Exhibit 10.1
LOAN AGREEMENT
Dated as of March 21, 2005
MANCHESTER TECHNOLOGIES, INC., a New York corporation having its
principal place of business at 50 Marcus Boulevard, Hauppauge, New York 11788
(the "Borrower"), MANCHESTER INTERNATIONAL LTD., a New York corporation having
its principal place of business at 50 Marcus Boulevard, Hauppauge, New York
11788 ("International" or a "Guarantor"), ELECTROGRAPH SYSTEMS, INC., a New York
corporation having its principal place of business at 50 Marcus Boulevard,
Hauppauge, New York 11788 ("Electrograph" or a "Guarantor"), TEXPORT TECHNOLOGY
GROUP, INC., a New York corporation having its principal place of business 50
Marcus Boulevard, Hauppauge, New York 11788 ("Texport" or a "Guarantor"),
MARKETPLACE 4U.COM, INC., a New York corporation having its principal place of
business at 50 Marcus Boulevard, Hauppauge, New York 11788 ("Marketplace" or a
"Guarantor"), e.TRACK SOLUTIONS, INC., a New York corporation with its principal
place of business at 50 Marcus Boulevard, Hauppauge, New York 11788 ("e.track"
or a "Guarantor"), MANCHESTER EQUIPMENT CO., INC., a New York corporation having
its principal place of business at 50 Marcus Boulevard, Hauppauge, New York
11788 ("MEC" or a "Guarantor"), CHAMPION VISION, INC., a New York corporation
having its principal place of business at 50 Marcus Boulevard, Hauppauge, New
York 11788 ("Champion" or a "Guarantor") and TELSTARR PROFESSIONAL SERVICES,
INC., a New York corporation having its principal place of business at 50 Marcus
Boulevard, Hauppauge, New York 11788 ("Tellstarr" or a "Guarantor")and CITIBANK,
N.A., having an office at 730 Veterans Memorial Highway, Hauppauge, New York
11788 ("Citibank" or the "Bank") hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means, as to any Person, (i) a Person which directly or
indirectly controls, or is controlled by, or is under common control with, such
Person; (ii) a Person which directly or indirectly beneficially owns or holds
five (5%) percent or more of any class of voting stock of, or five (5%) percent
or more of the equity interest in, such Person; or (iii) a Person five (5%)
percent or more of the voting stock of which, or five (5%) or more
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of the equity interest in which, is directly or indirectly beneficially owned or
held by such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise.
"Aggregate Outstandings" means, at any time, the aggregate of (i) the
principal amount of outstanding Revolving Credit Loans, (ii) the L/C Exposure,
(iii) the Import L/C Exposure, and (iv) the B/A Exposure.
"Agreement" means this Loan Agreement, as amended, supplemented or
modified from time to time.
"Bankers Acceptance" means presigned drafts received by the Bank for
the Borrower's or a Guarantor's account drawn on the Bank by or on behalf of the
Borrower or Guarantor, as the case may be, but shall be blank as to amount, date
of issue, maturity date and details of the underlying transaction.
"B/A Documents" means all documents required to be executed and
delivered by the Borrower or a Guarantor in connection with Bankers Acceptances
in accordance with the usual and customary practices of the Bank.
"B/A Exposure" means, at any time, the aggregate amount of all
outstanding Bankers Acceptances.
"Board of Governors" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York City, provided that, if the relevant day
relates to a Eurodollar Loan, an Interest Period, or notice with respect to a
Eurodollar Loan, the term "Business Day" shall mean a day on which dealings in
Dollar deposits are also carried on in the London interbank market and banks are
open for business in London.
"Capital Lease" means a lease which has been or should be, in
accordance with GAAP, capitalized on the books of the lessee.
"Commitment" means the obligation of the Bank to (i) make Revolving
Credit Loans to the Borrower pursuant to the terms and conditions of this
Agreement, (ii) issue Letters of Credit pursuant to the terms and conditions of
this Agreement, (iii) issue Import Letters of Credit pursuant to the terms and
conditions of this Agreement, and (iv) create Bankers Acceptances pursuant to
the terms and conditions of this Agreement, as modified by any
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reductions in the Commitment or by any assignments of all or any part of the
Bank's Commitment.
"Consolidated Affiliates" means, as to any Person, those Affiliates of
such Person which are consolidated with such Person in the financial statements
delivered pursuant to Section 5.01(b) of this Agreement.
"Consolidated Capital Expenditures" means, as to any Person, the
aggregate amount of any expenditures (including purchase money Debt or purchase
money Liens) by such Person and its Consolidated Affiliates for assets
(including fixed assets acquired under Capital Leases) which it is contemplated
will be used or usable in fiscal years subsequent to the year of acquisition,
computed and consolidated in accordance with GAAP.
"Consolidated Current Liabilities" means, as to any Person, the
aggregate amount of all liabilities of such Person and its Consolidated
Affiliates (including tax and other proper accruals) which would be properly
classified as current liabilities, computed and consolidated in accordance with
GAAP.
"Consolidated Funded Debt" means, as to any Person, the aggregate of
the Funded Debt of such Person and its Consolidated Affiliates, computed and
consolidated in accordance with GAAP.
"Consolidated Tangible Net Worth" means, as to any Person, the excess
of (i) such Person's Consolidated Total Assets, less all intangible assets
properly classified as such in accordance with GAAP, including, but without
limitation, patents, patent rights, trademarks, trade names, franchises,
copyrights, licenses, permits and goodwill (whether representing the excess of
cost of tangible assets acquired over book value or otherwise, deferred tax
assets and net leasehold improvements), over (ii) such Person's Consolidated
Total Liabilities.
"Consolidated Total Assets" means, as to any Person, the aggregate net
book value of the assets of such Person and its Consolidated Affiliates after
all appropriate adjustments in accordance with GAAP (including, without
limitation, reserves for doubtful receivables, obsolescence, depreciation and
amortization and excluding the amount of any write-up or revaluation of any
asset), computed and consolidated in accordance with GAAP.
"Consolidated Total Liabilities" means, as to any Person, all of the
liabilities of such Person and its Consolidated Affiliates, including all items
which, in accordance with GAAP, would be included on the liability side of a
balance sheet (other than capital stock, capital surplus and retained earnings),
computed and consolidated in accordance with GAAP.
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"Debt" means, as to any Person, all (i) indebtedness or liability of
such Person for borrowed money; (ii) indebtedness of such Person for the
deferred purchase price of property or services (including trade obligations);
(iii) obligations of such Person as a lessee under Capital Leases; (iv) current
liabilities of such Person in respect of unfunded vested benefits under any
Plan; (v) obligations of such Person in respect of letters of credit issued for
the account of or upon the application of such Person; (vi) obligations of such
Person arising under acceptance facilities; (vii) guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any other Person, or otherwise to assure a creditor
against loss; (viii) obligations secured by any Lien on property owned by such
Person whether or not the obligations have been assumed; (ix) liabilities of
such Person under any preferred stock or other preferred equity instrument
which, at the option of the holder or upon the occurrence of one or more events,
is redeemable by such holder, or which, at the option of such holder is
convertible into Debt; (x) indebtedness of any partnership of which such Person
is a general partner; and (xi) all other liabilities recorded as such, or which
should be recorded as such, on such Person's financial statements in accordance
with GAAP.
"Default" means any of the events specified in Section 6.01 of this
Agreement, whether or not any requirement for notice or lapse of time or any
other condition has been satisfied.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBIT" means, as to the Borrower and its Consolidated Affiliates for
any period, the sum of (i) net income (excluding extraordinary gains and
including extraordinary losses other than losses incurred in connection with the
buyout of existing Capital Leases in an aggregate amount not exceeding
$550,000.00), plus (ii) interest expense, plus (iii) federal, state and local
income taxes accrued, minus (iv) interest income, in each case measured for the
Borrower and its Consolidated Affiliates on a consolidated basis for such
period, computed and consolidated in accordance with GAAP.
"EBITDA" means, as to the Borrower and its Consolidated Affiliates for
any period, the sum of (i) net income (excluding extraordinary gains and
including extraordinary losses other than losses incurred in connection with the
buyout of existing Capital Leases in an aggregate amount not exceeding
$550,000.00), plus (ii) interest expense, plus (iii) depreciation expense, plus
(iv) amortization of intangible assets plus (v) federal, state and local income
taxes accrued, minus (vi) interest income, in each case measured for the
Borrower and its Consolidated Affiliates on a
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consolidated basis for such period, computed and consolidated in accordance with
GAAP.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, the regulations promulgated thereunder and the
published interpretations thereof as in effect from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with any other Person would be treated, with such
Person, as a single employer under Section 4001 of ERISA.
"Eurocurrency Reserve Requirement" means, with respect to the Reserve
Adjusted LIBOR Rate for an Interest Period, the aggregate (without duplication)
daily average of the rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without limitation, basic,
marginal, supplemental or emergency reserves) under any regulation (including,
but without limitation, Regulation D) promulgated by the Board of Governors (or
any successor thereto or other governmental authority having jurisdiction over
the Bank) by the Bank against "Eurocurrency liabilities" (as such term is used
in Regulation D), but without benefit or credit for proration, exemptions or
offsets that might otherwise be available to the Bank from time to time under
Regulation D. Without limiting the effect of the foregoing, the Eurocurrency
Reserve Requirement shall reflect any other reserves required to be maintained
by the Bank against (1) any category of liabilities that includes deposits by
reference to which the Reserve Adjusted LIBOR Rate is to be determined; or (2)
any category of extension of credit or other assets that include loans bearing a
Reserve Adjusted LIBOR Rate.
"Eurodollar Loan" means a Loan bearing interest at an interest rate
determined with reference to the Reserve Adjusted LIBOR Rate in accordance with
the provisions of Article II hereof.
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"Funded Debt" means, as to any Person, such Debt of such Person which
is (i) all indebtedness or liability for borrowed money; (ii) all indebtedness
or liability for the deferred purchase price of property (excluding trade
obligations); (iii) all obligations as a lessee under Capital Leases; (iv) all
obligations to reimburse the Bank for the amount of all unmatured drafts
accepted or deferred payment obligations incurred under Letters of Credit,
Import Letters of Credit and Bankers Acceptances, and (v) all liabilities of
such Person under any preferred stock which, at
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the option of the holder or upon the occurrence of one or more certain events,
is redeemable by such holder, or which, at the option of such holder is
convertible into Debt.
"Funded Debt to EBITDA Ratio" means, as to the Borrower and its
Consolidated Affiliates for any period, the ratio of (i) Consolidated Funded
Debt (as of the last day of such period) to (ii) EBITDA for such period. The
Funded Debt to EBITDA Ratio shall be measured and tested at the end of each
fiscal quarter and, in the case of EBITDA, shall be annualized for the fiscal
quarters ending October 31, 2004, January 31, 2005 and April 30, 2005, and
commencing with the fiscal quarter ending July 31, 2005, and shall include the
four (4) fiscal quarters then ended.
"GAAP" means Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" means those generally
accepted accounting principles and practices which are recognized as such by the
American Institute of Certified Public Accountants acting through the Financial
Accounting Standards Board ("FASB") or through other appropriate boards or
committees thereof and which are consistently applied for all periods so as to
properly reflect the financial condition, operations and cash flows of a Person,
except that any accounting principle or practice required to be changed by the
FASB (or other appropriate board or committee of the FASB) in order to continue
as a generally accepted accounting principle or practice may be so changed. Any
dispute or disagreement between the Borrower and the Bank relating to the
determination of Generally Accepted Accounting Principles shall, in the absence
of manifest error, be conclusively resolved for all purposes hereof by the
written opinion with respect thereto, delivered to the Bank, of the independent
accountants selected by the Borrower and approved by the Bank for the purpose of
auditing the periodic financial statements of the Borrower.
"Guarantor" or Guarantors" means one or more of those Persons
identified as Guarantors in the preamble to this Agreement, and any other Person
required to guarantee the obligations of the Borrower and/or Guarantor which is
the account party under Letters of Credit, Import Letters of Credit or the
obligor under the created Bankers Acceptance in accordance with Section 5.01(k)
of this Agreement.
"Guaranty" or "Guaranties" means the guaranty or guaranties executed
and delivered by the Guarantors pursuant to Section 3.01(h) or Section 5.01(k)
of this Agreement.
"Hazardous Materials" includes, without limitation, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, or related
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materials defined in the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801 et
seq.), the Resource Conservation and Recovery Act, as amended (42 U.S.C.
Sections 9601 et seq.), and in the regulations adopted and publications
promulgated pursuant thereto, or any other federal, state or local environmental
law, ordinance, rule or regulation.
"Import Letters of Credit" means commercial import letters of credit
issued by the Bank for the account of the Borrower or a Guarantor pursuant to
the terms and conditions of this Agreement.
"Import L/C Documents" means all documents required to be executed and
delivered by the Borrower or Guarantor which is the account party in connection
with the issuance of Import Letters of Credit in accordance with the usual and
customary practices of the Bank.
"Import L/C Exposure" means, at any time, the aggregate of (i) the
amount available to be drawn on all outstanding Import Letters of Credit, and
(ii) the amount of any payments made by the Bank under any Import Letters of
Credit that have not been reimbursed by the Borrower or Guarantor which is the
account party.
"Import L/C Sublimit" means One Million ($1,000,000.00) Dollars."
"Interest Coverage Ratio" means, as to the Borrower and its
Consolidated Affiliates for any period, the ratio of (i) EBIT for such period to
(ii) interest expense for such period. The Interest Coverage Ratio shall be
measured and tested at the end of each fiscal quarter and in the case of EBIT
shall be annualized for the fiscal quarters ending October 31, 2004, January 31,
2005 and April 30, 2005, and commencing with the fiscal quarter ending July 31,
2005 and shall include the four (4) fiscal quarters then ended.
"Interest Determination Date" means the date on which a Prime Rate Loan
is converted to a Eurodollar Loan and, in the case of a Eurodollar Loan, the
last day of the applicable Interest Period.
"Interest Payment Date" means (i) as to each Eurodollar Loan, (a) in
the case of Eurodollar Loans with Interest Periods of less than three (3)
months, the last day of such Interest Period and (b) in the case of Eurodollar
Loans with Interest Periods of three (3) months or more, the last Business Day
of each calendar quarter during the applicable Interest Period and the last day
of the applicable Interest Period and (ii) as to each Prime Rate Loan, the last
Business Day of each month.
