CREDIT AGREEMENT
FLEET BANK (called the "Bank") and TRANSITION ANALYSIS COMPONENT
TECHNOLOGY, INC., a corporation organized under the laws of the State of
Delaware with its principal place of business at 00000 Xxxx Xxxxx Xxxxxxx, Xxxxx
Xxxxx, Xxxxxxxxxx 00000 called (the "Borrower"), agree that the following terms
and conditions shall apply to all loans, notes and obligations of any kind of
Borrower to Bank now existing or hereafter arising or created, including without
limitation direct or indirect, absolute or contingent, and any sums which Bank
receives and is obligated by a Bankruptcy Court or other legal authority to
repay (called the "Obligations"). The Obligations under this Agreement are
without limitation as to amount, unless specifically restricted or limited in
the Special Provisions section of this Agreement. The Addendum (the "Addendum")
attached to this Agreement is made a part hereof and is incorporated herein by
reference. The Addendum may be amended from time to time in writing executed by
the parties to this Agreement.
Article I - BORROWER'S REPRESENTATIONS AND AGREEMENTS
A. Organization and Power. The Borrower is and will continue to be: (1)
validly existing and in good standing under the laws of the state of its
organization, and (2) duly qualified to transact business and in good standing
in all states and countries where such qualification is required. The Borrower
has and will continue to have full power and authority to own its properties, to
carry on its business as being conducted, to execute and perform this Agreement,
and to borrow hereunder. Except for the acquisition (by purchase of assets,
stock purchase, merger or otherwise) of Research Analysis Corporation ("RAC"),
which acquisition the Bank expressly consents to (the "RAC Acquisition"), the
Borrower will not create or acquire any new Affiliates after the date of this
Agreement without the prior written consent of the Bank. For purposes of this
Agreement, "Affiliates" are defined as entities directly or indirectly
controlling, controlled by or under common control with the Borrower by means of
voting securities, contract, ownership, or otherwise.
B. Proceedings of Borrower. The execution, delivery, and performance of
this Agreement and of any related notes, assignments, mortgages, security
agreements, guarantees, or other agreements and documents have been duly
authorized by all necessary parties. All of the same, when executed and
delivered: (1) are or will be valid and enforceable in accordance with their
respective terms, (2) will not violate any provision of law or the Borrower's
Certificate of Incorporation, Bylaws, or other organizational and governing
documents and (3) will not violate, result in a breach of, or constitute a
default under any agreement, decree, or order affecting the Borrower or by which
any of its properties is bound. No consent or approval of any court or
governmental instrumentality is required in connection with the authorization,
execution, delivery or performance of this Agreement or any related notes,
assignments, mortgages, security agreements, guarantees or other agreements. If
requested by the Bank, the Borrower will deliver to the Bank the certificate of
its corporate officers or general partners as to the matters described herein,
in form and substance satisfactory to the Bank.
C. Litigation. At the date of this Agreement, there is no litigation or
proceeding before any court or governmental body pending or, to its knowledge,
threatened in writing against
the Borrower which, if adversely determined, would have a material adverse
effect on the financial condition or normal manner of doing business of the
Borrower. The Borrower will immediately notify the Bank of the future
commencement of any such action or proceeding. The Borrower is not and will not
be in material violation of any court or governmental order.
D. Financial Statements. All historical financial statements furnished
by the Borrower to the Bank are complete and correct, have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the period indicated, and fairly present the financial condition of
the Borrower as of the respective dates thereof and the results of its
operations for the respective periods covered thereby. Since March 31, 1997, in
the case of the Borrower, and March 31, 1997, in the case of the Guarantor,
there has been no adverse change in the assets, liabilities, financial
condition, operations or business of the Borrower or Guarantor, respectively.
The Borrower will furnish to the Bank as soon as available, but in any
event, within the time required by the Addendum, copies of annual financial
statements of Borrower in reasonable detail satisfactory to the Bank, prepared
in accordance with generally accepted accounting principles and in the form
required by the Addendum. Borrower also will furnish to the Bank unaudited
financial statements prepared in accordance with generally accepted accounting
principles, in form satisfactory to the Bank, within the time required by the
Addendum. Each financial statement submitted shall be certified to be true and
correct to the best of his knowledge by the designated officer primarily
responsible for the financial affairs of Borrower, shall contain a certification
that Borrower is not in default of any of its Obligations, and shall include a
computation of applicable financial covenants.
E. Taxes. The Borrower has filed and will continue to file all tax
returns required by applicable authorities. The Borrower has paid and will
continue to pay all taxes and governmental charges upon Borrower, its income and
property to the extent that such taxes and charges have become due; provided,
however, that Borrower may in good faith diligently contest any tax prior to the
time at which levies, executions, or other enforcement actions may occur if
appropriate reserves are maintained.
