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Exhibit 10.39
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
BETWEEN
FLEET NATIONAL BANK
AND
SIGNAL TECHNOLOGY CORPORATION
Dated:
February 27, 2001
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THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT is made as of February
27, 2001, by and between SIGNAL TECHNOLOGY CORPORATION ("SIGNAL"), a Delaware
corporation having its chief executive office at 000 Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxxxxxxx 00000 (the "BORROWER"), and FLEET NATIONAL BANK, a national bank
having its head office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
("FLEET" or the "LENDER").
WHEREAS, the Borrower and the Lender are parties to a Second Amended
and Restated Credit Agreement dated as of September 30, 1993 (as amended, the
"EXISTING CREDIT AGREEMENT").
WHEREAS, the Borrower and the Lender desire to amend the Existing
Credit Agreement and to restate the Existing Credit Agreement as so amended.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree that the Existing Credit Agreement is
hereby amended and restated in its entirety to read as follows:
SECTION I
DEFINITIONS
1.1 DEFINITIONS. All capitalized terms used in this Agreement or in the
Notes or in any certificate, report or other document made or delivered pursuant
to this Agreement (unless otherwise defined therein) shall have the meanings
assigned to them below:
AFFECTED LOANS. See Section 2.10.
AFFILIATE. With reference to any Person, (i) any director, officer or
employee of that Person, (ii) any other Person controlling, controlled by or
under direct or indirect common control of that Person, (iii) any other Person
directly or indirectly holding five percent (5%) or more of any class of the
capital stock or other equity interests (including options, warrants,
convertible securities and similar rights) of that Person and (iv) any other
Person five (5%) or more of any class of whose capital stock or other equity
interests (including options, warrants, convertible securities and similar
rights) is held directly or indirectly by that Person.
AGREEMENT. This Third Amended and Restated Credit Agreement, including
the Exhibits and Schedules hereto, as the same may be supplemented, amended or
restated from time to time.
ALTERNATE BASE RATE. The greater of (i) the variable annual rate of
interest announced from time to time by the Lender at its head office as its
"Base Rate," and (ii) the Federal Funds Effective Rate plus " of 1% per annum
(rounded upwards, if necessary, to the next " of 1%). The Base Rate is a
reference rate and does not necessarily represent the lowest or best rate being
charged to any customer. Any change in the Base Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change.
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APPLICABLE MARGIN. As of any date, with respect to Base Rate Loans,
LIBOR Loans, Commitment Fees or Letter of Credit Fees, the applicable percentage
set forth below:
Base Rate Loans LIBOR Loans Commitment Fee Letter of Credit Fees
----------------------------- -------------------------- ------------------------ --------------------------
0.00% 1.50% 0.25% 1.25%
ARIZONA MORTGAGE. The existing mortgage in favor of the Lender with
respect to the Arizona Real Estate, as amended, modified, supplemented or
restated from time to time.
ARIZONA REAL ESTATE. The real estate and buildings located at 000 Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxx, Arizona, owned by Signal.
ASSIGNEE. See Section 9.1.
BASE RATE LOAN. Any Loan bearing interest determined with reference to
the Alternate Base Rate.
BORROWER. See Preamble.
BORROWER'S ACCOUNTANTS. PricewaterhouseCoopers LLP, or such other
independent certified public accountants as are selected by the Borrower and
reasonably acceptable to the Lender.
BUSINESS DAY. (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or legal holiday on which banks in
Boston, Massachusetts are open for the conduct of a substantial part of their
commercial banking business; and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
LIBOR Loans, any day that is a Business Day described in clause (i) and that is
also a day on which dealings in U.S. dollar deposits are also carried on in the
London interbank market and banks are open for business in London.
CAPITAL EXPENDITURES. Without duplication, any expenditure by the
Borrower or any of its Subsidiaries for fixed or capital assets, leasehold
improvements, capital leases, installment purchases of machinery and equipment,
acquisitions of real estate and other similar expenditures including (i) in the
case of a purchase, the entire purchase price, whether or not paid during the
fiscal period in question, (ii) in the case of a capital lease, the capitalized
amount (as determined under GAAP) of the obligations under such lease to pay
rent and other amounts, and (iii) expenditures in any construction in progress
account of the Borrower.
CLOSING DATE. The first date on which the conditions set forth in
Sections 3.1 and 3.2 have been satisfied and any Loans are to be made hereunder.
CODE. The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.
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COLLATERAL. All of the property, rights and interests of the Borrower
and its Subsidiaries that are or are intended to be subject to the security
interests and liens created by the Security Documents.
COMMITMENT. The total of the Revolving Credit Commitment, the Equipment
Loan Commitment and the Term Loan Commitment.
COMMITMENT FEE. See Section 2.5(a).
COMPANIES. See Section 2.1(c).
CONSOLIDATED NET INCOME. With respect to any Person, for any fiscal
period, the consolidated net income of such Person and its Subsidiaries for such
period, as determined in accordance with GAAP, provided that in no event shall
Consolidated Net Income include: (i) any gain or loss arising from any write-up
of assets, except to the extent inclusion thereof shall be approved in writing
by the Lender; (ii) earnings of any Subsidiary accrued prior to the date it
became a Subsidiary; (iii) any extraordinary or nonrecurring gains; (iv) any
deferred or other credit representing any excess of the equity of any Subsidiary
at the date of acquisition thereof over the amount invested in such Subsidiary;
(v) the net earnings of any business entity (other than a Subsidiary) in which
such Person or any Subsidiary has an ownership interest, except to the extent
such net earnings shall have actually been received by such Person or such
Subsidiary in the form of cash distributions; (vi) the proceeds of any life
insurance policy; and (vii) any reversal of any contingency reserve, except to
the extent that provision for such contingency reserve shall be made from income
arising during such period.
CONTINGENT LIABILITIES. As of any date, the aggregate loss
contingencies of the Borrower and its Subsidiaries, as defined by GAAP but
without regard to whether any such loss contingency is probable, reasonably
possible or remote and without regard to whether any loss contingency would have
to be accrued on the Borrower's financial statements under GAAP.
DEFAULT. An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.
DRAWDOWN DATE. The Business Day on which any Loan is made or is to be
made.
EATON LIABILITIES. All liabilities and obligations of the Borrower and
its Subsidiaries (i) to indemnify Xxxxx Corporation and (ii) for related
remediation costs, as described on EXHIBIT C attached hereto.
EBITDA. For any fiscal period, an amount equal to Consolidated Net
Income for such period, plus, to the extent excluded or deducted in computing
such Consolidated Net Income, (i) Interest Expense, (ii) taxes, (iii)
depreciation, (iv) amortization and (v) non-cash charges for stock options
granted to Persons who are not employees of the Borrower, in each case
determined in accordance with GAAP; PROVIDED that for purposes of calculating
EBITDA for the Borrower's fiscal quarter ended December 31, 2000, there shall
also be added to Consolidated Net Income for such fiscal quarter the amount of
the reserve for the Eaton Liabilities (up to a maximum of $9,000,000)
established by the Borrower as of December 31, 2000. To the extent that any
amount which was excluded or deducted in computing Consolidated Net Income and
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which is to be added back in computing EBITDA pursuant to the preceding sentence
was a negative number, the amount to be added back shall be such negative
number.
ENCUMBRANCES. See Section 7.3.
ENVIRONMENTAL LAWS. Any and all applicable federal, state and local
environmental, health or safety statutes, laws, regulations, rules and
ordinances (whether now existing or hereafter enacted or promulgated), and all
applicable judicial, administrative and regulatory decrees, judgments and
orders, including common law rulings and determinations, relating to injury to,
or the protection of, real or personal property or human health or the
environment, including, without limitation, all requirements pertaining to
reporting, licensing, permitting, investigation, remediation and removal of
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of such Hazardous
Materials.
EQUIPMENT LOAN COMMITMENT. The maximum dollar amount of credit which
the Lender has agreed to loan to the Borrower as Equipment Loans upon the terms
and subject to the conditions of this Agreement, initially Three Million Dollars
($3,000,000), as the Lender's Equipment Loan Commitment may be modified pursuant
hereto from time to time.
EQUIPMENT LOAN MATURITY DATE. January 31, 2005.
EQUIPMENT LOAN NOTE. See Section 2.2(b).
EQUIPMENT LOANS. See Section 2.1(b).
EQUIPMENT REVOLVER TERMINATION DATE. January 31, 2002.
ERISA. The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, collectively, as the same may from time to
time be supplemented or amended and remain in effect.
ERISA AFFILIATE. Any trade or business, whether or not incorporated,
that is treated as a single employer with the Borrower under Section 414(b),
(c), (m) or (o) of the Code.
ERISA EVENT. (a) Any "reportable event," as defined in Section 4043 of
ERISA or the regulations issued thereunder, with respect to a Plan unless the
30-day notice requirement with respect to such event has been waived by the
PBGC; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of the Borrower or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by the Borrower or any ERISA
Affiliate from the PBGC of any notice relating to the intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; (g) the receipt by
the Borrower or any ERISA Affiliate of any notice
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concerning the imposition of Withdrawal Liability (as defined in Part I of
Subtitle E of Title IV of ERISA) with respect to any Multiemployer Plan or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence
of a material "prohibited transaction" with respect to which the Borrower or any
of its Subsidiaries is a "disqualified person" (within the meaning of Section
4975 of the Code) or with respect to which the Borrower or any such Subsidiary
could otherwise be liable; and (i) any other event or condition with respect to
a Plan or Multiemployer Plan that could reasonably be expected to result in
material liability to the Borrower.
EVENT OF DEFAULT. Any event described in Section 8.1.
EXISTING CREDIT AGREEMENT. See Preamble.
FEDERAL FUNDS EFFECTIVE RATE. For any day, a fluctuating interest rate
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the
Lender from three Federal funds brokers of recognized standing selected by the
Lender.
FLORIDA MORTGAGE. The existing mortgage in favor of the Lender with
respect to the Florida Real Estate, as amended, modified, supplemented or
restated from time to time.
FLORIDA REAL ESTATE. The real estate and buildings located at 00 Xxxx
Xxxxxx, Xxxx Xxxxxx Xxxxx, Xxxxxxx, owned by Signal.
FUNDED DEBT. As of any date, as applied to the Borrower and its
Subsidiaries on a consolidated basis, (i) Indebtedness for borrowed money and
other extensions of credit, including letters of credit, (ii) Indebtedness in
respect of capitalized lease obligations, (iii) all other interest bearing
obligations which, in accordance with GAAP, would be included as a liability on
the consolidated balance sheet of the Borrower and its Subsidiaries, (iv) all
Guarantees of the foregoing and (v) Indebtedness in respect of holdback and
earnout payments due or to become due to sellers in connection with any
Permitted Acquisition, PROVIDED, HOWEVER, that any such holdback and earnout
payments which are contingent upon the acquired Person satisfying some future
condition shall not be deemed to be Indebtedness for purposes of this definition
of Funded Debt until such time as such payments actually become due and payable.
GAAP. Generally accepted accounting principles, consistently applied.
GUARANTEES. As applied to the Borrower and its Subsidiaries, all
guarantees, endorsements or other contingent or surety obligations with respect
to obligations of others whether or not reflected on the consolidated balance
sheet of the Borrower and its Subsidiaries, including any obligation to furnish
funds, directly or indirectly (whether by virtue of partnership arrangements, by
agreement to keep-well or otherwise), through the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan, or
to enter into a contract for any of the foregoing, for the purpose of payment of
obligations of any other Person.
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HAZARDOUS MATERIAL. Any substance: (i) the presence of which requires
or may hereafter require notification, investigation, removal or remediation
under any Environmental Law; (ii) which is or becomes defined as a "hazardous
waste," "hazardous material" or "hazardous substance" or "pollutant" or
"contaminant" under any present or future Environmental Law or amendments
thereto including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 ET SEQ.) and any
applicable local statutes and the regulations promulgated thereunder; (iii)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous and which is or becomes regulated
pursuant to any Environmental Law by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United States,
any applicable state of the United States, or any political subdivision thereof;
or (iv) without limitation, which contains gasoline, diesel fuel or other
petroleum products, asbestos or polychlorinated biphenyls ("PCB's").
INDEBTEDNESS. As applied to the Borrower and its Subsidiaries on a
consolidated basis, without duplication, (i) all obligations for borrowed money
or other extensions of credit whether secured or unsecured, absolute or
contingent, including, without limitation, unmatured reimbursement obligations
with respect to letters of credit or guarantees issued for the account of or on
behalf of the Borrower and its Subsidiaries and all obligations representing the
deferred purchase price of property, other than accounts payable arising in the
ordinary course of business, (ii) all obligations evidenced by bonds, notes,
debentures or other similar instruments, (iii) all obligations secured by any
mortgage, pledge, security interest or other lien on property owned or acquired
by the Borrower or any of its Subsidiaries whether or not the obligations
secured thereby shall have been assumed, (iv) that portion of all obligations
arising under leases that is required to be capitalized on the consolidated
balance sheet of the Borrower and its Subsidiaries, (v) all Guarantees, (vi) all
obligations that are immediately due and payable out of the proceeds of or
production from property now or hereafter owned or acquired by the Borrower or
any of its Subsidiaries and (vii) all other obligations which, in accordance
with GAAP, would be included as a liability on the consolidated balance sheet of
the Borrower and its Subsidiaries, but excluding anything in the nature of
capital stock, capital surplus and retained earnings.
INITIAL FINANCIAL STATEMENT. See Section 4.6.
INTEREST EXPENSE. For any fiscal period, the consolidated interest
expense (including imputed interest on capitalized lease obligations) and
amortized debt discount on Indebtedness of the Borrower and its Subsidiaries for
such period.
INTEREST PERIOD. With respect to each LIBOR Loan, the period commencing
on the date of the making or continuation of or conversion to such LIBOR Loan
and ending one (1), two (2) or three (3) months thereafter, as the Borrower may
elect in the applicable Notice of Borrowing or Conversion; PROVIDED that:
(i) any Interest Period (other than an Interest Period
determined pursuant to clause (iii) below) that would otherwise end on
a day that is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day falls in the next
calendar month, in which case such Interest Period shall end on the
immediately preceding Business Day;
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(ii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (iii) below, end on the last Business
Day of a calendar month;
(iii) any Interest Period that would otherwise end after the
Maturity Date shall end on the Maturity Date; and
(iv) notwithstanding clause (iii) above, no Interest Period
shall have a duration of less than one month, and if any Interest
Period applicable to a Loan would be for a shorter period, such
Interest Period shall not be available hereunder.
INVESTMENT. As applied to the Borrower and its Subsidiaries, (a) the
purchase or acquisition of any share of capital stock, partnership interest,
evidence of indebtedness or other equity security of any other Person (including
any Subsidiary), (b) any loan, advance or extension of credit (excluding
accounts receivable arising in the ordinary course of business) to, or
contribution to the capital of, any other Person (including any Subsidiary), (c)
any real estate held for sale or investment, any securities or commodities
futures contracts held, (d) any other investment in any other Person (including
any Subsidiary), and (e) the making of any commitment or acquisition of any
option to make an Investment.
IRB INDEBTEDNESS. The Indebtedness of the Borrower (whether as
principal obligor, guarantor or otherwise) with respect to the obligations of:
(i) ST Olektron Corp. (predecessor in interest to Signal) under the
Reimbursement Agreement, dated November 1, 1988, between ST Olektron Corp. and
The First National Bank of Boston (predecessor in interest to BankBoston, N.A.,
predecessor in interest to the Lender); (ii) ST Microsonics Corp. (predecessor
in interest to Signal) under (A) the Mortgage, Security and Trust Agreement,
dated as of June 1, 1981, among ST Microsonics Corp., The First National Bank of
Boston, as trustee, and the Massachusetts Industrial Finance Agency, (B) the
Loan Agreement, dated as of June 1, 1981, between ST Microsonics Corp. and the
Massachusetts Industrial Finance Agency, and (C) the Guaranty Agreement, dated
as of June 1, 1981, relating to items (A) and (B); and (iii) Signal under the
Guaranty, dated November 1, 1988, among Signal, The First National Bank of
Boston, as trustee, and the Town of Webster, Massachusetts; all as in effect
from time to time.
IRS. Internal Revenue Service.
ISSUING BANK. Fleet.
LENDER. See Preamble.
LETTER OF CREDIT APPLICATIONS. Applications for Letters of Credit in
such form as may be required by the Issuing Bank from time to time which are
executed and delivered by the Borrower to the Issuing Bank pursuant to Section
2A, as the same may be amended or supplemented from time to time.
LETTER OF CREDIT FEE. See Section 2.5(b).
LETTER OF CREDIT SUBLIMIT. Ten Million Dollars ($10,000,000).
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LETTERS OF CREDIT. See Section 2A.l.
LEVERAGE RATIO. As of the end of any fiscal quarter, the ratio of (i)
Funded Debt as of the end of such fiscal quarter to (ii) EBITDA for the period
of the four consecutive fiscal quarters then ended.
LIBOR LOAN. Any Loan bearing interest at a rate determined with
reference to the LIBOR Rate.
