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REVOLVING LINE OF CREDIT LOAN AGREEMENT
executed by and between
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
as the Borrower,
AND
MELLON BANK, N.A.,
as the Lender
Dated: May 31, 1996
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TABLE OF CONTENTS
Page
PREAMBLE AND RECITALS.......................................................1
ARTICLE I
DEFINITIONS AND RULES OF
INTERPRETATION AND CONSTRUCTION
Section 1.01 Definitions...................................................2
Section 1.02 Rules of Interpretation and Construction.....................19
Section 1.03 Accounting Principles........................................20
ARTICLE II
AMOUNT AND TERMS FOR THE REVOLVING CREDIT FACILITY
Section 2.01 Revolving Credit Facility....................................22
Section 2.02 Interest on the Revolving Credit Loans.......................26
Section 2.03 Fees.........................................................29
Section 2.04 Voluntary Prepayments........................................30
Section 2.05 Payments; Collection of Accounts.............................30
Section 2.06 Special Provision Governing Eurodollar Rate Loans............31
Section 2.07 Increased Capital............................................35
Section 2.08 Authorized Officers of the Borrower..........................35
Section 2.09 Taxes........................................................36
ARTICLE III
CONDITIONS TO THE REVOLVING CREDIT LOANS
Section 3.01 Conditions Precedent to the Effectiveness of this Loan
Agreement....................................................37
Section 3.02 Conditions Precedent to All Revolving Credit Loans and the
Issuance of Letters of Credit................................39
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties on the Effective Date.........41
Section 4.02 Subsequent Funding Representations and Warranties............48
ARTICLE V
REPORTING COVENANTS
Section 5.01 Statement of Accounting......................................49
Section 5.02 Reporting and Information Requirements.......................49
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01 Corporate Existence, Etc.....................................54
Section 6.02 Corporate Powers, Etc........................................54
Section 6.03 Compliance with Laws, Etc....................................54
Section 6.04 Payment of Taxes and Claims..................................54
Section 6.05 Maintenance of Properties; Insurance.........................54
Section 6.06 Inspection of Property; Books and Records; Discussion........55
Section 6.07 Litigation, Claims, Etc......................................55
Section 6.08 Labor Disputes...............................................55
Section 6.09 Maintenance of Licenses, Permits, Etc........................56
Section 6.10 Use of Proceeds..............................................56
Section 6.11 Continuation of or Change in Business........................56
Section 6.12 Additional Corporate Guarantors and/or Partnership
Guarantors...................................................56
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ARTICLE VII
NEGATIVE COVENANTS
Section 7.01 Consolidated Debt............................................57
Section 7.02 Sale of Assets; Liens .......................................57
Section 7.03 Loans, Advances and Investments..............................58
Section 7.04 Restricted Junior Payments...................................59
Section 7.05 Transactions with Shareholders and Affiliates................59
Section 7.06 Restriction on Fundamental Changes...........................59
Section 7.07 ERISA........................................................59
Section 7.08 Amendment of Articles of Incorporation or By-laws............60
Section 7.09 Margin Regulations...........................................60
Section 7.10 Cancellation of Consolidated Debt; Prepayment................60
Section 7.11 Environmental Liabilities....................................60
Section 7.12 Guaranties...................................................61
Section 7.13 No Negative Pledge to Other Person...........................61
ARTICLE VIII
FINANCIAL COVENANTS
Section 8.01 Minimum Consolidated Quick Ratio.............................62
Section 8.02 Maximum Consolidated Leverage Ratio..........................62
Section 8.03 Minimum Consolidated Interest Coverage Ratio.................62
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.01 Events of Default............................................63
Section 9.02 Rights and Remedies..........................................65
Section 9.03 Application of Proceeds......................................65
Section 9.04 No Notices...................................................66
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses ...............66
Section 9.06 No Additional Waiver Implied by One Waiver...................66
Section 9.07 Failure to Exercise Rights...................................66
Section 9.08 Waiver of Jury Trial.........................................67
Section 9.09 Remedies Cumulative..........................................67
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ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses....................................................68
Section 10.02 Indemnity...................................................68
Section 10.03 Amendments and Waivers......................................69
Section 10.04 Independence of Covenants...................................69
Section 10.05 Notices.....................................................69
Section 10.06 Survival of Warranties and Agreements.......................69
Section 10.07 Payments Set Aside..........................................69
Section 10.08 Severability................................................70
Section 10.09 Governing Law...............................................70
Section 10.10 Successors and Assigns......................................70
Section 10.11 Consent to Jurisdiction and Service of Process..............70
Section 10.12 Counterparts; Effectiveness; Inconsistencies................71
Section 10.13 Entire Agreement............................................71
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EXHIBITS AND SCHEDULES
Exhibits
Exhibit "A" List of Eurodollar Affiliates
Exhibit "B" Form of Notice of Borrowing
Exhibit "C" Form of Notice of Conversion/Continuation
Exhibit "D" Form of Revolving Credit Note
Exhibit "E" Form of Opinion Letter
Exhibit "F" Form of Officer's Certificate
Exhibit "G" Form of Letter of Credit Reimbursement Agreement
Schedules
Schedule 2.01 List of Subsidiaries and/or Affiliates Who May Borrow
and/or have Letters of Credit Issued for Their Account
Schedule 2.01 (iv) Existing Debt to be Refinanced
Schedule 4.01(iii) Existing Issued and Authorized Capital Stock of the
Borrower
Schedule 4.01(vii) Pending Actions, Suits, Proceedings, Governmental
Investigations or Arbitrations
Schedule 4.01(xv) Environmental Disclosure
Schedule 4.01(xvi) ERISA
Schedule 4.01 (xx) List of Joint Ventures
Schedule 4.01(xxi) Existing Insurance Policies, Programs and Claims
Schedule 4.01(xxvii) Labor Unions/Collective Bargaining Agreements
Schedule 6.05 Insurance Policies and Programs
Schedule 7.01(iii) Permitted Existing Consolidated Debt
Schedule 7.03 Existing Loans and Investments
Schedule 7.12(i) List of Existing Guaranties
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REVOLVING LINE OF CREDIT LOAN AGREEMENT
THIS REVOLVING LINE OF CREDIT LOAN AGREEMENT (including all amendments,
modifications and supplements is hereinafter referred to as the "Loan
Agreement"), is made this 31st day of May 1996, by and between
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC., a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, having
its principal office located at 0 Xxxxxx Xxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
(hereinafter referred to as the "Borrower"),
AND
MELLON BANK, N.A., a national banking association duly organized and
validly existing under the laws of the United States of America, having an
office located at Mellon Bank Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (hereinafter referred to as the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower is engaged in the business of designing,
manufacturing and marketing high technology products for military and commercial
customers in the United States and abroad; and
WHEREAS, the Borrower has requested that the Lender make to the Borrower
an unsecured recourse revolving line of credit loan in the aggregate principal
amount of up to Fifteen Million and 00/100 ($15,000,000.00) Dollars for the
purposes of (i) refinancing existing indebtedness of the Borrower and its
"Subsidiaries" and "Affiliates" (as such terms are hereinafter defined) and (ii)
financing a portion of the Borrower's working capital and standby letters of
credit requirements (hereinafter referred to as the "Revolving Credit
Facility"); and
WHEREAS, the Lender has agreed to make the Revolving Credit Facility
available to the Borrower, subject to the terms, conditions and provisions
hereinafter set forth; and
NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of the Borrower and the Lender, each
party binding itself and its successors and assigns, does hereby promise,
covenant and agree as follows:
ARTICLE I
DEFINITIONS, RULES OF INTERPRETATION AND
CONSTRUCTION, AND ACCOUNTING PRINCIPLES
Section 1.01 Definitions. The following terms, as used in this Loan
Agreement, shall have the following meanings, unless the context clearly
indicates and requires otherwise:
"Affiliate" of any Person shall mean any other Person which or who,
directly or indirectly, controls or is controlled by, or is under common control
with such Person; provided, however, natural persons and minority partners of
any said Person shall not be deemed an Affiliate for purposes of this
definition. For the purposes of the preceding sentence, "controls" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise, and in any case
shall include direct or indirect ownership (beneficially or of record) of, or
direct or indirect power to vote, fifty percent (50%) or more of the outstanding
shares of any class of capital stock of such Person (or in the case of a Person
that is not a corporation, fifty percent (50%) or more of any class of equity
interest).
"Agreement of Guaranty" shall mean that certain Agreement of Guaranty
executed by the Corporate Guarantors and the Partnership Guarantors, on a joint
and several basis, and delivered to the Lender, dated the date of this Loan
Agreement, pursuant to which the Corporate Guarantors and the Partnership
Guarantors unconditionally guaranty the prompt and complete performance of all
of the Borrower's duties, covenants and obligations under this Loan Agreement
and the Revolving Credit Note. The term "Agreement of Guaranty" shall also be
deemed to mean and refer to all amendments, modifications and supplements to
said agreement made and/or entered into subsequent to the Closing Date,
including, without limitation, all amendments which are consummated for the
purposes of adding any new and/or additional Persons as guarantors, all as
provided for in Section 6.12 of this Loan Agreement.
"Applicable Interest Rate" shall mean the applicable per annum interest
rate on each of the Revolving Credit Loans determined pursuant to Section
2.02(i) of this Loan Agreement.
"Authorized Officer" shall mean those officers/general partners of the
Borrower, the Corporate Guarantors and/or the Partnership Guarantors, whose
signatures and incumbency shall have been certified to the Lender pursuant to an
Officer's Certificate delivered on the Closing Date or any other form of
resolution or certification delivered to and approved by the Lender after the
Closing Date.
"Bankruptcy Code" shall mean Title 11 of the United States Bankruptcy Code
(11 U.S.C. Section 101 et seq.), as amended from time to time, or any successor
statute.
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"Benefit Plan" shall mean a defined benefit plan as defined in Section 3
(35) of ERISA (other than a Multiemployer Plan) in respect of which the
Borrower, its Subsidiaries, its Affiliates or an ERISA Affiliate is, or within
the immediately preceding six (6) years was, an "employer" as defined in Section
3(5) of ERISA.
"Big-Six Accounting Firm" shall mean any of Xxxxxx Xxxxxxxx & Co., KPMG
Peat Marwick, Coopers & Xxxxxxx, Xxxxx & Young, Deloitte & Touche and Price
Waterhouse or any of their respective successors.
"Borrower" shall have the meaning ascribed and assigned to such term as
set forth in the preamble of this Loan Agreement.
"Borrowing" and/or "Borrowings" shall mean a borrowing consisting of
Revolving Credit Loans made on the same day by the Lender.
"Borrowing Date" shall mean with respect to any Revolving Credit Loan, any
Business Day specified in any Notice of Borrowing delivered to the Lender by the
Borrower in accordance with the provisions of Section 2.01 (ii) of this Loan
Agreement, as the date upon which the Borrower requests the Lender to make a
Revolving Credit Loan hereunder and upon which such Revolving Credit Loan is
made.
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the Commonwealth of Pennsylvania, or is a day
upon which banking institutions located in such state are required or authorized
by law or other governmental action to close and (ii) with respect to all
notices, determinating fundings and payments in connection with the Eurodollar
Rate, any day which is a Business Day described in clause (i) above, and which
is also a day for trading by and between banks in the London interbank
eurodollar market.
"Capital Expenditures" shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities during such period)
of the Borrower, its Subsidiaries and its Affiliates during such period which
would be classified as capital expenditures in accordance with Generally
Accepted Accounting Principles (including, without limitation, expenditures for
maintenance and repairs which are capitalized, and Capitalized Leases to the
extent an asset is recorded in connection therewith in accordance with Generally
Accepted Accounting Principles).
"Capitalized Lease" and "Capitalized Leases" shall mean at any time any
lease which is, or is required under Generally Accepted Accounting Principles to
be, capitalized on the balance sheet of the lessee at such time.
"Capitalized Lease Obligation" shall mean all monetary obligations of any
Person under any leasing or similar arrangement which, in accordance with
Generally Accepted Accounting Principles, are or would be classified as
Capitalized Leases.
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"CERCLIS" shall mean the Comprehensive Environmental Response,
Compensation and Liability Information System List, as the same may be amended
from time to time.
"Claim" shall mean any claim or demand, by any Person, of whatsoever kind
or nature for any alleged Liabilities and Costs, based in a dispute whether
involving contract, tort, implied or express warranty, strict liability,
criminal or civil statute, permit, ordinance or regulation, common law or
otherwise, the consequences of which dispute are reasonably likely to result in
a Material Adverse Effect.
"Closing Date" shall mean the date upon which this Loan Agreement is
executed by the Lender and the Borrower, and the conditions set forth in Section
3.01 of this Loan Agreement have been completed and fulfilled to the
satisfaction of the Lender.
"Code" means the Internal Revenue Code of 1986, as amended, any successor
statute of similar import, and regulations thereunder, in each case as in effect
from time to time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Commitment Letter" shall mean the commitment letter dated March 25, 1996,
from the Lender to the Borrower, as amended by the letters dated March 28, 1996
and April 8, 1996, from the Lender to the Borrower, pursuant to which the Lender
offered and the Borrower accepted the Lender's commitment to provide the
Revolving Credit Facility.
"Consolidated Cash and Cash Equivalents" shall mean all (i) cash and cash
equivalents and (ii) any of the following: (a) marketable direct obligations
issued or unconditionally guarantied by the United States Government or issued
by an agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one (1) year after the date of acquisition
thereof; (b) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one (1) year after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc. and not listed in Credit Watch published by Standard &
Poor's Corporation; (c) commercial paper of a corporation having a net worth of
not less than $1,000,000,000.00, other than commercial paper issued by the
Borrower, its Subsidiaries or its Affiliates, maturing no more than ninety (90)
days after the date of creation thereof and, at the time of acquisition, having
a rating of at least A-1 or P-1 from either Standard & Poor's Corporation or
Xxxxx'x Investors Service, Inc.; (d) domestic certificates of deposit or
domestic time deposits or repurchase agreements maturing within one (1) year
after the date of acquisition thereof issued by any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having FDIC insurance; (e) any funds deposited or invested
by the Borrower, its Subsidiaries and/or its Affiliates of the Borrower in
accounts maintained with the Lender and/or with any other commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia having FDIC insurance; and (f) money market funds
having assets in excess of $1,000,000,000.00.
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"Consolidated Current Liabilities" shall mean, as at any date of
determination, all liabilities which, in accordance with Generally Accepted
Accounting Principles, would be classified on a consolidated balance sheet of
the Borrower, its Subsidiaries and its Affiliates as current liabilities, and in
any event all Borrowings under the Revolving Credit Facility.
"Consolidated Debt" shall mean with respect to the Borrower, its
Subsidiaries and its Affiliates, the aggregate sum of the following items as
such items appear on a consolidated balance sheet of the Borrower, its
Subsidiaries and its Affiliates to any Person (other than each other) in
accordance with Generally Accepted Accounting Principles: (i) the unpaid
principal balance of all indebtedness or liability for money borrowed or owed by
the Borrower, its Subsidiaries and/or its Affiliates to any Person (other than
each other) from time to time (including any renewals, extensions and refundings
thereof), whether or not the indebtedness was heretofore or hereafter created,
issued, incurred, assumed or guarantied; (ii) the unpaid principal balance of
all indebtedness or liability for the deferred purchase price of property or
services incurred (including trade obligations); (iii) all obligations as lessee
under leases which have been or should be recorded as Capitalized Lease
Obligations; (iv) all current Obligations in respect of any unfunded vested
benefits under any Plan covered by Title IV of ERISA; (v) all obligations,
contingent or otherwise relative to the face amount of all Letters of Credit
issued for the Borrower's, its Subsidiaries' and/or Affiliates' account, whether
or not drawn; (vi) all obligations arising under bankers' acceptance facilities
issued for the account of the Borrower, its Subsidiaries and/or its Affiliates;
(vii) all guaranties, endorsements and other contingent obligations to purchase,
to provide funds for payments, to supply funds to invest in the Borrower, its
Subsidiaries and/or its Affiliates or otherwise to assure a creditor against
loss (except endorsements of negotiable instruments for deposit or collection in
the ordinary course of business shall not constitute Consolidated Debt); and
(viii) all obligations secured by any mortgage, lien, pledge, or security
interest or other charge or encumbrance on property, whether or not the
obligations have been assumed.
"Consolidated Interest Coverage Ratio" shall mean, as of any date of
determination thereof for the period of four (4) consecutive Fiscal Quarters
immediately preceding said date of determination taken together as one
accounting period, the ratio of (i) the sum of (a) Consolidated Net Income for
such test period plus (b) all interest expenses on all Consolidated Debt for
such test period minus (c) prepaid principal on Consolidated Subordinated Debt
as permitted under Sections 7.04 and 7.10 of this Agreement, during such test
period -to- (ii) all interest expenses on all Consolidated Debt for such test
period, all as calculated in accordance with Generally Accepted Accounting
Principles.
"Consolidated Net Income" shall mean, as of any date of determination for
any test period, all amounts which, in accordance with Generally Accepted
Accounting Principles, would be included under net income (after the payment of
all federal and state income taxes) on a consolidated income statement of the
Borrower, its Subsidiaries and its Affiliates for such test period.
5
"Consolidated Net Worth" shall mean, as at any date of determination, all
items which, in accordance with Generally Accepted Accounting Principles, would
be included under shareholders' equity on a consolidated balance sheet of the
Borrower, its Subsidiaries and its Affiliates at such date.
"Consolidated Quick Ratio" shall mean, as at any date of determination,
the ratio of (i) the sum of (a) Consolidated Cash and Cash Equivalents plus, (b)
billed accounts receivable of the Borrower, its Subsidiaries and its Affiliates
as shown on their consolidated balance sheet in accordance with Generally
Accepted Accounting Principles -to- (ii) Consolidated Current Liabilities.
"Consolidated Senior Liabilities" shall mean, as at any date of
determination, all items which, in accordance with Generally Accepted Accounting
Principles, would be included on a consolidated balance sheet of the Borrower,
its Subsidiaries and its Affiliates as Consolidated Debt, excluding, however,
Consolidated Subordinated Debt.
"Consolidated Subordinated Debt" shall mean, as at any date of
determination, any Consolidated Debt of the Borrower, its Subsidiaries and/or
its Affiliates, which in accordance with the terms of the documentation
evidencing said Consolidated Debt, is subordinated to the repayment of the
Revolving Credit Facility, including, without limitation, (i) the then
outstanding principal balance of an original $25,000,000.00 9% Senior
Subordinated Convertible Debentures Due October 1, 2003, evidenced by that
certain Indenture dated as of September 22, 1995, executed by and between the
Borrower and The Trust Company of New Jersey and (ii) the then outstanding
principal balance of an original $25,000,000.00 8-1/2% Convertible Subordinated
Debentures Due August 1, 1998, evidenced by that certain Indenture dated August
1, 1983, executed by and between the Borrower and Bankers Trust Company.
"Consolidated Tangible Net Worth" shall mean, as at any date of
determination, Consolidated Net Worth minus the following: (i) goodwill,
including any amounts (however designated on the balance sheet) representing the
cost of acquisitions of Subsidiaries and/or Affiliates in excess of underlying
tangible assets; (ii) patents, trademarks and copyrights; and (iii) deferred
charges (including, without limitation, unamortized debt discount and expense,
organization expenses and experimental and development expenses, but excluding
prepaid expenses).
"Contractual Obligation" shall mean with respect to any Person, any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement or
instrument to which that Person is a party or by which it or any of its
properties is bound, or to which it or any of its properties is subject
(including, without limitation, any restrictive covenant affecting such Person
or any of its properties).
"Corporate Guarantors" shall mean the collective reference to (i)
Technology Applications & Service Company, a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, having
its principal office located at 000 Xxxxxxxxxxxx Xxxxx,
0
Xxxxxxxxxxxx, Xxxxxxxx 00000; (ii) Photronics Corp., a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, having its principal office located at 000 Xxxxx Xxxxxxx, Xxxxxxxxx,
Xxx Xxxx 00000; (iii) Precision Echo, Inc., a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
having its principal office located at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx Xxxxx,
Xxxxxxxxxx 00000; (iv) Ahead Technology Inc., a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
having its principal office located at 0000 Xxx Xxx Xxx, Xxx Xxxx, Xxxxxxxxxx
00000; (v) OMI Acquisition Corp., (also doing business as OMI Corp.), a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, having its principal office located at 000 Xxxxx
Xxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000; (vi) DRS Systems Management Corporation, a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, having its principal office located at 000 Xxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000; (vii) Ahead Technology Acquisition
Corporation, a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, having its principal office located at
0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000; (viii) DRS/MS, Inc., a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, having its principal office located at 000 Xxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 and (ix) any new or additional Subsidiaries of
the Borrower which are purchased, acquired or created during the term of the
Revolving Credit Facility. Each of the Corporate Guarantors may sometimes be
hereinafter referred to individually as a "Corporate Guarantor".
"Customary Permitted Liens" shall mean
(i) Liens (other than Environmental Liens and any Lien imposed under
ERISA) for taxes, assessments or charges of any Governmental Authority or claims
not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with Generally Accepted Accounting
Principles;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens (other than any Lien
imposed under ERISA) imposed by Law, including, without limitation, Liens in
favor of any Governmental Authority securing progress payments made under
government contracts created in the ordinary course of business and for amounts
not yet due or which are being contested in good faith by appropriate
proceedings which are sufficient to prevent imminent foreclosure of such Liens,
are promptly instituted and diligently conducted and with respect to which
adequate reserves or other appropriate provisions are being maintained in
accordance with Generally Accepted Accounting Principles;
(iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including, without limitation,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, leases, contracts, statutory obligations and
other similar obligations or arising as a result of progress payments or
deposits under government contracts (including foreign government contracts);
7
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the use of real property or
impair the use thereof;
(v) Liens arising as a result of the filing of any financing
statement under the Uniform Commercial Code of a particular State or comparable
law of any jurisdiction covering consigned or leased goods which do not
constitute assets of the Borrower, its Subsidiaries and/or its Affiliates and
which consignment and/or lease is not intended as security for an obligation;
(vi) Liens arising out of and with respect to customer deposits made
in the ordinary course of the Borrower's, its Subsidiaries' and/or its
Affiliates' businesses; and
(vii) extensions, renewals or replacements of any Lien referred to
in paragraphs (i) through (vi) above, provided (a) that, in the case of
paragraphs (i) through (iii) above, the principal amount of the obligation
secured thereby is not increased and (b) that any such extension, renewal or
replacement is limited to the property originally encumbered thereby.
"Default Rate" shall mean a rate of interest equal to three percent (3.0%)
above the applicable nondefault interest rate with respect to the Revolving
Credit Loans.
"DOL" shall mean the United States Department of Labor and any successor
department or agency.
"Dollar," "Dollars" and the symbol "$" shall mean lawful money of the
United States of America.
"Environment" shall mean all air, surface water, water, vapor,
groundwater, drinking water supply or land, including land surface or
subsurface, and includes all fish, wildlife, biota and all other natural
resources.
"Environmental Approval" shall mean any Governmental Action pursuant to or
required under any Environmental Law.
"Environmental Claim" shall mean, with respect to any Person, any action,
suit, proceeding, investigation, notice, claim, complaint or demand, made by any
other Person (including but not limited to, any Governmental Authority,
citizens' group or present or former employee of such first Person) alleging,
asserting or claiming any actual or potential (i) violation of any Environmental
Law, (ii) liability under any Environmental Law or (iii) liability for
investigatory costs, cleanup costs, governmental response costs, damages to the
Environment, property damages, personal injuries, fines or penalties arising out
of, based on or resulting from the presence, or release into the Environment, of
any Environmental Concern Materials at any location, whether or not owned by
such Person; provided, however, in no event shall any voluntary action,
proceeding or investigation
8
made or brought by the Borrower, its Subsidiaries and/or its Affiliates from
time to time in connection with their own activities or inactivities be included
in this definition.
"Environmental Cleanup Site" shall mean any location which is listed or
proposed for listing on the National Priorities List, on CERCLIS or on any
similar state list of sites requiring investigation or cleanup, or which is the
subject of any pending or threatened action, suit, proceeding or investigation
related to or arising from any alleged violation of any Environmental Law.
"Environmental Concern Materials" shall mean (i) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollution, contaminate or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in any Environmental Law), (ii)
any toxic chemical or other substance from or related to industrial, commercial
or institutional activities and (iii) asbestos, gasoline, diesel fuel, motor
oil, waste and used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon and urea-formaldehyde.