F. Properties. The Borrower has and will continue to have good and
marketable title to all of its properties and assets. Borrower also has
undisturbed peaceable possession under all leases to which it is a party, and
all such leases are in full force and effect. The Borrower will maintain its
property, plant, equipment, vehicles, and other tangible property in good
condition and will make all reasonably needed repairs, replacements, and
additions so that its business is not materially and adversely affected at any
time.
G. Indebtedness. The Borrower has and will continue to have no
outstanding obligations for borrowed money, indebtedness, and the like, other
than: (1) indebtedness to the Bank, (2) indebtedness for borrowed money to Zing
Technologies, Inc. in an amount not in excess of $185,000 and (3) obligations
permitted by the Addendum or otherwise agreed to in writing by Bank.
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H. Insurance. The Borrower will maintain insurance with responsible
insurance companies in types and amounts reasonably satisfactory to Bank.
Borrower will provide to the Bank, within ten (10) days of its request, evidence
of insurance. All insurance policies shall name the Bank as additional insured
and mortgagee/loss payee as its interests may appear, and shall provide for
prior notice to the Bank of cancellation.
If Borrower fails to pay any premiums with respect to any insurance
when due, the Bank may pay such premiums and add the amount so advanced to the
principal indebtedness owed on the Obligations.
I. Mortgages and Liens. The Borrower is not and will not be a party to
negative pledges except in favor of the Bank. The Borrower will not create, or
allow to exist, voluntarily or involuntarily, any mortgage, pledge, lien,
security interest, or other encumbrance of any kind (including the charge upon
property purchased under conditional sales or other title retention agreements)
upon any of its property whether now owned or hereafter acquired, excluding only
(i) interests held by the Bank, (ii) taxes, assessments, governmental charges
not yet due or diligently contested in good faith by appropriate proceedings
prior to levies, executions, or other enforcement actions occurring and for
which appropriate reserves are maintained and (iii) interests permitted by the
Addendum. The Borrower will not discount or sell any of its accounts receivable.
J. Loans, Investments, Contingent Liabilities. The Borrower will not
assume, guarantee, endorse, contingently agree to purchase, or otherwise become
liable upon or a surety for any obligation, contingent or otherwise, whether
funded or current, of any other person or entity except for endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business. The Borrower will not make loans or advances to, or
investments (other than any investment in a wholly-owed subsidiary (the
"Acquisition Subsidiary") to be merged with RAC in the RAC Acquisition) of any
kind in, any person or other entity whatsoever, excluding only investments in
obligations issued or fully guaranteed by the United States or the State of New
York or certificates of deposit and the like issued by the Bank.
K. Mergers, Sales, and Acquisitions. Except for the RAC Acquisition
(but, in the event where the RAC Acquisition is by way of merger between the
Borrower and RAC, but only if the Borrower is the surviving entity), the
Borrower will not enter into any merger or consolidation, or acquire all or
substantially all the stock or assets of any person or other entity, enter into
sale-leaseback arrangements, or sell, lease, transfer, or otherwise dispose of
any of its assets except for inventory dispositions in the ordinary course of
business and disposition of assets no longer used or useful in the conduct of
its business. Except for the merger agreement required in connection with the
RAC Acquisition to which Borrower and the Acquisition Subsidiary shall be a
party (the "Merger Agreement") the Borrower will not enter into transactions
with Affiliates less favorable than third party arms' length transactions.
L. Dividends, Stock Distributions, and Salaries. Except for the
Borrower's entitlement to reclaim shares of its capital stock otherwise issuable
pursuant to the Merger Agreement but for the breach of representation or
warranties by RAC and its shareholders under
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the Merger Agreement (the "Holdback Provisions"), the Borrower will not: (1)
declare any dividends on any of its capital stock, (2) apply any of its property
or assets to the purchase, redemption or other retirement of any of its capital
stock or (3) make any other distribution of any kind with respect to any of its
capital stock.
The Borrower will not permit withdrawals, salaries, or compensation of
any kind to be paid in any manner to any person, except in amounts reasonably
related to the services performed and except for incentives paid to employees to
the extent approved by a majority of the Board of Directors of the Borrower.
M. Franchises, Permits, Laws. The Borrower has done, and will cause to
be done, all things necessary (i) to obtain, preserve and keep in full force and
effect all franchises, permits, licenses, trademarks, tradenames, copyrights,
patents, and other authority as are necessary to enable it to conduct its
business as being conducted without known conflict with others, and (ii) to
comply in all material respects with all laws and regulations now in effect or
hereafter promulgated by any properly constituted governmental authority having
jurisdiction.
N. ERISA. No action, event, or transaction has occurred, and Borrower
will not permit any of the same to occur, which could give rise to a lien or
encumbrance on Borrower's assets as a result of the application of relevant
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), and
Borrower has and will continue to comply in all material respects with the
requirements of ERISA.