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"Interest Period" means as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect (or, if there is no numerically
corresponding day, on the last Business Day of such month); provided, however,
(i) that no Interest Period shall end later than the Maturity Date, (ii) if any
Interest Period would end on a day which shall not be a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day,
(iii) interest shall accrue from and including the first day of such Interest
Period to but excluding the date of payment of such interest, (iv) no Interest
Period may have a duration of less than one month, and (v) no Interest Period of
particular duration may be selected by the Borrower if the Bank determines, in
its sole discretion, that Eurodollar Loans with such maturities are not
generally available.
"Investment" means any stock, evidence of Debt or other security of any
Person, any loan, advance, contribution of capital, extension of credit or
commitment therefor, including without limitation the guaranty of loans made to
others (except for current trade and customer accounts receivable for services
rendered in the ordinary course of business and payable in accordance with
customary trade terms in the ordinary course of business) and any purchase of
(i) any security of another Person or (ii) any business or undertaking of any
Person or any commitment or option to make any such purchase, or any other
investment.
"Letters of Credit" means standby letters of credit issued by the Bank
for the account of the Borrower pursuant to the terms and conditions of this
Agreement.
"L/C Documents" means all documents required to be executed and
delivered by the Borrower in connection with the issuance of Letters of Credit
in accordance with the usual and customary practices of the Bank.
"L/C Exposure" means, at any time, the aggregate of (i) the amount
available to be drawn on all outstanding Letters of Credit and (ii) the amount
of any payments made by the Bank under any Letters of Credit that have not been
reimbursed by the Borrower.
"L/C Sublimit" means One Million ($1,000,000.00) Dollars.
"LIBOR Applicable Margin" has the meaning set forth in Section 2.04 of
this Agreement.
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"LIBOR Rate" means the rate per annum identified as the LIBOR Rate for
a requested Interest Period as published on page 3750 of the Dow Jones Telerate
service.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"Loan" or "Loans" means one or more Revolving Credit Loans and may
refer to one or more Prime Rate Loans and/or one or more Eurodollar Loans, as
the context requires.
"Loan Documents" means this Agreement, the Notes, the Guaranties, the
L/C Documents, the Import L/C Documents, the B/A Documents and any other
document executed or delivered pursuant to this Agreement.
"Material Adverse Change" means, as to any Person, (i) a material
adverse change in the financial condition, business, operations, properties,
prospects or results of operations of such Person or (ii) any event or
occurrence which is reasonably likely to have a material adverse effect on the
ability of such Person to perform its obligations under the Loan Documents.
"Maturity Date" means January 31, 2008.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Borrower or any ERISA Affiliate.
"Note" means the Revolving Credit Note.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means an acquisition by the Borrower or any
Subsidiary of the Borrower by merger, consolidation or purchase of a voting
majority of the stock of another Person or the purchase of all or substantially
all of the assets of another Person (or of a division or other operating
component of another Person) (an "Acquisition") if all of the following
conditions are met:
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(i) Such Acquisition is identified as a "Permitted
Acquisition" by the Borrower in writing to the Bank;
(ii) The Person to be acquired is domiciled in, has the
majority of its assets located in, and generates the majority of its
revenues from sources within, the United States;
(iii) The majority of such Person's revenue is derived from a
line or lines of business similar or complimentary to the line or lines
of business engaged in by the Borrower as of the date of this
Agreement, as are set forth and described in the Borrower's Form 10-K
for its fiscal year ended July 31, 2004;
(iv) If the aggregate consideration paid for the subject
Acquisition and all other Permitted Acquisitions since the date of this
Agreement exceeds $3,000,000.00, the Bank shall have received, at least
ten (10) Business Days prior to the closing of such Acquisition, a
certificate signed by the president or the chief financial officer of
the Borrower to the effect that (and including calculations indicating
that) on a pro forma basis after giving effect to such Acquisition: (a)
all representations and warranties contained in the Loan Documents will
remain true and correct, (b) the Borrower will remain in compliance
with all covenants contained in the Loan Documents, and (c) no Default
or Event of Default has occurred and is continuing or will occur as a
result of the consummation of such Acquisition; and
(v) If the aggregate consideration paid for the subject
Acquisition and all other Permitted Acquisitions since the date of this
Agreement exceeds $3,000,000.00, the Bank shall have received, at least
ten (10) Business Days prior to the closing of such Acquisition, (i) at
least two (2) years of historical financial statements of such Person,
and (ii) a set of projections (prepared on a consolidated and
consolidating basis), setting forth in reasonable detail the pro forma
effect of such Acquisition and showing compliance by the Borrower with
all covenants set forth in Section 5.03 of this Agreement for the
remainder of the term of this Agreement. The projections to be
delivered hereunder shall include and specify the assumptions used to
prepare such projections.
"Permitted Acquisition Loans" means Revolving Credit Loans, the
proceeds of which are used to fund Permitted Acquisitions.
"Permitted Acquisition Sublimit" means Ten Million ($10,000,000.00)
Dollars in the aggregate.
"Permitted Investments" means, (i) direct obligations of the United
States of America or any governmental agency thereof, or
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obligations guaranteed by the United States of America, provided that such
obligations mature within one year from the date of acquisition thereof; (ii)
time certificates of deposit having a maturity of one year or less issued by the
Bank or any other commercial bank organized and existing under the laws of the
United States or any state thereof and having aggregate capital and surplus in
excess of $1,000,000,000.00; (iii) money market mutual funds having assets in
excess of $2,500,000,000, including but not limited to the Merrill Lynch Premier
Institutional Fund and the Merrill Lynch Institutional Tax Exempt Fund; (iv)
commercial paper rated not less than P-1 or A-1 or their equivalent by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P"),
respectively; (v) tax exempt securities rated Prime 2 or better by Moody's or
A-1 or better by S&P; (vi) loans or advances to Guarantors permitted by
Section 5.02(g) of this Agreement; (vii) Investments in connection with
Permitted Acquisitions (subject to the limitations of Section 5.02(d) hereof)
and (viii) any Investment in a Person which thereupon becomes a Guarantor
pursuant to Section 5.01(k) of this Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity or a federal, state or
local government, or a political subdivision thereof or any agency of such
government or subdivision.
"Plan" means any employee benefit plan established, maintained, or to
which contributions have been made by the Borrower or any ERISA Affiliate.
"Prime Rate" means the rate of interest stated by the Bank to be its
prime rate as in effect from time to time; each change in said rate shall be
effective as of the date of such change.
"Prime Rate Loan" means a Loan bearing interest at an interest rate
determined with reference to the Prime Rate.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time.
"Quick Asset Ratio" means, as to the Borrower and its Consolidated
Affiliates, as of any date, the ratio of (i) the sum of (a) cash on hand or on
deposit in banks, (b) readily marketable securities issued by the United States,
(c) readily marketable commercial paper rated "A-2" or better by S&P (or having
a similar rating by any similar organization which rates commercial paper), (d)
certificates of deposit or banker's acceptances issued by commercial banks of
recognized standing operating in the United
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States, and (e) accounts receivable to (ii) the sum of (a) Consolidated Current
Liabilities and (b) to the extent not included in Consolidated Current
Liabilities, the outstanding Revolving Credit Loans.
"Regulation D" means Regulation D of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation G" means Regulation G of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation T" means Regulation T of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors, as the
same may be amended and in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors, as the
same may be amended and in effect from time to time.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Reserve Adjusted LIBOR Rate" means, with respect to any Eurodollar
Loan for any Interest Period, an interest rate per annum determined by the Bank
to be equal to the quotient of (a) the LIBOR Rate divided by (b) a number equal
to 1.00 minus the Eurocurrency Reserve Requirement as determined by the Bank on
the date the Reserve Adjusted LIBOR Rate is determined.
"Revolving Credit Loan" or "Revolving Credit Loans" means one or more,
as the context requires of the revolving credit loans made by the Bank to the
Borrower pursuant to the terms and conditions of this Agreement.
"Revolving Credit Note" means the promissory note of the Borrower
payable to the order of the Bank, in substantially the form of Exhibit A annexed
hereto, evidencing the indebtedness of the Borrower to the Bank resulting from
Revolving Credit Loans made by the Bank to the Borrower pursuant to this
Agreement.
"S&P" shall have the meaning given such term in the definition of
"Permitted Investments".
"Subsidiary" means, as to any Person, any corporation, partnership,
limited liability company, joint venture or other Person whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of which a
majority of the securities having ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening
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of a contingency) are at the time owned by such Person and/or one or more
Subsidiaries of such Person or (ii) in the case of a partnership, limited
liability company, joint venture or similar entity, of which a majority of the
partnership, membership or other ownership interests are at the time owned by
such Person and/or one or more of its Subsidiaries.
"Unused Facility Fee" means the fee payable pursuant to Section 2.06 of
this Agreement.
SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to and including".
SECTION 1.03. Accounting Terms. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under GAAP.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
SECTION 2.01. The Revolving Credit Loans. (a) The Bank agrees on the
terms and subject to the conditions of this Agreement, and in reliance upon the
representations and warranties of the Borrower and the Guarantors set forth in
this Agreement, that it will, until the Maturity Date, lend to the Borrower such
Revolving Credit Loans as the Borrower may request from time to time, which
Loans may be borrowed, repaid and reborrowed, provided, however, that the
Aggregate Outstandings outstanding at any one time shall not exceed Fifteen
Million ($15,000,000.00) Dollars, or such lesser amount of the Commitment as may
be reduced pursuant to Section 2.07 hereof.
(b) Each Revolving Credit Loan shall be a Prime Rate Loan or a
Eurodollar Loan (or a combination thereof) as the Borrower may request subject
to and in accordance with Section 2.02 hereof. The Bank may at its option make
any Eurodollar Loan by causing a foreign branch or affiliate to make such Loan,
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of the Bank's Revolving
Credit Note. Subject to the other provisions of this Agreement, Revolving Credit
Loans of more than one type may be outstanding at the same time provided,
however, that not more than five (5) Eurodollar Loans may be outstanding at the
same time.
SECTION 2.02. Notice of Revolving Credit Loans.
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(a) The Borrower shall give the Bank irrevocable written, telex,
telephonic (immediately confirmed in writing) or facsimile notice (i) at least
three (3) Business Days prior to each Revolving Credit Loan comprised in whole
or in part of one or more Eurodollar Loans (subject to availability) and (ii)
prior to 11:00 a.m. on the day of each Revolving Credit Loan consisting solely
of a Prime Rate Loan. Thereupon, the Bank shall thereupon transfer immediately
available funds equal to the requested borrowing to the Borrower's account with
the Bank. If a notice of borrowing is received by the Bank after 11:00 a.m. on a
Business Day, such notice shall be deemed to have been given on the next
succeeding Business Day.
(b) Each notice given pursuant to this Section 2.02 shall specify the
date of such borrowing, the amount thereof and whether such Loan is to be (or
what portion or portions thereof are to be) a Prime Rate Loan or a Eurodollar
Loan and, if such Loan or any portion thereof is to consist of one or more
Eurodollar Loans, the principal amounts thereof and Interest Period or Interest
Periods with respect thereto. If no election as to a type of Loan is specified
in such notice, such Loan (or portion thereof as to which no election is
specified) shall be a Prime Rate Loan. If no election as to the Interest Period
is specified in such notice with respect to any Eurodollar Loan, the Borrower
shall be deemed to have selected an Interest Period of one month's duration and
if a Eurodollar Loan is requested when such Loans are not available, the
Borrower shall be deemed to have requested a Prime Rate Loan.
(c) The Borrower shall have the right, on such notice to the Bank as is
required pursuant to (a) above, (x) to continue any Eurodollar Loan or a portion
thereof into a subsequent Interest Period (subject to availability) and (y) to
convert a Prime Rate Loan into a Eurodollar Loan (subject to availability)
subject to the following:
(i) if a Default or an Event of Default shall have occurred
and be continuing at the time of any proposed conversion or continuation only
Prime Rate Loans shall be available;
(ii) in the case of a continuation or conversion of fewer than
all Loans, the aggregate principal amount of each Eurodollar Loan continued or
into which a Loan is converted shall be in the minimum principal amount of
$250,000.00 and in increased integral multiples of $100,000.00;
(iii) each continuation or conversion shall be effected by the
Bank to the Loan (or portion thereof) being continued or converted;
(iv) if the new Loan made as a result of a continuation or
conversion shall be a Eurodollar Loan, the first Interest Period
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with respect thereto shall commence on the date of continuation or conversion;
(v) each request for a Eurodollar Loan which shall fail to
state an applicable Interest Period shall be deemed to be a request for an
Interest Period of one month and each request for a Eurodollar Loan made when
such Loans are not available shall be deemed to be a request for a Prime Rate
Loan;
(vi) in the event that the Borrower shall not give notice to
continue a Eurodollar Loan as provided above, such Loan shall automatically be
converted into a Prime Rate Loan at the expiration of the then current Interest
Period.
SECTION 2.03. Revolving Credit Note. (a) Each Revolving Credit Loan
shall be (i) in the case of each Prime Rate Loan in the minimum principal amount
of $100,000.00, and in increased integral multiples of $100,000.00 and (ii) in
the case of each Eurodollar Loan in the minimum principal amount of $250,000.00
and in increased integral multiples of $100,000.00 (except that, if any such
Prime Rate Loan so requested shall exhaust the remaining available Commitment,
such Prime Rate Loan may be in an amount equal to the amount of the remaining
available Commitment). Each Revolving Credit Loan shall be evidenced by the
Revolving Credit Note. The Revolving Credit Note shall be dated the date hereof
and be in the principal amount of $15,000,000.00, as modified by any assignment
of all or any part of the Bank's Commitment, and shall mature on the Maturity
Date, at which time the entire outstanding principal balance and all interest
thereon shall be due and payable. The Revolving Credit Note shall be entitled to
the benefits and subject to the provisions of this Agreement.
