AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
between
BUSINESS LOAN CENTER, INC. and
BLC FINANCIAL SERVICES, INC.
and
STERLING NATIONAL BANK
Dated as of August 27, 1997
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT dated as of August
27, 1997, among BUSINESS LOAN CENTER, INC., a Delaware corporation ("BLC Inc.")
and BLC FINANCIAL SERVICES, INC. a Delaware corporation (which owns all of the
issued and outstanding shares of stock of Business Loan Center, Inc.) (jointly
and severally with the others, the "Borrowers"), and STERLING NATIONAL BANK
formerly known as STERLING NATIONAL BANK & TRUST COMPANY OF NEW YORK (the
"Bank").
WHEREAS, the Borrowers, Business Loan Center, a New York general
partnership (which was a small business lender under the Small Business Act)
("BLC Partnership") and the Bank entered into a certain Revolving Credit
Agreement dated as of December 19, 1994, as amended, restated, supplemented or
otherwise modified from time to time (the "Revolving Credit Agreement"), a
certain Security Agreement dated as of December 19, 1994, and related
documentation pursuant to which the Bank has made certain advances to Borrowers;
WHEREAS, on the date hereof the Bank has assigned to Transamerica Business
Credit Corporation ("Transamerica") all of its right, title and interest to the
portions of the Revolving Credit Loans previously advanced by the Bank against
the Unguaranteed Portions of Eligible SBA Loans, and certain related
Obligations, Collateral and other assets and has further assigned to
Transamerica all of its rights and obligations to make future loans or advances
against the Unguaranteed Portions of Eligible SBA Loans (the "Assignment");
WHEREAS, as provided in the Assignment, Transamerica has paid to the Bank
$________________;
WHEREAS, the Bank will continue to make Advances hereunder against the
Guaranteed Portions of Eligible SBA Loans, but will no longer make Advances
against the Unguaranteed Portions thereof; and
WHEREAS, the Borrowers and the Bank desire to amend and restate the
Revolving Credit Agreement to reflect the foregoing and such other amendments as
provided for herein.
NOW, THEREFORE, in consideration of the promises and of the mutual
representations, covenants and agreements herein set forth, the Borrowers and
the Bank do hereby amend and restate the Agreement as follows:
The Borrowers have applied to the Bank for a revolving credit loan in an
aggregate principal amount at any one time outstanding not to exceed $8,000,000,
the proceeds of which will be used to finance loans by the Borrowers to small
businesses. The Bank is willing to make such loan to the Borrowers pursuant to
this Agreement upon the terms and subject to the conditions hereinafter set
forth.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. As used herein, the following words and terms
shall have the meanings designated below:
"Advance" shall mean each separate advance or readvance of funds pursuant
to this Agreement by the Bank to the Borrowers.
"Advance Amount" shall mean, with respect to each Advance hereunder, an
amount equal to 100% of the Guaranteed Amount of each SBA Loan securing such
Advance, as set forth in the Advance Request for such Advance, or such lesser
amount as the Bank may determine pursuant to Section 2.1(a) hereof.
"Advance Portion" shall mean a Guaranteed Portion.
"Advance Request" shall mean a written request for an Advance hereunder,
delivered by the Borrowers to the Bank not later than two (2) Business Days
prior to the Borrowing Date for such Advance, consisting of (i) a Notice of
Advance in the form of Exhibit C attached hereto, (ii) a Schedule of
Identification in the form of Exhibit D attached hereto for any SBA Loan to be
funded in whole or in part with the proceeds of such Advance, and (iii) if
applicable, copies of the Authorization and Loan Agreement (Guaranty Loans) on
SBA Form 529B, or such other form as the SBA shall from time to time prescribe,
for each SBA Loan being funded by such Advance, duly executed and completed by
the Borrowers and the SBA and setting forth the SBA Loan Number for such SBA
Loan and otherwise in form and substance satisfactory to the Bank.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agreement" shall mean this Amended and Restated Revolving Credit
Agreement, as the same may be supplemented, modified or amended from time to
time in accordance with the terms hereof.
"Auditors" shall have the meaning assigned to that term in Section 5.7(b)
hereof.
-2-
"Availability" shall mean an amount equal to 100% of the Guaranteed Amount
of each SBA Loan securing such Advances, as set forth in the Advance Request for
such Advances, or such lesser amount as the Bank may determine pursuant to
Section 2.1(a) hereof.
"Authorized Representative" with respect to any Person means any
individual designated in writing to the Bank and duly authorized by such Person
to act on its behalf.
"Base Rate" shall mean the rate of interest publicly announced by the Bank
at its principal office from time to time as its prime rate, which rate need not
be the best rate available. For purposes of this Agreement, any change in the
Base Rate shall be effective as of the opening of business on the date each such
change is announced.
"Borrowers" shall mean jointly and severally Business Loan Center, Inc., a
Delaware corporation and BLC Financial Services, Inc., a Delaware corporation
(which owns all of the issued and outstanding shares of stock of Business Loan
Center, Inc.).
"Borrowers' Account" shall mean a demand account established by the
Borrowers on or prior to the date set forth in Section 4.10 hereof and
maintained by the Borrowers with the Bank in accordance with this Agreement.
"Borrowing Date" shall mean the date upon which any Advance is made by the
Bank.
"Business Day" shall mean any day which is not a Saturday, Sunday or legal
holiday or any other day on which banking institutions in the State are
authorized by law or executive order to close.
"Chief Financial Officer" shall mean the Person with the primary
responsibility for the financial operations of the Borrowers including, without
limitation, the Financial Vice President, President or Treasurer and if more
than one such Person, each of them.
"Closing" shall mean the closing of this Agreement and all other Loan
Documents and the Multi-Party Agreement on the Closing Date.
"Closing Date" shall mean December 19, 1994.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor legislation, and any Treasury Regulations and administrative
pronouncements promulgated, from time to time, thereunder.
"Commitment" shall mean, with respect to the obligation of the Bank to
lend pursuant to this Agreement, $8,000,000.
-3-
"Collateral" shall mean the "Collateral" defined as such in the Security
Agreement, and any other property now or hereafter pledged or delivered to the
Bank or in which the Bank has been granted a security interest as collateral for
the Obligations.
"Consolidated Subordinated Debt" shall mean all indebtedness of the
Borrowers and their Subsidiaries (if any) which is subordinated by its terms (in
a manner satisfactory in form and substance to, approved in writing by the Bank)
to the prior payment in full of the Obligations and providing, among other
things, for suspension of principal and interest payments and redemption rights,
if at any time an Event of Default hereunder shall have occurred.
"Consolidated Tangible Net Worth" shall mean, at any date, the amount by
which "Consolidated Total Assets" shall exceed "Consolidated Total Liabilities".
As used herein, "Consolidated Total Assets" means, at any date, the aggregate
amount shown on the books and records of the Borrowers and their Subsidiaries
(if any), determined in accordance with Generally Accepted Accounting
Principles, of all property, both real and personal, of the Borrowers and their
Subsidiaries (if any), exclusive of franchises, copyrights, trademarks, service
marks, trade names, good will, patents and other like intangibles, treasury
stock and after deducting reserves for depreciation, depletion, obsolescence and
amortization and all other proper reserves which are or should be, in accordance
with Generally Accepted Accounting Principles, established in connection with
the business conducted by the Borrowers and their Subsidiaries (if any). As used
herein, "Consolidated Total Liabilities" means, at any date, the amount of all
liabilities which, in accordance with Generally Accepted Accounting Principles,
should be included in determining total liabilities as shown on a liabilities
side of a balance sheet of the Borrowers and their Subsidiaries (if any), at
such date, exclusive of all amounts in respect of deferred taxes.
"Effective Date" shall mean the date on which all of the conditions to
lend set forth in Sections 4.1 through 4.9 shall have been satisfied.
"Defaulted SBA Loan" shall mean, at any time, any SBA Loan with respect to
which a default or event of default has occurred and is continuing whether or
not the Borrower or the SBA, as applicable, has exercised any or all of its
rights and remedies under the documents evidencing, securing or guaranteeing
such SBA Loan.
"Eligible SBA Loans" shall mean any SBA Loan other than a Defaulted SBA
Loan and an SBA Loan with respect to which one or more monthly or other periodic
payment due from the borrower thereunder to the lender thereunder is in arrears.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall mean any Event of Default set forth in Article
VII hereof.
-4-
"Executive Officer" shall mean the President or Chief Financial Officer or
Executive Vice President of the Borrowers, and if more than one such Person,
each of them.
"Financing Statements" shall mean the Uniform Commercial Code financing
statements executed by the debtors named therein simultaneously herewith or
which may be executed hereafter in order to more specifically identify or in
order to maintain, continue, amend or otherwise perfect any security interest
granted in and to the Collateral.
"Fiscal Quarter" shall mean each of the three month periods ending on the
last day of March, June, September and December of each year.
"Fiscal Year" shall mean the twelve month period ending June 30 of each
year.
"Generally Accepted Accounting Principles" shall have the meaning assigned
to that term in Section 1.2 hereof.
"Guaranteed Amount" shall mean that portion of the original principal
amount of an SBA Loan the repayment of which the SBA has agreed to guaranty
pursuant to an Authorization and Loan Agreement (Guaranty Loans) on SBA Form
529B and Loan Guaranty Agreement (Deferred Participation) Form 750 or such other
form as the SBA shall from time to time prescribe, but in no event to exceed
eighty percent (80%) of the original principal amount of such SBA Loan.
"Guaranteed Portion" shall mean that portion of an Advance or the
Outstanding Balance, as applicable, which was used to fund the Guaranteed Amount
of SBA Loans.
"Guarantor" shall mean Xxxxxx Xxxxxxxxxxxx.
"Guaranty" shall mean that certain Guaranty Agreement, dated as of
December 19, 1994 and reaffirmed on the date hereof, between the Guarantor and
the Bank.
"Indebtedness" shall mean all items which would properly be included as
liabilities on a balance sheet as at the date Indebtedness is to be determined,
including, without limitation, the full principal amount of any guarantees of
the obligations of any other Person, but not including capital stock, capital
surplus, retained earnings, minority interests and valuation and contingency
reserves.
"Investor" shall mean a Person that purchases, or commits to purchase
pursuant to a Purchase Commitment, the Guaranteed Amount of one or more SBA
Loans from the Borrowers.
-5-
"Loan Documents" shall mean, collectively, this Agreement, the Revolving
Credit Note, the Security Agreement, the Guaranty, and all other documents
executed by the Borrowers or the Guarantor in connection with the Revolving
Credit Loan.
"Maturity Date" shall mean June 30, 1998, subject to extension as set
forth in Section 8.12 below.
"Multi-Party Agreement" shall mean the Multi-Party Agreement (Relating to
SBA Loan Documentation and Administration) dated December 19, 1994 by and among
Business Loan Center, the Bank and the SBA.
"Note" shall mean any promissory note evidencing the Revolving Credit Loan
made by the Bank pursuant to this Agreement substantially in the form attached
hereto as Exhibit A, including any replacements, restatements or substitutions
therefor and amendments thereto.
"Obligations" shall mean any and all of the obligations of the Borrowers
under this Agreement and any of the other Loan Documents.
"Obligors" shall mean the Borrowers.