O. Material Changes, Judgments. The Borrower will not make or permit
any material change to be made in the general character of its business as
carried on at the date of execution of this Agreement (it is agreed that the
continuation by Borrower of a business carried on by RAC as of the date of the
execution of this Agreement after the RAC Acquisition is completed will not be
deemed a material change to the general character of Borrower's business), or in
its capital structure, ownership interests, management, or form of organization
or organization documents, without the Bank's prior written consent.
Borrower will notify the Bank immediately of any default under any
existing contract or any acceleration of indebtedness or of any material adverse
change in its financial condition (including the filing of any liens or of any
suits or judgments which could, if adversely determined, materially affect its
business or financial condition). Borrower will immediately notify the Bank of
any change in its name, identity, ownership, organizational structure,
management or principal place of business.
P. Margin Securities. No proceeds of any loan or advance made by the
Bank have been or will be used for the purpose of carrying margin securities
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve except in compliance with such Regulation.
Q. Fees and Taxes. The Borrower will promptly pay all filing fees,
taxes, and assessments related to the Obligations and the perfection of any
collateral security required.
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R. Other Reports and Inspections. The Borrower will furnish to the Bank
such additional information, including, without limitation, certificates of no
default, as the Bank may reasonably request. The Borrower shall permit any
person designated by the Bank to make inspections of the property, assets, loan
collateral, books and records of the Borrower (and to make copies thereof), and
will discuss its affairs and finances with the Bank, as often and at such times
as may be reasonably requested.
S. Opinion of Counsel. At closing, the Borrower shall deliver an
opinion of its legal counsel covering such matters as may be reasonably
requested by the Bank.
T. Collateral. If the Bank at any time is of the opinion that any
collateral for the Obligations is insufficient or has declined, or is reasonably
projected to decline in value, or if the Bank otherwise deems itself insecure,
the Bank may call for additional security satisfactory to it, and Borrower
hereby promises to furnish such security forthwith.
U. Overdrafts. In the event the Bank, in its sole discretion, chooses
to honor any Borrower overdraft on any account held by Bank, the Borrower shall
pay the amount of the overdraft to the Bank forthwith. The Bank, at its option,
may treat the overdraft as a loan, payable on demand, and may, if it chooses,
add the amount of the overdraft to any existing Obligation.
V. Requests/Payments. The Bank is hereby authorized to honor borrowing
requests from Xxxxxx Xxxxxxxx or Xxxxxx Xxxxx and no other person. Requests must
be in writing, which may include facsimile transmissions. The Bank's crediting
of the Borrower's account with the amount requested shall conclusively establish
the Borrower's obligation to repay the amount advanced. The Borrower hereby
authorizes the Bank to debit the Borrower's accounts for payments due to the
Bank, but nothing contained herein shall release Borrower from responsibility
for assuring that payments are made when due.
W. Environmental Matters. For purposes of this Section, all property
owned or used by the Borrower, now, in the past, or in the future, shall be
called the "Borrower Property". "Hazardous Substances" means, without
limitation, any explosives, radon, radioactive materials, asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum
products, methane, hazardous materials, hazardous wastes, hazardous or toxic
substances and any other material defined as a hazardous substance in any
Environmental Law. "Environmental Laws" means all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances, regulations, codes, rules, policies, guidelines,
procedures, interpretations, decisions, orders, or directives, whether existing
as of the date hereof, previously enforced or subsequently enacted relating to
the protection of the environment and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances. "Environmental Permits" means all licenses, permits,
approvals, authorizations, consents or registrations required by any applicable
Environmental Laws and applicable judicial and administrative orders in
connection with ownership, lease, purchase, transfer, closure, use and/or
operation of Borrower Property and/or as may be required for the storage,
treatment, generation, transportation, processing, handling, production or
disposal
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of Hazardous Substances. "Environmental Report" means any written report
prepared for Borrower or Bank by an environmental consulting or environmental
engineering firm. "Release" has the same meaning as given to that term in
Section 101(22) of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time, 42 U.S.C. Section 9601(22),
and the regulations promulgated thereunder.
