LOAN AGREEMENT
Dated as of January 30, 1997
INNODATA CORPORATION, a Delaware corporation, having its principal place of
business at 95 Rockwell Place, Brooklyn, New York 11217 (the "Borrower"), and
THE CHASE MANHATTAN BANK, a New York banking corporation, having an office at
One Pierrepont Plaza, Brooklyn, New York 11201-2791 (the "Bank") hereby agree
as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the following
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terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ADJUSTED LIBOR RATE" means, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded, if not already a whole
multiple of 1/100 of one (.01%) percent to the nearest 1/100 of one (.01%)
percent) equal to the product of (a) the LIBOR Rate and (b) Statutory
Reserves.
"AFFILIATE" means, as to any Person (i) a Person which directly or indirectly
controls, or is controlled by, or is under common control with, such Person;
(ii) a Person which directly or indirectly beneficially owns or holds five
(5%) percent or more of any class of voting stock of, or five (5%) percent or
more of the equity interest in, such Person; or (iii) a Person five (5%)
percent or more of the voting stock of which, five (5%) or more of the equity
interest of which, is directly or indirectly beneficially owned or held by
such Person. The term control means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"AGREEMENT" means this Loan Agreement, as amended, supplemented or modified
from time to time.
"BOARD OF GOVERNORS" means the Board of Governors of the Federal Reserve
System of the United States of America.
"BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in New York City, provided that, if the relevant day
relates to a Eurodollar Loan, a Eurodollar Interest Period, or notice with
respect to a Eurodollar Loan, the term "Business Day" shall mean a day on
which dealings in dollar deposits are also carried on in the London Interbank
Market and banks are open for business in London.
"CAPITAL LEASE" means a lease which has been or should be, in accordance with
GAAP, capitalized on the books of the lessee.
"COLLATERAL" means all property which is subject or is to be subject to the
Lien granted by the Security Agreement.
"COMMITMENT" means the Bank's obligation, subject to the terms and conditions
hereof, to make Revolving Credit Loans to the Borrower pursuant to the terms
and conditions of this Agreement and to convert the outstanding balance of
such Revolving Credit Loans to the Converted Term Loan on the Conversion
Date.
"CONSOLIDATED AFFILIATES" means, as to any Person from time to time, those
Affiliates of such Person which are consolidated with such Person in the
financial statements delivered pursuant to Section 5.01 (b).
"CONSOLIDATED CAPITAL EXPENDITURES" means, as to any Person, the aggregate
amount of any expenditures (including purchase money Liens) by such Person and
its Consolidated Affiliates for assets (including fixed assets acquired under
Capital Leases) which it is contemplated will be used or usable in fiscal
years subsequent to the year of acquisition.
"CONSOLIDATED CURRENT ASSETS" means, as to any Person, at any date, the
aggregate amount of all assets of such Person and its Consolidated Affiliates
which would be properly classified as current assets at such date, but
excluding any prepaid items such as rent or insurance and deferred assets, all
computed and consolidated in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as to any Person, the aggregate
amount of all liabilities of such Person and its Consolidated Affiliates
(including tax and other proper accruals) which would be properly classified
as current liabilities, including the current portion of the outstanding
principal amount of the Notes, all computed and consolidated in accordance
with GAAP.
"CONSOLIDATED EBITDA" shall mean, with respect to the Borrower and its
Consolidated Affiliates for any period of determination, the sum of (i) net
income excluding any non-operating income (i.e., other than in the Borrower's
ordinary course of business), (ii) Interest Expense, (iii) depreciation and
amortization and (iv) Federal, state and local income taxes, in each case of
the Borrower and its Consolidated Affiliates on a consolidated basis for such
period, computed in accordance with GAAP.
"CONSOLIDATED SUBORDINATED DEBT" means, as to any Person, all of the
Subordinated Debt of such Person and its Consolidated Affiliates, computed and
consolidated in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means, as to any Person, the excess of (i)
the sum of such Person's Consolidated Total Assets plus such Person's
Consolidated Subordinated Debt, including the current portion thereof, less
all intangible assets properly classified as such in accordance with GAAP
including, but without limitation, patents, patent rights, trademarks, trade
names, franchises, copyrights, licenses (other than licenses for purchased
software used in such Person's ordinary course of business, in amounts not
exceeding $1,300,000.00 in the aggregate), permits and goodwill, over (ii)
such Person's Consolidated Total Liabilities.
"CONSOLIDATED TOTAL ASSETS" means, as to any Person, the aggregate book value
of the assets of such Person and its Consolidated Affiliates after all
appropriate adjustments in accordance with GAAP (including, without
limitation, reserves for doubtful receivables, obsolescence, depreciation and
amortization and excluding the amount of any write-up or revaluation of any
asset).
"CONSOLIDATED TOTAL LIABILITIES" means, as to any Person, all of the
liabilities of such Person and its Consolidated Affiliates, including all
items which, in accordance with GAAP would be included on the liability side
of the balance sheet (other than capital stock, capital surplus and retained
earnings) computed and consolidated in accordance with GAAP.
"CONSOLIDATED TOTAL UNSUBORDINATED LIABILITIES" means, as to any Person, the
Consolidated Total Liabilities less Consolidated Subordinated Debt of such
Person and its Consolidated Affiliates, computed and consolidated in
accordance with GAAP.
"CONSOLIDATED UNFUNDED CAPITAL EXPENDITURES" means, as to any Person,
Consolidated Capital Expenditures made by such Person without the incurrence
of Debt; provided, however, that 100% of the purchase price of Eligible
Equipment financed with Revolving Credit Loans shall be deemed a funded
capital expenditure.
"CONVERSION DATE" means December 31, 1997.
"CONVERTED TERM LOAN" shall have the meaning assigned in Section 2.05 hereof.
"CONVERTED TERM LOAN MATURITY DATE" means the third anniversary of the
Conversion Date.
"CONVERTED TERM LOAN NOTE" means a promissory note of the Borrower payable to
the order of the Bank, in substantially the form of Exhibit B annexed hereto,
evidencing the indebtedness of the Borrower to the Bank resulting from the
Converted Term Loan made by the Bank to the Borrower pursuant to this
Agreement.
"DEBT" means, as to any Person, (i) all indebtedness or liability of such
Person for borrowed money; (ii) indebtedness of such Person for the deferred
purchase price of property or services (including trade obligations); (iii)
obligations of such Person as a lessee under Capital Leases; (iv) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (v) obligations of such Person under letters of credit issued for the
account of such Person; (vi) obligations of such Person arising under
acceptance facilities; (vii) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business) and other contingent
obligations to purchase, to provide funds for payment, to supply funds to
invest in any other Person, or otherwise to assure a creditor against loss;
(viii) obligations secured by any Lien on property owned by such Person
whether or not the obligations have been assumed; and (ix) all other
liabilities recorded as such, or which should be recorded as such, on such
Person's financial statements in accordance with-GAAP.
"DEBT SERVICE COVERAGE RATIO" shall mean, with respect to the Borrower and its
Consolidated Affiliates on a consolidated basis for the applicable period of
determination, the ratio of (A) Consolidated EBITDA less Consolidated Unfunded
Capital Expenditures for the period of determination to (B) the sum of (i) the
aggregate of payments of principal with respect to indebtedness for borrowed
money (other than indebtedness relating to the Line of Credit or other
indebtedness obtained in compliance with Section 5.02 (a) (x) hereof during
the period of determination), plus (ii) the aggregate of payments of principal
on Capitalized Lease obligations during the period of determination, plus
(iii) cash Interest Expense during the period of determination, plus (iv) cash
dividend payments made by the Borrower and, without duplication, Consolidated
Affiliates during the period of determination; provided, however, that
dividends paid to or from the Borrower to or from Consolidated Affiliates, as
the case may be, shall not be considered cash dividend payments for the
purposes of this clause (iv).
"DEFAULT" means any of the events specified in Section 6.01 of this Agreement,
whether or not any requirement for notice or lapse of time or any other
condition has been satisfied.
"DOLLARS" AND THE SIGN "$" mean lawful money of the United States of America.
"ELIGIBLE EQUIPMENT" means any item of equipment which, after giving effect to
the purchase thereof through the use of proceeds of a Loan to be made
hereunder, will be owned by the Borrower free and clear of any Lien, except
the Bank's Lien under the Security Agreement, and which will meet each of the
following criteria:
(a) such equipment constitutes personalty and "equipment", and neither
constitutes nor includes, fixtures, inventory, chattel paper, accounts or
contract rights as such terms are defined in the Uniform Commercial Code of
New York as in effect from time to time;
(b) such equipment is not (i) a motor vehicle; (ii) the subject of any
lease or conditional sales arrangement; or (iii) intended for use primarily
for personal, family or household purposes;
(c) such equipment is not "consumer goods" as such terms are defined in
the Uniform Commercial Code of New York as in effect from time to time;
(d) such equipment at all times will be located in either the Philippines,
Sri Lanka, India, the United Kingdom or the State of New York, California,
Maryland or New Jersey, and the Bank (i) has received notice of such location
pursuant to Section 2.01 hereof, and (ii) continues to receive reports of the
location of such equipment outside the United States as part of the Borrower's
quarterly reporting requirements pursuant to Section 5.01 (b) (ii) hereof;
(e) such equipment is not interrelated or interconnected (in a manner
similar to an attachment or accession) to other equipment which is not
Collateral;
(f) such equipment is in good condition, repair and working order and is
insured in accordance with this Agreement and the Security Agreement;
(g) with respect to any software forming a component of equipment, the
Borrower has a license or a right to use such software, which license or right
by its terms may be assigned to the Bank pursuant to the Security Agreement
and/or an exercise by the Bank of its rights thereunder;
(h) such equipment is not aircraft or aircraft parts; and
(i) the Bank is the holder of a first priority security interest in the
Borrower's interest therein, and such security interest is perfected against
all Persons and is subject to no other Liens.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, the regulations promulgated thereunder and the published
interpretations thereof as in effect from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not incorporated)
which together with any other Person would be treated, with such Person, as a
single employer under Section 4001 of ERISA.
"EURODOLLAR LOAN" means a Loan bearing interest at a rate based on the
Adjusted LIBOR Rate in accordance with the provisions of Article II hereof.
"EVENT OF DEFAULT" means any of the events specified in Section 6.01 of this
Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"FIXED RATE LOANS" means Eurodollar Loans.
"GAAP" means Generally Accepted Accounting Principles.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means those generally accepted
accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through the
Financial Accounting Standards Board ("FASB") or through other appropriate
boards or committees thereof and which are consistently applied for all
periods so as to properly reflect the financial condition, operations and cash
flows of a Person, except that any accounting principle or practice required
to be changed by the FASB (or other appropriate board or committee of the
FASB) in order to continue as a generally accepted accounting principle or
practice may be so changed. Any dispute or disagreement between the Borrower
and the Bank relating to the determination of Generally Accepted Accounting
Principles shall, in the absence of manifest error, be conclusively resolved
for all purposes hereof by the written opinion with respect thereto, delivered
to the Bank, of the independent accountants selected by the Borrower and
approved by the Bank for the purpose of auditing the periodic financial
statements of the Borrower.
"HAZARDOUS MATERIALS" includes, without limit, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or
toxic substances, or related materials defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act, as amended (42 U.S.C. Sections 9601 et. seq.), and in the
regulations adopted and publications promulgated pursuant thereto, or any
other federal, state or local environmental law, ordinance, rule or
regulation.
"INTEREST DETERMINATION DATE" means, in the case of a Fixed Rate Loan, the
last day of the applicable Interest Period.
"INTEREST EXPENSE" means, with respect to the Borrower and its Consolidated
Affiliates for the applicable period of determination thereof, the interest
expense of the Borrower and its Consolidated Affiliates during such period
determined on a consolidated basis in accordance with GAAP, and shall in any
event include, without limitation (i) the amortization of debt discounts, (ii)
the amortization of all fees payable in connection with the incurrence of Debt
to the extent included in interest expense, and (iii) the portion of any
Capital Lease obligations allocable to interest expense.
"INTEREST PAYMENT DATE" means (i) as to each Fixed Rate Loan, the first
Business Day of each month during the applicable Interest Period and the last
day of the applicable Interest Period and (ii) as to each Prime Rate Loan, the
first Business Day of each month.
"INTEREST PERIOD" means (i) as to any Eurodollar Loan, the period commencing
on the date of such Eurodollar Loan and ending on the numerically
corresponding day in the calendar month that is one, two, three, six or twelve
months thereafter; as the Borrower may elect (or, if there is no numerically
corresponding day, on the last Business Day of such month), and (ii) if any
Interest Period would end on a day which is not a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day, (iii) no
Interest Period in respect of a Fixed Rate Loan representing a portion of the
principal required to be paid in accordance with the terms hereof may be
selected unless the outstanding Prime Rate Loans and Fixed Rate Loans for
which the relevant Interest Periods end on or prior to the date of such
payment are in an aggregate amount which will be sufficient to make such
payment, (iv) interest shall accrue from and including the first day of such
Interest Period to but excluding the date of payment of such interest, and (v)
no Interest Period of particular duration with respect to a Eurodollar Loan
may be selected by the Borrower if the Bank determines, in its sole
discretion, that Eurodollar Loans with such maturities are not generally
available.
"INVESTMENT" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made
to others (except for current trade and customer accounts receivable for
services rendered in the ordinary course of business and payable in accordance
with customary trade terms in the ordinary course of business) and any
purchase of (i) any security of another Person or (ii) any business or
undertaking of any Person or any commitment or option to make any such
purchase, or any other investment.