"Outstanding Balance" shall mean, on any date, the aggregate principal
amount of Advances made on or prior to such date which have not been repaid on
or prior to such date.
"Payment Date" shall have the meaning assigned to that term in Section
2.3(a) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean, as of any particular time, (a) liens
for taxes and assessments not then delinquent or then being contested in good
faith by the Borrowers and for which the Borrowers has maintained adequate
reserves satisfactory to the Auditors; (b) liens permitted pursuant to Sections
6.4(b) or (c) hereof; (c) any mechanic's, laborer's, materialman's, supplier's
or vendor's lien or right in respect thereof if payment is not yet due and
payable or is being contested in good faith by the Borrowers; (d) any defects,
irregularities, encumbrances, easements, rights of way, leases, subleases and
clouds on title which do not, in the opinion of the Bank, materially impair the
property affected thereby for the purpose for which it was acquired or is held
by the Borrowers; (e) liens in existence as of the date hereof listed on
Schedule III annexed hereto and all renewals and extensions thereof; (f) liens
in favor of, or consented to in writing, by the Bank; (g) liens subordinated as
a matter of law or otherwise upon terms and conditions reasonably satisfactory
to the Bank to the lien of the Bank under the Security Agreement; and (h) liens
to Transamerica granted pursuant to its security agreement with the Borrowers
and pursuant to the Partial Assignment Agreement of even date between the Bank
and Transamerica, as amended, restated, supplemented or otherwise modified from
time to time (the
-6-
"Partial Assignment Agreement"), in each case subject to the terms of the
Intercreditor Agreement of even date, as amended, restated, supplemented or
otherwise modified from time to time (the "Intercreditor Agreement").
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"Plan" shall have the meaning ascribed to that term in ERISA.
"Purchase Commitment" shall mean a Secondary Participation Guaranty and
Certification Agreement on SBA Form 1086, or such other form as the SBA shall
from time to time prescribe, pursuant to which an Investor agrees to purchase,
and Borrowers agrees to sell, the Guaranteed Amount of an SBA Loan with respect
to which an Advance has been made hereunder, duly executed and completed by the
Borrowers, the investor and the SBA.
"Purchase Money Mortgage" shall mean a mortgage or security interest given
by a purchaser of property to the seller thereof in partial payment of the
purchase price.
"Reportable Event" shall mean a Reportable Event as defined in section
4043(b) of ERISA.
"Required Filings" shall mean Uniform Commercial Code financing statements
filed in those locations which the Bank and its counsel deem necessary or
advisable in order to perfect a security interest in the Collateral pursuant to
said Code.
"Revolving Credit Loan" shall mean an Advance, or collectively, all such
Advances, made by the Bank pursuant to Section 2.1 hereof.
"SBA" shall mean the United States Small Business Administration and any
successor agency.
"SBA Loan" shall mean a loan by the Borrowers, as lender, to a borrower
eligible to participate in the SBA guaranteed loan program, as borrower, up to
eighty percent (80%) of the original principal amount of which is guaranteed by
the SBA.
"SBA Loan Documents "shall mean all documents, instruments and
certificates executed and delivered in connection with an SBA Loan.
"Security Agreement" shall mean the Security Agreement dated December 19,
1994 and amended on the date hereof, from the Borrowers to the Bank, and as may
be amended, restated, supplemented or otherwise modified from time to time
thereafter.
-7-
"State" shall mean the State of New York.
"Subsidiary" shall mean any corporation, the majority of the voting stock
(including shares arising out of other securities convertible, at the option of
the holder, into shares of voting stock) of which is owned by any one or more of
the Borrowers either directly or through Subsidiaries.
"Unguaranteed Amount" shall mean that portion of the original principal
amount of an SBA Loan the repayment of which the SBA has not agreed to guaranty.
"Unguaranteed Portion" shall mean that portion of an Advance or
Outstanding Balance, as applicable, which was used to fund the Unguaranteed
Amount of SBA Loans or which was used for general working capital purposes of
any of the Borrowers.
SECTION 1.2 Accounting Terms. Except as otherwise herein specifically
provided each accounting term used herein shall have the meaning given to it
under Generally Accepted Accounting Principles. "Generally Accepted Accounting
Principles" shall mean those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, and the results of operations and
changes in financial position, of the Borrowers, their Subsidiaries, if any, and
the Guarantor, except that any accounting principle or practice required to be
changed by the said Accounting Principles Board or Financial Accounting
Standards Board (or other appropriate board or committee of the said Boards) in
order to continue as a Generally Accepted Accounting Principle or practice may
be so changed. Any dispute or disagreement between the Borrowers and/or the
Guarantor, as applicable and the Bank relating to the determination of Generally
Accepted Accounting Principles shall, in the absence of manifest error, be
conclusively resolved for all purposes hereof by the written opinion of the
Auditors with respect thereto, delivered to the Bank.
ARTICLE II
THE LOAN
SECTION 2.1 The Revolving Credit Loan. (a) The Bank agrees, upon the terms
and subject to the conditions hereof, to make one or more Advances to the
Borrowers at any time and from time to time upon receipt of an Advance Request,
from the Closing Date to the Maturity Date, in an aggregate principal amount at
any one time outstanding not to exceed the Commitment; provided that the amount
of any Advance shall not exceed the Advance Amount thereof.
-8-
(b) The Borrowers may request the Bank to make an Advance by
delivering an Advance Request to the Bank at least two (2) Business Days prior
to the requested Borrowing Date, together with such other information as the
Bank may reasonably request in connection with such Advance. Any Advance Request
received after 12:00 noon on such date shall be deemed to be received by the
Bank on the immediately succeeding Business Day. If the Bank's computation of
the Advance Amount of any Advance shall conflict with the Borrowers' computation
thereof set forth in the Advance Request therefor for any reason, the Bank shall
deliver written telecopy or telephonic notice to Borrowers of such conflict, and
shall not be obligated to make such Advance until it shall receive a corrected
Advance Request.
(c) Each Advance to the Borrowers under this Agreement shall be made
at the Bank's Office at 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
not later than 2:00 p.m., New York City time, on the Borrowing Date with respect
to such Advance, by the Bank's crediting (not later than the close of business
on such date) the Borrowers' Account, in the Advance Amount. During the period
from the Closing Date to and including the Maturity Date (or until the earlier
termination of the Commitment), the Borrowers may borrow, pay, repay and
reborrow hereunder, subject to all the terms and provisions of this Agreement
provided that at no time shall the principal amount of the Outstanding Balance
exceed the Commitment.
SECTION 2.2 The Note. The Revolving Credit Loan made by the Bank
(including the principal amount and all accrued interest and other amounts due
under the Revolving Credit Loan as of the Effective Date) shall be evidenced by
the Note, duly executed by the Borrowers, dated the Effective Date, and payable
to the Bank in the principal amount of $8,000,000. The Note shall bear interest
from the Effective Date on the outstanding principal balance thereof as set
forth in Section 2.3 hereof. The Bank shall, and is hereby authorized by the
Borrowers to, record on the schedule attached to the Note (or on a continuation
of such schedule attached to the Note) and made a part thereof, an appropriate
notation evidencing the date of each Advance, as well as the date and amount of
each payment (including any prepayment) of principal and interest by the
Borrowers with respect thereto and the amount of all interest accrued but unpaid
under the Revolving Credit Loan as of the Effective Date; provided, however,
that the failure of the Bank to make such insertion shall not affect the
obligations of the Borrowers hereunder or under the Note.
SECTION 2.3 Interest on the Revolving Credit Loan. Interest on the
Revolving Credit Loan shall be payable monthly in arrears on the first day of
each month and ending on the Maturity Date (each, a "Payment Date") and shall be
computed (on the basis of a year of 360 days consisting of twelve (12) thirty
(30) day months) at an annual rate equal to the sum of the Base Rate as in
effect from time to time plus 1.25%.
If the Borrowers shall default in the payment of the principal of or interest on
any Advance or on any other amount becoming due hereunder, the Borrowers shall,
on demand, from time to time pay interest on such unpaid amounts, to the extent
permitted by applicable law, to and including the date of actual payment (after
as well as before judgment), at a rate per annum equal to the sum
-9-
of the Base Rate plus four percent (4%), for the period during which such
principal, interest or other amount shall be unpaid.
SECTION 2.4 Optional Prepayment of Revolving Credit Loan. The Borrowers
shall have the right at any time and from time to time to prepay any Advance in
whole or in part in an amount equal to or greater than $50,000, without premium
or penalty, upon at least two (2) Business Days' prior written, or telecopy
notice (any such telecopy notice to be confirmed promptly in writing) to the
Bank in accordance with Section 8.01 hereof. All prepayments shall be
accompanied by accrued interest on the principal amount being prepaid to and
including the date of prepayment and shall be applied to the outstanding
principal amount of the Advance being prepaid.
SECTION 2.5 Mandatory Prepayment of Revolving Credit Loan. (a) The
Borrowers shall prepay any Advance in part, without premium or penalty, in an
amount equal to the Advance Amount of such Advance secured by an SBA Loan
promptly upon Borrowers receipt of payment with respect to any SBA Loan from the
ultimate borrower, such payment to be allocated among all Investors, the SBA (if
applicable), and the Borrowers in accordance with their respective interests in
each SBA Loan, the Bank being entitled to receive 100% of the Borrowers'
interest therein. In addition, the Borrowers shall prepay the Advances in part,
without premium or penalty, upon (i) an Executive Officer of any of the
Borrowers obtaining actual knowledge that either (1) a default or event of
default under such SBA Loan has occurred and is continuing beyond any applicable
grace period plus ten (10) days in the event of a monetary default or plus
thirty (30) days in the event of a non-monetary default (or in either case such
longer period as set forth in the SBA Loan Documents), or (2) the SBA has
withdrawn and terminated its guarantee of the Guaranteed Amount of such SBA Loan
for any reason whatsoever (a "Non Conforming SBA Loan") and (ii) as a result of
either (1) or (2) the aggregate amount of all then outstanding Advances exceeds
an amount equal to the Availability, in which event the Borrower shall pay to
the Bank that amount which is equal to the difference between the aggregate
amount of all then outstanding Advances and the Availability.
All prepayments shall (i) be accompanied by (x) accrued interest on the
principal amount being prepaid to and including the date of prepayment and (y)
written notice from the Borrowers identifying the related SBA Loan, if
applicable, the Nonconforming SBA Loan, and explaining in reasonable detail the
reason for such prepayment, and (ii) be applied to the outstanding principal
amount of the Advance being prepaid. Upon receipt of any such prepayment the
Bank shall release its lien on the Nonconforming SBA Loan.
