EXHIBIT 10.1
LOAN AGREEMENT
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THIS LOAN AGREEMENT is made this 30th day of April, 2007 by and among
HERLEY INDUSTRIES, INC. (the "Borrower"), MANUFACTURERS AND TRADERS TRUST
COMPANY and BANK OF LANCASTER COUNTY, N.A. (each a "Lender" and, collectively,
the "Lenders," as further defined herein), and MANUFACTURERS AND TRADERS TRUST
COMPANY, as agent (in such capacity, the "Agent").
1. DEFINITIONS.
1.1 Defined Terms.
As used in this Agreement the following terms have the following meanings:
"Account": shall mean and include all accounts, accounts receivable,
contact rights, instruments (including those evidencing indebtedness owed to
Affiliates), documents, chattel paper (including electronic chattel paper),
general intangibles relating to accounts, drafts and acceptances, credit card
receivables and all other forms of obligations owing to such Person arising out
of or in connection with the sale or lease of Inventory or the rendition of
services, all supporting obligations, guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder.
"Acquisition": the acquisition of (i) a controlling equity or other
ownership interest in another Person (including the purchase of an option,
warrant or convertible or similar type security. to acquire such a controlling
interest at the time it becomes exercisable by the holder thereof), whether by
purchase of such equity or other ownership interest or upon exercise of an
option or warrant for, or conversion of securities into, such equity or other
ownership interest, or by merger or consolidation, or (ii) assets of another
Person that constitute all or any material part of the assets of such Person or
of a line or lines of business conducted by such Person.
"Advance": a Base Rate Advance or a LIBOR Advance, as the case may be.
"Aggregate Revolving Credit Commitments": on any date, the sum of the
Revolving Credit Commitments on such date.
"Agreement": this Loan Agreement, as the same may be amended, supplemented
or otherwise modified from time to time.
"Applicable Margin": with respect to the unpaid principal amount of LIBOR
Advances, the percentage set forth below under the heading "LIBOR Margin" next
to the applicable period:
Period
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LIBOR Margin
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when the Ratio of Total Liabilities to Tangible 1.35%
Net Worth is less than 0.40:1.0
when the Ratio of Total Liabilities to Tangible 1.50%
Net Worth is equal to or greater than 0.40:1.0
but not greater than 1.0:1.0
when the Ratio of Total Liabilities to Tangible 1.65%
Net Worth is greater than 1.0:1.0
Changes in the Applicable Margin resulting from a change in the Ratio of Total
Liabilities to Tangible Net Worth, as set forth in a Compliance Certificate
delivered pursuant to Section 5.1(c) evidencing such a change, shall become
effective upon the forty-fifth (45th) day after each fiscal quarter of the
Borrower. If the Borrower shall fail to deliver a Compliance Certificate within
45 days after the end of each fiscal quarter, then for purposes of determining
the Applicable Margin, the Ratio of Total Liabilities to Tangible Net Worth from
and including the date by which such Compliance Certificate was to have been
delivered to the actual date of delivery shall be conclusively presumed to be
greater than 1.0:1.0.
"Assignment and Acceptance Agreement": an assignment and acceptance
agreement executed by an assignor and an assignee pursuant to which the assignor
assigns to the assignee all or any portion of such assignor's Notes and
Revolving Credit Commitment, as contemplated by Section 9.9(a), in form and
content satisfactory to the Agent.
"Authorized Signatory": the chief executive officer, the president or the
chief financial officer.
"Base Rate": the rate of interest announced by the Agent as its prime rate
of interest ("Prime") minus 0.50%.
"Base Rate Advance": collectively, the Loans (or any portions thereof) at
such times as they (or such portions) are made and/or being maintained at the
Base Rate.
"Borrowing Date": any Business Day on which a Loan is made.
"Borrowing Request": a written request for Loans in the form supplied or
specified by the Agent.
"Business Day": any day of the year on which banking institutions in New
York, New York are not authorized or required by law or other governmental
action to close and, to the extent the LIBOR Rate is applicable, on which
dealings are carried on in the London Interbank Market.
"Collections": all payments (including payments made by or on behalf of the
Borrower or received by the Agent on account of the Borrower's obligations under
the Loan Documents or pursuant to enforcement proceedings thereunder) received
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by the Agent in respect of the Notes and/or the Loan Agreement including,
without limitation, late fees and charges, the Unused Facility Fee and other
fees collected by the Agent pursuant to the terms of the Loan Agreement;
provided, however, that the term "Collections" shall not include any sums (or
accrued interest thereon) paid to the Agent on account of the costs of closing,
administering or enforcing the, Loan Documents, transaction and service
expenses, issuance fees, processing fees, inspection fees, legal fees and costs
or late charges, to the extent a Lender has not shared in the payment of such
expenses, fees, costs or charges.
"Compliance Certificate": a written certificate made by the Borrower and
delivered to the Agent pursuant to Section 5.1(c).
"Conversion Date": as the case may be, the date on which a Base Rate
Advance is converted to a LIBOR Advance, the date on which a LIBOR Advance is
converted to a Base Rate Advance, or the date on which a LIBOR Advance is
renewed for a successive one (1) month Interest Period as contemplated by
Section 2.1.4(b).
"Cost of Acquisition": with respect to any Acquisition, as at the date of
entering into any agreement therefor, the sum of the following (without
duplication) (i) the value of the capital stock, warrants or options to acquire
capital stock of the Borrower or any subsidiary to be transferred in connection
therewith, (ii) the amount of any cash and fair market value of other property
(excluding property described in clause (i) and the unpaid principal amount of
any debt instrument) given as consideration, (iii) the amount (determined by
using the face amount or the amount payable at maturity, whichever is(.)
greater) of any Indebtedness incurred, assumed or acquired by the Borrower or
any subsidiary in connection with such Acquisition, (iv) all additional purchase
price amounts in the form of earnouts and other contingent obligations that
should be recorded on the financial statements of the Borrower and its
subsidiaries in accordance with GAAP, (v) all amounts paid in respect of
covenants not to compete, consulting agreements that should be recorded on
financial statements of the Borrower and its subsidiaries in accordance with
GAAP, (vi) the aggregate fair market value of all other consideration given by
the Borrower or any subsidiary in connection with such Acquisition, and (vii)
out-of-pocket transaction costs for the services and expenses of attorneys,
accountants and other consultants incurred in effecting such transaction, and(.)
other similar transaction costs so incurred and capitalized in accordance with
GAAP.
"Debt": for any date of determination, the aggregate of all amounts
outstanding on the Loans and all other indebtedness for which the Borrower is
liable, whether as borrower, maker, guarantor or endorser (excluding payment
instruments endorsed for deposit or collection in the ordinary course of
business).
"Debt Service Coverage Ratio": with respect to Borrower, Borrower's Net
Profit After Tax for its four (4) most recently completed fiscal quarters, less
dividends to stockholders with respect to such period, plus non-cash charges
(such as depreciation and amortization) for such period, divided by scheduled
principal payments on Borrower's Debt for such period.
"Default": any event or condition which constitutes an Event of Default or
which, with the giving of notice, the lapse of time, or any other condition,
would, unless cured or waived, become an Event of Default.
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"Eligible Account": shall mean (1) an Account that arose in the ordinary
course of business of Borrower from or in connection with a bonafide sale of
goods or rendition of services, performed in accordance with an order or
contract, oral or written, wherein all obligations of Borrower regarding the
shipment or delivery of such goods to the customer have been satisfied or the
services have been performed for the customer; (2) the rights of Borrower in and
to the Account and the proceeds thereof are not subject to any assignment,
claim, lien, security interest or other encumbrance; (3) to the best of
Borrower's knowledge, the account is not disputed or subject to offset, credit
allowance or adjustment by the customer, except discounts customarily offered in
Borrower's business; and (4) the Account has been due and payable for one
hundred twenty (120) days or less from the invoice date.
"Environmental Laws": any and all federal, state and local laws relating to
the environment, the use, storage, transporting, manufacturing, handling,
discharge, disposal or recycling of hazardous substances, materials or
pollutants or industrial hygiene and including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 USCA ss.9601 et seq.; (ii) the Resource Conservation and Recovery
Act of 1976, as amended, 42 USCA 0901 et seq.; (iii) the Toxic Substance Control
Act, as amended, 15 USCA ss.2601 et seq.; (iv) the Water Pollution Control Act,
as amended, 33 USCA ss.1251 et seq.; (v) the Clean Air Act, as amended, 42 USCA
ss.7401 et seq.; (vi) the Hazardous Material Transportation Act, as amended, 49
USCA ss.1801 et seq.;.; and (vii) all rules, regulations, judgments, decrees,
injunctions and restrictions thereunder and any similar state law.
"Event of Default": any of the events specified in Section 8.1, provided
that any requirement for the giving of notice, the lapse of time or any other
condition has been satisfied.
"GAAP": generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board and the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or such other statement by such other
entity as may be approved by a significant segment of the accounting profession,
which are applicable to the circumstances as of the date of determination,
consistently applied.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator.
"Guarantor" and "Guarantors": one or more of General Microwave Corporation,
a New York corporation, Micro-El Patent Corporation, a Delaware corporation,
General Microwave Israel Corporation, a Delaware corporation, Herley-CTI, Inc.,
a Delaware corporation, Herley-RSS, Inc., a Delaware corporation, Micro Systems,
Inc., a Florida corporation, Innovative Concepts, Inc. a Virginia corporation,
Stapor Research, Inc., a Virginia corporation, HMS Investments. Inc., a Delaware
corporation, HMS Trading, Inc., a Delaware corporation, MSI Acquisition Corp., a
Delaware corporation, ICI Acquisition Corp., a Delaware corporation, and any
additional U.S. - domiciled operating subsidiaries which Borrower or any
Guarantor may create or acquire at any time a Loan remains outstanding and
unpaid or any other amount is owing under any Loan Document. The terms
"Guarantor" and "Guarantors" do not include General Microwave Israel, Ltd. and
EW Simulation Technology Ltd.
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"Hazardous Substance": any hazardous or toxic substance, material or waste,
including, but not limited to, (i) those substances, materials and wastes listed
in the United States Department of Transportation Hazardous Materials Table (49
CFR 172.101) or by the Environmental Protection Agency as hazardous substances
(40 CFR Part 302) and amendments thereto and replacements therefor and (ii) any
substance, pollutant or material defined as, or designated in any Environmental
Law as a "hazardous substance," "toxic substance," "hazardous material,"
"hazardous waste," "restricted hazardous waste," "pollutant," "toxic pollutant"
or words of similar import.
"Highest Lawful Rate" : with respect to a Lender, the maximum rate of
interest, if any, that at any time or from time to time may be contracted for,
taken, charged or received by the Lender on the Notes or which may be owing to a
Lender pursuant to this Agreement under the laws applicable to the Lender and
this Agreement.