LIBOR RATE. With respect to any LIBOR Loan for any Interest Period, the
rate per annum as determined by the Lender on the basis of the offered rates for
deposits in U.S. dollars, for a period of time comparable to such Interest
Period, which appears on the Telerate page 3750 as of 11:00 a.m. London time on
the day that is two Business Days preceding the Drawdown Date of such LIBOR
Loan; provided, however, that if the rate described above does not appear on the
Telerate System on applicable interest determination date, the LIBOR Rate shall
be the rate (rounded upward, if necessary, to the nearest one hundred thousandth
of a percentage point) determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such Interest Period which
are offered by four major banks in the London interbank market at approximately
11:00 a.m. London time, on the day that is two (2) Business Days preceding the
first day of such Interest Period as selected by the Lender. The principal
London office of each of the four major London banks will be requested to
provide a quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the LIBOR 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 Interest Period 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) Business
Days preceding the first day of such Interest Period.
LIBOR RESERVE PERCENTAGE. For any Interest Period, the aggregate of the
maximum reserve percentages (including all basic, marginal, special, emergency
and supplemental reserves), expressed as a decimal, established by the Board of
Governors of the Federal Reserve System and any other banking authority,
domestic or foreign, to which any Lender is subject with respect to
"Eurocurrency Liabilities" (as defined in regulations issued from time to time
by such Board of Governors). The LIBOR Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any such reserve
percentage.
LOAN DOCUMENTS. This Agreement, the Notes, the Letter of Credit
Applications and the Security Documents, together with any agreements,
instruments or documents executed and delivered pursuant to or in connection
with any of the foregoing.
LOANS. The Loans made or to be made by the Lender to the Borrower
pursuant to Section II of this Agreement, including Revolving Credit Loans,
Equipment Loans, Term Loans and unpaid Reimbursement Obligations.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount from time to time
that beneficiaries may draw under outstanding Letters of Credit.
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MULTIEMPLOYER PLAN. Any plan which is a Multiemployer Plan as defined
in Section 4001(a)(3) of ERISA.
NOTE RECORD. Any internal record, including a computer record,
maintained by the Lender with respect to any Loan.
NOTES. The Revolving Credit Note and the Equipment Loan Note.
NOTICE OF BORROWING OR CONVERSION. The notice, substantially in the
form of EXHIBIT B hereto, to be given by the Borrower to the Lender to request a
Loan or to convert an outstanding Loan of one Type into a Loan of another Type,
in accordance with Section 2.3.
OBLIGATIONS. Any and all obligations of the Borrower to the Lender and
the Issuing Bank of every kind and description (including, without limitation,
Revolving Credit Loans, Equipment Loans, Term Loans and Reimbursement
Obligations), direct or indirect, absolute or contingent, primary or secondary,
due or to become due, now existing or hereafter arising, regardless of how they
arise or by what agreement or instrument, if any, and including obligations to
perform acts and refrain from taking action as well as obligations to pay money.
OPERATING CASH FLOW. For any fiscal period, an amount equal to (i)
EBITDA for such period, PLUS (ii) all holdback and earnout payments made during
such period by the Borrower and its Subsidiaries to sellers in connection with a
Permitted Acquisition, but only to the extent such payments have been expensed
in computing EBITDA for such period, MINUS (iii) cash payments of taxes on
income made by the Borrower and its Subsidiaries during such period, and MINUS
(iv) Capital Expenditures made by the Borrower and its Subsidiaries during such
period that were not financed in whole or in part with the proceeds of Equipment
Loans, PROVIDED, HOWEVER that there shall not be subtracted pursuant to this
clause (iv) Capital Expenditures (x) made with the proceeds of Indebtedness
permitted by Section 7.1(h), (y) up to $5,000,000 made during the year ended
December 31, 2000 or (z) up to $7,000,000 made during the year ending December
31, 2001.
PARTICIPANT. See Section 9.2.
PBGC. The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
PENSION PLAN. Any Plan which is an "employee pension benefit plan" (as
defined in ERISA).
PERMITTED ACQUISITIONS. See Section 7.7(f).
PERMITTED ENCUMBRANCES. See Section 7.3.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business or other legal entity, and any government or governmental
agency or political subdivision thereof.
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PLAN. Any "employee pension benefit plan" or "employee welfare benefit
plan" (each as defined in Section 3 of ERISA) maintained by the Borrower or any
of its Subsidiaries.
PROHIBITED TRANSACTION. Any "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code.
QUALIFIED INVESTMENTS. As applied to the Borrower and its Subsidiaries,
investments in (i) notes, bonds or other obligations of the United States of
America or any agency thereof that as to principal and interest constitute
direct obligations of or are guaranteed by the United States of America and that
have maturity dates not more than one year from the date of acquisition, (ii)
certificates of deposit, demand deposit accounts or other deposit instruments or
accounts maintained in the ordinary course of business with banks or trust
companies organized under the laws of the United States or any state thereof
that have capital and surplus of at least $100,000,000 which certificates of
deposit and other deposit instruments, if not payable on demand, have maturities
of not more than one year from the date of acquisition, (iii) commercial paper
that is rated not less than prime-one or A-1 or their equivalents by Xxxxx'x
Investors Service, Inc. or Standard & Poor's Rating Services, respectively, or
their successors, and in each case maturing not more than one year from the date
of acquisition, (iv) any repurchase agreement secured by any one or more of the
foregoing, and (v) advances to employees for business related expenses to be
incurred in the ordinary course of business and consistent with past practices
in an amount not to exceed $500,000 in the aggregate outstanding at any one
time, PROVIDED that advances to any single employee shall not exceed $20,000 in
the aggregate.
REAL PROPERTY SECURITY DOCUMENTS. The following documents, in each case
as amended and in effect from time to time: (i) the Arizona Mortgage, (ii) the
Florida Mortgage and (iii) all title policies, endorsements, attornment and
other agreements related to items (i) and (ii).
REIMBURSEMENT OBLIGATION. The obligation of the Borrower to reimburse
the Issuing Bank and the Lender on account of any drawing under any Letter of
Credit as provided in Section 2A.2.
RESPONSIBLE OFFICER. The chief financial officer of the Borrower and
any other officer of the Borrower designated by the chief financial officer to
sign Notices of Borrowing or Conversion.
RESTRICTED PAYMENT. Any dividend, distribution, loan, advance,
guaranty, extension of credit or other payment, whether in cash or property to
or for the benefit of any Person who holds an equity interest in the Borrower or
any of its Subsidiaries, whether or not such interest is evidenced by a
security, and any purchase, redemption, retirement or other acquisition for
value of any capital stock of the Borrower or any of its Subsidiaries, whether
now or hereafter outstanding, or of any options, warrants or similar rights to
purchase such capital stock or any security convertible into or exchangeable for
such capital stock.
REVOLVING CREDIT COMMITMENT. The maximum dollar amount of credit which
the Lender has agreed to loan to the Borrower as Revolving Credit Loans or make
available to the Borrower pursuant to Letters of Credit upon the terms and
subject to the conditions of this Agreement,
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initially Twenty Million Dollars ($20,000,000), as the Lender's Revolving Credit
Commitment may be modified pursuant hereto from time to time.
REVOLVING CREDIT LOANS. See Section 2.1(a).
REVOLVING CREDIT MATURITY DATE. February 27, 2004.
REVOLVING CREDIT NOTE. See Section 2.2(a).
SECURITY DOCUMENTS. The Real Property Security Documents, in each case
as amended and/or restated and in effect from time to time; security documents
in form and substance satisfactory to the Lender to secure any Letter of Credit
related to the Xxxxx Liabilities, as required by Section 3.2(g); and any
additional documents evidencing or perfecting the Lender's lien on the
Collateral.
SECURED OBLIGATIONS. Any and all obligations of the Borrower to the
Lender of every kind and description, direct or indirect, absolute or
contingent, primary or secondary due or to become due, now existing or hereafter
arising, in respect of the Term Loans, and including obligations to perform acts
and refrain from taking action as well as obligations to pay money with respect
to the Term Loans. The Secured Obligations shall not include Obligations for the
principal of, interest on, or fees relating to, the Revolving Credit Loans, the
Revolving Credit Commitment, Reimbursement Obligations, the Equipment Loans or
the Equipment Loan Commitment.
SIGNAL. See Preamble.
SUBSIDIARY. With respect to any Person, any corporation, association,
joint stock company, business trust, partnership, limited liability company or
other similar organization of which more than 50% of the ordinary voting power
for the election of a majority of the members of the board of directors or other
governing body of such entity is held or controlled by such Person or a
Subsidiary of such Person; or any other such organization the management of
which is directly or indirectly controlled by such Person or a Subsidiary of
such Person through the exercise of voting power or otherwise; or any joint
venture, whether incorporated or not, in which such Person has more than a 50%
ownership interest.
TERM LOANS. See Section 2.1(c).
TERM LOAN MATURITY DATE. January 31, 2003.
TOTAL DEBT SERVICE. For any period, the sum of (i) Interest Expense for
such period, PLUS (ii) the aggregate amount of all principal payments (other
than payments of Revolving Credit Loans and payments of Equipment Loans prior to
the Equipment Revolver Termination Date) made, accrued or becoming due during
such period in respect of any Indebtedness of the Borrower and its Subsidiaries,
PLUS (iii) all holdback and earnout payments made during such period by the
Borrower and its Subsidiaries to sellers in connection with a Permitted
Acquisition.
TOTAL EQUIPMENT LOAN OUTSTANDINGS. At any time, the aggregate
outstanding principal balance of Equipment Loans at such time.
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TOTAL REVOLVING CREDIT OUTSTANDINGS. At any time, the sum of (i) the
aggregate outstanding principal balance of Revolving Credit Loans at such time,
and (ii) the Maximum Drawing Amount at such time.
TYPE. A LIBOR Loan or a Base Rate Loan.
1.2 RULES OF INTERPRETATION.
(a) All terms of an accounting character used herein but not
defined herein shall have the meanings assigned thereto by GAAP applied on a
consistent basis. All calculations for the purposes of Section VI hereof shall
be made in accordance with GAAP.
(b) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented and in effect from
time to time in accordance with its terms and the terms of this Agreement.
(c) The singular includes the plural and the plural includes the
singular. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) The words "include," "includes" and "including" are not
limiting.
(f) The words "herein," "hereof," "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
(g) All terms not specifically defined herein or by GAAP that are
defined in the Uniform Commercial Code as in effect in The Commonwealth of
Massachusetts, shall have the meanings assigned to them in such Uniform
Commercial Code.
SECTION II
DESCRIPTION OF CREDIT
2.1 LOANS.
(a) REVOLVING CREDIT LOANS. Upon the terms and subject to the
conditions of this Agreement, and in reliance upon the representations,
warranties and covenants of the Borrower herein, the Lender agrees to make
revolving credit loans (the "REVOLVING CREDIT LOANS") to the Borrower upon the
Borrower's request from time to time from and after the Closing Date and prior
to the Revolving Credit Maturity Date, PROVIDED that the Total Revolving Credit
Outstandings (after giving effect to all requested Revolving Credit Loans and
Letters of Credit) shall not at any time exceed the Revolving Credit Commitment.
Subject to the terms and conditions of this Agreement, the Borrower may borrow,
repay, prepay and reborrow amounts, up to the limits imposed by this Section
2.1(a), from time to time between the Closing Date and
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the Revolving Credit Maturity Date upon request given to the Lender pursuant to
Section 2.3. Each request for a Revolving Credit Loan or Letter of Credit
hereunder shall constitute a representation and warranty by the Borrower that
the conditions set forth in Sections 3.1 and 3.2 have been satisfied as of the
date of such request.
(b) EQUIPMENT LOANS. Upon the terms and subject to the conditions
of this Agreement, and in reliance upon the representations, warranties and
covenants of the Borrower herein, the Lender agrees to make loans for the
purchase of equipment (the "EQUIPMENT LOANS") to the Borrower upon the
Borrower's request from time to time from and after the Closing Date and prior
to the Equipment Revolver Termination Date, PROVIDED that the Total Equipment
Loan Outstandings (after giving effect to all requested Equipment Loans) shall
not at any time exceed the Equipment Loan Commitment. Subject to the terms and
conditions of this Agreement, the Borrower may borrow, repay, prepay and
reborrow amounts, up to the limits imposed by this Section 2.1(b), from time to
time between the Closing Date and the Equipment Revolver Termination Date upon
request given to the Lender pursuant to Section 2.3. Each request for an
Equipment Loan hereunder shall constitute a representation and warranty by the
Borrower that the conditions set forth in Sections 3.1 and 3.2 have been
satisfied as of the date of such request.
(c) TERM LOANS. The Borrower and the Lender acknowledge and agree
that the Lender (successor in interest to BankBoston, N.A., successor in
interest to The First National Bank of Boston), (1) on March 31, 1993, advanced
funds to the Borrower and ST Microsonics Corp., ST Olektron Corp., ST Microwave
Corp., Signal Securities, Inc., ST Microwave (Arizona) Corp., ST Real Estate
Corp., ST Keltec Corp. and OMI Acquisition Corp. (collectively with the
Borrower, the "COMPANIES") on a joint and several basis for the purpose of
funding the acquisition of the real estate and buildings located at 000 Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxx, Arizona, and (2) on April 14, 1992, advanced funds
to the Companies on a joint and several basis for the purpose of funding the
acquisition of the real estate and buildings located at 00 Xxxx Xxxxxx, Xxxx
Xxxxxx Xxxxx, Xxxxxxx (collectively, the "TERM Loans"). The unpaid balance of
the Term Loans as of the Closing Date is Four Million Nine Hundred Thousand
Dollars ($4,900,000).
(d) LIMITATIONS. Each LIBOR Loan shall be in a minimum principal
amount of $500,000 or in integral multiples of $100,000 in excess of such
minimum amount, and each Base Rate Loan shall be in a minimum principal amount
of $100,000 or in integral multiples of $100,000 in excess of such minimum
amount. No more than ten (10) LIBOR Loans may be outstanding at any time.
(e) CONVERSIONS. Upon the terms and subject to the conditions and
limitations of this Agreement, the Borrower may convert all or any part of any
outstanding Loan into a Loan of another Type on any Business Day (which, in the
case of a conversion of an outstanding LIBOR Loan shall be the last day of the
Interest Period applicable to such LIBOR Loan). The Borrower shall give the
Lender prior notice of each such conversion (which notice shall be effective
upon receipt) in accordance with Section 2.3.
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(f) TERMINATION OR REDUCTION OF COMMITMENTS.
(i) The Revolving Credit Commitment shall terminate at 5:00
p.m. Boston time on the Revolving Credit Maturity Date and the
Equipment Loan Commitment shall terminate at 5:00 p.m. Boston time on
the Equipment Revolver Termination Date.
(ii) The Revolving Credit Commitment shall be reduced upon and
by the amount of each mandatory repayment or prepayment of Revolving
Credit Loans made pursuant to Sections 2.6(f) and (g) hereof.
(iii) The Equipment Loan Commitment shall be reduced upon and
by the amount of each mandatory repayment or prepayment of Equipment
Loans made prior to the Equipment Revolver Termination Date pursuant to
Sections 2.6(f) and (g) hereof. On and after the Equipment Revolver
Termination Date, the Equipment Loan Commitment shall be reduced upon
and by the amount of each mandatory or optional repayment or prepayment
of the Equipment Loans.
(iv) Subject to the provisions of Section 2.6 regarding
mandatory payments, the Borrower shall have the right at any time and
from time to time upon five (5) Business Days' prior written notice to
the Lender to reduce by $1,000,000, and in integral multiples of
$1,000,000 if in excess thereof, the Revolving Credit Commitment or to
terminate entirely the Revolving Credit Commitment, whereupon the
Revolving Credit Commitment shall be reduced by the amount specified in
such notice or shall, as the case may be, be terminated entirely.
(v) Subject to the provisions of Section 2.6 regarding
mandatory payments, the Borrower shall have the right at any time and
from time to time prior to the Equipment Revolver Termination Date,
upon five (5) Business Days' prior written notice to the Lender to
reduce by $500,000, and in integral multiples of $500,000 if in excess
thereof, the Equipment Loan Commitment or to terminate entirely the
Equipment Loan Commitment, whereupon the Equipment Loan Commitment
shall be reduced by the amount specified in such notice or shall, as
the case may be, be terminated entirely.
(vi) If, as a result of any reduction of the Revolving Credit
Commitment, the Maximum Drawing Amount at the time would exceed the
Revolving Credit Commitment or the amount of Letters of Credit
permitted to be outstanding under Sections 2.1(a) and 2A.1 hereof, the
Borrower shall, as a condition precedent to any such reduction, deposit
with and pledge to the Lender for the benefit of the Lender and the
Issuing Bank cash in an amount equal to 105% of such excess. If any
Letters of Credit would remain outstanding after the effective date of
termination of the Revolving Credit Commitment, in addition to
satisfaction of all other applicable terms and conditions of this
Agreement, the Borrower shall deposit with and pledge to the Lender
cash in an amount equal to 105% of the Maximum Drawing Amount at the
effective date of such termination.
(vii) No reduction or termination of any Commitment may be
reinstated.
2.2 THE NOTES.
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(a) The Revolving Credit Loans shall be evidenced by a promissory
note in substantially the form of EXHIBIT A-1 hereto, dated as of the Closing
Date (the "REVOLVING CREDIT NOTE").
(b) The Equipment Loans shall be evidenced by a promissory note in
substantially the form of EXHIBIT A-2 hereto, dated as of the Closing Date (the
"EQUIPMENT LOAN NOTE").
(c) The Borrower irrevocably authorizes the Lender to make or
cause to be made, at or about the time of the Drawdown Date of any Loan or at
the time of receipt of any payment of principal on any Note, an appropriate
notation on its Note Record reflecting (as the case may be) the making of such
Loan or the receipt of such payment. The outstanding amount of the Loans set
forth on the Note Record shall be PRIMA FACIE evidence of the principal amount
thereof owing and unpaid to the Lender, but the failure to record, or any error
in so recording, any such amount on the Lender's Note Record shall not limit or
otherwise affect the obligations of the Borrower hereunder or under any Note to
make payments of principal of or interest on any Note when due.