(b) At the time of the making of each Revolving Credit Loan and at the
time of each payment of principal thereon, the Bank is hereby authorized by the
Borrower to make a notation on the schedule annexed to the Revolving Credit Note
of the date and amount, and the type and Interest Period, if applicable, of the
Revolving Credit Loan or payment, as the case may be. Failure to make a notation
with respect to any Revolving Credit Loan shall not limit or otherwise affect
the obligation of the Borrower hereunder or under the Revolving Credit Note, and
any payment of principal by the Borrower shall not be affected by the failure to
make a notation thereof on said schedule.
SECTION 2.04. Payment of Interest on the Revolving Credit Note.
(a) In the case of a Prime Rate Loan, interest shall be payable at a
rate per annum equal to the Prime Rate. Such interest shall be payable on each
Interest Payment Date, commencing with the first Interest Payment Date after the
date of such Prime Rate Loan,
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on each Interest Determination Date and on the Maturity Date. Any change in the
rate of interest on the Revolving Credit Note due to a change in the Prime Rate
shall take effect as of the date of such change in the Prime Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the Reserve Adjusted LIBOR Rate plus the LIBOR
Applicable Margin as in effect on the first day of the Interest Period for such
Eurodollar Loan. Such interest shall be payable on each Interest Payment Date,
commencing with the first Interest Payment Date after the date of such
Eurodollar Loan and on the Maturity Date. In the event Eurodollar Loans are
available, the Bank shall determine the rate of interest applicable to each
requested Eurodollar Loan for each Interest Period at 11:00 a.m., New York City
time, or as soon as practicable thereafter, two (2) Business Days prior to the
commencement of such Interest Period and shall use its best efforts to notify
the Borrower of the rate of interest so determined. Such determination shall be
conclusive absent manifest error.
(c) The LIBOR Applicable Margin shall be determined on the basis of the
Borrower's Funded Debt to EBITDA Ratio, as calculated based on the Borrower's
consolidated financial statements for its most recent fiscal year or quarter.
The LIBOR Applicable Margin shall be determined as follows:
(i) The initial LIBOR Applicable Margin shall be 100 basis
points, and shall be applicable until delivery of the Borrower's
consolidated financial statements for its fiscal quarter ending January
31, 2005 pursuant to Section 5.01(b) hereof (subject to increase in the
event that the Borrower fails to deliver such statements as required
below).
Beginning with delivery of the Borrower's consolidated financial
statements for the fiscal quarter ending January 31, 2005, and for each fiscal
year or quarter thereafter:
(ii) If the Borrower's Funded Debt to EBITDA Ratio as of the
end of such fiscal year or quarter is less than 0.50 to 1.00, the LIBOR
Applicable Margin shall be 75 basis points.
(iii) If the Borrower's Funded Debt to EBITDA Ratio as of the
end of such fiscal year or quarter is equal to or greater than 0.50 to
1.00 but less than 1.50 to 1.00, the LIBOR Applicable Margin shall be
100 basis points.
(iv) If the Borrower's Funded Debt to EBITDA Ratio as of the
end of such fiscal year or quarter is equal to or greater than 1.50 to
1.00 but less than 2.00 to 1.00, the LIBOR Applicable Margin shall be
125 basis points.
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(v) If the Borrower's Funded Debt to EBITDA Ratio as of the
end of such fiscal year or quarter is equal to or greater than 2.00 to
1.00, the LIBOR Applicable Margin shall be 150 basis points.
The Applicable Margin for any Eurodollar Loan shall remain in effect
for the term of the Interest Period for such Eurodollar Loan and shall not
change during such term as a result of this Section 2.04.
In the event that the Borrower fails to deliver any financial
statements and the related certificate within five (5) days of the due date
therefor set forth in Section 5.01(b)(i), (ii), (iv) or (v) hereof, unless an
Event of Default is declared as a result of such failure, the LIBOR Applicable
Margin shall be 150 basis points until the Borrower delivers all required
financial statements and certificates at which time the LIBOR Applicable Margin
shall be redetermined as provided for in this Section 2.04.
Upon the occurrence and during the continuance of a Default or an Event
of Default, the LIBOR Applicable Margin may, as a result of changes in the
Borrower's Funded Debt to EBITDA Ratio, increase but will not decrease.
SECTION 2.05. Use of Proceeds. (a) The proceeds of the Revolving Credit
Loans shall be used by the Borrower (i) to finance working capital, (ii) subject
to the Permitted Acquisition Sublimit, to finance Permitted Acquisitions, and
(iii) for general corporate purposes. No part of the proceeds of any Loan may be
used for any purpose that directly or indirectly violates or is inconsistent
with the provisions of Regulation G, T, U or X.
(b) Letters of Credit shall, subject to the L/C Sublimit, be issued
exclusively to finance trade transactions and other commercial transactions
related to the working capital needs of the Borrower and the Guarantors and for
general corporate purposes of the Borrower and Guarantors.
(c) Import Letters of Credit shall, subject to the Import L/C Sublimit,
be issued exclusively to finance the importing of goods by the Borrower and the
Guarantors.
(d) Bankers Acceptances shall be issued exclusively to finance draws on
Import Letters of Credit by the Borrower and the Guarantors.
SECTION 2.06. Fees. The Borrower agrees to pay to the Bank, from the
date of this Agreement and for so long as the Commitment remains in effect, on
the last Business Day of each calendar quarter, and on any day that the
Commitment is reduced or
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terminated, an Unused Facility Fee computed at a rate per annum equal to 0.25%
(computed on the basis of the actual number of days elapsed over 360 days) on
the average daily unused amount of the Commitment, such Unused Facility Fee
being payable for the calendar quarter, or part thereof, preceding the payment
date.
SECTION 2.07. Reduction of Commitment. Upon at least three (3) Business
Days' prior written notice to the Bank, the Borrower may irrevocably elect to
have the unused Commitment terminated in whole or reduced in part provided,
however, that any such partial reduction shall be in a minimum amount of
$1,000,000.00, or whole multiples thereof. The Commitment, once terminated or
reduced, shall not be reinstated without the express written approval of the
Bank.
SECTION 2.08. Prepayment. (a) The Borrower shall have the right at any
time and from time to time to prepay any Prime Rate Loan, in whole or in part,
without premium or penalty on one (1) Business Day's prior irrevocable written
notice to the Bank provided, however, that each such prepayment shall be on a
Business Day and shall be in an aggregate principal amount which is in the
minimum amount of $100,000.00 and in increased integral multiples of
$100,000.00.
(b) The Borrower shall have the right at any time and from time to
time, subject to the provisions of this Agreement, including but without
limitation Section 2.13 hereof, to prepay any Eurodollar Loan, in whole or in
part, on three (3) Business Days' prior irrevocable written notice to the Bank,
provided, however, that each such prepayment shall be on a Business Day and
shall be in an aggregate principal amount which is in the minimum amount of
$250,000.00 and in increased integral multiples of $100,000.00.
(c) The notice of prepayment under this Section 2.08 shall set forth
the prepayment date and the principal amount of the Loan being prepaid and shall
be irrevocable and shall commit the Borrower to prepay such Loan by the amount
and on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2.08 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans as specified by the Borrower. In the absence of such
specification, amounts being prepaid shall be applied first to any Prime Rate
Loan then outstanding and then to Eurodollar Loans in the order of the nearest
expiration of their Interest Periods.
SECTION 2.09. Eurocurrency Reserve Requirement. It is understood that
the cost to the Bank of making or maintaining Eurodollar Loans may fluctuate as
a result of the applicability of, or change in, the Eurocurrency Reserve
Requirement. The Borrower
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agrees to pay to the Bank from time to time, as provided in Section 2.10 below,
such amounts as shall be necessary to compensate the Bank for the portion of the
cost of making or maintaining any Eurodollar Loans made by it resulting from any
change in the Eurocurrency Reserve Requirement, it being understood that the
rates of interest applicable to Eurodollar Loans hereunder have been determined
on the basis of the Eurocurrency Reserve Requirement in effect at the time of
determination of the Reserve Adjusted LIBOR Rate and that such rates do not
reflect costs imposed on the Bank in connection with any change to the
Eurocurrency Reserve Requirement. It is agreed that for purposes of this
paragraph the Eurodollar Loans made hereunder shall be deemed to constitute
Eurocurrency Liabilities as defined in Regulation D and to be subject to the
reserve requirements of Regulation D without benefit or credit of proration,
exemptions or offsets which might otherwise be available to each Bank from time
to time under Regulation D.
SECTION 2.10. Increased Costs. If, after the date of this Agreement,
the adoption of, or any change in, any applicable law, regulation, rule or
directive, or any interpretation thereof by any authority charged with the
administration or interpretation thereof:
(i) subjects the Bank to any tax with respect to its
Commitment, the Loans, its Note, the Letters of Credit, the Bankers Acceptances,
the Import Letters of Credit or on any amount paid or to be paid under or
pursuant to this Agreement, the Loans, the Note, the Letters of Credit, the
Bankers Acceptances or the Import Letters of Credit (other than any tax measured
by or based upon the overall net income of the Bank);
(ii) changes the basis of taxation of payments to the Bank of
any amounts payable hereunder (other than any tax measured by or based upon the
overall net income of the Bank);
(iii) imposes, modifies or deems applicable any reserve,
capital adequacy or deposit requirements against any assets held by, deposits
with or for the account of, or loans made by, the Bank; or
(iv) imposes on the Bank any other condition affecting its
Commitment, the Loans, the Note, the Letters of Credit, the Bankers Acceptances,
the Import Letters of Credit or this Agreement;
and the result of any of the foregoing is to increase the cost
to the Bank of maintaining this Agreement or its Commitment, making the Loans or
issuing or participating in the Letters of Credit, or to reduce the amount of
any payment (whether of principal, interest or otherwise) receivable by the Bank
or to
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require the Bank to make any payment on or calculated by reference to the gross
amount of any sum received by it, in each case by an amount which Bank in its
sole, reasonable judgment deems material, then and in any such case:
(a) the Bank shall notify the Borrower of such event, together
with the date thereof, the amount of such increased cost or reduction
or payment and the way in which such amount has been calculated; and
(b) the Borrower shall pay to the Bank, within ten (10) days
after the advice referred to in subsection (a) hereinabove, such an
amount or amounts as will compensate the Bank for such additional cost,
reduction or payment for so long as the same shall remain in effect.
The determination of the Bank as to additional amounts payable pursuant
to this Section 2.10 shall be conclusive evidence of such amounts absent
manifest error. The provisions of this Section 2.10 shall survive the
termination of this Agreement and the payment of the Loans, any unreimbursed
draws on any Letter of Credit, Bankers Acceptance or Import Letter of Credit and
all other amounts due hereunder.
SECTION 2.11. Capital Adequacy. If the Bank shall have reasonably
determined that, subsequent to the date hereof, any change in the applicability
of any law, rule, regulation or guideline, or the adoption after the date hereof
of any other law, rule, regulation or guideline regarding capital adequacy, or
any change in any of the foregoing or in the interpretation or administration of
any of the foregoing by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Bank (or any lending office of the Bank) or the Bank's holding company
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on the Bank's capital or
on the capital of the Bank's holding company, if any, as a consequence of its
obligations hereunder to a level below that which the Bank the Bank's holding
company could have achieved but for such adoption, change or compliance (taking
into consideration the Bank's policies and the policies of the Bank's holding
company with respect to capital adequacy) by an amount deemed by the Bank to be
material, then from time to time:
(a) the Bank shall notify the Borrower of such event, together with the
date thereof, the amount of such reduced rate of return and the way in which
such amount has been calculated; and
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(b) the Borrower shall pay to the Bank within ten (10) days after the
advice referred to in subsection (a) hereinabove, such an amount or amounts as
will compensate the Bank for such reduced rate of return for so long as such
reduction shall remain in effect.
SECTION 2.12. Change in Legality. (a) Notwithstanding anything to the
contrary contained elsewhere in this Agreement, if any change after the date
hereof in law, rule, regulation, guideline or order, or in the interpretation
thereof by any governmental authority charged with the administration thereof,
shall make it unlawful for the Bank to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to a
Eurodollar Loan, then, by written notice to the Borrower, the Bank shall:
(i) declare that Eurodollar Loans will not thereafter be made
by the Bank hereunder, whereupon the Borrower shall be prohibited from
requesting Eurodollar Loans from the Bank hereunder unless such
declaration is subsequently withdrawn; and
(ii) require that, subject to the provisions of Section 2.13
hereof, all outstanding Eurodollar Loans made by the Bank be converted
to a Prime Rate Loan, whereupon all of such Eurodollar Loans shall be
automatically converted to a Prime Rate Loan as of the effective date
of such notice as provided in paragraph (b) below.
(b) For purposes of this Section 2.12, a notice to the Borrower by the
Bank pursuant to paragraph (a) above shall be effective, for the purposes of
paragraph (a) above, if lawful, and if any Eurodollar Loans shall then be
outstanding, on the last day of the then current Interest Period; otherwise,
such notice shall be effective on the date of receipt by the Borrower.
SECTION 2.13. Funding Losses. The Borrower agrees to compensate the
Bank for any loss or expense which the Bank may sustain or incur as a
consequence of (a) default by the Borrower in payment or prepayment when due of
the principal amount of or interest on any Eurodollar Loan, (b) default by the
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (c) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement, or (d) the making of a prepayment or conversion of
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto, including, without limitation, in each case, any such loss
(including, without limitation, loss of margin) or expense arising from the
reemployment of funds obtained by it or from amounts payable by the Bank to
lenders of funds obtained by it
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in order to make or maintain such Loans. Such compensation may include an amount
equal to the excess, if any, of (i) the amount of interest which would have
accrued on the amount so prepaid or converted, or not so borrowed, converted or
continued, for the period from the date of such prepayment or conversion or of
such failure to borrow, convert or continue to the last day of such Interest
Period (or, in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such failure) in each
case at the applicable rate of interest for such Loans provided for herein,
including the LIBOR Applicable Margin included therein, over (ii) the amount of
interest (as reasonably determined by the Bank) which would have accrued to the
Bank on such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank eurodollar market. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder. When claiming under this Section 2.13, the Bank
shall provide to the Borrower a statement, signed by an officer of the Bank,
explaining the amount of any such loss or expense (including the calculation of
such amount), which statement shall, in the absence of manifest error, be
conclusive with respect to the parties hereto.
