EXHIBIT 4.1m
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LOAN AND SECURITY AGREEMENT
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By and Among
FLEET CAPITAL CORPORATION,
BUSINESS FINANCE GROUP
and
JOULE STAFFING SERVICES, INC.,
JOULE TECHNICAL STAFFING, INC.,
JOULE TECHNICAL SERVICES, INC.,
JOULE TRANSPORTATION, INC. and
JOULE CORPORATE SERVICES, INC.
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Dated: August 22, 2003
$7,500,000
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[COMPANY LOGO GRAPHIC OMITTED] Fleet Capital
A FleetBoston Financial Company
TABLE OF CONTENTS
Page
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SECTION 1. CREDIT FACILITY 1
1.1 Revolving Credit Loans 1
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1.2 [INTENTIONALLY LEFT BLANK] 1
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1.3 Letters of Credit; LC Guaranties 1
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SECTION 2. INTEREST, FEES AND CHARGES 2
2.1 Interest 2
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2.2 Computation of Interest and Fees 2
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2.3 Commitment Fee 3
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2.4 Letter of Credit and LC Guaranty Fees 3
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2.5 Unused Line Fee 3
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2.6 Collection Charges 3
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2.7 Field Examination, Audit and Appraisal Fees 3
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2.8 Reimbursement of Expenses 3
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2.9 Bank Charges 4
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SECTION 3. LOAN ADMINISTRATION 4
3.1 Manner of Borrowing Revolving Credit Loans 4
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3.2 Payments 6
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3.3 Mandatory Prepayments 7
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3.4 Application of Payments and Collections 8
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3.5 All Loans to Constitute One Obligation 8
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3.6 Loan Account 8
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3.7 Statements of Account 8
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3.8 Increased Costs 8
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3.9 Basis for Determining Interest Rate Inadequate or Unfair 9
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SECTION 4. TERM AND TERMINATION 10
4.1 Term of Agreement 10
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4.2 Termination 10
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SECTION 5. SECURITY INTERESTS 11
5.1 Security Interest in Collateral 11
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5.2 Other Collateral 12
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5.3 Lien Perfection; Further Assurances 13
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5.4 Lien on Realty 13
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SECTION 6. COLLATERAL ADMINISTRATION 14
6.1 General 14
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6.2 Administration of Accounts 14
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6.3 [INTENTIONALLY LEFT BLANK] 16
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6.4 Administration of Equipment 16
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6.5 Payment of Charges 17
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SECTION 7. REPRESENTATIONS AND WARRANTIES 17
7.1 General Representations and Warranties 17
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7.2 Continuous Nature of Representations and Warranties 22
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7.3 Survival of Representations and Warranties 22
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SECTION 8. COVENANTS AND CONTINUING AGREEMENTS 22
8.1 Affirmative Covenants 22
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8.2 Negative Covenants 25
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8.3 Specific Financial Covenants 28
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SECTION 9. CONDITIONS PRECEDENT 28
9.1 Documentation 28
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9.2 No Default 29
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9.3 Other Loan Documents 29
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9.4 No Litigation 29
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9.5 Availability 29
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SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT 29
10.1 Events of Default 29
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10.2 Acceleration of the Obligations 31
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10.3 Other Remedies 31
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10.4 Remedies Cumulative; No Waiver 32
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SECTION 11. MISCELLANEOUS 33
11.1 Power of Attorney 33
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11.2 Indemnity 34
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11.3 Modification of Agreement; Sale of Interest 34
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11.4 Severability 34
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11.5 Successors and Assigns 34
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11.6 Cumulative Effect; Conflict of Terms 34
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11.7 Execution in Counterparts 35
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11.8 Notice 35
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11.9 Lender's Consent 36
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11.10 Credit Inquiries 36
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11.11 Time of Essence 36
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11.12 Entire Agreement 36
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11.13 Interpretation 36
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11.14 GOVERNING LAW; CONSENT TO FORUM 36
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11.15 WAIVERS BY BORROWER 37
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 22nd day of August, 2003,
by and between FLEET CAPITAL CORPORATION, BUSINESS FINANCE GROUP ("Lender"), a
Rhode Island corporation with an office at 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx
Xxxxxx 00000; and JOULE STAFFING SERVICES, INC., JOULE TECHNICAL STAFFING, INC.,
JOULE TECHNICAL SERVICES, INC., JOULE TRANSPORTATION, INC. and JOULE CORPORATE
SERVICES, INC., all New Jersey corporations (individually and/or collectively,
as the context may require, jointly and severally, referred to as the
"Borrower"), with their chief executive office and principal place of business
at 0000 Xxxxx 0 Xxxxx, Xxxxxx, Xxx Xxxxxx 00000. Capitalized terms used in this
Agreement have the meanings assigned to them in Appendix A, General Definitions.
Accounting terms not otherwise specifically defined herein shall be construed in
accordance with GAAP consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in this Agreement and the other Loan
Documents, Lender agrees to make a Total Credit Facility of up to $7,500,000
available upon Borrower's request therefor, as follows:
1.1 Revolving Credit Loans
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1.1.1 Loans and Reserves. Lender agrees, for so long as no
Default or Event of Default exists, to make Revolving Credit Loans to Borrower
from time to time, as requested by Borrower in the manner set forth in
subsection 3.1.1 hereof, up to a maximum principal amount at any time
outstanding equal to the Borrowing Base at such time minus the LC Amount and
reserves, if any. Lender shall have the right to establish reserves in such
amounts, and with respect to such matters, as Lender shall deem necessary or
appropriate, against the amount of Revolving Credit Loans which Borrower may
otherwise request under this subsection 1.1.1, including, without limitation,
with respect to (i) price adjustments, damages, unearned discounts, returned
products or other matters for which credit memoranda are issued in the ordinary
course of Borrower's business; (ii) other sums chargeable against Borrower's
Loan Account as Revolving Credit Loans under any section of this Agreement;
(iii) amounts owing by Borrower to any Person (other than Lender) to the extent
secured by a Lien on, or trust over, any Property of Borrower; and (iv) such
other matters, events, conditions or contingencies as to which Lender, in its
sole credit judgment, determines reserves should be established from time to
time hereunder. The Revolving Credit Loans shall be further evidenced by the
Revolving Credit Note and shall be secured by all of the Collateral.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be
used solely for the satisfaction of existing Indebtedness of Borrower to Fleet
National Bank and for Borrower's general operating capital needs in a manner
consistent with the provisions of this Agreement and all applicable laws.
1.2 [INTENTIONALLY LEFT BLANK].
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1.3 Letters of Credit; LC Guaranties. Lender agrees, for so long
as no Default or Event of Default exists and if requested by Borrower, to (i)
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issue its, or cause to be issued its Affiliate's, Letters of Credit for the
account of Borrower or (ii) execute LC Guaranties by which Lender or its
Affiliate shall guaranty the payment or performance by Borrower of its
reimbursement obligations with respect to Letters of Credit and letters of
credit issued for Borrower's account by other Persons in support of Borrower's
obligations (other than obligations for the repayment of Money Borrowed),
provided that the LC Amount at any time shall not exceed $3,000,000. No Letter
of Credit or LC Guarantee may have an expiration date that is after the last day
of the Original Term. Any amounts paid by Lender under any LC Guaranty or in
connection with any Letter of Credit shall be treated as Revolving Credit Loans,
shall be secured by all of the Collateral and shall bear interest and be payable
at the same rate and in the same manner as Revolving Credit Loans.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
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2.1.1 Rates of Interest. Interest shall accrue on the
Revolving Credit Loans in accordance with the terms of the Revolving Credit
Note. Interest shall accrue on the principal amount of the Base Rate Advances
outstanding at the end of each day at a fluctuating rate per annum equal to .50%
plus the Base Rate. Interest shall accrue on the principal amount of each of the
LIBOR Advances outstanding at the end of each day at a fixed rate per annum
equal to 2.75% plus the LIBOR for the applicable Interest Period. The rate of
interest applicable to Base Rate Advances shall increase or decrease by an
amount equal to any increase or decrease in the Base Rate, effective as of the
opening of business on the day that any such change in the Base Rate occurs.
2.1.2 Performance Pricing. Provided no Default or Event of
Default has occurred or is continuing hereunder and the Borrower is in
compliance with the financial covenants set forth in Section 8.3, commencing
October 1, 2003, interest on LIBOR Advances after such date shall accrue at a
fixed rate per annum equal to 2.50% plus the LIBOR for the applicable Interest
Period. All LIBOR Advances made prior to October 1, 2003 shall continue to
accrue interest in accordance with the rate set at the time of such Loan.
Performance pricing under this subsection 2.1.2 shall not be available after
October 1, 2003 if the Borrower has failed to be in compliance as stated
hereinabove by October 1, 2003.
2.1.3 Default Rate of Interest. Upon and after the
occurrence of an Event of Default, and during the continuation thereof, the
principal amount of all Loans shall bear interest at a rate per annum equal to
5% above the interest rate otherwise applicable thereto (the "Default Rate").
2.1.4 Maximum Interest. In no event whatsoever shall the
aggregate of all amounts deemed interest under the Revolving Credit Note and
charged or collected pursuant to the terms of this Agreement exceed the highest
rate permissible under any law which a court of competent jurisdiction shall, in
a final determination, deem applicable hereto. If any provisions of this
Agreement, the Revolving Credit Note are in contravention of any such law, such
provisions shall be deemed amended to conform thereto.
2.2 Computation of Interest and Fees. Interest, Letter of Credit
and LC Guaranty fees and collection charges hereunder shall be calculated daily
and shall be computed on the actual number of days elapsed over a year of 360
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days. For the purpose of computing interest hereunder, all items of payment
received by Lender shall be deemed applied by Lender on account of the
Obligations (subject to final payment of such items) one and one-half (1-1/2)
Business Days after receipt by Lender of such items in Lender's account located
in Cranford, New Jersey.
2.3 Commitment Fee. Borrower shall pay to Lender a commitment fee
of $28,125, which shall be fully earned and nonrefundable on the Closing Date,
of which $14,062.50 shall be paid concurrently with the execution of this
Agreement and $14,062.50 on or before December 31, 2003. Any amounts remaining
from Borrower's $25,000.00 good faith deposit after deduction by Lender of
expenses, appraisals, field examination and legal fees shall be applied to the
commitment fee.
2.4 Letter of Credit and LC Guaranty Fees. Borrower shall pay to
Lender:
(i) for standby Letters of Credit and LC Guaranties of
standby Letters of Credit, 2.25% per annum of the aggregate face amount
of such Letters of Credit and LC Guaranties outstanding from time to
time during the term of this Agreement, plus all normal and customary
charges associated with the issuance thereof, which fees and charges
shall be deemed fully earned upon issuance of each such Letter of
Credit or LC Guaranty, shall be due and payable on the first Business
Day of each month and shall not be subject to rebate or proration upon
the termination of this Agreement for any reason.
2.5 Unused Line Fee. Borrower shall pay to Lender a fee equal to
..375% per annum of the average monthly amount by which $7,500,000 exceeds the
sum of the outstanding principal balance of the Revolving Credit Loans plus the
LC Amount. The unused line fee shall be payable monthly in arrears on the first
day of each calendar month hereafter.
2.6 Collection Charges. All items of payment received by Lender at
any time (irrespective of whether there are Revolving Credit Loans outstanding
at the time of receipt) shall be subject to a collection charge equal to one and
one-half (1-1/2) Business Days interest on the amount thereof at the rate then
applicable to Base Rate Advances under Revolving Credit Loans, which collection
charges shall be payable monthly in arrears on the first Business Day of each
month.
2.7 Field Examination, Audit and Appraisal Fees. Borrower shall
pay to Lender audit and appraisal fees in accordance with Lender's current
schedule of fees in effect from time to time in connection with audit and
appraisal of Borrower's books and records, real Property and such other matters
as Lender shall deem appropriate. Borrower shall also pay to Lender field
examination fees at the rate of $850 per person per man day, plus out-of-pocket
expenses incurred by Lender in connection with field examinations performed by
Lender or its agents or representatives. Provided no Default or Event of Default
has occurred, the field examination fees set forth in this subsection shall not
exceed $25,000 per annum. After the occurrence of an Event of Default, such fees
shall be subject to change as Lender shall determine.
2.8 Reimbursement of Expenses. If, at any time or times regardless
of whether or not an Event of Default then exists, Lender or any Participating
Lender incurs legal or accounting expenses or any other costs or out-of-pocket
expenses in connection with (i) the negotiation and preparation of any amendment
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of or modification of this Agreement or any of the other Loan Documents, or any
sale or attempted sale of any interest herein to a Participating Lender; (ii)
the administration of this Agreement or any of the other Loan Documents and the
transactions contemplated hereby and thereby; (iii) any litigation, contest,
dispute, suit, proceeding or action (whether instituted by Lender, Borrower or
any other Person) in any way relating to the Collateral, this Agreement or any
of the other Loan Documents or Borrower's affairs; (iv) any attempt to enforce
any rights of Lender or any Participating Lender against Borrower or any other
Person which may be obligated to Lender by virtue of this Agreement or any of
the other Loan Documents, including, without limitation, the Account Debtors; or
(v) any attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then all such
legal and accounting expenses, other costs and out of pocket expenses of Lender
shall be charged to Borrower. All amounts chargeable to Borrower under this
Section 2.8 shall be Obligations secured by all of the Collateral, shall be
payable on demand to Lender or to such Participating Lender, as the case may be,
and shall bear interest from the date such demand is made until paid in full at
the rate applicable to Base Rate Advances from time to time. Borrower shall also
reimburse Lender for expenses incurred by Lender in its administration of the
Collateral to the extent and in the manner provided in Section 6 hereof.
2.9 Bank Charges. Borrower shall pay to Lender, on demand, any and
all fees, costs or expenses which Lender or any Participating Lender pays to a
bank or other similar institution (including, without limitation, any fees paid
by Lender to any Participating Lender) arising out of or in connection with (i)
the forwarding to Borrower or any other Person on behalf of Borrower, by Lender
or any Participating Lender, of proceeds of loans made by Lender to Borrower
pursuant to this Agreement and (ii) the depositing for collection, by Lender or
any Participating Lender, of any check or item of payment received or delivered
to Lender or any Participating Lender on account of the Obligations.
