EXHIBIT 10(c)
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U.S. $7,000,000
CREDIT AGREEMENT
Dated as of October 15, 1994
between
C.I.S., INC.
and
HOSPITAL BILLING ANALYSIS, INC.,
as Borrowers,
C.I.S. TECHNOLOGIES, INC.,
as Parent,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
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THIS CREDIT AGREEMENT ("Agreement") is entered into as of October 15, 1994
by and among C.I.S., INC., an Oklahoma corporation ("CIS, Inc."), and HOSPITAL
BILLING ANALYSIS, INC., a California corporation ("HBA", and, together with CIS,
Inc., collectively, the "Borrowers"), C.I.S. TECHNOLOGIES, INC., a Delaware
corporation ("Parent"), and GENERAL ELECTRIC CAPITAL CORPORATION, a corporation
organized under the banking laws of the State of New York, (together with its
successors and assigns in such capacity, "Lender").
RECITALS
A. Borrowers desire to borrow up to $7,000,000 from Lender, and Lender is
willing to make certain loans and other financial accommodations to Borrowers of
up to such amount upon the terms and conditions set forth herein.
B. Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings ascribed to them in Annex A and, for purposes of
this Agreement and the other Loan Documents, the rules of construction set forth
in Annex A shall govern. Unless otherwise indicated, all references in this
Agreement to sections, subsections, schedules, exhibits, and attachments shall
refer to the corresponding sections, subsections, schedules, exhibits, and
attachments of or to this Agreement. All schedules, annexes, exhibits and
attachments hereto, or expressly identified to this Agreement, are incorporated
herein by reference, and taken together, shall constitute but a single
agreement. Unless otherwise expressly set forth herein, or in a written
amendment referring to such schedules and annexes, all schedules and annexes
referred to herein shall mean the schedules and annexes as in effect as of the
Closing Date. These Recitals shall be construed as part of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Revolving Credit Advances.
(a) Upon and subject to the terms and conditions hereof, Lender agrees to
make available, from time to time until the Commitment Termination Date, for
Borrowers' use and upon the request of Borrowers therefor to Lender, advances
(each, a "Revolving Credit Advance") in an aggregate principal amount at any
time outstanding up to but not exceeding the Revolving Credit Commitment of
Lender, provided that in no event shall the aggregate principal amount of the
Revolving Credit Loan exceed the Borrowing Availability. Borrowers may from
time to time borrow, repay and reborrow Revolving Credit Advances under this
Section 1.1, provided that each borrowing of Revolving Credit Advances hereunder
shall be made only at the Revolving Credit Rate.
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(b) Borrowers shall give Lender notice of each borrowing of a Revolving
Credit Advance hereunder as provided in Section 1.1(c) and on the date specified
for such borrowing Lender shall make available the amount of the Revolving
Credit Advances to be made by it on such date to the Borrowers giving such
notice in immediately available funds.
(c) Each notice of a borrowing of a Revolving Credit Advance shall be given
in writing (by telecopy, hand delivery, or U.S. mail) by Borrowers to Lender at
its address at 501 Merritt Seven, Norwalk, Connecticut 06851, Attention:
Collateral Analyst Department, Telephone No. (203) 840-4518, Telecopy No. (203)
840-4540/4710, given no later than 12:00 noon (New York time) on the Business
Day of the proposed Revolving Credit Advance. Each such notice of borrowing (a
"Notice of Revolving Credit Advance") shall be substantially in the form of
Exhibit A, specifying therein the requested date, the amount of such Revolving
Credit Advance and such other information as may be required by Lender. Lender
shall be entitled to rely upon any Notice of Revolving Credit Advance delivered
to Lender by Borrowers. Subject to the terms and conditions of this Agreement,
if Lender shall have received a Notice of Revolving Credit Advance prior to
12:00 noon (New York time) on a Business Day, Lender shall, not later than 3:00
p.m. (New York time) on such Business Day cause the amount requested in such
Notice of Revolving Credit Advance to be wired to the Disbursement Account.
(d) The Revolving Credit Advances made by Lender shall be evidenced by a
single promissory note of Borrowers substantially in the form of Exhibit C,
dated the date hereof, payable to Lender in a principal amount equal to the
amount of the Revolving Credit Commitment as originally in effect and otherwise
duly completed. The date and amount of each Revolving Credit Advance made by
Lender and each payment of principal with respect thereto shall be recorded on
the books and records of Lender, which books and records shall constitute prima
facie evidence of the accuracy of the information therein recorded. The entire
unpaid balance of the Revolving Credit Loan shall be immediately due and payable
on the Commitment Termination Date.
(e) The Borrowers shall furnish to Lender a Borrowing Base Certificate
substantially in the form of Exhibit B, completed and signed by the Chief
Executive Officer or Chief Financial Officer of the Borrowers, which sets forth
a calculation of the Borrowing Base at the times and for the periods set forth
in Annex E. The Borrowers agree that in making any Revolving Credit Advance
hereunder Lender shall be entitled to rely upon the most recent Borrowing Base
Certificate delivered to Lender. The Borrowers further agree that, if Borrowers
shall have failed to deliver a Borrowing Base Certificate to Lender within the
specified period, Lender shall be under no obligation to make any further
Revolving Credit Advances until such time as such Borrowing Base Certificate is
delivered to Lender.
1.2 Term Loan.
(a) Upon and subject to the terms and conditions hereof, the Lender agrees
to make available to Borrowers in a single funding, on the Closing Date, the
Term Loan in a maximum principal amount equal to the Lender's Term Loan
Commitment as follows: (i) on the Closing Date, in a single funding, a portion
of the Term Loan in a principal amount equal to $1,000,000 (the "Tranche A Term
Loan"); and (ii) at any time prior to
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November 30, 1994 upon three Business Days' prior written notice from Borrowers
to Lender, on the date of consummation of the AMSC Acquisition, in a single
funding, a portion of the Term Loan in a principal amount equal to $1,000,000
(the "Tranche B Term Loan"). In the event that the Tranche B Term Loan is not
funded on or prior to November 30, 1994, a portion of the Term Loan Commitment
in an amount equal to $1,000,000 shall terminate. The Term Loan shall be
evidenced by a single promissory note of Borrowers substantially in the form of
Exhibit D, dated the date hereof, payable to the Lender in a principal amount
equal to the amount of the Term Loan Commitment as originally in effect and
otherwise duly completed.
(b) Subject to the terms and conditions of this Agreement, on any date of
funding of the Tranche A Term Loan or the Tranche B Term Loan, Lender shall
cause to be wired to the Disbursement Account, the proceeds of such Term Loan.
(c) The aggregate principal amount of the Tranche A Term Loan and the
Tranche B Term Loan shall be payable in quarterly installments until paid in
full as follows:
Tranche A Tranche B
Payment Date Term Loan Term Loan
- - --------------- -------------- --------------
January 1, 1995 $ 83,333.33 $ 83,333.33
April 1, 1995 83,333.33 83,333.33
July 1, 1995 83,333.33 83,333.33
October 1, 1995 83,333.33 83,333.33
January 1, 1996 83,333.33 83,333.33
April 1, 1996 83,333.33 83,333.33
July 1, 1996 83,333.33 83,333.33
October 1, 1996 83,333.33 83,333.33
January 1, 1997 83,333.33 83,333.33
April 1, 1997 83,333.33 83,333.33
July 1, 1997 83,333.33 83,333.33
October 1, 1997 83,333.37 83,333.37
------------- -------------
Total $1,000,000.00 $1,000,000.00
Notwithstanding anything to the contrary contained herein or in the Term Note,
the entire unpaid balance of the Term Loan shall be immediately due and payable
on the Commitment Termination Date.
(d) Amounts repaid or prepaid in respect of the Term Loan may not be
reborrowed. The Term Loan shall be subject to mandatory prepayment as set forth
in Section 1.3(c) and may be voluntarily prepaid as set forth in Section 1.3(d).
1.3 Repayment; Termination of Commitment.
(a) Borrowers hereby jointly and severally promise to pay to Lender the
entire outstanding principal amount of the Revolving Credit Loan and the Term
Loan, and the Revolving Credit Loan and the Term Loan shall mature, on the
Commitment Termination Date.
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(b) In the event that the outstanding balance of the Revolving Credit Loan
shall at any time exceed the Borrowing Availability, (i) Borrowers shall
immediately repay the Revolving Credit Loan in the amount of such excess; and
(ii) the excess balance shall nevertheless constitute Obligations that are
secured by the Collateral and entitled to all of the benefits thereof and of the
Loan Documents and shall be evidenced by the Revolving Credit Note.
(c) Borrowers shall have the right at any time, upon ten (10) days prior
written notice to Lender, to voluntarily terminate the Revolving Credit
Commitment (in whole but not in part). Upon such termination, Borrowers' right
to receive Revolving Credit Advances shall simultaneously terminate and
Borrowers' obligation to pay the Non-Use Fee shall terminate, and
notwithstanding anything to the contrary contained herein or in any Loan
Document, the entire outstanding balance of the Revolving Credit Loan and the
Term Loan shall be immediately due and payable. On the date of such
termination, Borrowers shall pay to Lender in immediately available funds all of
the Obligations, including the Termination Fee, and any accrued and unpaid
interest thereon. If the Tranche B Term Loan is made available by Lender to
Borrower and the AMSC Acquisition is not consummated within three (3) Business
Days of funding thereof, Borrower shall on the fourth Business Day after funding
thereof repay the entire principal amount of the Tranche B Term Loan, together
with any accrued and unpaid interest thereon.
(d) Borrowers shall have the right at any time, upon thirty (30) days prior
written notice to Lender, to voluntarily prepay all or a portion of the Term
Loan, without premium or penalty. Any such payments of less than all of the
outstanding balance of the Term Loan shall be applied to the remaining
installments of the Term Loan in the inverse order of their maturity.
1.4 Use of Proceeds.
(a) Borrowers shall use the proceeds of the Revolving Credit Loan for (i)
the refinancing of certain outstanding Indebtedness as provided in Section 2.1,
(ii) the payment of costs and expenses of the financing transactions
contemplated by this Agreement that are payable by Borrowers, and (iii) for
working capital, other corporate purposes and acquisitions (other than the AMSC
Acquisition) permitted by the terms of this Agreement and the other Loan
Documents.
(b) Borrowers shall use the proceeds of the Term Loan as follows: (i) the
Tranche B Term Loan shall be used only for the financing of the AMSC
Acquisition, and (ii) the Tranche A Term Loan shall be used only for working
capital and other corporate purposes permitted by the terms of this Agreement
and the other Loan Documents.
1.5 Interest.
(a) Borrowers shall pay interest on the Term Loan and the Revolving Credit
Loan to Lender, (i) in arrears for the preceding calendar month, on the first
day of each calendar month commencing on November 1, 1994, (ii) on the
Commitment Termination Date, and (iii) if any interest accrues or remains
payable after the Commitment Termination Date, upon demand. If any interest or
other payment under this Agreement
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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, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(b) Borrowers shall be obligated to pay interest to Lender: (i) on the
outstanding balance of the Revolving Credit Loan, at a floating rate equal to
the Revolving Credit Rate; and (ii) on the outstanding balance of the Term Loan,
at a floating rate equal to the Term Rate. All computations of interest shall
be made by Lender and on the basis of a three hundred and sixty (360) day year,
in each case for the actual number of days occurring in the period for which
such interest is payable. Each determination by Lender of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error or bad faith.
(c) Upon notice from Lender to Borrowers after the occurrence of any
Default, the interest rate applicable to the Obligations (including, without
limitation, the Revolving Credit Loan and the Term Loan) shall, from the date of
the occurrence of such Default and so long as such Default continues, be the
Default Rate, provided, that upon the occurrence of an Event of Default
specified in Sections 8.1(f), (g), or (h), the interest rate applicable to all
of the Obligations shall be increased automatically to the Default Rate without
the necessity of any action on the part of Lender.
(d) Notwithstanding anything to the contrary set forth in this Section 1.5,
if, at any time until payment in full of all of the Obligations, the rate of
interest payable hereunder exceeds the highest rate of interest permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto (the "Maximum Lawful Rate"), then in such
event and so long as the Maximum Lawful Rate would be so exceeded, the rate of
interest payable hereunder shall be equal to the Maximum Lawful Rate; provided,
that if at any time thereafter the rate of interest payable hereunder is less
than the Maximum Lawful Rate, Borrowers shall continue to pay interest hereunder
at the Maximum Lawful Rate until such time as the total interest received by
Lender from the making of the Revolving Credit Loan and the Term Loan hereunder
is equal to the total interest which Lender would have received had the interest
rate payable hereunder been (but for the operation of this paragraph) the
interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, the interest rate payable hereunder shall be the rate of
interest provided in Sections 1.5 (a) through (c), unless and until the rate of
interest again exceeds the Maximum Lawful Rate, in which event this Section
1.5(d) shall again apply. In no event shall the total interest received by
Lender pursuant to the terms hereof exceed the amount which Lender could
lawfully have received had the interest due hereunder been calculated for the
full term hereof at the Maximum Lawful Rate. In the event the Maximum Lawful
Rate is calculated pursuant to this paragraph, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of days
in the year in which such calculation is made. In the event that a court of
competent jurisdiction, notwithstanding the provisions of this Section 1.5(d),
shall make a final determination that Lender has received interest hereunder or
under any of the Loan Documents in excess of the Maximum Lawful Rate, Lender
shall, to the extent permitted by applicable law, promptly apply such excess
first to any lawful interest due and not yet paid hereunder, then to the
outstanding principal of the Obligations, then to Fees and any other unpaid
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Obligations, and thereafter shall refund any excess to Borrowers or as a court
of competent jurisdiction may otherwise order.
1.6 Eligible Accounts. Based on the most recent Borrowing Base
Certificate delivered by Borrowers to Lender and on other information available
to Lender, Lender shall determine which Accounts shall be deemed to be Eligible
Accounts and Eligible Audit Service Accounts for purposes of determining the
amounts, if any, to be advanced to Borrowers under the Revolving Credit Loan.
1.7 Fees. As compensation for Lender's costs, skills, services and
efforts incurred and expended in making the Revolving Credit Loan and the Term
Loan available to Borrowers, Borrowers agree to pay to Lender the fees and
charges set forth in Annex D.
