LOAN AGREEMENT
Dated as of July 21, 1998
MANCHESTER EQUIPMENT CO., INC., a New York corporation having its
principal place of business at 160 Oser Avenue, Hauppauge, New York 11788 (the
"Borrower"), MANCHESTER INTERNATIONAL LTD., a New York corporation having its
principal place of business at 160 Oser Avenue, Hauppauge, New York 11788
("International" or a "Guarantor"), MANTECH COMPUTER SERVICES, INC., a New York
corporation having its principal place of business at 160 Oser Avenue,
Hauppauge, New York 11788 ("ManTech" or a "Guarantor"), MEC LEASING GROUP, LTD.,
a New York corporation having its principal place of business at 160 Oser
Avenue, Hauppauge, New York 11788 ("MEC" or a "Guarantor"), MANCHESTER
SOLUTIONS, INC., a New York corporation having its principal place of business
at 160 Oser Avenue, Hauppauge, New York 11788 ("Solutions" or a "Guarantor"),
ELECTROGRAPH SYSTEMS, INC., a New York corporation having its principal place of
business at 160 Oser Avenue, Hauppauge, New York 11788 ("Electrograph" or a
"Guarantor") and COASTAL OFFICE PRODUCTS, INC., a Maryland corporation having
its principal place of business at 4812 Frankford Avenue, Baltimore, MD 21206
("Coastal" or a "Guarantor"), THE BANK OF NEW YORK, a New York banking
organization, having an office at 604 Broad Hollow Road, Melville, New York
11747 ("BNY" or a "Bank"), EUROPEAN AMERICAN BANK, a New York banking
organization, having an office at EAB Plaza, Uniondale, New York 11555 ("EAB" or
a "Bank") and THE BANK OF NEW YORK, having an office at One Wall Street, New
York, New York 10286, as agent for the Banks (the "Agent"), hereby agree as
follows:
ARTICLE I
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):
"ABR Applicable Margin" has the meaning set forth in Section
2.04 of this Agreement.
"Adjusted LIBOR Rate" means, with respect to any Eurodollar Loan for
any Interest Period, an interest rate per annum (rounded,
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if not already a whole multiple of 1/100th of one (.01%) percent to the nearest
1/100th of one (.01%) percent) determined by the Agent to be equal to the
quotient of (a) the LIBOR Rate divided by (b) a percentage equal to 100% minus
the Eurocurrency Reserve Requirement as determined by the Agent on the date the
Adjusted LIBOR Rate is determined.
"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 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.
"Agent" means The Bank of New York, or any bank which succeeds to the
position of Agent, as provided in this Agreement.
"Aggregate Outstandings" means, at any time, the aggregate of (i) the
principal amount of outstanding Revolving Credit Loans and (ii) the L/C
Exposure.
"Agreement" means this Loan Agreement, as amended, supplemented or
modified from time to time.
"Alternate Base Rate" means, for any day, an interest rate per annum
equal to the higher of (i) the Prime Rate in effect on such day (computed on the
basis of the actual number of days elapsed over a year of 365/366 days) or (ii)
the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% (computed
on the basis of the actual number of days elapsed over a year of 360 days). For
purposes of this Agreement any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively. If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including, without
limitation, the inability or failure of the Agent to obtain sufficient bids or
publications in accordance with the terms thereof, the Alternate Base Rate shall
be determined without regard to clause (ii) of the first sentence of this
definition, until the circumstances giving rise to such inability no longer
exist.
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"Alternate Base Rate Loan" means a Loan bearing interest at
the Alternate Base Rate.
"Arranger" means BNY Capital Markets, Inc.
"Bank" or "Banks" means one or more, as the context requires, of BNY
and each other lender which is, or becomes, a party to this Agreement.
"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, with respect to each Bank, the aggregate
obligations of such Bank to (i) make Revolving Credit Loans to the Borrower
pursuant to the terms and conditions of this Agreement and (ii) participate in
Letters of Credit issued pursuant to the terms and conditions of this Agreement,
in each case in the aggregate Dollar amount and Pro Rata Share set forth in
Schedule 1.01-A annexed hereto, as modified by any reductions in the Total
Commitment or by any assignments of all or any part of such Bank's Commitment.
"Commitment Letter" means the letter from BNY to the Borrower, dated
January 23, 1998, pursuant to which BNY agreed to extend seventy (70%) percent
of a credit facility as described therein to the Borrower and the Arranger
agreed to use its best efforts to arrange, structure and syndicate such credit
facility.
"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
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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), 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.
"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
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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.
"Deutsche" means Deutsche Financial Services Corporation.
"Deutsche Agreement" means the Agreement for Wholesale Financing dated
as of August 25, 1997, between the Borrower and Deutsche, as it may be amended
or modified from time to time and shall include the Terms Letter, as defined
therein.
"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), plus (ii) interest expense, plus (iii) federal,
state and local income taxes accrued, 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), plus (ii) interest expense, plus (iii)
depreciation expense, plus (iv) amortization of intangible assets plus (v)
federal, state and local income taxes accrued, 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.
"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
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treated, with such Person, as a single employer under Section 4001 of ERISA.
"Eurocurrency Reserve Requirement" means, with respect to the Adjusted
LIBOR Rate for an Interest Period, the daily average of the stated maximum rate
(expressed as a decimal) at which reserves (including any marginal, supplemental
or emergency reserves) are required to be maintained at the beginning of such
Interest Period 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 Agent) by the Person
which is the Agent 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 Person which is the Agent 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 Person which is the Agent against (1) any category of
liabilities that includes deposits by reference to which the Adjusted LIBOR Rate
is to be determined; or (2) any category of extension of credit or other assets
that include loans bearing interest at an Adjusted LIBOR Rate.
"Eurodollar Loan" means a Loan bearing interest at a rate based on the
Adjusted LIBOR Rate in accordance with the provisions of Article II hereof.
"Event of Default" means any of the events specified in Section 6.01 of
this Agreement, provided that any requirement for notice or lapse of time or any
other condition has been satisfied.
"Federal Funds Effective Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three (3) federal funds brokers
of recognized standing selected by it.
"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 Issuing Bank for the amount of all unmatured drafts
accepted or deferred payment obligations incurred under
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Letters of Credit, and (v) all liabilities of such Person under any preferred
stock which, at 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, for a period covering 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 Agent 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 Agent, of the independent
accountants selected by the Borrower and approved by the Agent 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 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 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
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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.
"Intercreditor Agreement" means an agreement between Deutsche and the
Agent pursuant to which they agree that if any security interest in the assets
of the Borrower is obtained by Deutsche and the Agent (for the benefit of the
Banks), notwithstanding the priority of such security interests, as between
Deutsche and the Agent (i) Deutsche shall have a first priority security
interest in the Borrower's inventory financed through the Deutsche Agreement
(but not in the proceeds of such inventory) and (ii) the Agent (for the benefit
of the Banks) shall have a first priority security interest in all other
personal property of the Borrower.
"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 for a period covering the
four (4) fiscal quarters then ended.
"Interest Determination Date" means the date on which an Alternate Base
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 Alternate Base Rate Loan,
the last Business Day of each month.
"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) no Interest Period representing a portion of the principal required to be
paid in accordance with the
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scheduled reduction in the Total Commitment may be selected unless the
outstanding Alternate Base Rate Loans and Eurodollar Loans for which the
relevant Interest Periods end on or prior to the date of such payment are in an
aggregate amount which will be sufficient to make such payment, (iv) interest
shall accrue from and including the first day of such Interest Period to but
excluding the date of payment of such interest, (v) no Interest Period may have
a duration of less than one month and (vi) no Interest Period of particular
duration may be selected by the Borrower if the Agent 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.
"Issuing Bank" means BNY.
"Letters of Credit" means standby letters of credit issued by the
Issuing 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 Issuing 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 Issuing 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.
"LIBOR Rate" means the rate, as reported by BNY to the Agent, quoted by
BNY to leading banks in the interbank eurodollar market as the rate at which BNY
is offering Dollar deposits in an amount equal approximately to the Eurodollar
Loan of BNY to which an Interest Period shall apply for a period equal to such
Interest
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Period, as quoted at approximately 11:00 a.m. (New York City time) two Business
Days prior to the first day of such Interest Period.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever, including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing.
"Loan" or "Loans" means one or more Revolving Credit Loans and may
refer to one or more Alternate Base Rate Loans and/or one or more Eurodollar
Loans, as the context requires.
"Loan Documents" means this Agreement, the Note, the Guaranties, the
L/C Documents, the Commitment Letter 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 March 31, 2002.
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Borrower or any ERISA Affiliate.
"Note" or "Notes" means one or more of the Revolving Credit
Notes as the context requires.
"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 Agent;
(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 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, 1997;
(iv) If the aggregate consideration paid for the subject
Acquisition and all other Permitted Acquisitions since the date of this
Agreement exceeds $1,500,000.00, the Agent and the Banks 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 $1,500,000.00, the Agent and the Banks 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.
"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 any
commercial bank organized and existing under the laws of the United States or
any state thereof and having aggregate capital and surplus in excess of
$1,000,000,000.00; (iii) money market mutual funds having assets in excess of
$2,500,000,000; (iv) commercial paper rated not less than P-1 or A-1 or their
equivalent by Moody's 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 prime commercial lending rate of the Person
which is the Agent as publicly announced to be in effect from time to time, each
change in the Prime Rate to be effective on the date such change is announced to
be effective.
"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.
"Pro Rata Share" means, with respect to each Bank, its pro rata share
of the initial Total Commitment, as set forth in Schedule 1.01 annexed hereto as
the same may be modified by any assignment of all or any part of such Bank's
Commitment.
"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
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commercial banks of recognized standing operating in the United 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.
"Required Banks" means, (i) at any time while there are Revolving
Credit Loans outstanding, those Banks having, in the aggregate, seventy-five
(75%) percent of such Revolving Credit Loans or (ii) at any time while there are
no Revolving Credit Loans outstanding but the Total Commitment is available,
those Banks having, in the aggregate, seventy-five (75%) percent of the Total
Commitment.