SECTION 2.14. Change in LIBOR; Availability of Rates. In the event, and
on each occasion, that, on the day the interest rate for any Eurodollar Loan is
to be determined, the Bank shall have determined (which determination, absent
manifest error, shall be conclusive and binding upon the Borrower) that Dollar
deposits in the amount of the principal amount of the requested Eurodollar Loan
are not generally available in the interbank eurodollar market, or that the rate
at which such Dollar deposits are being offered will not adequately and fairly
reflect the cost to the Bank of making or maintaining the principal amount of
such Eurodollar Loan during such Interest Period, such Eurodollar Loan shall be
unavailable. The Bank shall, as soon as practicable thereafter, give written,
telex or telephonic notice of such determination of unavailability to the
Borrower. Any request by the Borrower for an unavailable Eurodollar Loan shall
be deemed to have been a request for a Prime Rate Loan. After such notice shall
have been given and until the Bank shall have notified the Borrower that the
circumstances giving rise to such unavailability no longer exist, each
subsequent request for an unavailable Eurodollar Loan shall be deemed to be a
request for a Prime Rate Loan.
SECTION 2.15. Authorization to Debit Borrower's Account. The Bank is
hereby authorized to debit the Borrower's account maintained with the Bank for
(i) all scheduled payments due from the Borrower of principal and/or interest
and/or commissions or fees under the Note or this Agreement or in respect of the
Letters of Credit, the Bankers Acceptances and the Import Letters of Credit (ii)
the Unused Facility Fee and (iii) all other amounts due
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hereunder; all such debits to be made on the days such payments are due in
accordance with the terms hereof.
SECTION 2.16. Late Charges, Default Interest. (a) If the Borrower shall
default in the payment of any principal installment of or interest on any Loan,
or any amount due in respect of any Letter of Credit, Bankers Acceptance or
Import Letter of Credit, or any other amount becoming due hereunder, the
Borrower shall pay to the Bank, as applicable, interest, to the extent permitted
by law, on such defaulted amount up to the date of actual payment (after as well
as before judgment) at a rate per annum (computed on the basis of the actual
number of days elapsed over a year of 360 days) equal to two (2%) percent plus
the interest rate which would then be in effect with respect to a Prime Rate
Loan made hereunder at the time such required payments were not made.
(b) Upon the occurrence and during the continuation of an Event of
Default, the Borrower shall pay to the Bank, interest on all Revolving Credit
Loans and on all amounts described in the definition of L/C Exposure, Import L/C
Exposure and B/A Exposure (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to two (2%) percent plus the interest rate which would then be in
effect with respect to Prime Rate Loans.
SECTION 2.17. Payments. All payments by the Borrower hereunder, under
the Note or in respect of the Letters of Credit, Import Letters of Credit and
Bankers Acceptances shall be made in Dollars in immediately available funds at
the office of the Bank by 12:00 noon, New York City time, on the date on which
such payment shall be due.
SECTION 2.18. Interest Adjustments. (a) If the provisions of this
Agreement, the Note, the L/C Documents, the B/A Documents or the Import L/C
Documents would at any time otherwise require payment by the Borrower to the
Bank of any amount of interest in excess of the maximum amount then permitted by
applicable law the interest payments shall be reduced to the extent necessary so
that the Bank shall not receive interest in excess of such maximum amount. To
the extent that, pursuant to the foregoing sentence, the Bank shall receive
interest payments hereunder, under the Notes, under the L/C Documents, the B/A
Documents or under the Import L/C Documents in an amount less than the amount
otherwise provided, such deficit (hereinafter called the "Interest Deficit")
will accumulate and will be carried forward (without interest) until the
termination of this Agreement. Interest otherwise payable by the Borrower to the
Bank hereunder, under the Note or under the L/C Documents, the B/A Documents and
the Import L/C Documents for any subsequent period shall be increased by such
maximum amount of the Interest Deficit that may be so added without causing
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the Bank to receive interest in excess of the maximum amount then permitted by
applicable law.
(b) The amount of the Interest Deficit at the Maturity Date shall be
cancelled and not paid.
ARTICLE IIA
THE LETTERS OF CREDIT
SECTION 2A.01. Letters of Credit. (a) On the terms and conditions set
forth herein, the Bank agrees, from time to time on any Business Day during the
period from the date of this Agreement to the day which is five (5) days prior
to the Maturity Date to issue Letters of Credit for the account of the Borrower
and the Guarantors. Within the foregoing limits, and subject to the other terms
and conditions hereof, the Borrower's and Guarantors' ability to obtain Letters
of Credit shall be fully revolving, and, accordingly, the Borrower and
Guarantors may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit which have expired or which have been drawn upon and
reimbursed.
(b) The Bank has no obligation to issue any Letter of Credit
if:
(i) any order, judgment or decree of any governmental
authority or arbitrator purports by its terms to enjoin or restrain the
Bank from issuing such Letter of Credit or any requirement of law
applicable to the Bank or any request or directive (whether or not
having the force of law) from any governmental authority with
jurisdiction over the Bank prohibits, or requests that the Bank refrain
from, the issuance of standby letters of credit generally or such
Letter of Credit in particular or imposes upon the Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement
(for which the Bank is not otherwise compensated hereunder) not in
effect on the date of this Agreement, or imposes upon the Bank any
unreimbursed loss, cost or expense which was not applicable on the date
of this Agreement and which the Bank in good faith deems material to
it;
(ii) the Bank has received written notice from the Borrower,
on or prior to the Business Day prior to the requested date of issuance
of such Letter of Credit, that one or more of the applicable conditions
contained in Article III hereof is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is (x)
more than one (1) year from its date of issuance or (y) later than five
(5) Business Days prior to the Maturity Date;
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(iv) the Aggregate Outstandings, after giving effect to the
requested Letter of Credit, shall exceed the Commitment;
(v) the aggregate L/C Exposure, after giving effect to such
Letter of Credit, shall exceed the L/C Sublimit; or
(vi) such Letter of Credit is not in form and substance
acceptable to the Bank, or the issuance of such Letter of Credit
violates any applicable policies of the Bank.
SECTION 2A.02. Issuance of Letters of Credit. Each Letter of Credit
shall be issued upon the request of the Borrower or Guarantors (which request
may be revoked only at such time and in sufficient time as will enable the Bank
to prevent the issuance of such Letter of Credit), received by the Bank in
accordance with arrangements between the Bank and the Borrower or Guarantors to
provide the Bank electronically or otherwise with the information necessary to
issue, amend or renew Letters of Credit. The arrangements between the Borrower
or Guarantors and the Bank are set forth in the L/C Documents (other than the
Letters of Credit) between the Bank and the Borrower or Guarantors. To the
extent any term in any such L/C Documents (other than a Letter of Credit)
conflicts with or is inconsistent with the terms of this Agreement, the term
most favorable to the Bank shall apply, and the Bank may exercise its rights
under either such L/C Document or this Agreement, but subject in any event to
the provisions herein with respect to notification. If any such inconsistency
exists, the Bank shall not be deemed to have waived any rights hereunder, nor
shall the Bank be deemed to have waived any rights under such L/C Document, by
reason of such inconsistency.
SECTION 2A.03. Role of the Bank. (a) The Bank shall not have any
responsibility to obtain any document in connection with paying any draw under a
Letter of Credit (other than any required sight or time draft, certificate and
other documents expressly required by such Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) The Borrower and Guarantors hereby assume all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter
of Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Borrower's and Guarantors' pursuing such rights and remedies
as it may have against the beneficiary or transferee at law or under any other
agreement. Neither the Bank, nor any of its officers, directors or employees,
nor any of the respective correspondents, participants or assignees of the Bank,
shall be liable or responsible for any of the matters described in clauses (i)
through (vii) of Section 2A.04 hereof; provided, however, that the Borrower
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and Guarantors may have a claim against the Bank which may be liable to the
Borrower and/or the Guarantors, to the extent of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrower and/or the
Guarantors which the Borrower and/or the Guarantors proves were caused by the
Bank's willful misconduct or gross negligence or the Bank's willful failure to
pay under any Letter of Credit after the presentation to it by the beneficiary
of a required sight or time draft and certificate(s) strictly complying with the
terms and conditions of a Letter of Credit, unless such failure is due to
compliance by the Bank with an order of a court or other legal process. In
furtherance and not in limitation of the foregoing: (i) the Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary;
and (ii) the Bank shall not be responsible for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reasons.
SECTION 2A.04. Obligations Absolute. The obligations of the Borrower
and Guarantors under this Agreement and any L/C Documents to reimburse the Bank
for a drawing under a Letter of Credit shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement and
the L/C Documents under all circumstances, including the following:
(i) any lack of validity or enforceability of this Agreement
or any L/C Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower
and/or the Guarantors in respect of any Letter of Credit or any other
amendment or waiver of or any consent to departure from all or any of
the L/C Documents;
(iii) the existence of any claim, setoff, defense or other
right that the Borrower and/or the Guarantors may have at any time
against any beneficiary or any transferee of any Letter of Credit (or
any Person for whom any such beneficiary or any such transferee may be
acting), the Bank or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C Documents
or any unrelated transaction;
(iv) any draft, demand, certificate or other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any
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document required in order to make a drawing under any Letter of
Credit;
(v) any payment by the Bank under a Letter of Credit against
presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by the Bank
under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or successor
to any beneficiary or any transferee of any Letter of Credit, including
any arising in connection with any insolvency proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from any other guarantee, for all or any of the obligations
of the Borrower and/or the Guarantors in respect of any Letter of
Credit; or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other
circumstance that might otherwise constitute a defense available to, or
a discharge of, the Borrower and/or the Guarantors.
SECTION 2A.05. Uniform Customs and Practices. The Uniform Customs and
Practice for Documentary Credits as most recently published by the International
Chamber of Commerce at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in such Letter of Credit) apply to such
Letter of Credit.
SECTION 2A.06. Fees and Commissions. (a) The Borrower and/or the
Guarantors shall pay to the Bank, a per annum fee equal to the LIBOR Applicable
Margin, as in effect from time to time, on the average amount available to be
drawn on Letters of Credit (computed on the basis of a year of 360 days for
actual days elapsed), payable quarterly in arrears.
(b) The Borrower and/or the Guarantors shall pay to the Bank its usual
and customary letter of credit fees as established from time to time, including
without limitation, fees, commissions and charges for issuance, payment,
processing amendment and expiration.
ARTICLE IIB
THE IMPORT LETTERS OF CREDIT AND BANKERS ACCEPTANCES
SECTION 2B.01. Import Letters of Credit. (a) On the terms
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and conditions set forth herein, the Bank agrees, from time to time on any
Business Day during the period from the date of this Agreement to the day which
is five (5) days prior to the Maturity Date to issue Import Letters of Credit
for the account of the Borrower and the Guarantors. Within the foregoing limits,
and subject to the other terms and conditions hereof, the Borrower's and
Guarantors' ability to obtain Import Letters of Credit shall be fully revolving,
and, accordingly, the Borrower and the Guarantors may, during the foregoing
period, obtain Import Letters of Credit to replace Import Letters of Credit
which have expired or which have been drawn upon and reimbursed.
(b) The Bank has no obligation to issue any Import Letter of
Credit if:
(i) any order, judgment or decree of any governmental
authority or arbitrator purports by its terms to enjoin or
restrain the Bank from issuing such Import Letter of Credit or
any requirement of law applicable to the Bank or any request
or directive (whether or not having the force of law) from any
governmental authority with jurisdiction over the Bank
prohibits, or requests that the Bank refrain from, the
issuance of commercial letters of credit generally or such
Import Letter of Credit in particular or imposes upon the Bank
with respect to such Import Letter of Credit any restriction,
reserve or capital requirement (for which the Bank is not
otherwise compensated hereunder) not in effect on the date of
this Agreement, or imposes upon the Bank any unreimbursed
loss, cost or expense which was not applicable on the date of
this Agreement and which the Bank in good faith deems material
to it;
(ii) the Bank has received written notice from the
Borrower or any Guarantor, on or prior to the Business Day
prior to the requested date of issuance of such Import Letter
of Credit, that one or more of the applicable conditions
contained in Article III hereof is not then satisfied;
(iii) the expiry date of any requested Import Letter
of Credit is (x) more than sixty (60) from its date of
issuance or (y) later than five (5) Business Days prior to the
Maturity Date;
(iv) the Aggregate Outstandings, after giving effect
to the requested Import Letter of Credit, shall exceed the
Commitment;
(v) the aggregate Import L/C Exposure, after giving
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effect to such Import Letter of Credit, shall exceed the
Import L/C Sublimit; or
(vi) such Import Letter of Credit is not in form and
substance acceptable to the Bank, or the issuance of such
Import Letter of Credit violates any applicable policies of
the Bank.
SECTION 2B.02. Issuance of Import Letters of Credit. Each Import Letter
of Credit shall be issued upon the request of the Borrower or a Guarantor (which
request may be revoked only at such time and in sufficient time as will enable
the Bank to prevent the issuance of such Import Letter of Credit), received by
the Bank in accordance with arrangements between the Bank and the Borrower or
Guarantor which is the account party to such Import Letter of Credit to provide
the Bank electronically or otherwise with the information necessary to issue,
amend or renew Import Letters of Credit. The arrangements between the Borrower
or Guarantor which is the account party to such Import Letter of Credit and the
Bank are set forth in the Import L/C Documents (other than the Import Letters of
Credit) between the Bank and the Borrower or Guarantor which is the account
party to such Import Letter of Credit. To the extent any term in any such Import
L/C Documents (other than an Import Letter of Credit) conflicts with or is
inconsistent with the terms of this Agreement, the term most favorable to the
Bank shall apply, and the Bank may exercise its rights under either such Import
L/C Document or this Agreement, but subject in any event to the provisions
herein with respect to notification. If any such inconsistency exists, the Bank
shall not be deemed to have waived any rights hereunder, nor shall the Bank be
deemed to have waived any rights under such Import L/C Document, by reason of
such inconsistency.
SECTION 2B.03. Role of the Bank. (a) The Bank shall not have any
responsibility to obtain any document in connection with paying any draw under
an Import Letter of Credit (other than any required sight or time draft,
certificate and other documents expressly required by such Import Letter of
Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such
document.
(b) Neither the Bank nor any of its correspondents or
assignees shall be liable to any Bank for: (i) any action taken or omitted in
connection herewith at the request or with the approval of the Bank; (ii) any
action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any Import L/C Document.