(b) Each Advance hereunder shall be payable in full on the earlier
of (i) the Maturity Date or (ii) the date on which Xxxxxx Services (or such
other independent service agency retained by the SBA to service the SBA Loans on
behalf of the SBA) records on its books and records the sale, assignment or
transfer by the Borrowers to an Investor of the Guaranteed Amount of the SBA
Loans securing such Advance and records on its books and records the purchase
price therefore (the "Purchase Date"), in each case together with accrued
interest on such
-10-
Advance to and including the date of payment. The Borrowers covenant and agree
with the Bank that (x) the Borrowers shall deliver to the Bank, promptly upon
the execution and delivery thereof, a copy of the Purchase Commitment for any
SBA Loan securing an Advance hereunder, which shall identify the Investor, and
(y) the Borrowers shall deliver to the Investor instructions to pay the total
purchase price of such SBA Loan including without limitation any and all
premiums above the face amount of the Guaranteed Amount) on the Purchase Date
set forth in the Purchase Commitment with respect thereto (the "Purchase Price")
to the Borrowers' Account so as to constitute immediately available funds on the
Purchase Date, such payment to be accompanied by information sufficient to
identify the Investor, the Purchase Price, and the SBA Loan purchased by the
Investor on such date. If the Purchase Price received by the Bank on any
Purchase Date is less than the amount required to pay the Guaranteed Portion of
the related Advance in full, together with accrued interest thereon to, and
including, the date of payment (the "Payment Amount"), then the Bank shall debit
the Borrowers' Account in the amount of such deficiency; provided, however, that
if there shall be insufficient funds in the Borrowers' Account prior to 2:00
P.M., New York City time, on the Purchase Date, the Borrowers shall deposit
funds into the Borrowers' Account so that by 2:00 P.M., New York City time, on
such date, sufficient funds shall be available in the Borrowers' Account. If the
Purchase Price received by the Bank on any Purchase Date exceeds the Payment
Amount, then the Bank shall credit the amount of such excess to the Borrowers'
Account.
SECTION 2.6 Funds; Manner of Payment. Each payment and prepayment of
principal of the Note and each payment of interest on the Note shall be made by
the Borrowers to the Bank in the following manner: at 000 Xxxx Xxxxxx, 0xx
xxxxx, Xxx Xxxx, Xxx Xxxx 00000, not later than 2:00 P.M., New York City time,
on the date on which payable, by debiting the Borrowers' Account in the amount
of such payment; provided, however, that if there shall be insufficient funds in
the Borrowers' Account prior to 2:00 P.M., New York City time on such date, the
Borrowers shall deposit funds into the Borrowers' Account so that by 2:00 P.M.,
New York City time on such date, sufficient funds shall be available in the
Borrowers' Account.
SECTION 2.7 Administrative Fee. The Borrowers shall pay to the Bank at the
closing of each SBA Loan an administrative fee which shall equal 1/4 of 1% of
each Advance as set forth on the Schedule of Identification (annexed hereto as
Exhibit D) delivered to the Bank in connection with such loan (the
"Administrative Fee").
SECTION 2.8 Collateral. (a) As security for the timely and full payment
and performance of all Obligations, concurrently herewith the Borrowers are
granting to the Bank a lien and security interest in the Collateral pursuant to
and as more fully set forth in the Security Agreement, which lien and security
interest is a first priority lien and security interest except as otherwise set
forth herein or in the Security Agreement.
(b) In the case of the sale pursuant to this Agreement and the
Purchase Commitment by the Borrowers of the Guaranteed Amount of any SBA Loan,
then the Bank's security interest and lien against such Guaranteed Amount shall
be deemed to be released at
-11-
9:00 a.m., New York City time on the business day in which the sale is to be
settled, prior to the closing for such sale (i.e., the time at which the
purchaser pursuant to such Purchase Commitment has been paid to the Fiscal and
Transfer Agent, as provided in SBA Form 1086, the purchase price for such
Guaranteed Amount, and the Borrower has delivered to the Fiscal and Transfer
Agent all documents required to be delivered to it pursuant to such Purchase
Commitment); provided, however, if the Bank's security interest and lien against
such Guaranteed Amount is released as provided above, but such sale is not
finally settled on such settlement date, then the Bank's security interest and
lien against such Guaranteed Amount shall be deemed to reattach against such
Guaranteed Amount as if such security interest and lien had not been released,
and the Bank's security interest and lien against such Guaranteed Amount shall
be deemed to be released at 9:00 a.m., New York City time on the business day to
which the settlement of such sale has been adjourned.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
The Borrowers represent and warrant to the Bank that:
SECTION 3.1 Organization; Power; Authorization. Each of the Borrowers is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of the Borrowers is duly qualified to transact
business in each state where any of the Collateral is located or in which the
character of its properties or the nature of the business conducted by it makes
such qualification necessary, except in jurisdictions where the failure to so
qualify will not materially adversely affect its business or operations or where
the failure to so qualify would not have an adverse effect on the Borrowers'
ability to collect any SBA Loans or enforce any collateral therefor in a state
where any account debtor of the Borrowers or such collateral may be located.
Each of the Borrowers has the power to borrow hereunder and has the power,
authority, franchises and licenses (a) to own their respective properties and
assets and to carry on and conduct their respective businesses and (b) to
execute and deliver this Agreement, the Note and all other Loan Documents to
which each is a party and to perform each and every obligation hereunder and
thereunder. The execution, delivery and performance by the Borrowers of this
Agreement, the Note and each of the other Loan Documents have been duly
authorized by all requisite action.
SECTION 3.2 No Conflict with, Violation of or Default under Laws or other
Agreements. Neither the execution or delivery of this Agreement or any other
Loan Document to which any of the Borrowers is a party, nor the consummation of
the transactions contemplated hereby or thereby, nor the compliance with or
performance of the terms and conditions of this Agreement or any other Loan
Document by the Borrowers is prevented or limited by, conflicts with, or will
result in the breach or violation of, or a material default under
-12-
the terms, conditions or provisions of (a) any material mortgage, security
agreement, indenture, evidence of indebtedness, loan or financing agreement,
partnership agreement, certificate of incorporation, by-laws or other material
agreement or material instrument to which any of the Borrowers is a party or by
which any of them is bound or (b) any provision of law, any order of any court
or administrative agency or any rule or regulation applicable to the Borrowers
or their respective businesses. None of Borrowers is in material default under,
or in violation of, any of its obligations under any material contract,
agreement, undertaking or instrument to which any of them is a party or by which
any of them is bound.
SECTION 3.3 Litigation; Official Approvals. (a) Except as set forth on
Schedule V hereto, there is no action, proceeding or investigation pending or
threatened against the Borrowers before any court or administrative agency that
might (i) materially and adversely affect its ability to perform their
obligations under this Agreement or any of the other Loan Documents, (ii)
involve the possibility of any judgment or liability which is uninsured and
would result in any material adverse change in the business, properties or
assets of any of the Borrowers, or (iii) materially and adversely affect the
enforceability of this Agreement, the Note, or any Loan Document. Except for any
necessary SBA approvals and as disclosed in writing to the Bank, all
authorizations, consents and approvals of and filings with governmental bodies
and agencies required in connection with the execution and delivery of this
Agreement, the Note and the other Loan Documents and the performance by the
Borrowers of their obligations hereunder and thereunder have been obtained. The
judgment creditor in connection with the judgment described on Schedule IX does
not have a security interest or other encumbrance in the assets of any Borrower
which is senior or pari passu to that of the Bank and has not levied upon any
Borrower or upon any Borrower's assets or taken any other action which has
granted or shall grant to it a security interest or other encumbrance pari passu
or senior to that of the Bank.
(b) Neither the Borrowers nor any of their Subsidiaries (if any) is
in default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which would have a materially adverse effect on the condition
(financial or otherwise) of the Borrowers or any of their Subsidiaries (if any).
SECTION 3.4 Information and Financial Data Accurate; Financial Statements;
No Adverse Changes. All information and financial and other data delivered to
the Bank in connection with or as an inducement to the making of the Revolving
Credit Loan (collectively, the "Application") relating to the Borrowers is true,
correct and complete as of the date hereof and no information has been omitted
therefrom which would make the Application misleading in any material respect.
The financial statements included in the Application or otherwise supplied to
the Bank (a) present fairly the financial position of the Borrowers as at their
respective dates and the results of operations and changes in financial position
for the periods to which they apply and (b) have been prepared in conformity
with Generally Accepted Accounting Principles applied on a consistent basis
throughout the periods involved. Since March 31, 1997, there has not been any
adverse change in the financial condition, assets, liabilities, business or
-13-
operations of the Borrowers, other than changes, none of which (either by itself
or in conjunction with all other changes) has been materially adverse. The
balance sheet referred to in Section 4.5(f) hereof accurately reflects the
financial position of the Borrowers as of its date and there has been no change
which would have a material adverse effect on the Borrowers.
SECTION 3.5 Title to Properties and Collateral. Each of the Borrowers has
good and marketable title to all of its properties and assets subject only to
(i) such liens, encumbrances and restrictions as are disclosed on the financial
statements previously delivered to the Bank or have been otherwise previously
disclosed in writing to the Bank and (ii) Permitted Encumbrances. Each of the
Borrowers has or will acquire good title to the Collateral that it is pledging
to the Bank on the date hereof or will be pledging to the Bank from time to time
in accordance with the terms of this Agreement and the other Loan Documents. The
Borrowers have possession of all original SBA Loan Documents other than those
delivered to a person or entity who has entered into a written agreement with
the Bank to hold such documents as bailee for and as agent for perfection
purposes for the Bank. All SBA Loans represent undisputed, unconditional, bona
fide indebtedness owed to the Borrowers by the account debtor named in the SBA
Loan Documentation with respect thereto and there are and shall be no setoffs or
counterclaims or rights of recoupment against such obligations. All SBA Loan
Documentation is true, complete and correct evidence of the obligations of the
account debtors to the Borrowers and signatories and endorsements that appear
thereon are genuine and all signatories and endorsers have full capacity to
contract.
SECTION 3.6 Taxes. The Borrowers have filed (or have extensions of the
time within which to file) returns for and paid in full all federal, state and
local taxes to the extent such filings and payments were required prior to the
date of this Agreement. All of such returns are true, correct and complete.
SECTION 3.7 Agreements Legal, Valid, Binding and Enforceable. This
Agreement, the Note and the other Loan Documents to which any of the Borrowers
is a party have been duly executed and delivered by, and are the legal, valid
and binding obligations of the Borrowers enforceable against the Borrowers in
accordance with their respective terms.
SECTION 3.8 No Untrue Statements. The representations, statements and
warranties of the Borrowers set forth in this Agreement and the other Loan
Documents (a) are true, correct and complete, (b) do not contain any untrue
statement of a material fact, and (c) do not omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading or incomplete. The Borrowers understand that all such statements,
representations and warranties have been relied upon as an inducement by the
Bank to make the Revolving Credit Loan.
-14-
SECTION 3.9 Employee Benefit Plans. Each of the Borrowers is in compliance
in all material respects with the applicable provisions of ERISA and the
regulations and published interpretations thereunder and the Borrowers have not
received, and the Borrowers have no reason to relieve that they will receive,
any notification of non-compliance thereunder. No Reportable Event has occurred
with respect to any Plan administered by the Borrowers or any administrator
designated by the Borrowers.
SECTION 3.10 Payment of Obligations. None of the Borrowers is in material
default under the terms of any indebtedness, liability or obligation of any of
the Borrowers with respect to any material loan or material borrowing of any of
the Borrowers of any nature whatsoever.
SECTION 3.11 Governmental Regulations. (a) None of the Borrowers is
engaged principally in, nor has as one of its important activities, 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 of the United States, as amended to the date hereof). If
requested by the Bank, the Borrowers or any Subsidiary will furnish to the Bank
a statement on Federal Reserve Form U-1.