"Revolving Credit Loan" or "Revolving Credit Loans" means one or more,
as the context requires of the revolving credit loans made by the Banks to the
Borrower pursuant to the terms and conditions of this Agreement.
"Revolving Credit Note" or "Revolving Credit Notes" means one or more,
as the context requires, of the promissory notes of the Borrower payable to the
order of each of the Banks, in substantially the form of Exhibit A annexed
hereto, evidencing the indebtedness of the Borrower to each such Bank resulting
from Revolving Credit Loans made by such Bank to the Borrower pursuant to this
Agreement.
"S&P" shall have the meaning given such term in the definition of
"Permitted Investments".
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"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 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.
"Total Commitment" means the aggregate of the Commitments of each of
the Banks, which (i) from the date of this Agreement until March 31, 2000 will
be $15,000,000.00; (ii) from April 1, 2000 until March 31, 2001 will be
$12,500,000.00; and (iii) from April 1, 2001 until the Maturity Date will be
$10,000,000.00.
"Unused Facility Fee" means the fee payable pursuant to Section 2.06 of
this Agreement.
"Year 2000 Issue" means the failure of computer software, hardware and
firmware systems and equipment containing embedded computer chips to properly
receive, transmit, process, manipulate, store, retrieve, re-transmit or in any
other way utilize data and information due to the occurrence of the year 2000 or
the inclusion of dates on or after January 1, 2000.
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.
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ARTICLE II
SECTION 2.01. The Revolving Credit Loans. (a) The Banks agree,
severally but not jointly, 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 the Banks 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 (x) the Aggregate Outstandings at any one
time shall not exceed the Total Commitment as it reduces from time to time in
accordance with the definition of "Total Commitment" and as it may be further
reduced pursuant to Section 2.07 hereof and (y) each Bank's Pro Rata Share of
Revolving Credit Loans and L/C Exposure shall not exceed its Pro Rata Share of
the Total Commitment.
(b) Each Revolving Credit Loan shall be an Alternate Base 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. Any 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 such 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.
(a) The Borrower shall give the Agent 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 an Alternate Base Rate Loan. Upon receipt of such notice, the Agent shall
promptly notify each Bank of the contents thereof and of the amount, type and
other relevant information regarding the Loan requested. Thereupon, each Bank
shall, not later than 2:00 p.m. (New York time), transfer immediately available
funds equal to such Bank's share of the requested borrowing to the Agent, which,
provided the conditions of Sections 3.01 and 3.02 of this Agreement have been
met, and provided the Banks have made such transfers, shall thereupon transfer
immediately available funds equal to the requested borrowing to the Borrower's
account with the Agent. If
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a notice of borrowing is received by the Agent after 11:00 a.m. on a Business
Day, such notice shall be deemed to have been given on the next succeeding
Business Day. Any Bank's failure to make any requested Loan shall not relieve
any other Bank of its obligation to make such Loan, but such other Bank shall
not be liable for such failure of the first Bank.
(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) an Alternate Base 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 an Alternate Base 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 an Alternate Base Rate
Loan.
(c) The Borrower shall have the right, on such notice to the Agent 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 an Alternate Base 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
Alternate Base 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
each Bank applying the proceeds of the new Loan 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 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
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Eurodollar Loan made when such Loans are not available shall be deemed to be a
request for an Alternate Base 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 an Alternate Base Rate Loan at the expiration of the then current
Interest Period.
(d) Unless the Agent shall have received notice from a Bank prior to
2:00 p.m. (New York time) on the requested date, that such Bank will not make
available to the Agent the Loan requested to be made on such date, the Agent may
assume that such Bank has made such Loan available to the Agent on such date in
accordance with Section 2.02(a) hereof and the Agent in its sole discretion may,
in reliance upon such assumption, make available to the Borrower on such date a
corresponding amount on behalf of such Bank. If and to the extent such Bank
shall not have so made available to the Agent the Loan requested to be made on
such date and the Agent shall have so made available to the Borrower a
corresponding amount on behalf of such Bank, such Bank shall, on demand, pay to
the Agent such corresponding amount together with interest thereon, at the
Federal Funds Effective Rate plus two (2%) percent, for each day from the date
such amount shall have been so made available by the Agent to the Borrower until
the date such amount shall have been repaid to the Agent. If such Bank does not
pay such corresponding amount promptly upon the Agent's demand therefor, the
Agent shall promptly notify the Borrower and the Borrower shall, not later than
one (1) Business Day following such notice, repay such corresponding amount to
the Agent together with accrued interest thereon at the applicable rate or rates
provided (i) in Section 2.04 hereof or (ii) if the Borrower fails to repay such
corresponding amount within three (3) Business Days after such notice, in
Section 2.16 hereof.
SECTION 2.03. Revolving Credit Notes. (a) Each Revolving Credit Loan
shall be (i) in the case of each Alternate Base 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 Alternate Base Rate Loan so requested
shall exhaust the remaining available Total Commitment, such Alternate Base Rate
Loan may be in an amount equal to the amount of the remaining available Total
Commitment). Each Revolving Credit Loan shall be evidenced by the Revolving
Credit Notes. Each Revolving Credit Note shall be dated the date hereof and be
in the principal amount set forth next to the applicable Bank's name on Schedule
1.01 annexed hereto, as modified by any assignment of all or any part of such
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. Each Revolving Credit Note shall be
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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, each Bank is hereby authorized by the
Borrower to make a notation on the schedule annexed to its 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 applicable 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
Notes.
(a) In the case of an Alternate Base Rate Loan, interest shall be
payable at a rate per annum (computed as provided in the definition of
"Alternate Base Rate") equal to the Alternate Base Rate plus the ABR Applicable
Margin as in effect from time to time. Such interest shall be payable on each
Interest Payment Date, commencing with the first Interest Payment Date after the
date of such Alternate Base Rate Loan, on each Interest Determination Date and
on the Maturity Date. Any change in the rate of interest on the Revolving Credit
Notes due to a change in the Alternate Base Rate or a change in the ABR
Applicable Margin shall take effect as of the date of such change in the
Alternate Base Rate or ABR Applicable Margin, as applicable.
(b) In the case of a Eurodollar Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the Adjusted LIBOR Rate plus 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 Agent
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 and the
Banks of the rate of interest so determined. Such determination shall be
conclusive absent manifest error.
(c) The ABR Applicable Margin and the LIBOR Applicable Margin shall
each be determined on the basis of the Borrower's Funded Debt to EBITDA Ratio,
as calculated based on the Borrower's consolidated
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financial statements for its most recent fiscal year or quarter. The ABR
Applicable Margin and the LIBOR Applicable Margin shall be determined as
follows:
(i) The initial ABR Applicable Margin shall be -0- basis
points and the initial LIBOR Applicable Margin shall be 75 basis
points, and shall be applicable until delivery of the Borrower's
consolidated financial statements for its fiscal quarter ending April
30, 1998 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 April 30, 1998, 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 ABR
Applicable Margin shall be -0- basis points and 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 ABR Applicable Margin shall be -0-
basis points and 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 ABR Applicable Margin shall be -0-
basis points and the LIBOR Applicable Margin shall be 125 basis points.
(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 ABR Applicable Margin shall be -0- basis points and 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 ABR Applicable
Margin shall be -0- basis points and the LIBOR Applicable Margin shall be 150
basis points until the Borrower delivers all required financial statements and
certificates at which time the ABR Applicable Margin and the LIBOR
- 19 -
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 ABR Applicable Margin and the LIBOR Applicable Margin may, as a
result of changes in the Borrower's Funded Debt to EBITDA Ratio, increase but
will not decrease.
(d) All interest shall be paid to the Agent for pro rata distribution
to the Banks.
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.
SECTION 2.06. Fees. (a) The Borrower agrees to pay to the Agent, for
pro rata distribution to the Banks, from the date of this Agreement and for so
long as the Total Commitment remains in effect, on the last Business Day of each
calendar quarter, and on any day that the Total Commitment is reduced or
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 Total Commitment, such Unused Facility
Fee being payable for the calendar quarter, or part thereof, preceding the
payment date.
(b) The Borrower agrees to pay to the Agent, for its services as Agent
hereunder, those fees, charges and expenses as the Borrower and the Agent may
mutually agree.
SECTION 2.07. Reduction of Commitment. Upon at least three (3) Business
Days' prior written notice to the Agent, the Borrower may irrevocably elect to
have the unused Total 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 Total Commitment, once
terminated or reduced, shall not be reinstated without the express written
approval of the Agent and the Banks. Any reduction to the Total Commitment shall
be applied pro rata to the respective Commitments of each Bank.
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SECTION 2.08. Prepayment. (a) The Borrower shall have the right at any
time and from time to time to prepay any Alternate Base Rate Loan, in whole or
in part, without premium or penalty on one (1) Business Day's prior irrevocable
written notice to the Agent 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 Agent,
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 Alternate
Base 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 Banks of making or maintaining Eurodollar Loans may fluctuate as
a result of the applicability of, or change in, the Eurocurrency Reserve
Requirement. The Borrower agrees to pay to the Agent on behalf of the Banks from
time to time, as provided in Section 2.10 below, such amounts as shall be
necessary to compensate each 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 Adjusted LIBOR Rate and that such rates do not reflect costs imposed on each
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
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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 any Bank or the Issuing Bank to any tax with
respect to its Commitment, the Loans, its Note, the Letters of Credit or on any
amount paid or to be paid under or pursuant to this Agreement, the Loans, the
Notes or the Letters of Credit (other than any tax measured by or based upon the
overall net income of such Bank or the Issuing Bank);
(ii) changes the basis of taxation of payments to any Bank or
the Issuing Bank of any amounts payable hereunder (other than any tax measured
by or based upon the overall net income of such Bank or the Issuing 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, any Bank or the Issuing Bank; or
(iv) imposes on the Agent, any Bank or the Issuing Bank any
other condition affecting its Commitment, the Loans, its Note, the Letters of
Credit or this Agreement;
and the result of any of the foregoing is to increase the cost
to the Agent, a Bank or the Issuing 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 Agent, any Bank or the Issuing Bank or to
require the Agent, any Bank or the Issuing Bank to make any payment on or
calculated by reference to the gross amount of any sum received by them, in each
case by an amount which the Agent, such Bank or the Issuing Bank, as the case
may be, in its sole, reasonable judgment deems material, then and in any such
case:
(a) the Agent, the Bank or the Issuing Bank which is affected
by any of the conditions described in (i), (ii), (iii) or (iv) above
shall notify the Borrower, and any such affected Bank or the Issuing
Bank shall notify the Agent 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
- 22 -
(b) the Borrower shall pay to the Agent, such affected Bank or
the Issuing Bank, as the case may be, within ten (10) days after the
advice referred to in subsection (a) hereinabove, such an amount or
amounts as will compensate the Agent, such affected Bank or the Issuing
Bank for such additional cost, reduction or payment for so long as the
same shall remain in effect.