SECTION 3. LOAN ADMINISTRATION.
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under
the credit facility established pursuant to Section 1 hereof shall be as
follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan
shall be made, or shall be deemed to be made, in the following manner: (i)
Borrower may give Lender notice of its intention to borrow, in which notice
Borrower shall specify the amount of the proposed borrowing and the proposed
borrowing date, no later than 11:00 a.m. New York time on the proposed borrowing
date, provided, however, that no such request may be made at a time when there
exists a Default or an Event of Default; and (ii) the becoming due of any amount
required to be paid under this Agreement, whether as interest or for any other
Obligation, shall be deemed irrevocably to be a request for a Revolving Credit
Loan on the due date in the amount required to pay such interest or other
Obligation. As an accommodation to Borrower, Lender may permit telephonic or
electronic requests for loans and electronic transmittal of instructions,
authorizations, agreements or reports to Lender by Borrower. Unless Borrower
specifically directs Lender in writing not to accept or act upon telephonic or
electronic communications from Borrower, Lender shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of Lender's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to it telephonically or
electronically and purporting to have been sent to Lender by Borrower and Lender
shall have no duty to verify the origin of any such communication or the
authority of the person sending it.
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3.1.2 Disbursement. Borrower hereby irrevocably authorizes
Lender to disburse the proceeds of each Revolving Credit Loan requested, or
deemed to be requested, pursuant to this subsection 3.1.2 as follows: (i) the
proceeds of each Revolving Credit Loan requested under subsection 3.1.1(i) shall
be disbursed by Lender in lawful money of the United States of America in
immediately available funds, in the case of the initial borrowing, in accordance
with the terms of the written disbursement letter from Borrower, and in the case
of each subsequent borrowing, by wire transfer to such bank account as may be
agreed upon by Borrower and Lender from time to time or elsewhere if pursuant to
a written direction from Borrower; and (ii) the proceeds of each Revolving
Credit Loan requested under subsection 3.1.1(ii) shall be disbursed by Lender by
way of direct payment of the relevant interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes
Lender, in Lender's sole discretion, to advance to Borrower, and to charge to
Borrower's Loan Account hereunder or any other account at Bank as a Base Rate
Advance, a sum sufficient to pay all interest accrued on the Obligations during
the immediately preceding month and to pay all costs, fees and expenses at any
time owed by Borrower to Lender hereunder.
3.1.4 LIBOR Advances. Notwithstanding the provisions of
subsection 3.1.1 and provided that no Default has occurred or is continuing, in
the event Borrower desires to obtain a LIBOR Advance, Borrower shall give Lender
prior, written, irrevocable notice no later than 11:00 a.m. New York City Time
on the 2nd Business Day prior to the requested borrowing date specifying (i)
Borrower's election to obtain a LIBOR Advance, (ii) the date of the proposed
borrowing (which shall be a Business Day) and (iii) the amount to be borrowed,
which amount shall be in a minimum principal amount of $1,000,000 and may
increase in integral multiples of $100,000. In no event shall Borrower be
permitted to have outstanding at any one time LIBOR Advances with more than
three (3) Interest Periods or aggregate LIBOR Advances in excess of $6,000,000.
3.1.5 Conversion of Base Rate Advances. Provided that no
Default has occurred which is then continuing, Borrower may, on any Business
Day, convert any Base Rate Advance into a LIBOR Advance. If Borrower desires to
convert a Base Rate Advance, Borrower shall give Lender not less than two (2)
Business Days' prior written notice (prior to 11:00 a.m. New York City Time on
such Business Day), specifying the date of such conversion and the amount to be
converted. Each conversion into or conversion of a LIBOR Advance shall be in a
minimum principal amount of $1,000,000 and may increase in integral multiples of
$100,000 in excess thereof. After giving effect to any conversion of Base Rate
Advances to LIBOR Advances, Borrower shall not be permitted to have outstanding
at any one time LIBOR Advances with more than three (3) Interest Periods or
aggregate LIBOR Advances in excess of $6,000,000.
3.1.6 Continuation of LIBOR Advances. Borrower shall have
the right on two (2) Business Days' prior irrevocable written notice given to
Lender by Borrower (prior to 11:00 a.m. New York City Time on such Business
Day), subject to the provisions hereof, to continue any LIBOR Advance into a
subsequent Interest Period of the same or a different permitted duration, in
each case subject to the satisfaction of the following conditions
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(i) in the case of a continuation of less than
all LIBOR Advances, the LIBOR Advances continued shall each be in a
minimum principal amount of $1,000,000 and may increase in integral
multiples of $100,000; and
(ii) no LIBOR Advance (or portion thereof) may be
continued as a LIBOR Advance if a Default has occurred which is then
continuing or if, after giving effect to such continuation, Borrower
shall have outstanding more than three (3) Interest Periods or
aggregate LIBOR Advances in excess of $6,000,000.
If Borrower shall fail to give timely notice of its election to
continue any LIBOR Advance or portion thereof as provided above, or if such
continuation shall not be permitted, such LIBOR Advance or portion thereof,
unless such LIBOR Advance shall be repaid, shall automatically be converted into
a Base Rate Advance at the end of the Interest Period then in effect with
respect to such LIBOR Advance.
3.1.7 Inability to Make LIBOR Advances. Notwithstanding any
other provision hereof, if any applicable law, treaty, regulation or directive,
or any change therein or in the interpretation or application thereof, shall
make it unlawful for Lender (for purposes of this subsection 3.1.7, the term
"Lender" shall include the office or branch where Lender or any corporation or
bank then controlling any Lender makes or maintains any LIBOR Advances) to make
or maintain its LIBOR Advances, or if with respect to any Interest Period,
Lender is unable to determine the LIBOR relating thereto, or adverse or unusual
conditions in, or changes in applicable law relating to, the London interbank
market make it, in the reasonable judgment of Lender, impracticable to fund
therein any of the LIBOR Advances, or make the projected LIBOR unreflective of
the actual costs of funds therefor to Lender, the obligation of Lender to make
LIBOR Advances hereunder shall forthwith be suspended during the pendency of
such circumstances and Borrower shall, if any affected LIBOR Advances are then
outstanding, promptly upon request from Lender, convert such affected LIBOR
Advances into Base Rate Advances.
3.2 Payments. Except where evidenced by notes or other instruments
issued or made by Borrower to Lender specifically containing payment provisions
which are in conflict with this Section 3.2 (in which event the conflicting
provisions of said notes or other instruments shall govern and control), the
Obligations shall be payable in U.S. Dollars as follows:
3.2.1 Principal. Principal payable on account of Revolving
Credit Loans shall be payable by Borrower to Lender immediately upon the
earliest of (i) the receipt by Lender or Borrower of any proceeds of any of the
Collateral, to the extent of said proceeds, (ii) the occurrence of an Event of
Default in consequence of which Lender elects to accelerate the maturity and
payment of the Obligations, or (iii) termination of this Agreement pursuant to
Section 4 hereof; provided, however, that if an Overadvance shall exist at any
time, Borrower shall, on demand, repay the Overadvance. Nothing contained herein
shall be construed as an obligation of Lender to extend an Overadvance to
Borrower. Each payment (including principal prepayment) by Borrower on account
of principal of the Revolving Credit Loans shall be applied first to Base Rate
Advances, then to LIBOR Advances.
3.2.2 Interest. Interest accrued on the Revolving Credit
Loans shall be due on the earliest of (i) the first calendar day of each month
(for the immediately preceding month), computed through the last calendar day of
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the preceding month, (ii) the occurrence of an Event of Default in consequence
of which Lender elects to accelerate the maturity and payment of the Obligations
or (iii) termination of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges
payable pursuant to this Agreement shall be payable by Borrower as and when
provided in Section 2 hereof, to Lender or to any other Person designated by
Lender in writing.
3.2.4 Other Obligations. The balance of the Obligations
requiring the payment of money, if any, shall be payable by Borrower to Lender
as and when provided in this Agreement, the Other Agreements or the Security
Documents, or on demand, whichever is later.
3.2.5 Prepayment of LIBOR Advances. Borrower may prepay a
LIBOR Advance only upon at least three (3) Business Days prior written notice to
Lender (which notice shall be irrevocable), and any such prepayment shall occur
only on the last day of the Interest Period for such LIBOR Advance. Borrower
shall pay to Lender, upon request of Lender, such amount or amounts as shall be
sufficient (in the reasonable opinion of Lender) to compensate Lender for any
loss, cost, or expense incurred as a result of: (i) any payment of a LIBOR
Advance on a date other than the last day of the Interest Period for such Loan;
(ii) any failure by Borrower to borrow a LIBOR Advance on the date specified by
Borrower's written notice; or (iii) any failure by Borrower to pay a LIBOR
Advance on the date for payment specified in Borrower's written notice. Without
limiting the foregoing, Borrower shall pay to Lender a "yield maintenance fee"
in an amount computed as follows: the current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the Interest Period chosen pursuant to the LIBOR
Advance as to which the prepayment is made, shall be subtracted from the LIBOR
in effect at the time of prepayment. If the result is zero or a negative number,
there shall be no yield maintenance fee. If the result is a positive number,
then the resulting percentage shall be multiplied by the amount of the principal
balance being prepaid. The resulting amount shall be divided by 360 and
multiplied by the number of days remaining in the Interest Period chosen
pursuant to the LIBOR Advance as to which the prepayment is made. Said amount
shall be reduced to present value calculated by using the above referenced
United States Treasury securities rate and the number of days remaining in the
term chosen pursuant to the LIBOR Advance as to which prepayment is made. The
resulting amount shall be the yield maintenance fee due to Lender upon the
prepayment of a LIBOR Advance. If by reason of an Event of Default, Lender
elects to declare the Obligations to be immediately due and payable, then any
yield maintenance fee with respect to a LIBOR Advance shall become due and
payable in the same manner as though the Borrower had exercised such right of
prepayment.
3.3 Mandatory Prepayments.
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3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation
of Collateral. Except as provided in subsection 6.4.2 hereof, if Borrower sells
any of the Equipment or real Property, or if any of the Collateral is lost or
destroyed or taken by condemnation, Borrower shall pay to Lender, unless
otherwise agreed by Lender, as and when received by Borrower and as a mandatory
prepayment of the Revolving Loan, as determined by Lender, a sum equal to the
proceeds (including insurance payments) received by Borrower from such sale,
loss, destruction or condemnation.
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3.4 Application of Payments and Collections. All items of payment
received by Lender by 12:00 noon, New York City time, on any Business Day shall
be deemed received on that Business Day. All items of payment received after
12:00 noon, New York City time, on any Business Day shall be deemed received on
the following Business Day. Borrower irrevocably waives the right to direct the
application of any and all payments and collections at any time or times
hereafter received by Lender from or on behalf of Borrower, and Borrower does
hereby irrevocably agree that Lender shall have the continuing exclusive right
to apply and reapply any and all such payments and collections received at any
time or times hereafter by Lender or its agent against the Obligations, in such
manner as Lender may deem advisable, notwithstanding any entry by Lender upon
any of its books and records. If as the result of collections of Accounts in
accordance with subsection 6.2.5 hereof a credit balance exists in the Loan
Account, such credit balance shall not accrue interest in favor of Borrower, but
shall be available to Borrower at any time or times for so long as no Default or
Event of Default exists.
3.5 All Loans to Constitute One Obligation. The Loans and LC
Guaranties shall constitute one general Obligation of Borrower, and shall be
secured by Lender's Lien upon all of the Collateral.
3.6 Loan Account. Lender shall enter all Loans as debits to the
Loan Account and shall also record in the Loan Account all payments made by
Borrower on any Obligations and all proceeds of Collateral which are finally
paid to Lender, and may record therein, in accordance with customary accounting
practice, other debits and credits, including interest and all charges and
expenses properly chargeable to Borrower.
3.7 Statements of Account. Lender will account to Borrower monthly
with a statement of Loans, charges and payments made pursuant to this Agreement,
and such account rendered by Lender shall be deemed final, binding and
conclusive upon Borrower unless Lender is notified by Borrower in writing to the
contrary within thirty (30) days of the date each accounting is mailed to
Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.
3.8 Increased Costs. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and having
general applicability to all banks within the jurisdiction in which Lender
operates (excluding, for the avoidance of doubt, the effect of and phasing in of
capital requirements or other regulations or guidelines passed prior to the date
of this Agreement), or any interpretation or application thereof by any
governmental authority charged with the interpretation or application thereof,
or the compliance of Lender therewith, shall:
(i) (1) subject Lender to any tax with respect to this
Agreement (other than (a) any tax based on or measured by net income or
otherwise in the nature of a net income tax, including, without
limitation, any franchise tax or any similar tax based on capital, net
worth or comparable basis for measurement and (b) any tax collected by
a withholding on payments and which neither is computed by reference to
the net income of the payee nor is in the nature of an advance
collection of a tax based on or measured by the net income of the
payee) or (2) change the basis of taxation of payments to Lender of
principal, fees, interest or any other amount payable hereunder or
under any Loan Documents (other than in respect of (a) any tax based on
8
or measured by net income or otherwise in the nature of a net income
tax, including, without limitation, any franchise tax or any similar
tax based on capital, net worth or comparable basis for measurement and
(b) any tax collected by a withholding on payments and which neither is
computed by reference to the net income of the payee nor is in the
nature of an advance collection of a tax based on or measured by the
net income of the payee);
(ii) impose, modify or hold applicable any reserve (except
any reserve taken into account in the determination of the applicable
LIBOR), special deposit, assessment or similar requirement against
assets held by, or deposits in or for the account of, advances or loans
by, or other credit extended by, any office of Lender, including
(without limitation) pursuant to Regulation D of the Board of Governors
of the Federal Reserve System; or
(iii) impose on Lender or the London interbank market any
other condition with respect to any Loan Document;
and the result of any of the foregoing is to increase the cost to Lender of
making, renewing or maintaining Loans hereunder by an amount that Lender deems
to be material or to reduce the amount of any payment (whether of principal,
interest or otherwise) in respect of any of the Loans by an amount that Lender
deems to be material, then, in any such case, Borrower shall pay Lender, upon
demand and certification not later than sixty (60) days following its receipt of
notice of the imposition of such increased costs, such additional amount as will
compensate Lender for such additional cost or such reduction, as the case may
be, to the extent Lender has not otherwise been compensated, with respect to a
particular Loan, for such increased cost as a result of an increase in the Base
Rate or the LIBOR. An officer of Lender shall determine the amount of such
additional cost or reduced amount using reasonable averaging and attribution
methods and shall certify the amount of such additional cost or reduced amount
to Borrower, which certification shall include a written explanation of such
additional cost or reduction to Borrower. Such certification shall be conclusive
absent manifest error. If Lender claims any additional cost or reduced amount
pursuant to this Section 3.8, then Lender shall use reasonable efforts
(consistent with legal and regulatory restrictions) to designate a different
lending office or to file any certificate or document reasonably requested by
Borrower if the making of such designation or filing would avoid the need for,
or reduce the amount of, any such additional cost or reduced amount and would
not, in the sole discretion of Lender, be otherwise disadvantageous to Lender.