The Borrower:
(a) has kept and shall keep, and shall cause all operators,
tenants, subtenants, licensees and occupants of the Borrower
Property to keep the Borrower Property free of all Hazardous
Substances and shall not cause or permit the Borrower Property
or any part thereof to be used for the storage, treatment,
generation, transportation, processing, handling, production
or disposal of any Hazardous Substances except in compliance
with all Environmental Laws;
(b) has complied with and shall comply with, and shall cause all
operators, tenants, subtenants, licensees and occupants of the
Borrower Property to comply in all material respects with all
applicable Environmental Laws and shall obtain and comply
with, and shall cause all operators, tenants, subtenants,
licensees and occupants of the Borrower Property to obtain and
comply with, all Environmental Permits;
(c) shall promptly provide Bank with a copy of all notifications
which it gives or receives with respect to any past or present
Release or the threat of a Release of any Hazardous Substance
on, at, or from the Borrower Property or any property adjacent
to the Borrower Property;
(d) shall undertake and complete all investigations, studies,
sampling and testing and all removal and other remedial
actions required by law to contain, remove and clean up all
Hazardous Substances that are determined to be present at the
Borrower Property in accordance with all applicable
Environmental Laws and all Environmental Permits;
(e) shall at all times allow the Bank and its officers, employees,
agents, representatives, contractors and subcontractors
reasonable access, after reasonable prior notice, to the
Borrower Property for the purposes of ascertaining site
conditions, including, but not limited to, subsurface
conditions;
(f) shall deliver promptly to Bank: (i) copies of any documents
received from the United States Environmental Protection
Agency (the "EPA") or any state, county or municipal
environmental or health agency concerning Borrower's
operations or Borrower Property; and (ii) copies of any
documents submitted by Borrower to EPA or any state, county or
municipal environmental or health agency concerning its
operations or the Borrower Property; and
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(g) agrees that if at any time Bank obtains any reasonable
evidence or information which suggests that a material
potential environmental problem may exist at Borrower
Property, and/or at any time after an Event of Default, Bank
may require that a full or supplemental environmental
inspection and audit report with respect to Borrower Property
of a scope and level of detail reasonably satisfactory to Bank
be prepared by an environmental engineer or other qualified
person acceptable to Bank at Borrower's expense. If such audit
report indicates the presence of any Hazardous Substance or a
Release or the threat of a Release of any Hazardous Substance
on, at, or from the Borrower Property, Borrower shall promptly
undertake and diligently pursue to completion all necessary,
appropriate and legally authorized investigative, containment,
removal, clean up and other remedial actions, using methods
recommended by the engineer or other person who prepared said
audit report and acceptable to the appropriate federal, state
and local agencies or authorities.
The Borrower agrees to indemnify, defend, and hold harmless the Bank
and its agents, employees, contractors, and representatives from and against any
and all liabilities, claims, damages, penalties, expenditures, losses,
expenditures for the protection of mortgaged property or other collateral, or
charges, including, but not limited to, all costs of investigation, monitoring,
legal representation, remedial response, removal, restoration or permit
acquisition of any kind whatsoever, which may now or in the future be
undertaken, suffered, paid, awarded, assessed, or otherwise incurred by the Bank
or any of its employees, agents or representatives relating to, resulting from
or arising out of (a) the presence of, or a Release or the threat of a Release
of, any Hazardous Substance on, at, or from Borrower Property, (b) a violation
of any applicable Environmental Law, (c) non-compliance with any Environmental
Permit or (d) a material misrepresentation or inaccuracy in any representation
or warranty or a material breach of or failure to perform any covenant made by
Borrower in this Agreement.
Notwithstanding anything to the contrary contained herein, the
Borrower's liability shall survive the discharge, satisfaction or assignment of
this Agreement by the Bank until all of the following conditions are satisfied
in full:
(a) all of the Obligations are paid in full and the Bank has no
remaining commitments to Borrower;
(b) neither Bank nor any affiliate of Bank has at any time or in
any manner participated in the management or control of, taken
possession of or title to the Borrower Property or any portion
thereof, whether by foreclosure of mortgages, deed in lieu of
foreclosure or otherwise, or had the capacity or ability to
participate in the decisions or actions of the Borrower as the
same relate to Hazardous Substances;
(c) between the date of this Agreement and the date on which the
Obligations are paid in full, as provided in clause (a) above,
there has been no change in any applicable Environmental Law
which would make a lender or mortgagee liable in respect of
any of the indemnified matters contained in this Section
notwithstanding the fact
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that no event, circumstance or condition of the nature
described in clause (b) above ever occurred; and
(d) there exist no indemnified matters which are then pending.
The Borrower agrees that the Bank shall not be liable in any way for
the completeness or accuracy of any Environmental Report or the information
contained therein. The Borrower further agrees that the Bank has no duty to warn
the Borrower or any other person or entity about any actual or potential
environmental contamination or other problem that may have become apparent or
may become apparent to the Bank.
X. Other Agreements. The Borrower shall be bound by such other
covenants and agreements as are contained in the Addendum, and such other
documents or agreements as may be executed between Borrower and Bank from time
to time.
Article II - DEFAULTS
A. Defaults. The following events (called "Events of Default")
constitute defaults under any Obligation of Borrower:
1. Nonpayment. Failure by the Borrower to make any payment (a) of
principal of the Obligations when due, or (b) any other
Obligations (including without limitation any payment of
interest, or fees) for five days following notice that the
same is due.
