter referred to as the "Borrower") has requested that the Bank make a
secured recourse equipment line of credit/term loan to the Borrower in the
aggregate principal amount of Five Million and 00/100 ($5,000,000.00) Dollars,
for the purpose of financing the acquisition of certain machinery and equipment
by the Borrower, the Debtor and the other "Guarantors", as such term is defined
herein (hereinafter referred to as the "Equipment Line of Credit/Term Loan
Facility"); and
WHEREAS, the Bank agreed to make the Equipment Line of Credit/Term Loan
Facility to the Borrower, subject to the terms, conditions and provisions
provided for in a certain Equipment Line of Credit/Term Loan Agreement dated as
of December 6, 1996, executed by and between the Borrower and the Bank
(hereinafter referred to as the "Loan Agreement"); and
WHEREAS, pursuant to the terms and conditions of a certain Agreement of
Guaranty dated [AS OF DECEMBER 6, 1996] [__________, 19__ ] (hereinafter
referred to as the "Agreement of Guaranty"), executed by the Debtor, as a
guarantor, and the other guarantors, in favor of the Bank, as the lender, the
Debtor agreed, on a joint and several basis with the other guarantors, to
guaranty the "Liabilities of the Borrower" (as such term is defined in the
Agreement of Guaranty); and
109
WHEREAS, all words and terms not defined herein shall have the respective
meanings and be construed herein as provided for in the Loan Agreement; and
WHEREAS, as an inducement to the Bank to make the Equipment Line of
Credit/Term Loan Facility to the Borrower, the Bank has required that the Debtor
enter into and execute this Security Agreement hereby granting and conveying to
the Bank a security interest in all of the personal property described on
Schedule "A" attached hereto and made a part hereof.
WHEREAS, the Debtor conducts its business at [a certain facility] [certain
facilities] set forth on Schedule "B" attached hereto and made a part hereof
(hereinafter referred to [collectively] as the "Premises"); and
NOW, THEREFORE, IN CONSIDERATION OF THE EQUIPMENT LINE OF CREDIT/TERM LOAN
FACILITY MADE TO THE BORROWER AND WITH KNOWLEDGE THAT THE BANK WOULD NOT MAKE
THE EQUIPMENT LINE OF CREDIT/TERM LOAN FACILITY BUT FOR THE PROMISES OF THE
DEBTOR HEREUNDER, THE DEBTOR AND THE BANK, HEREBY AGREE AS FOLLOWS:
1. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due by the Debtor of all obligations and
liabilities under the Agreement of Guaranty and all other Loan Documents
executed in connection with the Equipment Line of Credit/Term Loan Facility
including, without limitation, the following: (i) all indebtedness of the Debtor
owed to the Bank arising on or after the date hereof under the Agreement of
Guaranty, both principal and interest, and any extensions, renewals, refundings,
substitutions of or for such indebtedness in whole or in part, (ii) all
indebtedness of the Debtor owed to the Bank for reasonable fees and expenses
contemplated by the Agreement of Guaranty, (iii) all obligations of the Debtor
to the Bank arising under the other Loan Documents, (iv) all other indebtedness,
obligations and liabilities of the Debtor owed to the Bank now or hereafter
existing, in connection with the Agreement of Guaranty or the other Loan
Documents whether or not contemplated by the Bank and/or the Debtor at the date
hereof and whether direct or indirect, matured or contingent, joint or several
or otherwise, (v) all future advances made by the Bank for the protection or
preservation of the Collateral, including, without limitation, reasonable
advances for storage and transportation charges, taxes, insurance, repairs and
the like when and as the same become due whether at maturity or by declaration,
acceleration or otherwise, or if not due when payment thereof shall be demanded
by the Bank and (vi) any and all costs and expenses, including costs and
expenses of collection, paid or incurred by the Bank in connection with the
collection of the amounts referred to in the preceding clauses (i), (ii), (iii),
(iv) or (v), in connection with the enforcement or realization upon any or all
of the collateral or the Bank's security interest therein or in connection with
the taking of any other action permitted by this Security Agreement (hereinafter
referred to as the "Obligations"), the Debtor hereby collaterally assigns,
mortgages, hypothecates, conveys, transfers and grants to the Bank a continuing
security interest in all of the Debtor's future rights, title and interests in
and to the personal property described on Schedule "A" attached hereto and made
a part hereof, wherever said personal property may be located, including,
without limitation, those addresses set forth on Schedule "B"
110
attached hereto and made a part hereof, as it may hereinafter be amended and
modified from time to time (hereinafter referred to as the "Collateral").
2. Payment. The Debtor shall pay and perform all of the Obligations
secured by this Security Agreement strictly in accordance with their terms.
3. Representations and Warranties. The Debtor represents and warrants to
the Bank that (i) it shall be the sole owner of each item of the Collateral and
it shall at all times have good and marketable title thereto, free of all other
security interests, liens, encumbrances and claims or rights of others, except
any Liens permitted under the Loan Agreement; (ii) it has the full corporate or
partnership power and authority, as the case may be, to execute this Security
Agreement, to perform its obligations hereunder and to subject the Collateral to
be acquired by it to the security interest created hereby; (iii) no dispute,
right of set-off, counterclaim or defenses shall exist with respect to any part
of the Collateral; (iv) the security interest granted to the Bank pursuant to
this Security Agreement, is a continuing security interest and no notice of the
creation or existence of the renewal, extension or modification of the Agreement
of Guaranty, the Loan Agreement or any other Loan Documents need be given to the
Debtor for the security interest to remain perfected; and (v) no security
agreement, financing statement, or lien instrument covering all or any part of
the Collateral shall be on file in any public filing or recording office, and,
once filed, the filing of the UCC-1 Financing Statements covering the security
interest created hereby shall continue in effect, subject to renewal
requirements, if any, until released as provided for in Paragraph 23 below;
4. Covenants. Except as more fully and accurately set forth in the Loan
Agreement, which Loan Agreement, in the event of any inconsistency herewith,
shall control, the Debtor covenants and agrees (i) to deliver to the Bank at
such intervals as the Bank may require, such documents, lists, descriptions,
certificates, and other information as may be necessary or proper to keep the
Bank fully informed with respect to the description of the Collateral, (ii) from
time to time to promptly execute and deliver to the Bank, at the sole expense of
the Debtor, all such other assignments, certificates, supplemental documents,
and financing statements, and do all other acts or things, as the latter may
request in order to more fully evidence and perfect the security interest herein
created; (iii) to punctually and properly perform all of the Debtor's covenants,
duties, and liabilities under any other security agreement, mortgage, deed of
trust, collateral pledge agreement or contract of any kind now or hereafter
existing as security for or in connection with payment of the Equipment Line of
Credit/Term Loan Facility, or any part thereof; (iv) to give written notice to
the Bank of the removal of the Debtor's principal place of business, from a
county or state where it is now located, which notice shall be given not less
than thirty (30) days before such removal; (v) to promptly notify the Bank of
any change in any fact or circumstances other than the removal referred to in
clause (iv) of this Paragraph 4, which requires the advance notice provided for
therein warranted or represented by the Debtor in this Security Agreement or in
any other Loan Document furnished by the Debtor to the Bank in connection with
the Collateral or the Equipment Line of Credit/Term Loan Facility; (vi) to
promptly notify the Bank of any claim, action, or proceeding affecting title to
the Collateral, or any part thereof, or the security interest herein, and, at
the request of the Bank, to appear in and defend, at the Debtor's expense, any
such action or proceeding; (vii) to promptly, after being requested by the
111
Bank, pay to the Bank the amount of all (a) amounts actually incurred by the
Bank as court costs hereunder, (b) attorneys fees assessed by a court and
incurred by the Bank in enforcing this Security Agreement and (c) lawful fees
for filing, recording or releasing this Security Agreement in any public office;
and (viii) to do all things necessary or appropriate to enable the Bank to fully
exercise its rights under this Paragraph 4. In addition, the Debtor covenants
and agrees that (A) during the continuance of an Event of Default, upon notice
from the Bank, each Person obligated to make any payment to the Debtor with
respect to the Collateral, or any part thereof, is hereby authorized and
directed by the Debtor to make payment directly to the Bank; (B) the Debtor
shall promptly collect all sums payable in respect to the Collateral; (C) all
proceeds of the Collateral received by the Debtor, whether in the form of cash,
checks, or otherwise, shall be segregated from all other funds of the Debtor and
be held in trust for the Bank, and each item of such proceeds, immediately upon
receipt thereof by the Debtor, shall become part of the Collateral, subject to
the provisions of Paragraph 23 of this Security Agreement; and (D) the Debtor
shall have absolutely no dominion or control over any payment received in
respect of the Collateral, or any part thereof, except to deliver such payment
immediately to the Bank, properly endorsed, so that the Bank may collect and
apply the proceeds in accordance with the terms hereof. The Debtor covenants and
agrees that, without the prior express written consent of the Bank, the Debtor
shall not except as permitted by the Loan Agreement (1) sell, assign, or
transfer any of the Collateral to any person, firm, or corporation (except the
Bank), (2) create in favor of anyone, except the Bank, any other security
interest in the Collateral, or in any part thereof, or otherwise encumber or
permit the same to become subject to any lien, attachment, execution,
sequestration, or other legal or equitable process; (3) remove, or permit to be
removed, the Debtor's records concerning Collateral from the Premises; or (4)
modify, or permit the modification of, or substitute, or permit another Contract
to be substituted for, any Contract.
