EXHIBIT 10.5
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REVOLVING LOAN AGREEMENT
BETWEEN
MMAC COMMUNICATIONS CORP.
AND
KELTIC FINANCIAL PARTNERS, LP
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Dated: As of October 11, 2002
TABLE OF CONTENTS
LOAN AGREEMENT..................................................................................................1
AGREEMENT.......................................................................................................1
1. DEFINITIONS.....................................................................................1
1.1. "Account Debtor".......................................................................1
1.2. "Advance"..............................................................................1
1.3. "Affiliate"............................................................................1
1.4. "Agreement"............................................................................1
1.5. "Authenticate".........................................................................2
1.6. "Banking Day"..........................................................................2
1.7. "Banking Accounts".....................................................................2
1.8. "Borrower".............................................................................2
1.9. "Borrowing Capacity"...................................................................2
1.10. "Borrowing Base Certificate"...........................................................2
1.11. "Capital Expenditure"..................................................................2
1.12. "Code".................................................................................2
1.13. "Collateral"...........................................................................2
1.14. "Contract Year"........................................................................2
1.15. "Default"..............................................................................2
1.17. Reserved...............................................................................2
1.18. "Eligible Receivables".................................................................3
1.19. "Environment"..........................................................................4
1.20. "Environmental Laws"...................................................................4
1.21. "ERISA"................................................................................4
1.22. "Events of Default"....................................................................4
1.23. "Fiscal Year"..........................................................................5
1.24. "Fixed Charge Coverage Ratio"..........................................................5
1.25. "GAAP".................................................................................5
1.26. "General Security Agreement"...........................................................5
1.27. "Governmental Rules"...................................................................5
1.28. "Indebtedness".........................................................................5
1.29. "Inventory"............................................................................5
1.30. Reserved...............................................................................5
1.31. "Loan Documents".......................................................................5
1.32. "Loan Interest Rate"...................................................................5
1.33. "Loans"................................................................................6
1.34. "Lockbox"..............................................................................6
1.35. "Maintenance Contract Reserve Amount"..................................................6
1.36. "Material Adverse Effect"..............................................................6
1.37. "Maximum Facility".....................................................................6
1.38. "Obligations"..........................................................................6
1.39. "Notice of Borrowing"..................................................................6
1.40. "Person"...............................................................................6
1.41. "Plan".................................................................................6
1.42. "Property..............................................................................7
1.43. "Receivables"..........................................................................7
1.44. "Reconciliation Report"................................................................7
1.45. "Record"...............................................................................7
1.46. "Reportable Event".....................................................................7
1.47. "Revolving Loan".......................................................................7
1.48. "Revolving Note".......................................................................7
1.49. "Solvent"..............................................................................7
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1.50. Reserved...............................................................................7
1.51. "Termination Date".....................................................................7
1.52. "Termination Notice"...................................................................7
1.53. "UCC"..................................................................................7
2. THE REVOLVING LOAN..............................................................................8
2.1. Advances...............................................................................8
2.2. Overline...............................................................................8
2.3. Reserves...............................................................................8
2.4. Manner of Borrowing....................................................................8
2.5. Evidence of Borrower's Obligations.....................................................9
2.6. Payments...............................................................................9
2.7. Collections/Balance/Statements/etc.....................................................9
2.8. Payment on Termination Date...........................................................10
3. LENDER'S COMPENSATION..........................................................................10
3.1. Interest on Advances..................................................................10
3.2. Commitment and Closing Fee............................................................10
3.3. Facility Fee..........................................................................10
3.4. Collateral Management Fee.............................................................10
3.5. Field Examination Fees................................................................10
3.6. Liquidated Damages....................................................................11
3.7. Computation of Interest and Fees......................................................11
3.8. Payment of Interest and Fees..........................................................11
4. APPLICATION OF PROCEEDS........................................................................11
5. INDUCING REPRESENTATIONS.......................................................................11
5.1. Organization and Qualifications.......................................................11
5.2. Name and Address......................................................................11
5.3. Structure.............................................................................11
5.4. Legally Enforceable Agreement.........................................................12
5.5. Solvent Financial Condition...........................................................12
5.6. Financial Statements..................................................................12
5.7. Joint Ventures........................................................................12
5.8. Real Estate...........................................................................12
5.9. Patents, Trademarks, Copyrights and Licenses..........................................12
5.10. Existing Business Relationship........................................................12
5.11. Investment Company Act: Federal Reserve Board Regulations............................12
5.12. Tax Returns...........................................................................13
5.13. Litigation............................................................................13
5.14. Receivables Locations.................................................................13
5.15. RESERVED..............................................................................13
5.16. RESERVED..............................................................................13
5.17. Title/ Liens..........................................................................13
5.18. Existing Indebtedness.................................................................14
5.19. ERISA Matters.........................................................................14
5.20. O.S.H.A. .............................................................................14
5.21. Environmental Matters.................................................................14
5.22. Labor Disputes........................................................................15
5.23. Intellectual Property.................................................................15
5.24. Location of Banking and Securities Accounts...........................................15
5.25. Compliance With Laws..................................................................15
5.26. No Other Violations...................................................................15
5.27. Survival of Representations and Warranties............................................15
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6. FINANCIAL STATEMENTS AND INFORMATION; CERTAIN NOTICES TO LENDER................................15
6.1. Borrowing Base Certificate............................................................15
6.2. Monthly Reports.......................................................................16
6.3. Annual Financial Statements...........................................................16
6.4. Monthly Financial Statements..........................................................16
6.5. Projections...........................................................................16
6.6. Customer Lists........................................................................16
6.7. Insurance.............................................................................16
6.8. Notice of Event of Default and Adverse Business Developments..........................16
6.9. Other Information.....................................................................17
7. ACCOUNTING.....................................................................................17
8. AFFIRMATIVE COVENANTS..........................................................................17
8.1. Business and Existence................................................................17
8.2. Trade Names...........................................................................17
8.3. Transactions with Affiliates..........................................................17
8.4. Taxes.................................................................................17
8.5. Compliance with Laws..................................................................18
8.6. Maintain Properties: Insurance........................................................18
8.7. Business Records......................................................................18
8.8. Litigation............................................................................18
8.9. Damage or Destruction of Collateral...................................................18
8.10. Name Change...........................................................................18
8.11. Access to Books and Records...........................................................18
8.12. Solvent...............................................................................19
8.13. Compliance With Environmental Laws....................................................19
8.14. Compliance with ERISA and other Employment Laws.......................................19
8.15. Proceeds of Collateral................................................................19
8.16. Delivery of Documents.................................................................19
8.17. Equity Investment.....................................................................19
8.18. Authorization to Do Business..........................................................19
9. NEGATIVE COVENANTS.............................................................................19
9.1. Indebtedness..........................................................................19
9.2. Mergers; Consolidations; Acquisitions.................................................20
9.3. Sale or Disposition...................................................................20
9.4. Defaults..............................................................................20
9.5. Limitations on Liens..................................................................20
9.6. Dividends and Distributions...........................................................20
9.7. Borrower's Name and Offices...........................................................21
9.8. Fiscal Year...........................................................................21
9.9. Change of Control/Management..........................................................21
9.10. Guaranties; Contingent Liabilities....................................................21
9.11. Removal of Collateral.................................................................21
9.12. Transfer of Notes or Accounts.........................................................21
9.13. Settlements...........................................................................21
9.14. Change of Business....................................................................22
9.15. Change of Accounting Practices........................................................22
9.16. Inconsistent Agreement................................................................22
9.17. Loan or Advances......................................................................22
9.18. Investments...........................................................................22
9.19. Reserved..............................................................................22
9.20. Fixed Charge Coverage Ratio...........................................................22
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9.21. Reserved..............................................................................22
9.22. EBITDA................................................................................23
10. CONDITIONS TO ADVANCES.........................................................................23
10.1. Lender's Right to Take Certain Actions................................................23
11. TERM...........................................................................................23
12. EVENTS OF DEFAULT..............................................................................23
12.1. Defaults..............................................................................23
12.2. Obligations Immediately Due...........................................................25
12.3. Continuation of Security Interests....................................................25
13. REMEDIES OF LENDER.............................................................................25
14. GENERAL PROVISIONS.............................................................................25
14.1. Rights Cumulative.....................................................................25
14.2. Successors and Assigns................................................................25
14.3. Notice................................................................................25
14.4. Strict Performance....................................................................27
14.5. Waiver................................................................................27
14.6. Conflict of Laws......................................................................27
14.7. Expenses..............................................................................27
14.8. Reimbursements Charged to Revolving Loan..............................................28
14.9. Waiver of Right to Jury Trial.........................................................28
15. INDEMNIFICATION BY BORROWER/WAIVER OF CLAIMS...................................................28
15.1. Indemnification.......................................................................28
15.2. Savings Clause for Indemnification....................................................28
15.3. Waiver................................................................................29
16. MISCELLANEOUS..................................................................................29
16.1. Entire Agreement; Amendments; Lender's Consent........................................29
16.2. Cross Default; Cross Collateral.......................................................29
16.3. Execution in Counterparts.............................................................29
16.4. Severability of Provisions............................................................29
16.5. Table of Contents; Headings...........................................................29
16.6. Exhibits and Schedules................................................................29
17. CONSENT TO JURISDICTION........................................................................30
EXHIBIT A......................................................................................................32
EXHIBIT B......................................................................................................33
EXHIBIT C......................................................................................................34
EXHIBIT D......................................................................................................35
Schedule 5.2...................................................................................................36
Schedule 5.3...................................................................................................37
Schedule 5.8...................................................................................................38
Schedule 5.9...................................................................................................39
Schedule 5.13..................................................................................................40
Schedule 5.14..................................................................................................41
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Schedule 5.17..................................................................................................42
Schedule 5.18..................................................................................................43
Schedule 5.24..................................................................................................44
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LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of this 11th day of October,
2002, between MMAC COMMUNICATION CORP. ("Borrower"), a corporation organized and
existing pursuant to the laws of the State of Delaware having an address at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and KELTIC FINANCIAL PARTNERS, LP
("Lender"), a Delaware limited partnership, with a place of business at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, Borrower has requested that Lender extend a One
Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00) revolving
credit facility, the proceeds of which will be used to repay the existing
indebtedness of Delta Computec Inc., a New York corporation, and provide
Borrower with working capital support.