"Indictment": the indictment which was filed in the United States District
Court for the Eastern District of Pennsylvania on June 6, 2006 at Criminal Not.
06-CR268.
"Interest Period": with respect to any LIBOR Advance requested by the
Borrower, the period commencing on, as the case may be, the Borrowing Date or
the Conversion Date with respect to such LIBOR Advance and ending on the date
that is one month thereafter, provided, however: (i) if any Interest Period
would otherwise end on a day that is not a Business Day, such Interest Period
shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the immediately preceding Business Day and
(ii) no Interest Period shall end, in the case of a Revolving Credit Loan, after
the Revolving Credit Maturity Date.
"Inventory": shall mean and include all now owned or hereafter acquired
goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for
sale or lease, all raw materials, work in process, finished goods and materials
and supplies of any kind, nature or description which are or might be used or
consumed in such Person's business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them.
"Lender" and "Lenders": one or more of Manufacturers and Traders Trust
Company, in its capacity as a Lender, Bank of Lancaster County, N.A. and each
Person that becomes a Lender pursuant to the provisions of Section 9.9(a) of
this Agreement.
"LIBOR": shall mean the rate per annum obtained by dividing (i) the
one-month interest period London Interbank Offered Rate as fixed by the British
Bankers Association for United States dollar deposits in the London Interbank
Eurodollar Market at approximately 11:00 a.m. London, England time (or as soon
thereafter as practicable) as determined by the Bank from any broker, quoting
service or commonly available source utilized by the Bank by (ii) a percentage
equal to 100% minus the stated maximum rate of all reserves required to be
maintained against "Eurocurrency Liabilities" as specified in Regulation D (or
against any other category of liabilities which includes deposits by reference
to which the interest rate on LIBOR Rate Loan or Loans is determined or any
category of extensions of credit or other assets which includes loans by a
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non-United States' office of a bank to United States' residents) on such date to
any member bank of the Federal Reserve System. Notwithstanding any provision
above, the practice of rounding to determine LIBOR may be discontinued at any
time in the Bank's sole discretion. If LIBOR shall become unavailable, a per
annum rate of interest equal to the Base Rate shall be substituted for LIBOR.
"LIBOR Advances": collectively; the Loans (or any portions thereof) at such
time as they (or such portions) are made and/or being maintained at a rate of
interest based upon LIBOR.
"Lien": any mortgage, pledge, hypothecation, assignment, deposit or
preferential arrangement, encumbrance, lien (statutory or other), or other
security agreement or security interest of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement and any capital or financing lease having substantially the same
economic effect as any of the foregoing.
"Loans": the Revolving Credit Loans.
"Loan Documents": collectively, this Agreement, the Notes and all other
documents executed and delivered in connection with the Loans, and any future or
additional loan documents executed and delivered in connection with the Loans,
and any amendments or modifications thereof.
"Note": a Revolving Credit Note.
"Notes": the Revolving Credit Notes.
"Permitted Liens": any of the liens described in clauses (i) through (v) of
Section 6.3 of this Agreement:
"Person": an individual, a partnership, a corporation, a business trust, a
joint stock company, a trust, a limited liability company, an unincorporated
association, a joint venture, a Governmental Authority or any other entity of
whatever nature.
"Required Lenders": Lenders having Revolving Credit Commitments equal to at
least 66-2/3 % of the Aggregate Revolving Credit Commitments of all the Lenders.
"Revolving Credit Commitment": in respect of any Lender having a Revolving
Credit Commitment, such Lender's undertaking during the Revolving Credit
Commitment Period to make Revolving Credit Loans to the Borrower, subject to the
terms and conditions hereof, in an aggregate outstanding principal amount not
exceeding the amount set forth next to the name of such Lender in Exhibit A
under the heading "Revolving Credit Commitments."
"Revolving Credit Commitment Percentage": in respect of any Lender having a
Revolving Credit Commitment, the percentage that the amount of such Lender's
Revolving Credit Commitment comprises of the Aggregate Revolving Credit
Commitments, as set forth next to the name of such Lender in Exhibit A under the
heading "Revolving Credit Commitment Percentage."
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"Revolving Credit Commitment Period": the period from the date of this
Agreement through the day preceding the Revolving Credit Maturity Date.
"Revolving Credit Loan" and "Revolving Credit Loans": as defined in Section
2.1.
"Revolving Credit Maturity Date": March 31, 2009, or such earlier date on
which the Notes shall become due and payable, whether by acceleration or
otherwise.
"Tangible Net Worth": with respect to any Person, at any time of
determination, that amount which is equal to the excess of all of such Person's
assets (excluding inter-affiliate items and any and all intangible assets, such
as, but not limited to, customer lists, covenants not to compete, deferred
financing costs, deferred charges, goodwill, intellectual property, licenses,
organization costs, officer and stockholder advances or receivables, mineral
rights and the like) over all of such Person's liabilities (except
inter-affiliate items), determined in accordance with GAAP.
1.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the meanings given
such terms herein when used in the Loan Documents or any certificate,
opinion or other document made or delivered pursuant hereto or thereto,
unless otherwise defined therein.
(b) As used in the Loan Documents and in any certificate, opinion or
other document made or delivered pursuant hereto or thereto, accounting
terms not defined in Section 1.1, and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof," "herein," "hereto" and "hereunder" and similar
words when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement, and Section,
schedule and exhibit references contained herein shall refer to Sections
hereof or schedules or exhibits hereto unless otherwise expressly provided
herein.
(d) The word "or" shall not be exclusive "may not" is prohibitive and
not permissive, and an "agreement" of a Person shall include any applicable
promise, covenant, representation, warranty or other undertaking of such
Person.
(e) Unless the context otherwise requires, words in the singular
number include the plural, and words in the plural include the singular.
(f) Unless specifically provided in a Loan Document to the contrary,
references to time shall refer to the prevailing time in Lancaster,
Pennsylvania.
2. AMOUNT AND TERMS OF REVOLVING CREDIT.
2.1 Revolving Credit Loans. Subject to the terms and conditions hereof,
each Lender severally agrees to make revolving credit loans (each a "Revolving
Credit Loan" and, as the context may require, collectively with. all Revolving
Credit Loans of such Lender and with the Revolving Credit Loans of all other
Lenders, the "Revolving Credit Loans") to the Borrower from time to time during
the Revolving Credit Commitment Period, in an aggregate outstanding principal
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amount at any one time outstanding not to exceed such Lender's Revolving Credit
Commitment. At no time shall the aggregate outstanding principal amount of the
Revolving Credit Loans of all Lenders exceed the Aggregate Revolving Credit
Commitments. During the Revolving Credit Commitment Period, the Borrower may
borrow, prepay in whole or in part and reborrow under the Revolving Credit
Commitments, all in accordance with the terms and conditions of this Agreement.
The Borrower covenants that it will not request any borrowing under the
Revolving Credit Loans that would cause the aggregate outstanding principal
amounts of the Revolving Credit Loans to exceed the aforesaid limitations. Also,
in the event that HMS Investments, Inc. shall at any time(s) have total cash and
cash equivalents below $5,000,000, the aggregate outstanding principal amount of
the Revolving Credit Loans during any such period(s) may not exceed 100% of the
Borrower's Eligible Accounts as determined by Bank, it being agreed, however,
that cash held in General Microwave Israel, Ltd. may be used in calculating the
required minimum cash level. Any termination of the Revolving Credit Loans,
whether by expiration of the Revolving Credit Commitment Period or as a result
of the existence or continuance of any Event of Default, shall relieve each
Lender of the Lender's obligation hereunder to lend money or to make financial
accommodations to or for the Borrower and for any of its accounts, but shall in
no way release, terminate, discharge or excuse the Borrower from its absolute
duty to pay or perform any or all of its obligations under this Agreement. The
application of the preceding sentence is intended to apply as long as any sums
remain outstanding, due or owing under any Revolving Credit Loan.
2.1.1 Revolving Credit Notes. The Revolving Credit Loans made by a Lender
shall be evidenced by a Note of the Borrower (each a "Revolving Loan Note" and
collectively the "Revolving Loan Notes") the terms and conditions of which are
incorporated herein by reference. The (i) date and amount of each Revolving
Credit Loan made by a Lender, (ii) the interest rates and periods that such
rates are applicable, and (iii) each payment and prepayment of principal and/or
interest, shall be recorded by such Lender on its books and records, but any
failure of such Lender to make any such recordation or endorsement shall not
affect the obligations of the Borrower to make payment when due of any amount
owing under the Loan Documents. All repayments shall be credited to the balances
due under a Lender's Revolving Credit Loans in accordance with the normal and
customary practices of the Lender. Interest accrued under a Lender's Revolving
Credit Loans shall be computed on the outstanding balances as reflected on the
Lender's books and records.
2.1.2 Procedure for Borrowing. The Borrower may borrow under the Revolving
Credit Commitments on any Business Day during the Revolving Credit Commitment
Period, provided, however, that the Borrower shall notify the Agent (by
telephone or telecopy) no later than 11:00 A.M. on the requested Borrowing Date,
specifying (A) the aggregate principal amount to be borrowed under the Revolving
Credit Commitments, (B) whether the Advance is to be a Base Rate Advance or a
LIBOR Advance (if no interest rate option is specified, then the Borrower shall
be deemed to have specified the Base Rate Advance option) and (C) the requested
Borrowing Date. Each such notice shall be irrevocable and confirmed immediately
by delivery to the Agent of a Borrowing Request. The Agent and each Lender shall
be authorized to rely upon any Borrowing Request made by any representative of
the Borrower as constituting an authorized Borrowing Request under the Revolving
Credit Loans by the Borrower. Upon receipt of each notice of borrowing from the
Borrower, the Agent shall promptly notify each Lender thereof. Subject to its
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receipt of the notice referred to in the preceding sentence, each Lender will
make the amount of its Revolving Credit Commitment Percentage of each borrowing
of Revolving Credit Loans available to the Borrower not later than 3:00 P.M. on
the relevant Borrowing Date requested by the Borrower, in funds immediately
available to the Borrower, by crediting an account of the Borrower maintained
with Agent for such purpose with the amount of such borrowing.