(b) No part of the proceeds of the Revolving Credit Loan will be
used, whether directly or indirectly, and whether immediately, incidentally or
ultimately (i) to purchase or to carry margin stock (as defined in subsection
(a) of this Section) or to extend credit to others for the purpose of purchasing
or carrying margin stock, or to refund indebtedness originally incurred for such
purpose, or (ii) for any purpose which violates, or is inconsistent with, any of
the provisions of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
SECTION 3.12 Subsidiaries. Except as set forth on Schedule I hereto on the
Effective Date, and except as disclosed to the Bank on any subsequent Borrowing
Date, the Borrowers have no Subsidiaries.
SECTION 3.13 SBA Relationship. BLC Partnership transferred all of its
assets and obligations to BLC Inc. with the consent of the SBA. BLC Partnership
is no longer conducting any business as a SBA qualified lender or otherwise and
will not conduct any such business hereafter. BLC Inc. is now and has been since
______________ __, 199_ a qualified "non-bank lender" or "small business lending
company" eligible to participate with the SBA in making loans to qualifying
small business, within the meaning of Part 120 of Title 13 of the Code of
Federal Regulations, as amended.
SECTION 3.14 Use of Proceeds. Existing SBA Loans (a) The proceeds of the
Revolving Credit Loan will be used to finance loans by the Borrowers to small
businesses eligible to participate in the SBA's guaranteed loan program.
-15-
ARTICLE IV
CONDITIONS OF LENDING
The obligation of the Bank to lend hereunder is subject to the following
conditions precedent:
SECTION 4.1 Representations and Warranties. The representations and
warranties set forth in Article III hereof shall be true and correct on and as
of each Borrowing Date and on the Effective Date with the same effect as though
each such representation and warranty had been made on and as of each such date,
except to the extent that any of such representations and warranties expressly
relate to earlier dates.
SECTION 4.2 No Default. On each Borrowing Date and on the Effective Date,
the Borrowers shall be in compliance with all the terms and provisions set forth
herein on its part to be observed or performed and no Event of Default specified
in Article VII hereof, nor any event which upon notice or lapse of time or both
would constitute such an Event of Default, shall have occurred as of such
Borrowing Date or on the Effective Date.
SECTION 4.3 Officer's Certificate. On each Borrowing Date, the Bank shall
have received a certificate dated such date, and signed by an Executive Officer
of each of the Borrowers to the effect that the Borrowers are in compliance with
the conditions precedent set forth in Sections 4.1 and 4.2 hereof.
SECTION 4.4 Litigation. On each Borrowing Date and on the Effective Date,
there shall be no action, suit, arbitration or other proceeding, inquiry or
investigation, at law or in equity, or before or by any court, public board or
body, arbitrator or arbitral body, pending against any of the Borrowers or of
which the Borrowers have otherwise received official notice or, which to the
best knowledge of the Borrowers, is threatened against any of the Borrowers,
wherein any Person is challenging any of the transactions contemplated by this
Agreement or any of the other Loan Documents or wherein an unfavorable decision,
ruling or finding would materially adversely affect the ability of any of the
Borrowers to perform its obligations under this Agreement, the Note or any of
the other Loan Documents.
SECTION 4.5 Supporting Documents. On the Effective Date, the Bank shall
have received, as applicable, (a) copies of each Borrowers' Certificate of
Incorporation, as amended, certified by the Secretary of State of Delaware; (b)
certificates as to the good standing of the Borrowers in the State, dated a
recent date; (c) certificates of an Authorized Representative of each of the
Borrowers dated the Closing Date and certifying (i) that (A) attached thereto is
a copy of the By-laws in existence as of the date of such certificate and since
the day before the date of the resolutions referenced in clause (ii) below, and
(B) there have been no amendments to the
-16-
Certificate of Incorporation of such Borrowers since the date of the last
amendment thereto indicated on the certificates furnished pursuant to clause (a)
above; (ii) that attached thereto is a true and complete copy of resolutions
adopted by the Board of Directors or partners of the Borrowers authorizing the
execution and delivery of this Agreement, the Security Agreement, the Note, and
each of the other Loan Documents; (iii) the incumbency and specimen signature of
the Authorized Representative of the Borrowers executing this Agreement, the
Security Agreement, the Note, and any other Loan Documents and any other
documents and instruments furnished pursuant hereto or thereto and a
certification by another officer or partner of the Borrowers as to the
incumbency and signature of the Authorized Representative of the Borrowers; (iv)
that the representations and warranties set forth in Article III hereof are
true, correct and complete as of the date of the certificate except for changes,
none of which either alone or in conjunction with other changes materially
adversely affects any of the Borrowers, its business or its ability to perform
any of the Obligations; (v) that the Borrowers have performed and complied with
all of the agreements in the Loan Documents required to be performed or complied
with by it on or prior to the date of the certificate; and (vi) that no Event of
Default, or any condition, event or act which with the giving of notice or the
lapse of time, or both, would constitute an Event of Default, exists under this
Agreement or any of the Loan Documents; (d) certificates of insurance evidencing
compliance with Section 5.15 hereof, and, within thirty (30) days of the Closing
Date, copies of such insurance policies; (e) the Required Filings, naming the
Borrowers as debtor, the Bank as secured party and the Collateral as collateral;
(f) consolidated financial statements for the Borrowers as of March 31, 1997;
(g) evidence satisfactory to the Bank and its counsel that all of the assets of
BLC Partnership have been transferred to BLC Inc. and that the SBA approved such
transaction and that BLC Inc. is a qualified lender as set forth in Section 3.13
above; and (h) written a Purchase Commitment, with respect to the Guaranteed
Amount of any SBA Loan against which the Bank has been requested to advance a
Guaranteed Portion on the Closing Date.
SECTION 4.6 Effectuance of Assignment. On or prior to the Effective Date
the following shall have occurred: (a) the Bank and Transamerica shall have
entered into the Partial Assignment Agreement in a form satisfactory to Bank and
its counsel, and Transamerica shall have paid to the Bank all amounts due to the
Bank thereunder; (b) the Bank and Transamerica shall have entered into an
Intercreditor Agreement in a form satisfactory to Bank and its counsel; and (c)
the Borrowers shall have paid to the Bank, or on the Bank's behalf to Xx. Xxxxxx
Xxxxxxxxx, or the Bank shall have received from Transamerica in addition to all
other amounts to be paid by Transamerica pursuant to the Partial Assignment
Agreement, the entire portion of the Obligations which the Bank has assigned to
Xx. Xxxxxxxxx pursuant to the Amended and Restated Junior Participation
Agreement dated as of February 7, 1996 (the "Amended and Restated Junior
Participation Agreement").
SECTION 4.7 Approval of Counsel for the Bank. All legal matters incident
to this Agreement shall be satisfactory to Xxxx Marks & Xxxxx, special counsel
for the Bank, and the Borrowers shall have paid the reasonable fees and expenses
of such counsel in connection with the preparation and negotiation of this
Agreement and the other Loan Documents and the closing of the Revolving Credit
Loan, subject to the provisions of Section 8.3 hereof.
-17-
SECTION 4.8 Administrative Fee. On the Effective Date, the Borrowers shall
have paid the Administrative Fee.
SECTION 4.9 Other Documents. On or prior to the Effective Date, the Bank
shall have received any additional documents, affidavits or certificates of the
Borrowers or any other Person as it may reasonably require.
SECTION 4.10 Additional Conditions to First Advance and Additional
Advances. On or prior to the later to occur of the Effective Date or the date of
the first Advance hereunder, in addition to any other requirements hereunder,
the Bank shall have received, in each case in form and substance satisfactory to
the Bank and its counsel: (a) evidence that the Required Filings have been made;
and (b) all documents, certificates and instruments required to be delivered to
the Bank on or prior to the Effective Date pursuant to this Article IV or
Section 5.15 hereof which are not so delivered. Concurrently with or prior to
the making of any Advance, in addition to any other requirement hereunder, the
Borrowers shall have paid to the Bank any Administrative Fee and other fees
required to be paid hereunder and with respect to any Advance of a Guaranteed
Portion after the Effective Date, evidence of the type required to be provided
pursuant to Section 4.5(n). In the event that such conditions are not satisfied
on a timely basis the Bank shall not be obligated to make any Advances or
perform any of its other obligations hereunder.
ARTICLE V
AFFIRMATIVE COVENANTS OF THE BORROWERS
The Borrowers covenant and agree that, unless the Bank otherwise consents
in writing, so long as this Agreement shall remain in effect or the Note or any
of the Obligations shall be outstanding, the Borrowers shall, and shall cause
each of their Subsidiaries (if any) to:
SECTION 5.1 Preservation of Properties. Preserve and protect the
usefulness and value of the Collateral and its properties and assets including
without limitation the maintenance and preservation of all guarantees and
collateral for the SBA Loans.
SECTION 5.2 Corporate Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate or
partnership, as applicable, existence, rights and franchises and comply with all
laws applicable to it and at all times be qualified to do business in the
jurisdictions where each is required to be so qualified.
SECTION 5.3 Payment of Debts. Pay their debts, liabilities and obligations
when due, except those which are contested in good faith and for which the
Borrowers have maintained adequate reserves satisfactory to the Bank, provided
that such contest shall not result
-18-
in a lien other than a Permitted Encumbrance being placed on the Collateral or
any part thereof or result in the Collateral or any part thereof being subject
to forfeiture.
SECTION 5.4 Accounts and Records. Keep and maintain full and accurate
accounts and records in accordance with Generally Accepted Accounting
Principles, consistently applied.
SECTION 5.5 Payment of Taxes and Claims. Prepare and timely file all
federal, state and local tax returns required to be filed by the Borrowers and
pay and discharge all taxes, assessments and other governmental charges or
levies imposed upon the Borrowers or in respect of any of the Borrowers'
property and assets before the same shall become in default, as well as all
lawful claims (including, without limitation, claims for labor, materials and
supplies) which, if unpaid, might become a lien or charge upon the Collateral or
the Borrowers' property and assets or any part thereof, except those which are
contested in good faith by the Borrowers and for which the Borrowers have
maintained adequate reserves satisfactory to the Bank; provided that such
contest shall not result in a lien other than a Permitted Encumbrance being
placed on the Collateral or any part thereof being subject to forfeiture. The
Borrowers shall establish, to the extent necessary, reserves which are
reasonably believed by the Auditors to be adequate for the payment of additional
taxes for years which have not been audited by the respective taxing
authorities.
SECTION 5.6 Compliance with Law. Comply with all applicable federal,
state, county and municipal laws, ordinances, rules, orders and regulations now
in force or hereafter enacted.