"LIBOR RATE" means the rate (rounded upwards, if not already a whole multiple
of 1/16 of one (1%) percent, to the next higher of 1/16 of one (1%) percent)
at which dollar deposits approximately equal in principal amount to the
requested Eurodollar Loan and for a maturity equal to the requested Interest
Period are offered in immediately available funds to the London office of the
Bank by leading banks in the London Interbank Market for Eurodollars at
approximately 11:00 a.m., London time, three (3) Business Days prior to the
commencement of such Interest Period.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory
or other), or preference, priority, or other security agreement or
preferential arrangement, charge, or encumbrance of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction to evidence any of the foregoing.
"LINE OF CREDIT" shall have meaning ascribed thereto in Section 5.02(a) (x)
hereof.
"LOAN" OR "LOANS" means the Revolving Credit Loans or the Converted Term Loan
or any or all of the same as the context may require and includes Prime Rate
Loans and Fixed Rate Loans.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security Agreement and
any other document executed or delivered pursuant to this Agreement, the Swap
Documentation or the Line of Credit.
"MATERIAL ADVERSE CHANGE" means, as to any Person, (i) a material adverse
change in the financial condition, business, operations, properties or results
of operations of such Person or (ii) any event or occurrence which could have
a material adverse effect on the ability of such Person to perform its
obligations under the Loan Documents.
"MULTIEMPLOYER PLAN" means a Plan described in Section 4001(a) (3) of ERISA
which covers employees of the Borrower or any ERISA Affiliate.
"NOTE" OR "NOTES" means the Revolving Credit Note or the Converted Term Loan
Note or any or all of the same as the context may require.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.
"PERMITTED INVESTMENTS" means, after giving effect to Investments made by the
Borrower in accordance with the terms and conditions hereof (i) direct
obligations of the United States of America or any governmental agency
thereof, or obligations guaranteed by the United States of America, provided
that such obligations mature within one year from the date of acquisition
thereof; (ii) time certificates of deposit having a maturity of one year or
less issued by any commercial bank organized and existing under the laws of
the United States or any state thereof and having aggregate capital and
surplus in excess of $1,000,000,000.00; (iii) money market mutual funds having
assets in excess of $2,500,000,000; (iv) commercial paper rated not less than
P-1 or A-1 or their equivalent by Moody's Investor Services, Inc. or Standard
& Poor's Corporation, respectively; or (v) tax exempt securities rated Prime 2
or better by Moody's Investor Services, Inc. or A-1 or better by Standard &
Poor's Corporation.
"PERSON" means an individual, partnership, corporation (including a business
trust), joint stock -company, trust, unincorporated association, joint venture
or other entity or a federal, state or local government, or a political
subdivision thereof or any agency of such government or subdivision.
"PLAN" means any employee benefit plan established, maintained, or to which
contributions have been made by the Borrower or any ERISA Affiliate.
"PRIME RATE" means the rate per annum announced by the Bank from time to time
as its prime rate in effect at its principal office on a 360-day basis; each
change in the Prime Rate shall be effective on the date such change is
announced to become effective.
"PRIME RATE LOAN" means a Loan bearing interest at the Prime Rate plus the
margin as set forth in Section 2.08 hereof.
"PROHIBITED TRANSACTION" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time.
"REGULATION D" means Regulation D of the Board of Governors, as the same may
be amended and in effect from time to time.
"REGULATION G" means Regulation G of the Board of Governors, as the same may
be amended and in effect from time to time.
"REGULATION T" means Regulation T of the Board of Governors, as the same may
be amended and in effect from time to time.
"REGULATION U" means Regulation U of the Board of Governors, as the same may
be amended and in effect from time to time.
"REGULATION X" means Regulation X of the Board of Governors, as the same may
be amended and in effect from time to time.
"REPORTABLE EVENT" means any of the events set forth in Section 4043 of ERISA.
"REVOLVING CREDIT LOANS" shall have the meaning assigned to such term in
Section 2.01 of this Agreement.
"REVOLVING CREDIT NOTE" means a promissory note of the Borrower payable to the
order of the Bank, in substantially the form of Exhibit A annexed hereto,
evidencing the aggregate indebtedness of the Borrower to the Bank resulting
from Revolving Credit Loans made by the Bank to the Borrower pursuant to this
Agreement.
"SECURITY AGREEMENT" means a security agreement, in substantially the form of
Exhibit C annexed hereto, to be executed and delivered pursuant to the terms
of this Agreement.
"STATUTORY RESERVES" means a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one
minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency, or supplemental reserves)
expressed as a decimal established by the Board of Governors and any other
banking authority to which the Bank is subject with respect to the Adjusted
LIBOR Rate for Eurocurrency Liabilities (as defined in Regulation D). Such
reserve percentages shall include, without limitation, those imposed under
such Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or offsets
which may be available from time to time to the Bank under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"SUBORDINATED DEBT" means Debt of any Person, the repayment of which the
obligee has agreed in writing, on terms which have been approved by the Bank
in advance in writing, shall be subordinate and junior to the rights of the
Bank with respect to Debt owing from such Person to the Bank.
"SUBSIDIARY" means, as to any Person, any corporation, partnership or joint
venture whether now existing or hereafter organized or acquired: (i) in the
case of a corporation, of which a majority of the securities having ordinary
voting power for the election of directors (other than securities having such
power only by reason of the happening of a contingency) are at the time owned
by such Person and/or one or more Subsidiaries of such Person or (ii) in the
case of a partnership or joint venture of which a majority of the partnership
or other ownership interests are at the time owned by such Person and/or more
of its Subsidiaries.
"SWAP DOCUMENTATION" shall have the meaning ascribed thereto in Section
3.01(i) hereof.
SECTION 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
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computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding".
SECTION 1.03. ACCOUNTING TERMS. Except as otherwise herein specifically
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provided, each accounting term used herein shall have the meaning given to it
under GAAP. Without limiting the generality of the foregoing, the term
"current portion" shall mean that portion of the amount to be received or
expended, as the case may be, during the immediately next succeeding four (4)
consecutive fiscal quarterly periods reflected in the financial statements
having been most recently delivered to the Bank in accordance with the terms
and conditions hereof.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. THE REVOLVING CREDIT LOANS. The Bank agrees, on the date of this
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Agreement, and on the terms and conditions and in reliance upon the
representations and warranties hereinafter set forth in this Agreement, to
lend to the Borrower prior to the Conversion Date such amounts as the Borrower
may request from time to time (individually, a "Revolving Credit Loan" or
collectively, the "Revolving Credit Loan"), provided, however, that the
aggregate amount of such Revolving Credit Loans outstanding at any one time
shall not exceed One Million ($1, 000,000.00) Dollars (the "Commitment"), or
such lesser amount of the Commitment as may be reduced pursuant to the terms
hereof. Revolving Credit Loans borrowed and repaid may not be reborrowed and
the Commitment shall be reduced by the amount of such repaid Revolving Credit
Loans. The Bank shall have no obligation to respond to a notice given under
Section 2.02 hereof or to make a Revolving Credit Loan unless (1) the Bank
shall have received, at least 3 days prior to the proposed date of the
requested Revolving Credit Loan, true and complete copies of purchase invoices
(in form and substance satisfactory to the Bank) in respect of the equipment
which is to be purchased with the proceeds of such requested Revolving Credit
Loan; (2) the Borrower demonstrates to the Bank's satisfaction that such
equipment meets all of the criteria of Eligible Equipment including, without
limitation, the name of the country outside the United States or the name(s)
of the State(s) and counties within the United States within which such
equipment will be located; and (3) the Revolving Credit Loan to be used to pay
up to 80% of the purchase price of such equipment will constitute the only
Debt incurred with respect to such equipment, and each request by the Borrower
for a Revolving Credit Loan hereunder shall constitute the Borrower's
representation and warranty that the substance of each of clauses (2) and (3)
above, and all information provided in compliance therewith, is true and
complete in all respects.
Each Revolving Credit Loan shall be a Prime Rate Loan or a Fixed Rate Loan (or
a combination thereof) as the Borrower may request subject to and in
accordance with Section 2.02. The Bank may at its option make any Eurodollar
Loan by causing a foreign branch or affiliate to make such Loan, provided that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of the Revolving Credit Note.
Subject to the other provisions hereof, Revolving Credit Loans of more than
one type may be outstanding at the same time.
SECTION 2.02. NOTICE OF REVOLVING CREDIT LOANS.
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(a) The Borrower shall give the Bank irrevocable written, telex,
telephonic (immediately confirmed in writing) or facsimile notice (i) at least
three (3) Business Days prior to each Revolving Credit Loan comprised in whole
or in part of one or more Eurodollar Loans, and (ii) prior to 11:00 a.m. on
the day of each Revolving Credit Loan consisting solely of a Prime Rate Loan.
Such notice shall specify the date of such borrowing, the amount thereof, and
whether such Loan is to be (or what portion or portions thereof are to be) a
Prime Rate Loan or a Fixed Rate Loan and, if such Loan or any portion
therefore is to consist of one or more Fixed Rate Loans, the principal amounts
thereof and Interest Period or Interest Periods with respect thereto. If no
election as to a type of Loan is specified in such notice, such Loan (or
portion thereof as to which no election is specified) shall be a Prime Rate
Loan. If no election as to the Interest Period is specified in such notice
with respect to any Eurodollar Loan, the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(b) The Borrower may elect, subject to the terms and conditions hereof, to
continue a Fixed Rate Loan or a portion thereof from one Interest Period into
a subsequent Interest Period by giving the Bank at least three (3) Business
Days' prior written, telex, telephonic (immediately confirmed in writing) or
facsimile irrevocable notice of its intention to do so (subject to
availability). If no such election is made, or if an election is made to
continue a Fixed Rate Loan at the end of its Interest Period when such Loans
are not available, and the applicable Fixed Rate Loan is not otherwise
continued or converted, such Fixed Rate Loan shall automatically be converted
to a Prime Rate Loan on the expiration of such Interest Period.
(c) No Interest Period may be selected with respect to a Loan which would,
in either case, end later than the Conversion Date or the Converted Term Loan
Maturity Date.
SECTION 2.03. REVOLVING CREDIT NOTE. Each Revolving Credit Loan shall be in
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the minimum principal amount, and in minimum multiples thereafter, of One
Hundred Thousand ($100,000.00) Dollars, except that if a Prime Rate Loan so
requested shall exhaust the remaining available Commitment, such Prime Rate
Loan may be in an amount equal to the amount of the remaining available
Commitment, and shall be evidenced by the Revolving Credit Note of the
Borrower. The Revolving Credit Note shall be dated the date hereof and be in
the principal amount of One Million ($1,000,000.00) Dollars, and shall mature
on the Conversion Date, at which time the entire outstanding principal balance
and all interest thereon shall be due and payable. The Revolving Credit Note
shall be entitled to the benefits and subject to the provisions of this
Agreement.
At the time of the making of each Revolving Credit Loan and at the time of
each payment of principal thereon, if any, the holder of the Revolving Credit
Note is hereby authorized by the Borrower to make a notation on the schedule
annexed to the Revolving Credit Note of the date and amount, and the type and
Interest Period of the Revolving Credit Loan or payment, as the case may be.
Failure to make a notation with respect to any Revolving Credit Loan shall not
limit or otherwise affect the obligation of the Borrower hereunder or under
the Revolving Credit Note with respect to such Revolving Credit Loan, and any
payment of principal on the Revolving Credit Note by the Borrower shall not be
affected by the failure to make a notation thereof on said schedule.
SECTION 2.04. CONVERSION AND CONTINUATION OF LOANS. The Borrower shall have
--------------------------------------
the right, at any time, on three (3) Business Days' prior irrevocable written
notice to the Bank (which notice, to be effective, must be received by the
Bank not later than 11:00 a.m., New York City time, on the third (3rd)
Business Day preceding the date of any continuation or conversion (i) to
continue any Fixed Rate Loan or portion thereof into a subsequent Interest
Period (subject to availability) or (ii) to convert a Prime Rate Loan into a
Fixed Rate Loan (subject to availability), subject to the following:
(a) no Event of Default shall have occurred and be continuing at the time
of any proposed conversion or continuation;
(b) in the case of a continuation or conversion of fewer than all Loans,
the aggregate principal amount of each Fixed Rate Loan continued or converted
shall be in the minimum amount of $100,000 and in minimum multiples of
$100,000;
(c) each continuation or conversion shall be effected by the Bank applying
the proceeds of the new Loan to the Loan (or portion thereof) being continued
or converted;
(d) if the new Loan made as a result of a continuation or conversion shall
be a Fixed Rate Loan, the first Interest Period with respect thereto shall
commence on the date of continuation or conversion;
(e) each request for a Eurodollar Loan which shall fail to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month; and
(f) in the event that the Borrower shall not give notice to continue a
Fixed Rate Loan as provided above, such Loan shall automatically be converted
into a Prime Rate Loan at the expiration of the then current Interest Period.
SECTION 2.05. CONVERSION DATE: MAKING OF CONVERTED TERM LOAN.
-----------------------------------------------------
(a) The Borrower shall be obligated to pay to the Bank on the Conversion
Date the then outstanding principal amount of the Revolving Credit Loans and
all accrued but unpaid interest thereon. The Bank agrees, upon the terms and
subject to the conditions hereof including, without limitation, the conditions
of Section 3.03 hereof, and provided that no Default or Event of Default shall
have occurred and be continuing, to make a converted term loan (the "Converted
Term Loan") to the Borrower, on the Conversion Date in an amount equal to the
lesser of the Commitment or the aggregate principal amount of Revolving Credit
Loans then outstanding under the Revolving Credit Note.
(b) The Bank shall make the Converted Term Loan by crediting the amount
thereof towards the repayment of the principal amount of Revolving Credit
Loans outstanding under the Revolving Credit Note.
