EXHIBIT 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 20, 2000, is by and between
FIBERCORE, INC., a Nevada corporation with a principal place of business at 000
Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 (the "Borrower") and FLEET
NATIONAL BANK, a national banking association with an office at 000 Xxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Bank").
W I T N E S S E T H:
BACKGROUND. The Borrower has requested the Bank to lend it up to the sum
of $10,000,000.00 on a revolving loan basis (the "Loan"), and the Bank is
willing to do so upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained, and
each intending to be legally bound hereby, the parties agree as follows:
ARTICLE 1.0 DEFINITIONS
As used herein:
"Accounts," "Chattel Paper," "Contracts," "Documents," "Equipment," "Fixtures,"
"General Intangibles," "Goods," "Instruments," "Inventory" and "Investment
Property" shall have the same respective meanings as are given to those terms in
the Uniform Commercial Code as presently or hereafter adopted and in effect in
the Commonwealth of Massachusetts.
"Adverse Credit Rating" means a long term unsecured credit rating of the
Guarantor lower than BBB by Standard & Poor's Rating Group or lower than Baa2 by
Xxxxx'x Investors Service, Inc. or the lack of a credit rating of the Guarantor
by Standard & Poor's Rating Group and Xxxxx'x Investors Service, Inc.
"Affiliate" means, as to any Person, each other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
under common control with, such Person.
"Agreement" means this Loan and Security Agreement (together with any and all
schedules and exhibits attached from time to time hereto), as the same may from
time to time be amended or supplemented.
"Ancillary Documents" means the Guaranty specified in Section 3.01(E), the
Supplemental Documents, and the documents, whether deliverable at or after the
Closing, required hereunder.
"Assets" means all of the Borrower's right, title and interest in and to all of
the following, wherever located, whether now owned or hereafter acquired,
together with all replacements therefor:
(A) All Inventory;
(B) All Accounts, deposit accounts, Contracts, accounts receivable,
contract rights, and Chattel Paper, regardless of whether or not they constitute
proceeds of other Assets;
(C) All Investment Property, securities entitlements and financial assets,
and all General Intangibles, regardless of whether or not they constitute
proceeds of other Assets, including, without limitation, all the Borrower's
rights to acquire or obtain Goods and/or services with respect to the
manufacture, processing, storage, sale, shipment, delivery or installation of
any of the Borrower's Inventory or other Assets; all payment intangibles; and
including any and all right, title and interest of the Borrower in and to any
and all licenses, permits and approvals obtained or required in connection with
Borrower's business operations;
(D) All products of and accessions to any of the Assets;
(E) All liens, guaranties, support obligations, securities, rights,
remedies and privileges pertaining to any of the Assets, including the right of
stoppage in transit;
(F) All stock or other equity interests held by Borrower in all
Subsidiaries;
(G) All obligations owing to the Borrower of every kind and nature, and
all choses in action, all commercial tort claims, all letter of credit rights
and all supporting obligations;
(H) All tax refunds of every kind and nature to which the Borrower is now
or hereafter may become entitled no matter however arising, including, without
limitation, loss carry back refunds;
(I) All Intellectual Property, goodwill, trade secrets, computer programs,
customer lists, trade names, trademarks and patents;
(J) All Documents and Instruments, including promissory notes (whether
negotiable or non-negotiable, and regardless of their being attached to Chattel
Paper);
(K) All Equipment, including without limitation machinery, furniture,
motor vehicles, Fixtures and all other goods used in the conduct of the business
of the Borrower;
(L) All proceeds of Assets of every kind and nature and in whatever form,
including, without limitation, both cash and non-cash proceeds resulting or
arising from the rendering of services by the Borrower or the sale or other
disposition by the Borrower of the Inventory or other Assets;
(M) All books and records, magnetic tapes, electronic data, computer
records and discs relating to the conduct of the Borrower's business including,
without in any way limiting the generality of the foregoing, those relating to
its Accounts;
(N) All deposit accounts maintained by the Borrower with any bank, trust
company, investment firm or fund, or any similar institution or organization;
and
(O) All property of the Borrower in the possession of the Bank.
"Business Day" means any day other than a Saturday, Sunday or day which shall be
in the Commonwealth of Massachusetts a legal holiday or day on which banking
institutions are required or authorized to close.
"Closing" has the meaning given to such term in Section 3.01.
"Commercial Letters of Credit" means any and all letters of credit which may be
issued by the Bank from time to time to third parties for the benefit of the
Borrower pursuant to Section 2.04 of this Agreement.
"Event of Default" has the meaning provided in Section 7.01.
"Financial Statements" means the consolidated balance sheets of the Borrower and
its Subsidiaries as of December 31, 1998 and December 31, 1999, and consolidated
statements of income, stockholders' equity, and cash flows, and notes thereto,
of the Borrower for the year, certified by the Borrower's independent certified
public accountants to present fairly the consolidated financial position and
results of operations of the Borrower at such date and for such period in
accordance with GAAP, and the unaudited consolidated balance sheets of the
Borrower and its Subsidiaries, and the consolidated statements of income,
Stockholders' equity and changes in cash flow with the quarterly statements on
the Form 10Qs filed by the Borrower with the Securities and Exchange Commission
for the first three fiscal quarters of fiscal year 2000.
"GAAP" means generally accepted accounting principles applied consistently as
was done in the preparation of the Financial Statements, with such changes or
modifications thereto as may be approved in writing by the Bank.
"Guarantor" means Tyco International Group S.A.
"Guaranty" means the duly authorized and executed Guaranty of the Guarantor in
the form of Exhibit 1.01(A) attached to this Agreement.
"Indebtedness" means, as to the Borrower or any Subsidiary, all items of
indebtedness, obligation or liability whether matured or unmatured, liquidated
or unliquidated, direct or contingent, joint or several, including, but without
limitation:
(A) All indebtedness guarantied, directly or indirectly, in any manner, or
endorsed (other than for collection or deposit in the ordinary course of
business) or discounted with recourse;
(B) All indebtedness in effect guarantied, directly or indirectly, through
agreements, contingent or otherwise: (1) To purchase such indebtedness; or (2)
to purchase, sell, or lease (as lessee or lessor) property, products, materials,
or supplies or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such indebtedness or to insure the owner
of the indebtedness against loss; or (3) to supply funds to, or in any other
manner invest in, the debtor;
(C) All indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest, or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) All obligations incurred as the lessee of goods or services which, in
accordance with GAAP, should be capitalized on the lessee's balance sheet.
"Intellectual Property" means trademarks, service marks, trade names, trade
styles, logos, goodwill, trade secrets, patents, and licenses acquired under any
statutory, common law or registration process in any state or nation at any
time, or under any agreement executed with any person or entity at any time. The
term "license" refers not only to rights granted by agreement from the owner of
patents, trade marks, service marks and the like, but also to rights granted by
a franchisor under a franchise or similar agreement. The foregoing enumeration
is not intended as a limitation of the meaning of the word "license".
"Laws" means all ordinances, statutes, rules, regulations, orders, injunctions,
writs, or decrees of any government or political subdivision or agency thereof,
or of any court or similar entity established by any thereof.
"Liabilities" means all Indebtedness that, in accordance with GAAP, should be
classified as liabilities on a consolidated balance sheet of the Borrower and
its Subsidiaries.
"Note" means the Revolving Credit Note referred to in Section 2.03.
"Obligations" is intended to be used in its most comprehensive sense and means
the obligation of the Borrower and the Guarantor to the Bank of every kind and
description, whether direct or indirect, absolute or contingent, primary or
secondary, joint or several, due or to be come due, now existing or hereafter
arising or acquired and whether by way of loan, guaranty, discount, letter of
credit, lease or otherwise, including without limitation, the following
obligations:
(A) To pay the principal of, and interest on, the Note in accordance with
the terms thereof and to satisfy all other liabilities to the Bank, whether
hereunder or otherwise, whether now existing or hereafter incurred, matured or
unmatured, direct or contingent, joint or several, including any extensions,
modifications, renewals thereof and substitutions therefor.
