Exhibit 10.6 and 10.7
================================================================================
REVOLVING CREDIT AND TERM LOAN AGREEMENT
BY AND BETWEEN
HI-TECH PHARMACAL CO., INC.
AND
FLEET BANK, N.A.
DATED AS OF FEBRUARY 2, 2000
================================================================================
TABLE OF CONTENTS
-----------------
SECTION 1: DEFINITIONS............................................................ -1-
1.1 Defined Terms.............................................................. -1-
1.2 Accounting Terms........................................................... -8-
SECTION 2: AMOUNT AND TERMS OF LOANS.............................................. -8-
2.1 Loans...................................................................... -8-
2.2 Revolving Credit Commitment................................................ -8-
2.3 Revolving Credit Note...................................................... -9-
2.4 Procedure for Borrowing.................................................... -9-
2.5 Term Loan.................................................................. -10-
2.6 Term Note.................................................................. -10-
2.7 Continuation and Conversion of Loans....................................... -11-
2.8 Payments................................................................... -11-
2.9 Interest................................................................... -12-
2.10 Optional Prepayments; Indemnities.......................................... -13-
2.11 Regulatory Capital Requirements............................................ -14-
2.12 Increased Costs............................................................ -15-
2.13 Change in Legality......................................................... -15-
2.14 Letters of Credit.......................................................... -16-
2.15 Termination of Letter of Credit Obligations:............................... -16-
2.16 Mandatory Payment; Drawings................................................ -16-
2.17 Reimbursement: Master Agreement............................................ -17-
2.18 Use of Proceeds............................................................ -17-
SECTION 3: REPRESENTATIONS........................................................ -17-
3.1 Subsidiaries............................................................... -17-
3.2 Corporate Existence........................................................ -17-
-i-
3.3 Corporate Authority................................................................ -18-
3.4 Binding Agreements................................................................. -18-
3.5 Litigation......................................................................... -18-
3.6 No Conflicting Law or Agreements................................................... -18-
3.7 No Authorization................................................................... -19-
3.8 Compliance with Applicable Laws.................................................... -19-
3.9 Governmental Regulations........................................................... -19-
3.10 Federal Reserve Regulations; Use of Proceeds....................................... -19-
3.11 Contingent Liabilities............................................................. -19-
3.12 Financial Condition................................................................ -20-
3.13 Title to Properties................................................................ -20-
3.14 Taxes.............................................................................. -20-
3.15 Default............................................................................ -20-
3.16 No Burdensome Agreements........................................................... -20-
3.17 ERISA.............................................................................. -21-
3.18 Places of Business................................................................. -21-
3.19 Absence of Certain Changes......................................................... -21-
3.20 Security Documents................................................................. -21-
3.21 Environmental Matters.............................................................. -22-
3.22 Labor Matters...................................................................... -22-
3.23 Inventory and Records Locations.................................................... -22-
3.24 Intellectual Property.............................................................. -22-
3.25 No Misrepresentations.............................................................. -23-
SECTION 4: CONDITIONS TO THE ADVANCES AND TERM LOAN....................................... -24-
4.1 Conditions to the Initial Advance and the Term Loan................................ -24-
4.2 Condition to All Loans and Letters of Credit....................................... -25-
-ii-
4.3 Approval of Bank's Counsel................................................... -26-
SECTION 5: AFFIRMATIVE COVENANTS.................................................... -26-
5.1 Information.................................................................. -26-
5.2 Existence.................................................................... -28-
5.3 Payment of Obligations....................................................... -28-
5.4 Insurance.................................................................... -28-
5.5 Payment of Indebtedness and Performance
of Obligations............................................................... -29-
5.6 Condition of Property........................................................ -29-
5.7 Observance of Legal Requirements............................................. -29-
5.8 Books and Records; Field Audit............................................... -29-
5.9 Financial Requirements....................................................... -29-
5.10 New Subsidiaries............................................................. -30-
5.11 Environmental Compliance..................................................... -30-
SECTION 6: NEGATIVE COVENANTS....................................................... -30-
6.1 Debt......................................................................... -30-
6.2 Limitation on Liens.......................................................... -31-
6.3 Merger, Consolidation and Acquisition of Assets.............................. -31-
6.4 Sale, Transfer and Lease of Assets........................................... -31-
6.5 Contingent Liabilities....................................................... -31-
6.6 Investments; Loans........................................................... -32-
6.7 Sale or Discount of Receivables.............................................. -32-
6.8 Nature of Business........................................................... -32-
6.9 Capital Expenditures; Capitalized Leases..................................... -32-
6.10 Sale and Leaseback........................................................... -32-
6.11 Dividends and Purchase of Stock.............................................. -33-
-iii-
6.12 No Lien Senior to or Equal to Loan Documents.................................... -33-
6.13 Transactions with Affiliates.................................................... -33-
6.14 Change of Management............................................................ -33-
6.15 Changes......................................................................... -33-
SECTION 7: EVENTS OF DEFAULT........................................................... -34-
7.1 Events of Default............................................................... -34-
7.2 Remedies on Default............................................................. -36-
SECTION 8: COLLATERAL SECURITY......................................................... -36-
8.1 Collateral Security............................................................. -36-
8.2 Additional Collateral Security.................................................. -37-
SECTION 9: MISCELLANEOUS............................................................... -37-
9.1 Consents to Amendments.......................................................... -37-
9.2 Survival of Representations..................................................... -37-
9.3 Successors and Assigns.......................................................... -37-
9.4 Liability in Acting............................................................. -38-
9.5 The Bank's Rights Not Waived; Cumulative Rights................................. -38-
9.6 Expenses........................................................................ -38-
9.7 Other Agreements................................................................ -38-
9.8 Repayment....................................................................... -39-
9.9 Judicial Proceedings............................................................ -39-
9.10 Entire Agreement................................................................ -39-
9.11 Further Assurances.............................................................. -40-
9.12 Headings........................................................................ -40-
9.13 Notices......................................................................... -40-
9.14 Authority to Disclose........................................................... -41-
9.15 Severability.................................................................... -41-
-iv-
9.16 Counterparts................................................... -41-
9.17 Right of Set-off............................................... -41-
9.18 Pledge to Federal Reserve Bank................................. -42-
9.19 Participations................................................. -42-
9.20 Lost Documents................................................. -42-
SECTION 10: WAIVER OF RIGHT TO JURY TRIAL............................. -42-
SECTION 11: GOVERNING LAW.............................................. -43-
SCHEDULES.............................................................. -44-
EXHIBIT A.............................................................. -45-
EXHIBIT B.............................................................. -48-
-v-
REVOLVING CREDIT AND TERM LOAN AGREEMENT
----------------------------------------
THIS AGREEMENT made as of the 2nd day of February, 2000 by and between HI-
TECH PHARMACAL CO., INC., a Delaware corporation, with its principal place of
business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000 (the "Company") and
FLEET BANK, N.A., a national banking association, having a place of business
located at 000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Bank").
W I T N E S S E T H:
SECTION 1: DEFINITIONS
-----------
1.1 Defined Terms: As used in this Agreement the following terms have the
-------------
following meanings, unless the context otherwise requires:
Advance or Advances: shall mean, collectively, all advances made
-------------------
pursuant to Section 2.2 hereof.
Affiliate: shall mean a Person (1) which directly or indirectly
---------
controls, or is controlled by, or is under common control with the Company, (2)
which directly or indirectly beneficially owns or holds five (5%) percent or
more of any class of voting stock of the Company, or (3) five (5%) percent or
more of the voting stock of which is directly or indirectly beneficially owned
or held by the Company. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
Agreement: shall mean this Revolving Credit and Term Loan Agreement,
---------
as the same from time to time may be amended, supplemented or modified.
Bank Obligations: shall mean all present and future obligations and
----------------
Debt of the Company to the Bank under this Agreement, any other Loan Document or
any other agreement, document, instrument or otherwise owing to the Bank,
including, without limitation, the obligation to pay the Debt evidenced by the
Notes, and the obligations to pay interest (including interest accruing
subsequent to the commencement of bankruptcy, insolvency or similar proceedings
with respect to the Company) and other fees, expenses, and charges from time to
time owed hereunder or under any other Loan Document.
Business Day: shall mean any day other than a Saturday, Sunday, or
------------
other day on which commercial banks in New York are authorized or required to
close under the laws of New York, and, if
the applicable day relates to a LIBOR Rate Loan or an interest period for a
LIBOR Rate Loan, the day on which dealings in dollar deposits are also carried
on in the London interbank market and banks are open for business in London.
Capital Expenditures: shall mean for any period, the aggregate amount
--------------------
of all payments made by any Person directly or indirectly for the purpose of
acquiring, constructing or maintaining fixed assets, real property or equipment
which, in accordance with GAAP, would be added as a debit to the fixed asset
account of such Person, including, without limitation, all amounts paid or
payable with respect to Capitalized Lease Obligations and interest which are
required to be capitalized in accordance with GAAP.
Capitalized Lease Obligations: shall mean as to any Person, the
-----------------------------
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
CERCLA: shall mean the Comprehensive Environmental Response,
------
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et seq., as
amended from time to time, or any successor thereto, and the rules and
regulations issued thereunder, as from time to time in effect.
Collateral: shall mean the collateral as described in Section 8.2
----------
hereof.
Debt: shall mean (1) indebtedness or liability for borrowed money or
----
for the deferred purchase price of property or services (including trade
obligations); (2) obligations as lessee under capital leases; (3) current
liabilities in respect of unfunded vested benefits under any Plan; (4)
obligations under letters of credit issued for the account of any Person; (5)
all guaranties, endorsements (other than for collection or deposit in the
ordinary course of business), and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person, or otherwise
to assure a creditor against loss; and (6) obligations secured by any Lien on
property owned by the Person, whether or not the obligations have been assumed.
Default: shall mean any of the events specified in Section 7.1
-------
hereof, whether or not any requirement for notice or lapse of time or any other
condition has been satisfied.
-2-
Environmental Laws: shall mean all environmental, health and safety
------------------
laws, rules and regulations, and ordinances, including, without limitation: (i)
CERCLA and all other federal, state and local rules and regulations, ordinances,
decrees, criteria and guidelines, and all other similar documents and
instruments of all courts and Governmental Authorities, bureaus and agencies,
whether issued by environmental regulatory agencies or otherwise, and (ii) all
federal, state and local laws, regulations, resolutions, ordinances and decrees,
in each case relating to Environmental Matters.
Environmental Liability: shall mean any liability of a Person to any
-----------------------
other Person under Environmental Laws and Regulations and under any other
applicable law relating to any Environmental Matter, and, including, without
limitation, any liability for the costs of any investigation, clean-up or other
remedial action with respect to or in connection with any Environmental Matter.
Environmental Matter: shall mean a release caused by the seeping,
--------------------
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of hazardous wastes or other toxic or
chemical substance, pollutant or contaminant into the environment or the
generation, treatment, storage or disposal of any toxic or hazardous wastes or
other chemical substance, pollutant or contaminant.
Environmental Proceeding: shall mean any judgment, action, proceeding
------------------------
or investigation (including, without limitation, any federal or state
investigation evaluating whether any remedial action is needed to respond to an
Environmental Matter) pending before any court or Governmental Authority, bureau
or agency, including, without limitation, any environmental regulatory agency or
body, with respect to or threatened against or affecting the assets or liability
of a Person, including, without limitation, in respect of any "facility" owned,
leased or operated under CERCLA or under each other Environmental Law in
connection with any Environmental Matter.
ERISA: shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
ERISA Affiliate: shall mean any trade or business (whether or not
---------------
incorporated) which together with the Company would be treated as a single
employer under Section 4001 of ERISA.
Event of Default: shall mean any of the events specified in Section
----------------
7.1 hereof, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
-3-
Fluctuating Rate Loans: shall mean any Loan bearing interest based on
----------------------
the Prime Rate.
FNB: shall mean Fleet National Bank.
---
GAAP: shall mean generally accepted accounting principles as from
----
time to time in effect, including the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied.
Governmental Authority: shall mean any foreign, federal, state,
----------------------
municipal or other government, or any department, commission, board, bureau,
agency, public authority or instrumentality thereof or any court or arbitrator.