WHEREAS, Lender is willing to extend the credit facility on
the terms and subject to the conditions set forth in this Agreement.
AGREEMENT
1. DEFINITIONS As used herein, the following terms shall have the
following meanings (terms defined in the singular to have the same meaning when
used in the plural and vice versa):
1.1. "ACCOUNT DEBTOR" shall mean any Person who is or may
become obligated under or on account of any Receivable.
1.2. "ADVANCE" shall mean any loan or advance made by Lender
in connection with the Revolving Loan.
1.3. "AFFILIATE" shall mean any Person: (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, Borrower; (ii) which beneficially owns or holds
10% or more of any class of the voting stock or other equity interest in
Borrower; or (iii) 10% or more of the voting stock or other equity interest of
which is beneficially owned or held by Borrower. For purposes hereof, "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting stock or other equity interests, by contract or otherwise.
1.4. "AGREEMENT" shall include all amendments, modifications
and supplements and shall refer to this Agreement as the same may be in effect
at the time such reference becomes operative.
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1.5. "AUTHENTICATE" shall mean to sign or to execute or
otherwise adopt a symbol, or encrypt or similarly process a record in whole or
in part, with the present interest of the authenticating person to identify the
person and adopt or accept a Record.
1.6. "BANKING DAY" shall mean any day on which commercial
banks are not authorized or required to close in New York State.
1.7. "BANKING ACCOUNTS" as defined in Section 5.24 hereof.
1.8. "BORROWER" shall mean MMAC Communications Corp., and its
successors and assigns.
1.9. "BORROWING CAPACITY" as defined in Section 2.1.
1.10. "BORROWING BASE CERTIFICATE" shall mean a borrowing base
certificate substantially in the form of Exhibit C attached hereto.
1.11. "CAPITAL EXPENDITURE" shall mean, as determined in
accordance with GAAP, the dollar amount of gross expenditures (including
obligations under capital leases) made or incurred for fixed assets, real
property, plant and equipment, and all renewals, improvements and replacements
thereto (but not repairs thereof) during any period.
1.12. "CODE" shall mean the Internal Revenue Code of the
United States.
1.13. "COLLATERAL" shall mean all of the property and
interests in property described in the General Security Agreement, and all other
personal Property of Borrower and interests of Borrower in personal Property
that now or hereafter secures the payment and performance of any of the
Obligations pursuant to any of the Loan Documents or otherwise, including,
without limitation, any proceeds and insurance proceeds of the foregoing, but
shall not include Borrower's rights and interest under that certain agreement
between ▇▇▇▇▇▇▇▇.▇▇▇, Inc. and Borrower, dated as of the date of this Agreement,
providing for the payment obligation in the amount of $350,000.00 due from
▇▇▇▇▇▇▇▇.▇▇▇, Inc. in favor of Borrower, as more particularly described in said
agreement, as same may be extended or renewed (the "ViewCast Obligation").
1.14. "CONTRACT YEAR" shall mean, during the term of the
Loans, each consecutive twelve (12) month period commencing on the date hereof
and, in each case, ending on the date which is one day prior to the applicable
anniversary date hereof.
1.15. "DEFAULT" shall mean an event or condition the
occurrence of which would, with the lapse of time or the giving of notice, or
both, become an Event of Default, whether or not Lender has declared an Event of
Default to have occurred.
1.16. "EBITDA" shall mean Borrower's total income before
interest expense, taxes, depreciation and amortization, all calculated in
accordance with GAAP.
1.17. RESERVED
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1.18. "ELIGIBLE RECEIVABLES" shall mean and include, only
Receivables of Borrower, the records and accounts of which are located in
compliance with Section 5.14 hereof, that are acceptable to Lender in Lender's
sole and absolute discretion, arise out of sales in the ordinary course of
business made by Borrower to a Person which is not an Affiliate of Borrower nor
an employee of Borrower nor controlled by an Affiliate of Borrower, which are
not in dispute and which do not then violate any warranty with respect to
Eligible Receivables set forth in the General Security Agreement. No Receivable
shall be an Eligible Receivable if it is more than ninety (90) days past
original invoice date. Lender may treat any Receivable as ineligible if:
(a) any warranty contained in this Agreement or in the General
Security Agreement with respect to Eligible Receivables or any warranty with
respect to such Receivable contained in this Agreement or in the General
Security Agreement has been breached; or
(b) the Account Debtor or any Affiliate of the Account Debtor
has disputed liability, or made any claim with respect to such Receivable or
with respect to any other Receivable due from such customer or Account Debtor to
Borrower, with respect to any Receivable which Lender, in its sole and absolute
discretion, deems material; or
(c) the Account Debtor has filed a case for bankruptcy or
reorganization under the Bankruptcy Code, or if any case under the Bankruptcy
Code has been filed against the Account Debtor, or if the Account Debtor has
assigned for the benefit of creditors, or if the Account Debtor has failed,
suspended business operations, become insolvent, or has or suffered a receiver
or a trustee to be appointed for all or a significant portion of its assets or
affairs; or
(d) if the Account Debtor is also a supplier to or creditor of
Borrower or if the Account Debtor has or asserts any right of any offset with
respect to any Receivable or asserts any claim or counterclaim against Borrower
with respect to any Receivable or otherwise; in each case to the extent of such
excess; or
(e) the sale is to an Account Debtor outside the United States
or Canada, unless the sale is on letter of credit, acceptance or other terms
acceptable to Lender; or
(f) fifty percent (50%) or more of the Receivables of any
Account Debtor and its Affiliates is ineligible, then all the Receivables of
such Account Debtor and its Affiliates may be deemed ineligible by Lender
hereunder; or
(g) the total unpaid Receivables of the Account Debtor exceed
twenty percent (20%) of the net amount of all Receivables, to the extent of such
excess, provided, however, the aggregate amount of all Receivables from St.
Barnabas Healthcare System, Inc., St. Barnabas Corporate Data Center and St.
Barnabas System Business Office shall not exceed forty percent (40%) of
Borrower's total Eligible Receivables at the time outstanding, and the aggregate
amount of all Receivables from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall not exceed forty percent
(40%) of Borrower's total Eligible Receivables at the time outstanding; or
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(h) it relates to a sale of goods or services to the United
States of America, or any agency or department thereof, unless Borrower assigns
its right to payment of such Receivable to Lender, in form and substance
satisfactory to Lender, so as to comply with the Assignment of Claims Act of
1940, as amended; or
(i) it relates to intercompany sales, employee sales or any
Receivable due from an Affiliate of Borrower; or
(j) it consists of a sale to an Account Debtor on consignment,
▇▇▇▇ and hold, guaranteed sale, sale or return, sale on approval, payment plan,
scheduled installment plan, extended payment terms or any other repurchase or
return basis; or
(k) the Account Debtor is located in a state in which Borrower
is deemed to be doing business under the laws of such state and which denies
creditors access to its courts in the absence of qualifications to transact
business in such state or of the filing of any reports with such state, unless
Borrower has qualified as a foreign corporation authorized to do business in
such state or has filed all required reports; or
(l) the Receivable is evidenced by chattel paper or an
instrument of any kind which has not been assigned or endorsed and delivered to
Lender, or has been reduced to judgment; or
(m) the Receivable arises from a retail sale of goods to a
Person who is purchasing such goods primarily for personal, family or household
purposes; or
(n) if Lender believes, in its sole and absolute judgment,
that collection of such Receivable is insecure or that such Receivable may not
be paid by reason of the Account Debtor's financial inability to pay.
1.19. "ENVIRONMENT" shall mean any water or water vapor, any
land surface or subsurface, air, fish, wildlife, biota and all other natural
resources.
1.20. "ENVIRONMENTAL LAWS" shall mean all federal, state and
local environmental, land use, zoning, health, chemical use, safety and
sanitation laws, statutes, ordinances and codes relating to the protection of
the Environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of "hazardous
substances" and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
1.21. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.22. "EVENTS OF DEFAULT" shall have the meaning set forth in
Section 12.1 of this Agreement.