(B) The obligation to reimburse the Bank in accordance with the terms of
any and all agreements between the Bank and the Borrower with respect to any
Commercial Letters of Credit and foreign exchange contracts for the amounts
required to be paid on account of any and all such Commercial Letters of Credit
and foreign exchange contracts issued by or executed by the Bank for the benefit
of the Borrower.
(C) To repay to the Bank all amounts advanced by the Bank hereunder or
otherwise on behalf of the Borrower or any Guarantor, including, but without
limitation, advances for principal or interest payments to prior secured
parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, or
repairs to, or maintenance or storage of, any of the Assets; and to perform and
observe all covenants, agreements and undertakings of the Borrower or any
guarantor pursuant to the terms and conditions of this Agreement, the Note, the
Ancillary Documents or any other agreement or instrument now or hereafter
delivered to the Bank by the Borrower or any guarantor; and
(D) To reimburse the Bank, on demand, for all of the Bank's expenses and
costs, including without limitation the reasonable fees and expenses of its
counsel, in connection with the preparation, administration, amendment,
modification, or enforcement of this Agreement and the documents required
hereunder, including, without limitation, any proceeding brought, or threatened,
to enforce payment of any of the obligations referred to in the foregoing
Paragraphs (A), (B) and (C).
"Permitted Liens" means:
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business, that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business to secure
payment of worker's compensation, or to participate in any fund in connection
with worker's compensation, unemployment insurance, old-age pensions, or other
social security programs;
(C) Liens of mechanics, materialmen, warehousemen, carriers, or other like
liens, securing obligations incurred in the ordinary course of business that are
not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course of business
to secure performance of bids, tenders, contracts (other than for the repayment
of borrowed money) or leases or to secure statutory obligations, or surety,
appeal, indemnity, performance, or other similar bonds required in the ordinary
course of business;
(E) Encumbrances consisting of zoning restrictions, easements, or other
restrictions on the use of real property, none of which materially impairs the
use of such property by the Borrower in the operation of its business, and none
of which is violated in any material respect by existing or proposed structures
or land use;
(F) Liens in favor of the Bank;
(G) Existing liens set forth or described on Exhibit 1.01(B), attached
hereto and made a part hereof;
(H) Purchase money security interests granted to secure not more than
eighty-five per cent (85%) of the purchase price of assets, the purchase of
which does not violate this Agreement or any instrument required hereunder; and
(I) The following, if the validity or amount thereof is being contested in
good faith by appropriate and lawful proceedings, so long as levy and execution
thereon have been stayed and continue to be stayed and they do not, in the
aggregate, materially detract from the value of the property of the Borrower or
any Subsidiary, or materially impair the use thereof in the operation of its
business:
(1) Claims or liens for taxes, assessments, or charges not yet due
and payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and defects of title to,
real or personal property, including any attachment of personal or real property
or other legal process prior to adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens not overdue more than sixty (60) days; and
(4) Adverse judgments on appeal.
"Person" means any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture, court,
or government or political subdivision or agency thereof.
"Records" means correspondence, memoranda, tapes, discs, papers, books and other
documents, or transcribed information of any type, whether expressed in ordinary
or machine readable language.
"Revolving Credit Loan Activity Request" means a Revolving Credit Loan Activity
Request in the form of Exhibit 1.01(C) attached hereto.
"Subordinated Indebtedness" means all Indebtedness incurred at any time by the
Borrower or any Subsidiary, the repayment of which is subordinated to the Loan
in form and manner satisfactory to the Bank. All existing Subordinated
Indebtedness is so specified in Exhibit 1.01(D).
"Subsidiary" means any Affiliate that is directly, or indirectly through one or
more intermediaries, controlled by the Borrower or not less than 50% of the
voting capital stock of which is owned, directly or through one or more
intermediaries, by the Borrower.
"Supplemental Documents" means documents described in Exhibit 1.01(E) attached
to this Agreement and all other documents now or hereafter held by the Bank
pursuant to the terms and conditions of Article 9.0 hereof.
"Triggering Event" means the existence of an Adverse Credit Rating or the
occurrence of an Event of Default.
Accounting. Accounting terms used and not otherwise defined in this Agreement
have the meanings determined by, and all calculations with respect to accounting
or financial matters unless otherwise provided herein shall be computed in
accordance with, GAAP.
ARTICLE 2.0 THE LOAN
2.01 Disbursement of the Loan.
The Bank will credit the proceeds of the revolving loans hereunder to the
Borrower's deposit account with the Bank.
2.02 General Terms.
Subject to the terms hereof, the Bank will lend the Borrower, from time to
time until November 30, 2005 (the "Loan Termination Date") or, if earlier, the
occurrence of an Event of Default, such sums in integral multiples of
$100,000.00 as the Borrower may request by reasonable same day notice to the
Bank pursuant to a completed Revolving Credit Loan Activity Report, received by
the Bank not later than 11:00 A.M. of such day, but which shall not exceed, in
the aggregate principal amount at any one time outstanding, $10,000,000.00,
subject to reduction pursuant to Section 2.05 hereof (such amount, from time to
time in effect, the "Loan Commitment"). The Borrower may borrow, repay without
penalty or premium and reborrow hereunder, from the date of this Agreement until
the Loan Termination Date or the occurrence of an Event of Default, whichever
occurs first, either the full amount of the Loan Commitment or any lesser sum
which is $100,000.00 or an integral multiple thereof. It is the intention of the
parties that the outstanding principal amount of the Loan and aggregate face
amount of all Commercial Letters of Credit outstanding from time to time shall
at no time exceed the amount of the then existing Loan Commitment, and if, at
any time, an excess shall for any reason exist, the full amount of such excess,
together with accrued and unpaid interest thereon as herein provided, shall be
immediately due and payable in full.
If the Note or any payments thereunder or under this Agreement become due
on a day which is not a Business Day, the due date of the Note or any payment
hereunder shall be extended to the next succeeding Business Day, and such
extension of time shall be included in computing interest and fees in connection
with such payment.
2.03 The Note.
The Loan Commitment shall be evidenced by a Revolving Credit Note due and
payable on the Loan Termination Date in the form attached hereto as Exhibit
2.03.
2.04 Commercial Letters of Credit.
(A) From time to time prior to the Loan Termination Date, the Lender shall
issue Commercial Letters of Credit for the account of the Borrower subject to
the following conditions:
(1) Any such Commercial Letters of Credit shall be issued only to a
seller of goods (a "Beneficiary");
(2) No Beneficiary shall be an Affiliate;
(3) The Borrower shall pay to the Lender such customary commitment
fees, origination fees and other fees as the Lender shall charge from time to
time with respect to each Commercial Letter of Credit;
(4) No such Commercial Letter of Credit shall have an expiration
date which is later than the Loan Termination Date unless otherwise agreed to by
the Lender;
(5) Each such Commercial Letter of Credit shall be issued pursuant
to such customary agreements and upon such customary terms and conditions as
shall be required by the Lender; and
(6) No Event of Default shall have occurred hereunder at the time of
issuance of such Commercial Letter of Credit.
(B) The Loan Commitment available from time to time shall be reduced by
the aggregate face amount of all Commercial Letters of Credit at any time
outstanding.
2.04 The Commitment Fee.
From and after the date hereof, until the Loan Termination Date, the
Borrower shall pay a commitment fee of one-quarter of one percent (0.25%) on the
average daily undisbursed amount of the Loan Commitment during each quarterly
period or portion thereof. This commitment fee shall be payable quarterly, on
the last day of each February, May, August and November, commencing February 28,
2001. For purposes of this Section 2.04, the Loan Commitment shall be deemed to
have been disbursed in the aggregate face amount of all Commercial Letters of
Credit outstanding.