Installment Payment Date: shall mean any date on which all or any
------------------------
portion of the principal amount of a Term Loan is due and payable.
Interest Period: shall mean any period during which a Loan bears
---------------
interest as a LIBOR Rate Loan as elected by the Company in accordance with the
terms of this Agreement.
(a) If any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next succeeding
Business Day unless such Interest Period is with respect to a LIBOR Rate Loan
and the result of such extension would be to extend such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Business Day.
(b) No Interest Period shall extend beyond a stated Maturity Date.
LIBOR Rate: shall mean, as applicable to any LIBOR Rate Loan, the
----------
rate per annum (rounded upward, if necessary, to the nearest 1/32 of one
percent) as determined on the basis of the offered rates for deposits in U.S.
dollars, for a period of time comparable to such LIBOR Rate Loan which appears
on the Telerate page 3750 as of 11:00 a.m. London time on the day that is two
London Banking Days preceding the first day of such LIBOR Rate Loan; provided,
however, if the rate described above does not appear on the Telerate System on
any applicable interest determination date, the LIBOR rate shall be the rate
(rounded upwards as described above, if necessary) for deposits in dollars for a
period substantially equal to the interest period on the Reuters Page "LIBO" (or
such other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the day that is two
(2) London Banking Days prior to the beginning of such interest period.
-4-
"Banking Day" shall mean, in respect of any city, any date on which commercial
banks are open for business in that city.
If both the Telerate and Reuters system are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such LIBOR Rate Loan 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) London Banking Days preceding
the first day of such LIBOR Rate Loan as selected by the Bank. 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 rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S. dollars to leading European banks for a period of time comparable to
such LIBOR Rate Loan offered by major banks in New York City at approximately
11:00 a.m. New York City time, on the day that is two London Banking Days
preceding the first day of such LIBOR Rate Loan. In the event that the Bank is
unable to obtain any such quotation as provided above, it will be deemed that
LIBOR pursuant to a LIBOR Rate Loan cannot be determined. In the event that the
Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of the Bank, then for any period
during which such Reserve Percentage shall apply, LIBOR shall be equal to the
amount determined above divided by an amount equal to 1 minus the Reserve
Percentage. "Reserve Percentage" shall mean the maximum aggregate reserve
requirement (including all basic, supplemental, marginal and other reserves)
which is imposed on member banks of the Federal Reserve System against "Euro-
currency Liabilities" as defined in Regulation D.
LIBOR Rate Loan: shall mean a Loan bearing interest at a LIBOR based
---------------
rate.
Lien: shall mean any mortgage, deed of trust, pledge, security
----
interest, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing), any conditional sale or other title retention or
trust agreement, any lease in the nature thereof, and the filing or recording of
or agreement to give any financing statement or other document to be filed or
recorded under the Uniform Commercial Code of any jurisdiction.
Loan or Loans: shall mean, collectively, the Advances and the Term
-------------
Loan.
Loan Documents: shall mean the Notes, the Security Agreement, UCC-1
--------------
financing statements and UCC-3 amendments thereto,
-5-
the Master Agreement and any other documents executed by or on behalf of the
Company in connection herewith or therewith.
Master Agreement: shall mean that certain ISDA Master Agreement dated
----------------
as of February 2, 2000 entered into between the Company and FNB.
Material Adverse Change: shall mean a material adverse change in the
-----------------------
business, operations, results of operations, assets, liabilities or financial
condition of the Company or the Collateral, in each case as determined by the
Bank in its sole discretion.
Maturity Date: shall mean the date that all or a portion of the
-------------
outstanding principal balance of a Loan is due and payable pursuant to the terms
hereof which shall include without limitation the Termination Date, each
Installment Payment Date and the final maturity date of the Term Loan.
Multiemployer Plan: shall mean a Plan described in Section 4001(a)(3)
------------------
of ERISA which covers employees of the Company or an ERISA Affiliate.
Note or Notes: shall mean, collectively, the Revolving Credit Note
-------------
and the Term Note.
Officers' Certificate: shall mean a certificate signed in the name of
---------------------
the Company by its President, or one of its Vice Presidents, and by its
Treasurer or Secretary.
PBGC: shall mean the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA.
Person: shall mean and include an individual, a partnership, a firm,
------
a corporation, a trust, a joint venture, a limited liability company, an
unincorporated organization and a government or any department or agency
thereof.
Plan: shall mean any plan referred to in Section 4021(a) of ERISA in
----
respect of which the Company or an ERISA Affiliate is an "employer" or a
"substantial employer" as said terms are defined in Sections 3(5) and 4001(a)(2)
of ERISA, respectively.
Post Default Rate: shall mean at any time a rate of interest equal to
-----------------
four (4%) percent per annum in excess of the otherwise applicable rate.
-6-
Prime Rate: shall mean the variable per annum rate of interest so
----------
designated from time to time by the Bank as its prime rate. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate being
charged to any customer. Changes in the rate of interest resulting from changes
in the Prime Rate shall take place immediately without notice or demand of any
kind.
Prohibited Transaction: means any transaction set forth in Section
----------------------
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended
from time to time.
Reportable Event: shall mean any of the events set forth in Section
----------------
4043(b) of ERISA.
Requirement of Law: shall mean, with respect to any Person, articles
------------------
of organization, the certificate of limited partnership, partnership agreement,
charter and by-laws, or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon or affecting any such Person or any of its property or to
which such Person or any of its property is subject.
Revolving Credit Commitment: shall have the meaning assigned in
---------------------------
Section 2.2 hereof.
Revolving Credit Commitment Period: shall mean the period from and
----------------------------------
including the date hereof to, but not including, the Termination Date or such
earlier date as the Revolving Credit Commitment shall terminate as provided
herein.
Revolving Credit Note: shall have the meaning assigned in Section 2.3
---------------------
hereof.
Security Agreement: shall have the meaning assigned in Section 4.1(b)
------------------
hereof.
Subsidiary: shall mean any corporation, association, partnership,
----------
joint venture or other business entity of which the Company, directly or
indirectly, either (a) in respect of a corporation, owns or controls 50% or more
of the outstanding stock having ordinary voting power to elect a majority of the
board of directors or similar managing body, irrespective of whether or not a
class or classes shall or might have voting power by reason of the happening of
any contingency, or (b) in respect of an association, partnership, joint venture
or other business entity, either (i) owns 50% or more of the ownership
interests therein or (ii) is otherwise entitled to share in 50% or more of the
profits and losses, however determined.
-7-
Tangible Net Worth: shall mean, at any date, the net book value of
------------------
assets of the Company (other than patents, patent rights, trademarks, trade
names, franchises, copyrights, licenses, permits, goodwill and other intangible
assets classified as such in accordance with GAAP) after all appropriate
adjustments in accordance with GAAP (including, without limitation, reserves for
doubtful receivables, obsolescence, depreciation and amortization) plus Debt
subordinated to the Bank on terms satisfactory to the Bank less liabilities of
the Company, in each case computed in accordance with GAAP.
Taxes: shall mean any federal, state, local or foreign income, sales,
-----
use, transfer, payroll, personal, property, occupancy, franchise or other tax,
levy, impost, fee, imposition, license fee, assessment or similar charge,
together with any interest or penalties thereon.
Term Loan: shall mean the term loan referred to in Section 2.5
---------
hereof.
Term Note: shall mean have the meaning assigned in Section 2.6
---------
hereof.
Termination Date: shall mean February 2, 2003.
----------------
1.2 Accounting Terms: Each accounting term not defined in this Agreement,
----------------
and each accounting term partly defined in this Agreement, to the extent not
defined, shall have the meaning given to it under GAAP consistently applied.
SECTION 2: AMOUNT AND TERMS OF LOANS
-------------------------
2.1 Loans: Subject to the terms and conditions of this Agreement, the
-----
Bank agrees to make Loans to the Company, whether Advances or Term Loans, as
provided for herein.
2.2 Revolving Credit Commitment: Subject to the terms and conditions
---------------------------
hereof, the Bank agrees to extend credit to the Company (a) by making loans
(each such loan being hereinafter called an "Advance") to the Company from time
to time during the Revolving Credit Commitment Period or (b) by issuing Letters
of Credit for the Company up to an aggregate stated amount at any one time
outstanding of Two Hundred Thousand and 00/100 ($200,000.00) Dollars pursuant to
Section 2.14 hereof during the Revolving Credit Commitment Period provided that
at any time the sum of (i) the aggregate principal amount of the Advances plus
(ii) the aggregate stated amount of the Letters of Credit shall not exceed at
any one time outstanding Six Million and 00/100 ($6,000,000.00) Dollars (the
"Revolving Credit Commitment"). During the Revolving Credit
-8-
Commitment Period, the Company may use the Revolving Credit Commitment by
borrowing, paying and prepaying in whole or in part and reborrowing, in
accordance with the terms and conditions hereof.
2.3 Revolving Credit Note: The Advances made by the Bank pursuant to
---------------------
Section 2.2 hereof shall be evidenced by a promissory note of the Company,
payable to the order of the Bank, substantially in the form of Exhibit A hereto,
with blanks appropriately completed (the "Revolving Credit Note") representing
the obligation of the Company to pay the lesser of (a) the Revolving Credit
Commitment or, (b) the aggregate unpaid amount of all Advances made by the Bank
plus interest. The Revolving Credit Note shall bear interest on the unpaid
principal balance thereof from time to time outstanding at a rate per annum to
be elected by the Company in accordance with the notice provisions set forth in
Section 2.4 hereof, and in the case of LIBOR Rate Loans for the Interest Periods
of one, two, three or six months as therein specified, equal to either (1) the
LIBOR Rate plus 1.50%, or (2) the Prime Rate (which interest rate will change
when and as the Prime Rate changes). In all cases interest shall be computed on
the basis of a 360-day year for actual days elapsed and shall be payable as
provided in Section 2.8(a) hereof. After any stated or accelerated maturity, the
Revolving Credit Note shall bear interest at the Post Default Rate. The
Revolving Credit Note shall be dated the date of this Agreement, be payable to
the order of the Bank and be stated to mature on the Termination Date. The Bank
is hereby irrevocably authorized by the Company to enter on the schedule
attached to the Revolving Credit Note the amount of each Advance made by it,
each payment thereon, and the other information provided for on such schedule;
provided, however, that the failure to make any such entry with respect to any
Advance shall not limit or otherwise affect the obligation of the Company to
repay the same and, in all events, the principal amount owing by the Company in
respect to the Revolving Credit Note shall be the aggregate amount of all
Advances made by the Bank less all payments of principal thereon made by the
Company. The Bank may attach one or more continuations to such schedule as and
when required. The aggregate unpaid principal balance of the Advances set forth
on the schedule attached to its Revolving Credit Note shall be presumptive
evidence of the principal amount owing and paid thereon.
2.4 Procedure for Borrowing: The Company may borrow under the Revolving
-----------------------
Credit Commitment during the Revolving Credit Commitment Period on any Business
Day by giving the Bank irrevocable notice of a request for an Advance hereunder
at least one (1) Business Day but no more than four (4) Business Days before a
proposed borrowing, or at least three (3) Business Days but no more than four
(4) Business Days if the Advance will be a LIBOR Rate Loan, or continuation,
setting forth (i) the amount of the Loan request, which shall, in the case of
LIBOR Rate Loans, not be less than Two
-9-
Hundred Fifty Thousand ($250,000.00) Dollars and integral multiples of One
Hundred Thousand ($100,000.00) Dollars in excess thereof, and, in the case of
Fluctuating Rate Loans, not be less than One Hundred Thousand ($100,000.00)
Dollars and integral multiples of One Hundred Thousand ($100,000.00) Dollars in
excess thereof, (ii) whether the Advance shall be a Fluctuating Rate Loan or a
LIBOR Rate Loan, (iii) the requested Interest Period commencement date, and (iv)
the length of the Interest Period therefor which shall not extend beyond the
Termination Date. Such notice shall be written (including, without limitation,
via facsimile transmission) and shall be sufficient if received by 1:00 p.m. on
the date on which such notice is to be given. Unless notification is otherwise
furnished by the Company to the Bank (in a manner consistent with the
requirements of this Section 2.4), Loans will be made by credits to the
Company's demand deposit account maintained with the Bank upon compliance with
the requirements of this Agreement. If the Company furnishes such notice but no
election is made as to the Interest Period to be applicable thereto, the Loan
will automatically then be made as a Fluctuating Rate Loan until such required
information is furnished pursuant to the terms hereof.