"Environmental Law" and "Environmental Laws" shall mean any Law, whether
now existing or subsequently enacted or amended, relating to (i) pollution or
protection of the Environment, (ii) exposure of Persons, including, but not
limited to, employees, to Environmental Concern Materials, (iii) protection of
the public health or welfare from the effects of products, by-products, wastes,
emissions, discharges or releases of Environmental Concern Materials or (iv)
regulation of the manufacture, generation, use or introduction into commerce of
Environmental Concern Materials including their manufacture, formulation,
packaging, labeling, distribution, treatment, transportation, handling, storage
or disposal. Without limitation, "Environmental Law" shall include (a) any
Environmental Approval and the terms and conditions thereof; (b) the following
statutes: the Clean Air Act (42 U.S.C. ss.7401 et seq.); the Comprehensive
Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. ss.9601
et seq.); the Federal Water Pollution Control Act (33 U.S.C. ss.1251 et seq.);
the Hazardous Material Transportation Act (49 U.S.C. ss.1801 et seq.); the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss.136 et seq.);
the Resource Conservation and Recovery Act of 1976 (42 U.S.C. ss.6901 et seq.)
(including the Hazardous and Solid Waste Amendments of 1984), the Toxic
Substance Control Act (15 U.S.C. ss.2601 et seq.); the Federal Occupational
Safety & Health Act of 1970 (29 U.S.C. ss.651 et seq.) (including ss.3101 of the
Omnibus Reconciliation Act of 1990), and the regulations promulgated thereunder
and all as amended from time to time; and (c) any common law doctrine
(including, without limitation, injunctive relief and tort, such as negligence,
nuisance, trespass and strict liability) that may impose obligations or
liabilities for personal injury or property damage due to, or threatened as a
result of, the presence of or exposure to Environmental Concern Materials.
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability currently due and payable under any
Environmental Laws or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of any
Environmental Concern Materials into the Environment.
9
"Equipment" of any Person, shall mean and include (i) all of such Person's
now owned and hereafter acquired machinery; (ii) all manufacturing,
distribution, selling, data processing and office equipment; and (iii) all
furniture, furnishings, appliances, fixtures and trade fixtures, tools,
toolings, molds, dies, vehicles, vessels, aircraft and all other goods of every
type and description (other than inventory).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations promulgated thereunder by the United States Treasury
Department, the DOL and/or the PBGC.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower, its Subsidiaries and/or its
Affiliates would be deemed to be a "single employer" within the meaning of
Section 4001 of ERISA.
"Eurodollar Affiliate" shall mean with respect to the Lender, the
affiliate of the Lender, if any, set forth on Exhibit "A" attached to this Loan
Agreement.
"Eurodollar Interest Period" shall mean one or more periods of time during
which the Borrower may select, convert to or continue a Eurodollar Rate Loan,
such funding period with respect to the Revolving Credit Facility, to be either
a fourteen, thirty, sixty or ninety day period, subject to availability, all as
more fully subject to the provisions of Section 2.06 of this Loan Agreement.
"Eurodollar Interest Payment Date" shall mean, with respect to any
Eurodollar Rate Loan, the last day of each Eurodollar Interest Period applicable
to such Loan.
"Eurodollar Interest Rate Determination Date" shall mean the date on which
the Lender determines the Eurodollar Rate applicable to (i) a Borrowing or (ii)
the continuation or conversion of Eurodollar Rate Loans. The Eurodollar Interest
Rate Determination Date shall be the second Business Day prior to the first day
of the Eurodollar Interest Period applicable to such Borrowing, continuation or
conversion.
"Eurodollar Portion" of any Revolving Credit Loans shall mean at any time
the portion, including the whole, of such Revolving Credit Loans bearing
interest at any time under the Eurodollar Rate.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Interest
Period applicable to a Borrowing of Eurodollar Rate Loans, an interest rate per
annum determined by the Lender obtained by dividing (i) the rate of interest
determined by the Lender in good faith in accordance with its usual procedures
(which determination shall be conclusive) to be the average (rounded upward to
the nearest whole multiple of one one-thousandth of one percent (1/1000 of 1%)
per annum if such average is not such a multiple) of the rates per annum at
which deposits in Dollars are offered to major money center banks in the London
interbank eurodollar market at approximately 11:00 a.m.
10
(London time) on the Eurodollar Interest Rate Determination Date for a period
equal to such Eurodollar Interest Period and in an amount substantially equal to
the amount of the Eurodollar Rate Loan to be made by the Lender and to be
outstanding during such Eurodollar Interest Period by (ii) a percentage equal
to 100% minus the Eurodollar Reserve Percentage. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage. The "Eurodollar Rate" may also be expressed by
the following formula:
[average of the rates offered to major]
[money center banks in the ]
Eurodollar Rate = [London interbank Eurodollar market as determined by the
Agent]
[1.00 - Eurodollar Reserve Percentage]
Finally, the "Eurodollar Rate" shall in all circumstances mean the rate of
interest which is customarily referred to as the "London Interbank Offered
Rate".
"Eurodollar Rate Loans" shall mean those Revolving Credit Loans
outstanding which bear interest at a rate determined by reference to the
Eurodollar Rate as provided for in Sections 2.02(i) and 2.06 of this Loan
Agreement.
"Eurodollar Rate Option" shall mean one of the interest rates available to
the Borrower as provided for and described in Section 2.02(i)(a)(2) of this Loan
Agreement.
"Eurodollar Rate Taxes" shall have the meaning ascribed to such term in
Section 2.06(vii)(a) of this Loan Agreement.
"Eurodollar Reserve Percentage" shall mean for any date that percentage,
if any (expressed as a decimal, rounded upward to the nearest 1/100 of 1%), as
determined in good faith by the Lender (which determination shall be conclusive)
which is in effect on such date, as prescribed by the Federal Reserve Board, for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in respect of "eurocurrency liabilities" having a
term equal to the applicable Eurodollar Interest Period (or in respect of any
other category of liabilities which includes deposits by reference to which the
interest rate on Eurodollar Rate Loans is determined or any category of
extensions of credit or other assets which includes loans by a non-United States
office of any bank to United States residents).
"Event of Default" or "Events of Default" shall mean any of the events of
default as defined and described in Section 9.01 of this Loan Agreement.
"Facility Fee" shall mean that certain facility fee in the amount of
$20,000.00 paid by the Borrower to the Lender as follows: $10,000.00 upon
acceptance of the Commitment Letter and $10,000.00 on the Closing Date.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
11
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or any governmental authority succeeding to its functions.
"Fiscal Quarter" shall mean the following three month periods of each
Fiscal Year:
April 1 - June 30
July 1 - September 30
October 1 - December 31
January 1 - March 31
"Fiscal Year" shall mean that period commencing on April 1 and ending on
March 31 of each year or such other period as the Borrower may designate and the
Lender may approve in writing.
"Funding Segment" shall mean with respect to an Eurodollar Rate Loan, the
entire principal amount of such Eurodollar Portion to which at the time in
question there is applicable a particular Eurodollar Interest Period beginning
on a particular day and ending on a particular day. (By definition, each such
Eurodollar Portion is at all times composed of an integral number of discrete
Funding Segments and the sum of the principal amounts of all Funding Segments of
any such Eurodollar Portion at any time equals the principal amount of such
Eurodollar Portion at such time.)
"Generally Accepted Accounting Principles" shall mean generally accepted
accounting principles in the United States of America, as in effect from time to
time, as developed, modified and set forth in the opinions and pronouncements of
the Accounting Principles Board, the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, or in such other
statements by such other Person as may be in general use by significant segments
of the accounting profession, which are applicable to the circumstances as of
the date of determination, subject to the terms of Section 1.03 of this Loan
Agreement.
"Governmental Action" shall mean any approval, order, consent,
authorization, certificate, license, permit or validation of, or exemption or
other action by, or filing, recording or registration with or notice to, any
Governmental Authority.
"Governmental Acts" shall have the meaning ascribed and assigned to such
term as set forth in Section 2.01 (vii) of this Loan Agreement.
"Governmental Authority" shall mean any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"Indemnified Party" and "Indemnified Parties" shall mean the Lender and
the directors, officers, trustees, employees, agents, attorneys and controlling
shareholders of the Lender.
12
"Independent Certified Public Accountant" shall mean KPMG Peat Marwick and
any other recognized independent certified public accounting firm selected by
the Borrower, its Subsidiaries and/or its Affiliates which accounting firm is
satisfactory to the Lender, including, without limitation, any one of the other
Big-Six Accounting Firms.
"IRS" shall mean the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Law" shall mean any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, order, injunction, writ, decree
or award of any Governmental Authority.
"Lender" shall have the meaning ascribed and assigned to such term as set
forth in the preamble of this Loan Agreement.
"Letter of Credit" or "Letters of Credit" shall mean any standby letter of
credit issued by the Lender for the account of the Borrower pursuant to Section
2.01(vi) of this Loan Agreement.
"Letter of Credit Obligations" shall mean, at any time, the sum of (i)
Reimbursement Obligations at such time and (ii) the aggregate maximum amount
then available for drawing under outstanding Letters of Credit.
"Letters of Credit Reimbursement Agreement" shall mean, with respect to
any Letter of Credit, such form of application therefor and form of continuing
Letters of Credit Agreement therefor as the Lender may employ in the ordinary
course of its business.
"Liabilities and Costs" shall mean all liabilities, obligations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, costs and reasonable expenses (including, without limitation,
attorneys', experts' and consulting fees and costs of investigation and
feasibility studies), fines, penalties and monetary sanctions, interest, direct
or indirect, known or unknown, absolute or contingent, past, present or future
arising out of or relating to any action, suit, proceeding or resolution or
settlement thereof.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other) or
preference, priority, security interest or other security agreement of any kind
or nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).
"Loan Account" shall have the meaning ascribed to such term in Section
2.05(iv) hereof.
13
"Loan Agreement" shall have the meaning ascribed and assigned to such term
as set forth in the preamble of this Loan Agreement.
"Loan Documents" shall mean any and all agreements, documents,
certificates and instruments executed by the Borrower, the Corporate Guarantors,
the Partnership Guarantors and/or any other Person and delivered by them to the
Lender pursuant to and in connection with the Revolving Credit Facility,
including, without limitation, this Loan Agreement, the Revolving Credit Note
and the Agreement of Guaranty, in each case as amended, supplemented, restated,
extended or otherwise modified from time to time in accordance with the
provisions hereof or thereof.
"Margin Stock" shall have the meaning ascribed and assigned to such term
in Regulation G and Regulation U.
"Marketable Securities" shall mean any stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of indebtedness
commonly known as "securities", secured or unsecured, convertible, subordinated
or otherwise, and in general any instruments commonly known as "securities" and
any certificates of interest, shares or participation in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing which can readily be bought and sold
on any nationally recognized securities exchange and would properly be
classified as marketable securities on the consolidated balance sheet of the
Borrower, its Subsidiaries and its Affiliates in accordance with Generally
Accepted Accounting Principles.
"Material Adverse Effect" shall mean a material adverse effect upon (i)
the business, financial condition, financial performance, properties or
operations of the Borrower, its Subsidiaries and its Affiliates taken as a whole
or (ii) the ability of the Borrower, the Corporate Guarantors and the
Partnership Guarantors to perform their collective obligations and duties under
the Loan Documents.
"Maximum Amount of Revolving Credit Loans" shall mean, at any time, the
Revolving Credit Loan Sublimit, minus the amount of Letter of Credit Obligations
in excess of $7,500,000.00.
"Multiemployer Plan" shall mean an employee benefit plan defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by the Borrower, its Subsidiaries, its Affiliates
or an ERISA Affiliate.
"Notice of Borrowing" shall mean, with respect to a proposed Borrowing
pursuant to Section 2.01(ii) hereof, a notice substantially in the form of
Exhibit "B" attached hereto and made a part thereof.
"Notice of Conversions/Continuation" shall mean, with respect to a
proposed conversion or continuation of a Revolving Credit Loan pursuant to
Section 2.02(iii) hereof, a notice in the form of Exhibit "C" attached hereto
and made a part hereof.
14
"Obligations" shall mean all present and future indebtedness and other
liabilities of the Borrower owing to the Lender, or any Person entitled to
indemnification pursuant to Section 10.02 hereof, or any of their respective
successors, transferees or assigns, of every type and description, whether or
not evidenced by any note, guaranty or other instrument, arising under or in
connection with this Loan Agreement or any other Loan Document, whether or not
for the payment of money, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, attorneys' fees and disbursements and any
other sum chargeable to the Borrower under this Loan Agreement or any other Loan
Document.
"Office" when used in connection with the Lender, shall mean its principal
office located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, or at
such office or offices of the Lender or branch, subsidiary or affiliate thereof
as may be designated in writing from time to time by the Lender to the Borrower.
"Officer's Certificate" shall mean a certificate of the Borrower executed
by any of the Authorized Officers of the Borrower, including, without
limitation, the president, any vice-president or the chief financial officer, in
the form of Exhibit "F" attached hereto and made a part hereof.
"Operating Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capitalized Lease.
"Partnership Guarantors" shall mean (i) Laurel Technologies Partnership
t/a Laurel Technologies, a general partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, having its
principal office located at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxx 00000;
(ii) DRS Medical Systems, a general partnership duly organized, validly existing
and in good standing under the laws of the State of New Jersey, having its
principal office located at 000 Xxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 and (iii)
any new or additional Affiliates of the Borrower in which the Borrower acquires
an ownership interest of more than fifty percent (50%).
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any Person
succeeding to any or all of its functions and duties under ERISA.
"Permits" shall mean any permit, approval, authorization, license,
variance, or permission required from a Governmental Authority under any
applicable Requirement of Law.
"Person" or "Persons" shall mean any natural person, employee, general or
limited partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture, limited liability
company, company, trust, bank or other organization, whether or not a legal
entity or any other non-governmental entity, or any Governmental Authority.
15
"Plan" shall mean any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (other than a Multiemployer Plan) covered by Title IV of
ERISA by reason of Section 4021 of ERISA, of which the Borrower, its
Subsidiaries, its Affiliates or any ERISA Affiliate is or has been within the
preceding five years a "contributing sponsor" within the meaning of Section
4001(a)(13) of ERISA, or which is or has been within the preceding five years
maintained for employees of the Borrower, its Subsidiaries, its Affiliates or
any ERISA Affiliate.
"Potential Event of Default" shall mean an event, condition or situation
which, with the giving of any required notice and/or the passage of any required
grace or cure periods, or any combination of the foregoing, would constitute an
Event of Default.
"Prime Rate" or "Prime Lending Rate" shall mean the fluctuating interest
rate publicly announced by the Lender from time to time as its "prime rate "or
"prime lending rate", which per annum rate may not necessarily be the rate
actually charged by the Lender to its most creditworthy customers.
"Prime Rate Loans" shall mean all Revolving Credit Loans outstanding which
bear interest at a rate determined by reference to the Prime Rate as provided
for in Section 2.02(i) of this Loan Agreement.
"Prime Rate Option" shall mean one of the interest rates available to the
Borrower as provided for and described in Section 2.02(i)(a)(1) of this Loan
Agreement.
"Property" shall mean any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
owned, leased or operated by the Borrower, its Subsidiaries and/or its
Affiliates.
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976, 42
U.S.C. '6901 et. seq., and any successor statute, and regulations promulgated
thereunder.
"Regulation D" shall mean Regulation D of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Regulation G" shall mean Regulation G of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Regulation T" shall mean Regulation T of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Regulation U" shall mean Regulation U of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
"Regulation X" shall mean Regulation X of the Federal Reserve Board, or
any successor statute or regulation thereto, as in effect from time to time.
16
"Reimbursement Obligations" shall mean the unpaid reimbursement or
repayment obligations of the Borrower owed to the Lender pursuant to this Loan
Agreement and/or any Letters of Credit Reimbursement Agreement in connection
with any Letters of Credit.
"Release" shall mean release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of
Environmental Concern Materials in violation of Environmental Laws into the
indoor or outdoor Environment or into or out of any Property, including the
movement of Environmental Concern Materials through or in the air, soil, surface
water, groundwater or Property.
"Remedial Action" shall mean actions, other than voluntary actions on the
part of any Person, required to (i) clean up, remove, treat or in any other way
address Environmental Concern Materials in the indoor or outdoor environment;
(ii) prevent the Release or threat of Release or minimize the further Release of
Environmental Concern Materials so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(iii) perform pre-remedial studies and investigations and post-remedial
monitoring and care.
"Reportable Event" shall have the meaning ascribed to such term in Section
4043 of ERISA or regulations promulgated thereunder.
"Requirements of Law" shall mean, as to any Person, the charter and
by-laws or other organization or governing documents of such Person, and any
law, rule or regulation, Permit, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject, including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, U and X, and any certificate of occupancy, zoning
ordinance, building, environmental or land use requirement or Permit or
occupational safety or health law, rule or regulation.
"Restricted Junior Payments" shall mean (i) any dividend or other
distribution to the shareholders of the Borrower (whether direct or indirect and
whether in cash, property, Securities or otherwise) on account of any shares of
any class of capital stock (or equivalent partnership interest) of the Borrower
now or hereafter outstanding, (ii) any payment or prepayment of principal of,
premium, if any, or interest on, or fees in respect of, redemption, conversion,
exchange, purchase, retirement, defeasance, sinking fund or similar payment with
respect to any Consolidated Subordinated Debt after the occurrence of an Event
of Default and (iii) any prepayment in advance of anticipated and scheduled
payment dates of principal of, premium, if any, or interest on, or fees in
respect of, redemption, conversion, exchange, purchase, retirement, defeasance,
sinking fund or similar payment with respect to any Consolidated Subordinated
Debt (except for (a) prepayments in connection with the refinance of such
Consolidated Subordinated Debt in amounts and on terms and conditions equal to
or better than the existing terms and conditions and (b) prepayments of up to
$1,000,000.00 in the aggregate of outstanding principal on any said Consolidated
Subordinated Debt).
17
"Revolving Credit Accommodations" shall mean, at any time, the sum of (i)
all Revolving Credit Loans outstanding at such time and (ii) all Letter of
Credit Obligations outstanding at such time.
"Revolving Credit Facility" shall have the meaning ascribed and assigned
to such term as set forth in the second recital of this Loan Agreement.
"Revolving Credit Loan" and "Revolving Credit Loans" shall have the
meaning ascribed and assigned to such term in Section 2.01(i) of this Loan
Agreement.
"Revolving Credit Loan Sublimit" shall mean the $7,500,000.00 maximum
amount of Revolving Credit Loans that may be advanced under the Revolving Credit
Facility.
"Revolving Credit Note" shall mean that certain Revolving Line of Credit
Note in substantially the form attached hereto as Exhibit "D" with blanks
appropriately filled in, such note payable to the order of the Lender in a face
amount equal to the Revolving Credit Facility.
"Revolving Credit Termination Date" shall mean the earlier of (i) June 30,
1999 or (ii) the date of termination of the Revolving Credit Facility pursuant
to Section 9.02 of this Loan Agreement.
"Securities" shall mean any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness commonly known as
"securities", secured or unsecured, convertible, subordinated or otherwise, and
in general any instruments commonly known as "securities", and any certificates
of interest, shares or participation in temporary or interim certificates for
the purchase or acquisition of, and any right to subscribe to, purchase or
acquire any of the foregoing, but shall not include any evidence of the
Obligations.
"Securities Act" shall mean the Securities Act of 1933, as amended to the
date hereof and from time to time hereafter, and any successor statute.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended to the date hereof from time to time hereafter, and any successor
statute.
"Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan under Title IV of ERISA.
"Solvent" shall mean when used with respect to any Person, that at the
time of determination:
(i) the fair value of its assets (at fair valuation) is in excess of
the total amount of its liabilities, including, without limitation, contingent
liabilities;
18
(ii) it is then able to pay its debts as they mature; and
(iii) it owns property having a value (at fair valuation) in excess
of the total amount required to pay its debts.
"Subsidiary" or "Subsidiaries" shall mean (i) a corporation a majority of
whose capital stock with voting power, under ordinary circumstances, to elect a
majority of directors is at the time, directly or indirectly, owned by the
Borrower, by the Borrower and one or more Subsidiaries of the Borrower or by one
or more Subsidiaries of the Borrower, (ii) any other Person (other than a
corporation) in which the Borrower and one or more Subsidiaries of the Borrower,
directly or indirectly, at the date of determination thereof has at least
majority ownership interest and/or (iii) any entity whose net earnings (losses)
or portions thereof would be properly included and consolidated with the net
earnings of the Borrower; provided, however, that the term Subsidiary shall not
include any entity that is not reflected on the balance sheet of the Borrower
due to inactivity and lack of material assets and liabilities.
"Taxes" shall have the meaning ascribed and assigned to such term as set
forth in Section 2.02(vi) of this Loan Agreement.
"Termination Event" shall mean (i) any Reportable Event with respect to
any Benefit Plan described in Section 4043 of ERISA and the regulations issued
thereunder for which the notice requirements have not been waived by the PBGC,
(ii) the withdrawal of the Borrower, any of its Subsidiaries and/or Affiliates,
or an ERISA Affiliate from a Benefit Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, (iii) the
occurrence of an obligation arising under Section 4041 of ERISA of the Borrower,
any of its Subsidiaries and/or Affiliates or an ERISA Affiliate to provide
affected parties with a written notice of an intent to terminate a Benefit Plan
in a distress termination described in Section 4041(c) of ERISA, (iv) the
institution by the PBGC of proceedings to terminate any Benefit Plan, (v) any
event or condition which constitutes grounds under Section 4042 of ERISA for the
appointment of a trustee to administer a Benefit Plan or (vi) the partial or
complete withdrawal of the Borrower, any of its Subsidiaries and/or Affiliates
or any ERISA Affiliate from a Multiemployer Plan.
"Uniform Customs" shall mean the Uniform Customs and Practice for
Documentary Credits (1993 Revisions), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
Section 1.02 Rules of Interpretation and Construction. In this Loan
Agreement unless the context otherwise clearly requires:
(i) Articles and Sections mentioned by number only are the
respective Articles and Sections of this Loan Agreement as so numbered;
(ii) 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;
19
(iii) Words importing persons mean and include firms, associations,
partnerships (including limited partnerships), societies, trusts, corporations
or other legal entities, including public or governmental bodies, as well as
natural persons;
(iv) Any headings preceding the texts of the several Articles and
Sections of this Loan Agreement, and any table of contents or marginal notes
appended to copies hereof, shall be solely for convenience of reference and
shall not affect or control the meaning, construction or interpretation of this
Loan Agreement;
(v) If any clause, provision or section of this Loan Agreement shall
be ruled invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any of the remaining
provisions thereof, unless not invalidating or rendering unenforceable the
remaining provisions shall be inequitable;
(vi) The terms "herein", "hereunder", "hereby", "hereto", "hereof"
and any similar terms as used in this Loan Agreement refer to this Loan
Agreement as a whole and not to any particular provision of this Loan Agreement;
the term "heretofore" means before the date of execution of this Loan Agreement;
and the term "hereafter" means on or after the date of execution of this Loan
Agreement;
(vii) This Loan Agreement and all matters relating hereto shall be
governed by and construed and interpreted in accordance with the laws of the
Commonwealth of Pennsylvania; and
(viii) If any clause, provision or section of this Loan Agreement
shall be determined to be apparently contrary to or conflicting with any other
clause, provision or section of this Loan Agreement, then the clause, provision
or section containing the more specific provisions shall control and govern with
respect to such apparent conflict; and
(ix) References in this Loan Agreement to "determination" (and
similar terms) by the Lender include good faith and reasonable estimates by the
Lender (in the case of quantitative determinations) and good faith and
reasonable beliefs by the Lender (in the case of qualitative determinations).
Section 1.03 Accounting Principles.
(i) As used in this Loan Agreement "Generally Accepted Accounting
Principles" shall be established on the date a relevant computation or
determination is to be made or the date of relevant financial statements as the
case may be.
(ii) Except as otherwise provided in this Loan Agreement, all
computations and determinations as to accounting or financial matters shall be
made, and all financial statements to be delivered pursuant to this Loan
Agreement shall be prepared, in accordance with Generally Accepted Accounting
Principles (including principles of consolidation where appropriate), and all
20
accounting or financial terms shall have the meanings ascribed to such terms by
Generally Accepted Accounting Principles.