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1.23. "FISCAL YEAR" shall mean with respect to any Person, a
year of 365 or 366 days, as the case may be, ending on the last day of December
in any calendar year.
1.24. "FIXED CHARGE COVERAGE RATIO" shall mean the ratio of
EBITDA over the sum of (i) interest and fees on Indebtedness, plus (ii) the
greater of scheduled or actual principal payments on any Loans (other than
payments on account of Receivables in the ordinary course of Borrower's
business) plus (iii) the greater of scheduled or actual payments of principal on
any other indebtedness, plus (iv) capital expenditures, plus (v) taxes (not
otherwise included in the computation of EBITDA), plus (vi) cash dividends, plus
(vii) distributions paid on subordinated debt or equity.
1.25. "GAAP" shall mean generally accepted accounting
principles consistently applied and maintained throughout the period indicated
and consistent with the prior financial practice of Borrower, except for changes
mandated by the Financial Accounting Standards Board or any similar accounting
authority of comparable standing. Whenever any accounting term is used herein
which is not otherwise defined, it shall be interpreted in accordance with GAAP.
1.26. "GENERAL SECURITY AGREEMENT" shall mean the general
security agreement dated the date hereof executed and delivered by Borrower to
Lender.
1.27. "GOVERNMENTAL RULES" shall have the meaning given to
such term in Section 5.25 of this Agreement.
1.28. "INDEBTEDNESS" shall mean and include all obligations
for borrowed money of any kind or nature, including funded debt and unfunded
liabilities, contingent obligations under guaranties or letters of credit, and
all obligations for the acquisition or use of any fixed asset, including
capitalized leases, or improvements which are payable over a period longer than
one year, regardless of the term thereof or the person or persons to whom the
same is payable.
1.29. "INVENTORY" shall have the meaning given to such term in
the General Security Agreement.
1.30. RESERVED
1.31. "LOAN DOCUMENTS" shall mean this Agreement, the General
Security Agreement and all other documents and instruments to be delivered by
Borrower under this Agreement or in connection with the Loans or any other
Indebtedness or Obligations of Borrower to Lender, as the same may be amended,
modified or supplemented from time to time.
1.32. "LOAN INTEREST RATE" shall mean, at the option of
Lender, the greater of: (a) the prime rate published in the "Money Rates" column
of The Wall Street Journal from time to time or, in the event that The Wall
Street Journal is not available at any time, such rate published in another
nationally recognized publication as determined by Lender, plus two hundred
fifty (250) basis points per annum, or (b) seven and one-quarter percent
(7.25%).
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1.33. "LOANS" shall mean the loans and advances made by Lender
hereunder, including all Advances.
1.34. "LOCKBOX" shall mean the account established by Borrower
pursuant to the lockbox agreement among Borrower, Lender and a financial
institution with which Borrower maintains a depository account into which
proceeds from Collateral are deposited.
1.35. "MAINTENANCE CONTRACT RESERVE AMOUNT" as defined in
Section 2.3.
1.36. "MATERIAL ADVERSE EFFECT" shall mean any material
adverse effect, as determined in Lender's sole and absolute discretion, on (a)
the business, assets, operations, or condition, financial or otherwise, of
Borrower or any guarantor(s), if any; (b) Borrower's or any guarantor's, if any,
ability to pay or perform the Obligations in accordance with their terms; (c)
the value, collectibility or salability of the Collateral or the perfection or
priority of Lender's liens; (d) the validity or enforceability of this Agreement
or any of the Loan Documents; or (e) the practical realization of the benefits,
rights and remedies inuring to Lender hereunder or under the Loan Documents.
1.37. "MAXIMUM FACILITY" shall mean One Million Five Hundred
Thousand and 00/100 Dollars ($1,500,000.00).
1.38. "OBLIGATIONS" shall mean and include all loans
(including the Loans), advances, debts, liabilities, obligations, covenants and
duties owing by Borrower to Lender of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, whether
arising under this Agreement, the other Loan Documents or under any other
agreement or by operation of law, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening, guaranteeing or
confirming of a letter of credit, loan, guaranty, indemnification or in any
other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now due or hereafter
arising and however acquired, including, without limitation, all interest,
charges, expenses, commitment, facility, collateral management or other fees,
attorneys' fees and expenses, consulting fees and expenses and any other sum
chargeable to Borrower under this Agreement, the other Loan Documents or any
other agreement with Lender.
1.39. "NOTICE OF BORROWING" shall mean a borrowing request in
a Record substantially in the form of Exhibit B attached hereto.
1.40. "PERSON" shall mean an individual, partnership, limited
liability company, limited liability partnership, corporation, joint venture,
joint stock company, land trust, business trust or unincorporated organization,
or a government or agency or political subdivision thereof.
1.41. "PLAN" shall mean an employee benefit plan or other plan
now or hereafter maintained for employees of Borrower or any subsidiary of
Borrower and covered by Title IV of ERISA.
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1.42. "PROPERTY" shall mean any interest in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible.
1.43. "RECEIVABLES" shall have the meaning given to such term
in the General Security Agreement.
1.44. "RECONCILIATION REPORT" shall mean a report in form
satisfactory to Lender, reconciling Borrower's month-end Receivable agings,
payable agings and Inventory listings to Borrower's monthly financial
statements, and including bank reconciliations.
1.45. "RECORD" shall mean information that is inscribed on a
tangible medium or which is stored in an electronic or other medium and is
retrievable in perceivable form. If Lender so specifies with respect to a
particular type of Record, that type of Record shall be signed or otherwise
authenticated by Borrowers.
1.46. "REPORTABLE EVENT" shall have the meaning assigned to
that term in Title IV of ERISA.
1.47. "REVOLVING LOAN" shall mean the Advances to be made by
Lender to Borrower pursuant to Section 2.1 of this Agreement, and all interest
thereon and all fees, costs and expenses payable by Borrower in connection
therewith.
1.48. "REVOLVING NOTE" shall mean, the promissory note
substantially in the form annexed hereto as Exhibit A, to be given by Borrower
to Lender to evidence the Revolving Loan.
1.49. "SOLVENT" shall mean when used with respect to any
Person, such Person (i) owns property the fair value of which is greater than
the amount required to pay all of such Person's Indebtedness (including
contingent debts), (ii) owns property the present fair salable value of which is
greater than the amount that will be required to pay the probable liabilities of
such Person on its then existing Indebtedness as such become absolute and
matured, (iii) is able to pay all of its Indebtedness as such Indebtedness
matures, and (iv) has capital sufficient to carry on its then existing business.
1.50. RESERVED.
1.51. "TERMINATION DATE" shall mean the earlier of the date
which is 1 year from the date hereof, or the date on which Lender terminates
this Agreement pursuant to Section 12 hereof
1.52. "TERMINATION NOTICE" as defined in Section 3.6 hereof
1.53. "UCC" means the Uniform Commercial Code as in effect
from time to time.
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2. THE REVOLVING LOAN.
2.1. ADVANCES. Subject to the terms and conditions of this
Agreement and relying upon the representations and warranties set forth in this
Agreement, for so long as no Default or Event of Default exists, Lender shall
lend to Borrower on its request, a sum ("Borrowing Capacity") equal to the
lesser of:
(a) One Million Five Hundred Thousand and 00/100 Dollars
($1,500,000.00), or (b) up to seventy-five percent (75%) of the net face amount
of Borrower's Eligible Receivables.
Within the limits of the Borrowing Capacity, and subject to
the limitations set forth in this Agreement, Borrower may borrow, repay and
reborrow Advances.
2.2. OVERLINE. Borrower acknowledges that Lender has advised
Borrower that Lender does not intend to permit Borrower to incur Obligations at
any time in an outstanding principal amount exceeding the Maximum Facility;
however, it is agreed that should the Obligations of Borrower to Lender incurred
under the Loans or otherwise exceed that figure or any other limitation herein
set forth, including without limitation, the Borrowing Capacity, all such
Obligations shall (a) constitute Obligations under this Agreement, (b) be
entitled to the benefit of all security and protection under this Agreement and
the other Loan Documents, (c) be secured by the Collateral and (d) be payable
immediately without notice or demand by Lender.
2.3. RESERVES. The Borrowing Capacity shall be subject to such
reserves as Lender shall deem necessary and proper in Lender's sole and absolute
discretion. Reserves may be established by Lender from time to time in such
manner (including reduction of the advance rates set forth in Section 2.1(b)
above) and for such reasons as Lender may determine from time to time in
Lender's sole and absolute discretion. Payments, deposits, guaranties or
indemnifications made by Lender under any reimbursement agreement, guaranty or
similar instrument made in respect of any such instrument may be treated by
Lender as Advances to Borrower hereunder. Without limiting Lender's right to
establish reserves as herein above provided, the amount of Eligible Receivables
shall be reduced by an amount equal to the sum of: (i) the lesser of the
otherwise Eligible Receivables or unearned revenue on maintenance contracts
billed by Borrower on a semi-annual or annual basis, plus (ii) the lesser of the
otherwise Eligible Receivables or fifty percent (50%) of the unearned revenue on
maintenance contracts billed by Borrower on a quarterly basis (the "Maintenance
Contract Reserve Amount"), provided, however, that from the date of this
Agreement through and including December 31, 2002, the Maintenance Contract
Reserve Amount shall be zero dollars ($0.00).