(c) The Borrower and Guarantors hereby assume all risks of the
acts or omissions of any beneficiary or transferee with
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respect to its use of any Import Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the Borrower's or
Guarantors' pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. Neither the Bank,
nor any of its respective officers, directors or employees, nor any of the
respective correspondents, participants or assignees of the Bank, shall be
liable or responsible for any of the matters described in clauses (i) through
(vii) of Section 2B.04 hereof; provided, however, that the Borrower or Guarantor
which is the account party may have a claim against the Bank, and the Bank may
be liable to the Borrower or Guarantor which is the account party, to the extent
of any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower or Guarantor which is the account party which the Borrower or Guarantor
which is the account party proves were caused by the Bank's willful misconduct
or gross negligence or the Bank's willful failure to pay under any Import Letter
of Credit after the presentation to it by the beneficiary of a required sight or
time draft and certificate(s) strictly complying with the terms and conditions
of an Import Letter of Credit, unless such failure is due to compliance by the
Bank with an order of a court or other legal process. In furtherance and not in
limitation of the foregoing: (i) the Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; and (ii) the Bank shall
not be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign an Import Letter
of Credit or the rights or benefits thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any reasons.
SECTION 2B.04. Obligations Absolute. The obligations of the Borrower
and Guarantors under this Agreement and any Import L/C Documents to reimburse
the Bank for a drawing under an Import Letter of Credit shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and the Import L/C Documents under all circumstances, including the
following:
(i) any lack of validity or enforceability of this
Agreement or any Import L/C Document;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
obligations of the Borrower or any Guarantor in respect of any
Import Letter of Credit or any other amendment or waiver of or
any consent to departure from all or any of the Import L/C
Documents;
(iii) the existence of any claim, setoff, defense or
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other right that the Borrower or any Guarantor may have at any
time against any beneficiary or any transferee of any Import
Letter of Credit (or any Person for whom any such beneficiary
or any such transferee may be acting), the Bank or any other
Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the Import L/C
Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document
presented under any Import Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under any
Import Letter of Credit;
(v) any payment by the Bank under an Import Letter of
Credit against presentation of a draft or certificate that
does not strictly comply with the terms of any Import Letter
of Credit; or any payment made by the Bank under any Import
Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other representative of or
successor to any beneficiary or any transferee of any Import
Letter of Credit, including any arising in connection with any
insolvency proceeding;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any other guarantee, for all or any
of the obligations of the Borrower and/or the Guarantors in
respect of any Import Letter of Credit; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including any
other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or Guarantor
which is the account party.
SECTION 2B.05. Uniform Customs and Practices. The Uniform Customs and
Practice for Documentary Credits as most recently published by the International
Chamber of Commerce at the time of issuance of any Import Letter of Credit shall
(unless otherwise expressly provided in such Import Letter of Credit) apply to
such Import Letter of Credit.
SECTION 2B.06. Fees and Commissions. (a) The Borrower or Guarantor
which is the account party to an Import Letter of Credit
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shall pay to the Bank, (i) a fee equal to one quarter (1/4%) percent of the face
amount of each Import Letter of Credit upon the opening of such Import Letter of
Credit, and (ii) a fee equal to one quarter (1/4%) percent of the face amount of
each Import Letter of Credit upon the negotiation of such Import Letter of
Credit.
(b) The Borrower or Guarantor which is the account party to an
Import Letter of Credit shall pay to the Bank its usual and customary letter of
credit fees as established from time to time, including without limitation,
fees, commissions and charges for issuance, payment, processing amendment and
expiration.
SECTION 2B.07. Bankers Acceptances. (a) On the terms and conditions set
forth herein and in the B/A Documents, the Bank agrees, from time to time on any
Business Day during the period from the date of this Agreement to the Maturity
Date to create Bankers Acceptances for the account of the Borrower and the
Guarantors.
(b) The Bank has no obligation to create any Bankers
Acceptance if:
(i) any order, judgment or decree of any governmental
authority or arbitrator purports by its terms to enjoin or
restrain the Bank from creating such Bankers Acceptance or any
requirement of law applicable to the Bank or any request or
directive (whether or not having the force of law) from any
governmental authority with jurisdiction over the Bank
prohibits, or requests that the Bank refrain from, the
creation of Bankers Acceptances generally or such Bankers
Acceptance in particular or imposes upon the Bank with respect
to such Bankers Acceptance any restriction, reserve or capital
requirement (for which the Bank is not otherwise compensated
hereunder) not in effect on the date of this Agreement, or
imposes upon the Bank any unreimbursed loss, cost or expense
which was not applicable on the date of this Agreement and
which the Bank in good faith deems material to it;
(ii) the Bank has received written notice from the Borrower or
a Guarantor, on or prior to the Business Day prior to the
requested date of creation of such Bankers Acceptance, that
one or more of the applicable conditions contained in Article
III is not then satisfied;
(iii) the expiry date of any requested Bankers Acceptance is
(x) more than one hundred eighty (180) days from its date of
issuance or (y) later than five (5) Business Days prior to the
Maturity Date;
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(iv) the aggregate B/A Exposure, after giving effect to the
requested Bankers Acceptance, shall exceed $1,000,000.00; or
(v) any Bankers Acceptance is not in form and substance
acceptable to the Bank, or violates any applicable policies of
the Bank.
SECTION 2B.08. Bankers Acceptance Fees and Commissions. The Borrower
and Guarantors shall pay to the Bank a per annum commission equal to 1.25% of
the face amount of each Bankers Acceptance created, payable in advance.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to the Making of the Initial
Revolving Credit Loan, the Issuing of the Initial Letter of Credit, the Issuing
of the Initial Import Letter of Credit and the Creation of the Initial Bankers
Acceptance. The obligation of the Bank to make the initial Revolving Credit
Loans contemplated by this Agreement and the obligation of the Bank to issue the
initial Letter of Credit issued on or after the date of this Agreement, to issue
the initial Import Letter of Credit issued on or after the date of this
Agreement and create the initial Bankers Acceptance all as contemplated by this
Agreement, are each subject to the condition precedent that the Bank shall have
received from the Borrower and the Guarantors on or before the date of this
Agreement the following, each dated such day, in form and substance satisfactory
to the Bank and its counsel:
(a) Revolving Credit Note, duly executed by the Borrower and payable to
the order of the Bank.
(b) Certified (as of the date of this Agreement) copies of the
resolutions of the Board of Directors of the Borrower authorizing the Loans, the
Bankers Acceptances, the Letters of Credit and the Import Letters of Credit and
authorizing and approving this Agreement and the other Loan Documents to which
the Borrower is a party and the execution, delivery and performance thereof and
certified copies of all documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement and the other
Loan Documents.
(c) Certified (as of the date of this Agreement) copies of the
resolutions of the Boards of Directors and the shareholders of each of the
Guarantors, authorizing and approving this Agreement, their Guaranties and any
other Loan Document applicable to the
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Guarantors, and the execution, delivery and performance thereof and certified
copies of all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement, their Guaranties
and the other Loan Documents.
(d) A certificate of the Secretary or an Assistant Secretary (attested
to by another officer) of the Borrower certifying: (i) the names and true
signatures of the officer or officers of the Borrower authorized to sign this
Agreement, the Note and the other Loan Documents to be delivered hereunder on
behalf of the Borrower; and (ii) a copy of the Borrower's by-laws as complete
and correct on the date of this Agreement.
(e) A Certificate of the Secretary or an Assistant Secretary (attested
to by another officer) of each of the Guarantors certifying (i) the names and
true signatures of the officer or officers of the Guarantors authorized to sign
this Agreement, their Guaranties and any other Loan Documents to be delivered
hereunder on behalf of the Guarantors; (ii) a copy of each of the Guarantors'
by-laws as complete and correct on the date of this Agreement; and (iii) the
stock ownership of each Guarantor.
(f) Copies of the certificate of incorporation and all amendments
thereto of the Borrower and the Guarantors certified in each case by the
Secretary of State (or equivalent officer) of the state of incorporation of each
of the Borrower and the Guarantors and a certificate of existence and good
standing with respect to the Borrower and the Guarantors from the Secretary of
State (or equivalent officer) of the state of incorporation of the Borrower and
the Guarantors and from the Secretary of State (or equivalent officer) of any
state in which the Borrower or the Guarantors are authorized to do business.
(g) An opinion of Kressel, Rothlein, Walsh and Roth LLC, counsel for
the Borrower and the Guarantors as to certain matters referred to in Article IV
hereof and as to such other matters as the Bank or its counsel may reasonably
request.
(h) From each of the Guarantors, an executed Guaranty.
(i) From the Borrower and each Guarantor, copies of all of the
Borrower's and such Guarantor's credit agreements, loan agreements, indentures,
mortgages and other documents relating to the extension of credit.
(j) From the Borrower, (x) a commitment fee equal to $45,000.00, and
(y) the fees and expenses to be paid pursuant to this Agreement.
(k) Evidence that the Bank shall, prior to the date of this Agreement,
have completed its due diligence review of the Borrower
-34-
and Guarantors, the results of which shall be satisfactory to the Bank in its
sole discretion.
(l) Evidence that the following statements shall be true and the Bank
shall have received a certificate signed by the President or Chief Financial
Officer of the Borrower dated the date hereof, stating that:
(i) The representations and warranties contained in Article IV
of this Agreement and in the other Loan Documents are true and correct on and as
of such date; and
(ii) No Default or Event of Default has occurred and is
continuing, or would result from the making of the initial Revolving Credit
Loans or the issuance of the initial Letter of Credit, the initial Import Letter
of Credit or the initial Bankers Acceptance, as applicable.
(m) Evidence that all schedules, documents, exhibits, certificates and
other information provided to the Bank pursuant to or in connection with this
Agreement shall be satisfactory to the Bank and its counsel in all respects.
(n) Evidence that all legal matters incident to this Agreement and the
transactions contemplated hereby shall be satisfactory to Cullen and Dykman LLP,
counsel to the Bank.
(o) Such other approvals, opinions or documents as the Bank or its
counsel may reasonably request.
SECTION 3.02. Conditions Precedent to all Revolving Credit Loans, all
Letters of Credit, all Import Letters of Credit and all Bankers Acceptances. The
obligation of the Bank to make each Revolving Credit Loan (including the initial
Revolving Credit Loan) and the obligation of the Bank to issue each Letter of
Credit and Import Letter of Credit (including the initial Letter of Credit and
initial Import Letter of Credit) and to create each Bankers Acceptance
(including the initial Bankers Acceptance), shall each be subject to the further
condition precedent that on the date of such Revolving Credit Loan, Letter of
Credit, Import Letter of Credit or Bankers Acceptance:
(a) The following statements shall be true and each request for a
Revolving Credit Loan, Letter of Credit, Bankers Acceptance or Import Letter of
Credit shall be deemed to be a certification by the Borrower that:
(i) The representations and warranties contained in Article IV
of this Agreement and in the other Loan Documents shall be true and correct in
all material respects on and as of such date as though made on such date; and
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(ii) No Default or Event of Default shall have occurred and be
continuing, or would result from such Revolving Credit Loan, Letter of Credit,
Bankers Acceptance or Import Letter of Credit.
(b) The Bank shall have received such other approvals, opinions or
documents as the Bank or its counsel may reasonably request.
SECTION 3.03. Conditions Precedent to the Making of Permitted
Acquisition Loans. The obligation of the Bank to make each Revolving Credit Loan
which is a Permitted Acquisition Loan shall be subject to the further conditions
precedent that on the date of such Revolving Credit Loan, Letter of Credit,
Import Letter of Credit or Bankers Acceptance:
(a) The Bank shall have received, at least ten (10) Business Days prior
to such request, (i) the certificate and information required under the
definition of Permitted Acquisition, or (ii) if the consideration for the
Permitted Acquisition is such that the Borrower is not required to provide the
information described in clauses (iv) and (v) of the definition of Permitted
Acquisition, the Borrower shall have delivered to the Bank a certificate
evidencing pro forma compliance (with supporting documentation) by the Borrower
with Section 5.03 hereof for the remainder of the term of this Agreement.
(b) The Bank shall have received (i) copies of all contracts, documents
and agreements relating to the pending Permitted Acquisition (the "Acquisition
Documents"), and (ii) evidence that except for the payment of that portion of
the purchase price to be funded by the proceeds of such Permitted Acquisition
Loan, the pending Permitted Acquisition has been completed in accordance with
the terms of the Acquisition Documents and that no material condition or
material obligation on the part of the acquired Person or any Affiliate of the
acquired Person has been waived.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties. On the date of this
Agreement and on each date that the Borrower requests a Revolving Credit Loan, a
Letter of Credit, a Bankers Acceptance or an Import Letter of Credit, the
Borrower and each of the Guarantors represent and warrant as follows:
(a) Subsidiaries. On the date hereof, the only Subsidiaries of the
Borrower or a Guarantor are those set forth on Schedule
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4.01(a) annexed hereto, which Schedule accurately sets forth with respect to
each such Subsidiary, its name and address, any other addresses at which it
conducts business, its state of incorporation and each other jurisdiction in
which it is qualified to do business and the identity and share holdings of its
stockholders. Except as set forth on said Schedule 4.01(a), all of the issued
and outstanding shares of each Subsidiary which are owned by the Borrower or a
Guarantor are owned by the Borrower or such Guarantor free and clear of any
mortgage, pledge, lien or encumbrance. Except as set forth on said Schedule
4.01(a), there are not outstanding any warrants, options, contracts or
commitments of any kind entitling any Person to purchase or otherwise acquire
any shares of common or capital stock or other equity interest of the Borrower
or any Guarantor or any Subsidiary of the Borrower or a Guarantor, nor are there
outstanding any securities which are convertible into or exchangeable for any
shares of the common or capital stock of the Borrower or any Guarantor or any
Subsidiary of the Borrower or a Guarantor.
(b) Good Standing. The Borrower and the Guarantors, and each Subsidiary
of the Borrower or any Guarantor, are each corporations duly incorporated,
validly existing and in good standing under the laws of the States of their
respective incorporation and each has the corporate power to own or lease its
assets and to transact the business in which it is presently engaged and is duly
qualified and is in good standing in such other jurisdictions where the nature
or extent of its business requires such qualification.