2.05 Reduction of Commitment.
The Loan Commitment shall be reduced, beginning one (1) year from the date
of this Agreement and annually thereafter, by $750,000.00. Contemporaneously
with each such reduction, the Borrower shall repay to the Bank the amount, if
any, by which the then outstanding principal balance of the Loan exceeds the
Loan Commitment as so reduced, together with accrued and unpaid interest thereon
as herein provided. After each such reduction: (A) the commitment fee provided
for in Section 2.04 shall be calculated with respect to the Loan Commitment as
so reduced; and (b) the Loan Commitment as so reduced may not be increased
without the consent of the Bank.
2.06 Interest Rate and Payments of Interest.
(A) Except as otherwise provided under Section 2.06(B), interest on the
principal balance of the Loan from time to time outstanding will be payable at
the Note Rate (the "Rate") set forth in the Note.
(B) All agreements among the Borrower, the Guarantor and the Bank are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the Bank for the use or
the forbearance of the indebtedness evidenced hereby or by the Note exceed the
maximum permissible under applicable law. As used herein, the term "applicable
law" shall mean the law in effect as of the date hereof provided, however that
in the event there is a change in the law which results in a higher permissible
rate of interest, then this Agreement and the Note 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 Borrower and Bank in the execution, delivery and acceptance of
this Agreement and the Note 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 hereof, of the Note
or of any of the Ancillary 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 Bank 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 evidenced
hereby and not to the payment of interest. This provision shall control every
other provision of all agreements between Borrower and the Bank.
2.07 Payment to the Bank.
The Bank shall send the Borrower statements of all amounts due hereunder,
which statements shall be considered correct and conclusively binding on the
Borrower unless the Borrower notifies the Bank to the contrary within thirty
(30) days of its receipt of any statement that it deems to be incorrect.
Alternatively, at its sole discretion, the Bank may charge against any deposit
account of the Borrower all or any part of any amount due hereunder.
ARTICLE 3.0 CONDITIONS PRECEDENT
The obligation of the Lender to make the Loan is subject to the following
conditions precedent:
3.01 Documents Required for the Closing.
The Borrower shall have delivered to the Bank, prior to the initial
disbursement of the Loan (the "Closing"), the following:
(A) The Note duly executed by the Borrower, in the form attached hereto as
Exhibit 2.03;
(B) INTENTIONALLY OMITTED; --
(C) The Supplemental Documents to be held by the Bank pursuant to Article
9.0 of this Agreement;
(D) The Financial Statements;
(E) The duly executed Guaranty of the Guarantor in the form attached
hereto as Exhibit 1.01(A);
(F) A copy, certified as of the date of the Closing, of resolutions of the
board of directors of the Borrower, authorizing the execution, delivery, and
performance of this Agreement, the Note, the Ancillary Documents, and each other
document to be delivered pursuant hereto;
(G) A copy, certified as of the date of the Closing, of the bylaws of the
Borrower;
(H) A certificate (dated the date of the Closing) of the corporate clerk
or assistant secretary of the Borrower as to the incumbency and signatures of
the officers of the Borrower signing this Agreement, the Note, the Ancillary
Documents, and each other document to be delivered pursuant hereto;
(I) A copy, certified as of the most recent date practicable by the
Secretary of the State of Nevada, of the Articles of Incorporation of the
Borrower, and all amendments thereto, together with a certificate (dated the
date of the Closing) of the corporate secretary or assistant secretary of the
Borrower to the effect that such Articles of Incorporation have not been further
amended since the date of the aforesaid certification of the Secretary of the
State of Nevada;
(J) Certificates of tax and corporate good standing dated as of the most
recent date practicable, issued by the Commissioner of the Department of Revenue
and the Secretary of State of the State of Nevada, respectively, as to the tax
good standing and the legal existence and good legal standing, respectively, of
the Borrower;
(K) Certificates, as of the most recent dates practicable, of the
Secretary of the Commonwealth of Massachusetts and of the secretary of state of
each state in which the Borrower is qualified as a foreign corporation and, if
applicable, of the department of revenue or taxation of each of the foregoing
states, as to the good standing of the Borrower;
(L) A copy, certified as of the date of the Closing, of resolutions of the
board of directors of the Guarantor authorizing the execution, delivery, and
performance of the Guaranty;
(M) A copy, certified as of the date of the Closing, of the charter
documents of the Guarantor;
(N) A certificate (dated the date of the Closing) of the corporate
secretary or the assistant secretary as to the incumbency and signatures of the
officers of the Guarantor signing the Guaranty and each other document to be
delivered pursuant thereto;
(O) A copy, certified as of the most recent date practicable, of the
charter documents of the Guarantor, and all amendments thereto, together with a
certificate (dated the date of the Closing) of the corporate secretary or
assistant secretary of the Guarantor to the effect that such charter documents
have not been further amended since the date of the aforesaid certification;
(P) Certificates of tax and corporate good standing dated as of the most
recent date practicable, as to tax good standing and the legal existence and
good legal standing, respectively, of the Guarantor;
(Q) Written opinions of the law firms of Cadwalader, Xxxxxxxxxx & Xxxx and
Xxxxxx Xxxxxx & Xxxxxxx, legal counsel for the Borrower, dated the date of the
Closing and addressed to the Bank, in form satisfactory to the Bank and its
counsel, in the form of Exhibit 3.01(Q)(1) and Exhibit 3.01(Q)(2);
(R) A written opinion of the law firm of Xxxxxx, Xxxxxx & Xxxxxxxxx, legal
counsel for the Guarantor, dated the date of the Closing and addressed to the
Bank, in form satisfactory to the Bank and its counsel, in the form of Exhibit
3.01(R);
(S) A certificate, dated the date of the Closing, signed by the president
or a vice president of the Borrower and to the effect that
(1) The representations and warranties set forth in Section 5.01 are
true as of the date of the Closing; and
(2) No Event of Default hereunder, and no event which, with the
giving of notice or passage of time or both, would become such an Event of
Default, has occurred as of such date;
(T) Copies of all documents evidencing the terms and conditions of any
debt specified as Subordinated Indebtedness on Exhibit 1.01(D); and
(U) A completed Revolving Credit Loan Activity Request in the form of
Exhibit 1.01(C).
3.02 Documents Required for Subsequent Disbursements.
At the time of, and as a condition to, any disbursement of any part of the
Loan to be made by the Bank subsequent to the Closing, the Bank may require the
Borrower to deliver to the Bank a certificate, dated the date on which any such
disbursement is to be made, signed by the president or a vice president of the
Borrower, and to the effect that
(A) As of the date thereof, no Event of Default has occurred and is
continuing, and no event has occurred and is continuing that, but for the giving
of notice or passage of time or both, would be an Event of Default;
(B) No material adverse change has occurred in the business prospects,
financial condition, or results of operations of the Borrower or any Subsidiary
since the date of the Financial Statements; and
(C) Each of the representations and warranties contained in Section 5.01
is true and correct in all respects as if made on and as of the date of such
disbursement (except to the extent that such representation and warranties are
made only as of a specified date).
3.03 Certain Events.
At the time of, and as a condition to, the Closing and each disbursement
of any part of the Loan to be made by the Bank at or subsequent to the Closing:
(A) No Event of Default shall have occurred and be continuing, and no
event shall have occurred and be continuing that, with the giving of notice or
passage of time or both, would be an Event of Default;
(B) No material adverse change shall have occurred in the business
prospects, financial condition, or results of operations of the Borrower or any
Subsidiary since the dates of the Financial Statements; and
(C) All of the Ancillary Documents shall have remained in full force and
effect.
3.04 Legal Matters.
At the time of the Closing, all legal matters incidental thereto shall be
reasonably satisfactory to Bowditch & Xxxxx, LLP, legal counsel to the Bank.