2.4. MANNER OF BORROWING. Each Advance shall be requested in
an Authenticated Record sent via facsimile or electronic transmission,
including, without limitation, via e-mail by a Notice of Borrowing executed by
an authorized officer of Borrower, not later than 11:00 a.m. Eastern Time on any
Banking Day on which a Revolving Loan is requested. Provided that Borrower shall
have satisfied all conditions precedent set forth in this Agreement, including
the reaffirmation of the representations and warranties and covenants as
required under Section 10 hereof, and Borrower shall have sufficient Borrowing
Capacity to permit an Advance
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hereunder in accordance with Section 2.1 hereof, Lender shall make the Advance
to Borrower in the amount requested in the Record by Borrower in immediately
available funds for credit to any account of Borrower (other than a payroll
account) at a bank in the United States of America as Borrower may specify
(provided, however, that Borrower shall pay Lender its usual and customary fees
for such transfer). Lender shall not be responsible for any failure of any
amount so transferred to be credited to any such account, unless such failure is
due to Lender's gross negligence or willful misconduct.
2.5. EVIDENCE OF BORROWER'S OBLIGATIONS. Borrower's obligation
to pay the principal of, and interest on, the Advances made to Borrower shall be
evidenced by the Revolving Note executed by Borrower and delivered to Lender.
2.6. PAYMENTS. All payments with respect to the Obligations
shall either be charged by Lender to Borrower's account, charged as an Advance
or made by Borrower to Lender in U.S. currency and without any defense, offset
or counterclaim of any kind, at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇, ▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or to such other address as Lender shall specify, by 12:00 noon New
York, New York time on the date when due. Whenever any payment to be made shall
otherwise be due on a day that is not a Banking Day, such payment shall be made
on the next succeeding Banking Day and such extension of time shall be included
in computing interest in connection with any such payment. Lender may make an
Advance to reimburse itself for any payments on the Obligations (including fees
and expenses payable by Borrower), which are not paid when due, without notice
or demand to Borrower.
2.7. COLLECTIONS/BALANCE/STATEMENTS/ETC.
(a) Collection and Remittance.
(1) Borrower covenants and agrees to open
the Lockbox over which Lender shall have the sole
power of withdrawal. All proceeds of Collateral
whether cash, checks, drafts, notes, acceptances or
other forms of payment, if received by Borrower,
shall be received by Borrower in trust for Lender,
and Borrower agrees to deliver or cause to be
delivered, such payments forthwith, in the identical
form in which received, to Lender or to the Lockbox,
as Lender shall require from time to time.
(2) Collected funds in the Lockbox shall be
swept daily and the proceeds deposited to an account
of Lender or Borrower as Lender shall elect.
(b) Determination of Balance of Revolving Loans. In
determining the outstanding balance of the Loans, (i) available funds received
from the Lockbox in the Lender's account at Fleet Bank CT, Account Name: Keltic
Financial Partners, LP FBO Fleet Capital Corp.; Account No. 9428395446, ABA #011
900 571, (or such other account as Lender may direct from time to time), before
2 p.m. New York, New York time of a Banking Day will be credited on that Banking
Day, and thereafter on the following Banking Day, as follows: (A)
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First, to unpaid interest, (B) second to unpaid fees and expenses; (C) third to
the outstanding principal balance of the Revolving Loan, and (D) fourth to all
other Obligations in such order as Lender shall elect; (ii) any other form of
funds received by Lender will be credited on the Banking Day when Lender has
received notification that such funds are collected and available to Lender if
before 2 p.m. (New York, New York Time), and thereafter on the following Banking
Day; (iii) all credits shall be conditional upon final payment to Lender in cash
or solvent credits of the items giving rise to them and, if any item is not so
paid, the amount of any credit given for it shall be charged to the balance of
the Revolving Loan whether or not the item is returned; and (iv) for the purpose
of computing interest on the Revolving Loan and other Obligations, interest
shall continue to accrue on the amount of any payment credited to Borrower's
Revolving Loan balance by Lender for a period of three (3) Banking Days after
the date so credited.
2.8. PAYMENT ON TERMINATION DATE. Notwithstanding anything
herein to the contrary, the entire outstanding principal balance of the Loans,
plus all accrued and unpaid interest thereon and all fees and other amounts
payable under this Agreement and the Loan Documents, shall be due and payable in
full, on the Termination Date.
3. LENDER'S COMPENSATION.
3.1. INTEREST ON ADVANCES. Borrower shall pay interest
monthly, in arrears, on the first day of each month, commencing November 1, 2002
on the average daily unpaid principal amount of the Revolving Loan at a
fluctuating rate which is equal to the Loan Interest Rate. Notwithstanding the
foregoing, on and after the occurrence of an Event of Default, Borrower shall
pay interest on the Revolving Loan at a rate which is three and one-half percent
(3.50%) per annum above the Loan Interest Rate; provided, however, in no event
shall any interest to be paid hereunder or under any Loan Document exceed the
maximum rate permitted by law.
3.2. COMMITMENT AND CLOSING FEE. Borrower shall have paid to
Lender on or before the date of this Agreement Twenty-Two Thousand Five Hundred
and 00/100 Dollars ($22,500.00) as a commitment and closing fee.
3.3. FACILITY FEE. Borrower shall pay to Lender monthly, in
arrears, on the first day of each month a facility fee in an amount equal to one
percent (1.00%) per annum of the Maximum Facility, which facility fee is deemed
earned in full for each year on the date hereof and on each anniversary hereof.
3.4. COLLATERAL MANAGEMENT FEE. Borrower shall pay to Lender
monthly, in arrears, on the first day of each month, a collateral management fee
in an amount of One Thousand Five Hundred and 00/100 Dollars ($1,500.00).
3.5. FIELD EXAMINATION FEES. Borrower shall promptly reimburse
Lender for all costs and expenses associated with periodic field examinations
and fixed asset appraisals performed by Lender and its agents, as deemed
necessary by Lender.
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3.6. LIQUIDATED DAMAGES. If Borrower prepays all or any
portion of the principal of the Revolving Loan (other than from time to time
from working capital or other payments required hereunder), Borrower shall pay
to Lender at the time of such prepayment, liquidated damages in an amount equal
to (a) three percent (3.00%) of the Maximum Facility if the Borrower elects to
terminate the availability of Revolving Loans as hereinafter provided and the
prepayment is made prior to the first anniversary of this Agreement or (b) three
percent (3%) of the amount of any partial prepayment made prior to the first
anniversary of this Agreement. Borrower shall give Lender at least ninety (90)
days' advance written notice ("Termination Notice") of Borrower's election to
terminate the availability of Revolving Loans hereunder prior to the Termination
Date. The Termination Notice shall be irrevocable and shall specify the
effective date of such termination, which effective date shall not be less than
ninety (90) days after the giving of the Termination Notice and shall be in no
event later than the Termination Date.
3.7. COMPUTATION OF INTEREST AND FEES. All interest and fees
hereunder shall be computed on the basis of a year consisting of three hundred
sixty (360) days for the number of days actually elapsed.
3.8. PAYMENT OF INTEREST AND FEES. Interest and fees shall be
payable immediately when due, and may be paid by Lender's making an Advance in
the amount of the interest and/or fee due against the Revolving Loan, but any
failure or delay by Lender in submitting any invoice for such interest or fee or
in the making of an Advance against the Revolving Loan shall not discharge or
relieve Borrower of its obligation to make such interest or fee payment.
4. APPLICATION OF PROCEEDS. The proceeds of the Advances shall be used
solely by Borrower to affect the acquisition of certain assets, to repay
existing indebtedness incurred in connection therewith and for working capital
needed in the normal operation of Borrower's business.
5. INDUCING REPRESENTATIONS. In order to induce Lender to make the
Loans, Borrower makes the following representations and warranties to Lender:
5.1. ORGANIZATION AND QUALIFICATIONS. Borrower is a
corporation duly organized and existing under the laws of the State of Delaware.
Borrower's tax identification number is ▇▇-▇▇▇▇▇▇▇ and its organizational
identification number is ▇▇-▇▇▇▇▇▇▇. As soon as reasonably practicable from the
date hereof, Borrower will qualify itself to do business in every jurisdiction
where the nature of its business requires it to be so qualified.
5.2. NAME AND ADDRESS. During the preceding five (5) years,
Borrower has not been known as or used any corporate, fictitious or trade names,
except as set forth on Schedule 5.2 attached hereto. Borrower's office is at the
address set forth above.
5.3. STRUCTURE. Borrower has no subsidiaries or Affiliates,
except as set forth on Schedule 5.3 attached hereto.
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5.4. LEGALLY ENFORCEABLE AGREEMENT. The execution, delivery
and performance of this Agreement, and each and all of the other Loan Documents
and all and any other instruments and documents to be delivered by Borrower or
its Affiliates hereunder and the creation of all liens and security interests
provided for herein are within Borrower's corporate power, have been duly
authorized by all necessary or proper corporate action (including the consent of
shareholders where required), are not in contravention of any agreement or
indenture to which Borrower is a party or by which it is bound, or of the
Certificate of Incorporation or By-Laws of Borrower, and are not in
contravention of any provision of law and the same do not require the consent or
approval of any governmental body, agency, authority or any other Person which
has not been obtained and a copy thereof furnished to Lender.