5. Additional Covenants Concerning the Collateral. Except as more fully
and accurately set forth in the Loan Agreement, the Debtor further covenants and
agrees (i) to retain at all times possession of the Collateral during the
existence of this Security Agreement and not to sell, exchange, assign, loan,
deliver, lease, mortgage or otherwise dispose of same without the prior express
written consent of the Bank, except as may be permitted herein and in the Loan
Agreement; (ii) to keep the Collateral located at the site(s) and location(s)
described on Schedule "B" attached hereto and made a part hereof, and not to
remove same from said location (except as permitted in the Loan Agreement and
subparagraph (iii) below) without the prior express written consent of the Bank,
unless the Collateral is replaced with items of equal or greater utility and
value (which shall then be included as Collateral); (iii) at its own cost and
expense (a) to maintain, preserve and keep the Collateral in a manner consistent
with the standard operating practices applicable to a business similar to the
Debtor, in good and substantial repair, working order and condition, ordinary
wear and tear excepted, (b) as reasonably necessary, from time to time to make
or cause to be made, all necessary and proper repairs, replacements, renewals,
improvements and betterments thereto, and (c) as reasonably necessary, from time
to time, to make such substitutions, additions, modifications and improvements
as may be necessary and as shall not impair the structural integrity, operating
efficiency and economic value of the Collateral; (iv) the Debtor will comply, in
all material respects, with all acts, rules, regulations, orders, decrees and
directions of any Governmental Authority, applicable to the Collateral or any
part thereof or to, the operation of the Debtor's business; provided, however,
that the Debtor may
112
contest any act, regulation, order, decree or direction in any reasonable manner
which shall not in the sole opinion of the Bank adversely affect the Bank's
rights or the first priority of its security interest in the Collateral; (v) to
pay and discharge promptly all taxes, assessments, governmental charges or
levies, or other charges or liens imposed upon it or in respect of any of the
Collateral, existing at any time, whether before or after the making of the
Equipment Line of Credit/Term Loan Facility, except for those taxes,
assessments, governmental charges or levies or other charges or liens then being
contested in good faith by the Debtor by appropriate proceedings (provided that
such contest shall not result in a lien being placed on the Collateral or any
part thereof or result in the Collateral being subject to loss or forfeiture)
and for which the Debtor has maintained adequate reserves or accrued the
estimated liability on the balance sheet of the Debtor for the payment of same
and (vi) to carry insurance on the Collateral in amounts, types and with
insurance companies reasonably acceptable to the Bank. All such policies of
insurance referred to subparagraph (vi) shall contain loss payable clauses in
favor of the Debtor and the Bank as their respective interests may appear, and
such policies or certificates evidencing the same shall be deposited with the
Bank. The Debtor hereby assigns and sets over unto the Bank all moneys which may
become payable on account of such insurance referred to subparagraph (vi),
including without limitation, any return of unearned premiums which may be due
upon cancellation of any such insurance, and directs the insurers to pay the
Bank any amount so due. The Bank, its officers, employees and authorized agents
are hereby irrevocably appointed attorney-in-fact of the Debtor to endorse any
draft or check which may be payable to the Debtor in order to collect the
proceeds of such insurance or any return of unearned premiums. Such proceeds
shall be applied to the payment or prepayment of the Obligations related to such
Collateral. Any balance of insurance proceeds remaining in the possession of the
Bank after payment in full of the Obligations related to such Collateral,
provided no Event of Default has occurred and is continuing, shall be paid to
the Debtor on demand. If an Event of Default has occurred and is continuing,
then the Debtor shall have no right to or claim against the balance of said
insurance proceeds. All alterations, replacements, renewals or additions made
pursuant to clause (iii) of this Paragraph 5 shall become and constitute a part
of the Collateral. The Debtor shall not remove, demolish, materially alter,
discontinue the use of, sell, transfer, assign, hypothecate or otherwise dispose
of to any Person other than a Subsidiary or an Affiliate, any of the Collateral,
other than in the ordinary or usual course of the Debtor's business or as may be
permitted in the Loan Agreement. All Collateral which has been substituted for
any removed, replaced or disposed of Collateral shall be of a value and quality
at least equal to that of the removed, replaced or disposed of Collateral, and
shall be subject to the liens of the security interest granted to the Bank
hereunder.
6. Actions of the Bank. Except as more fully and accurately set forth in
[the Agreement of Guaranty and/or] the Loan Agreement, which in the event of any
inconsistency herewith, shall control, should any covenant, duty, or agreement
of the Debtor fail to be performed in accordance with its terms hereunder, the
Bank may perform or attempt to perform such covenant, duty or agreement on
behalf of the Debtor, and any reasonable amount expended by the Bank in such
performance or attempted performance together with interest thereon at the rate
then provided for in respect of the Equipment Line of Credit/Term Loan Facility
as provided in the [Agreement of Guaranty and/or] the Loan Agreement, shall
become a part of the Obligations secured by this Security Agreement, and, at the
request of the Bank, the Debtor
113
covenants and agrees to promptly pay such amount to the Bank at its office in
Philadelphia, Pennsylvania; provided, that the Bank does not assume and shall
never have any liability for the performance of any duties of the Debtor under
or in connection with the Collateral, or any part thereof, or under any
transaction, agreement, or contract out of which the Collateral, or any part
thereof, may arise.
7. Repayment of the Bank. The Debtor covenants and agrees that the Bank
may from time to time, without giving notice and without impairing or affecting
the security interest created by this Security Agreement (i) acquire a security
interest in any property in addition to the Collateral, or release any such
interest so acquired, or permit any substitution or exchange for such property;
(ii) acquire the primary or secondary liability of any party or parties with
respect to all or any part of the Equipment Line of Credit/Term Loan Facility or
release, modify or compromise the same or any part thereof; (iii) modify, extend
or renew for any period any part of the Equipment Line of Credit/Term Loan
Facility; and (iv) resort to the Collateral for payment of the Equipment Line of
Credit/Term Loan Facility whether or not the Bank shall have resorted to any
other collateral or proceeded against any other party primarily or secondarily
liable on the Equipment Line of Credit/Term Loan Facility or any of them.