(c) Due Execution, Etc. The execution, delivery and performance by the
Borrower and each Guarantor of the Loan Documents to which they are a party are
within the Borrower's and the Guarantors' corporate power and have been duly
authorized by all necessary corporate action and do not and will not (i) require
any consent or approval of the stockholders of the Borrower or Guarantors; (ii)
contravene the Borrower's or any of the Guarantors' certificates of
incorporation, charters or by-laws; (iii) violate any provision of any law,
rule, regulation, contractual restriction, order, writ, judgment, injunction, or
decree, determination or award binding on or affecting the Borrower or any
Guarantor; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement, or any other agreement, lease or
instrument to which the Borrower or any Guarantor is a party or by which it or
its properties may be bound or affected; or (v) result in, or require, the
creation or imposition of any Lien (other than the Lien of the Loan Documents)
upon or with respect to any of the properties now owned or hereafter acquired by
the Borrower or any Guarantor.
(d) No Consents Required. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution,
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delivery and performance by the Borrower or any Guarantor of any Loan Document
to which it is a party, except authorizations, approvals, actions, notices or
filings which have been obtained, taken or made, as the case may be.
(e) Validity and Enforceability. The Loan Documents when delivered
hereunder will have been duly executed and delivered on behalf of the Borrower
and each Guarantor, as the case may be, and will be legal, valid and binding
obligations of the Borrower and each Guarantor, as the case may be, enforceable
against the Borrower or such Guarantor in accordance with their respective
terms.
(f) Financial Statements. The consolidated financial statements of the
Borrower and its Consolidated Affiliates for the fiscal year ended July 31,
2004, and for the fiscal quarter ended October 31, 2004, copies of which have
been furnished to the Bank, fairly present the consolidated financial condition
of the Borrower and its Consolidated Affiliates as at such dates and the results
of operations of the Borrower and its Consolidated Affiliates for the periods
ended on such dates, all in accordance with GAAP, and since such dates there has
been (i) no material increase in the consolidated liabilities of the Borrower
and its Consolidated Affiliates and (ii) no Material Adverse Change in the
Borrower, any of its Consolidated Affiliates or any of the Guarantors.
(g) No Litigation. Except as set forth on Schedule 4.01(g) annexed
hereto, there is no pending or, to the Borrower's or any Guarantor's knowledge,
threatened action, proceeding or investigation affecting the Borrower, any
Guarantor or any Subsidiary of the Borrower or a Guarantor, before any court,
governmental agency or arbitrator, which may either in one case or in the
aggregate, result in the Material Adverse Change in the Borrower, any Guarantor
or any such Subsidiary or which relates to any Loan Document.
(h) Taxes. The Borrower, each Guarantor and each Subsidiary of the
Borrower or a Guarantor have filed all federal, state and local tax returns
required to be filed and have paid all taxes, assessments and governmental
charges and levies thereon to be due, including interest and penalties. The
federal income tax liability of the Borrower, each Guarantor and each such
Subsidiary has been finally determined and satisfied for all taxable years up to
and including the taxable year ended July 31, 2001.
(i) Licenses, etc. The Borrower, each Guarantor and each Subsidiary of
the Borrower or a Guarantor possess all licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights thereto, to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, no Person, to the best knowledge of the Borrower and
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each Guarantor, is infringing on any patent, trademark or copyright owned or
used by the Borrower, any Guarantor or any such Subsidiary, and neither the
Borrower, any Guarantor nor any such Subsidiary are in violation of any similar
rights of others.
(j) Burdensome Agreements. Neither the Borrower nor any of the
Guarantors nor any Subsidiary of the Borrower or a Guarantor is a party to any
indenture, loan or credit agreement or any other agreement, lease or instrument
or subject to any charter, corporate or partnership restriction which could
result in a Material Adverse Change in the Borrower, any of the Guarantors or
any such Subsidiary. Neither the Borrower nor any Guarantor nor any such
Subsidiary is in default in any respect in the performance, observance, or
fulfillment of any of the obligations or covenants contained in any agreement or
instrument material to its business.
(k) Margin Stock. The Borrower and Guarantors are not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation G, T, U or X), and no proceeds of any
Loan, and no Letter of Credit, Import Letter of Credit or Bankers Acceptance
will be used to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock or in any other way
which will cause the Borrower or any Guarantor to violate the provisions of
Regulation G, T, U or X.
(l) Compliance With Laws. The Borrower, each Guarantor and each
Subsidiary of the Borrower or a Guarantor are in all material respects in
compliance with all federal and state laws and regulations in all jurisdictions
where the failure to comply with such laws or regulations could result in a
Material Adverse Change in the Borrower, any of the Guarantors or any such
Subsidiary.
(m) ERISA. The Borrower, each Guarantor, each Subsidiary of the
Borrower or a Guarantor and each ERISA Affiliate are in compliance in all
material respects with all applicable provisions of ERISA. Neither a Reportable
Event nor a Prohibited Transaction has occurred and is continuing with respect
to any Plan; no notice of intent to terminate a Plan has been filed nor has any
Plan been terminated; no circumstances exist which constitute grounds under
Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate,
or appoint a trustee to administrate, a Plan, nor has the PBGC instituted any
such proceedings; neither the Borrower, any Guarantor, any Subsidiary of the
Borrower or a Guarantor, nor any ERISA Affiliate has completely or partially
withdrawn under Section 4201 or 4204 of ERISA from a Multiemployer Plan; the
Borrower, each Guarantor, each Subsidiary of the Borrower or a Guarantor and
each ERISA Affiliate have met their minimum funding requirements under ERISA
with respect to all of their Plans and the present fair market value of all Plan
assets exceeds the present value of all vested benefits under each Plan, as
determined on the most recent
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valuation date of such Plan in accordance with the provisions of ERISA for
calculating the potential liability of the Borrower, any Guarantor, any such
Subsidiary or any ERISA Affiliate to PBGC or such Plan under Title IV of ERISA;
and neither the Borrower, any Guarantor, any such Subsidiary nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.
(n) Hazardous Materials. The Borrower, each Guarantor and each
Subsidiary of the Borrower or a Guarantor are in compliance with all federal,
state or local laws, ordinances, rules, regulations or policies governing
Hazardous Materials and neither the Borrower, any Guarantor nor any such
Subsidiary has used Hazardous Materials on, from, or affecting any property now
owned or occupied or hereafter owned or occupied by the Borrower, any Guarantor
or any such Subsidiary in any manner which violates federal, state or local
laws, ordinances, rules, regulations or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials, and to the best of the Borrower's, the
Guarantors' and such Subsidiaries' knowledge, no prior owner of any such
property or any tenant, subtenant, prior tenant or prior subtenant have used
Hazardous Materials on, from or affecting such property in any manner which
violates federal, state or local laws, ordinances, rules, regulations, or
policies governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials.
(o) Use of Proceeds. The proceeds of the Revolving Credit Loans,
Letters of Credit, Import Letters of Credit and Bankers Acceptances shall be
used exclusively for the purposes set forth in Section 2.05 of this Agreement.
(p) Title to Property; No Liens. Each of the Borrower and each
Guarantor has good and marketable title to all of its properties and assets. The
properties and assets of the Borrower, the Guarantors and each Subsidiary of the
Borrower or a Guarantor are not subject to any Lien other than those described
in Section 5.02(a) hereof.
(q) Casualties. Neither the business nor the properties of the
Borrower, any Guarantor or any Subsidiary of the Borrower or a Guarantor are
affected by any fire, explosion, accident, strike, hail, earthquake, embargo,
act of God or of the public enemy, or other casualty (whether or not covered by
insurance), which could result in a Material Adverse Change in the Borrower or
any of the Guarantors.
(r) Advantage to Guarantors. The Guarantors acknowledge they have
derived or expect to derive a financial or other advantage from the Loans and
other extensions of credit obtained by the Borrower from the Bank hereunder.
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(s) Credit Agreements. Schedule 4.01(s) annexed hereto is a complete
and correct list of all credit agreements, indentures, purchase agreements
(other than purchase orders for the purchase of goods issued in the ordinary
course of business), guaranties, Capital Leases, and other investments,
agreements and arrangements presently in effect providing for or relating to
extensions of credit (including agreements and arrangements for the issuance of
letters of credit or for acceptance financing) in respect of which the Borrower
or any Guarantor is in any manner directly or contingently obligated, and the
maximum principal or face amounts of the credit in question, outstanding or to
be outstanding, are correctly stated, and all Liens of any nature given or
agreed to be given as security therefor are correctly described or indicated in
such Schedule and neither the Borrower nor any Guarantor is in default with
respect to its obligations thereunder.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as (i) any part of the
Commitment shall be in effect, (ii) any amount shall remain outstanding under
the Note, (iii) any Letter of Credit or L/C Exposure is outstanding, (iv) any
Import Letter of Credit or Import L/C Exposure is outstanding, or (v) any
Bankers Acceptance is outstanding, the Borrower and each of the Guarantors will,
unless the Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary of the
Borrower or a Guarantor to comply, in all material respects with all applicable
laws, rules, regulations and orders, where the failure to so comply could result
in a Material Adverse Change in the Borrower, a Guarantor or any such
Subsidiary.
(b) Reporting Requirements. Furnish to the Bank:
(i) Annual Financial Statements. As soon as available and in any event
within ninety (90) days after the end of each fiscal year of the Borrower, (1) a
copy of the audited consolidated financial statements of the Borrower and its
Consolidated Affiliates for such year, including a balance sheet with a related
statement of income and retained earnings and statement of cash flows, all in
reasonable detail and setting forth in comparative form the figures as of the
end of and for the previous fiscal year, together with an unqualified opinion,
prepared by KPMG, LLP or such other independent certified public accountants
selected by the Borrower and reasonably satisfactory to the Bank, all such
financial statements to be prepared in accordance with GAAP; and (2) copies of
the consolidating schedules to such consolidated financial statements.
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(ii) Quarterly Financial Statements. As soon as available and in any
event within forty-five (45) days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower, a copy of the consolidated
and consolidating financial statements of the Borrower and its Consolidated
Affiliates for such quarter and for the year to date, including balance sheets
with related statements of income and retained earnings and statements of cash
flows, all in reasonable detail and setting forth in comparative form the
figures for the comparable quarter and comparable year to date period for the
previous fiscal year, all such financial statements to be prepared by management
of the Borrower in accordance with GAAP.
(iii) Management Letters. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower or any Guarantor by independent certified
public accountants in connection with any examination of the financial
statements of the Borrower and each Guarantor made by such accountants.
(iv) Certificate of No Default. Simultaneously with the delivery of the
financial statements referred to in Section 5.01(b)(i) and (ii) hereof, a
certificate of the Chief Executive Officer, President or the Chief Financial
Officer of the Borrower, (1) certifying that no Default or Event of Default has
occurred and is continuing, or if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto and (2) with computations
demonstrating compliance with the covenants contained in Section 5.03 hereof.
(v) Accountant's Certificate. Simultaneously with the delivery of the
annual consolidated financial statements referred to in Section 5.01(b)(i)
hereof, a certificate of the independent certified public accountants who
audited such statements to the effect that, in making the examination necessary
for the audit of such statements, they have obtained no knowledge of any
condition or event which constitutes a Default or Event of Default, or if such
accountants shall have obtained knowledge of any such condition or event,
specifying in such certificate each such condition or event of which they have
knowledge and the nature and status thereof.
(vi) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower, any Guarantor or any Subsidiary of the Borrower
or a Guarantor which (1) relates to any Loan Document or (2) if determined
adversely to the Borrower, any Guarantor or any such
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Subsidiary could result in a Material Adverse Change in the Borrower, any
Guarantor or any such Subsidiary.
(vii) Notice of Defaults and Events of Default. As soon as possible and
in any event within ten (10) days after the occurrence of each Default or Event
of Default, a written notice setting forth the details of such Default or Event
of Default and the action which is proposed to be taken with respect thereto.
(viii) ERISA Reports. Promptly after the filing or receiving thereof,
copies of all reports, including annual reports, and notices which the Borrower,
any Guarantor or any Subsidiary of the Borrower or a Guarantor, files with or
receives from the PBGC or the U.S. Department of Labor under ERISA; and as soon
as possible after the Borrower, any Guarantor or any such Subsidiary knows or
has reason to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower, any
Guarantor or any such Subsidiary has instituted or will institute proceedings
under Title IV of ERISA to terminate any Plan, the Borrower or such Guarantor
will deliver to the Bank a certificate of the Chief Executive Officer, the
President or the Chief Financial Officer of the Borrower or such Guarantor
setting forth details as to such Reportable Event or Prohibited Transaction or
Plan termination and the action the Borrower or such Guarantor proposes to take
with respect thereto.
(ix) Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other party pursuant to the
terms of any indenture, loan, or credit or similar agreement and not otherwise
required to be furnished to the Bank pursuant to any other clause of this
Section 5.01(b).
(x) Proxy Statements, Etc. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports which
the Borrower, any Guarantor or any Subsidiary of the Borrower or any Guarantor
sends to its public stockholders, and copies of all regular, periodic, and
special reports, and all registration statements which the Borrower, any
Guarantor or any such Subsidiary files with the Securities and Exchange
Commission or any governmental authority which may be substituted therefor, or
with any national securities exchange.
(xi) Notice of Affiliates. Promptly after any Person becomes an
Affiliate of the Borrower or any Guarantor, notice to the Bank of such
Affiliate.
(xii) General Information. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower, any Guarantor
or any Subsidiary of the Borrower or a Guarantor as the Bank may from time to
time reasonably request.
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(c) Taxes. Pay and discharge, and cause its Subsidiaries to pay and
discharge, all taxes, assessments and governmental charges upon it or them, its
or their income or its or their properties prior to the dates on which penalties
are attached thereto, unless and only to the extent that (i) such taxes shall be
contested in good faith and by appropriate proceedings by the Borrower, any
Guarantor or any such Subsidiary, as the case may be, (ii) there shall be
adequate reserves therefor in accordance with GAAP entered on the books of the
Borrower, any Guarantor or any such Subsidiary and (iii) no enforcement
proceedings against the Borrower, such Guarantor or such Subsidiary shall have
been commenced.