(c) The Converted Term Loan shall bear interest, at the Borrower's option,
at a rate per annum equal to an interest rate based upon the Eurodollar Rate
or upon the Prime Rate, in each case, as set forth in Section 2.08 hereof.
SECTION 2.06. CONVERTED TERM LOAN NOTE. The Converted Term Loan shall be
----------------------------
evidenced by the Converted Term Loan Note of the Borrower. The Converted Term
Loan Note shall be dated the Conversion Date and shall mature on the Converted
Term Loan Maturity Date at which time the entire outstanding principal balance
and all interest thereon shall be due and payable. The Converted Term Loan
Note shall be entitled to the benefits and subject to the provisions of this
Agreement.
SECTION 2.07. REPAYMENT OF CONVERTED TERM LOAN NOTE. The principal balance of
--------------------------------------
the Converted Term Loan Note together with interest at the applicable interest
rate(s) shall be payable in thirty-six (36) monthly installments, due on the
first Business Day of each month beginning on the first such day after the
Conversion Date, and continuing on the first Business Day of each calendar
month thereafter, each such installment being in an amount equal to 1/36th of
the principal amount of the Converted Term Loan.
SECTION 2.08. PAYMENT OF INTEREST.
----------------------
(a) In the case of a Prime Rate Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to 3/4% in excess of the Prime Rate (which interest
rate shall change when and as the Prime Rate changes). Such interest shall be
payable on each Interest Payment Date, commencing with the first Interest
Payment Date after the date of such Prime Rate Loan. Any change in the rate of
interest on a Note due to a change in the Prime Rate shall take effect as of
the date of such change in the Prime Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a rate
per annum (computed on the basis of the actual number of days elapsed over a
year of 360 days) equal to the Adjusted LIBOR Rate plus three and one half of
one (3 1/2%) percent. Interest shall be payable on each Interest Payment Date,
commencing with the first Interest Payment Date after the date of such
Eurodollar Loan and on each Interest Determination Date. The Bank shall
determine the rate of interest applicable to each requested Eurodollar Loan
for each Interest Period at 11:00 a.m., New York City time, or as soon as
practicable thereafter, three (3) Business Days prior to the commencement of
such Interest Period and shall notify the Borrower of the rate of interest so
determined. Such determination shall be conclusive absent manifest error.
SECTION 2.09. USE OF PROCEEDS. The proceeds of the Revolving Credit Loans
------------------
shall be used by the Borrower to finance not more than 80% of the purchase
price of Eligible Equipment covered by invoices delivered to the Bank prior to
the making of a Revolving Credit Loan, all pursuant to Section 2.01 hereof.
The proceeds of the Converted Term Loan shall be used by the Borrower
exclusively to satisfy existing obligations to the Bank under the Revolving
Credit Note. No part of the proceeds of any Loan may be used for any purpose
that directly or indirectly violates or is inconsistent with, the provisions
of Regulations G, T, U or X.
SECTION 2.10. COMMITMENT FEE; DEFAULT FEE. The Borrower agrees to pay to the
----------------------------
Bank from the date of this Agreement through and including the Conversion Date
on the first Business Day of each month a commitment fee computed at the rate
of one eighth of one (1/8%) percent per annum (computed on the basis of the
actual number of days elapsed over 360 days) on the average daily unused
amount of the Commitment, such commitment fee being payable for the calendar
month, or part thereof, preceding the payment date. Additionally, upon the
occurrence of any Event of Default hereunder, the Borrower shall pay the Bank
$1,000.00 per each such occurrence, irrespective of a decision by the Bank to
waive, or refrain from waiving, such Event of Default.
SECTION 2.11. REDUCTION OF COMMITMENT. Upon at least three (3) Business Days'
------------------------
prior written notice, the Borrower may irrevocably elect to have the unused
Commitment terminated in whole or reduced in part provided, however, that any
such partial reduction shall be in a minimum amount of One Hundred Thousand
($100,000.00) Dollars, or whole multiples thereof. The Commitment, once
terminated or reduced, shall not be reinstated without the express written
approval of the Bank.
SECTION 2.12. PREPAYMENT.
-----------
(a) The Borrower shall have the right at any time and from time to time to
prepay any Prime Rate Loan, in whole or in part, without premium or penalty on
the same day on which telephonic notice is given to the Bank (immediately
confirmed in writing) of such prepayment provided, however, that each such
prepayment shall be on a Business Day and shall be in an aggregate principal
amount which is an integral multiple of $100,000.
(b) The Borrower shall have the right at any time and from time to time,
subject to the indemnity and reimbursement provisions hereof, to prepay any
Eurodollar Loan, in whole or in part, on three (3) Business Days prior
irrevocable written notice to the Bank, provided, however, that such
prepayment may only be made on an Interest Determination Date.
(c) The Borrower shall have the right at any time and from time to time,
subject to the indemnity and reimbursement provisions hereof, to prepay the
Converted Term Loan, in whole or in part upon at least three (3) Business Days
prior irrevocable written notice to the Bank; provided, however, that each
such prepayment shall be on a Business Day and shall be in an aggregate
principal amount which is an integral multiple of $100,000.
(d) The notice of prepayment shall set forth the prepayment date and the
principal amount of the Loan being prepaid and shall be irrevocable and shall
commit the Borrower to prepay such Loan by the amount and on the date stated
therein. All prepayments shall be accompanied by accrued interest on the
principal amount being prepaid to the date of prepayment. Each prepayment
shall be applied first towards unpaid interest on the amount being prepaid and
then towards the principal in whole or partial prepayment of Loans by the
Borrower. In the absence of such specification, amounts being prepaid in
respect of Revolving Credit Loans shall be applied first to any Prime Rate
Loan then outstanding. Eurodollar Loans may be prepaid only in accordance with
the provisions of paragraph (b) above. In the case of the Converted Term Loan,
all partial prepayments shall be applied to installments of principal of the
Converted Term Loan in the inverse order of maturity.
SECTION 2.13. REIMBURSEMENT BY BORROWER.
----------------------------
(a) The Borrower shall reimburse the Bank upon the Bank's demand for any
loss incurred or to be incurred by it in the reemployment of the funds
released by any prepayment or conversion of a Fixed Rate Loan required or
permitted by this Agreement, if such Fixed Rate Loan is prepaid or converted
(whether voluntarily or by acceleration) other than on the last day of the
Interest Period for such Fixed Rate Loan, or if the Borrower fails to borrow
(or is not able to borrow because of an Event of Default or for any other
reason hereunder) after having given the Bank notice of such borrowing. Such
loss shall be the product of (i) the difference as determined by the Bank
between (x) the rate of interest applicable to such Fixed Rate Loan being
prepaid for the remainder of the Interest Period and (y) the rate of interest
payable on United States Treasury obligations in an amount and with a maturity
similar to such Fixed Rate Loan times (ii) the aggregate amount of principal
so prepaid or converted times (iii) the number of days remaining in the
applicable Interest Period divided by 360.
(b) The Borrower shall reimburse the Bank upon the Bank's demand for any
loss, cost or expense incurred or to be incurred by it (in the Bank's
determination) as a result of any prepayment or conversion (whether
voluntarily or by acceleration) of any Eurodollar Loan other than on the last
day of the Interest Period for such Loan, or if the Borrower fails to borrow
the Eurodollar Loan (or is not able to borrow because of an Event of Default
or for any other reason hereunder) after having given the Bank irrevocable
notice of such borrowing. Such reimbursement shall include, but not be limited
to, any loss, cost or expense incurred by the Bank in obtaining, liquidating
or redeploying any funds used or to be used in making or maintaining the
Eurodollar Loan.
SECTION 2.14. STATUTORY RESERVES. It is understood that the cost to the Bank
-------------------
of making or maintaining Eurodollar Loans may fluctuate as a result of the
applicability of, or change in, Statutory Reserves. The Borrower agrees to pay
to the Bank from time to time, such amounts as shall be necessary to
compensate the Bank for the portion of the cost of making or maintaining any
Eurodollar Loans made by it resulting from any such Statutory Reserves, or
change therein, it being understood that the rates of interest applicable to
Eurodollar Loans hereunder have been determine don the basis of Statutory
Reserves in effect at the time of determination of the Adjusted LIBOR Rate and
that such rates do not reflect costs imposed on the Bank in connection with
any change to such Statutory Reserves. It is agreed that for purposes of this
paragraph the Eurodollar Loans made hereunder shall be deemed to constitute
Eurocurrency Liabilities as defined in Regulation D and to be subject to the
reserve requirements of Regulation D without benefit or credit of proration,
exemptions or offsets which might otherwise be available to the Bank from time
to time under Regulation D.
SECTION 2.15. INCREASED COSTS. If, after the date of this Agreement, the
-----------------
adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(a) subjects the Bank to any tax with respect to its Commitment, the Notes
or on any amount paid or to be paid under or pursuant to this Agreement or the
Notes (other than any tax measured by or based upon the overall net income of
the Bank);
(b) changes the basis of taxation of payments to the Bank of any amounts
payable hereunder (other than any tax measured by or based upon the overall
net income to the Bank);
(c) imposes, modifies or deems applicable any reserve, capital adequacy or
deposit requirements against any assets held by, deposits with or for the
account of, or loans made by, the Bank; or
(d) imposes on the Bank any other condition affecting its Commitment, the
Notes or this Agreement; and the result of any of the foregoing is to increase
the cost to the Bank of maintaining this Agreement or the Commitment or making
the Loans, or to reduce the amount of any payment (whether of principal,
interest or otherwise) receivable by the Bank or to require the Bank to make
any payment on or calculated reference to the gross amount of any sum received
by it, in each case by an amount which the Bank in its sole judgment deems
material, then and in any such case:
(i) the Bank shall promptly advise the Borrower of such event, together
with the date thereof, the amount of such increased cost or reduction or
payment and the way in which such amount has been calculated; and
(ii) the Borrower shall pay to the Bank, within ten (10) days after the
advice referred to in subsection (a) hereinabove, such an amount or amounts as
will compensate the Bank for such additional cost, reduction or payment for so
long as the same shall remain in effect.
The determination of the Bank as to additional amounts payable shall be
conclusive evidence of such amounts absent manifest error.
SECTION 2.16. CAPITAL ADEQUACY. If the Bank shall have determined that the
------------------
applicability of any law, rule, regulation or guideline, or the adoption after
the date hereof of any other law, rule, regulation or guideline regarding
capital adequacy, or any change in any of the foregoing or in the
interpretation or administration of any of the foregoing by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by the Bank (or any lending office of
the Bank) or the Bank's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the Bank's capital or on the capital
of the Bank's holding company, if any, as a consequence of its obligations
hereunder to a level below that which the Bank or the Bank's holding company
could have achieved but for such adoption, change or compliance (taking into
consideration to the Bank's policies and the policies of the Bank's holding
company with respect to capital adequacy) by an amount deemed by the Bank to
be material, then from time to time the Borrower shall pay to the Bank such
additional amount or amounts as will compensate the Bank or the Bank's holding
company for any such reduction suffered.
SECTION 2.17. CHANGE IN LEGALITY.
---------------------
(a) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, if any change after the date hereof in law, rule, regulation,
guideline or order, or in the interpretation thereof by any governmental
authority charged with the administration thereof, shall make it unlawful for
the Bank to make or maintained any Fixed Rate Loan or to give effect to its
obligations as contemplated hereby with respect to a Fixed Rate Loan, then, by
written notice to the Borrower, the Bank may:
(1) declare that Fixed Rate Loans will not thereafter be made hereunder,
whereupon the Borrower shall be prohibited from requesting such Fixed Rate
Loans hereunder unless such declaration is subsequently withdrawn; and
(2)require that, subject to the provisions hereof, all outstanding Fixed
Rate Loans made by it be converted to a Prime Rate Loan, whereupon all of such
Fixed Rate Loans shall be automatically converted to a Prime Rate Loan as of
effective date of such notice as provided in paragraph (b) below.
(b) For purposes hereof, a notice to the Borrower by the Bank pursuant to
paragraph (a) above shall be effective, for the purposes of paragraph (a)
above, if lawful, and if any Fixed Rate Loans shall then be outstanding, on
the last day of the then current Interest Period; otherwise, such notice shall
be effective on the date of receipt by the Borrower.
SECTION 2.18. INDEMNITY. The Borrower will indemnify the Bank against any loss
----------
or expense which the Bank may sustain or incur as a consequence of any default
in payment or prepayment of the principal amount of any Loan or any part
thereof or interest accrued thereon, as and when due and payable (at the due
date thereof, by notice of prepayment or otherwise), or the occurrence of any
Event of Default, including but not limited to any loss or expense sustained
or incurred in liquidating or employing deposits from third parties acquired
to affect or maintain such Loan or any part thereof. The Bank shall provide to
the Borrower a statement, signed by an officer of the Bank, explaining the
amount of any such loss or expense (including the calculation of such amount),
which statement shall, in the absence of manifest error, be conclusive with
respect to the parties hereto.