8. Bank's Appointment as Attorney-in-Fact. (i) The Debtor hereby
irrevocably constitutes and appoints the Bank and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Debtor and in
the name of the Debtor or in its own name, from time to time in the Bank's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement and, without limiting the generality of the
foregoing, hereby gives the Bank the power and right, on behalf of the Debtor,
without notice to or assent by the Debtor to do the following:
(a) upon the occurrence and continuance of an Event of Default as such
term is defined in the Agreement of Guaranty, to ask, demand, collect, receive
and give acquittances and receipts for any and all moneys due and to become due
under any contract and, in the name of the Debtor or its own name or otherwise,
to take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
contract or account and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Bank for the purpose of collecting any and all such moneys due under any
contract or account whenever payable;
(b) to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the Collateral, to effect
any repairs or any insurance called for by the terms of this Security Agreement
and to pay all or any part of the premiums therefor and the costs thereof;
(c) upon the occurrence and continuance of any Event of Default, (1) to
receive payment of and receipt for any and all moneys, claims and other amounts
due and to become due at any time in respect of or arising out of any
Collateral; (2) to commence and prosecute any
114
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any
other right in respect of any part Collateral; (3) to defend any suit, action or
proceeding brought against the Debtor with respect to any Collateral; (4) to
settle, compromise or adjust any suit, action or proceeding described above and,
in connection therewith, to give such discharges or releases as the Debtor may
deem appropriate; (5) generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though the Bank were the absolute owner thereof for all purposes,
and to do, at the Bank's option and the Debtor's expense, at any time, or from
time to time, all acts and things which the Bank reasonably deems necessary to
protect, preserve or realize upon the Collateral and the Bank's security
interest therein, in order to effect the intent of this Security Agreement, all
as fully and effectively as the Debtor might do; and (6) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications and notices in
connection with accounts and other documents relating to any such Collateral.
(d) to take such action as the Bank reasonably deems appropriate to
maintain, repair, protect and insure the Collateral, to attach, perfect,
continue, preserve and protect the Bank's security interest in the Collateral
and to perform, keep, observe and render true and correct any and all covenants,
agreements, representations and warranties of the Debtor hereunder;
(e) to inspect, audit and verify the Collateral, including reviewing all
of the Debtor's books and records and copying and making excerpts therefrom;
The Debtor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(ii) The powers conferred on the Bank hereunder are solely to protect its
interests in the Collateral and shall not impose any duty upon it to exercise
any such powers. The Bank shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and neither it nor any of
its officers, directors, employees or agents shall be responsible to the Debtor
for any act or failure to act, except for its own, his or her gross negligence
or willful misconduct.
(iii) The Debtor also authorizes the Bank, at any time and from time to
time when there exists any uncured Event of Default, to execute, in connection
with the sale of any Collateral, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
9. Events of Default. The Debtor shall be in default under this Security
Agreement if an Event of Default under the Agreement of Guaranty and/or the Loan
Agreement shall have occurred.
10. Remedies, Rights Upon Default. (i) If an Event of Default shall occur
and be continuing:
115
(a) All payments received by the Debtor under or in connection with any of
the Collateral shall be held by the Debtor in trust for the Bank, shall be
segregated from other funds of the Debtor and shall forthwith upon receipt by
the Debtor, be turned over to the Bank, in the same form as received by the
Debtor (duly endorsed by the Debtor to the Bank, if required); and
(b) Any and all such payments so received by the Bank (whether from the
Debtor or otherwise) shall, in the sole discretion of the Bank, be held by the
Bank as collateral security for, and/or then or at any time thereafter applied
in whole or in part by the Bank, against all or any part of the Obligations in
such order as the Bank shall elect. Any balance of such payments held by the
Bank and remaining after payment in full of all of the Obligations shall be paid
over to the Debtor or to whomsoever may be lawfully entitled to receive the
same.
(ii) If any Event of Default shall occur and be continuing, the Bank may
exercise in addition to all other rights and remedies granted to it in this
Security Agreement and in any other instrument or agreement securing, evidencing
or relating to the obligations, all rights and remedies of a secured party under
the applicable Uniform Commercial Code. Without limiting the generality of the
foregoing, the Debtor expressly agrees that in any such event the Bank, without
demand of performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or private sale)
to or upon the Debtor or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived), may forthwith
collect, receive appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange broker's board or at any of the Bank's
offices or elsewhere at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Bank shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of said Collateral so sold, free of any right or equity of redemption in the
Debtor, which right or equity is hereby expressly released. The Debtor further
agrees, at the Bank's written request, to assemble the Collateral and make it
available to the Bank at the Debtor's Premises. The Bank shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred therein or incidental to the care, safekeeping or otherwise of any or
all of the Collateral or in any way relating to the rights of the Bank
hereunder, including reasonable attorneys' fees and legal expenses, to the
payment in whole or in part of the Obligations, in such order as the Bank may
elect, the Debtor remaining liable for any deficiency remaining unpaid after
such application, and only after so paying over such net proceeds and after the
payment by the Bank of any other amount required by any provision of law,
including Section 9-504(l)(c) of the applicable Uniform Commercial Code, (or any
successor or substitute provision) need the Bank account for the surplus, if
any, to the Debtor. To the extent permitted by applicable law, the Debtor waives
all claims, damages, and demands against the Bank arising out of the
repossession, retention or sale of the Collateral, except for the gross
negligence or willful misconduct of the Bank. The Debtor agrees that the Bank
shall give at least twenty (20) days' notice (which notification shall be deemed
given when mailed, postage prepaid, addressed to the
116
Debtor at its address set forth in Paragraph 16 hereof) of the time and place of
any public sale or of the time after which a private sale may take place and
that such notice is reasonable notification of such matters. The Debtor shall
remain liable for any deficiency if the proceeds of any sale or disposition of
the Collateral are insufficient to pay all amounts to which the Bank is
entitled, the Debtor also being liable for the reasonable fees of any attorneys
employed by the Bank to collect such deficiency.
(iii) The Debtor also agrees to pay all reasonable costs of the Bank,
including attorneys' fees, incurred with respect to the collection of any of the
Obligations and the enforcement of any of the Bank's rights hereunder.
(iv) The Debtor hereby waives presentment, demand, protest or any notice
(to the extent permitted by applicable law) of any kind in connection with this
Security Agreement or any Collateral.
11. Limitation on the Bank's Duty in Respect of Collateral. Beyond the
safe custody thereof and any other duties imposed by applicable Law, the Bank
shall not have any duty as to any Collateral in its possession or control or in
the possession or control of any agent or nominee of it as to the preservation
of rights against prior parties or any other rights pertaining thereto.
12. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. No Waiver of Rights; Cumulative Remedies. Nothing herein contained and
no act done or omitted by the Bank pursuant to the powers and rights granted it
herein shall be deemed to be a waiver by the Bank of its rights and remedies
under the Equipment Line of Credit/Term Loan Note and the Loan Agreement, but
this Security Agreement is made and accepted without prejudice to any of the
rights and remedies possessed by the Bank under the terms thereof. The right of
the Bank to collect said indebtedness and to enforce any other security therefor
held by it may be exercised by the Bank either prior to, simultaneously with, or
subsequent to any action taken by it hereunder. The Bank shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder and no waiver shall be valid unless in writing, signed by the
Bank, and then only to the extent therein set forth. A waiver by the Bank of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Bank would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of the
Bank, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law.
117
14. Successors and Assigns. This Security Agreement and all obligations of
the Debtor hereunder shall be binding upon the successors and assigns of the
Debtor, and shall, together with the rights and remedies of the Bank hereunder,
inure to the benefit of the Bank and its successors and assigns.
15. Further Indemnification. The Debtor agrees to pay, and to save the
Bank harmless from, any and all liabilities with respect to, or resulting from
any delay by the Debtor in paying, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral or in connection with any of the transactions contemplated by this
Security Agreement.
16. Notices. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, sent by confirmed telecopy transmission or sent by
over-night courier service or United States mail (registered or certified, with
postage prepaid and properly addressed) and shall be deemed to have been given
when delivered in person or by overnight courier service, upon receipt of a
telecopy or telex during normal business hours or four (4) Business Days after
deposit in the United States mail (registered or certified, with postage prepaid
and properly addressed). All notices shall be sent to the applicable party at
the following addresses or in accordance with the last unrevoked written
direction from such party to the other parties hereto:
If to the Debtor: ___________________
___________________
___________________
Attn.:_____________
___________________
With a Xxxxxxx Xxxxxxx, A Professional Corporation
copy to: 0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxx Xxxxxxxx Xxxx, Esq.
If to the Bank: Mellon Bank, X.X.
Xxxxxx Bank Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn.: Loan Administration Dept.