(d) Corporate Existence. Except as permitted by clause (i) of Section
5.02(d) hereof, preserve and maintain, and cause its Subsidiaries to preserve
and maintain, their corporate existence and good standing in the jurisdiction of
their incorporation and the rights, privileges and franchises of the Borrower,
each Guarantor and each such Subsidiary in each case where failure to so
preserve or maintain could result in a Material Adverse Change in the Borrower,
any of the Guarantors or any such Subsidiary.
(e) Maintenance of Properties and Insurance. (i) Keep, and cause any
Subsidiaries to keep, their respective properties and assets (tangible or
intangible) that are useful and necessary in its business, in good working order
and condition, reasonable wear and tear excepted (including but not limited to
all internet web sites owned and/or operated by the Borrower and/or the
Guarantors); and (ii) maintain, and cause any Subsidiaries to maintain,
insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in similar businesses and owning properties doing business in
the same general areas in which the Borrower, any Guarantors and any such
Subsidiaries operate. The policies shall provide for thirty (30) days prior
written notice to the Bank of cancellation or change.
(f) Books of Record and Account. Keep, and cause any Subsidiaries to
keep, adequate records and proper books of record and account in which complete
entries will be made in a manner to enable the preparation of financial
statements in accordance with GAAP, reflecting all financial transactions of the
Borrower, the Guarantors, and any such Subsidiaries.
(g) Visitation. At any reasonable time and upon reasonable notice, and
from time to time, permit the Bank or any agents or representatives thereof, to
examine and make copies of and abstracts from the books and records of, and
visit the properties of, the Borrower, any Guarantor or any Subsidiary of the
Borrower or any Guarantor and to discuss the affairs, finances and accounts of
the Borrower, any Guarantor or any such Subsidiary with any of
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the respective officers or directors of the Borrower, such Guarantor, such
Subsidiary or the Borrower's, such Guarantor's or such Subsidiary's independent
accountants.
(h) Performance and Compliance with Other Agreements. Perform and
comply and cause each Subsidiary of the Borrower or any Guarantor to perform and
comply, with each of the provisions of each and every agreement the failure to
perform or comply with which could result in a Material Adverse Change in the
Borrower, any Guarantor or any such Subsidiary.
(i) Pension Funding. Comply with the following and cause each ERISA
Affiliate of the Borrower, any Guarantor or any Subsidiary of the Borrower or a
Guarantor to comply with the following:
(i) engage solely in transactions which would not subject any
of such entities to either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Internal
Revenue Code of 1986, as amended, in either case in an amount in excess
of $100,000.00;
(ii) make full payment when due of all amounts which, under
the provisions of any Plan or ERISA, the Borrower, any Guarantor, any
such Subsidiary or any ERISA Affiliate of any of same is required to
pay as contributions thereto;
(iii) all applicable provisions of the Internal Revenue Code
of 1986, as amended and the regulations promulgated thereunder,
including but not limited to Section 412 thereof, and all applicable
rules, regulations and interpretations of the Accounting Principles
Board and the Financial Accounting Standards Board;
(iv) not fail to make any payments in an aggregate amount
greater than $100,000.00 to any Multiemployer Plan that the Borrower,
any Guarantor, any such Subsidiary or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(v) not take any action regarding any Plan which could result
in the occurrence of a Prohibited Transaction.
(j) Licenses. Maintain at all times, and cause each Subsidiary of the
Borrower or any Guarantor to maintain at all times, all licenses, permits or
registrations necessary to the conduct of its business or as may be required by
any governmental agency or instrumentality thereof.
(k) New Affiliates. Cause any Affiliate of the Borrower or any
Guarantor which is (i) formed after the date of this Agreement and (ii) engaged
or is to be engaged in the same, a similar or
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related line of business as the Borrower or any Guarantor, to (x) become a
guarantor of all obligations of the Borrower and the Guarantors under this
Agreement and the other Loan Documents and (y) become a party to this Agreement.
SECTION 5.02. Negative Covenants. So long as (i) any part of the
Commitment shall be in effect, (ii) any amount shall remain outstanding under
the Note, (iii) any Letter of Credit or L/C Exposure is outstanding, (iv) any
Import Letter of Credit or Import L/C Exposure is outstanding, or (v) any
Bankers Acceptance is outstanding, neither the Borrower nor any of the
Guarantors nor any Subsidiary of the Borrower or a Guarantor will, without the
written consent of the Bank:
(a) Liens, Etc. Create, incur, assume or suffer to exist any Lien upon
or with respect to any of its properties, now owned or hereafter acquired,
except:
(i) Liens in favor of the Bank securing Debt permitted by
Section 5.02(b)(i) hereof;
(ii) Liens for taxes or assessments or other government
charges or levies if not yet due and payable or if due and payable if they are
being contested in good faith by appropriate proceedings and for which
appropriate reserves in accordance with GAAP are maintained;
(iii) Liens imposed by law, such as mechanics', materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due more than forty five (45) days or which are being contested in good
faith by appropriate proceedings and for which appropriate reserves in
accordance with GAAP have been established;
(iv) Liens under workers' compensation, unemployment
insurance, Social Security, or similar legislation;
(v) Liens, deposits, or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(vi) Liens described in Schedule 5.02(a) hereto,
provided that no such Liens shall be renewed, extended or refinanced;
(vii) Judgment and other similar Liens arising in connection
with court proceedings (other than those described in Section 6.01(f) hereof),
provided the execution or other
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enforcement of such Liens is effectively stayed and the claims secured thereby
are being actively contested in good faith and by appropriate proceedings;
(viii) Easements, rights-of-way, restrictions, and other
similar encumbrances which, in the aggregate, do not materially interfere with
the Borrower's or a Guarantor's occupation, use and enjoyment of the property or
assets encumbered thereby in the normal course of its business or materially
impair the value of the property subject thereto; and
(ix) Purchase money Liens on any property hereafter acquired
or the assumption of any Lien on property existing at the time of such
acquisition, or a Lien incurred in connection with any conditional sale or other
title retention agreement or a Capital Lease, provided that:
(1) Any property subject to any of the foregoing is
acquired by the Borrower or any Guarantor in the ordinary course of its
respective business and the Lien on any such property is created
contemporaneously with such acquisition;
(2) The obligation secured by any Lien so created,
assumed, or existing shall not exceed 100% of lesser of the cost or fair market
value of the property acquired as of the time of the Borrower or any Guarantor
acquiring the same;
(3) Each such Lien shall attach only to the property
so acquired and fixed improvements thereon;
(4) The Borrower and the Guarantors shall not incur,
in the aggregate, more than $2,000,000.00 of Debt
secured by Liens described in this clause (ix) during any fiscal year; and
(5) The obligation secured by such Lien is permitted
by the provisions of Section 5.02(b) hereof and the
related expenditure is permitted by the provisions of Section 5.03(b) hereof;
(b) Debt. Create, incur, assume, or suffer to exist any Debt, except:
(i) Debt of the Borrower and the Guarantors under this
Agreement, the Note or in respect of the Letters of Credit, the Import Letters
of Credit and the Bankers Acceptances;
(ii) Debt described in Schedule 5.02(b) hereto (including but
not limited to Capital Leases), provided that no such Debt shall be renewed,
extended or refinanced;
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(iii) Accounts payable to trade creditors for goods or
services and current operating liabilities (other than for borrowed money), in
each case incurred in the ordinary course of business and paid within the
specified time; and
(iv) Debt secured by Liens permitted under Section 5.02(a)(ix)
hereof.
(c) Lease Obligations. Create, incur, assume, or suffer to exist any
obligation as lessee for the rental or hire of any real or personal property,
except (i) Capital Leases permitted by Section 5.02(a) hereof; (ii) leases
existing on the date of this Agreement and any extensions or renewals thereof;
and (iii) leases (other than Capital Leases) which do not in the aggregate
require the Borrower or any Guarantor to make payments (including taxes,
insurance, maintenance, and similar expenses which the Borrower or any Guarantor
is required to pay under the terms of any lease) in any fiscal year in excess of
$750,000.00.
(d) Merger. Merge into, or consolidate with or into, or have merged
into it, any Person (for the purpose of this subsection (d), the acquisition or
sale by the Borrower or any Guarantor by lease, purchase or otherwise of all, or
substantially all, of the common stock or the assets of any Person or of it
shall be deemed a merger of such Person with the Borrower or any Guarantor)
other than (i) a merger of a Subsidiary into its parent corporation, or (ii)
Permitted Acquisitions, provided that the total aggregate consideration for all
Permitted Acquisitions (including all Permitted Acquisition Loans) shall not
exceed $10,000,000.00 in the aggregate during the term of this Agreement.
(e) Sale of Assets, Etc. Sell, assign, transfer, lease or otherwise
dispose of any of its assets (including a sale/leaseback transaction) with or
without recourse, except for (i) inventory disposed of in the ordinary course of
business and (ii) the sale or other disposition of assets no longer used or
useful in the conduct of its business.
(f) Investments, Etc. Make any Investment other than Permitted
Investments.
(g) Transactions With Affiliates. (i) Except in the ordinary course of
business and pursuant to the reasonable requirements of the business of the
Borrower, a Guarantor or a Subsidiary of the Borrower or a Guarantor and upon
fair and reasonable terms no less favorable to the Borrower, or such Guarantor
or such Subsidiary than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate, enter into any transaction, other
than loans or advances of money, including, without limitation, the purchase,
sale, or exchange of property or the rendering of any service, with any
Affiliate; or (ii) enter into any transaction
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involving the lending or advancing of money to any Affiliate, provided, however,
that the Borrower may lend up to $4,000,000.00 in the aggregate to the
Guarantors provided further that any such loans or advances shall be evidenced
by one or more notes or other evidence of such Debt which shall be, pursuant to
a pledge agreement satisfactory to the Bank, pledged to the Bank, as collateral
security for the Aggregate Outstandings and all other amounts due under this
Agreement or any other Loan Documents.
(h) Prepayment of Outstanding Debt. Pay, in whole or in part, any
outstanding Debt (other than the Loans and Capital Leases existing on the date
hereof) of the Borrower or any Guarantor or any Subsidiary of the Borrower or
any Guarantor which by its terms is not then due and payable (other than the
Loans and Capital Leases existing on the date hereof).
(i) Guarantees. Guaranty, or in any other way become directly or
contingently obligated for any Debt of any other Person (including any
agreements relating to working capital maintenance, take or pay contracts or
similar arrangements) other than (i) the Guaranties; (ii) the endorsement of
negotiable instruments for deposit in the ordinary course of business; (iii)
guarantees existing on the date hereof and set forth in Schedule 5.02(i) annexed
hereto; and (iv) guarantees of Debt permitted hereunder.
(j) Change of Business. Materially alter the nature of its business as
set forth and described in the Borrower's Form 10-K for its fiscal year ended
July 31, 2004.
(k) Fiscal Year. Change the ending date of its fiscal year from July
31.
(l) Losses. Incur a net loss for any fiscal year or in any consecutive
four (4) quarter period commencing July 31, 2005. In addition, the Borrower
shall not incur a loss in excess of $1,000,000.00 for each of the quarters
ending January 31, 2005 and April 30, 2005.
(m) Accounting Policies. Change any accounting policies, except as
permitted by GAAP.
(n) Change of Tax Status. Change its tax reporting status as a C
corporation.
(o) Dividends, Etc. Declare or pay any dividends, purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such,
whether in cash, assets, or in obligations of the Borrower or any Guarantor; or
allocate or otherwise set apart any sum for the payment of any dividend or
distribution on, or for the purchase, redemption or retirement of
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any shares of its capital stock; or make any other distribution by reduction of
capital or otherwise in respect of any share of its capital stock; provided,
however, that as long as no Default or Event of Default then exists or would
result therefrom, the Borrower may (i) repurchase, during the term of this
Agreement, not more than $3,500,000.00 of its outstanding common stock in open
market transactions, and (ii) declare dividends not exceeding $3,500,000.00 in
the aggregate during the term of this Agreement, provided that the total amount
of all such stock repurchases and dividends shall not exceed $5,000,000.00 in
the aggregate during the term of this Agreement.
(p) Hazardous Material. Cause or permit any property owned or occupied
by the Borrower, any Guarantor or any Subsidiary of the Borrower or any
Guarantor to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose of, transfer, produce or process Hazardous Materials, except in
compliance with all applicable federal, state and local laws or regulations; or
cause or permit, as a result of any intentional or unintentional act or omission
on the part of the Borrower, any Guarantor or any such Subsidiary or any tenant
or subtenant, a release of Hazardous Materials onto any property owned or
occupied by the Borrower, any Guarantor or any such Subsidiary or onto any other
property; or fail in all material respects to comply with all applicable
federal, state and local laws, ordinances, rules and regulations governing
Hazardous Materials, whenever and by whomever triggered; or fail to obtain and
comply with any and all approvals, registrations or permits required thereunder.
The Borrower and the Guarantors shall execute any documentation reasonably
required by the Bank in connection with the representations, warranties and
covenants contained in this paragraph and Section 4.01 of this Agreement.
SECTION 5.03. Financial Requirements. So long as (i) any part of the
Commitment shall be in effect, (ii) any amount shall remain outstanding under
any of the Notes, (iii) any Letter of Credit or L/C Exposure is outstanding,
(iv) any Import Letter of Credit or Import L/C Exposure is outstanding, or (v)
any Bankers Acceptance is outstanding:
(a) Minimum Consolidated Tangible Net Worth. The Borrower and its
Consolidated Affiliates will maintain at all times a Consolidated Tangible Net
Worth of not less than $32,000,000.00, to be tested at the end of each fiscal
quarter.
(b) Consolidated Capital Expenditures. The Borrower, the Guarantors and
their respective Subsidiaries will not make Consolidated Capital Expenditures
(exclusive of amounts allocated to capital assets acquired pursuant to a
Permitted Acquisition) in excess of $3,000,000.00 in the aggregate during any
fiscal year.
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(c) Quick Asset Ratio. The Borrower and the Guarantors will maintain at
all times, on a consolidated basis, a Quick Asset Ratio of not less than 1.00 to
1.00, such ratio to be tested at the end of each fiscal quarter.
(d) Funded Debt to EBITDA Ratio. The Borrower and Guarantors will
maintain at all times on a consolidated basis, a Funded Debt to EBITDA Ratio, of
not greater than 3.00 to 1.00, to be tested at the end of each fiscal quarter.