3.9 Basis for Determining Interest Rate Inadequate or Unfair. In
the event that Lender shall have determined that:
(i) reasonable means do not exist for ascertaining the
LIBOR for any Interest Period; or
(ii) Dollar deposits in the relevant amount and for the
relevant maturity are not available in the London interbank market with
respect to a proposed LIBOR Advance, or a proposed conversion of a Base
Rate Advance into a LIBOR Advance; then
Lender shall give Borrower prompt written, telephonic or electronic notice of
the determination of such effect. If such notice is given, (i) any such
requested LIBOR Advance shall be made as a Base Rate Advance, unless Borrower
9
shall notify Lender no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing that the request for
such borrowing shall be canceled or made as an unaffected type of LIBOR Advance,
and (ii) any Base Rate Advance which was to have been converted to an affected
type of LIBOR Advance shall be continued as or converted into a Base Rate
Advance, or, if Borrower shall notify Lender, no later than 10:00 a.m. (New York
City time) two (2) Business Days prior to the proposed conversion, shall be
maintained as an unaffected type of LIBOR Advance.
SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Lender's right to cease making
Loans to Borrower upon or after the occurrence of any Default or Event of
Default, this Agreement shall be in effect for a period of three (3) years from
the date hereof, through and including August 22, 2006 (the "Original Term"),
unless terminated as provided in Section 4.2 hereof.
4.2 Termination.
-----------
4.2.1 Termination by Lender. Upon at least ninety (90) days
prior written notice to Borrower, Lender may terminate this Agreement as of the
last day of the Original Term and Lender may terminate this Agreement without
notice upon or after the occurrence of an Event of Default.
4.2.2 Termination by Borrower. Upon at least ninety (90)
days prior written notice to Lender, Borrower may, at its option, terminate this
Agreement; provided, however, no such termination shall be effective until
Borrower has paid all of the Obligations in immediately available funds and all
Letters of Credit and LC Guaranties have expired or have been cash
collateralized to Lender's satisfaction. Any notice of termination given by
Borrower shall be irrevocable unless Lender otherwise agrees in writing, and
Lender shall have no obligation to make any Loans or issue or procure any
Letters of Credit or LC Guaranties on or after the termination date stated in
such notice. Borrower may elect to terminate this Agreement in its entirety
only. No section of this Agreement or type of Loan available hereunder may be
terminated singly.
4.2.3 Termination Charges. At the effective date of
termination of this Agreement for any reason, Borrower shall pay to Lender (in
addition to the then outstanding principal, accrued interest and other charges
owing under the terms of this Agreement and any of the other Loan Documents
including the balance of the commitment fee) as liquidated damages for the loss
of the bargain and not as a penalty, an amount equal to 1.5% of the Total Credit
Facility if termination occurs during the first twelve-month period of the
Original Term (August 22, 2003 through August 21, 2004); and .75% of the Total
Credit Facility if termination occurs during the second 12-month period of the
Original Term (August 22, 2004 through August 21, 2005). Notwithstanding the
foregoing, if the Obligations are refinanced with Lender, FleetBoston Financial
and/or any of their affiliates or related entities or if termination occurs
during the third twelve-month period of the Original Term (August 22, 2005
through August 22, 2006), no termination charge shall be payable.
4.2.4 Effect of Termination. All of the Obligations shall
be immediately due and payable upon the termination date stated in any notice of
termination of this Agreement, the last day of the Original Term or acceleration
10
of the Obligations by the Lender as set forth herein. All undertakings,
agreements, covenants, warranties and representations of Borrower contained in
the Loan Documents shall survive any such termination and Lender shall retain
its Liens in the Collateral and all of its rights and remedies under the Loan
Documents notwithstanding such termination until Borrower has paid the
Obligations to Lender, in full, in immediately available funds, together with
the applicable termination charge, if any. Notwithstanding the payment in full
of the Obligations, Lender shall not be required to terminate its security
interests in the Collateral unless, with respect to any loss or damage Lender
may incur as a result of dishonored checks or other items of payment received by
Lender from Borrower or any Account Debtor and applied to the Obligations,
Lender shall, at its option, (i) have received a written agreement, executed by
Borrower and by any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Lender from any such
loss or damage; or (ii) have retained such monetary reserves and Liens on the
Collateral for such period of time as Lender, in its reasonable discretion, may
deem necessary to protect Lender from any such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment
and performance to Lender of the Obligations, Borrower hereby grants to Lender a
continuing Lien upon all of Borrower's assets, including all of the following
Property and interests in Property of Borrower, whether now owned or existing or
hereafter created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with
respect thereto, including, any and all licenses, options, warranties,
service contracts, program services, test rights, maintenance rights,
support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements, additions or
model conversions of any of the foregoing;
(v) Contract Rights;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Equipment;
(ix) Financial Assets;
11
(x) Fixtures;
(xi) General Intangibles, including Payment Intangibles
and Software;
(xii) Goods (including all of its Equipment, Fixtures and
Inventory), and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor;
(xiii) Instruments;
(xiv) Intellectual Property;
(xv) Inventory;
(xvi) Investment Property;
(xvii) money (of every jurisdiction whatsoever);
(xviii) Letter-of-Credit Rights;
(xix) Payment Intangibles;
(xx) Security Entitlements;
(xxi) Software;
(xxii) Supporting Obligations;
(xxiii) Uncertificated Securities; and
(xxiv) to the extent not included in the foregoing, all
other personal property of any kind or description;
together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that to the extent that the provisions of any lease or
license of Computer Hardware and Software or Intellectual Property expressly
prohibit (which prohibition is enforceable under applicable law) any assignment
thereof, and the grant of a security interest therein, Lender will not enforce
its security interest in Borrower's rights under such lease or license (other
than in respect of the Proceeds thereof) for so long as such prohibition
continues, it being understood that upon request of Lender, Borrower will in
good faith use reasonable efforts to obtain consent for the creation of a
security interest in favor of Lender (and to Lender's enforcement of such
security interest) in such Lender's rights under such lease or license.
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5.2 Other Collateral.
----------------
5.2.1 Commercial Tort Claims. Borrower shall promptly
notify Lender in writing upon incurring or otherwise obtaining a Commercial Tort
Claim after the Closing Date against any third party and, upon request of
Lender, promptly enter into an amendment to this Agreement and do such other
acts or things deemed appropriate by Lender to give Lender a security interest
in any such Commercial Tort Claim.
5.2.2 Other Collateral. Borrower shall promptly notify
Lender in writing upon acquiring or otherwise obtaining any Collateral after the
date hereof consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights or Electronic Chattel Paper and, upon the request of
Lender, promptly execute such other documents, and do such other acts or things
deemed appropriate by Lender to deliver to Lender control with respect to such
Collateral (provided, however, the payroll accounts maintained by Borrower
and/or Guarantor and set forth on Exhibit S shall not be subject to the
requirements of this subsection 5.2.2.); promptly notify Lender in writing upon
acquiring or otherwise obtaining any Collateral after the date hereof consisting
of Documents or Instruments and, upon the request of Lender, will promptly
execute such other documents, and do such other acts or things deemed
appropriate by Lender to deliver to Lender possession of such Documents which
are negotiable and Instruments, and, with respect to nonnegotiable Documents, to
have such nonnegotiable Documents issued in the name of Lender; and with respect
to Collateral in the possession of a third party, other than Certificated
Securities and Goods covered by a Document and obtain an acknowledgement from
the third party that it is holding the Collateral for the benefit of Lender.
5.3 Lien Perfection; Further Assurances. Borrower shall execute
such UCC financing statements as are required by the UCC and such other
instruments, assignments or documents as are necessary to perfect Lender's Lien
upon any of the Collateral and shall take such other action as may be required
to perfect or to continue the perfection of Lender's Lien upon the Collateral.
Unless prohibited by applicable law, Borrower hereby irrevocably authorizes
Lender to execute and file any such financing statements, including, without
limitation, financing statements that indicate the Collateral (i) as all assets
of Borrower or words of similar effect, or (ii) as being of an equal or lesser
scope, or with greater or lesser detail, than as set forth in Section 5.1, on
Borrower's behalf. Borrower also hereby ratifies its authorization for Lender to
have filed in any jurisdiction any like financing statements or amendments
thereto if filed prior to the date hereof. The parties agree that a photographic
or other reproduction of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in lieu thereof. At
Lender's request, Borrower shall also promptly execute or cause to be executed
and shall deliver to Lender any and all documents, instruments and agreements
deemed necessary by Lender to give effect to or carry out the terms or intent of
the Loan Documents.
5.4 Lien on Realty. The due and punctual payment and performance
of the Obligations shall also be secured by the Lien created by the Mortgages
upon all real Property of Borrower or Guarantors as the case may be described
therein. The Mortgages shall be executed by Borrower or Guarantors in favor of
Lender and shall be duly recorded, at Borrower's expense, in each office where
such recording is required to constitute a fully perfected Lien on the real
Property covered thereby. Borrower shall deliver to Lender, at Borrower's
expense, title insurance commitments or title searches issued by a title
insurance company satisfactory to Lender. Borrower and/or Guarantors shall
deliver to Lender such other documents, including, without limitation, as-built
survey prints of the real Property, as Lender may request relating to the real
Property subject to the Mortgages.
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5.5 Titled Vehicles. The Obligations shall also be secured by a
first lien on Borrower's registered titled motor vehicles now existing or
hereinafter arising. Borrower shall promptly deliver original certificates of
title with appropriate endorsements or other documentation necessary for Lender
to perfect its lien on the vehicles.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
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6.1.1 Location of Collateral. All Collateral, other than
Inventory in transit and motor vehicles, will at all times be kept by Borrower
and its Subsidiaries at one or more of the business locations set forth in
Exhibit B hereto and shall not, without the prior written approval of Lender, be
moved therefrom except, prior to an Event of Default and Lender's acceleration
of the maturity of the Obligations in consequence thereof, for (i) sales of
Inventory in the ordinary course of business; (ii) removals in connection with
dispositions of Equipment that are authorized by subsection 6.4.2 hereof; and
(iii) movement of Equipment and motor vehicles between one or more of the
business locations set forth on Exhibit B.
6.1.2 Insurance of Collateral. Borrower shall maintain and
pay for insurance upon all Collateral wherever located and with respect to
Borrower's business, covering casualty, hazard, public liability and such other
risks in such amounts and with such insurance companies as are reasonably
satisfactory to Lender. Borrower shall deliver the originals of such policies to
Lender with satisfactory lender's loss payable endorsements, naming Lender as
loss payee, assignee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than thirty (30) days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever and a clause specifying
that the interest of Lender shall not be impaired or invalidated by any act or
neglect of Borrower or the owner of the Property or by the occupation of the
premises for purposes more hazardous than are permitted by said policy. If
Borrower fails to provide and pay for such insurance, Lender may, at its option,
but shall not be required to, procure the same and charge Borrower therefor.
Borrower agrees to deliver to Lender, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower therefor. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be at
Borrower's sole risk.
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6.2 Administration of Accounts.
--------------------------
6.2.1 Records, Schedules and Assignments of Accounts.
Borrower shall keep accurate and complete records of its Accounts and all
payments and collections thereon and shall submit to Lender on such periodic
basis as Lender shall request a sales and collections report for the preceding
period, in form satisfactory to Lender. On or before the fifteenth (15th) day of
each month from and after the date hereof, Borrower shall deliver to Lender, in
form acceptable to Lender, a detailed, aged trial balance of all Accounts
existing as of the last day of the preceding month, specifying the names,
addresses, face value, dates of invoices and due dates for each Account Debtor
obligated on an Account so listed ("Schedule of Accounts"), and, upon Lender's
reasonable request therefor, copies of proof of delivery and the original copy
of all documents, including, without limitation, repayment histories and present
status reports relating to the Accounts so scheduled and such other matters and
information relating to the status of then existing Accounts as Lender shall
reasonably request. In addition, if Accounts in an aggregate face amount in
excess of $100,000 become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Accounts or otherwise established by Lender, Borrower shall notify Lender of
such occurrence on the first Business Day following such occurrence and the
Borrowing Base shall thereupon be adjusted to reflect such occurrence. If
requested by Lender, Borrower shall execute and deliver to Lender formal written
assignments of all of its Accounts weekly or daily, which shall include all
Accounts that have been created since the date of the last assignment, together
with copies of invoices or invoice registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants
any discounts, allowances or credits that are not shown on the face of the
invoice for the Account involved, Borrower shall report such discounts,
allowances or credits, as the case may be, to Lender as part of the next
required Schedule of Accounts. If any amounts due and owing in excess of $50,000
are in dispute between Borrower and any Account Debtor, Borrower shall provide
Lender with written notice thereof at the time of submission of the next
Schedule of Accounts, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy. Upon and after the
occurrence of an Event of Default, Lender shall have the right to settle or
adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including attorney's fees, to
Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax
payable to any governmental taxing authority, Lender is authorized, in its sole
discretion, to pay the amount thereof to the proper taxing authority for the
account of Borrower and to charge Borrower therefor, provided, however that
Lender shall not be liable for any taxes to any governmental taxing authority
that may be due by Borrower.