With a Xxxx Xxxxx Xxxx and XxXxxx
copy to: 000 Xxxx Xxxxxx
Princeton Xxxxxxxxx Village
Princeton, New Jersey 08540
Attn.: Xxxxxx X. Xxxx, Xx., Esq.
and
118
Mellon Financial Services
Xxxxxxx Xxxxx Xxx
Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn.: Xx. Xxxxx Xxxxxx
Vice President
17. Law Applicable. The Uniform Commercial Code of the State or States
having jurisdiction with respect to all or any portion of the Collateral from
time to time shall govern the attachment, perfection and the effect of
attachment and perfection of the Bank's security interest in the Collateral, and
the rights, duties, and obligations of the Bank and the Debtor with respect
thereto. This Security Agreement shall be deemed to be a contract under the laws
of the Commonwealth of Pennsylvania and the execution and delivery thereof and,
to the extent not inconsistent with the preceding sentence, the terms and
provisions hereof shall be governed by and construed in accordance with the laws
of the said Commonwealth.
18. Counterparts. This Security Agreement may be executed by one or more
parties to this Security Agreement in any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
19. Further Assurances. The Debtor agrees that at any time and from time
to time upon the written request of the Bank, the Debtor will execute and
deliver such further documents and do such further acts and things as the Bank
may reasonably request in order to effect the purposes of this Security
Agreement.
20. Obligations Absolute. The obligations of the Debtor under this
Security Agreement shall be absolute and unconditional, and shall remain in full
force and effect without regard to, and shall not be released, suspended,
discharged, terminated or otherwise affected by any circumstance or occurrence
whatsoever, including without limitation: (i) any renewal, amendment or
modification of or addition or supplement to or deletion from the Obligations,
or any assignment or transfer thereof; (ii) any waiver, extension, indulgence or
other action or inaction under or in respect or any of the Obligations of this
Security Agreement; (iii) any furnishing of additional security to the Bank or
its assignee or any acceptance thereof or any release of any security by the
Bank or its assignee; (iv) any limitation on any parties' liability or
obligations under any of the obligations or any invalidity or inability, in
whole or in part, of any of the obligations; or (v) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Debtor, any partnership or any other Person or any
action taken with respect to this Bank by any trustee or custodian or receiver
or by any court in any such proceeding, whether or not the Debtor shall have
notice or knowledge of any of the foregoing.
119
21. Modifications in Writing. This Security Agreement may not be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
22. Security for the Equipment Line of Credit/Term Loan Facility.
Notwithstanding any other term, covenant or condition contained in this Security
Agreement, the Debtor and the Bank hereby agree that the Collateral shall secure
only the Obligations and that the Collateral is not offered as security in
connection with any other indebtedness due and owing from the Debtor to the
Bank.
23. Release of the Collateral. (i) Provided no Event of Default is
existing under this Security Agreement, the Agreement of Guaranty, the Loan
Agreement or any other Loan Documents, and the Equipment Line of Credit/Term
Loan referred to in the applicable Notice of Borrowing is repaid in full
pursuant to Article II, Section 2.01(v) of the Loan Agreement, the Bank agrees
to deliver to the Debtor releases of the Collateral acquired with said Equipment
Line of Credit/Term Loan for consideration; provided, however, the Bank shall
have received from the Debtor fully executed UCC-3 Termination Statement(s)
prepared by the Borrower, together with the appropriate filing fees for filing
said UCC-3 Termination Statement(s) in the appropriate filing office(s) and
accurately describing the Collateral to be released from the lien of this
Security Agreement.
(ii) Provided no Event of Default is existing under this Security
Agreement, the Agreement of Guaranty, the Loan Agreement or any other Loan
Documents, in the event the Equipment Line of Credit/Term Loan referred to in
the applicable Notice of Borrowing is repaid in full pursuant to Article II,
Section 2.04 of the Loan Agreement for whatever reason and from whatever source
of monies, the Bank agrees to deliver to the Debtor releases of the Collateral
acquired with said repaid Equipment Line of Credit/Term Loan for consideration;
provided, however, the Bank shall have received from the Debtor fully executed
UCC-3 Termination Statement(s) prepared by the Borrower, together with the
appropriate filing fees for filing said UCC-3 Termination Statement(s) in the
appropriate filing office(s) and accurately describing the Collateral to be
released from the lien of this Security Agreement.
120
IN WITNESS WHEREOF, the Bank and the Debtor have caused this Security
Agreement to be signed by their appropriate authorized corporate officers and
their corporate seals to be hereunto affixed and attested, pursuant to the
resolution of their Boards of Directors, all as of the day and year first above
written.
WITNESS/ATTEST: ____________________________________,
a ____________________, as the Debtor,
_______________________________ By:_______________________________
Name: Name:
Title: Title:
MELLON BANK, N.A.,
as the Bank
By:_______________________________
Name:
Title:
121
SCHEDULE "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN SECURITY AGREEMENT, EXECUTED BY
AND BETWEEN ______________________________ AND MELLON BANK, N.A. DATED
_____________________, 19_____
All present and future rights, title and interests of the Debtor in and
to:
(i) any Equipment acquired with any portion of the proceeds of the
Equipment Line of Credit/Term Loan Facility;
(ii) Chattel Paper;
(iii) Contracts;
(iv) General Intangibles; and
(v) to the extent not otherwise included, all Proceeds and products
of any or all of the foregoing.
As used in this Security Agreement the above-referenced terms shall have
the following meanings, unless the context otherwise requires:
"Equipment" shall mean all "equipment", as such term is now or hereafter
defined in the applicable Uniform Commercial Code, now or hereafter owned by the
Debtor, and shall also mean and include all personal property, including that
constituting machinery, equipment, plant, furnishings, fixtures and other fixed
assets now owned or hereafter acquired by the Debtor, including, without
limitation, all items of machinery and equipment of any kind, nature, and
description whether affixed to real property or not, including automobiles,
trucks and vehicles of every description, trailers, handling and delivery
equipment, fixtures and office furniture, as well as all additions to,
substitutions for, replacements of or accessions to any of the items recited as
aforesaid and all attachments, components, parts (including spare parts) and
accessories whether installed thereon or affixed thereto and all fuel for any
thereof.
Supplementing the foregoing and without limiting the generality of the
foregoing the Equipment shall and is hereby declared to include, without being
limited to, all screens, awnings, storm windows and doors, window shades,
blinds, drapery and curtain rods, brackets, electric and other signs, dynamos,
generators, engines, ducts, switchboards, controls, motors, belting, gas and
electric fixtures, bulbs, wiring, conduits and other gas and electric equipment,
apparatus, machinery, fittings, appliances and appurtenances, elevators,
escalators, power and machinery plants for running and operation of elevators
and escalators, fire prevention and extinguishing apparatus, bathtubs, sinks,
water closets, basins, faucets, tanks, burners, furnaces, heaters, air
conditioners, boilers, pipes, pumps, radiators, fans and other power, heating,
plumbing, hot water, sanitary, drainage and ventilating apparatus and equipment,
air conditioning and cooling systems and equipment, watercooling and condensing
apparatus and equipment, apparatus for exclusion and extermination of vermin and
insects, vacuum and other cleaning systems, dust removal apparatus, lifting and
housekeeping machinery, apparatus and equipment, call systems
and other communications systems, ash and fuel conveyors incinerators,
incinerating fixtures and equipment, laundry machinery, apparatus and equipment,
laundry disposal equipment, cleaning and pressing apparatus and equipment, valet
shop equipment, store fixtures and equipment, murals, mirrors attached to walls,
doors and other facilities, wall-to-wall carpets, linoleum, inlaid floor
coverings, wall beds, radio and television apparatus and equipment, electronic
apparatus and equipment, trees, shrubs, plants, planter and flower boxes,
blackboards, bulletin boards, stanchions, easels, platforms, bars, bar
equipment, beverage equipment, dining room and restaurant equipment, kitchen
cabinets, gas electric and other stoves, ovens and ranges, fireless cookers,
dishwashers, glasswashers, refrigerators, ice boxes, compressors, coils, water
coolers and other refrigerating and cooking apparatus and equipment, medicine
chests, commodes, hospital equipment, cornices, mantels, paneling, partitions,
drafting tables, drawing boards, drawing cases, safes, cabinets, lockers,
shelving, printing equipment and apparatus, public address systems, spotlight
equipment, and all other articles, equipment, appliances, implements, devices
and accessories or things whatsoever (including any and all accessions to,
proceeds of replacements of and substitutions for the equipment), used or to be
used, or placed or to be placed, in the rooms, halls, lounges, offices, lobbies,
lavatories, basement cellars, vaults and other portions of the real property,
whether herein enumerated or not, and whether or not affixed to the real
property, and which are used or useful in the operation and maintenance thereof
or in the business conducted therein.