2.5 Term Loan: Subject to the terms and conditions hereof, the Bank
---------
agrees to make a term loan (the "Term Loan") to the Company on the date hereof
in the principal amount of $449,973.00. The Term Loan shall bear interest at a
rate per annum to be elected by the Borrower at closing and continued or
converted in accordance with the requirements of Section 2.7 hereof, equal to
(y) the Prime Rate in effect from time to time or (z) the LIBOR Rate for a one
month Interest Period plus 1.50% which, at the Company's option, may be swapped
into a fixed rate equivalent in accordance with the Master Agreement.
2.6 Term Note: The Term Loan shall be evidenced by a promissory note of
---------
the Company substantially in the form of Exhibit B hereto with appropriate
insertions (the "Term Note") payable to the order of the Bank and dated the date
of the Term Loan. The principal amount of the Term Note shall be payable in
twenty-one (21) consecutive monthly installments, the first twenty (20) of which
shall be in an amount equal to $21,429.00 each, and the final installment to be
in the amount equal to the then unpaid principal balance, payable on the first
day of each month commencing March 1, 2000 until November 1, 2001 when the
entire unpaid principal balance of the Term Note together with all interest
accrued and unpaid shall be paid in full. In all cases, interest shall be
computed on the basis of a 360 day year for actual days elapsed and shall be
payable as provided in Section 2.8(a) hereof. After any stated or accelerated
maturity thereof, the Term Note shall bear interest at the Post Default Rate.
-10-
2.7 Continuation and Conversion of Loans: The Company shall have the
------------------------------------
right at any time on prior irrevocable written notice to the Bank (i) to
continue any Loan into a subsequent Interest Period and (ii) to convert any Loan
into another type of Loan permitted by this Agreement (specifying, in the case
of LIBOR Rate Loan, the Interest Period to be applicable thereto), subject to
the following:
(a) in the case of a conversion of less than all of the outstanding
Loans, the aggregate principal amount of Loans converted shall not be less than
the minimum amounts and multiples thereof specified in Section 2.4 hereof; and
(b) no Loan (other than a Fluctuating Rate Loan) shall be converted
at any time other than at the end of an Interest Period applicable thereto.
In the event that the Company shall not give notice to continue a Loan into
a subsequent Interest Period, such Loan (unless prepaid) shall automatically be
converted into a Fluctuating Rate Loan. The Interest Period resulting from a
conversion shall be specified by the Company in the irrevocable notice delivered
by the Company pursuant to this Section and Section 2.4 hereof; provided,
--------
however, that, if such notice does not specify the Interest Period to be
-------
applicable thereto, the Loan shall automatically be converted into, or continued
as, as the case may be, a Fluctuating Rate Loan until such required information
is furnished pursuant to the terms hereof. Notwithstanding anything to the
contrary contained above, if an Event of Default shall have occurred and is
continuing, no Loan may be continued into a subsequent Interest Period and no
Fluctuating Rate Loan may be converted into a Fixed Rate Loan.
2.8 Payments:
--------
(a) Interest accrued on each Loan shall be payable, in arrears
without duplication, on:
(i) the Maturity Date of such Loan (excluding any Installment
Payment Date unless interest would otherwise be payable on such Installment
Payment Date pursuant to subsections (ii) - (vi) below);
(ii) with respect to any portion of any Loan repaid or prepaid
pursuant to this Agreement, the date of such repayment or prepayment, as the
case may be;
(iii) the first day of each month, commencing with the first
such date following the date of the making of the Loans; and
-11-
(iv) with respect to that portion of the outstanding principal amount
converted into Fluctuating Rate Loans or Fixed Rate Loans on a day when interest
would not otherwise have been payable pursuant to Section 2.8(a)(iii), the date
of such conversion.
(b) All payments (including prepayments) to be made by the Company on
account of principal or interest with respect to any Loan or on account of fees
or any other obligations of the Company to the Bank hereunder shall be charged
to a demand deposit account maintained by the Borrower with the Bank. If any
payment to be so made hereunder, or under a Note, becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day and, to the extent permitted by applicable law, interest
thereon shall be payable at the then applicable rate during such extension.
(c) If the entire amount of any required principal and/or interest
payment is not paid in full within ten (10) days after the same is due, the
Company shall pay to the Bank a late fee equal to three (3%) percent of the
required payment.
2.9 Interest: (a) The Company shall give irrevocable written notice
--------
to the Bank of its election of interest rate options upon the time period set
forth in and containing the information required by Section 2.4 hereof.
(b) The interest rate applicable to the Note, while a fluctuating
rate is in effect, shall change when and as the Prime Rate is changed, and any
such change in the Prime Rate shall become effective on the day on which such
change is adopted.
(c) Interest on the Loans shall be computed on the basis of a year of
three hundred sixty (360) days for actual days elapsed (including the first but
excluding the last) occurring in the period for which payable.
(d) If all or a portion of the principal or interest of any Loan
shall not be paid when due (whether at the stated or any accelerated maturity of
such Loan) or if any fee or other amount due hereunder shall not be paid when
due, the Company's right to select pricing options shall cease, all Loans, and
such interest, fee or amount due hereunder, to the extent permitted by
applicable law, shall bear interest (payable on demand, and in any event on the
first day of each month, and computed daily on the basis of a 360-day year for
actual days elapsed) at the Post Default Rate.
(e) All agreements between the Company and the Bank are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the Notes or otherwise, shall the amount
paid or agreed to be paid to
-12-
the Bank for the use or the forbearance of the Notes 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 the Notes 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 Company and the Bank in the execution, delivery and acceptance of the Notes
to contract in strict compliance with the laws of the State of New York from
time to time in effect. If, under or from any circumstances whatsoever,
fulfillment of any provision hereof or 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 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 the Company and the
Bank.
2.10 Optional Prepayments; Indemnities: (a) Subject to the provisions
---------------------------------
of (b) below, the Company may at its option at any time or from time to time
prepay a Loan in whole or in part, without premium or penalty, upon at least one
(1) Business Day prior written notice to the Bank specifying the date and the
amount of prepayment. Partial prepayments shall be in the amount of One Hundred
Thousand and 00/100 ($100,000.00) Dollars or an integral multiple thereof and
each prepayment shall be made together with interest accrued thereon to and
including the date of prepayment. The Company may not prepay any Loan (other
than a Fluctuating Rate Loan) prior to the last day of the Interest Period
therefor. Any partial prepayment of the Term Loan shall be applied to the last
maturing installments in inverse order of their respective maturities.
(b) The Company may prepay a LIBOR Rate Loan only upon at least three
(3) Business Days prior written notice to the Bank (which notice shall be
irrevocable), and any such prepayment shall occur only on the last day of the
Interest Period for such LIBOR Rate Loan. The Company shall pay to the Bank,
upon request of the Bank, such amount or amounts as shall be sufficient (in the
reasonable opinion of the Bank) to compensate it for any loss, cost, or expense
incurred as a result of: (i) any payment of a LIBOR Rate Loan on a date other
than the last day of the Interest Period for such Loan; (ii) any failure by the
Company to borrow a LIBOR Rate Loan on the date specified by the Company's
written notice; (iii) any failure by the Company to pay a LIBOR Rate Loan on the
date for payment specified in the Company's written notice. Without limiting
the foregoing, the Company shall pay to the Bank
-13-
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 term chosen
pursuant to the Fixed Rate Election as to which the prepayment is made, shall be
subtracted from the LIBOR in effect at the time of prepayment. If the result is
zero or a negative number, there shall be no yield maintenance fee. If the
result is a positive number, then the resulting percentage shall be multiplied
by the amount of the principal balance being prepaid. The resulting amount shall
be divided by 360 and multiplied by the number of days remaining in the term
chosen pursuant to the Fixed Rate Election as to which the prepayment is made.
Said amount shall be reduced to present value calculated by using the above
referenced United States Treasury securities rate and the number of days
remaining in the term chosen pursuant to the Fixed Rate Election as to which
prepayment is made. The resulting amount shall be the yield maintenance fee due
to the Bank upon the payment of a LIBOR Rate Loan. Each reference in this
paragraph to "Fixed Rate Election" shall mean the election by the Company of the
LIBOR Rate. If by reason of an Event of Default, the Bank elects to declare the
Note to be immediately due and payable, then any yield maintenance fee with
respect to a LIBOR Rate Loan shall become due and payable in the same manner as
though the Company had exercised such right of prepayment.
If by reason of an Event of Default the Bank elects to declare a Note to be
immediately due and payable, then any amounts due pursuant hereto shall become
due and payable in the same manner as though the Company had exercised such
right of prepayment.
A certificate as to any additional amounts payable pursuant to this Section
2.10 setting forth the basis and method of determining such amounts shall be
conclusive, absent manifest error, as to the determination by the Bank set forth
therein if made reasonably and in good faith. The Company shall pay any amounts
so certified to it by the Bank within ten (10) days of receipt of any such
certificate. For purposes of this Section 2.10, all references to the "Bank"
shall be deemed to include any participant in the Revolving Credit Commitment
and/or the Term Loan.
2.11 Regulatory Capital Requirements: If any existing or future law,
-------------------------------
regulation, or guideline or the interpretation thereof by any court or
administrative or Governmental Authority charged with the administration
thereof, or compliance by the Bank with any request or directive (whether or not
having the force of law) of any such authority, imposes, modifies, deems
applicable or results in the application of any capital maintenance, capital
ratio or similar requirement against loan commitments made by the Bank (or
participations therein) or the Bank in anticipation of the effectiveness of any
capital maintenance, capital ratio or similar requirement takes reasonable
action to enable itself to comply
-14-
therewith, and the result thereof is to impose upon the Bank or increase any
capital requirement applicable as a result of the making or maintenance of the
Revolving Credit Commitment or participations therein (which imposition of or
increase in capital requirements may be determined by the Bank's reasonable
allocation of the aggregate of such capital impositions or increases) then,
within fifteen (15) days after demand by the Bank, the Company shall immediately
pay to the Bank from time to time as specified by the Bank additional fees which
shall be sufficient to compensate the Bank for such impositions of or increase
in capital requirements, together with interest on each such amount from fifteen
(15) days after the date demanded until payment in full thereof at the Post
Default Rate. A certificate setting forth in reasonable detail the computation
of the amounts necessary to compensate the Bank as a result of an imposition of
or increase in capital requirements submitted by the Bank to the Company shall
be conclusive, absent manifest error or bad faith, as to the amount thereof.
2.12 Increased Costs. If the Bank determines that the effect of any
---------------
applicable law or government regulation, guideline or order or the
interpretation thereof by any Governmental Authority charged with the
administration thereof (such as, for example, a change in official reserve
requirements which the Bank is required to maintain in respect of loans or
deposits or other funds procured for funding such loans) is to increase the cost
to the Bank of making or continuing Loans hereunder or to reduce the amount of
any payment of principal or interest receivable by the Bank thereon, then the
Company will pay to the Bank on demand such additional amounts as the Bank may
determine to be required to compensate the Bank for such additional costs or
reduction. Any additional payment under this Section will be computed from the
effective date at which such additional costs have to be borne by the Bank. A
certificate as to any additional amounts payable pursuant to this Section 2.12
setting forth in reasonable detail the basis and method of determining such
amounts shall be conclusive, absent manifest error, as to the determination by
the Bank set forth therein if made reasonably and in good faith. The Company
shall pay any amounts so certified to it by the Bank within ten (10) days of
receipt of any such certificate. For purposes of this Section 2.12 all
references to a "Bank" shall be deemed to include any participant in the Bank's
Revolving Credit Commitment and/or the Loans.