SECTION 2.19. CHANGE IN LIBOR; AVAILABILITY OF RATES. In the event, and on
-----------------------------------------
each occasion, that, on the day the interest rate for any Fixed Rate Loan is
to be determined, for (i) a requested Eurodollar Loan, the Bank shall have
determined (which determination, absent manifest error, shall be conclusive
and binding upon the Borrower) that dollar deposits in the amount of the
principal amount of the requested Eurodollar Loan are not generally available
in the London Interbank Market, or that the rate at which such dollar deposits
are being offered will not adequately and fairly reflect the cost to the Bank
of making or maintaining the principal amount of such Eurodollar Loan during
such Interest Period, such Eurodollar Loan shall be unavailable, or (ii) the
Converted Term Loan, the Bank shall have determined (which determination,
absent manifest error, shall be conclusive and binding upon the Borrower) that
reasonable means do not exist for ascertaining the rate of interest to be
applied to such Converted Term Loan, Loans based on such rate (or rates) shall
be unavailable. The Bank shall, as soon as practicable thereafter, give
written, telex or telephonic notice of such determination of unavailability to
the Borrower. Any request by the Borrower for an unavailable Fixed Rate Loan
shall be deemed to have been a request for a Prime Rate Loan. After such
notice shall have been given and until the Bank shall have notified the
Borrower that the circumstances giving rise to such notice no longer exist,
each subsequent request for an unavailable Fixed Rate Loan shall be deemed to
be a request for a Prime Rate Loan.
SECTION 2.20. AUTHORIZATION TO DEBIT BORROWER'S ACCOUNT. The Bank is hereby
-------------------------------------------
authorized to debit the Borrower's account maintained with the Bank for all
scheduled payments of principal and/or interest under the Notes and the
commitment fee to be paid periodically pursuant to the terms and conditions
hereof.
SECTION 2.21. LATE CHARGES, DEFAULT INTEREST.
----------------------------------
(a) If the Borrower shall default in the payment of any principal
installment of or interest on any Loan or any other amount becoming due
hereunder, the Borrower shall pay interest, to the extent permitted by law, on
such defaulted amount up to the date of actual payment (after as well as
before judgment) at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to two (2%) percent in
excess of the interest rate otherwise in effect with respect to the type of
Loan in connection with which the required payments have not been made.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Borrower shall pay interest on all amounts owing under the Notes
and this Agreement (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to two (2%) percent in excess of the interest rate otherwise in
effect hereunder.
SECTION 2.22. PAYMENTS.All payments by the Borrower hereunder or under the
---------
Notes shall be made in U.S. dollars in immediately available funds at the
office of the Bank by 12:00 noon, New York City time on the date on which such
payment shall be due. Interest on the Notes shall accrue from and including
the date of each Loan to but excluding the date on which such Loan is paid in
full or refinanced with a Loan of a different type.
SECTION 2.23. INTEREST ADJUSTMENTS.
----------------------
(a) If the provisions of this Agreement or the Notes would at any time
otherwise require payment by the Borrower to the Bank of any amount of
interest in excess of the maximum amount then permitted by applicable law the
interest payments shall be reduced to the extent necessary so that the Bank
shall not receive interest in excess of such maximum amount. To the extent
that, pursuant to the foregoing sentence, the Bank shall receive interest
payments hereunder or under the Notes in an amount less than the amount
otherwise provided, such deficit (hereinafter called the "Interest Deficit")
will cumulate and will be carried forward (without interest) until the
termination of this Agreement. Interest otherwise payable to the Bank
hereunder and under the
(b) Notes for any subsequent period shall be increased by such maximum
amount of the Interest Deficit that may be so added without causing the Bank
to receive interest in excess of the maximum amount then permitted by
applicable law.
(c) The amount of the Interest Deficit shall be treated as a prepayment
penalty and paid in full at the time of any optional prepayment by the
Borrower to the Bank of all outstanding Loans. The amount of the Interest
Deficit relating to the Notes at the time of any complete payment of the Notes
at that time outstanding (other than an optional prepayment thereof) shall be
cancelled and not paid.
SECTION 2.24. PARTICIPATIONS, ETC. The Bank shall have the right at any time,
--------------------
with or without notice to the Borrower, to sell, assign, transfer or negotiate
all or any part of the Revolving Credit Note or the Converted Term Loan Note
or the Commitment or grant participations therein to one or more banks
(foreign or domestic, including an affiliate of the Bank), insurance companies
or other financial institutions, pension funds or mutual funds. The Borrower
agrees and consents to the Bank providing financial and other information
regarding its business and operations to prospective purchasers or
participants and further agree that to the extent that the Bank should sell,
assign, transfer or negotiate all or any part of the Notes or the Commitment,
the Bank shall be forever released and discharged from its obligations under
the Notes, the Commitment and this Agreement to the extent same is sold,
assigned, transferred or negotiated.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. CONDITION PRECEDENT TO THE MAKING OF THE INITIAL REVOLVING
--------------------------------------------------------------
CREDIT LOAN. The obligation of the Bank to make the initial Revolving Credit
--------
Loan contemplated by this Agreement is subject to the condition precedent that
the Bank shall have received from the Borrower on or before the date of this
Agreement the following, each dated such day, in form and substance
satisfactory to the Bank and its counsel:
(a) The Revolving Credit Note duly executed and payable to the order of
the Bank and receipt of the Bank of an origination fee in the amount of
$5,000.00.
(b) Certified (as of the date of this Agreement) copies of the resolutions
of the Board of Directors of the Borrower authorizing the Loans and
authorizing and approving this Agreement and the other Loan Documents and the
execution, delivery and performance thereof and certified copies of all
documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the other Loan
Documents.
(c) A certificate of the Secretary or an Assistant Secretary (attested to
by another officer) of the Borrower certifying: (i) the names and true
signatures of the officer or officers of the Borrower authorized to sign this
Agreement, the Revolving Credit Note, the Converted Term Loan Note and other
Loan Documents to be delivered hereunder on behalf of the Borrower; and (ii) a
copy of the Borrower's by-laws as complete and correct on the date of this
Agreement.
(d) Copies of the certificate of incorporation and all amendments thereto
of the Borrower certified by the Secretary of State (or equivalent officer) of
the state of incorporation of the Borrower and a certificate of existence and
good standing with respect to the Borrower from the Secretary of State (or
equivalent officer) of any state in which the Borrower is authorized to do
business.
(e) An opinion of Oscar Folger, Esq., counsel for the Borrower as to
certain matters referred to in Article IV hereof and as to such other matters
as the Bank or its counsel may reasonably request.
(f) From the Borrower, an executed Security Agreement giving to the Bank a
first priority perfected security interest in the Eligible Equipment to which
the initial Revolving Credit Loan relates and a first priority security
interest in all other assets of the Borrower including, but not limited to,
all personal property, equipment, fixtures, inventory, accounts, chattel paper
and general intangibles all whether now owned or hereafter acquired (the
"Collateral"); provided, however, that the Bank's first priority position in
the Collateral shall not relate to the assets of the Borrower more fully
described on Schedule 5.02 (a) annexed hereto under the heading: "Existing
Liens" until the obligations underlying such existing liens on such assets
(hereinafter, the "Existing Liens") are satisfied.
(g) From the Borrower, (i) a lien search (effective the date of the
initial Revolving Credit Loan) conducted in (A) the offices of the New York
Secretary of State and the Secretary of State of each of California, New
Jersey and Maryland and (B) the Clerk of Kings County, New York and the clerk
of each county within the States of California, New Jersey and Maryland within
which Eligible Equipment to be financed with proceeds of Loans will be
located, in each case demonstrating that no Liens exist against the Borrower
except for Existing Liens; (ii) the invoices required pursuant to Section 2.01
hereof in respect of the Eligible Equipment to which the initial Revolving
Credit Loan relates; and (iii) UCC-1 filings perfecting the Bank's first
priority security interest in the Collateral including, without limitation,
Bank's first priority security interest in such Eligible Equipment.
(h) Receipt and review by the Bank to its satisfaction of (A) a property
damage insurance policy for the for the Collateral, in the amount of the
greater of (1) the replacement value of the Collateral or (2) the principal
amount outstanding under the Loans, naming the Bank as loss payee with an
insurance company acceptable to the Bank. The policies shall provide for
thirty (30) days prior notice to the Bank of cancellation or change.
(i) The Bank shall have received documentation in form and substance
satisfactory to the Bank in its sole discretion (collectively, the "Swap
Documentation"), fully executed by the Borrower, providing for one or more
interest rate swap transactions.
(j) The following statements shall be true and the Bank shall have
received a certificate signed by the President or Chief Financial Officer of
the Borrower dated the date hereof, stating that:
(1) The representations and warranties contained in Section 2.01 and
Article IV of this Agreement are true and correct on and as of such date; and
(2) No Default or Event of Default has occurred and is continuing, or
would result from the making of the initial Revolving Credit Loan.
(k) All legal matters incident to this Agreement and the Loan transactions
contemplated hereby shall be satisfactory to Cullen and Dykman, counsel to the
Bank.
(l) The Bank's counsel shall have been paid their fees and disbursements
relating to this Agreement, the Loan Documents and the transactions
contemplated hereby and thereby.
(m) Receipt by the Bank of such other approvals, opinions or documents as
the Bank or its counsel may reasonably request.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL REVOLVING CREDIT LOANS. The
---------------------------------------------------------
obligations of the Bank to make each Revolving Credit Loan (including the
initial Revolving Credit Loan) shall be subject to the further condition
precedent that on the date of such Revolving Credit Loan:
The following statements shall be true and the Bank shall have received a
certificate signed by the President or the Chief Financial Officer of the
Borrower dated the date of such Revolving Credit Loan, stating that:
(a) The representations and warranties contained in Section 2.01 and
Article IV of this Agreement are true and correct on and as of such date as
though made on and as of such date; and
(b) No Default or Event of Default has occurred and is continuing, or
would result from such Revolving Credit Loan.
The Borrower shall have compiled with each of the terms and conditions of
Section 2.01 relating to the Collateral for such Revolving Credit Loan
including, without limitation, the delivery of an amendment to the Security
Agreement and UCC-3 amendment statements, in each case, referring to, and
describing in sufficient detail, such Collateral and providing invoices
relating thereto, and the Borrower shall have demonstrated to the Bank's
satisfaction that such Collateral meets the criteria of Eligible Equipment and
that, after giving effect to the making of such Revolving Credit Loan, the
Bank will have a first priority security interest in the Collateral located
within the United States.
The Bank shall have received such other approvals, opinions or documents
as the Bank may reasonably request.
SECTION 3.03. CONDITIONS PRECEDENT TO THE CONVERTED TERM LOAN. The obligation
------------------------------------------------
of the Bank to make the Converted Term Loan shall be subject to the condition
precedent that the Bank shall have received on or before the Conversion Date
all of the documents required by Sections 3.01 and 3.02 and each of the
following, in form and substance satisfactory to the Bank and its counsel:
The Converted Term Loan Note duly executed by the Borrower:
An opinion of Oscar Folger, Esq., counsel for the Borrower, dated the
Conversion Date, as to such matters as the Bank or its counsel may reasonably
request;
Officer's Certificate, Etc. The following statements shall be true and
----------------------------
the Bank shall have received a certificate signed by the President or the
Chief Financial Officer of the Borrower dated the Conversion Date stating
that:
(a) The representations and warranties contained in Section 2.01 and
Article IV of this Agreement are true and correct on and as of the Conversion
Date as though made on and as of such date; and
(b) No Default or Event of Default has occurred and is continuing, or
would result from the making of the Converted Term Loan.
Additional Documentation. The Bank shall have received such other
-------------------------
approvals, opinions, or documents as the Bank or its counsel may reasonably
--
request.
ARTICLE IV
REPRESENTATION AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES. On the date hereof, on each date
that the Borrower requests a Revolving Credit Loan and on the Conversion Date
the Borrower represents and warrants as follows:
(a) On the date hereof, the only Subsidiaries of the Borrower are those
set forth on Schedule 4.01(a) annexed hereto, which Schedule accurately sets
forth with respect to each such Subsidiary, its name and address, any other
addresses at which it conducts business, its state of incorporation and each
other jurisdiction in which it is qualified to do business and the identity
and share holdings of its stockholders. Except as set forth on Schedule
4.01(a), all of the issued and outstanding shares of each Subsidiary which are
owned by the Borrower are owned by the Borrower free and clear of any
mortgage, pledge, lien or encumbrance. Except as set forth on Schedule
4.01(a), there are not outstanding any warrants, options, contracts or
commitments of any kind entitling any Person to purchase or otherwise acquire
any shares of common or capital stock or other equity interest of the Borrower
or any Subsidiary of the Borrower, nor are there outstanding any securities
which are convertible into or exchangeable for any shares of the common or
capital stock of the Borrower or any Subsidiary of the Borrower.
(b) The Borrower is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation and has
the corporate power to own its assets and to transact the business in which it
is presently engaged and is duly qualified and is in good standing in all
other jurisdictions where the character or nature of its business requires
such qualification.
(c) The execution, delivery and performance by the Borrower of the Loan
Documents to which it is a party are within the Borrower's corporate power and
have been duly authorized by all necessary corporate action and do not and
will not (i) require any consent or approval of the stockholders of the
Borrower; (ii) do not contravene the Borrower's certificate of incorporation,
charter or by-laws; (iii) violate any provision of any law, rule, regulation,
contractual restriction, order, writ, judgment, injunction, or decree,
determination or award binding on or affecting the Borrower; (iv) result in a
breach of or constitute a default under any indenture or loan or credit
agreement, or any other agreement, lease or instrument to which the Borrower
is a party or by which it or its properties may be bound or affected; or (v)
result in, or require, the creation or imposition of any Lien (other than the
Existing Liens and the Lien of the Loan Documents) upon or with respect to any
of the properties now owned or hereafter acquired by the Borrower.
(d) No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Borrower of any Loan Document
to which it is a party, except authorizations, approvals, actions, notices or
filings which have been obtained, taken or made, as the case may be.
(e) The Loan Documents when delivered hereunder will have been duly
executed and delivered on behalf of the Borrower and will be legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms.