"Chattel Paper" shall mean all "chattel paper", as such term is now or
hereafter defined in the applicable Uniform Commercial Code, now or hereafter
owned by the Debtor, relating to any Equipment being acquired with any portion
of the proceeds of the Equipment Line of Credit/Term Loan Facility.
"Contracts" shall mean all contracts, licenses, instruments, undertakings,
documents or other agreements in or under which the Borrower may now or
hereafter have any rights, title or interests, including, without limitation,
(i) any claim arising thereunder from misrepresentation or breach of warranty,
and (ii) all such agreements which pertain to the lease, sale, construction,
design, manufacture or other disposition of any Equipment being acquired with
any portion of the proceeds of the Equipment Line of Credit/Term Loan Facility,
other than such contracts, instruments, undertakings, documents or other
agreements which specifically prohibit their assignment as security, provided,
that notwithstanding any such prohibition such contracts, instruments,
undertakings, documents or other agreements shall be deemed to be Contracts to
the extent that such prohibition is inconsistent with the provisions of the
applicable Uniform Commercial Code.
"General Intangibles" shall mean all "general intangibles", as such term
is now or hereafter defined in the applicable Uniform Commercial Code relating
to any Equipment.
SCHEDULE "B"
ATTACHED TO AND MADE A PART OF THAT CERTAIN SECURITY AGREEMENT, EXECUTED BY
AND BETWEEN _______________________________ AND MELLON BANK, N.A. DATED
_________________, 19____
Location of Collateral
EXHIBIT "H"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Form of Agreement of Guaranty
THIS AGREEMENT OF GUARANTY (including all amendments, modifications
and supplements is hereinafter referred to as the "Agreement of Guaranty"), made
this ___ day of _____________, 19__ by
____________________________________________________________________,
a [CORPORATION] [GENERAL PARTNERSHIP] [LIMITED PARTNERSHIP] [OTHER] duly
organized, validly existing and in good standing under the laws of the State of
_________________, having its principal office located at
_____________________________________________ (hereinafter referred to as the
Guarantor")
IN FAVOR OF
MELLON BANK, N.A., a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at Mellon Bank Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (hereinafter referred to as the "Lender").
W I T N E S S E T H:
WHEREAS, pursuant to a certain Equipment Line of Credit/Term Loan
Agreement dated as of December 6, 1996, executed by and between
Diagnostic/Retrieval Systems, Inc., a Delaware corporation (hereinafter referred
to as the "Borrower"), as the borrower, and the Lender, as the lender
(hereinafter said Equipment Line of Credit Term Loan Agreement, as it may be
amended, modified, extended, renewed and/or supplemented shall be referred to as
the "Loan Agreement"), the Lender agreed to make to the Borrower a secured
recourse equipment line of credit/term loan in the aggregate principal amount of
Five Million and 00/100 ($5,000,000.00) Dollars for the purpose of financing the
acquisition of certain machinery and equipment by the Borrower and the Guarantor
(hereinafter referred to as the "Loan"), which Loan is evidenced by a certain
Equipment Line of Credit/Term Loan Note dated as of December 6, 1996, in the
aggregate principal amount of the Loan (hereinafter said Equipment Line of
Credit/Term Loan Note, as it may be amended, modified, extended, renewed and/or
supplemented shall be referred to as the "Note"); and
WHEREAS, the Guarantor is [A SUBSIDIARY] [AN AFFILIATE] of the
Borrower and therefore the Guarantor has a common ownership interest with the
Borrower; and
WHEREAS, all words and terms not defined herein shall have the
respective meanings and be construed herein as provided for in the Note and the
Loan Agreement; and
WHEREAS, as an inducement to the Lender to make the Loan to the
Borrower, the Lender has required that the Guarantor, said Guarantor being
affiliated with the Borrower and thus will directly or indirectly benefit from
the Loan, personally and unconditionally enter into and execute this Agreement
of Guaranty, hereby guarantying the full, prompt and unconditional payment when
due of any "Liabilities of the Borrower" (as said term is defined in Paragraph 1
hereof) due and owing to the Lender in connection with the Loan, and the full
and complete performance of all other obligations of the Borrower with respect
to the Loan.
NOW, THEREFORE, IN CONSIDERATION OF THE LOAN MADE TO THE BORROWER
AND WITH KNOWLEDGE THAT THE LENDER WOULD NOT MAKE THE LOAN BUT FOR THE PROMISES
OF THE GUARANTOR HEREUNDER, THE GUARANTOR HEREBY ABSOLUTELY AND UNCONDITIONALLY,
REPRESENTS, WARRANTS AND COVENANTS AS FOLLOWS:
1. The Guarantor hereby irrevocably guaranties, on a joint and
several basis with all other existing and all future guarantors that now or
hereafter have or may enter into guaranties of the Loan with the Lender, the
full, prompt and unconditional payment when due, of each and every Liability of
the Borrower owing to the Lender, when and as the same shall become due, whether
at the stated maturity date, by acceleration or otherwise, and the full, prompt,
and unconditional performance of each and every term and condition of any
transaction to be kept and performed by the Borrower under the Note and under
the Loan Agreement. This Agreement of Guaranty is a primary obligation of the
Guarantor and shall be a continuing inexhaustible Agreement of Guaranty. In the
event any of the Liabilities of the Borrower shall not be paid according to
their terms, then, upon the written request of the Lender, the Guarantor shall
immediately pay the same, this Agreement of Guaranty being a guaranty of full
payment and not collectibility.
The term "Liability of the Borrower" or "Liabilities of the
Borrower" shall include all liabilities of the Borrower owed to the Lender in
connection with the Loan, whether direct or indirect, absolute or contingent,
joint or several, now or hereafter existing, due or to become due, to, and all
liabilities of any successor of the Borrower owed to the Lender in connection
with the Loan, whether direct or indirect, absolute or contingent, joint or
several, now or hereafter existing, due or to become due, to, or held by, the
Lender.
2. The Guarantor represents and warrants that the representations
and warranties set forth in Article IV of the Loan Agreement, with respect to
the Guarantor, are true, correct and complete, and the Guarantor hereby
expressly confirms and affirms each
representation and warranty concerning itself, as set forth in Article IV,
Section 4.01 and 4.02 of the Loan Agreement, as if restated in full herein.
* CHOOSE THE CORRECT P. #3 BELOW AND DELETE THE OTHER CHOICE
[3. (i) The Guarantor represents and warrants that (a) it is a
corporation duly organized, validly existing and in good standing under the laws
of the State of its incorporation, (b) is duly qualified to conduct business as
a foreign corporation and in good standing under the laws of each jurisdiction
in which it owns or leases real property or in which the nature of its business
requires it to be so qualified and (c) it has all requisite power and authority
to own, operate and encumber its properties and assets and conduct its business
as presently conducted or proposed to be conducted in connection with and
following the consummation of the transactions contemplated by this Agreement of
Guaranty.
(ii)(a) The Guarantor has the requisite corporate authority (1) to
execute, deliver and perform this Agreement of Guaranty and (2) to file any
documents required to be filed by it, if any, under this Agreement of Guaranty
with the appropriate Governmental Authority.
(b) The execution, delivery and performance under (or filing as the
case may be) of this Agreement of Guaranty and any other Loan Document to which
it is a party and the consummation of the transactions contemplated herein, have
been duly authorized by the Board of Directors the Guarantor and no further
corporate proceedings on the part of the Guarantor are necessary to consummate
such transactions.
(c) This Agreement of Guaranty has been duly executed and delivered
by the Guarantor and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.]