2.13 Change in Legality: (a) Notwithstanding anything to the contrary
------------------
herein contained, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for the Bank to
make or maintain any LIBOR Rate Loan, then, by written notice to the Company,
the Bank may:
-15-
(i) declare that LIBOR Rate Loans will not thereafter be made
by the Bank hereunder, whereupon the Company shall be prohibited from requesting
LIBOR Rate Loans from the Bank hereunder unless such declaration is subsequently
withdrawn; and
(ii) require that all outstanding LIBOR Rate Loans made by it be
converted to Fluctuating Rate Loans, in which event (x) all such Revolving
Credit Loans made by the Bank shall be automatically converted to Fluctuating
Rate Loans as of the effective date of such notice as provided in paragraph (b)
below and (y) all payments and prepayments of principal which would otherwise
have been applied to repay the converted LIBOR Rate Loans shall instead be
applied to repay the Fluctuating Rate Loans resulting from the conversion of
such Revolving Credit Loans.
(b) For purposes of this Section 2.13, a notice to the Company by the
Bank pursuant to paragraph (a) above shall be sent and deemed effective in
accordance with the provisions of Section 9.13 hereof and (ii) for purposes of
this Section 2.13 all references to a "Bank" shall be deemed to include any
participant in the Bank's Revolving Credit Commitment and/or the Loans.
2.14 Letters of Credit: Each Letter of Credit shall be issued by the
-----------------
Bank upon receipt and processing of the Bank's normal letter of credit
application provided that the Bank need not issue any Letter of Credit that
would extend beyond the Termination Date or has a stated amount of less than Ten
Thousand ($10,000.00) Dollars. Letters of Credit issued hereunder shall be
utilized for the import of raw materials or inventory and shall have terms of no
more than 180 days. The Company shall pay to the Bank, upon issuance of the
Letter of Credit, a letter of credit commission in the amount of one (1%)
percent per annum of the stated amount of the Letter of Credit calculated to the
expiration date of the Letter of Credit plus the Bank's standard processing fees
from time to time in effect.
2.15 Termination of Letter of Credit Obligations: Notwithstanding
-------------------------------------------
anything to the contrary herein, if any restriction is imposed on the Bank
(including without limitation any change in or limitation upon letters of
credit) which would prevent the Bank from issuing Letters of Credit or
maintaining its obligation to issue Letters of Credit then the Bank may, by
notice to the Company in writing, terminate such obligations hereunder.
2.16 Mandatory Payment; Drawings: The Company is obligated, and
---------------------------
hereby unconditionally agrees to pay immediately to the Bank an amount equal to
any drawing on a Letter of Credit on the date of such drawing. If the Company
shall fail to make any such payment to the Bank the payment made by the Bank
under any such Letter of Credit shall immediately constitute, without necessity
of further act or evidence, an Advance repayable on demand.
-16-
2.17 Reimbursement: Master Agreement. In the event that the Company
-------------------------------
fails to pay any amount that is due and owing to FNB under and pursuant to the
Master Agreement (after giving effect to any applicable grace period), then upon
demand by FNB, in its sole discretion, the Bank shall pay such amount directly
to FNB for the account of the Company and the Company hereby authorizes and
consents to such payment by the Bank. The Company agrees that (i) FNB shall
have no obligation to demand that the Bank advance such funds on behalf of the
Company, (ii) the making of such a demand by FNB will not create any obligation
to make such a demand in the future and (iii) at all times, FNB may choose not
to make such demand and choose, instead, to exercise its rights under the Master
Agreement. It shall be an additional obligation of the Company to reimburse the
Bank for any amount the Bank may pay on account of any amount that is due and
owing by the Company to FNB. Such additional obligation shall be due upon
demand and shall bear interest at the Post Default Rate from, and including, the
date of payment by the Bank to, but excluding, the date the Company reimburses
the Bank for such additional obligation. The Company hereby authorizes and
directs the Bank to charge any operating account of the Company maintained at
any office of the Bank for any such payments. FNB is an intended third-party
beneficiary of the Bank's obligations under this Section 2.17.
2.18 Use of Proceeds: The Company hereby covenants and agrees that
---------------
the proceeds of the initial Advance will be used to repay in full, on the date
hereof, indebtedness outstanding under the revolving credit agreement between
the Company and the Bank dated January 23, 1992, which facility shall then be
canceled, and thereafter for working capital support. Proceeds of the Term Loan
will be used to repay in full the indebtedness outstanding under the term loan
agreement between the Company and the Bank dated May 21, 1997, as amended.
SECTION 3: REPRESENTATIONS
---------------
In order to induce the Bank to enter into this Agreement and to make the
Loans herein provided for the Company hereby represents and warrants to the Bank
that:
3.1 Subsidiaries: The Company has no Subsidiaries.
------------
3.2 Corporate Existence: The Company is a corporation duly organized,
-------------------
validly existing and in good standing under the laws of the State of Delaware,
and has the corporate power to own its assets and to transact the business in
which it is presently engaged and as proposed to be conducted and is duly
qualified as a foreign corporation to do business and is in good standing in
each
-17-
jurisdiction in which the character of the properties owned by it therein or the
transaction of its business makes such qualification necessary.
3.3 Corporate Authority: The execution, delivery and performance of this
-------------------
Agreement, the borrowings hereunder and the execution and delivery of the Loan
Documents and all other documents executed in connection with this Agreement by
the Company have been duly authorized by all requisite corporate action. No
consent or approval of stockholders or consent, approval, license or
authorization of, or registration or declaration with, any governmental or
administrative authority, instrumentality, bureau or agency is required as a
condition to the execution, delivery, validity or enforceability of this
Agreement or the other Loan Documents.
3.4 Binding Agreements: This Agreement and the other Loan Documents
------------------
constitute the valid and legally binding obligations of the Company enforceable
in accordance with their respective terms except as may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights.
3.5 Litigation: Except as set forth on Schedule 3.5 hereof, there are no
----------
actions, suits, proceedings or investigations pending or, to the best knowledge
of the Company, threatened by or against the Company at law or in equity
(whether or not purportedly on behalf of the Company) before or by any Federal
or state court, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which (x) call into question the
enforceability or validity of, or (y) individually or together with such
actions, suits, proceedings and investigations, if adversely determined, would,
in the aggregate, cause a Material Adverse Change, or the ability of the Company
to perform its obligations under this Agreement or any Loan Document. To the
best of its knowledge, the Company is not in default with respect to any order,
decree or judgment of any court, arbitrator or Governmental Authority, bureau or
agency.
3.6 No Conflicting Law or Agreements: There is no charter, by-law or
--------------------------------
provision of any preferred stock of the Company and no provision of any existing
mortgage, indenture, contract, shareholder agreement or other agreement binding
on the Company or affecting its properties, nor is there any existing statute,
rule, regulation, judgment, decree or order applicable to the Company binding
thereon or affecting the property thereof which would conflict with, result in a
breach of or constitute a default thereunder or in any way prevent the
execution, delivery, or carrying out of the terms of this Agreement or the Loan
Documents, or which would result in the creation or imposition of, or the
obligation to create, any Lien upon the property thereof. The Company is not a
party to any contract or agreement or subject to
-18-
any charge or other corporate restriction which materially adversely affects its
business, property, assets or financial condition.
3.7 No Authorization: No authorization or approval or other action by,
----------------
and no notice to or filing with, any Governmental Authority is required for the
due execution, delivery and performance by the Company of this Agreement or any
other of the Loan Documents.
3.8 Compliance with Applicable Laws: The Company is not in default under
-------------------------------
any judgment, order, writ, injunction, decree or decision of any Governmental
Authority applicable to the Company. The Company is in compliance in all
material respects with all statutes and regulations of all Governmental
Authorities.
3.9 Governmental Regulations: The Company is not subject to regulation
------------------------
under the Public Utility Holding Company Act of 1935, the Federal Power Act or
the Investment Company Act of 1940, and the Company is not subject to any
statute or regulation which prohibits or restricts the incurrence of Debt for
borrowed money under this Agreement or the Notes, including, without limitation,
statutes or regulations relative to common or contract carriers or to the sale
of electricity, gas, steam, water, telephone, telegraph or other public utility
services.
3.10 Federal Reserve Regulations; Use of Proceeds: The Company is not
--------------------------------------------
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended ("Margin Stock"). No part of the proceeds of the
Loans will be used, directly or indirectly, for a purpose with violates any law,
rule or regulation of any Governmental Authority, including, without limitation,
the provisions of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System, as amended. No part of the proceeds of the Loans will be
used, directly or indirectly, to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock.
3.11 Contingent Liabilities: Except as indicated on Schedule 3.11
----------------------
hereto, the Company is not liable, directly or indirectly, in connection with
the obligations, stock or dividends of any other Person, whether by guarantee,
endorsement, agreement to supply or advance funds, agreement to purchase or
repurchase goods or services whether or not such goods or services are actually
acquired, or otherwise.
-19-
3.12 Financial Condition: The financial statement of the Company
-------------------
including the balance sheet of the Company as of April 30, 1999 together with
the related statements of income, retained earnings and cash flows for the
fiscal year then ended audited by Xxxxxxx X. Xxxxxx & Company, LLP, CPAs and the
interim financial statements of the Company including the balance sheet of the
Company as of October 31, 1999 together with the related statements of income,
retained earnings and cash flows for the period then ended certified by the
chief financial officer of the Company and delivered to the Bank, are complete
and correct and fairly present the financial condition of the Company, and the
results of the Company's operations as of the dates and for the periods referred
to and have been prepared in accordance with GAAP consistently applied
throughout the periods involved. There has been no Material Adverse Change
since the dates of said financial statements.
3.13 Title to Properties: The Company has valid leases on or good and
-------------------
marketable title to its properties and assets including the properties and
assets reflected in the balance sheets described in Section 3.12 hereof. Such
properties and assets of the Company are not subject to any Lien except as
reflected in the financial statements described in Section 3.12 hereof and are
all the properties and assets necessary to the business of the Company as
presently conducted and as proposed to be conducted.
3.14 Taxes: Except as set forth on Schedule 3.14 hereof, the Company
-----
has filed or has obtained extensions for the filing of, all Federal, state and
other tax returns which are required to be filed and have paid or will pay all
taxes shown as due. All the tax liabilities of the Company are adequately
provided for as of the date hereof. The Company has not received any notice from
the Internal Revenue Service or any other taxing authority proposing additional
taxes.
3.15 Default: No Default or Event of Default has occurred and is
-------
continuing, or will occur as the result of the consummation of the transactions
contemplated hereby and the Company is not in default in any material respect in
the observance or performance of any of the covenants, terms or conditions of
any agreement or instrument to which it is a party.
3.16 No Burdensome Agreements: The Company is not a party to any
------------------------
agreement or instrument and the Company is not subject to any Requirement of
Law, or any restriction under its certificate of incorporation or by-laws which
materially adversely affects the business, properties, assets, operations or
financial condition of the Company.
-20-
3.17 ERISA: The Company and each ERISA Affiliate are in compliance in
-----
all material respects with all applicable provisions of ERISA, the violation of
which would cause a Material Adverse Change. Neither a Reportable Event nor a
Prohibited Transaction has occurred and is continuing with respect to any Plan;
no notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstances exist which constitute grounds under Section 4042
of ERISA entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer a Plan, nor has the PBGC instituted such proceedings;
neither the Company nor any ERISA Affiliate has completely or partially
withdrawn under Sections 4201 or 4202 of ERISA from a Multiemployer Plan; the
Company and each ERISA Affiliate have met their minimum funding requirements
under ERISA with respect to all of their Plans and the present fair market value
of all Plan assets exceeds the present value of all vested benefits under each
Plan, as determined on the most recent valuation date of the Plan in accordance
with the provisions of ERISA and the regulations thereunder for calculating the
potential liability of the Company or any ERISA Affiliate to PBGC or the Plan
under Title IV of ERISA; and neither the Company nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
3.18 Places of Business: As of the date hereof, the principal place
------------------
of business and chief executive office of the Company is the address set forth
in Section 9.13, and the books and records of the Company and all chattel paper
and all records of account are located at the principal place of business and
chief executive office of the Company. Upon completion of the new facility at
000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx, such facility shall become the Company's
principal place of business and chief executive office.
3.19 Absence of Certain Changes: Except as set forth on Schedule 3.19
--------------------------
annexed hereto, the Company has not, since the date of its formation, changed
its name, operated or done business under any fictitious, trade or assumed name,
been the surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person.
3.20 Security Documents: (a) The Company owns, and has full authority
------------------
to pledge, assign and grant to the Bank a security interest in, the Collateral.