2.3 NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS.
(a) Whenever the Borrower desire to obtain or continue a Loan
hereunder or convert an outstanding Loan into a Loan of another Type, the
Borrower shall give the Lender a telephonic notice promptly confirmed by a
written Notice of Borrowing or Conversion, which telephonic notice shall be
irrevocable and which must be received no later than 2:00 p.m. Boston time on
the date which is (i) one (1) Business Day before the day on which the requested
Loan is to be made as or converted to a Base Rate Loan, and (ii) three (3)
Business Days before the day on which the requested Loan is to be made or
continued as or converted to a LIBOR Loan. Such Notice of Borrowing or
Conversion shall specify (A) the effective date and amount of each Loan or
portion thereof requested to be made, continued or converted, subject to the
limitations set forth in Section 2.1, (B) the interest rate option requested to
be applicable thereto, and (C) the duration of the applicable Interest Period,
if any (subject to the provisions of the definition of the term "Interest
Period"). If such Notice of Borrowing or Conversion fails to specify the
interest rate option to be applicable to the requested Loan, then the Borrower
shall be deemed to have requested a Base Rate Loan. If the written confirmation
of any telephonic notification differs in any material respect from the action
taken by the Lender, the records of the Lender shall control absent manifest
error.
(b) Subject to the provisions of the definition of the term
"Interest Period" herein, the duration of each Interest Period for a LIBOR Loan
shall be as specified in the applicable Notice of Borrowing or Conversion. If no
Interest Period is specified in a Notice of Borrowing or Conversion with respect
to a requested LIBOR Loan, then the Borrower shall be deemed to have selected an
Interest Period of one (1) month's duration. If the Lender receives a Notice of
Borrowing or Conversion after the time specified in subsection (a) above, such
Notice shall not be effective. If the Lender does not receive an effective
Notice of Borrowing or Conversion with respect to an outstanding LIBOR Loan, or
if, when such Notice of Borrowing or Conversion must be given prior to the end
of the Interest Period applicable to such outstanding Loan, the Borrower shall
have failed to satisfy any of the conditions hereof, the Borrower shall
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be deemed to have elected to convert such outstanding Loan in whole into a Base
Rate Loan on the last day of the then current Interest Period with respect
thereto.
2.4 INTEREST RATES AND PAYMENTS OF INTEREST.
(a) Each Loan which is a Base Rate Loan shall bear interest on the
outstanding principal amount thereof at a rate per annum equal to the Alternate
Base Rate plus the Applicable Margin, which rate shall change contemporaneously
with any change in the Alternate Base Rate or the Applicable Margin, as provided
below. Such interest shall be payable monthly in arrears on the first Business
Day of each month.
(b) Each Loan which is a LIBOR Loan shall bear interest on the
outstanding principal amount thereof, for each Interest Period applicable
thereto, at a rate per annum equal to the LIBOR Rate plus the Applicable Margin,
which rate shall change with any change in the Applicable Margin, as provided
below. Such interest shall be payable for such Interest Period on the last day
thereof and, if such Interest Period is longer than three (3) months, at
intervals of three (3) months after the first day thereof.
(c) If an Event of Default shall have occurred and be continuing,
then at the option of the Lender (i) the unpaid principal balance of Loans shall
bear interest, to the extent permitted by law, compounded daily at an interest
rate equal to two percent (2%) per annum above the interest rate applicable to
each such Loan in effect on the day such Event of Default occurs, until such
Event of Default is cured or waived, and (ii) the Borrower shall pay to the
Lender a fee (in addition to the Letter of Credit Fee) equal to two percent (2%)
per annum of the Maximum Drawing Amount of all Letters of Credit outstanding
during the period from the occurrence of such Event of Default until such Event
of Default is cured or waived.
(d) So long as the Lender shall be required under regulations of
the Board of Governors of the Federal Reserve System (or any other banking
authority, domestic or foreign, to which the Lender is subject) to maintain
reserves with respect to liabilities or assets consisting of or including
"Eurocurrency Liabilities" (as defined in regulations issued from time to time
by such Board of Governors), the Borrower shall pay to the Lender additional
interest on the unpaid principal amount of each LIBOR Loan made by the Lender
from the date of such Loan until such principal amount is paid in full, at an
interest rate per annum equal at all times to the remainder (rounded upwards, if
necessary, to the next higher 1/100 of 1%) obtained by subtracting (i) the LIBOR
Rate for the Interest Period for such LIBOR Loan from (ii) the rate obtained by
dividing such LIBOR Rate by a percentage equal to 100% minus the LIBOR Reserve
Percentage of the Lender for such Interest Period. Such additional interest
shall be determined by the Lender and notified to the Borrower, and shall be
payable on each date on which interest is payable on such LIBOR Loan.
(e) All agreements between the Borrower and the Lender are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the Obligations or otherwise, shall the
amount paid or agreed to be paid to the Lender for the use or the forbearance of
the Obligations exceed the maximum permissible under applicable law. As used
herein, the term "applicable law" shall mean the law of The Commonwealth of
Massachusetts in effect as of the date hereof, provided, however, that in the
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event there is a change in the law which results in a higher permissible rate of
interest, then the Loan Documents shall be governed by such new law as of its
effective date. In this regard, it is expressly agreed that it is the intent of
the Borrower and the Lender in the execution, delivery and acceptance of the
Loan Documents to contract in strict compliance with the laws of The
Commonwealth of Massachusetts from time to time in effect. If, under or from any
circumstances whatsoever, fulfillment of any provision of any of the Loan
Documents at the time of performance of such provision shall be due, shall
involve transcending the limit of such validity prescribed by applicable law,
then the obligation to be fulfilled shall automatically be reduced to the limits
of such validity, and if under or from circumstances whatsoever the Lender
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance of the Obligations and not to payment of
interest. This provision shall control every other provision of all Loan
Documents.
2.5 FEES.
(a) The Borrower shall pay to the Lender a commitment fee (the
"COMMITMENT FEE"), computed on a daily basis and payable quarterly in arrears on
the first Business Day of each quarter, equal to (i) the average amount by which
the Revolving Credit Commitment exceeds the Total Revolving Credit Outstandings
during such fiscal quarter, MULTIPLIED BY (ii) the Applicable Margin.
(b) The Borrower shall pay to the Lender for the benefit of the
Issuing Bank and the Lender a fee (the "LETTER OF CREDIT FEE"), payable
quarterly in arrears on the first Business Day of each quarter, at a rate per
annum equal to (i) the Maximum Drawing Amount of each Letter of Credit
multiplied by (ii) the Applicable Margin.
(c) The Borrower shall pay to the Lender on the Closing Date a
closing fee of $50,000.
(d) The Borrower shall pay to the Lender such other fees as the
Borrowers and the Lender shall mutually agree.
(e) The Borrower authorizes the Issuing Bank and the Lender to
charge to their Note Record or to any deposit account which the Borrower may
maintain with any of them the unpaid interest, fees, charges, taxes and expenses
provided for in this Agreement, the other Loan Documents or any other document
executed or delivered in connection herewith or therewith.
2.6 PAYMENTS AND PREPAYMENTS OF THE LOANS.
(a) On the Revolving Credit Maturity Date, the Borrower shall pay
in full the unpaid principal balance of all outstanding Revolving Credit Loans,
together with all unpaid interest thereon and all fees and other amounts due
with respect thereto.
(b) The Borrower shall pay the unpaid principal of the Equipment Loans as of the
Equipment Revolver Termination Date in twelve (12) equal consecutive quarterly
installments of $250,000 on the first Business Day of January, April, July and
October in each
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year, commencing January 2, 2002, with the unpaid principal balance of the
Equipment Loans, together with all unpaid interest thereon and all fees and
other amounts due with respect thereto, due and payable in full on the Equipment
Loan Maturity Date.
(c) The Borrower shall pay the unpaid balance of the Term Loans in
quarterly installments of $100,000 each on the first Business Day of January,
April, July and October in each year, with the unpaid principal balance of the
Term Loans, together with all unpaid interest thereon and all fees and other
amounts due with respect thereto, due and payable in full on the Term Loan
Maturity Date.
(d) If at any time the Total Revolving Credit Outstandings exceed
the Revolving Credit Commitment, the Borrower shall immediately pay the amount
of any such excess to the Lender for application to the Revolving Credit Loans.
If at any time the Total Equipment Loan Outstandings exceed the Equipment Loan
Commitment, the Borrower shall immediately pay the amount of any such excess to
the Lender for application to the Equipment Loans.
(e) LIBOR Loans may be prepaid by the Borrower at any time,
subject to the provisions of Section 2.8, upon three (3) Business Days' notice
to the Lender. Base Rate Loans may be prepaid by the Borrower at any time,
without premium or penalty, upon one (1) Business Day's notice to the Lender.
Any such notice of prepayment by the Borrower shall be irrevocable. Prepayments
of Revolving Credit Loans may be reborrowed to the extent provided in Section
2.1(a) and prepayments of Equipment Loans may be reborrowed to the extent
provided in Section 2.1(b).
(f) The Borrower shall pay to the Lender for application to the
Loans, as provided in subsection (g) below, an amount equal to 100% of the net
cash proceeds received by the Borrower or any of its Subsidiaries from (i) sales
of assets by the Borrower or any of its Subsidiaries (including sales of any
securities (other than cash or cash equivalents) owned by the Borrower or any of
its Subsidiaries but excluding sales of inventory and obsolete or worn-out
equipment in the ordinary course of business) yielding in excess of $500,000 of
proceeds in the aggregate, provided that the amount required to be repaid
pursuant to this clause (i) shall only be equal to the amount by which the net
cash proceeds received by the Borrower or any of its Subsidiaries exceeds
$500,000 and (ii) issuances of Indebtedness.
(g) All mandatory prepayments made pursuant to subsection (f)
above shall be applied, as follows:
(i) first, to the payment of the outstanding principal balance of
Revolving Credit Loans, except that to the extent such prepayment is
made with the net cash proceeds of sales of assets purchased with
proceeds of Equipment Loans, such prepayment shall be applied to the
payment of the unpaid installments of the Equipment Loans in inverse
order of maturity;
(ii) second, to the payment of the unpaid installments of the
Equipment Loans in inverse order of maturity until the Equipment Loans
are paid in full;
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(iii) third, to the payment of the unpaid installments of the Term
Loans in inverse order of maturity until the Term Loans are paid in
full;
(iv) fourth, to the payment of the outstanding principal balance
of any other Obligations, and
(v) fifth, as the Borrower shall direct.
(h) If the Revolving Credit Commitment is terminated entirely and
the Borrower obtains a commitment from a financial or lending institution other
than the Lender to provide a revolving line of credit, the Borrower shall
immediately pay in full all Obligations.
2.7 METHOD OF PAYMENTS.
(a) All payments by the Borrower hereunder and under any of the
other Loan Documents shall be made in lawful money of the United States by 2:00
p.m. Boston time at the Lender's head office as set forth on the first page of
this Agreement or at such other location that the Lender may from time to time
designate, in each case in immediately available funds. All such payments shall
be made without set-off or counterclaim and free and clear of and without
deduction for any taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any jurisdiction or any political subdivision
thereof or taxing or other authority therein unless the Borrower is compelled by
law to make such deduction or withholding. If any such obligation is imposed
upon the Borrower with respect to any amount payable by it hereunder or under
any of the other Loan Documents, the Borrower will pay to the Lender such
additional amount in U.S. Dollars as shall be necessary to enable the Lender to
receive the same net amount which the Lender would have received on such due
date had no such obligation been imposed upon the Borrower. The Borrower will
deliver promptly to the Lender certificates or other valid vouchers or other
evidence of payment reasonably satisfactory to the Lender for all taxes or other
charges deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document. The Lender may, and the Borrower
hereby authorizes the Lender to, debit the amount of any unpaid payment not made
by such time to the demand deposit accounts of the Borrower with the Lender or
to its Note Record.
(b) If the Commitment shall have been terminated or the
Obligations shall have been declared immediately due and payable pursuant to
Section 8.2, all funds received from or on behalf of the Borrower by the Lender
or the Issuing Bank in respect of Obligations, shall be applied by the Lender in
the following manner and order: (i) first, to reimburse the Lender and the
Issuing Bank for any amounts payable pursuant to Sections 10.2 and 10.3 hereof;
(ii) second, to the payment of Commitment Fees, Letter of Credit Fees and any
other fees payable hereunder; (iii) third, to the payment of interest due on the
Loans and the Reimbursement Obligations; (iv) fourth, to the payment of the
outstanding principal balance of the Loans and the Reimbursement Obligations,
PRO RATA to the outstanding principal balance of each; (v) fifth, to the payment
of any other Obligations payable by the Borrower, PRO RATA to the outstanding
principal balance of each; and (vi) any remaining funds shall be returned to the
Borrower or to whoever shall be entitled thereto or as a court of competent
jurisdiction shall direct.
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2.8 INDEMNITY. If the Borrower for any reason (including, without
limitation, pursuant to Sections 2.6(d), 2.10, 2.11, 2.12 and 8.2 hereof) makes
any payment of principal with respect to any LIBOR Loan on any day other than
the last day of an Interest Period applicable to such LIBOR Loan, or fails to
borrow or continue or convert to a LIBOR Loan after giving a Notice of Borrowing
or Conversion thereof pursuant to Section 2.3, or fails to prepay a LIBOR Loan
after having given notice thereof, the Borrower shall pay to the Lender any
amount required to compensate the Lender for any additional losses, costs or
expenses which it may reasonably incur as a result of such payment or failure,
including, without limitation, any loss (including loss of anticipated profits),
costs or expense incurred by reason of the liquidation or re-employment of
deposits or other funds required by the Lender to fund or maintain such LIBOR
Loan. Without limiting the foregoing, the Borrower shall pay to the 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 expiration
of the Interest Period of the Loan as to which the prepayment is made, shall be
subtracted from the interest rate applicable (pursuant to Section 2.4(b)) to
each LIBOR Loan 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 of the
Loan 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 Interest Period of the Loan as to
which prepayment is made. The resulting amount shall be the yield maintenance
fee due to the Lender upon the payment of a LIBOR Loan under the circumstances
described in the first sentence of this Section 2.8. The Borrower shall pay such
amount upon presentation by the Lender of a statement setting forth the amount
and the Lender's calculation thereof pursuant hereto, which statement shall be
deemed true and correct absent manifest error.
If the Obligations are declared immediately due and payable pursuant to
Section 8.2, then any amount provided for in this Section shall be due and
payable in the same manner as though the Borrower had made a prepayment of the
LIBOR Loans.
2.9 COMPUTATION OF INTEREST AND FEES; DUE DATE. Interest and all fees
payable hereunder shall be computed daily on the basis of a year of 360 days and
paid for the actual number of days elapsed. If the due date for any payment of
principal is extended by operation of law, interest shall be payable for such
extended time. If any payment required by this Agreement becomes due on a day
that is not a Business Day, such payment may be made on the next succeeding
Business Day (subject to the definition of the term "Interest Period" with
respect to LIBOR Loans), and such extension shall be included in computing
interest and fees in connection with such payment.
2.10 CHANGED CIRCUMSTANCES; ILLEGALITY.
(a) Notwithstanding any other provision of this Agreement, in the
event that:
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(i) on any date on which the LIBOR Rate would otherwise be set the
Lender shall have determined in good faith (which determination shall
be final and conclusive) that adequate and fair means do not exist for
ascertaining the LIBOR Rate, or
(ii) at any time the Lender shall have determined in good faith
(which determination shall be final and conclusive) that:
(A) the making or continuation of or conversion of any Loan to a
LIBOR Loan has been made impracticable or unlawful by (1) the
occurrence of a contingency that materially and adversely affects the
interbank LIBOR market or (2) compliance by the Lender in good faith
with any applicable law or governmental regulation, guideline or order
or interpretation or change thereof by any governmental authority
charged with the interpretation or administration thereof or with any
request or directive of any such governmental authority (whether or not
having the force of law); or
(B) the LIBOR Rate shall no longer represent the effective cost to
the Lender for U.S. dollar deposits in the interbank market for
deposits in which it regularly participates;
then, and in any such event, the Lender shall forthwith so notify the Borrower
thereof. Until the Lender notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the obligation of the Lender to allow
selection by the Borrower of the Type of Loan affected by the contingencies
described in this Section (herein called "AFFECTED LOANS") shall be suspended.
If at the time the Lender so notifies the Borrower, the Borrower has previously
given the Lender a Notice of Borrowing or Conversion with respect to one or more
Affected Loans but such Loans have not yet gone into effect, such notification
shall be deemed to be a request for Base Rate Loans.
(b) In the event of a determination of a change in circumstances
pursuant to subsection (a)(ii)(A) above, the Borrower shall, with respect to the
outstanding Affected Loans, prepay the same, together with interest thereon and
any amounts required to be paid pursuant to Section 2.9, on such date as shall
be specified in such notice (which shall not be earlier than the date such
notice is given) and may, subject to the conditions of this Agreement, borrow a
Loan of another Type in accordance with Section 2.1 hereof by giving a Notice of
Borrowing or Conversion pursuant to Section 2.3 hereof.