[3. (i) The Guarantor represents and warrants that (a) it is a
[general] [limited] partnership duly organized, validly existing and in good
standing under the laws of the State of its formation, (b) is duly qualified to
do business and in good standing under the laws of each jurisdiction in which it
owns or leases real property or in which the nature of its business requires it
to be so qualified and (c) it has all requisite power and authority to own,
operate and encumber its properties and assets and to conduct its business as
presently conducted or proposed to be conducted in connection with and following
the consummation of the transactions contemplated by this Agreement of Guaranty.
(ii)(a) The Guarantor has the requisite partnership authority (1) to
execute, deliver and perform this Agreement of Guaranty and (2) to file any
documents required to be filed by it, if any, under this Agreement of Guaranty
with the appropriate Governmental Authority.
(b) The execution, delivery and performance under (or filing as the
case may be) of this Agreement of Guaranty and any other Loan Document to which
it is a party and the
consummation of the transactions contemplated herein, have been duly authorized
in accordance with the partnership agreement of the Guarantor and no further
proceedings on the part of the Guarantor are necessary to consummate such
transactions.
(c) This Agreement of Guaranty has been duly executed and delivered
by the Guarantor and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.]
4. The Guarantor represents and warrants that (i) the assumption by
it of its obligations hereunder will result in material benefits to it and (ii)
this Agreement of Guaranty when executed and delivered by it will constitute a
legal, valid and binding obligation on its part, enforceable against it in
accordance with its terms, subject, as to enforcement of remedies only, to any
applicable bankruptcy, insolvency, reorganization, moratorium, similar laws of
general application at the time in effect and general principles of equity.
5. The Guarantor waives notice of acceptance of this Agreement of
Guaranty and notice of any Liability of the Borrower to which it may apply, and
waives notice of default, non-payment, partial payment, presentment, demand,
protest, notice of protest or dishonor and all other notices to which the
guarantor might otherwise be entitled, or which might be required by law and
required to be given by the Lender.
6. The Guarantor's liability hereunder shall be in no way affected,
diminished or released by (i) any amendment, change or modification of the
provisions of the Note, the Loan Agreement or any other Loan Document made to or
with the Lender by the Borrower, (ii) any extensions of time for performance
required thereby, (iii) the release of the Borrower from performance or
observation of any of the agreements, covenants, terms or conditions contained
in any of said instruments by the Lender or by operation of law, whether made
with or without notice to the Guarantor, (iv) acceptance by the Lender of
additional security or any increase, substitution or changes therein or (v) the
release by the Lender of any security or any withdrawal thereof or decrease
therein.
7. Without incurring responsibility to the Guarantor and without
impairing or releasing the obligations of the Guarantor hereunder, the Lender
may at any time and from time to time without the consent of, or notice to the
Guarantor, upon any terms or conditions and in whole or in part:
(i) change the manner, place or terms of payment and/or change
or extend the time for payment or renew or alter, any Liability of the Borrower
or any security therefor, and the guaranty herein made shall apply to the
Liabilities of the Borrower as so changed, extended, renewed or altered;
(ii) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by whomsoever at
any time pledged,
mortgaged or in which a security interest is given to secure, or howsoever
securing, the Liabilities of the Borrower;
(iii) exercise or refrain from exercising any rights against
the Borrower or others (including the Guarantor) or against the security, or
otherwise act or refrain from acting;
(iv) settle or compromise any Liability of the Borrower,
dispose of any security therefor, with or without consideration, or any
liability incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
Liability of the Borrower (whether due or not) to creditors of the Borrower
other than the Lender and the Guarantor; and
(v) apply any sums by whomsoever paid or howsoever realized to
any Liability of the Borrower.
8. No invalidity, irregularity or unenforceability of all or any
part of any Liability of the Borrower or the impairment or loss of any security
therefor, that is not caused by any actions or inactions of the Lender, shall
affect, impair or be a defense to this Agreement of Guaranty.
9. Upon the occurrence of an "Event of Default" as such term is
defined in the Loan Agreement, the Lender shall be immediately entitled (i) to
enforce the obligation of the Guarantor hereunder and (ii) to set-off any money
owed by the Lender in any capacity to the Guarantor or any property of the
Guarantor in the possession of the Lender against any of the monetary
obligations of the Guarantor to the Lender under this Agreement of Guaranty,
without first giving prior notice to the Guarantor (any such notice being
expressly waived by the Guarantor; however, the Lender shall give the Guarantor
notice within three (3) days after the Lender has set off any amounts), and the
Lender shall be deemed to have exercised such right of set-off and to have made
a charge against any such money or property immediately upon the occurrence of
such Event of Default, even through the actual book entries may be made at some
time subsequent thereof. Upon any default by the Guarantor with respect to any
of its covenants and agreements under this Agreement of Guaranty, the Lender may
(but shall not be so obligated), without waiving or releasing the Guarantor from
any of its obligations hereunder, and without prejudice to any other right or
remedy of the Lender hereunder, whether or not expressly set forth herein,
perform such covenant or agreement in respect of which there shall be a default
hereunder and in that regard pay such money as may be required or as the Lender
may reasonably deem expedient. Any such monies paid by the Lender as aforesaid,
together with interest thereon at the rate then applicable (or which would then
have been applicable) under the Note and/or the Loan Agreement shall be
obligations of the Borrower under the Note and/or the Loan Agreement which shall
be due and payable by the Guarantor to the Lender for the account of the
Borrower on demand.
l0. The Guarantor hereby waives any right or claim of right to cause
a marshalling of the Borrower's assets or to cause the Lender to proceed against
any of the security
or collateral held by the Lender before proceeding against the Guarantor, and
the Guarantor hereby waives any and all legal requirement that the Lender shall
institute any action at law or in equity against the Borrower, or anyone else,
with respect to the Note, the Loan Agreement or with respect to any other Loan
Documents or with respect to any security held by the Lender, as a condition
precedent to bringing any action against the Guarantor upon this Agreement of
Guaranty.
11. The Guarantor hereby irrevocably and unconditionally waives and
relinquishes any and all statutory, contractual, common law, equitable or other
claims and rights (i) to seek reimbursement, contribution, indemnification,
set-off or other recourse from or against the Borrower in connection with any
payments made by the Guarantor under this Agreement of Guaranty and (ii) to be
subrogated to the Lender's rights under the Loan Documents upon the Guarantor's
performance under this Agreement of Guaranty.
12. Until termination, this Agreement of Guaranty is made and shall
continue as to any Liability of the Borrower to the Lender without regard to the
existence of other collateral or security or guaranties, if any, or to the
validity or effectiveness of any or all thereof; and any or all such collateral
and security and guaranties may, from time to time, without notice to or consent
of the Guarantor, be sold, released, surrendered, exchanged, settled,
compromised, waived, subordinated or modified, with or without consideration, on
such terms and conditions as may be acceptable to Lender without in any manner
affecting or impairing the liability of the Guarantor. The Guarantor's
obligations under this Agreement of Guaranty shall extend to any and all monies
advanced by the Lender pursuant to the Note and/or the Loan Agreement.
13. The Guarantor covenants and agrees that the covenants set forth
in Articles VI and VII of the Loan Agreement are true, correct and complete and
the Guarantor hereby expressly confirms and affirms each covenant in Article VI,
Sections 6.01 through 6.12 and Article VII, Sections 7.01 through 7.13 of the
Loan Agreement as if restated in full herein.