5.5. SOLVENT FINANCIAL CONDITION. Borrower is Solvent.
5.6. FINANCIAL STATEMENTS. As of the date hereof, Borrower has
no prepared financial statements (as Borrower has been inactive) except for
Borrower's balance sheet as of October 1, 2002, which Borrower acknowledges
accurately reflects Borrower's best estimate of its assets and liabilities as of
that date, after due and diligent inquiry and investigation.
5.7. JOINT VENTURES. Borrower is not engaged in any joint
venture or partnership with any other Person.
5.8. REAL ESTATE. Attached hereto as Schedule 5.8 is a list
showing all real property owned or leased by Borrower, and if leased, the
correct name and address of the landlord and the date and term of the applicable
lease.
5.9. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Borrower
owns or possesses all the patents, trademarks, service marks, trade names,
copyrights and licenses necessary for the present and planned future conduct of
its business without any conflict with the rights of others. All such patents,
trademarks, service marks, trade names, copyrights, licenses and other similar
rights are listed on Schedule 5.9 attached hereto and made a part hereof, if
any.
5.10. EXISTING BUSINESS RELATIONSHIP. There exists no actual
or threatened termination, cancellation or limitation of, or any adverse
modification or change in, the business relationship of Borrower with any
supplier, customer or group of customers whose purchases individually or in the
aggregate could cause a Material Adverse Effect.
5.11. INVESTMENT COMPANY ACT: FEDERAL RESERVE BOARD
REGULATIONS. Borrower is not an "investment company", or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company", as
such terms are defined in the Investment Company Act of 1940, as amended (15
U.S.C. Sections 80(a)(1), et seq.). The making of the Loans hereunder by Lender,
the application of the proceeds and repayment thereof by Borrower and the
performance of the transactions contemplated by this Agreement will not violate
any provision of said Act, or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder. Borrower does not own any margin
security as that term is defined in Regulation U of the Board of Governors of
the Federal Reserve System and the proceeds of the Loans made pursuant to this
Agreement will be used only for the purposes
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contemplated hereunder. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin security or for any other purpose which
might constitute any of the Loans under this Agreement a "purpose credit" within
the meaning of said Regulation U or Regulation X of the Federal Reserve Board.
Borrower will not take, or permit any agent acting on its behalf to take, any
action which might cause this Agreement or any document or instrument delivered
pursuant hereto to violate any regulation of the Federal Reserve Board.
5.12. TAX RETURNS. Borrower and the guarantor(s), if any, have
filed all tax returns (Federal, state or local) required to be filed and paid
all taxes shown thereon to be due including interest and penalties or has
provided adequate reserves therefor, where the failure to file said return(s)
could reasonably be excepted to have a Material Adverse Effect. No assessments
have been made against Borrower or any guarantor(s), if any, by any taxing
authority nor has any penalty or deficiency been made by any such authority. To
the best of Borrower's knowledge, no Federal income tax return of either
Borrower or any guarantor, if any, is presently being examined by the Internal
Revenue Service nor are the results of any prior examination by the Internal
Revenue Service or any State or local tax authority being contested by Borrower
or any guarantor, if any.
5.13. LITIGATION. Except as disclosed in Schedule 5.13, no
action or proceeding is now pending or, to the knowledge of Borrower, is
threatened against Borrower or any guarantor, if any, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of the
Federal or state government or of any municipal government or any agency or
subdivision thereof, or before any arbitrator or panel of arbitrators, and
neither Borrower nor any guarantor, if any, has accepted liability for any such
action or proceeding. There is no proceeding pending before any governmental
agency (Federal, state or local) and, to the best of Borrower's knowledge, no
investigation has been commenced before any such government agency the effect of
which, if adversely decided, would or could, have a Material Adverse Effect.
5.14. RECEIVABLES LOCATIONS. Annexed hereto as Schedule 5.14
is a list showing all places at which Borrower maintains, or will maintain,
records relating to Receivables.
5.15. RESERVED.
5.16. RESERVED.
5.17. TITLE/ LIENS. Borrower has good and marketable title to
the Collateral as sole owner thereof. There are no existing liens on any
property of Borrower, except for liens in favor of Lender and liens described in
Schedule 5.17. Except as set forth on Schedule 5.17, none of the Collateral is
subject to any prohibition against encumbering, pledging, hypothecating or
assigning the same or requires notice or consent in connection therewith.
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5.18. EXISTING INDEBTEDNESS. Borrower has no existing
Indebtedness except the Indebtedness described in Schedule 5.18.
5.19. ERISA MATTERS. The present value of all accrued vested
benefits under any Plan (calculated on the basis of the actuarial evaluation for
the Plan) did not exceed as of the date of the most recent actuarial evaluation
for such Plan the fair market value of the assets of such Plan allocable to such
benefits. Borrower is not aware of any information since the date of such
evaluation which would affect the information contained therein. Such Plan has
not incurred an accumulating funding deficiency, as that term is defined in
Section 302 of ERISA or Section 412 of the Code (whether or not waived), no
liability to the Pension Benefit Guaranty Corporation (other than required
premiums which have become due and payable, all of which have been paid) has
been incurred with respect to the Plan and there has not been any Reportable
Event which presents a risk of termination of the Plan by the Pension Benefit
Guaranty Corporation. Borrower has not engaged in any transaction which would
subject Borrower to tax, penalty or liability for prohibited transactions
imposed by ERISA or the Code.
5.20. O.S.H.A. Borrower has duly complied with, and its
facilities, business, leaseholds, equipment and other property are in compliance
in all respects with, the provisions of the federal Occupational Safety and
Health Act and all rules and regulations thereunder and all similar state and
local Governmental Rules. There are no outstanding citations, notices or orders
of non-compliance issued to Borrower or relating to its facilities, business,
leaseholds, equipment or other property under any such Governmental Rules.
5.21. ENVIRONMENTAL MATTERS. Except as disclosed in Schedule
5.21;
(a) No Property owned or used by Borrower is or has been used
for the generation, manufacture, refining, transportation, treatment, storage,
handling or disposal of any "hazardous substances" or "hazardous wastes". The
following are all of the Standard Industrial Classification Codes applicable to
the properties and operations of Borrower: 7378 (b) Borrower is in compliance
with all applicable Environmental Laws; (c) there has been no contamination or
release of hazardous substances at, upon, under or within any Property owned or
leased by Borrower, and there has been no contamination (as defined in any
applicable Environmental Law) or release of hazardous substances (as defined in
any applicable Environmental Law) on any other Property that has migrated or
threatens to migrate to any Property owned or leased by Borrower; (d) no
hazardous substances are present at any Property owned or leased by Borrower,
nor will any hazardous substances be present upon any such Property or in the
operation thereof by Borrower; (e) all permits and authorizations required under
Environmental Laws for all operations of Borrower have been duly issued and are
in full force and effect, including but not limited to those for air emissions,
water discharges and treatment, storage tanks and the generation, treatment,
storage and disposal of hazardous substances; (f) there are no past, pending or
threatened environmental claims against Borrower or any Property owned or leased
by Borrower; and there is no condition or occurrence on any Property owned or
leased by Borrower that could be anticipated (1) to form the basis of an
environmental claim against Borrower or its properties or (2) to cause any
Property owned or leased by Borrower to be subject to any restrictions on its
ownership, occupancy or transferability under any Environmental Law; and (g) the
representations and warranties set forth in this Section 5.21 shall
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survive repayment of the Obligations and the termination of this Agreement and
the other Loan Documents.
5.22. LABOR DISPUTES. There are no pending or, to Borrower's
knowledge, threatened labor disputes which could have a Material Adverse Effect.
5.23. INTELLECTUAL PROPERTY. Borrower is the owner of or
possesses the right to use all necessary patents, trademarks, service marks,
copyrights and other intellectual property necessary or useful in the operation
of its business, in each case free of any claims or infringements.
5.24. LOCATION OF BANKING AND SECURITIES ACCOUNTS. Schedule
5.24 hereto sets forth a complete and accurate list of all deposit, checking and
other bank accounts, all securities and other accounts maintained with any
broker dealer and all other similar accounts maintained by Borrower
(collectively, "Bank Accounts"), together with a description thereof.
5.25. COMPLIANCE WITH LAWS. Borrower is in compliance with all
Federal, state and local governmental rules, ordinances and regulations
("Governmental Rules") applicable to its ownership or use of properties or the
conduct of its business, except where the failure to so comply would not
reasonably be expected to have or result in a Material Adverse Effect.
5.26. NO OTHER VIOLATIONS. Borrower is not in violation of any
term of its Certificate of Incorporation or By-laws and no event or condition
has occurred and is continuing which constitutes or results in (or would
constitute or result in, with the giving of notice, lapse of time or other
condition) (a) a breach of, or a default under, any agreement, undertaking or
instrument to which Borrower is a party or by which it or any of its Property
may be affected, or (b) the imposition of any lien on any Property of Borrower.