ARTICLE 4.0 SET-OFF
The Borrower hereby grants to the Bank, a continuing lien, security
interest and right of setoff as security for all liabilities and obligations to
the Bank, whether now existing or hereafter arising, upon and against all
deposits, credits, Assets and property, now or hereafter in the possession,
custody, safekeeping or control of the Bank or any entity under the control of
FleetBoston Financial Corporation and its successors and assigns, or in transit
to any of them. At any time, without demand or notice (any such notice being
expressly waived by the Borrower), the Bank may set off the same or any part
thereof and apply the same to any liability or obligation of Borrower even
though unmatured and regardless of the adequacy of any other Assets securing the
Loan. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES
WITH RESPECT TO ANY OTHER ASSETS WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
ARTICLE 5.0 REPRESENTATIONS AND WARRANTIES
5.01 Original.
To induce the Bank to enter into this Agreement, the Borrower represents
and warrants to the Bank as follows:
(A) The Borrower is a corporation duly organized, validly existing, and in
good standing under the Laws of the State of Nevada; the Borrower has no
Subsidiaries other than the Subsidiaries named in Exhibit 5.01(A); each
Subsidiary is a corporation duly organized, validly existing, and in good
standing under the Laws of its state of incorporation, all as set forth in
Exhibit 5.01(A); the Borrower and Subsidiaries have the lawful power to own
their properties and to engage in the businesses they conduct, and each is duly
qualified and in good standing as a foreign corporation in the jurisdictions
wherein the nature of the business transacted by it or property owned by it
makes such qualification necessary; the states in which the Borrower and each
Subsidiary are qualified to do business are set forth in Exhibit 5.01(A) or
otherwise disclosed to the Bank in writing; the percentage of the Borrower's
ownership of the outstanding stock of each Subsidiary is as listed in Exhibit
5.01(A); the addresses of all places of business of the Borrower and its
Subsidiaries are as set forth in Exhibit 5.01(A) or otherwise disclosed to the
Bank in writing; neither the Borrower nor any Subsidiary has changed its name,
been the surviving corporation in a merger, acquired any business, or changed
its principal executive office within five (5) years and one (1) month prior to
the date hereof except as set forth in Exhibit 5.01(A); and all of the
authorized, issued, and outstanding shares of capital stock of each Subsidiary
are owned by the Borrower;
(B) Neither the Borrower nor any Subsidiary is directly or indirectly
controlled by, or acting on behalf of, any Person which is an "Investment
Company", within the meaning of the Investment Company Act of 1940, as amended;
(C) Neither the Borrower nor any Subsidiary is in default with respect to
any of its existing Indebtedness, and the making and performance of this
Agreement, the Note, and the Ancillary Documents will not (immediately or with
the passage of time, the giving of notice, or both):
(1) Violate the Articles of Incorporation or by-laws of the Borrower
or any Subsidiary, or violate any Laws or result in a default under any
contract, agreement, or instrument to which the Borrower or any Subsidiary is a
party or by which the Borrower or any Subsidiary or its property is bound; or
(2) Result in the creation or imposition of any security interest
in, or lien or encumbrance upon, any of the assets of the Borrower or any
Subsidiary except in favor of the Bank;
(D) The Borrower has the power and authority to enter into and perform
this Agreement, the Note, and the Ancillary Documents to which it is a party,
and to incur the obligations herein and therein provided for, and has taken all
actions necessary to authorize the execution, delivery, and performance of this
Agreement, the Note, and the Ancillary Documents;
(E) This Agreement, the Note, and the Ancillary Documents are, or when
delivered will be, valid, binding, and enforceable in accordance with their
respective terms;
(F) Except as disclosed in Exhibit 5.01(F) hereto, there is no pending
order, notice, claim, litigation, proceeding, or investigation against or
affecting the Borrower or any Subsidiary, whether or not covered by insurance,
that would in the aggregate involve the payment of $100,000.00 or more or would
otherwise materially and adversely affect the financial condition or business
prospects of the Borrower and its Subsidiaries, taken as a whole, if adversely
determined;
(G) The Borrower and its Subsidiaries have good and marketable title to
all of their assets, none of which is subject to any security interest,
encumbrance or lien, or claim of any third Person except for Permitted Liens and
liens granted by a Subsidiary in such Subsidiary's assets as security for
borrowed money;
(H) The Financial Statements, including any schedules and notes pertaining
thereto, have been prepared in accordance with GAAP, and fairly present the
consolidated financial condition of the Borrower and its Subsidiaries at the
dates thereof and the results of operations for the periods covered thereby, and
there have been no material adverse changes in the consolidated financial
condition or business of the Borrower and its Subsidiaries from the date of the
Financial Statements to the date hereof;
(I) As of the date hereof, the Borrower and its Subsidiaries have no
material Indebtedness of any nature, including, but without limitation,
liabilities for taxes and any interest or penalties relating thereto except to
the extent reflected (in a footnote or otherwise) and reserved against in the
consolidated balance sheet dated September 30, 2000 included in the Financial
Statements or as disclosed in, or permitted by, this Agreement; and the Borrower
does not know or have reasonable ground to know of any basis for the assertion
against it or any Subsidiary of any such claim or litigation based upon such
Indebtedness as of the date of the Closing except as disclosed on Exhibit
5.01(F) or otherwise disclosed to the Bank in writing;
(J) Except as otherwise permitted herein, the Borrower has filed all
federal, state, and local tax returns and other reports required by any
applicable Laws to have been filed prior to the date hereof, has paid or caused
to be paid all taxes, assessments, and other governmental charges that are due
and payable prior to the date hereof, and has made adequate provision for the
payment of such taxes, assessments, or other charges accruing but not yet
payable; the Borrower has no knowledge of any deficiency or additional
assessment in a materially important amount in connection with any taxes,
assessments, or charges not provided for on its books;
(K) Except to the extent that the failure to comply would not materially
interfere with the conduct of the business of the Borrower or any Subsidiary,
the Borrower and its Subsidiaries have each complied with all applicable Laws
with respect to (1) any restrictions, specifications, or other requirements
pertaining to products that it manufactures or sells or to the services it
performs; (2) the conduct of its business; and (3) the use, maintenance, and
operation of the real and personal properties owned or leased by it in the
conduct of its business;
(L) No representation or warranty by or with respect to the Borrower or
any Subsidiary contained herein or in any certificate or other document
furnished by the Borrower or any Subsidiary pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact necessary to make
such representation or warranty not misleading in light of the circumstances
under which it was made;
(M) Each consent, approval or authorization of, or filing, registration or
qualification with, any Person required to be obtained or effected by the
Borrower, any Subsidiary, or any Guarantor in connection with the execution and
delivery of this Agreement, the Note, and the Ancillary Documents or the
undertaking or performance of any obligation hereunder or thereunder has been
duly obtained or effected;
(N) All Indebtedness existing as of the Closing of the Borrower or any
Subsidiary: (1) for money borrowed, or (2) under any security agreement,
mortgage or agreement covering the lease by the Borrower or any Subsidiary as
lessee of real or personal property is described in Exhibit 5.01(N);
(O) Except as described in Exhibit 5.01(O), attached hereto, or otherwise
disclosed to the Bank in writing, (a) neither the Borrower nor any Subsidiary
has any material leases, contracts, or commitments of any kind (including,
without limitation, employment agreements; collective bargaining agreements;
powers of attorney; distribution arrangements; licenses, patents or license
agreements; contracts for future purchase or delivery of goods or rendering of
services; bonuses, pension, and retirement plans; or accrued vacation pay,
insurance, and welfare agreements); (b) to the best of Borrower's knowledge, all
parties to all such material leases, contracts, and other commitments to which
the Borrower or any Subsidiary is a party have complied with the provisions of
such leases, contracts, and other commitments; and (c) to the best of Borrower's
knowledge, no party is in default under any thereof and no event has occurred
which, but for the giving of notice or the passage of time, or both, would
constitute a default;
(P) The Borrower has not made any agreement or taken any action which may
cause anyone to become entitled to a commission or finder's fee as a result of
or in connection with the making of the Loan;
(Q) The Borrower's consolidated federal tax returns for all years of
operation, including the year ended December 31, 1999, have been filed with the
Internal Revenue Service and have not been challenged;
(R) Any Employee Pension Benefit Plans, as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), of the Borrower
and each Subsidiary meet, as of the date hereof, the minimum funding standards
of 29 U.S.C.A. 1082 (Section 302 of ERISA), and no Reportable Event or
Prohibited Transaction, as defined in ERISA, has occurred with respect to any
Employee Benefit Plans, as defined in ERISA, of the Borrower or any Subsidiary;
and
(S) All Intellectual Property owned or used by the Borrower is described
in Exhibit 5.01(S) attached hereto, and the Borrower has title or valid licenses
as to all such Intellectual Property subject to no superior right or to any
restriction except as is set forth in Exhibit 5.01(S) attached hereto.