14. The Guarantor covenants and agrees that it shall indemnify,
protect, defend and hold harmless the Lender as well as the Lender's directors,
officers, employees, agents, attorneys and shareholders (hereinafter referred to
collectively as the "Indemnified Parties" and individually as an "Indemnified
Party") from and against any and all losses, damages, expenses or liabilities of
any kind or nature and from any suits, claims, or demands, including reasonable
counsel fees incurred in investigating or defending such claim, suffered by any
of them and caused by, relating to, arising out of, resulting from, or in any
way connected or in any manner relating to the conduct of the business of the
Borrower and/or the Guarantor or the use or intended use of the proceeds of the
Loans provided, however, the Guarantor shall not be obligated to indemnify,
protect, defend and save harmless an Indemnified Party, if the loss, damage,
expense or liability was caused by or resulted from said Indemnified Party's own
gross negligence or willful misconduct. In case any action shall be brought
against an Indemnified Party based upon any of the above and in respect to which
indemnity may be sought against the Guarantor, said Indemnified Party against
whom such action was brought, shall promptly notify the Guarantor in writing,
and the Guarantor shall assume the defense thereof, including the
employment of counsel selected by the Guarantor and reasonably satisfactory to
said Indemnified Party, the payment of all costs and expenses and the right to
negotiate and consent to any settlement. Upon reasonable determination made by
said Indemnified Party against whom such action was brought, said Indemnified
Party, shall have the right to employ separate counsel in any such action and to
participate in the defense thereof; provided, however, that said Indemnified
Party shall pay the costs and expenses incurred in connection with the
employment of separate counsel. The Guarantor shall not be liable for any
settlement of any such action effected without its consent, but if settled with
the Guarantor's consent, or if there is a final judgment for the claimant in any
such action, the Guarantor agrees to indemnify and save harmless said
Indemnified Party against whom such action was brought, from and against any
loss or liability by reason of such settlement or judgment. The provisions of
this Paragraph 14 shall survive the termination of the Loan and the repayment of
the indebtedness evidenced by the Note.
15. If claim is ever made upon the Lender for repayment or recovery
of any amount or amounts received by the Lender in payment for, or on account
of, any of the Liabilities of the Borrower, and the Lender repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over the Lender or any of its property
or (ii) any settlement or compromise of any such claim affected by the Lender
with any such claimant (including the Borrower), then, and in such event, the
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon the Guarantor, notwithstanding the cancellation of any
note or any other instrument evidencing any Liability of the Borrower, and the
Guarantor shall be and remain liable to the Lender hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by the Lender.
16. Settlement of any claim by the Lender against the Borrower,
whether in any proceeding or not, and whether voluntary or involuntary, shall
not reduce the amount due under the terms of this Agreement of Guaranty except
to the extent of the amount paid by the Borrower in connection with the
settlement.
17. No delay on the part of the Lender in exercising any of its
rights, powers or privileges or partial or single exercise thereof under the
Note, this Agreement of Guaranty or any other document made to or with the
Lender by the Borrower shall operate as a waiver of any such privileges, powers
or rights. No waiver of any of its rights hereunder, and no modification or
amendment of this Agreement of Guaranty, shall be deemed to be made by the
Lender unless the same shall be in writing, duly signed on behalf of the Lender,
by a duly authorized officer, and each such waiver, if any, shall apply only
with respect to the specific instance involved, and shall in no way impair the
rights of the Lender or the obligations of the Guarantor to the Lender in any
other respect at any other time.
18. All rights, powers and remedies afforded to the Lender by reason
of this Agreement of Guaranty are separate and cumulative remedies and no one of
such remedies whether or not exercised by the Lender shall be deemed to exclude
any of the other remedies
available to the Lender nor prejudice availability of any other legal or
equitable remedy which the Lender may have with respect to the Loan.
19. This Agreement of Guaranty shall be governed by and construed
and interpreted in accordance with, the laws of the Commonwealth of Pennsylvania
and no defense given or allowed by the laws of any other state or country shall
be interposed in any action or proceeding hereon unless such defense is also
given or allowed by the laws of the Commonwealth of Pennsylvania. The Lender may
bring any action or proceeding to enforce or arising out of this Agreement of
Guaranty in any state or federal court of competent jurisdiction in the
Commonwealth of Pennsylvania. If the Lender commences such an action in a court
located in the Commonwealth of Pennsylvania, or any United States District court
in Pennsylvania, the Guarantor hereby agrees that it will submit to the personal
jurisdiction of such courts and will not attempt to have such action dismissed,
abated or transferred on the ground of forum non conveniens, and in furtherance
of such agreement the Guarantor hereby agrees and consents that without limiting
other methods of obtaining jurisdiction, personal jurisdiction over it in any
such action or proceeding may be obtained within or without the jurisdiction of
any court located in Pennsylvania and that any process or notice of motion or
other application to any such court in connection with any such action or
proceeding may be served upon the Guarantor by registered mail to or by personal
service at the last known address of the Guarantor; provided, however, that
nothing contained herein shall prohibit the Guarantor from seeking, by
appropriate motion, to remove an action brought in Pennsylvania state court to
the United States District Court for the Eastern District of Pennsylvania. If
such action is so removed, however, the Guarantor shall not seek to transfer
such action to any other district, nor shall the Guarantor seek to transfer to
any other district any action which Lender originally commences in such federal
court. Any action or proceeding brought by the Guarantor arising out of this
Agreement of Guaranty shall be brought solely in a court of competent
jurisdiction located in the Commonwealth of Pennsylvania, or in a United States
District Court for the Eastern District of Pennsylvania. The Guarantor hereby
waives any right to seek removal of any action or proceeding other than as
permitted according to this Paragraph 19.
20. This Agreement of Guaranty shall be binding upon and inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
21. This Agreement of Guaranty shall terminate upon the termination
of the Note in accordance with its terms. The Borrower or the Guarantor may
terminate this Agreement of Guaranty and the Note and all other obligations of
the Borrower or the Guarantor to the Lender under the Note or this Agreement of
Guaranty, by paying to the Lender all sums due and owing to the Lender hereunder
and under the Note or this Agreement of Guaranty.
22. Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in writing
and may be personally served, telecopied, or sent by overnight courier service
or United States mail and shall be deemed to have been given when delivered in
person or by overnight courier service, upon receipt of a confirmed telecopy
transmission during normal business hours or four (4) Business
Days after deposit in the United States mail (registered or certified, with
postage prepaid and properly addressed). Notices to the Lender shall not be
effective until received by the Lender. For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered shall be as
set forth below, or, as to each party, at such other address as may be
designated by such party in a written notice to the other party.
If to the Guarantor: _____________________
_____________________
_____________________
Attn:________________
_____________________
With a copy to: Xxxxxxx Xxxxxxx A Professional Corporation
0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxxx Xxxx, Esq.
If to the Lender: Mellon Bank, N.A.
Raritan Xxxxx Xxx
Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xx. Xxxxx Xxxxxx
Vice President
With a copy to: Xxxx Xxxxx Xxxx & XxXxxx
Princeton Xxxxxxxxx Village
000 Xxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn: Xxxxxx X. Xxxx, Xx., Esq.
All notices, payments, requests, reports, information or demands so given shall
be deemed effective upon receipt or, if mailed, upon receipt or the expiration
of the fourth (4th) Business Day following the date of mailing, whichever occurs
first, except that any notice of change in address shall be effective only upon
receipt by the party to whom said notice is addressed. A failure to send the
requisite copies does not invalidate an otherwise properly sent notice to the
Guarantor and/or the Lender.
23. In case of any proceedings to collect any liabilities of the
Guarantor owed to the Lender hereunder, the Guarantor shall pay all costs and
expenses of every kind for
collection, sale or delivery of any collateral or assets or properties of the
Guarantor, including reasonable attorneys' fees, and after deducting such costs
and expenses from the proceeds of sale or collection, the Lender may apply any
residue to the liabilities of the Guarantor who shall continue liable for any
deficiency, with interest at the rate provided for in the Note and/or the Loan
Agreement.
24. In all references herein to any parties, persons, entities or
corporations, the use of any particular gender or the plural or singular number
is intended to include the appropriate gender or number as the text of the
within instrument may require.
25. The Guarantor hereby acknowledges and agrees that they shall
have the sole responsibility for obtaining from the Borrower such information
concerning the Borrower's financial condition and business operations as the
Guarantor may require, and that the Lender has no duty at any time to disclose
to the Guarantor any information relating to the business operations or
financial condition of the Borrower.
26. This Agreement of Guaranty may be executed in counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument.
27. The Guarantor hereby acknowledges and agrees that in accordance
with and as provided for in Article VI, Section 6.12 of the Loan Agreement
additional guarantors will agree to guaranty, on a joint and several basis, with
the Guarantor, all the Liabilities of the Borrower. The Guarantor hereby
confirms and reaffirms that the addition from time to time of any new
guarantor(s) shall not affect the enforceability and validity of this Agreement
of Guaranty against the Guarantor. This Agreement of Guaranty shall remain in
full force and effect and binding against the Guarantor as a continuing guaranty
of the Liabilities of the Borrower, subject to the termination provisions
herein, without any additional act(s) or documentation by the Guarantor at the
time of the addition of said new guarantor(s).