(iii) If any change in Generally Accepted Accounting Principles
after the date of this Loan Agreement is or shall be required to be applied to
transactions then or thereafter in existence, and a violation of one or more
provisions of this Loan Agreement shall have occurred or in the opinion of the
Borrower would likely occur which would not have occurred or be likely to occur
if no change in accounting principles had taken place, (a) the Borrower and the
Lender agree that such violation shall not be considered to constitute an Event
of Default or a Potential Event of Default for a period of thirty (30) days from
the date the Borrower notifies the Lender of the applicability of this Section
1.03(iii); (b) the Borrower and the Lender agree in such event to negotiate in
good faith an amendment of this Loan Agreement which shall approximate to the
extent possible the economic effect of the original financial covenants after
taking into account such change in Generally Accepted Accounting Principles; and
(c) if the Borrower and the Lender are unable to negotiate such an amendment
within the thirty (30) day period described above in clause (a), the Borrower
shall have the option of (A) prepaying and terminating the Loan (pursuant to
applicable provisions hereof) or (B) submitting the drafting of such an
amendment to a firm of Independent Certified Public Accountants of nationally
recognized standing acceptable to the Borrower and the Lender, which shall
complete its draft of such amendment within thirty (30) days of submission; if
the Borrower and the Lender cannot agree, the firm shall be selected by binding
arbitration in the City of Philadelphia, Pennsylvania in accordance with the
then applicable rules of the American Arbitration Association. If the Borrower
does not exercise either such option within said period, then as used in this
Loan Agreement, "Generally Accepted Accounting Principles" shall mean generally
accepted accounting principles in effect at the relevant date. The Borrower and
the Lender agree that if the Borrower elects the option in clause (B) above,
until such firm has been selected and completes drafting such amendment, no such
violation shall constitute an Event of Default or a Potential Event of Default.
(iv) If any change in Generally Accepted Accounting Principles after
the date of this Loan Agreement is required to be applied to transactions or
conditions then or thereafter in existence, and the Lender shall assert that the
effect of such change is or shall likely be to distort materially the effect of
any of the definitions of financial terms in Article I of this Loan Agreement or
any of the covenants of the Borrower in Article VIII of this Loan Agreement
(hereinafter referred to as the "Financial Provisions"), so that the intended
economic effect of any of the Financial Provisions will not in fact be
accomplished, then
(a) the Lender shall notify the Borrower of such assertion,
specifying the change in Generally Accepted Accounting Principles which is
objected to, and until otherwise determined as provided below, the specified
change in Generally Accepted Accounting Principles shall not be made by the
Borrower in its financial statements for the purpose of applying the Financial
Provisions; and
(b) The Lender and the Borrower shall follow the procedures
set forth in paragraph (iii)(b) and the first sentence of paragraph (c) of
subsection (iii) of this Section 1.03. If
21
the Borrower and the Lender are unable to agree on an amendment as provided in
said paragraph (iii)(b) and if the Borrower does not exercise either option set
forth in the first sentence of said paragraph (iii)(c) within the specified
period, then as used in this Loan Agreement "Generally Accepted Accounting
Principles" shall mean generally accepted accounting principles in effect at
the relevant date, except that the specified change in "Generally Accepted
Accounting Principles" which is objected to by the Lender shall not be made
in applying the Financial Provisions. The Borrower and the Lender agree that if
the Borrower elects the option in clause (B) of the first sentence of said
paragraph (iii)(c), until such independent accounting firm has been selected and
completes drafting such amendment, the specified change in "Generally Accepted
Accounting Principles" shall not be made in applying the Financial Provisions.
(v) All expenses of compliance with this Section 1.03 shall be paid
for by the Borrower, except the Borrower and the Lender shall be responsible for
their own costs and expenses associated with proceedings under Section
1.03(iii)(c) hereof other than the cost and expense payable to the American
Arbitration Association and any such accounting firm which shall be divided
equally between the Lender on the one hand and the Borrower on the other.
ARTICLE II
AMOUNTS AND TERMS FOR THE REVOLVING CREDIT FACILITY
Section 2.01 Revolving Credit Facility.
(i) Availability. (a) Subject to the terms and conditions set forth
in this Loan Agreement, the Lender hereby agrees to make to the Borrower or to
any other Person described on Schedule 2.01 hereof as directed by the Borrower
pursuant to this Loan Agreement, from time to time during the period from the
Closing Date to the Business Day next preceding the Revolving Credit Termination
Date, revolving credit loans (hereinafter each individually, a "Revolving Credit
Loan" and collectively, the "Revolving Credit Loans"), in an amount which shall
not exceed, in the aggregate at any time outstanding, the Revolving Credit Loan
Sublimit; provided, however, at no time shall the aggregate principal amount of
all Revolving Credit Loans outstanding at any time exceed the Maximum Amount of
Revolving Credit Loans at such time. The Revolving Credit Loans shall be
evidenced by the Revolving Credit Note. The Lender is hereby authorized to
record the date and amount of each Revolving Credit Loan made by the Lender, the
date and amount of each payment or prepayment of principal thereof either (1) on
the Schedule "A" annexed to and constituting a part of the Revolving Credit Note
or (2) by entering such information into the Lender's automated loan tracking
system, and any such recordation shall constitute prima facie evidence of the
accuracy of the information so recorded; provided, however, the failure to make
such notation(s) with respect to any Borrowing shall not limit or otherwise
affect the obligation of the Borrower to the Lender under this Loan Agreement or
the Revolving Credit Note. If the outstanding amount of the Revolving Credit
Loans shall exceed the amount of the Revolving Credit Loan Sublimit at any time,
such excess shall be immediately payable to the Lender.
22
(b) Revolving Credit Loans may be voluntarily prepaid pursuant
to Section 2.04 hereof and, subject to the provisions of this Loan Agreement,
any amounts so prepaid may be reborrowed, up to the amount available under this
Section 2.01(i) at the time of such Borrowing, until the Business Day next
preceding the Revolving Credit Termination Date. The Lender's commitment to make
Revolving Credit Loans shall expire, and each Revolving Credit Loan then
outstanding shall be repaid by the Borrower no later than the Revolving Credit
Termination Date.
(ii) Notice of Borrowing. Whenever the Borrower desires to borrow a
Prime Rate Loan or an Eurodollar Rate Loan under this Section 2.01, the Borrower
shall deliver to the Lender a Notice of Borrowing no later than 2:00 p.m.
(Philadelphia, Pennsylvania time) on the proposed Borrowing Date, in the case of
a Borrowing as a Prime Rate Loan, and at least two (2) Business Days in advance
of the proposed Borrowing Date in the case of a Borrowing as a Eurodollar Rate
Loan. The Notice of Borrowing shall specify (a) the Borrowing Date (which shall
be a Business Day) in respect of the Revolving Credit Loan, (b) the amount of
the proposed Borrowing which shall not be less than $25,000.00, (c) the intended
use of the proceeds of such Borrowing, (d) the applicable interest rate option
as described in Section 2.02(i) of this Loan Agreement and, if applicable (e)
the Eurodollar Interest Period. In lieu of delivering the above-described Notice
of Borrowing, the Borrower may give the Lender telephonic notice of any proposed
Borrowing by the time required under this Section 2.01(ii); provided, however,
that such notice shall be confirmed in writing by delivery to the Lender
promptly (but in no event later than the Borrowing Date of the requested
Revolving Credit Loan) of a Notice of Borrowing. Any Notice of Borrowing (or
telephonic notice in lieu thereof) pursuant to this Section 2.01(ii) shall be
irrevocable.
(iii) Making of Revolving Credit Loans. The Lender shall make the
proceeds of such Revolving Credit Loan available to the Borrower at the Lender's
Office, no later than 2:00 p.m. (Philadelphia, Pennsylvania time) on such
Borrowing Date and shall disburse such funds in Dollars and in immediately
available funds to an account of the Borrower maintained with the Lender and
thereafter to any substitute account, designated in writing by the Borrower in
the Notice of Borrowing.
(iv) Use of Proceeds of Revolving Credit Facility. The proceeds of
the Revolving Credit Facility shall be used by the Borrower for (a) refinancing
Consolidated Debt as permitted under this Loan Agreement, including, without
limitation, the Consolidated Debt described on Schedule "2.01(iv)" attached
hereto, (b) working capital in the ordinary course of the Borrower's and/or its
Subsidiaries' and Affiliates' businesses and (c) the issuance of Letters of
Credit. Letters of Credit may be used in support of working capital in the
ordinary course of business and for other lawful and permitted corporate and/or
partnership purposes to the extent not otherwise prohibited hereunder.
(v) Reduction of Revolving Credit Facility; Revolving Credit
Termination Date.
(a) The Borrower shall have the right, at any time and from
time to time, to terminate in whole or permanently reduce in part, without
premium or fee, the Revolving Credit Facility by an amount up to the amount of
the Revolving Credit Facility minus all Revolving Credit
23
Accommodations, then outstanding. The Borrower shall give not less than two (2)
Business Days' prior express written notice to the Lender designating the date
(which shall be a Business Day) of such termination or reduction and the amount
of any partial reduction. Such termination or partial permanent reduction of the
Revolving Credit Facility shall be effective on the date specified in the
Borrower's notice. Any such partial permanent reduction of the Revolving Credit
Facility shall be in an aggregate minimum principal amount of $250,000.00 and
integral multiples of $25,000.00 in excess of that amount.
(b) The Revolving Credit Facility shall expire without further
action on the part of the Lender, and all then outstanding Revolving Credit
Loans and Reimbursement Obligations shall be repaid in full on June 30, 1999,
except for the Letter of Credit described in Section 2.01 (vi) (a) (3) below.
(vi) Issuance of Letters of Credit. (a) Subject to the terms and
conditions set forth in this Loan Agreement, the Lender agrees to issue for the
account of the Borrower and/or those Persons described on Schedule 2.01 of this
Loan Agreement, one or more Letters of Credit up to an aggregate face amount at
any time outstanding equal to the amount of the Revolving Credit Facility minus
all outstanding Revolving Credit Accommodations, from time to time during the
period commencing on the Closing Date and ending on a Business Day at least two
(2) Business Days preceding the Revolving Credit Termination Date. The Letter of
Credit Obligations shall constitute financial accommodations under the Revolving
Credit Facility and shall reduce availability for Revolving Credit Loans under
the Revolving Credit Facility by the amount of such Letter of Credit Obligations
in excess of $7,500,000.00. Each Letter of Credit (1) shall be denominated in
Dollars, (2) shall be in all instances a standby letter of credit except with
respect to a direct pay Letter of Credit which the Lender will issue in
connection with the replacement of the XX Xxxxxx Irrevocable Letter of Credit
No. PB-284327, dated December 19, 1991 and (3) shall expire no later than June
30, 1999, except for the Letter of Credit between OMI Acquisition Corp. d/b/a
OMI Corp and the Government of Israel in the maximum amount of $3,650,000.00
which may terminate no later than July 30, 1999. Each Letter of Credit shall be
subject to the Uniform Customs and, to the extent not inconsistent therewith,
the laws of the Commonwealth of Pennsylvania.
(b) In addition to being subject to the satisfaction of the
conditions precedent contained in Section 3.02 hereof, the obligation of the
Lender to issue any Letter of Credit is subject to the satisfaction in full of
the following conditions:
(1) the Borrower shall have delivered to the Lender
at such times and in such manner as the Lender may prescribe, a Letters of
Credit Reimbursement Agreement and such other documents and materials as may be
required pursuant to the terms thereof;
(2) immediately after the issuance of such Letter of
Credit the aggregate principal amount of Letter of Credit Obligations then
existing shall not exceed the difference between the amount of the Revolving
Credit Facility minus all Revolving Credit Accommodations then existing; and
24
(3) as of the date of issuance, no order, judgment or
decree of any court, arbitrator or Governmental Authority shall purport by its
terms to enjoin or restrain the Lender from issuing the Letter of Credit and
no Law applicable to the Lender and no request or directive (whether or not
having the force of Law and whether or not the failure to comply therewith would
be unlawful) from any Governmental Authority with jurisdiction over the Lender
shall prohibit or request that the Lender refrain from the issuance of letters
of credit generally or the issuance of such Letter of Credit.
(c) Notwithstanding any provisions to the contrary in any
Letter of Credit Reimbursement Agreement:
(1) the Borrower shall unconditionally reimburse the
Lender for drawings under such Letter of Credit no later than the time specified
in such Letters of Credit Reimbursement Agreement irrespective of any claim,
setoff, defense or other right which the Borrower may have at any time against
the Lender or any other Person, except with respect to the Lender's gross
negligence or willful misconduct; and
(2) in connection with a Letter of Credit issued by
the Lender, to the extent any Reimbursement Obligation is not paid when due,
such Reimbursement Obligation shall be deemed to be a Revolving Credit Loan
payable to the Lender in the amount of such Reimbursement Obligation;
(3) any Reimbursement Obligation with respect to any
Letter of Credit shall bear interest from the date of the relevant drawing under
the pertinent Letter of Credit at the interest rate applicable to Prime Rate
Loans until paid in full.
(d) No action taken or omitted to be taken by the Lender under
or in connection with any Letter of Credit (except in connection with its gross
negligence or willful misconduct) shall put the Lender under any resulting
liability to the Borrower. In the event this Loan Agreement and any Letter of
Credit Reimbursement Agreement are inconsistent, the terms of this Loan
Agreement shall prevail. In addition, notwithstanding any terms, conditions
and/or provisions of any Letter of Credit Reimbursement Agreement that states
that a Letter of Credit has been collateralized or otherwise secured by assets
of the Borrower, the Lender agrees that (1) no collateral has been or will be
given to it as security for any Letter of Credit, (2) no property is or will be
held in trust for the Lender and (3) the Lender will not be granted a security
interest of any kind.
(e) The Borrower and/or the Persons described on Schedule 2.01
attached hereto, may from time to time request that the Lender issue a Letter of
Credit by delivering to the Lender at its address for notices specified herein,
Letters of Credit Reimbursement Agreement therefor, completed to the
satisfaction of the Lender, and such other certificates, documents and other
papers and information delivered to it in connection therewith in accordance
with its customary procedures and shall promptly issue the Letter of Credit
requested thereby (but in no event shall the Lender be required to issue any
Letter of Credit earlier than three Business Days
25
after its receipt of the Letters of Credit Reimbursement Agreement therefor and
all such other certificates, documents and other papers and information relating
thereto) by issuing the original of such Letter of Credit to the beneficiary
thereof or as otherwise may be agreed by Lender and the Borrower. The Lender
shall furnish a copy of such Letter of Credit to the Borrower promptly following
the issuance thereof.
(vii) Lender Not Liable. (a) In addition to amounts payable as
provided elsewhere in Section 2.01(vi) hereof, the Borrower hereby agrees to
protect, indemnify, pay and save the Lender harmless from and against any and
all Liabilities and Costs which the Lender may incur or be subject to as a
consequence, direct or indirect, of (1) the issuance of a Letter of Credit for
the account of the Borrower, other than as a result of the Lender's gross
negligence or willful misconduct, as determined by the final judgment of a court
of competent jurisdiction or (2) the failure of the Lender to honor a drawing
under such Letter of Credit as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto Governmental Authority
(all such acts or omissions hereinafter referred to as the "Governmental Acts").
(b) As between the Borrower, its Subsidiaries, its Affiliates
and the Lender, the Borrower assumes all risks of the acts and omissions of, or
misuses of any Letter of Credit by the beneficiary of such Letter of Credit. In
furtherance and not in limitation of the foregoing, subject to the provisions of
the Letters of Credit Reimbursement Agreement, the Lender shall not be
responsible (except in connection with its gross negligence or willful
misconduct): (1) for the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection with the
application for and issuance of the Letters of Credit, even if it should in fact
prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent
or forged; (2) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or part, which may prove to
be invalid or ineffective for any reason; (3) for failure of the beneficiary of
a Letter of Credit to comply duly with conditions required in order to draw upon
such Letter of Credit; (4) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex, or
other similar form of teletransmissions or otherwise, whether or not they be in
cipher; (5) for errors in interpretation of technical terms; (6) for any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under any Letter of Credit or of the proceeds thereof; (7) for the
misapplication by the beneficiary of a Letter of Credit of the proceeds of any
drawing under such Letter of Credit; and (8) for any consequences arising from
causes beyond the control of the Lender including, without limitation, any
Governmental Acts. None of the above shall affect, impair, or prevent the
vesting of any of the rights or powers of the Lender under this Loan Agreement.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
Lender under or in connection with Letters of Credit issued on behalf of the
Borrower and/or the Persons described on Schedule 2.01 attached hereto, or any
related certificates, if taken or omitted in good faith, shall not, in the
absence of gross negligence or willful misconduct, put the Lender under any
resulting liability to the Borrower or relieve the Borrower of any of its
obligations hereunder to any such Person.
26
Section 2.02 Interest on the Revolving Credit Loans.
(i) Rate of Interest. (a) All Revolving Credit Loans shall bear interest
computed daily on the outstanding principal balance thereof from the date made
until paid in full at one or more of the interest rate options selected by the
Borrower from among the two (2) interest rate options set forth below. Subject
to the provisions of this Loan Agreement, the Borrower may select different
options to apply simultaneously to different portions of the Revolving Credit
Loans and may select different Funding Segments to apply simultaneously to
different parts of the Eurodollar Rate Portion of the Revolving Credit Loans.
Each selection of a rate option shall apply separately and without overlap to
the Revolving Credit Loans as a class. The aggregate number of Funding Segments
applicable to the Eurodollar Rate Portion of the Revolving Credit Loans at any
time shall not exceed twenty (20).
Interest Rate Options For Revolving Credit Loans:
(1) Prime Rate: A fluctuating rate per annum for each day
equal to the Prime Rate of the Lender, in effect from time to time
(such interest rate to change immediately upon any change in the Prime
Rate); or
(2) Eurodollar Rate. A fixed rate per annum for each day
during a Eurodollar Interest Period equal to the Eurodollar Rate for such
Eurodollar Interest Period plus one hundred seventy-five (175) basis
points. The Lender shall give prompt notice to the Borrower of the
Eurodollar Rate determined or adjusted in accordance with the provisions
hereof, which determination or adjustment shall be conclusive (absent
manifest error) if made in good faith.
(b) Notwithstanding subparagraph (a) above, interest in respect of
any Revolving Credit Loans shall not exceed the maximum rate permitted by
applicable Law.
(ii) Interest Payments. Subject to Section 2.02(iv) hereof, interest
accrued on all Prime Rate Loans shall be payable by the Borrower in arrears (a)
on the first day of each Fiscal Quarter during the term of this Loan Agreement,
with the first payment commencing on July 1, 1996 and (b) at maturity. Interest
accrued on each Eurodollar Rate Loan shall be payable by the Borrower in arrears
(1) on each Eurodollar Interest Payment Date applicable to that Loan, (2) upon
prepayment thereof in full or in part and (3) at maturity.
(iii) Conversion or Continuation. (a) Subject to the provisions of Section
2.06 hereof, the Borrower shall have the option (1) to convert at any time all
or any part of outstanding Revolving Credit Loans which, in the aggregate, equal
$100,000.00 or an integral multiple of $1,000.00 in excess of that amount from
Prime Rate Loans to Eurodollar Rate Loans; or (2) to convert all or any part of
outstanding Revolving Credit Loans which, in the aggregate, equal $100,000.00 or
an integral multiple of $1,000.00 in excess of that amount from Eurodollar Rate
Loans to Prime Rate Loans on the expiration date of any Eurodollar Interest
Period applicable thereto; or (3) upon the
27
expiration of any Eurodollar Interest Period applicable to a Eurodollar Rate
Loan, to continue all or any portion of such Revolving Credit Loans equal to
$100,000.00 or an integral multiple of $1,000.00 in excess of that amount as
Eurodollar Rate Loans of the same type, and the succeeding Eurodollar Interest
Period of such continued Revolving Credit Loans shall commence on the expiration
date of the Eurodollar Interest Period applicable thereto; provided, however,
that no outstanding Revolving Credit Loan may be continued as, or be converted
into, a Eurodollar Rate Loan when any Event of Default or Potential Event of
Default has occurred and is continuing.
(b) In the event the Borrower shall elect to convert or continue a
Revolving Credit Loan under this Section 2.02(iii), the Borrower shall deliver a
Notice of Conversion/Continuation to the Lender no later than 2:00 p.m.
(Philadelphia, Pennsylvania time) on the proposed conversion date in the case of
a conversion to a Prime Rate Loan, and no later than 2:00 p.m. (Philadelphia,
Pennsylvania time) at least two Business Days in advance of the proposed
conversion/continuation date in the case of a conversion to or a continuation of
a Eurodollar Rate Loan. A Notice of Conversion/Continuation shall specify (1)
the proposed conversion/continuation date (which shall be a Business Day), (2)
the amount of the Revolving Credit Loan to be converted/continued, (3) the
nature of the proposed conversion/continuation and (4) in the case of a
conversion to, or continuation of, a Eurodollar Rate Loan, the requested
Eurodollar Interest Period. In lieu of delivering the above-described Notice of
Conversion/Continuation, the Borrower may give the Lender telephonic notice of
any proposed conversion/continuation by the time required under this Section
2.02(iii); provided, however, that such notice shall be confirmed in writing by
delivery to the Lender promptly (but in no event later than the proposed
conversion/continuation date) of a Notice of Conversion/Continuation.
(c) Any Notice of Conversion/Continuation for conversion to, or
continuation of, a Revolving Credit Loan (or telephonic notice in lieu thereof)
shall be irrevocable and the Borrower shall be bound to convert or continue in
accordance therewith.
(iv) Default Interest. Notwithstanding the rates of interest specified in
Section 2.02(i) hereof and the payment dates specified in Section 2.02(ii)
hereof, effective immediately upon the occurrence of any Event of Default under
Section 9.01 of this Loan Agreement and for as long thereafter as any such Event
of Default shall be continuing, the principal balance of all Loans then
outstanding and, to the extent permitted by applicable Law, any interest
payments on the Loans not paid when due, shall bear interest payable upon demand
at the Default Rate.
(v) Computation of Interest. Interest on Prime Rate Loans and Eurodollar
Rate Loans shall be computed on the basis of the actual number of days elapsed
in the period during which interest accrues and a year of 360 days. In computing
interest on any Revolving Credit Loan, the date of the making of the Revolving
Credit Loan or the first day of a Eurodollar Interest Period, as the case may
be, shall be included and the date of payment or the expiration date of a
Eurodollar Interest Period, as the case may be, shall be excluded; provided,
however, that if a Revolving Credit Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Revolving Credit Loan.
28
(vi) Changes; Legal Restrictions. Except as provided in Section 2.06(iv)
hereof with respect to certain determinations on Eurodollar Interest Rate
Determination Dates, in the event that after the date hereof (a) the adoption of
or any change in any law, treaty, rule, regulation, guideline or determination
of a court or Governmental Authority or any change in the interpretation or
application thereof by a court or Governmental Authority, or (b) compliance by
the Lender with any request or directive from any central bank or other
Governmental Authority or quasi-governmental authority:
(1) subjects the Lender (or its applicable lending office or
Eurodollar Affiliate) to any taxes, levies, imposts, duties, charges, fees,
deductions or withholdings of any kind which the Lender determines to be
applicable to this Loan Agreement, the Revolving Credit Loans, or change in the
basis of taxation of payments to the Lender of principal, fees, interest, or any
other amount payable hereunder, except for net income or franchise taxes imposed
by any jurisdiction (all such non-excepted taxes, duties and other charges being
hereinafter referred to as "Taxes"); or
(2) does or may impose, modify, or hold applicable, in the
determination of a Lender, any reserve, special deposit, compulsory loan, FDIC
insurance, capital allocation or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by,
commitments made, or other credit extended by, or any other acquisition of funds
by, the Lender or any applicable lending office or Eurodollar Affiliate of the
Lender (except, with respect to Prime Rate Loans to the extent that the reserve
and FDIC insurance requirements are reflected in the definition of "Prime Rate"
and, with respect to a Eurodollar Rate Loan, to the extent that the reserve
requirements are reflected in the definition of "Eurodollar Rate"); or
(3) does or is reasonably likely to impose on the Lender any other
condition materially more burdensome in nature, extent or consequence than those
in existence as of the Closing Date;
and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing or maintaining the Revolving Credit Loans, then, in any such
case, the Borrower shall promptly pay to the Lender, upon demand, such amount or
amounts (based upon an allocation thereof by the Lender to the financing
transactions contemplated by this Loan Agreement and effected by this Section
2.02 (vi) as may be necessary to compensate the Lender for any such additional
cost incurred or reduced amount received. The Lender shall deliver to the
Borrower a written statement of the costs or reductions claimed and the basis
therefore, and the allocation made by the Lender of such costs and reductions
shall be conclusive, absent manifest error. If the Lender subsequently recovers
any amounts previously paid by the Borrower pursuant to this Section 2.02 (vi),
the Lender shall, within thirty (30) days after receipt of such refund and to
the extent permitted by applicable Law, pay to the Borrower the amount of any
such recovery.