(e) Interest Coverage Ratio. The Borrower and Guarantors will maintain
at all times, on a consolidated basis, an Interest Coverage Ratio of not less
than 2.50 to 1.00, such ratio to be tested at the end of each fiscal quarter.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any installment of principal of, or
interest on, the Note when due, or any fees or other amounts owed in connection
with this Agreement or the Borrower or any Guarantor shall fail to reimburse the
Bank for any draw, accepted draft, deferred payment obligations or any other
amounts owed in connection with any Letters of Credit, Import Letter of Credit
or Bankers Acceptance when due; or
(b) Any representation or warranty made or deemed made by the Borrower
or any Guarantor herein or in the other Loan Documents or which is contained in
any certificate, document, opinion, or financial or other statement furnished at
any time under or in connection with any Loan Document shall prove to have been
incorrect in any material respect when made or deemed made; or
(c) The Borrower or any Guarantor shall fail to perform or observe (i)
any term, covenant or agreement contained in Sections
5.01(a),(c),(d),(e),(f),(g),(h),(i) or (j) hereof within twenty (20) days after
such performance or observation is required or (ii) the Borrower or any
Guarantor shall fail to perform or observe any other term, covenant or agreement
contained in this Agreement or in any other Loan Document (other than the Notes)
on its part to be performed or observed; or
(d) The Borrower, any Guarantor, or any Subsidiary of the Borrower or a
Guarantor shall fail to pay any Debt in the principal amount of $500,000.00 or
more in the aggregate (excluding Debt evidenced by the Notes or any other Loan
Document) of the Borrower,
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any Guarantor or any such Subsidiary (as the case may be), or any installment
thereof, or any interest or premium thereon, when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other default under
any agreement or instrument relating to any such Debt, or any other event, shall
occur and shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or
(e) The Borrower, any Guarantor or any Subsidiary of the Borrower or a
Guarantor shall generally not pay its Debts as such Debts become due, or shall
admit in writing its inability to pay its Debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower, any Guarantor or any such Subsidiary
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its Debts under any law relating to bankruptcy, insolvency
or reorganization or the relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property and if instituted against the
Borrower, any Guarantor or any such Subsidiary shall remain undismissed for a
period of 30 days; or the Borrower, any Guarantor or any such Subsidiary shall
take any action to authorize any of the actions set forth above in this
subsection (e); or
(f) Any judgment or order or combination of judgments or orders for the
payment of money, in excess of $500,000.00 in the aggregate, which sum shall not
be subject to full, complete, effective and acknowledged insurance coverage,
shall be rendered against the Borrower, any Guarantor or any Subsidiary of the
Borrower or a Guarantor and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be any
period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(g) Any Guarantor shall fail to perform or observe any term or
provision of its Guaranty or any representation or warranty made by any
Guarantor (or any of its officers or partners) in connection with such
Guarantor's Guaranty shall prove to have been incorrect in any material respect
when made; or
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(h) Any of the following events shall occur or exist with respect to
the Borrower, any Guarantor, any Subsidiary of the Borrower or a Guarantor, or
any ERISA Affiliate: (i) any Prohibited Transaction involving any Plan; (ii) any
Reportable Event with respect to any Plan; (iii) the filing under Section 4041
of ERISA of a notice of intent to terminate any Plan or the termination of any
Plan; (iv) any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the termination
of, or for the appointment of a trustee to administer, any Plan, or the
institution by the PBGC of any such proceedings; (v) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan or the
reorganization insolvency, or termination of any Multiemployer Plan; and in each
case above, such event or condition, together with all other events or
conditions, if any, could in the opinion of the Bank subject the Borrower, any
Guarantor, any such Subsidiary or any ERISA Affiliate to any tax, penalty, or
other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceeds or may exceed $250,000.00;
or
(i) This Agreement or any other Loan Document, at any time after its
execution and delivery and for any reason, ceases to be in full force and effect
in all material respects or shall be declared to be null and void, or the
validity or enforceability of any document or instrument delivered pursuant to
this Agreement shall be contested by the Borrower, any Guarantor or any party to
such document or instrument or the Borrower, any Guarantor or any party to such
document or instrument shall deny that it has any or further liability or
obligation under any such document or instrument; or
(j) Barry R. Steinberg shall, during his lifetime, fail or cease to
maintain the ownership, directly or indirectly, of an amount of voting stock of
the Borrower which is equal to the greater of (i) twenty-five (25%) percent of
such voting stock or (ii) more of such voting stock than is owned or controlled
by any other Person; or
(k) Barry R. Steinberg shall not be retained in a reasonably active
capacity in the management of the Borrower and the Guarantors, unless such
failure is due to his death or permanent disability; or
(l) An event of default specified in any Loan Document other than this
Agreement shall have occurred and be continuing.
SECTION 6.02. Remedies on Default. Upon the occurrence and continuance
of an Event of Default the Bank may, by notice to the Borrower take any or all
of the following actions: (i) terminate the Commitment, (ii) declare the Note,
all interest thereon and all
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other amounts payable under this Agreement to be forthwith due and payable,
(iii) demand that the Borrower and Guarantors provide the Bank with cash
collateral for any undrawn Letters of Credit and any Bankers Acceptances or
other accepted drafts or deferred payment obligations under any Letters of
Credit, and (iv) demand that the Borrower and Guarantors provide the Bank with
cash collateral for any undrawn Import Letters of Credit and any Bankers
Acceptances or other accepted drafts or deferred payment obligations under any
Import Letters of Credit, whereupon the Commitment shall be terminated, and the
Note, all such interest, all such cash collateral and all such other amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower, and (v) proceed to enforce its and the Bank's rights whether by
suit in equity or by action at law, whether for specific performance of any
covenant or agreement contained in this Agreement or any other Loan Document, or
in aid of the exercise of any power granted in either this Agreement or any Loan
Document or proceed to obtain judgment or any other relief whatsoever
appropriate to the enforcement of its and the Bank's rights, or proceed to
enforce any other legal or equitable right which the Bank may have by reason of
the occurrence of any Event of Default hereunder or under any other Loan
Document, provided, however, upon the occurrence of an Event of Default referred
to in Section 6.01(e) hereof, the Commitment shall be immediately terminated,
and the Note, all interest thereon, all such cash collateral and all other
amounts payable under this Agreement shall be immediately due and payable
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by the Borrower and Guarantors. Any amounts
collected pursuant to action taken under this Section 6.02 shall be applied to
the payment of, first, any costs incurred by the Bank in taking such action,
including but without limitation attorneys' fees and expenses, second, to
provide cash collateral to the Bank for any undrawn Letters of Credit, Import
Letters of Credit, Bankers Acceptances, accepted drafts or deferred payment
obligations, third, to payment of the accrued interest on the Note and fourth,
to payment of the unpaid principal of the Note.
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or reserved
to the Bank hereunder or in any other Loan Document is intended to be exclusive
of any other available remedy, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this Agreement or
any other Loan Document or now or hereafter existing at law or in equity. No
delay or omission to exercise any right or power accruing upon any Event of
Default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient. In order to entitle the Bank to
exercise any remedy reserved in this Article VI, it shall not be necessary to
give any notice,
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other than such notice as may be herein expressly required in this Agreement or
in any other Loan Document.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments. Etc. No amendment, modification, termination
or waiver of any provision of any Loan Document to which the Borrower or any
Guarantor is a party, nor consent to any departure by the Borrower or any
Guarantor from any Loan Document to which it is a party, shall in any event be
effective unless the same shall be in writing and signed by the Bank, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given.
SECTION 7.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and mailed, telegraphed, sent by facsimile or delivered, if to the Borrower or
any Guarantor, at the address of the Borrower or Guarantor, as the case may be,
set forth at the beginning of this Agreement and if to the Bank, at the address
of the Bank set forth at the beginning of this Agreement to the attention of
Stuart N. Berman, V.P., or, as to each party, at such other address as shall be
designated by such party in a written notice complying as to delivery with the
terms of this Section 7.02 to the other parties. Courtesy copies of all notices
to the Borrower or any Guarantor shall be sent to Joel Rothlein, Esq., Kressel,
Rothlein and Roth, 684 Broadway, Massapequa, New York 11758, provided, however,
that the failure of the Bank to send such courtesy copies shall not affect the
Bank's rights hereunder. All such notices and communications shall be effective
when mailed, telegraphed or delivered, except that notices to the Bank shall not
be effective until received by the Bank.
SECTION 7.03. No Waiver, Remedies. No failure on the part of the Bank
to exercise, and no delay in exercising, any right, power or remedy under any
Loan Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
the Loan Documents are cumulative and not exclusive of any remedies provided by
law.
SECTION 7.04. Costs, Expenses and Taxes. The Borrower and each
Guarantor agrees to pay on demand all costs and expenses of the Bank in
connection with the preparation, execution, delivery and administration of this
Agreement, the Note, the Letters of Credit, the Import Letters of Credit, the
Bankers Acceptances and any other Loan Documents, including, without limitation,
the
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reasonable fees and expenses of counsel for the Bank with respect thereto and
with respect to advising the Bank as to its rights and responsibilities under
this Agreement, and all costs and expenses, if any (including reasonable counsel
fees and expenses), of the Bank in connection with the enforcement of this
Agreement, the Note, the Letters of Credit, the Import Letters of Credit, the
Bankers Acceptances and any other Loan Documents. The Borrower and Guarantors
shall at all times protect, indemnify, defend and save harmless the Bank from
and against any and all claims, actions, suits and other legal proceedings, and
liabilities, obligations, losses, damages, penalties, judgments, costs, expenses
or disbursements which the Bank may, at any time, sustain or incur by reason of
or in consequence of or arising out of the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. The
Borrower and each Guarantor acknowledges that it is the intention of the parties
hereto that this Agreement shall be construed and applied to protect and
indemnify the Bank against any and all risks involved in the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, all of which risks are hereby assumed by the Borrower and Guarantors,
including, without limitation, any and all risks of the acts or omissions,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority, provided that the Borrower and Guarantors
shall not be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Bank's gross negligence or willful misconduct. The provisions
of this Section 7.04 shall survive the payment of the Note and all other
obligations hereunder and the termination of this Agreement.
SECTION 7.05. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Bank or
any Affiliates of the Bank to or for the credit or the account of the Borrower
or any Guarantor against any and all of the obligations of the Borrower or any
Guarantor now or hereafter existing under this Agreement and the Note,
irrespective of whether or not the Bank shall have made any demand under this
Agreement or the Note and although such obligations may be unmatured. The rights
of the Bank under this Section are in addition to all other rights and remedies
(including, without limitation, other rights of set-off) which the Bank may
have.
SECTION 7.06. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Guarantors and the Bank.
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SECTION 7.07. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrower and
Guarantors may not assign or otherwise transfer any of their respective rights
or obligations under this Agreement without the prior written consent of the
Bank.
(b) The Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans and interests in Letters of Credit, Import Letters of
Credit and Bankers Acceptances. In the event of any such grant by the Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower, the Bank shall remain responsible for the performance of its
obligations hereunder, and the Borrower shall continue to deal solely and
directly with the Bank in connection with the Bank's rights and obligations
under this Agreement. Any agreement pursuant to which the Bank may grant such a
participating interest shall provide that the Bank shall retain the sole right
and responsibility to enforce the obligations of the Borrower and Guarantors
hereunder including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
participation agreement may provide that the Bank will not agree to any
modification, amendment or waiver of this Agreement described in clauses (a)
through (i) of Section 7.01 hereof without the consent of such Participant. The
Borrower and each Guarantor agrees that each Participant shall, to the extent
provided in its participation agreement, be entitled to the benefits of this
Article VII and Article III hereof with respect to its participating interest.
(c) The Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the Bank from its obligations hereunder.
SECTION 7.08. Further Assurances. The Borrower and each Guarantor agree
at any time and from time to time at its expense, upon request of the Bank or
its counsel, to promptly execute, deliver, or obtain or cause to be executed,
delivered or obtained any and all further instruments and documents and to take
or cause to be taken all such other action the Bank may deem desirable in
obtaining the full benefits of this Agreement or any other Loan Document.
SECTION 7.09. Section Headings, Severability, Entire Agreement. Section
and subsection headings have been inserted herein for convenience only and shall
not be construed as part of this Agreement. Every provision of this Agreement
and each other Loan Document is intended to be severable; if any term or
provision of this Agreement, any other Loan Document, or any other document
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delivered in connection herewith or therewith shall be invalid, illegal or
unenforceable for any reason whatsoever, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not in any
way be affected or impaired thereby. All exhibits and schedules to this
Agreement shall be annexed hereto and shall be deemed to be part of this
Agreement. This Agreement and the exhibits and schedules attached hereto embody
the entire agreement and understanding between the Borrower, the Guarantors and
the Bank and supersede all prior agreements and understandings relating to the
subject matter hereof.
SECTION 7.10. Governing Law. This Agreement, the Note and all other
Loan Documents shall be governed by, and construed in accordance with, the laws
of the State of New York.
SECTION 7.11. Waiver of Jury Trial. The Borrower, each Guarantor and
the Bank waive all rights to trial by jury on any cause of action directly or
indirectly involving the terms, covenants or conditions of this Agreement or any
Loan Document.
SECTION 7.12. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CITIBANK, N.A.
By:/s/ Stuart N. Berman
-------------------------------
Name: Stuart N. Berman
Title: Vice President
MANCHESTER TECHNOLOGIES, INC.
By:/s/ Barry R. Steinberg
-------------------------------
Name: Barry R. Steinberg
Title: Chief Executive Officer
EACH OF THE GUARANTORS LISTED ON
SCHEDULE A HERETO
By:/s/ Barry R Steinberg
-------------------------------
Name: Barry R. Steinberg
Title: Chief Executive Officer
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SCHEDULE A
MANCHESTER INTERNATIONAL LTD.
ELECTROGRAPH SYSTEMS, INC.
TEXPORT TECHNOLOGY GROUP, INC.
MARKETPLACE 4U.COM, INC.
TELSTARR PROFESSIONAL SERVICES, INC.
E.TRACK SOLUTIONS, INC.
MANCHESTER EQUIPMENT CO., INC.
CHAMPION VISION, INC.
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