The provisions of the Security Agreement are effective to create in favor of the
Bank a legal, valid and enforceable security interest in all right, title and
interest of the Company in the Collateral except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by equitable principles
relating to enforceability (where enforcement is sought by proceedings in equity
or law). The financing statements which have been filed in the offices of the
jurisdictions listed on Schedule 3.20(a) hereto
-21-
under the names set forth therein and the Security Agreement constitute and
create a fully perfected first priority security interest in all right, title
and interest of the Company in the Collateral, superior in right to any other
Liens, existing or future, which any Person may have against the Collateral,
except for Liens, if any, permitted by Section 6.2(v) hereof.
(b) Schedule 3.20(b) contains a true and complete list and accurate
description of all real property owned by the Company, of all leasehold
interests of the Company in all real property leased by the Company and of the
leases related thereto including the landlord and owner of such real property
and an accurate description of same.
3.21 Environmental Matters: The Company has complied in all material
---------------------
respects with all applicable Environmental Laws, including, without limitation,
the financial responsibility requirements contained in CERCLA and any analogous
state law. The Company does not manage any hazardous wastes, hazardous
substances, hazardous materials, toxic substances or toxic pollutants in
violation of any Environmental Law or any other applicable law. To the best
knowledge of the Company, there are no known conditions or circumstances
associated with the currently or previously owned or leased properties or
operations of the Company or tenants thereof which may give rise to any
Environmental Liabilities. Except as set forth on Schedule 3.21 hereof, the
Company is not a party to, nor has the Company received written notice or
otherwise learned of any Environmental Proceeding against it, and the Company is
not subject to any threatened or actual Environmental Liability.
3.22 Labor Matters: The Company is not engaged in any unfair labor
-------------
practice. There is (i) no unfair labor practice complaint pending against the
Company or, to the best knowledge of the Company, threatened against the Company
before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under collective bargaining agreements is so
pending against the Company, or to the best of its knowledge, threatened against
the Company and (ii) no strike, labor dispute, slowdown or stoppage pending
against the Company or, to the best knowledge of the Company, threatened against
the Company.
3.23 Inventory and Records Locations: There is no jurisdiction in
-------------------------------
which the Company has any assets other than those jurisdictions listed on
Schedule 3.20(b) and those jurisdictions in which assets are located on a
temporary basis in the ordinary course of business.
3.24 Intellectual Property: The Company possesses or has the right to
---------------------
use all franchises, copyrights, patents, trademarks, trademark rights, trade
names rights, permits, licenses and other rights as are necessary for the
conduct of its business as presently
-22-
conducted and as proposed to be conducted. Schedule 3.24 attached hereto sets
forth (a) all of the federal, state and foreign registrations of trademarks and
of other marks, trade names or other trade rights of the Company and all pending
applications for any such registrations, (b) all of the patents and copyrights
of the Company and all pending applications therefor and (c) all other
trademarks and other marks, trade names and other trade rights used by the
Company in connection with its business (collectively, the "Proprietary
Rights"). The Company is the owner of each of the trademarks listed on Schedule
3.24 indicated as owned by them and no other person, firm, corporation or
association has the right to use any of such marks in commerce. Each of the
trademarks listed on Schedule 3.24 is a federally registered trademark of the
Company having registration numbers and issue dates set forth on Schedule 3.24.
The Proprietary Rights listed on Schedule 3.24 are all those used in the
business of the Company. No person has a right to receive any royalty or similar
payment in respect of any such Proprietary Rights pursuant to any contractual
arrangements entered into by the Company and no person otherwise has a right to
receive any royalty or similar payment in respect of any such Proprietary Rights
in excess in the aggregate of $250,000.00 in any fiscal year. The Company has
not granted any license or sold or otherwise transferred any interest in any of
the Proprietary Rights to any other Person. To the best of the Company's
knowledge, the use of the Proprietary Rights by the Company is not infringing
upon or otherwise violating the rights of any third party in or to such
Proprietary Rights, and no proceedings have been instituted against or notices
received by the Company that are presently outstanding alleging that the use of
their Proprietary Rights infringes upon or otherwise violates the rights of the
Company in any of the Proprietary Rights. All of the Proprietary Rights of the
Company are valid and enforceable rights of the Company and will not cease to be
valid and in full force and effect by reason of the execution and delivery of
this Agreement or the other Loan Documents or the consummation of the
transactions contemplated hereby or thereby.
3.25 No Misrepresentations: No representation or warranty contained
---------------------
herein or in any of the other Loan Documents, and no document, certificate or
report furnished or to be furnished by the Company in connection with the
transactions contemplated hereby and thereby, contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements herein or therein
contained not misleading in the light of the circumstances under which made.
-23-
SECTION 4: CONDITIONS TO THE ADVANCES AND TERM LOAN
----------------------------------------
4.1 Conditions to the Initial Advance and the Term Loan: The obligation
---------------------------------------------------
of the Bank to make the initial Advances and the Term Loan hereunder is subject
to compliance with the following conditions precedent to the satisfaction of the
Bank:
(a) Notes: There shall have been delivered to the Bank the Revolving
-----
Credit Note and the Term Note in proper form duly executed by the Company and
payable to the order of the Bank in the forms of Exhibit A and Exhibit B,
respectively, annexed hereto with blanks appropriately completed.
(b) Security Agreement: There shall have been delivered to the Bank a
------------------
continuing general security agreement of the Company on the Bank's standard form
(the "Security Agreement") covering the personal property of the Company as set
forth therein together with:
(i) security agreement questionnaire executed by the Company,
(ii) landlord waivers executed by each landlord of any location
at which the Company has equipment or inventory,
(iii) UCC-1 financing statements filed in the appropriate
jurisdictions executed by the Company, as debtor, and the Bank, as secured
party, covering the Bank's security interest in all personal property of the
Company and UCC-3 amendments thereto, and
(iv) UCC searches in all appropriate jurisdictions for the
Company.
(c) Insurance: There have been delivered to the Bank true and correct
---------
copies of certificates of insurance, with a responsible insurance carrier having
a rating by A.M. Bests of A or better acceptable to the Bank, listing the Bank
as loss payee and providing 30 days' notice of cancellation.
(d) Opinion of Counsel: There shall have been delivered to the Bank
------------------
an opinion of counsel dated the date of this Agreement in all respects
satisfactory to the Bank and its counsel.
(e) Certified Copies and Other Documents: There shall have been
------------------------------------
delivered to the Bank such certificates and other documents relating to the
Company with respect to the matters herein contemplated as the Bank may request,
including but not limited to:
-24-
(i) Certificate of good standing from the Secretary of State
of Delaware and certificates of authority to do business from each other
jurisdiction in which the Company conducts business and an undertaking letter
with respect to good standing in New York State;
(ii) Certificate of incorporation certified by the Delaware
Secretary of State;
(iii) An Officers' Certificate of the Company dated the date of
this Agreement certifying, (x) true and correct copies of the by-laws of the
Company as in effect on the date of adoption of the resolutions referred to in
(y) of this subsection (iii), (y) true and correct copies of resolutions adopted
by the board of directors of the Company (1) authorizing the borrowings from the
Bank hereunder, the execution and delivery by the Company of this Agreement and
the Loan Documents and the performance by the Company of its obligations under
this Agreement and the Loan Documents and the granting of the lien and security
interest contemplated thereby, (2) approving forms in substantially execution
form of this Agreement and the Loan Documents, and (3) authorizing officers of
the Company to execute and deliver this Agreement and the Loan Documents and any
related documents, and (z) the incumbency and specimen signatures of the
officers of the Company executing any documents delivered to the Bank by the
Company in connection with the Loans.
(f) SWAP Documents. There shall have been delivered to the Bank a
--------------
duly executed Master Agreement and W-9 form.
(g) Fees: The Company shall have paid the reasonable fees and
----
disbursements of the Bank's counsel.
(h) Other Documents: The Bank shall have received such other
---------------
documents as the Bank shall reasonably require.
4.2 Condition to All Loans and Letters of Credit: The obligation of the
--------------------------------------------
Bank to make each subsequent Loan hereunder and to issue any Letter of Credit is
subject to:
(a) Compliance Certificate: Receipt by the Bank of a certificate,
----------------------
dated the date of each Loan, to the effect that:
(i) the Company has complied with all the terms, covenants and
conditions of this Agreement and the Loan Documents to which it is a party;
(ii) there exists no Default or Event of Default; and
-25-
(iii) the representations and warranties contained in Section 3
hereof are true and correct, on the proposed borrowing date, both prior and
after giving effect to the requested Loan.
(b) Material Adverse Change: The Company shall not have had a
-----------------------
Material Adverse Change since the later of the date of this Agreement or the
last borrowing date hereunder.
4.3 Approval of Bank's Counsel: All of the documentation specified in
--------------------------
Sections 4.1 and 4.2 shall be in form and substance satisfactory to the Bank and
their counsel and all legal matters incident to the Loans hereunder shall be
satisfactory to counsel to the Bank.
SECTION 5: AFFIRMATIVE COVENANTS
---------------------
The Company covenants and agrees that, so long as the Revolving Credit
Commitment remains in effect, either Note remains outstanding and unpaid or any
other amount is owing to the Bank hereunder and until the fulfillment of all
obligations hereunder, it will:
5.1 Information: Furnish to the Bank or cause to be furnished to the
-----------
Bank:
(1) Within 120 days after the end of each fiscal year, the Company's
Form 10-K and the financial statements of the Company as of the end of such
fiscal year, which statements shall consist of a balance sheet and related
statements of income, retained earnings and cash flows, all in such reasonable
detail as the Bank may request and prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied and audited by a
firm of independent certified public accountants selected by the Company and
acceptable to the Bank.
(2) Within 60 days after the end of the first six month period of
each fiscal year, the Company's Form 10-Q and the financial statements of the
Company as of the end of such period, which statements shall consist of a
balance sheet, and related statements of income, retained earnings and cash
flows, all in such reasonable detail as the Bank may request, prepared in
accordance with GAAP, consistently applied, and reviewed by a firm of
independent certified public accountants selected by the Company and acceptable
to the Bank.
(3) Promptly after filing with the Securities and Exchange Commission
or any other Governmental Authority succeeding to the functions thereof, all
other regular, periodic and special reports as well as any registration
statements of the Company.
-26-
(4) Concurrently with their distribution to stockholders of the
Company, copies of all proxy statements, financial statements and reports which
the Company sends to its stockholders.
(5) Within 15 days after the close of each month, accounts receivable
aging report in form and detail acceptable to the Bank.
(6) At the time it delivers each of the financial statements
described in (i) and (ii) above, a certificate of the Company's chief financial
officer demonstrating compliance with the Financial Covenants below and stating
that, except as disclosed in such certificate, the person making such
certificate has no knowledge of any default or event of default.
(7) Prompt written notice if: (i) any obligation (other than an
obligation under this Agreement) of the Company for borrowed money or for the
deferred purchase price of any property is declared or shall become due and
payable prior to its stated maturity, (ii) the holder of any note (other than
the Notes), or other evidence of Debt, certificate or security evidencing any
such obligation, has the right to declare such obligation due and payable prior
to its stated maturity, or (iii) to the knowledge of any officer of the Company
there shall occur and be continuing a Default or an Event of Default hereunder.
(8) Prompt written notice of: (i) any citation, summons, subpoena,
order to show cause or other order naming the Company a party to any proceeding
before any Governmental Authority which if adversely determined would have a
material adverse effect on the business, financial condition or operations of
the Company, and include with such notice a copy of such citation, summons,
subpoena, order to show cause or other order, (ii) any lapse or other
termination of a license, permit or other authorization issued to the Company by
any Governmental Authority or Person, which lapse or other termination would
have a material adverse effect on the property, business, profits or conditions
(financial or otherwise) of the Company, (iii) any refusal by any Governmental
Authority or Person to renew or extend such license, permit or other
authorization, and (iv) any suit between the Company and any Governmental
Authority or Person or formal demand made upon the Company by any Governmental
Authority or Person which if adversely determined would cause a Material Adverse
Change.
(9) Prompt written notice in the event that (i) the Company shall
fail to make any payment when due and payable under any Plan or (ii) the Company
shall receive notice from the Internal Revenue Service or the Department of
Labor that it shall have failed to meet the minimum funding requirements of any
Plan, and include therewith a copy of such notice.