Section 2.03. Fees.
(i) Facility Fee. The Borrower has paid to the Lender the Facility
Fee as of the Closing Date.
29
(ii) Unused Commitment Fee. The Borrower shall pay to the Lender an
unused commitment fee accruing at the rate of one-eighth of one percent (0.125%)
per annum from and after the Closing Date until the Obligations are repaid in
full and the Revolving Credit Facility is terminated, upon the average daily
amount of the excess of the Revolving Credit Facility over all Revolving Credit
Accommodations from time to time. All such commitment fees payable under this
Section 2.03 shall be calculated and payable quarterly in arrears on the first
Business Day in each Fiscal Quarter beginning after the Closing Date.
(iii) Late Charge Fee. In the event that any payment, including,
without limitation, interest or principal, required to be made by the Borrower
under the Revolving Credit Note or under this Loan Agreement shall not be
received by the Lender within fifteen (15) days of when due, the Lender may
charge, and if so charged, the Borrower shall pay, a late charge of ($0.05) for
each dollar ($1.00) of each delinquent payment for the purpose of defraying the
expense incident to the handling of such delinquent payment. In no event shall
said late charge fee be less than ten dollars ($10.00).
(iv) Letter of Credit Fees. The Borrower shall pay to the Lender in
connection with the issuance, termination, draw under, transfer of and any other
related Letter of Credit activity, the Lender's customary fees as are
established from time to time and are generally applicable to customers of the
Lender. Such fees shall include, but not be limited to, a fee payable at the
time of issuance of each Letter of Credit in the amount equal to seventy-five
(75) basis points of the face amount of said Letter of Credit, calculated on an
annualized basis.
(v) Payment of Fees. The fees described in this Section 2.03
represent compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit, and the obligation
of the Borrower to pay each fee described herein shall be in addition to, and
not in lieu of, the obligation of the Borrower to pay interest, other fees and
expenses otherwise described in this Loan Agreement and the Commitment Letter.
Fees shall be payable when due at the Office of the Lender in immediately
available funds. All fees shall be non-refundable when paid. All fees and
expenses specified or referred to in this Loan Agreement due and owing to the
Lender, including, without limitation, those referred to in this Section 2.03
and in Section 10.01 hereof and in the Commitment Letter, shall bear interest,
if not paid when due, at the Default Rate (but not to exceed the maximum rate
permitted by applicable Law), shall constitute Obligations. All fees described
in this Section 2.03 and the Commitment Letter which are expressed as a per
annum charge shall be calculated on the basis of the actual number of days
elapsed in a 360-day year.
Section 2.04 Voluntary Prepayments. (i) The Borrower may, at any time and
from time to time, upon the giving of at least one (1) Business Days' prior
express written notice to the Lender, voluntarily prepay any Prime Rate Loan in
whole or in part, without premium or fee, in an aggregate minimum amount of
$25,000.00 and in integral multiples of $1,000.00 ,provided, however,: any
principal prepayment of a Prime Rate Loan shall be accompanied by the payment of
all unpaid accrued interest due and owing on said Prime Rate Loan.
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(ii) The Borrower may, at any time and from time to time, upon the
giving of at least one (1) Business Days' prior express written notice to the
Lender, voluntarily prepay any Eurodollar Rate Loan in whole or in part, in an
aggregate minimum amount of $25,000.00 and in integral multiples of $1,000.00,
subject to the following: (a) any principal prepayment of a Eurodollar Rate Loan
shall be accompanied by the payment of all unpaid accrued interest due and owing
on said Eurodollar Rate Loan and (b) the Borrower shall pay to the Lender all
amounts described in Section 2.06(vi) of this Loan Agreement.
(iii) Notwithstanding any provision of this Section 2.04 to the
contrary, in the event that any prepayments of any Revolving Credit Loans are
made in connection with the termination of this Loan Agreement, such prepayments
shall be made only upon ten (10) Business Days' prior express written notice to
the Lender.
Section 2.05 Payments; Collection of Accounts.
(i) Manner and Time of Payment. All payments of principal, interest
and fees hereunder payable to the Lender shall be made without condition or
reservation or right, in Dollars and in immediately available funds, delivered
to the Lender not later than 2:00 p.m. (Philadelphia, Pennsylvania time) on the
date due, to such account of the Lender at its Office, as the Lender may
designate. Funds received by the Lender after that time and date shall be deemed
to have been paid on the next succeeding Business Day. The Lender shall send a
monthly and/or quarterly invoice, as applicable, to the Borrower reflecting the
accrued interest due and owing and all fees due and owing hereunder. The
Borrower hereby agrees that on the Business Day that any payment of principal,
interest and fees are due, the Lender shall automatically charge a demand
deposit account of the Borrower, which account shall be maintained with the
Lender at all times throughout the term of the Revolving Credit Facility. The
Borrower's authorization of the Lender to charge such account having sufficient
funds on deposit shall constitute payment of the amount so authorized
notwithstanding the Lender's failure to charge said account. Any failure or
delay by the Lender in submitting invoices for interest and fee payments shall
not discharge or relieve the Borrower of the obligation to make such payments
into the demand deposit account.
(ii) Apportionment of Payments. So long as there does not exist an
Event of Default, all payments of principal and interest in respect of
outstanding Revolving Credit Loans, all payments of the fees described herein
and in the Commitment Letter, and all payments in respect of any other
Obligation shall be allocated by the Borrower as it may be entitled thereto as
provided herein. After the occurrence and during the continuance of an Event of
Default, the Lender shall, after providing notice to the Borrower that payments
and proceeds shall be so applied, apply all payments remitted to the Lender
subject to the provisions of this Loan Agreement, (a) first, to pay Obligations
in respect of any fees, expense reimbursements or indemnities then due and owing
to the Lender from the Borrower; (b) second, to pay interest due in respect of
Revolving Credit Loans and Reimbursement Obligations; (c) third, to pay or
prepay principal of Revolving Credit Loans and (d) fourth, to the ratable
payment of all other Obligations.
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(iii) Payments on Non-Business Days. Whenever any payment to be made
by the Borrower hereunder shall be stated to be due on a day which is not a
Business Day, payments shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder and of any of the fees specified in Section 2.03 hereof, as
the case may be.
(iv) Lender's Accounting. The Lender shall maintain a loan account
(hereinafter referred to as the "Loan Account") on its books in which shall be
recorded (a) principal amount of Revolving Credit Loans owing to the Lender from
time to time; (b) all other appropriate debits and credits as provided in this
Loan Agreement, including, without limitation, all interest, fees, expenses,
charges and other Obligations; (c) all payments of Obligations made by the
Borrower or for the Borrower's account; and (d) all Letter of Credit
Obligations. All entries in the Loan Account shall be made in accordance with
the Lender's customary accounting practices as in effect from time to time. The
Lender will render a statement of the Loan Account upon the request of the
Borrower. Each and every such statement shall be deemed final, binding and
conclusive upon the Borrower in all respects as to all matters reflected therein
(absent manifest error), unless the Borrower, within ten (10) days after the
date such statement is rendered, delivers to the Lender written notice of any
objection which the Borrower may have to any such statement. In that event, only
those items expressly objected to in such notice shall be deemed to be disputed
by the Borrower.
Section 2.06 Special Provisions Governing Eurodollar Rate Loans.
Notwithstanding other provisions of this Loan Agreement to the contrary, if any,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
(i) Amount of Eurodollar Rate Loans. Each Eurodollar Rate Loan shall
be for a minimum amount of $100,000.00 and in integral multiples of $1,000.00
in excess of that amount.
(ii) Determination of Eurodollar Interest Period. By giving notice as set
forth in Sections 2.01 (ii) and 2.02(iii) hereof (with respect to a conversion
into or a continuation of Eurodollar Rate Loans), the Borrower shall have the
option, subject to the other provision of this Section 2.06, to specify an
Eurodollar Interest Period to apply to the Borrowing of Eurodollar Rate Loans
described in such notice, subject to availability. The determination of
Eurodollar Interest Periods shall be subject to the following provisions:
(a) In the case of immediately successive Eurodollar Interest
Periods applicable to a Borrowing of Eurodollar Rate Loans, each successive
Eurodollar Interest Period shall commence on the day on which the next preceding
Eurodollar Interest Period expires;
(b) If any Eurodollar Interest Period would otherwise expire on a
day which is not a Business Day, the Eurodollar Interest Period shall be
extended to expire on the next succeeding Business Day; provided, however, that
if any such Eurodollar Interest Period applicable to a Borrowing of Eurodollar
Rate Loans would otherwise expire on a day which is not a Business Day
32
but is a day of the month after which no further Business Day occurs in that
month, that Eurodollar Interest Period shall expire on the immediately preceding
Business Day;
(c) The Borrower may not select a Eurodollar Interest Period for any
Revolving Credit Loan which terminates later than the Revolving Credit
Termination Date;
(d) The Borrower may not select a Eurodollar Interest Period with
respect to any portion of principal of a Eurodollar Rate Loan which extends
beyond a date on which the Borrower is required to make a scheduled payment of
any portion of principal, it being understood and agreed that any Eurodollar
Rate Loan whose Eurodollar Interest Period ends less than one month prior to
such required principal payment date shall be deemed converted to a Prime Rate
Loan as of the last day of such Eurodollar Interest Period for purposes of
determining whether any portion of principal of any Eurodollar Rate Loan is
required in order to make a mandatory payment of principal; and
(e) There shall be no more than twenty (20) Eurodollar Interest
Periods under this Loan Agreement in effect at any one time under the Revolving
Credit Facility.
(iii) Determination of Interest Rate. As soon as practicable after 2:00
p.m. (Philadelphia, Pennsylvania time) on any Eurodollar Interest Rate
Determination Date, the Lender shall determine (which determination shall,
absent manifest error, be rebuttably presumed correct) the interest rate which
shall apply to the Eurodollar Rate Loans for which an interest rate is then
being determined for the applicable Eurodollar Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrower.
(iv) Interest Rate Unascertainable, Inadequate or Unfair. If, with respect
to any Eurodollar Interest Period, the Lender determines that (a) deposits in
Dollars (in the applicable amounts) are not being offered in the relevant market
for such Eurodollar Interest Period, (b) adequate and reasonable means do not
exist for ascertaining the Eurodollar Rate or (c) a contingency has occurred
which materially and adversely affects the London interbank Eurodollar market
then the Lender shall forthwith give notice thereof to the Borrower, whereupon
until the Lender notifies the Borrower that the circumstances giving rise to
such suspension no longer exist, (1) the right of the Borrower to elect to have
Revolving Credit Loans bear interest based upon the Eurodollar Rate shall be
suspended and (2) each outstanding Eurodollar Rate Loan shall be converted into
a Prime Rate Loan on the last day of the then current Eurodollar Interest Period
therefor, notwithstanding any prior election by the Borrower to the contrary.
(v) Illegality. (a) In the event that on any date the Lender shall have
determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties) that the making or continuation of any
Eurodollar Rate Loan has become unlawful by compliance by the Lender in good
faith with any Law, of any Governmental Authority (whether or not having the
force of Law and whether or not failure to comply therewith would be unlawful),
then, and in any such event, the Lender shall promptly give notice (by telephone
promptly confirmed in writing) to the Borrower.
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(b) Upon the giving of the notice referred to in Section 2.06(v)(a)
hereof, (1) the Borrower's right to request of the Lender and the Lender's
obligation to make Eurodollar Rate Loans shall be immediately suspended, and the
Lender shall make a Revolving Credit Loan, as part of any requested Borrowing of
Eurodollar Rate Loans, as a Prime Rate Loan, which Prime Rate Loan shall, for
all purposes, be considered a part of such Borrowing, and (2) if the affected
Eurodollar Rate Loan or Loans are then outstanding, the Borrower shall
immediately (or, if permitted by applicable Law, no later than the date
permitted thereby, upon at least one Business Day's written notice to the
Lender) convert each such Revolving Credit Loan into a Prime Rate Loan.
(c) In the event that the Lender determines at any time following
its giving of the notice referred to in Section 2.06(iv) and Section 2.06(v)(a)
hereof that the Lender may lawfully make Eurodollar Rate Loans of the type
referred to in such notice, the Lender shall promptly give notice (by telephone
confirmed in writing) to the Borrower of that determination, whereupon the
Borrower's right to request of the Lender, and the Lender's obligation to make,
Eurodollar Rate Loans shall be restored.
(vi) Compensation. In addition to such amounts as are required to be paid
by the Borrower pursuant to Sections 2.02(iv), 2.02(vi), 2.03 (iii), 2.04(ii),
2.06(vii), 2.07 and 2.09 hereof, the Borrower shall compensate the Lender, upon
demand, for all losses, expenses and liabilities (including, without limitation,
any loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds required by the Lender to fund or maintain the Lender's
Eurodollar Rate Loans) which losses, expenses and liabilities the Lender may
sustain (a) if for any reason a Borrowing, conversion or continuation of
Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of
Borrowing or a Notice of Conversion/Continuation or in a telephonic request for
borrowing or conversion/continuation or a successive Eurodollar Interest Period
does not commence after notice therefor is given pursuant to Section 2.02(iii)
hereof as a result of any action or inaction on the part of any Person (other
than the Lender), (b) if any prepayment of an Eurodollar Rate Loan (including,
without limitation, any prepayment pursuant to Section 2.04 hereof) occurs for
any reason on a date which is not the last day of the applicable Eurodollar
Interest Period, (c) as a consequence of any required conversion of a Eurodollar
Rate Loan to a Prime Rate Loan as a result of any of the events indicated in
Section 2.06(v) or (d) as a consequence of any other failure by the Borrower to
repay Eurodollar Rate Loans when required by the terms of this Loan Agreement.
The Lender shall deliver to the Borrower a written statement as to such losses,
expenses and liabilities which statement shall be conclusive as to such amounts
in the absence of manifest error.
(vii) Eurodollar Rate Taxes. The Borrower agrees that:
(a) the Borrower will pay, prior to the date on which penalties
attach thereto, all present and future income, stamp and other taxes, levies, or
costs and charges whatsoever imposed, assessed, levied or collected on or in
respect of a Revolving Credit Loan solely as a result of the interest rate being
determined by reference to the Eurodollar Rate or the provisions of this Loan
Agreement relating to the Eurodollar Rate or the recording, registration,
notarization or other
34
formalization of any thereof or any payments of principal, interest or other
amounts made on or in respect of a Revolving Credit Loan made to the Borrower
when the interest rate is determined by reference to the Eurodollar Rate (all
such taxes, levies, costs and charges being hereinafter collectively called
"Eurodollar Rate Taxes"); provided, however, that Eurodollar Rate Taxes shall
not include net income or franchise taxes imposed by any jurisdiction. The
Borrower shall also pay such additional amounts equal to increases in net income
or franchise taxes attributable to payments made by the Borrower pursuant to
this clause (a). Promptly after the date on which payment of any such Eurodollar
Rate Tax is due pursuant to applicable law, the Borrower will, at the request of
the Lender, furnish to the Lender evidence, in form and substance satisfactory
to the Lender, that the Borrower has met its obligation under this Section
2.06(vii); and
(b) the Borrower will indemnify the Lender against, and reimburse
the Lender on demand for, any Eurodollar Rate Taxes paid by the Lender in
respect of a Revolving Credit Loan made to the Borrower, as determined by the
Lender in its sole discretion. The Lender shall provide the Borrower with (1)
appropriate receipts for any payments or reimbursements made by the Borrower
pursuant to this clause (b) and (2) such information as may reasonably be
required to indicate the basis for such Eurodollar Rate Taxes; provided,
however, that if the Lender subsequently recovers, or receives a net tax benefit
with respect to, any amount of Eurodollar Rate Taxes previously paid by the
Borrower pursuant to this Section 2.06(vii)(b), the Lender shall, within thirty
(30) days after receipt of such refund, and to the extent permitted by
applicable law, pay to the Borrower the amount of any such recovery or permanent
net tax benefit.
(viii) Booking of Eurodollar Rate Loans. The Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of, any of its branch
offices, agencies or the office of an Affiliate of the Lender; provided,
however, the Lender shall not be entitled to receive any greater amount under
Section 2.02(vi) or 2.06(vii) hereof as a result of the transfer of any such
Revolving Credit Loan than the Lender would be entitled to immediately prior
thereto unless (a) such transfer occurred at a time when circumstances giving
rise to the claim for such greater amount did not exist and were not reasonably
foreseeable in the view of the Lender and (b) such claim would have arisen even
if such transfer had not occurred.
(ix) Affiliates Not Obligated. No Eurodollar Affiliate or other Affiliate
of the Lender shall be deemed a party to this Loan Agreement or shall have any
rights, liability or obligation under this Loan Agreement.
Section 2.07 Increased Capital. If either (i) the introduction of or any
change in or in the interpretation of any Law or regulation or (ii) compliance
by the Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) affects or would affect
the amount of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and the Lender determines that the amount of
such capital is increased by or based upon the existence of the Lender's
commitment to make Revolving Credit Loans and other commitments of this type or
upon the existence of letters of credit (or similar contingent obligations),
then, upon demand by the Lender, the Borrower shall immediately pay to the
Lender,
35
from time to time as specified by the Lender, additional amounts sufficient to
compensate the Lender in the light of such circumstances, to the extent that the
Lender determines such increase in capital to be allocable to the existence of
the Lender's commitment to fund the Revolving Credit Facility. A certificate as
to such amounts submitted to the Borrower by the Lender, shall, in the absence
of manifest error, be conclusive and binding for all purposes.
Section 2.08. Authorized Officers of the Borrower. The Borrower shall
notify the Lender in writing of the names of the officers and employees
authorized to request Revolving Credit Loans and shall provide the Lender with a
specimen signature of each such Authorized Officer. The Lender shall be entitled
to rely conclusively on such officer's or employee's authority to request such
Revolving Credit Loans until the Lender receives written notice to the contrary.
The Lender shall have no duty to verify the authenticity of the signature
appearing on any written Notice of Borrowing or Notice of
Conversion/Continuation and, with respect to an oral request for such a
Revolving Credit Loan, the Lender shall have no duty to verify the identity of
any Person representing himself as one of the officers or employees authorized
to make such request on behalf of the Borrower. The Lender shall not incur any
liability to the Borrower in acting upon any telephonic notice referred to above
which the Lender believes in good faith to have been given by a duly Authorized
Officer or other Person authorized to borrow on behalf of the Borrower or for
otherwise acting in good faith under this Section 2.08.
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Section 2.09 Taxes.
(i) Payments Net of Taxes. All payments made by the Borrower under
this Loan Agreement or any other Loan Document shall be made free and clear of,
and without reduction or withholding for or on account of, any present or future
Taxes.
If any Taxes are required to be withheld or deducted from any
amounts payable to the Lender under this Loan Agreement or any other Loan
Document, the Borrower shall pay the relevant amount of such Taxes and the
amounts so payable to the Lender shall be increased to the extent necessary to
yield to the Lender (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this Loan
Agreement and the other Loan Documents. Whenever any Taxes are paid by the
Borrower with respect to payments made in connection with this Loan Agreement or
any other Loan Document, as promptly as possible thereafter, the Borrower shall
send to the Lender for its own account a certified copy of an original official
receipt received by the Borrower showing payment thereof.
(ii) Indemnity. The Borrower hereby indemnifies the Lender for the
full amount of all Taxes attributable to payments by or on behalf of the
Borrower hereunder or under any of the other Loan Documents (including any
incremental Taxes, interest or penalties that may become payable by the Lender
as a result of any failure to pay such Taxes unless such failure was the result
of the action or inaction of the Lender to notify the Borrower in writing of the
existence of such Taxes). Such indemnification shall be made within thirty (30)
days from the date the Lender makes written demand therefor.
37
ARTICLE III
CONDITIONS TO THE REVOLVING CREDIT LOANS
Section 3.01 Conditions Precedent to the Effectiveness of this Loan
Agreement. This Loan Agreement shall become effective on the Closing Date when
the following conditions precedent have been satisfied (unless waived by the
Lender or unless the deadline for delivery has been extended by the Lender):
(i) Certain Documents. The Lender shall have received on or before
the Closing Date all of the following, all of which, except as otherwise
specifically described below, shall be in form and substance satisfactory to the
Lender:
(a) This Loan Agreement together with all Exhibits and
Schedules attached hereto;
(b) A Notice of Borrowing pursuant to Section 2.01 hereof
dated the Closing Date executed by the Borrower;
(c) The Revolving Credit Note;
(d) The Agreement of Guaranty;
(e) The opinions of counsel to the Borrower substantially in
the form of Exhibit "E" attached hereto;
(f) A certificate of the Secretary or Assistant Secretary of
the Borrower, its Subsidiaries and its corporate Affiliates dated the Closing
Date certifying (1) the names and true signatures of the incumbent officers of
the Borrower, its Subsidiaries and its corporate Affiliates authorized to sign
this Loan Agreement and all other Loan Documents executed by the Borrower, its
Subsidiaries and its corporate Affiliates in connection with this Loan
Agreement, (2) the By-Laws of the Borrower, its Subsidiaries and its corporate
Affiliates as in effect on the date of such certification, (3) the resolutions
of the Borrower's, its Subsidiaries' and its corporate Affiliates' respective
Boards of Directors approving and authorizing the execution, delivery and
performance of this Loan Agreement and all other Loan Documents which were
executed by the Borrower, its Subsidiaries and its corporate Affiliates in
connection herewith and (4) that there have been no changes in the Certificate
of Incorporation and By-Laws of the Borrower since the date of the most recent
certification thereof by the Office of the appropriate Secretary of State
delivered to the Lender prior to the Closing Date;
(g) The Certificate of Incorporation of the Borrower, its
Subsidiaries and/or its corporate Affiliates as amended, modified or
supplemented to the Closing Date, shall be certified to be true, correct and
complete by the appropriate Secretaries of State as of dates acceptable to the
Lender;
38
(h) Good Standing Certificate(s) certified by the appropriate
Secretaries of State relating to the Borrower, its Subsidiaries and/or its
corporate Affiliates for each of the states in which the Borrower, its
Subsidiaries and/or its corporate Affiliates are qualified to conduct business;
(i) The annual operating plan for the 1997 Fiscal Year.
(j) Evidence of the insurance required by this Loan Agreement;
(k) A contemporaneous search of UCC, real property, tax,
judgment and litigation dockets and records and other appropriate registers
shall have revealed no filings or recordings in effect with respect to the
Borrower, its Subsidiaries and its Affiliates, except such as are acceptable to
the Lender, and the Lender shall have received a copy of the search reports
received as a result of the search; and
(l) The partnership agreements for each of the Partnership
Guarantors shall be certified to be true, correct and complete by the
Partnership Guarantors as of the Closing Date.
(m) Such additional documentation as the Lender may reasonably
require.
(ii) Fees and Expenses Paid. The Borrower shall have paid to the
Lender, for its own account, all fees and expenses due and payable under this
Loan Agreement and the Commitment Letter on or before the Closing Date.
(iii) Representations and Warranties. All of the representations and
warranties of the Borrower, the Corporate Guarantors and/or the Partnership
Guarantors contained in subsections (i) through (xxxi) of Section 4.01 hereof
and in any other Loan Document (other than for changes permitted or contemplated
by this Loan Agreement and/or the Agreement of Guaranty) shall be true and
correct in all material respects on and as of the Closing Date as though made on
and as of that date (except any such representations and warranties stated to be
given on a specific date other than the Closing Date).
(iv) No Default. No Event of Default or Potential Event of Default
hereunder or under the other Loan Documents shall have occurred and be
continuing on the Closing Date.
(v) No Injunction. No Requirements of Law shall prohibit, and no
order, judgment or decree of any Governmental Authority shall and, except as set
forth on Schedule 4.01(vii) hereto, no litigation shall be pending or threatened
which in the judgment of the Lender would, enjoin, prohibit, restrain, impose or
result in the imposition of any material adverse condition upon the consummation
of the transactions contemplated hereby.
(vi) Consents. The Borrower, the Corporate Guarantors and/or the
Partnership Guarantors shall have received all consents and authorizations
required pursuant to any material
39
Contractual Obligation with any other Person and shall have obtained all
consents and authorizations of, and effected all notices to and filings with,
any Governmental Authority, in each case, as may be necessary to allow the
Borrower, the Corporate Guarantors and/or the Partnership Guarantors lawfully to
execute, deliver and perform, in all material respects, its obligations under
this Loan Agreement and the other Loan Documents.