(f) The consolidated financial statements of the Borrower and its
Consolidated Affiliates for the fiscal year ended December 31, 1995 and the
three fiscal quarterly periods ended September 30, 1996, copies of which have
been furnished to the Bank, fairly present the financial condition of the
Borrower and its Consolidated Affiliates as at such date and the results of
operations of the Borrower and its Consolidated Affiliates for the period
ended on such date, all in accordance with GAAP, and since such date there has
been (i) no material increase in the liabilities of the Borrower and its
Consolidated Affiliates and (ii) no Material Adverse Change in the Borrower
and its Consolidated Affiliates.
(g) There is no pending or threatened action, proceeding or investigation
affecting the Borrower or any Subsidiary of the Borrower before any court,
governmental agency or arbitrator, which may either in one case or in the
aggregate, result in a Material Adverse Change in the Borrower or any such
Subsidiary.
(h) The Borrower has filed all federal, state and local tax returns
required to be filed and have paid all taxes, assessments and governmental
charges and levies thereon to be due, including interest and penalties. The
federal income tax liability of the Borrower has been determined and satisfied
for all taxable years up to and including the taxable year ending December 31,
1995.
(i) The Borrower and each Subsidiary of the Borrower possess all licenses,
permits, franchises, patents, copyrights, trademarks and trade names, or
rights thereto, to conduct their respective businesses substantially as now
conducted and as presently proposed to be conducted, and neither the Borrower
nor any such Subsidiary is in violation of any similar rights of others.
(j) Neither the Borrower nor any Subsidiary of the Borrower is a party to
any indenture, loan or credit agreement or any other agreement, lease or
instrument or subject to any charter or corporate restriction which could
result in a Material Adverse Change in the Borrower or any such Subsidiary.
(k) The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation G, T, U or X), and no proceeds of any Loan will be used to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or in any other way which will cause
the Borrower to violate the provisions of Regulations G, T, U, or X.
(l) No proceeds of any Loan will be used to acquire any security in any
transaction which is subject to Section 13 or 14 of the Securities Exchange
Act of 1934.
(m) The Borrower and each Subsidiary of the Borrower are in all material
respects in compliance with all federal and state laws and regulations in all
jurisdictions where the failure to comply with such laws or regulations could
result in a Material Adverse Change in the Borrower or any such Subsidiary.
(n) The Borrower, each Subsidiary of the Borrower and each ERISA Affiliate
are in compliance in all material respects with all applicable provisions of
ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred
and is continuing with respect to any Plan; no notice of intent to terminate a
Plan has been filed nor has any Plan been terminated; no circumstances exist
which constitute grounds under Section 4042 of ERISA entitling the PBGC to
institute proceedings to terminate, or appoint a trustee to administrate, a
Plan, nor has the PBGC instituted any such proceedings; neither the Borrower,
any Subsidiary of the Borrower nor any ERISA Affiliate has completely or
partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer
Plan; the Borrower, each Subsidiary of the Borrower and each ERISA Affiliate
have met their minimum funding requirements under ERISA with respect to all of
their Plans and the present fair market value of all Plan assets exceeds the
present value of all vested benefits under each Plan, as determined on the
most recent valuation date of the Plan in accordance with the provisions of
ERISA for calculating the potential liability of the Borrower, any such
Subsidiary or any ERISA Affiliate to PBGC or the Plan under Title IV of ERISA;
and neither the Borrower, any such Subsidiary nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
(o) The Borrower and each Subsidiary of the Borrower are in compliance
with all federal, state or local laws, ordinances, rules, regulations or
policies governing Hazardous Materials and neither the Borrower nor any such
Subsidiary has used Hazardous Materials on, from, or affecting any property
now owned or occupied or hereafter owned or occupied by the Borrower or any
such Subsidiary in any manner which violates federal, state or local laws,
ordinances, rules, regulations or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials, and that to the best of the Borrower's and
such Subsidiaries' knowledge, no prior owner of any such property or any
tenant, subtenant, prior tenant or prior subtenant have used Hazardous
Materials on, from or affecting such property in any manner which violates
federal, state or local laws, ordinances, rules, regulations, or policies
governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials.
(p) The proceeds of the Revolving Credit Loans and the Converted Term Loan
shall be used exclusively for the purposes set forth herein.
(q) The properties and assets of the Borrower are not subject to any Lien
other than the Existing Liens and the Liens under the Loan Documents.
(r) Neither the business nor the properties of the Borrower or any
Subsidiary of the Borrower are affected by any fire, explosion, accident,
strike, hail, earthquake, embargo, act of God or of the public enemy, or other
casualty (whether or not covered by insurance), which could result in a
Material Adverse Change in the Borrower or any such Subsidiary.
(s) The Lien on the Collateral created by the Security Agreement
constitutes a valid first priority perfected security interest in favor of the
Bank, except for that portion of the Collateral to which the Existing Liens
relate. Each Lien on Eligible Equipment created by the Security Agreement
constitutes, or will constitute, as the case may be, a first priority security
interest in favor of the Bank.
(t) Schedule 4.01(x) is a complete and correct list of all credit
agreements, indentures, purchase agreements, guaranties, Capital Leases, and
other investments, agreements and arrangements presently in effect providing
for or relating to extensions of credit (including agreements and arrangements
for the issuance of letters of credit or for acceptance financing) in respect
of which the Borrower is in any manner directly or contingently obligated, and
the maximum principal or face amounts of the credit in question, outstanding
or to be outstanding, are correctly stated, and all Liens of any nature given
or agreed to be given as security therefor are correctly described or
indicated in such Schedule.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. AFFIRMATIVE COVENANTS. So long as any amount shall remain
-----------------------
outstanding under the Revolving Credit Note or the Converted Term Loan Note,
or so long as the Commitment shall remain in effect, the-Borrower will, unless
the Bank shall otherwise consent in writing:
Compliance with Laws, Etc. Comply, and cause each Subsidiary of the
-----------------------------
Borrower to comply, in all material respects with all applicable laws, rules,
regulations and orders, where the failure to so comply could result in a
Material Adverse Change in the Borrower or any such Subsidiary.
Reporting Requirements. Furnish to the Bank:
------------------------
(a) Annual Financial Statements. As soon as available and in any event
----------------------------
within ninety (90) days after the end of each fiscal year of the Borrower (1)
a copy of the audited consolidated financial statements of the Borrower and
its Consolidated Affiliates for such year, including balance sheets with
related statements of income and retained earnings and statements of cash
flows, all in reasonable detail and setting forth in comparative form the
figures for the previous fiscal year, together with an unqualified opinion,
prepared by independent certified public accountants selected by the Borrower
and satisfactory to the Bank, all such financial statements to be prepared in
accordance with GAAP; and (2) annual projections relating to the Borrower and
its Consolidated Affiliates on a consolidated basis covering the then current
fiscal year together with the next succeeding fiscal year thereafter.
(b) Quarterly Financial Statements. As soon as available and in any event
-------------------------------
within forty five (45) days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, a copy of the consolidated
financial statements of the Borrower and its Consolidated Affiliates for such
quarter, including a balance sheet with related statements of income and
retained earnings and a statement of cash flows, all in reasonable detail and
setting forth in comparative from the figures for the comparable quarter for
the previous fiscal year, prepared by the Borrower and satisfactory to Bank,
all such financial statements to be prepared in accordance with GAAP. The
Borrower and the Bank acknowledge that delivery to the Bank of the Borrower's
10Q statement as delivered to the Securities and Exchange Commission (together
with all amendments thereto, if applicable) shall satisfy Borrower's
obligations under this Section 5.01(b) (ii) to the extent such 10Q statement
contains the financial statements referred to in this Section 5.01(b) (ii).
(c) Management Letters. Promptly upon receipt thereof, copies of any
--------------------
reports submitted to the Borrower by independent certified public accountants
in connection with examination of the financial statements of the Borrower
made by such accountants;
(d) Certificate of No Default. Simultaneously with the delivery of the
--------------------------
financial statements referred to in Section 5.01(b) (i) and (ii), a
certificate of the President or the Chief Financial Officer of the Borrower
(1) certifying that no Default or Event of Default has occurred and is
continuing, or if a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto; and (2) with computations
demonstrating compliance with the covenants contained in Section 5.03.
(e) Notice of Litigation. Promptly after the commencement thereof, notice
---------------------
of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower or any Subsidiary of the Borrower which, if
determined adversely to the Borrower or any such Subsidiary could result in a
Material Adverse Change in the Borrower or any such Subsidiary.
(f) Notice of Defaults and Events of Default. As soon as possible and in
-----------------------------------------
any event within five (5) days after the occurrence of each Default or Event
of Default, a written notice setting forth the details of such Default or
Event of Default and the action which is proposed to be taken by the Borrower
with respect thereto.
(g) ERISA Reports. Promptly after the filing or receiving thereof, copies
--------------
of all reports, including annual reports, and notices which the Borrower or
any Subsidiary of the Borrower files with or receives from the PBGC or the
U.S. Department of Labor under ERISA; and as soon as possible after the
Borrower or any such Subsidiary knows or has reason to know that any
Reportable Event or Prohibited Transaction has occurred with respect to any
Plan or that the PBGC or the Borrower or any such Subsidiary has instituted or
will institute proceedings under Title IV or ERISA to terminate any plan, the
Borrower will deliver to the Bank a certificate of the President or the Chief
Financial Officer of the Borrower setting forth details as to such Reportable
Event or Prohibited Transaction or Plan termination and the action the
Borrower proposes to take with respect thereto.
(h) Reports to Other Creditors. Promptly after the furnishing thereof,
---------------------------
copies of any statement or report furnished to any other party pursuant to the
terms of any indenture, loan, or credit or similar agreement and not otherwise
required to be furnished to the Bank pursuant to any other clause of this
Section 5.01(b).
(i) Proxy Statements, Etc. Promptly after the sending or filing thereof,
----------------------
copies of all proxy statements, financial statements and reports which the
Borrower sends to its stockholders, and copies of all regular, periodic, and
special reports, and all registration statements which the Borrower files with
the Securities and Exchange Commission or any governmental authority which may
be substituted therefor, or with any national securities exchange.
(j) General Information. Such other information respecting the condition
--------------------
or operations, financial or otherwise, of the Borrower or any Subsidiary of
the Borrower as the Bank may from time to time reasonably request.
Taxes. Pay and discharge, and cause its Subsidiaries to pay and
------
discharge, all taxes, assessments and governmental charges upon it or them,
----
its or their income and its or their properties prior to the dates on which
penalties are attached thereto, unless and only to the extent that (i) such
taxes shall be contested in good faith and by appropriate proceedings by the
Borrower or any such Subsidiary, as the case may be, and (ii) there be
adequate reserves therefor in accordance with GAAP entered on the books of the
Borrower or any such Subsidiary.
Corporate Existence. Preserve and maintain, and cause its Subsidiaries to
--------------------
preserve and maintain, their corporate existence and good standing in the
jurisdiction of their incorporation and the rights, privileges and franchises
and the Borrower and each such Subsidiary in each case where failure to so
preserve or maintain could result in a Material Adverse Change in the Borrower
or such Subsidiary.
Maintenance of Properties and Insurance. (i) Keep, and cause any
--------------------------------------------
Subsidiaries to keep, the respective properties and assets (tangible or
---
intangible) that are useful and necessary in its business, in good working
-
order and condition, reasonable wear and tear excepted; and (ii) maintain, and
cause any Subsidiaries to maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering
such risks as are usually carried by companies engaged in similar businesses
and owning properties doing business in the same general areas in which the
Borrower and any such Subsidiaries operate.
Books of Record and Account. Keep and cause any Subsidiaries to keep,
--------------------------------
adequate records and proper books of record and account in which complete
entries will be made in a manner to enable the preparation of financial
statements in accordance with GAAP, reflecting all financial transactions of
the Borrower and any such Subsidiaries.
Visitation. Upon 3 Business Days prior notice, permit the Bank or any
-----------
agents or representatives thereof, to examine and make copies of and abstracts
from the books and records of, and visit the properties of, the Borrower and
to discuss the affairs, finances and accounts of the Borrower with any of the
officers or directors of the Borrower or the Borrower's independent
accountants.
Performance and Compliance with Other Agreements. Perform and comply with
-------------------------------------------------
each of the provisions of each and every agreement the failure to perform or
comply with which could result in a Material Adverse Change in the Borrower or
any Subsidiary.
Continued Perfection of Liens and Security Interest. Record or file or
-------------------------------------------------------
rerecord or refile the Loan Documents or a financing statement or any other
filing or recording or refiling or rerecording in each and every office where
and when necessary to preserve and perfect the security interests of the Loan
Documents.
Pension Funding. Comply with the following and cause each ERISA Affiliate
----------------
of the Borrower or any Subsidiary of the Borrower to comply with the
following:
(a) engage solely in transactions which would not subject any of such
entities to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in either
case in an amount in excess of $25,000.00;
(b) make full payment when due of all amounts which, under the provisions
of any Plan or ERISA, the Borrower, any such Subsidiary or any ERISA Affiliate
of any of same is required to pay as contributions thereto;
(c) all applicable provisions of the Internal Revenue Code and the
regulations promulgated thereunder, including but not limited to Section 412
thereof, and all applicable rules, regulations and interpretations of the
Accounting Principles Board and the Financial Accounting Standards Board;
(d) not fail to make any payments in an aggregate amount greater than
$25,000.00 to any Multiemployer Plan that the Borrower, any such Subsidiary or
any ERISA Affiliate may be required to make under any agreement relating to
such Multiemployer Plan, or any law pertaining thereto; or
(e) not take any action regarding any Plan which could result in the
occurrence of a Prohibited Transaction.
Licenses. Maintain at all times, and cause each Subsidiary to maintain at
---------
all times, all licenses or permits necessary to the conduct of its business or
as may be required by any governmental agency or instrumentality thereof.