1.8 Cash Management System. On or prior to the Closing Date, Borrowers
will establish and maintain until the Termination Date, the cash management
system described in Annex B.
1.9 Receipt of Payments. Borrowers shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
Dollars in immediately available funds to the Collection Account. For purposes
of computing interest and Fees and determining the Borrowing Availability: (a)
all payments (including cash sweeps) consisting of cash, wire, or electronic
transfers in immediately available funds shall be deemed received by Lender upon
deposit in the Collection Account and notice to Lender of such deposit; and (b)
all payments consisting of checks, drafts, or similar non-cash items shall be
deemed received upon receipt of good funds following deposit in the Collection
Account (together with notice to Lender of such deposit).
1.10 Application and Allocation of Payments. Borrowers irrevocably waive
the right to direct the application of any and all payments at any time or times
hereafter received from or on behalf of Borrowers, and Borrowers irrevocably
agree that Lender shall have the continuing exclusive right to apply any and all
such payments against the then due and payable Obligations of Borrowers and in
repayment of the Revolving Credit Loan and the Term Loan as Lender may deem
advisable. In the absence of a specific determination by Lender with respect
thereto, the same shall be applied in the following order: (a) then due and
payable Fees and expenses; (b) then due and payable interest payments; (c) then
due and payable Obligations other than Fees, expenses and interest and principal
payments; (d) then due and payable principal payments on the Term Loan; and (e)
then due and payable principal payments on the Revolving Credit Loan. Lender is
authorized to, and at its option may, make or cause to be made Revolving Credit
Advances on behalf of Borrowers for payment of all Fees, expenses, charges,
costs, principal, interest, or other Obligations then due and payable by
Borrowers under this Agreement or any of the Loan Documents, even if the making
of such Revolving Credit Advance causes the outstanding balance of the Revolving
Credit Loan to exceed the Borrowing Availability, in which case the terms of
Section 1.3(b) shall apply.
1.11 Accounting. Lender will provide a monthly accounting of transactions
under the Revolving Credit Loan to Borrowers. Each and every such accounting
shall (absent manifest error) be deemed final, binding and conclusive upon
Borrowers in all respects as to all matters reflected therein, unless Borrowers,
within thirty (30) days
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after the date any such accounting is rendered, shall notify Lender in writing
of any objection which Borrowers may have to any such accounting, describing the
basis for such objection with specificity. In that event, only those items (the
"disputed items") expressly objected to in such notice shall be deemed to be
disputed by Borrowers. Lender's determination, based upon the facts available,
of any disputed item shall (absent manifest error) be final, binding and
conclusive on Borrowers.
1.12 Indemnity.
(a) Borrowers shall indemnify and hold Lender and its Affiliates, officers,
directors, employees, attorneys and agents (each, an "Indemnified Person"),
harmless from and against any and all suits, actions, costs, fines,
deficiencies, penalties, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys' fees and disbursements and other costs
of investigations or defense, including those incurred upon any appeal) (each, a
"Claim") which may be instituted or asserted against or incurred by such
Indemnified Person as the result of credit having been extended under this
Agreement or any other Loan Document or otherwise arising in connection with the
transactions contemplated hereunder and thereunder, including any and all
Environmental Liabilities and Costs and regardless of whether the Indemnified
Person is a party to such Claim; provided, that Borrowers shall not be liable
for any indemnification to such Indemnified Person with respect to any portion
of any such Claim which results solely from such Indemnified Person's gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction. NEITHER LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL
BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO, ANY SUCCESSOR, ASSIGNEE OR
THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED UNDER THE LOAN DOCUMENTS OR OTHERWISE IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED THEREBY.
In any suit proceeding or action brought by Lender relating to any Account,
Chattel Paper, Contract, General Intangible, Inventory, Instrument, Equipment or
Document for any sum owing thereunder, or to enforce any provision of any
Account, Chattel Paper, Contract, General Intangible, Instrument or Document,
Borrowers shall save, indemnify and keep Lender harmless from and against all
expense, loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of the obligor thereunder
arising out of a breach by any Borrower of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to, or
in favor of, such obligor or its successors from any Borrower, all such
obligations of Borrowers shall be and remain enforceable against, and only
against, Borrowers and shall not be enforceable against Lender.
(b) Borrowers hereby acknowledge and agree that Lender (as of the date
hereof) (i) is not now nor has ever been in control of any of the Subject
Property or the affairs of any Loan Party, and (ii) does not have the capacity
through the provisions of the Loan Documents to influence the conduct of any
Loan Party with respect to the ownership, operation or management of any of the
Subject Property.
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1.13 Access. Borrowers and Parent shall (and shall cause each of their
Subsidiaries to): (a) provide access during normal business hours to Lender and
any of its officers, employees and agents, as frequently as Lender determines to
be appropriate, upon reasonable advance notice (unless a Default shall have
occurred and be continuing, in which event no notice shall be required and
Lender shall have access at any and all times), to the properties and facilities
of the Loan Parties; (b) permit Lender and any of its officers, employees and
agents to inspect, audit and make extracts from all of the Loan Parties'
records, files and books of account; and (c) permit Lender to conduct audits to
inspect, review and evaluate the Collateral, and Borrowers and Parent agree to
render to Lender at Borrowers' cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Borrowers shall,
and shall cause each of their Subsidiaries to, make available to Lender and its
respective counsel, as quickly as practicable under the circumstances, originals
or copies of all books, records, board minutes, contracts, insurance policies,
environmental audits, business plans, files, financial statements (actual and
pro forma), filings with federal, state and local regulatory agencies, and other
instruments and documents which Lender may request. Each Borrower and Parent
shall deliver any document or instrument reasonably necessary for Lender, as it
may from time to time request, to obtain records from any service bureau or
other Person which maintains records for such Loan Party, and shall maintain
duplicate records or supporting documentation on media, including computer tapes
and discs owned by such Loan Party. Borrowers and Parent agree to make
available to Lender upon its reasonable request information and records prepared
by its independent certified public accountants and its banking and other
financial institutions.
1.14 Taxes.
(a) Any and all payments by or on behalf of Borrowers hereunder or under
the Revolving Credit Note, the Term Note, or any other Loan Document, shall be
made, in accordance with this Section 1.14, free and clear of and without
deduction for any and all present or future Taxes. If Borrowers shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Revolving Credit Note, the Term Note or any other Loan
Document to Lender, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 1.14) Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii)
Borrowers shall make such deductions, and (iii) Borrowers shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law.
(b) In addition, Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
(c) Borrowers shall indemnify and pay, within ten (10) days of demand
therefor, Lender for the full amount of Taxes or Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 1.14) paid by Lender and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted.
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(d) Within thirty (30) days after the date of any such payment of Taxes or
Other Taxes, Borrowers shall furnish to Lender, the original or a certified copy
of a receipt evidencing payment thereof.
1.15 Joint and Several Liability. All Obligations of any or all of the
Borrowers under this Agreement and the other Loan Documents shall be joint and
several and constitute one general obligation and liability of each Borrower to
the Lender. The Borrowers acknowledge that they will benefit directly and
indirectly from the Revolving Credit Loan and the Term Loan and agree that their
liability hereunder shall be absolute and unconditional regardless of any
defense available to or discharge of any other Borrower.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Term Loan and the Initial Revolving Credit Advance.
Notwithstanding any other provision of this Agreement and without affecting in
any manner the rights of Lender hereunder, none of Borrowers or Parent shall
have any rights under this Agreement (but shall have all applicable obligations
hereunder), and Lender shall not be obligated to make the Term Loan or any
Revolving Credit Advances, or to take, fulfill, or perform any other action
hereunder, until the following conditions have been fulfilled to the
satisfaction of Lender:
(a) This Agreement or counterparts thereof shall have been duly executed by
Borrowers and Parent and delivered to Lender.
(b) Lender shall have received such documents, instruments, certificates,
opinions and agreements as Lender shall request in connection with the
transactions contemplated by this Agreement, including all documents,
instruments, agreements and other materials listed in the Schedule of Documents
each in form and substance satisfactory to Lender.
(c) Lender shall have received evidence satisfactory to Lender that all of
the obligations of the Loan Parties under their financing agreements and
instruments with Liberty Bank and Trust Company of Tulsa, N.A., and the Small
Business Administration in each case, as in effect immediately prior to the
Closing Date, will be performed and paid in full from the proceeds of the
initial Revolving Credit Advance and that all Liens in favor of such lenders
upon any of the Collateral or any other property or assets of any Loan Party
shall have been terminated immediately upon such payment.
(d) Evidence satisfactory to Lender that the Loan Parties have obtained
consents and acknowledgments of all Persons whose consents and acknowledgments
may be required, including all requisite Governmental Authorities, to the terms
and to the execution and delivery of this Agreement and the other Loan Documents
and the consummation of the transactions contemplated hereby and thereby.
(e) Evidence satisfactory to Lender that the insurance policies provided
for in Section 3.19 and Annex F are in full force and effect, together with
appropriate evidence showing a loss payable and/or additional insured clauses or
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endorsements, as appropriate, in favor of Lender and in form and substance
satisfactory to Lender.
(f) All of the assets supporting the initial Revolving Credit Advance and
the amount, if any, of the reserves to be established on the Closing Date shall
be sufficient in value, on a pro forma basis after giving effect to the payment
of all anticipated closing expenditures, whether or not then paid, as determined
by Lender, and without any material deterioration of trade payables, to provide
Borrowers with Excess Borrowing Availability under the Revolving Credit Loan of
not less than $3,000,000.
(g) Payment by Borrowers to Lender of all Fees, costs, and expenses of
closing (including fees and expenses of consultants and counsel to Lender
presented as of the Closing Date).
(h) No action, proceeding, investigation, regulation or legislation shall
have been instituted, threatened or proposed before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain damages
in respect of, or which is related to or arises out of, this Agreement or any of
the other Loan Documents or the consummation of the transactions contemplated
hereby and thereby and which, in Lender's sole judgment, would make it
inadvisable to consummate the transactions contemplated by this Agreement or any
of the other Loan Documents.
(i) Lender shall have received the Financials.
(j) Lender shall be satisfied, in its reasonable judgment, with the
corporate, capital, tax, legal and management structure of each Loan Party, and
shall be satisfied, in its sole judgment exercised reasonably, with the nature
and status of all contractual obligations, securities, labor, tax, ERISA,
employee benefit, environmental, health and safety matters, in each case,
involving or affecting any Loan Party.
(k) All of the conditions precedent to closing under the Company Documents
and the Equity Documents shall have been met to the satisfaction of Lender and
all of such documents shall have been executed and delivered by the parties
thereto and the closings thereunder shall be consummated simultaneously with the
closing hereunder.
2.2 Further Conditions to Each Loan. It shall be a further condition to
the funding of the Tranche A Term Loan or the Tranche B Term Loan and the
initial and each subsequent Revolving Credit Advance that the following
statements shall be true on the date of each such funding, advance or
incurrence, as the case may be:
(a) Each Loan Party's representations and warranties contained herein or in
any of the Loan Documents shall be true and correct on and as of the Closing
Date and the date on which such Revolving Credit Advance or such Term Loan is
made, as though made on or incurred on and as of such date, except to the extent
that any such representation or warranty expressly relates solely to an earlier
date and except for changes therein permitted or contemplated by this Agreement.
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(b) No event shall have occurred and be continuing, or would result from
the making of such Term Loan or such Revolving Credit Advance, as the case may
be, which constitutes or would constitute a Default.
(c) After giving effect to such Revolving Credit Advance, the aggregate
principal amount of the Revolving Credit Loan shall not exceed the Borrowing
Availability.
(d) With respect to the Tranche B Term Loan, the AMSC Acquisition shall be
consummated on the date of funding thereof and Lender shall have received such
evidence of consummation of, and other information with respect to, the AMSC
Acquisition as it may require.
The request and acceptance by Borrowers of the proceeds of any Term Loan or any
Revolving Credit Advance, as the case may be, shall be deemed to constitute, as
of the date of such request or acceptance, (i) a representation and warranty by
Parent and Borrowers that the conditions in this Section 2.2 have been satisfied
and (ii) a confirmation by Parent and Borrowers of the granting and continuance
of Lender's Liens pursuant to the Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement, Borrowers and Parent
represent and warrant to Lender that:
3.1 Corporate Existence; Compliance with Law. Each Loan Party: (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and is duly qualified to do business
and is in good standing in each other jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification and the
failure to so qualify would not have a Material Adverse Effect; (b) has the
requisite corporate and authority and the legal right to own, pledge, mortgage
or otherwise encumber and operate its properties, to lease the property it
operates under lease, and to conduct its business as now, heretofore and
proposed to be conducted; (c) has all material licenses, permits, consents or
approvals from or by, and has made all filings with, and has given all notices
to, all Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct; (d) is in compliance with its articles or
certificate of incorporation and by-laws; and (e) is in compliance in all
material respects with all applicable provisions of law.
3.2 Executive Offices; Collateral Locations; Corporate or Other Names.
The current locations of each Loan Party's executive office, principal place of
business, corporate offices, all warehouses and premises within which any
Collateral is stored or located, and the locations of all of the Loan Parties'
records concerning the Collateral are set forth in Schedule 3.2 and, except as
set forth in Schedule 3.2, such locations have not changed during the preceding
12 months. During the prior five (5) years, except as set forth in Schedule
3.2, no Loan Party has been known as or used any corporate, fictitious or trade
name.
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3.3 Corporate Power; Authorization; Enforceable Obligations. The
execution, delivery and performance by each Loan Party of the Loan Documents and
all other instru-ments and documents to be delivered by such Loan Party
hereunder and thereunder to the extent it is a party thereto and the creation of
all Liens provided for herein and therein: (a) are within such Loan Party's
corporate power; (b) have been duly authorized by all necessary corporate and
shareholder action; (c) are not in contravention of any provision of such Loan
Party's articles or certificate of incorporation or by-laws or other
organizational documents; (d) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality; (e) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which any Loan Party is a
party or by which any Loan Party or any of its property is bound; (f) will not
result in the creation or imposition of any Lien upon any of the property of any
Loan Party other than those in favor of Lender, all pursuant to the Loan
Documents; and (g) do not require the consent or approval of any Governmental
Authority or any other Person, except those referred to in Section 2.1(d), all
of which will have been duly obtained, made or complied with prior to the
Closing Date and which are in full force and effect. At or prior to the Closing
Date, each of the Loan Documents shall have been duly executed and delivered for
the benefit of or on behalf of each Loan Party which is a party thereto and each
shall then constitute a legal, valid and binding obligation of such Loan Party
to the extent it is a party thereto, enforceable against such Loan Party in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights and
to equitable principles of general applicability.