2.11 INCREASED COSTS. In case any change made after the Closing Date in
any law, regulation, treaty or official directive or the interpretation or
application thereof by any court or by any governmental authority charged with
the administration thereof or the compliance with any guideline or request of
any central bank or other governmental authority (whether or not having the
force of law):
(i) subjects the Lender to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by the
Borrower or otherwise with respect to the transactions contemplated
hereby (except for taxes on the overall net income of the Lender
imposed by the United States of America or any political subdivision
thereof); or
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(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit or similar requirement against assets held by,
or deposits in or for the account of, or loans by, the Lender (other
than such requirements as are already included in the determination of
the LIBOR Rate); or
(iii) imposes upon the Lender any other condition with respect to
its obligations or performance under this Agreement or in respect of
any Letter of Credit;
and the result of any of the foregoing is to increase the cost to the Lender,
reduce the income receivable by the Lender or impose any expense upon the Lender
with respect to any Loans or its obligations under this Agreement or in respect
of any Letter of Credit, the Lender shall notify the Borrower thereof. The
Borrower agrees to pay to the Lender the amount of such increase in cost,
reduction in income or additional expense as and when such cost, reduction or
expense is incurred or determined, upon presentation by the Lender of a
statement in the amount and setting forth in reasonable detail the Lender's
calculation thereof and the assumptions upon which such calculation was based,
which statement shall be deemed true and correct absent manifest error.
2.12 CAPITAL REQUIREMENTS. If after the date hereof the Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies, or
any change in the interpretation or application thereof by any governmental
authority charged with the administration thereof, or (ii) compliance by the
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on the Lender's or such
holding company's capital as a consequence of the Lender's Commitment to make
Loans hereunder or its obligations in respect of any Letter of Credit to a level
below that which the Lender or such holding company could have achieved but for
such adoption, change or compliance (taking into consideration the Lender's or
such holding company's then existing policies with respect to capital adequacy
and assuming the full utilization of such entity's capital) by any amount deemed
by the Lender to be material, then the Lender shall notify the Borrower thereof.
The Borrower agrees to pay to the Lender the amount of such reduction of return
on capital as and when such reduction is determined, payable within 90 days
after presentation by the Lender of a statement in the amount and setting forth
in reasonable detail the Lender's calculation thereof and the assumptions upon
which such calculation was based (which statement shall be deemed true and
correct absent manifest error) unless within such 90 day period the Borrower
shall have prepaid in full all Obligations to the Lender, in which event no
amount shall be payable to the Lender under this Section. In determining such
amount, the Lender may use any reasonable averaging and attribution methods.
SECTION IIA
LETTERS OF CREDIT
2A.1 ISSUANCE. Upon the terms and subject to the conditions hereof, the
Issuing Bank, in reliance upon the representations and warranties of the
Borrower contained herein, agrees to issue letters of credit (the "LETTERS OF
CREDIT") for the account of the Borrower in such form as may be requested from
time to time by the Borrower and agreed to by the Issuing Bank, PROVIDED that
the Maximum Drawing Amount (after giving effect to all requested Letters of
Credit) shall
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not at any time exceed the Letter of Credit Sublimit, PROVIDED FURTHER that the
Total Revolving Credit Outstandings (after giving effect to all requested
Revolving Credit Loans and Letters of Credit) shall not at any time exceed the
Revolving Credit Commitment, and PROVIDED FURTHER that no Letter of Credit shall
have an expiration date later than the Revolving Credit Maturity Date. At least
three (3) Business Days prior to the proposed issuance date of any Letter of
Credit, the Borrower shall deliver to the Issuing Bank a Letter of Credit
Application setting forth the Maximum Drawing Amount of all Letters of Credit
(including the requested Letter of Credit), the requested language of the
requested Letter of Credit and such other information as the Issuing Bank shall
require. Each request for the issuance of a Letter of Credit hereunder shall
constitute a representation and warranty by the Borrower that the conditions set
forth in Sections 3.1 and 3.2 have been satisfied as of the date of such
request. The parties acknowledge and agree that "Letters of Credit" shall
include all letters of credit previously issued by the Issuing Bank and its
predecessors with respect to the IRB Indebtedness.
2A.2 REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce the
Issuing Bank to issue, extend and renew each Letter of Credit, the Borrower
hereby agrees to reimburse or pay to the Lender, for the account of the Issuing
Bank or, as the case may be, the Lender, with respect to each Letter of Credit
issued, extended or renewed by the Issuing Bank hereunder as follows:
(a) on each date that any draft presented under any Letter of
Credit is honored by the Issuing Bank or the Issuing Bank otherwise makes
payment with respect thereto, (i) the amount paid by the Issuing Bank under or
with respect to such Letter of Credit, and (ii) the amount of any taxes, fees,
charges or other costs and expenses whatsoever incurred by the Issuing Bank or
the Lender in connection with any payment made by the Issuing Bank under, or
with respect to, such Letter of Credit; and
(b) upon the Revolving Credit Maturity Date or the acceleration of
the Reimbursement Obligations pursuant to Section 8, an amount equal to 105% of
the then Maximum Drawing Amount of all Letters of Credit, which amount shall be
held by the Issuing Bank as cash collateral for all Reimbursement Obligations.
Each such payment shall be made to the Lender at its head office in immediately
available funds. Interest on any and all amounts remaining unpaid by the
Borrower under this Section 2A.2 at any time from the date such amounts become
due and payable (whether as stated in this Section 2A.2, by acceleration or
otherwise) until payment in full (whether before or after judgment) shall be
payable to the Lender, for the account of Issuing Bank or (as the case may be)
the Lender, on demand at a rate per annum equal to two percent (2%) above the
Interest Rate applicable to Base Rate Loans at the time in the absence of an
Event of Default.
2A.3 LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Issuing
Bank shall notify the Borrower of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. The responsibility of the Issuing Bank to the
Borrower shall be only to determine that the documents (including each draft)
delivered under each Letter of Credit in connection with such presentment shall
be in conformity in all material respects with such Letter of Credit. On the
date that such draft is paid or other payment is made by the Issuing Bank, the
Issuing Bank shall promptly notify the Lender of the
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amount of any unpaid Reimbursement Obligation. All such unpaid Reimbursement
Obligations with respect to Letters of Credit shall be deemed to be Revolving
Credit Loans.
2A.4 OBLIGATIONS ABSOLUTE.
(a) The Borrower's Reimbursement Obligations shall be absolute and
unconditional under any and all circumstances and irrespective of the occurrence
of any Default or Event of Default or any condition precedent whatsoever or any
set off, counterclaim or defense to payment which the Borrower may have or have
had against the Issuing Bank, the Lender or any beneficiary of a Letter of
Credit. The Borrower further agrees that the Issuing Bank and the Lender shall
not be responsible for, and the Borrower's Reimbursement Obligations shall not
be affected by, among other things, the validity or genuineness of documents or
of any endorsements thereon, even if such documents should in fact prove to be
in any or all respects invalid, fraudulent or forged, or any dispute between or
among the Borrower, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrower, against the beneficiary of
any Letter of Credit or any such transferee.
(b) The Issuing Bank and the Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit. The Borrower agrees that any action taken or omitted by the Issuing Bank
or the Lender under or in connection with each Letter of Credit and the related
drafts and documents, if done in good faith, shall be binding upon the Borrower
and shall not result in any liability on the part of the Issuing Bank or the
Lender to the Borrower.
2A.5 RELIANCE BY THE ISSUING BANK AND THE LENDER. To the extent not
inconsistent with Section 2A.4, the Issuing Bank and the Lender shall be
entitled to rely, and shall be fully protected in relying upon, any Letter of
Credit, draft writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Issuing Bank or the Lender.
SECTION III
CONDITIONS OF LOANS AND LETTERS OF CREDIT
3.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTERS OF CREDIT. The
obligation of the Lender to make the initial Loans and of the Issuing Bank to
issue any Letter of Credit on or after the date hereof is subject to the
satisfaction of the following conditions precedent on or prior to the Closing
Date:
(a) The Lender shall have received the following agreements,
documents, certificates and opinions in form and substance reasonably
satisfactory to the Lender and duly executed and delivered by the parties
thereto:
(i) This Agreement;
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(ii) The Revolving Credit Note;
(iii) The Equipment Loan Note;
(iv) Amendments to the Arizona Mortgage and the Florida Mortgage,
and corresponding title insurance endorsements;
(v) Amendments to UCC financing statements covering the
Collateral;
(vi) The Borrower's Lien and Possession Affidavit;
(vii) Certificates of insurance or insurance binders evidencing
compliance with Section 5.3(b) hereof;
(viii) Notice of Borrowing or Conversion signed by a Responsible
Officer as of the Closing Date;
(ix) A certificate of the Secretary or an Assistant Secretary of
the Borrower with respect to resolutions of its Board of Directors
authorizing the execution and delivery of the Loan Documents and
identifying the officer(s) authorized to execute, deliver and take all
other actions required under this Agreement, and providing specimen
signatures of such officer(s);
(x) The Certificate of Incorporation of the Borrower and all
amendments and supplements thereto, as filed in the office of the
Secretary of State of its jurisdiction of incorporation, certified by
said Secretary of State as being a true and correct copy thereof;
(xi) The By-laws of the Borrower and all amendments and
supplements thereto, certified by the Secretary or an Assistant
Secretary of the Borrower as being a true and correct copy thereof;
(xii) A certificate of the Secretary of State of the Borrower's
jurisdiction of incorporation as to legal existence and good standing
of the Borrower in such state;
(xiii) A certificate of the Secretaries of State of each state in
which the Borrower is doing business as to the due qualification and
good standing of the Borrower as a foreign corporation in such states;
(xiv) An opinion addressed to the Lender from Xxxxxxx Xxxx LLP,
counsel to the Borrower;
(xv) A certificate of the chief financial officer of the Borrower
as to the solvency of the Borrower, the accuracy of the Borrower's
representations and warranties and such other matters as the Lender may
reasonably request; and
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(xvi) Such other documents, instruments, opinions and certificates
and completion of such other matters, as the Lender may reasonably deem
necessary or appropriate.
(b) No litigation, arbitration, proceeding or investigation shall
be pending or threatened which questions the validity or legality of the
transactions contemplated by any Loan Document or seeks a restraining order,
injunction or damages in connection therewith, or which, in the judgment of the
Lender, might adversely affect the transactions contemplated hereby or might
have a materially adverse effect on the assets, business, financial condition or
prospects of the Borrower taken as a whole.
(c) All necessary filings and recordings against the Collateral
shall have been completed and the Lender's liens on the Collateral shall have
been perfected, as contemplated by the Security Documents.
(d) The Borrower shall have paid to the Lender all fees required
to be paid hereunder (including pursuant to Section 2.5(c) hereof) on or prior
to the Closing Date.
3.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT. The
obligation of the Lender to make any Loan, including the initial Loans, or to
continue LIBOR Loans or to convert Base Rate Loans to LIBOR Loans, and of the
Issuing Bank to issue any Letter of Credit is further subject to the following
conditions:
(a) timely receipt by the Lender of the Notice of Borrowing or
Conversion with respect to any Loan, or by the Issuing Bank of the Letter of
Credit Application with respect to any Letter of Credit;
(b) the outstanding Loans and Letters of Credit do not and, after
giving effect to any requested Loan or Letter of Credit, will not exceed the
limitations set forth in Sections 2.1 and 2A.1 hereof;
(c) the representations and warranties contained in Section IV
shall be true and accurate in all material respects on and as of the date of
such Notice of Borrowing or Conversion or Letter of Credit Application and on
the effective date of the making, continuation or conversion of each Loan or
issuance of each Letter of Credit as though made at and as of each such date
(except to the extent of changes resulting from transactions contemplated or
permitted by this Agreement and the other Loan Documents and changes occurring
in the ordinary course of business that singly or in the aggregate are not
materially adverse and except to the extent that such representations and
warranties expressly relate to an earlier date);
(d) no Default or Event of Default shall have occurred and be
continuing at the time of the making of such requested Loan or the issuance of
such requested Letter of Credit after giving effect thereto;
(e) the resolutions referred to in Section 3.1 shall remain in
full force and effect;
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(f) no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for the Lender, would
make it illegal or against the policy of any governmental agency or authority
for the Lender to make Loans hereunder or, in the opinion of counsel for the
Issuing Bank, for the Issuing Bank to issue Letters of Credit hereunder (as the
case may be); and
(g) any Letter of Credit related to the Xxxxx Liabilities shall be
fully secured by cash (or cash equivalents acceptable to the Lender) deposited
with and pledged to the Issuing Bank in an amount equal to at least 105% of the
Maximum Drawing Amount of such Letter of Credit.
The making, continuation or conversion of each Loan and the issuance of
each Letter of Credit shall be deemed to be a representation and warranty by the
Borrower on the date of the making, continuation or conversion of such Loan or
the issuance of such Letter of Credit as to the accuracy of the facts referred
to in subsection (c) of this Section 3.2 and of the satisfaction of all of the
conditions set forth in this Section 3.2.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender and the Issuing Bank to enter into this
Agreement and to make Loans and to issue Letters of Credit hereunder, the
Borrower represents and warrants to the Lender and the Issuing Bank that, except
as set forth on EXHIBIT C attached hereto:
4.1 ORGANIZATION; QUALIFICATION; BUSINESS.
(a) The Borrower and each of its Subsidiaries (all of which are
listed in EXHIBIT C attached hereto) (i) is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation, (ii) has all requisite power to own its property and conduct its
business as now conducted and as presently contemplated and (iii) is duly
qualified and in good standing as a foreign corporation and is duly authorized
to do business in each jurisdiction (all of which are listed on EXHIBIT C
attached hereto) where the nature of its properties or business requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, financial condition, assets or
properties of the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
(b) Since the date of the Initial Financial Statement, the
Borrower has continued to engage in substantially the same business as that in
which they were then engaged and are engaged in no unrelated business.
4.2 CORPORATE AUTHORITY. The execution, delivery and performance of the
Loan Documents and the transactions contemplated thereby are within the power
and authority of the Borrower and have been authorized by all necessary
corporate proceedings, and do not and will not (a) contravene any provision of
the charter documents or bylaws of the Borrower or any law, rule or regulation
applicable to the Borrower, (b) contravene any provision of, or constitute an
event of default or event that, but for the requirement that time elapse or
notice be given, or both, would constitute an event of default under, any other
agreement, instrument, order or
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undertaking binding on the Borrower, or (c) result in or require the imposition
of any Encumbrance on any of the properties, assets or rights of the Borrower,
except in favor of the Lender and the Issuing Bank.
4.3 VALID OBLIGATIONS. The Loan Documents and all of their respective
terms and provisions are the legal, valid and binding obligations of the
Borrower, enforceable in accordance with their respective terms except as
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally, and except as the
remedy of specific performance or of injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought. The
Security Documents have effectively created in favor of the Lender legal, valid
and enforceable security interests in the Collateral and such security interests
are fully perfected first priority security interests.
4.4 CONSENTS OR APPROVALS. The execution, delivery and performance of
the Loan Documents by the Borrower and the transactions contemplated herein do
not require any approval or consent of, or filing or registration with, any
governmental or other agency or authority, or any other Person (including
without limitation any lessor or lessee of any of the Borrower's properties),
except under or as contemplated by the Security Documents.
4.5 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. The Borrower and each
of its Subsidiaries has good and marketable title to all of the properties,
assets and rights of every name and nature now purported to be owned by it, and
good and valid leasehold title to all of the properties, assets and rights of
every name and nature now purported to be leased by it, including, without
limitation, such properties, assets and rights as are reflected in the Initial
Financial Statement (except such properties, assets or rights as have been
disposed of in the ordinary course of business since the date thereof), free
from all Encumbrances except Permitted Encumbrances, and, except as so
disclosed, free from all defects of title that are reasonably likely to
materially adversely affect such properties, assets or rights, or the Borrower's
or its Subsidiaries' operations conducted with respect thereto, taken as a
whole. All leases under which the Borrower or any of its Subsidiaries is the
lessor or lessee are in full force and effect and there are no existing defaults
or events that with the giving of notice or passage of time or both could ripen
into defaults thereunder. No third parties possess any rights with respect to
any of the Borrower's or its Subsidiaries' owned or leased properties, the
exercise of which would have a material adverse effect on the Borrower or its
Subsidiaries or their respective operations, taken as a whole. All real property
owned or leased by the Borrower or its Subsidiaries is described in EXHIBIT C
hereto.
4.6 FINANCIAL STATEMENTS. The Borrower has furnished to the Lender its
consolidated balance sheet as of December 31, 1999 and its consolidated
statements of income, changes in stockholders' equity and cash flow for the
fiscal year then ended, and related footnotes, audited and certified by the
Borrower's Accountants. The Borrower has also furnished to the Lender its
unaudited consolidated balance sheet as of September 30, 2000 and its unaudited
consolidated statements of income, changes in stockholders' equity and cash flow
for the nine (9) months then ended (the "INITIAL FINANCIAL STATEMENT"),
certified by the principal financial officer of the Borrower, subject to normal,
recurring year-end adjustments that shall not in the aggregate be material in
amount. All such financial statements were prepared in accordance with GAAP
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applied on a consistent basis throughout the periods specified and present
fairly the financial position of the Borrower and its Subsidiaries as of such
dates and the results of the operations of the Borrower and its Subsidiaries for
such periods. The Borrower has also furnished to the Lender its pro forma
consolidated balance sheet as of the Closing Date and projections of its future
consolidated results of operations. To the knowledge of the Borrower and its
Subsidiaries, no fact exists that (individually or in the aggregate) would
result in any material change in any of such projections. The projections are
based upon reasonable estimates and assumptions, have been prepared on the basis
of the assumptions stated therein, and reflect the reasonable estimates of the
Borrower and its Subsidiaries of the results of operations and other information
projected therein. At the date hereof, the Borrower has no Indebtedness or other
material liabilities, debts or obligations, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, including, but not
limited to, liabilities or obligations on account of taxes or other governmental
charges, that are not set forth on the Initial Financial Statement or on EXHIBIT
C hereto.