(vii) No Material Adverse Change. No adverse change deemed material
by the Lender, in its sole opinion, shall have occurred since the date of the
most recent annual audited financial report of the Borrower, its Subsidiaries
and its Affiliates delivered to the Lender through the Closing Date, as to the
condition (financial or otherwise), operations, performance or properties of the
Borrower, its Subsidiaries and its Affiliates individually or taken as a whole.
3.02. Conditions Precedent to All Revolving Credit Loans and the Issuance
of Letters of Credit. The obligation of the Lender to make any Revolving Credit
Loan and/or issue any Letter of Credit requested to be made and/or issued by it,
on any date, is subject to the following conditions precedent as of such date:
(i) Notice of Borrowing. With respect to a request for a Revolving
Credit Loan, the Lender shall have received in accordance with the provisions of
Section 2.01(ii) hereof, on or before any Borrowing Date, an original and duly
executed Notice of Borrowing.
(ii) Application for Letters of Credit. With respect to a request
for the issuance of a Letter of Credit, the Lender shall have received in
accordance with the provisions of Section 2.01(vi) hereof, on or before the date
of issuance, an original and duly executed Letters of Credit Reimbursement
Agreement.
(iii) Additional Matters. As of the Borrowing Date for any Revolving
Credit Loan and the date of the issuance of any Letter of Credit:
(a) Representations and Warranties. All of the representations
and warranties of the Borrower contained in subsections (i) through (xxx) of
Section 4.01 hereof and in any other Loan Document (other than representations
and warranties which expressly speak only of a different date and other than for
changes permitted or contemplated by this Loan Agreement) shall be true and
correct in all material respects;
(b) No Default. No Event of Default or Potential Event of
Default shall have occurred and be continuing or would result from the making of
the requested Revolving Credit Loan or the issuance of the requested Letter of
Credit;
(c) No Injunction. No law or regulations shall prohibit, and
no order, judgment or decree of any Governmental Authority shall, and, except as
set forth on Schedule 4.01(vii) hereto, no litigation shall be pending or
threatened which in the reasonable judgment of the Lender would, enjoin,
prohibit, restrain, impose or result in the imposition of any material adverse
condition upon (1) the Lender from making the Revolving Credit Loan requested to
be
40
made on the Borrowing Date and (2) the Lender from issuing the Letter of
Credit requested to be issued; and
(d) No Material Adverse Change. No adverse change deemed
material by the Lender, in its reasonable opinion, shall have occurred after the
Closing Date as to the condition (financial or otherwise), operations,
performance or properties of the Borrower, its Subsidiaries and/or its
Affiliates, individually or taken as a whole.
Each submission by the Borrower to the Lender of a Notice of
Borrowing with respect to a Revolving Credit Loan and the acceptance by the
Borrower of the proceeds of each such Revolving Credit Loan made hereunder or
the request for the issuance of a Letter of Credit and the issuance of such
Letter of Credit, shall constitute a representation and warranty by the Borrower
as of the Borrowing Date in respect of such Revolving Credit Loan that all the
conditions contained in this Section 3.02 have been satisfied.
41
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties on the Effective Date. In
order to induce the Lender to enter into this Loan Agreement, the Borrower
hereby represents and warrants to the Lender that the following statements are
true, correct and complete on and as of the Closing Date:
(i) Organization; Corporate Powers. The Borrower (a) is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, (b) is duly qualified to conduct business as a foreign
corporation and is in good standing under the Laws of each jurisdiction in which
it owns or leases real property or in which the nature of its business requires
it to be so qualified and (c) has all requisite power and authority to own,
operate and encumber its property and assets and to conduct its business as
presently conducted and as proposed to be conducted in connection with and
following the consummation of the transactions contemplated by the Loan
Documents.
(ii) Authority. (a) The Borrower has the requisite corporate power
and authority (1) to execute, deliver and perform each of the Loan Documents
executed by it, or to be executed by it, and (2) to file the Loan Documents
filed by it, or to be filed by it, with the appropriate Governmental Authority.
(b) The execution, delivery and performance (or filing, as the
case may be) of each of the Loan Documents to which it is a party and the
consummation of the transactions contemplated thereby, have been duly authorized
by the Board of Directors of the Borrower and no further corporate proceedings
on the part of the Borrower are necessary to consummate such transactions.
(c) Each of the Loan Documents to which the Borrower is a
party has been duly executed and delivered (or filed, as the case may be) by the
Borrower and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms.
(iii) Subsidiaries and Ownership of Capital Stock. As of the Closing
Date, the Borrower has eight (8) Subsidiaries. In addition, the two (2)
Partnership Guarantors are Affiliates of the Borrower. Schedule 4.01(iii)
attached hereto sets forth the number of issued and authorized shares of each
class of capital stock of the Borrower. No capital stock (or any securities,
instruments, warrants, option or purchase rights, conversion or exchange rights,
calls, commitments or claims of any character convertible into or exercisable
for capital stock) of the Borrower is subject to issuance under any security,
instrument, warrant, option or purchase rights, conversion or exchange rights,
call, commitment or claim of any right, title or interest therein or thereto,
except as set forth on Schedule 4.01(iii) attached hereto. The outstanding
capital stock of the Borrower is duly authorized, validly issued, fully paid and
nonassessable and is not Margin Stock.
42
(iv) No Conflict. The execution and delivery by the Borrower, the
Corporate Guarantors and the Partnership Guarantors of each Loan Document and
the performance of each of the transactions contemplated thereby do not and will
not (a) to the best knowledge of the Borrower, constitute a tortious
interference with any Contractual Obligation of the Borrower, the Corporate
Guarantors and the Partnership Guarantors, (b) conflict with or violate the
Borrower's and/or the Corporate Guarantors' respective Certificates of
Incorporation or By-Laws, (c) conflict with or violate the Partnership
Guarantors' partnership agreements, (d) conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a default under any
Requirement of Law or, subject to clause (a) above, Contractual Obligation of
the Borrower, or require termination of any Contractual Obligation, the
consequences of which conflict or default or termination would have or is
reasonably likely to have a Material Adverse Effect (e) result in or require the
creation or imposition of any Lien whatsoever upon any of the properties or
assets of the Borrower, its Subsidiaries and/or its Affiliates (other than Liens
permitted pursuant to Section 7.02(ii) hereof) or (f) require any approval of
stockholders, other than as otherwise obtained.
(v) Governmental Consents. The execution, delivery and performance
of each Loan Document and the transactions contemplated thereby do not and will
not require any registration with, consent or approval of, or notice to, or
other action to, with or by any Governmental Authority, except filings, consents
or notices which have been, or will in due course, be made, obtained or given.
(vi) Governmental Regulation. The Borrower, its Subsidiaries and its
Affiliates are not subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, the
Investment Company Act of 1940 or any other Law such that the Borrower's, its
Subsidiaries' and/or its Affiliates' ability to incur indebtedness is limited or
their ability to consummate the transactions contemplated hereby is materially
impaired.
(vii) Litigation; Adverse Effects. (a) Except as set forth in
Schedule 4.01(vii) attached hereto, there is no action, suit, proceeding,
governmental investigation or arbitration, at law or in equity, or before or by
any Governmental Authority, pending, or to the knowledge of the Borrower,
threatened against the Borrower, its Subsidiaries and/or its Affiliates or
threatened against any Property of the Borrower, its Subsidiaries and its
Affiliates which is reasonably likely to (1) result in any Material Adverse
Effect, (2) materially and adversely affect the ability of the Borrower, its
Subsidiaries and its Affiliates to perform their respective obligations under
the Law, any material Contractual Obligation and/or the Loan Documents or (3)
materially and adversely affect the ability of the Borrower, its Subsidiaries
and/or its Affiliates to perform their collective Obligations or the Lender's
ability to enforce such Obligations.
(b) The Borrower, its Subsidiaries and its Affiliates are not
(1) in violation of any applicable Law which violation has or is reasonably
likely to have a Material Adverse Effect or (2) subject to or in default with
respect to any final judgment, writ, injunction, decree, rule or regulation of
any court or Governmental Authority which has or is reasonably likely to have a
Material Adverse Effect. Except as set forth in Schedule 4.01(vii) attached
hereto, there is no action, suit, proceeding or investigation pending or, to the
best knowledge of the Borrower,
43
threatened against or affecting the Borrower, its Subsidiaries and/or its
Affiliates challenging the validity or the enforceability of any of the Loan
Documents.
(viii) No Material Adverse Change. No material adverse change has
occurred in (a) the condition (financial or otherwise), operations or
performance of the Borrower, its Subsidiaries and its Affiliates taken as a
whole, or the ability of the Borrower to perform its Obligations under the Loan
Documents to which it is a party.
(ix) Payment of Taxes. All tax returns and reports of the Borrower,
its Subsidiaries and its Affiliates required to be filed, have been timely filed
(or appropriate extensions of time for the filing of same have been timely
requested), and all taxes, assessments, fees and other governmental charges
thereupon and upon their respective Properties, assets, income and franchises
which are shown on such returns as being due and payable, have been paid when
due and payable, except such taxes, if any, that are reserved against in
accordance with Generally Accepted Accounting Principles, such taxes as are
being contested in good faith by appropriate proceedings or such taxes the
failure to make payment of which when due and payable would not have, in the
aggregate, a Material Adverse Effect. The Borrower has no knowledge of any
proposed tax assessment against the Borrower, the Corporate Guarantors and/or
the Partnership Guarantors that is reasonably likely to have a Material Adverse
Effect, which is not being actively contested in good faith by the Borrower, the
Corporate Guarantors and/or the Partnership Guarantors.
(x) Material Adverse Agreements. The Borrower, its Subsidiaries
and/or its Affiliates are not a party to or subject to any Contractual
Obligation or other restriction contained in their respective Certificates of
Incorporation, By-laws, partnership agreements or similar governing documents
which has or is reasonably likely to have a Material Adverse Effect.
(xi) Performance. The Borrower, its Subsidiaries and its Affiliates
are not in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation
applicable to them, and no condition exists which, with the giving of notice or
the lapse of time or both, would constitute a default under such Contractual
Obligation, in each case, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have or are not reasonably likely to
have a Material Adverse Effect.
(xii) Securities Activities. The Borrower, its Subsidiaries and
its Affiliates are not engaged principally in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock.
(xiii) Requirements of Law. The Borrower has no actual knowledge of
any non-compliance with respect to all Requirements of Law applicable to the
Borrower, its Subsidiaries, its Affiliates and their respective businesses, and
the Borrower, its Subsidiaries and its Affiliates are not charged with, or to
the best of the Borrower's knowledge, under investigation with respect to, any
violation of any such Requirements of Law, except where a non-compliance or
violation of all Requirements of Law would not result in a Material Adverse
Effect.
44
(xiv) Patents, Trademarks, Permits, Etc. The Borrower, its
Subsidiaries and its Affiliates own, license or otherwise have the lawful right
to use, or have all permits and other governmental approvals, patents,
trademarks, trade names, copyrights, technology, know-how and processes used in
or necessary for the conduct of their respective businesses as currently
conducted which are material to their condition (financial or otherwise),
operations and performance, taken as a whole. The use of such permits and other
governmental approvals, patents, trademarks, trade names, copyrights,
technology, know how and processes by the Borrower, its Subsidiaries and its
Affiliates does not infringe on the rights of any Person, subject to such claims
and infringements and do not, in the aggregate, give rise to any liability on
the part of the Borrower, its Subsidiaries and its Affiliates which has or is
reasonably likely to have a Material Adverse Effect.
(xv) Environmental Matters. Except as disclosed in Schedule 4.01(xv)
attached hereto and except where the failure to comply with the provisions of
clauses (a) through (k) below does not result in a Material Adverse Effect, (a)
the operations of the Borrower, its Subsidiaries and its Affiliates comply in
all substantial respects with all applicable environmental, health and safety
Requirements of Law; (b) the Borrower, its Subsidiaries and its Affiliates have
obtained all environmental, health and safety Permits necessary for their
respective operations, and all such Permits are in good standing, and the
Borrower, its Subsidiaries and its Affiliates are in material compliance with
all terms and conditions of such Permits; (c) the Borrower's, its Subsidiaries'
and its Affiliates' respective present Properties and operations, and to the
best of the Borrower's knowledge, the Borrower's, its Subsidiaries' and its
Affiliates' respective past Properties and operations, are not the subject of
any order from or agreement with any Governmental Authority or private party or
any judicial or administrative proceeding or investigations respecting any
environmental, health or safety Requirements of Law, and are not the subject of
any Remedial Action or other Liabilities and Costs arising from the Release or
threatened Release of an Environmental Concern Material into the Environment;
(d) the Borrower, its Subsidiaries and its Affiliates have not filed any notice
under any Requirement of Law indicating past or present treatment, storage or
disposal of an Environmental Concern Material in violation of any Environmental
Law; (e) the Borrower, its Subsidiaries and its Affiliates have not filed any
notice under any applicable Requirement of Law reporting a Release of an
Environmental Concern Material into the Environment in violation of any
Environmental Law; (f) there is not now, nor has there ever been, on or in the
Property of the Borrower, its Subsidiaries and/or its Affiliates in violation of
any Environmental Law: (1) any generation, treatment, recycling, storage or
disposal of any Environmental Concern Material, (2) any underground storage
tanks or surface impoundments, (3) any asbestos-containing material, or (4) any
polychlorinated biphenyls (PCB's) used in hydraulic oils, electrical
transformers or other equipment; (g) the Borrower, its Subsidiaries and/or its
Affiliates has not received any notice or claim to the effect that it is or may
be liable to any Person as a result of the Release or threatened Release of a
Environmental Concern Material into the Environment, or as a result of exposure
to asbestos or to cotton dust, which may result in any liability; (h) after due
inquiry, no Environmental Lien has attached to any Property of the Borrower, its
Subsidiaries and/or its Affiliates; (i) the Borrower, its Subsidiaries and its
Affiliates have not entered into any negotiations or agreements with any Person
(including, without limitation, the prior owner(s) of any Property owned or
leased by the Borrower, its Subsidiaries and /or its
45
Affiliates) relating to any Remedial Action or environmentally related Claim;
(j) the Borrower, its Subsidiaries and its Affiliates have no material
contingent liability in connection with any Release or threatened Release of any
Environmental Concern Material into the Environment; and (k) none of the
products that the Borrower, its Subsidiaries and/or its Affiliates manufacture,
distribute or sell, or, to the best of the Borrower's knowledge, ever has
manufactured, distributed or sold, contains an asbestos-containing material.
(xvi) ERISA. As of the Closing Date, the Borrower, its Subsidiaries,
its Affiliates and any ERISA Affiliate do not maintain or contribute to any Plan
other than a Plan listed on Schedule 4.01(xvi) attached hereto. Except as
otherwise provided on Schedule 4.01(xvii), each Plan which is intended to be a
qualified plan has been determined by the IRS to be qualified under Section
401(a), and each trust related to any such Plan has been so determined to be
exempt from federal income tax under Section 501(a) of the Code prior to its
amendment by the Tax Reform Act of 1986, and such Plan and trust are being
operated in all material respects in compliance with and will be timely amended
in accordance with the Tax Reform Act of 1986 and the Omnibus Budget
Reconciliation Act of 1987 as interpreted by the regulations promulgated
thereunder. Except as otherwise provided on Schedule 4.01(xvi) attached hereto,
the Borrower, its Subsidiaries, its Affiliates and any ERISA Affiliate do not
maintain or contribute to any employee welfare benefit plan within the meaning
of Section 3(1) of ERISA which provides lifetime benefits to retirees other than
as may be required by the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended and interpreted by regulations promulgated thereunder. The
Borrower, its Subsidiaries, its Affiliates and all of their ERISA Affiliates are
in compliance in all material respects with the responsibilities, obligations or
duties imposed on them by ERISA or regulations promulgated thereunder with
respect to all Plans. No material accumulated funding deficiency (as defined in
Section 302(a)(2) of ERISA and Section 412(a) of the Code) exists in respect to
any Benefit Plan. The Borrower, its Subsidiaries, its Affiliates any ERISA
Affiliate and any fiduciary of any Plan (a) have not engaged in a nonexempt
"prohibited transaction" described in Section 406 of ERISA or Section 4975 of
the Code or (b) have not taken any action which would constitute or result in a
Termination Event with respect to any Plan such that actions under (a) or (b) or
both would result in a material obligation to pay money. The Borrower, its
Subsidiaries, its Affiliates and any ERISA Affiliate have not incurred any
material liability to the PBGC which remains outstanding other than the
liability to pay the PBGC insurance premiums for the current year. Schedule B to
the most recent annual report filed with the IRS with respect to each Benefit
Plan (which has been furnished to the Lender) is complete and accurate in all
material respects. Except as provided on Schedule 4.01(xvi) attached hereto,
since the date of each such Schedule B, there has been no material adverse
change in the funding status or financial condition of the Benefit Plan relating
to such Schedule B which would result in a Material Adverse Effect. The
Borrower, its Subsidiaries, its Affiliates and any ERISA Affiliate have not
failed to make a required installment under subsection (m) of Section 412 of the
Code or any other payment required under Section 412 of the Code on or before
the due date for such installment or other payment which would in the aggregate
have a Material Adverse Effect. The Borrower, its Subsidiaries, its Affiliates
and any ERISA Affiliate are not required to provide security to a Plan under
Section 401(a)(29) of the Code due to a Plan amendment that results in an
increase in current liability for the plan year. The Borrower, its Subsidiaries,
its Affiliates and any ERISA Affiliate are not contributing and have not ever
46
contributed to or been obligated to contribute to any Multiemployer Plan, and no
employees or former employees of the Borrower, its Subsidiaries, its Affiliates
or any ERISA Affiliate have been covered by any Multiemployer Plan in respect of
their employment by the Borrower or any ERISA Affiliate, and, accordingly, the
representations and warranties in this paragraph (xvi) do not apply to
Multiemployer Plans.
(xvii) Solvency. The Borrower, its Subsidiaries and its Affiliates
taken as a whole are Solvent after giving effect to the transactions
contemplated by this Loan Agreement and the other Loan Documents, the payment
and accrual of all costs payable on the Closing Date with respect to any of the
foregoing, and all obligations, if any, under any Plan or the equivalent for
unfunded past service liability and any other unfunded medical (including
post-retirement) and death benefits.
(xviii) Notes Qualification. As of the date on which this
representation and warranty is made, the offering and issuance of the Revolving
Credit Note is exempt from registration under Section 5 of the Securities Act or
has been registered pursuant to a registration statement filed pursuant to the
Securities Act and, if so registered, is qualified under the Trust Indenture Act
of 1939, as amended.
(xix) Assets and Properties. Substantially all of the assets and
properties owned by, leased to or used by the Borrower, its Subsidiaries and its
Affiliates (a) are in good operating condition and repair, (ordinary wear and
tear excepted), (b) are free and clear of any known defects (except such defects
as do not substantially interfere with the continued use thereof in the conduct
of normal operations) and (c) are able to serve the function for which they are
currently being used, in each case where the failure of such asset to meet such
requirements would not have or is not reasonably likely to have a Material
Adverse Effect.
(xx) Joint Venture; Partnership. Except as set forth in Schedule
4.01 (xx) attached hereto, as of the Closing Date the Borrower, its Subsidiaries
and its Affiliates are not engaged in any joint venture or partnership with any
other Person.
(xxi) Insurance. The Borrower, its Subsidiaries and its Affiliates
maintain with financially sound and reputable insurers not related to or
affiliated with the Borrower, its Subsidiaries and its Affiliates, insurance
with respect to its properties and businesses, insured against such liabilities,
casualties and contingencies and in such types and amounts as is customary in
the case of corporations engaged in the same or a similar business or having
similar properties similarly situated. Schedule 4.01(xxi) attached hereto sets
forth a list of all insurance currently maintained by or in respect of the
Borrower, its Subsidiaries and its Affiliates setting forth the identity of the
insurance carrier, the type of coverage, the amount of coverage and the
deductible. There are no claims, actions, suits, proceedings against, arising
under or based upon any of such insurance policies except as set forth in
Schedule 4.01(xxi) attached hereto.
(xxii) Title to Property. The Borrower, its Subsidiaries and its
Affiliates have good and marketable title in fee simple to all respective
Property owned or purported to be owned by
47
them, including, without limitation to all property reflected in the most recent
consolidated balance sheet referred to in Section 4.01(xxiii) hereof or
submitted pursuant to Article V (except as sold or otherwise disposed of in the
ordinary course of business after the date of such balance sheet), in each case
free and clear of all Liens, other than Liens permitted under the terms of
Section 7.02 of this Loan Agreement.
(xxiii) Audited Financial Statements. The Borrower has heretofore
furnished to the Lender consolidated and consolidating balance sheet of the
Borrower, its Subsidiaries and its Affiliates dated as of March 31, 1995, and
the related statements of income, cash flows and changes in stockholders' equity
for the 1995 Fiscal Year then ended, as examined and reported on by its
Independent Certified Public Accountant, who delivered an unqualified opinion in
respect thereof, all as set forth in the Form 10-K. Such financial statements
(including the notes thereto) present fairly the financial condition of the
Borrower, its Subsidiaries and its Affiliates as of the end of such Fiscal Year
and the results of its operations and its cash flows for the Fiscal Year then
ended, all in conformity with Generally Accepted Accounting Principles.
(xxiv) Interim Financial Statements. The Borrower has heretofore
furnished to the Lender interim balance sheets of the Borrower, its Subsidiaries
and its Affiliates as of the end of its first, second and third Fiscal Quarters
of the Fiscal Year beginning April 1, 1995, together with the related statements
of income and cash flows for the applicable fiscal periods ending on each such
date, all as set forth in the Form 10-Q. Such financial statements present
fairly the financial condition of the Borrower, its Subsidiaries and its
Affiliates as of the end of such Fiscal Quarters and the results of its
operations and its cash flows for the fiscal periods then ended, all in
conformity with Generally Accepted Accounting Principles (except to the extent
set forth in the notes to said financial statements), subject to normal and
recurring year-end audit adjustments.
(xxv) Absence of Undisclosed Liabilities. The Borrower, its
Subsidiaries and its Affiliates have no liability or obligation of any nature
whatever (whether absolute, accrued, contingent or otherwise, whether or not
due), forward or long-term commitments or unrealized or anticipated losses from
unfavorable commitments, except (a) as disclosed in the financial statements
referred to in Sections 4.01(xxiii) and (xxiv) hereof, (b) matters that,
individually or in the aggregate could not have a Material Adverse Effect and
(c) Contractual Obligations incurred in the ordinary course of the Borrower's,
its Subsidiaries' and its Affiliates' business.
(xxvi) Margin Regulations. No part of the proceeds of the Revolving
Credit Facility will be used for the purpose of buying or carrying any Margin
Stock, as such term is used in Regulations G and U of the Federal Reserve Board,
as amended from time to time, or to extend credit to others for the purpose of
buying or carrying any Margin Stock. The Borrower, its Subsidiaries and its
Affiliates are not engaged in the business of extending credit to others for the
purpose of buying or carrying Margin Stock. Neither the making of any Revolving
Credit Loan nor any use of proceeds of any such Revolving Credit Loan will
violate or conflict with the provisions of Regulation G, T, U or X of the
Federal Reserve Board, as amended from time to time.
48
(xxvii) Labor Matters. Except as set forth on Schedule 4.01(xxvii)
attached hereto, the Borrower, its Subsidiaries and its Affiliates is not a
party to any labor union or collective bargaining agreements. The Borrower, its
Subsidiaries and its Affiliates is in compliance with all applicable laws
respecting employment and employment practices, including, without limitation,
laws, regulations, and judicial and administrative decisions relating to wages,
hours, conditions of work, collective bargaining, health and safety, payment of
social security, payroll, withholding and other taxes, worker's compensation,
insurance requirements, as well as requirements of ERISA and the Consolidated
Omnibus Budget Reconciliation Act, except to the extent that noncompliance would
not have a Material Adverse Effect. There is no (a) unfair labor practice
complaint pending or, to the best knowledge of the Borrower, threatened against
the Borrower before the National Labor Relations Board or any court nor any
pending or, to the best knowledge of the Borrower, threatened sexual harassment,
or wrongful discharge claim, (b) labor strike, dispute, slowdown, or stoppage
pending or, to the best knowledge of the Borrower, threatened against the
Borrower, or (c) representation petition, respecting the employees of the
Borrower filed or threatened to be filed with the National Labor Relations
Board.