5.02 Survival.
All of the representations and warranties set forth in Section 5.01 shall
survive until all Obligations are satisfied in full and there remain no
outstanding commitments hereunder.
ARTICLE 6.0 COVENANTS OF THE BORROWER
6.01 Affirmative Covenants.
The Borrower does hereby covenant and agree with the Bank that, so long as
any of the Obligations remain unsatisfied or any commitments hereunder remain
outstanding, it will comply, or if appropriate cause its Subsidiaries to comply,
at all times with the following affirmative covenants:
(A) The Borrower will use the proceeds of the Loan only for the purposes
set forth in Exhibit 6.01(A), and will furnish the Bank such evidence as it may
reasonably require with respect to such use;
(B) The Borrower will furnish the Bank:
(1) As soon as available, but in any event within forty-five (45)
days after the close of each fiscal quarter, a copy of the Form 10Q filed by the
Borrower with the United States Securities and Exchange Commission;
(2) As soon as available, but in any event within one hundred twenty
(120) days after the close of each fiscal year: (a) a consolidated statement of
stockholders' equity and a consolidated statement of changes in financial
position of the Borrower and its Subsidiaries for such fiscal year; (b)
consolidated and consolidating income statements of the Borrower and its
Subsidiaries for such fiscal year; and (c) consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as of the end of such fiscal
year-all such statements to be in reasonable detail, including all supporting
schedules and comments; the consolidated statements and balance sheets to be
audited by an independent certified public accountants selected by Borrower and
acceptable to the Bank, and certified by such accountants to have been prepared
in accordance with GAAP and to present fairly the consolidated financial
position and results of operations of the Borrower and its Subsidiaries; in
addition, the Borrower will obtain from such independent certified public
accountants and deliver to the Bank, within one hundred twenty (120) days after
the close of each fiscal year, their written statement that in making the
examination necessary to their certification they have obtained no knowledge of
any Event of Default by the Borrower, or disclosing all Events of Default of
which they have obtained knowledge (it being understood and agreed by the Bank
that in making their examination, such accountants shall not be required to go
beyond the bounds of generally accepted auditing procedures for the purpose of
certifying financial statements); the Bank shall have the right, from time to
time to discuss the affairs of the Borrower directly with such independent
certified public accountants after notice to the Borrower and opportunity of the
Borrower to be represented at any such discussions.
(3) Contemporaneously with each year-end financial report required
by the foregoing paragraph (2), a certificate of the president or principal
financial officer of the Borrower stating that he has individually reviewed the
provisions of this Agreement and that a review of the activities of the Borrower
during such year or quarterly period, as the case may be, has been made by him
or under his supervision, with a view to determining whether the Borrower has
fulfilled all its obligations under this Agreement, and that, to the best of his
knowledge, the Borrower has observed and performed each undertaking contained in
this Agreement and is not in default in the observance or performance of any of
the provisions hereof or, if the Borrower shall be so in default, specifying all
such defaults and events of which he may have knowledge;
(4) Promptly after the sending or making available or filing of the
same, copies of all reports, proxy statements, and financial statements that the
Borrower sends or makes available to its stockholders and all Form 10K reports,
registration statements and reports that the Borrower files with the Securities
and Exchange Commission or any successor Person;
(5) Upon the Bank's request, a compliance certificate in a form
provided by the Bank certifying compliance with the Borrower's covenants and
agreements with the Bank and as to such other matters as the Bank may reasonably
request; and
(6) Upon the Bank's request, from time to time, copies of any or all
agreements, contracts, or commitments referred to in Section 5.01(O) hereof;
(C) The Borrower will maintain its Inventory, Equipment, real estate, and
other properties in good condition and repair (normal wear and tear excepted),
and will pay and discharge or cause to be paid and discharged, when due, the
cost of repairs to, or maintenance of, the same, and will pay or cause to be
paid in a timely manner all rental or mortgage payments due on such real estate.
The Borrower hereby agrees that, in the event it fails to pay or cause to be
paid any such payment, it will promptly notify the Bank thereof, and the Bank
may, in its discretion, do so and on demand be reimbursed therefor by the
Borrower;
(D) The Borrower and its Subsidiaries will maintain, or cause to be
maintained, public liability insurance (subject to deductibles acceptable to the
Bank for each entity) and fire and extended coverage insurance on all assets
that are of a character usually insured by corporations engaged in the same or
similar businesses, all in form and amount sufficient to indemnify the Borrower
or Subsidiary for 100% of the appraised value of any such asset lost or damaged
(subject to any deductible customary in the Borrower's or Subsidiary's industry)
or in an amount consistent with the amount of insurance generally carried on
comparable assets within the industry and with such insurers as may be
satisfactory to the Bank. The Borrower and its Subsidiaries will cause all such
insurance policies to contain a standard mortgage clause and to be payable to
the Bank as its interest may appear, to deliver the policies of insurance to the
Bank, and, in the case of all policies of insurance carried for the benefit of
the Borrower or any Subsidiary by any lessee, sublessee, subtenant, or other
party having rights to occupy or use the mortgaged property or any part thereof
or interest therein under any lease, sublease, or other agreement (whether oral,
written, or otherwise evidenced), to cause all such policies to be payable to
the Bank as its interest may appear. Such policies shall contain a provision
whereby they cannot be cancelled except after twenty (20) days' written notice
to the Bank. The Borrower will furnish to the Bank such evidence of insurance as
the Bank may require. The Borrower hereby agrees that, in the event it or any
Subsidiary fails to pay or cause to be paid the premium on any such insurance
when due, the Bank, in its discretion, may do so and be reimbursed by the
Borrower therefor;
(E) The Borrower and its Subsidiaries will each pay or cause to be paid
when due, all taxes, assessments, and charges or levies imposed upon it or on
any of its property or which it is required to withhold and pay except where
contested in good faith by appropriate proceedings with adequate reserves
therefor having been set aside on its books; provided, however, that the
Borrower and each Subsidiary shall pay or cause to be paid all such taxes,
assessments, charges or levies forthwith whenever foreclosure on any lien that
may have attached (or security therefor) appears imminent;
(F) INTENTIONALLY OMITTED.