5.27. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower
covenants, warrants and represents to Lender that all representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall be true at the time of Borrower's execution of this Agreement
and the other Loan Documents, and Lender's right to bring an action for breach
of any such representation or warranty or to exercise any remedy hereunder based
upon the breach of such representation or warranty shall survive the execution,
delivery and acceptance hereof by Lender and the closing of the transactions
described herein or related hereto until the Obligations are finally and
irrevocably paid in full.
6. FINANCIAL STATEMENTS AND INFORMATION; CERTAIN NOTICES TO LENDER. So
long as Borrower shall have any Obligations to Lender under this Agreement,
Borrower shall deliver to Lender, or shall cause to be delivered to Lender:
6.1. BORROWING BASE CERTIFICATE. At least weekly, but in any
event monthly (within two (2) days after the end of each month) and
contemporaneously with each request for an Advance, a satisfactorily completed
and executed Borrowing Base Certificate.
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6.2. MONTHLY REPORTS. Within fifteen (15) days after the end
of each month, an accounts receivable aging, accounts payable aging, an
inventory listing, a collateral update certificate, and a Reconciliation Report
of Borrower for such month, all in form satisfactory to Lender, prepared by
Borrower and if Lender so requests, customer statements, sales journals, cash
receipts journals and detailed sales credit reports.
6.3. ANNUAL FINANCIAL STATEMENTS. Within one hundred twenty
(120) days after the close of each Fiscal Year of the Borrower, a copy of the
annual audited financial statements of Borrower prepared by an independent
certified public accountant consisting of a balance sheet, statements of
operations and retained earnings and accompanying footnotes, statements of cash
flow, acceptable to Lender in its sole discretion.
6.4. MONTHLY FINANCIAL STATEMENTS. Within thirty (30) days
after the end of each month of the Borrower, financial statements consisting of
a balance sheet, statements of operations and retained earnings and statements
of cash flow, prepared by management of Borrower in accordance with GAAP,
together with a compliance certificate in the form attached as Exhibit D hereto.
6.5. PROJECTIONS. Within thirty (30) days prior to the end of
each Fiscal Year of the Borrower, monthly financial projections for the next
Fiscal Year and annual projections for the next succeeding Fiscal Year for the
Borrower in form satisfactory to Lender.
6.6. CUSTOMER LISTS. Semiannually, a list of all of Borrower's
customers and vendors, including the addresses, and telephone and facsimile
numbers of such customers and vendors which lists shall be delivered within
thirty (30) days after each second fiscal quarter and within thirty (30) days
after each Fiscal Year end.
6.7. INSURANCE. Annually, within thirty (30) days of the
renewal date of such insurance policy, evidence of insurance in form and content
satisfactory to Lender and otherwise in compliance with Section 8.6 hereof,
together with the original insurance policy.
6.8. NOTICE OF EVENT OF DEFAULT AND ADVERSE BUSINESS
DEVELOPMENTS. Immediately after becoming aware of the existence of a Default or
any Event of Default under this Agreement or any other Loan Documents or after
becoming aware of the following:
(a) any dispute that may arise between Borrower and any
governmental regulatory body or law enforcement authority, including any action
relating to any tax liability of Borrower or guarantor if any, which would be
reasonably expected to cause or have a Material Adverse Effect;
(b) any labor controversy resulting in or threatening to
result in a strike or work stoppage against Borrower;
(c) any proposal by any public authority to acquire the assets
or business of Borrower, which would be reasonably expected to cause or have a
Material Adverse Effect;
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(d) the location of any Collateral other than at Borrower's
place of business or as permitted under this Agreement;
(e) any proposed or actual change of Borrower's name,
identity, state of organization or corporate structure; and
(f) any other matter which has resulted or may result in a
Material Adverse Effect.
In each case, Borrower will provide Lender with telephonic
notice followed by notice in a Record specifying and describing the nature of
such Default, Event of Default or development or information, and such
anticipated effect.
6.9. OTHER INFORMATION. Such other information respecting the
financial condition of Borrower or any Property of Borrower in which Lender may
have a lien as Lender may, from time to time, request.
7. ACCOUNTING. Lender may account monthly to Borrower regarding the
monthly activity for the Loans. Each and every account shall be deemed final,
binding and conclusive upon Borrower in all respects, as to all matters
reflected therein, unless Borrower, within fifteen (15) days after the date the
account was rendered, delivers to Lender notice in a Record of any objections
which Borrower may have to any such account and in that event only those items
expressly objected to in such notice shall be deemed to be disputed by Borrower.
If Borrower disputes the correctness of any statement, Borrower's notice shall
specify in detail the particulars of its basis for contending that such
statement is incorrect.
8. AFFIRMATIVE COVENANTS. Borrower represents and warrants that, so
long as it shall have any Obligations to Lender hereunder, Borrower will:
8.1. BUSINESS AND EXISTENCE. Preserve and maintain Borrower's
separate existence and rights, privileges and franchises.
8.2. TRADE NAMES. Transact business in Borrower's own name and
invoice all of Borrower's receivables in Borrower's own name.
8.3. TRANSACTIONS WITH AFFILIATES. Whenever Borrower engages
in transactions with any of Borrower's Affiliates, conduct the same on an
arms-length basis or other basis more favorable to Borrower.
8.4. TAXES. Pay and discharge all taxes, assessments,
government charges and levies imposed upon Borrower, Borrower's income or
Borrower's profits or upon any Property belonging to Borrower prior to the date
on which penalties attach thereto, except where (i) the failure to pay same
shall not cause or result in a Material Adverse Effect; and (ii) the same may be
contested in good faith by appropriate proceedings being diligently conducted,
and where reserves satisfactory to Lender have been established and are
maintained.
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8.5. COMPLIANCE WITH LAWS. Comply with all Governmental Rules
applicable to Borrower, including, without limitation, all laws and regulations
regarding the collection, payment and deposit of employees' income, unemployment
and Social Security taxes, except where the failure to so comply shall not cause
or result in a Material Adverse Effect.
8.6. MAINTAIN PROPERTIES: INSURANCE. Safeguard and protect all
property used in the conduct of Borrower's business and keep all of Borrower's
Property insured with insurance companies licensed to do business in the states
where the Property is located against loss or damage by fire or other risk under
extended coverage endorsement and against theft, burglary, and pilferage
together with such other hazards as Lender may from time to time request, in
amounts satisfactory to Lender. Borrower shall deliver the policy or policies of
such insurance or certificates of insurance to Lender containing endorsements in
form satisfactory to Lender naming Lender as lender loss payee and additional
insured and providing that the insurance shall not be canceled, amended or
terminated except upon thirty (30) days' prior written notice to Lender. All
insurance proceeds received by Lender shall be retained by Lender for
application to the payment of such portion of the Obligations as Lender may
determine in Lender's sole discretion. Borrower shall promptly notify Lender of
any event or occurrence causing a material loss or decline in value of Property
insured or the existence of an event justifying a claim under any insurance and
the estimated amount thereof.
8.7. BUSINESS RECORDS. Keep adequate records and books of
account with respect to Borrower's business activities in which proper entries
are made in accordance with sound bookkeeping practices reflecting all financial
transactions of Borrower; and Borrower shall maintain all of its Bank Accounts
as set forth on Schedule 5.24 hereof.
8.8. LITIGATION. Give Lender prompt notice of any suit at law
or in equity against itself involving money or property valued in excess of Ten
Thousand and 00/100 Dollars ($10,000.00) except where the same is fully covered
by insurance and the insurer accepts liability therefor in a Record.
8.9. DAMAGE OR DESTRUCTION OF COLLATERAL. Maintain or cause to
be maintained the Collateral and all its other assets and properties in good
condition and repair at all times, preserve the Collateral and all its other
assets and properties from loss, damage, or destruction of any nature whatsoever
and provide Lender with prompt notice in a Record of any destruction or
substantial damage to any Collateral subject to Lender's security interest
having a fair market value in excess of $15,000.00 and of the occurrence of any
condition or event which has caused, or may cause, a material loss or
depreciation in the value of any Collateral.
8.10. NAME CHANGE. Except as set forth in Section 9.7 below,
Provide Lender with not fewer than thirty (30) days notice in an Authenticated
Record prior to any proposed change of name or the creation of any subsidiary.
8.11. ACCESS TO BOOKS AND RECORDS. Provide Lender with such
reports and with such access to Borrower's books and records and permit Lender
to copy and inspect such reports and books and records all as Lender deems
necessary or desirable to enable Lender to monitor the credit facilities
extended hereby. Lender may examine and inspect the Inventory,
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equipment or other Collateral and may examine, inspect and copy all books and
records with respect thereto at any time during Borrower's normal business
hours. Borrower shall maintain full, accurate and complete records respecting
Inventory, including a perpetual inventory, and all other Collateral at all
times. Borrower will pay all costs to be paid on taxes, assessments,
governmental charges or private encumbrances levied, assessed, imposed or
payable upon or with respect to the Inventory, equipment or other Collateral or
any part thereof.
8.12. SOLVENT. Continue to be Solvent.
8.13. COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply with all
applicable Environmental Laws.
8.14. COMPLIANCE WITH ERISA AND OTHER EMPLOYMENT LAWS. Comply
with all applicable provisions of ERISA and the Internal Revenue Code of 1986,
as amended, and any other applicable laws, rules or regulations relating to the
compensation of employees and funding of employee pension plans.