New Affiliates. Cause any Affiliate of the Borrower formed after the date
---------------
of this Agreement to become a Guarantor of all Debts and other obligations of
the Borrower to the Bank; provided, however, that this Section 5.01(1) shall
relate only to such Affiliates in the event (i) the Borrower's Investment
therein equals or exceeds $1,000,00.00; or (ii) such Affiliate would still be
considered an Affiliate of the Borrower after application of the definition
"Affiliate" set forth in Article 1 hereof with the percentages set forth
therein deemed to be 80% instead of 5%.
SECTION 5.02. NEGATIVE COVENANTS. So long as any amount shall remain
--------------------
outstanding under the Revolving Credit Note or the Converted Term Loan Note,
or so long as the Commitment shall remain in effect, the Borrower will not,
without the written consent of the Bank:
Liens, Etc. Create, incur, assume or suffer to exist, any Lien, upon or
with respect to any of its properties, now owned or hereafter acquired,
except:
(a) Liens in favor of the Bank and the Existing Liens;
(b) Liens for taxes or assessments or other government charges or levies
if not yet due and payable or if due and payable if they are being contested
in good faith by appropriate proceedings and for which appropriate reserves
are maintained;
(c) Liens imposed by law, such as mechanics', materialmen's, landlords',
warehousemen's, and carriers' Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past due
or which are being contested in good faith by appropriate proceedings and for
which appropriate reserves have been established;
(d) Liens under workers' compensation, unemployment insurance, Social
Security, or similar legislation;
(e) Liens, deposits, or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of
business;
(f) Liens and Existing Liens described in Schedule 5.02(a), provided that
no such Liens or Existing Liens or obligations secured thereby shall be
renewed, extended or refinanced;
(g) Judgment and other similar Liens arising in connection with court
proceedings (other than those described in Section 6.01(f)), provided the
execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are being actively contested in good faith and by
appropriate proceedings;
(h) Easements, rights-of-way, restrictions, and other similar encumbrances
which, in the aggregate, do not materially interfere with the Borrower's
occupation, use and enjoyment of the property or assets encumbered thereby in
the normal course of its business or materially impair the value of the
property subject thereto;
(i) Purchase money Liens on any property other than Eligible Equipment
hereafter acquired or the assumption of any Lien on property existing at the
time of such acquisition, or a Lien incurred in connection with any
conditional sale or other title retention agreement or a Capital Lease,
provided that:
(j) Any property subject to any of the foregoing does not constitute
Eligible Equipment finance or to be financed by a Loan hereunder, and has been
acquired by the Borrower in the ordinary course of its business and the Lien
on any such property has been created contemporaneously with such acquisition;
(k) Each such Lien shall attach only to the property so acquired and fixed
improvements thereon;
(l) The obligation secured by such Lien is permitted by the provisions of
Section 5.02(b) after giving effect to the other terms and conditions hereof;
and
(m) Liens granted by the Borrower to a lender in order to secure working
capital financing on terms similar to those governing the line of credit
maintained by the Bank for the Borrower (the "Line of Credit"); provided,
however, that the Borrower and the Bank acknowledge and agree that such Liens
may only be granted in the event the Bank refuses a request for borrowing
under the Line of Credit and there are no loans outstanding under the Line of
Credit at the time of such refusal; provided, further, that the Borrower and
the Bank acknowledge and agree that such additional Liens shall be granted
upon terms and conditions which in all respects fully subordinate the rights
of payment and remedy of such lender to the rights of the Bank to the
indefeasible repayment of all indebtedness, liabilities and obligations of the
Borrower to the Bank and all of the Bank's remedies relating thereto.
Debt. Create, incur, assume, or suffer to exist, any Debt, except:
-----
(a) Debt of the Borrower under this Agreement, the Notes, the Swap
Documentation and the Line of Credit;
(b) Debt described in Schedule 5.02(b), provided that no such Debt shall
be renewed, extended or refinanced;
(c) Subordinated Debt including, without limitation, any indebtedness
secured by liens granted in accordance with Section 5.02(a) (x) hereof for so
long as such indebtedness remains Subordinated Debt;
(d) Accounts payable to trade creditors for goods or services which are
not aged more than One Hundred Eighty (180) days past due and with respect to
which, payment has been demanded, and current operating liabilities (other
than for borrowed money) which are not more than One Hundred Eighty (180) days
past due, in each case incurred in the ordinary course of business and paid
within the specified time, unless contested in good faith and by appropriate
proceedings;
(e) Debt of the Borrower secured by purchase money Liens or Existing Liens
permitted by Section 5.02(a) (ix).
Lease Obligations. Create, incur, assume, or suffer to exist any
-------------------
obligation as lessee for the rental or hire of any real or personal property,
---
except (i) Capital Leases permitted by Section 5.02(a); (ii) leases existing
on the date of this Agreement and any extensions or renewals thereof; and
(iii) leases (other than Capital Leases) which do not in the aggregate require
the Borrower to make payments (including taxes, insurance, maintenance, and
similar expenses which the Borrower is required to pay under the terms of any
lease) in any fiscal year of the Borrower in excess of One Million Five
Hundred Thousand ($1,500,000.00) Dollars.
Merger. Merge into, or consolidate with or into, or have merged into it,
-------
any Person; and, for the purpose of this subsection (d), the acquisition or
sale by the Borrower by lease, purchase or otherwise, of all, or substantially
all, of the common stock or the assets of any Person shall be deemed a merger
of such Person with the Borrower; provided, however, that notwithstanding the
foregoing, the Borrower shall be permitted to enter into agreements, and to
consummate transactions relating to (i) mergers or joint ventures resulting in
the Borrower as the surviving entity thereof (or, in the case of a joint
venture, if the entity(s) formed as a result of the joint venture
constitute(s) an Affiliate of the Borrower) and involving aggregate
consideration to be paid upon the consummation thereof in an aggregate amount
of less than $1,000,000.00; and (ii) mergers or joint ventures involving
aggregate consideration to be paid upon the consummation thereof in an
aggregate amount equal to or exceeding $1,000,000.00 with respect to which the
Borrower has received the Bank's prior written consent.
Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise dispose
-----------------
of any of its assets, (including a sale leaseback transaction) with or without
recourse, except for (i) inventory disposed of in the ordinary course of
business; and (ii) the sale or other disposition of assets no longer used or
useful in the conduct of its business.
Investments, Etc. After giving effect to the terms and conditions hereof,
-----------------
make any Investment other than Permitted Investments.
Transactions With Affiliates. Except for transactions between the
-------------------------------
Borrower and Consolidated Subsidiaries or Guarantors and except in the
--
ordinary course of business and pursuant to the reasonable requirements of the
--
Borrower's or a Subsidiary's business and upon fair and reasonable terms no
less favorable to the Borrower or the Subsidiary than would be obtained in a
comparable arm's length transaction with a Person not an Affiliate, enter into
any transaction including, without limitation, the purchase, sale, or exchange
of property or the rendering of any service, with any Affiliate.
Prepayment of Outstanding Debt. Pay, in whole or in part, any outstanding
-------------------------------
Debt (other than Debt owing to the Bank) of the Borrower, which by its terms
is not then due and payable.
Guarantees. Guaranty, or in any other way become directly or contingently
-----------
obligated for any Debt of any other Person (including any agreements relating
to working capital maintenance, take or pay contracts or similar arrangements)
other than the endorsement of negotiable instruments for deposit in the
ordinary course of business.
Change of Business. Materially alter the nature of its business.
---------------------
Fiscal Year. Change the ending date of its fiscal year from December
-------------
31st.
Losses. Incur a net loss for any fiscal year; provided, however, that a
-------
net loss of not more than $650,000 may be incurred by the Borrower in respect
of its fiscal year ending December 31, 1996.
Accounting Policies. Change any accounting policies, except as permitted
---------------------
by GAAP.
Change of Tax Status. Change its tax reporting status without the prior
-----------------------
written consent of the Bank.
Dividends, Etc. Declare or pay any dividends, purchase, redeem, retire or
---------------
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such,
whether in cash, assets, or in obligations of the Borrower; or allocate or
otherwise set apart any sum for the payment of any dividend or distribution
on, or for the purchase, redemption or retirement of any shares of its capital
stock; or make any other distribution by reduction of capital or otherwise in
respect of any share of its capital stock; provided, however, that the
Borrower may declare and pay stock dividends in respect of its capital stock
and may repurchase shares of its common stock so long as both before and after
giving effect to any such declaration, payment or repurchase, no Default or
Event of Default then exists.
Hazardous Material. The Borrower and each Subsidiary of the Borrower
--------------------
shall not cause or permit any property owned or occupied by the Borrower or
any such Subsidiary to be used to generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer, produce or process Hazardous
Materials, except in compliance with all applicable federal, state and local
laws or regulations nor shall the Borrower or any such Subsidiary cause or
permit, as a result of any intentional or unintentional act or omission on the
part of the Borrower or any such Subsidiary or any tenant or subtenant, a
release of Hazardous Materials onto any property owned or occupied by the
Borrower or any such Subsidiary or onto any other property. The Borrower and
each such Subsidiary shall not fail to comply with all applicable federal,
state and local laws, ordinances, rules and regulations, whenever and by
whomever triggered, and shall not fail to obtain and comply with, any and all
approvals, registrations or permits required thereunder. The Borrower shall
execute any documentation required by the Bank in connection with the
representations, warranties and covenants contained in this paragraph and
Section 4.01 of this Agreement.
Loans; Advances.Make any loan or advance to any third party; provided,
-----------------
however, that the Borrower may make loans and advances (i) in unlimited
amounts to wholly owned Subsidiaries which are also Consolidated Affiliates
and Guarantors hereunder; (ii) in amounts not exceeding $1,000,000.00 per
entity to Affiliates and Subsidiaries which are not Guarantors hereunder; and
(iii) in an aggregate amount not to exceed $100,000.00 to third parties which
are not Guarantors, Affiliates or Subsidiaries.
Agree to acquire stock or assets of any Person without the prior written
consent of the Bank.
SECTION 5.03. FINANCIAL REQUIREMENTS. So long as any amount shall remain
------------------------
outstanding under the Revolving Credit Note or the Converted Term Loan Note or
so long as the Commitment shall remain in effect or so long as there shall
remain outstanding any indebtedness, liabilities or obligations of the
Borrower to the Bank:
(a) Minimum Consolidated Tangible Net Worth. The Borrower will maintain as
----------------------------------------
at the dates referred to below a Consolidated Tangible Net Worth of not less
than the amounts set forth below opposite each such date(s):
Dates Minimum Consolidated
Tangible Net Worth
12/31/96 $ 8,100,000.00
3/31/97 and 6/30/97 $ 7,800,000.00
9/30/97 and the last day of each fiscal quarter thereafter $ 8,000,000.00
(b) Leverage Ratio. The Borrower will maintain as the dates referred to
---------------
below a ratio of Consolidated Total Liabilities to Consolidated Tangible Net
Worth at not greater than the ratio set forth below opposite each date(s):
Maximum Ratio of Consolidated
Total Liabilities to
Dates Consolidated Tangible Net Worth
12/31/96 and the last day of
each fiscal quarter thereafter 1.00:1.00
(c) Debt Service Coverage Ratio. The Borrower will maintain for the four
----------------------------
consecutive fiscal quarterly periods ending on a determination date, a Debt
Service Coverage Ratio at not less than the ratio set forth below opposite the
applicable determination date:
Determination Date: Minimum Debt Service Coverage Ratio
December 31, 1997 1.00:1.00
March 31, 1998 and the last day of each
fiscal quarter thereafter 1.25:1.00
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. EVENTS OF DEFAULT. If any of the following events ("Events of
-------------------
Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of principal of, or
interest on the Revolving Credit Note or the Converted Term Loan Note or any
fees or other amounts owed in connection with this Agreement within ten (10)
days after due under the terms hereof; or
(b) Any representation or warranty made by the Borrower herein or in the
Loan Documents or which is contained in any certificate, document, opinion, or
financial or other statement furnished at any time under or in connection with
any Loan Document shall prove to have been incorrect in any material respect
when made; or
(c) The Borrower shall fail to perform any term, covenant, or agreement
contained in this Agreement or in any other Loan Document (other that the
Notes) or any other agreement, instrument or document on its part to be
performed or observed in favor of the Bank or any other Person including,
without limitation, with respect to the Swap Documentation or the Line of
Credit.
(d) The Borrower or any Subsidiary of the Borrower shall fail to pay any
Debt (excluding Debt evidenced by the Revolving Credit Note and the Converted
Term Loan Note) of the Borrower, or any such Subsidiary (as the case may be),
or any interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other default under any agreement
or instrument relating to any such Debt, or any other event shall occur and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or
any such Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof; or
(e) The Borrower or any Subsidiary of the Borrower shall generally not pay
its Debts as such Debts become due, or shall admit in writing its inability to
pay its Debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Borrower or
any such Subsidiary seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its Debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors, or seeking
the entry of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its property and
if instituted against the Borrower or any such Subsidiary shall remain
undismissed for a period of 30 days; or the Borrower or any such Subsidiary
shall take any action to authorize any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order or combination of judgments or orders for the
payment of money, in excess of $50,000 in the aggregate, which sum shall not
be subject to full, complete and effective insurance coverage, shall be
rendered against the Borrower or any Subsidiary of the Borrower and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(g) Any of the following events occur or exist with respect to the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate: (i) any
Prohibited Transaction involving any Plan; (ii) any Reportable Even with
respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv) any event
or circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution of the
PBGC of any such proceedings; (v) complete or partial withdrawal under Section
4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization
insolvency, or termination of any Multiemployer Plan; and in each case above,
such event or condition, together with all other events or conditions, if any,
could in the opinion of the Bank subject the Borrower, any such Subsidiary or
any ERISA Affiliate to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof) which
in the aggregate exceeds or may exceed Fifty Thousand ($50,000) Dollars.