(G) The Borrower and its Subsidiaries will each, when requested to do so,
make available for inspection by duly authorized representatives of the Bank any
of its books and records and will furnish the Bank any information regarding its
business affairs and financial condition within a reasonable time after written
request therefor;
(H) The Borrower and its Subsidiaries will each take all necessary steps
to preserve its corporate existence and franchises and comply with all present
and future Laws applicable to it in the operation of its business, and all
material agreements to which it is subject;
(I) The Borrower and its Subsidiaries will each collect its Accounts and
sell its Inventory only in the ordinary course of business;
(J) The Borrower and its Subsidiaries will each keep accurate and complete
Records of its Accounts, Inventory, and Equipment consistent with sound business
practices;
(K) The Borrower and its Subsidiaries will each give immediate notice to
the Bank of (1) any litigation or proceeding in which it is a party if an
adverse decision therein would require it to pay more than $50,000.00 or deliver
assets the value of which exceeds such sum (whether or not the claim is
considered to be covered by insurance); and (2) the institution of any other
suit or proceeding involving it that might materially and adversely affect its
operations, financial condition, property, or business prospects;
(L) Within ten (10) days after the filing thereof, the Borrower will
furnish the Bank with true, correct and complete copies of federal income tax
returns filed by the Borrower, together with all schedules thereto;
(M) The Borrower and its Subsidiaries will each pay when due (or within
applicable grace periods) all of its other Indebtedness due third Persons except
when the amount thereof is being contested in good faith by appropriate
proceedings and with adequate reserves therefor being set aside on its books;
provided, however, that no payment shall be made in respect to Subordinated
Indebtedness except in strict compliance with all of the terms of subordination
thereof. If default be made by the Borrower or any Subsidiary in the payment of
any principal (or installment thereof) of, or interest on, any such
Indebtedness, the Bank shall have the right, in its discretion, to pay such
interest or principal for the account of the Borrower or such Subsidiary and be
reimbursed by the Borrower or such Subsidiary therefor;
(N) The Borrower and its Subsidiaries will each notify the Bank
immediately if it becomes aware of the occurrence of any Event of Default or of
any fact, condition, or event that only with the giving of notice or passage of
time or both, could become an Event of Default or if it becomes aware of any
material adverse change in the business prospects, financial condition
(including, without limitation, proceedings in bankruptcy, insolvency,
reorganization, or the appointment of a receiver or trustee), or results of
operations of the Borrower, a Subsidiary, or any Guarantor or of the failure of
the Borrower or any Subsidiary to observe any of their respective undertakings
hereunder or under the Ancillary Documents;
(O) The Borrower and its Subsidiaries will each notify the Bank thirty
(30) days in advance of any change in the location of any of its places of
business or of the establishment of any new, or the discontinuance of any
existing, place of business; and
(P) The Borrower and its Subsidiaries will each (1) fund any of its
Employee Pension Benefit Plans in accordance with no less than the minimum
funding standards of 29 U.S.C.A. 1082 (Section 302 of ERISA); (2) furnish the
Bank, promptly after the filing of the same, with copies of any reports or other
statements filed with the United States Department of Labor or the Internal
Revenue Service with respect to any such Plan; and (3) promptly advise the Bank
of the occurrence of any Reportable Event or Prohibited Transaction with respect
to any Employee Benefit Plan.
(Q) The Borrower will permit the Bank to conduct field audits periodically
on any premises occupied by the Borrower or on which any Assets is located
(which field audits shall not exceed two per calendar year unless an Event of
Default shall have occurred) and shall pay to the Bank the Bank's reasonable
costs and expenses related to each such audit; and
(R) The Borrower will maintain its operating accounts with the Bank while
any Obligations to the Bank are outstanding.
6.02 Negative Covenants.
The Borrower does hereby covenant and agree with the Bank that, so long as
any of the Obligations remain unsatisfied or any commitments hereunder remain
outstanding, it will comply, or if appropriate cause its Subsidiaries to comply,
at all times with the following negative covenants, unless the Bank shall
otherwise have agreed in writing:
(A) Neither the Borrower nor any Subsidiary will change its name, enter
into any merger, consolidation or reorganization;
(B) INTENTIONALLY OMITTED;
(C) Neither the Borrower nor any Subsidiary will sell, lease, transfer,
assign, or otherwise dispose of any of the Assets, provided, however, that the
Borrower or any Subsidiary may sell, lease, transfer or assign Assets in the
ordinary course of business and may sell, lease, transfer or assign technology
licenses for fair consideration to joint ventures in which the Borrower or a
Subsidiary is a joint venturer;
(D) Neither the Borrower nor any Subsidiary will sell or otherwise dispose
of, or for any reason cease operating, any of its divisions, franchises, or
lines of business;
(E) The Borrower will not mortgage, pledge, grant, or permit to exist a
security interest in, or a lien upon, any of its Assets of any kind, now owned
or hereafter acquired, except for Permitted Liens, liens in favor of the Bank,
and existing liens listed on Exhibit 1.01(B) to the extent shown on such Exhibit
1.01(B) to be permitted to exist after the Closing;
(F) Neither the Borrower nor any Subsidiary will become liable, directly
or indirectly, as guarantor or otherwise for any obligation of any other Person,
except the Borrower or any Subsidiary may (i) endorse commercial paper for
deposit or collection in the ordinary course of business, (ii) provide an
uncollateralized guaranty of an obligation of a Subsidiary, or (iii) pledge cash
not exceeding 60% of any grant or loan received in connection with funding for
operations of a Subsidiary;
(G) Neither the Borrower nor any Subsidiary will incur, create, assume, or
permit to exist any Indebtedness except: (1) the Loan; (2) existing Indebtedness
listed on Exhibit 1.01(B) to the extent shown on such Exhibit 1.01(B) to be
permitted to exist after the Closing; (3) trade indebtedness incurred in the
ordinary course of business (provided, however, that neither the Borrower nor
any Subsidiary may acquire inventory other than for cash or on open account
except as expressly approved in writing and in advance by the Bank); (4)
contingent Indebtedness permitted by Section 6.02(F); (5) Indebtedness secured
by Permitted Liens; (6) Subordinated Indebtedness; and (7) Indebtedness of a
Subsidiary for borrowed money;
(H) The Borrower will not declare or pay any dividends in cash, nor make
any other cash payment or cash distribution on account of its capital stock; nor
make any assignment or transfer of Accounts, or, other than in the ordinary
course of business, of Inventory;
(I) Neither the Borrower nor any Subsidiary will form any subsidiary
(unless all stock owned by the Borrower or the Subsidiary in any new subsidiary
is delivered to the Bank to be held pursuant to Article 9.0 hereof), make any
investment in (including any assignment of Inventory or other property), or make
any loan in the nature of an investment to, any Person, other than investments
of the Borrower in the Subsidiaries listed on Exhibit 5.01(A);
(J) Neither the Borrower nor any Subsidiary will make any loan or advance
to any officer, shareholder, director, or employee of the Borrower or any
Subsidiary, except for business travel and similar temporary advances in the
ordinary course of business and loans to employees not exceeding $5,000.00 in
each instance;
(K) Neither the Borrower nor any Subsidiary will purchase or otherwise
invest in or hold securities, nonoperating real estate, or other nonoperating
assets except: (1) direct obligations of the United States of America, or of a
bank with assets of not less than $50,000,000,000.00 or other investments
approved in advance in writing by the Bank; (2) the present investment in any
such assets held as of September 30, 2000 and reflected in the Financial
Statements; (3) the stock held by the Borrower in its Subsidiaries; and (4)
operating assets that hereafter become nonoperating assets;
(L) Neither the Borrower nor any Subsidiary will redeem, purchase, or
retire any of its capital stock or purchase or retire for any consideration, any
warrant, right, or option pertaining thereto or other security convertible into
any of the foregoing, or permit any redemption or retirement of the outstanding
capital stock of the Borrower or of any Subsidiary;
(M) Neither the Borrower nor any Subsidiary will enter into any
sale-leaseback transaction;
(N) Neither the Borrower nor any Subsidiary will furnish the Bank any
certificate or other document that will contain any untrue statement of material
fact or that will omit to state a material fact necessary to make it not
misleading in light of the circumstances under which it was furnished; and
(O) Neither the Borrower nor any Subsidiary will directly or indirectly
apply any part of the proceeds of the Loan to the purchasing or carrying of any
"margin stock" within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, or any regulations, interpretations, or rulings
thereunder.