2.1.3 Repayment. Payments of principal, interest and other amounts due and
owing under each Revolving Credit Note shall be made by the Borrower to the
Agent for the account of the respective Lender in immediately available funds as
and when provided in Section 2.3(c) with respect to interest, and with respect
to principal, as and when provided in such Revolving Credit Note or as otherwise
provided in this Agreement. The Agent will promptly remit to each Lender its pro
rata share of all Collections when received by the Agent, subject to the
following:
(a) After deduction of reasonable expenses and other charges incurred
by the Agent and reimbursable by the Borrower, Collections shall be applied
first to the payment of all accrued but unpaid interest then due and
payable in. the order of maturity of the installments of such interest on a
pro rata basis in relation to the respective aggregate amounts of accrued
but unpaid interest on each Lender's Revolving Credit Loans; and
(b) Second, to the repayment of all amounts of principal on a pro rata
basis in relation to the respective outstanding principal balance of each
Lender's Revolving Credit Loans constituting LIBOR Advances, and the
balance, if any, to the payment to the Agent in its capacity as a Lender of
the outstanding principal balance of Base Rate Advances; provided, however,
that principal amounts constituting LIBOR Advances may be repaid only on
the last day of the respective Interest Period applicable to such LIBOR
Advance and, if repayment of a LIBOR Advance does not occur on the last day
of the respective Interest Period and the Borrower has not otherwise
provided the Agent with timely notice of the conversion of such LIBOR
Advance to a Base Rate Advance in accordance with Section 2.1.4 of this
Agreement, then such LIBOR Advance shall be deemed to constitute a renewed
LIBOR Advance for a successive one (1) month Interest Period. Outstanding
principal amounts constituting Base Rate Advances may be repaid at any
time.
(c) Notwithstanding the provisions of Sections 2.1.3(a) and (b) above,
following the occurrence of an Event of Default and the acceleration by the
Lenders of the amounts due under the Notes, the Agent shall distribute
Collections, after deduction of reasonable expenses and other charges
incurred by the Agent and reimbursable by the Borrower, to the Lenders on a
pro rata basis in relation to the respective aggregate outstanding
principal balance of each Lender's Loans to the aggregate outstanding
principal balance of all Loans.
2.1.4 Conversions. The Borrower may elect from time to time to convert Base
Rate Advances to LIBOR Advances by giving the Agent irrevocable notice of such
election no later than 12:00 Noon, three (3) Business Days prior to the date of
such conversion, specifying the amount to be so converted. In addition, the
Borrower may elect from time to time to convert LIBOR Advances to Base Rate
Advances by giving the Agent irrevocable notice of such election no later than
12:00 Noon, one (1) Business Day prior to such conversion, provided that any
such conversion of LIBOR Advances to Base Rate Advances shall only be made on a
Business Day and only on the last day of the Interest Period applicable to the
LIBOR Advances which are to be converted to Base Rate Advances. The Agent shall
promptly provide the Lenders with notice of any such election. LIBOR Advances
and Base Rate Advances may be converted pursuant to this Section in whole or in
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part. Notwithstanding anything in this Section to the contrary, no conversion
will be effected, if the Borrower or the Agent has knowledge that a Default or
Event of Default has occurred and is continuing either (i) at the time the
Borrower notifies the Agent of its election to convert or (ii) on the requested
Conversion Date.
2.1.5 Duration of the Revolving Credit Loans. All sums outstanding under
the Loans shall be paid in full and the Revolving Credit Loans shall expire on
the Revolving Credit Maturity Date.
2.2 Prepayments of the Loans.
The Borrower may, at its option, prepay Base Rate Advances, in whole or in
part, without premium or penalty, at any time and from time to time. The
Borrower may pay a LIBOR Advance, in whole or in part, only at the end of the
Interest Period applicable to such LIBOR Advance.
2.3 Interest Rate and Payment Dates.
(a) Prior to Maturity. Except as otherwise provided in Section 2.3(b),
prior to maturity the Loans shall bear interest on the outstanding principal
balances thereof at the applicable interest rate or rates per annum set forth
below.
Advances Rate
Base Rate Advance Base Rate
LIBOR Advance LIBOR plus the Applicable Margin
(b) Event of Default. After the occurrence and during the continuance of an
Event of Default, the outstanding principal balance of the Loans and any overdue
interest or other amount payable under the Loan Documents shall bear interest at
a rate per annum equal to two percent (2%) plus the rate which would otherwise
be applicable under Section 2.3(a) of this Agreement.
(c) General. Interest shall be calculated on the basis of a three hundred
sixty (360) days per year factor applied to the actual days on which there
exists an outstanding principal balance on a Loan. Interest shall be payable in
arrears on the first day of each month during the Revolving Credit Commitment
Period in respect of Base Rate Advances, on the last day of the applicable
Interest Period in respect of LIBOR Advances, and on the Revolving Credit
Maturity Date. Any change in the interest rate on a Loan resulting from a change
in the Base Rate shall become effective as of the opening of business on the day
on which such change shall become effective. The Agent shall notify the Borrower
of the effective date and the amount of each such change in the Base Rate, but
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any failure to so notify shall not in any manner affect the obligation of the
Borrower to pay interest on the Loans in the amounts and on the dates required.
Each determination of the Base Rate and LIBOR, as the case may be, by the Agent
pursuant to this Agreement shall be conclusive and binding on the Borrower
absent manifest error. At no time shall the interest rate payable on the Loans
of any Lender, together with all other amounts payable under the Loan Documents
to the extent the same are construed to constitute interest, exceed the Highest
Lawful Rate applicable to such Lender. If interest payable to a Lender on any
date would exceed the maximum amount permitted by the Highest Lawful Rate
applicable to such Lender, such interest payment shall automatically be reduced
to such maximum permitted amount, and interest for any subsequent period, to the
extent less than the maximum amount permitted for such period by the Highest
Lawful Rate, shall be increased by the unpaid amount of such reduction. Any
interest actually received for any period in excess of such maximum allowable
amount for such period shall be deemed to have been applied as a prepayment of
the Loans. The Borrower acknowledges that to the extent interest payable on a
Loan is based on the Base Rate or LIBOR, such rates are only some of the bases
for computing interest on loans made by the Lenders, and by basing interest
payable on any of such rates, the Lenders have not committed to charge, and the
Borrower has not in any way bargained for, interest based on a lower or the
lowest rate at which the Lenders may now or in the future make loans to other
borrowers.
2.4 Use of Proceeds.
(a) The proceeds of the Loans shall be used for working capital and general
corporate purposes including, without limitation, financing Acquisitions
(subject, however, to the conditions of Section 6.1), and for the issuance of
letters of credit as provided in Section 2.4(b).
(b) To the extent that the Agent, in its sole discretion, determines that
funds are available under the Revolving Credit Commitments, each Lender agrees
to severally issue standby letters of credit on behalf of the Borrower upon
request, subject to such terms and conditions as may be required and approved by
the Agent and the Lenders .in their collective discretion, including without
limitation, the terms of the letters of credit and the terms of repayment to be
set forth in separate reimbursement agreements in form and substance acceptable
to the Agent and the Lenders. The Agent shall attribute between or among the
Lenders the amounts of letters of credit requested by the Borrower.
2.5 Fees.
(a) The Borrower agrees to pay to the Agent annually in advance, for its
own account, an administration fee in the amount of $5,000 and to pay Agent for
the ratable benefit of Lenders an "Unused Facility Fee" equal to 20 basis points
(0.20%) per annum (calculated on the basis of a 360 day year for the actual days
elapsed) of the unused portion of the Aggregate Revolving Credit Commitments
(such unused portion being determined by subtracting the aggregate amount of all
outstanding Revolving Credit Loans on the applicable date of determination from
the Aggregate Revolving Credit Commitments). For purposes of calculating the
unused portion of the Aggregate Revolving Credit Commitments, Letters of Credit
made under the Loans shall be deemed to be used portions of the Aggregate
Revolving Credit Commitments. The Unused Facility Fee shall be paid in
immediately available funds and shall be calculated on the basis of the average
daily unused portion of the Aggregate Revolving Credit Commitments and shall be
payable quarterly in arrears and on the Revolving Credit Maturity Date. When
received, the Agent will promptly remit to each Lender its pro rata share of the
Unused Facility Fee based upon such Lender's Revolving Credit Commitment
Percentage.
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(b) If the Lenders are requested to issue standby letters of credit
pursuant to Section 2.4(b) of this Agreement, a separate letter of credit fee
equal in amount to one percent (1.00%) of the aggregate amounts of the
(.)letters of credit shall be due and payable by the Borrower to the Lender upon
the issuance of the letters of credit and at each anniversary of the issuance
date occurring during the terms of the letters of credit.
(c) All such fees shall be the absolute property of the Lenders upon
payment. Payment of such fees shall not be considered payment of any of the
Lenders' expenses incurred in connection with the Loans. No portion of such fees
shall be refunded in the event the Borrower prepays any Loan including, without
limitation, any prepayment of the Borrower's obligations under a letter of
credit reimbursement agreement, whether in whole or in part.
2.6 Agent's Records. The Agent's records with respect to the Loans, the
interest rates applicable thereto, each payment by the Borrower of principal and
interest on the Loans, and fees, expenses and any other amounts due and payable
in connection with the Loan Documents shall be presumptively correct absent
manifest error as to the amount of the Loans, the amount of principal and
interest paid by the Borrower in respect of each Loan and as to the other
information relating to the Loans, and amounts paid and payable by the Borrower
hereunder and under the Notes and other Loan Documents.
2.7 Application of Deposits. In addition to any rights of set off arising
under the Loan Documents or under law, upon the occurrence of an Event of
Default, the Borrower hereby authorizes the Lenders to apply any amount on
deposit in any deposit account of the Borrower now or hereafter maintained with
a Lender against any of the Borrower's indebtedness under the Loan Documents.
3. CONDITIONS OF LENDING - GENERAL.
In addition to the conditions precedent set forth in Section 4, the
obligation of the Lenders to make the Loans shall be subject to the fulfillment
of the following conditions precedent:
3.1 Evidence of Action. The Agent shall have received a certificate dated
as of the closing date of the Secretary or Assistant Secretary of the Borrower
(i) attaching a true and complete copy of the resolutions of the Borrower's
Board of Directors and of all documents evidencing other necessary corporate
action (in form and substance satisfactory to the Agent) taken by it to
authorize the Loan Documents to which it is a party and the transactions
contemplated thereby, (ii) attaching a true and complete copy of the Borrower's
articles of incorporation and by-laws, (iii) setting forth the incumbency of the
Borrower's officer or officers who may sign the Loan Documents to which it is a
party, including therein a signature specimen of each such officer, and (iv)
attaching certificates of good standing of the Secretaries of State of the
Commonwealth of Pennsylvania and the State of Delaware.
3.2 This Agreement. The Agent shall have received counterparts of this
Agreement duly executed by an Authorized Signatory of the Borrower and of each
Lender party hereto.
3.3 Notes. The Agent shall have received the Revolving Credit Notes duly
executed by an Authorized Signatory of the Borrower.
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3.4 Opinion of Counsel to the Borrower. The Agent shall have received an
opinion of counsel to the Borrower, addressed to the Agent and Agent's Counsel,
dated the closing date, in form and substance satisfactory to the Agent and
covering such matters as the Agent may reasonably request.
3.5 Litigation. There shall be no injunction, writ, preliminary restraining
order or other order of any nature issued by any Governmental Authority in any
respect affecting the transactions provided for herein and no action or
proceeding by or before any Governmental Authority shall have been commenced and
be pending or, to the knowledge of the Borrower, threatened, seeking to prevent
or delay the transactions contemplated by the Loan Documents or challenging any
other terms and provisions hereof or thereof or seeking any damages in
connection therewith.