6.2.4 Account Verification. Whether or not a Default or an
Event of Default has occurred, any of Lender's officers, employees or agents
shall have the right, at any time or times hereafter, in the name of Lender, any
designee of Lender, or Borrower, to verify the validity, amount or any other
matter relating to any Accounts by mail, telephone, electronic communication or
otherwise. Borrower shall cooperate fully with Lender in an effort to facilitate
and promptly conclude any such verification process.
6.2.5 Maintenance of Lockbox and Dominion Account. Borrower
shall maintain a lockbox and Dominion Account pursuant to the Blocked Account
Service Agreement with such banks as may be selected by Borrower and be
15
acceptable to Lender. Borrower shall issue to any such banks an irrevocable
letter of instruction directing such banks to deposit all payments or other
remittances received in the lockbox to the Dominion Account for application on
account of the Obligations. Borrower shall direct all Account Debtors to remit
payment directly to the lockbox, and all items received in the lockbox shall be
deposited in the Dominion Account. All funds received into the lockbox or
deposited in the Dominion Account shall immediately become the property of
Lender and Borrower shall obtain the agreements by such banks in favor of Lender
to waive any recoupment, set-off rights, and any security interest in, or
against the funds so deposited. Lender assumes no responsibility for such
lockbox arrangement, including, without limitation, any claim of accord and
satisfaction or release with respect to deposits accepted by any bank
thereunder.
6.2.6 Collection of Accounts, Proceeds of Collateral. If,
notwithstanding Borrower's instructions to its Account Debtors to remit payment
to the lockbox, payments on account of the Accounts receivable are made directly
to Borrower, all remittances received by Borrower on account of Accounts,
together with the proceeds of any other Collateral, shall be held as Lender's
property by Borrower as trustee of an express trust for Lender's benefit and
Borrower shall immediately deposit same in kind in the Dominion Account. Lender
retains the right at all times after the occurrence and during the continuance
of a Default or an Event of Default to notify Account Debtors that Accounts have
been assigned to Lender and to collect Accounts directly in its own name, or in
the name of Lender's agent, and to charge the collection costs and expenses,
including attorneys' fees, to Borrower.
6.3 [INTENTIONALLY LEFT BLANK].
--------------------------
6.4 Administration of Equipment.
---------------------------
6.4.1 Records and Schedules of Equipment. Borrower shall
keep accurate records itemizing and describing the kind, type, quality, quantity
and value of its Equipment and all dispositions made in accordance with
subsection 6.4.2 hereof, and shall furnish Lender with a current schedule
containing the foregoing information on at least an annual basis and more often
if requested by Lender. Immediately on request therefor by Lender, Borrower
shall deliver to Lender any and all evidence of ownership, if any, of any of the
Equipment.
6.4.2 Dispositions of Equipment. Borrower will not sell,
lease or otherwise dispose of or transfer any of the Equipment or any part
thereof without the prior written consent of Lender; provided, however, that the
foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Equipment which, in the aggregate during
any consecutive twelve-month period, has a fair market value or book value,
whichever is less, of $35,000 or less, provided that all proceeds thereof are
remitted to Lender for application to the Loans, or (ii) replacements of
Equipment that is substantially worn, damaged or obsolete with Equipment of like
kind, function and value, provided that the replacement Equipment shall be
acquired prior to or concurrently with any disposition of the Equipment that is
to be replaced, the replacement Equipment shall be free and clear of Liens other
than Permitted Liens that are not Purchase Money Liens, and Borrower shall have
given Lender at least five (5) days prior written notice of such disposition.
16
6.5 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to Base Rate Advances from time to
time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to
enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Lender that:
7.1.1 Organization and Qualification. Each of Borrower and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Exhibit C hereto and in all other states and jurisdictions in which
the failure of Borrower or any of its Subsidiaries to be so qualified would have
a material adverse effect on the financial condition, business or Properties of
Borrower or any of its Subsidiaries.
7.1.2 Corporate Power and Authority. Each of Borrower and
its Subsidiaries is duly authorized and empowered to enter into, execute,
deliver and perform this Agreement and each of the other Loan Documents to which
it is a party. The execution, delivery and performance of this Agreement and
each of the other Loan Documents have been duly authorized by all necessary
corporate action and do not and will not (i) require any consent or approval of
the shareholders (or members, in the case of a limited liability company) of
Borrower or any of its Subsidiaries; (ii) contravene Borrower's or any of its
Subsidiaries' charter, articles or certificate of incorporation or by-laws;
(iii) violate, or cause Borrower or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having applicability to
Borrower or any of its Subsidiaries; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which Borrower or any of its Subsidiaries is a party or
by which it or its Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
Borrower or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and
each of the other Loan Documents when delivered under this Agreement will be, a
legal, valid and binding obligation of each of Borrower and its Subsidiaries
enforceable against it in accordance with its respective terms.
7.1.4 Capital Structure. Exhibit D hereto states (i) the
correct name of each of the Subsidiaries of Borrower, its jurisdiction of
incorporation and the percentage of its Voting Stock owned by Borrower, (ii) the
name of each of Borrower's corporate or joint venture Affiliates and the nature
of the affiliation, (iii) the number, nature and holder of all outstanding
Securities of Borrower and each Subsidiary of Borrower and (iv) the number of
authorized, issued and treasury shares of Borrower and each Subsidiary of
Borrower. Borrower has good title to all of the shares it purports to own of the
stock of each of its Subsidiaries, free and clear in each case of any Lien other
than Permitted Liens. All such shares have been duly issued and are fully paid
and non-assessable. There are no outstanding options to purchase, or any rights
17
or warrants to subscribe for, or any commitments or agreements to issue or sell,
or any Securities or obligations convertible into, or any powers of attorney
relating to, shares of the capital stock of Borrower or any of its Subsidiaries.
There are no outstanding agreements or instruments binding upon any of
Borrower's shareholders (or members, in the case of a limited liability company)
relating to the ownership of its shares of capital stock (or member interests,
in the case of a limited liability company).
7.1.5 Corporate Names, etc. Neither Borrower nor any of its
Subsidiaries has been known as or used any corporate, fictitious or trade names
except those listed on Exhibit E hereto. Except as set forth on Exhibit E,
neither Borrower nor any of its Subsidiaries has been the surviving corporation
of a merger or consolidation or acquired all or substantially all of the assets
of any Person. Each of Borrower's and its Subsidiaries' state(s) of
incorporation or organization, Type of Organization and Organizational I.D.
Number is set forth on Exhibit E. The exact legal name of Borrower and each of
its Subsidiaries is set forth on Exhibit E.
7.1.6 Business Locations; Agent for Process. Each of
Borrower's and its Subsidiaries' chief executive office and other places of
business are as listed on Exhibit B hereto. During the preceding one-year
period, neither Borrower nor any of its Subsidiaries has had an office, place of
business or agent for service of process other than as listed on Exhibit B.
Except as shown on Exhibit B, no Inventory is stored with a bailee, warehouseman
or similar party, nor is any Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens. Each of
Borrower and its Subsidiaries has good, indefeasible and marketable title to and
fee simple ownership of, or valid and subsisting leasehold interests in, all of
its real Property, and good title to all of the Collateral and all of its other
Property, in each case, free and clear of all Liens except Permitted Liens.
Borrower has paid or discharged all lawful claims which, if unpaid, might become
a Lien against any of Borrower's Properties that is not a Permitted Lien. The
Liens granted to Lender under Section 5 hereof are first-priority Liens, subject
only to Permitted Liens.
7.1.8 Accounts. Lender may rely, in determining which
Accounts are Eligible Accounts, on all statements and representations made by
Borrower with respect to any Account or Accounts. Unless otherwise indicated in
writing to Lender, with respect to each Account:
(i) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale
and delivery of goods or rendition of services by Borrower in the
ordinary course of its business and in accordance with the terms and
conditions of all purchase orders, contracts or other documents
relating thereto and forming a part of the contract between Borrower
and the Account Debtor;
(iii) It is for a liquidated amount maturing as
stated in the duplicate invoice covering such sale or rendition of
services, a copy of which has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest
therein, is not, and will not (by voluntary act or omission of
18
Borrower) be in the future, subject to any offset, Lien, deduction,
recoupment, defense, dispute, counterclaim or any other adverse
condition except for disputes resulting in returned goods where the
amount in controversy is deemed by Lender to be immaterial, and each
such Account is absolutely owing to Borrower and is not contingent in
any respect or for any reason;
(v) Borrower has made no agreement with any
Account Debtor thereunder for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except
discounts or allowances which are granted by Borrower in the ordinary
course of its business for prompt payment and which are reflected in
the calculation of the net amount of each respective invoice related
thereto and are reflected in the Schedules of Accounts submitted to
Lender pursuant to subsection 6.2.1 hereof;
(vi) There are no facts, events or occurrences
which in any way impair the validity or enforceability of any Accounts
or tend to reduce the amount payable thereunder from the face amount of
the invoice and statements delivered to Lender with respect thereto;
(vii) To the best of Borrower's knowledge, the
Account Debtor thereunder (1) had the capacity to contract at the time
any contract or other document giving rise to the Account was executed
and (2) such Account Debtor is Solvent; and
(viii) To the best of Borrower's knowledge, there
are no proceedings or actions which are threatened or pending against
any Account Debtor thereunder which might result in any material
adverse change in such Account Debtor's financial condition or the
collectibility of such Account.
7.1.9 Equipment. The Equipment is in good operating
condition and repair, and all necessary replacements of and repairs thereto
shall be made so that the value and operating efficiency of the Equipment shall
be maintained and preserved, reasonable wear and tear excepted. Borrower will
not permit any of the Equipment to become affixed to any real Property leased to
Borrower so that an interest arises therein under the real estate laws of the
applicable jurisdiction unless the landlord of such real Property has executed a
landlord waiver or leasehold mortgage in favor of and in form acceptable to
Lender, and Borrower will not permit any of the Equipment to become an accession
to any personal Property other than Equipment that is subject to first-priority
(except for Permitted Liens) Liens in favor of Lender.
7.1.10 Financial Statements; Fiscal Year. The Consolidated
and consolidating balance sheets of Borrower as of September 30, 2002, and the
related statements of income, changes in stockholder's equity, and changes in
financial position for the periods ended on such dates, have been prepared in
accordance with GAAP, and present fairly the financial position of Borrower at
such dates and the results of Borrower's operations for such periods. Since
September 30, 2002, there has been no material change in the condition,
financial or otherwise, of Borrower and no change in the aggregate value of
Equipment and real Property owned by Borrower, except changes in the ordinary
course of business, none of which individually or in the aggregate has been
materially adverse. The fiscal year of Borrower and each of its Subsidiaries
ends on September 30 of each year.
19
7.1.11 Full Disclosure. The financial statements referred to
in subsection 7.1.10 hereof do not, nor does this Agreement or any other written
statement of Borrower to Lender, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained therein or
herein not misleading. There is no fact which Borrower has failed to disclose to
Lender in writing which materially affects adversely or, so far as Borrower can
now foresee, will materially affect adversely the Properties, business,
prospects, profits or condition (financial or otherwise) of Borrower or any of
its Subsidiaries or the ability of Borrower or its Subsidiaries to perform this
Agreement or the other Loan Documents.
7.1.12 Solvent Financial Condition. Each of Borrower and its
Subsidiaries is now and, after giving effect to the Loans to be made and the
Letters of Credit and LC Guaranties to be issued hereunder, at all times will
be, Solvent.
7.1.13 Surety Obligations. Neither Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract, or has issued or entered into any agreement to assure
payment, performance or completion of performance of any undertaking or
obligation of any Person.
7.1.14 Taxes. Borrower's federal tax identification number
as to Joule Staffing Services, Inc. is: 00-0000000; as to Joule Technical
Staffing, Inc.: 00-0000000; as to Joule Technical Services, Inc.: 00-0000000 as
to Joule Transportation, Inc.: 00-0000000; as to Joule Inc.: 00-0000000; and as
to Joule Corporate Services, Inc.: 00-0000000. The federal tax identification
number of each of Borrower's Subsidiaries is shown on Exhibit F hereto. Borrower
and each of its Subsidiaries has filed all federal, state and local tax returns
and other reports it is required by law to file and has paid, or made provision
for the payment of, all taxes, assessments, fees, levies and other governmental
charges upon it, its income and Properties as and when such taxes, assessments,
fees, levies and charges are due and payable, unless and to the extent any
thereof are being actively contested in good faith and by appropriate
proceedings and Borrower maintains reasonable reserves on its books therefor.
The provision for taxes on the books of Borrower and its Subsidiaries are
adequate for all years not closed by applicable statutes, and for its current
fiscal year.
7.1.15 Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses. Each of
Borrower and its Subsidiaries owns or possesses all the patents, trademarks,
service marks, tradenames, copyrights and licenses necessary for the present and
planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, tradenames,
copyrights, licenses and other similar rights are listed on Exhibit G hereto.
7.1.17 Governmental Consents. Each of Borrower and its
Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it and to own or lease and operate its
Properties as now owned or leased by it.
20
7.1.18 Compliance with Laws. Each of Borrower and its
Subsidiaries has duly complied with, and its Properties, business operations and
leaseholds are in compliance in all material respects with, the provisions of
all federal, state and local laws, rules and regulations applicable to Borrower
or such Subsidiary, as applicable, its Properties or the conduct of its business
and there have been no citations, notices or orders of noncompliance issued to
Borrower or any of its Subsidiaries under any such law, rule or regulation. Each
of Borrower and its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in compliance with all federal,
state and local laws, rules and regulations applicable to it. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. ss.201 et
seq.), as amended.
7.1.19 Restrictions. Neither Borrower nor any of its
Subsidiaries is a party or subject to any contract, agreement, or charter or
other corporate restriction, which materially and adversely affects its business
or the use or ownership of any of its Properties. Neither Borrower nor any of
its Subsidiaries is a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than as set forth on
Exhibit H hereto, none of which prohibit the execution of or compliance with
this Agreement or the other Loan Documents by Borrower or any of its
Subsidiaries, as applicable.