-27-
(10) Copies of any request for a waiver of the funding standards or
any extension of the amortization periods required by Sections 303 and 304 of
ERISA, or Section 402 of the Code, promptly after any such request is submitted
to the Department of Labor or the Internal Revenue Service, as the case may be.
(11) Promptly after a Reportable Event occurs which may result in a
termination of a Plan, or the Company receives notice that the PBGC has
instituted or intends to institute proceedings under Section 4042 of ERISA to
terminate a Plan, a copy of any notice of such Reportable Event which is filed
with the PBGC, or any notice delivered by the PBGC evidencing its institution of
such proceedings or its intent to institute such proceedings, or any notice to
the PBGC that a Plan is to be terminated, as the case may be.
(12) Promptly upon becoming aware of the occurrence of any Prohibited
Transaction in connection with any Plan, a written notice specifying the nature
thereof, what action the Company is taking or proposes to take with respect
thereto, and, when known, any action taken by the Internal Revenue Service with
respect thereto.
(13) Promptly after the filing thereof, copies of each annual report
required to be filed pursuant to Section 103 of ERISA and copies of any other
reports required to be filed with respect to any Plan.
(14) At the time any officer of the Company obtains knowledge of any
Default, the Company shall furnish to the Bank a certificate of the chief
financial officer of the Company setting forth the details thereof and the
action which the Company is taking or proposes to take with respect thereto.
(15) Promptly upon request therefor, such other information and
reports relating to the financial condition and operations of the Company as the
Bank at any time or from time to time may reasonably request.
5.2 Existence: Preserve and maintain its corporate existence and their
---------
rights, privileges and franchises.
5.3 Payment of Obligations: Pay and discharge all taxes, assessments and
----------------------
governmental charges or levies imposed upon it or upon its income and profits,
or upon any property belonging to it, prior to the date upon which penalties
attach thereto.
5.4 Insurance: Maintain insurance, at all times throughout the term of
---------
this Agreement, on its property with responsible insurance carriers having a
rating by A.M. Bests of A or better acceptable to the Bank licensed to do
business in the State of New York and in
-28-
each jurisdiction in which the Company conducts business against such risks,
loss, damage and liability (including liability to third parties) and in such
amounts as is customarily maintained by similar businesses, including, without
limitation, public liability and workers' compensation insurance, each such
policy which shall name the Bank as additional insured and loss payee as its
interests may appear and which shall require thirty (30) days prior notice to
the Bank of cancellation or termination thereof and will file with the Bank
within ten (10) days after request therefor a detailed list of such insurance
then in effect, stating the names of the carriers thereof, the policy numbers,
the insureds thereunder, the amounts of insurance, dates of expiration thereof
and the property and risks covered thereby, together with a certificate of a
duly authorized officer of the Company certifying that in the opinion of the
management of the Company such insurance is adequate in nature and amount,
complies with the obligations of the Company under this Section, and is in full
force and effect.
5.5 Payment of Indebtedness and Performance of Obligations: Pay and
------------------------------------------------------
discharge promptly all lawful claims for labor, materials and supplies or
otherwise which, if unpaid, would cause a Material Adverse Change.
5.6 Condition of Property: At all times, maintain, protect and keep in
---------------------
good repair, working order and condition, all property of the Company used or
required in connection with the proper conduct of the Company's business,
ordinary wear and tear excepted.
5.7 Observance of Legal Requirements: Observe and comply in all respects
--------------------------------
with all laws (including but not limited to ERISA), ordinances, orders,
judgments, rules, regulations, certifications, franchises, permits, licenses,
directions and requirements of all Governmental Authorities which now or at any
time thereafter may be applicable to the Company, a violation of which would
have a material adverse effect on the property, business, profits or conditions
(financial or otherwise) of the Company.
5.8 Books and Records; Field Audit: Keep proper books of record and
------------------------------
account in accordance with GAAP and permit the Bank or its duly authorized
agents upon reasonable notice during normal business hours, at the Company's
expense, to examine its books and records.
5.9 Financial Requirements: Maintain at all times during this Agreement,
----------------------
or at the times indicated below, the following financial requirements:
(a) A Debt Service Coverage Ratio, as hereinafter defined, of at
least 2.0:1.0 as at the end of each fiscal year. Debt Service Coverage Ratio
shall mean (a) earnings before
-29-
interest, taxes, depreciation and amortization minus unfinanced capital
expenditures minus dividends minus taxes divided by (b) the current portion of
long term debt plus interest expense.
(b) A ratio of total debt to Tangible Net Worth of no greater than
1.0:1.0 as at the end of each fiscal year.
(c) A ratio of current assets to current liabilities at least 1.5:1.0
as at the end of each fiscal quarter.
(d) A Tangible Net Worth of at least $15,000,000.00 as at the end of
each fiscal year.
(e) Working Capital of at least $5,000,000.00 as at the end of each
fiscal quarter.
5.10 New Subsidiaries: Cause any Subsidiary formed after the date of
----------------
this Agreement to become a guarantor of all debts and obligations of the Company
under this Agreement and cause such Subsidiary to execute an agreement, in form
satisfactory to the Bank, subjecting it to the affirmative and negative
covenants contained in this Agreement and a Security Agreement together with
related security agreement questionnaires and UCC-1 financing statements.
5.11 Environmental Compliance: The Company will operate all property
------------------------
owned or leased by it such that no Environmental Liability shall arise or
continue to exist under any Environmental Law.
SECTION 6: NEGATIVE COVENANTS
------------------
The Company covenants and agrees that, so long as the Revolving Credit
Commitment remains in effect, either Note remains outstanding and unpaid, or any
other amount is owing to the Bank hereunder, and until the fulfillment of all
obligations hereunder, the Company shall not:
6.1 Debt: Create, incur, assume or suffer to exist any Debt or liability
----
for borrowed money, or any other indebtedness or liability evidenced by notes,
bonds, debentures or similar obligations, except for (i) Debt to the Bank, (ii)
Debt not exceeding Three Million and 00/100 ($3,000,000.00) Dollars per fiscal
year under Capitalized Lease Obligations or secured by purchase money liens and
security interests permitted by Section 6.2(v) hereof, (iii) Debt listed on
Schedule 6.1 hereof, which Debt shall not be amended or modified or the
obligations of the Company thereunder increased, without the prior written
consent of the Bank, (iv) accounts payable to trade creditors in the ordinary
course of business which are not overdue beyond such period as is commercially
reasonable for the Company's business and (v) Debt not
-30-
otherwise indicated in the subheadings above not to exceed Five Hundred Thousand
and 00/100 ($500,000.00) in the aggregate at any one time outstanding.
6.2 Limitation on Liens: Create, incur, assume or suffer to exist any
-------------------
Lien upon, or any security interest in, any of its property or assets, whether
now owned or hereafter acquired, except (i) liens securing Debt permitted under
Section 6.1(i); (ii) liens for taxes or assessments or other governmental
charges or levies if not yet due and payable; (iii) liens imposed by law, such
as mechanic's, materialman's, landlord's, warehouseman's and carrier's liens,
and other similar liens securing obligations in the ordinary course of business
which are not past due more than thirty (30) days or which are being contested
in good faith by appropriate proceedings and for which appropriate reserves are
maintained; (iv) liens, pledges or deposits under workers' compensation,
unemployment insurance, social security or similar legislation; and (v) purchase
money liens, or security interests on any property hereafter acquired incurred
in connection with any conditional sale or other title retention agreement or a
financing lease provided that any property subject to any of the foregoing is
acquired by the Company in the ordinary course of its business as heretofore
conducted and the lien or security interest on any such property attaches to
such asset concurrently or within thirty (30) days after the acquisition thereof
and that each such lien, encumbrance and security interest shall attach only to
the property so acquired or a lien or security interest incurred in connection
with any Capitalized Lease Obligation and the total obligations secured by all
such liens and security interests shall not exceed the limit set forth in
Section 6.1(ii) hereof.
6.3 Merger, Consolidation and Acquisition of Assets: Merge into or
-----------------------------------------------
consolidate with any other Person or permit any other Person to merge into it,
or acquire all or substantially all the properties or assets of any other Person
or become a partner of or venturer with any other Person without the Bank's
written consent, which consent will not be unreasonably withheld.
6.4 Sale, Transfer and Lease of Assets: Sell, transfer, lease or
----------------------------------
otherwise dispose of all or any part of its assets or property, except for
inventory sold in the ordinary course of business and except for the sale or
other disposition of assets no longer used or useful in the conduct of its
business.
6.5 Contingent Liabilities: Except for the guarantees listed on Schedule
----------------------
6.5 hereof, assume, guarantee, endorse, sell with recourse, contingently agree
to purchase, discount, or otherwise become or remain liable with respect to any
Debt, obligation or other liability of any other Person, or enter into any
agreement for the purchase or other acquisition of any products, materials or
supplies, or for transportation or for the payment for services, if
-31-
in any such case payment therefor is to be made regardless of the non-delivery
of the products, materials or supplies or the non-furnishing of the
transportation or service except for the endorsement of negotiable instruments
in the ordinary course of business.
6.6 Investments; Loans: Purchase, acquire, exercise an option to purchase
------------------
or acquire, or own the assets, obligations, stock or any other interest of or
in, or make loans or advances to, or investments in, any Person, whatsoever
except for (i) obligations issued or guaranteed by the United States of America
or securities issued by agencies or instrumentalities of the United States
having maturities of three years or less from the date of acquisition; (ii)
prime commercial paper of any domestic corporation; (iii) certificates of
deposit, time deposits and money market deposit accounts of any domestic
commercial bank which has capital and surplus in excess of $100,000,000.00
having maturities of three years or less from the date of acquisition; (iv)
short-term repurchase agreements with any domestic bank which has capital and
surplus in excess of $100,000,000.00; (v) shares of any domestic investment
company whose investment portfolio consists exclusively of the obligations of
the type listed in clause (i) - (iv) above; and (vi) in addition to the
investments set forth above, investments not to exceed $500,000.00 at any time
in the aggregate.
6.7 Sale or Discount of Receivables: Discount or sell with recourse, or
-------------------------------
sell for less than the face value thereof, any of its notes receivable or
accounts receivable except (i) in settlement of bad debts in the ordinary course
of business and (ii) for discounts or adjustments reflected in the Company's
books and records on the same basis and in accordance with the usual customary
practices of the Company as they exist on the date of this Agreement.
6.8 Nature of Business: Change the general nature of its business or
------------------
the general manner of conducting its business.
6.9 Capital Expenditures; Capitalized Leases. Expend in excess of
----------------------------------------
$3,000,000.00, in the aggregate in any fiscal year for Capital Expenditures
including payments made on account of Capitalized Leases. For purposes of the
foregoing, Capital Expenditures shall include payments made on account of any
deferred purchase price or on account of any indebtedness incurred to finance
any such purchase price.
6.10 Sale and Leaseback: Directly or indirectly enter into any
------------------
arrangement whereby the Company shall sell or transfer any property then owned
by it and shall thereafter rent or lease the property so sold or transferred.
-32-
6.11 Dividends and Purchase of Stock: Declare any dividends either in
-------------------------------
cash or property (other than dividends payable in capital Stock of the Company)
on any shares of any class of its capital Stock or apply any of its property or
assets to the purchase, redemption or other retirement of, or set apart any sum
for the payment of any dividends on, or the purchase, redemption or other
retirement of, or make any other distribution by reduction of capital or
otherwise in respect of, any shares of any class of capital stock of the Company
except that the Company may purchase or redeem shares of its common stock for a
maximum aggregate annual amount of $1,000,000.00.
6.12 No Lien Senior to or Equal to Loan Documents: Create or cause to
--------------------------------------------
be created any lien or charge on any property subject to the security interests
of the Loan Documents which is superior or equal to the liens or security
interests of the Loan Documents.
6.13 Transactions with Affiliates: Except in the ordinary course of
----------------------------
and pursuant to the reasonable requirements of the Company's business and upon
fair and reasonable terms no less favorable to the Company than would obtain in
a comparable arm's length transaction with a Person not an Affiliate, enter into
any transaction, including, without limitation, the purchase, sale, or exchange
of property or the rendering of any service, with any Affiliate, including,
without limitation, the purchase, sale, or exchange of property or the rendering
of any service, with any Affiliate.