3.6 Search Reports. The Agent shall have received UCC, tax and judgment
lien search reports with respect to each applicable public office where Liens
are filed disclosing that there are no Liens of record in such official's office
covering any of the Borrower's property or showing the Borrower as a debtor,
except for Permitted Liens.
3.7 Property, Public Liability and Other Insurance. The Agent shall have
received a certificate or certificates of all insurance maintained by the
Borrower in form and substance reasonably satisfactory to the Lender, together
with the endorsements described in Section 5.3.
3.8 Other Documents. The Agent shall have received such other documents as
the Agent shall reasonably request.
3.9 Fees and Expenses of Agent's Counsel. The fees and expenses of Agent's
Counsel in connection with the preparation, negotiation and closing of the Loan
Documents shall have been paid by Borrower.
3.10 Guarantors. Each of the Guarantors shall have executed and delivered
to the Agent Continuing Guaranty Agreements in form and substance acceptable to
the Agent, providing joint and several suretyship for the absolute, full and
timely payment and performance by the Borrower of the terms and conditions of
each of the Loan Documents.
3.11 Stock Pledge(s). The Agent shall have received the pledge(s) of 66% of
the stock of each foreign subsidiary.
3.12 Collateral. In the event that Borrower's backlog should, at any time,
fall below $50,000,000, Borrower shall grant Agent for the ratable benefit of
Lenders a perfected first priority security interest in and lien on all
Accounts, now owned and hereafter acquired (the "Accounts Lien"), and shall take
any and all actions as Agent may request for purposes thereof and to effect the
same. Should the aggregate outstanding principal amounts of the Revolving Credit
Loans (including issued letters of credit) then or at any time(s) thereafter
exceed 100% of Borrower's Eligible Accounts, Borrower shall also grant Agent for
the ratable benefit of Lenders a perfected first priority security interest in
and lien on all Inventory, now owned and hereafter acquired (the "Inventory
Lien"), and shall take any and all actions as Agent may request for purposes
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thereof and to effect the same. Borrower authorizes Agent to file one or more
financing statements in the appropriate public office(s) under the Uniform
Commercial Code. So long as an Event of Default has not occurred, the Accounts
Lien and the Inventory Lien will be removed (without prejudice) if and when
Borrower's backlog exceeds $55,000,000.
4. CONDITIONS OF LENDING - ADVANCES.
The Obligation of a Lender to make any Advance under the Loans is subject
to the satisfaction of the following additional conditions precedent as of each
Borrowing Date:
4.1 Compliance.
On each Borrowing Date and after giving effect to the Advance to be made
thereon, (a) the Borrower shall be in compliance with all of the terms,
covenants and conditions of the Loan Documents, (b) the representations and
warranties set forth in the various Loan Documents shall be true and correct
with the same force and effect as if made on and as of each such Borrowing Date
(except to the extent any such representation or warranty may expressly relate
solely to an earlier date); (c) there shall exist no Default or Event of
Default., and (d) the outstanding principal amounts of the Loans will not exceed
the limitations as to the maximum outstanding principal amount of the Loans
specified in Section 2.1 of this Agreement. Each borrowing by the Borrower shall
constitute a certification by the Borrower as of the date of such borrowing that
each of the foregoing matters is true and correct in all respects.
4.2 Loan Documentation.
All documents required by the provisions of the Loan Documents to be
executed or delivered to the Agent on or before the applicable Borrowing Date
shall have been executed and shall have been delivered at the office of the
Agent set forth in Section 9.6 on or before such Borrowing Date.
4.3 Documentation and Proceedings.
All corporate and legal proceedings and all documents and papers in
connection with the transactions contemplated by the Loan Documents shall be in
form and substance reasonably satisfactory to the Agent and the Agent shall have
received all information and copies of all documents which the Agent may
reasonably have requested in connection therewith, such documents (where
appropriate) to be certified by an Authorized Signatory of the Borrower or
proper Governmental Authorities.
4.4 Required Acts and Conditions.
All acts, conditions and things (including, without limitation, the
obtaining of any necessary regulatory approvals and the making of any filings,
recordings or registrations) required to be done, performed and to have happened
on or prior to such Borrowing Date and which are necessary for the continued
effectiveness of the Loan Documents, shall have been done and performed and
shall have happened in due compliance with all applicable laws.
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4.5 Approval of Counsel.
All legal matters in connection with the making of each Advance shall be
reasonably satisfactory to Agent's Counsel.
4.6 Supplemental Opinions.
If requested by the Agent with respect to the applicable Borrowing Date,
there shall have been delivered to the Agent favorable supplementary opinions of
counsel to the Borrower, addressed to the Agent and dated such Borrowing Date,
covering such matters incident to the transactions contemplated herein as the
Agent may reasonably request.
4.7 Other Documents.
The Agent shall have received such other documents as the Agent shall
reasonably request.
5. AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees that, so long as this Agreement is in
effect, any Loan- remains outstanding and unpaid, or any other amount is owing
under any Loan Document to any Lender, the Borrower shall, except as otherwise
specifically provided:
5.1 Reports to Agent.
Deliver to the Agent the following reports:
(a) The Borrower's financial statements as follows: (i) quarterly
consolidated statements certified by the Borrower's chief financial
officer within forty-five (45) days after the end of each of the
Borrower's first three (3) fiscal quarters in each fiscal year; and
(ii) year-end consolidated statements within ninety (90) days after
Borrower's fiscal year-end, which year-end statements shall be audited
by an independent certified public accountant and include an
unqualified opinion of such accountant, any management letter issued
to the Borrower by such accountant and the Borrower's response to such
management letter. All financial 'statements shall be prepared in
accordance with GAAP consistently applied.
(b) The Borrower's quarterly report on Form 10-Q and annual
report on Form 10-K as filed with the Securities and Exchange
Commission within ten (10) days after filing.
(c) With the quarterly financial statements required under
Section 5.1(a)(1), a certificate of compliance with the requirements
set forth in Sections 6.9, 6.10 and 6.11 of this Agreement signed by
the Borrower's chief financial officer.
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(d) Monthly cash and monthly backlog reporting.
(e) Such other reports as may be reasonably requested by the
Agent from time to time.
All of the foregoing reports shall be in form and substance reasonably
satisfactory to the Agent. If the reports are required to be audited by an
independent certified public accountant, such independent certified public
accountant shall be reasonably acceptable to the Agent.
5.2 Certificates; Other Information.
Furnish to the Agent prompt written notice if: (i) any indebtedness of the
Borrower is declared or shall become due and payable prior to its stated
maturity, or called and not paid when due, (ii) a default shall have occurred
under any note (other than the Notes) or the holder of any such note, or other
evidence of indebtedness, certificate or security evidencing any such
indebtedness or any obligee with respect to any other indebtedness of the
Borrower has the right to declare any such indebtedness due and payable prior to
its stated maturity, or (iii) there shall occur and be continuing a Default or
an Event of Default.
5.3 Insurance.
(a) Borrower shall maintain insurance as follows:
(i) Insurance against loss or damage to the Borrower's assets and
properties by fire and any of the risks covered by insurance of the
type now known as "fire and extended coverage," in an amount not less
than the percentage of the full replacement cost of all such
properties and assets, required to satisfy any applicable co-insurance
requirement in such policy and with not more than $25,000.00
deductible from the loss payable for any casualty. The policies of
insurance carried in accordance with this subparagraph (i) shall
contain the "Replacement Cost Endorsement";
(ii) Comprehensive public liability insurance on an "occurrence
basis" against claims for "personal injury," including without
limitation bodily injury, death or property damage, such insurance to
afford immediate minimum protection to a limit of not less than
$1,000,000 under a primary policy of insurance together with a limit
of not less than $2,000,000 under an umbrella policy of insurance with
respect to personal injury or death to any one or more persons or
damage to property;
(iii) Worker's compensation insurance (including employer's
liability insurance, if requested by Agent) for all employees of
Borrower in such amount as is reasonably satisfactory to Agent, or if
such limits are established by law, in such amounts;
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(iv) Directors and Officers liability insurance to a limit of not
less than $3,000,000.
(v) Such other insurance, and in such amounts, as may from time
to time be reasonably required by Agent against the same or other
hazards.
(b) All policies of insurance required by the terms of paragraph (a) shall
contain an endorsement or agreement by the insurer that any loss shall be
payable in accordance with the terms of such policy notwithstanding any act or
negligence of Borrower which might otherwise result in forfeiture of such
insurance and the further agreement of the insurer waiving all rights of
set-off, counterclaim or deduction against Borrower.
(c) All policies of insurance shall be, issued by companies and in amounts
reasonably satisfactory to Agent. All policies of insurance shall have attached
thereto a lender's clause in favor of Agent, and in form reasonably satisfactory
to Agent, providing that the Agent shall not be subject to contribution, and a
lender's loss payable endorsement for benefit of Agent, all of a form
satisfactory to Agent. Borrower shall furnish Agent with a signed duplicate
original policy with respect to all required insurance coverage. If Agent
consents to Borrower providing any of the required insurance through blanket
policies carried by Borrower and covering more than one location, then Borrower
shall furnish Agent with a signed certificate of insurance for each such policy
setting forth the coverage, the limits of liability, the name of the carrier,
the policy number, and the expiration date, and listing Agent as lender or loss
payee. At least twenty (20) days prior to the expiration of each such policy,
Borrower shall furnish Agent with evidence satisfactory to Agent of payment of
premium and the reissuance of a policy continuing insurance in force as required
by this Agreement. All such policies, including policies for any amount carried
in excess of the required minimum and policies not specifically required by
Agent, shall be in form satisfactory to Agent, shall be maintained in force and
effect, shall be assigned and delivered to Agent, with premiums prepaid as
collateral security for payment of the indebtedness secured hereby, and shall
contain a provision that such policies will not be canceled or materially
amended which term shall include any reduction in the scope or limits of
coverage, without at least ten (10) days prior written notice to Agent. If the
insurance, or any part thereof, shall expire, or be withdrawn, or become void or
unsafe by reason of Borrower's breach of any condition thereof, or become void
or unsafe by reason of the value or impairment of the capital of any company in
which the insurance may then be carried, or if for any reason whatever the
insurance shall be reasonably deemed by Agent to be unsatisfactory, Borrower
shall obtain new insurance reasonably satisfactory to Agent.
(d) In the event the Borrower fails to provide, maintain, keep in force or
deliver or furnish to Agent the policies of insurance required by this
Agreement, Agent may procure such insurance or single-interests insurance for
such risks covering Agent's interest, and Borrower will pay all premiums thereon
promptly upon demand by Agent, and until such payment is made by Borrower, the
amount of all such premiums, together with interest thereon at the rate
specified in the Note.