SECTION 5.7 Financial Statements and Reports. Furnish, or cause to be
furnished, to the Bank the following financial statements:
(a) As soon as available and in any event within forty five (45)
days after the close of each of the first three fiscal quarters in each Fiscal
Year of the Borrowers, unaudited consolidated and consolidating financial
statements of the Borrowers and each Subsidiary (if any) on a comparative basis
(including financial position, earnings and retained earnings statements)
prepared by the Chief Financial Officer of each of the Borrowers;
(b) As soon as available and in any event within ninety (90) days
after the close of each Fiscal Year of the Borrowers a copy of the annual
audited consolidated financial statements of the Borrowers and each Subsidiary
on a comparative basis (including financial position, earnings and retained
earnings statements), prepared by Xxxxxxx Xxxxxx & Co. or other independent
certified public accountants selected by the Borrowers and acceptable to the
Bank (the "Auditors"), together with the unqualified opinion of such Auditors to
the effect that such financial statements present fairly the consolidated
financial position of the Borrowers as at their respective dates and results of
operations and changes in consolidated financial position for the respective
periods to which they apply, in accordance with Generally Accepted Accounting
Principles,
-19-
together with such other information in connection with the financial statements
supplied pursuant to this subsection as the Bank reasonably may request;
(c) Concurrently with the delivery of the statements set forth in
(a) and (b) above, a certificate signed by the Chief Financial Officer of each
of the Borrowers setting forth the computations as to compliance with the
financial covenants set forth in Section 6.9 hereof;
(d) Within ten (10) days after the end of each month, a report as to
all SBA Loans setting forth the following information, on a loan-by-loan basis:
the original principal amount, interest rate, Guaranteed Portion, payments
received through the beginning of the month, payments received during the month
and the distribution of such payments, and whether such loan is in default or
whether the Borrowers know of any event which, with the passage of time or the
giving of notice or both, would constitute an event of default thereunder,
certified by the Chief Financial Officer of each of the Borrowers;
(e) Copies of all documents filed with the Securities Exchange
Commission or the SBA, or sent to shareholders of any of the Borrowers;
(f) Copies of all reports, forms, information statements and/or
documents filed with the PBGC with respect to any Plan of the Borrowers, other
than any such reports, forms, information statements and/or documents prepared
and/or submitted solely in the ordinary course of the Borrowers' business;
(g) Information and schedules relating to all other indebtedness and
obligations of the Borrowers as the Bank reasonably may request;
(h) Copies of all instruments and documents regarding any SBA Loan,
contemporaneously with the submission of any Advance Request with respect
thereto; and
(i) As soon as practicable, any other information regarding the
operations, business affairs and condition (financial or otherwise) of the
Borrowers or filings with any governmental authorities other than those to be
provided pursuant to (e) and (f) above, as the Bank reasonably may request.
SECTION 5.8 Access to Books and Records. Permit the Bank, and its duly
authorized agents, officers and independent auditors, during normal business
hours and upon prior notice (except upon an Event of Default, in which
circumstance no notice shall be required) to (a) examine the books and records
of the Borrowers and to make copies and extracts therefrom, and (b) discuss the
affairs, finances and accounts of the Borrowers, and be advised as to the same
by, the officers of the Borrowers, as shall be relevant to the performance or
observance of the terms, covenants or conditions of this Agreement or the
financial condition of the Borrowers.
-20-
SECTION 5.9 Notification of Event of Default. (a) Give prompt written
notice to the Bank of (i) any Event of Default or of any condition, event or act
which with the giving of notice or the lapse of time, or both, would constitute
an Event of Default, specifying the same and the steps being taken to remedy the
same and (ii) any default, event of default or any condition, event or act
which, with the giving of notice or the lapse of time or both, would constitute
such a default or event of default under any SBA Loan, other agreement or
contract to which any of the Borrowers is a party or by which any of its
property or assets is bound which would have a material and adverse effect on
the business or condition (financial or otherwise) of any of the Borrowers,
which notice shall include a description of the default and any action being
taken with respect thereto by the Borrowers or their account debtors.
(b) Promptly notify the Bank in writing of (i) any change in, the
business or the operations which may be materially adverse to the Borrowers or
any of their Subsidiaries (if any), disclosing the nature thereof, (ii) any
modification, change or amendment to the Guaranty Agreement on SBA Form 750
between the Borrowers and the SBA, and (iii) any information which indicates
that any financial statements which are the subject of any representation
contained in this Agreement, or which are furnished to the Bank in connection
with this Agreement, fail, in any material extent, to present fairly the
financial condition and results of operations purported to be presented therein,
disclosing the nature thereof.
SECTION 5.10 Certificate of No Default. Deliver to the Bank on each
Borrowing Date and concurrently with the delivery of the financial statements
set forth in Sections 5.7(a) and (b) hereof, a certificate of an Authorized
Representative of each of the Borrowers either stating that he or she is not
aware of any condition, event or act which constitutes an Event of Default or
any condition, event or act which, with the giving of notice or the lapse of
time, or both, would constitute an Event of Default, or, if any such condition,
event or act exists, specifying the same and the steps being taken to remedy the
same. In addition, upon twenty (20) days' prior request by the Bank, an
Authorized Representative of each of the Borrowers shall execute, acknowledge
and deliver to the Bank a certificate of such Authorized Representative either
stating that to his or her knowledge no default or breach exists hereunder or
under any other Loan Document, or specifying each such default or breach of
which he or she has knowledge and the steps being taken to remedy the same.
SECTION 5.11 Payment of Costs and Expenses. Pursuant and subject to
Section 8.3 hereof, promptly pay the costs and expenses of the Bank, including,
without limitation, the reasonable fees and disbursements of any counsel for the
Bank, incurred from time to time, in connection with the transactions
contemplated by this Agreement and the other Loan Documents.
SECTION 5.12 Notification of Litigation and Adverse Business Development.
Give prompt written notice to the Bank of (a) any action, proceeding or
investigation pending or threatened against any of the Borrowers before any
court or governmental instrumentality or other administrative agency which
involves the possibility of any judgment or liability which would
-21-
result in any material adverse changes in the business, properties or assets of
any of the Borrowers, either individually or in the aggregate, or (b) any
materially adverse change in the financial condition, assets, liabilities,
business or operations of any of the Borrowers, either individually or in the
aggregate.
SECTION 5.13 Compliance with ERISA. (a) Comply in all material respects
with the applicable provisions of ERISA and (b) furnish to the Bank (i) as soon
as possible, and in any event within five (5) Business Days after any Executive
Officer of any of the Borrowers knows or has reason to know that any Reportable
Event with respect to any Plan of the Borrowers has occurred, a statement of the
Chief Financial Officer of each of the Borrowers setting forth details as to
such Reportable Event and the action which the Borrowers propose to take with
respect thereto, together with a copy of the notice of such Reportable Event, if
any, given to the PBGC, and (ii) promptly after receipt thereof, a copy of any
notice the Borrowers or any Subsidiary of the Borrowers may receive from the
PBGC relating to the intention of the PBGC to terminate any Plan or to appoint a
trustee to administer any Plan.
SECTION 5.14 New Subsidiaries. Promptly notify the Bank of any newly
formed or acquired Subsidiary.
SECTION 5.15 Insurance. Keep their insurable properties adequately insured
at all times, by financially sound and reputable insurers, and maintain
insurance against employee theft and such other insurance to such extent and
against such loss, damage, liability (including liability to third parties) and
risks (including fire and other risks insured against by extended coverage) as
is customary with companies in the same or similar business of comparable size
to the Borrowers, and maintain in full force and effect public liability
insurance against claims for personal injury or death or property damage
occurring upon, in, about or in connection with the use of any properties owned,
occupied or controlled by it in an amount not less than $1,000,000, including a
minimum of $1,000,000 in primary insurance, and maintain such other insurance as
may be required by applicable law, or as reasonably may be required by the Bank.
SECTION 5.16 Federal Reserve Regulations, Etc.. (a) No part of the
proceeds of the Revolving Credit Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately (a) to purchase
or to carry margin stock or to extend credit to others for the purpose of
purchasing or carrying margin stock, or to refund indebtedness originally
incurred for such purpose, or (b) for any purpose which violates, or is
inconsistent with, any of the provisions of Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System.
(b) The proceeds of the Revolving Credit Loan will be used solely
for the purposes set forth in Section 3.14 hereof.
SECTION 5.17 Notification of Adverse Legal Development. Give prompt
written notice to the Bank of any change in any Federal, state or local law,
statute, rule or
-22-
regulation, which change would have a material adverse effect (or, in the case
of a change in any statute, rule or regulation of or relating to the SBA, an
adverse effect) on the business or condition (financial or otherwise) of any of
the Borrowers, and of which change any of the Borrowers has knowledge.
SECTION 5.18 SBA Funding Eligibility. At all times during the term of this
Agreement remain a "non-bank lender" or "small business lending company"
eligible to participate with the SBA in making loans to qualifying small
businesses, within the meaning of Part 120 of Title 13 of the Code of Federal
Regulations, as amended. All SBA Loans shall conform in all respects with all
applicable rules, regulations and requirements of the SBA, and shall be
evidenced by documents, instruments and certificates on such forms as the SBA
shall from time to time prescribe for use by the Borrowers or their account
debtors or such other forms as shall be expressly approved in writing by the
SBA.
SECTION 5.19 Handling of SBA Loans. In furtherance of the continuing
assignment and security interest contained in the Security Agreement, the
Borrowers will, upon the creation of any SBA Loans, or at such intervals as the
Bank may require, provide the Bank with confirmatory assignments in form
satisfactory to the Bank, copies of invoices to customers, evidence of shipment
and delivery, and such further information and documentation as the Bank may
require and the Borrowers, at the Bank's request, shall deliver to the Bank all
documents and written instruments constituting or relating to the SBA Loans. The
Borrowers will take any and all steps and observe such formalities and will
execute and deliver all papers and instruments and do all things necessary to
effectuate this agreement and facilitate collection of the SBA Loans.
Until the Borrowers' authority so to do is terminated by written notice
from the Bank (which notice the Bank may give at any time in its discretion or
at any time after default by the Borrowers under this Agreement) the Borrowers
will, at their own cost and expense, but on the Bank's behalf and for the Bank's
account, collect and otherwise enforce as the Bank's property and in trust for
the Bank, all amounts unpaid on SBA Loans and shall not commingle such
collections with the Borrowers own funds or use the same except to pay the
Borrowers obligations to the Bank. The Borrowers shall forthwith remit all
amounts so collected in kind whether in the form of cash, checks, drafts, notes,
acceptances or other evidence of payment, including all prepayments by account
debtors to the Borrowers in the form received.
ARTICLE VI
NEGATIVE COVENANTS OF THE BORROWERS
The Borrowers covenant and agree that, so long as this Agreement shall
remain in effect or the Note or any of the Obligations shall be outstanding,
neither they nor any of their Subsidiaries (if any) shall, without the prior
written consent of the Bank:
-23-
SECTION 6.1 ERISA. Permit any Plan to engage in a prohibited transaction
within the meaning of section 406 of ERISA or section 4975 of the Code, except
in those cases for which there is a statutory or administrative exemption
available under section 408 of ERISA or section 4975(d) of the Code, or permit
to exist with respect to any Plan any accumulated funding deficiency within the
meaning of section 412 of the Code, or incur any liability to the PBGC other
than for required insurance premiums.
SECTION 6.2 Merger. (a) Merge into, acquire or consolidate with or into
any Person unless (i) one of the Borrowers is the surviving or resulting Person
and (ii) after giving effect to such merger, acquisition or consolidation no
Event of Default shall exist, or (b) sell, assign, lease, transfer or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) except
for sale of the Guarantee Portion of any SBA Loan in the ordinary course of
business of the Borrowers.