ARTICLE 7.0 DEFAULT
7.01 Events of Default.
The occurrence of any one or more of the following events shall constitute
an Event of Default hereunder:
(A) The Borrower, the Guarantor or any Subsidiary shall fail to pay when
due any of its Obligations to the Bank;
(B) The Borrower, the Guarantor or any Subsidiary shall fail to observe or
perform any other obligation to be observed or performed by it hereunder or
under any of the Ancillary Documents, and such failure shall continue for twenty
(20) days after (1) notice of such failure from the Bank; or (2) the Bank is
notified of such failure or should have been so notified pursuant to the
provisions of Section 6.01(N), whichever is earlier;
(C) The Borrower or any Subsidiary shall fail to pay any Indebtedness with
an aggregate principal amount of more than $100,000.00 due any third Persons,
and such failure shall continue beyond any applicable grace period, or the
Borrower or any Subsidiary shall suffer to exist any other event of default
under any agreement evidencing such Indebtedness, and such event of default
shall result in such Indebtedness becoming due and payable, or permit the holder
thereof to declare such Indebtedness to become due and payable, before its
scheduled maturity date;
(D) Any financial statement, representation, warranty, or certificate made
or furnished by or with respect to the Borrower, the Guarantor or any Subsidiary
to the Bank in connection with this Agreement, or as inducement to the Bank to
enter into this Agreement, or in any separate statement or document to be
delivered to the Bank hereunder, shall be materially false, incorrect, or
incomplete when made;
(E) The Borrower, the Guarantor or any Subsidiary shall admit its
inability to pay its debts as they mature or shall make an assignment for the
benefit of itself or any of its creditors;
(F) Proceedings in bankruptcy, or for reorganization of the Borrower, the
Guarantor or any Subsidiary, or for the readjustment of any of their respective
debts under the Bankruptcy Code, as amended, or any part thereof, or under any
other Laws, whether state or federal, for the relief of debtors, now or
hereafter existing, shall be commenced against or by the Borrower, the Guarantor
or Subsidiary and, except with respect to any such proceedings instituted by the
Borrower, the Guarantor or a Subsidiary, shall not be discharged within sixty
(60) days of their commencement;
(G) A receiver or trustee shall be appointed for the Borrower, the
Guarantor or any Subsidiary or for any substantial part of their respective
assets, or any proceedings shall be instituted for the dissolution or the full
or partial liquidation of the Borrower, the Guarantor or any Subsidiary, and
except with respect to any such appointments requested or instituted by the
Borrower, the Guarantor or any Subsidiary, such receiver or trustee shall not be
discharged within sixty (60) days of his appointment, and except with respect to
any such proceedings instituted by the Borrower, the Guarantor or a Subsidiary,
such proceedings shall not be discharged within sixty (60) days of their
commencement, or the Borrower, the Guarantor or any Subsidiary shall discontinue
business or materially change the nature of its business, or the Assets becomes,
in the reasonable judgment of the Bank, insufficient in value to satisfy the
Obligations, or the Bank otherwise reasonably finds itself insecure as to the
prompt and punctual payment and discharge of the Obligations;
(H) The Borrower or any Subsidiary shall suffer final judgments for
payment of money aggregating in excess of $50,000.00 and shall not discharge the
same within a period of thirty (30) days unless, pending further proceedings,
execution has not been commenced or, if commenced, has been effectively stayed;
(I) A judgment creditor of the Borrower, the Guarantor or any Subsidiary
shall obtain possession of any of the Assets by any means, including (without
implied limitation) levy, distraint, replevin, or self-help;
(J) Any obligee of Subordinated Indebtedness shall fail to comply with the
subordination provisions of the instruments evidencing such Subordinated
Indebtedness; or
(K) The Guarantor shall fail to comply fully with the requirements of, or
terminate or attempt to terminate, the Guaranty; or
(L) An Escrow Agent appointed pursuant to Section 9.03 shall fail to
release to the Bank any of the Supplemental Documents in accordance with an
escrow agreement entered into pursuant to Section 9.03 upon written demand for
such release from the Bank or its counsel or other representatives.
7.02 Acceleration.
At its option, and at any time, whether immediately or otherwise, the Bank
may, upon the occurrence of any Event of Default, declare all Obligations of the
Borrower or the Guarantor to the Bank immediately due and payable without
further action of any kind including without limitation, notice, demand or
presentment.
ARTICLE 8.0 THE BANK'S RIGHTS AND REMEDIES
8.01 The Bank's Rights Upon Default
Upon demand on the Note or the occurrence of an Event of Default and at
any time thereafter, the Bank, without presentment, demand, notice, protest or
advertisement of any kind, will have the rights provided for in this Article.
8.02 Use of Intellectual Property
Upon demand on the Note or the occurrence of an Event of Default and at
any time thereafter, the Bank may use all or any part of the Borrower's
Intellectual Property which the Borrower now has or may hereafter acquire. The
Bank may license such Intellectual Property to third parties, seek registration
of such Intellectual Property in any state or nation or prosecute pending
applications for patent, trademark, or service marks in the Borrower's name in
any state or nation.
8.03 Notification of Default to Third Parties
Upon demand on the Note or the occurrence of an Event of Default and at
any time thereafter, the Bank may notify the Borrower's suppliers, account
debtors and other third parties of the default and of any and all decisions made
and actions taken by the Bank with respect to this Agreement and the
Obligations, without liability of any kind.
8.04 Exercise of Other Remedies
Upon the occurrence of any Event of Default and at any time thereafter,
the Bank may exercise the remedies of a Bank afforded by the Uniform Commercial
Code and other applicable law or by the terms of any agreement between the
Borrower and the Bank.
8.05 Cumulative Rights and Remedies
All rights and remedies of the Bank, whether provided for herein or in
other agreements, instruments or documents or conferred by law, are cumulative
and may be exercised alone or simultaneously.
8.06 Additional Rights and Remedies
(A) Upon the occurrence of an Event of Default, all obligations on the
part of the Bank to make advances under the Note, if the Bank so elects, shall
cease and terminate, and, at the option of the Bank, the Note shall become
immediately due and payable, and the Bank shall thereupon be authorized and
empowered to exercise any rights of foreclosure or as otherwise provided for the
realization of any security for the Note covered by any of the Ancillary
Documents; but the Bank may make any advances or portions of advances, after
demand or the occurrence of any such Event of Default, without thereby waiving
its right to demand payment of the Borrower's indebtedness evidenced by the Note
and secured by the Ancillary Documents, and without becoming liable to make any
other or further advances as hereinabove contemplated by this Agreement.
(B) Upon the occurrence of any of the Events of Default, the rights,
powers, and privileges provided in this Section 8.06 and all other remedies
available to the Bank under this Agreement or at law or in equity may be
exercised by the Bank at any time and from time to time, whether or not the
indebtedness evidenced and secured by the Note and the Ancillary Documents shall
be due and payable, and whether or not the Bank shall have instituted any
foreclosure proceedings or other action for the enforcement of its rights under
the Note or any of the Ancillary Documents.
ARTICLE 9.0 SUPPLEMENTAL DOCUMENTS.
9.01 Delivery
Concurrently with the execution and delivery of this Agreement, the
Borrower shall deliver to the Bank the Supplemental Documents, duly executed by
an authorized officer of the Borrower. At the request of the Bank, from time to
time hereafter, the Borrower shall deliver to the Bank such additional documents
and instruments as the Bank deems appropriate to effectuate the provisions and
intent of the Supplemental Documents or to more fully vest or assure the
security interests contemplated thereby.
9.02 Custody and Release
The Supplemental Documents shall be held by the Bank as custodian and
shall not take effect or be filed with any filing office or otherwise released
to any third party, and no security interest or lien credited pursuant to any
Supplemental Documents shall attach, until the Bank elects, upon the occurrence
of a Triggering Event, to cause the Supplemental Documents to become effective.
The Bank shall give the Borrower prompt written notice of its election to cause
the Supplemental Documents to become effective.
9.03 Escrow Agent
At the election of the Borrower, the Supplemental Documents shall be
placed in escrow with a mutually acceptable institutional escrow agent regularly
engaged in escrow services in The Commonwealth of Massachusetts subject to a
mutually agreeable escrow agreement. If the Borrower elects to have the
Supplemental Documents placed in escrow, all fees, costs and expenses of the
escrow agent shall be borne by the Borrower.
ARTICLE 10.0 MISCELLANEOUS
10.01 Construction.
The provisions of this Agreement shall be in addition to those of any
guaranty, pledge or security agreement, note, or other evidence of liability now
or hereafter held by the Bank, all of which shall be construed as complementary
to each other. Nothing herein contained shall prevent the Bank from enforcing
any or all other guaranty, pledge or security agreements, notes, or other
evidences of liability in accordance with their respective terms.
10.02 Further Assurance.
From time to time, the Borrower will execute and deliver to the Bank such
additional documents and will provide such additional information as the Bank
may reasonably require to carry out the terms of this Agreement and be informed
of the status and affairs of the Borrower.