(e) In the event of loss in excess of $500,000.00, Borrower will give
immediate notice thereof to Agent, and Agent may make proof of loss if not made
promptly by Borrower. Each insurance company concerned is hereby authorized and
directed to make payment under such insurance, including return of unearned
premiums, directly to Agent, instead of to Borrower and Agent jointly, and
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Borrower appoints Agent irrevocably, as Borrower's attorney-in-fact to endorse
any draft therefor. If otherwise, such policies, including all right, title and
interest of the Borrower thereunder, shall become the absolute property of the
Agent.
5.4 Taxes.
Duly pay and discharge all taxes or other claims which might become a Lien
upon any of Borrower's properties except to the extent that such items are being
in good faith appropriately contested with adequate reserves therefor having
been set aside and with security satisfactory to the Agent.
5.5 Properties.
Maintain, preserve and keep Borrower's properties in good repair, working
order and condition, and make all reasonable repairs, replacements, additions,
betterments and improvements thereto.
5.6 Corporate Existence.
Maintain Borrower's corporate existence and comply with all statutes, rules
and regulations, the non-compliance with which would materially and adversely
affect its business, assets of condition, financial or otherwise.
5.7 Issuance Taxes.
Pay all stamp or issuance taxes, if any, payable by reason of the
execution, delivery or issuance of this Agreement, the Notes or Loan Documents
under any applicable ordinance or statute now existing or hereafter enacted, and
the Borrower will at all times indemnify and hold harmless the Lenders against
any liability in respect thereof.
5.8 Audits by Agent.
Upon the occurrence of an Event of Default or if the Agent reasonably
believes that an Event of Default is imminent based on reports or financial
reports received by Agent, permit the Agent and its duly authorized agents to
make, or cause to be made, inspections of any of Borrower's properties and
examinations and audits of any books, records and papers of the Borrower and to
make extracts therefrom at all such reasonable times and as often as the Agent
may reasonably require.
5.9 Management.
Maintain the current management and executive personnel of the Borrower or
other management and executive personnel reasonably satisfactory to the Agent,
and furnish to the Agent within five (5) days of any election or appointment of
officers or directors written notice of any change of such officers and
directors.
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5.10 Compliance With Laws.
Fully comply with all applicable Laws with respect to: (a) products that
the Borrower sells and services it performs, (b) the conduct of its business
generally, (c) its use, maintenance and operation of the real and personal
properties owned or leased by it and, without limiting the foregoing, the
Borrower shall obtain and maintain all permits, licenses and approvals necessary
or appropriate to engage in its business. as presently conducted and presently
contemplated.
5.11 Employee Benefit Plans.
Comply, and shall cause each of Borrower's employee benefit plans to
comply, with all applicable provisions of law.
5.12 Environmental Matters.
Comply, and shall cause Borrower's properties (whether owned or leased) to
comply, with all applicable Environmental Laws without limiting the foregoing,
(a) the Borrower shall:
(1) promptly notify the Agent and each other Person that it is
required under applicable Environmental Laws to notify upon the Borrower's
acquiring knowledge of a release or threatened release of any Hazardous
Substance on, from, or near any of its properties,
(2) promptly notify the Agent once an environmental investigation or
clean-up proceeding is instituted by any Person in connection with the
Borrower or any of its properties,
(3) comply in all material respects with and provide such assistance
as may be reasonably required in any such environmental investigation and
clean-up proceeding,
(4) promptly execute and complete remedial actions necessary to ensure
that no environmental liens or encumbrances are levied against or exist
with respect to any of the Borrower's properties or other assets, and
(5) promptly notify the Agent of any citation, notification,
complaint, or written notice of violation which it receives from any Person
which relates or pertains to the making, storing, handling, treating,
disposing, generating, transporting or release of any Hazardous Substance;
and
(b) the Borrower shall not use, produce, transport, dispose of or otherwise
handle any Hazardous Substances or permit any other Person to do so at or from
any of the Borrower's properties except in the ordinary course of Borrower's
business and in compliance with all applicable Environmental Laws.
The Borrower, promptly upon the written request of the Agent from time to
time after (1) the occurrence of an Event of Default, or (2) the occurrence of
any release of any Hazardous Substance in, on or from any property of the
Borrower in violation of any Environmental Law, shall provide the Agent with an
environmental site assessment or report, all in scope, form, and content
satisfactory to the Agent. Upon any such event, the Agent, or its designated
agent, may interview any or all of the agents and employees of the Borrower
19
regarding environmental matters, including any consultants or experts retained
by the Borrower, all of whom are directed to discuss environmental issues fully
and openly with the Agent or its designated agent and to provide such
information as may be requested. All of the costs and expenses incurred by the
Agent with respect to the audits, tests, inspections, and examinations which the
Agent may conduct pursuant to this Section, including the fees of the engineers,
laboratories, and contractors, shall be paid by the Borrower.
The Borrower shall indemnify and hold harmless the Agent from all loss,
liability, damage, reasonable costs and expenses (including, but not limited to,
reasonable legal fees), fines, or other penalties or payments, for failure of
the Borrower or any of its properties to comply fully with all environmental
Laws The provisions of this Section shall survive the payment and satisfaction
of the Loans and the termination of this Agreement.
5.13 Deposit Relationship.
Maintain a meaningful deposit relationship with the Agent.
5.14 Further Assurances And Power Of Attorney.
Execute from time to time such other and further documents, which in the
opinion of the Agent or the Agent's counsel, may be reasonably necessary to
perfect, confirm, establish, reestablish, continue, or complete the agreements
of the Borrower under the Loan Documents and the purposes and intentions of this
Agreement, it being the intention of the Borrower to provide hereby a full and
absolute warranty of further assurance to the Agent, provided that Borrower
shall not be obligated under this Section 5.14 to execute any document that
could effect an amendment or modification of any term or condition of this
Agreement or any other Loan Document. If the Borrower fails to execute any
document requested by the Agent pursuant to Section 3.12 or this Section 5.14,
the Borrower hereby appoints the Lender or any officer of the Agent as the
Borrower's attorney in fact for purposes of executing such documents in the
Borrower's name, place and stead, which power of attorney shall be considered as
coupled with an interest and irrevocable.
6. NEGATIVE COVENANTS.
The Borrower agrees that, so long as this Agreement is in effect, any Loan
remains outstanding and unpaid, or any other amount is owing under any Loan
Document to a Lender, the Borrower will not, directly or indirectly, without
prior adequate notice to Lender with respect to Section 6.1 and without the
prior written consent of the Agent for all other Sections:
6.1 Acquisitions.
Enter into any agreement, contract, binding commitment or other arrangement
providing for, or take any action to solicit the tender of securities or proxies
in order to effect any Acquisition in excess of $20,000,000 without Agent's
prior review and approval if such Acquisition is being financed in whole or in
part by one or more Loans made pursuant to this Agreement. The Agent shall be
deemed to have approved the Acquisition if the Agent shall not have objected to
the Acquisition in writing within five (5) Business Days after receipt of
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projections including balance sheet, income statement and cash floor projections
and such other information regarding the Acquisition and its anticipated effect
on the Borrower as Agent reasonably may request.
6.2 Loans and Investments.
Lend or advance money, credit or property to or invest in (by capital
contribution, loan, purchase or otherwise) any firm, corporation, or other
person, except: (a) extensions of credit to customers in the ordinary course of
business, (b) securities with maturities of 180 days or less from the date of
acquisition issued or fully guaranteed or insured by the United States
government or any agency thereof and backed by the full faith and credit of the
United States, (c) certificates of deposit, eurodollar time deposits, overnight
bank deposits and bankers' acceptances of any domestic commercial bank having
capital and surplus in excess of $500,000,000 having maturities of one year or
less from the date of acquisition, (d) commercial paper of an issuer rated at
least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Services,
Inc., or carrying an equivalent rating by a nationally recognized rating agency
if both of the two named rating agencies cease publishing ratings of
investments, in each case, with maturities of not greater than sixty (60) days
from the date acquired, (e) loans to employees of the Borrower made in the
ordinary course of business, and (f) joint ventures entered into by the Borrower
in the ordinary course of business.
6.3 Create Encumbrances.
Create, assume or permit to exist, any mortgage, pledge, Lien or
encumbrance of or upon, or security interest in, any of its property or assets
now owned or hereafter acquired except (i) currently existing mortgages, Liens,
pledges and security interests in favor of Manufacturers and Traders Trust
Company as a lender of other loans to the Borrower; (ii) other Liens, charges
and encumbrances incidental to the conduct of its business or the ownership of
its property and assets which were not incurred in connection with the borrowing
of money or the obtaining of advances or credit and which do not materially
impair the use thereof in the operation of its business; (iii) Liens for taxes
or other governmental charges which are not delinquent or which are being
contested in good faith and for which a reserve shall have been established in
accordance with generally accepted accounting principles; (iv) any Lien created
under the Loan Documents; and (v) any purchase money security interest securing
indebtedness incurred in the ordinary course of business.
6.4 Guaranties.
Assume, endorse, be or become liable for or guarantee the obligations of
any person or entity except (i) the endorsement of negotiable instruments for
deposit or collection in the ordinary course of business, (ii) performance bonds
and indemnities with bonding companies and similar entities entered into in the
ordinary course of business and (iii) guarantees entered into by Borrower
guarantying the performance of its subsidiaries under contracts with customers
entered into in the ordinary course of business.
6.5 Impairment of Assets.
Permit anything to be done that may materially impair the value of its
properties and assets.
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6.7 Articles of Incorporation and By-Laws.
Amend or otherwise modify the Borrower's articles of incorporation or
by-laws in any way which would adversely affect the interests of the Lenders
under any of the Loan Documents.
6.8 Prepayments of Indebtedness.
Prepay or obligate itself to prepay, in whole or in part, any indebtedness
(other than the obligations under the Loan Documents).
6.9 Minimum Tangible Net Worth.
Permit the Tangible Net Worth of the Borrower, on a consolidated basis, to
be less than $90,000,000 at the time any Loan remains outstanding and unpaid, or
any other amount is owing under any Loan Document to any Lender, to be tested
quarterly.
6.10 Maximum Total Liabilities to Tangible Net Worth Ratio.
Permit a Total Liabilities to Tangible Net Worth Ratio of the Borrower at
not greater than 1.50-to-1 at any time any Loan remains outstanding and unpaid,
or any other amount is owing under any Loan Document to any Lender, to be tested
quarterly.
6.11 Minimum Debt Service Coverage Ratio.
Permit the Debt Service Coverage Ratio of the Borrower to be less than
2.0-to-1 at any time any Loan remains outstanding and unpaid, or any other
amount is owing under any Loan Document to any Lender, to be tested quarterly on
a rolling four quarter basis.
7. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lenders to enter into this Agreement and to make the
Loans, the Borrower makes the following representations and warranties to the
Agent and the Lenders and acknowledges the Agent's and each Lender's justifiable
right to rely upon these representations and warranties:
7.1 Corporate Organization.
The Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is in good standing and
duly qualified to conduct business in the Commonwealth of Pennsylvania and in
each other jurisdiction in which the character of the properties owned by it
therein or in which the transaction of its business makes such qualification
necessary.
7.2 Enforceability of Documents.
This Agreement, the Notes and each of the other Loan Documents to which the
22
Borrower is a party have been duly authorized, executed and delivered and
constitute the valid and legally binding obligation of the Borrower, enforceable
in accordance with their respective terms.
7.3 Legality of Documents.
The execution and delivery of this Agreement, the Notes and all of the
other Loan Documents to which the Borrower is a party and performance thereof
will not violate any provision of law or of the articles of incorporation or
by-laws (.)Of the Borrower or any agreement, indenture or instrument to which
the Borrower is a party or its properties or assets may be bound or affected or
of any other agreement to which the Borrower is a party.
7.4 Pending or Threatened Litigation.
As of the date hereof, there .are no outstanding judgments, actions or
proceedings pending before any court or governmental authority, bureau or
agency, with respect to or threatened against or affecting the Borrower which
would result in a material adverse change in the financial condition of the
Borrower or its subsidiaries, except as disclosed in Schedule 7.4 attached
hereto. Borrower agrees to promptly provide to Agent written notice of any and
all outstanding judgments, actions or proceedings which may at any time
hereafter be pending before any court or governmental authority, bureau or
agency, with respect to or threatened against or affecting the Borrower which
may reasonably be expected to have a material adverse effect on the Borrower,
its financial condition, business, properties or prospects, or the ability of
any Lender to enforce the loan Documents in accordance with their respective
terms.
7.5 No Defaults.
As of the date hereof the Borrower is not in material default under, or in
material violation of, nor will the execution, delivery or performance of this
Agreement, the Notes or any of the other Loan Documents to which the Borrower
is' a party constitute a default under or violation of, any term of any
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment used in the conduct of the Borrower's business or by which Borrower is
bound. The operations of the Borrower comply in all material respects with all
laws, ordinances and regulations applicable to it and no consents,
authorizations or approvals of any Governmental Authority are required by the
Borrower in connection with the Loan Documents.
7.6 No Onerous Agreements.
The Borrower is not a party to nor bound by, nor are any of the properties
or assets owned by it or used in the conduct of its business affected by, any
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment, or subject to any charter or other corporate restriction, which
materially and adversely affects its business, assets or condition, financial or
otherwise.
7.7 Financial Statements.
All balance sheets, profit and loss statements and other financial
information heretofore furnished to the Agent by the Borrower are true, correct
and complete in all material respects, and present fairly the financial
condition of the Borrower and its subsidiaries, if any, as at the date thereof
and for the periods covered thereby, including contingent liabilities of every
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kind, which financial condition has not materially adversely changed since the
date of the most recently dated balance sheet of the Borrower heretofore
furnished to the Agent.
7.8 No Margin Stock Purchases.
No part of the proceeds of .the Loans will be used directly or indirectly
for the purpose of purchasing or carrying, or for payment in full or in part of
indebtedness which was incurred for the purpose of purchasing or carrying, any
margin stock as such term is defined by Regulation U of the Board of Governors
of the Federal Reserve System.
7.9 Power and Authority.
The Borrower has the power to execute and deliver this Agreement, the Notes
and all other Loan Documents to which it is a party and has taken all necessary
action to authorize the execution, delivery and performance of the same.
7.10 Properties.
The Borrower has good and marketable title to all of its assets, subject to
no Liens except Permitted Liens.
7.11 Taxes.
The Borrower has filed all returns and reports that are required to be
filed by it in connection with any federal, state or local tax, duty or charge
levied, assessed or imposed upon it or its property or withheld by it, including
unemployment, social security and similar taxes and all of such taxes have been
either paid or adequate reserve or other provision has been made.
7.12 Environmental Matters.
(a) The Borrower is in compliance with the requirements of all
applicable Environmental Laws.
(b) To the best of the Borrower's knowledge, no Hazardous Substances
have been generated or manufactured on, transported to or from, treated at,
stored at or discharged from any property owned or occupied by the Borrower
in violation of any Environmental Laws; no Hazardous Substances have been
discharged into subsurface waters under any such property in violation of
any Environmental Laws; no Hazardous Substances have been discharged from
any such property on or into property or waters (including subsurface
waters) adjacent to any such property in violation of any Environmental
Laws and any underground or above ground storage tanks situated on any such
property and regulated under any Environmental Laws are in compliance with
all applicable Environmental Laws.
(c) The Borrower (i) has not received notice (written or oral) or
otherwise learned of any claim, demand, suit, action, proceeding, event,
condition, report, directive, Lien, violation, non-compliance or
investigation indicating or concerning any potential or actual liability
(including, without limitation, potential liability for enforcement,
investigatory costs, cleanup costs, government response costs, removal
24
costs, remedial costs, natural resources damages, property damages,
personal injuries or penalties) arising in connection with: (x) any
non-compliance with or violation of the requirements of any applicable
Environmental Laws, or (y) the presence of any Hazardous Substance on any
property owned or occupied by the Borrower or the release or threatened
release of any Hazardous Substance into the environment, (ii) has not
received notice of any threatened or actual liability in connection with
the presence of any Hazardous Substance on any property owned or occupied
by the Borrower or the release or threatened release of any Hazardous
Substance into the environment, (iii) has not received notice of any
federal or state investigation evaluating whether any remedial action is
needed to respond to the presence of any Hazardous Substance on any
property owned or occupied by the Borrower or a release or threatened
release of any Hazardous Substance into the environment for which the
Borrower is or may be liable, or (iv) has not received notice that the
Borrower is or may be liable to any Person under any Environmental Law.
7.13 Employee Benefit Plans.
Each employee benefit plan as to which the Borrower may have any liability
complies in all material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"), including minimum funding
requirements, and (i) no Prohibited Transaction (as defined under ERISA) has
occurred with respect to any such plan, (ii) no Reportable Event (as defined
under Section 4042 of ERISA) has occurred with respect to any such plan which
would cause the Pension Benefit Guaranty Corporation to institute proceedings
under Section 4042 of ERISA, (iii) the 'Borrower has not withdrawn from any such
plan or initiated steps to do so, and (iv) no steps have been taken to terminate
any such plan.
7.14 Solvency.
As of the date hereof and after giving effect to the transactions
contemplated by the Loan Documents, (i) the aggregate value of the Borrower's
assets will exceed its liabilities (including contingent, subordinated,
unmatured and unliquidated liabilities), (ii) the Borrower will have sufficient
cash flow to enable it to pay its debts as they mature, and (iii) the Borrower
will not have unreasonably small capital for the business in which it is
engaged.
7.15 Subsidiaries.
As of the date of this Agreement, the only direct or indirect subsidiaries of
the Borrower are the Guarantors.
7.16 Disclosure.
No representation or warranty by the Borrower set forth in this Agreement,
any other Loan Document or in any other document or instrument delivered by-the
Borrower to the Agent pursuant to this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary to make the statements made not misleading.
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8. DEFAULT.
8.1 Events of Default.
If any one or more of the following Events of Default, each constituting an
"Event of Default," shall occur, the obligations of the Lenders to make Advances
shall cease and the entire unpaid balance of the principal of and interest on
the Loans shall immediately become due and payable in the case of (g) or at the
option of the Agent in all other cases, without notice, presentment, protest or
demand (all of which are expressly waived by the Borrower) to the Borrower being
required except as specified below:
(a) Failure of the Borrower to make any payment of principal or interest
in respect of any Loan within 10 days after it is due; or
(b) The failure of the Borrower to pay the amount by which the aggregate
outstanding principal amount of all Loans exceeds Aggregate Revolving
Credit Commitments within two (2) Business Days after written notice
thereof shall have been given by the Agent to the Borrower; or
(c) Failure by the Borrower or any Guarantor to perform any other term,
condition or covenant of this Agreement, the Notes, any Loan Document
or any other agreement, instrument or document delivered pursuant
hereto or in connection herewith or therewith, which shall remain
unremedied for the period of thirty (30) days after written notice
thereof shall have been given by the Agent to the Borrower, provided,
however, if such failure be such that it cannot be corrected within
thirty(30) days, it shall not be an Event of Default if, in the
reasonable discretion of the Agent, the Borrower is taking appropriate
corrective action to cure the failure and such failure will not impair
the ability of the Borrower to pay or perform the Borrower's
obligations under the Loan Documents; or
(d) Default is made, with respect to any evidence of indebtedness for
borrowed money of the Borrower to any Person, whether now existing or
hereafter created, if as a result of such default the maturity of such
evidence of indebtedness is accelerated, or any such indebtedness, if
owed to the Agent or any Lender, is not paid when due and payable; or
(e) A material breach of or material default by the Borrower under the
terms, covenants or conditions of any agreements, loans or other
transactions of the Borrower with the Agent or any other lender, after
the expiration of any applicable grace or cure period; or
(f) Any representation or warranty made in writing to the Agent and/or the
Lenders in this Agreement, the Notes or other Loan Documents or in
connection with the making of any Loan or any certificate, statement
or report made in compliance with this Agreement, shall have been
false in any material respect when made; or
26
(g) The Borrower or any Guarantor or endorser or surety thereof shall make
an assignment for the benefit of creditors, file a petition under the
Federal Bankruptcy Code or any similar law, state or federal, be
adjudicated insolvent or bankrupt, petition or apply to any tribunal
for the appointment of a receiver, or trustee or a custodian for it or
a substantial part of its assets, or shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution, or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect; or if there shall have been filed
any such petition or application, or any such petition or application,
or any such proceeding shall have been commenced against it, which
remains undismissed for a period of sixty (60) days or more; or the
Borrower or any endorser or surety by any act or omission shall
indicate its consent to approval of or acquiescence in any such
petition, application or proceeding or the appointment of a receiver,
or trustee or a custodian for it or any substantial part of any of its
properties, or shall suffer any such receivership, trusteeship, or
custodianship to continue undischarged for a period of sixty (60) days
or more; or
(h) Any judgment against the Borrower in excess of $500,000.00, or any
attachment, levy or execution against any of its properties in excess
of $500,000.00 shall remain unpaid, unstayed on appeal, undischarged,
unbonded or undismissed for a period of thirty (30) days or more; or
(i) The Borrower shall be unable, or admit its inability, to meet its
obligations as they come due or failure of the Borrower generally to
pay its debts as they become due; or
(j) Occurrence, in Agent's sole and independent discretion, reasonably
exercised, of a material adverse change in the business, properties or
financial condition of the Borrower, or an event or condition which,
in Agent's sole and independent discretion reasonably exercised would
be expected to result in such a material adverse change.