4.7 CHANGES. Since the date of the Initial Financial Statement, there
have been no changes in the assets, liabilities, financial condition, business
or prospects of the Borrower or any of its Subsidiaries other than changes in
the ordinary course of business, the effect of which has not, in the aggregate,
been materially adverse to the business or financial condition of the Borrower
and its Subsidiaries taken as a whole.
4.8 SOLVENCY. The Borrower has and, after giving effect to the Loans,
will have, assets (both tangible and intangible) having a fair saleable value in
excess of the amount required to pay the probable liability on their
then-existing debts (whether matured or unmatured, liquidated or unliquidated,
fixed or contingent). The Borrower has and will have access to adequate capital
for the conduct of its business and the discharge of its debts incurred in
connection therewith as such debts mature. The Borrower was not insolvent
immediately prior to the making of the Loans and immediately after giving effect
thereto, the Borrower will not be insolvent.
4.9 DEFAULTS. As of the date of this Agreement, no Default exists.
4.10 TAXES. The Borrower and each of its Subsidiaries have filed all
federal, state and other tax returns required to be filed, and all taxes,
assessments and other governmental charges due from the Borrower and each of its
Subsidiaries have been fully paid, except for such taxes, assessments or charges
that are being contested in good faith by appropriate proceedings and with
respect to which (a) adequate reserves have been established and are being
maintained in accordance with GAAP and (b) no lien has been filed to secure such
taxes, assessments or charges. All such contests at the date hereof are
described on EXHIBIT C hereto. None of the Borrower and its Subsidiaries has
executed any waiver that would have the effect of extending the applicable
statute of limitations in respect of tax liabilities. The federal and state
income tax returns of the Borrower and each of its Subsidiaries have not been
audited or otherwise examined by any federal or state taxing authority. The
Borrower and each of its Subsidiaries have established on its books reserves
adequate for the payment of all federal, state and other tax liabilities.
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4.11 LITIGATION. There is no litigation, arbitration, proceeding or
investigation pending, or, to the knowledge of the Borrower's or any of its
Subsidiaries' officers, threatened, against the Borrower or such Subsidiary
that, if adversely determined, (a) may reasonably be expected to result in a
material judgment not fully covered by insurance, (b) may reasonably be expected
to result in a forfeiture of all or any substantial part of the property of the
Borrower or its Subsidiaries, or (c) may reasonably be expected to have a
material adverse effect on the assets, business or financial condition of the
Borrower and its Subsidiaries taken as a whole.
4.12 SUBSIDIARIES. All the Borrower's Subsidiaries are listed on
EXHIBIT C hereto. The Borrower or its Subsidiaries are the owners, free and
clear of all Encumbrances, of all of the issued and outstanding stock or other
equity interest of each such Subsidiary. All shares of such stock or other
equity interest have been validly issued and are fully paid and nonassessable,
and no rights to subscribe to any additional shares have been granted, and no
options, warrants or similar rights are outstanding.
4.13 INVESTMENT COMPANY ACT. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.
4.14 COMPLIANCE. The Borrower has all necessary permits, approvals,
authorizations, consents, variances, licenses, franchises, registrations and
other rights and privileges (including patents, trademarks, trade names and
copyrights) to allow them to own and operate its business and properties without
any violation of laws, regulations, authorizations and orders of public
authorities (including Environmental Laws) or the rights of others, except to
the extent that any such violation would not have a material adverse effect on
the business, financial condition or operation of the Borrower and its
Subsidiaries taken as a whole. The Borrower and each of its Subsidiaries are
duly authorized, qualified and licensed under, and the Borrower, each of its
Subsidiaries and all real properties owned or leased by them are in compliance
with, all applicable laws, regulations, authorizations and orders of public
authorities, including Environmental Laws, except to the extent that any such
failure to be so authorized, qualified, licensed or in compliance would not have
a material adverse effect on the business, financial condition or operation of
the Borrower and its Subsidiaries taken as a whole. The Borrower and each of its
Subsidiaries have performed all obligations required to be performed by them
under, and are not in default under or in violation of, their certificates of
incorporation or bylaws or any other agreement, lease, mortgage, note, bond,
indenture, license or other instrument or undertaking to which any of them is a
party or by which any of them or any of their properties are bound, except for
violations none of which, either individually or in the aggregate, would have
any material adverse effect on the business, condition (financial or otherwise)
or assets of the Borrower and its Subsidiaries taken as a whole.
4.15 ERISA. The Borrower and each of its ERISA Affiliates are in
compliance in all material respects with ERISA and the provisions of the Code
and the regulations and published interpretations thereunder applicable to the
Plans. No ERISA Event has occurred or is reasonably expected to occur, including
by reason of the consummation of the transactions contemplated by this Agreement
that, when taken together with all other such ERISA Events, could reasonably be
expected to result in material liability to the Borrower or any of its ERISA
Affiliates. None of the Plans had any "unfunded benefit liabilities" (within the
meaning of Section 4001(a)(18) of ERISA) as of the last annual valuation dates
applicable thereto.
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4.16 ENVIRONMENTAL MATTERS.
(a) The Borrower and each of its Subsidiaries have obtained all
permits, licenses and other authorizations which are required under all
Environmental Laws, except to the extent failure to have any such permit,
license or authorization would not have a material adverse effect on the
business, financial condition or operations of the Borrower and its Subsidiaries
taken as a whole. The Borrower and each of its Subsidiaries are in compliance
with the terms and conditions of all such permits, licenses and authorizations,
and are also in compliance with all applicable orders, decrees, judgments and
injunctions, issued, entered, promulgated or approved under any Environmental
Law, except to the extent failure to comply would not have a material adverse
effect on the business, financial condition or operations of the Borrower and
its Subsidiaries taken as a whole.
(b) No written notice, notification, demand, request for
information, citation, summons or order has been issued and is outstanding, no
complaint has been filed, no penalty has been assessed and no investigation or
review is pending or, to the best of the Borrower's knowledge, threatened by any
governmental or other entity (i) with respect to any alleged failure by the
Borrower or any of its Subsidiaries to have any permit, license or authorization
required in connection with the conduct of its business or to comply with any
Environmental Laws or (ii) regarding the presence of any Hazardous Material at,
on or under any property owned, leased or used by the Borrower or any of its
Subsidiaries or any other location to which Hazardous Materials from such
property had been transported or which they have been disposed of.
(c) No material oral or written notification of a release of a
Hazardous Material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no property owned, leased or used by the Borrower or any of its
Subsidiaries is listed or, to the best of the Borrower's knowledge, proposed for
listing on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or on any similar
state list of sites requiring investigation or clean-up.
(d) There are no Encumbrances arising under or pursuant to any
Environmental Law on any of the real property or properties owned, leased or
used by the Borrower or any of its Subsidiaries and no governmental actions have
been taken or, to the best of the Borrower's knowledge, are in process which
could subject any of such properties to such liens or Encumbrances, as a result
of which the Borrower or any of its Subsidiaries would be required to place any
notice or restriction relating to the presence of Hazardous Materials at any
property owned by it in any deed to such property.
(e) Neither the Borrower, nor its Subsidiaries and, to the best
knowledge of the Borrower, any previous owner, tenant, occupant or user of any
property owned, leased or used by the Borrower or any of its Subsidiaries have
(i) engaged in or permitted any operations or activities upon or any use or
occupancy of such property, or any portion thereof, for the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of any Hazardous Materials on, under, in or about such
property, except to the extent commonly used in day-to-day operations of such
property and in such case only in compliance in all material respects with all
Environmental Laws, or (ii) transported any Hazardous Materials to, from or
across such property except to the extent commonly used in day-to-day operations
of
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such property and, in such case, in compliance in all material respects with,
all Environmental Laws. To the best knowledge of the Borrower, no Hazardous
Materials migrated from other properties upon, about or beneath such property,
and no Hazardous Materials are presently constructed, deposited, stored or
otherwise located on, under, in or about such property except to the extent
commonly used in day-to-day operations of such property and in compliance in all
material respects with all Environmental Laws.
4.17 RESTRICTIONS ON THE BORROWER. The Borrower is not party to or
bound by any contract, agreement or instrument, nor subject to any charter or
other corporate restriction which will, under current or reasonably foreseeable
conditions, materially and adversely affect the business, property, assets,
operations or conditions, financial or otherwise, of the Borrower or any of its
Subsidiaries.
4.18 LABOR RELATIONS. There is (i) no unfair labor practice complaint
pending against the Borrower or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened, before the National Labor Relations
Board, and no grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened, except for
such complaints, grievances and arbitration proceedings which, if adversely
decided, would not have a material and adverse effect on the condition
(financial or otherwise) properties, business or results of operations of the
Borrower or any of its Subsidiaries, taken as a whole, (ii) no strike, labor
dispute, slowdown or stoppage pending against the Borrower or any of its
Subsidiaries or, to the best knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries, except for any such labor action as would
not have a material and adverse effect on the condition (financial or
otherwise), properties, business or results of operations of the Borrower or any
of its Subsidiaries, taken as a whole, and (iii) to the best knowledge of the
Borrower, no union representation question existing with respect to the
employees of the Borrower or any of its Subsidiaries and, to the best knowledge
of the Borrower, no union organizing activities are taking place, except for any
such question or activities as would not have a material adverse effect on the
condition (financial or otherwise), properties, business or results of
operations of the Borrower or any of its Subsidiaries, taken as a whole.
4.19 MARGIN RULES. The Borrower does not own or have any present
intention of purchasing or carrying, and no portion of any Loan shall be used
for purchasing or carrying, any "margin security" or "margin stock" as such
terms are used in Regulations T, U or X of the Board of Governors of the Federal
Reserve System.
4.20 DISCLOSURE. No representation or warranty made by the Borrower in
any Loan Document and no document or information furnished to the Lender by or
on behalf of or at the request of the Borrower in connection with any of the
transactions contemplated by the Loan Documents contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements contained therein not misleading in light of the circumstances in
which they are made.
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SECTION V
AFFIRMATIVE COVENANTS
The Borrower covenants that so long as any Loan, Letter of Credit or
other Obligation remains outstanding or the Lender or the Issuing Bank have any
obligation to lend or to issue any Letter of Credit hereunder:
5.1 FINANCIAL STATEMENTS. The Borrower shall furnish to the Lender:
(a) as soon as available to the Borrower, but in any event within
ninety (90) days after the end of each fiscal year, the Borrower's consolidated
and consolidating balance sheet as of the end of and related consolidated and
consolidating statements of income, retained earnings and cash flow for such
year, prepared in accordance with GAAP and audited and certified without
qualification by the Borrower's Accountants in the case of such consolidated
statements, and certified by the chief financial officer of the Borrower in the
case of such consolidating statements; and, concurrently with such financial
statements, a copy of the Borrower's Accountants' management report and a
written statement by the Borrower's Accountants that, in the making of the audit
necessary for their report and opinion upon such financial statements they have
obtained no knowledge of any Default or, if in the opinion of such accountants
any such Default exists, they shall disclose in such written statement the
nature and status thereof;
(b) as soon as available to the Borrower, but in any event within
forty-five (45) days after the end of each fiscal quarter, the Borrower's
consolidated and consolidating balance sheet as of the end of, and related
consolidated and consolidating statements of income, retained earnings and cash
flow for, the fiscal quarter then ended and the portion of the year then ended,
prepared in accordance with GAAP and certified by the chief financial officer of
the Borrower, except for lack of footnotes and subject to normal, recurring
year-end adjustments that shall not in the aggregate be material in amount;
(c) concurrently with the delivery of each financial statement
pursuant to subsections (a) and (b) of this Section 5.1, a report in
substantially the form of EXHIBIT D hereto signed on behalf of the Borrower by
its chief financial officer;
(d) at least thirty (30) days prior to the first day of each
fiscal year, the Borrower's projections for such fiscal year, prepared on a
quarterly basis and including consolidated balance sheets and statements of
income, retained earnings and cash flows;
(e) promptly after the receipt thereof by the Borrower, copies of
any reports (including any so-called management letters) submitted to the
Borrower by independent public accountants in connection with any annual or
interim review of the accounts of the Borrower made by such accountants;
(f) promptly after the same are delivered to their stockholders or
the Securities and Exchange Commission, copies of all proxy statements,
financial statements and reports as the Borrower shall send to its stockholders
or as the Borrower may file with the
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Securities and Exchange Commission or any governmental authority at any time
having jurisdiction over the Borrower or its Subsidiaries; and
(g) from time to time, such other financial data and information
about the Borrower or its Subsidiaries as the Lender may reasonably request.
5.2 CONDUCT OF BUSINESS. The Borrower and each of its Subsidiaries
shall:
(a) duly observe and comply in all material respects with all
laws, regulations, decrees, orders, judgments and valid requirements of any
governmental authorities applicable to their corporate existence, rights and
franchises, to the conduct of their business and to their property and assets
(including without limitation all Environmental Laws and ERISA), and shall
maintain and keep in full force and effect and comply in all material respects
with all licenses and permits necessary to the proper conduct of their business;
(b) maintain their existence and remain or engage substantially in
the same business as that in which they are now engaged and in no unrelated
business.
5.3 MAINTENANCE AND INSURANCE.
(a) The Borrower and each of its Subsidiaries shall maintain its
properties in good repair, working order and condition (normal wear and tear
excepted) as required for the normal conduct of its business.
(b) The Borrower and each of its Subsidiaries shall at all times
maintain liability and casualty insurance on its properties with financially
sound and reputable insurers in such amounts and with such coverages,
endorsements, deductibles and expiration dates as the officers of the Borrower
in the exercise of their reasonable judgment deem to be adequate, as are
customary in the industry for companies of established reputation engaged in the
same or similar business and owning or operating similar properties and as shall
be reasonably satisfactory to the Lender. The Lender shall be named as loss
payee, additional insured and/or mortgagee under such insurance as the Lender
shall require from time to time, and the Borrower shall provide to the Lender
loss payable endorsements in form and substance reasonably satisfactory to the
Lender. In addition, the Lender shall be given thirty (30) days advance notice
of any cancellation of insurance. In the event of failure to provide and
maintain insurance as herein provided, the Lender may, at its option, provide
such insurance and charge the amount thereof to the Borrower as a Revolving
Credit Loan. The Borrower shall furnish to the Lender certificates or other
evidence satisfactory to the Lender of compliance with the foregoing insurance
provisions. The Lender shall not, by the fact of approving, disapproving or
accepting any such insurance, incur any liability for the form or legal
sufficiency of insurance contracts, solvency of insurance companies or payment
of law suits.
5.4 TAXES. The Borrower shall pay or cause to be paid all taxes,
assessments or governmental charges on or against them or any of its
Subsidiaries or its or their properties on or prior to the time when they become
due, except for any tax, assessment or charge that is being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been established and are being maintained in accordance with GAAP if no
Encumbrance shall have been filed to secure such tax, assessment or charge.
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5.5 INSPECTION. The Borrower shall permit the Lender and its designees,
at any reasonable time during normal business hours and at reasonable intervals
of time, and upon reasonable notice (or if a Default shall have occurred and is
continuing, then at any time and without prior notice), to (i) visit and inspect
the properties of the Borrower and its Subsidiaries, (ii) examine and make
copies of and take abstracts from the books and records of the Borrower and its
Subsidiaries, (iii) discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with their appropriate officers, employees and accountants
and (iv) conduct reviews of the books and records of the Borrower and its
Subsidiaries, all at the expense of the Borrower.
5.6 MAINTENANCE OF BOOKS AND RECORDS. The Borrower and each of its
Subsidiaries shall keep adequate books and records of account, in which true and
complete entries will be made reflecting all of its business and financial
transactions in accordance with GAAP and applicable law.
5.7 USE OF PROCEEDS.
(a) The Borrower will use the proceeds of Revolving Credit Loans
solely for (i) the working capital needs of the Borrower, including payment of
the costs and expenses of the transactions contemplated hereby, (ii) financing
Permitted Acquisitions and (iii) general corporate purposes.
(b) The Borrower will use the proceeds of Equipment Loans solely
for the purchase of equipment.
5.8 FURTHER ASSURANCES. At any time and from time to time the Borrower
shall, and shall cause each of its Subsidiaries to, execute and deliver such
further documents and take such further action as may reasonably be requested by
the Lender to effect the purposes of the Loan Documents.
5.9 NOTIFICATION REQUIREMENTS. The Borrower shall furnish to the
Lender:
(a) promptly upon becoming aware of the existence of any condition
or event that constitutes a Default, written notice thereof specifying the
nature and duration thereof and the action being or proposed to be taken with
respect thereto;
(b) promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against the Borrower or any of its Subsidiaries of which they have
notice, the outcome of which is reasonably likely to have a materially adverse
effect on the assets, business or prospects of the Borrower alone or the
Borrower and its Subsidiaries on a consolidated basis, written notice thereof
and the action being or proposed to be taken with respect thereto; and
(c) promptly after any occurrence of or after the Borrower becomes
aware of, any other condition affecting the Borrower or any Subsidiary which is
reasonably likely to constitute a material adverse change in or which might have
a material adverse effect on the business, properties or condition (financial or
otherwise) of the Borrower alone or the Borrower and its Subsidiaries, taken as
a whole, written notice thereof.