(xxviii) Brokerage Commissions. No other Person is entitled to
receive from the Borrower, its Subsidiaries and/or its Affiliates any brokerage
commission, finder's fee or similar fee or payment in connection with the
consummation of the transactions contemplated by this Loan Agreement. No
brokerage or other fee, commission or compensation is to be paid by the Lender
by reason of any act, alleged act or omission of the Borrower, its Subsidiaries
and/or its Affiliates with respect to the transactions contemplated hereby.
(xxix) Books and Records. The Borrower maintains its books and
records relative to its assets, properties and business transactions at the
Borrower's principal corporate offices located at 0 Xxxxxx Xxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000; provided, however, with respect to the books and records of the
Borrower's division commonly known as "DRS Military Systems", its books and
records are maintained at 000 Xxxxx Xxxxx, Xxxxxxx Xxx Xxxxxx 00000.
(xxx) Business Name. The only name by which the Borrower is known or
under which the Borrower is conducting its business is "Diagnostic/Retrieval
Systems, Inc." or "DRS".
Section 4.02. Subsequent Funding Representations and Warranties. In order
to induce the Lender to enter into this Loan Agreement and to make the Revolving
Credit Loans, the Borrower hereby represents and warrants to the Lender that the
statements set forth in sections (i) through (xxx) of Section 4.01 hereof
(except (i) to the extent that such statements (a) are made expressly only as of
the Closing Date or (b) other than for changes permitted or contemplated by this
Loan Agreement), are true, correct and complete in all material respects on and
as of the Borrowing Date in respect of each Borrowing after the Closing Date.
49
ARTICLE V
REPORTING COVENANTS
On and after the Closing Date and so long as the Borrower shall have any
Obligation hereunder, unless the Lender shall give its prior express written
consent to the effect otherwise, then:
Section 5.01. Statement of Accounting. The Borrower shall make and keep
books, records and accounts which, in reasonable detail, accurately and fairly
reflect its transactions and dispositions of its assets and shall maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization, (ii) transactions are recorded as necessary
(a) to permit preparation of financial statements in conformity with Generally
Accepted Accounting Principles and any other accounting principles applicable
thereto and (b) to maintain accountability for assets and (iii) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Section 5.02 Reporting and Information Requirements. The Borrower shall
deliver or cause to be delivered to the Lender the following financial
statements, data, reports and information, at the Borrower's own cost and
expense:
(i) Annual Audited Consolidated and Consolidating Financial
Statements of the Borrower, its Subsidiaries and its Affiliates. As soon as
available, but in any event within ninety (90) days after the close of each
Fiscal Year of the Borrower, "audited" consolidated statements of income,
retained earnings and a statement of cash flows for the Borrower, its
Subsidiaries and its Affiliates for such Fiscal Year and a consolidated balance
sheet for the Borrower, its Subsidiaries and its Affiliates as of the close of
such Fiscal Year, and notes to each, all as set forth in the Form 10-K filed
with the United States Securities and Exchange Commission. Such consolidated
financial statements shall be accompanied by an opinion of the Independent
Certified Public Accountant, which opinion shall be free of exceptions or
qualifications which is of "going concern" or like nature or which relates to a
more limited scope of examination. Such opinion shall in any event contain a
written statement of such accountants substantially to the effect that (a) such
accountants examined the financial statements in accordance with Generally
Accepted Auditing Standards and accordingly made such tests of accounting
records and such other auditing procedures as such accountants considered
necessary under the circumstances and (b) in the opinion of such accountants
such financial statements present fairly the financial position and cash flows
of the Borrower, its Subsidiaries and its Affiliates as of the end of such
Fiscal Year, and the results of the Borrower's, its Subsidiaries' and its
Affiliates' operations and the changes in their financial position for such
Fiscal Year, in conformity with Generally Accepted Accounting Principles applied
on a basis consistent with that of the preceding Fiscal Year. In addition to the
delivery of the annual "audited" consolidated financial statements, the Borrower
shall also deliver to the Lender, at the same time, an "unaudited" management
prepared consolidating statement of income for the Borrower, its Subsidiaries
and its Affiliates for such Fiscal Year and a consolidating balance
50
sheet for the Borrower, its Subsidiaries and its Affiliates as of the close of
such Fiscal Year, all prepared and certified to the Lender by the Borrower's
chief accounting officer in her capacity as an Authorized Officer.
(ii) Annual Operating Plan. As soon as available, but in any event
within ninety (90) days after the close of each Fiscal Year of the Borrower, a
copy of the Borrower's, its Subsidiaries' and its Affiliates' annual operating
plan for the then current Fiscal Year.
(iii) Quarterly Consolidated and Consolidating Financial Statements
of the Borrower, its Subsidiaries and its Affiliates. As soon as available, but
in any event within forty-five (45) days after the close of each of the first
three Fiscal Quarters of each Fiscal Year of the Borrower, "unaudited"
consolidated statements of income and a statement of cash flows for the
Borrower, its Subsidiaries and its Affiliates for such Fiscal Quarter and for
the period from the beginning of such Fiscal Year to the end of such Fiscal
Quarter, and an "unaudited" balance sheet of the Borrower, its Subsidiaries and
its Affiliates as of the close of such Fiscal Quarter, all as set forth in the
Form 10-Q filed with the United States Securities and Exchange Commission. In
addition to the delivery of the quarterly consolidated financial statements, the
Borrower shall also deliver to the Lender, at the same time, an "unaudited"
management prepared consolidating statement of income for the Borrower, its
Subsidiaries and its Affiliates for such Fiscal Quarter and for the period from
the beginning of such Fiscal Year to the end of such Fiscal Quarter and an
"unaudited" consolidating balance sheet of the Borrower, its Subsidiaries and
its Affiliates as of the close of such Fiscal Quarter, all as certified by the
chief accounting officer of the Borrower in her capacity as an Authorized
Officer as presenting fairly the financial position of the Borrower, its
Subsidiaries and its Affiliates as of the end of such dates and fiscal periods
and the results of the Borrower's, its Subsidiaries' and its Affiliates'
operations and the changes in the Borrower's, its Subsidiaries' and its
Affiliates' financial position and cash flows for such fiscal periods, in
conformity with Generally Accepted Accounting Principles applied in a manner
consistent with that of the most recent audited financial statements furnished
to the Lender, subject to normal and recurring year-end audit adjustments.
(iv) Contract Backlog Report. As soon as available, but in any event
within forty-five (45) days after the close of each Fiscal Quarter of each
Fiscal Year of the Borrower, a contract backlog report for the Borrower, its
Subsidiaries and its Affiliates signed by an Authorized Officer of the Borrower.
(v) Compliance Certificates. Together with each delivery of any
financial statement pursuant to this Section 5.02(i) and Section 5.02(iii)
above, an Officer's Certificate of the Borrower substantially in the form of
Exhibit "F" attached hereto, (a) stating that the officer signatory thereto in
his capacity as an Authorized Officer has reviewed the terms of this Loan
Agreement and the principal Loan Documents, and has made, or caused to be made
under his supervision, a review in reasonable detail of the transactions and
condition of the Borrower, its Subsidiaries and its Affiliates, taken as a
whole, during the accounting period covered by such financial statements, and
that such review has not disclosed the existence during or at the end of such
accounting period, and that the signer does not have knowledge of the existence
as at the date
51
of the Officer's Certificate, of any condition or event which constitutes an
Event of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence thereof
and what action the Borrower has taken, is taking and proposes to take with
respect thereto; and (b) demonstrating in reasonable detail compliance during
and at the end of such accounting periods with the covenants contained in
Article VIII of this Loan Agreement.
(vi) Quarterly Accounts Receivable Aging Reports, Etc. As soon as
available, but in any event within forty-five (45) days after the close of each
Fiscal Quarter of each Fiscal Year of the Borrower, a quarterly accounts
receivable aging report in summary form only, setting forth the amounts due and
owing to each of the Borrower, its Subsidiaries and its Affiliates,
respectively, as of the close of the preceding Fiscal Quarter.
(vii) Other Reports and Information. Promptly upon their becoming
available to the Borrower, a copy of (a) all reports, financial statements and
other information distributed generally by the Borrower, its Subsidiaries and/or
its Affiliates to their respective stockholders, partners, bondholders or the
financial community and (b) all accountants' management letters pertaining to,
all other reports submitted by accountants in connection with any audit of, and
all other material reports, if any, from outside accountants with respect to,
the Borrower, its Subsidiaries and/or its Affiliates.
(viii) Further Information. The Borrower shall promptly furnish to
the Lender such business, financial or other information concerning the
Borrower, its Subsidiaries and its Affiliates in such form as the Lender may
reasonably request from time to time.
(ix) Notice of Event of Default. Promptly upon becoming aware of any
Event of Default or Potential Event of Default, the Borrower shall give the
Lender written notice thereof, together with a written statement of the
President or chief accounting officer of the Borrower in her capacity as an
Authorized Officer setting forth the details thereof and any action with respect
thereto taken or contemplated to be taken by the Borrower.
(x) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Borrower shall give the Lender written notice concerning any
material adverse change in the business, assets, operations or financial
condition of the Borrower, its Subsidiaries and/or its Affiliates taken as a
whole, including, without limitation, any loss from casualty or theft in excess
of $500,000.00 whether or not insured, affecting any Property of the Borrower,
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by the Borrower.
(xi) Notice of Material Proceedings. Promptly upon becoming aware
thereof, the Borrower shall give the Lender written notice of the commencement,
existence or threat of any action, suit, proceeding, governmental investigation
or arbitration against or affecting the Borrower, its Subsidiaries and/or its
Affiliates (including without limitation, litigation, arbitration or
52
administration proceedings) which, if adversely decided, would have a Material
Adverse Effect on the business, assets, operations or financial condition of the
Borrower, its Subsidiaries and/or its Affiliates taken as a whole or on the
ability of the Borrower, its Subsidiaries and/or its Affiliates to perform their
obligations under this Loan Agreement or the other Loan Documents.
(xii) Notice of Pension-Related Events. The Borrower shall give
the Lender the following:
(a) As soon as possible, and in any event within ten (10) days
after the Borrower, its Subsidiaries, its Affiliates or an ERISA Affiliate knows
or has reason to know that a Termination Event has occurred, a written statement
of the chief accounting officer of the Borrower describing such Termination
Event and the action, if any, which the Borrower, its Subsidiaries, its
Affiliates. or an ERISA Affiliate has taken, is taking or proposes to take with
respect thereto, and when known, any action taken or threatened by the IRS, the
DOL or PBGC with respect thereto;
(b) As soon as possible, and in any event within fifteen (15)
days, after the Borrower, its Subsidiaries, its Affiliates or an ERISA Affiliate
knows or has reason to know that a non-exempt prohibited transaction (as defined
in Section 406 of ERISA and Section 4975 of the Code) has occurred, a statement
of the chief accounting officer of the Borrower describing such transaction;
(c) Within ten (10) days after the filing thereof with the
DOL, IRS or PBGC, copies of each annual report, filed with respect to each
Benefit Plan;
(d) Within ten (10) days after the filing thereof with the
IRS, a copy of each funding waiver request filed with respect to any Benefit
Plan and all communications received by the Borrower, its Subsidiaries, its
Affiliates, or an ERISA Affiliate with respect to such request;
(e) Within thirty (30) days after a written request from the
Lender, information describing an amendment of any existing Benefit Plan which
will result in a material increase in the benefits under such Benefit Plan or a
notification of any such increase, or the establishment of any new Plan or the
commencement of contributions to any Plan to which the Borrower, its
Subsidiaries, its Affiliates or an ERISA Affiliate was not previously
contributing in a material amount;
(f) Promptly upon, and in any event within fifteen (15)
Business Days after, receipt by the Borrower, its Subsidiaries, its Affiliates
or an ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or to
have a trustee appointed to administer a Benefit Plan, copies of each such
notice;
(g) Promptly upon, and in any event within ten (10) Business
Days after, receipt by the Borrower, its Subsidiaries, its Affiliates or an
ERISA Affiliate of an unfavorable determination letter from the IRS regarding
the qualification of a Plan under Section 401(a) of the Code;
53
(h) Promptly upon, and in any event within fifteen (15)
Business Days after, receipt by the Borrower, its Subsidiaries, its Affiliates
or an ERISA Affiliate of a notice from a Multiemployer Plan regarding the
imposition of withdrawal liability; and
(i) Promptly upon, and in any event within fifteen (15)
Business Days after, the Borrower, its Subsidiaries, its Affiliates or any ERISA
Affiliate fails to make a required installment under subsection (m) of Section
412 of the Code or any other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or payment, a
notification of such failure provided that such installment payment is an amount
which is material.
(xiii) Notice of Other Material Defaults. Promptly upon becoming
aware of any material default by the Borrower, its Subsidiaries and/or its
Affiliates under any Contractual Obligation to which the Borrower, its
Subsidiaries and/or its Affiliates or by which the Borrower, its Subsidiaries
and/or its Affiliates or their respective properties may be bound (the result of
which could reasonably be expected to have a Material Adverse Effect), the
Borrower shall give the Lender written notice thereof, together with a written
statement of the President or chief accounting officer of the Borrower in her
capacity as an Authorized Officer setting forth the details thereof and any
action with respect thereto taken or contemplated to be taken by the Borrower,
its Subsidiaries and/or its Affiliates.
(xiv) Notice of Material Claims. The Borrower shall promptly notify
the Lender of all written claims, complaints, orders, citations or notices,
whether formal or informal, received by the Borrower, its Subsidiaries or its
Affiliates from a Governmental Authority or other Person relating to any Law,
including, without limitation, any Environmental Law or health and safety law,
which could reasonably be expected to have a Material Adverse Effect. Such
notices shall include, among other information, the name of the party who filed
the claim, the potential amount of the claim, and the nature of the claim.
54
ARTICLE VI
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all of the Obligations, unless the Lender shall give
its prior express written consent to the effect otherwise, then:
Section 6.01 Corporate Existence, etc. The Borrower, its Subsidiaries and
its Affiliates shall at all times maintain their respective status as a
corporation and/or partnership, as applicable, duly organized, validly existing
and in good standing under the laws of their respective jurisdiction of
incorporation and/or formation and preserve and keep in full force and effect
their rights and franchises unless the failure to maintain such rights and
franchises would not have a Material Adverse Effect.
Section 6.02 Corporate Powers, etc. The Borrower, its Subsidiaries and its
Affiliates shall qualify and remain qualified to conduct business in each
jurisdiction in which the nature of their respective businesses or the ownership
of their respective properties or both requires it to be so qualified, unless
the failure to maintain so qualified would not have a Material Adverse Effect.
The Borrower, its Subsidiaries and its Affiliates shall transact business in
their own names and trade names and shall invoice all accounts in their own
respective names and trade names.
Section 6.03 Compliance with Laws, etc. The Borrower, its Subsidiaries and
its Affiliates shall comply with all Requirements of Law, and all restrictive
covenants affecting the Borrower, its Subsidiaries and its Affiliates or the
business, properties, assets or operations of the Borrower, its Subsidiaries and
its Affiliates except to the extent non-compliance with this Section 6.03 would
not result in a Material Adverse Effect.
Section 6.04 Payment of Taxes and Claims. The Borrower, its Subsidiaries
and its Affiliates shall pay or cause to be paid (i) all taxes, assessments and
other governmental charges imposed upon them or on any of their respective
properties or assets or in respect of any of their respective franchises,
business, income or property before any penalty or interest accrues thereon and
(ii) all Claims (including, without limitation, claims for labor, services,
materials and supplies) for sums material in the aggregate to the Borrower, its
Subsidiaries and its Affiliates which have become due and payable and which by
Law have or may become a Lien (other than a Customary Permitted Lien) upon the
Borrower's, its Subsidiaries' and/or its Affiliates' Property, prior to time
when any penalty or fine shall be incurred with respect thereto; provided,
however, that no such taxes, assessments and governmental charges referred to in
clause (i) above or Claims referred to in clause (ii) above need be paid if
being contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if adequate reserves shall have been set aside therefor
in accordance with Generally Accepted Accounting Principles.
Section 6.05. Maintenance of Properties; Insurance. The Borrower, its
Subsidiaries and its Affiliates shall maintain or cause to be maintained in good
repair, working order and condition,
55
excepting ordinary wear and tear, all of their respective Properties material to
their operations and will make or cause to be made all appropriate repairs,
renewals and replacements thereof, consistent with past practice. The Borrower,
its Subsidiaries and its Affiliates shall maintain or cause to be maintained
with financially sound and reputable insurers reasonably acceptable to the
Lender, the insurance policies and programs listed on Schedule 6.05 attached
hereto or substantially similar programs or policies and amounts or other
programs, policies and amounts acceptable to the Lender. Not later than thirty
(30) days later than the renewal, replacement or material modification of any
policy or program, the Borrower shall deliver or cause to be delivered to the
Lender a certificate of insurance setting forth for each such policy or program:
(i) the amount of such policy, (ii) the risks insured against by such policy,
(iii) the name of the insurer and each insured party under such policy, and (iv)
the policy number of such policy.
Section 6.06. Inspection of Property; Books and Records; Discussions.
Except for information and records which the Borrower may not under applicable
Law disseminate or disclose to the Lender, the Borrower shall permit any
authorized representative(s) designated by the Lender to visit, to conduct a
field audit or to otherwise inspect any of the Borrower's, its Subsidiaries'
and/or its Affiliates' respective Properties, including their financial and
accounting records, and to make copies and take extracts therefrom, and to
discuss the Borrower's, its Subsidiaries' and/or its Affiliates' respective
affairs, finances and accounts with the Lender's officers, employees,
representatives or independent certified public accountants, upon reasonable
notice and during normal business hours. All information furnished to the Lender
shall be received and maintained by the Lender in strict confidence and in
accordance with applicable Law, and the Lender shall not disseminate said
information to any Person except where required by and in accordance with
applicable Law or where contemplated by the Loan Documents. The Lender agrees
that it shall not take any action or omit to take any action which would cause
or result in the violation of Law (including without limitation, any export
control law) by the Borrower, its Subsidiaries and its Affiliates. Each such
visitation and inspection by or on behalf of the Lender after the occurrence and
during the continuance of an Event of Default shall be at the Borrower's own
cost and expense. The Borrower shall, and shall cause its Subsidiaries and its
Affiliates, to keep proper books and records and account in accordance with
sound and accepted accounting practices, consistently applied (and all
Requirements of Law).
Section 6.07. Litigation, Claims, etc. The Borrower shall provide the
Lender with (i) a litigation status report with respect to any suit at law or in
equity asserted against it of the type referred to in Schedule 4.01(vii)
attached hereto, in form and substance satisfactory to the Lender, promptly
after the close of each calendar quarter; (ii) notice of any suit at law or in
equity or claim brought or asserted against the Borrower, its Subsidiaries
and/or its Affiliates promptly after learning thereof with respect to any suit
or claim involving money or property valued in excess of $500,000.00 or any such
suits or claims which in the aggregate involve money or property valued in
excess of $500,000.00; and (iii) prompt notice of any investigation or
proceeding before or by any Governmental Authority, the effect of which is
reasonably likely to have a Material Adverse Effect.
56
Section 6.08 Labor Disputes. The Borrower shall notify the Lender in
writing, promptly, but in any event within two (2) Business Days after learning
thereof, of any material labor dispute to which the Borrower, its Subsidiaries
and/or its Affiliates may become a party, any strikes or walkouts relating to
any of their Properties and the expiration of any labor contract to which they
are a party or by which they are bound.
Section 6.09 Maintenance of Licenses, Permits, etc. The Borrower (i) shall
maintain in full force and effect, and shall cause each of its Subsidiaries and
Affiliates, to maintain in full force and effect, all licenses, permits,
governmental approvals, franchises, authorizations or other rights necessary for
the operation of the Borrower's, its Subsidiaries' and/or its Affiliates'
businesses, except where the failure to obtain any of the foregoing would not
have or is not reasonably likely to have a Material Adverse Effect and (ii)
shall notify the Lender in writing, promptly after learning thereof, of the
suspension, cancellation, revocation or discontinuance of or of any pending or
threatened action or proceeding seeking to suspend, cancel, revoke or
discontinue any such license, permit, governmental approval, franchise
authorization or right, where the result thereof could reasonably be expected to
have a Material Adverse Effect.
Section 6.10 Use of Proceeds. The Borrower shall not use the proceeds of
any Loans hereunder directly or indirectly for any unlawful purpose, in any
manner inconsistent with Section 2.01(iv) hereof, or inconsistent with any other
provision of any Loan Document.
Section 6.11 Continuation of or Change in Business. The Borrower, its
Subsidiaries and its Affiliates shall continue to engage in their collective
businesses substantially as conducted and operated during the present and
preceding Fiscal Year, and the Borrower, its Subsidiaries and its Affiliates
shall not engage in any other material business other than the business of high
technology products and services for military and commercial customers in the
United States and abroad.
Section 6.12 Additional Corporate Guarantors and/or Partnership
Guarantors. The Borrower shall cause any Subsidiaries and/or Affiliates which
are acquired or formed after the Closing Date to execute the Agreement of
Guaranty.
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ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all of the Obligations, unless the Lender shall give
its prior written consent to the effect otherwise, then:
Section 7.01. Consolidated Debt. The Borrower, its Subsidiaries and its
Affiliates shall not directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to, any Consolidated
Debt, except for:
(i) the Obligations;
(ii) accounts payable owing to and letters of credit in favor of
trade creditors arising from current liabilities for goods and services
purchased in the normal course of the Borrower's, its Subsidiaries' and/or its
Affiliates' respective businesses;
(iii) the permitted existing Consolidated Debt as described on
Schedule 7.01 (iii) attached hereto, and extensions, renewals, replacements and
refinancing thereof, not exceeding the principal amount outstanding on the date
of such extension, renewal, replacement or refinancing, provided that the terms
are no less advantageous to the Borrower, its Subsidiaries and/or its Affiliates
than the predecessor obligation;
(iv) Consolidated Debt in respect of loans, advances or guarantees
permitted by Section 7.03 hereof; and
(v) Consolidated Debt in connection with purchase money Liens
permitted by Section 7.02 (ii) (e) hereof; and
(vi) Consolidated Debt in the form of term loans only, having in the
aggregate an outstanding principal balance of not more than $5,000,000.00, which
Consolidated Debt was acquired by the Borrower, its Subsidiaries and/or its
Affiliates in connection with the acquisition (whether a stock acquisition or
asset acquisition) of any Subsidiary, Affiliate or any other Person.
Section 7.02. Sales of Assets; Liens.
(i) Sales. The Borrower, its Subsidiaries and its Affiliates shall
not sell, assign, transfer, lease, convey, abandon or otherwise dispose of,
voluntarily or involuntarily, any Properties, whether now owned or hereafter
acquired, or any income or profits therefrom, except such sales, assignments,
transfer, leases, conveyances, etc., which do not result in a Material Adverse
Effect.
58
(ii) Liens. The Borrower, its Subsidiaries and its Affiliates shall
not directly or indirectly create, incur, assume or permit to exist any Lien on
or with respect to any of their respective Properties except:
(a) Liens securing the Obligations, if any such liens are
granted to the Lender in the future;
(b) any interest or title of a lessor or secured by a lessor's
interest under any lease permitted by this Loan Agreement;
(c) Liens existing on the date of this Loan Agreement securing
any of the existing Consolidated Debt described on Schedule 7.01(iii) attached
hereto (but said Liens may not be increased in principal amount);
(d) Customary Permitted Liens;
(e) purchase money Liens securing Consolidated Debt (including
the interest of a lessee under a Capitalized Lease) in the aggregate principal
amount outstanding at any time not to exceed $1,000,000.00; and
(f) Liens securing Consolidated Debt permitted under Section
7.01 (vi) above.