SECTION 6.3 Indebtedness. Incur, create or assume, directly or indirectly,
any indebtedness or liability of any kind whatsoever including, but not limited
to, advances or any other indebtedness or liability evidenced by notes, bonds,
debentures or any conditional sale or similar title retention agreements or
capitalized leases, except for (a) the Note; (b) Consolidated Subordinated Debt;
(c) existing indebtedness as disclosed on Schedule II annexed hereto, provided
that such indebtedness shall not be renewed, extended or refinanced without the
prior written consent of the Bank; (d) indebtedness of the Borrowers and their
Subsidiaries (if any) to the Bank; (e) purchase money indebtedness incurred in
connection with consolidated capital expenditures, and which indebtedness
fulfills the requirements of Section 6.4(c) hereof; (f) indebtedness of
Borrowers and their Subsidiaries (if any) to Transamerica; and (g) indebtedness
incurred in the ordinary course of business; provided, however, that all
indebtedness incurred in the ordinary course of the business of the BLC Inc.
together with all outstanding indebtedness referred to in clause (c) shall not
exceed $200,000 at any time:
SECTION 6.4 Liens. Create, assume, permit or suffer to exist any mortgage,
pledge, encumbrance, security interest or other lien securing an obligation on
any property, real, personal, or mixed, whether now owned or hereafter acquired
("Encumbrances"), except for (a) Permitted Encumbrances; (b) existing
Encumbrances as disclosed on Schedule III annexed hereto, as the same may be
renewed or extended; and (c) Purchase Money Mortgages granted in connection with
indebtedness incurred for consolidated capital expenditures, provided that after
giving effect to the creation of such Purchase Money Mortgage(s) (i) the
Borrowers are not in violation of any other covenant or agreement contained in
this Agreement and (ii) the Guarantor is not in violation of any covenant or
agreement contained in the Guaranty, and provided further that such Purchase
Money Mortgages do not exceed 100% of the purchase price of the asset being so
financed, and provided finally that no asset (other than the asset being
acquired) secures the indebtedness secured by such Purchase Money Mortgage.
-24-
SECTION 6.5 Guaranties. (a) Guarantee, endorse, become surety for, or
otherwise in any way become or be responsible for, the obligations of any other
Person, including, without limitation, by agreement to maintain net worth or
working capital of any other Person or agreement for the furnishing of funds to
any other Person, directly or indirectly, through the purchase of goods,
supplies or services (or by way of stock purchase, capital contribution, advance
or loan) or for the purpose of paying or discharging the liabilities of any
other Person, or otherwise, (b) enter into or be a party to any contract for the
purchase of merchandise, materials, supplies or other property if such contract
provides that payment for such merchandise, materials, supplies or other
property shall be made regardless of whether delivery of such merchandise,
materials, supplies or other property is ever made or tendered, or (c) obtain
upon its credit the issuance of any letter or letter of credit for the discharge
of the obligations of any other Person, except (i) the Borrowers and their
Subsidiaries (if any) may endorse negotiable instruments for deposit or
collection in the normal course of their respective businesses; (ii) guaranties
issued in favor of the Bank; and (iii) existing guaranties as disclosed on
Schedule IV annexed hereto, as the same may be renewed or extended.
SECTION 6.6 Nature of Business. Materially change, alter or amend the
nature or conduct of its business from that engaged in by it on the Effective
Date.
SECTION 6.7 Investments. Make or permit to exist any loans or advances to,
or purchase or repurchase any stock, other securities or evidences of
indebtedness of, or make or permit to exist any investment or acquire any
interest whatsoever in (by capital contribution or otherwise), any other Person,
except for investments of its cash in (a) full faith and credit obligations of
the United States Government or any agency thereof maturing within one year of
the date of purchase; (b) dollar denominated certificates of deposit issued by
the Bank; (c) commercial paper rated A-1 or P-1; (d) any other investment
expressly permitted by the SBA; and (g) subject to Section 6.2 hereof,
investments in connection with acquisitions of entities engaged in businesses
substantially similar to that engaged in by the Borrowers as of the Closing
Date, provided that after giving effect to any such investment (i) the Borrowers
shall not be in violation of any other covenant or agreement contained in this
Agreement and (ii) the Guarantor shall not be in violation of any covenant or
agreement contained in the Guaranty.
SECTION 6.8 Handling of SBA Loans. Sell, lease, transfer, assign or
otherwise dispose of or amend or waive any provisions of any Guaranteed Portion
of SBA Loans, notes, accounts receivable or other obligations owed to the
Borrowers or any Subsidiary by any Person, or release any collateral therefor or
amend or waive any documents with respect to the collateral therefor, except (a)
for the purpose of collection in the ordinary course of their respective
businesses, and (b) for sales of the Guaranteed Portion of SBA Loans as
expressly permitted by this Agreement.
SECTION 6.9 Financial Covenants. (a) The Borrowers shall maintain at all
times a reserve against losses on SBA Loans equal to four percent (4%) of the
Borrowers' residual interest in the outstanding principal balance of all SBA
Loans outstanding.
-25-
(b) The Borrowers shall not permit their Consolidated Tangible Net
Worth (excluding Consolidated Subordinated Debt) to be less than $1,800,000 at
any time.
SECTION 6.10 Location of Collateral. Change its chief executive office or
the places where any Collateral is kept except upon sixty (60) days prior
written notice to Bank.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES; APPLICATION OF PROCEEDS
SECTION 7.1 Events of Default. Any one or more of the following events
shall constitute an Event of Default:
(a) if any payment of all or any part of the principal or interest
thereon due pursuant to this Agreement and/or the Note, whether at the stated
maturity thereof or at any date fixed for payment by acceleration, by notice of
prepayment or otherwise shall not be paid as and when due and such non-payment
shall continue for ten (10) days;
(b) if any of the Borrowers shall default in the performance or
observance of any covenant contained in Article VI;
(c) if any of the Borrowers shall default in the performance or
observance of any covenant, agreement or condition (other than such referred to
in Section 7.1(a) or (b) hereof) set forth in this Agreement and continuance of
such default for a period of thirty (30) days after notice thereof to the
Borrowers;
(d) if any representation or warranty made by any of the Borrowers
herein or in any other Loan Document shall prove to have been false, incorrect
or misleading in any material respect on the date as of which made;
(e) if any of the Borrowers or any of their Subsidiaries (if any)
shall (i) generally not be paying its debts as they come due, (ii) file a
petition in bankruptcy or a petition to take advantage of any insolvency act,
(iii) become insolvent or make an assignment for the benefit of its creditors,
(iv) consent to the appointment of a custodian or receiver of itself or of the
whole or any substantial part of its property, (v) on a petition in bankruptcy
filed against it, have an order for relief entered against it, or (vi) file a
petition or answer seeking reorganization or arrangement under the federal
Bankruptcy Code or any other applicable law or statute of the United States of
America or any other jurisdiction;
(f) if a petition in bankruptcy shall be filed against any of the
Borrowers or any of their Subsidiaries and not be dismissed within forth five
(45) days from the date of the filing;
-26-
(g) if a court of competent jurisdiction shall enter an order,
judgment or decree appointing, without the consent of the Borrowers or any of
their Subsidiaries, a custodian or receiver of any of the Borrowers or such
Subsidiary, or of the whole or any substantial part of its property, or
approving a petition filed against any of the Borrowers or any of their
Subsidiaries seeking reorganization or arrangement of any of the Borrowers or
such Subsidiary under the federal Bankruptcy Code or any other applicable law or
statute of the United States of America or any other jurisdiction, and such
order, judgment or decree shall not be set aside or stayed within forth five
(45) days from the date of its entry;
(h) if, under the provisions of any other law for the relief or aid
of debtors, any court of competent jurisdiction shall assume custody or control
of any of the Borrowers or any of their Subsidiaries or of the whole or any
substantial part of its property and such custody or control shall not be
terminated or stayed within forth five (45) days from the date of assumption of
custody or control;
(i) if a final judgment, a fine or other order for the payment of
money in excess of $50,000 shall be rendered by a court or administrative agency
against any of the Borrowers and/or any of their Subsidiaries and the applicable
Person shall not discharge the same or provide for its discharge in accordance
with its terms, obtain an adequate bond with respect thereto, or procure a stay
of execution thereof within sixty (60) days from the date of its entry and
within the sixty (60)-day period, or any longer period during which execution of
such judgment, fine or other order shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during the appeal;
(j) if there shall occur any Reportable Event with respect to any
Plan of the Borrowers or any of their Subsidiaries;
(k) if Xxxxxx Xxxxxxxxxxxx shall cease to hold his management
position with respect to the Borrowers and shall not have been replaced within
ninety (90) days of such cessation with a Person approved by the Bank (such
approval not to be unreasonably withheld or delayed); or
(l) if an Event of Default (as defined therein) shall occur under
any or all of the Loan Documents.
SECTION 7.2 Bank's Remedies. In case one or more Events of Default shall
have occurred, the Bank may terminate the Commitment and declare the entire
Outstanding Balance to be immediately due and payable, whereupon the maturity of
the then Outstanding Balance shall be accelerated and all principal, interest
accrued thereon and all other amounts due hereunder shall forthwith become due
and payable, and the Bank shall have the following rights and remedies, all such
rights and remedies and the actions contemplated by Sections 7.3 - 7.6 hereof
being specifically subject to and modified by the Multi-Party Agreement:
-27-
(a) at any time thereafter and so long as such Event of Default
shall be continuing, to declare the entire Outstanding Balance and the other
Obligations to be immediately due and payable, whereupon the maturity of the
then Outstanding Balance and other Obligations shall be accelerated and the
same, interest accrued thereon, and all other amounts due hereunder shall
forthwith become due and payable without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived, anything contained herein
or in the Note or other Obligations to the contrary notwithstanding;
(b) to take any action at law or in equity to collect the payments
due under the Note or to enforce performance and observance of the Obligations
of the Borrowers and the Guarantor under this Agreement, the Guaranty and the
other Loan Documents, or to recover damages for breach thereof;
(c) to exercise any and all rights under the Security Agreement; and
(d) to exercise any and all rights and remedies conferred upon
secured parties by the Uniform Commercial Code and other applicable laws.
SECTION 7.3 Specific Performance. In addition to the above remedies, if
any of the Borrowers commits a breach or threatens to commit a breach of this
Agreement or any other Loan Document, the Bank shall have the right and remedy,
without posting bond or other security, to have the provisions of this Agreement
or such other Loan Document specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause immediate and irreparable injury to the Bank and
that money damages will not provide an adequate remedy therefor.
SECTION 7.4 Agreement to Pay Attorneys' Fees and Expenses. If there shall
exist an Event of Default as defined in this Agreement and/or any other Loan
Document and the Bank shall employ attorneys, or incur other costs and expenses
for the collection of payments due or to become due or for the enforcement or
performance or observance of any obligation or agreement on the part of the
Borrowers under this Agreement and/or any other Loan Document, or enforcement of
the Note, the Borrowers agree that they will pay to the Bank, on demand, the
reasonable fees and disbursements of such attorneys together with all other
costs and expenses incurred by the Bank.