2. Non-Compliance With Bank Agreements. Failure by Borrower to
comply with any other term of this Agreement or failure by
Borrower or Zing Technologies, Inc. ("Zing") to make any
payment of any kind to the Bank or to comply with any term in
any agreement with or obligation to the Bank for ten (10) days
after notice, or such additional period of time, not to exceed
90 days, as shall be required, with the exercise of due
diligence, to cure such default.
3. Representations. Any information furnished by the Borrower or
Zing to Bank having been false or misleading in any material
respect as of the date furnished.
4. Changes. Dissolution, cessation of business, or transfer of a
material part of assets of the Borrower.
5. Financial Difficulties. (i) Institution of bankruptcy
proceedings or other proceedings of any kind for the relief or
collection of debts by the Borrower or Zing or (ii)
institution of involuntary bankruptcy or similar proceedings
against the Borrower or Zing which are not dismissed for 90
days. For purposes of this paragraph, bankruptcy, debt
collection and similar proceedings shall include, without
limitation assignments for the benefit of creditors,
appointment of trustees, receivers, or custodians for a
material part of assets, levies upon or attachments of
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assets, or filing of judgments not fully insured or bonded or
removed within thirty days, and filing of tax liens.
6. Other Material Obligations. Default by Borrower or Zing with
respect to any material obligation to or contract with the
Bank or any other person or entity beyond the expiration of
applicable notice and/or grace periods thereunder.
7. Condemnation. Condemnation, seizure, or appropriation of a
material part of Borrower's, Zing's or any other guarantor of
any of the Obligations' assets by a court or governmental
authority.
8. Litigation. Filing of litigation or proceedings before any
court or governmental entity against Borrower, Zing or any
guarantor of any of the Obligations, not fully covered by
insurance and which if adversely determined would have a
material adverse effect on the financial condition or normal
manner of doing business of the Borrower, Zing or guarantor.
9. Zing Defaults. Zing (i) becomes or is declared insolvent,
dissolves, liquidates, allows or permits a merger,
consolidation or other change of its organizational structure,
(ii) suspends its usual business or (iii) transfers or permits
the transfer or permits the transfer of a material portion of
its assets.
B. Remedies. If any one or more Events of Default occur, the Bank may,
at its option, take any or all of the following actions at the same or different
times: (i) terminate any further commitments or obligations of the Bank, (ii)
accelerate all or part of the Obligations such that the same become forthwith
due and payable without presentment, demand, protest, or other notice of any
kind, all of which are hereby expressly waived and (iii) increase the rate of
interest on the Obligations to a rate four percent (4%) above the rate otherwise
in effect, which increased rate shall remain in effect until payment in full of
the Obligations or written waiver of such default held by the Bank.
In case any such Events of Default shall occur, the Bank shall be
entitled to use any legal remedy. Without limitation, the Bank shall be entitled
to recover judgment against the Borrower either before, or after, or during the
pendency of any proceedings for the enforcement of any security interests,
mortgages or guarantees. In the event of realization of any funds from any
security or guarantee and application thereof to the payment of the Obligations,
the Bank shall be entitled to enforce payment of and recover judgment for all
amounts remaining due and unpaid upon such Obligations. The Bank may proceed to
protect and enforce its rights by any other appropriate proceedings, including
action for the specific performance of any covenant or agreement contained in
this Agreement and other agreements held by the Bank.
Article III - MISCELLANEOUS
A. Expenses. Borrower shall promptly pay any fees, expenses, and
disbursements, including reasonable attorneys' fees of Bank related to this
Agreement and any Obligations.
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Among others, Borrower shall promptly pay (i) any cost of perfection of interest
of Bank in collateral, search fees, appraisal fees and the like, and (ii) any
expenses, reasonable attorneys' fees, costs, or disbursements in connection with
collection of any Obligation or enforcement of any of Bank's rights hereunder or
under any security agreement, guarantee, or other agreement given by Borrower to
the Bank. This obligation shall survive the payment of any notes executed by
Borrower. Bank may apply any payments of any nature received by it first to the
payment of Obligations under this section, notwithstanding any conflicting
provision contained in any other agreement with Borrower.
B. Waiver. No course of dealing, delay or failure of the Bank to
exercise any right, remedy, power or privilege hereunder or under any other
agreement with Borrower shall impair the same or be construed to be a waiver of
the same or of any Event of Default or an acquiescence therein. No single or
partial exercise of any right, remedy, power, or privilege shall preclude other
or further exercise thereof by the Bank. All rights, remedies, powers, and
privileges herein conferred upon the Bank shall be deemed cumulative and not
exclusive of any others available.
C. Security/Setoff. The Bank shall have a security interest in and
right of setoff with respect to all deposits or other sums credited by or due
from the Bank to the Borrower and a security interest in all securities or other
property of the Borrower in the Bank's possession for safekeeping or otherwise.
