Exhibit 10.10
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of ______ ___, 2002, by and among HERLEY
INDUSTRIES, INC. (the "Borrower"), ALLFIRST BANK AND FULTON BANK (each a
"Lender" and, collectively, the "Lenders," as further defined herein), and
ALLFIRST BANK, as agent (in such capacity, the "Agent").
1. DEFINITIONS.
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1.1 Defined Terms.
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As used in this Agreement the following terms have the
following meanings:
"Acquisition": the acquisition of (i) a controlling equity or other
ownership interest in another Person (including the purchase of an option,
warrant or convertible or similar type security to acquire such a controlling
interest at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity or other ownership interest or upon exercise of an
option or warrant for, or conversion of securities into, such equity or other
ownership interest, or by merger or consolidation, or (ii) assets of another
Person that constitute all or any material part of the assets of such Person or
of a line or lines of business conducted by such Person.
"Advance": a Target Rate Advance or LIBOR Advance, as the case may be.
"Agent's Counsel": Rhoads & Sinon LLP, counsel to the Agent in connection
with the transactions contemplated by this Agreement.
"Aggregate LIBOR Advances Commitments": on any date, the sum of the LIBOR
Advances Commitments on such date.
"Aggregate Revolving Credit Commitments": on any date, the sum of the
Revolving Credit Commitments on such date.
"Agreement": this Loan Agreement, as the same may be amended, supplemented
or otherwise modified from time to time.
"Applicable Margin": (i) with respect to the unpaid principal amount of
Target Rate Advances, the percentage set forth below under the heading "Target
Rate Margin" next to the applicable period and (ii) with respect to the unpaid
principal amount of LIBOR Advances, the percentage set forth below under the
heading "LIBOR Margin" next to the applicable period:
Target Rate
Period Margin LIBOR Margin
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when the Ratio of Total Liabilities to 1.50% 1.35%
Tangible Net Worth is less than 0.40:1.0
when the Ratio of Total Liabilities to 1.65% 1.50%
Tangible Net Worth is equal to or
greater than 0.40:1.0 but not greater
than 1.0:1.0
when the Ratio of Total Liabilities to 1.80% 1.65%
Tangible Net Worth is greater than
1.0:1.0
Changes in the Applicable Margin resulting from a change in the Ratio of
Total Liabilities to Tangible Net Worth, as set forth in a Compliance
Certificate delivered pursuant to Section 5.1(c) evidencing such a change, shall
become effective upon the forty-fifth (45th) day after each fiscal quarter of
the Borrower. If the Borrower shall fail to deliver a Compliance Certificate
within 45 days after the end of each fiscal quarter, then for purposes of
determining the Applicable Margin, the Ratio of Total Liabilities to Tangible
Net Worth from and including the date by which such Compliance Certificate was
to have been delivered to the actual date of delivery shall be conclusively
presumed to be greater than 1.0:1.0.
"Assignment and Acceptance Agreement": an assignment and acceptance
agreement executed by an assignor and an assignee pursuant to which the assignor
assigns to the assignee all or any portion of such assignor's Notes and
Revolving Credit Commitment, as contemplated by Section 9.9(a), in form and
content satisfactory to the Agent.
"Authorized Signatory": the president or the chief financial officer.
"Borrowing Date": any Business Day on which a Loan is made.
"Borrowing Request": a written request for Loans in the form supplied or
specified by the Agent.
"Business Day": any day on which commercial banks located in Maryland are
open for domestic and international business including deals in U.S. Dollar
deposits.
"Collections": all payments (including payments made by or on behalf of the
Borrower or received by the Agent on account of the Borrower's obligations under
the Loan Documents or pursuant to enforcement proceedings thereunder) received
by the Agent in respect
of the Notes and/or the Loan Agreement including, without limitation, late fees
and charges, the Unused Facility Fee and other fees collected by the Agent
pursuant to the terms of the Loan Agreement; provided, however, that the term
"Collections" shall not include any sums (or accrued interest thereon) paid to
the Agent on account of the costs of closing, administering or enforcing the
Loan Documents, transaction and service expenses, processing fees, inspection
fees, legal fees and costs or late charges, to the extent a Lender has not
shared in the payment of such expenses, fees, costs or charges.
"Compliance Certificate": a written certificate made by the Borrower and
delivered to the Agent pursuant to Section 5.1(c).
"Conversion Date": as the case may be, the date on which a Target Rate
Advance is converted to a LIBOR Advance, the date on which a LIBOR Advance is
converted to a Target Rate Advance, or the date on which a LIBOR Advance is
renewed for a successive 30 day Interest Period as contemplated by Section
2.1.4(b).
"Cost of Acquisition": with respect to any Acquisition, as at the date of
entering into any agreement therefor, the sum of the following (without
duplication): (i) the value of the capital stock, warrants or options to acquire
capital stock of the Borrower or any subsidiary to be transferred in connection
therewith, (ii) the amount of any cash and fair market value of other property
(excluding property described in clause (i) and the unpaid principal amount of
any debt instrument) given as consideration, (iii) the amount (determined by
using the face amount or the amount payable at maturity, whichever is greater)
of any Indebtedness incurred, assumed or acquired by the Borrower or any
subsidiary in connection with such Acquisition, (iv) all additional purchase
price amounts in the form of earnouts and other contingent obligations that
should be recorded on the financial statements of the Borrower and its
subsidiaries in accordance with GAAP, (v) all amounts paid in respect of
covenants not to compete, consulting agreements that should be recorded on
financial statements of the Borrower and its subsidiaries in accordance with
GAAP, (vi) the aggregate fair market value of all other consideration given by
the Borrower or any subsidiary in connection with such Acquisition, and (vii)
out-of-pocket transaction costs for the services and expenses of attorneys,
accountants and other consultants incurred in effecting such transaction, and
other similar transaction costs so incurred and capitalized in accordance with
GAAP.
"Debt": for any date of determination, the aggregate of all amounts
outstanding on the Loans and all other indebtedness for which the Borrower is
liable, whether as borrower, maker, guarantor or endorser (excluding payment
instruments endorsed for deposit or collection in the ordinary course of
business).
"Debt Service Coverage Ratio": with respect to Borrower, Borrower's Net
Profit After Tax for its four (4) most recently completed fiscal quarters, less
dividends to stockholders with respect to such period, plus non-cash charges
(such as depreciation and amortization) for such period, divided by scheduled
principal payments on Borrower's Debt for such period.
"Default": any event or condition which constitutes an Event of Default or
which, with the giving of notice, the lapse of time, or any other condition,
would, unless cured or waived, become an Event of Default.
"Environmental Laws": any and all federal, state and local laws relating to
the environment, the use, storage, transporting, manufacturing, handling,
discharge, disposal or recycling of hazardous substances, materials or
pollutants or industrial hygiene and including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 USCA ss.9601 et seq.; (ii) the Resource Conservation and Recovery
Act of 1976, as amended, 42 USCA ss.6901 et seq.; (iii) the Toxic Substance
Control Act, as amended, 15 USCA ss.2601 et seq.; (iv) the Water Pollution
Control Act, as amended, 33 USCA ss.1251 et seq.; (v) the Clean Air Act, as
amended, 42 USCA ss.7401 et seq.; (vi) the Hazardous Material Transportation
Act, as amended, 49 USCA ss.1801 et seq.; and (vii) all rules, regulations,
judgments, decrees, injunctions and restrictions thereunder and any similar
state law.
"Event of Default": any of the events specified in Section 8.1, provided
that any requirement for the giving of notice, the lapse of time or any other
condition has been satisfied.
"GAAP": generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statement by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination,
consistently applied.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.
"Guarantor" and "Guarantors": one or more of HMS Investments, Inc., Herley
Wireless Technologies, Inc., Terrasat, Inc., General Microwave Corporation,
General Microwave Israel Corporation, General Microwave Israel, Ltd., and any
additional operating subsidiaries which Borrower or any Guarantor may create or
acquire at any time a Loan remains outstanding and unpaid or any other amount is
owing under any Loan Document.
"Hazardous Substance": any hazardous or toxic substance, material or waste,
including, but not limited to, (i) those substances, materials and wastes listed
in the United States Department of Transportation Hazardous Materials Table (49
CFR 172.101) or by the Environmental Protection Agency as hazardous substances
(40 CFR Part 302) and amendments thereto and replacements therefor and (ii) any
substance, pollutant or material defined as, or designated in, any Environmental
Law as a "hazardous substance," "toxic substance," "hazardous material,"
"hazardous waste," "restricted hazardous waste," "pollutant," "toxic pollutant"
or words of similar import.
"Highest Lawful Rate": with respect to Lender, the maximum rate of
interest, if any, that at any time or from time to time may be contracted for,
taken, charged or received by Lender on the Notes or which may be owing to
Lender pursuant to this Agreement under the laws applicable to Lender and this
Agreement.
"Interest Period": with respect to any LIBOR Advance requested by the
Borrower, the thirty (30) day period beginning on, as the case may be, the
Borrowing Date or the Conversion Date with respect to such LIBOR Advance;
provided, however: (i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day, and (ii) no Interest Period shall end, in the case of a
Revolving Credit Loan, after the Revolving Credit Maturity Date and, in the case
of a Term Loan, after the maturity date of the applicable Term Loan Note.
"Lender" and "Lenders": one or more of Allfirst Bank, in its capacity as a
Lender, Fulton Bank, and each Person that becomes a Lender pursuant to the
provisions of Section 9.9(a) of this Agreement.
"LIBOR": with respect to any Interest Period applicable to a LIBOR Advance,
a per annum rate of interest equal to the 30 day London Interbank Offered Rate
as quoted by the Agent from time to time two (2) Business Days prior to the
first day of such Interest Period, adjusted for Federal Reserve Board reserve
requirements and FDIC insurance. The LIBOR will be quoted by the Agent as
published in the money rates table of The Wall Street Journal or otherwise
publicly quoted or published from time to time. If the LIBOR shall become
unavailable, a per annum rate of interest equal to the Agent's Base Rate minus
0.5% shall be substituted for the LIBOR. The "Agent's Base Rate," which is not
necessarily the lowest rate of interest charged by Agent, is defined as the
prime rate of interest on domestic commercial loans established by the Agent
from time to time.
"LIBOR Advances": collectively, the Loans (or any portions thereof) at such
time as they (or such portions) are made and/or being maintained at a rate of
interest based upon the LIBOR.
"LIBOR Advances Commitment": in respect of any Lender having a LIBOR
Advances Commitment, such Lender's undertaking during the Revolving Credit
Commitment Period to make LIBOR Advances to the Borrower, subject to the terms
and conditions hereof, in an aggregate outstanding principal amount not
exceeding the amount set forth next to the name of such Lender in Exhibit A
under the heading "Revolving Credit Commitments" and on the "LIBOR Advances
Commitment" line with respect to such Lender.
"LIBOR Advances Commitment Percentage": in respect of any Lender having a
LIBOR Advances Commitment, the percentage that the amount of such Lender's LIBOR
Advances Commitment comprises of the Aggregate LIBOR Advances Commitments, as
set forth next to the name of such Lender in Exhibit A under the heading "LIBOR
Advances Commitment Percentage".
"Lien": any mortgage, pledge, hypothecation, assignment, deposit or
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security interest of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement and any capital or financing lease having substantially the same
economic effect as any of the foregoing.
"Loans": the Revolving Credit Loans and/or the Term Loans, as the case may
be.
"Loan Documents": collectively, this Agreement, the Notes and all other
documents executed and delivered in connection with the Loans, and any future or
additional loan documents executed and delivered in connection with the Loans,
and any amendments or modifications thereof.
"Maximum LIBOR Advances Amount": $45,000,000.00.
"Maximum Target Rate Advances Amount": $5,000,000.00.
"Note": a Revolving Credit Note or a Term Loan Note, as the case may be.
"Notes": the Revolving Credit Notes and/or the Term Loan Notes, as the case
may be.
"Permitted Liens": any of the liens described in clauses (i) through (v) of
Section 6.4 of this Agreement.
"Person": an individual, a partnership, a corporation, a business trust, a
joint stock company, a trust, a limited liability company, an unincorporated
association, a joint venture, a Governmental Authority or any other entity of
whatever nature.
"Required Lenders": Lenders having Revolving Credit Commitments equal to at
least 66-2/3% of the Aggregate Revolving Credit Commitments of all the Lenders.
"Revolving Credit Commitment": in respect of any Lender having a Revolving
Credit Commitment, such Lender's undertaking during the Revolving Credit
Commitment Period to make Revolving Credit Loans to the Borrower, subject to the
terms and conditions hereof, in an aggregate outstanding principal amount not
exceeding the amount set forth next to the name of such Lender in Exhibit A
under the heading "Revolving Credit Commitments."
"Revolving Credit Commitment Percentage": in respect of any Lender having a
Revolving Credit Commitment, the percentage that the amount of such Lender's
Revolving Credit Commitment comprises of the Aggregate Revolving Credit
Commitments, as set forth next to the name of such Lender in Exhibit A under the
heading "Revolving Credit Commitment Percentage."
"Revolving Credit Commitment Period": the period from the date of this
Agreement through the day preceding the Revolving Credit Maturity Date.
"Revolving Credit Loan" and "Revolving Credit Loans": as defined in Section
2.1.
"Revolving Credit Maturity Date": January 31, 2004, or such
earlier date on which the Revolving Credit Notes shall become due and payable,
whether by acceleration or otherwise.
"Revolving Credit Note" and "Revolving Credit Notes": as defined in Section
2.1.1.
"Tangible Net Worth": with respect to any Person, at any time of
determination, that amount which is equal to the excess of all of such Person's
assets (excluding inter-affiliate items and any and all intangible assets, such
as, but not limited to, customer lists, covenants not to compete, deferred
financing costs, deferred charges, goodwill, intellectual property, licenses,
organization costs, officer and stockholder advances or receivables, mineral
rights and the like) over all of such Person's liabilities (except
inter-affiliate items), determined in accordance with GAAP.
"Target Rate": the Federal Funds Target Rate as established by the Federal
Open Market Committee of the Federal Reserve Board from time to time.
"Target Rate Advances": collectively, the Loans (or any portions thereof)
at such time as they (or such portions) are made and/or being maintained at a
rate of interest based upon the Target Rate.
"Target Rate Advances Commitment": in respect of any Lender having a Target
Rate Advances Commitment, such Lender's undertaking during the Revolving Credit
Commitment Period to make Target Rate Advances to the Borrower, subject to the
terms and conditions hereof, in an aggregate outstanding principal amount not
exceeding the amount set forth next to the name of such Lender in Exhibit A
under the heading "Revolving Credit Commitments" and on the "Target Rate
Advances Commitment" line with respect to such Lender.
"Term Loan" and "Term Loans": as defined in Section 2.2.
"Term Loan Note" and "Term Loan Notes": as defined in Section 2.2.1.
"Term Loan Notice": as defined in Section 2.2.
1.2 Other Definitional Provisions.
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(a) All terms defined in this Agreement shall have the
meanings given such terms herein when used in the Loan Documents or any
certificate, opinion or other document made or delivered pursuant hereto or
thereto, unless otherwise defined therein.
(b) As used in the Loan Documents and in any certificate,
opinion or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in Section 1.1, and accounting terms partly defined
in Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof," "herein," "hereto" and "hereunder" and
similar words when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
schedule and exhibit references contained herein shall refer to Sections hereof
or schedules or exhibits hereto unless otherwise expressly provided herein.
(d) The word "or" shall not be exclusive; "may not" is
prohibitive and not permissive, and an "agreement" of a Person shall include any
applicable promise, covenant, representation, warranty or other undertaking of
such Person.
(e) Unless the context otherwise requires, words in the
singular number include the plural, and words in the plural include the
singular.
(f) Unless specifically provided in a Loan Document to the
contrary, references to time shall refer to the prevailing time in Lancaster,
Pennsylvania.
2. AMOUNT AND TERMS OF REVOLVING CREDIT LOANS AND TERM LOANS.
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2.1 Revolving Credit Loans.
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Subject to the terms and conditions hereof, each Lender
severally agrees to make revolving credit loans (each a "Revolving Credit Loan"
and, as the context may require, collectively with all Revolving Credit Loans of
such Lender and with the Revolving Credit Loans of all other Lenders, the
"Revolving Credit Loans") to the Borrower from time to time during the Revolving
Credit Commitment Period, in an aggregate outstanding principal amount at any
one time outstanding not to exceed such Lender's Revolving Credit Commitment. At
no time shall the aggregate outstanding principal amount of the Revolving Credit
Loans of all Lenders exceed the Aggregate Revolving Credit Commitments. During
the Revolving Credit Commitment Period, the Borrower may borrow, prepay in whole
or in part and reborrow under the Revolving Credit Commitments, all in
accordance with the terms and conditions of this Agreement. Subject to the
provisions of Section 2.1.3, Revolving Credit Loans may be (a) Target Rate
Advances, (b) LIBOR Advances, or (c) a combination thereof, provided that the
aggregate outstanding principal amount of all Target Rate Advances shall not
exceed the Maximum Target Rate Advances Amount and the aggregate outstanding
principal amount of all LIBOR Advances shall not exceed the Maximum LIBOR
Advances Amount. The Borrower covenants that it will not request any borrowing
under the Revolving Credit Loans that would cause the aggregate outstanding
principal amounts of the Revolving Credit Loans to exceed the aforesaid
limitations. Any termination of the Revolving Credit Loans, whether by
expiration of the Commitment Period or as a result of the existence or
continuance of any Event of Default, shall relieve each Lender of the Lender's
obligation hereunder to lend money or to make financial accommodations to or for
the Borrower and for any of its accounts, but shall in no way release,
terminate, discharge or excuse the Borrower from its absolute duty to pay or
perform any or all of its obligations under this Agreement. The application of
the preceeding sentence is intended to apply as long as any sums remain
outstanding, due or owing under any Revolving Credit Loan.
2.1.1 Revolving Credit Notes. The Revolving Credit Loans made
by a Lender shall be evidenced by a Revolving Loan Note of the Borrower, the
terms and conditions of which are incorporated herein by reference. The (i) date
and amount of each Revolving Credit Loan made by a Lender, (ii) its character as
a Target Rate Advance, a LIBOR Advance, or a combination thereof, (iii) the
interest rates and periods that such rates are applicable, and (iv) each payment
and prepayment of principal and/or interest, shall be recorded by such Lender on
its books and records, but any failure of such Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make payment when due of any amount owing under the Loan Documents. All
repayments shall be credited to the balances due under a Lender's Revolving
Credit Loans in accordance with the normal and customary practices of the
Lender. Interest accrued under a Lender's Revolving Credit Loans shall be
computed on the outstanding balances as reflected on the Lender's books and
records.
2.1.2 Procedure for Borrowing. The Borrower may borrow under
the Revolving Credit Commitments on any Business Day during the Revolving Credit
Commitment Period, provided, however, that the Borrower shall notify the Agent
(by telephone or telecopy) no later than 11:00 A.M. on the requested Borrowing
Date, specifying (A) the aggregate principal amount to be borrowed under the
Revolving Credit Commitments, (B) whether the Advance is to be a Target Rate
Advance or a LIBOR Advance (if no interest rate option is specified, then the
Borrower shall be deemed to have specified the Target Rate Advance option) and
(C) the requested Borrowing Date. Each such notice shall be irrevocable and
confirmed immediately by delivery to the Agent of a Borrowing Request. The Agent
and each Lender shall be authorized to rely upon any Borrowing Request made by
any representative of the Borrower as constituting an authorized Borrowing
Request under the Revolving Credit Loans by the Borrower. Upon receipt of each
notice of borrowing from the Borrower, the Agent shall promptly notify each
Lender thereof. Subject to the provisions of Section 2.1.3 hereof and its
receipt of the notice referred to in the preceding sentence, each Lender will
make the amount of its Revolving Credit Commitment Percentage of each borrowing
of Revolving Credit Loans available to the Borrower not later than 3:00 P.M. on
the relevant Borrowing Date requested by the Borrower, in funds immediately
available to the Borrower, by crediting an account of the Borrower maintained
with Agent for such purpose with the amount of such borrowing.
2.1.3 Attribution of Target Rate Advances and LIBOR Advances.
All Target Rate Advances shall be made solely by Agent in its capacity as a
Lender. All LIBOR Advances shall be made by the Lenders on a pro rata basis in
accordance with their respective LIBOR Advances Commitment Percentages. For
example, by way of illustration only, assuming the aggregate outstanding
principal amount of all Revolving Credit Loans is $10,000,000, of which
$3,000,000 constitute Target Rate Advances made solely by Agent in its capacity
as a Lender, and $7,000,000 constitute LIBOR Advances, then: (i) $3,920,000 (56
percent of $7,000,000) of the LIBOR Advances shall be made by the Agent in its
capacity as a Lender, and (ii) $3,080,000 (44 percent of $7,000,000) of the
LIBOR Advances shall be made by Fulton Bank.
2.1.4 Repayment. Payments of principal, interest and other
amounts due and owing under each Revolving Credit Note shall be made by the
Borrower to the Agent for the account of the respective Lender in immediately
available funds as and when provided in Section 2.4(c) with respect to interest,
and with respect to principal, as and when provided in such Revolving Credit
Note or as otherwise provided in this Agreement. The Agent will promptly remit
to each Lender its pro rata share of all Collections when received by the Agent,
together with interest at the Federal Funds Rate from the date received until
remitted, subject to the following:
(a) After deduction of reasonable expenses and other charges
incurred by the Agent and reimbursable by the Borrower, Collections
shall be applied first to the payment of all accrued but unpaid
interest then due and payable in the order of maturity of the
installments of such interest on a pro rata basis in relation to the
respective aggregate amounts of accrued but unpaid interest on each
Lender's Revolving Credit Loans constituting LIBOR Advances, and the
balance, if any, to the payment to Agent in its capacity as a Lender of
all accrued but unpaid interest then due and payable on all Target Rate
Advances; and
(b) Second, to the repayment of all amounts of principal on a
pro rata basis in relation to the respective outstanding principal
balance of each Lender's Revolving Credit Loans constituting LIBOR
Advances, and the balance, if any, to the payment to the Agent in its
capacity as a Lender of the outstanding principal balance of Target
Rate Advances; provided, however, that principal amounts constituting
LIBOR Advances may be repaid only on the last day of the respective
Interest Period applicable to such LIBOR Advance and, if repayment of a
LIBOR Advance does not occur on the last day of the respective Interest
Period and the Borrower has not otherwise provided the Agent with
timely notice of the conversion of such LIBOR Advance to a Target Rate
Advance in accordance with Section 2.1.5 of this Agreement, then such
LIBOR Advance shall be deemed to constitute a renewed LIBOR Advance for
a successive thirty (30) day Interest Period. Outstanding principal
amounts constituting Target Rate Advances may be repaid at any time and
Collections not otherwise applied to reimbursed expenses and charges,
interest or principal amounts constituting LIBOR Advances as provided
in the foregoing provisions of this Section 2.1.4 shall be paid to
Agent in its capacity as a Lender as repayments of Target Rate
Advances; and
(c) Notwithstanding the provisions of Sections 2.1.4(a) and
(b) above, following the occurrence of an Event of Default and the
acceleration by the Lenders of the amounts due under the Notes, the
Agent shall distribute Collections, after deduction of reasonable
expenses and other charges incurred by the Agent and reimbursable by
the Borrower, to the Lenders on a pro rata basis in relation to the
respective aggregate outstanding principal balance of each Lender's
Loans to the aggregate outstanding principal balance of all Loans.
2.1.5 Conversions. The Borrower may elect from time to time to
convert Target Rate Advances to LIBOR Advances by giving the Agent irrevocable
notice of such election no later than 12:00 Noon, three (3) Business Days prior
to the date of such conversion, specifying the amount to be so converted. In
addition, the Borrower may elect from time to time to convert LIBOR Advances to
Target Rate Advances by giving the Agent irrevocable notice of such election no
later than 12:00 Noon, one (1) Business Day prior to such conversion, provided
that any such conversation of LIBOR Advances to Target Rate Advances shall only
be made on a Business Day and only on the last day of the Interest Period
applicable to the LIBOR Advances which are to be converted to Target Rate
Advances. The Agent shall promptly provide the Lenders with notice of any such
election. LIBOR Advances and Target Rate Advances may be converted pursuant to
this Section in whole or in part. Notwithstanding anything in this Section to
the contrary, no conversion will be effected, if the Borrower or the Agent has
knowledge that a Default or Event of Default has occurred and is continuing
either (i) at the time the Borrower notifies the Agent of its election to
convert or (ii) on the requested Conversion Date.
2.1.6 Duration of the Revolving Credit Loans. All sums
outstanding under the Loans shall be paid in full and the Revolving Credit Loans
shall expire on the Revolving Credit Maturity Date.
2.2 Term Loans.
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Subject to the terms and conditions hereof, Borrower shall
have the option, exercisable by written notice (each a "Term Loan Notice") to
the Agent received at any time and from time to time prior to the Revolving
Credit Maturity Date at least three (3) Business Days prior to the requested
date of conversion, to convert all or a part of the outstanding principal
balance of the Revolving Credit Loans constituting LIBOR Advances, in the amount
or amounts specified in such Term Loan Notice, to one or more term loans (each a
"Term Loan" and, as the context may require, collectively with all Term Loans of
a Lender and with the Term Loans of all other Lenders, the "Term Loans") payable
in not more than sixty (60) consecutive equal monthly installment payments of
principal, plus accrued and unpaid interest. At no time, however, shall the
aggregate original principal amount of the Term Loans of any Lender then
outstanding, together with the aggregate outstanding principal amount of the
Revolving Credit Loans of such Lender, exceed such Lender's Revolving Credit
Commitment; nor shall the aggregate original principal amount of the Term Loans
of all Lenders outstanding, together with the aggregate outstanding principal
amount of the Revolving Credit Loans of all Lender's, exceed the Aggregate
Revolving Credit Commitments. For purposes of accruing interest on the
outstanding principal balance of each and every Term Loan, each such Term Loan
shall be deemed to be comprised solely of LIBOR Advances.
2.2.1 Term Loan Notes. The Term Loans made by a Lender shall
be evidenced by a Term Loan Note of the Borrower, substantially in the form of
Exhibit B hereto, with appropriate insertions therein as to date, principal
amount and identity of the Lender, the terms and conditions of which shall be
incorporated herein by reference. Each such Term Loan Note will supplement and
be in addition to, but not supersede or replace, the Revolving Loan Notes.
2.2.2 Attribution of Term Loan Amounts. Upon receipt of a Term
Loan Notice, the Agent shall promptly determine the pro rata amount of the
principal amount specified to be converted that is to be attributable to each
Lender, such that the aggregate original principal amounts of each Lender's Term
Loans when made, together with the aggregate outstanding principal balance of
each Lender's Revolving Credit Loans at that time, shall equal in amount each
such Lender's Revolving Credit Commitment Percentage of the aggregate original
principal amounts of all Lenders Term Loans, together with the aggregate
outstanding principal balance of all Lender's Revolving Credit Loans.
2.2.3 Duration of Term Loans. Notwithstanding the expiration
of the Revolving Credit Commitment Period, all sums outstanding under the Term
Loans shall be paid in full in accordance with the terms and conditions of the
respective Term Loan Note.
2.3 Prepayments of the Loans.
------------------------
The Borrower may, at its option, prepay Target Rate Advances,
in whole or in part, without premium or penalty, at any time and from time to
time. The Borrower may pay a LIBOR Advance, in whole or in part, only at the end
of the Interest Period applicable to such LIBOR Advance.
2.4 Interest Rate and Payment Dates.
-------------------------------
(a) Prior to Maturity. Except as otherwise provided in Section 2.4(b), prior to
maturity the Loans shall bear interest on the outstanding principal balances
thereof at the applicable interest rate or rates per annum set forth below.
Advances Rate
-------- ----
Target Rate Advance Target Rate plus the Applicable Margin
LIBOR Advance LIBOR plus the Applicable Margin
(b) Event of Default. After the occurrence and during the
continuance of an Event of Default, the outstanding principal balance of the
Loans and any overdue interest or other amount payable under the Loan Documents
shall bear interest at a rate per annum equal to two percent (2%) plus the rate
which would otherwise be applicable under Section 2.4(a) of this Agreement.
(c) General. Interest shall be calculated on the basis of a
three hundred sixty (360) days per year factor applied to the actual days on
which there exists an outstanding principal balance on a Loan. Interest shall be
payable in the case of Revolving Credit Loans in arrears on the first day of
each month during the Revolving Credit Commitment Period in respect of Target
Rate Advances, on the last day of the applicable Interest Period in respect of
LIBOR Advances, and on the Revolving Credit Maturity Date. Interest shall be
payable in the case of Term Loans in arrears on the last day of each successive
Interest Period during the term of the respective Term Loan Note and the
maturity date thereof. Any change in the interest rate on a Loan resulting from
a change in the Target Rate shall become effective as of the opening of business
on the day on which such change shall become effective. The Agent shall notify
the Borrower of the effective date and the amount of each such change in the
Target Rate, but any failure to so notify shall not in any manner affect the
obligation of the Borrower to pay interest on the Loans in the amounts and on
the dates required. Each determination of the Target Rate and LIBOR, as the case
may be, by the Agent pursuant to this Agreement shall be conclusive and binding
on the Borrower absent manifest error. At no time shall the interest rate
payable on the Loans of any Lender, together with all other amounts payable
under the Loan Documents to the extent the same are construed to constitute
interest, exceed the Highest Lawful Rate applicable to such Lender. If interest
payable to a Lender on any date would exceed the maximum amount permitted by the
Highest Lawful Rate applicable to such Lender, such interest payment shall
automatically be reduced to such maximum permitted amount, and interest for any
subsequent period, to the extent less than the maximum amount permitted for such
period by the Highest Lawful Rate, shall be increased by the unpaid amount of
such reduction. Any interest actually received for any period in excess of such
maximum allowable amount for such period shall be deemed to have been applied as
a prepayment of the Loans. The Borrower acknowledges that to the extent interest
payable on a Loan is based on the Target Rate or LIBOR, such rates are only some
of the bases for computing interest on loans made by the Lenders, and by basing
interest payable on any of such rates, the Lenders have not committed to charge,
and the Borrower has not in any way bargained for, interest based on a lower or
the lowest rate at which the Lenders may now or in the future make loans to
other borrowers.
2.5 Use of Proceeds.
---------------
(a) The proceeds of the Loans shall be used for working
capital and general corporate purposes including, without limitation, financing
Acquisitions (subject, however, to the conditions of Section 6.2).
(b) To the extent that the Agent, in its sole discretion,
determines that funds are available under the Revolving Credit Commitments, each
Lender agrees to severally issue standby letters of credit on behalf of the
Borrower upon request, subject to such terms and conditions as may be required
and approved by the Agent and the Lenders in their collective discretion,
including without limitation, the terms of the letters of credit and the terms
of repayment to be set forth in separate reimbursement agreements in form and
substance acceptable to the Agent and the Lenders. The Agent shall attribute
between or among the Lenders the amounts of letters of credit requested by the
Borrower as if such letters of credit were Term Loans to be attributed pursuant
to Section 2.2.2.
2.6 Fees.
----
(a) The Borrower agrees to pay to the Agent an "Unused
Facility Fee" equal to 15 basis points (0.15%) per annum (calculated on the
basis of a 360 day year for the actual days elapsed) of the unused portion of
the Maximum LIBOR Advances Amount (such unused portion being determined by
subtracting the aggregate amount of all outstanding LIBOR Advances on the
applicable date of determination from the Maximum LIBOR Advances Amount). For
purposes of calculating the unused portion of the Maximum LIBOR Advances Amount,
Letters of Credit made under the Loans and the original principal amounts of
Term Loans then outstanding shall be deemed to be used portions of the Maximum
LIBOR Advances Amount. The Unused Facility Fee shall be paid in immediately
available funds and shall be calculated on the basis of the average daily unused
portion of the Maximum LIBOR Advances Amount and shall be payable quarterly in
arrears and on the Revolving Credit Maturity Date. When received, the Agent will
promptly remit to each Lender its pro rata share of the Unused Facility Fee
based upon such Lender's Revolving Credit Commitment Percentage.
(b) If the Lenders are requested to issue standby letters of
credit pursuant to Section 2.5(b) of this Agreement, a separate letter of credit
fee equal in amount to one percent (1.00%) of the aggregate amounts of the
letters of credit shall be due and payable by the Borrower to the Lender upon
the issuance of the letters of credit and at each anniversary of the issuance
date occurring during the terms of the letters of credit.
(c) All such fees shall be the absolute property of the
Lenders upon payment. Payment of such fees shall not be considered payment of
any of the Lenders' expenses incurred in connection with the Loans. No portion
of such fees shall be refunded in the event the Borrower prepays any Loan
including, without limitation, any prepayment of the Borrower's obligations
under a letter of credit reimbursement agreement, whether in whole or in part.
2.7 Agent's Records.
---------------
The Agent's records with respect to the Loans, the interest
rates applicable thereto, each payment by the Borrower of principal and interest
on the Loans, and fees, expenses and any other amounts due and payable in
connection with the Loan Documents shall be presumptively correct absent
manifest error as to the amount of the Loans, the amount of principal and
interest paid by the Borrower in respect of each Loan and as to the other
information relating to the Loans, and amounts paid and payable by the Borrower
hereunder and under the Notes and other Loan Documents.
2.8 Set-Off: Payment From Accounts.
------------------------------
2.8.1 Security Interest in Money and Property Held By
------------------------------------------------
Lender; Set-Offs.
----------------
[Not Applicable]
2.8.2 Application of Deposits.
------------------------- In addition to any
rights of set-off arising under the Loan Documents or
under law, upon the occurrence of an Event of Default, the
Borrower hereby authorizes the Lenders to apply any amount
on deposit in any deposit account of the Borrower now or
hereafter maintained with a Lender against any of the
Borrower's indebtedness under the Loan Documents.
3. CONDITIONS OF LENDING - GENERAL.
-------------------------------
In addition to the conditions precedent set forth in Section 4, the
obligation of the Lenders to make the Loans shall be subject to the fulfillment
of the following conditions precedent:
3.1 Evidence of Action.
------------------
The Agent shall have received a certificate dated as of the
closing date of the Secretary or Assistant Secretary of the Borrower (i)
attaching a true and complete copy of the resolutions of the Borrower's Board of
Directors and of all documents evidencing other necessary corporate action (in
form and substance satisfactory to the Agent) taken by it to authorize the Loan
Documents to which it is a party and the transactions contemplated thereby, (ii)
attaching a true and complete copy of the Borrower's articles of incorporation
and by-laws, (iii) setting forth the incumbency of the Borrower's officer or
officers who may sign the Loan Documents to which it is a party, including
therein a signature specimen of each such officer, and (iv) attaching
certificates of good standing of the Secretaries of State of the Commonwealth of
Pennsylvania and the State of Delaware.
3.2 This Agreement.
--------------
The Agent shall have received counterparts of this Agreement
duly executed by an Authorized Signatory of the Borrower and of each Lender
party hereto.
3.3 Notes.
-----
The Agent shall have received the Revolving Credit Notes duly
executed by an Authorized Signatory of the Borrower.
3.4 Security Agreement. [ Not Applicable]
------------------
3.5 Opinion of Counsel to the Borrower.
----------------------------------
The Agent shall have received an opinion of counsel to the
Borrower, addressed to the Agent and Agent's Counsel, dated the closing date, in
form and substance satisfactory to the Agent and covering such matters as the
Agent may reasonably request.
3.6 Litigation.
----------
There shall be no injunction, writ, preliminary restraining
order or other order of any nature issued by any Governmental Authority in any
respect affecting the transactions provided for herein and no action or
proceeding by or before any Governmental Authority shall have been commenced and
be pending or, to the knowledge of the Borrower, threatened, seeking to prevent
or delay the transactions contemplated by the Loan Documents or challenging any
other terms and provisions hereof or thereof or seeking any damages in
connection therewith.
3.7 Search Reports.
--------------
The Agent shall have received UCC, tax and judgment lien
search reports with respect to each applicable public office where Liens are
filed disclosing that there are no Liens of record in such official's office
covering any of the Borrower's property or showing the Borrower as a debtor,
except for Permitted Liens.
3.8 Property, Public Liability and Other Insurance.
----------------------------------------------
The Agent shall have received a certificate or certificates of
all insurance maintained by the Borrower in form and substance reasonably
satisfactory to the Lender, together with the endorsements described in Section
5.3.
3.9 Other Documents.
---------------
The Agent shall have received such other documents as the
Agent shall reasonably request.
3.10 Fees and Expenses of Agent's Counsel.
------------------------------------
The fees and expenses of Agent's Counsel in connection with
the preparation, negotiation and closing of the Loan Documents shall have been
paid by Borrower.
3.11 Guarantors.
----------
Each of the Guarantors shall have executed and delivered to
the Agent Guaranty and Suretyship Agreements in form and substance acceptable to
the Agent, providing joint and several suretyship for the absolute, full and
timely payment and performance by the Borrower of the terms and conditions of
each of the Loan Documents.
4. CONDITIONS OF LENDING - ADVANCES.
--------------------------------
The obligation of a Lender to make any Advance under the Loans is
subject to the satisfaction of the following additional conditions precedent as
of each Borrowing Date:
4.1 Compliance.
----------
On each Borrowing Date and after giving effect to the Advance
to be made thereon, (a) the Borrower shall be in compliance with all of the
terms, covenants and conditions of the Loan Documents, (b) the representations
and warranties set forth in the various Loan Documents shall be true and correct
with the same force and effect as if made on and as of each such Borrowing Date
(except to the extent any such representation or warranty may expressly relate
solely to an earlier date); (c) there shall exist no Default or Event of
Default, and (d) the outstanding principal amounts of the Loans will not exceed
the limitations as to the maximum outstanding principal amount of the Loans
specified in Sections 2.1 and 2.2 of this Agreement. Each borrowing by the
Borrower shall constitute a certification by the Borrower as of the date of such
borrowing that each of the foregoing matters is true and correct in all
respects.
4.2 Loan Documentation.
------------------
All documents required by the provisions of the Loan Documents
to be executed or delivered to the Agent on or before the applicable Borrowing
Date shall have been executed and shall have been delivered at the office of the
Agent set forth in Section 9.6 on or before such Borrowing Date.
4.3 Documentation and Proceedings.
-----------------------------
All corporate and legal proceedings and all documents and
papers in connection with the transactions contemplated by the Loan Documents
shall be in form and substance reasonably satisfactory to the Agent and the
Agent shall have received all information and copies of all documents which the
Agent may reasonably have requested in connection therewith, such documents
(where appropriate) to be certified by an Authorized Signatory of the Borrower
or proper Governmental Authorities.
4.4 Required Acts and Conditions.
----------------------------
All acts, conditions and things (including, without
limitation, the obtaining of any necessary regulatory approvals and the making
of any filings, recordings or registrations) required to be done, performed and
to have happened on or prior to such Borrowing Date and which are necessary for
the continued effectiveness of the Loan Documents, shall have been done and
performed and shall have happened in due compliance with all applicable laws.
4.5 Approval of Counsel.
-------------------
All legal matters in connection with the making of each
Advance shall be reasonably satisfactory to Agent 's Counsel.
4.6 Supplemental Opinions.
---------------------
If requested by the Agent with respect to the applicable
Borrowing Date, there shall have been delivered to the Agent favorable
supplementary opinions of counsel to the Borrower, addressed to the Agent and
dated such Borrowing Date, covering such matters incident to the transactions
contemplated herein as the Agent may reasonably request.
4.7 Other Documents.
---------------
The Agent shall have received such other documents as the
Agent shall reasonably request.
5. AFFIRMATIVE COVENANTS.
---------------------
The Borrower covenants and agrees that, so long as this
Agreement is in effect, any Loan remains outstanding and unpaid, or any other
amount is owing under any Loan Document to any Lender, the Borrower shall,
except as otherwise specifically provided:
5.1 Reports to Agent.
----------------
Deliver to the Agent the following reports:
(a) The Borrower's financial statements as follows:
(i) quarterly consolidated statements certified by the
Borrower's chief financial officer within forty-five (45) days
after the end of each of the Borrower's first three (3) fiscal
quarters in each fiscal year; and (ii) year-end consolidated
statements within ninety (90) days after Borrower's fiscal
year-end, which year-end statements shall be audited by an
independent certified public accountant and include an
unqualified opinion of such accountant, any management letter
issued to the Borrower by such accountant and the Borrower's
response to such management letter. All financial statements
shall be prepared in accordance with GAAP consistently
applied.
(b) The Borrower's quarterly report on Form 10-Q and
annual report on Form 10-K as filed with the Securities and
Exchange Commission within ten (10) days after filing.
(c) With the quarterly financial statements required
under Section 5.1(a)(1), a certificate of compliance with the
requirements set forth in Sections 6.11, 6.12 and 6.13 of this
Agreement signed by the Borrower's chief financial officer.
(d) Such other reports as may be reasonably requested
by the Agent from time to time.
All of the foregoing reports shall be in form and substance reasonably
satisfactory to the Agent. If the reports are required to be audited by an
independent certified public accountant, such independent certified public
accountant shall be reasonably acceptable to the Agent.
5.2 Certificates; Other Information.
-------------------------------
Furnish to the Agent prompt written notice if: (i) any
indebtedness of the Borrower is declared or shall become due and payable prior
to its stated maturity, or called and not paid when due, (ii) a default shall
have occurred under any note (other than the Notes) or the holder of any such
note, or other evidence of indebtedness, certificate or security evidencing any
such indebtedness or any obligee with respect to any other indebtedness of the
Borrower has the right to declare any such indebtedness due and payable prior to
its stated maturity, or (iii) there shall occur and be continuing a Default or
an Event of Default.
5.3 Insurance.
---------
(a) Borrower shall maintain insurance as follows:
(i) Insurance against loss or damage to the
Borrower's assets and properties by fire and any of the risks
covered by insurance of the type now known as "fire and
extended coverage," in an amount not less than the percentage
of the full replacement cost of all such properties and
assets, required to satisfy any applicable co-insurance
requirement in such policy and with not more than $25,000.00
deductible from the loss payable for any casualty. The
policies of insurance carried in accordance with this
subparagraph (i) shall contain the "Replacement Cost
Endorsement";
(ii) Comprehensive public liability insurance on an
"occurrence basis" against claims for "personal injury,"
including without limitation bodily injury, death or property
damage, such insurance to afford immediate minimum protection
to a limit of not less than $1,000,000 under a primary policy
of insurance together with a limit of not less than $2,000,000
under an umbrella policy of insurance with respect to personal
injury or death to any one or more persons or damage to
property;
(iii) Worker's compensation insurance (including
employer's liability insurance, if requested by Agent) for all
employees of Borrower in such amount as is reasonably
satisfactory to Agent, or if such limits are established by
law, in such amounts;
(iv) Directors and Officers liability insurance
to a limit of not less than $3,000,000.
(v) Such other insurance, and in such amounts, as may
from time to time be reasonably required by Agent against the
same or other hazards.
(b) All policies of insurance required by the terms of
paragraph (a) shall contain an endorsement or agreement by the insurer that any
loss shall be payable in accordance with the terms of such policy
notwithstanding any act or negligence of Borrower which might otherwise result
in forfeiture of such insurance and the further agreement of the insurer waiving
all rights of set-off, counterclaim or deduction against Borrower.
(c) All policies of insurance shall be issued by companies and
in amounts reasonably satisfactory to Agent. All policies of insurance shall
have attached thereto a lender's clause in favor of Agent, and in form
reasonably satisfactory to Agent, providing that the Agent shall not be subject
to contribution, and a lender's loss payable endorsement for benefit of Agent,
all of a form satisfactory to Agent. Borrower shall furnish Agent with a signed
duplicate original policy with respect to all required insurance coverage. If
Agent consents to Borrower providing any of the required insurance through
blanket policies carried by Borrower and covering more than one location, then
Borrower shall furnish Agent with a signed certificate of insurance for each
such policy setting forth the coverage, the limits of liability, the name of the
carrier, the policy number, and the expiration date, and listing Agent as lender
or loss payee. At least twenty (20) days prior to the expiration of each such
policy, Borrower shall furnish Agent with evidence satisfactory to Agent of
payment of premium and the reissuance of a policy continuing insurance in force
as required by this Agreement. All such policies, including policies for any
amount carried in excess of the required minimum and policies not specifically
required by Agent, shall be in form satisfactory to Agent, shall be maintained
in force and effect, shall be assigned and delivered to Agent, with premiums
prepaid as collateral security for payment of the indebtedness secured hereby,
and shall contain a provision that such policies will not be canceled or
materially amended which term shall include any reduction in the scope or limits
of coverage, without at least ten (10) days prior written notice to Agent. If
the insurance, or any part thereof, shall expire, or be withdrawn, or become
void or unsafe by reason of Borrower's breach of any condition thereof, or
become void or unsafe by reason of the value or impairment of the capital of any
company in which the insurance may then be carried, or if for any reason
whatever the insurance shall be reasonably deemed by Agent to be unsatisfactory,
Borrower shall obtain new insurance reasonably satisfactory to Agent.
(d) In the event the Borrower fails to provide, maintain, keep
in force or deliver or furnish to Agent the policies of insurance required by
this Agreement, Agent may procure such insurance or single-interests insurance
for such risks covering Agent 's interest, and Borrower will pay all premiums
thereon promptly upon demand by Agent, and until such payment is made by
Borrower, the amount of all such premiums, together with interest thereon at the
rate specified in the Note.
(e) In the event of loss in excess of $100,000.00, Borrower
will give immediate notice thereof to Agent, and Agent may make proof of loss if
not made promptly by Borrower. Each insurance company concerned is hereby
authorized and directed to make payment under such insurance, including return
of unearned premiums, directly to Agent instead of to Borrower and Agent
jointly, and Borrower appoints Agent irrevocably, as Borrower's attorney-in-fact
to endorse any draft therefor. If otherwise, such policies, including all right,
title and interest of the Borrower thereunder, shall become the absolute
property of the Agent.
5.4 Taxes.
-----
Duly pay and discharge all taxes or other claims which might
become a Lien upon any of Borrower's properties except to the extent that such
items are being in good faith appropriately contested with adequate reserves
therefor having been set aside and with security satisfactory to the Agent.
5.5 Properties.
----------
Maintain, preserve and keep Borrower's properties in good
repair, working order and condition, and make all reasonable repairs,
replacements, additions, betterments and improvements thereto.
5.6 Corporate Existence.
-------------------
Maintain Borrower's corporate existence and comply with all
statutes, rules and regulations, the non-compliance with which would materially
and adversely affect its business, assets or condition, financial or otherwise.
5.7 Issuance Taxes.
--------------
Pay all stamp or issuance taxes, if any, payable by reason of
the execution, delivery or issuance of this Agreement, the Notes or Loan
Documents under any applicable ordinance or statute now existing or hereafter
enacted, and the Borrower will at all times indemnify and hold harmless the
Lenders against any liability in respect thereof.
5.8 Audits by Agent.
---------------
Upon the occurrence of an Event of Default or if the Agent
reasonably believes that an Event of Default is imminent based on reports or
financial reports received by Agent, permit the Agent and its duly authorized
agents to make, or cause to be made, inspections of any of Borrower's properties
and examinations and audits of any books, records and papers of the Borrower and
to make extracts therefrom at all such reasonable times and as often as the
Agent may reasonably require.
5.9 Management.
----------
Maintain the current management and executive personnel of the
Borrower or other management and executive personnel reasonably satisfactory to
the Agent, and furnish to the Agent within five (5) days of any election or
appointment of officers or directors written notice of any change of such
officers and directors.
5.10 Compliance With Laws.
--------------------
Fully comply with all applicable Laws with respect to: (a)
products that the Borrower sells and services it performs, (b) the conduct of
its business generally, (c) its use, maintenance and operation of the real and
personal properties owned or leased by it; and, without limiting the foregoing,
the Borrower shall obtain and maintain all permits, licenses and approvals
necessary or appropriate to engage in its business as presently conducted and
presently contemplated.
5.11 Employee Benefit Plans.
----------------------
Comply, and shall cause each of Borrower's employee benefit
plans to comply, with all applicable provisions of law.
5.12 Environmental Matters.
---------------------
Comply, and shall cause Borrower's properties (whether owned
or leased) to comply, with all applicable Environmental Laws. Without limiting
the foregoing,
(a) the Borrower shall:
(1) promptly notify the Agent and each other Person that it is
required under applicable Environmental Laws to notify upon the Borrower's
acquiring knowledge of a release or threatened release of any Hazardous
Substance on, from, or near any of its properties,
(2) promptly notify the Agent once an environmental
investigation or clean-up proceeding is instituted by any
Person in connection with the Borrower or any of its
properties,
(3) comply in all material respects with and provide such
assistance as may be reasonably required in any such
environmental investigation and clean-up proceeding,
(4) promptly execute and complete remedial actions necessary
to ensure that no environmental liens or encumbrances are levied against or
exist with respect to any of the Borrower's properties or other assets, and
(5) promptly notify the Agent of any citation, notification,
complaint, or written notice of violation which it receives from any Person
which relates or pertains to the making, storing, handling, treating, disposing,
generating, transporting or release of any Hazardous Substance; and
(b) the Borrower shall not use, produce, transport, dispose of or
otherwise handle any Hazardous Substances or permit any other Person to do so at
or from any of the Borrower's properties except in the ordinary course of
Borrower's business and in compliance with all applicable Environmental Laws.
The Borrower, promptly upon the written request of the Agent from time
to time after (1) the occurrence of an Event of Default, or (2) the occurrence
of any release of any Hazardous Substance in, on or from any property of the
Borrower in violation of any Environmental Law, shall provide the Agent with an
environmental site assessment or report, all in scope, form, and content
satisfactory to the Agent. Upon any such event, the Agent, or its designated
agent, may interview any or all of the agents and employees of the Borrower
regarding environmental matters, including any consultants or experts retained
by the Borrower, all of whom are directed to discuss environmental issues fully
and openly with the Agent or its designated agent and to provide such
information as may be requested. All of the costs and expenses incurred by the
Agent with respect to the audits, tests, inspections, and examinations which the
Agent may conduct pursuant to this Section, including the fees of the engineers,
laboratories, and contractors, shall be paid by the Borrower.
The Borrower shall indemnify and hold harmless the Agent from all loss,
liability, damage, reasonable costs and expenses (including, but not limited to,
reasonable legal fees), fines, or other penalties or payments, for failure of
the Borrower or any of its properties to comply fully with all environmental
Laws. The provisions of this Section shall survive the payment and satisfaction
of the Loans and the termination of this Agreement.
5.13 Deposit Relationship.
--------------------
Maintain a meaningful deposit relationship with the Agent.
5.14 Further Assurances And Power Of Attorney.
----------------------------------------
Execute from time to time such other and further documents,
which in the opinion of the Agent or the Agent's counsel, may be reasonably
necessary to perfect, confirm, establish, reestablish, continue, or complete the
agreements of the Borrower under the Loan Documents and the purposes and
intentions of this Agreement, it being the intention of the Borrower to provide
hereby a full and absolute warranty of further assurance to the Agent, provided
that Borrower shall not be obligated under this Section 5.14 to execute any
document that could effect an amendment or modification of any term or condition
of this Agreement or any other Loan Document. If the Borrower fails to execute
any document requested by the Agent pursuant to this Section 5.14, the Borrower
hereby appoints the Lender or any officer of the Agent as the Borrower's
attorney in fact for purposes of executing such documents in the Borrower's
name, place and stead, which power of attorney shall be considered as coupled
with an interest and irrevocable.
6. NEGATIVE COVENANTS.
------------------
The Borrower agrees that, so long as this Agreement is in effect, any
Loan remains outstanding and unpaid, or any other amount is owing under any Loan
Document to a Lender, the Borrower will not, directly or indirectly, except as
expressly permitted with respect to Section 6.2, without prior adequate notice
to Lender with respect to Section 6.3 and without the prior written consent of
the Agent for all other Sections:
6.1 Borrower's Indebtedness. [Not Applicable]
-----------------------
6.2 Acquisitions.
------------
Enter into any agreement, contract, binding commitment or
other arrangement providing for any Acquisition, or take any action to solicit
the tender of securities or proxies in respect thereof in order to effect any
Acquisition, unless (i) the Borrower shall have first reviewed the proposed
Acquisition with the Agent, (ii) no Event of Default shall have occurred and be
continuing either immediately prior to or after giving effect to the Acquisition
and, (iii) if the cost of Acquisition is in excess of $20,000,000 and is being
financed in whole or in part by one or more Loans made pursuant to this
Agreement, the Agent shall not have objected to the Acquisition in writing
within five (5) Business Days after receipt of such information regarding the
Acquisition and its anticipated effect on the Borrower as Agent reasonably may
request.
6.3 Loans and Investments.
---------------------
Lend or advance money, credit or property to or invest in (by
capital contribution, loan, purchase or otherwise) any firm, corporation, or
other person, except: (a) extensions of credit to customers in the ordinary
course of business, (b) securities with maturities of 180 days or less from the
date of acquisition issued or fully guaranteed or insured by the United States
government or any agency thereof and backed by the full faith and credit of the
United States, (c) certificates of deposit, eurodollar time deposits, overnight
bank deposits and bankers' acceptances of any domestic commercial bank having
capital and surplus in excess of $500,000,000 having maturities of one year or
less from the date of acquisition, (d) commercial paper of an issuer rated at
least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Services,
Inc., or carrying an equivalent rating by a nationally recognized rating agency
if both of the two named rating agencies cease publishing ratings of
investments, in each case, with maturities of not greater than sixty (60) days
from the date acquired, (e) loans to employees of the Borrower made in the
ordinary course of business, and (f) joint ventures entered into by the Borrower
in the ordinary course of business.
6.4 Create Encumbrances.
-------------------
Create, assume or permit to exist, any mortgage, pledge, Lien
or encumbrance of or upon, or security interest in, any of its property or
assets now owned or hereafter acquired except (i) currently existing mortgages,
Liens, pledges and security interests in favor of Allfirst Bank as a lender of
other loans to the Borrower; (ii) other Liens, charges and encumbrances
incidental to the conduct of its business or the ownership of its property and
assets which were not incurred in connection with the borrowing of money or the
obtaining of advances or credit and which do not materially impair the use
thereof in the operation of its business; (iii) Liens for taxes or other
governmental charges which are not delinquent or which are being contested in
good faith and for which a reserve shall have been established in accordance
with generally accepted accounting principles; (iv) any Lien created under the
Loan Documents; and (v) any purchase money security interest securing
indebtedness incurred in the ordinary course of business.
6.5 Guaranties.
----------
Assume, endorse, be or become liable for or guarantee the
obligations of any person or entity except the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business and
performance bonds and indemnities with bonding companies and similar entities
entered into in the ordinary course of business.
6.6 Dividends and Other Distributions of Capital.
--------------------------------------------
[Not Applicable]
6.7 Impairment of Assets.
--------------------
Permit anything to be done that may materially impair the
value of its properties and assets.
6.8 Changes in Business.
-------------------
Make or permit to be made any material change in the nature,
character, name or conduct of the Borrower's business as conducted on the date
hereof.
6.9 Articles of Incorporation and By-Laws.
-------------------------------------
Amend or otherwise modify the Borrower's articles of
incorporation or by-laws in any way which would adversely affect the interests
of the Lenders under any of the Loan Documents.
6.10 Prepayments of Indebtedness.
---------------------------
Prepay or obligate itself to prepay, in whole or in part, any
indebtedness (other than the obligations under the Loan Documents).
6.11 Minimum Tangible Net Worth.
--------------------------
Permit the Tangible Net Worth of the Borrower, on a
consolidated basis, to be less than $115,000,000 at the time any Loan remains
outstanding and unpaid, or any other amount is owing under any Loan Document to
any Lender.
6.12 Maximum Total Liabilities to Tangible Net Worth Ratio.
-----------------------------------------------------
Permit a Total Liabilities to Tangible Net Worth Ratio of the
Borrower at not greater than 1.50-to-1 at any time any Loan remains outstanding
and unpaid, or any other amount is owing under any Loan Document to any Lender.
6.13 Minimum Debt Service Coverage Ratio.
-----------------------------------
Permit the Debt Service Coverage Ratio of the Borrower to be
less than 2.0-to-1 at any time any Loan remains outstanding and unpaid, or any
other amount is owing under any Loan Document to any Lender.
7. REPRESENTATIONS AND WARRANTIES.
------------------------------
In order to induce the Lenders to enter into this Agreement and to make
the Loans, the Borrower makes the following representations and warranties to
the Agent and the Lenders and acknowledges the Agent's and each Lender's
justifiable right to rely upon these representations and warranties:
7.1 Corporate Organization.
----------------------
The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is in good
standing and duly qualified to conduct business in the Commonwealth of
Pennsylvania and in each other jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such qualification necessary.
7.2 Enforceability of Documents.
---------------------------
This Agreement, the Notes and each of the other Loan Documents
to which the Borrower is a party have been duly authorized, executed and
delivered and constitute the valid and legally binding obligation of the
Borrower, enforceable in accordance with their respective terms.
7.3 Legality of Documents.
---------------------
The execution and delivery of this Agreement, the Notes and
all of the other Loan Documents to which the Borrower is a party and performance
thereof will not violate any provision of law or of the articles of
incorporation or by-laws of the Borrower or any agreement, indenture or
instrument to which the Borrower is a party or its properties or assets may be
bound or affected or of any other agreement to which the Borrower is a party.
7.4 Pending or Threatened Litigation.
--------------------------------
As of the date hereof, there are no outstanding judgments,
actions or proceedings pending before any court or governmental authority,
bureau or agency, with respect to or threatened against or affecting the
Borrower which would result in a material adverse change in the financial
condition of the Borrower or its subsidiaries. Borrower agrees to promptly
provide to Agent written notice of any and all outstanding judgments, actions or
proceedings which may at any time hereafter be pending before any court or
governmental authority, bureau or agency, with respect to or threatened against
or affecting the Borrower which may reasonably be expected to have a material
adverse effect on the Borrower, its financial condition, business, properties or
prospects, or the ability of any Lender to enforce the Loan Documents in
accordance with their respective terms.
7.5 No Defaults.
-----------
As of the date hereof the Borrower is not in material default
under, or in material violation of, nor will the execution, delivery or
performance of this Agreement, the Notes or any of the other Loan Documents to
which the Borrower is a party constitute a default under or violation of, any
term of any agreement, ordinance, resolution, decree, bond, note, indenture,
order or judgment used in the conduct of the Borrower's business or by which
Borrower is bound. The operations of the Borrower comply in all material
respects with all laws, ordinances and regulations applicable to it and no
consents, authorizations or approvals of any Governmental Authority are required
by the Borrower in connection with the Loan Documents.
7.6 No Onerous Agreements.
---------------------
The Borrower is not a party to nor bound by, nor are any of
the properties or assets owned by it or used in the conduct of its business
affected by, any agreement, ordinance, resolution, decree, bond, note,
indenture, order or judgment, or subject to any charter or other corporate
restriction, which materially and adversely affects its business, assets or
condition, financial or otherwise.
7.7 Financial Statements.
--------------------
All balance sheets, profit and loss statements and other
financial information heretofore furnished to the Agent by the Borrower are
true, correct and complete in all material respects, and present fairly the
financial condition of the Borrower and its subsidiaries, if any, as at the date
thereof and for the periods covered thereby, including contingent liabilities of
every kind, which financial condition has not materially adversely changed since
the date of the most recently dated balance sheet of the Borrower heretofore
furnished to the Agent.
7.8 No Margin Stock Purchases.
-------------------------
No part of the proceeds of the Loans will be used directly or
indirectly for the purpose of purchasing or carrying, or for payment in full or
in part of indebtedness which was incurred for the purpose of purchasing or
carrying, any margin stock as such term is defined by Regulation U of the Board
of Governors of the Federal Reserve System.
7.9 Power and Authority.
-------------------
The Borrower has the power to execute and deliver this
Agreement, the Notes and all other Loan Documents to which it is a party and has
taken all necessary action to authorize the execution, delivery and performance
of the same.
7.10 Properties.
----------
The Borrower has good and marketable title to all of its
assets, subject to no Liens except Permitted Liens.
7.11 Taxes.
-----
The Borrower has filed all returns and reports that are
required to be filed by it in connection with any federal, state or local tax,
duty or charge levied, assessed or imposed upon it or its property or withheld
by it, including unemployment, social security and similar taxes and all of such
taxes have been either paid or adequate reserve or other provision has been
made.
7.12 Environmental Matters.
---------------------
(a) The Borrower is in compliance with the requirements of all
applicable Environmental Laws.
(b) To the best of the Borrower's knowledge, no Hazardous
Substances have been generated or manufactured on, transported to or from,
treated at, stored at or discharged from any property owned or occupied by the
Borrower in violation of any Environmental Laws; no Hazardous Substances have
been discharged into subsurface waters under any such property in violation of
any Environmental Laws; no Hazardous Substances have been discharged from any
such property on or into property or waters (including subsurface waters)
adjacent to any such property in violation of any Environmental Laws; and any
underground or above ground storage tanks situated on any such property and
regulated under any Environmental Laws are in compliance with all applicable
Environmental Laws.
(c) The Borrower (i) has not received notice (written or oral)
or otherwise learned of any claim, demand, suit, action, proceeding, event,
condition, report, directive, Lien, violation, non-compliance or investigation
indicating or concerning any potential or actual liability (including, without
limitation, potential liability for enforcement, investigatory costs, cleanup
costs, government response costs, removal costs, remedial costs, natural
resources damages, property damages, personal injuries or penalties) arising in
connection with: (x) any non-compliance with or violation of the requirements of
any applicable Environmental Laws, or (y) the presence of any Hazardous
Substance on any property owned or occupied by the Borrower or the release or
threatened release of any Hazardous Substance into the environment, (ii) has not
received notice of any threatened or actual liability in connection with the
presence of any Hazardous Substance on any property owned or occupied by the
Borrower or the release or threatened release of any Hazardous Substance into
the environment, (iii) has not received notice of any federal or state
investigation evaluating whether any remedial action is needed to respond to the
presence of any Hazardous Substance on any property owned or occupied by the
Borrower or a release or threatened release of any Hazardous Substance into the
environment for which the Borrower is or may be liable, or (iv) has not received
notice that the Borrower is or may be liable to any Person under any
Environmental Law.
7.13 Employee Benefit Plans.
----------------------
Each employee benefit plan as to which the Borrower may have
any liability complies in all material respects with all applicable provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA"), including
minimum funding requirements, and (i) no Prohibited Transaction (as defined
under ERISA) has occurred with respect to any such plan, (ii) no Reportable
Event (as defined under Section 4042 of ERISA) has occurred with respect to any
such plan which would cause the Pension Benefit Guaranty Corporation to
institute proceedings under Section 4042 of ERISA, (iii) the Borrower has not
withdrawn from any such plan or initiated steps to do so, and (iv) no steps have
been taken to terminate any such plan.
7.14 Solvency.
--------
As of the date hereof and after giving effect to the
transactions contemplated by the Loan Documents, (i) the aggregate value of the
Borrower's assets will exceed its liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities), (ii) the Borrower will
have sufficient cash flow to enable it to pay its debts as they mature, and
(iii) the Borrower will not have unreasonably small capital for the business in
which it is engaged.
7.15 Subsidiaries.
------------
As of the date of this Agreement, the only direct or indirect
subsidiaries of the Borrower are the Guarantors.
7.16 Disclosure.
----------
No representation or warranty by the Borrower set forth in
this Agreement, any other Loan Document or in any other document or instrument
delivered by the Borrower to the Agent pursuant to this Agreement, contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make the statements made not misleading.
8. DEFAULT.
-------
8.1 Events of Default.
-----------------
If any one or more of the following Events of Default, each
constituting an "Event of Default," shall occur, the obligations of the Lenders
to make Advances shall cease and the entire unpaid balance of the principal of
and interest on the Loans shall immediately become due and payable in the case
of (g) or at the option of the Agent in all other cases, without notice,
presentment, protest or demand (all of which are expressly waived by the
Borrower) to the Borrower being required except as specified below:
(a) Failure of the Borrower to make any payment of
principal or interest in respect of any Loan
within 10 days after it is due; or
(b) The failure of the Borrower to pay the amount by
which the aggregate outstanding principal amount of all Loans
exceeds Aggregate Revolving Credit Commitments within two (2)
Business Days after written notice thereof shall have been
given by the Agent to the Borrower; or
(c) Failure by the Borrower or any Guarantor to
perform any other term, condition or covenant of this
Agreement, the Notes, any Loan Document or any other
agreement, instrument or document delivered pursuant hereto or
in connection herewith or therewith, which shall remain
unremedied for the period of thirty (30) days after written
notice thereof shall have been given by the Agent to the
Borrower; provided, however, if such failure be such that it
cannot be corrected within thirty (30) days, it shall not be
an Event of Default if, in the reasonable discretion of the
Agent, the Borrower is taking appropriate corrective action to
cure the failure and such failure will not impair the ability
of the Borrower to pay or perform the Borrower's obligations
under the Loan Documents; or
(d) Default is made with respect to any evidence of
indebtedness for borrowed money of the Borrower to any Person,
whether now existing or hereafter created, if as a result of
such default the maturity of such evidence of indebtedness is
accelerated, or any such indebtedness, if owed to the Agent or
any Lender, is not paid when due and payable; or
(e) A material breach of or material default by the
Borrower under the terms, covenants or conditions of any
agreements, loans or other transactions of the Borrower with
the Agent or any other lender, after the expiration of any
applicable grace or cure period; or
(f) Any representation or warranty made in writing to
the Agent and/or the Lenders in this Agreement, the Notes or
other Loan Documents or in connection with the making of any
Loan or any certificate, statement or report made in
compliance with this Agreement, shall have been false in any
material respect when made; or
(g) The Borrower or any Guarantor or endorser or
surety thereof shall make an assignment for the benefit of
creditors, file a petition under the Federal Bankruptcy Code
or any similar law, state or federal, be adjudicated insolvent
or bankrupt, petition or apply to any tribunal for the
appointment of a receiver, or trustee or a custodian for it or
a substantial part of its assets, or shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution, or liquidation law or
statute of any jurisdiction, whether now or hereafter in
effect; or if there shall have been filed any such petition or
application, or any such petition or application, or any such
proceeding shall have been commenced against it, which remains
undismissed for a period of sixty (60) days or more; or the
Borrower or any endorser or surety by any act or omission
shall indicate its consent to approval of or acquiescence in
any such petition, application or proceeding or the
appointment of a receiver, or trustee or a custodian for it or
any substantial part of any of its properties, or shall suffer
any such receivership, trusteeship, or custodianship to
continue undischarged for a period of sixty (60) days or more;
or
(h) Any judgment against the Borrower in excess of
$500,000.00, or any attachment, levy or execution against any
of its properties in excess of $500,000.00 shall remain
unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days or more; or
(i) The Borrower shall be unable, or admit its
inability, to meet its obligations as they come due or failure
of the Borrower generally to pay its debts as they become due;
or
(j) Occurrence, in Agent's sole and independent
discretion, reasonably exercised, of a material adverse change
in the business, properties or financial condition of the
Borrower, or an event or condition which, in Agent's sole and
independent discretion reasonably exercised would be expected
to result in such a material adverse change.
8.2 Remedies.
--------
In the event of the occurrence and during the continuation of
any Event of Default, the Agent may, but shall not be required to (i) proceed to
apply to the payment of the Loans the balance to the credit of any account or
accounts maintained with any Lender by the Borrower and all property of Borrower
now or at any time in any Lender's possession in any capacity whatsoever
(set-off) and (ii) the obligation of any Lender to make loans or otherwise
extend credit to the Borrower shall immediately terminate. The Agent may
exercise any other right or remedy provided pursuant to the Loan Documents and
hereby granted or allowed to it by law, and each and every right and remedy
provided pursuant to the Loan Documents and hereby granted to the Agent or any
Lender or allowed to one or the other by law shall be cumulative and not
exclusive the one of the other, and may be exercised by the Agent from time to
time and as often as may be necessary. The Agent shall have at any time, in its
discretion, the right to enforce collection and payment by appropriate action or
proceedings, and the net amounts received therefrom, after deduction of all
costs and expenses incurred in connection therewith, shall be applied on account
of the Loan and any other indebtedness or liabilities of the Borrower aforesaid,
all without notice to the Borrower. The Agent shall not be required to marshall
any security or guarantees or to resort to the same in any particular order.
9. THE AGENT.
---------
9.1 Appointment.
-----------
Each Lender hereby irrevocably designates and appoints
Allfirst Bank, as the Agent of such Lender under the Loan Documents and each
such Lender hereby irrevocably authorizes Allfirst Bank, as the Agent for such
Lender, to take such action on its behalf under the provisions of the Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Agent by the terms of the Loan Documents, together with such
other powers as are reasonably incidental thereto. Notwithstanding any provision
to the contrary elsewhere in any Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth therein, or any
fiduciary relationship with any Lender, and no implied (or express) covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into the Loan Documents or otherwise exist against the Agent, whether arising
under principles of agency or otherwise under applicable law. The term "Agent"
is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship among independent contracting
parties.
9.2 Administration.
In the course of its administration of the Loans and the Loan
Documents, the Agent may, without notice to or consent of the Lenders, in its
sole discretion except as otherwise provided below, exercise or refrain from
exercising any powers or rights vested in the Agent under the Loan Documents or
any document relating thereto or which the Agent may be entitled to assert at
law or in equity or otherwise enforce or refrain from enforcing the obligations
of the Borrower. Notwithstanding the foregoing, the Agent will not, without the
consent of all of the Lenders: (i) consent to the reduction of (A) any amount
due and owing by the Borrower pursuant to the Loan Documents, (B) any rate of
interest payable under the Loan Documents, or (C) the rate at which fees accrue
under the Loan Documents; (ii) increase the amounts of or reinstate any Loan
other than such reinstatement as is provided in the Loan Documents; (iii) extend
the maturity date of any Loan; (iv) postpone the due date for any payment to be
made by Borrower pursuant to the Loan Documents; (vi) consent to or waive any
failure by the Borrower to pay money to the Lenders if such failure would
otherwise constitute an Event of Default under the Loan Documents; (vii) waive
any Event of Default under the Loan Documents; (viii) waive compliance with any
of the terms and conditions of the Loan Documents; (ix) give or withhold
consents to or approvals of any action or failure to act by the Borrower; (x)
change the definition of "Required Lenders"; (xi) release any Guarantor from
Liability under its respective Guaranty and Suretyship Agreement; or (xii) amend
this Section 9.2 or any other provision of this Agreement providing for consent
or other action by the Required Lenders; provided, however, that items (viii)
and (ix) shall require the consent of the Required Lenders only. Notwithstanding
any other provision to the contrary, Agent agrees to promptly provide to each
Lender a copy of each report, certificate or other notice or request received
from or on behalf of Borrower or any Guarantor pursuant to Sections 5.1, 5.2
and/or 5.3 of this Agreement or otherwise, as well as a copy of each notice the
Agent provides to the Borrower or any Guarantor pursuant to this Agreement or
any other Loan Document.
9.3 Delegation of Duties.
--------------------
The Agent may execute any of its duties under the Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
rely upon the advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any such agent or attorney-in-fact in the absence of the Agent's own gross
negligence or willful misconduct.
9.4 Exculpatory Provisions.
----------------------
Neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any
action lawfully taken or omitted to be taken by it or such Person under or in
connection with the Loan Documents (except for its own gross negligence or
willful misconduct), or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrower or
any Guarantor or any officer thereof contained in the Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, the Loan Documents or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of any of the Loan Documents or for any failure of the Borrower or any other
Person to perform its obligations thereunder. The Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, the Loan
Documents, or to inspect the properties, books or records of any Loan Party. The
Agent shall not be under any liability or responsibility whatsoever, as Agent,
to the Borrower or any other Person as a consequence of any failure or delay in
performance, or any breach, by any Lender of any of its obligations under any of
the Loan Documents.
9.5 Reliance by Agent.
-----------------
The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, opinion, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrower), independent accountants and other
experts selected by the Agent. The Agent may treat each Lender, or the Person
designated in the last notice filed with it under this Section, as the holder of
all of the interests of such Lender in its Loans and in its Notes until written
notice of transfer, signed by such Lender (or the Person designated in the last
notice filed with the Agent) and by the Person designated in such written notice
of transfer, in form and substance satisfactory to the Agent, shall have been
filed with the Agent. The Agent shall not be under any duty to examine or pass
upon the validity, effectiveness or genuineness of the Loan Documents or any
instrument, document or communication furnished pursuant thereto or in
connection therewith, and the Agent shall be entitled to assume that the same
are valid, effective and genuine, have been signed or sent by the proper parties
and are what they purport to be. The Agent shall be fully justified in failing
or refusing to take any action under the Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under the Loan Documents in accordance with a request or direction of
the Required Lenders, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes. Where this Agreement expressly permits or prohibits
an action unless the Required Lenders otherwise determine, the Agent shall, and
in all other instances, the Agent may, but shall not be required to, initiate
any solicitation for the consent or a vote of the Lenders.
9.6 Notice of Default.
-----------------
The Agent shall not be deemed to have knowledge or notice of
the occurrence of any Event of Default, except with respect to default in the
payment of principal, interest and fees required to be paid to the Agent for the
account of the Lenders, unless the Agent has received written notice thereof
from a Lender or the Borrower referring to this Agreement, describing such Event
of Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall promptly give notice
thereof to the Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders, provided, however, that unless and until the Agent shall have received
such directions, the Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem to be in the best interests of the Lenders.
9.7 Non-Reliance on Agent and Other Lenders.
---------------------------------------
Each Lender expressly acknowledges that neither the Agent nor
any of its respective officers, directors, employees, agents, attorneys-in-fact
or affiliates ("Agent-Related Persons") has made any representations or
warranties to it and that no act by the Agent or any Agent-Related Person
hereinafter, including any review of the affairs of the Borrower or any other
Person, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
evaluation of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrower and the
Guarantors and made its own decision to enter into this Agreement. Each Lender
also represents that it will, independently and without reliance upon the Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
evaluations and decisions in taking or not taking action under any Loan
Document, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of the Borrower and the Guarantors. Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Agent hereunder, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Borrower and the Guarantors which may come into the possession of the Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
9.8 Indemnification.
---------------
Each Lender agrees to indemnify and reimburse the Agent in its
capacity as such (to the extent not promptly reimbursed by the Borrower and
without limiting the obligation of the Borrower or any Guarantor) upon demand,
pro rata according to its Revolving Credit Commitment, from and against any and
all liabilities, obligations, claims, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever
(including, without limitation, any amounts paid to the Lenders (through the
Agent) by the Borrower pursuant to the terms of the Loan Documents, that are
subsequently rescinded or avoided, or must otherwise be restored or returned)
which may at any time (including, without limitation, at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, the Loan Documents or any other documents
contemplated by or referred to therein or the transactions contemplated thereby
or any action taken or omitted to be taken by the Agent under or in connection
with any of the foregoing to the extent the Agent is not reimbursed for such
expenses by or on behalf of the Borrower; provided, however, that no Lender
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting solely from the gross negligence or
willful misconduct of the Agent. The agreements in this Section shall survive
the payment of all amounts payable under the Loan Documents, the termination of
the Aggregate Revolving Credit Commitments and the resignation of the Agent.
9.9 Agent in Its Individual Capacity.
--------------------------------
Allfirst Bank and its respective affiliates may make loans to,
accept deposits from, issue letters of credit for the account of, and generally
engage in any kind of business with, the Borrower and/or any Guarantor as though
Allfirst Bank was not Agent hereunder and without notice to or consent of any
Lender. The Lenders acknowledge that pursuant to such activities, Allfirst Bank
or its affiliates may receive information regarding the Borrower or a Guarantor
(including information that may be subject to confidentiality obligations in
favor of the Borrower or such Guarantor) and acknowledge that the Agent shall be
under no obligation to provide such information to them. With respect to
Allfirst Bank's Revolving Credit Commitment and the Notes issued to Allfirst
Bank hereunder, Allfirst Bank shall have the same rights and powers under the
Loan Documents as any Lender and may exercise the same as though it was not the
Agent, and the terms "Lender" and "Lenders" shall in each case include Allfirst
Bank in its individual capacity.
9.10 Successor Agent.
---------------
If at any time the Agent deems it advisable, in its sole
discretion, it may submit to each of the Lenders a written notice of its
resignation as Agent under this Agreement, such resignation to be effective upon
the earlier of (i) the written acceptance of the duties of the Agent under the
Loan Documents by a successor Agent and (ii) on the 30th day after the date of
such notice. Upon any such resignation, the Required Lenders shall have the
right to appoint from among the Lenders a successor Agent. If no successor Agent
shall have been so appointed by the Required Lenders and accepted such
appointment in writing within 30 days after the retiring Agent's giving of
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which successor Agent shall be a commercial bank
organized under the laws of the United States of America or any State thereof.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent's rights, powers, privileges and duties as Agent under the Loan Documents
shall be terminated. The Borrower and the Lenders shall execute such documents
as shall be necessary to effect such appointment. After any retiring Agent's
resignation hereunder as Agent, the provisions of the Loan Documents shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under the Loan Documents. If at any time hereunder there shall not be a
duly appointed and acting Agent, the Borrower agrees to make each payment due
under the Loan Documents directly to the Lenders entitled thereto during such
time.
10. GENERAL.
-------
10.1 Survival of Warranties.
----------------------
All agreements, representation and warranties made herein
shall survive the delivery of this Agreement.
10.2 Modification of Documents.
-------------------------
No modification or waiver of any provision of this Agreement,
the Notes, the other Loan Documents or other instruments or consent to any
departure by the Borrower from any of the terms or conditions thereof, shall in
any event be effective unless it shall be in writing and signed by the Agent
(and, but only to the extent specifically required by Section 9.2, each Lender)
and the Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
the Borrower in any case shall, of itself, entitle the Borrower to any other or
further notice or demand in similar or other circumstances.
10.3 Rights Cumulative.
-----------------
Each and every right granted to the Agent or a Lender
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed one or the other by law or equity, shall be cumulative and
may be exercised from time to time. No failure on the part of the Agent to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or future exercise thereof or the exercise of any other right.
10.4 Construction and Severability.
-----------------------------
This Agreement, the Notes and the other Loan Documents and the
rights and obligations of the parties shall be construed and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania. The provisions of
this Agreement are severable and if any clause or provision shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or provision, or
part thereof, in such jurisdiction and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or provision
in this Agreement in any jurisdiction.
10.5 Conflict of Documents.
---------------------
The provisions of this Agreement are in addition to, and not
in limitation of, the provisions of the Notes and the other Loan Documents. In
the event of conflict between the provisions of this Agreement and the
provisions of the Notes or any Loan Document, the provisions of this Agreement
shall prevail.
10.6 Notices.
-------
Notices by one party to the other shall be in writing and
shall be deemed to have been validly given at the time when posted in the U.S.
Mails, postage prepaid, or hand delivered to the following address or to any
alternate address designated in writing by the recipient:
The Borrower: Herley Industries, Inc.
3061 Industry Drive
Lancaster, Pennsylvania 17603
Attn: Myron Levy, CEO
The Agent: Allfirst Bank
1703 Oregon Pike
Lancaster, Pennsylvania 17601-4201
Attn: Jane E. Kline, Vice President
The Lender: Fulton Bank
One Penn Square
Lancaster, PA 17108-1146
Attn: William T. Kepler
Vice President
10.7 Expenses of the Agent.
---------------------
The Borrower shall pay all fees and expenses reasonably
incurred by the Agent in connection with the preparation, execution, delivery
and performance of this Agreement, the Notes, the other Loan Documents and all
other instruments executed in connection herewith or in connection with the
collection of the indebtedness hereunder, or any part thereof. These fees and
expenses shall include, without limitation, fees and disbursements of Agent's
Counsel.
10.8 Binding Effect.
--------------
This Agreement and any other documents and instruments
delivered or required to be delivered pursuant hereto shall inure to the benefit
of and shall be binding upon the parties hereto and their heirs, executors,
administrators, personal representatives, successors and permitted assigns of
the parties hereto. The Borrower may not assign its rights or obligations
hereunder without the prior written consent of Agent and all of the Lenders.
10.9 Participations and Assignments.
------------------------------
(a) Each Lender with the prior written consent of the Agent
and the Borrower (which consent of the Borrower shall not be unreasonably
withheld and shall not be required upon the occurrence and during the
continuance of an Event of Default), shall have the right to assign all or any
part of such Lender's Loans, Revolving Credit Commitment and Notes, on a pro
rata basis, to any other lender; provided, however, notwithstanding the
foregoing, that any such assignment by Fulton Bank and each Fulton Affiliate (as
hereinafter defined) shall be permitted without such consent if made to a Fulton
Affiliate. For the purposes of Section 10.9, the term "Fulton Affiliate" shall
mean any commercial bank organized under the laws of the United States of
America or any State thereof that is, directly or indirectly, wholly-owned by
the entity that is Fulton Bank's "ultimate parent entity" as such term is
defined in 16 CFR ss.801.1. For each assignment, the parties to such assignment
shall execute and deliver to the Agent for its acceptance and recording an
Assignment and Acceptance Agreement. Upon such execution, delivery, acceptance
and recording by the Agent, from and after the effective date specified in such
Assignment and Acceptance Agreement, the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance Agreement,
the assignor Lender thereunder shall be released from its obligations under the
Loan Documents. The Borrower agrees upon written request of the Agent and at the
Borrower's expense to execute and deliver (1) to such assignee, Notes, dated the
effective date of such Assignment and Acceptance Agreement, in an aggregate
principal amount equal to the Loans assigned to, and Revolving Credit Commitment
assumed by, such assignee and (2) to such assignor Lender, Notes, dated the
effective date of such Assignment and Acceptance Agreement, in an aggregate
principal amount equal to the balance of such assignor Lender's Loans and
Revolving Credit Commitment, if any, and each assignor Lender shall cancel and
return to the Borrower its existing Notes. Upon any such assignment, the
applicable Revolving Credit Commitment and Revolving Credit Commitment
Percentages set forth in Exhibit A shall be adjusted accordingly by the Agent
and a new Exhibit A shall be distributed by the Agent to the Borrower and each
Lender.
(b) Each Lender may grant participations in all or any part of
its Loans, its Notes and its Revolving Credit Commitment to one or more lenders,
provided that (i) such Lender's obligations under the Loan Documents shall
remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties to the Loan Documents for the performance of such obligations, (iii) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents, (iv) no sub-participations shall be
permitted and (v) the voting rights of any holder of any participation shall be
limited to decisions that only do any of the following: (A) subject the
participant to any additional obligation, (B) reduce the principal of, or
interest on the Notes or any fees or other amounts payable hereunder to the
extent such participant has an interest therein, (C) postpone any date fixed for
the payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder to the extent such participant has an interest
therein; provided, however, notwithstanding the foregoing, that any such
participation granted by Fulton Bank and each Fulton Affiliate shall require the
prior written consent of the Agent if made to any lender other than a Fulton
Affiliate.
10.10 Indemnification by the Borrower.
-------------------------------
In addition to all amounts payable hereunder, the Borrower
shall protect, indemnify, and save harmless the Agent, each Lender and their
respective officers, employees and agents (collectively, the "Indemnitees")
against and from any and all liabilities, suits, actions, claims, demands,
losses, expenses and costs of every kind and nature incurred by, or asserted or
imposed against any Indemnitee by reason of (a) any accident, injury (including
death) or damage to any person or property, however caused (other than the
negligence or willful misconduct of such Indemnitee), resulting from, connected
with or growing out of any act of commission or omission of the Borrower, or any
officers, employees, agents, assignees, contractors or subcontractors of the
Borrower, or (b) any untrue statement by the Borrower or any of its officers,
employees or agents of a material fact or any omission by the Borrower or any of
its officers, employees or agents to state a material fact necessary in order to
make any statements made, in light of the circumstances under which they were
made, not misleading and made in connection with the Loans and the transactions
contemplated by this Agreement; and, in any such case, regardless of whether
such liabilities, suits, actions, claims, demands, damages, losses, expenses and
costs be against, or be suffered or sustained by, any Indemnitee, or be against,
or be suffered or sustained by, legal entities, officers, agents, or other
persons to whom an Indemnitee may become liable therefor. The Borrower may, and
if so requested by the Indemnitee shall, undertake to defend, at its sole cost
and expense, any and all suits, actions and proceedings brought against such
Indemnitee in connection with any of the matters indemnified against in this
Section. The Agent and each Lender agree to give the Borrower timely notice of
and shall forward to the Borrower every demand, notice, summons or other process
received with respect to any claim or legal proceeding within the purview
hereof, but the failure to give such notice shall not affect an Indemnitee's
rights to indemnification hereunder unless the failure to give notice shall have
deprived the Borrower of a reasonable opportunity to contest any such matter. If
the indemnification provided for herein is held by a court to be unavailable or
is insufficient to hold harmless the Indemnitees in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), then the
Borrower shall contribute to the amount paid or payable by the Indemnitees as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the Borrower on the one hand and the Indemnitees on the other hand, as well as
any other relevant equitable considerations. The provisions of this Section
shall survive the expiration of the Revolving Credit Commitment Period, the
repayment, satisfaction or discharge of the Loans, and the Resignation of the
Agent or replacement of any Lender.
10.11 Integration.
-----------
All Exhibits to a Loan Document shall be deemed to be a part
thereof. The Loan Documents embody the entire agreement and understanding among
the Borrower, the Agent, the Lenders and the other parties thereto with respect
to the subject matter thereof and supersede all prior agreements and
understandings among the Borrower, the Agent, the Lenders and the other parties
with respect to the subject matter thereof including, without limitation, those
portions of that certain Credit Agreement dated February 16, 1999 by and between
The First National Bank of Maryland, a division of FMB Bank (a predecessor to
Allfirst Bank), as the same has been amended and supplemented, and the related
Loan Documents, specifically relating to the Revolving Loan as defined therein;
provided, however, that the provisions of said prior Credit Agreement and the
related Loan Documents, to the extent the same apply to the Mortgage Loan as
defined therein, shall continue in full force and effect.
10.12 Waiver of Trial by Jury.
-----------------------
THE AGENT, EACH LENDER AND THE BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE
BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE AGENT OR ANY
LENDER, OR COUNSEL THERETO, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE
AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE
THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. THE BORROWER ACKNOWLEDGES THAT THE
AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER
ALIA, THE PROVISIONS OF THIS SECTION.
10.13 Jurisdiction and Venue.
The Borrower hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court for the county or judicial district
where the Agent's office indicated in Section 10.6 of this Agreement is located,
and consents that all service of process be sent by nationally recognized
overnight courier service directed to the Borrower at the Borrower's address set
forth herein and service so made will be deemed to be completed on the business
day after deposit with such courier; provided that nothing contained in this
Agreement will prevent the Agent or any Lender from bringing any action,
enforcing any award or judgment or exercising any rights against the Borrower
individually, against any security or against any property of the Borrower
within any other country, state or other foreign or domestic jurisdiction. The
Agent and the Borrower agree that the venue provided above is the most
convenient forum for both the Agent and the Borrower. The Borrower waives any
objection to venue and any objection based on a more convenient forum in any
action instituted under this Agreement.
The Borrower acknowledges that it has read and understands all the
provisions of this Agreement, including Waiver of Trial by Jury, and has been
advised by counsel as necessary or appropriate.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be duly executed on its respective behalf on the
date first set forth above.
ATTEST: HERLEY INDUSTRIES, INC.
By: By:
------------------------------------- -------------------
Anello C. Garefino, Treasurer and CFO Myron Levy, CEO
(SEAL)
ALLFIRST BANK, in its
capacities as Agent
and Lender
By:
--------------------
Vice President
FULTON BANK
By: --------------------
Vice President
EXHIBIT A
REVOLVING CREDIT COMMITMENTS
AND REVOLVING CREDIT COMMITMENT PERCENTAGES
Revolving Credit Revolving Credit LIBOR Advances
Lender Commitments Commitment % Commitment %
- --------------------- ---------------- ---------------- --------------
Allfirst Bank $30,000,000.00 60%
Target Rate Advances $5,000,000.00 -- --
LIBOR Advances
Commitment $25,000,000.00 -- 56%
Fulton Bank $20,000,000.00 40%
LIBOR Advances $20,000,000.00 44%
Commitment