The determination of the Agent, any affected Bank or the
Issuing 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 and
all other amounts due hereunder.
SECTION 2.11. Capital Adequacy. If the Agent, any Bank or the Issuing
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 such Bank or the Issuing Bank (or any
lending office of such Bank or the Issuing Bank) or such Bank's or the Issuing
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 such Bank's or the Issuing Bank's capital or on the capital of such Bank's or
the Issuing Bank's holding company, if any, as a consequence of its obligations
hereunder to a level below that which such Bank or the Issuing Bank or such
Bank's or the Issuing Bank's holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Bank's or the
Issuing Bank's policies and the policies of such Bank's or the Issuing Bank's
holding company with respect to capital adequacy) by an amount deemed by such
Bank or the Issuing Bank to be material, then from time to time:
(a) the Agent, the Bank or the Issuing Bank which is affected by any of
the conditions described above shall notify the Borrower, and any such affected
Bank or the Issuing Bank shall notify the Agent 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
(b) the Borrower shall pay to the Agent, the affected Bank or the
Issuing Bank, as the case may be, within ten (10) days after the advice referred
to in subsection (a) hereinabove, such an
- 23 -
amount or amounts as will compensate the Agent, such affected Bank or the
Issuing 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 any of the Banks to make or maintain any Eurodollar
Loan or to give effect to its obligations as contemplated hereby with respect to
a Eurodollar Loan, then, any such affected Bank shall notify the Agent of same
and, by written notice to the Borrower, the Agent, on behalf of such Bank shall:
(i) declare that Eurodollar Loans will not thereafter be made
by such Bank hereunder, whereupon the Borrower shall be prohibited from
requesting Eurodollar Loans from such 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 such Bank be converted
to an Alternate Base Rate Loan, whereupon all of such Eurodollar Loans
shall be automatically converted to an Alternate Base 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
Agent 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. (a) The Borrower agrees to compensate
each Bank for any loss or expense which such 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 such Bank to
lenders of funds obtained by
- 24 -
it 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 such Bank) which would have
accrued to such 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 claiming Bank shall provide to the Borrower a statement, signed by an
officer of such 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 Agent 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 Banks of making or maintaining the principal amount of
such Eurodollar Loan during such Interest Period, such Eurodollar Loan shall be
unavailable. The Agent shall, as soon as practicable thereafter, give written,
telex or telephonic notice of such determination of unavailability to the
Borrower and the Banks. Any request by the Borrower for an unavailable
Eurodollar Loan shall be deemed to have been a request for an Alternate Base
Rate Loan. After such notice shall have been given and until the Agent 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 an Alternate Base Rate Loan.
SECTION 2.15. Authorization to Debit Borrower's Account. The Agent is
hereby authorized to debit the Borrower's account maintained with the Agent for
(i) all scheduled payments due from the Borrower of principal and/or interest
and/or commissions or fees under the Notes or this Agreement or in respect of
the Letters of Credit, (ii) the Agent's fees, (iii) the Unused Facility Fee and
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(iv) all other amounts due 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, or any other amount
becoming due hereunder, the Borrower shall pay to the Agent for pro rata
distribution to the Banks or the Issuing 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 an Alternate Base 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 Agent, for pro rata distribution to the
Banks, interest on all Revolving Credit Loans and on all amounts described in
clauses (ii) and (iii) of the definition of L/C 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 Alternate Base Rate
Loans.
SECTION 2.17. Payments. All payments by the Borrower hereunder, under
the Notes or in respect of the Letters of Credit shall be made in Dollars in
immediately available funds at the office of the Agent by 12:00 noon, New York
City time, on the date on which such payment shall be due. The Agent shall
promptly pay to each of the Banks such amount of such payment to which such Bank
is entitled, as determined by the Agent, subject to manifest error.
SECTION 2.18. Interest Adjustments. (a) If the provisions of this
Agreement, the Notes or the L/C Documents would at any time otherwise require
payment by the Borrower to any Bank or the Issuing 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 such Bank or
the Issuing Bank shall not receive interest in excess of such maximum amount. To
the extent that, pursuant to the foregoing sentence, the Agent shall receive
interest payments on behalf of the Banks or the Issuing Bank hereunder, under
the Notes or under the L/C Documents in an amount less than the amount otherwise
provided, such deficit (hereinafter called the "Interest Deficit") will cumulate
and will be carried forward (without interest) until the termination of this
Agreement. Interest otherwise payable by the Borrower to any Bank or the Issuing
Bank hereunder, under the Notes or under the L/C Documents for any subsequent
period shall be increased by such
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maximum amount of the Interest Deficit that may be so added without causing such
Bank or the Issuing 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.
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ARTICLE IIA
THE LETTERS OF CREDIT
SECTION 2A.01. Letters of Credit. (a) On the terms and conditions set
forth herein, (i) the Issuing 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 (ii) the Banks severally agree to participate in Letters of
Credit issued for the account of the Borrower. Within the foregoing limits, and
subject to the other terms and conditions hereof, the Borrower's ability to
obtain Letters of Credit shall be fully revolving, and, accordingly, the
Borrower 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 Issuing 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
Issuing Bank from issuing such Letter of Credit or any requirement of
law applicable to the Issuing Bank or any request or directive (whether
or not having the force of law) from any governmental authority with
jurisdiction over the Issuing Bank prohibits, or requests that the
Issuing Bank refrain from, the issuance of standby letters of credit
generally or such Letter of Credit in particular or imposes upon the
Issuing Bank with respect to such Letter of Credit any restriction,
reserve or capital requirement (for which the Issuing Bank is not
otherwise compensated hereunder) not in effect on the date of this
Agreement, or imposes upon the Issuing Bank any unreimbursed loss, cost
or expense which was not applicable on the date of this Agreement and
which the Issuing Bank in good faith deems material to it;
(ii) the Issuing Bank has received written notice from any
Bank, the Agent or 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;
(iv) the Aggregate Outstandings, after giving effect to the
requested Letter of Credit, shall exceed the Total Commitment;
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(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 Issuing Bank, or the issuance of such Letter of
Credit violates any applicable policies of the Issuing Bank.
SECTION 2A.02. Issuance of Letters of Credit. Each Letter of Credit
shall be issued upon the request of the Borrower (which request may be revoked
only at such time and in sufficient time as will enable the Issuing Bank to
prevent the issuance of such Letter of Credit), received by the Issuing Bank in
accordance with arrangements between the Issuing Bank and the Borrower to
provide the Issuing Bank electronically or otherwise with the information
necessary to issue, amend or renew Letters of Credit. The arrangements between
the Borrower and the Issuing Bank are set forth in the L/C Documents (other than
the Letters of Credit) between the Issuing Bank and the Borrower. 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 Issuing Bank shall apply, and the Issuing 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 sharing and notification. If any
such inconsistency exists, the Agent and the Banks shall not be deemed to have
waived any rights hereunder, nor shall the Issuing Bank be deemed to have waived
any rights under such L/C Document, by reason of such inconsistency.
SECTION 2A.03. Participations of Banks. (a) Immediately upon the
issuance of each Letter of Credit, each Bank shall be deemed to, and hereby
irrevocably unconditionally agrees to, purchase from the Issuing Bank a
participation in such Letter of Credit and each drawing thereunder in any amount
equal in each case to the product of (i) the Pro Rata Share of such Bank, times
(ii) the maximum amount available to be drawn under such Letter of Credit and
the amount of such drawing, respectively. Each issuance of a Letter of Credit
shall be deemed to utilize the Commitment of each Bank by an amount equal to the
amount of such Pro Rata Share.
(b) The Issuing Bank will promptly notify the Borrower of any drawing
under a Letter of Credit. The Borrower shall reimburse the Issuing Bank on each
date that any amount is paid by the Issuing Bank under any Letter of Credit
(each such date, an "Honor Date") at such time(s) as are agreed upon by the
Borrower and the Issuing Bank, in an amount equal to the amount so paid by the
Issuing Bank. If the Borrower fails to reimburse the Issuing Bank for the full
amount of any drawing under any Letter of Credit at such agreed upon time on the
Honor Date, the Issuing Bank will promptly notify the Agent and the Agent will
promptly notify each Bank thereof.
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The Honor Date shall, in every case, be not later than five (5) Business Days
prior to the Maturity Date.
(c) Upon receipt of any notice from the Agent of any failure by the
Borrower to reimburse the Issuing Bank, each Bank shall make available to the
Agent for the account of the Issuing Bank such Bank's Pro Rata Share of the
amount of such reimbursement. If, after receipt of such notice, any Bank fails
to transfer its Pro Rata Share of the amount of such reimbursement to the Agent,
interest shall accrue on such Bank's obligation to make such payment from the
Honor Date to the date such Bank makes such payment, at a rate per annum equal
to the Federal Funds Effective Rate in effect from time to time during such
period. Any failure of the Agent to give notice to the Banks on an Honor Date or
in sufficient time to enable any Bank to effect such payment on such date shall
not relieve such Bank from its obligations under this subsection (c).
(d) Each Bank's payment to the Issuing Bank pursuant to Section
2A.03(c) hereof shall be deemed payment in respect of and in satisfaction of its
participation in such Letter of Credit.