SECTION 7.5 Application of Proceeds. All payments received after an Event
of Default shall be applied as follows:
(a) First: to the payment of all fees, costs and expenses described
in the preceding Section 7.4;
-28-
(b) Second: to the payment in full of the Note and the other
Obligations with all such payments being applied first to the payment of
interest, with any balance first to the payment and reduction of principal, and
then to other amounts due; and
(c) Third: the balance, if any, of such proceeds remaining after
payment in full of the foregoing items, to the Borrowers or as a court of
competent jurisdiction may otherwise direct.
If the amount of the proceeds received from the sale or other disposition
of the Collateral shall be insufficient to satisfy in full the amounts referred
to in paragraphs (a) and (b) above, the Borrowers shall remain and be liable for
any such deficiency.
SECTION 7.6 No Remedy Exclusive. Except as otherwise expressly.provided
herein, no remedy herein conferred or reserved to the Bank is intended to be
exclusive of any other available remedy, but each and every remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or any other Loan Document or now or hereafter existing at law or in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any Event of Default shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. In order to
entitle the Bank to exercise any remedy reserved to it in this Agreement, it
shall not be necessary to give notice.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. All notices, certificates or other communications
permitted or required hereunder shall be conclusively deemed to have been
received and shall be effective on the day on which delivered (i) in the case of
the Borrowers, addressed to 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx Xxxxxxxxxxxx with copy to: Weil, Gotshal & Xxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Simeon Gold, Esq. and (ii) in the case
of the Bank, addressed to 000 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx Xxxxxxx, Senior Vice President, or if sent by registered or
certified mail, return receipt requested, postage prepaid, on the third Business
Day after the day on which mailed, addressed to the Borrowers or the Bank, as
the case may be, at its address set forth above. Either party, by notice given
hereunder, may designate a further or different address to which subsequent
notices, certificates or communications shall be sent.
SECTION 8.2 Survival. All covenants, agreements, obligations,
representations and warranties made by the Borrowers herein and in the
certificates delivered pursuant hereto shall be deemed to have been relied upon
by the Bank and shall survive the making by the Bank of the Revolving Credit
Loan and the execution and delivery to the Bank of
-29-
the Note regardless of any investigation made by the Bank or on its behalf and
without regard to any modification extension renewal, amendment or waiver of any
provision of any Loan Document, and shall continue in full force and effect
until such time as the principal of, premium, if any, interest on and all other
amounts due under the Note shall have been paid, and all fees, costs and
expenses due under the Loan Documents have been paid and any liability to the
Bank under the Loan Documents shall have been discharged in a manner
satisfactory to the Bank.
SECTION 8.3 Expenses of the Bank. At all times, the Borrowers will pay all
out-of-pocket expenses incurred by the Bank in connection with (a) the
preparation of this Agreement and the other Loan Documents (whether or not the
transactions hereby contemplated shall be consummated) including without
limitation, the reasonable fees and disbursements of Xxxx Marks & Xxxxx, special
counsel to the Bank, (b) the making of the Advances hereunder and (c) the
enforcement and protection of the rights of the Bank in connection with this
Agreement or the other Loan Documents, or with the Advances made or the Note
issued hereunder, and with respect to any action which may be instituted against
the Bank in respect of the foregoing, including, without limitation, the
reasonable fees and disbursements of counsel for the Bank.
SECTION 8.4 Applicable Law. This Agreement and the Note shall be construed
in accordance with and governed by the laws of the State of New York and
applicable federal law.
SECTION 8.5 Amendments, Changes and Modifications. Except as otherwise
provided in this Agreement or in the other Loan Documents, subsequent to the
issuance of the Note and prior to payment in full of the Note, no modification,
amendment, alteration, release or termination of any provision of this Agreement
or of the Note, nor consent to any departure by the Borrowers from the
provisions hereof, shall in any event be effective unless the same shall be in
writing and signed by the parties, their successors or assigns, on whom the same
shall be binding. Any such modification, amendment, release, termination or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on the Borrowers in any case shall entitle
the Borrowers to any other or further notice or demand in the same, similar or
other circumstance.
SECTION 8.6 Waivers. No waiver of any of the provisions of this Agreement
(a) shall be valid unless evidenced by a writing executed by each party to be
bound thereby, (b) shall be deemed or shall constitute a waiver of any other
provision of this Agreement or any other provisions hereof (whether or not
similar), or (c) shall constitute a continuing waiver unless otherwise expressly
provided. The failure or delay on the part of the Bank at any time or times in
exercising any right or remedy hereunder shall not operate as a waiver thereof
nor shall any single or partial exercise of any power or right or remedy
preclude other or further exercise thereof or the exercise of any other right or
remedy.
-30-
SECTION 8.7 Extension of Maturity. Subject to Article II hereof, should
any installment of principal of or interest on the Note become due and payable
on a day other than a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day, and, in the case of principal, shall be
payable with interest accrued to such date.
SECTION 8.8 Separability. In case any one or more of the provisions
contained in this Agreement or in the Note should be determined to be
superseded, invalid, illegal or otherwise unenforceable in any respect, pursuant
to applicable law, such determination shall not affect the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby, and such provisions shall
be enforced as if the invalid provision were deleted.
SECTION 8.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one and the same Agreement.
SECTION 8.10 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof and
supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as specifically set forth or
incorporated herein.
SECTION 8.11 Headings; Interpretation. Section and paragraph headings and
the table of contents are not to be considered part of this Agreement, are
included solely for convenience, are not intended to be full or accurate
descriptions of the contents thereof, and shall not affect its meaning,
construction or effect. Sections and paragraphs mentioned by number only are the
respective sections and paragraphs of this Agreement. The use of the terms
"herein", "hereunder", "hereof", and like terms shall be deemed to refer to this
entire Agreement and not merely to the particular provision in which the term is
contained, unless the context clearly indicates otherwise. Capitalized terms
used and not otherwise defined herein shall have the meanings given to them in
the other Loan Documents or the Uniform Commercial Code adopted by the State of
New York, as amended from time to time in accordance therewith.
SECTION 8.12 Term. This Agreement shall become effective upon the
Effective Date and shall remain in full force and effect from the date thereof
until the Maturity Date, provided however that this Agreement shall be
automatically renewed and extended for successive periods of one year each,
subject, however, to the right of either party to terminate it as at the
Maturity Date or at the end of any succeeding one year term upon at least sixty
(60) days prior written notice and subject to early termination upon the
occurrence of any Event of Default hereunder. Termination of this Agreement
shall not affect any of the Debtor's obligations incurred prior to the effective
date of such termination and the provisions hereof shall continue
-31-
to be fully operative until all transactions entered into, rights created, or
obligations incurred prior to the termination have been fully disposed of,
concluded or liquidated.
SECTION 8.13 Successors and Assigns. (a) Whenever in this Agreement
reference is made to any party, such reference shall be deemed to include the
successors or assigns thereof. All of the terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective transferees, legal representatives, heirs, successors and
assigns. The provisions of this Agreement are intended to be for the benefit of
the Bank, its successors and assigns as holder of the Note.
(b) The Bank, in its sole discretion, shall have the right, at any
time and from time to time, to sell participation interests in any or all of the
Advances to other lenders or, upon notice to the Borrowers, to assign all or any
portion of, or sell participation interests in, its beneficial interest in the
Note to any other lender or lenders acceptable to the Bank; provided, however,
the Bank shall not sell its entire interest in all of the Advances and Note
without the prior consent of the SBA, which consent shall not be unreasonably
withheld. Notwithstanding anything to the contrary contained in this subsection,
such sale or assignment by the Bank of any such participation or interest shall
in no manner increase or modify the Obligations pursuant to this Agreement, the
Note or any other Loan Document.
SECTION 8.14 Gender and Number. Words importing a particular gender mean
and include every other gender and words importing the singular number mean and
include the plural number and vice-versa.
SECTION 8.15 Exhibits and Schedules. Exhibits and Schedules, if any, to
this Agreement are an integral part of this Agreement.
SECTION 8.16 No Conflict with SBA Regulations. Notwithstanding any other
provision in his Agreement to the contrary, in the event any provision of this
Agreement is deemed to conflict or be inconsistent with any SBA rule, regulation
or policy, whether currently in effect or hereafter promulgated (an "SBA Rule"),
the provision of such SBA Rule shall govern and shall be deemed controlling for
all purposes of this Agreement. The parties hereto agree to be bound by the oral
or written opinion of the SBA's Chief Counsel for Business Loans in Washington,
D.C., as to the construction or interpretation of any SBA Rule.
-32-
IN WITNESS WHEREOF, the Borrowers and the Bank have caused this Revolving
Credit Agreement to be duly executed by their duly authorized officers, all as
of the day and year first above written.
BUSINESS LOAN CENTER, INC.
By: /s/ Xxxxxx Xxxxxxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxxxxxx, President
BLC FINANCIAL SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxxxxxx, President
STERLING NATIONAL BANK
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------
Xxxxxxx Xxxxxxx, Senior Vice President
-33-
EXHIBIT A
[FORM OF REVOLVING CREDIT NOTE]
$8,000,000 New York, New York
August 27, 1997
FOR VALUE RECEIVED, BUSINESS LOAN CENTER, INC., a Delaware corporation and
BLC FINANCIAL SERVICES, INC., a Delaware corporation (jointly and severally the
"Borrowers"), hereby jointly and severally promise to pay to the order of
STERLING NATIONAL BANK (the "Bank"), at its office located at 000 Xxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the Maturity Date the lesser of (i) the
principal sum of Eight Million Five Hundred Thousand Dollars ($8,000,000) and
(ii) the aggregate unpaid principal amount of all Advances (as defined in the
Agreement) to the Borrowers from the Bank pursuant to Section 2.01 of the
Amended and Restated Revolving Credit Agreement dated as of August 27, 1997,
between the Borrowers and the Bank (the "Agreement"), in lawful money of the
United States of America in immediately available funds on June 30, 1998,
subject to acceleration as set forth in the Agreement and subject to extension
as set forth in the Agreement.
This Revolving Credit Note is one of the Revolving Credit Notes referred
to in the Agreement. All capitalized terms used herein and not defined herein
which are defined in the Agreement, shall have the same meaning in this Note as
in the Agreement.
The Borrowers shall pay interest on the outstanding principal balance of
this Note on a monthly basis, on the first day of each month (on the basis of a
year of 360 days consisting of twelve (12) thirty (30) day months) at an annual
rate equal to the sum of the Base Rate, as in effect from time to time, plus
1.25%.
"Base Rate" shall mean the rate of interest publicly announced by the Bank
at its principal office from time to time as its prime rate, which rate need not
be the best rate available; any change in the Base Rate shall be effective as of
the opening of business on the date each such change is announced. The Borrowers
promise to pay interest, payable on demand, on any overdue principal and, to the
extent permitted by applicable law, overdue interest, from the respective due
dates of such amounts at a rate or rates determined as set forth in the
Agreement.
A-1
The Bank may charge any amount due under this Note to the Borrowers'
account with the Bank. Such amount shall be deemed paid out of the first
collections (other than the amounts then payable by the Bank to the SBA's
collection agent for ultimate payment to a party other than the Bank pursuant to
the Loan Documentation) in the account subsequent to the date of the charge. If
the Bank's Base Rate shall be increased, the compensation to be paid by the
Borrowers to the Bank shall be increased by 1/4 of 1% per annum for each 1/4 of
1% per annum of increase in said Base Rate. If the Bank's Base Rate shall be
decreased, the compensation to be paid to the Bank shall be reduced by 1/4 of 1%
per annum for each 1/4 of 1% per annum reduction in the said Base Rate.