8.2 Remedies.
In the event of the occurrence and during the continuation of any Event of
Default, the Agent may, but shall not be required to (i) proceed to apply to the
payment of the Loans the balance to the credit of any account or accounts
maintained with any Lender by the Borrower and all property of Borrower now or
at any time in any Lender's possession in any capacity whatsoever (set-off) and
(ii) the obligation of any Lender to make loans or otherwise extend credit to
the Borrower shall immediately terminate. The Agent may exercise any other right
or remedy provided pursuant to the Loan Documents and hereby granted or allowed
to it by law, and each and every right and remedy provided pursuant to the Loan
Documents and hereby granted to the Agent or any Lender or allowed to one or the
27
other by law shall be cumulative and not exclusive the one of the other, and may
be exercised by the Agent from time to time and as often as may be necessary.
The Agent shall have at any time, in its discretion, the right to enforce
collection and payment by appropriate action or proceedings, and the net amounts
received therefrom, after deduction of all costs and expenses incurred in
connection therewith, shall be applied on account of the Loan and any other
indebtedness or liabilities of the Borrower aforesaid, all without notice to the
Borrower. The Agent shall not be required to marshall any security or guarantees
or to resort to the same in any particular order.
9. THE AGENT.
9.1 Appointment.
Each Lender hereby irrevocably designates and appoints Manufacturers and
Traders Trust Company, as the Agent of such Lender under the Loan Documents and
each such Lender hereby irrevocably authorizes Manufacturers and Traders Trust
Company, as the Agent for such Lender, to take such action on its behalf under
the provisions of the Loan Documents and to exercise such powers and perform in
such duties as are expressly delegated to the Agent by the teens of the Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in any Loan Document,
the Agent shall not have any duties or responsibilities, except those expressly
set forth therein, or any fiduciary relationship with any Lender, and no implied
(or express) covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Loan Documents or otherwise exist against the
Agent, whether arising under principles of agency or otherwise under applicable
law. The term "Agent" is used merely as a matter of market custom, and is
intended to create or reflect only an administrative relationship among
independent contracting parties.
9.2 Administration.
In the course of its administration of the Loans and the Loan Documents,
the Agent may, without notice to or consent of the Lenders, in its sole
discretion except as otherwise provided below, exercise or refrain from
exercising any powers or rights vested in the Agent under the Loan Documents or
any document relating thereto or which the Agent may be entitled to assert at
law or in equity or otherwise enforce or refrain from enforcing the obligations
of the Borrower. Notwithstanding the foregoing, the Agent will not, without the
consent of all of the Lenders: (i) consent to the reduction of (A) any amount
due and owing by the Borrower pursuant to the Loan Documents, (B) any rate of
interest payable under the Loan Documents, or (C) the rate at which fees accrue
under the Loan Documents; (ii) increase the amounts of or reinstate any Loan
other than such reinstatement as is provided in the Loan Documents; (iii) extend
the maturity date of any Loan; (iv) postpone the due date for any payment to be
made by Borrower pursuant to the Loan Documents; (vi) consent to or waive any
failure by the Borrower to pay money to the Lenders if such failure would
otherwise constitute an Event of Default under the Loan Documents; (vii) release
any Guarantor from Liability under its respective Guaranty Agreement; (viii)
release any Guarantor from Liability under its respective Guaranty; or (ix)
amend this Section 9.2 or any other provision of this Agreement providing for
consent or other action by the Required Lenders; Notwithstanding any other
provision to the contrary, Agent agrees to promptly provide to each Lender a
copy of each report, certificate or other notice or request received from or on
behalf of Borrower or any Guarantor pursuant to Sections 5.1, 5.2 and/or 5.3 of
this Agreement or otherwise, as well as a copy of each notice the Agent provides
to the Borrower or any Guarantor pursuant to this Agreement or any other Loan
Document.
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9.3 Delegation of Duties.
The Agent may execute any of its duties under the Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to rely upon the
advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any such agent(s)
or attorney(s)-in-fact in the absence of the Agent's own gross negligence or
willful misconduct.
9.4 Exculpatory Provisions.
Neither the Agent nor any of its officers, directors, employees, agents,
attorneys-in- fact or affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
the Loan Documents (except for its own gross negligence or willful misconduct),
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by the Borrower or any Guarantor
or any officer thereof contained in the Loan Documents or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Agent under or in connection with, the Loan Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any of
the Loan Documents or for any failure of the Borrower or any other Person to
perform its obligations thereunder. The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, the Loan Documents, or to
inspect the properties, books or records of any Loan Party. The Agent shall not
be under any liability or responsibility whatsoever, as Agent, to the Borrower
or any other Person as a consequence of any failure or delay in performance, or
any breach, by any Lender of any of its obligations under any of the Loan
Documents.
9.5 Reliance by Agent.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
opinion, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Borrower), independent accountants and other experts
selected by the Agent. The Agent may treat each Lender, or the Person designated
in the last notice filed with it under this Section, as the holder of all of the
interests of such Lender in its Loans and in its Notes until written notice of
transfer, signed by such Lender (or the Person designated in the last notice
filed with the Agent) and by the Person designated in such written notice of
transfer, in form and substance satisfactory to the Agent, shall have been filed
with the Agent. The Agent shall not be under any duty to examine or pass upon
the validity, effectiveness or genuineness of the Loan Documents or any
instrument, document or communication furnished pursuant thereto or in
connection therewith, and the Agent shall be entitled to assume that the same
are valid, effective and genuine, have been signed or sent by the proper parties
and are what they purport to be. The Agent shall be fully justified in failing
or refusing to take any action under the Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under the Loan Documents .in accordance with a request or direction of
29
the Required Lenders, and such request or direction and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes. Where this Agreement expressly permits or prohibits
an action unless the Required Lenders otherwise determine, the Agent shall, and
in-all other instances, the Agent may, but shall not be required to, initiate
any solicitation for the consent or a vote of the Lenders.
9.6 Notice of Default.
The Agent shall not be deemed to have knowledge or notice of the occurrence
of any Event of Default, except with respect to default in the payment of
principal, interest and fees required to be paid to the Agent for the account of
the Lenders, unless the Agent has received written notice thereof from a Lender
or the Borrower referring to this Agreement, describing such Event of Default
and stating that such notice is a "notice of default." In the event that the
Agent receives such a notice, the Agent shall promptly give notice thereof to
the Lenders. The Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders,
provided, however, that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem to be in the best interests of the Lenders.
9.7 Non-Reliance on Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates ("Agent-Related Persons") has made any representations or warranties
to it and that no act by the Agent or any Agent-Related Person hereinafter,
including any review of the affairs of the Borrower or any other Person, shall
be deemed to constitute any representation or warranty by the Agent to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own evaluation of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and the Guarantors and made its
own decision to enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, evaluations and decisions in
taking or not taking action under any Loan Document, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrower and the Guarantors. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Borrower and the
Guarantors which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
30
9.8 Indemnification.
Each Lender agrees to indemnify and reimburse the Agent in its capacity as
such (to the extent not promptly reimbursed by the Borrower and without limiting
the obligation of the Borrower or any Guarantor) upon demand, pro rata according
to its Revolving Credit Commitment, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever (including, without
limitation, any amounts paid to the Lenders (through the Agent) by the Borrower
pursuant to the terms of the Loan Documents, that are subsequently rescinded or
avoided, or must otherwise be restored or returned) which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal ,advice in respect of rights or
responsibilities under, the Loan Documents or any other documents contemplated
by or referred to therein or the transactions contemplated thereby or any action
taken or omitted to be taken by the Agent under or in connection with any of the
foregoing to the extent the Agent is not reimbursed for such expenses by or on
behalf of the Borrower, provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting solely from the gross negligence or willful misconduct of the
Agent. The agreements in this Section shall survive the payment of all amounts
payable under the Loan Documents, the termination of the Aggregate Revolving
Credit Commitments and the resignation of the Agent.
9.9 Agent in Its Individual Capacity.
Manufacturers and Traders Trust Company and its respective affiliates may
make loans to, accept deposits from, issue letters of credit for the account of,
and generally engage in any kind of business with, the Borrower, and/or any
Guarantor as though Manufacturers and Traders Trust Company was not Agent
hereunder, and without notice to or consent of any Lender. The Lenders
acknowledge that pursuant to such activities, Manufacturers and Traders Trust
Company or its affiliates may receive information regarding the Borrower or a
Guarantor (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Guarantor) and acknowledge that the
Agent shall be under no obligation to provide such information to them. With
respect to Manufacturers and Traders Trust Company's Revolving Credit Commitment
and the Notes issued to Manufacturers and Traders Trust Company hereunder,
Manufacturers and Traders Trust Company shall have the same rights and powers
under the Loan Documents as any Lender and may exercise the same as though it
was not the Agent, and the terms. "Lender" and "Lenders" shall in each case
include Manufacturers and Traders Trust Company in its individual capacity.
9.10 Successor Agent.
If at any time the Agent deems it advisable, in its sole discretion, it may
submit to each of the Lenders a written notice, of its resignation as Agent
under this Agreement, such resignation to be effective upon the earlier of (i)
the written acceptance of the duties of the Agent under the Loan Documents by a
successor Agent and (ii) on the 30th day after the date of such notice. Upon any
such resignation, the Required Lenders shall have the right to appoint from
among the Lenders a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders and accepted such appointment in writing
31
within 30 days after the retiring Agent's giving of notice of resignation, then
the retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which successor Agent shall be a commercial bank organized under the laws of the
United States of America or any State thereof. 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's rights, powers,
privileges and duties as Agent under the Loan Documents shall be terminated. The
Borrower and the Lenders shall execute such documents as shall be necessary to
effect such appointment. After any retiring Agent's resignation hereunder as
Agent, the provisions of the Loan Documents shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents. If at any time hereunder there shall not be a duly appointed and
acting Agent, the Borrower agrees to make each payment due under the Loan
Documents directly to the Lenders entitled thereto during such time.
10. GENERAL.
10.1 Survival of Warranties.
All agreements, representation and warranties made herein shall survive the
delivery of this Agreement.
10.2 Modification of Documents.
No modification or waiver of any provision of this Agreement, the Notes,
the other Loan Documents or other instruments or consent to any departure by the
Borrower from any of the terms or conditions thereof, shall in any event be
effective unless it shall be in writing and signed by the Agent (and, but only
to the extent specifically required by Section 9.2 each Lender) and the
Borrower, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
the Borrower in any case shall, of itself, entitle the Borrower to any other or
further notice or demand in similar or other circumstances.
10.3 Rights Cumulative.
Each and every right granted to the Agent or a Lender hereunder or under
any other document delivered hereunder or in connection herewith, or allowed one
or the other by law or equity, shall be cumulative and may be exercised from
time to time. No failure on the part of the Agent to exercise, and no delay in
exercising, any right shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or future exercise thereof or
the exercise of any other right.