(e) Each Bank's obligation to make payment in respect of its
participation in Letters of Credit shall be absolute and unconditional and
without recourse to the Issuing Bank and shall not be affected by any
circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right which such Bank may have against the Issuing Bank, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or any Event of Default; or (iii) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing; provided,
however, that the provisions of this Section 2A.03(e) shall not be read to cause
any Bank to waive any defense to such payment if such defense is the result of
the Issuing Bank's gross negligence or willful misconduct.
SECTION 2A.04. Repayment of Participations. (a) Upon receipt by the
Issuing Bank of (i) reimbursement from the Borrower for any payment made by the
Issuing Bank under a Letter of Credit with respect to which any Bank has paid
for its participation in such Letter of Credit or (ii) payment of interest
thereon, the Issuing Bank will pay such amounts to the Agent in the same funds
as those received by the Issuing Bank. The Agent shall promptly distribute to
each Bank its Pro Rata Share thereof.
(b) If the Agent or the Issuing Bank is required at any time to return
to the Borrower, or to a trustee, receiver, liquidator, custodian, or any
official in any insolvency proceeding, any portion of the payments made by the
Borrower to the Agent or to the Issuing Bank pursuant to Section 2A.03(a) hereof
in reimbursement of a payment made under a Letter of Credit or interest thereon
or
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fees relating thereto or as a result of a setoff, each Bank shall, on demand of
the Agent or the Issuing Bank, as the case may be, forthwith return to the Agent
or the Issuing Bank, as the case may be, the amount of its Pro Rata Share of any
amounts so returned by the Agent or the Issuing Bank plus interest thereon from
the date such demand is made to the date such amounts are returned by such Bank
to the Agent or the Issuing Bank, at a rate per annum equal to the Federal Funds
Effective Rate in effect from time to time.
(c) If any event described in subsection (b) above occurs, the
obligation of the Borrower in respect of the payment or setoff required to be
returned shall be revived and continued in full force and effect as if such
payment had not been make or such setoff had not been effected.
SECTION 2A.05 Role of the Issuing Bank. (a) The Issuing 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) Neither the Issuing 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 Banks (including the
Required Banks, as applicable); (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 L/C Document.
(c) The Borrower hereby assumes 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 pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. Neither the
Agent, nor the Issuing Bank or any Bank, nor any of their respective officers,
directors or employees, nor any of the respective correspondents, participants
or assignees of the Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 2A.06 hereof;
provided, however, that the Borrower may have a claim against the Issuing Bank,
and the Issuing Bank may be liable to the Borrower, to the extent of any direct,
as opposed to consequential or exemplary, damages suffered by the Borrower which
the Borrower proves were caused by the Issuing Bank's willful misconduct or
gross negligence or the Issuing 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
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with the terms and conditions of a Letter of Credit, unless such failure is due
to compliance by the Issuing Bank with an order of a court or other legal
process. In furtherance and not in limitation of the foregoing: (i) the Issuing
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 Issuing 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.06. Obligations Absolute. The obligations of the Borrower
under this Agreement and any L/C Documents to reimburse the Issuing 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 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 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 Issuing 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 document required in order to make a
drawing under any Letter of Credit;
(v) any payment by the Issuing 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 Issuing Bank under any Letter of Credit to any Person purporting to
be a trustee in
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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 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.
SECTION 2A.07. 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.08. Fees and Commissions. (a) The Borrower shall pay to the
Agent, for pro rata distribution to the Banks, 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. The Agent shall
promptly pay to each Bank its Pro Rata Share of such fee.
(b) The Borrower shall pay to the Issuing 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 and a fronting fee on the average outstanding amount
available to be drawn on Letters of Credit calculated at an annual rate per
annum of 0.125%.
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ARTICLE III
SECTION 3.01. Conditions Precedent to the Making of the Initial
Revolving Credit Loan and the Issuing of the Initial Letter of Credit. The
obligation of the Banks to make the initial Revolving Credit Loans contemplated
by this Agreement and the obligation of the Issuing Bank to issue the initial
Letter of Credit issued on or after the date of this Agreement, all as
contemplated by this Agreement, are each subject to the condition precedent that
the Agent, the Banks and the Issuing 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 Agent and its counsel:
(a) Revolving Credit Notes, each duly executed by the Borrower and
payable to the order of each of the Banks.
(b) Certified (as of the date of this Agreement) copies of the
resolutions of the Board of Directors of the Borrower authorizing the Loans and
the 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 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 Notes 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
- 34 -
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 and Roth, 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 Agent or its counsel may reasonably request.
(h) From each of the Guarantors, an executed Guaranty.
(i) From the Borrower, a true and correct copy of the Deutsche
Agreement, which shall be satisfactory to the Agent and its counsel in all
material respects.
(j) From the Borrower, evidence that AT&T Commercial Finance
Corporation and Deutsche have each released any security interest it may have in
the assets of the Borrower, and that corresponding Uniform Commercial Code
termination statements have been filed in the appropriate filing offices.
(k) From Deutsche, the Intercreditor Agreement.
(l) 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.
(m) From the Borrower, (x) the fees and expenses to be paid pursuant to
this Agreement, and (y) those other fees, charges and expenses as the Borrower,
the Banks and the Agent may mutually agree.
(n) Evidence that the Agent and the Banks shall, prior to the date of
this Agreement, have completed their due diligence reviews of the Borrower, the
results of which shall be satisfactory to the Agent and the Banks in their sole
discretion.
(o) Evidence that the following statements shall be true and the Agent
shall have received a certificate signed by the President
- 35 -
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, as applicable.
(p) Evidence that all schedules, documents, exhibits, certificates and
other information provided to the Agent or the Banks pursuant to or in
connection with this Agreement shall be satisfactory to the Agent and its
counsel in all respects.
(q) Evidence that all legal matters incident to this Agreement and the
transactions contemplated hereby shall be satisfactory to Cullen and Dykman,
counsel to the Agent.
(r) Such other approvals, opinions or documents as the Agent or its
counsel may reasonably request.
SECTION 3.02. Conditions Precedent to All Revolving Credit Loans and
all Letters of Credit. The obligation of the Banks to make each Revolving Credit
Loan (including the initial Revolving Credit Loan) and the obligation of the
Issuing Bank to issue each Letter of Credit (including the initial Letter of
Credit), shall each be subject to the further condition precedent that on the
date of such Revolving Credit Loan or Letter of Credit:
(a) The following statements shall be true and each request for a
Revolving Credit Loan or 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 and as such date;
and
(ii) No Default or Event of Default shall have occurred and be
continuing, or would result from such Revolving Credit Loan or Letter of Credit.
(b) The Agent shall have received such other approvals, opinions or
documents as the Agent or its counsel may reasonably request.
SECTION 3.03. Conditions Precedent to the Making of Permitted
Acquisition Loans. The obligation of the Banks to make each
- 36 -
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:
(a) The Agent and the Banks 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
Agent and the Banks 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 Agent and the Banks shall have received (i) if requested by the
Agent, copies of all contracts, documents and agreements relating to the pending
Permitted Acquisition (the "Acquisition Documents"), and (ii) in all cases,
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.
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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 or
a 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 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
- 38 -
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, 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,
1997, and for the fiscal quarter ended January 31, 1998 copies of which have
been furnished to the Agent and the Banks, 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,
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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, 1994.
(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 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 is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation G, T, U or X), and no proceeds of any Loan, and no
Letter of Credit, will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock or in any other way which will cause the Borrower to violate the
provisions of 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
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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 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 shall
be used exclusively for the purposes set forth in Section 2.05 of this
Agreement. Letters of Credit 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
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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 Banks hereunder.
(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
cause 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.
(t) Vendor Finance Agreements. The Deutsche Agreement is the only
agreement to which the Borrower is a party which provides for the financing of
the Borrower's purchase of inventory and (i) the Borrower is not in default of
the Deutsche Agreement and (ii) the Borrower's obligations under the Deutsche
Agreement are unsecured.
(u) Year 2000 Issue. The Borrower, the Guarantors and each Subsidiary
of the Borrower or a Guarantor have reviewed the effect of the Year 2000 Issue
on the computer software, hardware and firmware systems and equipment containing
embedded microchips owned or operated by or for the Borrower, the Guarantors or
such Subsidiaries or used or relied upon in the conduct of their business
(including systems and equipment supplied by others or with which such computer
systems of the Borrower, the Guarantors or such Subsidiaries interface). The
costs to the Borrower, the Guarantors and such Subsidiaries of any reprogramming
required as a result of the Year 2000 Issue to permit the proper functioning of
such systems and equipment and the proper processing of data, and the testing of
such reprogramming, and of the reasonably foreseeable consequences of the Year
2000 Issue to the Borrower, the Guarantors or such Subsidiaries (including
reprogramming errors and the failure of systems or equipment supplied by others)
are not reasonably expected to result in a Default or Event of Default or to
result in a Material Adverse Change in the Borrower, any Guarantors or any such
Subsidiaries.
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ARTICLE V
SECTION 5.01. Affirmative Covenants. So long as (i) any part of the
Total Commitment shall be in effect, (ii) any amount shall remain outstanding
under any of the Notes, or (iii) any Letter of Credit or L/C Exposure is
outstanding, the Borrower and each of the Guarantors will, unless the Agent and
the Required Banks 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 Agent and each of
the Banks:
(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 KMPG Peat Marwick LLP or such other independent certified public
accountants selected by the Borrower and reasonably satisfactory to the Agent,
all such financial statements to be prepared in accordance with GAAP; and (2)
copies of the consolidating schedules to such consolidated financial statements.
(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
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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 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 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
- 44 -
terminate any Plan, the Borrower or such Guarantor will deliver to the Agent and
the Banks a certificate of 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 Agent 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 Agent and the Banks 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 Agent may from time to
time reasonably request.
(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
- 45 -
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; 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 notice to the Agent 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 Agent or any of the Banks 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 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;
- 46 -
(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 or permits
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 related line of business as the
Borrower or any Guarantor, to (x) become a guarantor of all obligations of the
Borrower under this Agreement and the other Loan Documents and (y) become a
party to this Agreement.