IN WITNESS WHEREOF, the Guarantor has caused this Agreement of
Guaranty to be duly executed and delivered by its appropriate authorized
[GENERAL PARTNER(S)] [CORPORATE OFFICERS], [AND, IF APPLICABLE, ITS CORPORATE
SEAL TO BE HEREUNTO AFFIXED AND ATTESTED, PURSUANT TO THE RESOLUTION OF ITS
BOARD OF DIRECTORS,] all as of the day and year first above written.
WITNESS/ATTEST: ____________________________,
a __________________, as the Guarantor
_______________________ By: __________________
Name: Name:
Title: Title:
SCHEDULE 2.01(I)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
List of Subsidiaries and/or Affiliates Who May Borrow
All Corporate Guarantors and Partnership Guarantors
SCHEDULE 4.01(III)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Existing Issued and Authorized Capital Stock of the Borrower
1. Preferred Stock
Par Value: $10.00 per share
Authorized: 20,000,000 shares
Issued: 0 shares
Outstanding: 0 shares
2. Common Stock
Par Value: $0.01 per share
Authorized: 20,000,000 shares
Issued: 5,986,366 shares
Outstanding: 5,565,690 shares (420,676 shares held in treasury)
3. Options per 1991 Stock Option Plan
Number of Shares Subject to Options: 281,500 shares common stock
4. Options per 1991 Non-Qualified Stock Option Plan
Number of Shares Subject to Options: 120,000 shares common stock
5. % Senior Subordinated Convertible Debentures Due 2003
Number of Shares Issuable Upon Conversion: 2,824,858 shares common stock
6. 8.5% Convertible Subordinated Debentures Due 1998
Number of Shares Issuable Upon Conversion: 332,800 shares common stock
7. 1996 Omnibus Plan
Number of Shares Issuable Upon Conversion: 0 shares common stock
SCHEDULE 4.01(VII)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Pending Actions, Suits, Proceedings, Governmental
Investigations or Arbitrations
NONE
SCHEDULE 4.01(XV)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Environmental Disclosure
NONE
SCHEDULE 4.01(XVI)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
ERISA
SCHEDULE 4.01(XX)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
List of Joint Ventures
1. DRS Medical Systems
2. Laurel Technologies Partnership
SCHEDULE 4.01(XXI)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Existing Insurance Policies, Programs and Claims
See Attached Certificates of Insurance. Also see attached list of claims.
SCHEDULE 4.01(XXVII)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Labor Unions/Collective Bargaining Agreements
NONE
SCHEDULE 4.01(XXVIII)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Location of Collateral
1. Diagnostic/Retrieval Systems, Inc.
(i) 0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
(ii) 0000 Xxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(iii) DRS Military Systems (a Division of DRS, Inc.)
000 Xxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
(iv) DRS Military Systems - Los Alamos
000 Xxxx Xxxx Xxxxx
Xxx Xxxxxx, Xxx Xxxxxx 00000
2. Technology Applications & Service Company
(i) 000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
(ii) Technical Services Division
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
(iii) Technical Services Division
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
3. DRS Systems Management Corp.
c/o Laurel Technologies
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
4. DRS/MS, Inc.
DRS Medical Systems (formerly Universal
Sonics Corp.)
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
5. Precision Echo, Inc.
0000 Xxxxxxx Xxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
6. Ahead Technology Acquisition Corp.
MEC Technology
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxx 00000
7. Ahead Wisconsin Acquisition Corp.
Vikron Technology, Inc.
000 Xxxxxxxx Xxxxx Xxxx Xxxxx
Xx. Xxxxx Xxxxx, Xxxxxxxxx 00000
8. Nortronics Acquisition Corporation
Nortronics, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxx 00000
9. OMI Acquisition Corp. (d/b/a OMI Corp.)
0000 Xxxxxxxx Xxxx Xxxxx, X.X.
Xxxx Xxx, Xxxxxxx 00000
10. Pacific Technologies, Inc.
0000 Xxxxxx Xxx Xxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
SCHEDULE 6.05
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Insurance Policies and Programs
See attached Certificate of Insurance
SCHEDULE 7.01(III)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Permitted Existing Consolidated Debt
1. 9% Senior Subordinated Convertible Debentures due October 1, 2003
Principal amount outstanding: $25,000,000.00
2. 8.5% Convertible Subordinated Debentures due August 1, 1998
Principal amount outstanding: $4,992,000.00
3. Suffolk County Industrial Development Agency 1991 Variable Rate Demand
Industrial Development Revenue Refunding Bonds (Photronics Corp. Facility)
Principal amount outstanding: $1,695,000.00
4. Covenant and Agreement Not to Compete Dated October 28, 1994 Between Ahead
Technology, Inc. and Xxxxxx X. Van Houtten
Amount outstanding: $333,000.00 ($9,000.00 per month)
5. Assumption and Assignment of License Agreement Dated as of July 7, 1995
Among Xxxx Zeiss Stiftung, Opto Mechanik, Inc., OMI Acquisition Corp. and
Photronics Corp.
Amount outstanding: $58,851.00 (varying installments through April 28,
1997)
6. Term Note to Technology Development and Education Corporation
Principal amount outstanding: $70,695.00 (monthly installments through
March 1, 2000)
7. Term Note to Southern Alleghenies Planning and Development Commission
Principal amount outstanding: $53,690.00 (monthly installments through
March 1, 2000)
8. The following 3 Letters of Credit
(i) Irrevocable Letter of Credit, No. PB-284327, issued by Xxxxxx
Guaranty Trust Company of New York for the account of Photronics
Corp. for the benefit of Manufacturers and Traders Trust Company in
the Stated Amount of $1,726,781.25, issued on December 19, 1991 and
expiring no later than January 19, 1998.
(ii) Irrevocable Standby Letter of Credit, No. 531876, issued by Comerica
Bank - California for the account of Precision Echo, Inc.for the
benefit of Xxxxx Xxxx Institute of Science and Technology (Taiwan)
in the Stated Amount of $268,200.00, issued on March 18, 1996 and
expiring no later than April 8, 1997.
(iii) Irrevocable Standby Letter of Credit, No. 531883, issued by
Comerica Bank - California for the account of Precision Echo,
Inc. for the benefit of Xxxxx Xxxx Institute of Science and
Technology (Taiwan) in the Stated Amount of $44,700.00 issued
on March 18, 1996 and expiring no later than August 8, 1997.
NOTE: All principal amounts are as of December 2, 1996.
SCHEDULE 7.03
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
Existing Loans and Investments
I. Loans:
1. Amended and Restated Promissory Note from Xxxx X. Xxxxxx
(Chairman of the Board, President and Chief Executive
Officer) to the Company, dated as of May 26, 1995;
$104,100 principal amount; 8% per annum interest rate
2. Loan Receivable from Xxxx X. Xxxxxx, Xx. (President -
DRS Electronic Systems Group); $50,000 current principal
balance; no stated interest rate (interest is imputed
annually based on Internal Revenue Code and IRS
regulations)
II. Investments:
1. Excess corporate cash balances are currently invested in
the following:
(i) The Xxxxxxxx Money Market Fund (X.X. Xxxxxx)
(ii) Xxxxxxx Xxxxx Institutional Fund
SCHEDULE 7.12(I)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
EQUIPMENT LINE OF CREDIT/TERM LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED AS OF DECEMBER 6, 1996
List of Existing Guaranties
1. That certain Agreement of Guaranty dated May 31, 1996, executed by the
Corporate Guarantors in favor of the Lender, as amended and modified by
that certain First Amendment and Modification Agreement dated as of
December 6, 1996, executed by and between the Borrower, the Corporate
Guarantors and the Lender, pursuant to which the Corporate Guarantors
agreed to guaranty, on a joint and several basis, the "Liabilities of the
Borrower" (as said term is defined in said Agreement of Guaranty) in
connection with an unsecured recourse revolving line of credit loan from
the Lender to the Borrower in the aggregate principal amount of
$15,000,000.00