Section 7.03. Loans, Advances and Investments. The Borrower, its
Subsidiaries and its Affiliates shall not, at any time make or suffer to exist
or remain outstanding, any loan or advance to, or purchase, acquire or own
(beneficially or of record) any stock, bonds, notes or securities of, or any
partnership interest (whether general or limited) in, or any other interest in,
or make any capital contribution to or other investment in, any other Person, or
agree, become or remain liable (contingent or otherwise) to do any of the
foregoing, except:
(i) Loans and investments existing on the date hereof and listed in
Schedule 7.03 attached hereto and extensions, renewals and refinancing thereof
on terms no less favorable than those existing immediately before such
extension, renewal or refinancing);
(ii) Accounts receivable owing to the Borrower, its Subsidiaries and
its Affiliates arising from sales of inventory under usual and customary terms
in the ordinary course of business and loans and advances extended by the
Borrower, its Subsidiaries and/or its Affiliate to subcontractors or suppliers
(excluding subcontractors or suppliers who are Subsidiaries or Affiliates) under
usual and customary terms in the ordinary course of business;
(iii) Loans from the Borrower, a Subsidiary or an Affiliate to
either the Borrower, another Subsidiary or another Affiliate;
59
(iv) Loans or advances not to exceed $250,000.00 in the aggregate at
any time outstanding made to officers, partners or other employees of the
Borrower; its Subsidiaries and/or its Affiliates;
(v) Investments in Cash or Cash Equivalents;
(vi) Investments in all existing and any new Subsidiaries or
Affiliates; and
(vii) Loans not to exceed $2,000,000.00 in the aggregate at any time
outstanding to Persons whom the Borrower, its Subsidiaries and/or its Affiliates
have identified to the Lender in writing are targets of a proposed or
contemplated acquisition by the Borrower, its Subsidiaries and/or its
Affiliates.
Section 7.04. Restricted Junior Payments. The Borrower, its Subsidiaries
and its Affiliates shall not declare or make any Restricted Junior Payment.
Section 7.05. Transactions with Subsidiaries and Affiliates. The Borrower,
its Subsidiaries and its Affiliates shall not directly or indirectly enter into
or permit to exist any transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Subsidiary or Affiliate, on terms that are less favorable than those that
might be obtained in an arm's length transaction at the time from Persons who
are not such a Subsidiary or Affiliate. Nothing contained in this Section 7.05
shall prohibit any transaction expressly permitted by Section 7.03 hereof.
Section 7.06. Restriction on Fundamental Changes. The Borrower, its
Subsidiaries and its Affiliates shall not enter into any merger or
consolidation, or liquidate, windup or dissolve (or suffer any liquidation or
dissolution), or convey, lease, sell, transfer or otherwise dispose of, in one
transaction or series of transactions, all or any substantial part of their
respective businesses, properties or assets, whether now or hereafter acquired
except (i) as permitted by Section 7.02(i) hereof and (ii) mergers of any
Subsidiary or Affiliate into (a) the Borrower or (b) another Subsidiary or
Affiliate.
Section 7.07. ERISA. The Borrower, its Subsidiaries and its Affiliates
shall not, and the Borrower shall not permit any of its ERISA Affiliates to, do
any of the following to the extent that such act or failure to act would result
in the aggregate, after taking into account any other such acts or failure to
act, in an obligation to pay a sum of money that is material to the business of
the Borrower, its Subsidiaries and its Affiliates:
(i) Engage, or permit an ERISA Affiliate to engage, in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code for which a class exemption is not available or a private exemption has not
been obtained from the DOL;
(ii) Permit to exist any accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived;
60
(iii) Fail, or permit an ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Plan;
(iv) Terminate, or permit an ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of the Borrower, its
Subsidiaries, its Affiliates or an ERISA Affiliate under Title IV of ERISA; or
(v) Fail, or permit any ERISA Affiliate to fail, to pay any required
installment under section (m) of Section 412 of the Code or any other payment
required under Section 412 of the Code on or before the due date for such
installment or other payment.
Section 7.08 Amendment of Articles of Incorporation or By-Laws. The
Borrower, its Subsidiaries and its Affiliates shall not materially amend, modify
or supplement their respective articles of incorporation, by-laws or partnership
agreements, except upon at least ten (10) days' prior express written notice to
the Lender.
Section 7.09 Margin Regulations. No portion of the proceeds of any credit
extended under this Loan Agreement shall be used in any manner which might cause
the extension of credit or the application of such proceeds to violate
Regulation G, Regulation U or Regulation X or any other regulation of the
Federal Reserve Board or to violate the Securities Exchange Act or the
Securities Act, in each case as in effect on the date or dates of such Borrowing
and such use of proceeds.
Section 7.10 Cancellation of Consolidated Debt; Prepayment. The Borrower,
its Subsidiaries and its Affiliates shall not cancel any Claim or Consolidated
Debt (except for adequate consideration and in the ordinary course of their
respective businesses) and shall not prepay any long-term Consolidated
Subordinated Debt; provided, however, that the foregoing shall not prohibit the
prepayment of the Obligations and the refinance of any Consolidated Subordinated
Debt (i) in amounts and on terms and conditions equal to or better than the
existing terms and conditions and (ii) in an aggregate amount of up to
$1,000,000.00 at any time.
Section 7.11 Environmental Liabilities. The Borrower, its Subsidiaries and
its Affiliates shall not become subject to any Liabilities and Costs which the
Lender deems has or is likely to have a Material Adverse Effect arising out of
or related to (i) the Release or threatened Release at any location of any
Environmental Concern Material into the Environment, or any Remedial Action in
response thereto, or (ii) any violation of any Environmental, health or safety
Requirement of Law; provided, however, that this covenant shall not be violated
so long as (a) the Borrower, its Subsidiaries and its Affiliates shall have
notified the Lender of the assertion of such liability or required expenditures
promptly upon receiving written notice of such assertion, (b) the Borrower shall
have continued to furnish the Lender with such information concerning such
asserted liability or required expenditure as the Lender shall have reasonably
requested, or as otherwise provided herein, (c) the Borrower, its Subsidiaries
and its Affiliates shall be diligently pursuing indemnification for such
liability or required expenditures from any Person which has an obligation to
provide such indemnification, and (d) the Lender is satisfied that the
imposition of such liability
61
during the pendency of the Borrower's, its Subsidiaries' or its Affiliates'
pursuit of indemnification will not materially impair the Borrower's, its
Subsidiaries' or its Affiliates' ability to perform its financial obligations
under this Loan Agreement.
Section 7.12 Guaranties. The Borrower, its Subsidiaries and its
Affiliates shall not assume, guaranty, endorse or otherwise be or become
directly or contingently responsible or liable, for obligations or liabilities
of any Person, except for:
(i) guaranties existing on the Closing Date as described on Schedule
7.12(i) attached hereto;
(ii) guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(iii) guaranties of direct obligations of either the Borrower, its
Subsidiaries and/or its Affiliates.
Section 7.13 No Negative Pledges to Other Person. The Borrower, its
Subsidiaries and its Affiliates shall not grant to another Person a covenant
commonly referred to as a "negative pledge" with respect to their respective
assets and properties.
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ARTICLE VIII
FINANCIAL COVENANTS
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all the Obligations, unless the Lender shall give its
prior written consent to the effect otherwise:
Section 8.01 Minimum Consolidated Quick Ratio. The Borrower shall have on
the last day of each Fiscal Quarter and each Fiscal Year (which covenant shall
be tested at the end of the periods covered by the quarterly and annual
consolidated and consolidating financial statements which are to be provided to
the Lender pursuant to Section 5.02 of this Loan Agreement) a Consolidated Quick
Ratio, equal to or greater than 1.0 to 1.0.
Section 8.02 Maximum Consolidated Leverage Ratio. The Borrower shall have
on the last day of each Fiscal Quarter and each Fiscal Year (which covenant
shall be tested at the end of the periods covered by the quarterly and annual
financial statements which are to be provided to the Lender pursuant to Section
5.02 of this Loan Agreement) a ratio of (i) Consolidated Senior Liabilities
(excluding all contingent liabilities under Generally Accepted Accounting
Principles)-to- (ii) the sum of (a) Consolidated Tangible Net Worth plus (b)
Consolidated Subordinated Debt, equal to or less than 1.0 to 1.0.
Section 8.03 Minimum Consolidated Interest Coverage Ratio. The Borrower
shall have on the last day of each Fiscal Quarter and each Fiscal Year (which
covenant shall be tested at the end of the periods covered by the quarterly and
annual consolidated and consolidating financial statements which are to be
provided to the Lender pursuant to Section 5.02 of this Loan Agreement) a
Consolidated Interest Coverage Ratio equal to or greater than 1.75 to 1.0.
63
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.01 Events of Default. The occurrence of any of the following
events with the passing of any applicable notice and cure periods shall
constitute an "Event of Default" under this Loan Agreement (hereinafter referred
to as an "Event of Default"):
(i) Any representation or warranty made by the Borrower, the
Partnership Guarantors, the Corporate Guarantors or any other Person in any of
the Loan Documents furnished in connection with the Revolving Credit Facility,
shall prove to have been false, incorrect or misleading in any substantial and
material respect on the date as of which made;
(ii) The Borrower shall have failed to make any payment of any
installment of interest on any of the Revolving Credit Note, the Letters of
Credit Reimbursement Agreement and/or under this Loan Agreement on their
respective due dates;
(iii) The Borrower shall have failed to make any payment of
principal on any of the Revolving Credit Note, the Letters of Credit
Reimbursement Agreement and/or under this Loan Agreement on their respective due
dates;
(iv) The Borrower, the Partnership Guarantors and/or the Corporate
Guarantors shall have failed to duly observe or perform any covenant, condition
or agreement with respect to the payment of moneys on the part of the Borrower,
the Partnership Guarantors and/or the Corporate Guarantors to be observed or
performed pursuant to the terms of the Loan Documents, other than the payment of
principal and interest which shall be governed by Section 9.01(ii) and (iii)
above, and such default shall have remained uncured for a period of thirty (30)
days after written notice thereof to the Borrower, the Partnership Guarantors
and/or the Corporate Guarantors by the Lender;
(v) The Borrower, the Partnership Guarantors and/or the Corporate
Guarantors shall have failed to duly observe or perform any covenant, condition
or agreement on the part of the Borrower, the Partnership Guarantors and/or the
Corporate Guarantors to be observed or performed pursuant to the terms of the
Loan Documents other than the payment of moneys which shall be governed by
Section 9.01 (ii), (iii) and (iv) above, and such default shall have remained
uncured for a period of thirty (30) days after written notice thereof to the
Borrower, the Partnership Guarantors and/or the Corporate Guarantors by the
Lender;
(vi) The Borrower, the Partnership Guarantors and/or the Corporate
Guarantors shall have applied for or consented to the appointment of a
custodian, receiver, trustee or liquidator of all or a substantial part of their
respective assets; a custodian shall have been appointed with or without consent
of the Borrower, the Partnership Guarantors and/or the Corporate Guarantors; the
Borrower, the Partnership Guarantors and/or the Corporate Guarantors shall
generally not be paying their respective Debts as they become due; the Borrower,
the Partnership Guarantors and/or the Corporate Guarantors shall have made a
general assignment for the benefit of their respective creditors; the Borrower,
the Partnership Guarantors and/or the Corporate Guarantors, shall have filed a
voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with their respective creditors, or shall have
taken advantage of any insolvency law, or shall have filed an answer admitting
the material allegations of a petition in bankruptcy, reorganization or
insolvency proceeding; or a petition in bankruptcy shall have been filed against
the Borrower, the Partnership Guarantors and/or
64
the Corporate Guarantors and shall not have been dismissed for a period of sixty
(60) consecutive days, or an Order for Relief shall have been entered against
the Borrower, the Partnership Guarantors and/or the Corporate Guarantors under
the Bankruptcy Code; or an order, judgment or decree shall have been entered
without the application, approval or consent of the Borrower, the Partnership
Guarantors and/or the Corporate Guarantors by any court of competent
jurisdiction appointing a receiver, trustee, custodian or liquidator of the
Borrower, the Partnership Guarantors and/or the Corporate Guarantors of a
substantial part of their respective assets and such order, judgment or decree
shall have continued unstayed and in effect for any period of sixty (60)
consecutive days;
(vii) A writ of execution or attachment or any similar process shall
be issued or levied against all or any part of or interest in any of the
Properties of the Borrower, the Partnership Guarantors and/or the Corporate
Guarantors or any judgment involving monetary damages shall be entered against
the Borrower, the Partnership Guarantors and/or the Corporate Guarantors which
shall become a lien on the Borrower's, the Partnership Guarantors' and/or the
Corporate Guarantors' Properties or any portion thereof or interest therein and
such execution, attachment or similar process is not released, bonded,
satisfied, vacated or stayed within thirty (30) days after its entry or levy,
and said writ of execution, attachment, levy or judgment shall involve monetary
damages aggregating more than $500,000.00;
(viii) Seizure or foreclosure of any of the Properties of the
Borrower, the Partnership Guarantors and/or the Corporate Guarantors pursuant to
process of law or by respect of legal self-help, involving monetary damages
aggregating more than $500,000.00, unless said seizure or foreclosure is stayed
or bonded within thirty (30) days after the occurrence of same;
(ix) The voluntary permanent closing of business or ceasing of
operations of the Borrower, the Partnership Guarantors and/or the Corporate
Guarantors, the result of which would have a Material Adverse Effect;
(x) Default by the Borrower, the Partnership Guarantors and/or the
Corporate Guarantors in any of the terms or conditions of any agreement
(excluding the Loan Documents) covering the payment of borrowed money from the
Lender and/or any other creditor (which with respect to any other creditor shall
be in an amount involving not less than $500,000.00), which default has been
declared by the Lender or said other creditor, and said Debt with respect to any
other creditor has been accelerated;
65
(xi) The occurrence of a material adverse change in the business,
financial condition, financial performance, properties or operations of the
Borrower, the Partnership Guarantors and the Corporate Guarantors taken as a
whole; and
(xii) The occurrence of a Reportable Event, the result of which
would have a Material Adverse Effect.
Section 9.02 Rights and Remedies.
(i) Acceleration. Upon the occurrence and during the continuance of
any Event of Default described in the foregoing Section 9.01(vi) hereof, the
Revolving Credit Facility shall automatically and immediately terminate and the
unpaid principal amount of and any and all accrued interest on the Revolving
Credit Loans and all Reimbursement Obligations shall automatically become
immediately due and payable, with all additional interest from time to time
accrued thereon and without presentment, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and of acceleration), all of which are hereby expressly waived by the Borrower,
and the obligation of the Lender to make any Revolving Credit Loans or issue any
Letters of Credit hereunder shall thereupon terminate. Upon the occurrence and
during the continuance of any other Event of Default described in Section 9.01
above, the Lender may by written notice to the Borrower, (a) declare that the
Revolving Credit Facility is terminated, whereupon the obligation of the Lender
to make any Revolving Credit Loans or issue any Letters of Credit hereunder
shall immediately terminate and/or (b) declare the unpaid principal amount of
and any and all accrued and unpaid interest on the Revolving Credit Loans and
all Reimbursement Obligations to be, and the same shall thereupon be,
immediately due and payable with all additional interest from time to time
accrued thereon and without presentment, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and of acceleration), all of which are hereby expressly waived by the Borrower.
(ii) Rights Under Loan Documents. Upon the occurrence and during the
continuance of any Event of Default, the Lender may take any lawful action
against the Borrower to collect the payments then due and thereafter to become
due under the Loan Documents, including any rights in law or equity.
(iii) Setoff. Upon the occurrence and during the continuance of any
Event of Default, without prior notice or other action (any such notice being
expressly waived by the Borrower; however the Lender shall give the Borrower
notice within three (3) days after the Lender has set off any amounts) the
Lender may setoff any money owed by the Lender in any capacity to the Borrower
or any Property of the Borrower in the possession of the Lender against any of
the monetary obligations of the Borrower to the Lender under the Loan Documents,
and the Lender shall be deemed to have exercised such right of setoff and to
have made a charge against any such money or property immediately, even though
the actual book entries may be made at some time subsequent thereto.
66
Section 9.03 Application of Proceeds. (i) All payments and proceeds
received under Section 9.02 of this Loan Agreement shall be applied in the
following order of priority:
(a) First, to the payment of all reasonable fees, costs and
expenses (including reasonable attorney's fees and expenses) incurred by the
Lender and/or its agents or representatives in connection with the realization
of such payments or proceeds;
(b) Next, to the payment in full of all unpaid principal,
accrued interest and other sums, if any, due and owing under the Revolving
Credit Facility;
(c) Next, the balance, if any, or such payments, proceeds, or
amounts to the Borrower, or, if otherwise determined by a court of competent
jurisdiction, to whomever may be entitled thereto.
(ii) If the amount of the proceeds received in Section 9.03(i) above
shall be insufficient to satisfy in full the amounts referred to in clauses (a)
and (b) above, then the Borrower shall remain and be liable for any such
deficiency.
Section 9.04 No Notices. In order to entitle the Lender to exercise any
remedy available to it under Section 9.02 of this Loan Agreement, it shall not
be necessary for the Lender to give any notice, other than such notice as may be
required expressly in this Loan Agreement or by applicable law.
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses. Upon the
occurrence and during the continuance of an Event of Default, as a result of
which the Lender shall require and employ attorneys or incur other expenses for
the collection of payments due or to become due or the enforcement or
performance or observance of any obligation or agreement on the part of the
Borrower contained herein, the Borrower shall, on demand, pay to the Lender, the
reasonable fees of such attorneys and such other expenses so incurred by them.
Section 9.06 No Additional Waiver Implied by One Waiver. In the event any
agreement contained in this Loan Agreement should be breached by any party and
thereafter waived by the other parties, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 9.07 Failure to Exercise Rights. Nothing herein contained shall
impose upon the Lender any obligation to enforce any terms, covenants or
conditions contained in this Loan Agreement and the other Loan Documents.
Failure of the Lender, in any one or more instances, to insist upon strict
performance by the Borrower of any terms, covenants or conditions of this Loan
Agreement and the other Loan Documents, shall not be considered or taken as a
waiver or relinquishment by the Lender of its right to insist upon and to
enforce in the future, by injunction or other appropriate legal or equitable
remedy, strict compliance by the Borrower with all the terms, covenants and
conditions of this Loan Agreement and the other Loan Documents. The consent of
67
the Lender to any act or omission by the Borrower shall not be construed to be a
consent to any other or subsequent act or omission or to waive the requirement
for the Lender's consent to be obtained in any future or other instance.
Section 9.08 Waiver Of Jury Trial. THE BORROWER AND THE LENDER HEREBY
WAIVE ANY AND ALL RIGHTS THAT THEY MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF
THE UNITED STATES OF AMERICA OR ANY STATE, TO A TRIAL BY JURY OF ANY AND ALL
ISSUES ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING BETWEEN
THE BORROWER, THE LENDER OR THEIR SUCCESSORS AND ASSIGNS, OUT OF OR IN ANY WAY
CONNECTED WITH THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. IT IS INTENDED
THAT SAID WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, AND/OR
COUNTERCLAIMS IN ANY ACTION OR PROCEEDING. THE BORROWER AND THE LENDER RECOGNIZE
THAT ANY DISPUTE ARISING IN CONNECTION WITH THE REVOLVING CREDIT FACILITY IS
LIKELY TO BE COMPLEX AND CONSEQUENTLY THEY WISH TO STREAMLINE AND MINIMIZE THE
COST OF THE DISPUTE RESOLUTION PROCESS BY AGREEING TO WAIVE THEIR RIGHTS TO A
JURY TRIAL.
Section 9.09 Remedies Cumulative. No remedy herein conferred upon or
reserved to the Lender is intended to be exclusive of any other remedy or
remedies; but each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder, or now or hereafter existing at
law or in equity or by statute. No express or implied waiver by the Lender of
any Event of Default hereunder shall in any way be, or construed to be, a waiver
of any future or subsequent Event of Default. No delay or omission to exercise
any right or power accruing upon any Event of Default continuing as aforesaid,
shall impair any such right or power or shall be construed to be a waiver of any
such Event of Default, or acquiescence therein; and every such right and power
may be exercised from time to time and as often as may be deemed expedient.
68
ARTICLE X
MISCELLANEOUS
Section 10.01 Expenses.
(i) Generally. The Borrower agrees upon demand to pay, or reimburse
the Lender for, all the Lender's reasonable external legal costs and expenses
(but not internal legal costs and expenses) and all internal and external audit,
appraisal, valuation and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of Xxxx Xxxxx Xxxx &
XxXxxx and any other external attorneys retained by the Lender, auditors,
accountants, appraisers, insurance and environmental advisers, and other
consultants) incurred by the Lender in connection with (a) any amendment waiver
or consents required or requested by the Borrower hereunder and (b) the
protection, collection or enforcement of any of the Obligations.
(ii) After Default. The Borrower further agrees to pay, or reimburse
the Lender for all reasonable out-of-pocket costs and expenses, including,
without limitation, reasonable external attorneys' fees and disbursements, and
costs of settlement incurred by the Lender after the occurrence and during the
continuance of an Event of Default (a) in enforcing any Obligation or exercising
or enforcing any other right or remedy available by reason of such Event of
Default, (b) in connection with any refinancing or restructuring of the credit
arrangements provided under this Loan Agreement in the nature of a "work-out" or
in any insolvency or bankruptcy proceeding, (c) in commencing, defending or
intervening in any litigation or in filing a petition, complaint, answer, motion
or other pleadings in any legal proceeding relating to the Borrower and related
to or arising out of the transactions contemplated thereby or by any of the Loan
Documents and (d) in taking any other action in or with respect to any suit or
proceeding (whether in bankruptcy or otherwise).
Section 10.02 Indemnity. The Borrower further agrees to defend, protect,
indemnify, and hold harmless the Indemnified Parties from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for the Indemnified Parties in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified Parties
shall be designated a party thereto), imposed on, incurred by or asserted
against the Indemnified Parties (whether direct, indirect or consequential and
whether based on any Federal or state Laws or other statutory regulations,
including, without limitation, securities and commercial laws and regulations,
under common law or at equitable cause, or on contract or otherwise, including
any liability and costs under Federal, state or local environmental, health or
safety laws, regulations, or common law principles, arising from or in
connection with the past, present or future environmental condition of the
Property, the presence of asbestos-containing materials at the Property, or the
Release or threatened Release of any Environmental Concern Material into the
Environment from the Property) in any manner relating to the conduct of the
business of the Borrower, its Subsidiaries and/or its Affiliates or the use or
intended use of the proceeds of the Loans hereunder (collectively, the
"Indemnified Matters");
69
provided, however, that the Borrower shall not have any obligation to an
Indemnified Party hereunder with respect to (a) matters for which such
Indemnified Party has been compensated pursuant to or for which an exemption is
provided in Section 2.06 and Section 2.07 hereof or any other provision of this
Loan Agreement and (b) Indemnified Matters caused by or resulting from the
willful misconduct or gross negligence of that Indemnified Party, as determined
by a court of competent jurisdiction. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnified Parties.
Section 10.03 Amendments and Waivers. No amendment or modification of any
provision of this Loan Agreement shall be effective without the written
agreement of the Lender and the Borrower, and no termination or waiver of any
provision of this Loan Agreement, or consent to any departure by the Borrower
therefrom, shall in any event be effective without the written concurrence of
the Lender, which the Lender shall have the right to grant or withhold at its
sole discretion.
Section 10.04 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
expressly permitted by any of such covenants, the fact that it would be
implicitly permitted by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of an Event of Default or
Potential Event of Default if such action is taken or condition exists.
Section 10.05 Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telecopied, telexed or sent by
over-night courier service or United States mail and shall be deemed to have
been given when delivered in person or by over-night courier service, upon
receipt of a telecopy or telex during normal business hours or four (4) Business
Days after deposit in the United States mail (registered or certified, with
postage prepaid and properly addressed). Notices to the Lender pursuant to
Article II hereof shall not be effective until received by the Lender. For the
purposes hereof, the addresses of the parties hereto (until notice of a change
thereof is delivered as provided in this Section 10.05) shall be as set forth
below each party's name on the signature pages hereof, or, as to each party, at
such other address as may be designated by such party in a written notice to the
other party.
Section 10.06 Survival of Warranties and Agreements. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement and the other Loan Documents.
Section 10.07 Payments Set Aside. To the extent that the Borrower makes a
payment or payments to the Lender, or the Lender enforces its rights and
remedies under the Loan Documents or exercises its right of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
70
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such recovery, the obligation or part thereof originally
intended to be satisfied, and all Liens, right and remedies therefor (to the
extent permissible and practicable under the law and the circumstances), shall
be revived and continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred.
Section 10.08 Severability. In case any provision in or obligation under
this Loan Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 10.09 Governing Law. This Loan Agreement shall be governed by, and
shall be construed and enforced in accordance with, the laws of the Commonwealth
of Pennsylvania.