(l) Agent's Administrative Fee. Pay to the Agent the annual
administrative fees as mutually agreed between the Borrower and the
Agent.
(m) Vendor Finance Agreement. Notify the Agent and each of the Banks
(i) of any default by the Borrower under the terms of the Deutsche Agreement,
(ii) not less than ten (10) days prior to the execution of any amendment or
modification to the Deutsche Agreement, or any replacement thereof, and provide
copies to the Agent and the Banks of any such proposed amendment, modification
or replacement, and (iii) of any event which would cause, or result in, the
Borrower's obligations to Deutsche (or any successor to Deutsche under the
Deutsche Agreement or any replacement agreement) becoming secured. In the event
that the Borrower's obligations to Deutsche (or such successor) become secured,
Borrower shall (i) grant to the Agent for the benefit of the Banks, a security
interest in all personal property of the Borrower and (ii) enter
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into such security agreements, Uniform Commercial Code financing statements and
such other documents as the Agent may request.
(n) Year 2000 Issue. The Borrower and each Guarantor shall take, and
shall cause each of their Subsidiaries to take, all necessary action to complete
in all material respects by September 30, 1999, the reprogramming of computer
software, hardware and firmware systems and equipment containing embedded
microchips owned or operated by or for the Borrower, each of the Guarantors and
their Subsidiaries or used or relied upon in the conduct of their business
(including systems and equipment supplied by others or with which such systems
of the Borrower, each of the Guarantors and their Subsidiaries interface)
required as a result of the Year 2000 Issue to permit the proper functioning of
such computer systems and other equipment and testing of such systems and
equipment, as so reprogrammed. At the request of the Agent, the Borrower shall
provide to the Agent reasonable assurance of its compliance with the preceding
sentence.
SECTION 5.02. Negative Covenants. So long as (i) any part of the Total
Commitment shall be in effect, (ii) any amount shall remain outstanding under
any of the Notes, or (iii) any Letter of Credit or L/C Exposure 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 Agent and the
Required Banks:
(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 Banks 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;
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(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 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;
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(b) Debt. Create, incur, assume, or suffer to exist any Debt, except:
(i) Debt of the Borrower under this Agreement, the Notes
or in respect of the Letters of Credit;
(ii) Debt described in Schedule 5.02(b) hereto, provided that
no such Debt shall be renewed, extended or refinanced;
(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
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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 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 Agent, pledged to the Agent, for the benefit of
the Banks, 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) 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).
(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.
(k) Fiscal Year. Change the ending date of its fiscal year
from July 31.
(l) Losses. Incur a net loss for any fiscal year.
(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
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distribution on, or for the purchase, redemption or retirement of any shares of
its capital stock; or make any other distribution by reduction of capital or
otherwise in respect of any share of its capital stock; provided, however, that
as long as no Default or Event of Default then exists or would result therefrom,
the Borrower may repurchase, during the term of this Agreement, not more than
$1,800,000.00 of its outstanding common stock in open market transactions.
(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 Agent 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
Total Commitment shall be in effect, (ii) any amount shall remain outstanding
under any of the Notes, or (iii) any Letter of Credit or L/C Exposure 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 $22,000,000.00, 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 (i) $3,000,000.00 in the aggregate during
the fiscal year ending July 31, 1998 and (ii) $2,500,000.00 in the aggregate
during any fiscal year thereafter.
(c) Quick Asset Ratio. The Borrower and the Guarantors will
maintain at all times, on a consolidated basis, a Quick Asset Ratio
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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.
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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, any of the Notes when due, or any fees or other amounts owed in
connection with this Agreement or the Borrower shall fail to reimburse the
Issuing Bank for any draw, accepted draft, deferred payment obligations or any
other amounts owed in connection with any Letters of Credit 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 $50,000.00 or
more (excluding Debt evidenced by the Notes or any other Loan Document) of the
Borrower, 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
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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 $250,000.00 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
(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 Agent 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
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(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 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 Steinberg shall not be retained in a reasonably active full
time 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 Agent may, and at the request of the Required Banks
shall, by notice to the Borrower take any or all of the following actions: (i)
terminate the Total Commitment, (ii) declare the Notes, all interest thereon and
all other amounts payable under this Agreement to be forthwith due and payable,
and (iii) demand that the Borrower provide the Issuing Bank with cash collateral
for any undrawn Letters of Credit and any accepted drafts or deferred payment
obligations under any Letters of Credit, whereupon the Total Commitment shall be
terminated, and the Notes, 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 (iv) proceed to enforce its and the
Banks' 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 Banks'
rights, or proceed to enforce any other legal or equitable right which the Agent
or the Banks may have by reason of the occurrence of any Event of Default
hereunder or under any other
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Loan Document, provided, however, upon the occurrence of an Event of Default
referred to in Section 6.01(e) hereof, the Total Commitment shall be immediately
terminated, and the Notes, 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. 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 Agent in taking such action, including but
without limitation attorneys fees and expenses, second, to provide cash
collateral to the Issuing Bank for any undrawn Letters of Credit, accepted
drafts or deferred payment obligations, third, to payment of the accrued
interest on the Notes and fourth, to payment of the unpaid principal of the
Notes.
SECTION 6.03. Remedies Cumulative. No remedy conferred upon or reserved
to the Agent or the Banks 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 Agent or the
Banks to exercise any remedy reserved in this Article VI, it shall not be
necessary to give any notice, other than such notice as may be herein expressly
required in this Agreement or in any other Loan Document.
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ARTICLE VII
THE AGENT; RELATIONS AMONG BANKS AND BORROWER
SECTION 7.01. Appointment, Powers and Immunities of Agent. Each Bank
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under any other Loan Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Loan
Document, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Loan Document, and shall not by reason of
this Agreement be a trustee or fiduciary for any Bank. The Agent shall not be
responsible to the Banks for any recitals, statements, representations or
warranties made by the Borrower or the Guarantors, or any officer or official of
the Borrower or Guarantors, or any of them, or any other Person contained in
this Agreement or any other Loan Document, or in any certificate or other
document or instrument referred to or provided for in, or received by any of
them under, this Agreement or any other Loan Document, or for the value,
legality, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document or any other document or instrument
referred to or provided for herein or therein, except as explicitly provided
herein, or for the failure by the Borrower, the Guarantors, or any of them to
perform any of their or its respective obligations hereunder or thereunder. The
Agent may employ agents and attorneys-in-fact and shall not be responsible,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Except as otherwise explicitly provided herein, neither
the Agent nor any of its directors, officers, employees or agents shall be
liable or responsible to any Bank for any action taken or omitted to be taken by
it or them hereunder or under any other Loan Document or in connection herewith
or therewith, except for its or their own gross negligence or wilful misconduct.
The Borrower shall pay any fee agreed to by the Borrower and the Agent with
respect to the Agent's services hereunder.
SECTION 7.02. Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent with reasonable care. The Agent may deem and
treat each Bank as the holder of the Loans made by it for all purposes hereof
unless and until a notice of the permitted transfer thereof satisfactory to the
Agent and signed by
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such Bank shall have been furnished to the Agent but the Agent shall not be
required to deal with any Person who has acquired a participation in any Loan
from a Bank. As to any matters not expressly provided for by this Agreement or
any other Loan Document, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
signed by the Required Banks, and such instructions of the Required Banks and
any action taken or failure to act pursuant thereto shall be binding on all of
the Banks and any other holder of all or any portion of any Loan.
SECTION 7.03. Defaults. The Agent shall not be deemed to have knowledge
of the occurrence of a Default or Event of Default (other than the non-payment
of principal of or interest on the Loans or the non-payment of fees due
hereunder) unless the Agent has actual knowledge of such Default or Event of
Default or has received notice from a Bank or the Borrower specifying such
Default or Event of Default and stating that such notice is a "Notice of
Default." In the event that the Agent receives such a notice of, or otherwise
has actual knowledge of the occurrence of, a Default or Event of Default, the
Agent shall give prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such non-payment). The Agent shall (subject to Section
7.08 and Section 8.01 hereof) take such action with respect to such Default or
Event of Default which is continuing as shall be directed by the Required Banks;
provided that, unless and until the Agent shall have received such directions,
the Agent may take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interest of the Banks; and provided further that the Agent shall not be required
to take any such action which it determines to be contrary to law.
SECTION 7.04. Rights of Agent as a Bank. With respect to the Loans made
by it, any Person which is the Agent in its capacity as a Bank hereunder shall
have the same rights and powers hereunder as any other Bank and may exercise the
same as though it were not acting as the Agent, and the term "Bank" or "Banks"
shall, unless the context otherwise indicates, include any Person which is the
Agent in its capacity as a Bank. The Agent or any Bank and their respective
Affiliates may (without having to account therefor to any other Bank except as
otherwise expressly provided in this Agreement) accept deposits from, lend money
to (on a secured or unsecured basis), and generally engage in any kind of
banking, trust or other business with, the Borrower, the Guarantors or any of
them (and any of their Affiliates); provided that no payment or lien priority
shall be given to the Agent or to any Bank for any other transaction without the
express written approval of all of the other Banks. In the case of BNY, it may
do so as if it were not acting as the Agent, and the Agent may accept fees and
other consideration from the Borrower, the Guarantors or any of them for
services in connection with this Agreement or otherwise without
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having to account for the same to the Banks. Although the Agent or a Bank or any
of their respective Affiliates may in the course of such relationships and
relationships with other Persons acquire information about the Borrower, the
Guarantors, their Affiliates and such other Persons, neither the Agent nor such
Bank shall have any duty to the other Banks or the Agent to disclose such
information to the other Banks or the Agent except as otherwise provided herein
with respect to the occurrence of an Event of Default.
SECTION 7.05. Indemnification of Agent. The Banks agree to indemnify
the Agent (to the extent not reimbursed under Section 8.04 hereof or under the
applicable provisions of any other Loan Document, but without limiting the
obligations of the Borrower and Guarantors under Section 8.04 hereof or such
provisions), ratably in accordance with their Pro Rata Shares of the Total
Commitment (without giving effect to any participation in all or any portion of
the Total Commitment sold by them to any other Person), for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement, any other Loan Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses which the
Borrower and Guarantors are obligated to pay under Section 8.04 hereof or under
the applicable provisions of any other Loan Document but excluding, unless a
Default or Event of Default has occurred, normal administrative costs and
expenses incidental to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or of any such other documents
or instruments; provided that no Bank shall be liable for any of the foregoing
to the extent they arise from the gross negligence or wilful misconduct of the
Agent.