8.15. PROCEEDS OF COLLATERAL. Forthwith upon receipt, pay to
Lender all proceeds of Collateral, whereupon such proceeds shall be applied to
the Obligations in an order and manner as shall be determined in the sole and
absolute discretion of Lender (except as otherwise provided in Section 2.7 of
this Agreement).
8.16. DELIVERY OF DOCUMENTS. Notify Lender if any proceeds of
Receivables shall include, or any of the Receivables shall be evidenced by,
notes, trade acceptances or instruments or documents, or if any Inventory is
covered by documents of title or chattel paper, whether or not negotiable, and
if required by Lender, immediately deliver them to Lender appropriately
endorsed. Borrower waives protest regardless of the form of the endorsement. If
Borrower fails to endorse any instrument or document, Lender is authorized to
endorse it on Borrower's behalf.
8.17. EQUITY INVESTMENT. On or before January 10, 2003,
furnish to Lender satisfactory documentation evidencing that Borrower's parent,
▇▇▇▇▇▇▇▇.▇▇▇, Inc., has made a minimum equity investment in Borrower of
$350,000.00.
8.18. AUTHORIZATION TO DO BUSINESS. On or before November 11,
2002, furnish to Lender documentation evidencing that Borrower is authorized to
do business in the State of New Jersey.
9. NEGATIVE COVENANTS. So long as Borrower shall have any Obligations
to Lender hereunder and unless Lender has first consented thereto in an
Authenticated Record, Borrower shall not:
9.1. INDEBTEDNESS. Create, incur, assume or suffer to exist,
voluntarily or involuntarily, any Indebtedness, except (i) Obligations to
Lender, (ii) trade debt incurred in the ordinary course of Borrower's business;
(iii) purchase money financing and equipment leases not to exceed Fifty Thousand
and 00/100 Dollars ($50,000.00) in any Fiscal Year; (iv) Indebtedness
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due to ▇▇▇▇▇▇▇▇.▇▇▇, Inc. that is subordinated to the Obligations pursuant to
that certain Subordination Agreement entered into contemporaneously herewith
between Lender, ▇▇▇▇▇▇▇▇.▇▇▇, Inc. and Borrower; and (v) existing Indebtedness
described on Schedule 7.18, and the refinancing, renewals and extensions
thereof, provided, however, such refinancings, renewals and extensions are on
terms and conditions that are at least as favorable to Borrower as are existing
on the date of this Agreement and the amount of such Indebtedness is not
increased.
9.2. MERGERS; CONSOLIDATIONS; ACQUISITIONS. Enter into any
merger, consolidation, reorganization or recapitalization with any other Person;
take any steps in contemplation of dissolution or liquidation; conduct any part
of its business through any corporate subsidiary, unincorporated association or
other Person; acquire the stock or assets of any Person, whether by merger,
consolidation, purchase of stock or otherwise, other than a wholly owned
subsidiary, provided such acquisition does not cause or result in a Material
Adverse Effect; or acquire all or any substantial part of the properties of any
Person other than a wholly-owned subsidiary, provided such acquisition does not
cause or result in a Material Adverse Effect.
9.3. SALE OR DISPOSITION. Sell or dispose of all or any
portion of its assets or grant any Person an option to acquire any such assets,
provided, however, that the foregoing shall not prohibit sales of Inventory in
the ordinary course of business or dispositions of obsolete Inventory or
Equipment.
9.4. DEFAULTS. Permit any landlord, mortgagee, trustee under
deed of trust or lienholder to declare a default under any lease, mortgage, deed
of trust or lien on real estate owned or leased by Borrower, which default
remains uncured after any stated cure period or for a period in excess of thirty
(30) days from its occurrence, whichever is less, unless such default is being
contested by Borrower in good faith by appropriate proceedings being diligently
conducted, and where appropriate reserves, satisfactory to Lender, are
established and maintained.
9.5. LIMITATIONS ON LIENS. Suffer any lien, encumbrance,
mortgage or security interest (other than liens created hereunder or liens
relating to Indebtedness under Section 9.1 above) on any of its property, except
such liens as appear on Schedule 5.17 attached hereto and any renewals,
extensions or modifications thereof, if any, but subject to the conditions set
forth in Section 9.1 above.
9.6. DIVIDENDS AND DISTRIBUTIONS. Pay any cash dividends, make
any capital distribution in cash or other property or return of capital, or
purchase or redeem any of its stock or other securities, or retire any of its
stock, or take any action which would have an effect equivalent to any of the
foregoing provided, however, that so long as no Default or Event of Default
shall have occurred and be continuing, and so long as Borrower is qualified as a
subchapter S corporation for federal or applicable state tax purposes, Borrower
may make equal distributions per share to its shareholders in amounts sufficient
to enable such persons to pay Federal or applicable state income tax which is
directly attributable to the net income of Borrower in any Fiscal Year, which
distributions shall be made pro rata based on a percentage of stock and shall be
calculated based on the assumption that each shareholder's income will be
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taxed at the maximum rate permissible under Federal or applicable state law;
provided, however upon the occurrence of an Event of Default, upon Lender's
demand, such shareholders shall pay over to Lender any such distributions
received in accordance with the provisions noted above.
9.7. BORROWER'S NAME AND OFFICES. Transfer Borrower's chief
executive office or change its company name or office where it maintains records
(including computer printouts and programs) with respect to Receivables or any
other Collateral, except with Lender's prior consent in an Authenticated Record.
Lender acknowledges that Borrower intends to change its name to "Delta Computec
Inc." shortly after the date of this Agreement. Borrower shall advise Lender of
the date on which such name change is to become effective and promptly furnish
to Lender documentation evidencing the filing of a certificate of amendment of
its Certificate of Incorporation or such other document(s) satisfactory to
Lender.
9.8. FISCAL YEAR. Change its Fiscal Year without giving Lender
thirty (30) days' prior notice.
9.9. CHANGE OF CONTROL/MANAGEMENT. (a) Allow, without the
prior consent of Lender in an Authenticated Record, a change in the ownership
structure of Borrower.
(b) Have a controller other than ▇▇▇▇ ▇▇▇▇▇ or another
qualified controller that is reasonably acceptable to Lender and is employed in
such capacity within forty-five (45) days after his or her predecessor ceases to
act in that capacity.
(c) Have a president other than ▇▇▇▇ ▇▇▇▇▇▇.
9.10. GUARANTIES; CONTINGENT LIABILITIES. (a) Assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon the obligation of any Person, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business, or (b) agree to maintain the working capital or net worth of
any Person.
9.11. REMOVAL OF COLLATERAL. Remove, or cause or permit to be
removed, any of the Collateral or other assets from the premises where such
Collateral is currently located, except in the ordinary course of business.
9.12. TRANSFER OF NOTES OR ACCOUNTS. Sell, assign, transfer,
discount or otherwise dispose of any Receivables or any promissory note or other
instrument payable to it with or without recourse, provided, however, so long as
no Default or Event of Default shall have occurred and be continuing, Borrower
shall be authorized to discount any Receivable up to 10% of the face amount of
such Receivable, but is no event shall the aggregate dollar amount of such
discounts exceed $50,000.00 per year.
9.13. SETTLEMENTS. Compromise, settle or adjust any claim or
related claims relating to any of the Collateral that individually or in the
aggregate exceeds $25,000.00.
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9.14. CHANGE OF BUSINESS. Cause or permit a change in the
nature of its business as conducted on the date of this Agreement.
9.15. CHANGE OF ACCOUNTING PRACTICES. Change its present
accounting principles or practices in any respect, except, upon notice to Lender
in a Record, as may be required by changes in GAAP.
9.16. INCONSISTENT AGREEMENT. Enter into any agreement
containing any provision that would be violated by the performance of the
Obligations or such Borrower's obligations under any document delivered or to be
delivered by it in connection with this Agreement or any other Loan Document.
9.17. LOAN OR ADVANCES. Make any loans or advances to any
Person other than travel advances and loans to its employees in an aggregate
amount not to exceed $5,000.00.
9.18. INVESTMENTS. Make any investment in any Person, firm or
corporation, including, without limitation, in any Affiliates or form any
Affiliates or subsidiaries not existing on the date hereof, except for
short-term investments (not to exceed 90 days) of excess cash in obligations
issued or guaranteed by the United States of America or any agency thereof, or
commercial paper with a published rating of not less than A-1 or P-1 (or the
equivalent rating) or certificates of time deposit or banker's acceptances and
repurchase agreements backed by United States government securities of a
commercial bank having a combined capital surplus of at least $500,000,000.00
and U.S. money market funds that invest solely in obligations issued or
guaranteed by the United States of America or any agency thereof.
9.19. RESERVED.
9.20. FIXED CHARGE COVERAGE RATIO. Permit Borrower's Fixed
Charge Coverage Ratio for the periods set forth below to be less than the levels
set forth below, tested quarterly:
Amount Time Period
------ -----------
1.20 to 1.00 For the fiscal quarter ending on December 31, 2002
1.50 to 1.00 For each fiscal quarter thereafter.