(h) This Agreement or any other Loan Document, at any time after its
execution and delivery and for any reason, ceases to be in full force and
effect or shall be declared to be null and void, or the validity or
enforceability of any document or instrument delivered pursuant to this
Agreement shall be contested by the Borrower or any party to such document or
instrument or the Borrower or any party to such document or instrument shall
deny that it has any or further liability or obligation under any such
document or instrument; or
(i) An event of default specified in any Loan Document other than this
Agreement shall have occurred and be continuing.
(j) Any event occurs which would, after notice or lapse of time or both,
adversely affect the security interest of the Bank in Collateral including,
without limitation, any first priority security interest granted to the Bank
under the terms hereof and the Loan Documents in Eligible Equipment.
SECTION 6.02. REMEDIES ON DEFAULT. Upon the occurrence and continuance of an
--------------------
Event of Default the Bank may by notice to the Borrower, (i) terminate the
Commitment, (ii) declare the Revolving Credit Note, the Converted Term Loan
Note, all interest thereon and all other amounts payable under this Agreement
to be forthwith due and payable, whereupon the Commitment shall be terminated,
the Revolving Credit Note, the Converted Term Loan Note, all such interest and
all such amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower and (ii) proceed to enforce its rights
whether by suit in equity or by action at law, whether for specific
performance of any covenant or agreement contained in this Agreement or any
Loan Document, or in aid of the exercise of any power granted in either this
Agreement or any Loan Document or proceed to obtain judgment or any other
relief whatsoever appropriate to the enforcement of its rights, or proceed to
enforce any other legal or equitable right which the Bank may have by reason
of the occurrence of any Event of Default hereunder or under any Loan
Document, provided, however, upon the occurrence of an Event of default
referred to in Section 6.01(e), the Commitment shall be immediately
terminated, the Revolving Credit Note and the Converted Term Loan Note, all
interest thereon and all other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower.
Any amounts collected pursuant to action taken under this Section 6.02 shall
be applied to the payment of, first, any costs incurred by the Bank in taking
such action, including but without limitation attorneys fees and expenses,
second, to payment of the accrued interest on the Revolving Credit Note and
the Converted Term Loan Note, and third, to payment of the unpaid principal of
the Revolving Credit Note and the Converted Term Loan Note.
SECTION 6.03. REMEDIES CUMULATIVE. No remedy conferred upon or reserved to the
--------------------
Bank hereunder or in any Loan Document is intended to be exclusive of any
other available remedy, but each and every such remedy shall be cumulative and
in addition to every other remedy given under this Agreement or any Loan
Document or now or hereafter existing at law or in equity. No delay or
omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right and power may be exercised from time to time and
as often as may be deemed expedient. In order to entitle the Bank to exercise
any remedy reserved to it in this Article VI, it shall not be necessary to
give any notice, other than such notice as may be herein expressly required in
this Agreement or in any Loan Document.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. AMENDMENTS, ETC. No amendment, modification, termination or
-----------------
waiver of any provision of any Loan Document to which the Borrower is a party,
nor consent to any departure by the Borrower from any Loan Document to which
it is a party, shall in any event be effective unless the same shall be in
writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 7.02. NOTICES, ETC. All notices and other communications provided for
-------------
hereunder shall be in writing (including telegraphic communication) and
mailed, telegraphed, sent by facsimile or delivered, if to the Borrower, at
the address of the Borrower set forth at the beginning of this Agreement and
if to the Bank, at the address of the Bank set forth at the beginning of this
Agreement to the attention of the Bank's Account Officer, or, as to each
party, at such other address as shall be designated by such party' in a
written notice complying as to delivery with the terms of this Section 7.02 to
the other parties. All such notices and communications shall be effective when
mailed, telegraphed or delivered, except that notices to the Bank shall not be
effective until received by the Bank.
SECTION 7.03. NO WAIVER, REMEDIES. No failure on the part of the Bank to
----------------------
exercise, and no delay in exercising, any right, power or remedy under any
Loan Document, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any Loan Document preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Loan Documents are cumulative and not exclusive of any
remedies provided by law.
SECTION 7.04. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on demand
--------------------------
all costs and expenses of the Bank in connection with the preparation,
execution, delivery and administration of this Agreement, the Revolving Credit
Note, the Converted Term Loan Note and any other Loan Documents, including,
without limitation, the fees and expenses of counsel for the Bank with respect
thereto and with respect to advising the Bank as to its rights and
responsibilities under this Agreement, and all costs and expenses, if any
(including counsel fees and expenses), in-connection with the enforcement of
this Agreement, the Revolving Credit Note, the Converted Term Loan Note and
any other Loan Documents. The Borrower shall at all times protect, indemnify,
defend and save harmless the Bank from and against any and all claims,
actions, suits and other legal proceedings, and liabilities, obligations,
losses, damages, penalties, judgments, costs, expenses or disbursements which
the Bank may, at any time, sustain or incur by reason of or in consequence of
or arising out of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby. The Borrower
acknowledges that it is the intention of the parties hereto that this
Agreement shall be construed and applied to protect and indemnify the Bank
against any and all risks involved in the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby, all of
which risks are hereby assumed by the Borrower, including, without limitation,
any and all risks of the acts or omissions, whether rightful or wrongful, of
any present or future de jure or de facto government or governmental
authority, provided that the Borrower shall not be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Bank's gross
negligence or willful misconduct. The provisions of this Section 7.04 shall
survive the payment of the Notes and the termination of this Agreement.
SECTION 7.05. RIGHT OF SET-OFF. Upon (i) the occurrence and during the
-------------------
continuance of any Event of Default and (ii) the declaration of the making of
the Revolving Credit Note or the Converted Term Loan Note due and payable
pursuant to the provisions of Section 6.02, the Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by the Bank to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter existing under
this Agreement and the Revolving Credit Note and the Converted Term Loan Note,
irrespective of whether or not the Bank shall have made any demand under this
Agreement or the Revolving Credit Note or the Converted Term Loan Note and
although such obligations may be unmatured. The rights of the Bank under this
Section are in addition to all other rights and remedies (including, without
limitation, other rights of set-off) which the Bank may have.
SECTION 7.06. BINDING EFFECT. This Agreement shall become effective when it
----------------
shall have been executed by the Borrower and the Bank and thereafter it shall
be binding upon and inure to the benefit of the Borrower and the Bank and
their respective successors and assigns, except that the Borrower shall not
have any right to assign its rights hereunder to any interest herein without
the prior written consent of the Bank.
SECTION 7.07. FURTHER ASSURANCES. The Borrower agrees at any time and from
--------------------
time to time at its expense, upon request of the Bank or its counsel, to
promptly execute, deliver, or obtain or cause to be executed, delivered or
obtained any and all further instruments and documents and to take or cause to
be taken all such other action the Bank may deem desirable in obtaining the
full benefits of, or in preserving the liens on or security interests in the
Collateral.
SECTION 7.08. SECTION HEADINGS, SEVERABILITY, ENTIRE AGREEMENT. Section and
--------------------------------------------------
subsection headings have been inserted herein for convenience only and shall
not be construed as part of this Agreement. Every provision of this Agreement
and each Loan Document is intended to be severable; if any term or provision
of this Agreement, any Loan Document, or any other document delivered in
connection herewith shall be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions hereof or thereof shall not in any way be affected or impaired
thereby. All exhibits and schedules to this Agreement shall be annexed hereto
and shall be deemed to be part of this Agreement. This Agreement and the
exhibits and schedules attached hereto embody the entire Agreement and
understanding between the Borrower and the Bank and supersede all prior
agreements and understandings relating to the subject matter hereof.
SECTION 7.09. GOVERNING LAW.This Agreement, the Revolving Credit Note and the
--------------
Converted Term Loan Note and all other Loan Documents shall be governed by,
and construed in accordance with, the laws of the State of New York.
SECTION 7.10. WAIVER OF JURY TRIAL. The Borrower, each Guarantor and the Bank
---------------------
waive all rights to trial by jury on any cause of action directly or
indirectly involving the terms, covenants or conditions of this Agreement or
any Loan Document.
SECTION 7.11. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
--------------------------
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
INNODATA CORPORATION
By:______/S/__________
Name: Martin Kaye
Title: V. P. Finance
THE CHASE MANHATTAN BANK
By:______/S/__________
Name: Brian A. Ziemba
Title: Vice Presdident
REVOLVING CREDIT NOTE
$1,000,000.00
Brooklyn, New York
January 30, 1997
FOR VALUE RECEIVED, on the earlier of the Conversion Date (as defined in the
Agreement defined below) or December 31, 1997, INNODATA CORPORATION, a
Delaware corporation, having its principal place of business at 95 Rockwell
Place, Brooklyn, New York 11217 (the "Borrower"), promises to pay to the order
of THE CHASE MANHATTAN BANK ("Bank") at its office located at One Pierrepont
Plaza, Brooklyn, New York 11201, the principal sum of the lesser of: (a) ONE
MILLION ($1,000,000.00) Dollars; or (b) the aggregate unpaid principal amount
of all Revolving Credit Loans made by Bank to Borrower pursuant to the
Agreement (as defined below).
Borrower shall pay interest on the unpaid principal balance of this Note from
time to time outstanding, at said office, at the rates of interest, at the
times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in lawful money
of the United States of America in immediately available funds. Except as
otherwise provided in the Agreement, if a payment becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the
rate herein specified during such extension.
Borrower hereby authorizes Bank to enter from time to time the amount of each
Loan to Borrower and the amount of each payment on a Loan on the schedule
annexed hereto and made a part hereof. Failure of Bank to record such
information on such schedule shall not in any way effect the obligation of
Borrower to pay any amount due under this Note.
This Note is the Revolving Credit Note referred to in that certain Loan
Agreement between Borrower and Bank of even date herewith (the "Agreement"),
as such Agreement may be further amended from time to time, and is subject to
prepayment and its maturity is subject to acceleration upon the terms
contained in said Agreement. All capitalized terms used in this Note and not
defined herein shall have the meanings given them in the Agreement.
If any action or proceeding be commenced to collect this Note or enforce any
of its provisions, Borrower further agrees to pay all costs and expenses of
such action or proceeding and attorneys' fees and expenses and further
expressly waives any and every right to interpose any counterclaim in any such
action or proceeding. Borrower hereby submits to the jurisdiction of the
Supreme Court of the State of New York and agrees with Bank that personal
jurisdiction over Borrower shall rest with the Supreme Court of the State of
New York for purposes of any action on or related to this Note, the
liabilities, or the enforcement of either or all of the same. Borrower hereby
waives personal service by manual delivery and agrees that service of process
may be made post-paid certified mail directed to the Borrower at the
Borrower's address set forth above or at such other `address as may be
designated in writing by the Borrower to Bank in accordance with Section 7.02
of the Agreement, and that upon mailing of such process such service be
effective with the same effect as though personally served. Borrower hereby
expressly waives any and every right to a trial by jury in any action on or
related to this Note, the liabilities or the enforcement of either or all of
the same. Bank may transfer this Note and may deliver the security or any part
thereof to the transferee or transferees, who shall thereupon become vested
with all the powers and rights above given to Bank in respect thereto, and
Bank shall thereafter be forever relieved and fully discharged from any
liability or responsibility in the matter. The failure of any holder of this
Note to insist upon strict performance of each and/or all of the terms and
conditions hereof shall not be construed or deemed to be a waiver of any such
terms or condition.
Borrower and all endorsers and guarantors hereof waive presentment and demand
for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the laws of
the State of New York.
INNODATA CORPORATION
By: _____/S/_____
Name: Martin Kaye
Title: V. P. Finance
CHASE
GRID TIME PROMISSORY NOTE
January 30, 1997
For value received, the undersigned unconditionally (and if more than one,
jointly and severally) promises to pay to the order of THE CHASE MANHATTAN
BANK ("Chase"), at its office located at 270 PARK AVE, NEW YORK, NEW YORK
10017, or to such other address as Chase may notify the undersigned, the sum
of TWO MILLION AND NO CENTS Dollars ($2,000,000) or such unpaid principal
amount of each loan made to the undersigned by Chase and outstanding under
this Note, on the maturity date(s) as shown on the attached schedule or any
continuation of the schedule.
This Note includes any Schedule or Rider attached hereto.
MATURITY DATE(S). Each loan shall mature on the last day of the Interest
- ------------------
Period therefor, as noted on the Interest Period column on the attached
- -----
schedule. As to a Variable Rate loan, if no Interest Period is noted, then
- -----
such loan is payable On Demand.
- ---
INTEREST. The undersigned promise(s) to pay interest on the unpaid balance of
- ---------
the principal amount of each such loan from and including the date of each
loan to but excluding the date such loan shall be paid in full at the
following applicable rates (check Other Rate box if applicable):
Variable Rate: A rate of interest per year which shall automatically increase
or decrease from time to time so that all times such rate shall remain equal
to that rate of interest from time to time announced by Chase at its head
office as its prime commercial lending rate (the "Prime Rate") plus 1/2%.
Changes in the rate of interest hereunder shall be effective as of and for the
entire day on which such change in the Prime Rate becomes effective.
and
x Other Rate: see Rider(s) attached hereto.
Interest shall be payable, as to a Variable Rate loan, on the 1st day of each
month and as to an Other Rate loan, on the last day of each Interest Period,
or if such Interest Period is more than 90 days, then on the 90th day after
the date of such loan and on the last day of such Interest Period, unless
otherwise specified on a Rider attached hereto, in respect of the
corresponding principal. Interest shall be calculated on the basis of a year
of 360 days and payable for the actual number of days elapsed.