SECTION 7.06. Documents. It is the responsibility of the Borrower to
forward to each Bank, on or before the due dates set forth herein, a copy of
each report, notice or other document required by this Agreement or any other
Loan Document to be delivered to the Agent. The Agent is not responsible for
forwarding such information to the Banks.
SECTION 7.07. Non-Reliance on Agent and Other Banks. Each Bank agrees
that it has, independently and without reliance on the Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of the Borrower, the Guarantors and their Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and
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decisions in taking or not taking action under this Agreement or any other Loan
Document. The Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or Guarantors of this Agreement or any
other Loan Document or any other document referred to or provided for herein or
therein or to inspect the properties or books of the Borrower, the Guarantors or
any Subsidiary of the Borrower or any Guarantor. Except for notices, reports and
other documents and information expressly required to be furnished to the Banks
by the Agent hereunder, the Agent shall not have any duty or responsibility to
any other Bank to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of the Borrower, the
Guarantors or any Subsidiary (or any of their Affiliates) which may come into
the possession of the Agent or of its Affiliates. The Agent shall not be
required to file this Agreement, any other Loan Document or any document or
instrument referred to herein or therein, or record or give notice of this
Agreement, any other Loan Document or any document or instrument referred to
herein or therein, to any Person.
SECTION 7.08. Failure of Agent to Act. Except for action expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall have received further
assurances (which may include cash collateral) of the indemnification
obligations of the Banks under Section 7.05 hereof in respect of any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.
SECTION 7.09. Resignation of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Required Banks shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the Required Banks
and shall have accepted such appointment within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a bank which has an
office in New York, New York. The Required Banks or the retiring Agent, as the
case may be, shall upon the appointment of a Successor Agent promptly so notify
the Borrower, the Guarantors and the other Banks. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation as Agent, the provisions of this Article 7 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent.
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SECTION 7.10. Amendments Concerning Agency Function. The Agent shall
not be bound by any waiver, amendment, supplement or modification of this
Agreement or any other Loan Document which affects its rights or duties
hereunder or thereunder unless it shall have given its prior written consent
thereto.
SECTION 7.11. Liability of Agent. The Agent shall not have any
liabilities or responsibilities to the Borrower, the Guarantors or any of them
on account of the failure of any Bank to perform its obligations hereunder or to
any Bank on account of the failure of the Borrower, the Guarantors or any of
them to perform their or its obligations hereunder or under any other Loan
Document.
SECTION 7.12. Transfer of Agency Function. Without the consent of the
Borrower, the Guarantors or any Bank, the Agent may at any time or from time to
time transfer its functions as Agent hereunder to any of its offices wherever
located, provided that the Agent shall promptly notify the Borrower, the
Guarantors and the Banks thereof.
SECTION 7.13. Withholding Taxes. Each Bank represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to the Agent such forms, certifications,
statements and other documents as the Agent may request from time to time to
evidence such Bank's exemption from the withholding of any tax imposed by any
jurisdiction or to enable the Agent to comply with any applicable laws or
regulations relating thereto. Without limiting the effect of the foregoing, if
any Bank is not created or organized under the laws of the United States of
America or any state thereof, in the event that the payment of interest by the
Borrower is treated for U.S. income tax purposes as derived in whole or in part
from sources from within the United States, such Bank will furnish to the Agent
Form 4224 or Form 1001 of the Internal Revenue Service, or such other forms,
certifications, statements or documents, duly executed and completed by such
Bank as evidence of such Bank's exemption from the withholding of United States
tax with respect thereto. The Agent shall not be obligated to make any payments
hereunder to such Bank in respect of any Loan until such Bank shall have
furnished to the Agent the requested form, certification, statement or document.
SECTION 7.14. Several Obligations and Rights of Banks. The failure of
any Bank to make any Loan to be made by it on the date specified therefor shall
not relieve any other Bank of its obligation to make its Loan on such date, but
no Bank shall be responsible for the failure of any other Bank to make a Loan to
be made by such other Bank.
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SECTION 7.15. Pro Rata Treatment of Loans, Etc. Except to the extent
otherwise provided, each prepayment and payment of principal of or interest on
Loans of a particular type and a particular Interest Period, if any, shall be
made to the Agent for the account of the Banks holding Loans of such type and
Interest Period, if any, pro rata in accordance with the respective unpaid
principal amounts for such Loans of such Interest Period held by such Banks.
SECTION 7.16. Sharing of Payments Among Banks. If a Bank shall obtain
payment of any principal of or interest on any Loan, any fee due hereunder or on
any L/C Exposure, made by it through the exercise of any right of setoff,
banker's lien, counterclaim, or any other means, it shall share such payment
with the other Banks and the amount of such payment shall be applied to reduce
the Loans of all the Banks pro rata in accordance with the unpaid principal on
the Loans held by each of them, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share the benefit
of such payment (net of any expenses which may be incurred by such Bank in
obtaining or preserving such benefit) pro rata in accordance with the unpaid
principal and interest on the Loans held by each of them. To such end the Banks
shall make appropriate adjustments among themselves if such payment is rescinded
or must otherwise be restored. The Borrower agrees that any Bank so purchasing a
participation (or direct interest) in the Loans made by the other Banks may
exercise all rights of set off, banker's lien, counterclaim or similar rights
with respect to such participation (or direct interest). Nothing contained
herein shall require any Bank to exercise any such right or shall affect the
right of any Bank to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness of the Borrower. Notwithstanding
the foregoing or any other provision of this Agreement, no right or remedy of
any Bank relating to any assets of the Borrower (including real property,
improvements or fixtures) not covered by this Agreement or the other Loan
Documents shall in any way be affected by this Agreement or otherwise with
respect to any other indebtedness of the Borrower to any of the Banks.
SECTION 7.17. Nonreceipt of Funds by Agent; Payments to Banks. (a)
Unless the Agent shall have received notice from the Borrower prior to the date
on which any payment is due to the Banks hereunder that the Borrower will not
make such payment in full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent in its sole discretion
may, but shall not be obligated to, in reliance upon such assumption, cause to
be distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent that the Borrower shall not have so made
such payment in full to the Agent, such Bank agrees to repay to the Agent on
demand such amount and if for any reason the Agent does not receive such amount
from such Bank on the day of such demand, if such demand is made before
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2:00 p.m. on such day, or on the next Business Day if demand is made after 2:00
p.m. on such day, such Bank shall repay to the Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each day
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent, at the customary rate set by the Agent for the
correction of errors among banks for three (3) Business Days and thereafter at
the Prime Rate.
(b) If the Agent shall fail to pay any amounts owing by the Agent to a
Bank as promptly as may be required by this Agreement, the Agent shall pay to
such Bank, on its demand, interest on such delinquent amount at the customary
rate set by the Agent for the correction of errors among banks for three (3)
Business Days and thereafter at the Prime Rate.
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ARTICLE VIII
SECTION 8.01. Amendments. Etc. Except as otherwise expressly provided
in this Agreement, any provision of this Agreement may be amended or modified
only by an instrument in writing signed by the Borrower, the Guarantors, the
Agent and the Required Banks, and any provision of this Agreement may be waived
by the Borrower (if such provision requires performance by the Agent or the
Banks) or by the Agent acting with the consent of the Required Banks (if such
provision requires performance by the Borrower); provided that no amendment,
modification or waiver shall, unless by an instrument signed by all of the Banks
or by the Agent acting with the consent of all of the Banks: (a) increase or
extend the term of the Commitment or the Loans, (b) extend the date fixed for
the payment of principal of or interest on any Loan, (c) reduce the amount of
any payment of principal thereof or the rate at which interest is payable
thereon or any fee payable hereunder, (d) alter the terms of this Section 8.01,
(e) amend the definition of the term "Required Banks", (f) change the fees
payable to any Bank except as otherwise provided herein, (g) permit the Borrower
to transfer or assign any of its obligations hereunder or under the other Loan
Documents, (h) amend the provisions of Article 7 hereof, (i) give any payment
priority to any Person (including any of the Banks) over amounts due in
connection with the Loans or the Letters of Credit, (j) release any Collateral
(other than as permitted by a security agreement) or (k) amend any provision of
this Agreement or any other Loan Document which requires the action of all
Banks. No failure on the part of the Agent or any Bank to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof or preclude
any other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic communication)
and mailed via certified mail, return receipt requested, telegraphed, sent by
overnight mail delivery service, 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 Agent or
any Bank, at the address of the Agent or such Bank set forth at the beginning of
this Agreement to the attention of Manchester Equipment Co., Inc. Account
Officer, or, as to each party, at such other address as shall be designated by
such party in a written notice complying as to delivery with the terms of this
Section 8.02 to the other parties. Copies of all notices to the Borrower or any
Guarantor shall be sent to Joel Rothlein, Esq., Kressel, Rothlein and Roth, 684
Broadway,
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Massapequa, New York 11758. All such notices and communications shall be
effective when mailed, telegraphed or delivered, except that notices to the
Agent or any of the Banks shall not be effective until received by the Agent or
such Bank.
SECTION 8.03. No Waiver, Remedies. No failure on the part of the Agent
or any 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 8.04. Costs, Expenses and Taxes. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration of this Agreement, the Notes, the Letters
of Credit and any other Loan Documents, including, without limitation, the
reasonable fees and expenses of counsel for the Agent with respect thereto and
with respect to advising the Banks as to their respective rights and
responsibilities under this Agreement, and all costs and expenses, if any
(including reasonable counsel fees and expenses), of the Agent and the Banks in
connection with the enforcement of this Agreement, the Notes, the Letters of
Credit and any other Loan Documents. The Borrower shall at all times protect,
indemnify, defend and save harmless the Agent and the Banks 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 Agent or the Banks may, at any time, sustain or incur by
reason of or in consequence of or arising out of the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby. The
Borrower acknowledges that it is the intention of the parties hereto that this
Agreement shall be construed and applied to protect and indemnify the Agent and
the Banks against any and all risks involved in the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby, all
of which risks are hereby assumed by the Borrower, including, without
limitation, any and all risks of the acts or omissions, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority, provided that the Borrower shall not be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent or
any Bank's gross negligence or willful misconduct. The provisions of this
Section 8.04 shall survive the payment of the Notes and the termination of this
Agreement.