6.14 Change of Management: Permit Xxxxx Xxxxxxx at any time to not be
--------------------
active on a substantially full time basis in the affairs of the Company by
maintaining the position of President or Chief Executive Officer or its
equivalent.
6.15 Changes: Change its name without giving at least ten (10)
-------
Business Days prior notice thereof to the Bank, make any material change in its
business, or in the nature of its operations, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or, without the prior written
consent of the Bank, convey, sell, assign, lease or otherwise dispose of,
voluntarily or involuntarily, in one transaction or a series of transactions,
all or (except as permitted by Section 6.4) any part of its business or property
or assets, whether now owned or hereafter acquired (including, without
limitation, receivables and leasehold interests, other than as permitted or
required herein).
-33-
SECTION 7: EVENTS OF DEFAULT
-----------------
7.1 Events of Default: "Event of Default", wherever used herein, means
-----------------
any one of the following events (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any agreement, decree or order of any court or any order,
rule or regulation of any administrative or Governmental Authority):
(a) Default in the payment of the principal of or interest on a Note
or in the payment of any amount payable pursuant to Sections 2.10, 2.11 or 2.12;
or
(b) Any representation or warranty made by the Company herein or any
statement or representation made in any certificate, report or opinion delivered
pursuant hereto shall prove to have been incorrect in any material respect when
made; or
(c) Default in the due observance or performance of any covenant,
condition or agreement to be observed or performed pursuant to Section 5.2,
Section 5.9 or Section 6 hereof; or
(d) Default in the due observance or performance of any other
covenant, condition or agreement to be observed or performed pursuant hereto
(other than a covenant, condition or agreement a default in the performance of
which or a breach of which is elsewhere in this Section specifically dealt with)
and such default shall remain unremedied for thirty (30) consecutive calendar
days after written notice shall have been given by the Bank; or
(e) Entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under the Federal Bankruptcy Code or any other
applicable Federal or state law, or appointing a receiver, liquidator, assignee,
trustee, (or other similar official) of the Company or of any substantial part
of their properties, or ordering the winding up or liquidation of their affairs,
and the continuance of any such decree or order unstayed and in effect for a
period of forty-five (45) consecutive days; or
(f) The Company shall: (i) apply for or consent to the appointment of
a receiver, trustee or liquidator of the Company or any of its properties or
assets; (ii) admit in writing its inability to pay its debts as they mature;
(iii) make a general assignment for the benefit of creditors; (iv) be
adjudicated a bankrupt or insolvent; or (v) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with creditors or to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution or
-34-
liquidation law or statute, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law or if corporate
action shall be taken by the Company for the purpose of effecting any of the
foregoing; or
(g) Rendering against the Company of a final judgment, decree or
order for the payment of money in excess of One Hundred Fifty Thousand and
00/100 ($150,000.00) Dollars and the continuance of such judgment, decree or
order unsatisfied and in effect for a period of thirty (30) consecutive days
without a stay of execution; or
(h) The Company shall default in any payment of principal of or
interest on any Debt or obligation for borrowed money (other than the Notes) or
for the deferred purchase price of property which Debt, obligation or purchase
price exceeds the principal amount of One Hundred Fifty Thousand and 00/100
($150,000.00) Dollars or defaults in the performance of any other agreement,
term or condition contained in any such obligation or in any agreement relating
thereto, if the effect of such default is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of such holder or holders) to
cause, such obligation to become due prior to its stated maturity; or
(i) Any of the following events occur or exist with respect to the
Company or an ERISA Affiliate: (1) any Prohibited Transaction involving any
Plan, (2) any Reportable Event shall occur with respect to any Plan, (3) the
filing under Section 4041 of ERISA of a notice of intent to terminate any Plan
or the termination of any Plan, (4) any event or circumstance exists which might
constitute grounds entitling the PBGC to institute proceedings under Section
4042 of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such proceedings, or
(5) complete or partial withdrawal under Section 4201 or 4204 of ERISA from a
Multiemployer Plan or the reorganization, insolvency or termination of any
Multiemployer Plan, and in each case above, such event or condition, together
with all other events or conditions, if any, could in the opinion of the Bank
subject the Company to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC or otherwise (or a combination thereof) which in
the aggregate exceed or may exceed Five Thousand and 00/100 ($5,000.00) Dollars.
(j) Any Loan Document shall cease to be in full force and effect, a
default shall occur thereunder or the Company shall assert that it has no
further obligation to the Bank thereunder; or
(k) A Material Adverse Change shall have occurred.
Then, upon the happening of any of the foregoing Events of Default, the
obligation of the Bank to make further Loans or to issue Letters of Credit shall
terminate, the principal of and
-35-
accrued interest on the Notes shall become and be immediately due and payable
upon declaration to that effect delivered by the Bank to the Company; provided,
that, upon the happening of any event specified in subsections (e) or (f) of
this Section 7.1, the obligation of the Bank to make further Loans or to issue
Letters of Credit shall terminate and the Notes shall be immediately due and
payable without declaration or other notice to the Company and the Company
expressly waives any presentment, demand, protest or other notice of any kind.
7.2 Remedies on Default: Upon the occurrence and continuance of an Event
-------------------
of Default, the Bank may proceed to enforce its rights whether by suit in equity
or by action at law, whether for specific performance of any covenant or
agreement contained in this Agreement or any Loan Document, or in aid of the
exercise of any power granted in either this Agreement or any Loan Document or
proceed to obtain judgment or any other relief whatsoever appropriate to the
enforcement of its rights, or proceed to enforce any other legal or equitable
right which the Bank may have by reason of the occurrence of any Event of
Default hereunder or under any Loan Document, including without limitation the
remedies of a secured creditor under the Uniform Commercial Code. Any amounts
collected pursuant to action taken under this Section 7.2 shall be paid to the
Bank and applied to the payment of, first, any costs incurred by the Bank in
taking such action, second, to payment of the accrued interest on and unpaid
principal of the Notes and any balance remaining after such payments shall be
paid to the Company.
If one or more Events of Default shall occur, the Bank shall have the
right, in addition to all other rights and remedies available to it, to set off
against the unpaid balance of the Notes any debt owing to the Company by the
Bank, including without limitation, any funds in any deposit account maintained
by the Company with the Bank, and nothing in this Agreement shall be deemed any
waiver or prohibition of the Bank's right of banker's lien or set-off.
SECTION 8: COLLATERAL SECURITY
-------------------
8.1 Collateral Security. The payment of any and all sums owing under the
-------------------
Loan Documents, the obligation to reimburse the Bank for any amount paid to FNB
on account of the Company's obligations under Master Agreement as set forth in
Section 2.17 hereof and all other obligations, direct or contingent, joint,
several or independent, of the Company now or hereafter existing due or to
become due to, or held or to be held by the Bank, whether created directly or
acquired by assignment or otherwise including, without limitation, any arising
under this Agreement (all of such obligations being hereinafter collectively
called the "Obligations"), are secured by and the Company hereby grants to the
-36-
Bank, a 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, collateral and property, now or
hereafter in the possession, custody, safekeeping or control of the Bank or any
entity under the control of Fleet Boston Corporation, its successors and
assigns, or in transit to any of them. At any time, without demand or notice,
the Bank may set off the same or any part thereof and apply the same to any
liability or obligation of Company even though unmatured and regardless of the
adequacy of any other collateral securing the Loans. ANY AND ALL RIGHTS TO
REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE TERM LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF
WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE COMPANY, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
8.2 Additional Collateral Security. In addition to the collateral
------------------------------
described in Section 8.1 hereof, payment of the Obligations is also secured by
(a) a first priority security interest in all personal property of the Company,
whether now owned or hereafter acquired, to the extent provided in the Security
Agreement executed and delivered by the Company to the Bank and (b) all right,
title and interest of the Company in and to the Master Agreement and each
transaction entered into thereunder including, without limitation, all amounts
payable or deliverable thereunder and all proceeds of the foregoing in whatever
form received, in each case whether now owned or hereafter acquired.
SECTION 9: MISCELLANEOUS
-------------
9.1 Consents to Amendments: This Agreement may be amended and the Company
----------------------
may take any action prohibited, or omit to perform any act required to be
performed by it, if the Company shall first obtain the Bank's written consent to
such amendment, action or omission to act.
9.2 Survival of Representations: All representations, warranties,
---------------------------
covenants and agreements made by the Company in connection herewith shall
survive the execution and delivery of this Agreement and the Notes.
9.3 Successors and Assigns: All covenants and agreements herein shall
----------------------
bind and inure to the benefit of the respective successors and assigns of the
parties hereto, provided the Company may not transfer or assign any of its
rights or interests hereunder without the specific written consent of the Bank.
-37-
9.4 Liability in Acting: In connection with this Agreement and the Loans,
-------------------
the Bank will be protected in acting upon any notice, request, consent,
certificate, agreement, writing, signature, resolution, application or other
paper or document believed by it to be genuine and to have been signed,
executed, passed, presented or delivered by the proper party or parties.
9.5 The Bank's Rights Not Waived; Cumulative Rights: Wherever in this
-----------------------------------------------
Agreement or in any other manner an option, power or right is granted the Bank,
it may be exercised without notice to the Company, except as in this Agreement
specifically provided. Each and every right and remedy granted to the Bank
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the Bank to exercise, or
delay in exercising, any right or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise by the Bank of any right or remedy preclude
any other or future exercise thereof or the exercise of any other right or
remedy. No delay, omission or failure to act on the part of the Bank in
exercising any option, power or right, shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude the other, later or
further exercise thereof or the exercise of any other power or right.
9.6 Expenses: The Company agrees to pay the out-of-pocket expenses of the
--------
Bank (including the reasonable fees and expenses of its counsel) in connection
with the preparation, reproduction, execution and delivery of this Agreement,
the Notes and all of the Loan Documents, and to pay all such expenses incurred
in connection with any modifications, waivers, consents or amendments hereto and
thereto, and the Company further agrees to pay the out-of-pocket expenses of the
Bank (including the reasonable fees and expenses of its counsel) incurred in
connection with the interpretation, enforcement, collection, restructuring a
"work-out" of all or of any provisions of this Agreement, the Notes, the
Security Agreement and all other Loan Documents, whether or not suit is
instituted. The obligations of the Company under this Section 9.6 with respect
to all costs and expenses so arising prior to or in connection with the payment
in full of the Notes and the discharge of the Liens securing the same shall
continue in full force and effect, and shall survive the termination of this
Agreement, notwithstanding the payment of the Notes (or any evidence of Debt
hereafter issued in exchange or substitution therefor) or any disposition
thereof by the Bank.
9.7 Other Agreements: The rights and remedies granted to the Bank by the
----------------
Company hereunder are cumulative and in addition to the rights granted by every
other agreement which the Company at any time executes and delivers to the Bank,
and no such agreement shall be read or construed to limit, restrict or otherwise
modify in any
-38-
way the rights given hereby, except as the intent to limit is expressly set
forth in such agreement and likewise no provision of this Agreement shall be
deemed to limit, restrict or otherwise modify in any way any rights or remedies
granted to the Bank by other agreements by the Company. All agreements herein
contained and contained in any such other written agreement, whether typed or
otherwise, shall be fully effective and fully enforceable in favor of the Bank
and against the Company, except that if there by a conflict in the provisions of
such agreements with this Agreement, the agreement requiring the higher or
greater degree of performance shall prevail, and if there are similar but not
identical provisions, such agreements and this Agreement shall be read and
interpreted separately and the Company shall comply with all such provisions.
9.8 Repayment: The Company hereby covenants and agrees to repay to the
---------
Bank its obligations hereunder, both principal and interest, as and when the
same shall become due and payable, and faithfully to perform every term,
condition and covenant of this Agreement and of any instrument evidencing such
obligation, and every other agreement securing or relating to the same.
9.9 Judicial Proceedings: (a) Venue: Any judicial proceeding brought
-------------------- -----
against the Company with respect to this Agreement, any other Loan Document or
any property of the Company, may be brought in any court of competent
jurisdiction located in the State of New York. By execution and delivery of this
Agreement, the Company accepts, generally and unconditionally, the nonexclusive
jurisdiction of such courts and any related appellate court, and irrevocably
agrees to be bound by any judgment thereby in connection therewith.