3.4 Financial Statements. Borrowers and Parent have delivered the
Financials identified in Schedule 3.4, and each of such Financials complies with
the description thereof contained in Schedule 3.4.
3.5 Material Adverse Change. As of the date hereof, no Loan Party has any
obligations, contingent liabilities, or liabilities for Charges, long-term
leases or unusual forward or long-term commitments which are not reflected in
the audited December 31, 1993, consolidated balance sheet of Parent, which could
have a Material Adverse Effect. Except as otherwise permitted hereunder or as
set forth in Schedule 3.5, no Restricted Payment has been made since December
31, 1993, and no shares of Stock of Parent have been, or are now required to be,
redeemed, retired, purchased or otherwise acquired for value by Parent. Except
as otherwise disclosed in paragraph 1 of Schedule 3.12, since December 31, 1993,
no event has occurred or is continuing which would result in a Material Adverse
Effect.
3.6 Ownership of Property; Liens. Except as described in Schedule 3.6,
the real estate listed in Schedule 3.6 constitutes all of the real property
owned, leased, or used in its business by each Loan Party. Each Loan Party
holds good and marketable title to all of its property and assets and valid
leasehold interests in all of such Loan Party's Leases and none of the
properties or assets of any Loan Party are subject to any Liens, except (x)
Permitted Encumbrances and (y) from and after the Closing Date, the Lien in
favor of Lender pursuant to the Collateral Documents. Each Loan Party has
received all deeds, assignments, waivers, consents, non-disturbance and
recognition or similar agreements, bills of sale and other documents, and duly
effected all recordings, filings
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and other actions necessary to establish, protect and perfect such Loan Party's
right, title and interest in and to all such real estate and other assets or
property. Except as described in Schedule 3.6, (a) no Loan Party or, to
Borrowers' or Parent's knowledge, any other party to any Lease, is in default of
its obligations thereunder or has delivered or received any notice of default
under any such Lease, and no event has occurred which, to Borrowers' or Parent's
knowledge, with the giving of notice, the passage of time, or both, would
constitute a default under any such Lease; (b) no Loan Party owns or holds, or
is obligated under or a party to, any option, right of first refusal or any
other contractual right to purchase, acquire, sell, assign or dispose of any
property owned or leased by such Loan Party except as set forth in Schedule 3.6;
and (c) no material portion of any real property owned or leased by any Loan
Party has suffered any material damage by fire or other casualty loss which has
not heretofore been completely repaired and restored to its original condition.
All permits required to have been issued or appropriate to enable the real
property owned or leased by any Loan Party to be lawfully occupied and used for
all of the purposes for which they are currently occupied and used, have been
lawfully issued and are, as of the date hereof, in full force and effect, except
to the extent that the failure to have any such permit would not have a Material
Adverse Effect.
3.7 Restrictions; No Default. No Contract, lease, agreement, instrument
or other document to which any Loan Party is a party or by which it or any of
its properties or assets is bound or affected and no provision of any charter,
corporate restriction, applicable law or governmental regulation has resulted in
or will result in a Material Adverse Effect. No Loan Party is in default and,
to Borrowers' or Parent's knowledge, no third party is in default, under or with
respect to any Contract, lease, agreement, instrument or other document to which
any Loan Party is a party, which default could result in a Material Adverse
Effect. No Default has occurred and is continuing.
3.8 Labor Matters. There are no strikes or other labor disputes against
any Loan Party that are pending or, to Borrowers' or Parent's knowledge,
threatened. Hours worked by and payment made to employees of each Loan Party
have not been in violation of the Fair Labor Standards Act or any other
applicable law dealing with such matters which would have a Material Adverse
Effect. All material payments due from any Loan Party on account of employee
health and welfare insurance have been paid or accrued as a liability on the
books of such Loan Party. Except as set forth in Schedule 3.8, no Loan Party
has any obligation under any collective bargaining agreement, management
agreement, or any employment agreement, and a correct and complete copy of each
agreement listed on Schedule 3.8 has been provided to Lender. There is no
organizing activity involving any Loan Party pending or, to Borrowers' or
Parent's knowledge, threatened by any labor union or group of employees. Except
as set forth in Schedule 3.14, there are no representation proceedings pending
or, to Borrowers' or Parent's knowledge, threatened with the National Labor
Relations Board, and no labor organization or group of employees of any Loan
Party has made a pending demand for recognition, and, there are no complaints or
charges against any Loan Party pending or threatened to be filed with any
federal, state, local or foreign court, governmental agency or arbitrator based
on, arising out of, in connection with, or otherwise relating to the employment
or termination of employment by any Loan Party of any individual.
3.9 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Schedule 3.9, no Loan Party has any
Subsidiaries, or
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is engaged in any joint venture or partnership with, or an Affiliate of, any
other Person. The Stock of each Subsidiary owned by each of the stockholders
thereof named in Schedule 3.9 constitutes all of the issued and outstanding
Stock of such Loan Party. Except as set forth in Schedule 3.9, there are no
outstanding rights to purchase options, warrants or similar rights or agreements
pursuant to which any Loan Party may be required to issue, sell or purchase any
Stock or other equity security. Schedule 3.9 lists all outstanding Stock of each
Loan Party as of the Closing Date. Schedule 6.3 lists all Indebtedness of each
Loan Party as of the Closing Date.
3.10 Government Regulation. No Loan Party: (a) is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940 as amended; (b) is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act or any other federal or state statute that restricts or limits such
Loan Party's ability to incur Indebtedness, pledge its assets, or to perform its
obligations hereunder, or under any other Loan Document, and the making of the
Term Loan and the Revolving Credit Advances, in each case by Lender, the
application of the proceeds and repayment thereof by each Loan Party, and the
consummation of the transactions contemplated by this Agreement and the other
Loan Documents, will not violate any provision of any such statute or any rule,
regulation or order issued by the Securities and Exchange Commission.
3.11 Margin Regulations. No Loan Party is engaged in the business of
extending credit for the purpose of purchasing or carrying Margin Stock and no
proceeds of the Term Loan nor of any Revolving Credit Advance 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. No Loan Party will take or permit
to be taken any action which might cause any Loan Document or any document or
instrument delivered pursuant hereto or thereto to violate any regulation of the
Board of Governors of the Federal Reserve Board.
3.12 Taxes. Except as set forth in Schedule 3.12, all federal, state,
local and foreign tax returns, reports and statements, including information
returns required to be filed by each Loan Party, have been filed with the
appropriate Governmental Authority and all Charges and other impositions shown
thereon to be due and payable have been paid prior to the date on which any
fine, penalty, interest or late charge may be added thereto for nonpayment
thereof, or any such fine, penalty, interest, late charge or loss has been paid.
Except as set forth in Schedule 3.12, each Loan Party has paid when due and
payable all material Charges required to be paid by it. Proper and accurate
amounts have been withheld by each Loan Party from their respective employees
for all periods in full and complete compliance with the tax, social security
and unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings have been timely paid to the respective
Governmental Authorities. Schedule 3.12 sets forth those taxable years for
which any of the tax returns of each Loan Party are currently being audited by
the IRS or any other applicable Governmental Authority; and any assessments or
threatened assessments in connection with such audit or otherwise currently
outstanding. Except as described in Schedule 3.12, no Loan Party has executed
or filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for assessment
or collection of any Charges. None of the property owned by any Loan Party is
property which is required
14
to treat as being owned by any other Person pursuant to the provisions of IRC
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, and in
effect immediately prior to the enactment of the Tax Reform Act of 1986 or is
"tax-exempt use property" within the meaning of IRC Section 168(h). No Loan
Party has agreed or been requested to make any adjustment under IRC Section
481(a) by reason of a change in accounting method or otherwise. No Loan Party
has any obligation under any written tax sharing agreement except as described
in Schedule 3.12.
3.13 ERISA. Schedule 3.13 lists all Plans maintained or contributed to by
any Loan Party and all Qualified Plans, unfunded Pension Plans, or Welfare Plans
maintained or contributed to by any ERISA Affiliate. No Loan Party or any
current or former ERISA Affiliate sponsors (or has sponsored), contributes to
(or has contributed to), or is (or was) required to contribute to any Title IV
Plan, any Plan subject to IRC Section 412 or ERISA Section 302, or any Retiree
Welfare Plan. IRS determination letters regarding the qualified status under
IRC Section 401 of each Qualified Plan have been received as of the dates listed
in Schedule 3.13. Each of the Qualified Plans has been amended to comply with
the Tax Reform Act of 1986 and to make other changes required under the IRC or
ERISA, and if such required amendments are not subject to the determination
letters described in the previous sentence, each Qualified Plan so amended will
be submitted to the IRS for a determination letter as to the ongoing qualified
status of the Plan under the IRC within the applicable IRC Section 401(b)
remedial amendment period; and each such Plan shall be amended, including
retroactive amendments, as required during such determination letter process to
maintain the qualified status of such Plans. To the knowledge of Borrowers and
Parent, the Qualified Plans as amended continue to qualify under Section 401 of
the IRC, the trusts created thereunder continue to be exempt from tax under the
provisions of IRC Section 501(a), and nothing has occurred which would cause the
loss of such qualification or tax-exempt status. To the knowledge of Borrowers
and Parent, each Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the filing of all reports
required under the IRC or ERISA which are true and correct as of the date filed,
and all required contributions and benefits have been paid in accordance with
the provisions of each such Plan. No Loan Party has engaged in a prohibited
transaction, as defined in IRC Section 4975 or Section 406 of ERISA, in
connection with any Plan which would subject any such Person (after giving
effect to any exemption) to a material tax on prohibited transactions imposed by
IRC Section 4975 or any other material liability. Except as set forth in
Schedule 3.13: (i) there are no pending, or to the knowledge of Borrowers and
Parent, threatened claims, actions or lawsuits (other than claims for benefits
in the normal course), asserted or instituted against (x) any Plan or its
assets, (y) any fiduciary with respect to any Plan or (z) any Loan Party or any
ERISA Affiliate with respect to any Plan (ii) each Loan Party or other ERISA
Affiliate has complied with the notice and continuation coverage requirements of
IRC Section 4980B and the proposed or final regulations thereunder; and (iii) no
liability under any Plan has been funded, nor has such obligation been satisfied
with, the purchase of a contract from an insurance company that is not rated AAA
by Standard & Poor's Corporation and the equivalent by each other nationally
recognized rating agency.
3.14 No Litigation. Except as set forth in Schedule 3.14, no action,
claim or proceeding is now pending or, to the knowledge of Borrowers and Parent,
threatened against any Loan Party, at law, in equity or otherwise, before any
court, board, commission, agency or instrumentality of any federal, state, or
local government or of any agency or
15
subdivision thereof, or before any arbitrator or panel of arbitrators (a) which
challenges any such Person's right, power, or competence to enter into or
perform any of its obligations under the Loan Documents, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) which
if determined adversely, could have or result in a Material Adverse Effect. To
the knowledge of Borrowers and Parent, there does not exist a state of facts
which is reasonably likely to give rise to such proceedings.
3.15 Brokers. No broker or finder acting on behalf of any Loan Party
brought about the obtaining, making or closing of the credit extended pursuant
to this Agreement or the transactions contemplated by the Loan Documents and no
Loan Party has any obligation to any Person in respect of any finder's or
brokerage fees in connection therewith .
3.16 Intellectual Property. Except as otherwise set forth in Schedule
3.16, each Loan Party owns all Intellectual Property which is necessary to
continue to conduct its business as heretofore conducted by it, except where the
failure to own any such Intellectual Property right would not have or result in
a Material Adverse Effect, now conducted by it and, to the Borrowers' and
Parent's knowledge, proposed to be conducted by it, each of which is listed,
together with United States Patent and Trademark Office application or
registration numbers, where applicable, in Schedule 3.16. Each Loan Party
conducts business without infringement or claim of infringement of any
Intellectual Property right of others, except where such infringement or claim
of infringement could not have or result in a Material Adverse Effect. Except
as set forth in Schedule 3.16, to Borrowers' and Parent's knowledge, there is no
infringement or claim of infringement by others of any material Intellectual
Property of any Loan Party, except where such infringement or claim of
infringement could not have or result in a Material Adverse Effect.
3.17 Full Disclosure. No information contained in this Agreement, the
other Loan Documents, the Financials or any written statement furnished by or on
behalf of any Loan Party or any Affiliate thereof pursuant to the terms of this
Agreement or any other Loan Document, which has previously been delivered to
Lender, contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made. With
respect to any business plan (including without limitation Parent's strategic
plan) furnished by or on behalf of the Loan Parties to Lender relating to the
financial condition, operations, business, properties or prospects of any Loan
Party or any Subsidiary thereof: (a) all facts upon which such business plan is
based are true and complete in all material respects and no material fact was
omitted therefrom, (b) all material assumptions underlying such business plan
are reasonable under the circumstances and are disclosed therein, and (c) the
forecasts in such business plan are made with care and diligence and are
reasonably based on those facts and assumptions. With respect to any such
business plans made available to Lender after the Closing Date, the foregoing
clauses (a) through (c) shall be true and correct in all respects as of the date
of such business plan.
3.18 Hazardous Materials. Except for routine operations in the ordinary
course of business in compliance with applicable permits issued by a
Governmental
16
Authority, the Subject Property is free of any Hazardous Material and no Loan
Party has caused or suffered to occur any Release at, under, above or within any
Subject Property. There are no existing or potential Environmental Liabilities
and Costs of any Loan Party of which any Borrower or Parent, after due inquiry,
have knowledge, which could have or result in a Material Adverse Effect. No Loan
Party is involved in operations which could lead to the imposition of any
material Environmental Liabilities and Costs on it, or any owner of any premises
which it occupies, or any Lien securing the same under any Environmental Law.
3.19 Insurance Policies. Schedule 3.19 lists all insurance of any nature
maintained for current occurrences by each Loan Party, as well as a summary of
the terms of such insurance. Such insurance complies with and shall at all
times comply with the standards set forth in Annex F.