SECTION 8.05. Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default, the Banks each are
- 66 -
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 Banks or any Affiliates of the Banks 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 Notes, irrespective of whether or not the Agent or the
Banks shall have made any demand under this Agreement or the Notes and although
such obligations may be unmatured. The rights of the Banks under this Section
are in addition to all other rights and remedies (including, without limitation,
other rights of set-off) which the Agent and the Banks may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower, the
Guarantors, the Agent and the Banks.
SECTION 8.07. 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 may not
assign or otherwise transfer any of its rights or obligations under this
Agreement without the prior written consent of all Banks.
(b) Any 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. In the event of any
such grant by a Bank of a participating interest to a Participant, whether or
not upon notice to the Borrower and the Agent, such Bank shall remain
responsible for the performance of its obligations hereunder, and the Borrower
and the Agent shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrower 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 such
Bank will not agree to any modification, amendment or waiver of this Agreement
described in clauses (a) through (i) of Section 8.01 hereof without the consent
of such Participant. The Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the benefits of
this Article VIII and Article III hereof with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
(c) or (d) below shall be given effect for purposes of this
- 67 -
Agreement only to the extent of a participating interest granted in accordance
with this subsection (b).
(c) (i) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part (equivalent to an
initial Commitment of not less than $2,000,000.00) of all, of its rights and
obligations under this Agreement and the Notes, and such Assignee shall assume
such rights and obligations, pursuant to an Assignment and Assumption Agreement
in substantially the form of Exhibit B hereto executed by such Assignee and such
transferor Bank, with the subscribed consent of the Agent, which shall not be
unreasonably withheld and with, so long as no Default or Event of Default has
occurred and is continuing (and subject to) the subscribed consent of the
Borrower, which shall not be unreasonably withheld; provided that if an Assignee
is an affiliate of such transferor Bank, no such consent shall be required. Upon
execution and delivery of such instrument and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor bank and such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no further consent or action by any party shall be required.
(ii) Upon the consummation of any assignment pursuant to this
subsection (c), the transferor Bank, the Agent and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to the
Assignee. In connection with any such assignment, the transferor Bank shall pay
to the Agent an administrative fee for processing such assignment in the amount
of $3,500.00. If an Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to the Borrower and the
Agent certification as to exemption from deduction or withholding of any United
States federal income taxes in accordance with Section 7.13 hereof.
(d) Any 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 transferor Bank from its obligations hereunder.
SECTION 8.08. Further Assurances. The Borrower and each Guarantor agree
at any time and from time to time at its expense, upon request of the Agent, the
Banks or their respective 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 Agent or
any Bank may deem desirable in obtaining the full benefits of this Agreement or
any other Loan Document.
- 68 -
SECTION 8.09. 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
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, the
Agent and the Banks and supersede all prior agreements and understandings
relating to the subject matter hereof provided, however, that to the extent that
the provisions of the Commitment Letter are not inconsistent with the provisions
of this Agreement and the other Loan Documents but are cumulative with respect
thereto, such provisions of the Commitment Letter shall survive the execution
and delivery of this Agreement.
SECTION 8.10. Governing Law. This Agreement, the Notes and
all other Loan Documents shall be governed by, and construed in
accordance with, the laws of the State of New York.
SECTION 8.11. Waiver of Jury Trial. The Borrower, each Guarantor, the
Agent and the Banks 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 8.12. 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.
- 69 -
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.
THE BANK OF NEW YORK, as Agent ELECTROGRAPH SYSTEM, INC.
By:____________________________ By:______________________
Name: Gerard Waters Name: Barry R. Steinberg
Title: Vice President Title: President
THE BANK OF NEW YORK COASTAL OFFICE PRODUCTS, INC.
By:____________________________ By:______________________
Name: Gerard Waters Name: Barry R. Steinberg
Title: Vice President Title: President
EUROPEAN AMERICAN BANK
By:____________________________
Name: Stuart Berman
Title: Vice President
MANCHESTER EQUIPMENT CO., INC.
By:____________________________
Name: Barry R. Steinberg
Title: President
MANCHESTER INTERNATIONAL LTD.
By:____________________________
Name: Barry R. Steinberg
Title: President
MANTECH COMPUTER SERVICES, INC.
By:____________________________
Name: Barry R. Steinberg
Title: President
MEC LEASING GROUP, LTD.
By:____________________________
Name: Barry R. Steinberg
Title: President
MANCHESTER SOLUTIONS, INC.
By:____________________________
Name: Barry R. Steinberg
Title: President
- 70 -
SCHEDULE 1.01
Total Commitments of Each Bank
Initial
Dollar Amount Pro Rata Share
The Bank of New York - $ 10,500,000.00 70%
European American Bank - $ 4,500,000.00 30%
- 71 -
SCHEDULE 4.01(a)
SUBSIDIARY'S NAME STATE OF IDENTITY AND
AND ADDRESS INCORPORATION AND PERCENTAGE OF
EACH STATE IN WHICH OWNERSHIP OF EACH
IT IS QUALIFIED TO SHAREHOLDER
DO BUSINESS
ManTech Computer New York Corporation Manchester Equipment Co., Inc.
Services, Inc. doing Business in Sole Shareholder
160 Oser Avenue State of New York
Hauppauge, NY 11788
MEC Leasing Group,
Ltd.
160 Oser Avenue
Hauppauge, NY 11788
New York Corporation
doing Business in
State of New York.
Manchester Equipment
Co., Inc. Sole
Shareholder
Manchester
Solutions, Inc.
160 Oser Avenue
Hauppauge, NY 11788
New York Corporation
doing Business in
State of New York.
Manchester Equipment
Co., Inc. Sole
Shareholder
Manchester
International Ltd.
160 Oser Avenue
Hauppauge, NY 11788
New York Corporation
doing Business in
State of New York.
Manchester Equipment
Co., Inc. Sole
Shareholder
Coastal Office
Products, Inc.
4812 Frankford
Avenue
Baltimore, MD 21206
Maryland Corporation
doing Business in
State of Maryland.
Manchester Equipment
Co., Inc. Sole
Shareholder
Electrograph
Systems, Inc.
160 Oser Avenue
Hauppauge, NY 11788
New York Corporation
doing Business in
New York, Maryland,
California, Texas.
Manchester Equipment
Co., Inc. Sole
Shareholder
- 72 -
SCHEDULE 4.01(g)
Litigation
(Borrower as Defendant)
United States District Court, Eastern District of New York
97 CV 1504(TCP)(MLD)
Vincent Manngard, Raymond M. Wapner and Kurt Joerger, On Behalf of
Themselves and Others Similarly Situated, Plaintiffs,
-against-
Manchester Equipment Co., Inc., Barry R. Steinberg, Joel G. Stemple
and Joseph Looney, Defendants.
- -------------------------------------------------------------------
This Class Action on behalf of the Shareholders has been settled
pending a final approval of the settlement terms by the Court.
The Bar date has long passed without any party objecting or opting out.
Accordingly, there is no reason to doubt that the Court will approve the
settlement.
- 73 -
SCHEDULE 4.01(s)
Creditor Nature of Amount of Liens Securing
Agreement Credit Credit
Mitsubishi Electronics Guarantee of No Limits None
America, Inc. Electrograph
Systems, Inc.,
a Subsidiary
of Manchester
Equipment Co.,
Inc.
Fujitsu General Electrograph No Limits None
America, Inc. Systems, Inc.,
Guarantee of a Subsidiary of
Manchester
Equipment Co.,
Inc.
Matsushita Guaranty of No Limits None
Electric Electrograph
Corporation of Systems, Inc. a
America Subsidiary of
Manchester
Equipment Co.,
Inc.
Tech Data Guaranty of No Limits None
Corporation Coastal Office
Products, Inc.,
a Subsidiary of
Manchester
Equipment Co.,
Inc.
Deutsche Credit $10 Million None
Financial Agreement of
Services, Inc. Manchester
Equipment Co.
Inc.
International Capital Lease $71,667.58 None
Business of AS400-Main (Balance)
Machines Frame Computer
Corporation for Manchester
Equipment Co.,
Inc.
- 74 -
Creditor Nature of Amount of Liens Securing
Agreement Credit Credit
First National Auto Loan of $5,164.79 On Title
Bank Coastal Office (Balance)
Products,
Inc., a
Subsidiary of
Manchester
Equipment Co.,
Inc.
First National Auto Loan of $8,334.88 On Title
Bank Coastal Office (Balance)
Products, Inc.
a Subsidiary
of Manchester
Equipment Co.,
Inc.
GMAC Auto Loan of $9,918.45 On Title
Coastal Office (Balance)
Products, Inc.
a Subsidiary
of Manchester
Equipment Co.,
Inc.
GMAC Auto Loan of $10,481.49 On Title
Coastal Office (Balance)
Products, Inc.
a Subsidiary
of Manchester
Equipment Co.,
Inc.
Ford Motor Auto Loan of $222.04 On Title
Credit Coastal Office (Balance)
Products, Inc.
a Subsidiary
of Manchester
Equipment Co.,
Inc.
Ford Motor Auto Loan of $222.04 On Title
Credit Coastal Office
Products, Inc.
a Subsidiary
of Manchester
Equipment Co.,
Inc.
- 75 -
SCHEDULE 5.02(a)
Creditor Amount Property Subject to Lien
Except as disclosed in Schedule 4.01(s), none.
- 76 -
SCHEDULE 5.02(b)
Creditor Amount
Except as disclosed in Schedule 4.01(s), none.