7.1.20 Litigation. Except as set forth on Exhibit I hereto
and workers compensation actions/motor vehicle actions covered by insurance and
disclosed to Lender, there are no actions, suits, proceedings or investigations
pending, or to the knowledge of Borrower, threatened, against or affecting
Borrower or any of its Subsidiaries, or the business, operations, Properties,
prospects, profits or condition of Borrower or any of its Subsidiaries. Neither
Borrower nor any of its Subsidiaries is in default with respect to any order,
writ, injunction, judgment, decree or rule of any court, governmental authority
or arbitration board or tribunal.
7.1.21 No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or Borrower's performance hereunder, constitute a Default or an Event of
Default. Neither Borrower nor any of its Subsidiaries is in default, and no
event has occurred and no condition exists which constitutes, or which with the
passage of time or the giving of notice or both would constitute, a default in
the payment of any Indebtedness to any Person for Money Borrowed.
7.1.22 Leases. Exhibit J hereto is a complete listing of all
capitalized leases of Borrower and its Subsidiaries and Exhibit K hereto is a
complete listing of all operating leases of Borrower and its Subsidiaries. Each
of Borrower and its Subsidiaries is in compliance with all of the terms of each
of its respective capitalized and operating leases.
7.1.23 Pension Plans. Except as disclosed on Exhibit L
hereto, neither Borrower nor any of its Subsidiaries has any Plan. Borrower and
each of its Subsidiaries is in full compliance with the requirements of ERISA
and the regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of Borrower or any of its Subsidiaries exists in connection with any
Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal liability
in connection with a Multi-employer Plan.
21
7.1.24 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower or any of its Subsidiaries,
or with any material supplier, and there exists no present condition or state of
facts or circumstances which would materially affect adversely Borrower or any
of its Subsidiaries or prevent Borrower or any of its Subsidiaries from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.
7.1.25 Labor Relations. Except as described on Exhibit M
hereto, neither Borrower nor any of its Subsidiaries is a party to any
collective bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Borrower's or any of
its Subsidiaries' employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or its Subsidiaries' business or operations
that would render the information in any exhibit attached hereto either
inaccurate, incomplete or misleading, so long as Lender has consented to such
changes or such changes are expressly permitted by this Agreement. Without
limiting the generality of the foregoing, each loan request made pursuant to
subsection 3.1.1 hereof shall constitute Borrower's reaffirmation, as of the
date of each such loan request, of each representation, warranty or other
statement made or furnished to Lender by or on behalf of Borrower, any
Subsidiary of Borrower, or Guarantor in this Agreement, any of the other Loan
Documents, or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto.
7.3 Survival of Representations and Warranties. All
representations and warranties of Borrower contained in this Agreement or any of
the other Loan Documents shall survive the execution, delivery and acceptance
thereof by Lender and the parties thereto and the closing of the transactions
described therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of
Lender, from time to time, as often as may be reasonably requested, but only
during normal business hours, to visit and inspect the Properties of Borrower
and each of its Subsidiaries, inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, Borrower's and each of its Subsidiaries' business, assets,
liabilities, financial condition, business prospects and results of operations.
22
8.1.2 Notices. Promptly notify Lender in writing of the
occurrence of any event or the existence of any fact which renders any
representation or warranty in this Agreement or any of the other Loan Documents
inaccurate, incomplete or misleading.
8.1.3 Financial Statements. Keep, and cause each Subsidiary
to keep, adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP reflecting
all its financial transactions; and cause to be prepared and furnished to Lender
the following (all to be prepared in accordance with GAAP applied on a
consistent basis, unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender and is consistent with
GAAP):
(i) not later than one hundred twenty (120) days
after the close of each fiscal year of Borrower, unqualified, audited
financial statements of Borrower and its Subsidiaries as of the end of
such year, on a Consolidated and consolidating basis, certified by a
firm of independent certified public accountants of recognized standing
selected by Borrower but acceptable to Lender (except for a
qualification for a change in accounting principles with which the
accountant concurs);
(ii) not later than thirty (30) days after the
end of each month hereafter, including the last month of Borrower's
fiscal year, unaudited, interim financial statements of Borrower and
its Subsidiaries as of the end of such month and of the portion of
Borrower's financial year then elapsed, on a Consolidated and
consolidating basis, certified by the principal financial officer of
Borrower as prepared in accordance with GAAP and fairly presenting the
Consolidated financial position and results of operations of Borrower
and its Subsidiaries for such month and period subject only to changes
from audit and year-end adjustments and except that such statements
need not contain notes;
(iii) promptly upon Lender's request, but in any
event, on the last Business Day of each week, a Borrowing Base
Certificate along with sales reports, cash journal receipts and
debit/credit memos;
(iv) promptly upon Lender's request, but in any
event, on the last Business Day of each week, an affidavit executed and
delivered by Xxxxxxx Xxxxxxx, Chief Financial Officer of Borrower, in
form and substance satisfactory to Lender, as to the payment or
withholding of all payroll related taxes and any other deductions
including, but not limited to, medical insurance, pension, qualified
retirement programs, workers compensation and unemployment insurance,
required by state and federal law for such Persons in the employment of
Borrower as Borrower shall be required by law to perform, the failure
of which could result in a lien imposed by any federal or state agency;
(v) not later than fifteen (15) days after the
end of each month, a detailed Accounts receivable aging report and
Accounts payable aging report as of the last day of the preceding
month;
23
(vi) not later than fifteen (15) days after the
end of each month, the Schedule of Accounts described in subsection
6.2.1, together with a loan recapitulation report and loan/Accounts
receivable reconciliation report substantially in the form of Exhibit Q
attached hereto, along with a calculation of Accounts that fail to meet
the requirements of Eligible Accounts, in form and substance
satisfactory to Lender;
(vii) promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements, financial
statements or reports which Borrower has made available to its
shareholders (or members, in the case of a limited liability company)
and copies of any regular, periodic and special reports or registration
statements which Borrower files with the Securities and Exchange
Commission or any governmental authority which may be substituted
therefor, or any national securities exchange;
(viii) promptly after the filing thereof, copies of
any annual report to be filed with ERISA in connection with each Plan;
(ix) not later than ten (10) days after filing,
copies of federal income tax returns;
(x) not later than thirty (30) days after the
beginning of each fiscal year of the Borrower, a certificate as to the
corporate organization of Joule Inc. and its Affiliates and
Subsidiaries and such Affiliates and Subsidiaries of all of the
foregoing. The current organizational chart is attached hereto as
Exhibit R;
(xi) not later than thirty (30) days after the
beginning of each fiscal year of the Borrower, an update of the payroll
accounts set forth on Exhibit S; and
(xii) such other data and information (financial
and otherwise) as Lender, from time to time, may reasonably request,
bearing upon or related to the Collateral or Borrower's and each of its
Subsidiaries' financial condition or results of operations.
Concurrently with the delivery of the financial statements
described in clause (i) of this subsection 8.1.3, Borrower shall forward to
Lender a copy of the accountants' letter to Borrower's management that is
prepared in connection with such financial statements and also shall cause to be
prepared and shall furnish to Lender a certificate of the aforesaid certified
public accountants certifying to Lender that, based upon their examination of
the financial statements of Borrower and its Subsidiaries performed in
connection with their examination of said financial statements, they are not
aware of any Default or Event of Default, or, if they are aware of such Default
or Event of Default, specifying the nature thereof, and acknowledging, in a
manner satisfactory to Lender, that they are aware that Lender is relying on
such financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this subsection 8.1.3, or more frequently if requested by
Lender, Borrower shall cause to be prepared and furnished to Lender a Compliance
Certificate in the form of Exhibit N hereto executed by the Chief Financial
Officer of Borrower.
8.1.4 Landlord and Storage Agreements. Provide Lender with
copies of all agreements between Borrower or any of its Subsidiaries and any
24
landlord or warehouseman which owns any premises at which any Inventory may,
from time to time, be kept.
8.1.5 Guarantor Financial Statements. Deliver or cause to
be delivered to Lender financial statements for each Guarantor in form and
substance satisfactory to Lender at such intervals and covering such time
periods as Lender may request, including, but not limited to federal income tax
returns within ten (10) days of filing thereof.
8.1.6 Projections. No later than thirty (30) days prior to
the end of each fiscal year of Borrower, deliver to Lender Projections of
Borrower for the forthcoming three (3) years, year by year, and for the
forthcoming fiscal year, month by month.
8.1.7 Deposit and Brokerage Accounts. For each deposit
account or brokerage account that Borrower at any time opens or maintains,
Borrower shall, at Lender's request and option, pursuant to an agreement in form
and substance satisfactory to Lender, cause the depository bank or securities
intermediary, as applicable, to agree to comply at any time with instructions
from Lender to such depository bank or securities intermediary, as applicable,
directing the disposition of funds from time to time credited to such deposit or
brokerage account, without further consent of Borrower.
8.1.8 Subsidiaries and Affiliate Guarantors. In the event
of the formation of any Affiliate or Subsidiary of the Borrower or Guarantor
subsequent to the Closing Date, the Borrower and/or Guarantor shall cause such
Affiliate or Subsidiary to execute and deliver to Lender agreements of guaranty
and security agreements with respect to the Obligations created herein, all in
form and substance satisfactory to Lender.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless Lender has first consented thereto in writing, it will
not:
8.2.1 Mergers; Consolidations; Acquisitions; Structural
Changes. Merge or consolidate, or permit any Subsidiary of Borrower to merge or
consolidate, with any Person; nor acquire, nor permit any of its Subsidiaries to
acquire, all or any substantial part of the Properties of any Person; nor change
its or any of its Subsidiaries' state of incorporation or organization or Type
of Organization; nor change its or any of its Subsidiaries' legal names or line
of business as currently being conducted; nor create or permit any of its
Subsidiaries to create any additional Subsidiaries or Affiliates.
8.2.2 Loans. Make, or permit any Subsidiary of Borrower to
make, any loans or other advances of money (other than for salary, travel
advances, advances against commissions and other similar advances in the
ordinary course of business) to any Person (other than between a co-Borrower).
8.2.3 Total Indebtedness. Create, incur, assume, or suffer
to exist, or permit any Subsidiary of Borrower to create, incur or suffer to
exist, any Indebtedness, except:
(i) Obligations owing to Lender;
25
(ii) Subordinated Debt existing on the date of
this Agreement;
(iii) accounts payable to trade creditors and
current operating expenses (other than for Money Borrowed) which are
not aged more than one hundred twenty (120) days from billing date or
more than thirty (30) days from the due date, in each case incurred in
the ordinary course of business and paid within such time period,
unless the same are being actively contested in good faith and by
appropriate and lawful proceedings; and Borrower or such Subsidiary
shall have set aside such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by Borrower or such Subsidiary and
its independent accountants;
(iv) Obligations to pay Rentals permitted by
subsection 8.2.13;
(v) Permitted Purchase Money Indebtedness;
(vi) contingent liabilities arising out of
endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business; and
(vii) Indebtedness not included in paragraphs (i)
through (vi) above which does not exceed at any time, in the aggregate,
the sum of $15,000.
8.2.4 Affiliate Transactions. Enter into, or be a party to,
or permit any Subsidiary of Borrower to enter into or be a party to, any
transaction with any Affiliate of Borrower or stockholder, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower's or
such Subsidiary's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable to Borrower than would obtain in a
comparable arm's length transaction with a Person not an Affiliate or
stockholder of Borrower or such Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or
permit any Subsidiary of Borrower to create or suffer to exist, any Lien upon
any of its Property, income or profits, whether now owned or hereafter acquired,
except:
(i) Liens at any time granted in favor of
Lender;
(ii) Liens for taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due, or being
contested in the manner described in subsection 7.1.14 hereto, but only
if in Lender's judgment such Lien does not adversely affect Lender's
rights or the priority of Lender's Lien in the Collateral;
(iii) Liens arising in the ordinary course of
Borrower's business by operation of law or regulation, but only if
payment in respect of any such Lien is not at the time required and
such Liens do not, in the aggregate, materially detract from the value
of the Property of Borrower or materially impair the use thereof in the
operation of Borrower's business;
26
(iv) Purchase Money Liens securing Permitted
Purchase Money Indebtedness;
(v) Liens securing Indebtedness of one of
Borrower's Subsidiaries to Borrower or another such Subsidiary;
(vi) such other Liens as appear on Exhibit O
hereto; and
(vii) such other Liens as Lender may hereafter
approve in writing.
8.2.6 Subordinated Debt. Make, or permit any Subsidiary of
Borrower to make, any payment of any part or all of any Subordinated Debt or
take any other action or omit to take any other action in respect of any
Subordinated Debt, except in accordance with a subordination agreement relative
thereto which shall be in form and substance satisfactory to Lender.
8.2.7 Distributions. Declare or make, or permit any
Subsidiary of Borrower to declare or make, any Distributions other than
Distributions paid to Joule Inc. for the purposes of paying taxes.
8.2.8 Capital Expenditures. Make Capital Expenditures
(including, without limitation, by way of capitalized leases) which, in the
aggregate, as to Borrower and its Subsidiaries, exceed $600,000 during any
fiscal year of Borrower.
8.2.9 Disposition of Assets. Sell, lease or otherwise
dispose of any of, or permit any Subsidiary of Borrower to sell, lease or
otherwise dispose of any of, its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except (i) sales of Inventory in the ordinary course of business for so
long as no Event of Default exists hereunder, (ii) a transfer of Property to
Borrower by a Subsidiary of Borrower or (iii) dispositions expressly authorized
by this Agreement.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries
to issue any additional shares of its capital stock except director's qualifying
shares.
8.2.11 Xxxx-and-Hold Sales, Etc. Make a sale to any customer
on a xxxx-and-hold, guaranteed sale, sale and return, sale on approval or
consignment basis, or any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, or permit any
Subsidiary of Borrower to make or have, any Restricted Investment.
8.2.13 Leases. Become, or permit any of its Subsidiaries to
become, a lessee under any operating lease (other than a lease under which
Borrower or any of its Subsidiaries is lessor) of Property if the aggregate
Rentals payable during any current or future period of twelve (12) consecutive
months under the lease in question and all other leases under which Borrower or
any of its Subsidiaries is then lessee would exceed $600,000. The term "Rentals"
means, as of the date of determination, all payments which the lessee is
required to make by the terms of any lease.
27
8.2.14 Tax Consolidation. File or consent to the filing of
any consolidated income tax return with any Person other than a Subsidiary of
Borrower.