3.20 Deposit and Disbursement Accounts. Schedule 3.20 lists all banks and
other financial institutions at which each Loan Party maintains deposits and/or
other accounts and/or post office lock boxes, including the Disbursement
Account, the Concentration Account and the Lock Box Accounts, and such Schedule
correctly identifies the name, address and telephone number of each depository,
the name in which the account is held, a description of the purpose of the
account, and the complete account number.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. Borrowers and Parent covenant and agree that
from and after the Closing Date and until the Termination Date, they shall
deliver to Lender the Financials and notices at the times and in the manner set
forth in Annex E. Concurrently with the delivery of such annual audited
financial statements, Borrowers shall cause to be delivered to Lender a
certificate of Borrowers' independent certified public accountants certifying
that during the course of performing their audit of the Loan Parties they did
not become aware of any Default under the Loan Documents or specifying each
Default of which they became aware.
4.2 Communication with Accountants. Borrowers and Parent (each for itself
and each Subsidiary) authorize Lender to communicate directly with them and
their Subsidiaries' independent certified public accountants and tax advisors
and authorizes those accountants and advisors to disclose to Lender any and all
work papers and financial statements and other supporting financial documents
and schedules, including copies of any management letter with respect to the
business, financial condition and other affairs of Parent, each Borrower and
each Subsidiary thereof. So long as no Event of Default has occurred and is
continuing, Lender shall promptly notify Parent in writing of any such
communication; provided that Lender shall incur no liability for failure to give
such notice. At or before the Closing Date and on each anniversary of the
Closing Date, Borrowers and Parent shall, and shall cause each Subsidiary
thereof to, deliver a letter (the "Accountant's Letter") addressed to and
acknowledged by such accountants and tax advisors instructing them to make
available to Lender such information and records as Lender may reasonably
request and to otherwise comply with the provisions of this Section 4.
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5. AFFIRMATIVE COVENANTS
Borrowers and Parent covenant and agree (each for itself and its
Subsidiaries) that, unless Lender shall otherwise consent in writing, from and
after the date hereof and until the Termination Date, Borrowers and Parent
shall, and shall cause each Subsidiary thereof to, comply with the following
affirmative covenants:
5.1 Maintenance of Existence and Conduct of Business. Each Loan Party
shall: (a) do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and its rights and franchises; (b)
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder; (c) at all times maintain, preserve and protect all of its
Intellectual Property, and preserve all the remainder of its property, in use or
useful in the conduct of its business and keep the same in good repair, working
order and condition (taking into consideration ordinary wear and tear) and from
time to time make, or cause to be made, all necessary or appropriate repairs,
replacements and improvements thereto consistent with industry practices, so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; (d) keep and maintain its Equipment and
Fixtures in good operating condition (reasonable wear and tear excepted)
sufficient for the continuation of such Person's business conducted on a basis
consistent with past practices and shall provide or arrange for all maintenance
and service and all repairs necessary for such purpose; and (e) transact
business only under the names set forth in Schedule 3.2.
5.2 Payment of Charges and Claims. Each Loan Party shall pay and
discharge, or cause to be paid and discharged in accordance with the terms
thereof, (A) all Charges imposed upon it or any other Loan Party or its or their
income and profits, or any of its property (real, personal or mixed), and (B)
all lawful claims for labor, materials, supplies and services or otherwise,
which if unpaid might by law become a Lien on its property; provided, that such
Loan Party shall not be required to pay any such Charge or claim which is being
contested in good faith by proper legal actions or proceedings, so long as at
the time of commencement of any such action or proceeding and during the
pendency thereof (i) adequate reserves with respect thereto are established and
are maintained in accordance with GAAP, (ii) such contest operates to suspend
collection of the contested Charges or claims and is maintained and prosecuted
continuously with diligence, (iii) none of the Collateral would be subject to
forfeiture or loss or any Lien by reason of the institution or prosecution of
such contest, (iv) no Lien shall exist, be imposed or be attempted to be imposed
for such Charges or claims during such action or proceeding unless the full
amount of such Charge or claim is covered by insurance satisfactory in all
respects to Lender, (v) such Loan Party shall promptly pay or discharge such
contested Charges and all additional charges, interest penalties and expenses,
if any, and shall deliver to Lender evidence acceptable to Lender of such
compliance, payment or discharge, if such contest is terminated or discontinued
adversely to such Loan Party, and (vi) Lender has not advised Borrower in
writing that Lender reasonably believes that nonpayment or nondischarge thereof
would result in a Material Adverse Effect.
5.3 Books and Records. Each Loan Party shall keep adequate records and
books of account with respect to its business activities, in which proper
entries, reflecting all of its consolidated and consolidating financial
transactions, are made in accordance with GAAP and on a basis consistent with
the Financials.
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5.4 Litigation. Each Loan Party shall notify Lender in writing, promptly
upon learning thereof, of any litigation, Claim or other action commenced or
threatened against any Loan Party, and of the institution against any Loan Party
of any suit or administrative proceeding which (a) may involve an amount in
excess of $250,000 individually or in the aggregate or (b) could have or result
in a Material Adverse Effect if adversely determined.
5.5 Insurance.
(a) The Loan Parties shall, at their sole cost and expense, maintain or
cause to be maintained, the policies of insurance in such amounts and as
otherwise described in Annex F and with insurers recognized as adequate by
Lender. The Loan Parties shall notify Lender promptly of any occurrence causing
a material loss or decline in value of any real or personal property and the
estimated (or actual, if available) amount of such loss or decline, except as
specified otherwise in Annex F. Subject to Section 5.13, Borrowers and Parent
hereby direct all present and future insurers under its "All Risk" policies of
insurance to pay all proceeds payable thereunder directly to Lender, other than
proceeds relating to the loss or damage to property which secures Indebtedness
permitted under clauses (c) of Section 6.3 which is required by the terms of
such Indebtedness to be paid to the holder thereof ("excluded proceeds").
Borrowers and Parent irrevocably make, constitute and appoint Lender (and all
officers, employees or agents designated by Lender) as their true and lawful
agent and attorney in-fact for the purpose of, upon the occurrence and during
the continuance of a Default, making, settling and adjusting claims under the
"All Risk" policies of insurance, endorsing the name of such Person on any
check, draft, instrument or other item of payment for the proceeds of such "All
Risk" policies of insurance (other than excluded proceeds), and for making all
determinations and decisions with respect to such "All Risk" policies of
insurance. In the event any Loan Party at any time or times hereafter shall
fail to obtain or maintain (or fail to cause to be obtained or maintained) any
of the policies of insurance required above or to pay any premium in whole or in
part relating thereto, Lender, without waiving or releasing any Obligations or
Default hereunder, may at any time or times thereafter (but shall not be
obligated to) obtain and maintain such policies of insurance and pay such
premium and take any other action with respect thereto which Lender deems
advisable. All sums so disbursed, including reasonable attorneys' fees, court
costs and other charges related thereto, shall be payable, on demand, by
Borrowers to Lender and shall be additional Obligations hereunder secured by the
Collateral, provided, that if and to the extent Borrowers fail to promptly pay
any of such sums upon Lender's demand therefor, Lender is authorized to, and at
its option may, make or cause to be made Revolving Credit Advances on behalf of
Borrowers for payment thereof.
(b) Lender reserves the right at any time, upon review of Borrowers' risk
profile, to reasonably require additional forms and limits of insurance to
adequately protect Lender's interests. Each Loan Party shall, if so requested
by Lender, deliver to Lender, as often as Lender may reasonably request, a
report of a reputable insurance broker satisfactory to Lender with respect to
its insurance policies.
(c) Each Loan Party shall deliver to Lender endorsements to all of its (i)
"All Risk" and business interruption insurance naming Lender as loss payee to
the
19
extent provided in Section 5.5(a), and (ii) general liability and other
liability policies naming Lender as an additional insured.
5.6 Compliance with Laws. Each Loan Party shall comply with all federal,
state and local laws, permits and regulations applicable to it, including those
relating to licensing, environmental, ERISA and labor matters, except to the
extent any failure to so comply would not have a Material Adverse Effect.
5.7 Agreements. Each Loan Party shall perform, within all required time
periods (after giving effect to any applicable grace periods), all of its
obligations and enforce all of its rights under each agreement, contract,
instrument or other document to which it is a party, where the failure to so
perform and enforce could have or result in a Material Adverse Effect. Each
Loan Party shall perform and comply with all obligations in respect of Accounts,
Chattel Paper, Instruments, Contracts, Licenses, and Documents and all other
agreements constituting or giving rise to Collateral. No Borrower shall,
without Lender's prior written consent, with respect to any of the Accounts (a)
grant any extension of the time of payment of any thereof; (b) compromise or
settle the same for less than the full amount thereof; (c) release, in whole or
in part, any Person liable for the payment thereof; or (d) allow any credit or
discount whatsoever thereon other than trade discounts granted in the ordinary
course of business of such Borrower, provided, that Borrowers may, without
Lender's prior written consent, release, in whole or in part, compromise,
settle, or allow credits or discounts with respect to the payment of any of the
Accounts, each in an amount not to exceed (i) $50,000 in the aggregate in any
calendar month, and (ii) $150,000 in the aggregate in any twelve month period,
so long as such compromise, settlement, credit or discount is reported on the
next Borrowing Base Certificate submitted by Borrowers.
5.8 Supplemental Disclosure. On the request of Lender (in the event that
such information is not otherwise delivered by Borrowers or Parent to Lender
pursuant to this Agreement), Borrowers and Parent will supplement (or cause to
be supplemented) each Schedule hereto, or representation herein or in any other
Loan Document with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedule or as an exception to such representation or
which is necessary to correct any information in such Schedule or representation
which has been rendered inaccurate thereby; provided, that such supplement to
such Schedule or representation shall not be deemed an amendment thereof unless
expressly consented to in writing by Lender, and no such amendments, except as
the same may be consented to in a writing which expressly includes a waiver,
shall be or be deemed a waiver by Lender of any Default disclosed therein. Each
Loan Party shall, if so requested by Lender, furnish to Lender as often as it
reasonably requests, statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
Lender may reasonably request, all in reasonable detail, and, each, Loan Party
shall advise Lender promptly, in reasonable detail, of (a) any Lien, other than
as permitted pursuant to Section 6.7, attaching to or asserted against any of
the Collateral, (b) any material change in the composition of the Collateral,
and (c) the occurrence of any other event which would have a Material Adverse
Effect upon the Collateral and/or Lender's Lien thereon.
20
5.9 Environmental Matters. Each Loan Party shall (a) comply with all
Environmental Laws and permits applicable to it where the failure to so comply
could have or result in a Material Adverse Effect, (b) notify Lender promptly
after such Loan Party becomes aware of any Release upon any Subject Property
which could have or result in a Material Adverse Effect, and (c) promptly
forward to Lender a copy of any order, notice, permit, application, or any
communication or report received by any Loan Party in connection with any such
Release or any other material matter relating to the Environmental Laws that may
affect any Subject Property or any Loan Party. The provisions of this Section
5.9 shall apply whether or not the Environmental Protection Agency, any other
federal agency or any state or local environmental agency has taken or
threatened any action in connection with any Release or the presence of any
Hazardous Materials.
5.10 Subsidiaries. Each Loan Party shall take such action from time to
time as shall be necessary to ensure that each of its Subsidiaries is a Wholly-
owned Subsidiary, except as otherwise permitted under clause (ii) of the first
sentence of Section 6.1 and any limited liability company Subsidiary organized
pursuant to the Company Documents. No Loan Party will permit any of its
Subsidiaries to enter into, after the date of this Agreement, any indenture,
agreement, instrument or other arrangement that, directly or indirectly,
prohibits or restrains, or has the effect of prohibiting or restraining, or
imposes materially adverse conditions upon, the incurrence or payment of
Indebtedness, the granting of Liens, the declaration or payment of dividends or
other Restricted Payments, the making of loans, advances or Investments or the
sale, assignment, transfer or other disposition of any property or assets. Upon
Lender's request (exercised in its sole discretion), Parent shall cause its
Subsidiaries or any of them to (i) guarantee the Obligations by executing and
delivering a Subsidiary Guaranty and/or (ii) pledge all of its assets to secure
the Obligations by executing and delivering a Subsidiary Security Agreement.
5.11 Application of Proceeds. Borrowers shall use the proceeds of the
Revolving Credit Loan and the Term Loan as provided in Section 1.4.
5.12 Fiscal Year. Each Loan Party shall maintain as its Fiscal Year the
twelve month period ending on December 31 of each year.
5.13 AMSC Acquisition. Parent shall provide to Lender copies of all
documentation relating to the AMSC Acquisition which documentation shall be
satisfactory in all respects to Lender. The notes (the "Acquisition Notes")
proposed to be made by Parent in favor of the sellers as partial consideration
for the purchase price of the AMSC Acquisition shall (i) be satisfactory in all
respects to Lender, (ii) be subject to acceleration, redemption, mandatory
prepayment or purchase only upon the bankruptcy of the Parent or upon a payment
default, (iii) be in an original aggregate principal amount of not more than
$2,000,000, and (iv) provide that no scheduled payments of principal or interest
are payable thereunder prior to a date which is no less than 36 months from the
date of issuance. The Acquisition Notes shall be secured only by the stock of
AMSC owned by Parent.
6. NEGATIVE COVENANTS
21
Borrowers and Parent covenant and agree (for itself and each Subsidiary)
that, without Lender's prior written consent, from and after the date hereof and
until the Termination Date, Borrowers and Parent shall, and shall cause each
Subsidiary thereof to, comply with the following negative covenants:
6.1 Mergers, Subsidiaries, Etc. No Loan Party shall directly or
indirectly, by operation of law or otherwise, merge with, consolidate with,
acquire all or substantially all of the assets or capital stock of, or otherwise
combine with, any Person, except (i) the merger or consolidation of a Wholly-
owned Subsidiary (other than a Borrower) with another Subsidiary of Parent
(other than a Borrower), so long as the Subsidiary surviving such merger or
consolidation is a Wholly-owned Subsidiary; and (ii) the acquisition of the
assets or stock of any Person; provided that for any acquisition of the stock of
another Person (such Person and any Subsidiaries thereof being "Acquired
Subsidiaries"), such Acquired Subsidiaries are, after giving effect to such
acquisition, Wholly-owned Subsidiaries; provided, further, that an Acquired
Subsidiary shall be permitted to be a non-Wholly-owned Subsidiary if (1) such
Acquired Subsidiary is a Subsidiary of another such Acquired Subsidiary at the
time of acquisition, (2) the fair market value of such Acquired Subsidiary's
assets is less than ten percent of the aggregate purchase price for all Acquired
Subsidiaries then being acquired, and (3) no less than 80% of the voting Stock
of such Acquired Subsidiary is held directly or indirectly by Parent. Prior to
forming, acquiring or otherwise holding any Subsidiary after the date hereof,
each Loan Party shall (a) provide not less than thirty (30) days prior written
notice to Lender, (b) take all actions requested by Lender to protect and
preserve the Collateral, and (c) except for any Subsidiary formed or acquired in
connection with, or as a result of, a Permitted Acquisition, obtain Lender's
prior written consent.