The Borrowers hereby waive diligence, presentment, demand, protest and
notice of any kind whatsoever. The nonexercise by the holder hereof of any of
its rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
All borrowings evidenced by this Revolving Credit Note and all payments
and prepayments of the principal hereof and interest hereon and the respective
dates thereof shall be recorded by the holder hereof on the schedule attached
hereto and made a part hereof, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that the failure by
the holder to make such insertion shall not affect the joint and several
obligations of the Borrowers hereunder.
Reference is made to the Agreement, which, among other things, contains
provisions for the acceleration of the maturity hereof upon the happening of
certain events and for optional and mandatory prepayment of the principal hereof
prior to the maturity hereof, all upon the terms and conditions therein
specified. This Revolving Credit Note is secured by the Collateral referred to
in the Agreement and in the Security Agreement. This Revolving Credit Note shall
be construed in accordance with and governed by the laws of the State of New
York and applicable federal law.
BUSINESS LOAN CENTER, INC.
By: /s/ Xxxxxx Xxxxxxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxxxxxx, President
BLC FINANCIAL SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxxxxxx, President
X-0
X-0
Xxxxxxxx of Advances/Repayments
Initials of Guaranteed Amount of
Entering Portion of Principal Outstanding
Date Officer Advance* Repayment Balance
---- ------- -------- --------- -------
* including accrued but unpaid outstanding interest under Revolving Credit Loan
A-4
EXHIBIT B
NOTICE OF ADVANCE AND
BORROWING BASE CERTIFICATE
(LETTERHEAD OF BORROWERS)
Date:_______
Sterling National Bank
000 Xxxx Xxxxxx,
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Senior Vice President
Gentlemen:
THE UNDERSIGNED HEREBY APPLY for an Advance in the amount of $_________ to
be made on [Borrowing Date] pursuant to the Amended and Restated Revolving
Credit Agreement dated as of August 27, 1997 (the "Agreement"), between Sterling
National Bank and the undersigned. The capitalized terms used herein and not
defined shall have the same meanings as are set forth in the Agreement.
WE HEREBY CERTIFY that as of the date hereof and as of the Borrowing Date
as follows:
Total Value Of All Loans $__________
Less: Amount guaranteed by SBA ................ $__________
Total residual loans where one or
more monthly payments are in
arrears (on a maturity basis).................. $__________
___________
(Borrowing Base) A__________
Loan prior to this advance ___________
Net available prior to this advance ===========
Advance Request ===========
The purposes of the above Advance Request are:
B-1
$_______________ to fund the
Guaranteed Portion
of the SBA Loan
identified on the
annexed Schedule
of Identification;
The undersigned hereby certify to Sterling National Bank ("Sterling") that
each representation and warranty set forth in the Amended and Restated Revolving
Credit Agreement and the Amended Security Agreement ("Agreements") is true and
correct and the undersigned are in full compliance with all the terms and
conditions of the Agreements. The Agreements are in full force and effect and no
event which, with the passage of time or the giving notice would constitute an
Event of Default under the Agreements has occurred or is continuing.
BUSINESS LOAN CENTER, INC.
By:____________________________
Name and Title:
BLC FINANCIAL SERVICES, INC.
By:____________________________
Name and Title:
BUSINESS LOAN CENTER
By:____________________________
A General Partner
B-2
EXHIBIT C
SCHEDULE OF IDENTIFICATION
(LETTERHEAD OF Borrowers)
Date:_________
Sterling National Bank
000 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Vice President
Gentlemen:
We hereby identify the following SBA Loan in connection with the within
Notice of Advance and Borrowing Base Certificate to which this Schedule is
attached. Capitalized terms used herein but not defined shall have the same
meanings as set forth in the Amended and Restated Revolving Credit Agreement,
dated as of August 27, 1997, between the undersigned and Sterling National Bank
("Sterling")
SBA Loan No.:_____________________
Borrower(s):______________________
Interest Rate:____________________
Original Note Amount:_____________
Guaranteed Amount:________________
Maturity Date:____________________
As required by the Amended and Restated Revolving Credit Agreement, we
have attached hereto a copy of the Authorization and Loan Agreement (Guaranty
Loans) on SBA Form 529B for the above-described SBA Loan. Further, as required
by the Amended and Restated Revolving Credit Agreement, the original Note with
respect to said Loan will be delivered
C-1
immediately to Sterling's agent pursuant to the Multi-Party Agreement dated as
of December 19, 1994 and all other original SBA Loan Documentation with respect
thereto will be held by us at our principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx
Xxxx, Xxx Xxxx.
Very truly yours,
BUSINESS LOAN CENTER, INC.
By:___________________________
Name and Title:
BLC FINANCIAL SERVICES, INC.
By:____________________________
Name and Title:
* One such form shall be completed and submitted for each SBA Loan funded in
whole or in part with an Advance under the Amended and Restated Revolving
Credit Agreement.
C-2
LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A Note
Exhibit B Notice of Advance and
Borrowing Base Certificate
Exhibit C Schedule of Identification
Schedules
Schedule I Existing Subsidiaries
Schedule II Existing Indebtedness
Schedule III Existing Encumbrances
Schedule IV Existing Guaranties
Schedule V Litigation
Schedule VI Permitted Transfers of Assets
Schedule VII SBA Loans funded by New York Federal
Savings Bank loans being pledged to the
Bank.
Schedule VIII State by state breakdown of all existing SBA Loans
Schedule IX UCC financing statements to be terminated; Judgments to be
satisfied
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS............................................. 2
SECTION 1.1 Definitions............................................. 2
SECTION 1.2 Accounting Terms........................................ 8
ARTICLE II
THE LOAN................................................ 8
SECTION 2.1 The Revolving Credit Loan............................... 8
SECTION 2.2 The Note................................................ 9
SECTION 2.3 Interest on the Revolving Credit Loan................... 9
SECTION 2.4 Optional Prepayment of Revolving Credit Loan............ 9
SECTION 2.5 Mandatory Prepayment of Revolving Credit Loan........... 10
SECTION 2.6 Funds; Manner of Payment................................ 11
SECTION 2.7 Administrative Fee 11
SECTION 2.8 Collateral.............................................. 11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWERS......... 12
SECTION 3.1 Organization; Power; Authorization...................... 12
SECTION 3.2 No Conflict with, Violation of or Default under Laws or
other Agreements............................... 12
SECTION 3.3 Litigation; Official Approvals.......................... 13
SECTION 3.4 Information and Financial Data Accurate; Financial
Statements; No Adverse Changes................. 13
SECTION 3.5 Title to Properties and Collateral...................... 14
SECTION 3.6 Taxes................................................... 14
SECTION 3.7 Agreements Legal, Valid, Binding and Enforceable........ 14
SECTION 3.8 No Untrue Statements.................................... 14
SECTION 3.9 Employee Benefit Plans.................................. 14
SECTION 3.10 Payment of Obligations.................................. 14
SECTION 3.11 Governmental Regulations................................ 15
SECTION 3.12 Subsidiaries............................................ 15
SECTION 3.13 SBA Relationship........................................ 15
SECTION 3.14 Use of Proceeds......................................... 15
ARTICLE IV
CONDITIONS OF LENDING................................... 16
SECTION 4.1 Representations and Warranties.......................... 16
SECTION 4.2 No Default.............................................. 16
SECTION 4.3 Officer's Certificate................................... 16
SECTION 4.4 Litigation.............................................. 16
-i-
SECTION 4.5 Supporting Documents.................................... 16
SECTION 4.6 Effectuance of Assignment.
SECTION 4.7 Approval of Counsel for the Bank........................ 17
SECTION 4.8 Administrative Fee...................................... 18
SECTION 4.9 Other Documents......................................... 18
SECTION 4.10 Additional Conditions to First Advance and Additional
Advances....................................... 18
ARTICLE V
AFFIRMATIVE COVENANTS OF THE BORROWERS.................. 18
SECTION 5.1 Preservation of Properties.............................. 18
SECTION 5.2 Corporate Existence..................................... 18
SECTION 5.3 Payment of Debts........................................ 18
SECTION 5.4 Accounts and Records.................................... 19
SECTION 5.5 Payment of Taxes and Claims............................. 19
SECTION 5.6 Compliance with Law..................................... 19
SECTION 5.7 Financial Statements.................................... 19
SECTION 5.8 Access to Books and Records............................. 20
SECTION 5.9 Notification of Event of Default........................ 20
SECTION 5.10 Certificate of No Default............................... 21
SECTION 5.11 Payment of Costs and Expenses........................... 21
SECTION 5.12 Notification of Litigation and Adverse Business
Development.................................... 21
SECTION 5.13 Compliance with ERISA................................... 22
SECTION 5.14 New Subsidiaries........................................ 22
SECTION 5.15 Insurance............................................... 22
SECTION 5.16 Federal Reserve Regulations, Etc........................ 22
SECTION 5.17 Notification of Adverse Legal Development............... 22
SECTION 5.18 SBA Funding Eligibility................................. 23
SECTION 5.19 Handling of SBA Loans................................... 23
ARTICLE VI
NEGATIVE COVENANTS OF THE BORROWERS..................... 23
SECTION 6.1 ERISA................................................... 23
SECTION 6.2 Merger.................................................. 24
SECTION 6.3 Indebtedness............................................ 24
SECTION 6.4 Liens................................................... 24
SECTION 6.5 Guaranties.............................................. 24
SECTION 6.6 Nature of Business...................................... 25
SECTION 6.7 Investments............................................. 25
SECTION 6.8 Handling of SBA Loans................................... 25
SECTION 6.9 Financial Covenants..................................... 25
SECTION 6.10 Location of Collateral.................................. 26
-ii-
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES; APPLICATION OF PROCEEDS.... 26
SECTION 7.1 Events of Default....................................... 26
SECTION 7.2 Bank's Remedies......................................... 27
SECTION 7.3 Specific Performance.................................... 28
SECTION 7.4 Agreement to Pay Attorneys' Fees and Expenses........... 28
SECTION 7.5 Application of Proceeds................................. 28
SECTION 7.6 No Remedy Exclusive..................................... 29
ARTICLE VIII
MISCELLANEOUS........................................... 29
SECTION 8.1 Notices................................................. 29
SECTION 8.2 Survival................................................ 29
SECTION 8.3 Expenses of the Bank.................................... 30
SECTION 8.4 Applicable Law.......................................... 30
SECTION 8.5 Amendments, Changes and Modifications................... 30
SECTION 8.6 Waivers................................................. 30
SECTION 8.7 Extension of Maturity................................... 30
SECTION 8.8 Separability............................................ 30
SECTION 8.9 Counterparts............................................ 31
SECTION 8.10 Entire Agreement........................................ 31
SECTION 8.11 Headings; Interpretation................................ 31
SECTION 8.12 Term.................................................... 31
SECTION 8.13 Successors and Assigns.................................. 31
SECTION 8.14 Gender and Number....................................... 32
SECTION 8.15 Exhibits and Schedules.................................. 32
SECTION 8.16 No Conflict with SBA Regulations........................ 32
-iii-