Section 10.10 Successors and Assigns. This Loan Agreement and the other
Loan Documents shall be binding upon the parties hereto and their respective
successors and assigns. The Borrower's duties and Obligations hereunder, may not
be assigned without the prior express written consent of the Lender. The Lender
shall not sell, transfer or otherwise assign its interest in the Revolving
Credit Facility to any other Person without the prior express written consent of
the Borrower, except (i) where required by applicable banking Law or a change in
banking policy at the Lender resulting in the Lender no longer making loans to
customers similar to the Borrower and (ii) where the Lender has been acquired or
merged into or with another institutional lender.
Section 10.11 Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS LOAN AGREEMENT,
THE REVOLVING CREDIT NOTE AND THE LETTERS OF CREDIT REIMBURSEMENT AGREEMENT MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
COMMONWEALTH OF PENNSYLVANIA, AND BY EXECUTION AND DELIVERY OF THIS LOAN
AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS LOAN AGREEMENT AND THE REVOLVING CREDIT
NOTE AND THE LETTER OF CREDIT REIMBURSEMENT AGREEMENT FROM WHICH NO APPEAL HAS
BEEN TAKEN OR IS AVAILABLE. THE BORROWER DESIGNATES AND APPOINTS XXXXXXX
XXXXXXX, A PROFESSIONAL CORPORATION AS ITS AGENT TO RECEIVE ON ITS BEHALF
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE
BEING HEREBY ACKNOWLEDGED BY SUCH PERSON TO BE EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE
71
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS
SPECIFIED ON THE SIGNATURE PAGES HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN
(10) DAYS AFTER SUCH MAILING. THE BORROWER AND THE LENDER IRREVOCABLY WAIVE ANY
OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS LOAN
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS
AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
Section 10.12 Counterparts; Effectiveness; Inconsistencies. This Loan
Agreement and any amendments, waivers, consents, or supplements may be executed
in counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Loan Agreement and each of the other Loan Documents shall
be construed to the extent reasonable to be consistent one with the other, but
to the extent that the terms and conditions of this Loan Agreement are actually
inconsistent with the terms and conditions of any other Loan Documents, this
Loan Agreement shall govern.
Section 10.13 Entire Agreement. This Loan Agreement, taken together with
all of the other Loan Documents and all certificates and other documents
delivered by the Borrower or any other Person to the Lender, embody the entire
agreement and supersede all prior agreements, written and oral, relating to the
subject matter hereof.
72
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed and delivered by their proper and duly authorized corporate officers
as appropriate, and the Borrower has caused its corporate seal to be hereunto
affixed and attested pursuant to the resolution of its Board of Directors, all
on the day and year first hereinabove written.
[SEAL] DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
ATTEST: a Delaware corporation, as the Borrower
By: /s/ XXXX X. XXXXXX
/s/ XXXXX X. XXXXX ------------------------------------
------------------------------ Xxxx X. Xxxxxx
Xxxxx X. Xxxxx President & CEO
Secretary
Notice Address:
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxx
Controller, Treasurer and Secretary
With a copy to:
Xxxxxxx Xxxxxxx, A Professional Corporation
0 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxx Xxxxxxxx Xxxx, Esq.
MELLON BANK, N.A.,
as the Lender
By:/s/ G. XXXXXXX XXXXXXXX
------------------------------
G. Xxxxxxx Xxxxxxxx
First Vice President
73
Notice Address:
Xxxxxxx Xxxxx Xxx - Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxx
Vice President
With a copy to:
Xxxx Xxxxx Xxxx & XxXxxx
Princeton Xxxxxxxxx Village
000 Xxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attn: Xxxxxx X. Xxxx, Xx., Esq.
74
EXHIBIT "A"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
List of Eurodollar Affiliates
None
EXHIBIT "B"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Form of Notice of Borrowing
To: Mellon Bank, N.A. (hereinafter referred to as the "Lender") in its capacity
as lender under that certain Revolving Line of Credit Loan Agreement dated May
31, 1996 (hereinafter referred to as the "Loan Agreement") entered into by and
between Diagnostic/Retrieval Systems, Inc. (hereinafter referred to as the
"Borrower") and the Lender. Terms defined in the Loan Agreement and not
otherwise expressly defined herein are used herein as therein defined.
Pursuant to Section 2.01(ii) of the Loan Agreement, this Notice of
Borrowing in respect of a Revolving Credit Loan (hereinafter referred to as the
"Notice") represents the request of the Borrower to borrow a Revolving Credit
Loan on __________, 19 (hereinafter referred to as the "Borrowing Date") from
the Lender in aggregate principal amount of $__________ as a [Prime Rate Loan]
[Eurodollar Rate Loan]. In the event the Borrowing is a Eurodollar Rate Loan
then the Borrower requests the following Eurodollar Interest Period: [14] [30]
[60] or [90]. Proceeds of such Revolving Credit Loan are to be deposited on the
Borrowing Date in the account maintained by the Borrower with the Lender,
Account No. __________, in immediately available funds [and immediately
thereafter such proceeds shall be wire-transferred to an account maintained with
___________, Account Number: ___________].
The Borrower hereby certifies that (i) the representations and warranties
of the Borrower set forth in Sections 4.01 and Section 4.02 of the Loan
Agreement and in any other Loan Document (except (a) representations and
warranties which expressly speak only as of a different date, and (b)
representations and warranties that are subject to change as permitted or
contemplated by the Loan Documents) are true and correct in all material
respects as of the Borrowing Date; (ii) no Event of Default or Potential Event
of Default has occurred and is continuing under the Loan Agreement or any other
Loan Document or will result from this proposed Borrowing; and (iii) the
Borrower shall have performed in all material respects all agreements contained
in and satisfied all conditions under Section 3.02 of the Loan Agreement and the
other Loan Documents required to be performed by it on or prior to the Borrowing
Date.
The Borrower hereby represents and warrants and agrees that the proceeds
of the Revolving Credit Loan requested by this Notice shall be used for (a)
refinancing existing Consolidated Debt and/or (b) working capital in the
ordinary course of the Borrower's and/or its Subsidiaries' and Affiliates'
businesses and/or (c) the issuance of Letters of Credit.
Dated: _________, 19__
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
a Delaware corporation
By:________________________________
Name:
Title:
EXHIBIT "C"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Form of Notice of Conversion/Continuation
To: Mellon Bank, N.A. (hereinafter referred to as the "Lender") in its capacity
as lender under that certain Revolving Line of Credit Loan Agreement dated May
31, 1996 (hereinafter referred to as the "Loan Agreement") entered into by and
between Diagnostic/Retrieval Systems, Inc. (hereinafter referred to as the
"Borrower") and the Lender. Terms defined in the Loan Agreement and not
otherwise defined herein are used herein as therein defined.
Pursuant to Section 2.02(iii) of the Loan Agreement, this Notice of
Conversion/Continuation (hereinafter referred to as the "Notice") represents the
Borrower's election to [insert one of the following"]:
* convert an aggregate principal amount of $__________ of Revolving Credit Loans
which are Prime Rate Loans to Eurodollar Rate Loans on __________, 19__. [The
initial Eurodollar Interest Period for such Eurodollar Rate Loans is required to
be a [fourteen] [thirty ] [sixty] or [ninety] day periods.]
** convert an aggregate principal amount of $ of Revolving Credit Loans which
are Eurodollar Rate Loans with a current Eurodollar Interest Period ending on
__________, 19__, to Prime Rate Loans [on ___________, 19__ [.]***
***, and continue as Eurodollar Rate Loans an aggregate principal of
$___________ of Eurodollar Rate Loans with a current Eurodollar Interest Period
ending ____________, 19__. The succeeding Eurodollar Interest Period is
requested to be a [fourteen], [thirty], [sixty] or [ninety] day periods.
----------
* Use if converting Prime Rate Loans to Eurodollar Rate Loans.
** Use if converting Eurodollar Rate Loans to Prime Rate Loans.
*** Use if continuing as Eurodollar Rate Loans.
The Borrower hereby certifies that no Event of Default or Potential Event of
Default has occurred and is continuing under the Loan Agreement.
Dated: _________, 19__
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
a Delaware corporation
By:_______________________________
Name:
Title:
EXHIBIT "D"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT BY AND BETWEEN
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC. AND MELLON BANK, N.A.,
DATED MAY 31, 1996
Revolving Line of Credit Note
$7,500,000.00 Philadelphia, Pennsylvania
May 31, 1996
FOR VALUE RECEIVED, the undersigned, DIAGNOSTIC/RETRIEVAL SYSTEMS,
INC., a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware (hereinafter referred to as the "Borrower"),
promises to pay to the order of MELLON BANK, N.A. (hereinafter referred to as
the "Lender") on or before the Revolving Credit Termination Date, the lesser of
(i) the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND AND 00/100
($7,500,000.00) DOLLARS or (ii) the aggregate unpaid principal amount of all
Revolving Credit Loans made by the Lender to the Borrower pursuant to the Loan
Agreement. The Borrower further promises to pay to the order of the Lender
interest on the unpaid principal amount of the Revolving Credit Loans from the
date outstanding at the interest rate per annum determined pursuant to Section
2.02 of, or as otherwise provided in, the Loan Agreement payable on the dates
set forth in Section 2.02(ii) of, or as otherwise provided in, the Loan
Agreement.
All payments of principal and interest hereunder shall be due and
payable to the Lender not later than 2:00 p.m. (Philadelphia, Pennsylvania
time), on the day when due, all as more fully set forth in Section 2.05 of the
Loan Agreement. Such payments shall be made in U.S. Dollars in immediately
available funds without setoff, counterclaim (other than a compulsory
counterclaim) or other deduction of any nature.
Except as otherwise provided in the Loan Agreement, if any payment of
principal or interest hereunder shall become due on a day which is not a
Business Day, such payment shall be made on the next following Business Day and
such extension of time shall be included in computing interest in connection
with such payment.
This Revolving Line of Credit Note is the "Revolving Line of Credit
Note" referred to in, and is entitled to the benefits of the Revolving Line of
Credit Loan Agreement dated May 31, 1996, executed by and between the Borrower
and the Lender (as the same may be amended, modified or supplemented from time
to time, hereinafter referred to as the "Loan Agreement"), which among other
things provides for the acceleration of the maturity hereof upon the occurrence
of certain events and for prepayments in certain circumstances and upon certain
terms and conditions. Terms defined in the Loan Agreement shall have the same
meanings herein.
The holder of this Revolving Line of Credit Note is authorized to
endorse on the Schedule 1 attached hereto and made a part hereof or on a
continuation thereof which shall be attached hereto and made a part hereof
(hereinafter referred to as the "Grid") the date and amount of each Revolving
Credit Loan made pursuant to Section 2.01 of the Loan Agreement, and the date
and amount of each payment or prepayment of principal thereof, which endorsement
shall constitute prima facie evidence of the accuracy of the information
endorsed; provided, however, that the failure to make any such endorsement shall
not affect the obligations of the Borrower in respect of such Revolving Credit
Loan.
The Borrower hereby expressly waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance, default or enforcement of this Revolving Line of Credit
Note and the Loan Agreement.
This Revolving Line of Credit Note shall be governed by, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Line of
Credit Note to be executed and delivered by its proper and duly Authorized
Officer and has caused its corporate seal to be hereunto affixed and attested,
pursuant to the resolution of its Board of Directors, all on the day and year
first hereinabove written.
[SEAL] DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
ATTEST: a Delaware corporation
___________________________ By:_______________________________________
Name: Name:
Secretary Title:
SCHEDULE 1 TO REVOLVING LINE OF CREDIT NOTE
LOANS AND PAYMENTS OF REVOLVING CREDIT LOANS
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UNPAID
AMOUNT OF PRINCIPAL
AMOUNT OF PRINCIPAL BALANCE OF NOTATION
DATE LOANS REPAID LOANS MADE BY
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EXHIBIT "E"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Form of Opinion Letter
See attached
EXHIBIT "F"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Form of Officer's Certificate
This Officer's Certificate of Diagnostic/Retrieval Systems, Inc. (hereinafter
referred to as the "Certificate") is delivered to you pursuant to Section
5.02(vii) of the Revolving Line of Credit Loan Agreement dated May 31, 1996 (as
may be amended from time to time (hereinafter referred to as the "Loan
Agreement"), by and between Diagnostic/Retrieval Systems, Inc. (hereinafter
referred to as the "Borrower"), and Mellon Bank, N.A. (hereinafter referred to
as the "Lender"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein as therein defined.
1. I am the duly elected, qualified and acting [Chief Financial Officer],
[President] or [Chief Accounting Officer] of the Borrower.
2. I have reviewed and am familiar with the contents of this Certificate. I
am providing this certificate solely in my capacity as an officer of the
Borrower. The matters set forth herein are true to the best of my knowledge,
after diligent inquiry, but I express no personal opinion as to any conclusions
of law or other legal matters.
3. I have reviewed the terms of the Loan Agreement and the principal Loan
Documents and have made, or caused to be made, under our supervision, a review
in reasonable detail of the transactions and condition of the Borrower, its
Subsidiaries and its Affiliates during the accounting period covered by the
attached financial statements and computations attached hereto as Exhibit "F-1"
("Financial Statements"). Such review did not disclose the existence during or
at the end of the accounting period covered by the attached Financial
Statements, and I have no knowledge of the existence as of the date of this
Certificate, of any condition or event which constitutes an Event of Default or
Potential Event of Default, except as set forth below:*
4. I hereby certify in my capacity as [President or Chief Financial Officer
or Chief Accounting Officer] and in my capacity as an Authorized Officer that
the Financial Statements attached hereto present fairly the financial position
of the Borrower, its Subsidiaries and its Affiliates as of the end of such
fiscal period and the results of its operations and the changes in its financial
position and cash flows for such fiscal period, all in conformity with Generally
Accepted Accounting Principles applied in a manner consistent with that of the
most recent audited financial statements furnished to the Lender, subject to
normal and recurring year-end audit adjustments.
IN WITNESS WHEREOF, I execute this Certificate this ____ day of _____, 19__.
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
a Delaware corporation
By:_____________________________
Name:
Title:
----------
* Describe here (or in a separate attachment to this Certificate) the
exceptions, if any, to Paragraph 3 by listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
the Borrower has taken, is taking and proposes to take with respect to each such
condition or event.
EXHIBIT "F-1"
FORM OF COMPLIANCE CERTIFICATE
----------------------
This Officer's Certificate of Diagnostic/Retrieval Systems, Inc.
(hereinafter referred to as the "Certificate") is delivered to you pursuant to
Section 5.02(iv) of the Revolving Line of Credit Loan Agreement dated May 31,
1996 (as may be amended from time to time, hereinafter referred to as the "Loan
Agreement") by and between Diagnostic/Retrieval Systems, Inc. (hereinafter
referred to as the "Borrower"), and Mellon Bank, N.A., (hereinafter referred to
as the "Lender"). Terms defined in the Loan Agreement and not otherwise defined
herein are used herein as therein defined. The Borrower hereby delivers to the
Lender, together with the financial statements being delivered pursuant to
Section 5.02(i) and (iii) of the Loan Agreement, this Certificate for the
accounting period from ________________, 19__ to ___________, 19__*. For
purposes hereof, section and subsection references herein relate to sections and
subsections, respectively, of the Loan Agreement, and amounts or ratios refer to
the maximum or minimum amounts or ratios required under the relevant sections of
the Loan Agreement.
I. NEGATIVE COVENANTS
A. CONSOLIDATED DEBT (Section 7.01(vi))
B. LIENS (Section 7.02(ii)(e))
Amount of Purchase Money Liens $________________
Permitted Amount $1,000,000.00 at anytime outstanding
----------
* Insert dates representing the fiscal period covered by
this Certificate.
C. LOANS, ADVANCES AND INVESTMENTS (Section 7.03)
1. Subsection 7.03(iv)
Aggregate demand advances to officers and employees outstanding at any
time during the period covered by this Certificate:
$[ ]
Outstanding -------------------
Aggregated maximum $250,000.00 at anytime outstanding
permitted to
officers/employees
D. RESTRICTED JUNIOR PAYMENTS (Section 7.04)
Actual Amount $
Permitted Amount [$__________]
II. FINANCIAL COVENANTS
A. MINIMUM CONSOLIDATED QUICK RATIO (Section 8.01)
Consolidated Quick Ratio, as determined at the end of the period covered
by this Certificate:
Actual Consolidated Quick Ratio __________ to 1.0
Minimum Required Current Ratio 1.0 to 1.0
B. MAXIMUM CONSOLIDATED LEVERAGE RATIO (Section 8.02)
Consolidated Leverage Ratio, as determined at the end of the period
covered by this Certificate:
Actual Consolidated Senior Liabilities (exclusive of
contingent liabilities) $___________
Actual Consolidated Tangible Net Worth $___________
Actual Consolidated Subordinated Debt $___________
Actual Consolidated Leverage Ratio ___________ to 1.0
Maximum Permitted Consolidated Leverage Ratio 1.0 to 1.0
C. MINIMUM CONSOLIDATED INTEREST COVERAGE RATIO (Section 8.03)
Consolidated Interest Coverage Ratio, as determined at the end of the
period covered by this Certificate:
Actual Consolidated Net Income $___________
Actual Interest Expense $___________
Actual Prepaid Subordinated Debt $___________
Actual Consolidated Interest Coverage Ratio ____ to 1.0
Minimum Required Consolidated Interest
Ratio 1.75 to 1.0
I hereby certify, in my capacity as an Authorized Officer of the
Borrower, that the information set forth above is accurate as of
_____________, 19__, to the best of my knowledge after diligent inquiry.
Dated:_______________, 19__
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.,
a Delaware corporation
By:________________________________
Name:
Title:
EXHIBIT "G"
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Form of Letter of Credit Reimbursement Agreement
See attached
SCHEDULE 2.01
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
List of Subsidiaries and/or Affiliates Who May
Borrow and/or have Letters of Credit Issued for their Account
All Corporate Guarantors and Partnership Guarantors
SCHEDULE 2.01(IV)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Existing Debt to be Refinanced
1. Note Payable to PNC Bank
-------------------------------------------- ----------------------------------
Interest Rate Prime + 0.5.%
-------------------------------------------- ----------------------------------
Amount Borrowed $1,450,000.00
-------------------------------------------- ----------------------------------
Current Principal Balance $1,147,916.65
============================================ ==================================
Accrued Unpaid Interest thru May 31, 1996 $8,458.33
-------------------------------------------- ----------------------------------
2. Demand Line of Credit with Johnstown Bank & Trust Company
-------------------------------------------- ----------------------------------
Interest Rate Prime + 1.0.%
-------------------------------------------- ----------------------------------
Maximum Principal Amount $1,000,000.00
-------------------------------------------- ----------------------------------
Current Principal Balance $-0-
============================================ ==================================
Accrued Unpaid Interest thru May 31, 1996 $4,363.95
-------------------------------------------- ----------------------------------
3. Note Payable to Comerica Bank (Equipment Loan)
-------------------------------------------- ----------------------------------
Interest Rate 8.422%
-------------------------------------------- ----------------------------------
Amount Borrowed $212,000.00
-------------------------------------------- ----------------------------------
Current Principal Balance $164,888.88
============================================ ==================================
Accrued Unpaid Interest thru May 31, 1966 $1,071.83
-------------------------------------------- ----------------------------------
SCHEDULE 4.01(III)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Existing Issued and Authorized Capital Stock of the Borrower
1. Preferred Stock
Par Value: $10.00 per share
Authorized: 20,000,000 shares
Issued: 0 shares
Outstanding: 0 shares
2. Common Stock
Par Value: $0.01 per share
Authorized: 20,000,000 shares
Issued: 5,966,066 shares
Outstanding: 5,467,632 shares (498,434 shares held in treasury)
3. Options per 1991 Stock Option Plan
Number of Shares Subject to Options: 307,800 shares common stock
4. Options per 1991 Non-Qualified Stock Option Plan
Number of Shares Subject to Options: 130,000 shares common stock
5. % Senior Subordinated Convertible Debentures Due 2003
Number of Shares Issuable Upon Conversion: 2,824,858 shares common stock
6. 8.5% Convertible Subordinated Debentures Due 1998
Number of Shares Issuable Upon Conversion: 332,800 shares common stock
SCHEDULE 4.01(VII)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Pending Actions, Suits, Proceedings, Governmental
Investigations or Arbitrations
NONE
SCHEDULE 4.01(XV)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Environmental Disclosure
NONE
SCHEDULE 4.01(XVI)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
ERISA
Schedule 4.01 (xx)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
List of Joint Ventures
1. DRS Medical Systems
2. Laurel Technologies Partnership
SCHEDULE 4.01(XXI)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Existing Insurance Policies, Programs and Claims
See Attached Certificates of Insurance. Also see attached list of claims.
SCHEDULE 4.01(XXVII)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Labor Unions/Collective Bargaining Agreements
NONE
SCHEDULE 6.05
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Insurance Policies and Programs
See attached Certificate of Insurance
SCHEDULE 7.01(III)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Permitted Existing Consolidated Debt
1. 9% Senior Subordinated Convertible Debentures due October 1, 2003
Principal amount outstanding:$25,000,000.00
2. 8.5% Convertible Subordinated Debentures due August 1, 1998
Principal amount outstanding:$4,992,000.00
3. Suffolk County Industrial Development Agency 1991 Variable Rate Demand
Industrial Development Revenue Refunding Bonds (Photronics Corp. Facility)
Principal amount outstanding: $1,695,000.00
4. Covenant and Agreement Not to Compete Dated October 28, 1994 Between Ahead
Technology, Inc. and Xxxxxx X. Van Houtten
Amount outstanding: $369,000.00 ($9,000.00 per month)
5. Assumption and Assignment of License Agreement Dated as of July 7, 1995
Among Xxxx Zeiss Stiftung, Opto Mechanik, Inc., OMI Acquisition Corp. and
Photronics Corp.
Amount outstanding: $197,580.00 (varying installments through
April 28, 1997)
6. Term Note to Technology Development and Education Corporation
Principal amount outstanding: $84,262.00 (monthly installments
through March 1, 2000)
7. Term Note to Southern Alleghenies Planning and Development Commission
Principal amount outstanding: $63,516.00 (monthly installments
through March 1, 2000)
8. Term Note to CIT Group for Equipment Loan
Principal amount outstanding as of May 30, 1996 was $22,321.31.
9. The following 4 Letters of Credit
(i) Standby Letter of Credit, Letter of Credit, No. T-251275, issued by
Chemical Bank for the account of OMI Corp. for the benefit of the
Government of Israel Ministry of Defense in the Stated Amount of
$1,200,000.00, issued on December 15, 1995 and expiring no later
than June 28, 1998.
(ii) Irrevocable Letter of Credit, No. PB-284327, issued by Xxxxxx
Guaranty Trust Company of New York for the account of Photronics
Corp. for the benefit of Manufacturers and Traders Trust Company in
the Stated Amount of $2,451,103.00, issued on December 19, 1991 and
expiring no later than December 19, 1996.
(iii) Irrevocable Standby Letter of Credit, No. 526808, issued by Comerica
Bank - California for the account of Precision Echo, Inc.for the
benefit of Xxxxx Xxxx Institute of Science and Technology (Taiwan)
in the Stated Amount of $135,000.00, issued on February 2,1995 and
expiring no later than July 29, 1996.
(iv) Irrevocable Standby Letter of Credit, No. 531883, issued by Comerica
Bank - California for the account of Precision Echo, Inc. for the
benefit of Xxxxx Xxxx Institute of Science and Technology (Taiwan)
in the Stated Amount of $44,700.00 issued on March 18, 1996 and
expiring no later than August 8, 1997.
NOTE: All principal amounts are as of May 1, 1996.
SCHEDULE 7.03
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
Existing Loans and Investments
I. Loans:
1. Amended and Restated Promissory Note from Xxxx X. Xxxxxx
(Chairman of the Board, President and Chief Executive Officer)
to the Company, dated as of May 26, 1995; $104,100 principal
amount; 8% per annum interest rate
2. Loan Receivable from Xxxx X. Xxxxxx, Xx. (President - DRS
Electronic Systems Group); $50,000 current principal balance;
no stated interest rate (interest is imputed annually based on
Internal Revenue Code and IRS regulations)
II. Investments:
1. Excess corporate cash balances are currently invested in the
following:
(i) The Xxxxxxxx Money Market Fund (X.X. Xxxxxx)
(ii) Xxxxxxx Xxxxx Institutional Fund
SCHEDULE 7.12(I)
ATTACHED TO AND MADE A PART OF THAT CERTAIN
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BY AND BETWEEN DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
AND MELLON BANK, N.A., DATED MAY 31, 1996
List of Existing Guaranties
NONE