6.2 Investments. No Loan Party shall, directly or indirectly, make or
maintain any Investment except: (a) as otherwise permitted by Section 6.3 or
6.4; (b) Investments outstanding on the date hereof and listed in Schedule 6.2;
(c) trade credit for the purchase of inventory or goods sold to any Person
(other than a Subsidiary or Affiliate of such Loan Party) in the ordinary course
of business on terms not exceeding 120 days; (d) Investments in Cash Equivalents
at any time during which no Revolving Credit Advances are outstanding which are
subject to a first priority perfected Lien of Lender; and (e) Permitted
Acquisitions.
6.3 Indebtedness. No Loan Party shall create, incur, assume or permit to
exist any Indebtedness, except: (a) the Obligations; (b) Deferred Taxes; (c)
Capital Lease Obligations and Indebtedness secured by purchase money Liens on
Equipment permitted under clause (c) of Section 6.7 in a maximum aggregate
amount outstanding not to exceed $500,000 outstanding at any time; (d)
Indebtedness existing on the Closing Date and set forth in Schedule 6.3 and (e)
Indebtedness assumed in connection with Permitted Acquisitions, including
Indebtedness of any Acquired Subsidiary, in a maximum aggregate principal amount
outstanding not to exceed $500,000 outstanding at any time.
6.4 Affiliate Transactions. Except as otherwise expressly permitted
hereunder, no Loan Party shall enter into any lending, borrowing or other
commercial transaction with any of its Subsidiaries or Affiliates, including
payment of any management, consulting, advisory or similar fee provided that
such Loan Parties may make:
22
(i) intercompany advances by any Loan Party to another Loan Party not in excess
of $100,000 in the aggregate for all Loan Parties in any Fiscal Year; (ii) an
advance by Borrowers to Parent in an amount equal to $1,000,000 from proceeds of
the Tranche B Loan to be used by Parent in payment of the cash portion of the
purchase price for the AMSC Acquisition; and (iii) redemption of the Parent's
common stock from Philip Kurtz in repayment of the loan referred to on Schedule
6.4. Set forth in Schedule 6.4 is a list of all such lending, borrowing or other
commercial transactions existing or outstanding as of the Closing Date.
6.5 Capital Structure and Business. No Loan Party (including any Acquired
Subsidiary) shall: (a) make any changes in its business objectives, purposes,
or operations which could in any way adversely affect the repayment of the
Obligations or have or result in a Material Adverse Effect; (b) amend its
certificate of incorporation, charter, by-laws or other organizational
documents; or (c) engage in any business other than the business currently
engaged in by such Loan Party and related businesses.
6.6 Guaranteed Indebtedness. No Loan Party shall incur any Guaranteed
Indebtedness except: (a) by endorsement of instruments or items of payment for
deposit to the general account of such Loan Party; (b) for Guaranteed
Indebtedness incurred for the benefit of such Loan Party if the primary
obligation is permitted by this Agreement for such Loan Party to incur (and such
Guaranteed Indebtedness shall be treated as a primary obligation for all
purposes hereof); and (c) for performance bonds or indemnities entered into in
the ordinary course of business consistent with past practices.
6.7 Liens. No Loan Party shall create or permit to exist any Lien on any
of its properties or assets except for: (a) presently existing or hereafter
created Liens in favor of Lender to secure the Obligations; (b) Permitted
Encumbrances; and (c) purchase money Liens or purchase money security interests
upon or in Equipment acquired by such Loan Party in the ordinary course of
business to secure the purchase price of such Equipment or to secure Capital
Lease Obligations or Indebtedness permitted under clause (c) of Section 6.3
incurred solely for the purpose of financing the acquisition of such Equipment;
provided that no Loan Party shall create or permit any Lien to exist on any of
the Collateral (other than Liens described in clauses (a) and (b) above).
6.8 Sale of Assets. No Loan Party shall sell, transfer, convey, assign or
otherwise dispose of any of its assets or properties, including any Collateral;
provided, that the foregoing shall not prohibit (a) the sale of Inventory in the
ordinary course of business; and (b) the sale or disposition of any assets which
have become obsolete or surplus to the business of such Loan Party in any Fiscal
Year having a fair market value of not greater than $35,000 in the aggregate for
all of the Loan Parties.
6.9 ERISA. No Loan Party or any ERISA Affiliate shall acquire any new
ERISA Affiliate that maintains or has an obligation to contribute to a Pension
Plan that has either an "accumulated funding deficiency," as defined in Section
302 of ERISA, or any "unfunded vested benefits," as defined in Section
4006(a)(3)(E)(iii) of ERISA in the case of any Pension Plan other than a
Multiemployer Plan and in Section 4211 of ERISA in the case of a Multiemployer
Plan. Additionally, no Borrower or any ERISA Affiliate shall: (a) permit or
suffer any condition set forth in Section 3.13 to cease to be met and satisfied
at any time, other than permitting an ERISA Affiliate acquired after the Closing
Date to
23
sponsor a Title IV Plan, a Plan subject to IRC Section 412 or ERISA Section 302,
or a Retiree Welfare Plan.; (b) terminate any Title IV Plan where such
termination could reasonably be anticipated to result in liability to such
Borrower; (c) permit any accumulated funding deficiency, as defined in Section
302(a)(2) of ERISA, to be incurred with respect to any Pension Plan; (d) fail to
make any contributions or fail to pay any amounts due and owing as required by
the terms of any Plan before such contributions or amounts become delinquent;
(e) make a complete or partial withdrawal (within the meaning of Section 4201 of
ERISA) from any Multiemployer Plan; (f) fail to provide Lender with copies of
any Plan documents or governmental reports or filings, if reasonably requested
by Lender; (g) fail to make any contribution or pay any amount due as required
by IRC Section 412 or Section 302 of ERISA; (h) allow any ERISA Event or event
described in Section 4062(e) of ERISA to occur with respect to any Title IV
Plan; (i) with respect to all Retiree Welfare Plans, allow the present value of
future anticipated expenses to exceed $50,000 or fail to provide copies of such
projections to Lender.
6.10 Financial Covenants. No Loan Party shall breach or fail to comply
with any of the financial covenants set forth in Annex G, each of which shall be
calculated in accordance with GAAP consistently applied (and based upon the
financial statements delivered hereunder).
6.11 Hazardous Materials. Except as set forth in Schedule 3.18, no Loan
Party shall, or permit any of its Subsidiaries or any other Person within its
control: (a) to cause or permit a Release of Hazardous Material on, under, in
or about any Subject Property which could have or result in a Material Adverse
Effect; (b) to use, store, generate, treat or dispose of Hazardous Materials,
except in compliance in all material respects with the Environmental Laws; or
(c) to transport any Hazardous Materials to or from any Subject Property, except
in compliance in all material respects with the Environmental Laws.
6.12 Sale-Leasebacks. No Loan Party shall engage in any sale-leaseback or
similar transaction involving any of its property or assets.
6.13 Cancellation of Indebtedness. No Loan Party shall cancel any claim
or Indebtedness owing to it, except for adequate consideration and in the
ordinary course of its business.
6.14 Restricted Payments. No Loan Party shall make any Restricted Payment
to any Person other than to a Parent, except Restricted Payments permitted under
Section 6.4.
6.15 Bank Accounts. No Loan Party shall maintain any deposit, operating
or other bank accounts except for those accounts identified in Schedule 3.20
without the prior written consent of Lender which shall not be unreasonably
withheld so long as the maintenance of such account does not in Lender's
reasonable judgment negatively affect the cash management system described in
Annex B or the preservation of the Collateral and the requirements of Annex B
with respect to such account are satisfied.
6.16 No Speculative Investments. No Loan Party shall engage in any
speculative investment or any investment involving commodity options or futures
contracts.
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6.17 Margin Regulations. No Loan Party shall use the proceeds of any
Revolving Credit Advance to purchase or carry any Margin Stock or any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
6.18 Limitation on Negative Pledge Clauses. No Loan Party shall directly
or indirectly, enter into any agreement with any Person, other than the
agreements with Lender pursuant to a Loan Document which prohibits or limits the
ability of a Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired.
7. TERM
7.1 Duration. The financing arrangement contemplated hereby shall be in
effect until the Commitment Termination Date. On the Commitment Termination
Date, the Revolving Credit Commitment and the Term Loan Commitment shall
terminate and the Revolving Credit Loan, the Term Loan and all other Obligations
shall immediately become due and payable in full, in cash.
7.2 Survival of Obligations. Except as otherwise expressly provided for
in the Loan Documents, no termination or cancellation (regardless of cause or
procedure) of any financing arrangement under this Agreement shall in any way
affect or impair the Obligations, duties, indemnities, and liabilities of any
Loan Party, or the rights of Lender relating to any Obligations, due or not due,
liquidated, contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the performance of which
is not required until after the Commitment Termination Date. Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon any Loan Party, and all rights of Lender, all as contained in the
Loan Documents shall not terminate or expire, but rather shall survive such
termination or cancellation and shall continue in full force and effect until
such time as all of the Obligations have been indefeasibly paid in full in
accordance with the terms of the agreements creating such Obligations.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the following
events (regardless of the reason therefor) shall constitute an "Event of
Default" hereunder:
(a) Any Loan Party shall fail to make any payment in respect of any
Obligations hereunder or under any of the other Loan Documents when due and
payable or declared due and payable, including any payment of principal of, or
interest on, the Revolving Credit Loan or the Term Loan.
(b) Any Loan Party shall fail or neglect to perform, keep or observe any of
the provisions of Section 1.8, Section 4.1, or Section 6, including any of the
provisions set forth in Annex B, Annex F, or Annex G.
25
(c) Any Loan Party shall fail or neglect to perform, keep or observe any
term or provision of this Agreement (other than any such term or provision
referred to in paragraph (a) or (b) above) or of any of the other Loan
Documents, and the same shall remain unremedied for a period ending on the first
to occur of thirty (30) days after Borrowers shall receive written notice of any
such failure from Lender or thirty (30) days after any Loan Party shall become
aware thereof.
(d) A default shall occur under any other agreement, document or instrument
to which any Loan Party is a party or by which any Loan Party or its property is
bound, and such default (i) involves the failure to make any payment (whether of
principal, interest or otherwise) due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) in respect of any Indebtedness of
such Loan Party in an aggregate amount exceeding $100,000, except for payments
lawfully withheld by such Loan Party as a setoff in connection with a good faith
dispute between such Loan Party and the holder of such Indebtedness, or (ii)
causes (or permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness, or a portion thereof in an aggregate amount exceeding $100,000, to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment.
(e) Any representation or warranty herein or in any Loan Document or in any
written statement pursuant thereto or hereto, any report, financial statement or
certificate made or delivered to Lender by any Loan Party shall be untrue or
incorrect in any material respect as of the date when made or deemed made
(including those made or deemed made pursuant to Section 2.2).
(f) Any of the assets of any Loan Party shall be attached, seized, levied
upon or subjected to a writ or distress warrant, or come within the possession
of any receiver, trustee, custodian or assignee for the benefit of creditors of
such Loan Party and shall remain unstayed or undismissed for thirty (30)
consecutive days; or any Person other than a Loan Party shall apply for the
appointment of a receiver, trustee or custodian for any Loan Party's assets and
shall remain unstayed or undismissed for thirty (30) consecutive days; or any
Loan Party shall have concealed, removed or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them or made or suffered a transfer of any of its property
or the incurring of an obligation which may be fraudulent under any bankruptcy,
fraudulent conveyance or other similar law.
(g) A case or proceeding shall have been commenced against any Loan Party
in a court having competent jurisdiction seeking a decree or order (i) under
Title 11 of the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other similar law,
(ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of any Loan Party or of any substantial part
of its properties, or (iii) ordering the winding up or liquidation of the
affairs of any Loan Party and such case or proceeding shall remain undismissed
or unstayed for sixty (60) consecutive days or such court shall enter a decree
or order granting the relief sought in such case or proceeding.
(h) Any Loan Party (i) shall file a petition seeking relief under Title 11
of the United States Code, as now constituted or hereafter amended, or any other
26
applicable federal, state or foreign bankruptcy or other similar law, (ii) shall
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar official) of
any Loan Party or of any substantial part of any Loan Party's properties, (iii)
shall fail generally to pay its debts as such debts become due, or (iv) shall
take any corporate action in furtherance of any such action.
(i) Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $50,000 in the aggregate
shall be rendered against any Loan Party, unless the same shall be (i) fully
covered by insurance in accordance with Section 5.5, or (ii) vacated, stayed,
bonded, paid or discharged within a period of fifteen (15) days from the date of
such judgment.
(j) There shall occur any Material Adverse Effect which shall not have been
cured (or waived by Lender) within thirty (30) days of notice thereof from
Lender to Borrowers.
(k) Any provision of any Loan Document shall for any reason cease to be
valid, binding and enforceable in accordance with its terms or any Loan Party or
other party thereto shall so state in writing; or any Lien created under any
Collateral Document shall cease to be a valid and perfected Lien having the
first priority in any of the Collateral purported to be covered thereby.
(l) There shall occur a Change of Control.
(m) An event or condition specified in Section 6.9 hereof shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result of such
event or condition, together with all other such events or conditions, a
Borrower, any Subsidiary thereof or any ERISA Affiliate shall incur or in the
opinion of Lender shall be reasonably likely to incur a liability to a Plan, a
Multiemployer Plan or PBGC (or any combination of the foregoing) in excess of
$50,000 in the aggregate.