10.03 Enforcement and Waiver by the Bank.
The Bank shall have the right at all times to enforce the provisions of
this Agreement and the Ancillary Documents in strict accordance with the terms
hereof and thereof, notwithstanding any conduct or custom on the part of the
Bank in refraining from so doing at any time or times. The failure of the Bank
at any time or times to enforce its rights under such provisions, strictly in
accordance with the same, shall not be construed as having created a custom in
any way or manner contrary to specific provisions of this Agreement or as having
in any way or manner modified or waived the same. All rights and remedies of the
Bank are cumulative and concurrent and the exercise of one right or remedy shall
not be deemed a waiver or release of any other right or remedy.
10.04 Expenses of the Bank.
The Borrower shall pay on demand all reasonable expenses of the Bank in
connection with the preparation, administration, default, collection, waiver or
amendment of loan terms, or in connection with the Bank's exercise, preservation
or enforcement of any of its rights, remedies or options hereunder, including,
without limitation, reasonable fees of outside legal counsel or the reasonable
allocated costs of in-house legal counsel, reasonable accounting, consulting,
brokerage or other similar professional fees or expenses, and any reasonable
fees or expenses associated with travel or other reasonable costs relating to
any appraisals or examinations conducted in connection with this Agreement, the
Note, the Ancillary Documents, or any other assets therefor, and the amount of
all such expenses shall, until paid, bear interest at the rate applicable to
principal under the Note (including any default rate) and be an obligation
secured by any assets.
10.05 Notices.
Any notices or consents required or permitted by this Agreement shall be
in writing and shall be deemed delivered if delivered in person or if sent by
certified mail, postage prepaid, return receipt requested, facsimile or
telegraph, as follows, unless such address is changed by written notice
hereunder:
(A) If to the Borrower: FIBERCORE, INC.
000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
With a copy to:
(B) If to the Bank: FLEET NATIONAL BANK
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Senior Commercial Loan Officer
With copies to: FLEET NATIONAL BANK
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Senior Commercial Loan Officer
and to: Xxxxxx X. Xxxxxx III, Esquire
Bowditch & Xxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Any party may change the address to which notices are to be sent to it by giving
written notice of such change of address to the other party in the manner herein
provided for giving notice. Any such notice, demand, request, or other
communication shall be deemed given when mailed as aforesaid.
10.06 Waiver and Indemnification by the Borrower.
To the maximum extent permitted by applicable Laws, the Borrower:
(A) Waives (1) protest of all commercial paper at any time held by the
Bank on which the Borrower is in any way liable; (2) except as the same may
herein be specifically granted, notice of acceleration and of intention to
accelerate; and (3) notice and opportunity to be heard, after acceleration in
the manner provided in Section 7.02, before exercise by the Bank of the remedies
of self-help, set-off, or of other summary procedures permitted by any
applicable Laws or by any agreement with the Borrower, and, except where
required hereby or by any applicable Laws, notice of any other action taken by
the Bank; and
(B) Indemnifies the Bank and its officers, attorneys, agents, and
employees from all claims for loss or damage caused by any act or omission on
the part of any of them except the gross negligence or willful misconduct of any
thereof.
10.07 Participation.
The Bank shall have the unrestricted right at any time and from time to
time, and without the consent of or notice to Borrower or the Guarantor, to
grant to one or more banks or other financial institutions (each, a
"Participant") participating interests in the Bank's obligation to lend
hereunder and/or any or all of the loans held by the Bank hereunder. In the
event of any such grant by the Bank of a participating interest to a
Participant, whether or not upon notice to Borrower, the Bank shall remain
responsible for the performance of its obligations hereunder and Borrower shall
continue to deal solely and directly with the Bank in connection with the Bank's
rights and obligations hereunder. The Bank may furnish any information
concerning Borrower in its possession from time to time to prospective
Participants, provided that the Bank shall require any such prospective
Participant to agree in writing to maintain the confidentiality of such
information.
10.08 Waiver Of Jury Trial.
THE BORROWER AND THE BANK (BY ACCEPTANCE OF THIS AGREEMENT) MUTUALLY
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY ANCILLARY DOCUMENTS EXECUTED OR
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY RELATED HERETO, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE BANK RELATING TO THE
ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE ANCILLARY DOCUMENTS, AND AGREE
THAT NEITHER PARTY WILL 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, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE
BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS AGREEMENT AND MAKE THE LOAN
EVIDENCED BY THE NOTE. 10.09 Applicable Law.
This Agreement is entered into and performable in the Commonwealth of
Massachusetts and shall be subject to and construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts.
10.10 Binding Effect, Assignment, and Entire Agreement.
This Agreement shall inure to the benefit of, and shall be binding upon,
the respective successors and permitted assigns of the parties hereto. The
Borrower has no right to assign any of its rights or obligations hereunder
without the prior written consent of the Bank. This Agreement, including the
Exhibits hereto, all of which are hereby incorporated herein by reference, and
the documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties and may be amended only by a writing signed on
behalf of each party.
10.11 Replacement Note or Supplemental Documents.
Upon receipt of an affidavit of an officer of the Bank as to the loss,
theft, destruction or mutilation of the Note or any other Supplemental Document
which is not of public record, and, in the case of any such loss, theft,
destruction or mutilation, upon cancellation of such Note or other Supplemental
Document, the Borrower will issue, in lieu thereof, a replacement Note or other
Supplemental Document in the same principal amount thereof and otherwise of like
tenor.
10.12 Pledge to the Federal Reserve.
The Bank may at any time pledge all or any portion of its rights under
this Agreement, or the Ancillary Documents (including any portion of the Note)
to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the
Federal Reserve Act, 12 U.S.C. ss. 341. No such pledge or assignment or
enforcement thereof shall release the Bank from its obligations under this
Agreement, the Note or any of the Ancillary Documents.
10.13 Right to Sell.
The Bank shall have the unrestricted right at any time or from time to
time, and without the consent of the Borrowers or the Guarantor, to assign all
or any portion of its rights and obligations hereunder to one or more bank or
other financial institutions (each, an "Assignee"), and the Borrowers and the
Guarantor agree that they shall execute, or cause to be executed, such
documents, including without limitation, amendments to this Agreement and to any
other documents, instruments and agreements executed in connection herewith as
Bank shall deem necessary to effect the foregoing. In addition, at the request
of the Bank and any such Assignee, the Borrowers shall issue one or more new
promissory notes, as applicable, to any such Assignee and, if the Bank has
retained any of its rights and obligations hereunder following such assignment,
to the Bank, which new promissory notes shall be issued in replacement of, but
not in discharge of, the liability evidenced by the promissory note held by the
Bank prior to such assignment and shall reflect to the amount of the respective
commitments and loans held by such Assignee and the Bank after giving effect to
such assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments and any other documentation required by the Bank in
connection with such assignment, and the payment by Assignee of the purchase
price agreed to by the Bank and such Assignee, such Assignee shall be a party to
this Agreement and shall have all of the rights and obligations of the Bank
hereunder (and under any and all other guaranties, documents, instruments and
agreements executed in connection herewith) to the extent that such rights and
obligations have been assigned by the Bank pursuant to the assignment
documentation between the Bank and such assignee, and the Bank shall be released
from its obligations hereunder and thereunder to a corresponding extent.
Borrowers may furnish any information concerning Borrowers in its possession
from time to time to prospective Assignees, provided that the Bank shall require
any such prospective Assignees to agree in writing to maintain the
confidentiality of such information.
10.14 Consent to Jurisdiction.
The Borrower agrees that any suit related to this Agreement, the Note or
the Ancillary Documents may be brought in the courts of the Commonwealth of
Massachusetts or any federal court sitting therein and consent to the
jurisdiction of such courts and to service of process in any such suit being
made upon the Borrower by mail at the addresses identified herein. The Borrower
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
court.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as a
sealed instrument as of the day and year first above written.
FIBERCORE, INC.
_____________________________ By:_________________________________
Witness
Name:_______________________________
Title:______________________________
FLEET NATIONAL BANK
______________________________ By:_________________________________
Witness
Name:_______________________________
Title:______________________________