8.3 Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations to Lender,
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall:
8.3.1 Fixed Charge Coverage Ratio. Maintain a Fixed Charge
Coverage Ratio of not less than the ratio shown below for the period
corresponding thereto measured on a rolling four quarter basis (to be tested
quarterly):
Date of Period End Ratio
------------------ -----
September 30, 2003 and thereafter 1.0 to 1.0
8.3.2 Minimum Net Income. Not incur more than two (2)
consecutive quarterly losses of net income in accordance with GAAP (to be tested
quarterly).
8.3.3 Maximum Leverage Ratio. Maintain a maximum Leverage
Ratio of not more than the ratio shown below for the period corresponding
thereto (to be tested quarterly):
Date of Period End Ratio
------------------ -----
September 30, 2003 and thereafter 1.5 to 1.0
8.3.4 Annual Income/Loss. Not incur a loss for any fiscal
year commencing October 1, 2004.
For the purposes of calculating the covenants contained in Section 8.3,
such calculations shall exclude all non-recurring charges related to the
expected stock repurchase regarding Joule Inc. and its Subsidiaries.
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Lender
under the other sections of this Agreement, Lender shall not be required to make
any Loan under this Agreement unless and until each of the following conditions
has been and continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and
substance satisfactory to Lender, a duly executed copy of this Agreement and the
other Loan Documents, together with such additional documents, instruments and
certificates as Lender shall require in connection therewith from time to time,
all in form and substance satisfactory to Lender.
28
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set
forth in the other Loan Documents shall have been satisfied.
9.4 No Litigation. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of this Agreement or the consummation of the transactions contemplated
hereby.
9.5 Availability. Borrower shall have no less than ten (10%)
percent in excess of Availability otherwise available under the Revolving Loan
as of the Closing Date after deducting all necessary obligations, costs, fees
and expenses in connection with the closing of the Loan Documents.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the
following events shall constitute an "Event of Default":
10.1.1 Payment of Note. Borrower shall fail to pay any
installment of principal, interest or premium, if any, owing on the Revolving
Credit Note, on the due date of such installment.
10.1.2 Payment of Other Obligations. Borrower shall fail to
pay any of the Obligations that are not evidenced by the Revolving Credit Note,
on the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise).
10.1.3 Misrepresentations. Any representation, warranty or
other statement made or furnished to Lender by or on behalf of Borrower, any
Subsidiary of Borrower, or Guarantor in this Agreement, any of the other Loan
Documents or any instrument, certificate or financial statement furnished in
compliance with or in reference thereto proves to have been false or misleading
in any material respect when made or furnished or when reaffirmed pursuant to
Section 7.2 hereof.
10.1.4 Breach of Specific Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in Sections 5.2, 5.3,
5.4, 6.1.1, 6.1.2, 6.2.5, 6.2.6, 8.1, 8.2 or 8.3 hereof on the date that
Borrower is required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in Section
10.1 hereof) and the breach of such other covenant is not cured to Lender's
satisfaction within fifteen (15) days after the sooner to occur of Borrower's
receipt of notice of such breach from Lender or the date on which such failure
or neglect first becomes known to any officer of Borrower.
29
10.1.6 Default Under Security Documents/Other Agreements.
Any event of default shall occur under, or Borrower shall default in the
performance or observance of any term, covenant, condition or agreement
contained in, any of the Security Documents or the Other Agreements and such
default shall continue beyond any applicable grace period.
10.1.7 Other Defaults. There shall occur any default or
event of default on the part of Borrower under any agreement, document or
instrument to which Borrower is a party or by which Borrower or any of its
Property is bound, creating or relating to any Indebtedness (other than the
Obligations) if the payment or maturity of such Indebtedness is accelerated in
consequence of such event of default or demand for payment of such Indebtedness
is made.
10.1.8 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.9 Adverse Changes. There shall occur any material
adverse change in the financial condition or business prospects of Borrower or
any Guarantor.
10.1.10 Insolvency and Related Proceedings. Borrower or any
Guarantor shall cease to be Solvent or shall suffer the appointment of a
receiver, trustee, custodian or similar fiduciary, or shall make an assignment
for the benefit of creditors, or any petition for an order for relief shall be
filed by or against Borrower or any Guarantor under the Bankruptcy Code (if
against Borrower or any Guarantor, the continuation of such proceeding for more
than thirty (30) days), or Borrower or any Guarantor shall make any offer of
settlement, extension or composition to their respective unsecured creditors
generally.
10.1.11 Business Disruption; Condemnation. There shall occur
a cessation of a substantial part of the business of Borrower, any Subsidiary of
Borrower or any Guarantor for a period which significantly affects Borrower's or
such Guarantor's capacity to continue its business, on a profitable basis; or
Borrower, any Subsidiary of Borrower or any Guarantor shall suffer the loss or
revocation of any license or permit now held or hereafter acquired by Borrower
or such Guarantor which is necessary to the continued or lawful operation of its
business; or Borrower or any Guarantor shall be enjoined, restrained or in any
way prevented by court, governmental or administrative order from conducting all
or any material part of its business affairs; or any material lease or agreement
pursuant to which Borrower or any Guarantor leases, uses or occupies any
Property shall be canceled or terminated prior to the expiration of its stated
term; or any part of the Collateral shall be taken through condemnation or the
value of such Property shall be impaired through condemnation.
10.1.12 Change of Ownership. If Xxxxxxx Xxxxxxxxxx, Xxxxx
Xxxxxxxxxx, Xxxxxx Xxxxxxxxxx, Xxxx Xxxxxxxxxx and Xxxxx Xxxxxxxxxx shall cease
directly or indirectly to own and control, beneficially or of record,
collectively, at least 71% of the issued and outstanding capital stock of
Guarantor or if any Borrower ceases to be 100% owned by the Guarantor, Joule
Inc.
10.1.13 ERISA. A Reportable Event shall occur which Lender,
in its sole discretion, shall determine in good faith constitutes grounds for
the termination by the Pension Benefit Guaranty Corporation of any Plan or for
the appointment by the appropriate United States district court of a trustee for
any Plan, or if any Plan shall be terminated or any such trustee shall be
30
requested or appointed, or if Borrower, any Subsidiary of Borrower or any
Guarantor is in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multi-employer Plan resulting from Borrower's, such
Subsidiary's or such Guarantor's complete or partial withdrawal from such Plan.
10.1.14 Challenge to Agreement. Borrower, any Subsidiary of
Borrower or any Guarantor, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Lender.
10.1.15 Repudiation of or Default Under Guaranty Agreement.
Any Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.1.16 Criminal Forfeiture. Borrower, any Subsidiary of
Borrower or any Guarantor shall be criminally indicted or convicted under any
law that could lead to a forfeiture of any Property of Borrower, any Subsidiary
of Borrower or any Guarantor.
10.1.17 Judgments. Any money judgment, writ of attachment or
similar process is filed against Borrower, any Subsidiary of Borrower or any
Guarantor, or any of their respective Property.
10.1.18 Change in Management. If Xxxxxxx Xxxxxxxxxx, Xxxx X.
Xxxxxxx, Xx. or Xxxxxxx X. Xxxxxxx shall cease to be involved in the day-to-day
operations of the Borrower in substantially the same capacity in which they are
involved on the Closing Date provided however, in the event any of the above
Persons ceases to be involved in the day-to-day operations of the Borrower in
substantially the same capacity as on the Closing Date (for any reason) and is
not replaced, within 120 days of the departure of such Person by a Person
acceptable to Lender in its sole discretion.
10.2 Acceleration of the Obligations. Without in any way limiting
the right of Lender to demand payment of any portion of the Obligations payable
on demand in accordance with Section 3.2 hereof, upon or at any time after the
occurrence of an Event of Default, all or any portion of the Obligations shall,
at the option of Lender and without presentment, demand, protest or further
notice by Lender, become at once due and payable and Borrower shall forthwith
pay to Lender, the full amount of such Obligations, provided, that upon the
occurrence of an Event of Default specified in subsection 10.1.10 hereof, all of
the Obligations shall become automatically due and payable without declaration,
notice or demand by Lender.
10.3 Other Remedies. Upon and after the occurrence of an Event of
Default, Lender shall have and may exercise from time to time the following
other rights and remedies:
10.3.1 All of the rights and remedies of a secured party
under the UCC or under other applicable law, and all other legal and equitable
rights to which Lender may be entitled, all of which rights and remedies shall
be cumulative and shall be in addition to any other rights or remedies contained
in this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
31
10.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Lender at a place designated by
Lender which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
Borrower, Borrower agrees not to charge Lender for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Seller may, at Seller's option,
disclaim any and all warranties regarding the Collateral in connection with any
such sale. Borrower agrees that ten (10) days written notice to Borrower of any
public or private sale or other disposition of Collateral shall be reasonable
notice thereof, and such sale shall be at such locations as Lender may designate
in said notice. Lender shall have the right to conduct such sales on Borrower's
premises, without charge therefor, and such sales may be adjourned from time to
time in accordance with applicable law. Lender shall have the right to sell,
lease or otherwise dispose of the Collateral, or any part thereof, for cash,
credit or any combination thereof, and Lender may purchase all or any part of
the Collateral at public or, if permitted by law, private sale and, in lieu of
actual payment of such purchase price, may set off the amount of such price
against the Obligations. The proceeds realized from the sale of any Collateral
may be applied, after allowing two (2) Business Days for collection, first to
the costs, expenses and attorneys' fees incurred by Lender in collecting the
Obligations, in enforcing the rights of Lender under the Loan Documents and in
collecting, retaking, completing, protecting, removing, storing, advertising for
sale, selling and delivering any Collateral; second to the interest due upon any
of the Obligations; and third, to the principal of the Obligations. If any
deficiency shall arise, each Borrower and Guarantor shall remain jointly and
severally liable to Lender therefor.
10.3.4 Lender is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit.
10.3.5 Lender may, at its option, require Borrower to
deposit with Lender funds equal to the LC Amount and, if Borrower fails to
promptly make such deposit, Lender may advance such amount as a Base Rate
Advance (whether or not an Overadvance is created thereby). Any such deposit or
advance shall be held by Lender as a reserve to fund future payments on such LC
Guaranties and future drawings against such Letters of Credit. At such time as
all LC Guaranties have been paid or terminated and all Letters of Credit have
been drawn upon or expired, any amounts remaining in such reserve shall be
applied against any outstanding Obligations, or, if all Obligations have been
indefeasibly paid in full, returned to Borrower.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or in any Guaranty Agreement given to Lender or contained in
any other agreement between Lender and Borrower, heretofore, concurrently, or
hereafter entered into, shall be deemed cumulative to and not in derogation or
32
substitution of any of the terms, covenants, conditions, or agreements of
Borrower herein contained. The failure or delay of Lender to require strict
performance by Borrower of any provision of this Agreement or to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral shall not
operate as a waiver of such performance, Liens, rights, powers and remedies, but
all such requirements, Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Lender shall have been fully satisfied. None of
the undertakings, agreements, warranties, covenants and representations of
Borrower contained in this Agreement or any of the other Loan Documents and no
Default or Event of Default by Borrower under this Agreement or any other Loan
Documents shall be deemed to have been suspended or waived by Lender, unless
such suspension or waiver is by an instrument in writing specifying such
suspension or waiver and is signed by a duly authorized representative of Lender
and directed to Borrower.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
11.1.1 At such time or times upon or after the occurrence of
a Default or an Event of Default as Lender or said agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
11.1.2 At such time or times upon or after the occurrence of
an Event of Default as Lender or its agent in its sole discretion may determine:
(i) demand payment of the Accounts from the Account Debtors, enforce payment of
the Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable and, at Lender's option, with all warranties regarding the
Collateral disclaimed; (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor or to any notice of lien, assignment or satisfaction of lien or similar
document in connection with any of the Collateral; (vi) receive, open and
dispose of all mail addressed to Borrower and to notify postal authorities to
change the address for delivery thereof to such address as Lender may designate;
(vii) endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to the Accounts, Inventory and any other
Collateral; (ix) use Borrower's stationery and sign the name of Borrower to
verifications of the Accounts and notices thereof to Account Debtors; (x) use
the information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts, Inventory, Equipment
33
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in Lender's
determination, to fulfill Borrower's obligations under this Agreement.
11.2 Indemnity. Borrower hereby agrees to indemnify Lender and hold
Lender harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Lender (including reasonable attorneys
fees and legal expenses) as the result of Borrower's failure to observe, perform
or discharge Borrower's duties hereunder. In addition, Borrower shall defend
Lender against and save it harmless from all claims of any Person with respect
to the Collateral. Without limiting the generality of the foregoing, these
indemnities shall extend to any claims asserted against Lender by any Person
under any Environmental Laws or similar laws by reason of Borrower's or any
other Person's failure to comply with laws applicable to solid or hazardous
waste materials or other toxic substances. Notwithstanding any contrary
provision in this Agreement, the obligation of Borrower under this Section 11.2
shall survive the payment in full of the Obligations and the termination of this
Agreement.
11.3 Modification of Agreement; Sale of Interest. This Agreement
may not be modified, altered or amended, except by an agreement in writing
signed by Borrower and Lender. Borrower may not sell, assign or transfer any
interest in this Agreement, any of the other Loan Documents, or any of the
Obligations, or any portion thereof, including, without limitation, Borrower's
rights, title, interests, remedies, powers, and duties hereunder or thereunder.
Borrower hereby consents to Lender's participation, sale, assignment, transfer
or other disposition, at any time or times hereafter, of this Agreement and any
of the other Loan Documents, or of any portion hereof or thereof, including,
without limitation, Lender's rights, title, interests, remedies, powers, and
duties hereunder or thereunder. In the case of an assignment, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as it would if it were "Lender" hereunder and Lender shall be
relieved of all obligations hereunder upon any such assignments. Borrower agrees
that it will use its best efforts to assist and cooperate with Lender in any
manner reasonably requested by Lender to effect the sale of participations in or
assignments of any of the Loan Documents or any portion thereof or interest
therein, including, without limitation, assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower, its Subsidiaries and any
Guarantor to any potential participant or assignee.
11.4 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements
and the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 11.3
hereof.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the
Other Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
34
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
11.7 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute but
one and the same instrument.