10.4 Construction and Severability.
This Agreement, the Notes and the other Loan Documents and the rights and
obligations of the parties shall be construed and interpreted in accordance with
the laws of the Commonwealth of Pennsylvania. The provisions of this Agreement
are severable and if any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
32
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision in this Agreement in
any jurisdiction.
10.5 Conflict of Documents.
The provisions of this Agreement are in addition to, and not in limitation
of, the provisions of the Notes and the other Loan Documents. In. the event of
conflict between the provisions of this Agreement and the provisions of the
Notes or any Loan Document, the provisions of this Agreement shall prevail.
10.6 Notices.
Notices by one party to the other shall be in writing and shall be deemed
to have been validly given at the time when posted in the U.S. Mail, postage
prepaid, or hand delivered to the following address or to any alternate address
designated in writing by the recipient:
The Borrower: Herley Industries, Inc. 3061 Industry Drive
Lancaster, Pennsylvania 17603 Attn: Myron Levy, CEO
The Agent: Manufacturers and Traders Trust Company
1703 Oregon Pike
Lancaster, Pennsylvania 17601-4201 Attn: Jane E. Kline,
Vice President
The Lenders: Manufacturers and Traders Trust Company
1703 Oregon Pike
Lancaster, Pennsylvania 17601-4201 Attn: Jane E. Kline,
Vice President
The Lenders: Bank of Lancaster County, N.A.
101 North Pointe Boulevard
Lancaster, PA 17601
Attn: Susan S. Carson
10.7 Expenses of the Agent.
The Borrower shall pay all fees and expenses reasonably incurred by the
Agent in connection with the preparation, execution, delivery and performance of
this Agreement, the Notes, the other Loan Documents and all other instruments
executed in connection herewith or in connection with the collection of the
indebtedness hereunder, or any part thereof. These fees and expenses shall
include, without limitation, fees and disbursements of Agent's Counsel.
10.8 Binding Effect.
This Agreement and any other documents and instruments delivered or
required to be delivered pursuant hereto shall inure to the benefit of and shall
33
be binding upon the parties hereto and their heirs, executors, administrators,
personal representatives, successors and permitted assigns of the parties
hereto. The Borrower may not assign its rights or obligations hereunder without
the prior written consent of Agent and all of the Lenders.
10.9 Participations and Assignments.
(a) Each Lender with the prior written consent of the Agent shall have the
right to assign all or any part of such Lender's Loans, Revolving Credit
Commitment and Notes, on a pro rata basis, to any other Lender, provided,
however, notwithstanding the foregoing, that any such assignment by Bank of
Lancaster County and each Bank of Lancaster County Affiliate (as hereinafter
defined) shall be permitted without such consent if made to a Bank of Lancaster
County Affiliate. For the purposes of this Section 10.9, the term "Bank of
Lancaster County Affiliate" shall mean any commercial bank organized under the
laws of the United States of America or any State thereof that is, directly or
indirectly., wholly-owned by the entity that is Bank of Lancaster County's
"ultimate parent entity" as such term is defined in 16 CFR ss.801.1. For each
assignment, the parties to such assignment shall execute and deliver to the
Agent for its acceptance and recording an Assignment and Acceptance Agreement.
Upon such execution, delivery, acceptance and recording by the Agent, from and
after the effective date specified in such Assignment and Acceptance Agreement,
the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance Agreement, the assignor Lender thereunder shall
be released from its obligations under the Loan Documents. The Borrower agrees
upon written request of the Agent and at the Borrower's expense to execute and
deliver (1) to such assignee, Notes, dated the effective date of such Assignment
and Acceptance Agreement, in an aggregate principal amount equal to the Loans
assigned to, and Revolving Credit Commitment assumed by, such assignee and (2)
to such assignor Lender, Notes, dated the effective date of such Assignment and
Acceptance Agreement, in an aggregate principal amount equal to the balance of
such assignor Lender's Loans and Revolving Credit Commitment, if any, and each
assignor' Lender shall cancel and return to the Borrower its existing Notes.
Upon any such assignment, the applicable Revolving Credit Commitment and
Revolving Credit Commitment Percentages set forth in Exhibit A shall be adjusted
accordingly by the Agent and a new Exhibit A shall be distributed by the Agent
to the Borrower and each Lender.
(b) Each Lender may grant participations in all or any part of its Loans,
its Notes and its Revolving Credit Commitment to one or more lenders, provided
that (i) such Lender's obligations under the Loan Documents shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
to the Loan Documents for the performance of such obligations, (iii) the
Borrower, the Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under the Loan Documents, (iv) no sub-participations shall be
permitted and (v) the voting. rights of any holder of any participation shall be
limited to decisions that only do any of the following: (A) subject the
participant to any additional obligation (B) reduce the principal of, or
interest on the Notes or any fees or other amounts payable hereunder to the
extent such participant has an interest therein (C) postpone any date fixed for
the payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder to the extent such participant has an interest
therein, provided, however, notwithstanding the foregoing, that any such
participation granted by Bank of Lancaster County and each Bank of Lancaster
County Affiliate shall require the prior written consent of the Agent if made to
any lender other than a Bank of Lancaster County Affiliate.
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10.10 Indemnification by the Borrower.
In addition to all amounts payable hereunder, the Borrower shall protect,
indemnify, and save harmless the Agent, each Lender and their respective
officers, employees and agents (collectively, the "Indemnitees") against and
from any and all liabilities, suits, actions, claims, demands, losses, expenses
and costs of every kind and nature incurred by, or asserted or imposed against
any Indemnitee by reason of (a) any accident, injury (including death) or damage
to any person or property, however caused (other than the gross negligence or
willful misconduct of such Indemnitee), resulting from, connected with or
growing out of any act of commission or omission of the Borrower, or any
officers, employees, agents, assignees, contractors or subcontractors of the
Borrower, or (b) any untrue statement by the Borrower or any of its officers,
employees or agents of a material fact or any omission by the Borrower or any of
its officers, employees or agents to state a material fact necessary in order to
make any statements made, in light of the circumstances under which they were
made, not misleading and made in connection with the Loans and the transactions
contemplated by this Agreement and, in any such case, regardless of whether such
liabilities, suits, actions, claims, demands, damages, losses, expenses and
costs be against, or be suffered or sustained by, any Indemnitee, or be against,
or be suffered or sustained by, legal entities, officers, agents, or other
persons to whom an Indemnitee may become liable therefor. The Borrower may, and
if so requested by the Indemnitee shall, undertake to defend, at its sole cost
and expense, any and all suits, actions and proceedings brought against such
Indemnitee in connection with any of the matters indemnified against in this
Section. The Agent and each Lender agree to give the Borrower timely notice of
and shall forward to the Borrower every demand, notice, summons or other process
received with respect to any claim or legal proceeding within the purview
hereof, but the failure to give such notice shall not affect an Indemnitee's
rights to indemnification hereunder unless the failure to give notice shall have
deprived the Borrower of a reasonable opportunity to contest any such matter. If
the indemnification provided for herein is held by a court to be unavailable or
is insufficient to hold harmless the Indemnitees in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), then the
Borrower shall contribute to the amount paid or payable by the Indemnitees as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the Borrower on the one hand and the Indemnitees on the other hand, as well as
any other relevant equitable considerations. The provisions of this Section
shall survive the expiration of the Revolving Credit Commitment Period, the
repayment, satisfaction or discharge of the Loans, and the Resignation of the
Agent or replacement of any Lender.
10.11 Integration.
All Exhibits to a Loan Document shall be deemed to be a part thereof. The
Loan Documents embody the entire agreement and understanding among the Borrower,
the Agent, the Lenders and the other parties thereto with respect to the subject
matter thereof and supersede all prior agreements and understandings among the
Borrower, the Agent, the Lenders and the other parties with respect to the
subject matter thereof. This Agreement amends and restates that certain Loan
Agreement dated June 19, 2002, by and among Herley Industries, Inc., Allfirst
Bank (a predecessor to Manufacturers and Traders Trust Company), Fulton Bank and
Manufacturers and Traders Trust Company, as Agent, as the same has been amended
and supplemented from time to time.
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10.12 Waiver of Trial by Jury.
THE AGENT, EACH LENDER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE BORROWER HEREBY
CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE AGENT OR ANY LENDER, OR COUNSEL
THERETO, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR ANY LENDER
WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT
TO JURY TRIAL PROVISION. THE BORROWER ACKNOWLEDGES THAT THE AGENT AND THE
LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, INTER ALIA, THE
PROVISIONS OF THIS SECTION.
10.13 Jurisdiction and Venue.
The Borrower hereby irrevocably consents to the exclusive jurisdiction of
any state or federal court for the county or judicial district where the Agent's
office indicated in Section 10.6 of this Agreement is located, and consents that
all service of process be sent by nationally recognized overnight courier
service directed to the Borrower at the Borrower's address set forth herein and
service so made will be deemed to be completed on the business day after deposit
with such courier, provided that nothing contained in this Agreement will
prevent the Agent or any Lender from bringing any action, enforcing any award or
judgment or exercising any rights against the Borrower individually, against any
security or against any property of the Borrower within any other country, state
or other foreign or domestic jurisdiction. The Agent and the Borrower agree that
the venue provided above is the most convenient forum for both the Agent and the
Borrower. The Borrower waives any objection to venue and any objection based on
a more convenient forum in any action instituted under this Agreement.
10.14 Indictment.
The advance formula set forth in Section 2.1 that applies in the event that
HMS Investments, Inc. shall at any time(s) have total cash and cash equivalents
below $5,000,000 and the collateral requirement contained in Section 3.12 will
cease and terminate if and when the Indictment is actually resolved to Agent's
reasonable satisfaction.
The Borrower acknowledges that it has read and understands all the
provisions of this Agreement, including Waiver, of Trial by Jury, and has been
advised by counsel as necessary or appropriate.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
caused this Agreement to be duly executed on its respective behalf on the date
first set forth above.
WITNESS: HERLEY INDUSTRIES, INC.
/S/ /S/
- ----------------------------- By: -----------------------------------
PRESIDENT
Title: --------------------------------
ATTEST: BANK OF LANCASTER COUNTY, N.A.
/S/ /S/
- ---------------------------- By: -----------------------------------
VICE PRESIDENT SENIOR VICE PRESIDCENT
Title: --------------------- Title: --------------------------------
WITNESS: MANUFACTURERS AND TRADERS
TRUST COMPANY
/S/ /S/
- ---------------------------- By: -----------------------------------
Title: --------------------------------
37
REVOLVING CREDIT COMMITMENTS
AND REVOLVING CREDIT COMMITMENT PERCENTAGES
Revolving Credit Revolving Credit
Lender Commitment Commitment Percentage
- --------------------------------------------------------------------------------
Manufacturers and Traders $30,000,000.00 75 %
Trust Company
Bank of Lancaster County, $10,000,000.00 25 %
N.A.
Aggregate Revolving Credit $40,000,000.00 100 %
Commitment
38