(b) Waiver of Counterclaim: The Company irrevocably waives any
----------------------
objection it may now or hereafter have as to the venue of any suit, action or
proceeding with respect to this Agreement or any other Loan Document or any
property of the Company brought in a court located in the State of New York or
any claim that such court is an inconvenient forum. The Company further hereby
waive the right to interpose any counterclaim.
(c) Proceedings by Company against the Bank: Any judicial proceeding
---------------------------------------
by the Company against the Bank involving, directly or indirectly, any matter in
any way arising out of, related to, or connected with this Agreement or any
other Loan Document, shall be brought only in a court located in the counties of
Nassau or Suffolk, State of New York.
9.10 Entire Agreement: The Company and the Bank agree that this
----------------
Agreement, and all documents executed and delivered in connection herewith
including the Notes represent the entire understanding of
-39-
the parties. No modification, amendment or waiver of any provision of this
Agreement or the Notes, nor consent to any departure by the Company shall in any
event be effective unless the same shall be in writing and signed by the Bank
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. As of the date hereof, no representations
have been made by the Bank or anyone acting or purporting to act for the Bank
concerning the handling, treatment, release or modification of the Loans, the
security therefor, accounts or other relationships or accommodations with the
Bank, nor concerning any future, larger or different loans, accounts or other
accommodations of or to the Company or any other Person, except as specifically
set forth in this Agreement, and the Company represents to and covenants with
the Bank that it has not relied on any such representation.
9.11 Further Assurances: The Company agrees at any time and from time to
------------------
time at its expense, upon request of the Bank, to promptly execute, deliver, or
obtain or cause to be executed, delivered or obtained any and all further
instruments and documents and to take or cause to be taken all such other action
as the Bank may deem reasonably desirable in obtaining the full benefits of, or
in preserving the liens and/or security interests of the Loan Documents.
9.12 Headings: The headings herein are for convenience only and shall
--------
not limit or affect the meaning or construction of the provisions herein.
9.13 Notices: Notices and consents provided herein shall be in writing
-------
and shall be given to the other party by overnight mail, personal delivery or
certified mail, return receipt requested, in a prepaid wrapper directed to the
other party at its address stated below or such other address as from time to
time designated in writing by one party to the other:
(a) if to the Company: Hi-Tech Pharmacal Co., Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 0000
Attn: Mr. Xxxxx Xxxxxxx
President
(b) if to the Bank: Fleet Bank, N.A.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxxxx
Vice President
-40-
Any notice, request, consent, demand, waiver or communication given in
accordance with the provisions of this Section 9.13 shall be conclusively deemed
to have been received by a party hereto and to be effective on the day on which
delivered to such party at its address specified above, or, if sent by mail, on
the third Business Day after the day when deposited in the mail, postage
prepaid, and addressed to such party at such address, provided that notices of
change of address shall be deemed to be effective when actually received.
9.14 Authority to Disclose: All Federal, state, municipal and other
---------------------
authorities (including the United States Treasury Department and the Internal
Revenue Service) and all banks, trust companies and other banking or financial
corporations, and organizations and all accountants, auditors, appraisers and
examiners with which or whom the Company has heretofore, now has or hereafter
may have banking or professional relations, are hereby irrevocably authorized
and directed to permit representatives of the Bank to have full access during
regular business hours and from time to time upon reasonable request to make
copies of and extracts from all reports, examinations, audits, appraisals, and
returns by or with respect to the Company and all information concerning the
Company from time to time contained in their files and records. The Bank shall
hold information so obtained in confidence in accordance with its customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices except that it may disclose
such information as it may be required by law to disclose with notice to the
Company if permitted by law and the Bank's policy.
9.15 Severability: In the event that any one or more of the provisions
------------
of this Agreement or any document executed in connection herewith shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
9.16 Counterparts: This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which shall be deemed an original. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one counterpart.
9.17 Right of Set-off: The Company hereby grants to the Bank, a 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, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of the Bank or any entity under the
control of Fleet Boston Corporation, its successors and assigns, or in transit
to any of them. At any time after an event of default, without demand or
notice, the Bank may set off the same or any part
-41-
thereof and apply the same to any liability or obligation of the Company even
though unmatured and regardless of the adequacy of any other collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS OR
REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE COMPANY, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
9.18 Pledge to Federal Reserve Bank: The Bank may at any time pledge all
------------------------------
or any portion of its rights under the Loan Documents including any portion of
the promissory 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 enforcement thereof shall release the Bank from its obligations under
any of the Loan Documents.
9.19 Participations: The Bank shall have the unrestricted right at any
--------------
time and from time to time, and without the consent of or notice to Company, 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 the Company, the Bank shall remain
responsible for the performance of its obligations hereunder and the Company
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 the Company 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.
9.20 Lost Documents: Upon receipt of an affidavit of an officer of the
--------------
Bank as to the loss, theft, destruction or mutilation of a Note or any other
security 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
security document, the Company will issue, in lieu thereof, a replacement note
or other security document in the same principal amount thereof and otherwise of
like tenor.
SECTION 10: WAIVER OF RIGHT TO JURY TRIAL
-----------------------------
THE COMPANY AND THE BANK 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 OR ANY OTHER
LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE
OF CONDUCT, COURSE OF DEALINGS, STATEMENTS
-42-
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR THE BANK TO ACCEPT THIS AGREEMENT AND MAKE THE LOANS.
SECTION 11: GOVERNING LAW
-------------
The validity, interpretation and enforcement of this Agreement shall be
governed by the laws of the State of New York without giving effect to the
conflict of law principles thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
the year and date first above written.
HI-TECH PHARMACAL CO., INC.
By:______________________
Xxxxx Xxxxxxx
President
FLEET BANK, N.A.
By:______________________
Xxxxxxx X. Xxxxx
Assistant Vice President
-43-
SCHEDULES
---------
TO BE SUPPLIED BY COMPANY COUNSEL
Schedule 3.5 - Litigation
----------
Schedule 3.11 - Contingent Liabilities
----------------------
Schedule 3.14 - Taxes
-----
Schedule 3.19 - Certain Changes
---------------
Schedule 3.20(a) - UCC Financing Statement Jurisdictions
-------------------------------------
Jurisdictions Secured Party Debtor
------------- ------------- ------
Schedule 3.20(b) - Real Property
-------------
A. Real Property owned by the Company:
B. Real Property leased by the Company:
Schedule 3.21 - Environmental Matters
---------------------
Schedule 3.24 - Intellectual Property
---------------------
Section 6.1 - Indebtedness
------------
Section 6.5 - Guarantees
----------
-44-
EXHIBIT A
---------
FORM OF REVOLVING CREDIT NOTE
-----------------------------
REVOLVING CREDIT NOTE
---------------------
$6,000,000.00 Melville, New York February 2, 2000
HI-TECH PHARMACAL CO., INC., a Delaware corporation (the "Company"), for
value received, hereby promises to pay to the order of FLEET BANK, N.A. (the
"Bank") on the Termination Date as defined in the Agreement herewith referred
to, at the office of the Bank specified in Section 9.13 of the Agreement, in
lawful money of the United States of America and in immediately available funds
the principal amount of SIX MILLION AND 00/100 ($6,000,00000) DOLLARS or, if
less than such principal amount, the aggregate unpaid principal amount of all
Advances made by the Bank to the Company pursuant to Section 2.2 of the
Agreement. The Company further promises to pay interest at said office in like
money on the unpaid principal balance of this Note from time to time outstanding
at an annual rate as selected by the Company pursuant to the terms of Section 2
of the Agreement. Interest shall be computed on the basis of a 360-day year for
actual days elapsed and shall be payable as provided in the Agreement. All
Advances made by the Bank pursuant to Section 2.2 of the Agreement and payments
of the principal thereon may be endorsed by the holder of this Note on the
schedule annexed hereto, to which the holder may add additional pages. The
aggregate net unpaid amount of the Advances set forth in such schedule shall be
presumed to be the principal balance hereof. After the stated or any accelerated
maturity hereof, this Note shall bear interest at the Post Default Rate as set
forth in the Agreement, payable on demand, but in no event in excess of the
maximum rate of interest permitted under applicable law.
This Note is the Revolving Credit Note referred to in the Agreement dated
as of February 2, 2000 by and between the Company and the Bank as same may be
amended from time to time (the "Agreement"). Terms defined in the Agreement
shall have then defined meanings when used in this Note. This Note is entitled
to the benefits of this Agreement thereof and may be prepaid, and is required to
be prepaid, in whole or in part (subject to the indemnity provided in the
Agreement) as provided therein. This Note is secured by the collateral described
in the Security Agreement.
Upon the occurrence of any one or more of the Events of Default specified
in the Agreement, all amounts then remaining unpaid on this Note may be declared
to be immediately due and payable as provided in the Agreement.
This Note shall be construed in accordance with and governed by the laws of
the State of New York.
HI-TECH PHARMACAL CO., INC.
By:______________________
Xxxxx Xxxxxxx
President
State of New York, County of Nassau, ss:
On the 2nd day of February, in the year 2000, before me the undersigned,
personally appeared XXXXX XXXXXXX, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual or the
person upon behalf of which the individual acted, executed the instrument.
-------------------------
Notary Public
Exhibit A-Page 46
SCHEDULE OF LOANS AND PAYMENT OF PRINCIPAL
TO REVOLVING CREDIT NOTE
DATED AS OF FEBRUARY 2, 2000
HI-TECH PHARMACAL CO., INC.
TO
FLEET BANK, N.A.
Last Day Balance
Amount Interest of Interest Principal Remaining Notation
Date of Loan Rate Period Paid Unpaid Made By
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Exhibit A-Page 47
EXHIBIT B
---------
FORM OF TERM NOTE
-----------------
TERM NOTE
---------
$449,973.00 Melville, New York February 2, 2000
HI-TECH PHARMACAL CO., INC., a Delaware corporation (the "Borrower"), for
value received, hereby promises to pay to the order of FLEET BANK, N.A. (the
"Bank") at the office of the Bank specified in Section 9.13 of the Agreement
hereinafter referred to, in lawful money of the United States and in immediately
available funds, the principal sum of Four Hundred Forty Nine Thousand Nine
Hundred Seventy Three and 00/100, ($449,973.00) payable in 21 consecutive
monthly installments, the first 20 of which shall be in the amount of $21,429.00
each payable on the 1st day of each month commencing March 1, 2000 and the last
and final installment equal to the then unpaid principal balance of this Note
payable on November 1, 2001. The Company further promises to pay interest at
said office in like money on the unpaid principal balance of this Note from time
to time outstanding at an annual rate as selected by the Company pursuant to the
terms of Section 2 of the Agreement. Interest shall be computed on the basis of
a 360-day year for actual days elapsed and shall be payable as provided in the
Agreement. After the stated or accelerated maturity hereof, this Note shall
bear interest at the Post Default Rate as set forth in the Agreement, payable on
demand, but in no event in excess of the maximum rate of interest permitted
under any applicable law.
This Note is the Term Note referred to in the Agreement dated as of
February 2, 2000 by and between the Company and the Bank as same may be amended
from time to time (the "Agreement"). Terms defined in the Agreement shall have
then defined meanings when used in this Note. This Note is entitled to the
benefits of this Agreement thereof and may be prepaid, and is required to be
prepaid, in whole or in part (subject to the indemnity provided in the
Agreement) as provided therein. This Note is secured by the collateral
described in the Security Agreements.
Upon the occurrence of any one or more of the Events of Default specified
in the Agreement, all amounts then remaining unpaid under this Note may be
declared immediately due and payable as provided in the Agreement.
This Note shall be construed in accordance with and governed by the laws of
the State of New York.
HI-TECH PHARMACAL CO., INC.
By:______________________
Xxxxx Xxxxxxx
President
State of New York, County of Nassau, ss:
On the 2nd day of February, in the year 2000, before me the undersigned,
personally appeared XXXXX XXXXXXX, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual or the
person upon behalf of which the individual acted, executed the instrument.
-------------------------
Notary Public
Exhibit B-Page 49