11.8 Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately when delivered against
receipt, one Business Day after deposit in the mail, postage prepaid, or with an
overnight courier or, in the case of facsimile notice, when sent, addressed as
follows:
If to Lender: Fleet Capital Corporation, Business Finance
Group
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Mail Stop: NJRP 46703E
Attention: Xxxxxx Xxxxxxxx, Vice President
Facsimile No.: (000) 000-0000
With a copy to: Xxxx Xxxxx LLP
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Borrower: Joule Inc.
0000 Xxxxx 0 Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxxx, Chairman
Xxxxxxx X. Xxxxxxx, Chief
Financial Officer
Facsimile No.: (000) 000-0000
With a copy to: XxXxxxx, Deutsch & Xxxxxxxx, LLP
00 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to subsection 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender.
35
11.9 Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
11.10 Credit Inquiries. Borrower hereby authorizes and permits
Lender to respond to usual and customary credit inquiries from third parties
concerning Borrower or any of its Subsidiaries or any Guarantor.
11.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
11.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written.
11.13 Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
PRINCETON, NEW JERSEY. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY; PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN NEW
JERSEY, THE LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND
PROCEDURE FOR FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE
ENFORCEMENT OF LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE
EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT
WITH THE LAWS OF NEW JERSEY. AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF
BUSINESS OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE
SUPERIOR COURT OF NEW JERSEY, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF NEW JERSEY, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO
THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
36
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT
THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW,
OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN
SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN
ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY
JURY (WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY, RELEASE,
COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER,
ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES
AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; (v) NOTICE OF ACCEPTANCE HEREOF; AND (VI) EXCEPT AS PROHIBITED BY LAW, ANY
RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S
ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING
WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS
KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
37
IN WITNESS WHEREOF, this Agreement has been duly executed in Princeton,
New Jersey, on the day and year specified at the beginning of this Agreement.
WITNESS: JOULE STAFFING SERVICES, INC.,
a New Jersey corporation
/s/ XXXXXXX X. XXXXXXX By: /s/ XXXX X. XXXXXXX
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxx, Secretary Xxxx X. Xxxxxxx, President
WITNESS: JOULE TECHNICAL STAFFING, INC.,
a New Jersey corporation
/s/ XXXXXXX X. XXXXXXX By: /s/ XXXX X. XXXXXXX
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxx, Secretary Xxxx X. Xxxxxxx, President
WITNESS: JOULE TECHNICAL SERVICES, INC.,
a New Jersey corporation
/s/ XXXXXXX X. XXXXXXX By: /s/ XXXX X. XXXXXXX
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxx, Secretary Xxxx X. Xxxxxxx, President
WITNESS: JOULE TRANSPORTATION, INC.,
a New Jersey corporation
/s/ XXXXXXX X. XXXXXXX By: /s/ XXXX X. XXXXXXX
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxx, Secretary Xxxx X. Xxxxxxx, President
WITNESS: JOULE CORPORATE SERVICES, INC.,
a New Jersey corporation
/s/ XXXXXXX X. XXXXXXX By: /s/ XXXX X. XXXXXXX
----------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxxx, Secretary Xxxx X. Xxxxxxx, President
FLEET CAPITAL CORPORATION,
BUSINESS FINANCE GROUP
By: /s/ XXXXX XXXXXXXX
-----------------------------------
Xxxxx Xxxxxxxx, Vice President
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APPENDIX A
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GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of August 22,
2003, by and among Fleet Capital Corporation, Business Finance Group and Joule
Staffing Services, Inc., Joule Technical Staffing, Inc., Joule Technical
Services, Inc., Joule Transportation, Inc. and Joule Corporate Services, Inc.,
(a) the terms Account, Certificated Security, Chattel Paper, Deposit Account,
Document, Equipment, Financial Asset, Fixture, General Intangibles, Goods,
Instrument, Inventory, Investment Property, Security, Proceeds, Security
Entitlement and Uncertificated Security have the respective meanings assigned
thereto under the UCC (as defined below); (b) the terms Commercial Tort Claims,
Electronic Chattel Paper, Health-Care-Insurance Receivables, Letter-of-Credit
Rights, Payment Intangibles, Software, Supporting Obligations and Tangible
Chattel Paper have the respective meanings assigned thereto in the UCC (as
defined below); (c) all terms indicating Collateral having the meanings assigned
thereto under the UCC shall be deemed to mean such Property, whether now owned
or hereafter created or acquired by Borrower or in which Borrower now has or
hereafter acquires any interest; (d) capitalized terms which are not otherwise
defined have the respective meanings assigned thereto in said Loan and Security
Agreement; and (e) the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):
Account Debtor - any Person who is or may become obligated on
or under or on account of any Account, Contract Right, Chattel Paper or
General Intangible.
Affiliate - a Person (other than a Subsidiary): (i) which
directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, a Person; (ii) which
beneficially owns or holds 5% or more of any class of the Voting Stock
of a Person; or (iii) 5% or more of the Voting Stock (or in the case of
a Person which is not a corporation, 5% or more of the equity interest)
of which is beneficially owned or held by a Person or a Subsidiary of a
Person.
Agreement - the Loan and Security Agreement referred to in the
first sentence of this Appendix A, all Exhibits thereto and this
Appendix A.
Availability - the amount of money which Borrower is entitled
to borrow from time to time as Revolving Credit Loans, such amount
being the difference derived when the sum of the principal amount of
Revolving Credit Loans then outstanding (including any amounts which
Lender may have paid for the account of Borrower pursuant to any of the
Loan Documents and which have not been reimbursed by Borrower) and the
LC Amount is subtracted from the Borrowing Base. If the amount
outstanding is equal to or greater than the Borrowing Base,
Availability is zero (0).
Bank - Fleet National Bank, its successors and/or assigns.
Base Rate - the rate of interest announced or quoted by Bank
from time to time as its prime rate for commercial loans, whether or
39
not such rate is the lowest rate charged by Bank to its most preferred
borrowers; and, if such prime rate for commercial loans is discontinued
by Bank as a standard, a comparable reference rate designated by Bank
as a substitute therefor shall be the Base Rate.
Base Rate Advances - any Loan bearing interest computed by
reference to the Base Rate.
Blocked Account Service Agreement - the Three Party Blocked
Account Service Agreement executed on or about the Closing Date among
the Borrower, Lender and Bank.
Borrowing Base - as at any date of determination thereof, an
amount equal to the lesser of:
(i) $7,500,000 at such date; or
(ii) an amount equal to:
(a) up to 85% of the net amount of
Eligible Accounts outstanding at such date;
LESS
(b) the LC Amount with a sublimit of
$3,000,000 for Letters of Credit.
For purposes hereof, the net amount of Eligible Accounts at
any time shall be the face amount of such Eligible Accounts less any
and all returns, rebates, discounts (which may, at Lender's option, be
calculated on shortest terms), credits, allowances or excise taxes of
any nature at any time issued, owing, claimed by Account Debtors,
granted, outstanding or payable in connection with such Accounts at
such time. Lender may, in its sole discretion, adjust the Borrowing
Base from time to time to reflect reserves for dilution of Accounts.
Borrowing Base Certificate - a certificate by a responsible
officer of Borrower, substantially in the form of Exhibit P (or another
form acceptable to Lender) setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof, all
in such detail as shall be satisfactory to Lender. All calculations of
the Borrowing Base in connection with the preparation of any Borrowing
Base Certificate shall originally be made by Borrower and certified to
Lender; provided, that Lender shall have the right to review and
adjust, in the exercise of its reasonable credit judgment, any such
calculation after giving notice thereof to the Borrower, (1) to reflect
its reasonable estimate of declines in value of any of the Collateral
described therein, and (2) to the extent that such calculation is not
in accordance with this Agreement.
Business Day - any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New Jersey or
is a day on which banking institutions located in such state are
closed.
40
Capital Expenditures - expenditures made or liabilities
incurred for the acquisition of any fixed assets or improvements,
replacements, substitutions or additions thereto which have a useful
life of more than one year, including the total principal portion of
Capitalized Lease Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions
precedent in Section 9 of the Agreement are satisfied and the initial
Loan is made or the initial Letter of Credit or LC Guaranty is issued
under the Agreement.
Collateral - all of the Property and interests in Property
described in Section 5 of the Agreement, and all other Property and
interests in Property that now or hereafter secure the payment and
performance of any of the Obligations.
Computer Hardware and Software - all of Borrower's rights
(including rights as licensee and lessee) with respect to (i) computer
and other electronic data processing hardware, including all integrated
computer systems, central processing units, memory units, display
terminals, printers, computer elements, card readers, tape drives, hard
and soft disk drives, cables, electrical supply hardware, generators,
power equalizers, accessories, peripheral devices and other related
computer hardware; (ii) all Software and all software programs designed
for use on the computers and electronic data processing hardware
described in clause (i) above, including all operating system software,
utilities and application programs in any form (source code and object
code in magnetic tape, disk or hard copy format or any other listings
whatsoever); (iii) any firmware associated with any of the foregoing;
and (iv) any documentation for hardware, Software and firmware
described in clauses (i), (ii) and (iii) above, including flow charts,
logic diagrams, manuals, specifications, training materials, charts and
pseudo codes.
Consolidated - the consolidation in accordance with GAAP of
the accounts or other items as to which such term applies.
Contract Right - any right of Borrower to payment under a
contract for the sale or lease of goods or the rendering of services,
which right is at the time not yet earned by performance.
Current Assets - at any date means the amount at which all of
the current assets of a Person would be properly classified as current
assets shown on a balance sheet at such date in accordance with GAAP
except that amounts due from Affiliates and investments in Affiliates
shall be excluded therefrom.
Current Liabilities - at any date means the amount at which
all of the current liabilities of a Person would be properly classified
as current liabilities on a balance sheet at such date in accordance
with GAAP excluding the Loans and current maturities of any long-term
Indebtedness.
Default - an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both, become an
Event of Default.
41
Default Rate - as defined in subsection 2.1.2 of the
Agreement.
Distribution - in respect of any corporation means and
includes: (i) the payment of any dividends or other distributions on
capital stock of the corporation (except distributions in such stock)
and (ii) the redemption or acquisition of Securities unless made
contemporaneously from the net proceeds of the sale of Securities.
Dollars, "$" and U.S. Dollars - means the lawful money of the
United States of America.
Dominion Account - a special account established by Borrower
pursuant to the Agreement at a bank selected by Borrower, but
acceptable to Lender in its reasonable discretion, and over which
Lender shall have sole and exclusive access and control for withdrawal
purposes.
EBITDA - with respect to any fiscal period, the sum of
Borrower's Consolidated net earnings (or loss) (but excluding therefrom
extraordinary items and non-recurring gains) before interest expense,
taxes, depreciation and amortization for said period as determined in
accordance with GAAP.
Eligible Account - an Account arising in the ordinary course
of Borrower's business from the sale of goods or rendition of services
which Lender, in its sole credit judgment, deems to be an Eligible
Account. Without limiting the generality of the foregoing, no Account
shall be an Eligible Account if:
(i) it arises out of a sale made by Borrower to
a Subsidiary or an Affiliate of Borrower or to a Person
controlled by an Affiliate of Borrower; or
(ii) it is unpaid for more than sixty (60) days
after the original due date shown on the invoice; or
(iii) it is due or unpaid more than ninety (90)
days after the original invoice date; or
(iv) 50% or more of the Accounts from the Account
Debtor are not deemed Eligible Accounts hereunder; or
(v) the total unpaid Accounts of the Account
Debtor exceed 20% of the net amount of all Eligible Accounts,
to the extent of such excess; or
(vi) any covenant, representation or warranty
contained in the Agreement with respect to such Account has
been breached; or
(vii) the Account Debtor is also Borrower's
creditor or supplier, or the Account Debtor has disputed
42
liability with respect to such Account, or the Account Debtor
has made any claim with respect to any other Account due from
such Account Debtor to Borrower, or the Account otherwise is
or may become subject to any right of setoff by the Account
Debtor; or
(viii) the Account Debtor has commenced a voluntary
case under the federal bankruptcy laws, as now constituted or
hereafter amended, or made an assignment for the benefit of
creditors, or a decree or order for relief has been entered by
a court having jurisdiction in the premises in respect of the
Account Debtor in an involuntary case under the federal
bankruptcy laws, as now constituted or hereafter amended, or
any other petition or other application for relief under the
federal bankruptcy laws has been filed against the Account
Debtor, or if the Account Debtor has failed, suspended
business, ceased to be Solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for
it or for all or a significant portion of its assets or
affairs; or
(ix) it arises from a sale to an Account Debtor
outside the United States, unless the sale is on letter of
credit, guaranty or acceptance terms, in each case acceptable
to Lender in its sole discretion; or
(x) it arises from a sale to the Account Debtor
on a xxxx-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment pre-billed, progress-billed,
retainage or any other condition, repurchase or return basis;
or
(xi) the Account Debtor is the United States of
America or any department, agency or instrumentality thereof,
unless Borrower assigns its right to payment of such Account
to Lender, in a manner satisfactory to Lender, so as to comply
with the Assignment of Claims Act of 1940 (31 U.S.C. ss.203 et
seq., as amended); or
(xii) the Account is subject to a Lien other than
Lender's; or
(xiii) the goods giving rise to such Account have
not been delivered to and accepted by the Account Debtor or
the services giving rise to such Account have not been
performed by Borrower and accepted by the Account Debtor or
the Account otherwise does not represent a final sale; or
(xiv) the Account is evidenced by chattel paper or
an instrument of any kind, or has been reduced to judgment; or
(xv) Borrower has made any agreement with the
Account Debtor for any deduction therefrom, except for
discounts or allowances which are made in the ordinary course
of business for prompt payment and which discounts or
allowances are reflected in the calculation of the face value
of each invoice related to such Account; or
(xvi) Borrower has made an agreement with the
Account Debtor to extend the time of payment thereof; or
43
(xvii) it is an Account with respect to which the
Account Debtor is located in a jurisdiction which requires
such Borrower, as a precondition to commencing or maintaining
an action in the courts of that jurisdiction, either to (A)
receive a certificate of authority to do business and be in
good standing in such jurisdiction; or (B) file a notice of
business activities report or similar report with such
jurisdiction's taxing authority, unless (x) such Borrower has
taken one of the actions described in clauses (A) or (B); (y)
the failure to take one of the actions described in either
clause (A) or (B) may be cured retroactively by such Borrower
at its election; or (z) such Borrower has proven, to Lender's
reasonable satisfaction, that it is exempt from any such
requirements under any such jurisdiction's laws; or
(xviii) the Account or Account Debtor is otherwise
unsatisfactory to Lender in its sole discretion.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety and environmental matters.