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5.10 ERISA REPORTS; COMPLIANCE.
(a) Each Plan shall comply in all material respects with ERISA and
the Code, except to the extent failure to comply in any instance would not have
a material adverse effect on the business, financial condition or operations of
the Borrower and its Subsidiaries taken as a whole.
(b) With respect to any Plan, the Borrower shall, or shall cause
its ERISA Affiliates to, furnish to the Lender promptly (i) as soon as possible
and in any event within ten (10) days after a Borrower or any of its ERISA
Affiliates knows that any ERISA Event has occurred or is expected to occur, a
statement of the chief financial officer of the Borrower describing such ERISA
Event, including copies of any notice concerning such ERISA Event received from
the PBGC, a plan administrator, or from a Multiemployer Plan sponsor, and the
action, if any, the Borrower or such ERISA Affiliate propose to take with
respect thereto; and (ii) upon the Lender's written request, a copy of the
annual report of each Pension Plan (Form 5500 or comparable form) required to be
filed with the IRS and/or the Department of Labor. Promptly after the adoption
of any Pension Plan subject to Title IV of ERISA, the Borrower shall notify the
Lender of such adoption.
5.11 ENVIRONMENTAL COMPLIANCE.
(a) The Borrower and its Subsidiaries will comply in all material
respects with all applicable Environmental Laws in all jurisdictions in which
any of them operates now or in the future, and the Borrower and its Subsidiaries
will comply in all material respects with all such Environmental Laws that may
in the future be applicable to the Borrower's or its Subsidiaries' business,
properties and assets.
(b) If the Borrower or any of its Subsidiaries shall (i) receive
notice that any material violation of any Environmental Law may have been
committed or is about to be committed by the Borrower or any of its
Subsidiaries, (ii) receive notice that any administrative or judicial complaint
or order has been filed or is about to be filed against the Borrower or any of
its Subsidiaries alleging a material violation of any Environmental Law
requiring the Borrower or any of its Subsidiaries to take any action in
connection with the release of Hazardous Materials into the environment, (iii)
receive any notice from a federal, state or local government agency or private
party alleging that the Borrower or any of its Subsidiaries may be liable or
responsible for any material amount of costs associated with a response to or
cleanup of a release of Hazardous Materials into the environment or any damages
caused thereby, (iv) become aware of any investigative action or proceedings by
a governmental agency or authority commenced or threatened against the Borrower
or any of its Subsidiaries regarding any potential violation of Environmental
Laws or any spill, release, discharge or disposal of any Hazardous Material or
(v) notify any governmental agency or authority regarding any potential
violation of Environmental Laws or any spill, release, discharge or disposal of
any Hazardous Material by the Borrower or any of its Subsidiaries, the Borrower
shall promptly notify the Lender thereof (and shall provide the Lender with a
copy of any such notice) and of any action being or proposed to be taken with
respect thereto, and thereafter shall continue to furnish to the Lender all
further notices, demands, reports and other information regarding the foregoing.
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(c) Within fifteen (15) days after the Borrower or any of its
Subsidiaries have learned of the enactment or promulgation of any Environmental
Law which may result in any material adverse change in the condition, financial
or otherwise, of the Borrower or any Subsidiary, the Borrower or such Subsidiary
shall provide the Lender with notice thereof.
(d) No later than thirty (30) days following the end of each
calendar year, the Borrower shall deliver to the Lender a written report, in a
form and with such specificity as is satisfactory to the Lender, describing the
status of any pending environmental matters described in EXHIBIT C attached
hereto or subsequently reported to the Lender pursuant to this Section 5.11.
SECTION VI
FINANCIAL COVENANTS
The Borrower covenants that effective as of December 31, 2000 and
continuing so long as any Loan, Letter of Credit or other Obligation remains
outstanding or the Lender or the Issuing Bank have any obligation to make any
Loan or issue any Letter of Credit hereunder:
6.1 LEVERAGE RATIO. The Borrower shall not permit the Leverage Ratio of
the Borrower and its Subsidiaries to exceed 2.50 to 1.00, calculated as of the
end of each fiscal quarter.
6.2 FIXED CHARGE COVERAGE RATIO. The Borrower shall not permit the
ratio of Operating Cash Flow of the Borrower and its Subsidiaries to Total Debt
Service to be less than 2.00 to 1.00 during any four consecutive fiscal quarters
(as determined at the end of each fiscal quarter for the four quarters then
ended).
6.3 MINIMUM EBITDA.
(a) The Borrower shall not permit EBITDA for any fiscal quarter
ending during any period referenced in the table below to be less than the
amount set forth below opposite such period:
PERIOD EBITDA
------ ------
Quarter ended 12/31/00 $1,675,000
Quarter ending 3/31/01 $ 688,000
Quarter ending 6/30/01 $1,154,000
Quarter ending 9/30/01 $1,675,000
Quarter ending 12/31/01 $2,755,000
(b) The Borrower shall not permit EBITDA for any four consecutive
fiscal quarters (as determined at the end of each fiscal quarter for the four
fiscal quarters then ended, taken as a single fiscal period) ending (i) during
2002 to be less than EBITDA for the year ending December 31, 2001 or (ii) during
2003 to be less than EBITDA for the year ending December 31, 2002.
6.4 CAPITAL EXPENDITURES. The Borrower and its Subsidiaries shall not
make aggregate Capital Expenditures in excess of $7,000,000 during any fiscal
year.
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6.5 MAXIMUM XXXXX LIABILITIES. The Borrower shall not permit Xxxxx
Liabilities to exceed $10,000,000 at any time.
SECTION VII
NEGATIVE COVENANTS
The Borrower covenants that so long as any Loan, Letter of Credit or
other Obligation remains outstanding or the Lender or the Issuing Bank have any
obligation to make any Loan or to issue any Letter of Credit hereunder:
7.1 INDEBTEDNESS. Neither the Borrower nor any of its Subsidiaries
shall create, incur, assume, guarantee or be or remain liable with respect to
any Indebtedness other than the following:
(a) Obligations;
(b) Indebtedness existing as of the date of this Agreement and
disclosed on EXHIBIT C hereto and renewals and refinancings thereof, but not any
increase in the principal amounts thereof;
(c) Indebtedness for taxes, assessments or governmental charges to
the extent that payment therefor shall at the time not be required to be made in
accordance with Section 5.4;
(d) current liabilities on open account for the purchase price of
services, materials and supplies incurred by the Borrower in the ordinary course
of business (not as a result of borrowing), provided that such open account
Indebtedness shall be promptly paid and discharged when due or in conformity
with customary trade terms and practices except for any such open account
Indebtedness (i) which is being contested in good faith by the Borrower, (ii) as
to which adequate reserves required by GAAP have been established and are being
maintained and (iii) as to which no Encumbrance has been placed on any property
of the Borrower or any of its Subsidiaries;
(e) Indebtedness incurred in connection with Permitted
Acquisitions to the extent permitted by Section 7.7(f)(ii);
(f) Guarantees permitted under Section 7.2 hereof;
(g) the IRB Indebtedness;
(h) Indebtedness for Capital Expenditures incurred in the ordinary
course of business after the date hereof and renewals and refinancings thereof,
PROVIDED that such Indebtedness does not exceed $1,000,000 in the aggregate at
any time outstanding; and
(i) Indebtedness of a Subsidiary of the Borrower to the Borrower
or any other Subsidiary of the Borrower which is a guarantor of the Obligations.
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7.2 GUARANTIES. Neither the Borrower nor any of its Subsidiaries shall
create, incur, assume, guarantee or be or remain liable with respect to any
Guarantees other than (i) Guarantees existing on the date of this Agreement and
disclosed on EXHIBIT C hereto, and (ii) Guarantees resulting from the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business.
7.3 ENCUMBRANCES.
(a) Neither the Borrower nor any of its Subsidiaries shall create,
incur, assume or suffer to exist any mortgage, pledge, security interest, lien
or other charge or encumbrance of any kind, including the lien or retained
security title of a conditional vendor upon or with respect to any of its
property or assets ("ENCUMBRANCES"), or assign or otherwise convey any right to
receive income, including the sale or discount of accounts receivable with or
without recourse, except the following ("PERMITTED ENCUMBRANCES"):
(i) Encumbrances in favor of the Lender or the Issuing Bank to
secure Obligations;
(ii) Encumbrances existing as of the date of this Agreement and
disclosed in EXHIBIT C hereto;
(iii) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed or is
not required in accordance with the provisions of Section 5.4;
(iv) landlords' and lessors' liens in respect of rent not in
default or liens in respect of pledges or deposits under workmen's
compensation, unemployment insurance, social security laws, or similar
legislation (other than ERISA) or in connection with appeal and similar
bonds incidental to litigation; mechanics', warehouseman's, laborers'
and materialmen's and similar liens, if the obligations secured by such
liens are not then delinquent; liens securing the performance of bids,
tenders, contracts (other than for the payment of money); and liens
securing statutory obligations or surety, indemnity, performance, or
other similar bonds incidental to the conduct of the Borrower's or any
of its Subsidiaries' business in the ordinary course and that do not in
the aggregate materially detract from the value of its property or
materially impair the use thereof in the operation of its business;
(v) judgment liens securing judgments that (i) are not fully
covered by insurance, and (ii) shall not have been in existence for a
period longer than ten (10) days after the creation thereof or, if a
stay of execution shall have been obtained, for a period longer than
ten (10) days after the expiration of such stay;
(vi) rights of lessors under capital leases to the extent such
capital leases are permitted hereunder;
(vii) easements, rights of way, restrictions and other similar
charges or Encumbrances relating to real property and not interfering
in a material way with the ordinary conduct of the Borrower's and its
Subsidiaries business taken as a whole;
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(viii) Encumbrances securing Indebtedness for Capital Expenditures
to the extent such Indebtedness is permitted by Section 7.1(h) provided
that (x) each such Encumbrance is given solely to secure the purchase
price of the property acquired, does not extend to any other property
and is given at the time of acquisition of the property, and (y) the
Indebtedness secured thereby does not exceed the lesser of the cost of
such property or its fair market value at the time of acquisition;
(ix) Encumbrances in favor of the Borrower or any of its
Subsidiaries to secure Indebtedness permitted by Section 7.1(i); and
(x) liens constituting a renewal, extension or replacement of any
Permitted Encumbrance.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, covenant or agree with any Person not to create, incur, assume
or suffer to exist any Encumbrances.
7.4 MERGER; SALE OR LEASE OF ASSETS; LIQUIDATION.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, (i) merge or consolidate into or with any other Person or
entity, other than a merger permitted by Section 7.7(f) and a merger of any
Subsidiary with and into the Borrower, with the Borrower as the survivor of such
merger, or (ii) liquidate or dissolve, except that any wholly-owned Subsidiary
of the Borrower may liquidate or dissolve.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, sell, lease (as lessor) or otherwise dispose of any assets or
properties, other than sales of Qualified Investments, inventory and obsolete or
worn out equipment, in each case in the ordinary course of business and
consistent with past practices.
7.5 SUBSIDIARIES.
(a) The Borrower shall not permit any of its Subsidiaries to issue
any additional shares of its capital stock or other equity securities, any
options therefor or any securities convertible thereto, other than to the
Borrower. Neither the Borrower nor any of its Subsidiaries shall sell, transfer
or otherwise dispose of any of the capital stock or other equity securities of a
Subsidiary, except to the Borrower or any of its wholly-owned Subsidiaries. The
Borrower shall not, and shall not permit any of its Subsidiaries to, create or
suffer to exist any consensual Encumbrances or restrictions on the ability of
any Subsidiary to (i) pay dividends or make any other distributions on its
equity interests held by the Borrower or pay any Indebtedness owed to the
Borrower or any Subsidiary or (ii) to make loans or advances or transfer any of
its assets to the Borrower or any other Subsidiary.
(b) The Borrower shall not permit Signal Technology Sales Corp. or
any other Subsidiary of the Borrower having its principal place of business
outside of the United States to retain more than $5,000 in cash, cash
equivalents and other Qualified Investments, and shall cause any such Subsidiary
to distribute to the Borrower any such assets in excess of such amount.
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7.6 RESTRICTED PAYMENTS. Neither the Borrower nor any of its
Subsidiaries shall pay, make, declare or authorize any Restricted Payment other
than:
(a) compensation paid to employees, officers and directors in the
ordinary course of business and consistent with prudent business practices;
(b) dividends payable solely in common stock; and
(c) dividends paid by any Subsidiary of the Borrower to the
Borrower.
7.7 INVESTMENTS; PURCHASES OF ASSETS. Neither Borrower nor any of its
Subsidiaries shall make or maintain any Investments or purchase or otherwise
acquire any material amount of assets other than:
(a) Investments (i) existing on the date hereof in Subsidiaries of
the Borrower, and (ii) Investments in Subsidiaries of the Borrower which are
guarantors of Obligations pursuant to guarantees in form and substance
reasonably satisfactory to the Lender;
(b) Qualified Investments;
(c) Capital Expenditures;
(d) purchases of inventory in the ordinary course of business;
(e) normal trade credit extended in the ordinary course of
business and consistent with prudent business practice; and
(f) the purchase of all or substantially all of the assets or
outstanding equity securities of any other Person or the merger or consolidation
of any other Person with or into the Borrower or any its Subsidiaries, in each
case provided that all of the following conditions (to the extent applicable to
such transaction) are satisfied (a "PERMITTED ACQUISITION"):
(i) if the proposed transaction involves a merger or
consolidation, at the completion of such merger or consolidation the
surviving party shall be the Borrower or a wholly-owned Subsidiary of
the Borrower;
(ii) the total consideration (including assumed Indebtedness) paid
by the Borrower (x) in connection with any single Permitted Acquisition
shall not exceed $5,000,000 and (y) in connection with all Permitted
Acquisitions prior to the Revolving Credit Maturity Date shall not
exceed $10,000,000 in the aggregate;
(iii) the assets, business or Person to be acquired shall be in
the same or a substantially similar line of business as that of the
Borrower;
(iv) no Default shall have occurred and be continuing at the time
of, and none shall exist after giving effect to, such acquisition,
merger or consolidation;
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(v) EBITDA of the Person or business to be acquired shall have
been positive for the most recent four (4) fiscal quarters preceding
the consummation of the proposed acquisition and, after giving effect
thereto, are projected to be positive, as set forth in projections
delivered to the Lender at least fourteen (14) days prior to
consummation thereof;
(vi) immediately after giving effect to the proposed acquisition,
the Leverage Ratio of the Borrower shall not exceed 2.25 to 1.00;
(vii) at least fourteen (14) days prior to consummation of the
proposed acquisition, the Borrower shall have provided to the Lender:
(A) financial statements of the Person to be acquired which have
been reviewed or audited by such Person's independent accountants;
(B) a summary of the terms and conditions of the transaction
pursuant to which such Person is to be acquired; and
(C) a certificate of the Borrower, reasonably satisfactory to the
Lender, with respect to the matters set forth in clauses (v) and (vi)
above and setting forth on a pro forma basis, after giving effect to
the proposed transaction, a calculation of the covenants set forth in
Section VI;
(viii) the proposed transaction is accomplished by mutual
agreement between the Borrower and the Person to be acquired or whose
assets or business is to be acquired and not as a result of a tender
offer or other type of so-called "hostile takeover" transaction; and
(ix) the Borrower shall cause the Person to be acquired or any new
Subsidiary acquiring the assets of or surviving a merger with such
Person to become a guarantor of this Agreement pursuant to a guaranty
which shall be in form and substance reasonably satisfactory to the
Lender or, with the Lender's consent, a Borrower under this Agreement.
7.8 ERISA COMPLIANCE. Neither the Borrower nor any of its ERISA
Affiliates nor any Plan shall (i) engage in any Prohibited Transaction which
would have a material adverse effect on the business, financial condition or
operations of the Borrower and its Subsidiaries taken as a whole, (ii) incur any
"accumulated funding deficiency" (within the meaning of Section 412(a) of the
Code and Section 302 of ERISA), whether or not waived, (iii) permit to exist any
material amount of "unfunded benefit liabilities" (within the meaning of Section
4001(a)(18) of ERISA), (iv) terminate any Pension Plan in a manner which could
result in the imposition of a lien on any property of the Borrower or any of its
Subsidiaries, (v) fail to make any required contribution to any Multiemployer
Plan or (vi) completely or partially withdraw from a Multiemployer Plan if such
complete or partial withdrawal will result in any material withdrawal liability
under Title IV of ERISA.
7.9 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, enter into any
purchase, sale, lease or other transaction
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with any Affiliate except (i) transactions in the ordinary course of business on
terms that are no less favorable to the Borrower than those which might be
obtained at the time in a comparable arm's-length transaction with any Person
who is not an Affiliate and (ii) employment contracts with senior management of
the Borrower entered into in the ordinary course of business and consistent with
prudent business practices. Notwithstanding the foregoing, the Borrower will
not, and will not permit any Subsidiary to, directly or indirectly, pay any
management, consulting, overhead, indemnity, guarantee or other similar fee or
charge to any Affiliate.
7.10 FISCAL YEAR. The Borrower and its Subsidiaries shall not change
their fiscal years without the prior written consent of the Lender.
7.11 VOLUNTARY PREPAYMENTS OF INDEBTEDNESS. Except as permitted under
this Agreement, neither Borrower nor its Subsidiaries shall pay, make, declare
or authorize prepayments on any Indebtedness other than Obligations.