8.2 Remedies. If any Event of Default shall have occurred and be
continuing, the rate of interest applicable to the Revolving Credit Loan and the
Term Loan may, at Lender's sole discretion, be increased, effective as of the
date of the occurrence of the Default giving rise to such Event of Default, to
the Default Rate as provided in Section 1.5(c). If any Event of Default shall
have occurred and be continuing, Lender may, without notice, take any one or
more of the following actions: (a) terminate the Revolving Credit Commitment,
whereupon Lender's obligation to make further Revolving Credit Advances shall
terminate; (b) declare all or any portion of the Obligations to be forthwith due
and payable, whereupon such Obligations shall become and be due and payable; or
(c) exercise any rights and remedies provided to Lender under the Loan Documents
and/or at law or equity, including all remedies provided under the Code;
provided, that upon the occurrence of an Event of Default specified in Section
8.1 (f), (g) or (h) the rate of interest applicable to all Obligations shall be
increased automatically to the Default Rate as provided in Section 1.5(c), and
the Revolving Credit Commitment shall immediately terminate and the Obligations
shall become immediately due and payable, in each case, without declaration,
notice or demand by Lender to any Person.
27
8.3 Waivers. Except as otherwise provided for in this Agreement and
applicable law, to the full extent permitted by applicable law, Borrowers waive
(a) presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default, nonpayment,
maturity, release, compromise, settlement, extension or renewal of any or all
Loan Documents, notes, commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Lender on which
Borrowers may in any way be liable, and Borrowers hereby ratify and confirm
whatever Lender may do in this regard, (b) all rights to notice and a hearing
prior to Lender's taking possession or control of, or to Lender's replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to Lender to exercise any of its remedies, and (c)
the benefit of any right of redemption and all valuation, appraisal and
exemption laws. Borrowers and Parent acknowledge that they have been advised by
counsel of their choice with respect to this Agreement, the other Loan Documents
and the transactions contemplated by this Agreement and the other Loan
Documents.
9. SUCCESSORS AND ASSIGNS
9.1 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding on and shall inure to the benefit of Borrowers, Parent, Lender,
and their respective successors and assigns, except as otherwise provided herein
or therein. None of Borrowers or Parent may assign, delegate, transfer,
hypothecate or otherwise convey their rights, benefits, obligations or duties
hereunder or under any of the Loan Documents without the prior express written
consent of Lender. Any such purported assignment, transfer, hypothecation or
other conveyance by any Borrower or Parent without such prior express written
consent shall be void. The terms and provisions of this Agreement and the other
Loan Documents are for the purpose of defining the relative rights and
obligations of Borrowers and Parent, on the one hand, and Lender, on the other
hand, with respect to the transactions contemplated hereby and there shall be no
third party beneficiaries of any of the terms and provisions of this Agreement
or any of the other Loan Documents.
9.2 Assignments and Participations. Lender may assign, negotiate, pledge
or otherwise hypothecate all or any portion of this Agreement, or grant
participations herein, in the Revolving Credit Loan, the Term Loan, or in any of
its rights or security hereunder and under the other Loan Documents or any part
thereof, including, without limitation, any instruments securing the Borrowers'
obligations hereunder. Borrowers shall assist Lender in selling assignments or
participations under this Section 9.2 in whatever manner reasonably necessary in
order to enable or effect any such assignment or participation, including the
execution and delivery of any and all agreements, notes and other documents and
instruments as shall be requested and the preparation and delivery of
informational materials, appraisals or other documents for, and the
participation of relevant management in meetings with, potential assignees or
participants.
10. MISCELLANEOUS
10.1 Complete Agreement; Modification of Agreement. This Agreement and
the other Loan Documents constitute the complete agreement between the parties
with respect
28
ANNEX A
to
CREDIT AGREEMENT
Dated as of October 15, 1994
DEFINITIONS; RULES OF CONSTRUCTION
1. Definitions. In addition to the defined terms appearing in this
Agreement and other Loan Documents, capitalized terms used in this Agreement and
the other Loan Documents shall have (unless otherwise provided elsewhere in this
Agreement and the other Loan Documents) the following respective meanings:
"Account Debtor" shall mean any Person who may become obligated to a
Borrower under, with respect to, or on account of, an Account, Chattel Paper or
General Intangibles.
"Accounts" shall mean, with respect to any Person, all "accounts," as
such term is defined in the Code, now owned or hereafter acquired by such Person
and, in any event, including: (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments) now owned or hereafter
received or acquired by or belonging or owing to such Person, whether arising
out of goods sold or services rendered by it or from any other transaction
(including any such obligations which may be characterized as an account or
contract right under the Code); (b) all of such Person's rights in, to and under
all purchase orders or receipts now owned or hereafter acquired by it for goods
or services; (c) all of such Person's rights to any goods represented by any of
the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods); (d) all monies due or to become due to such Person under all
purchase orders and contracts for the sale or lease of goods or the performance
of services or both by such Person or in connection with any other transaction
(whether or not yet earned by performance on the part of such Person) now or
hereafter in existence, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts; and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Acquired Subsidiary" shall have the meaning assigned to it in
Section 6.1.
"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, five percent (5%) or more of the Stock
having ordinary voting power in the election of directors of such Person, (b)
each Person that controls, is controlled by
or is under common control with such Person or any Affiliate of such Person, or
(c) each of such Person's officers, directors, joint ventures and partners. For
the purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" shall mean this Credit Agreement to which this Annex A is
attached and of which it forms a part, including all Annexes, Schedules, and
Exhibits attached or otherwise identified thereto, all restatements,
modifications and supplements hereof or hereto, and any appendices, attachments,
exhibits or schedules to any of the foregoing, and shall refer to this Agreement
as the same may be in effect at the time such reference becomes operative;
provided, that any reference to the Schedules to this Agreement shall be deemed
a reference to the Schedules as in effect as of the Closing Date, unless
otherwise provided in a written amendment thereto.
"AMSC" shall mean Automated Medical Systems Consultants, Inc., a
Florida corporation.
"AMSC Acquisition" shall mean the acquisition by Parent of all of the
capital stock of AMSC from its shareholders as contemplated by the letter of
intent dated August 24, 1994, as amended by the letter dated September 27, 1994,
among Parent, Wendy R. Lewis and Randall Ray and which is intended to be
effected pursuant to an Agreement and Plan of Reorganization to be entered into
among AMSC, Wendy R. Lewis, Randall Ray, Parent and C.I.S. Merger Co., a
Delaware corporation, and other documentation satisfactory to Lender.
"Audit Services" shall mean the audit services provided by HBA to
Persons in or related to the medical care industry, including, but not limited
to, charge recovery and verification services, services in connection with HBA's
Defense Audit Program, Concurrent Audit Programs, and supplemental audit support
services.
"Borrowers" has the meaning assigned to it in the preamble to this
Agreement.
"Borrowing Availability" shall mean, at any time, the lesser at such
time of (a) the Revolving Credit Commitment and (b) the Borrowing Base.
"Borrowing Base" shall mean, at any time, an amount determined by
Lender to be equal to the sum at such time of:
(a) up to ________ (__%) [redacted] of Eligible Accounts (other
than Eligible Charge Recovery Accounts) of Borrowers; and
(b) up to the lesser of (i) _________ (__%) [redacted] of
Eligible Charge Recovery Accounts of HBA and (ii) $1,500,000;
minus, the amount of any reserves as Lender may deem necessary or appropriate
from time to time in its reasonable discretion.
2
"Borrowing Base Certificate" shall mean a certificate duly
completed in the form attached hereto as Exhibit B.
"Business Day" shall mean any day that is not a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in New York City.
"Capital Expenditures" shall mean, as of any date, all payments or
accruals (including Capital Lease Obligations) for any asset or improvements or
for replacements, substitutions or additions thereto, that are required to be
capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Cash Equivalents" shall mean: (a) securities with maturities of one
year or less from the date of acquisition, issued or fully guaranteed or insured
by the government of the United States of America or any agency thereof and
backed by the full faith and credit of the United States of America; (b)
certificates of deposit, Eurodollar time deposits, overnight bank deposits and
bankers' acceptances of any domestic commercial bank having capital and surplus
in excess of $500,000,000, having maturities of one year or less from the date
of acquisition; and (c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Corp. or at least P-1 by Moody's Investors Services, Inc., or
carrying an equivalent rating by a nationally recognized rating agency if both
of the two named rating agencies cease publishing ratings of investments, in
each case with maturities of not less than sixty (60) days from the date
acquired.
"Change of Control" shall mean (i) the replacement of a majority of
the Board of Directors of Parent, over a two-year period, from the directors who
constituted the Board of Directors at the beginning of such period, which
replacement shall not have been approved by a vote of at least a majority of the
Board of Directors of Parent then still in office who were either members of the
Board of Directors at the beginning of such period or whose appointment as a
member of the Board of Directors was previously so approved; (ii) as a result of
a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, a Person or entity or group of Persons acting in concert
as a partnership, joint venture, alliance or other group shall have become the
"beneficial owner" (within the meaning of Rule 13d-3 under the Exchange Act as
in effect on the Closing Date) of securities of Parent representing 30% or more
of the combined voting power of the then outstanding securities of ordinarily
(and apart from rights arising under special circumstances) having the right to
vote in the election of directors thereof; or (iii) all of the shares of capital
stock of each Borrower are not owned directly by Parent.
3
"Charge Recovery Account" shall mean any Account that arises from the
provision by HBA of Charge Recovery Audit Services and as to which Account the
Account Debtor has not yet received a remittance notice from the third party
payor or insurer.
"Charges" shall mean, for any Loan Party, all Federal, state, county,
city, municipal, local, foreign or other governmental taxes (including taxes
owed to PBGC at the time due and payable), levies, assessments, charges or Liens
upon or relating to (a) the Collateral, (b) the Obligations, (c) the employees,
payroll, income or gross receipts of such Loan Party, (d) the ownership or use
by such Loan Party of any of its assets, or (e) any other aspect of such Loan
Party's business.
"Chattel Paper" shall mean all "chattel paper," as such term is
defined in the Code, now owned or hereafter acquired and wherever located.
"CIS, Inc." has the meaning assigned to it in the first paragraph
of this Agreement.
"Claim" shall have the meaning assigned to it in Section 1.12.
"Closing Date" shall mean the Business Day on which the conditions
precedent set forth in Section 2 have been satisfied, in Lender's sole
discretion, or waived in writing by Lender, and the initial Revolving Credit
Advance and the Term Loan have been made.
"Closing Fee" shall have the meaning assigned to it in Annex D.
"Code" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York; provided, that in the event
that by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of, or the remedies with respect to, Lender's security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, the term "Code" shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions.
"Collateral" shall mean the property covered by the Collateral
Documents and any other property, real or personal, tangible or intangible, now
existing or hereafter acquired, that may at any time be or become subject to a
Lien in favor of Lender to secure the Obligations.
"Collateral Documents" shall mean the Security Agreement, any
Subsidiary Security Agreement, the Concentration Account Agreement, the Lock Box
Account Agreements and the Disbursement Account Agreement and all other
instruments and agreements now or hereafter securing the whole or any part of
the Obligations.
"Collection Account" shall mean that certain account of Lender,
account number 502-328-54 in the name of GECC/CAF Depository at Bankers Trust
Company, 1 Bankers
4
Trust Plaza, New York, New York 10006, ABA number 021-001-033, or such other
account as may be designated by Lender.
"Commitment Termination Date" shall mean the earliest of (a) October
31, 1997, (b) the date of termination of the Revolving Credit Commitment
pursuant to Section 8.2, and (c) the date of termination of the Revolving Credit
Commitment in accordance with the provisions of Section 1.3(c).
"Company Documents" shall mean the Limited Liability Company
Agreement, the Services Agreement and the Technology Agreement, each dated as of
October 31, 1994 among Parent, Borrowers, GE Capital Commercial Finance, Inc.
and SA Services, L.L.C., and all other agreements, documents, and instruments
executed and delivered in connection therewith.
"Concentration Account" shall have the meaning assigned to it in
Annex B.
"Concentration Account Agreement" shall have the meaning assigned
to it in Annex B.
"Contracts" shall mean, with respect to any Person, all the contracts,
undertakings, or agreements (other than rights evidenced by Chattel Paper,
Documents or Instruments) in or under which such Person may now or hereafter
have any right, title or interest, including any agreement relating to the terms
of payment or the terms of performance of any Account.
"Copyrights" shall, with respect to any Person, mean any United States
copyright to which such Person now or hereafter has title, as well as any
application for a United States of America copyright hereafter made by such
Person.
"Current Assets" shall mean, with respect to any Person at any date,
all assets of such Person which are or should be classified as current on a
consolidated balance sheet of such Person as of such date prepared in accordance
with GAAP.
"Current Liabilities" shall mean, with respect to any Person at any
date, all liabilities of such Person which are or should be classified as
current on a consolidated balance sheet of such Person as of such date prepared
in accordance with GAAP.
"Default" shall mean any Event of Default or any event which, with the
passage of time or notice or both, would, unless cured or waived, become an
Event of Default.
"Default Rate" shall mean the rate equal to the sum of two and one-
half percent (2.5%), plus (i) in the case of the Revolving Credit Loan, the
Revolving Credit Rate; or (ii) in the case of the Term Loan, the Term Rate.
5
"Deferred Taxes" shall mean, with respect to any Person at any date,
the amount of deferred taxes of such Person as shown on the balance sheet of
such Person prepared in accordance with GAAP of such date.
"Disbursement Account" shall have the meaning assigned to it in
Annex B.
"Disbursement Account Agreement" shall have the meaning assigned to
it in Annex B.
"Documents" shall mean, with respect to any Person, all "documents,"
as such term is defined in the Code, now owned or hereafter acquired by such
Person, wherever located, and in any event any bills of lading, dock warrants,
dock receipts, warehouse receipts, or other documents of title.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"DOL" shall mean the United States Department of Labor or any
successor thereto.
"EBIT" shall mean, for any period, the Net Income (Loss) of Parent and
its Subsidiaries for such period, plus interest expense, tax expense, and
extraordinary losses and minus extraordinary gains, in each case, of Parent and
its Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP to the extent included in the determination of such Net
Income (Loss).