The Bank's security interest shall secure payment of the Obligations and the
payment and performance of all other obligations of the Borrower to the Bank,
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising. In the event of any demand or Event of Default
with respect to the Obligations, regardless of the adequacy of collateral,
without any demand or notice, except as required by applicable law, the Bank may
apply or setoff such deposits or other sums (including without limitation
amounts held in joint accounts and trust or agency accounts) and may sell or
dispose of any or all of such securities or other property and may exercise any
and all rights it may have under the New York Uniform Commercial Code, as in
effect from time to time. The rights of the Bank under this Agreement are in
addition to, and not exclusive of, any other rights it may have with respect to
such deposits, sums, securities, or other property under other agreements or
applicable principles of law. The Bank shall have no duty to take steps to
preserve rights against prior parties as to such securities or other property.
D. Business Days. Whenever any payment is due, or obligation is to be
performed hereunder on a Saturday, Sunday or holiday on which the Bank is
authorized to close, such payment may be made or obligation performed on the
next succeeding business day. Such extension of time shall, in such case, be
included in the computation of any interest or fees.
E. Amendments. This Agreement is intended to be continuing and shall
not be changed, terminated, or amended without the express written agreement of
both the Borrower and the Bank.
F. Participations. It is understood and agreed that the Bank may sell
participations in the Obligations to other banking institutions without giving
notice to the Borrower. Such other
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institutions shall be entitled to the same rights and remedies as the Bank has
hereunder or with respect to any Obligations.
G. Parties in Interest. All the terms and provisions of this Agreement
shall inure to the benefit of and be binding upon and be enforceable by the
respective legal representatives, successors and assigns of the parties hereto.
H. Governing Law. This Agreement, together with all of the rights and
obligations of the parties hereto, shall be construed, governed, and enforced in
accordance with the laws of the State of New York. Borrower consents to
jurisdiction and service of process, which may be effected by certified mail, in
the courts of the State of New York and in the courts of the United States
having jurisdiction thereof.
I. Trial By Jury. THE BORROWER WAIVES TRIAL BY JURY OF ANY CLAIMS OR
PROCEEDINGS WITH RESPECT TO THIS AGREEMENT, OR THE OBLIGATIONS, TO THE FULLEST
EXTENT ALLOWED BY LAW.
J. Termination. This Agreement may be terminated only (i) by a written
agreement of the Bank, or (ii) upon written request of Borrower at such time as
the Obligations have been satisfied in full and the Bank has no remaining
commitments to Borrower of any kind.
K. Severability. Any partial invalidity of the provisions of this
Agreement or any notes, agreements, or documents related hereto or to the
Obligations shall not invalidate the remaining portions hereof or thereof.
L. Counterparts. This Agreement may be executed in one or more
counterparts.
IN WITNESS WHEREOF, the parties have caused this Agreement (inclusive
of the terms contained in the Addendum) to be executed by their duly authorized,
respective officers.
TRANSITION ANALYSIS COMPONENT FLEET BANK
TECHNOLOGY, INC.
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. XxXxxxx
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Name: Xxxxxx X. Xxxxx Name: Xxxxxxx X. XxXxxxx
Title: Chief Financial Officer Title: Vice President
Date: As of August 28, 1997 Date: As of August 28, 1997
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THE UNDERSIGNED, GUARANTOR, AGREES TO THE TERMS OF THIS AGREEMENT (INCLUSIVE OF
THE TERMS CONTAINED IN THE ADDENDUM)
ZING TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
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STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the 28th day of August, 1997, before me personally came Xxxxxx X.
Xxxxx to me known, who, being by me duly sworn, did depose and say that he has
an address at 000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx; that he is the Chief
Financial Officer of TRANSITION ANALYSIS COMPONENT TECHNOLOGY, INC., the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the board of directors of said
corporation.
/s/ Xxxx Xxxxxx-Xxxxxx
-----------------------------------
Notary Public
STATE OF NEW YORK )
)ss.:
COUNTY OF WESTCHESTER )
On the 28th day of August, 1997, before me personally came Xxxxxxx X.
XxXxxxx, to me known, who, being by me duly sworn, did depose and say that he
has an address at No. 0000 Xxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000; that he is
the Vice President of FLEET BANK, the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the board of directors of said corporation.
/s/ Xxxx Xxxxxx-Xxxxxx
-----------------------------------
Notary Public
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ADDENDUM TO CREDIT AGREEMENT (THE "CREDIT AGREEMENT") DATED AS
OF AUGUST 28, 1997 BETWEEN TRANSITION ANALYSIS COMPONENTS
TECHNOLOGY, INC. AND FLEET BANK
Any default in the observance or performance of any other obligation of
the Borrower or Zing Technologies, Inc. ("Zing") owing to the Bank shall
constitute a default under the terms of this Agreement and the Note (as defined
below). All terms contained in the Note are hereby incorporated herein and made
a part hereof.