7.12 USE OF PROCEEDS. No portion of any Loan shall be used for the
"purpose of purchasing or carrying" any "margin stock" or "margin security" as
such terms are used in Regulations T, U and X of the Board of Governors of the
Federal Reserve System, or otherwise in violation of such regulations.
SECTION VIII
DEFAULTS
8.1 EVENTS OF DEFAULT. There shall be an Event of Default hereunder if
any of the following events occurs:
(a) the Borrower or any of its Subsidiaries shall fail to pay any
principal of any Loan, any Reimbursement Obligation or any interest, fees or
other amounts owing under any Loan Document or in respect of any Obligation when
the same shall become due and payable, whether at maturity or at any accelerated
date of maturity or at any other date fixed for payment; or
(b) the Borrower or any of its Subsidiaries shall fail to perform
or comply with any term, covenant or agreement applicable to them contained in
Sections 5.1, 5.2(b), 5.5, 5.6, 5.7, 5.9, 5.11, 6 and 7 of this Agreement; or
(c) the Borrower or any of its Subsidiaries shall fail to perform
or comply with any term, covenant or agreement applicable to them (other than as
specified in subsections 8.1(a) or (b) hereof) contained in this Agreement or
any other Loan Document and such default shall continue for thirty (30) days;
(d) any representation or warranty of the Borrower made in this
Agreement or any other Loan Document or in any certificate, notice or other
writing delivered hereunder or thereunder shall prove to have been false in any
material respect upon the date when made or deemed to have been made; or
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(e) the Borrower or any of its Subsidiaries shall fail to pay when
due (after any applicable period of grace) any amount payable (i) with respect
to any Indebtedness exceeding $500,000 in principal amount or (ii) under any
agreement for the use of real or personal property requiring aggregate payments
in excess of $150,000 in any twelve (12) month period, or fail to observe or
perform any material term, covenant or agreement evidencing or securing such
Indebtedness or relating to such agreement for the use of real or personal
property and such default shall continue for ten (10) days; or
(f) the Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar official of itself or of all or a
substantial part of its property, (ii) be generally not paying its debts as such
debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the United States Bankruptcy
Code (as now or hereafter in effect), (v) take any action or commence any case
or proceeding under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, or any other law providing for
the relief of debtors, (vi) fail to contest in a timely or appropriate manner,
or acquiesce in writing to, any petition filed against it in an involuntary case
under the United States Bankruptcy Code or other law, (vii) take any action
under the laws of its jurisdiction of incorporation or organization similar to
any of the foregoing, or (viii) take any corporate action for the purpose of
effecting any of the foregoing; or
(g) a proceeding or case shall be commenced against the Borrower
or any of its Subsidiaries, without the application or consent of the Borrower
or such Subsidiary in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding up, or composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of its
assets, or (iii) similar relief in respect of it, under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts or any other law providing for the relief of debtors, and such
proceeding or case shall continue undismissed, or unstayed and in effect, for a
period of forty-five (45) days; or an order for relief shall be entered in an
involuntary case under the Federal Bankruptcy Code, against the Borrower or
Subsidiary; or action under the laws of the jurisdiction of incorporation or
organization of any of the Borrower or any of its Subsidiaries similar to any of
the foregoing shall be taken with respect to any of the Borrower or such
Subsidiary and shall continue unstayed and in effect for a period of forty-five
(45) days; or
(h) a judgment or order for the payment of money shall be entered
against any of the Borrower or any of its Subsidiaries by any court, or a
warrant of attachment or execution or similar process shall be issued or levied
against property of any of the Borrower or any Subsidiary, that in the aggregate
exceeds $500,000 in value, the payment of which is not fully covered by
insurance in excess of any deductibles not exceeding $500,000 in the aggregate,
and such judgment, order, warrant or process shall continue undischarged or
unstayed for thirty (30) days; or
(i) the Borrower or any ERISA Affiliate shall fail to pay when due
any material amount that they shall have become liable to pay to the PBGC or to
a Plan under Title IV of ERISA, unless such liability is being contested in good
faith by appropriate proceedings, the Borrower or the ERISA Affiliate, as the
case may be, have established and are maintaining
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adequate reserves in accordance with GAAP and no lien shall have been filed to
secure such liability; or the PBGC shall institute proceedings under Title IV of
ERISA to terminate or to cause a trustee to be appointed to administer any such
Plan or Plans; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or
(j) any of the Loan Documents shall be canceled, terminated,
revoked or rescinded otherwise than in accordance with the express terms thereof
or with the express prior written agreement, consent or approval of the Lender,
or any action at law or in equity or other legal proceeding to cancel, revoke or
rescind any Loan Document shall be commenced by or on behalf of the Borrower, or
any court or other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or shall issue a judgment, order,
decree or ruling to the effect that, any one or more of the Loan Documents is
illegal, invalid or unenforceable in accordance with the terms thereof; or
(k) any failure of both Xxxxxx X. Xxxxxxx to be at all times the
duly elected and acting chief executive officer of the Borrower and Xxxxxx X.
Xxxxxx to be at all times the duly elected and acting chief financial officer of
the Borrower or the imposition of any material restriction on their respective
rights to exercise the powers and authority of such offices and to manage the
business of the Borrower in a manner consistent with past practices, unless, in
the event of their ceasing to act in their capacities as chief executive officer
and chief financial officer, replacements reasonably acceptable to the Lender
are appointed within ninety (90) days of such cessation; or
(l) the effectiveness of (i) the consolidation or merger of Signal
into or with any other entity, or (ii) the exchange of the outstanding shares of
Signal for securities or other consideration issued or paid by any other entity
or (iii) the sale or other disposition by Signal of all or substantially all of
its assets, AND in any such transaction, the holders of all outstanding shares
of Signal's voting stock immediately prior to such transaction hold, immediately
following the consummation of such transaction, less than two-thirds of the
voting stock of Signal, the survivor of such merger or consolidation, or of the
transferee of the assets of Signal, as the case may be; or
(m) the occurrence of any material adverse change in the condition
or affairs (financial or otherwise) of the Borrower or any of its Subsidiaries
or of any endorser, guarantor or surety for any Obligation which causes the
Lender to deem itself insecure.
8.2 REMEDIES. Immediately and automatically upon the occurrence of an
Event of Default described in subsections 8.1(f) and (g), and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the option of the Lender and upon the
Lender's declaration:
(a) the obligation of the Lender to make any further Loans and of
the Issuing Bank to issue any Letters of Credit hereunder shall terminate;
(b) the unpaid principal amount of the Loans together with accrued
interest, all Reimbursement Obligations and all other Obligations shall become
immediately due and
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payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived; and
(c) the Lender and the Issuing Bank may exercise any and all
rights they have under this Agreement, the other Loan Documents or at law or in
equity, and proceed to protect and enforce their respective rights by any action
at law or in equity or by any other appropriate proceeding.
No remedy conferred upon the Lender or the Issuing Bank in the Loan Documents is
intended to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or by any other
provision of law. Without limiting the generality of the foregoing or of any of
the terms and provisions of any of the Security Documents, if and when the
Lender exercises remedies under the Security Documents with respect to
Collateral, the Lender may, in its sole discretion, determine which items and
types of Collateral to dispose of and in what order and may dispose of
Collateral in any order the Lender shall select in its sole discretion, and the
Borrower consent to the foregoing and waives all rights of marshalling with
respect to all Collateral.
SECTION IX
ASSIGNMENT AND PARTICIPATION
9.1 ASSIGNMENT.
(a) The Lender shall have the right to assign at any time any
portion of its Commitment hereunder and its interests in the risk relating to
any Loans in an amount equal to or greater than $1,000,000 to other banks or
financial institutions (each an "ASSIGNEE") provided that unless an Event of
Default shall have occurred and be continuing, the Borrower shall have given its
prior written consent to such assignment, such consent not to be unreasonably
withheld or delayed. Each Assignee shall execute and deliver to the Lender and
the Borrower a joinder agreement which shall be reasonably satisfactory to the
Lender and the Borrower. Upon the execution and delivery of such joinder
agreement, (a) such Assignee shall, on the date and to the extent provided in
such joinder agreement, become a "Lender" party to this Agreement and the other
Loan Documents for all purposes of this Agreement and the other Loan Documents
and shall have all rights and obligations of a "Lender" with a Commitment as set
forth in such joinder agreement, and the Lender shall, on the date and to the
extent provided in such joinder agreement, be released prospectively from its
obligations hereunder and under the other Loan Documents to a corresponding
extent (and, in the case of an assignment covering all of the remaining portion
of the Lender's rights and obligations under this Agreement, the Lender shall
cease to be a party hereto but shall continue to be entitled to the benefits of
Section 10.3 and to any fees accrued for its account hereunder and not yet
paid); (b) the assigning Lender, if it holds any Notes, shall promptly surrender
such Notes to the Borrower for cancellation and delivery to the Borrower,
provided that if the Lender has retained any Commitment, the Borrower shall
execute and deliver to the Lender new Notes in the amount of its retained
Commitment; (c) the Borrower shall issue to such Assignee Notes in the amount of
such Assignee's Commitment, dated the Closing Date or such other date as may be
specified by such Assignee and otherwise in
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substantially the form of Exhibits A-1 and A-2; (d) this Agreement shall be
deemed appropriately amended to reflect (i) the status of such Assignee as a
party hereto and (ii) the status and rights of the Lender hereunder; and (e) the
Borrower shall take such action as the Lender may reasonably request to perfect
any security interests or mortgages in favor of the Lender, including any
Assignee which becomes a party to this Agreement.
(b) If the Assignee, or any Participant pursuant to Section 9.2
hereof, is organized under the laws of a jurisdiction other than the United
States or any state thereof, such Assignee shall execute and deliver to the
Borrower, simultaneously with or prior to such Assignee's execution and delivery
of the counterpart joinder described above in Section 9.1(a), and such
Participant shall execute and deliver to the Lender granting the participation,
a United States Internal Revenue Service Form W 8EC1 or W 8BEN (or any successor
form), appropriately completed, wherein such Assignee or Participant claims
entitlement to complete exemption from United States Federal Withholding Tax on
all interest payments hereunder and all fees payable pursuant to any of the Loan
Documents. The Borrower shall not be required to pay any increased amount to any
Assignee or other Lender on account of taxes to the extent such taxes would not
have been payable if the Assignee or Participant had furnished one of the Forms
referenced in this Section 9.1(b) unless the failure to furnish such a Form
results from (i) a condition or event affecting the Borrower or an act or
failure to act of the Borrower or (ii) the adoption of or change in any law,
rule, regulation or guideline affecting such Assignee or Participant occurring
(x) after the date on which any such Assignee executes and delivers the
counterpart joinder, or (y) after the date such Assignee shall otherwise comply
with the provisions of Section 9.1(a), or (z) after the date a Participant is
granted its participation.
(c) The Lender may at any time pledge all or any portion of its
rights under the Loan Documents, including any portion of any Note, to any of
the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or any enforcement thereof
shall release the Lender from its obligations under any of the Loan Documents.
9.2 PARTICIPATIONS. The Lender shall have the right at any time and
from time to time, without the consent of or notice to the Borrower, to grant
participations to one or more banks or other financial institutions (each a
"PARTICIPANT") in all or any part of any Loans and Letter of Credit
Participations owing to the Lender and the Notes held by the Lender, and shall
have the right to furnish from time to time to prospective Participants any
information concerning the Borrower in its possession subject to the
restrictions set forth in Section 9.3 hereof. The Lender shall retain the sole
right to approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents, PROVIDED that the
documents evidencing any such participation may provide that, except with the
consent of such Participant, the Lender will not consent to (a) the reduction in
or forgiveness of the stated principal of or rate of interest on or commitment
fee with respect to the portion of any Loan subject to such participation, (b)
the extension or postponement of any stated date fixed for payment of principal
or interest or commitment fee with respect to the portion of any Loan subject to
such participation, (c) the waiver or reduction of any right to indemnification
of the Lender hereunder or (d) except as otherwise permitted hereunder, the
release of any Collateral. Notwithstanding the foregoing, no participation shall
operate to increase the total Commitments hereunder or otherwise alter the
substantive terms of this Agreement. In the event of any such sale by the
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Lender of participating interests to a Participant, the Lender's obligations
under this Agreement shall remain unchanged, the Lender shall remain solely
responsible for the performance thereof, the Lender shall remain the holder of
such Note for all purposes under this Agreement and the Borrower shall continue
to deal solely and directly with the Lender in connection with the Lender's
rights and obligations under this Agreement.
9.3 DISCLOSURE. The Borrower agree that in addition to disclosures made
in accordance with standard and customary banking practices, the Lender may
disclose information obtained by the Lender pursuant to this Agreement to
Assignees or Participants and potential assignees or participants hereunder;
PROVIDED that such Assignees or Participants or potential assignees or
participants shall agree (i) to treat in confidence such information unless such
information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process, and
(iii) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation.
SECTION X
GENERAL
10.1 NOTICES. Unless otherwise specified herein, all notices hereunder
to any party hereto shall be in writing and shall be deemed to have been given
when delivered by hand, or when sent by electronic facsimile transmission, or on
the first Business Day after delivery to any overnight delivery service, freight
pre-paid, or five (5) days after being sent by certified or registered mail,
return receipt requested, postage pre-paid, and addressed to such party at its
address indicated below:
If to the Borrower, at
The Tower at Northwoods
000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
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If to the Lender, at
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Vice President or
Relationship Manager, Middle Market Banking
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Worcester LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
or at any other address specified by such party in writing.
10.2 EXPENSES. Whether or not the transactions contemplated herein
shall be consummated, the Borrower hereby agrees to reimburse the Lender and the
Issuing Bank for all reasonable out-of-pocket fees and disbursements (including
all reasonable attorneys' fees and collateral evaluation costs) incurred or
expended in connection with the preparation, filing or recording, interpretation
or administration of this Agreement and the other Loan Documents, or any
amendment, modification, approval, consent or waiver hereof or thereof, or in
connection with the enforcement of any Obligations, the exercise, preservation
or enforcement of any rights, remedies or options of the Issuing Bank or the
satisfaction of any Indebtedness of the Borrower hereunder or thereunder, or in
connection with any litigation, proceeding or dispute in any way related to the
credit hereunder, including, without limitation, reasonable fees and
disbursements of outside legal counsel and the allocated costs of in house legal
counsel, accounting, consulting, brokerage or other similar professional fees or
expenses, and any reasonable fees or expenses associated with travel or other
costs relating to any appraisals or examinations conducted in connection with
the Loans or any Collateral, in the amount of all such costs and expenses shall,
until paid, bear interest at the rate applicable to Base Rate Loans and shall be
an Obligation and to the extent such costs and expenses shall have been incurred
in connection with the Term Loans, shall be a Secured Obligation secured by the
Collateral. The Borrower agrees to pay any taxes (including any interest and
penalties in respect thereof), other than the Lender's federal and state income
taxes, payable on or with respect to the transactions contemplated by the Loan
Documents (the Borrower hereby agrees to indemnify the Lender and the Issuing
Bank with respect thereto).
10.3 INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Lender and the Issuing Bank, as well as its respective
shareholders, directors, officers, agents, attorneys, subsidiaries and
affiliates, from and against all damages, losses, settlement payments,
obligations, liabilities, claims, suits, penalties, assessments, citations,
directives, demands, judgments, actions or causes of action, whether statutorily
created or under the common law, all reasonable costs and expenses (including,
without limitation, reasonable fees and disbursements of attorneys, engineers
and consultants) and all other liabilities whatsoever (including, liabilities
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under Environmental Laws) which shall at any time or times be incurred,
suffered, sustained or required to be paid by any such Person (except any of the
foregoing which result from the gross negligence or willful misconduct of such
Person) on account of or in relation to or any way in connection with any of the
arrangements or transactions contemplated by, associated with or ancillary to
this Agreement, the other Loan Documents or any other documents executed or
delivered in connection herewith or therewith, all as the same may be amended
from time to time, or with respect to any Letters of Credit, whether or not all
or part of the transactions contemplated by, associated with or ancillary to
this Agreement, any of the other Loan Documents or any such other documents are
ultimately consummated. In any investigation, proceeding or litigation, or the
preparation therefor, the Lender shall be entitled to select its own counsel
and, in addition to the foregoing indemnity, the Borrower agrees to pay the
reasonable fees and expenses of such counsel promptly after receipt of an
invoice setting forth in reasonable detail such fees and expenses of such
counsel. In the event of the commencement of any such proceeding or litigation,
the Borrower shall be entitled to participate in such proceeding or litigation
with counsel of its choice at its own expense, provided that such counsel shall
be reasonably satisfactory to the Lender. The Borrower authorizes the Lender and
the Issuing Bank to charge any deposit account or Note Record which it may
maintain with any of them for any of the foregoing which remain unpaid. The
covenants of this Section 10.3 shall survive payment or satisfaction of payment
of all amounts owing with respect to the Notes, any other Loan Document or any
other Obligation.
10.4 SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the other Loan Documents or in
any documents or other papers delivered by or on behalf of the Borrower pursuant
hereto shall be deemed to have been relied upon by the Lender and the Issuing
Bank, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Lender of the Loans as herein
contemplated, and shall continue in full force and effect so long as any
Obligation remains outstanding and unpaid or the Lender has any obligation to
make any Loans hereunder or the Issuing Bank has any obligation to issue any
Letter of Credit. All statements contained in any certificate or other writing
delivered by or on behalf of the Borrower pursuant hereto or in connection with
the transactions contemplated hereby shall constitute representations and
warranties by the Borrower hereunder.