ERISA - the Employee Retirement Income Security Act of 1974,
as amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the
Agreement.
Fixed Charge Coverage Ratio - means, as of any date, the ratio
of (i) EBITDA minus Distributions, unfunded Capital Expenditures, and
cash taxes paid during the applicable measurement period to (ii)
scheduled payments of principal and interest on account of current
maturities of Money Borrowed during the applicable measurement period.
GAAP - generally accepted account principles in the United
States of America in effect from time to time.
Guarantor - collectively, jointly and severally, Joule Inc., a
Delaware corporation, 0000 Xxxxx 0 Corp., a New Jersey corporation, 000
X. Xxxxx Xx. Corp., a New Jersey corporation and any other Person who
may hereafter guarantee payment or performance of the whole or any part
of the Obligations.
Guaranty Agreement - the Continuing Corporate Guaranty
Agreements which are to be executed by the Guarantor in form and
substance satisfactory to Lender.
Indebtedness - as applied to a Person means, without
duplication
(i) all items which in accordance with GAAP
would be included in determining total liabilities as shown on
44
the liability side of a balance sheet of such Person as at the
date as of which Indebtedness is to be determined, including,
without limitation, Capitalized Lease Obligations,
(ii) all obligations of other Persons which such
Person has guaranteed,
(iii) all reimbursement obligations in connection
with letters of credit or letter of credit guaranties issued
for the account of such Person, and
(iv) in the case of Borrower (without
duplication), the Obligations.
Intellectual Property - all past, present and future: trade
secrets, know-how and other proprietary information; trademarks,
internet domain names, service marks, trade dress, trade names,
business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and
other source and/or business identifiers, and the goodwill of the
business relating thereto and all registrations or applications for
registrations which have heretofore been or may hereafter be issued
thereon throughout the world; copyrights (including copyrights for
computer programs) and copyright registrations or applications for
registrations which have heretofore been or may hereafter be issued
throughout the world and all tangible property embodying the
copyrights, unpatented inventions (whether or not patentable); patent
applications and patents; industrial design applications and registered
industrial designs; license agreements related to any of the foregoing
and income therefrom; books, records, writings, computer tapes or
disks, flow diagrams, specification sheets, computer software, source
codes, object codes, executable code, data, databases and other
physical manifestations, embodiments or incorporations of any of the
foregoing; the right to xxx for all past, present and future
infringements of any of the foregoing; all other intellectual property;
and all common law and other rights throughout the world in and to all
of the foregoing.
Interest Period - as applicable to any LIBOR Advance, a period
commencing on the date a LIBOR Advance is made, and ending on the date
which is thirty (30), sixty (60) or ninety (90) days later, as may then
be requested by Borrower; provided that (i) any Interest Period which
would otherwise end on a day which is not a Business Day shall end in
the next preceding or succeeding Business Day as is Lender's custom in
the market to which such LIBOR Advance relates; (ii) there remains a
minimum of thirty (30), sixty (60) or ninety (90) days (depending upon
which Interest Period Borrower selects) in the Original Term; and (iii)
all Interest Periods of the same duration which commence on the same
date shall end on the same date.
LC Amount - at any time, the aggregate undrawn face amount of
all Letters of Credit and LC Guaranties then outstanding.
LC Guaranty - any guaranty pursuant to which Lender or any
Affiliate of Lender shall guaranty the payment or performance by
Borrower of its reimbursement obligation under any letter of credit.
45
Letter of Credit - any standby letter of credit issued by
Lender or any of Lender's Affiliates for the account of Borrower.
Leverage Ratio - means, as of any date, the ratio on a
Consolidated basis of (i) Indebtedness minus Subordinated Debt to (ii)
Tangible Capital Funds.
LIBOR - as applicable to any LIBOR Advance, the rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as
determined on the basis of the offered rates for deposits in U.S.
dollars, for a period of time comparable to such LIBOR Advance which
appears on the Telerate page 3750 as of 11:00 a.m. (London time) on the
day that is two (2) London Banking Days preceding the first day of such
LIBOR Advance; provided, however, if the rate described above does not
appear on the Telerate System on any applicable interest determination
date, the LIBOR rate shall be the rate (rounded upwards as described
above, if necessary) for deposits in U.S. dollars for a period
substantially equal to the interest period on the Reuters Page "LIBO"
(or such other page as may replace the LIBO Page on that service for
the purpose of displaying such rates), as of 11:00 a.m. (London Time),
on the day that is two (2) London Banking Days prior to the beginning
of such interest period. If both the Telerate and Reuters systems are
unavailable, then the rate for that date will be determined on the
basis of the offered rates for deposits in U.S. dollars for a period of
time comparable to such LIBOR Advance which are offered by four (4)
major banks in the London interbank market at approximately 11:00 a.m.
(London time), on the day that is two (2) London Banking Days preceding
the first day of such LIBOR Advance as selected by Lender. The
principal London office of each of the major London Banks so selected
will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two (2) such quotations are provided, the
rate for that date will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the rate for that
date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable
to such LIBOR Advance offered by major banks in New York City at
approximately 11:00 a.m. (New York City time), on the day that is two
(2) London Banking Days preceding the first day of such LIBOR Advance.
In the event that Lender is unable to obtain any such quotation as
provided above, it will be determined that LIBOR pursuant to a LIBOR
Advance cannot be determined. In the event that the Board of Governors
of the Federal Reserve System shall impose a Reserve Percentage with
respect to LIBOR deposits of Bank then for any period during which such
Reserve Percentage shall apply, LIBOR shall be equal to the amount
determined above divided by an amount equal to 1 minus the Reserve
Percentage.
LIBOR Advance - any Loan bearing interest computed by
reference to the LIBOR.
Lien - any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on common law, statute or contract. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting Property. For the
purpose of the Agreement, Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
46
Loan Account - the loan account established on the books of
Lender pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Document List, the Other
Agreements and the Security Documents.
Loans - all loans and advances of any kind made by Lender,
and/or by any affiliate of Lender, pursuant to the Agreement.
London Banking Day - any date on which commercial banks are
open for business in London, England.
Money Borrowed - means (i) Indebtedness arising from the
lending of money by any Person to Borrower; (ii) Indebtedness, whether
or not in any such case arising from the lending by any Person of money
to Borrower, (A) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (B) which constitutes
obligations evidenced by bonds, debentures, notes or similar
instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or
partial payment for Property; (iii) Indebtedness that constitutes a
Capitalized Lease Obligation; (iv) reimbursement obligations with
respect to letters of credit or guaranties of letters of credit and (v)
Indebtedness of Borrower under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (i) through
(iii) hereof, if owed directly by Borrower.
Mortgages - the mortgages to be executed by Borrower or
Guarantor as the case may be, on or about the Closing Date in favor of
Lender and by which Borrower or Guarantor as the case may be, shall
grant and convey to Lender, as security for the Obligations, a Lien
upon the real Property of Borrower or Guarantor as the case may be,
located at 0000 Xxxxx 0, Xxxxxx, Xxx Xxxxxx 00000; 0000 Xxxxx 0,
Xxxxxx, Xxx Xxxxxx 00000; and 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxxxx 00000.
Multiemployer Plan - has the meaning set forth in Section
4001(a)(3) of ERISA.
Obligations - all Loans and all other advances, (including,
but not limited to, Letter of Credit reimbursement obligations,
obligations arising under any interest or currency swap, future, option
or similar arrangements, foreign exchange contracts, all obligations
arising from any derivative transactions and electronic funds transfers
(whether through automated clearing house or otherwise) or out of
Lender's non-receipt or inability to collect funds or otherwise not
being made whole in connection with depositing transfer checks or
similar arrangements) debts, liabilities, obligations, covenants and
duties, together with all interest, fees and other charges thereon,
owing, arising, due or payable from Borrower to Lender, and/or to any
affiliate of Lender, of any kind or nature, present or future, whether
or not evidenced by any note, guaranty or other instrument, whether
arising under the Agreement or any of the other Loan Documents or
otherwise whether direct or indirect (including those acquired by
assignment), absolute or contingent, primary or secondary, due or to
become due, now existing or hereafter arising and however acquired.
47
Organizational I.D. Number - with respect to Borrower, the
organizational identification number assigned to Borrower by the
applicable governmental unit or agency of the jurisdiction of
organization of Borrower.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and
documents (other than the Agreement and the Security Documents),
heretofore, now or hereafter executed by Borrower, any Subsidiary of
Borrower or any other third party and delivered to Lender in respect of
the transactions contemplated by the Agreement.
Overadvance - the amount, if any, by which the outstanding
principal amount of Revolving Credit Loans plus the LC Amount exceeds
the Borrowing Base.
Participating Lender - each Person who shall be granted the
right by Lender to participate in any of the Loans described in the
Agreement and who shall have entered into a participation agreement in
form and substance satisfactory to Lender.
Permitted Liens - any Lien of a kind specified in subsection
8.2.5 of the Agreement.
Permitted Purchase Money Indebtedness - Purchase Money
Indebtedness of Borrower incurred after the date hereof which is
secured by a Purchase Money Lien and which, when aggregated with the
principal amount of all other such Indebtedness of Borrower at the time
outstanding, does not exceed $15,000. For the purposes of this
definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized
Lease Obligation.
Person - an individual, partnership, corporation, limited
liability company, joint stock company, land trust, business trust, or
unincorporated organization, or a government or agency or political
subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained
for employees of Borrower that is covered by Title IV of ERISA.
Projections - Borrower's forecasted Consolidated and
consolidating (a) balance sheets, (b) profit and loss statements, (c)
cash flow statements, and (d) capitalization statements, all prepared
on a consistent basis with Borrower's historical financial statements,
together with appropriate supporting details and a statement of
underlying assumptions.
Property - any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
48
Purchase Money Indebtedness - means and includes (i)
Indebtedness (other than the Obligations) for the payment of all or any
part of the purchase price of any fixed assets, (ii) any Indebtedness
(other than the Obligations) incurred at the time of or within ten (10)
days prior to or after the acquisition of any fixed assets for the
purpose of financing all or any part of the purchase price thereof, and
(iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures
Purchase Money Indebtedness, but only if such Lien shall at all times
be confined solely to the fixed assets the purchase price of which was
financed through the incurrence of the Purchase Money Indebtedness
secured by such Lien.
Rentals - as defined in subsection 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section
4043(b) of ERISA.
Reserve Percentage - the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which
is imposed on member banks of the Federal Reserve System against
"Euro-currency Liabilities" as defined in Regulation D.
Restricted Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, or in any Property except the
following:
(i) investments in one or more Subsidiaries of
Borrower to the extent existing on the Closing Date;
(ii) Property to be used in the ordinary course
of business;
(iii) Current Assets arising from the sale of
goods and services in the ordinary course of business of
Borrower and its Subsidiaries;
(iv) investments in direct obligations of the
United States of America, or any agency thereof or obligations
guaranteed by the United States of America, provided that such
obligations mature within one (1) year from the date of
acquisition thereof;
(v) investments in certificates of deposit
maturing within one (1) year from the date of acquisition
issued by a bank or trust company organized under the laws of
the United States or any state thereof having capital surplus
and undivided profits aggregating at least $100,000,000; and
(vi) investments in commercial paper given the
highest rating by a national credit rating agency and maturing
not more than 270 days from the date of creation thereof.
49
Revolving Credit Loan - a Loan made by Lender as provided in
Section 1.1 of the Agreement.
Revolving Credit Note - the Revolving Credit Note to be
executed by Borrower on or about the Closing Date in favor of Lender to
evidence the Revolving Credit Loan, which shall be in the form of
Exhibit A to the Agreement.
Schedule of Accounts - as defined in subsection 6.2.1 of the
Agreement.
Security - shall have the same meaning as in Section 2(1) of
the Securities Act of 1933, as amended.
Security Documents - [the Guaranty Agreement, the Mortgage]
and all other instruments and agreements now or at any time hereafter
securing the whole or any part of the Obligations.
Solvent - as to any Person, that such Person (i) owns Property
whose fair saleable value is greater than the amount required to pay
all of such Person's Indebtedness (including contingent debts), (ii) is
able to pay all of its Indebtedness as such Indebtedness matures and
(iii) has capital sufficient to carry on its business and transactions
and all business and transactions in which it is about to engage.
Subordinated Debt - Indebtedness of Borrower that is
subordinated to the Obligations in a manner satisfactory to Lender.
Subsidiary - any corporation of which a Person owns, directly
or indirectly through one or more intermediaries, more than 50% of the
Voting Stock at the time of determination.
Tangible Capital Funds - means at any time, the net worth of a
Person as determined in accordance with GAAP, plus Subordinated Debt of
such Person minus all items that would be considered "intangible
assets" under GAAP minus amounts due from employees, officers,
directors and managers and equity holders of such Person and deferred
tax assets.
Total Credit Facility - $7,500,000.
Type of Organization - with respect to Borrower, the kind or
type of entity by which Borrower is organized, such as a corporation or
limited liability company.
UCC - the Uniform Commercial Code as in effect in the State of
New Jersey on the date of this Agreement, as the UCC may be amended or
otherwise modified, including by the UCC Revisions.
Voting Stock - Securities of any class or classes of a
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors
(or Persons performing similar functions).
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Other Terms. All other terms contained in the Agreement shall
have, when the context so indicates, the meanings provided for by the
UCC to the extent the same are used or defined therein.
Certain Matters of Construction. The terms "herein," "hereof"
and "hereunder" and other words of similar import refer to the
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. The
section titles, table of contents and list of exhibits appear as a
matter of convenience only and shall not affect the interpretation of
the Agreement. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include
any and all modifications thereto and any and all extensions or
renewals thereof.
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