"Eligible Accounts" shall mean, with respect to any Borrower, such
Accounts of such Borrower that are not ineligible as the basis for Revolving
Credit Advances based on the criteria set forth below. Unless otherwise agreed
to in writing by Lender, in determining whether an Account constitutes an
Eligible Account, Lender shall not include any Account:
(a) that does not arise from the sale of goods or services by such
Borrower in the ordinary course of Borrower's business;
(b) upon which (i) such Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatever, or
(ii) such Borrower is not able to bring suit or otherwise enforce its remedies
against the Account Debtor through judicial process;
(c) (i) against which, or against any contract or agreement pursuant
to which such account arises, is asserted or may be asserted any defense,
counterclaim or set-off, or (ii) which is a "contra" Account, whether well-
founded or otherwise, in each case to the extent of such defense, counterclaim,
set-off or "contra" amount;
(d) that is not a true and correct statement of a bona fide
indebtedness incurred in the amount of the Account for merchandise sold and
accepted by or services rendered to the Account Debtor obligated upon such
Account;
6
(e) with respect to which an invoice, acceptable to Lender in form and
substance to ensure compliance with the terms of the Loan Documents, has not
been sent to Account Debtor;
(f) that is not owned by such Borrower or is subject to any right,
claim, or interest of another other than the Lien in favor of Lender;
(g) that arises from a sale to or performance of services for an
employee, Affiliate, parent or Subsidiary of such Borrower, or an entity which
has common officers or directors with such Borrower;
(h) that is the obligation of an Account Debtor that is the Federal
government or a political subdivision thereof, unless such Borrower has complied
with the Federal Assignment of Claims Acts of 1940, and any amendments thereto,
with respect to such obligation;
(i) that is evidenced by chattel paper, a promissory note,
negotiable instrument or any other instrument of any kind;
(j) that is the obligation of an Account Debtor located in a foreign
country, unless the sale of goods giving rise to the Account is on a letter of
credit or other credit support basis satisfactory to Lender's security interest
in or assignment of such Account and letter of credit or other credit support is
duly and properly created and/or perfected to Lender's satisfaction; or the sale
represented by such Account is denominated in other than Dollars or is payable
outside the United States of America;
(k) that is the obligation of an Account Debtor to whom such Borrower
is or may become liable for goods sold or services rendered by the Account
Debtor to such Borrower;
(l) that arises with respect to goods or services which are delivered
or rendered on a cash-on-delivery basis or placed on consignment, guaranteed
sale or other terms by reason of which the payment by the Account Debtor may be
conditional;
(m) that is in default; provided, that an Account shall be deemed
in default upon the occurrence of any of the following:
(i) with respect to any Account of CIS, Inc., such Account is
not paid within the earlier of (x) sixty (60) days from the due date,
and (y) ninety (90) days from its invoice date;
(ii) with respect to any Account of HBA (other than a Charge
Recovery Account), such Account is not paid within the earlier of (x)
thirty (30) days from the due date, and (y) sixty (60) days from its
invoice date;
(iii) with respect to any Charge Recovery Account, such
Account is not paid within 180 days of HBA's submission of a claim in
respect thereof to the insurer or other third party payor;
7
(iv) the sale represented by such Account is subject to any
material claim or dispute by the Person to whom or to which it was made;
(v) if any Account Debtor obligated upon such Account suspends
business, becomes insolvent, makes a general assignment for the benefit
of creditors, or fails to pay its debts generally as they come due; or
(vi) if any petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any other
national, state or provincial receivership, insolvency relief or other
law or laws for the relief of debtors;
(n) that is the obligation of an Account Debtor as to which fifty
percent (50%) or more of the Dollar value of the Accounts of such Account Debtor
have become, or have been determined by Lender to be, ineligible;
(o) the sale represented by such Account is on terms longer than
such Borrower's standard terms;
(p) that arises from any bill-and-hold or other sale of goods which
remain in a Borrower's possession or under such Borrower's control;
(q) as to which the interest of Lender therein is not a first
priority perfected security interest;
(r) to the extent such Account exceeds any credit limit established by
Lender with respect to any Account Debtor from time to time;
(s) that fails to meet or violates any of such Borrower's
representations, warranties or covenants contained in this Agreement or any
other Loan Document; or
(t) that is not otherwise acceptable in the reasonable judgment of
Lender based upon such credit and collateral considerations as Lender may deem
appropriate from time to time.
"Eligible Charge Recovery Accounts" shall mean such Eligible
Accounts which are also Charge Recovery Accounts.
"Environmental Laws" shall mean all Federal, state and local laws,
statutes, ordinances, orders and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any applicable
judicial or administrative interpretation thereof relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental
Laws include, but are not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. (S)(S) 9601 et
seq.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49
U.S.C. (S)(S) 1801 et seq.); the Federal Insecticide, Fungicide, and Rodenticide
Act, as
8
amended (7 U.S.C. (S)(S) 136 et seq.); the Resource Conservation and Recovery
Act, as amended (42 U.S.C. (S)(S) 6901 et seq.) ("RCRA"); the Toxic Substance
Control Act, as amended (15 U.S.C. (S)(S) 2601 et seq.); the Clean Air Act, as
amended (42 U.S.C. (S)(S) 740 et seq.); the Federal Water Pollution Control Act,
as amended (33 U.S.C. (S)(S) 1251 et seq.); the Occupational Safety and Health
Act, as amended (29 U.S.C. (S)(S) 651 et seq.) ("OSHA"); and the Safe Drinking
Water Act, as amended (42 U.S.C. (S)(S) 300(f) et seq.), and any and all
regulations promulgated thereunder, and all analogous state and local
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
"Environmental Liabilities and Costs" shall mean all liabilities,
obligations, responsibilities, remedial actions, removal costs, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim, suit,
action or demand by any person or entity, whether based in contract, tort,
implied or express warranty, strict liability, criminal or civil statute or
common law (including any thereof arising under any Environmental Law, permit,
order or agreement with any Governmental Authority) and which relate to any
health or safety condition regulated under any Environmental Law or in
connection with any other environmental matter or Release, threatened Release,
or the presence of a Hazardous Material.
"Equipment" shall mean all "equipment" as such term is defined in the
Code, and, in any event, shall include all machinery, equipment, furnishings,
fixtures and vehicles and any and all additions, accessions, substitutions and
replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto.
"Equity Documents" shall mean the Stock Purchase Agreement and the
Registration Rights Agreement, each dated as of even date herewith, between
Parent and Lender, and all other agreements, documents and instruments executed
and delivered in connection therewith.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Loan Party, any
trade or business (whether or not incorporated) under common control with such
Loan Party and which, together with such Loan Party is treated as a single
employer within the meaning of Section 414(b), (c), (m) or (o) of the IRC.
"ERISA Event" shall mean, with respect to any Loan Party or any ERISA
Affiliate, (a) a Reportable Event with respect to a Title IV Plan or a
Multiemployer Plan; (b) the withdrawal of any Loan Party or any ERISA Affiliate
from a Title IV Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(c) the complete or partial withdrawal of such Loan Party or any ERISA Affiliate
from any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination
9
under Section 4041 of ERISA; (e) the institution of proceeding to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (vi) the failure to make
required contributions to a Qualified Plan; or (f) any other event or condition
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA.
"Event of Default" shall have the meaning assigned to it in Section
8.1.
"Excess Borrowing Availability" shall mean at any time of measurement,
the amount by which Borrowing Availability exceeds the aggregate outstanding
principal amount of the Revolving Credit Advances.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fees" shall mean the fees due to Lender as set forth in Section 1.7,
and any other fees due to Lender pursuant to the Loan Documents.
"Financials" shall mean the financial statements referred to in
paragraph 1 of Schedule 3.4.
"Fiscal Month" shall mean each of the monthly accounting periods of
the Loan Parties.
"Fiscal Quarter" shall mean each of the three-month periods ending
on March 31, June 30, September 30 or December 31.
"Fiscal Year" shall, for the Loan Parties, mean the 12-month period of
the Loan Parties ending on December 31 of each year. Subsequent changes of the
fiscal year of such Loan Parties shall not change the term "Fiscal Year," unless
Lender shall consent in writing to such change.
"Fixed Charge Coverage Ratio" shall mean, for any period, the ratio of
the following for Parent and its Subsidiaries determined on a consolidated basis
in accordance with GAAP: (a) EBIT for such period to (b) the sum of (i) interest
expense paid or deemed paid in respect of Funded Debt during such period, plus
(ii) regularly scheduled payments of principal paid or deemed paid on Funded
Debt during such period, plus (iii) taxes paid during such period.
"Fixtures" shall, with respect to any Person, mean all "fixtures," as
such term is defined in the Code, now or hereafter owned or acquired such
Person, wherever located, and, in any event, including all of the fixtures,
systems, machinery, apparatus, equipment and fittings of every kind and nature
whatsoever and all appurtenances and additions thereto and substitutions
therefor or replacements thereof, now or hereafter attached or affixed to or
constituting a part of, or located in or upon, real property wherever located
(including all heating, electrical, mechanical, lighting, lifting, plumbing,
ventilating, air-conditioning and air cooling, refrigerating, incinerating and
10
power, loading and unloading, signs, escalators, elevators, boilers,
communication, switchboards, sprinkler and other fire prevention and
extinguishing fixtures, systems, machinery, apparatus and equipment, and all
engines, motors, dynamos, machinery, pipes, pumps, tanks, conduits and ducts
constituting a part of any of the foregoing, together with all extensions,
improvements, betterments, renewals, substitutes, and replacements of, and all
additions and appurtenances to any of the foregoing property).
"Funded Debt" shall mean, for any Person, all of such Person's
Indebtedness which by the terms of the agreement governing or instrument
evidencing such Indebtedness matures more than one year from, or is directly or
indirectly renewable or extendible at the option of such Person under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from, the date of creation thereof,
including current maturities of long-term debt, revolving credit, and short-term
debt extendible beyond one year at the option of such Person.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time, consistently applied,
except that, for purposes of Section 6.10 and Annex G, GAAP shall be determined
on the basis of such principles in effect on December 31, 1993 and consistent
with those used in the preparation of the audited financial statements referred
to in Section 3.4.
"General Intangibles" shall mean, with respect to any Person, all
"general intangibles," as such term is defined in the Code, now owned or
hereafter acquired by such Person and, in any event, including all right, title
and interest which such Person may now or hereafter have in or under any
Contract, all customer lists, Intellectual Property, interests in partnerships,
joint ventures and other business associations, permits, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Intellectual Property), all rights and claims in or under insurance policies,
(including insurance for fire, damage, loss, and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man, and business interruption insurance, and all unearned
premiums), uncertificated securities, chooses in action, and other bank accounts
(including with respect to the Loan Parties the Lock Box Accounts, the
Concentration Account and the Disbursement Account), rights to receive tax
refunds and other payments and rights of indemnification.
"Goods" has the meaning assigned to it in the Code.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner including any obligation or arrangement of such Person (a) to
purchase or repurchase any
11
such primary obligation, (b) to advance or supply funds (i) for the purchase or
payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet condition of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation, or (d) to indemnify the owner of such
primary obligation against loss in respect thereof.
"Hazardous Material" shall mean (i) any element, material, compound,
mixture, solution, chemical, substance, or pollutant within the definition of
"hazardous substance" under Section 101(14) of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. (S) 9601(14); petroleum or
any fraction, byproduct or distillation product thereof; asbestos,
polychlorinated biphenyls, or any radioactive substances; and any material
regulated as a hazardous substance by any jurisdiction in which any Loan Party
owns or operates or has owned or operated a facility; or (ii) any element,
pollutant, contaminate or discarded material (including any radioactive
material) within the definition of Section 103(6) of the Resource Conservation
and Recovery Act, 42 U.S.C. (S) 6903(6); and any material regulated as a
hazardous waste by any jurisdiction in which any Loan Party owns or operates or
has owned or operated a facility, or to which any Loan Party sends material for
treatment, storage or disposal as waste.
"HBA" has the meaning assigned to it in the first paragraph of this
Agreement.
"Indebtedness" of any Person shall mean (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured, but not including obligations to trade creditors incurred in the
ordinary course of business), (b) all obligations evidenced by notes, bonds,
debentures or similar instruments, (c) all indebtedness created or arising under
any conditional sale or other title retention agreements with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (d) all Capital Lease Obligations, (e)
all Guaranteed Indebtedness, (f) all Indebtedness referred to in clause (a),
(b), (c), (d) or (e) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (g) the Obligations, and (h) all liabilities under
Title IV of ERISA.
"Indemnified Person" shall have the meaning assigned to it in
Section 1.12.
"Index Rate" shall mean, for any day, the latest rate for thirty-day
dealer placed commercial paper (which for purposes hereof shall mean high grade
unsecured notes sold through dealers by major corporations in multiples of
$1,000) which normally is published in the "Money Rates" section of The Wall
Street Journal for such day or, in the event such rate is not so published, in
such other nationally recognized publication
12
as Lender may specify. Each change in any interest rate provided for herein
based upon the Index Rate shall take effect at the time of such change in the
Index Rate.
"Instruments" shall mean, for any Person, all "instruments," as such
term is defined in the Code, now owned or hereafter acquired by such Person,
wherever located and in any event all certificated securities, certificates of
deposit and all notes and other evidences of indebtedness, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" shall mean, for any Person, collectively, all
Trademarks, all Patents, all Copyrights and all Licenses now held or hereafter
acquired by such Person, together with all franchises, tax refund claims, rights
of indemnification, payments under insurance, indemnities, warranties and
guarantees payable with respect to the foregoing.
"Inventory" shall mean, for any Person, all "inventory," as such term
is defined in the Code, now or hereafter owned or acquired by, such Person,
wherever located, and, in any event, including inventory, merchandise, goods and
other personal property which are held by or on behalf of such Person for sale
or lease or are furnished or are to be furnished under a contract of service or
which constitute raw materials, work in process or materials used or consumed or
to be used or consumed in such Person's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
other supplies, and all accessions and additions thereto and all documents of
title covering any of the foregoing.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Investment" shall mean, for any Person (a) the acquisition (whether
for cash, property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or other
securities of any other Person or any agreement to make any such acquisition;
(b) the making of any deposit with, capital contribution or other investment in,
or advance, loan or other extension of credit to, any other Person (including
the purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such Person); and
(c) the entering into of any Guaranteed Indebtedness of, or other contingent
obligation with respect to, Indebtedness or other liability of any other Person
and (without duplication) any amount committed to be advanced, lent or extended
to such Person.