10.5 SET-OFF. Regardless of the adequacy of any Collateral or other
means of obtaining repayment of the Obligations, any deposits, balances or other
sums credited by or due from the head office of the Lender or any of its branch
offices to the Borrower and any property of any of the Borrower now or hereafter
in the possession, custody, safekeeping or control of the Lender or in transit
to the Lender may, at any time and from time to time without notice to the
Borrower or compliance with any other condition precedent now or hereafter
imposed by statute, rule of law, or otherwise (all of which are hereby expressly
waived to the extent the Borrower may legally do so) be set off, appropriated,
and applied by the Lender against any and all Obligations of the Borrower in
such manner as the head office of the Lender or any of its branch offices in its
sole discretion may determine, and the Borrower hereby grant the Lender a
continuing security interest in such deposits, balances or other sums for the
payment and performance of all such Obligations.
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ANY AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS,
PRIOR TO EXERCISING ITS RIGHTS OF SETOFF WITH RESPECT TO SUCH DEPOSITS,
BALANCES, OTHER SUMS AND PROPERTY OF THE BORROWER IS HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED.
10.6 NO WAIVERS. No failure or delay by the Lender or the Issuing Bank
in exercising any right, power or privilege hereunder, under the Notes or under
any other Loan Document shall operate as a waiver thereof; nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. No waiver shall extend to
or affect any Obligation not expressly waived or impair any right consequent
thereon. No course of dealing or omission on the part of the Lender or the
Issuing Bank in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto. No notice to or demand upon the Borrower shall
entitle the Borrower to other or further notice or demand in similar or other
circumstances. The rights and remedies herein and in the Notes and the other
Loan Documents are cumulative and not exclusive of any rights or remedies
otherwise provided by agreement or law.
10.7 AMENDMENTS, WAIVERS, ETC. None of this Agreement, the Notes, any
Loan Document or any provision hereof or thereof may be amended, waived,
discharged or terminated except by a written instrument signed by the Lender
and, with respect to Letters of Credit, the Issuing Bank, and also, in the case
of amendments, by the Borrower.
10.8 BINDING EFFECT OF AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the Borrower, the Lender, the Issuing Bank and their
respective successors and assigns; PROVIDED that the Borrower may not assign or
transfer its rights or obligations hereunder.
10.9 LOST NOTE, ETC. Upon receipt of an affidavit of loss and
indemnification of an officer of the Lender as to the loss, theft, destruction
or mutilation of any Note or any Security Document which is not a public record
and upon cancellation of such Note or Security Document, if available, the
Borrower agrees to issue, in lieu thereof, a replacement Note or other Security
Document in the same principal amount as the original and otherwise of like
tenor.
10.10 CAPTIONS; COUNTERPARTS. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof. This Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, but all of which together shall
constitute one instrument. In proving this Agreement it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought.
10.11 ENTIRE AGREEMENT, ETC. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby and supersede
all prior agreements (including the Commitment Letter dated September 20, 2000
between the Lender and the Borrower and the Existing Credit Agreement) with
respect to the subject matter hereof.
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10.12 WAIVER OF JURY TRIAL. EACH THE BORROWER AND THE LENDER HEREBY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT
OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY OF THE OTHER
LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY,
INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE LENDER RELATING TO THE ADMINISTRATION OR
ENFORCEMENT OF THE LOANS AND THE LOAN DOCUMENTS, AND AGREES THAT IT WILL NOT
SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH OF THE
BORROWER AND THE LENDER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES. THE BORROWER (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND
(b) ACKNOWLEDGES THAT THE LENDER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS TO WHICH EACH IS A PARTY BECAUSE OF, AMONG OTHER
THINGS, THE BORROWER'S WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
10.13 GOVERNING LAW. THIS AGREEMENT AND EACH OF THE OTHER LOAN
DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND
SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF SAID COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF
LAW). THE BORROWER'S CONSENT TO THE JURISDICTION OF ANY OF THE FEDERAL OR STATE
COURTS LOCATED IN SUFFOLK COUNTY IN THE COMMONWEALTH OF MASSACHUSETTS IN
CONNECTION WITH ANY SUIT TO ENFORCE THE RIGHTS OF THE LENDER UNDER THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS AND CONSENTS TO SERVICE OF PROCESS
IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE BORROWER'S ADDRESS
SET FORTH HEREIN. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION WHICH THEY MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION BROUGHT IN THE
COURTS REFERRED TO IN THE PRECEDING SENTENCE AND IRREVOCABLY WAIVE AND AGREE NOT
TO PLEAD OR CLAIM IN ANY SUCH ACTION THAT SUCH ACTION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
10.14 SEVERABILITY. The provisions of this Agreement are severable and
if any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof,
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54
in such jurisdiction, and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or provision of this
Agreement in any jurisdiction.
[Remainder of page intentionally left blank.]
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55
IN WITNESS WHEREOF, the undersigned have duly executed this Third
Amended and Restated Credit Agreement under seal as of the date first above
written.
SIGNAL TECHNOLOGY CORPORATION
By:
------------------------------------
Title:
FLEET NATIONAL BANK
By:
------------------------------------
Xxxxxxx X. Xxxxxxx
Vice President
56
EXHIBIT A-1
FORM OF REVOLVING CREDIT NOTE
$20,000,000 Dated as of: _________
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of Fleet National Bank ("Payee") at
000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000:
(a) on or prior to the Revolving Credit Maturity Date, the
principal amount of TWENTY MILLION DOLLARS ($20,000,000) or, if less, the
aggregate unpaid principal amount of Revolving Credit Loans advanced by the
Payee to the Borrower pursuant to the Third Amended and Restated Credit
Agreement of even date herewith, as amended or supplemented from time to time
(the "CREDIT AGREEMENT"), by and among the Borrower and the Payee; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of and has been issued by the Borrower in accordance with the terms
of the Credit Agreement and is one of the Notes referred to therein. The Payee
and any holder hereof is entitled to the benefits and subject to the conditions
of the Credit Agreement and may enforce the agreements of the Borrower contained
therein, and any holder hereof may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to repay or prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Agreement.
If any Event of Default shall occur, the entire unpaid principal amount
of this Note and all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect provided in the
Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and all
other demands and notice in connection with the delivery, acceptance,
performance, default or enforcement of this Note, assent to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or Person primarily or secondarily liable.
57
This Note shall be deemed to take effect as a sealed instrument under
the laws of The Commonwealth of Massachusetts and for all purposes shall be
construed in accordance with such laws (without regard to conflicts of laws
rules).
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed
under seal by its duly authorized officer as of the day and year first above
written.
SIGNAL TECHNOLOGY CORPORATION
By:
--------------------------
Title:
- 2 -
58
EXHIBIT A-2
FORM OF EQUIPMENT LOAN NOTE
$3,000,000 Dated as of: _________
FOR VALUE RECEIVED, the undersigned (the "Borrower") absolutely and
unconditionally promises to pay to the order of the Fleet National Bank
("Payee") at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000:
(a) the principal amount of THREE MILLION DOLLARS ($3,000,000)
or, if less, the aggregate unpaid principal amount of Equipment Loans advanced
by the Payee to the Borrower pursuant to the Third Amended and Restated Credit
Agreement of even date herewith, as amended or supplemented from time to time
(the "CREDIT AGREEMENT"), by and between the Borrower and the Payee, payable in
twelve (12) equal consecutive quarterly installments of $250,000 on the first
Business Day of January, April, July and October in each year, commencing
January 2, 2002, with the unpaid principal balance of the Equipment Loans,
together with all unpaid interest thereon and all fees and other amounts due
with respect thereto, due and payable in full on the Equipment Loan Maturity
Date; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which such
principal amount is paid in full, at the times and at the rates provided in the
Credit Agreement.
This Note evidences borrowings under, is subject to the terms and
conditions of and has been issued by the Borrower in accordance with the terms
of the Credit Agreement and is one of the Notes referred to therein. The Payee
and any holder hereof is entitled to the benefits and subject to the conditions
of the Credit Agreement and may enforce the agreements of the Borrower contained
therein, and any holder hereof may exercise the respective remedies provided for
thereby or otherwise available in respect thereof, all in accordance with the
respective terms thereof.
All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Credit Agreement.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to repay or prepay the whole or part of the
principal of this Note on the terms and conditions specified in this Agreement.
If any Event of Default shall occur, the entire unpaid principal amount
of this Note and all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect provided in the
Credit Agreement.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and all
other demands and notice in connection with the delivery, acceptance,
performance, default or enforcement of this Note, assent to any extension or
postponement of the time of payment or any other indulgence, to any
59
substitution, exchange or release of collateral and to the addition or release
of any other party or Person primarily or secondarily liable.
This Note shall be deemed to take effect as a sealed instrument under
the laws of The Commonwealth of Massachusetts and for all purposes shall be
construed in accordance with such laws (without regard to conflicts of laws
rules).
IN WITNESS WHEREOF, the Borrower has caused this Note to be signed
under seal by its duly authorized officer as of the day and year first above
written.
SIGNAL TECHNOLOGY CORPORATION
By:
--------------------------
Title:
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EXHIBIT B
Fleet National Bank
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Credit Agreement Dated as of February 27, 2001 (the "Agreement")
----------------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.3 of the Agreement the undersigned hereby
confirms its request made on ____________, ____ for a [Base Rate] [LIBOR] Loan
in the amount of $__________ on ___________, ____.
[The Interest Period applicable to said Loan will be [one] [two]
[three] months.]*
[Said Loan represents a conversion of the [Base Rate] [LIBOR] Loan in
the same amount made on .]**
The representations and warranties contained or referred to in Section
4 of the Agreement are true and accurate on and as of the effective date of the
Loan as though made at and as of such date (except to the extent of changes
resulting from transactions contemplated or permitted by the Agreement and the
other Loan Documents and any changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse and except
to the extent that such representations and warranties expressly relate to an
earlier date) and no Default or Event of Default has occurred and is continuing
or will result from the Loan.
SIGNAL TECHNOLOGY CORPORATION
By:
--------------------------
Title:
-------------------
Date
--------------------------------
* To be inserted in any request for a LIBOR Loan.
** To be inserted in any request for a conversion.
61
EXHIBIT C
DISCLOSURE
62
EXHIBIT D
REPORT OF CHIEF FINANCIAL OFFICER
SIGNAL TECHNOLOGY CORPORATION (the "Borrower") HEREBY CERTIFIES that:
This Report is furnished pursuant to Section 5.1(c) of the Credit
Agreement dated as of February 27, 2001 (the "Agreement"). Unless otherwise
defined herein, the terms used in this Report have the meanings given to them in
the Agreement.
As required by Section 5.1(a) and (b) of the Agreement, consolidated
financial statements of the Borrower and its Subsidiaries for the [year/quarter]
ended ________________, ____ (the "Financial Statements") prepared in accordance
with GAAP accompany this Report. The Financial Statements present fairly the
consolidated financial position of the Borrower and its Subsidiaries as at the
date thereof and the consolidated results of operations of the Borrower and its
Subsidiaries for the period covered thereby (subject only to normal recurring
year-end adjustments).
The figures set forth in SCHEDULE 1 hereto for determining compliance
by the Borrower with the financial covenants contained in the Agreement are true
and complete as of the date hereof.
The activities of the Borrower and its Subsidiaries during the period
covered by the Financial Statements have been reviewed by the Chief Financial
Officer or by employees or agents under his immediate supervision. Based on such
review, to the best knowledge and belief of the Chief Financial Officer, and as
of the date of this Report, no Default has occurred.*
Set forth below is a description of any event or occurrence which
rendered the representations and warranties set forth in Section 4.16 inaccurate
in any material respect during the period covered by the Financial Statements:
WITNESS my hand this ____ day of __________, ____.
SIGNAL TECHNOLOGY CORPORATION
By:
--------------------------
Chief Financial Officer
-----------------------------
* If a Default has occurred, this paragraph is to be modified with an
appropriate statement as to the nature thereof, the period of existence thereof
and what action the Borrower has taken, are taking, or propose to take with
respect thereto.
63
SCHEDULE 1 TO EXHIBIT D
FINANCIAL COVENANTS
64
TABLE OF CONTENTS
PAGE
SECTION I DEFINITIONS............................................................................................1
1.1 Definitions.........................................................................................1
1.2 Rules of Interpretation............................................................................12
SECTION II DESCRIPTION OF CREDIT................................................................................12
2.1 Loans..............................................................................................12
2.2 The Notes..........................................................................................14
2.3 Notice and Manner of Borrowing or Conversion of Loans..............................................15
2.4 Interest Rates and Payments of Interest............................................................16
2.5 Fees...............................................................................................17
2.6 Payments and Prepayments of the Loans..............................................................17
2.7 Method of Payments.................................................................................19
2.8 Indemnity..........................................................................................20
2.9 Computation of Interest and Fees; Due Date.........................................................20
2.10 Changed Circumstances; Illegality.................................................................20
2.11 Increased Costs...................................................................................21
2.12 Capital Requirements..............................................................................22
SECTION III CONDITIONS OF LOANS AND LETTERS OF CREDIT...........................................................24
3.1 Conditions Precedent to Initial Loans and Letters of Credit........................................24
3.2 Conditions Precedent to all Loans and Letters of Credit............................................26
SECTION IV REPRESENTATIONS AND WARRANTIES.......................................................................27
4.1 Organization; Qualification; Business..............................................................27
4.2 Corporate Authority................................................................................27
4.3 Valid Obligations..................................................................................28
4.4 Consents or Approvals..............................................................................28
4.5 Title to Properties; Absence of Encumbrances.......................................................28
4.6 Financial Statements...............................................................................28
4.7 Changes............................................................................................29
4.8 Solvency...........................................................................................29
4.9 Defaults...........................................................................................29
4.10 Taxes.............................................................................................29
4.11 Litigation........................................................................................30
4.12 Subsidiaries......................................................................................30
4.13 Investment Company Act............................................................................30
4.14 Compliance........................................................................................30
4.15 ERISA.............................................................................................30
4.16 Environmental Matters.............................................................................31
4.17 Restrictions on the Borrower......................................................................32
4.18 Labor Relations...................................................................................32
4.19 Margin Rules......................................................................................32
4.20 Disclosure........................................................................................32
65
TABLE OF CONTENTS
(continued)
SECTION V AFFIRMATIVE COVENANTS.................................................................................33
5.1 Financial Statements...............................................................................33
5.2 Conduct of Business................................................................................34
5.3 Maintenance and Insurance..........................................................................34
5.4 Taxes..............................................................................................34
5.5 Inspection.........................................................................................35
5.6 Maintenance of Books and Records...................................................................35
5.7 Use of Proceeds....................................................................................35
5.8 Further Assurances.................................................................................35
5.9 Notification Requirements..........................................................................35
5.10 ERISA Reports; Compliance.........................................................................36
5.11 Environmental Compliance..........................................................................36
SECTION VI FINANCIAL COVENANTS..................................................................................37
6.1 Leverage Ratio.....................................................................................37
6.2 Fixed Charge Coverage Ratio........................................................................37
6.3 Minimum EBITDA.....................................................................................37
6.4 Capital Expenditures...............................................................................37
6.5 Maximum Contingent Liabilities.....................................................................38
SECTION VII NEGATIVE COVENANTS..................................................................................38
7.1 Indebtedness.......................................................................................38
7.2 Guaranties.........................................................................................39
7.3 Encumbrances.......................................................................................39
7.4 Merger; Sale or Lease of Assets; Liquidation.......................................................40
7.5 Subsidiaries.......................................................................................40
7.6 Restricted Payments................................................................................41
7.7 Investments; Purchases of Assets...................................................................41
7.8 ERISA Compliance...................................................................................42
7.9 Transactions with Affiliates.......................................................................42
7.10 Fiscal Year.......................................................................................43
7.11 Voluntary Prepayments of Indebtedness.............................................................43
7.12 Use of Proceeds...................................................................................43
SECTION VIII DEFAULTS...........................................................................................43
8.1 Events of Default..................................................................................43
8.2 Remedies...........................................................................................45
SECTION IX ASSIGNMENT AND PARTICIPATION.........................................................................46
9.1 Assignment.........................................................................................46
9.2 Participations.....................................................................................47
9.3 Disclosure.........................................................................................48
SECTION X GENERAL...............................................................................................48
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66
TABLE OF CONTENTS
(continued)
10.1 Notices...........................................................................................48
10.2 Expenses..........................................................................................49
10.3 Indemnification...................................................................................49
10.4 Survival of Covenants, Etc........................................................................50
10.5 Set-Off...........................................................................................50
10.6 No Waivers........................................................................................51
10.7 Amendments, Waivers, etc..........................................................................51
10.8 Binding Effect of Agreement.......................................................................51
10.9 Lost Note, Etc....................................................................................51
10.10 Captions; Counterparts...........................................................................51
10.11 Entire Agreement, Etc............................................................................51
10.12 Waiver of Jury Trial.............................................................................52
10.13 Governing Law....................................................................................52
10.14 Severability.....................................................................................52
EXHIBITS
EXHIBIT A-1 - Form of Revolving Credit Note
EXHIBIT A-2 - Form of Equipment Loan Note
EXHIBIT B - Form of Notice of Borrowing or Conversion
EXHIBIT C - Disclosure
EXHIBIT D - Form of Report of Chief Financial Officer
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