Section 1. AVAILABILITY; TERMINATION:
--------------------------
(a) The maximum amount of advances outstanding under the Note at any
time shall not exceed, in the aggregate, $1,500,000 (the "Credit Amount").
(b) The Borrower shall have the right to terminate the Credit Amount at
any time, provided that: (i) the Borrower shall give the Bank at least ten (10)
business days notice of such termination in the manner provided in this
Agreement and (ii) such termination of the Credit Amount is accompanied by the
repayment of all outstanding advances and accrued and unpaid interest then due
under the Note. The Credit Amount, once terminated, may not be reinstated.
Section 2. PURPOSE:
--------
The proceeds of this Agreement and the Note shall be used (i) for
equipment purchases and (ii) for general corporate purposes of the Borrower, and
for no other purpose.
Section 3. BORROWING PROCEDURES:
---------------------
The Borrower may, on any business day prior to but excluding June 30,
2000 (the "Termination Date") request advances hereunder in accordance with the
provisions of Article I (V) of the Credit Agreement in amounts not less than
$25,000 upon written or telephonic notice. If the Bank receives a request for an
advance prior to 11:00 a.m. on a business day, the Borrower may request such
advance be made available to the Borrower on the same business day. Written
notices by the Borrower shall be in the form of Exhibit A duly executed (an
"Advance Request"), and may be delivered by facsimile transmission. All
telephonic notices shall be confirmed promptly in writing by delivery of an
Advance Request. The principal amount owing from time to time may be recorded by
the Bank on the Commercial Purpose Master Note dated as of August 28, 1997 made
by the Borrower and payable to the order of the Bank (the "Note") or on any
schedule annexed thereto by the Bank or on any replacement of the Note.
Section 4. COLLATERAL:
-----------
The Obligations shall be secured by a first priority perfected security
interest in all assets (exclusive of real estate owned), and personal property
(exclusive of titled motor vehicles) of the Borrower, including, without
limitation all accounts, inventory, equipment, documents, and
general intangibles, whether now owned or hereafter acquired or arising, and all
income and proceeds thereof and replacements thereto.
Section 5. FINANCIAL REPORTING:
--------------------
The Borrower shall furnish to the Bank:
1. Promptly after filing or sending thereof, copies of Borrower's
Annual Report on Form 10-K and Quarterly Report on Form 10-Q
(together with all exhibits thereto), and in no event later
than one hundred twenty (120) days after the end of each
fiscal year in the case of the Form 10-K, and sixty (60) days
after the end of each fiscal quarter in the case of the Form
10-Q.
2. Promptly after filing or sending thereof, copies of Zing's
Annual Report on Form 10-K and Quarterly Report on Form 10-Q
(together with all exhibits thereto), and in no event later
than one hundred twenty (120) days after the end of each
fiscal year in the case of the Form 10-K, and sixty (60) days
after the end of each fiscal quarter in the case of the Form
10-Q.
3. Within sixty (60) days after the end of each fiscal quarter, a
non-default certificate which shall include a schedule showing
the calculation of all Financial Covenants and which shall be
signed by the chief financial officer of the Guarantor.
4. As and when filed, copies of all reports filed by the Borrower
and/or Guarantor with the Securities Exchange Commission.
5. Such other information regarding the operations, business
affairs and financial condition of the Borrower and the
Guarantor as the Bank may reasonably request.
Section 6. NEGATIVE COVENANTS:
-------------------
The Borrower will not, directly or indirectly, without the prior
written consent of the Bank:
1. Incur, create or permit to exist any mortgage, pledge, lien,
charge or other encumbrance of any of the Borrower's assets
other than (i) liens in favor of the Bank contemplated by this
Agreement, (ii) pledges or deposits in connection with or to
secure worker's compensation and unemployment insurance, (iii)
tax liens which are being contested in good faith with the
prior written consent of the Bank and against which, if
requested by the Bank, Borrower shall maintain reserves in an
amount and in form (book, cash, bond or otherwise)
satisfactory to the Bank or (iv) those specifically permitted,
in writing, by the Bank.
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2. Incur, create or permit to exist any indebtedness or
contingent liability other than (i) the advances under the
Note or (ii) guarantees or other obligations owed to the Bank.
3. Guarantee or otherwise in any way become, or be responsible
for, indebtedness or obligations (including working capital
maintenance, take-or-pay contracts, etc.) of any other person,
contingently or otherwise, except for the endorsement of
negotiable instruments by the Borrower in the ordinary course
of business.