- 77 -
SCHEDULE 5.02(i)
Description of All Guaranties of Borrower:
Mitsubishi Electronics America, Inc. Guarantee of Electrograph
Systems, Inc.
Fujitsu General America, Inc. Guarantee of Electrograph
Systems, Inc.
Matsushita Electric Corporation of America Guaranty of Electrograph
Systems, Inc.
- 78 -
EXHIBIT A
REVOLVING CREDIT NOTE
$_________________ Garden City, New York
__________, 199_
FOR VALUE RECEIVED, on the Maturity Date, MANCHESTER EQUIPMENT CO.,
INC., a ___________ corporation, having its principal place of business at 160
Oser Avenue, Hauppauge, New York 11788 ("Borrower"), promises to pay to the
order of __________________ ("Bank") at the office of The Bank of New York, as
Agent, located at 604 Broad Hollow Road, Melville, New York 11747, the principal
sum of the lesser of: (a) ________________ ($___________) DOLLARS; or (b) the
aggregate unpaid principal amount of all Revolving Credit Loans made by Bank to
Borrower pursuant to the Agreement (as defined below).
Borrower shall pay interest on the unpaid principal balance of this
Note from time to time outstanding, at said office, at the rates of interest, at
the times and for the periods set forth in the Agreement.
All payments including prepayments on this Note shall be made in lawful
money of the United States of America in immediately available funds. Except as
otherwise provided in the Agreement, if a payment becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
Borrower hereby authorizes Bank to enter from time to time the amount
of each Loan to Borrower and the amount of each payment on a Loan on the
schedule annexed hereto and made a part hereof.
- 79 -
Failure of Bank to record such information on such schedule shall not in any way
effect the obligation of Borrower to pay any amount due under this Note.
This Note is one of the Revolving Credit Notes referred to in that
certain Loan Agreement among Borrower, certain Guarantors, The Bank of New York,
as Agent, The Bank of New York, and European American Bank, of even date
herewith (the "Agreement"), as such Agreement may be amended from time to time,
and is subject to prepayment and its maturity is subject to acceleration upon
the terms contained in said Agreement. All capitalized terms used in this Note
and not defined herein shall have the meanings given them in the Agreement.
If any action or proceeding be commenced to collect this Note or
enforce any of its provisions, Borrower further agrees to pay all costs and
expenses of such action or proceeding and reasonable attorneys' fees and
expenses and further expressly waives any and every right to interpose any
counterclaim in any such action or proceeding. Borrower hereby submits to the
jurisdiction of the Supreme Court of the State of New York and agrees with Bank
that personal jurisdiction over Borrower shall rest with the Supreme Court of
the State of New York for purposes of any action on or related to this Note, the
liabilities, or the enforcement of either or all of the same. Borrower hereby
waives personal service by manual delivery and agrees that service of process
may be made by certified mail, return receipt requested, directed to the
Borrower at the Borrower's address set forth above or at such other address as
may be designated in writing by the Borrower to Bank in accordance with Section
8.02 of the Agreement, and that upon
- 80 -
mailing of such process such service shall be effective with the same effect as
though personally served. Borrower hereby expressly waives any and every right
to a trial by jury in any action on or related to this Note, the liabilities
hereunder or the enforcement of either or all of the same. Subject to the
provisions of the Agreement, Bank may transfer this Note to a transferee or
transferees, who shall thereupon become vested with all the powers and rights
above given to Bank in respect thereto, and Bank shall thereafter be forever
relieved and fully discharged from any liability or responsibility with respect
to any matters occurring after the date of such transfer. The failure of any
holder of this Note to insist upon strict performance of each and/or all of the
terms and conditions hereof shall not be construed or deemed to be a waiver of
any such term or condition.
Borrower and all endorsers and guarantors hereof waive presentment and
demand for payment, notice of non-payment, protest, and notice of protest.
This Note shall be construed in accordance with and governed by the
laws of the State of New York.
MANCHESTER EQUIPMENT CO., INC.
By:
Name:
Title:
- 81 -
Schedule of Revolving Credit Loans
Amount of
Principal Unpaid Name of
Making Amount of Type of Paid or Principal Person Making
Date Loan Loan Prepaid Balance Notation
- 82 -
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Assignment") dated
as of __________________ among ___________________ (the "Assignor"),
________________ (the "Assignee") and THE BANK OF NEW YORK, as Agent (the
"Agent").
WITNESSETH
WHEREAS, this Assignment and Assumption Agreement (the
"Assignment") relates to the Loan Agreement dated July __, 1998 among Manchester
Equipment Co. Inc., certain Guarantors, the Assignor as a Bank and the Agent (as
amended, the "Agreement"); and
WHEREAS, as provided under the Agreement, the Assignor has
heretofore made Loans to the Borrower and has, or may have, participations in
Letters of Credit; and
WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Agreement in respect of all or a portion
of its Commitment, the Loans and the L/C Exposure and the Assignee proposes to
accept assignment of such rights and assume the corresponding obligations from
the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set
forth in the Agreement.
SECTION 2. Assignment. The Assignor hereby sells and assigns
to the Assignee, without recourse, and the Assignee hereby purchases and assumes
from the Assignor, a ____% interest in and to all of the Assignor's rights and
obligations as a Bank under the Agreement as of the Effective Date (as defined
below) including, without limitation, such percentage interest in (w) the
Assignor's Commitment, (x) the Revolving Credit Loans owing to Assignor
outstanding on the Effective Date, (y) the Revolving Credit Note held by the
Assignor under the Agreement, together with the rights to interest accruing from
the Effective Date and (z) the Assignor's participation in Letters of Credit,
drawings thereunder, unmatured drafts accepted and deferred payment obligations
incurred under Letters of Credit ("L/C Exposure").
SECTION 3. Assignor Representations. The Assignor (i)
represents and warrants that as of the date hereof, (x) its
Commitment, unreduced by any assignments thereof which have not yet
become effective, is $_____________, (y) the outstanding balance of
- 83 -
its Revolving Credit Loans, unreduced by any assignments thereof which have not
yet become effective, is $___________ and (z) its L/C Exposure, unreduced by any
assignments which have not yet become effective, is $__________; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or any other Loan Document or any other instrument or document
furnished pursuant thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Agreement, any other Loan Document or
any other instrument or document furnished pursuant thereto, other than that it
is the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim created by it;
(iii) makes no representation or warranty and assumes no responsibility with
respect to the solvency or financial condition of the Borrower or the
Guarantors, or the performance or observance by the Borrower or the Guarantors
of any of their obligations under the Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto; and (iv) confirms that
its Revolving Credit Note shall be exchanged as of the Effective Date for two
Revolving Credit Notes, each dated the Effective Date, to be delivered to the
Assignor and the Assignee, in an aggregate principal amount of $____________ and
$__________, respectively.
SECTION 4. Assignee Representations. The Assignee (i)
represents and warrants that it is legally authorized to enter into this
Assignment and Assumption Agreement; (ii) confirms that it has received copies
of the Agreement and the other Loan Documents, together with copies of such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption
Agreement; (iii) attaches the forms prescribed by the Internal Revenue Service
of the United States certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Agreement and the Notes or such
other documents as are necessary to indicate that all such payments are subject
to such rates at a rate reduced by an applicable tax treaty; (iv) agrees that it
will, independently and without reliance upon the Agent, the Assignor or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Agreement and the other Loan Documents; and (v)
agrees that it will perform in accordance with their terms all the obligations
which by the terms of the Agreement are required to be performed by it as a
Bank.
SECTION 5. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in federal funds an amount equal to the outstanding principal of
the Revolving Credit Loans and any outstanding Letter of Credit reimbursement
obligations assigned hereunder. Each of the Assignor and the Assignee hereby
agrees that if either of them receives any amount
- 84 -
under the Agreement or any other Loan Document which is for the account of the
other, it shall receive the same for the account of such other party to the
extent of such other party's interest herein and shall promptly pay the same to
the Agent on behalf of such other party.
SECTION 6. Effectiveness. Subject to the remaining provisions
of this Section 6, the effective date for this Assignment and Assumption
Agreement shall be ___________, 19__ (the "Effective Date"). Following the
execution of this Assignment and Assumption Agreement, it will be delivered by
the Assignor to the Agent for acknowledgment and recording by the Agent. The
Assignor agrees to pay to the Agent, on or prior to the Effective Date, the
$3,500.00 assignment fee required by Section 8.07 of the Agreement. This
Assignment and Assumption Agreement shall become effective, as of the Effective
Date, upon (i) its execution by the Agent and (ii) if required by Section 8.07
of the Agreement, the consent of the Borrower.
SECTION 7. Effect of Assignment. On and after the Effective
Date, (i) the Assignee shall be a party to the Agreement and the other Loan
Documents to which each Bank is a party and, to the extent provided in this
Assignment and Assumption Agreement, shall have the rights and obligations of a
Bank and (ii) the Assignor shall, to the extent provided in this Assignment and
Assumption Agreement, relinquish its rights and be released from its obligations
under the Agreement and the other Loan Documents to which it is a party.
SECTION 8. Payments. From and after the Effective Date, the
Agent shall make all payments in respect of the interest assigned hereby
(including payments of principal, interest and other amounts) to the Assignee.
SECTION 9. Governing Law. This Assignment and
Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
SECTION 10. Counterparts. This Assignment and Assumption
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
- 85 -
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By:_____________________
Name:
Title:
[ASSIGNEE]
By:_____________________
Name:
Title:
THE BANK OF NEW YORK, as Agent
By:____________________
Name:
Title:
- 86 -
CONSENT OF BORROWER
Manchester Equipment Co., Inc., the Borrower under that
certain Loan Agreement dated as of ____________, 199_ among Manchester Equipment
Co. Inc., certain Guarantors and The Bank of New York, as Agent and The Bank of
New York, and European American Bank as lending banks, as amended or
supplemented from time to time (the "Agreement"), hereby consents to the
attached Assignment and Assumption Agreement and the transactions contemplated
thereby.
Date:_______________ MANCHESTER EQUIPMENT CO., INC.
By:_________________________
Name:
Title:
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