After the occurrence of an Event of Default set forth below, Chase, at its
option, by written notice to the undersigned may increase the interest rate on
this Note by an additional four percent (4%) per year effective on the date of
such notice.
PAYMENTS. All payments under this Note shall be made in lawful money of the
- ---------
United States of America and in immediately available funds at Chase's office
- --
specified above. Chase may (but shall not be obligated) debit the amount of
any payment (principal or interest) under this Note when due to any deposit
account of (any of) the undersigned with Chase. If the undersigned are more
than one, all obligations of each of the undersigned under this Note shall be
joint and several. This Note may be prepaid without premium unless otherwise
specified on a Rider attached hereto. Chase may apply any money received or
collected for payment of this Note to the principal of, interest on or any
other amount payable under, this Note in any order that Chase may elect.
Whenever any payment to be made hereunder (including principal and interest)
shall be stated to be due on a day which Chase's head office is not open for
business, that payment will be due on the next following banking day, and any
extension of time shall in each case be included in the computation of
interest payable on this Note.
If any payment (principal or interest) shall not be paid when due other than a
payment of the entire principal balance of the Note due upon acceleration
after default, the undersigned shall pay a late payment charge equal to five
percent (5%) of the amount of such delinquent payment, provided that the
amount of such late payment charge shall be not less than $25 nor more than
$500.
AUTHORIZATIONS. The undersigned hereby authorizes Chase to make loans and
- ---------------
disburse the proceeds thereof to the account listed below and to make
- ----
repayments of such loans by debiting such account upon oral, telephonic or
- ----
telecopied instructions made by any person purporting to be an officer or
- ---
agent of the undersigned who is empowered to make such requests and give such
- ---
instructions. The undersigned may amend these instructions, from time to time,
effective upon actual receipt of the amendment by Chase. Chase shall not be
responsible for the authority, or lack of authority, of any person giving such
telephonic instructions to Chase pursuant to these provisions. By executing
this Note, the undersigned agrees to be bound to repay any loan obtained
hereunder as reflected on Chase's books and records and made in accordance
with these authorizations, regardless of the actual receipt of the proceeds
thereof.
RECORDS. The date, amount and maturity date of each loan under this Note and
- --------
each payment of principal, loan(s) to which such principal is applied (which
shall be at the discretion of Chase) and the outstanding principal balance of
loans, shall be recorded by Chase on its books and prior to any transfer of
this Note (or, at the discretion of Chase at any other time) endorsed by Chase
on the schedule attached or any continuation of the schedule. Any such
endorsement shall be conclusive absent manifest error.
REPRESENTATIONS AND WARRANTIES. If the undersigned is other than an
- ---------------------------------
individual, the undersigned represents and warrants upon the execution and
- ----------
delivery of this Note and upon each loan request hereunder, that: (a) it is
- ---
duly organized and validly existing under the laws of the jurisdiction of its
- --
organization or incorporation and, if relevant under such laws, in good
standing; (b) it has the power to execute and deliver this Note and to perform
its obligations hereunder and has taken all necessary action to authorize such
execution, delivery and performance; (c) such execution, delivery and
performance do not violate or conflict with any law applicable to it, any
provision of its organizational documents, any order or judgment of any court
or other agency of government applicable to it or any of its assets or any
material contractual restriction binding on or materially affecting it or any
of its assets; (d) to the best of undersigned's knowledge, all governmental
and other consents that are required to have been obtained by it with respect
to this Note have been obtained and are in full force and effect and all
conditions of any such consents have been complied with; (e) its obligations
under this Note constitute its legal, valid and binding obligations,
enforceable in accordance with its terms except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency or other
similar laws affecting creditors' rights generally; (f) all financial
statements and related information furnished and to be furnished to Chase from
time to time by the undersigned are true and complete and fairly present the
financial or other information stated therein as at such dates or for the
periods covered thereby; (g) there are no actions, suits, proceedings or
investigations pending or, to the knowledge of the undersigned, threatened
against or affecting the undersigned before any court, governmental agency or
arbitrator, which involve forfeiture of any assets of the undersigned or which
may materially adversely affect the financial condition, operations,
properties or business of the undersigned or the ability of the undersigned to
perform its obligation under this Note; and (h) there has been no material
adverse change in the financial condition of the undersigned since the last
such financial statements or information. If the undersigned is an individual,
the undersigned represents and warrants at the times set forth at the
beginning of this section, the correctness of clauses (c), (d), (e), (f), (g)
and (h) above to the extent applicable to an individual.
NO COMMITMENT. This Note does not create and shall not be deemed or construed
- ---------------
to create any contractual commitment to lend by Chase. Any such commitment in
respect of this Note can only be made by and shall only be effective to the
extent set forth in a separate writing expressly designated for that purpose
and subscribed by a duly authorized officer of Chase.
SECURITY. As collateral security for the payment of this Note and of any and
- ---------
all other obligations and liabilities of the undersigned to Chase, now
existing or hereafter arising, the undersigned grants to Chase a security
interest in and a lien upon and right of offset against all moneys, deposit
balances, securities or other property or interest therein of the undersigned
now or at any time hereafter held or received by or for or left in the
possession or control of Chase or any of its affiliates, including
subsidiaries, whether for safekeeping, custody, transmission, collection,
pledge or for any other or different purpose.
DEFAULT. IF any of the following events of default shall occur with respect to
- --------
any of the undersigned (each an "Event of Default").
(a) the undersigned shall fail to pay the principal of, or interest on,
this Note, or any other amount payable under this Note, as and when due and
payable;
(b) any representation or warranty made or deemed made by the undersigned
in this Note or in any document granting security or support for (or otherwise
executed in connection with) this Note or by any third party supporting or
liable with respect to this Note (whether by guaranty, subordination, grant of
security or any other credit support, a "Third Party") in any document
evidencing the obligations of a Third Party (this Note and all of the
foregoing documents and all agreements, instruments or other documents
executed by the undersigned or a Third Party being the "Facility Documents")
or which is contained in any certificate, document, opinion, financial or
other statement furnished at any time under or in connection with any Facility
Document, shall prove to have been incorrect in any material respect on or as
of the date made or deemed made;
(c) the undersigned or any Third Party shall fail to perform or observe
any term, covenant or agreement contained in any Facility Document on its part
to be performed or observed, and such failure shall continue for 30
consecutive days;
(d) the undersigned or any Third Party shall fail to pay when due any
indebtedness (including but not limited to indebtedness for borrowed money) or
if any such indebtedness shall become due and payable, or shall be capable of
becoming due and payable at the option of any holder thereof, by acceleration
of its maturity, or if there shall be any default by the undersigned or any
Third Party under any agreement relating to such indebtedness;
(e) the undersigned or any Third Party: (i) shall generally not, or be
unable to, or shall admit in writing its inability to, pay its debts as such
debts become due; (ii) shall make an assignment for the benefit of creditors;
(iii) shall file a petition in bankruptcy or for any relief under any law of
any jurisdiction relating to reorganization, arrangement, readjustment of
debt, dissolution or liquidation; (iv) shall have any such petition filed
against it and the same shall remain undismissed for a period of 30 days or
shall consent or acquiesce thereto; or (v) shall have had a receiver,
custodian or trustee appointed for all or a substantial part of its property;
(f) if the undersigned or any Third Party is an individual, such
individual shall die or be declared incompetent;
(g) any Third Party Facility Document shall at any time and for any reason
cease to be in full force and effect or shall be declared null and void, or
its validity or enforceability shall be contested by the relevant Third Party
or such Third Party shall deny it has any further liability or obligation
under any Facility Document or shall fail to perform its obligations under any
Facility Document; (h) any security agreement or other agreement (whether by
the undersigned or any Third Party) granting a security interest, lien,
mortgage or other encumbrance securing obligations under any Facility Document
shall at any time and for any reason cease to create a valid and perfected
first priority security interest, lien, mortgage or other encumbrance in or on
the property purported to be subject to such agreement or shall cease to be in
full force and effect or shall be declared null and void, or the validity or
enforceability of any such agreement shall be contested by any party to such
agreement, or such party shall deny it has any further liability or obligation
under such agreement or any such party shall fail to perform any of its
obligations under such agreement.
(h) the undersigned shall make or permit to be made any material change in
the character, management or direction of the undersigned's business or
operations (including, but not limited to, a change in its executive
management or in the ownership of its capital stock which effects a change in
the control of any such business or operations), which is not satisfactory to
Chase;
(i) the undersigned or any Third Party shall suffer a material adverse
change in its business, financial condition, properties or prospects;
(j) any action, suit, proceeding or investigation against or affecting the
undersigned or a Third Party before any court or governmental agency which
involves forfeiture of any assets of the undersigned or a Third Party shall
have been commenced; or
(k) one or more judgments, decrees or orders for the payment of money in
excess of $50,000 in the aggregate shall be rendered against the undersigned
and shall continue unsatisfied and in effect for a period of 30 consecutive
days without being vacated, discharged, satisfied or stayed or bonded pending
appeal.
THEN, IN ANY SUCH CASE, if Chase shall elect by notice to the undersigned, the
unpaid principal amount of this Note, together with accrued interest, shall
become forthwith due and payable; provided that in the case of an event of
default under (e) above, the unpaid principal amount of this Note, together
with accrued interest, shall immediately become due and payable without any
notice or other action by Chase.
THE EVENTS OF DEFAULT AND REMEDIES SET FORTH ABOVE ARE IN ADDITION TO AND
WITHOUT IN ANY WAY DIMINISHING ANY RIGHT BY CHASE TO MAKE DEMAND FOR PAYMENT
AT ANY TIME.
CERTAIN WAIVERS. The undersigned waive(s) presentment, notice of dishonor,
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protest and any other notice or formality with respect to this Note.
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COSTS. The undersigned agree(s) to reimburse Chase on demand for all costs,
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expenses and charges (including, without limitation, fees and charges of
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external legal counsel for Chase and costs allocated by its internal legal
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department) in connection with the preparation, interpretation, performance or
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enforcement of this Note and the Facility Documents.
NOTICES. All notices, requests, demands or other communications to or upon the
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undersigned or Chase shall be in writing and shall be deemed to be delivered
upon receipt if delivered by hand or overnight courier or five days after
mailing to the address (a) of the undersigned as set forth next to the
undersigned's execution of this Note, (b) of Chase as first set forth above,
or (c) of the undersigned or Chase at such other address as the undersigned or
Chase shall specify to the other in writing.
ASSIGNMENT. This note shall be binding upon the undersigned and its or their
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successors and shall inure to the benefit of Chase and its successors and
assigns.
AMENDMENT AND WAIVER. This Note may be amended only by a writing signed on
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behalf of each party and shall be effective only to the extent set forth in
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that writing. No delay by Chase in exercising any power or right hereunder
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shall operate as a waiver thereof or of any other power or right; nor shall
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any single or partial exercise of any power or right preclude other or future
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exercise thereof, or the exercise of any other power or right hereunder.
GOVERNING LAW: JURISDICTION. This Note shall governed by and construed in
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accordance with the laws of the State of New York, Connecticut or New Jersey,
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depending on the location of the Chase office set forth in this Note. The
undersigned consent(s) to the nonexclusive jurisdiction and venue of the state
or federal courts located in such state. In the event of a dispute hereunder,
suit may be brought against the undersigned is such courts or in any
jurisdiction where the undersigned or any of its assets may be located.
Service of process by Chase in connection with any dispute shall be binding on
the undersigned if sent to the undersigned by registered mail at the
address(es) specified below or to such further address(es) as the undersigned
may specify to Chase in writing.
MAXIMUM INTEREST. Notwithstanding any other provision of this Note, the
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undersigned shall not be required to pay any amount pursuant to this Note
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which is in excess of the maximum amount permitted to be charged by national
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banks under applicable law and any such excess interest paid shall be refunded
to the undersigned or applied to principal owing hereunder.
Commercial Transaction. IF THE UNDERSIGNED IS A CONNECTICUT DOMICILED ENTITY
OR RESIDENT, EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGES THAT THIS NOTE AND
THE TRANSACTIONS CONTEMPLATED HEREBY CONSTITUTE COMMERCIAL TRANSACTIONS WITHIN
THE MEANING OF SECTION 52L-278a OF THE CONNECTICUT GENERAL STATUTES. EACH OF
THE UNDERSIGNED EXPRESSLY WAIVES ANY AND ALL RIGHTS, CONSTITUTIONAL OR
OTHERWISE, WITH RESPECT TO NOTICE AND HEARING AND ANY RIGHTS UNDER CHAPTER
903A OF THE CONNECTICUT GENERAL STATUTES IN CONNECTION WITH ANY PREJUDGMENT
REMEDY AVAILABLE TO CHASE.
BORROWER WAIVERS. THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
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INTENTIONALLY WAIVE(S) (TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW) ANY
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RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS NOTE
OR ANY FACILITY DOCUMENT, AND AGREES THAT ANY SUCH DISPUTE SHALL, AT CHASE'S
OPTION, BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
IN ADDITION, THE UNDERSIGNED WAIVES THE RIGHT TO INTERPOSE ANY DEFENSE BASED
UPON ANY STATUTE OF LIMITATIONS OR ANY CLAIM OF DELAY BY CHASE AND ANY SET-OFF
OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION.
Chase Account No. to be charged for
Disbursements and Payments: 012 -080020
INNODATA CORPORATION
By _____/S/_____
Print Name MARTY KAYE
Title: Chief Financial Officer
By ________
Print Name:
Title:
Address for notices
95 ROCKWELL
BROOKLYN, NY 11217
Telecopier No. (718) 260 4375