"Leases" shall mean all of those leasehold estates in real property
now owned or hereafter acquired by a Loan Party, as lessee or sublessee.
"Lender" shall have the meaning assigned to it in the first
paragraph of this Agreement.
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"License" shall mean, with respect to any Person, any Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by such Person.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Loan Documents" shall mean this Agreement, the Revolving Credit Note,
the Term Note, the Parent Guaranty, any Subsidiary Guaranty, the Collateral
Documents and all agreements, instruments, documents and certificates in favor
of Lender in connection with this Agreement or the financing transactions
contemplated hereby, including all pledges, powers of attorney, consents,
assignments, contracts, notices and other written matter whether now existing or
hereafter arising.
"Loan Party" shall mean Borrowers, Parent and each Subsidiary of
Parent or either Borrower.
"Lock Box Accounts" shall have the meaning assigned to it in Annex
B.
"Lock Box Account Agreements" shall have the meaning assigned to it
in Annex B.
"Margin Stock" shall have the meaning specified in Regulation G, T, U
or X of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects, or financial or other condition of
the Parent and its Subsidiaries taken as a whole or of any Borrower or the
industry within which Parent or any Borrower operates, (b) any Loan Party's
ability to pay or perform the Obligations in accordance with the terms of the
Loan Documents, (c) the Collateral or Lender's Liens on the Collateral or the
priority of any such Liens, or (d) the rights and remedies of Lender under this
Agreement and the other Loan Documents.
"Maximum Lawful Rate" shall have the meaning assigned to it in
Section 1.5(d).
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a) (3) of ERISA, and to which Borrower or any ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Net Income (Loss)" shall mean for any period, the aggregate net
income (or loss) after income and franchise taxes of the Parent and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP; less any net income
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of any Person that is not a direct or indirect wholly-owned Subsidiary of
Parent, unless received by Parent in cash.
"Net Worth" shall mean, with respect to any Person, at any date, the
total assets (excluding investments in subsidiaries and any assets attributable
to any issuances by such Person of any Stock on or after the date hereof) minus
the total liabilities, in each case, of such Person at such date determined in
accordance with GAAP.
"Non-Use Fee" shall have the meaning assigned to it in Annex D.
"Notice of Revolving Credit Advance" shall have the meaning
assigned to it in Section 1.1(c).
"Obligations" shall mean all loans, advances, debts, liabilities and
obligations for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or amounts are liquidated or determinable) owing by any Loan Party
to Lender, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under any of the Loan Documents. This term includes
all principal, interest (including interest which accrues after the commencement
of any case or proceeding referred to in Section 8.1(g) or (h)), all Fees,
Charges, expenses, attorneys' fees and any other sum chargeable to any Loan
Party under any of the Loan Documents.
"Other Taxes" shall have the meaning assigned to it in Section
1.14(b).
"Parent" has the meaning assigned to it in the first paragraph of
this Agreement.
"Parent Guaranty" shall mean the Parent Guaranty, substantially in the
form of Exhibit E attached hereto executed by Parent in favor of Lender.
"Patent License" shall mean, with respect to any Person, rights under
any written agreement now owned or hereafter acquired by granting any right with
respect to any invention on which a Patent is in existence.
"Patents" shall mean, with respect to any Person, all of the following
in which such Person now holds or hereafter acquires any interest: (a) all
letters patent of the United States of America or any other country, all
registrations and recordings thereof, and all applications for letters patent of
the United States of America or any other country, including registrations,
recordings and applications in the United States Patent and Trademark Office or
in any similar office or agency of the United States of America, any State or
Territory thereof, or any other country, and (b) all reissues, divisions,
continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
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"Pension Plan" shall mean an employee pension benefit plan, as defined
in Section 3(2) of ERISA, which is not an individual account plan, as defined in
Section 3(34) of ERISA, and which Borrower or any Subsidiary of Borrower or any
ERISA Affiliate maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by any of them.
"Permitted Acquisition" shall mean any acquisition permitted under
clause (ii) of the first sentence of Section 6.1.
"Permitted Encumbrances" shall mean, for any Loan Party, the following
encumbrances: (a) Liens for taxes or assessments or other governmental Charges
or levies, either not yet due and payable or which are not payable under Section
5.2; (b) pledges or deposits securing obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation; (c) pledges or deposits securing bids, tenders, contracts (other
than contracts for the payment of money) or leases to which such Loan Party is a
party as lessee made in the ordinary course of business; (d) deposits securing
public or statutory obligations of such Loan Party; (e) inchoate and unperfected
workers', mechanics', suppliers' or similar liens arising in the ordinary course
of business; (f) carriers', warehousemen's or other similar possessory liens
arising in the ordinary course of business and securing indebtedness not yet due
and payable in an outstanding aggregate amount not in excess of $100,000 at any
time in the aggregate for all of the Loan Parties; (g) deposits securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which such Loan Party
is a party; (h) any attachment or judgment lien, unless the judgment it secures
shall not, within 30 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 30 days after the expiration of any such stay; (i) zoning restrictions,
easements, licenses, or other restrictions on the use of real property or other
minor irregularities in title (including leasehold title) thereto, so long as
the same do not materially impair the use, value, or marketability of such real
property, leases or leasehold estates; and (j) Liens on Schedule 6.7 existing on
the Closing Date.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Plan" shall mean, with respect to any Loan Party or any ERISA
Affiliate, at any time, an employee benefit plan, as defined in Section 3(3) of
ERISA, which such Loan Party maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
"Proceeds" shall mean all "proceeds," as such term is defined in the
Code and, in any event, shall include, with respect to any Person: (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to such
Person from time to time with respect to any of its property or assets; (b) any
and all payments (in any form whatsoever) made or due and payable to such Person
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of
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such Person's property or assets by any governmental body, authority, bureau or
agency (or any person acting under color of governmental authority), (c) any
claim of such Person against third parties (i) for past, present or future
infringement of any Patent or Patent License or (ii) for past, present or future
infringement or dilution of any Trademark or Trademark License or for injury to
the goodwill associated with any Trademark, Trademark registration or Trademark
licensed under any Trademark License; (d) any recoveries by such Person against
third parties with respect to any litigation or dispute concerning any of such
Person's property or assets; and (e) any and all other amounts from time to time
paid or payable under or in connection with any of such Person's property or
assets, upon disposition or otherwise.
"Property" shall have the meaning assigned to it in Section 5.14.
"Qualified Plan" shall mean, for any Loan Party, an employee pension
benefit plan, as defined in Section 3(2) of ERISA, which is intended to be tax-
qualified under IRC Section 401(a), and which such Loan Party or any ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Regulatory Change" shall mean, with respect to Lender, any change
after the date of this Agreement in Federal, state or foreign law or regulations
(including Regulation D) or the adoption or making after such date of any
interpretation, directive or request applying to a class of lenders including
Lender of or under any Federal, state or foreign law or regulations (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful) by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"Release" shall mean, as to any Person, any release or any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing or migration of a Hazardous Material into the
indoor or outdoor environment by such Person (or by a person under such Person's
direction or control), including the movement of a Hazardous Material through or
in the air, soil, surface water, ground water or property; but shall exclude any
release, discharge, emission or disposal in material compliance with a then
effective permit or order of a Governmental Authority.
"Reportable Event" shall mean any of the events described in Section
4043(b) (1), (2), (3), (5), (6), (8) or (9) of ERISA.
"Restricted Payment" shall mean, with respect to any Person: (a) the
declaration or payment of any dividend or the occurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of such Person's Stock; (b) any payment on account of the purchase,
redemption, defeasance or other retirement of such Person's Stock or any other
payment or distribution made in respect thereof, either directly or indirectly;
or (c) any payment, loan, contribution, or other transfer of funds or other
property to any stockholder of such Person.
"Retiree Welfare Plan" shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage
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provided pursuant to Section 4980B of the IRC and at the sole expense of the
participant or the beneficiary of the participant.
"Revolving Credit Advances" shall have the meaning assigned to it
in Section 1.1(a).
"Revolving Credit Commitment" shall mean the commitment of Lender to
make Revolving Credit Advances to Borrowers pursuant to Section 1.1 in the
aggregate principal amount outstanding not to exceed at any time $5,000,000, as
such amount may be reduced or modified pursuant to this Agreement.
"Revolving Credit Loan" shall mean the aggregate amount of Revolving
Credit Advances of Lender outstanding at any time.
"Revolving Credit Note" shall mean the promissory note provided for by
Section 1.1(d) and all promissory notes delivered in substitution or exchange
therefor.
"Revolving Credit Rate" shall mean the sum of the Index Rate plus
_______________ percent (_____%) [redacted] per annum.
"Schedule of Documents" shall mean the schedule attached hereto as
Annex C, including all appendices, exhibits or schedules thereto, listing
certain documents and information to be delivered in connection with the Loan
Documents and the transactions contemplated thereunder.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit F attached hereto, between Lender, Borrowers and Parent.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participation or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including common stock, preferred stock, or any other
"equity security" (as such term is defined in Rule 3a11-1 of the General Rules
and Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended).
"Subject Property" shall mean all real property owned, leased or
operated by any Loan Party.
"Subsidiary" shall mean, with respect to any Person: (a) any
corporation of which an aggregate of 50% or more of the outstanding Stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person and/or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise; and (b) any partnership in which such Person
and/or one or more Subsidiaries of such Person shall have an interest (whether
in the form of voting or
18
participation in profits or capital contribution) of 50% or more or of which any
such Person is a general partner or may exercise the powers of a general
partner.
"Subsidiary Guaranty" shall mean any guaranty executed by a Subsidiary
of Parent in substantially the form of Exhibit G hereto.
"Subsidiary Security Agreement" shall mean any security agreement
entered into between a Subsidiary of Parent and Lender in substantially the form
of Exhibit H hereto.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Lender by the United States of America, the
jurisdiction under the laws of which Lender is organized or the jurisdiction in
which Lender's applicable lending office is located or, in each case, any
political subdivision thereof.
"Term Loan" shall mean the Tranche A Term Loan and the Tranche B Term
Loan made by Lender to Borrowers in accordance with the terms of Section 1.2.
"Term Loan Commitment" shall mean, the commitment of Lender to make
the Term Loan to Borrowers pursuant to Section 1.2 in the aggregate principal
amount of $2,000,000.
"Term Note" shall mean the promissory note provided for in Section
1.2(a) and all promissory notes delivered in substitution or exchange therefor.
"Term Rate" shall mean the sum of the Index Rate, plus ______
percent (__%) [redacted] per annum.
"Termination Date" shall mean the date on which (a) the Revolving
Credit Commitment has been terminated in full, and Lender shall have no further
obligation to make any credit extensions or financial accommodations hereunder,
and (b) all Obligations have been irrevocably paid in full.
"Termination Fee" shall have the meaning assigned to it in Annex D.
"Title IV Plan" shall mean a Pension Plan, other than a
Multiemployer Plan, which is covered by Title IV of ERISA.
"Total Days Sales in Accounts" shall mean, for a Borrower and for any
of such Borrower's Accounts, at the end of each Fiscal Quarter of such Borrower,
the product obtained by multiplying the total number of days in such Fiscal
Quarter by a fraction, the numerator of which is the average of the three Fiscal
Month-end book values of such Accounts (net of allowance for doubtful accounts)
of such Borrower for such Fiscal Quarter as reflected in its books and records
and determined in accordance with established practices consistently applied,
and the denominator of which is the gross sales of such Borrower for such Fiscal
Quarter that gave rise to such Accounts as reflected in its books and records
and determined in accordance with established practices consistently applied.
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"Trademark License" shall mean, with respect to any Person, rights
under any written agreement now owned or hereafter acquired by such Person
granting any right to use any Trademark or Trademark registration.
"Trademarks" shall mean, with respect to any Person, all of the
following in which such Person now holds or hereafter acquires any interest: (a)
all common law and statutory trademarks, trade names, corporate names, business
names, trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including registrations, recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States of America, any State or Territory thereof, or any other
country or any political subdivision thereof; (b) all reissues, extensions or
renewals thereof; and (c) all licenses thereunder and together with the goodwill
associated with and symbolized by such trademark.
"Tranche A Term Loan" shall have the meaning assigned to it in
Section 1.2(a)(i).
"Tranche B Term Loan" shall have the meaning assigned to it in
Section 1.2(a)(ii).
"Welfare Plans" shall mean any welfare plan, as defined in Section
3(1) of ERISA, which is maintained or contributed to by any Loan Party or any
ERISA Affiliate.
"Wholly-owned Subsidiary" shall mean any Subsidiary of which all of
the Stock is owned, directly or indirectly, by Parent.
2. Certain Matters of Construction. Any accounting term used in the
Agreement or the other Loan Documents shall have, unless otherwise specifically
provided therein, the meaning customarily given such term in accordance with
GAAP, and all financial computations thereunder shall be computed, unless
otherwise specifically provided therein, in accordance with GAAP consistently
applied. That certain items or computations are explicitly modified by the
phrase "in accordance with GAAP" shall in no way be construed to limit the
foregoing.
All other undefined terms contained in the Agreement or the other Loan
Documents shall, unless the context indicates otherwise, have the meanings
provided for by the Code as in effect in the State of New York to the extent the
same are used or defined therein. The words "herein," "hereof" and "hereunder"
or other words of similar import refer to the Agreement as a whole, including
the exhibits and schedules thereto, as the same may from time to time be
amended, modified or supplemented, and not to any particular section, subsection
or clause contained in this Agreement.
For purposes of this Agreement and the other Loan Documents, the
following additional rules of construction shall apply: (a) wherever from the
context it appears appropriate, each term stated in either the singular or
plural shall include the singular and the plural, and pronouns stated in the
masculine, feminine or neuter
20
gender shall include the masculine, the feminine and the neuter; (b) the term
"including" shall not be limiting or exclusive, unless specifically indicated to
the contrary; (c) all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations; and
(d) all references to any instruments or agreements, including references to any
of the Loan Documents, shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof, in each case, made in
accordance with the terms of the Loan Documents.
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