4. Lend or advance money, credit, or property to any person, or
invest (other than Borrower's formation and acquisition of the
Acquisition Subsidiary (as defined in the Credit Agreement))
in (by capital contribution or otherwise) or (other than the
exercise of the Holdback Provisions) purchase or repurchase
the stock or indebtedness, or all or a substantial part of the
assets or properties, of any person and except for customary
collection arrangements for accounts receivable.
5. Sell, transfer, discount or otherwise dispose of notes,
accounts receivable or other rights to receive payment with or
without recourse, except for collection in the ordinary course
of business.
6. A. Sell, lease, transfer or otherwise dispose of its
properties or assets except in the ordinary course of
business and in arm's length transactions, or,
B. Except for the RAC Acquisition (as defined in the Credit
Agreement) (but in the event where the RAC Acquisition is
by way of merger between the Borrower and Research
Analysis Corporation ("RAC"), only if the Borrower is the
surviving entity), consolidate with or merge into any
other corporation or permit any other corporation to merge
into it or acquire all or substantially all of the
property or assets of any other person; provided, however,
prior to the consummation of the RAC Acquisition, the
Borrower provides evidence to the Bank, satisfactory to
the Bank, that all UCC-1 filings naming RAC and the
Acquisition Subsidiary, as debtor, in any jurisdiction
where RAC and the Acquisition Subsidiary conduct business
or are organized are terminated.
7. Materially alter the nature of the business of the Borrower
(its is agreed that the continuation by Borrower of a business
conducted by RAC as of the date of the execution of this
Addendum after the RAC Acquisition (as defined in the Credit
Agreement) is completed will not be deemed to materially alter
the nature of Borrower's business).
8. Pay any dividend or distribution.
9. Permit any changes in management from those existing on the
date of the execution and delivery of the Note and Agreement
(other than entering into
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employment agreements with two shareholders of RAC (Messrs.
Xxxxxxxxx and Xxxxxx) in connection with the consummation of
the RAC Acquisition).
Section 7. FINANCIAL COVENANTS:
--------------------
The Borrower shall comply or cause the Guarantor to comply with the
following covenant, tested as at the end of each fiscal quarter of the
Guarantor:
Tangible Net Worth. The Guarantor shall maintain a Net Worth
(defined as total assets less total liabilities, each as
determined in accordance with generally accepted accounting
practices) in (i) cash and currently on hand and on deposit,
demand deposits and checks held, (ii) short term, highly
liquid investments that are readily convertible to known
amounts of cash and (iii) marketable securities, in an amount,
in the aggregate, not less than $3,000,000.
Section 8. FEES. (a) The Borrower shall pay to the Bank a commitment fee on the
daily average of the Unused Commitment for the period from and including the
date of this Agreement to the earlier of the date the Credit Amount is
terminated or the Termination Date at a rate per annum equal to 1/4 of one
percent, calculated on the basis of a year of 360 days for the actual number of
days elapsed. The accrued commitment fee shall be due and payable in arrears
upon any reduction or termination of the Credit Amount and on the first such day
of each January, April, July and October, commencing on the first such date
after the execution and delivery of this Agreement. The term "Unused Commitment"
means, on any date, the amount of the Credit Amount less the amount of all
outstanding advances under the Note.
(b) The Borrower shall pay to the Bank the sum of Three
Thousand Seven Hundred Fifty and no/100 Dollars ($3,750.00) in consideration of
the Bank entering into this Agreement with the Borrower payable on the date this
Agreement is executed by the Borrower.
Section 9. MISCELLANEOUS:
--------------
1. The Borrower shall maintain or cause its Affiliates, as
required by the Bank, to maintain a satisfactory banking
relationship with the Bank as reasonably determined by the
Bank.
2. All financial statements of the Borrower and Guarantor shall
be prepared in accordance with, and all Financial Covenants
set forth herein shall be calculated on the basis of,
Generally Accepted Accounting Principles.
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EXHIBIT A
FORM OF ADVANCE REQUEST
, 19
-------------------- ---- ---
Fleet Bank
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Re: Credit Agreement dated as of August __, 1997 Transition
Analysis Component Technology, Inc. and Fleet Bank (the
"Agreement")
Gentlemen:
Pursuant to Section 3 of the Addendum to the Agreement (the
"Addendum"), the undersigned hereby confirms its request made on
_________________ ____, 19___ for an advance in the amount of
$__________________ (the "Advance") to be made on _____________ ____, 19___.
The representations and warranties contained or referred to in Article
I of the Agreement are true and accurate on and as of the effective date of the
Advance as though made at and as of such date (except to the extent that such
representations and warranties expressly relate to an earlier date); and no
Default or Event of Default has occurred and is continuing or will result from
the Advance.
TRANSITION ANALYSIS COMPONENT
TECHNOLOGY, INC.
By:
---------------------------------
Name:
Title:
