Exhibit 10d (cont.)
ANNEXES, SCHEDULES AND EXHIBITS
TO
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of February 1, 1996
among
C.I.S., INC.,
as Borrower,
C.I.S. TECHNOLOGIES, INC.,
as Parent,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
STM-62344.3
INDEX OF ANNEXES, SCHEDULES AND EXHIBITS
Annex A - Definitions; Rules of Construction
Annex B - Cash Management System
Annex C - Schedule of Closing Documents
Annex D - Schedule of Certain Fees
Annex E - Financial Statements and Notices
Annex F - Insurance Requirements
Annex G - Financial Covenants
Schedule 3.2 - Executive Offices; Trade Names
Schedule 3.4 - Financial Statements
Schedule 3.5 - Dividends
Schedule 3.6 - Real Estate and Leases
Schedule 3.8 - Labor Matters
Schedule 3.9 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.12 - Tax Matters
Schedule 3.13 - ERISA Plans
Schedule 3.14 - Litigation
Schedule 3.16 - Patents, Trademarks, Copyrights and Licenses
Schedule 3.19 - Insurance Policies
Schedule 3.20 - Bank Accounts
Schedule 6.2 - Investments
Schedule 6.3 - Indebtedness
Schedule 6.4 - Loans to and Transactions with Employees
Schedule 6.7 - Liens
Schedule 10.8 - Authorized Signatures
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Revolving Credit Note
Exhibit D - Form of Term Note
Exhibit E - Parent Guaranty
Exhibit F - Security Agreement
Exhibit G - Form of Subsidiary Guaranty
Exhibit H - Form of Subsidiary Security Agreement
Exhibit I - Form of Pledge Agreement
STM-62344.3
-i-
ANNEX A
to
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of February 1, 1996
DEFINITIONS; RULES OF CONSTRUCTION
1. Definitions. In addition to the defined terms appearing in
this Agreement and other Loan Documents, capitalized terms used in this
Agreement and the other Loan Documents shall have (unless otherwise
provided elsewhere in this Agreement and the other Loan Documents) the
following respective meanings:
"Account Debtor" shall mean any Person who may become obligated
to a Borrower under, with respect to, or on account of, an Account,
Chattel Paper or General Intangibles.
"Accounts" shall mean, with respect to any Person, all
"accounts," as such term is defined in the Code, now owned or hereafter
acquired by such Person and, in any event, including: (a) all accounts
receivable, other receivables, book debts and other forms of obligations
(other than forms of obligations evidenced by Chattel Paper, Documents
or Instruments) now owned or hereafter received or acquired by or
belonging or owing to such Person, whether arising out of goods sold or
services rendered by it or from any other transaction (including any
such obligations which may be characterized as an account or contract
right under the Code); (b) all of such Person's rights in, to and under
all purchase orders or receipts now owned or hereafter acquired by it
for goods or services; (c) all of such Person's rights to any goods
represented by any of the foregoing (including unpaid sellers' rights of
rescission, replevin, reclamation and stoppage in transit and rights to
returned, reclaimed or repossessed goods); (d) all monies due or to
become due to such Person under all purchase orders and contracts for
the sale or lease of goods or the performance of services or both by
such Person or in connection with any other transaction (whether or not
yet earned by performance on the part of such Person) now or hereafter
in existence, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts; and (e) all collateral
security and guarantees of any kind, now or hereafter in existence,
given by any Person with respect to any of the foregoing.
"Acquisition Notes" shall mean those notes each dated November
31, 1994 made by Parent in connection with the acquisition by Parent of
all of the capital stock of AMSC in favor of Randall Ray and Wendy R.
Lewis in the original principal amount of $245,000 and $255,000 in the
case of the convertible notes made in favor of Randall Ray and Wendy R.
Lewis, respectively, and $735,000 and $765,000 in the case of the non-
convertible notes made in favor of such Persons, respectively.
"Affiliate" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether
beneficially, or as a trustee, guardian or other fiduciary, five percent
(5%) or more of the Stock having ordinary voting power in the election
of directors of such Person, (b) each Person that controls, is
controlled by or is under common control with such Person or any
Affiliate of such
STM-62598.3
Person, or (c) each of such Person's officers, directors, joint ventures
and partners. For the purpose of this definition, "control" of a Person
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" shall mean this Amended and Restated Credit
Agreement to which this Annex A is attached and of which it forms a
part, including all Annexes, Schedules, and Exhibits attached or
otherwise identified thereto, all restatements, modifications and
supplements hereof or hereto, and any appendices, attachments, exhibits
or schedules to any of the foregoing, and shall refer to this Agreement
as the same may be in effect at the time such reference becomes
operative; provided, that any reference to the Schedules to this
Agreement shall be deemed a reference to the Schedules as in effect as
of the Closing Date, unless otherwise provided in a written amendment
thereto.
"AMSC" shall mean Automated Medical Systems Consultants, Inc.,
a Florida corporation.
"Audit Services" shall mean the audit services provided by
Borrower (as successor in interest to HBA) to Persons in or related to
the medical care industry, including, but not limited to, charge
r e covery and verification services, services in connection with
Borrower's (as successor in interest to HBA) Defense Audit Program,
Concurrent Audit Programs, and supplemental audit support services.
"Borrower" has the meaning assigned to it in the preamble to
this Agreement.
"Borrowing Availability" shall mean, at any time, the lesser at
such time of (a) the Revolving Credit Commitment and (b) the Borrowing
Base.
"Borrowing Base" shall mean, at any time, an amount determined
by Lender to be equal to the sum at such time of:
(a) up to eighty-five percent (85%) of Eligible Accounts
(other than Eligible Charge Recovery Accounts); and
(b) up to the lesser of (i) fifty percent (50%) of Eligible
Charge Recovery Accounts and (ii) $1,500,000;
minus, the amount of any reserves as Lender may deem necessary or
appropriate from time to time in its reasonable discretion.
"Borrowing Base Certificate" shall mean a certificate duly
completed in the form attached hereto as Exhibit B.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in
New York City.
"Capital Expenditures" shall mean, as of any date, all payments
or accruals (including Capital Lease Obligations) for any asset or
improvements or for replacements, substitutions or additions thereto,
that are required to be capitalized under GAAP.
STM-62598.3
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"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person
as lessee that, in accordance with GAAP, either would be required to be
classified and accounted for as a capital lease on a balance sheet of
such Person or otherwise be disclosed as such in a note to such balance
sheet.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder
that, in accordance with GAAP, would appear on a balance sheet of such
lessee in respect of such Capital Lease or otherwise be disclosed in a
note to such balance sheet.
"Cash Equivalents" shall mean: (a) securities with maturities
of one year or less from the date of acquisition, issued or fully
guaranteed or insured by the government of the United States of America
or any agency thereof and backed by the full faith and credit of the
United States of America; (b) 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; and (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Corp. or at least 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 less than sixty (60)
days from the date acquired.
"Change of Control" shall mean (i) the replacement of a
majority of the Board of Directors of Parent, over a two-year period,
from the directors who constituted the Board of Directors at the
beginning of such period, which replacement shall not have been approved
by a vote of at least a majority of the Board of Directors of Parent
then still in office who were either members of the Board of Directors
at the beginning of such period or whose appointment as a member of the
Board of Directors was previously so approved; (ii) as a result of a
tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, a Person or entity or group of Persons acting in
concert as a partnership, joint venture, alliance or other group shall
have become the "beneficial owner" (within the meaning of Rule 13d-3
under the Exchange Act as in effect on the Closing Date) of securities
of Parent representing 30% or more of the combined voting power of the
then outstanding securities of ordinarily (and apart from rights arising
under special circumstances) having the right to vote in the election of
directors thereof; or (iii) all of the shares of capital stock of
Borrower are not owned directly by Parent.
"Charge Recovery Account" shall mean any Account that arises
from the provision by Borrower (as successor in interest to the business
of HBA) of Charge Recovery Audit Services and as to which Account the
Account Debtor has not yet received a remittance notice from the third
party payor or insurer.
"Charges" shall mean, for any Loan Party, all Federal, state,
county, city, municipal, local, foreign or other governmental taxes
(including taxes owed to PBGC at the time due and payable), levies,
assessments, charges or Liens upon or relating to (a) the Collateral,
(b) the Obligations, (c) the employees, payroll, income or gross
receipts of such Loan Party,(d) the ownership or use by such Loan Party
of any of its assets, or (e) any other aspect of such Loan Party's
business.
"Chattel Paper" shall mean all "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired and wherever
located.
"CIS Accounts" shall mean Accounts of Borrower which are not
HBA Accounts.
"Claim" shall have the meaning assigned to it in Section 1.12.
"Closing Date" shall mean the Business Day on which the
conditions precedent set forth in Section 2 have been satisfied, in
STM-62598.3
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Lender's sole discretion, or waived in writing by Lender, and the
Tranche D Term Loan has been made.
"Closing Fee" shall have the meaning assigned to it in Annex D.
"Code" shall mean the Uniform Commercial Code as the same may,
from time to time, be in effect in the State of New York; provided, that
in the event that by reason of mandatory provisions of law, any or all
of the attachment, perfection or priority of, or the remedies with
respect to, Lender's security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than
the State of New York, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the
provisions hereof relating to such attachment, perfection, priority or
remedies and for purposes of definitions related to such provisions.
"Collateral" shall mean the property covered by the Collateral
Documents and any other property, real or personal, tangible or
intangible, now existing or hereafter acquired, that may at any time be
or become subject to a Lien in favor of Lender to secure the
Obligations.
"Collateral Documents" shall mean the Security Agreement, the
Pledge Agreement, any Subsidiary Security Agreement, the Concentration
Account Agreement, the Lock Box Account Agreements and the Disbursement
Account Agreement and all other instruments and agreements now or
hereafter securing the whole or any part of the Obligations.
"Collection Account" shall mean that certain account of Lender,
account number 502-328-54 in the name of GECC/CAF Depository at Bankers
Trust Company, 1 Bankers Trust Plaza, New York, New York 10006, ABA
number 021-001-033, or such other account as may be designated by
Lender.
"Commitment Termination Date" shall mean the earliest of (a)
October 31, 1997, (b) the date of termination of the Revolving Credit
Commitment pursuant to Section 8.2, and (c) the date of termination of
the Revolving Credit Commitment in accordance with the provisions of
Section 1.3(c).
"Company Documents" shall mean the Limited Liability Company
Agreement, dated as of October 31, 1994, between Borrower and GE Capital
Finance, Inc. and the Services Agreement and the Technology Agreement,
each dated as of October 31, 1994 among Parent, Borrower, GE Capital
Commercial Finance, Inc. and SA Services, L.L.C., and all other
agreements, documents, and instruments executed and delivered in
connection therewith.
"Concentration Account" shall have the meaning assigned to it
in Annex B.
"Concentration Account Agreement" shall have the meaning
assigned to it in Annex B.
"Contracts" shall mean, with respect to any Person, all the
contracts, undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which such Person
may now or hereafter have any right, title or interest, including any
agreement relating to the terms of payment or the terms of performance
of any Account.
"Copyrights" shall, with respect to any Person, mean any United
States copyright to which such Person now or hereafter has title, as
well as any application for a United States of America copyright
hereafter made by such Person.
STM-62598.3
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"Current Assets" shall mean, with respect to any Person at any
date, all assets of such Person which are or should be classified as
current on a consolidated balance sheet of such Person as of such date
prepared in accordance with GAAP.
"Current Liabilities" shall mean, with respect to any Person at
any date, all liabilities of such Person which are or should be
classified as current on a consolidated balance sheet of such Person as
of such date prepared in accordance with GAAP.
"Default" shall mean any Event of Default or any event which,
with the passage of time or notice or both, would, unless cured or
waived, become an Event of Default.
"Default Rate" shall mean the rate equal to the sum of two and
one-half percent (2.5%), plus (i) in the case of the Revolving Credit
Loan, the Revolving Credit Rate; or (ii) in the case of the Term Loan,
the Term Rate.
"Deferred Taxes" shall mean, with respect to any Person at any
date, the amount of deferred taxes of such Person as shown on the
balance sheet of such Person prepared in accordance with GAAP of such
date.
"Disbursement Account" shall have the meaning assigned to it in
Annex B.
"Disbursement Account Agreement" shall have the meaning
assigned to it in Annex B.
"Documents" shall mean, with respect to any Person, all
"documents," as such term is defined in the Code, now owned or hereafter
acquired by such Person, wherever located, and in any event any bills of
lading, dock warrants, dock receipts, warehouse receipts, or other
documents of title.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"DOL" shall mean the United States Department of Labor or any
successor thereto.
"Earn Out Agreement" shall mean that certain agreement dated
May 11, 1995 by and among FFMC, Parent, John A. Booth and each of the
parties listed on the signature lines thereto as Shareholders.
"EBIT" shall mean, for any period, the Net Income (Loss) of
Parent and its Subsidiaries for such period, plus interest expense, tax
expense, and extraordinary losses and minus extraordinary gains, in each
case, of Parent and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP to the extent included in the
determination of such Net Income (Loss).
"Eligible Accounts" shall mean, with respect to Borrower and
AMSC, such Accounts of Borrower or AMSC that are not ineligible as the
basis for Revolving Credit Advances based on the criteria set forth
below. Unless otherwise agreed to in writing by Lender, in determining
whether an Account constitutes an Eligible Account, Lender shall not
include any Account:
(a) that does not arise from the sale of goods or services by
Borrower or AMSC in the ordinary course of Borrower's or AMSC's, as the
case may be, business;
STM-62598.3
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(b) upon which (i) Borrower's or AMSC's right to receive
payment is not absolute or is contingent upon the fulfillment of any
condition whatever, or (ii) Borrower or AMSC is not able to bring suit
or otherwise enforce its remedies against the Account Debtor through
judicial process;
(c) (i) against which, or against any contract or agreement
pursuant to which such account arises, is asserted or may be asserted
any defense, counterclaim or set-off, or (ii) which is a "contra"
Account, whether well-founded or otherwise, in each case to the extent
of such defense, counterclaim, set-off or "contra" amount;
(d) that is not a true and correct statement of a bona fide
indebtedness incurred in the amount of the Account for merchandise sold
and accepted by or services rendered to the Account Debtor obligated
upon such Account;
(e) with respect to which an invoice, acceptable to Lender in
form and substance to ensure compliance with the terms of the Loan
Documents, has not been sent to Account Debtor;
(f) that is not owned by Borrower or AMSC, as the case may
be, or is subject to any right, claim, or interest of another other than
the Lien in favor of Lender;
(g) that arises from a sale to or performance of services for
an employee, Affiliate, parent or Subsidiary of Borrower or AMSC, as the
case may be, or an entity which has common officers or directors with
Borrower or AMSC;
(h) that is the obligation of an Account Debtor that is the
Federal government or a political subdivision thereof, unless Borrower
or AMSC, as the case may be, has complied with the Federal Assignment of
Claims Acts of 1940, and any amendments thereto, with respect to such
obligation;
(i) that is evidenced by chattel paper, a promissory note,
negotiable instrument or any other instrument of any kind;
(j) that is the obligation of an Account Debtor located in a
foreign country, unless the sale of goods giving rise to the Account is
on a letter of credit or other credit support basis satisfactory to
Lender's security interest in or assignment of such Account and letter
of credit or other credit support is duly and properly created and/or
perfected to Lender's satisfaction; or the sale represented by such
Account is denominated in other than Dollars or is payable outside the
United States of America;
(k) that is the obligation of an Account Debtor to whom
Borrower or AMSC, as the case may be, is or may become liable for goods
sold or services rendered by the Account Debtor to Borrower or AMSC;
(l) that arises with respect to goods or services which are
delivered or rendered on a cash-on-delivery basis or placed on consign-
ment, guaranteed sale or other terms by reason of which the payment by
the Account Debtor may be conditional;
(m) that is in default; provided, that an Account shall be
deemed in default upon the occurrence of any of the following:
STM-62598.3
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(i) with respect to any CIS Account or Account of AMSC,
such CIS Account or Account of AMSC, as the case may be, is not paid
within the earlier of (x) sixty (60) days from the due date, and (y)
ninety (90) days from its invoice date;
(ii) with respect to any HBA Account (other than a
Charge Recovery Account), such HBA Account is not paid within the
earlier of (x) thirty (30) days from the due date, and (y) sixty (60)
days from its invoice date;
(iii) with respect to any Charge Recovery Account, such
Account is not paid within 180 days of Borrower's or AMSC's, as the
case may be, submission of a claim in respect thereof to the insurer
or other third party payor;
(iv) the sale represented by such Account is subject to
any material claim or dispute by the Person to whom or to which it
was made;
(v) if any Account Debtor obligated upon such Account
suspends business, becomes insolvent, makes a general assignment for
the benefit of creditors, or fails to pay its debts generally as they
come due; or
(vi) if any petition is filed by or against any Account
Debtor obligated upon such Account under any bankruptcy law or any
other national, state or provincial receivership, insolvency relief
or other law or laws for the relief of debtors;
(n) that is the obligation of an Account Debtor as to which
fifty percent (50%) or more of the Dollar value of the Accounts of such
Account Debtor have become, or have been determined by Lender to be,
ineligible;
(o) the sale represented by such Account is on terms longer
than Borrower's or AMSC's, as the case may be, standard terms;
(p) that arises from any bill-and-hold or other sale of goods
which remain in Borrower's or AMSC's possession or under Borrower's or
AMSC's control;
(q) as to which the interest of Lender therein is not a first
priority perfected security interest;
(r) to the extent such Account exceeds any credit limit
established by Lender with respect to any Account Debtor from time to
time;
(s) that fails to meet or violates any of Borrower's or
AMSC's, as the case may be, representations, warranties or covenants
contained in this Agreement or any other Loan Document; or
(t) that is not otherwise acceptable in the reasonable
judgment of Lender based upon such credit and collateral considerations
as Lender may deem appropriate from time to time.
"Eligible Charge Recovery Accounts" shall mean such Eligible
Accounts which are also Charge Recovery Accounts.
STM-62598.3
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"Environmental Laws" shall mean all Federal, state and local
laws, statutes, ordinances, orders and regulations, now or hereafter in
effect, and in each case as amended or supplemented from time to time,
and any applicable judicial or administrative interpretation thereof
relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include, but are
not limited to, the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.)
("CERCLA"); the Hazardous Material Transportation Act, as amended (49
U.S.C. Section 1801 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. Section 136 et seq.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Section 6901 et seq.)
("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. Section 2601
et seq.); the Clean Air Act, as amended (42 U.S.C. Section 740 et seq.); the
Federal Water Pollution Control Act, as amended (33 U.S.C. Section 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
Section 651 et seq.) ("OSHA"); and the Safe Drinking Water Act, as amended
(42 U.S.C. Section 300(f) et seq.), and any and all regulations promulgated
thereunder, and all analogous state and local counterparts or
equivalents and any transfer of ownership notification or approval
statutes.
"Environmental Liabilities and Costs" shall mean all
liabilities, obligations, responsibilities, remedial actions, removal
costs, losses, damages, punitive damages, consequential damages, treble
damages, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs
of investigation and feasibility studies), fines, penalties, sanctions
and interest incurred as a result of any claim, suit, action or demand
by any person or entity, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute or common
law (including any thereof arising under any Environmental Law, permit,
order or agreement with any Governmental Authority) and which relate to
any health or safety condition regulated under any Environmental Law or
in connection with any other environmental matter or Release, threatened
Release, or the presence of a Hazardous Material.
"Equipment" shall mean all "equipment" as such term is defined
in the Code, and, in any event, shall include all machinery, equipment,
furnishings, fixtures and vehicles and any and all additions,
accessions, substitutions and replacements of any of the foregoing,
wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to
time, and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Loan Party,
any trade or business (whether or not incorporated) under common control
with such Loan Party and which, together with such Loan Party is treated
as a single employer within the meaning of Section 414(b), (c), (m) or
(o) of the IRC.
"ERISA Event" shall mean, with respect to any Loan Party or any
ERISA Affiliate, (a) a Reportable Event with respect to a Title IV Plan
or a Multiemployer Plan; (b) the withdrawal of any Loan Party or any
ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of
such Loan Party or any ERISA Affiliate from any Multiemployer Plan;
(d) the filing of a notice of intent to terminate a Title IV Plan or the
treatment of a plan amendment as a termination under Section 4041 of
ERISA; (e) the institution of proceeding to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (vi) the failure to make required
contributions to a Qualified Plan; or (f) any other event or condition
w h ich might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the
STM-62598.3
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termination of, or the appointment of a trustee to administer, any Title
IV Plan or Multiemployer Plan or the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA.
"Event of Default" shall have the meaning assigned to it in
Section 8.1.
"Excess Borrowing Availability" shall mean at any time of
measurement, the amount by which Borrowing Availability exceeds the
aggregate outstanding principal amount of the Revolving Credit Advances.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Existing Credit Agreement" shall have the meaning assigned to
it in the Recitals to this Agreement.
"Fees" shall mean the fees due to Lender as set forth in
Section 1.7, and any other fees due to Lender pursuant to the Loan
Documents.
"FFMC" shall mean First Financial Management Corporation, a
Georgia corporation.
"FFMC Guaranty" shall mean that certain Corporate Guaranty
dated as of May 31, 1995 by Parent in favor of FFMC.
"FFMC Note" shall mean that certain promissory note in the
original aggregate principal amount of $5,000,000 originally made by
HCCI (and subsequently assumed by Borrower in connection with the
Reorganization) in favor of FFMC.
"FFMC Pledge Agreement" shall mean that certain Stock Pledge
Agreement, dated as of May 31, 1995, between Parent and FFMC whereby
Parent has pledged in favor of FFMC all of the capital stock of HCCI.
"FFMC Security Agreement" shall mean that certain Security
Agreement dated May 31, 1995 made by HCCI in favor of FFMC, whereby HCCI
has granted in favor of FFMC a second priority security interest in
HCCI's accounts receivable.
"Financials" shall mean the financial statements referred to in
paragraph 1 of Schedule 3.4.
"Fiscal Month" shall mean each of the monthly accounting
periods of the Loan Parties.
"Fiscal Quarter" shall mean each of the three-month periods
ending on March 31, June 30, September 30 or December 31.
"Fiscal Year" shall, for the Loan Parties, mean the 12-month
period of the Loan Parties ending on December 31 of each year.
Subsequent changes of the fiscal year of such Loan Parties shall not
change the term "Fiscal Year," unless Lender shall consent in writing to
such change.
"Fixed Charge Coverage Ratio" shall mean, for any period, the
ratio of the following for Parent and its Subsidiaries determined on a
consolidated basis in accordance with GAAP: (a) EBIT for
STM-62598.3
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such period to (b) the sum of (i) interest expense paid or deemed paid
in respect of Funded Debt during such period, plus (ii) regularly
scheduled payments of principal paid or deemed paid on Funded Debt
during such period, plus (iii) taxes paid during such period.
"Fixtures" shall, with respect to any Person, mean all
"fixtures," as such term is defined in the Code, now or hereafter owned
or acquired such Person, wherever located, and, in any event, including
all of the fixtures, systems, machinery, apparatus, equipment and
fittings of every kind and nature whatsoever and all appurtenances and
additions thereto and substitutions therefor or replacements thereof,
now or hereafter attached or affixed to or constituting a part of, or
located in or upon, real property wherever located (including all
heating, electrical, mechanical, lighting, lifting, plumbing,
ventilating, air-conditioning and air cooling, refrigerating,
incinerating and power, loading and unloading, signs, escalators,
elevators, boilers, communication, switchboards, sprinkler and other
fire prevention and extinguishing fixtures, systems, machinery,
apparatus and equipment, and all engines, motors, dynamos, machinery,
pipes, pumps, tanks, conduits and ducts constituting a part of any of
the foregoing, together with all extensions, improvements, betterments,
renewals, substitutes, and replacements of, and all additions and
appurtenances to any of the foregoing property).
"Funded Debt" shall mean, for any Person, all of such Person's
Indebtedness which by the terms of the agreement governing or instrument
evidencing such Indebtedness matures more than one year from, or is
directly or indirectly renewable or extendible at the option of such
Person under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of more than one year
from, the date of creation thereof, including current maturities of
long-term debt, revolving credit, and short-term debt extendible beyond
one year at the option of such Person.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time,
consistently applied, except that, for purposes of Section 6.10 and
Annex G, GAAP shall be determined on the basis of such principles in
effect on December 31, 1994 and consistent with those used in the
preparation of the audited financial statements referred to in Section
3.4.
"General Intangibles" shall mean, with respect to any Person,
all "general intangibles," as such term is defined in the Code, now
owned or hereafter acquired by such Person and, in any event, including
all right, title and interest which such Person may now or hereafter
have in or under any Contract, all customer lists, Intellectual
Property, interests in partnerships, joint ventures and other business
a s s o ciations, permits, proprietary or confidential information,
inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with
any Intellectual Property), all rights and claims in or under insurance
policies, (including insurance for fire, damage, loss, and casualty,
whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man, and business
interruption insurance, and all unearned premiums), uncertificated
securities, chooses in action, and other bank accounts (including with
respect to the Loan Parties the Lock Box Accounts, the Concentration
Account and the Disbursement Account), rights to receive tax refunds and
other payments and rights of indemnification.
"Goods" has the meaning assigned to it in the Code.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency,
department or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
STM-62598.3
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"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any indebtedness, lease,
dividend, or other obligation ("primary obligations") of any other
Person (the "primary obligor") in any manner including any obligation or
arrangement of such Person (a) to purchase or repurchase any such
primary obligation, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation, or (d) to indemnify the owner of such primary
obligation against loss in respect thereof.
"Hazardous Material" shall mean (i) any element, material,
compound, mixture, solution, chemical, substance, or pollutant within
the definition of "hazardous substance" under Section 101(14) of the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601(14); petroleum or any fraction, byproduct or distillation
product thereof; asbestos, polychlorinated biphenyls, or any radioactive
substances; and any material regulated as a hazardous substance by any
jurisdiction in which any Loan Party owns or operates or has owned or
operated a facility; or (ii) any element, pollutant, contaminate or
discarded material (including any radioactive material) within the
definition of Section 103(6) of the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6903(6); and any material regulated as a hazardous
waste by any jurisdiction in which any Loan Party owns or operates or
has owned or operated a facility, or to which any Loan Party sends
material for treatment, storage or disposal as waste.
"HBA" has the meaning assigned to it in the Recitals to this
Agreement.
"HBA Accounts" shall mean Accounts of Borrower which are
attributable to that portion of Borrower's business which prior to the
Reorganization was HBA's business.
"HCCI" has the meaning assigned to it in the Recitals to this
Agreement.
"HCCI Acquisition" shall mean the acquisition by Parent of all
the capital stock of HCCI from MicroBilt Corporation pursuant to the
Stock Purchase Agreement and the other HCCI Acquisition Documents.
"HCCI Acquisition Documents" shall mean the Stock Purchase
Agreement, the Earn Out Agreement and any other document directly
related to the HCCI Acquisition.
"Indebtedness" of any Person shall mean (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of
property or services (including reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured, but not including obligations to
trade creditors incurred in the ordinary course of business), (b) all
obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all indebtedness created or arising under any
conditional sale or other title retention agreements with respect to
property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), (d) all Capital Lease
Obligations, (e) all Guaranteed Indebtedness, (f) all Indebtedness
referred to in clause (a), (b), (c), (d) or (e) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property (including
accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness, (g) the Obligations, and (h) all liabilities under Title
IV of ERISA.
STM-62598.3
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"Indemnified Person" shall have the meaning assigned to it in
Section 1.12.
"Index Rate" shall mean, for any day, the latest rate for
thirty-day dealer placed commercial paper (which for purposes hereof
shall mean high grade unsecured notes sold through dealers by major
corporations in multiples of $1,000) which normally is published in the
"Money Rates" section of The Wall Street Journal for such day or, in the
event such rate is not so published, in such other nationally recognized
publication as Lender may specify. Each change in any interest rate
provided for herein based upon the Index Rate shall take effect at the
time of such change in the Index Rate.
"Instruments" shall mean, for any Person, all "instruments," as
such term is defined in the Code, now owned or hereafter acquired by
such Person, wherever located and in any event all certificated
securities, certificates of deposit and all notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a
group of writings that constitute, Chattel Paper.
"Intellectual Property" shall mean, for any Person,
collectively, all Trademarks, all Patents, all Copyrights and all
Licenses now held or hereafter acquired by such Person, together with
all franchises, tax refund claims, rights of indemnification, payments
under insurance, indemnities, warranties and guarantees payable with
respect to the foregoing.
"Inventory" shall mean, for any Person, all "inventory," as
such term is defined in the Code, now or hereafter owned or acquired by,
such Person, wherever located, and, in any event, including inventory,
merchandise, goods and other personal property which are held by or on
behalf of such Person for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials,
work in process or materials used or consumed or to be used or consumed
in such Person's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies,
and all accessions and additions thereto and all documents of title
covering any of the foregoing.
"Investment" shall mean, for any Person (a) the acquisition
(whether for cash, property, services or securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of any other Person or any agreement to
make any such acquisition; (b) the making of any deposit with, capital
contribution or other investment in, or advance, loan or other extension
of credit to, any other Person (including the purchase of property from
another Person subject to an understanding or agreement, contingent or
otherwise, to resell such property to such Person); and (c) the entering
into of any Guaranteed Indebtedness of, or other contingent obligation
with respect to, Indebtedness or other liability of any other Person and
(without duplication) any amount committed to be advanced, lent or
extended to such Person.
"IRC" shall mean the Internal Revenue Code of 1986, as amended,
and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Leases" shall mean all of those leasehold estates in real
property now owned or hereafter acquired by a Loan Party, as lessee or
sublessee.
"Lender" shall have the meaning assigned to it in the first
paragraph of this Agreement.
STM-62598.3
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"License" shall mean, with respect to any Person, any Patent
License, Trademark License or other license of rights or interests now
held or hereafter acquired by such Person.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim,
security interest, easement or encumbrance, or preference, priority or
other security agreement or preferential arrangement of any kind or
nature whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of
the foregoing, and the filing of, or agreement to give, any financing
statement perfecting a security interest under the Code or comparable
law of any jurisdiction).
"Loan Documents" shall mean this Agreement, the Revolving
Credit Note, the Term Note, the Parent Guaranty, any Subsidiary
Guaranty, the Collateral Documents and all agreements, instruments,
documents and certificates in favor of Lender in connection with this
Agreement or the financing transactions contemplated hereby, including
all pledges, powers of attorney, consents, assignments, contracts,
notices and other written matter whether now existing or hereafter
arising.
"Loan Party" shall mean Borrower, Parent and each Subsidiary of
Parent or Borrower.
"Lock Box Account Agreements" shall have the meaning assigned
to it in Annex B.
"Lock Box Accounts" shall have the meaning assigned to it in
Annex B.
"Margin Stock" shall have the meaning specified in Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations, prospects, or financial or
other condition of the Parent and its Subsidiaries taken as a whole or
of Borrower or the industry within which Parent or Borrower operates,
(b) any Loan Party's ability to pay or perform the Obligations in
accordance with the terms of the Loan Documents, (c) the Collateral or
Lender's Liens on the Collateral or the priority of any such Liens, or
(d) the rights and remedies of Lender under this Agreement and the other
Loan Documents.
"Maximum Lawful Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a) (3) of ERISA, and to which Borrower or any
ERISA Affiliate is making, is obligated to make, has made or been
obligated to make, contributions on behalf of participants who are or
were employed by any of them.
"Net Income (Loss)" shall mean for any period, the aggregate
net income (or loss) after income and franchise taxes of the Parent and
its Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP; less any net income of any Person that is not a
direct or indirect Wholly-owned Subsidiary of Parent, unless received by
Parent in cash.
"Net Proceeds" shall mean with respect to any issuance of Stock
by Borrower, Parent or any of their respective Subsidiaries or
Affiliates subsequent to the Closing Date, the cash proceeds received by
such Person from such issuance net of investment banking fees, legal
fees, accountants fees, underwriting discounts and commissions and other
customary fees and expenses and other reasonable costs and expenses
actually incurred in connection therewith other than such amounts
payable to an Affiliate of Borrower.
STM-62598.3
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"Net Worth" shall mean, with respect to any Person, at any
date, the total assets (excluding investments in subsidiaries and any
assets attributable to any issuances by such Person of any Stock on or
after the date hereof) minus the total liabilities, in each case, of
such Person at such date determined in accordance with GAAP.
"Non-Use Fee" shall have the meaning assigned to it in Annex D.
"Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(c).
"Obligations" shall mean all loans, advances, debts,
liabilities and obligations for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such
performance is then required or contingent, or amounts are liquidated or
determinable) owing by any Loan Party to Lender, and all covenants and
duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument,
arising under any of the Loan Documents. This term includes all
p r incipal, interest (including interest which accrues after the
commencement of any case or proceeding referred to in Section 8.1(g) or
(h)), all Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Loan Party under any of the Loan Documents.
"Other Taxes" shall have the meaning assigned to it in Section
1.14(b).
"Parent" has the meaning assigned to it in the first paragraph
of this Agreement.
"Parent Guaranty" shall mean the Parent Guaranty, dated as of
October 15, 1994, attached hereto as Exhibit E executed by Parent in
favor of Lender.
"Patent License" shall mean, with respect to any Person, rights
under any written agreement now owned or hereafter acquired by granting
any right with respect to any invention on which a Patent is in
existence.
"Patents" shall mean, with respect to any Person, all of the
following in which such Person now holds or hereafter acquires any
interest: (a) all letters patent of the United States of America or any
other country, all registrations and recordings thereof, and all
applications for letters patent of the United States of America or any
other country, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office
or agency of the United States of America, any State or Territory
thereof, or any other country, and (b) all reissues, divisions, continu-
ations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is not an individual account
plan, as defined in Section 3(34) of ERISA, and which Borrower or any
Subsidiary of Borrower, if any, or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Permitted Encumbrances" shall mean, for any Loan Party, the
following encumbrances: (a) Liens for taxes or assessments or other
governmental Charges or levies, either not yet due and payable or which
are not payable under Section 5.2; (b) pledges or deposits securing
obligations under workmen's compensation, unemployment insurance, social
security or public liability laws or similar
STM-62598.3
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legislation; (c) pledges or deposits securing bids, tenders, contracts
(other than contracts for the payment of money) or leases to which such
Loan Party is a party as lessee made in the ordinary course of business;
(d) deposits securing public or statutory obligations of such Loan
Party; (e) inchoate and unperfected workers', mechanics', suppliers' or
similar liens arising in the ordinary course of business; (f) carriers',
warehousemen's or other similar possessory liens arising in the ordinary
course of business and securing indebtedness not yet due and payable in
an outstanding aggregate amount not in excess of $100,000 at any time in
the aggregate for all of the Loan Parties; (g) deposits securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which such
Loan Party is a party; (h) any attachment or judgment lien, unless the
judgment it secures shall not, within 30 days after the entry thereof,
have been discharged or execution thereof stayed pending appeal, or
shall not have been discharged within 30 days after the expiration of
any such stay; (i) zoning restrictions, easements, licenses, or other
restrictions on the use of real property or other minor irregularities
in title (including leasehold title) thereto, so long as the same do not
materially impair the use, value, or marketability of such real
property, leases or leasehold estates; and (j) Liens on Schedule 6.7
existing on the Closing Date.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation,
entity or government (whether Federal, state, county, city, municipal or
otherwise, including any instrumentality, division, agency, body or
department thereof).
"Plan" shall mean, with respect to any Loan Party or any ERISA
Affiliate, at any time, an employee benefit plan, as defined in
Section 3(3) of ERISA, which such Loan Party maintains, contributes to
or has an obligation to contribute to on behalf of participants who are
or were employed by any of them.
"Pledge Agreement" shall mean the Pledge Agreement,
substantially in the form of Exhibit I attached hereto, made by Parent
in favor of Lender.
"Proceeds" shall mean all "proceeds," as such term is defined
in the Code and, in any event, shall include, with respect to any
Person: (a) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to such Person from time to time with respect to any
of its property or assets; (b) any and all payments (in any form
whatsoever) made or due and payable to such Person from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of such Person's property or assets by any
governmental body, authority, bureau or agency (or any person acting
under color of governmental authority), (c) any claim of such Person
against third parties (i) for past, present or future infringement of
any Patent or Patent License or (ii) for past, present or future
infringement or dilution of any Trademark or Trademark License or for
injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License; (d) any
recoveries by such Person against third parties with respect to any
litigation or dispute concerning any of such Person's property or
assets; and (e) any and all other amounts from time to time paid or
payable under or in connection with any of such Person's property or
assets, upon disposition or otherwise.
"Property" shall have the meaning assigned to it in Section
5.14.
"Qualified Plan" shall mean, for any Loan Party, an employee
pension benefit plan, as defined in Section 3(2) of ERISA, which is
intended to be tax-qualified under IRC Section 401(a), and which such
Loan Party or any ERISA Affiliate maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were
employed by any of them.
STM-62598.3
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"Regulatory Change" shall mean, with respect to Lender, any
change after the date of this Agreement in Federal, state or foreign law
or regulations (including Regulation D) or the adoption or making after
such date of any interpretation, directive or request applying to a
class of lenders including Lender of or under any Federal, state or
foreign law or regulations (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) by any
court or governmental or monetary authority charged with the inter-
pretation or administration thereof.
"Release" shall mean, as to any Person, any release or any
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, disposing or migration of a
Hazardous Material into the indoor or outdoor environment by such Person
(or by a person under such Person's direction or control), including the
movement of a Hazardous Material through or in the air, soil, surface
water, ground water or property; but shall exclude any release,
discharge, emission or disposal in material compliance with a then
effective permit or order of a Governmental Authority.
"Reorganization" shall have the meaning assigned to it in the
Recitals to this Agreement.
"Reportable Event" shall mean any of the events described in
Section 4043(b) (1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Restricted Payment" shall mean, with respect to any Person:
(a) the declaration or payment of any dividend or the occurrence of any
liability to make any other payment or distribution of cash or other
property or assets in respect of such Person's Stock; (b) any payment on
account of the purchase, redemption, defeasance or other retirement of
such Person's Stock or any other payment or distribution made in respect
thereof, either directly or indirectly; or (c) any payment, loan,
contribution, or other transfer of funds or other property to any
stockholder of such Person.
"Retiree Welfare Plan" shall refer to any Welfare Plan
providing for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of
employment, other than continuation coverage provided pursuant to
Section 4980B of the IRC and at the sole expense of the participant or
the beneficiary of the participant.
"Revolving Credit Advances" shall have the meaning assigned to
it in Section 1.1(a).
"Revolving Credit Commitment" shall mean the commitment of
Lender to make Revolving Credit Advances to Borrower pursuant to Section
1.1 in the aggregate principal amount outstanding not to exceed at any
time $6,000,000, as such amount may be reduced or modified pursuant to
this Agreement.
"Revolving Credit Loan" shall mean the aggregate amount of
Revolving Credit Advances of Lender outstanding at any time.
"Revolving Credit Note" shall mean the promissory note provided
for by Section 1.1(d) and all promissory notes delivered in substitution
or exchange therefor.
"Revolving Credit Rate" shall mean the sum of the Index Rate
plus three and seventy-five one hundredths percent (3.75%) per annum.
STM-62598.3
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"Schedule of Documents" shall mean the schedule attached hereto
as Annex C, including all appendices, exhibits or schedules thereto,
listing certain documents and information to be delivered in connection
with the Loan Documents and the transactions contemplated thereunder.
"Security Agreement" shall mean the Security Agreement, dated
as of October 15, 1994, attached hereto as Exhibit F, between Lender,
Borrower and Parent.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, participation or other equivalents
(regardless of how designated) of or in a corporation, partnership or
equivalent entity whether voting or nonvoting, including common stock,
preferred stock, or any other "equity security" (as such term is defined
in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended).
"Stock Purchase Agreement" shall mean that certain Stock
Purchase and Sale Agreement dated the 11th day of May, 1995 by and among
FFMC, MicroBilt Corporation and Parent.
"Subject Property" shall mean all real property owned, leased
or operated by any Loan Party.
"Subsidiary" shall mean, with respect to any Person: (a) any
corporation of which an aggregate of 50% or more of the outstanding
Stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the time,
Stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency)
is at the time, directly or indirectly, owned legally or beneficially by
such Person and/or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the
vote of 50% or more of such Stock whether by proxy, agreement, operation
of law or otherwise; and (b) any partnership in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether
in the form of voting or participation in profits or capital
contribution) of 50% or more or of which any such Person is a general
partner or may exercise the powers of a general partner.
"Subsidiary Guaranty" shall mean any guaranty executed by a
Subsidiary of Parent in substantially the form of Exhibit G hereto,
including, without limitation, that certain guaranty dated as of
November 1, 1994, made by AMSC in favor of Lender.
"Subsidiary Security Agreement" shall mean any security
agreement entered into between a Subsidiary of Parent and Lender in
substantially the form of Exhibit H hereto, including without
limitation, that certain security agreement, dated as of November 1,
1994, between AMSC and Lender.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges
or withholdings, and all liabilities with respect thereto, excluding
taxes imposed on or measured by the net income of Lender by the United
States of America, the jurisdiction under the laws of which Lender is
organized or the jurisdiction in which Lender's applicable lending
office is located or, in each case, any political subdivision thereof.
"Term Loan" shall mean the Tranche A Term Loan, the Tranche B
Term Loan, the Tranche C Term Loan and the Tranche D Term Loan made by
Lender to Borrower in accordance with the terms of Section 1.2.
"Term Loan Commitment" shall mean, the commitment of Lender to
make the Term Loan to Borrower pursuant to Section 1.2 in the aggregate
principal amount of $8,250,000.
STM-62598.3
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"Term Note" shall mean the promissory note provided for in
Section 1.2(a) and all promissory notes delivered in substitution or
exchange therefor.
"Term Rate" shall mean the sum of the Index Rate, plus four
percent (4%) per annum.
"Termination Date" shall mean the date on which (a) the
Revolving Credit Commitment has been terminated in full, and Lender
shall have no further obligation to make any credit extensions or
financial accommodations hereunder, and (b) all Obligations have been
irrevocably paid in full.
"Title IV Plan" shall mean a Pension Plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA.
"Total Days Sales in Accounts" shall mean, for Borrower and for
any of Borrower's Accounts, at the end of each Fiscal Quarter of
Borrower, the product obtained by multiplying the total number of days
in such Fiscal Quarter by a fraction, the numerator of which is the
average of the three Fiscal Month-end book values of such Accounts (net
of allowance for doubtful accounts) of Borrower for such Fiscal Quarter
as reflected in its books and records and determined in accordance with
established practices consistently applied, and the denominator of which
is the gross sales of Borrower for such Fiscal Quarter that gave rise to
such Accounts as reflected in its books and records and determined in
accordance with established practices consistently applied.
"Trademark License" shall mean, with respect to any Person,
rights under any written agreement now owned or hereafter acquired by
such Person granting any right to use any Trademark or Trademark
registration.
"Trademarks" shall mean, with respect to any Person, all of the
following in which such Person now holds or hereafter acquires any
interest: (a) all common law and statutory trademarks, trade names,
corporate names, business names, trade styles, service marks, logos,
other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles
of like nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or
agency of the United States of America, any State or Territory thereof,
or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all licenses
thereunder and together with the goodwill associated with and symbolized
by such trademark.
"Tranche A Term Loan" shall have the meaning assigned to it in
Section 1.2(a)(i).
"Tranche B Term Loan" shall have the meaning assigned to it in
Section 1.2(a)(ii).
"Tranche C Term Loan" shall have the meaning assigned to it in
Section 1.2(a)(iii).
"Tranche D Term Loan" shall have the meaning assigned to it in
Section 1.2(a)(iv).
"Welfare Plans" shall mean any welfare plan, as defined in
Section 3(1) of ERISA, which is maintained or contributed to by any Loan
Party or any ERISA Affiliate.
"Wholly-owned Subsidiary" shall mean any Subsidiary of which
all of the Stock is owned, directly or indirectly, by Parent.
STM-62598.3
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2. Certain Matters of Construction. Any accounting term used in
the Agreement or the other Loan Documents shall have, unless otherwise
specifically provided therein, the meaning customarily given such term
in accordance with GAAP, and all financial computations thereunder shall
be computed, unless otherwise specifically provided therein, in accord-
ance with GAAP consistently applied. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in
no way be construed to limit the foregoing.
All other undefined terms contained in the Agreement or the
other Loan Documents shall, unless the context indicates otherwise, have
the meanings provided for by the Code as in effect in the State of New
York to the extent the same are used or defined therein. The words
"herein," "hereof" and "hereunder" or other words of similar import
refer to the Agreement as a whole, including the exhibits and schedules
thereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause
contained in this Agreement.
For purposes of this Agreement and the other Loan Documents,
the following additional rules of construction shall apply: (a)
wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural,
and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter; (b) the term
"including" shall not be limiting or exclusive, unless specifically
indicated to the contrary; (c) all references to statutes and related
regulations shall include any amendments of same and any successor
statutes and regulations; and (d) all references to any instruments or
agreements, including references to any of the Loan Documents, shall
include any and all modifications or amendments thereto and any and all
extensions or renewals thereof, in each case, made in accordance with
the terms of the Loan Documents.
STM-62598.3
-19-
ANNEX B
to
CREDIT AGREEMENT
Dated as of February 1, 1996
CASH MANAGEMENT SYSTEM
Borrower and Parent agree to establish and maintain (and to cause
each of its Subsidiaries to establish and maintain), until the
Termination Date, the cash management system described below:
1. No Loan Party shall maintain any deposit, checking,
operating or other bank account except for those accounts identified in
Schedule 3.20. So long as any Revolving Credit Advance is outstanding,
no more than $250,000 in the aggregate may, for any two (2) consecutive
Business Days, be maintained in the accounts of Loan Parties identified
in Schedule 3.20.
2. For so long as any Obligations are outstanding, Loan
Parties shall deposit or, if directed by Lender, cause to be deposited
directly, in either case on the date of receipt thereof, all cash,
checks, notes, drafts or other similar items of payment relating to or
constituting payments made in respect of any and all Collateral into
lock boxes or lock box accounts in Borrower's or Lender's name
(collectively, the "Lock Box Accounts") at the banks set forth in
Attachment I hereto. On or before the Closing Date, Borrower shall have
established a concentration account in Borrower's name (the
"Concentration Account") at the bank set forth in Attachment I hereto.
3. On or before the Closing Date, the banks at which the
Lock Box Accounts are held shall have entered into tri-party lock box
agreements (the "Lock Box Account Agreements") with Lender, Borrower and
Parent, in form and substance acceptable to Lender. Each such Lock Box
Account Agreement shall provide, among other things, that (a) such bank
executing such agreement has no rights of setoff or recoupment or any
other claim against such Lock Box Account, other than for payment of its
service fees and other charges directly related to the administration of
such account, and (b) such bank agrees to sweep on a daily basis all
available amounts in the Lock Box Account to the Concentration Account.
4. On or before the Closing Date, the bank at which the
Concentration Account is held shall have entered into a tri-party
blocked account agreement (the "Concentration Account Agreement") with
Lender, Borrower and Parent, in form and substance acceptable to Lender.
Such Concentration Account Agreement shall provide, among other things,
that (a) such bank executing such agreement has no rights of setoff or
recoupment or any other claim against such Concentration Account, other
than for payment of its service fees and other charges directly related
to the administration of such account, and (b) at any time upon Lender's
request (which Lender may give or refrain from giving in its sole
discretion), such bank agrees to sweep on a daily basis all amounts
received in the Concentration Account to the Collection Account.
5. On the Closing Date (to the extent not previously
operative pursuant to the terms of the Existing Credit Agreement), (a)
the blocked account arrangements shall immediately become operative at
the banks at which the Lock Box Accounts and the Concentration Account
a r e maintained, and (b) subject to clause (b) of paragraph 4
above, amounts outstanding under the Revolving Credit Loan shall
STM-62598.3
-21-
be reduced through daily sweeps, by wire transfer, of the Lock Box
Accounts into the Concentration Account, and of the Concentration
Account into the Collection Account, as provided in this Annex B.
Borrower acknowledges that, at any time after Lender has given the
notice referred to in Paragraph 4(b) above, it shall have no right to
gain access to any of the moneys in the Lock Box Accounts or the
Concentration Account until the Termination Date.
6. Borrower may maintain, in its name, an account or
accounts (the "Disbursement Accounts") at a bank acceptable to Lender
into which Lender shall deposit the proceeds of the Term Loan and, from
time to time, deposit proceeds of Revolving Credit Advances made
pursuant to Section 1.1 for use solely in accordance with the provisions
of Section 1.4. The Disbursement Accounts as of the Closing Date are
listed in Attachment I hereto. If Lender so requires, on or before the
Closing Date, or at any time thereafter, the banks set forth in
paragraph 3 of Attachment I hereto shall have entered into agreements
(the "Disbursement Account Agreements") acknowledging Lender's security
interest in the Disbursement Accounts in form and substance acceptable
to Lender.
7. So long as no Default has occurred, Borrower may amend
Attachment I hereto to add or replace a Lock Box Account, Concentration
Account or Disbursement Account; provided, that (a) Lender shall have
consented to the opening of such account with the relevant bank, and
(b) with respect to any Lock Box Account or the Concentration Account,
at the time of the opening of such account, Borrower and such bank shall
have executed and delivered to Lender a Concentration Account Agreement,
in form and substance satisfactory to Lender, and with respect to any
Disbursement Account, at the time of the opening of such account,
Borrower and such bank shall have executed and delivered to Lender a
Disbursement Account Agreement. Borrower shall close any of its
accounts (and establish replacement accounts in accordance with the
foregoing sentence) within 30 days of notice from Lender that the
creditworthiness of the bank holding such accounts is no longer
acceptable in Lender's sole judgment. The Lock Box Accounts, the
Disbursement Account and the Concentration Account shall be cash
collateral accounts with all cash, checks and other similar items of
payment in such accounts securing payment of the Obligations, and in
which Borrower shall have granted a first priority perfected Lien to
Lender for the benefit of Lender pursuant to the Security Agreement.
8. All amounts deposited in the Collection Account shall be
deemed received by Lender in accordance with the terms of Section 1.10
and shall be applied (and allocated) by Lender in accordance with the
terms of Section 1.10. In no event shall any amount be so applied
unless and until such amount shall have been credited in immediately
available funds to the Collection Account.
9. Borrower hereby constitutes and irrevocably appoints
Lender its true and lawful attorney, with full power of substitution, to
demand, collect, receive and sue for all amounts which may become due or
payable under the Lock Box Accounts and the Concentration Account, and
to execute all withdrawal receipts or other orders for Borrower, in its
own name or in Borrower's name or otherwise, which Lender deems
necessary or appropriate to protect and preserve its right, title and
interest in such accounts.
10. Upon request of Lender, Borrower shall forward to Lender,
on a daily basis, evidence of the deposit of all items of payment
received by Borrower into the Lock Box Accounts and copies of all such
c h ecks and other items, together with a statement showing the
application of those items relating to payments on Accounts to
outstanding Accounts and a collection report with regard thereto in form
and substance satisfactory to Lender. So long as no Default has
occurred and is continuing, in making any such
STM-62598.3
-22-
request, Lender shall consider (i) whether Borrower's financial
condition necessitates the receipt by Lender of such information to
monitor and protect the Collateral, and (ii) the amount of Excess
Borrowing Availability.
STM-62598.3
-23-
ATTACHMENT I TO ANNEX B
LIST OF LOCK BOX ACCOUNTS, CONCENTRATION ACCOUNT AND DISBURSEMENT
ACCOUNT
1. Lock Box Accounts.
C.I.S. Technologies - Lockbox 3267-04-4
Liberty Tulsa (Oxford Branch)
P.O. Box One
Tulsa, OK 74193
(918) 586-1000
2. Concentration Account.
C.I.S. Technologies - Operating 3053-04-8
Liberty Tulsa (Oxford Branch)
P.O. Box One
Tulsa, OK 74193
(918) 586-1000
3. Disbursement Account.
C.I.S. Technologies 639
Peoples National Bank
320 N. Main
Kingfisher, OK 73750
(405) 375-5911
STM-62598.3
-24-
ANNEX C
to
CREDIT AGREEMENT
Dated as of February 1, 1996
SCHEDULE OF CLOSING DOCUMENTS
The effectiveness of this Agreement and the obligation of
Lender to make the Tranche D Term Loan is subject to satisfaction of the
condition precedent that Lender shall have received the following, each,
unless otherwise specified below, dated the Closing Date, in form and
substance satisfactory to Lender and its counsel, unless otherwise
specified below:
I. PRINCIPAL LOAN DOCUMENTS.
(a) Credit Agreement. The Credit Agreement duly executed by
Borrower and Parent.
(b) Notes. A duly executed Revolving Credit Note and Term Note to
the order of Lender.
II. COLLATERAL DOCUMENTS.
(a) Pledge Agreement. The Pledge Agreement duly executed by Parent
together with delivery to Lender of:
i) Certificates or other evidences of ownership representing
the Pledged Shares (as defined therein) and appropriate
undated stock powers (or the equivalent thereof) executed
in blank; and
ii) Evidence that all action necessary or, in the opinion of
and at the request of Lender, desirable to perfect and
protect the security interests created by the Pledge
Agreement has been taken.
(b) Recordings and Filings. Evidence of the completion of all
recordings and filings as may be necessary or, in the opinion
of and at the request of Lender, desirable to perfect or
continue to perfect the Lien created by the Collateral
Documents; and
(c) Evidence of Insurance. Evidence that the insurance required by
the terms hereof is in full force and effect.
III. THIRD PARTY AGREEMENTS.
(a) Cash Management System. To the extent not previously
delivered to Lender in connection with the Existing Credit Agreement,
duly executed Lock Box Account Agreements, Concentration Account
Agreement and Disbursement Account Agreement as contemplated by Annex B.
STM-62598.3
-1-
IV. DOCUMENTS DELIVERED BY BORROWER.
(a) Board Resolutions and Incumbency Certificates. A
certificate of the Secretary or an Assistant Secretary of:
i) Parent certifying (A) the resolutions adopted by
the Board of Directors of Parent approving each Loan Document to be
entered into in connection with this Agreement to which Parent is a
party and the transactions contemplated hereby and thereby, (B) all
documents evidencing other necessary corporate action by Parent and
required governmental and third party approvals with respect to each
such Loan Document, and (C) the names and true signatures of the
authorized officers of Parent; and
ii) Borrower certifying (A) the resolutions adopted by
the Board of Directors of such Borrower approving the Loan Documents
to be entered into in connection with this Agreement to which
Borrower is a party and the transactions contemplated thereby, (B)
all documents evidencing other necessary corporate action by Borrower
and required governmental and third party approvals with respect to
the Loan Documents to which it is a party, and (C) the names and true
signatures of the authorized officers of Borrower.
(b) Articles of Incorporation; By-Laws and Good Standing
Certificates. Each of the following documents:
i) the certificate of incorporation of each of Parent,
Borrower, and AMSC as in effect on the Closing Date, certified by the
Secretary of State or other appropriate authority of the State of its
incorporation as of a recent date, and the by-laws of Parent,
Borrower, and AMSC as in effect on the Closing Date, certified by the
Secretary, Assistant Secretary or other appropriate officer or
director of Parent, Borrower and AMSC; and
ii) a good standing certificate for each of Parent,
Borrower and AMSC from the Secretary of State or other appropriate
authority of the State of its incorporation as of a recent date.
(c) Financial Statements. Copies of the financial statements
described in Schedule 3.4.
V. LEGAL OPINIONS.
(a) Legal Opinion. An opinion of Tom Noulles, Chief Legal
Counsel to Parent and Borrower, in form and substance satisfactory to
Lender and its special counsel.
STM-62598.3
-2-
ANNEX D
to
CREDIT AGREEMENT
Dated as of February 1, 1996
SCHEDULE OF CERTAIN FEES
1. Closing Fee. Borrower shall pay to Lender, for the account of
Lender, a closing fee of $125,000 (the "Closing Fee") on the Closing
Date.
2. Non-Use Fee. Borrower shall pay to Lender, for the account of
Lender, an unused facility fee (the "Non-Use Fee"), equal to one-half of
one percent (0.5%) per annum on the average unused daily balance of the
Revolving Credit Commitment, payable in arrears (i) for the preceding
calendar month, on the first Business Day of each calendar month
commencing December 1, 1994, and (ii) on the Commitment Termination
Date. All computations of the foregoing fees shall be made by Lender on
the basis of a three hundred sixty (360) day year, and for the actual
number of days occurring in the period for which such fee is payable.
3. Collateral Examination Charge. Borrower shall pay to Lender,
for Lender's own account, a collateral examination charge of $500 per
day per individual in connection with any field examination conducted by
Lender.
STM-62598.3
-1-
ANNEX E
to
CREDIT AGREEMENT
Dated as of February 1, 1996
FINANCIAL STATEMENTS AND NOTICES
1. As frequently as Lender may request for any period, and in any
event no later than the tenth (10th) Business Day of each Fiscal Month:
(a) a Borrowing Base Certificate as of the last day of the
preceding period;
(b) at the request of Lender, a collateral report for
Borrower with respect to (i) all additions and reductions (both cash and
non-cash) with respect to Borrower's Accounts and (ii) reports of
Borrower's Accounts other than Eligible Accounts; and
2. By no later than the tenth (10th) Business Day of each Fiscal
Month, for Borrower, a monthly aged Accounts trial balance by Account
Debtor and a schedule detailing ineligible Accounts for adjustments to
the Borrowing Base, and a reconciliation of such aged Accounts trial
balance to Borrower's general ledger for the previous Fiscal Month and
monthly financial statement, in each case accompanied by such supporting
detail and documentation as Lender may request.
3. At the request of Lender, by no later than thirty (30) days
after the end of each Fiscal Month:
(a) an internally prepared income statement and statement of
cash flows for such Fiscal Month and that portion of the current Fiscal
Year ending as of the close of such Fiscal Month, and balance sheet as
at the end of such Fiscal Month, for Parent on a consolidated basis,
which financial and other information shall provide comparisons to the
prior year's equivalent period, both on a monthly and year-to-date
basis, and to budget; and
(b) a certification of the Chief Executive Officer or Chief
Financial Officer of Parent and Borrower that all such financial
statements are complete and correct and present fairly the financial
position, the results of operations and the changes in financial
position of Parent as at the end of such Fiscal Month and for the period
then ended, and that there was no Default in existence as of such time
or specifying those Defaults of which he or she was aware.
4. Within forty-five (45) days after the close of each Fiscal
Quarter:
(a) copies of the quarterly unaudited financial statements of
Parent determined on a consolidated and consolidating basis, each
consisting of a balance sheet and statement of operations, retained
earnings and cash flow, setting forth in comparative form the figures
for the same Fiscal Quarter of the previous Fiscal Year, which financial
statements shall be prepared in accordance with GAAP and
STM-62598.3
-1-
accompanied by a statement in reasonable detail showing the calculations
used in determining compliance with the financial covenants set forth in
Annex G;
(b) a report of the Chief Executive Officer or the Chief
Financial Officer of Parent setting forth management's discussion and
analysis of all current income statement, balance sheet and cash flow
financial trends; and
(c) a certification of the Chief Executive Officer or Chief
Financial Officer of Parent that all such financial statements are
complete and correct and present fairly in accordance with GAAP the
financial position, the results of operations and the changes in
financial position of such Parent as at the end of such Fiscal Quarter
and for the period then ended, and that there was no Default in
existence as of such time or specifying those Defaults of which he or
she was aware.
5. Within ninety (90) days after the close of each Fiscal Year:
(a) copies of the annual audited financial statements of
Parent determined on a consolidated and consolidating basis (together
with an auditor's compilation thereof), each consisting of a balance
sheet and statement of operations, retained earnings and cash flow,
setting forth in comparative form the figures for the previous Fiscal
Year, which financial statements shall be prepared in accordance with
GAAP, certified without qualification by Coopers & Lybrand or another
firm of independent certified public accountants of recognized national
standing selected by Parent and acceptable to Lender, and accompanied by
(i) a statement in reasonable detail showing the calculations used in
determining Parent's and Borrower's compliance with the financial
covenants set forth in Annex G, and (ii) a report from such accountants
to the effect that in connection with their audit examination, they did
not become aware of any Default, or specifying those Defaults, of which
they became aware;
(b) a report of the Chief Executive Officer or the Chief
Financial Officer of Parent setting forth management's discussion and
analysis of all current income statement, balance sheet and cash flow
financial trends;
(c) the annual letter from each Loan Parties' Chief Executive
Officer or Chief Financial Officer to such accountants in connection
with their audit examination detailing such Loan Party's contingent
liabilities and material litigation, ERISA, labor and environmental
matters; and
(d) a certification of the Chief Executive Officer or Chief
Financial Officer of Parent that all such financial statements are
complete and correct and present fairly in accordance with GAAP the
financial position, the results of operations and the changes in
financial position of such Loan Party as at the end of such Fiscal Year
and for the period then ended, and that there was no Default in
existence as of such time or specifying those Defaults of which he or
she was aware.
6. Not later than January 31 of each Fiscal Year, a final
operating plan which shall include a quarterly budget (including a
Capital Expenditures budget) for the Loan Parties acceptable to Lender
for such Fiscal Year approved by the applicable Loan Party's board of
directors and, in each case, which includes the following:
(a) projected balance sheets for such Fiscal Year, on a
quarterly basis:
STM-62598.3
-2-
(b) projected cash flow statements and, with respect to
Borrower, forecasted Excess Borrowing Availability, including summary
details of cash disbursements (including Capital Expenditures) for such
Fiscal Year, on a quarterly basis;
(c) projected statements of operations for such Fiscal Year,
on a quarterly basis; and
(d) projected annual balance sheet, cash flow statements, and
statements of operations of Parent on a consolidated basis for such
Fiscal Year; together with a description of major assumptions used in
generating such balance sheets, cash flows and income statements, and
operating plan, and other appropriate supporting details as requested by
Lender.
7. As soon as practicable, but in any event within two (2)
Business Days after Parent or Borrower becomes aware of the existence of
any Default, or any development or other information that would have a
Material Adverse Effect, telephonic or telegraphic notice specifying the
nature of such Default or development or information, including the
anticipated effect thereof, which notice shall be promptly confirmed in
writing within five (5) days.
8. Upon Lender's request, copies of all federal, state, local and
foreign tax returns, information returns and reports in respect of
income, franchise or other taxes on or measured by income (excluding
sales, use or like taxes) filed by any Loan Party thereof.
9. Promptly upon their becoming available, copies of any final
registration statements and the regular, periodic and special reports,
if any, which any Loan Party thereof shall have filed with the
S e c urities and Exchange Commission (or any governmental agency
substituted therefor) or any national securities exchange.
10. Promptly upon the mailing thereof to the shareholders of Parent
generally, copies of all financial statements, reports and proxy
statements so mailed.
11. As soon as possible, and in any event within 10 days after
Parent or Borrower knows or has reason to believe that any of the events
or conditions specified below with respect to any Plan or Multiemployer
Plan has occurred or exists, a statement signed by the chief financial
officer of such Loan Party setting forth details respecting such event
or condition and the action, if any, that such Loan Party or any ERISA
Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to PBGC by such Loan
Party or any ERISA Affiliate with respect to such event or condition):
(a) any reportable event, as defined in Section 4043(b) of
ERISA and the regulations issued thereunder, with respect to a Plan, as
to which PBGC has not by regulation waived the requirement of Section
4043(a) of ERISA that it be notified within 30 days of the occurrence of
such event (provided that a failure to meet the minimum funding standard
of Section 412 of the IRC or Section 302 of ERISA shall be a reportable
event regardless of the issuance of any waivers in accordance with
Section 412(d) of the IRC);
(b) the filing under Section 4041 of ERISA of a notice of
intent to terminate any Plan or the termination of any Plan;
STM-62598.3
-3-
(c) the institution by PBGC of proceedings under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by Borrower, any Subsidiary thereof
or any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer Plan;
(d) the complete or partial withdrawal by any Loan Party or
any ERISA Affiliate under Section 4201 or 4204 of ERISA from a
Multiemployer Plan, or the receipt by any Loan Party or any ERISA
A f f iliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under Section 4041A of
ERISA; and
(e) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against any Loan Party or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed within
30 days.
12. Such other reports and information respecting any Loan Party's
businesses, financial condition or prospects as Lender may, from time to
time, reasonably request.
STM-62598.3
-4-
ANNEX F
to
CREDIT AGREEMENT
Dated as of February 1, 1996
INSURANCE REQUIREMENTS
I. Coverage Requirements. The insurance policies maintained by Loan
Parties provide for, without limitation, the following insurance
coverage:
(a) "All Risk" physical damage on all of the Loan Parties'
tangible, real and personal property and assets, wherever located, and
covers, without limitation, fire and extended coverage, boiler and
machinery coverage, flood, earthquake, theft, burglary, explosion,
collapse, and all other hazards and risks ordinarily insured against by
owners or users of such properties in similar businesses. All policies
of insurance on such real and personal property contain an endorsement,
in form and substance acceptable to Lender, showing loss payable to
Lender (Form 438 BFU or its equivalent). Such endorsement, or an
independent instrument furnished to Lender, provides that the insurance
companies will give Lender at least thirty (30) days prior written
notice before any such policy or policies of insurance shall be altered
or canceled and that no act or default of any Loan Party or any other
Person shall affect the right of Lender to recover under such policy or
policies of insurance in case of loss or damage;
(b) Comprehensive general liability insurance on an
"occurrence basis" against claims for personal injury, bodily injury and
property damage with a minimum limit of $1,000,000 per occurrence and
$2,000,000 in the aggregate. Such coverage includes, without
limitation, premises/operations, broad form contractual liability,
underground, explosion and collapse hazard, independent contractors,
broad form property coverage, products and completed operations
liability;
(c) Statutory limits of worker's compensation insurance which
includes employee's occupational disease and employer's liability in the
amount of $500,000 for each accident or occurrence;
(d) Automobile liability insurance for all owned, non-owned
or hired automobiles against claims for personal injury, bodily injury
and property damage with a minimum combined single limit of $1,000,000
per occurrence;
(e) Umbrella insurance of $10,000,000 per occurrence and
$10,000,000 in the aggregate; and
(f) Crime insurance with respect to employee dishonesty in an
amount not less than $250,000.
All of such policies (i) shall have deductibles acceptable to
Lender (it being understood that current deductibles are acceptable);
(ii) shall provide that Lender will be notified by written notice at
l e ast thirty (30) days prior to such policy's cancellation or
modification; (iii) are in full force and effect; (iv) are in form and
with insurers recognized as adequate by Lender (insurers with an A.M.
Best rating lower
STM-62598.3
-1-
than "A" will not be considered adequate); and (v) provide coverage of
such risks and for such amounts as is customarily maintained for
businesses of the scope and size of Lender and as otherwise acceptable
to Lender. Each property insurance policy contains a clause which
provides that Lender's interest under such policy shall not be
invalidated by any act or omission to act of, or any breach of warranty
by, the insured, or by any change in the title, ownership or possession
of the insured property, or by the use of the property for purposes more
hazardous than is permitted in such policy. The Loan Parties have
delivered to Lender a certificate of insurance that evidences the
existence of such policy of insurance, payment of all premiums therefor
and compliance with all provisions of this Agreement.
STM-62598.3
-2-
ANNEX G
to
CREDIT AGREEMENT
Dated as of February 1, 1996
FINANCIAL COVENANTS
1. Fixed Charge Coverage Ratio. Parent and its Subsidiaries, on a
consolidated basis, shall maintain for each four Fiscal Quarter period,
commencing with the four Fiscal Quarter period ending on September 30,
1995, a Fixed Charge Coverage Ratio for such period of not less than the
amount for such period set forth below:
For Four Fiscal Minimum
Quarter Period Ending Ratio
September 30, 1995 1.9 to 1.0
December 31, 1995 1.9 to 1.0
March 31, 1996 1.9 to 1.0
June 30, 1996 1.9 to 1.0
September 30, 1996 1.9 to 1.0
December 31, 1996 1.9 to 1.0
March 31, 1997 1.9 to 1.0
June 30, 1997 1.9 to 1.0
September 30, 1997 1.9 to 1.0
2. Minimum Net Worth. Parent shall maintain as at the end of each
Fiscal Quarter Net Worth of the Parent and its Subsidiaries on a
consolidated basis of not less than the amount for such period set forth
below:
Fiscal Quarter
Ending Minimum Net Worth
September 30, 1995 27,225,000
December 31, 1995 27,600,000
March 31, 1996 27,975,000
June 30, 1996 28,350,000
September 30, 1996 28,725,000
December 31, 1996 29,100,000
March 31, 1997 29,475,000
June 30, 1997 29,850,000
September 30, 1997 30,225,000
STM-62598.3
-1-
3. Total Days Sales in Accounts. Total Days Sales in Accounts as
at the end of each Fiscal Quarter shall not exceed (i) with respect to
CIS Accounts, 85, (ii) with respect to HBA Accounts (other than Charge
Recovery Accounts), 65, and (iii) with respect to Charge Recovery
Accounts, 275.
4. Current Ratio. Parent and its Subsidiaries on a consolidated
basis shall maintain a ratio of Current Assets to Current Liabilities as
at the end of each Fiscal Quarter of not less than 1.75 to l.
STM-62598.3
-2-
SCHEDULE 3.4
to
CREDIT AGREEMENT
Dated as of February 1, 1996
FINANCIAL STATEMENTS
All of the following balance sheets and statements of operations and
cash flows of the Parent and its Subsidiaries on a consolidated basis,
copies of which are attached hereto and have been furnished by the
Parent to Lender prior to the date of this Agreement, have been, except
as noted therein, prepared in conformity with GAAP and present fairly
the financial position of the Parent and its Subsidiaries on a
consolidated basis in each case as at the dates thereof, and the results
of operations and cash flows for the periods then ended (as to the
unaudited interim financial statements, subject to normal year-end audit
adjustments and the absence of footnotes):
(i) the unaudited consolidated and consolidating balance
sheet of the Parent as at September 30, 1995 and the related
consolidated and consolidating statement of operations and cash flows
for the nine Fiscal Months ending September 30, 1994; and
(ii) the audited and certified consolidated and consolidating
balance sheet of the Parent as of December 31, 1994 and the consolidated
and consolidating statement of operations and cash flows for the year
then ended, with the opinion thereon of Coopers & Lybrand L.L.P.
STM-62598.3