9.21. RESERVED.
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9.22. EBITDA. Permit Borrower's EBITDA to be less than the
following during the time periods set forth below:
Amount Time Period
------ -----------
$250,000.00 For the fiscal quarter ending December 31, 2002
$325,000.00 For each fiscal quarter thereafter.
10. CONDITIONS TO ADVANCES.
10.1. LENDER'S RIGHT TO TAKE CERTAIN ACTIONS. (a) Lender's
obligation to advance any Loan is subject to the condition that, as of the date
of the advancing of such Loan, no Event of Default or Default shall have
occurred and be continuing and that the matters set forth in Section 5 hereof
and the representations and covenants set forth in the other Loan Documents
continue to be true and complete.
(b) Borrower's acceptance of each Loan under this Agreement
shall constitute a confirmation, as of the date of the advancing of such Loan,
of the matters set forth in Section 5 hereof, of the representations and
covenants set forth in the other Loan Documents, and that no Default or Event of
Default then exists. If requested by Lender, Borrower shall further confirm such
matters by delivery of a Record dated the day of the advancing of such Loan and
signed by an authorized officer of Borrower.
11. TERM. Unless sooner terminated by Lender or Borrower pursuant to
the terms of this Agreement, the period during which the Revolving Loan shall be
available shall initially be a period commencing on the date hereof and
concluding on the Termination Date.
12. EVENTS OF DEFAULT.
12.1. DEFAULTS. Upon the happening of any of the following
events (collectively, "Events of Default"):
(a) if Borrower shall fail to make payment when due of any
Obligation under this Agreement or any other Loan Document; or
(b) if Borrower shall fail to comply with any term, condition,
covenant, warranty or representation contained in Articles 6 or 9 of this
Agreement; or
(c) if Borrower shall fail to comply with any term, condition,
covenant or warranty of or in this Agreement other than in Articles 6 or 9 of
this Agreement, and such failure continues for a period in excess of fifteen
(15) days after notice thereof is given by Lender to Borrower; or
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(d) if Borrower shall fail to comply with any term, condition,
covenant, warranty or representation in any of the other Loan Documents or any
other agreement between Lender and Borrower; or
(e) if Borrower shall cease to be Solvent, make an assignment
for the benefit of its creditors, call a meeting of its creditors to obtain any
general financial accommodation, suspend business or if any case under any
provision of the Bankruptcy Code, including provisions for reorganizations,
shall be commenced by or against Borrower or if a receiver, trustee or
equivalent officer shall be appointed for all or any of the assets of Borrower;
or
(f) if any statement or representation contained in any
financial statement or certificate delivered by Borrower to Lender shall be
false, in any material respect; when made; or
(g) if any federal tax lien is filed of record against any
Borrower or any guarantor(s), if any, and is not bonded or discharged within
fifteen (15) days; or
(h) if Borrower's independent public accountants shall refuse
to deliver any financial statement required by this Agreement; or
(i) if a judgment for more than Twenty-Five Thousand and
00/100 Dollars ($25,000.00) shall be entered against Borrower in any action or
proceeding and shall not be stayed, vacated, bonded, paid, discharged or applied
in good faith within thirty (30) days, except a judgment where the claim is
covered by insurance and the insurance company has accepted liability therefor
in a Record; or
(j) if any obligation of Borrower in respect of Indebtedness
(other than Indebtedness to Lender) exceeding in the aggregate $25,000.00 shall
be declared to be or shall become due and payable prior to the stated maturity
thereof or such obligation shall not be paid as and when the same becomes due
and payable; or there shall occur any event or condition which constitutes an
event of default under any mortgage, indenture, instrument, agreement or
evidence of Indebtedness relating to any obligation of Borrower in respect of
any such Indebtedness the effect of which is to permit the holder or the holders
of such mortgage, indenture, instrument, agreement or evidence of Indebtedness,
or a trustee, agent or other representative on behalf of such holder or holders,
to cause the Indebtedness evidenced thereby to become due prior to its stated
maturity; or
(k) upon the happening of any Reportable Event which Lender in
its sole discretion determines might constitute grounds for the termination of
any Plan, or if a trustee shall be appointed by an appropriate United States
District Court or other court of administrative tribunal to administer any Plan,
or if the Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any Plan or to appoint a trustee to administer any Plan; or
(1) upon the occurrence and continuance of any Material
Adverse Effect, which in the sole and absolute opinion of Lender, impairs
Lender's security, increases Lender's risks; or impairs the Borrower's ability
to perform hereunder or under the Loan Documents; or
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(m) upon the occurrence of a default under the ViewCast
Obligation; or
(n) upon the happening of any of the events described in
▇▇▇▇▇▇▇▇ ▇▇.▇ (▇), (▇), (▇), (▇), (▇), (▇), (▇) or (l) with respect to any
guarantor, if any, or if any such guarantor purports to terminate its guaranty
or upon the death of a guarantor, if any, that is a natural person, if any.
Then, and in any such event, Lender may terminate this
Agreement without prior notice or demand to Borrower or may demand payment of
all Obligations (whether otherwise then payable on demand or not) without
terminating this Agreement and shall, in any event, be under no further
responsibility to extend any credit or afford any financial accommodation to
Borrower, whether under this Agreement or otherwise.
12.2. OBLIGATIONS IMMEDIATELY DUE. Upon the Termination Date
for any reason, all of Borrower's Obligations to Lender, including but not
limited to the Loans, shall immediately become due and payable without further
notice or demand.
12.3. CONTINUATION OF SECURITY INTERESTS. Notwithstanding any
termination, until all Obligations of Borrower shall have been fully paid and
satisfied, Lender shall retain all security in and title to all existing and
future Receivables, General Intangibles, Inventory, Equipment, Fixtures,
Investment Property, and other Collateral held by Lender under the General
Security Agreement or under any other Loan Document and Borrower shall continue
to assign Receivables and consign Inventory to Lender and continue to turn over
collections to Lender.
13. REMEDIES OF LENDER. Upon the occurrence of any Event of Default or
upon any termination of this Agreement following an Event of Default, then
Lender shall have, in addition to all of its other rights under this Agreement
all of the rights and remedies provided in the General Security Agreement.
14. GENERAL PROVISIONS.
14.1. RIGHTS CUMULATIVE. Lender's rights and remedies under
this Agreement shall be cumulative and non-exclusive of any other rights or
remedies which Lender may have under any other agreement or instrument, by
operation of law or otherwise.
14.2. SUCCESSORS AND ASSIGNS. This Agreement is entered into
for the benefit of the parties hereto and their successors and assigns. It shall
be binding upon and shall inure to the benefit of the said parties, their
successors and assigns. Lender shall have the right, without the necessity of
any further consent or authorization by Borrower, to sell, assign, securitize or
grant participation in all, or a portion of, Lender's interest in the Loans, to
other financial institutions of the Lender's choice and on such terms as are
acceptable to Lender in its sole discretion.
14.3. NOTICE. Wherever this Agreement provides for notice to
any party (except as expressly provided to the contrary), it shall be given by
messenger, facsimile, certified U.S. mail with return receipt requested, or
nationally recognized overnight courier with receipt
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requested, effective when received by the party to whom addressed, and shall be
addressed as follows, or to such other address as the party affected may
hereafter designate:
If to Lender: Keltic Financial Partners, LP
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Managing Partner
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ (ext. 208)
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Pitney, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, LLP
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower: MMAC Communications Corp.
Attn: President
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇▇.▇▇▇, Inc.
Attn: Chief Financial Officer
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
14.4. STRICT PERFORMANCE. The failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement shall not waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by
Lender of any Default or Event of Default by Borrower under this Agreement or
any of the other Loan Documents shall not suspend, waive or affect any
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other Default or Event of Default by Borrower under this Agreement or any of the
other Loan Documents, whether the same is prior or subsequent thereto and
whether of the same or a different type.
14.5. WAIVER. Borrower waives presentment, protest, notice of
dishonor and notice of protest upon any instrument on which it may be liable to
Lender as maker, endorser, guarantor or otherwise.
14.6. CONFLICT OF LAWS. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York;
provided, however, that if any of the Collateral shall be located in any
jurisdiction other than New York, the laws of such jurisdiction shall govern the
method, manner and procedure for foreclosure of Lender's lien upon such
Collateral and the enforcement of Lender's other remedies in respect of such
Collateral to the extent that the laws of such jurisdiction are different from
or inconsistent with the laws of New York.
14.7. EXPENSES. If, at any time or times prior or subsequent
to the date hereof, regardless of whether or not an Event of Default then exists
or any of the transactions contemplated hereunder are concluded, Lender employs
counsel for advice or other representation, or incurs legal expenses, or
consulting fees and expenses, or other costs or out-of-pocket expenses in
connection with: (a) the negotiation and preparation of this Agreement or any of
the other Loan Documents, or any amendment of or modification of this Agreement
or any of the other Loan Documents; (b) the administration of this Agreement or
any of the other Loan Documents and the transactions contemplated hereby and
thereby; (c) periodic audits and appraisals performed by Lender; (d) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Lender, Borrower or any other Person) in any way relating to the Collateral,
this Agreement or any of the other Loan Documents or Borrower's affairs; (e) the
perfection of any lien on the Collateral; (f) any attempt to enforce any rights
or remedies of Lender against Borrower or any other Person which may be
obligated to Lender by virtue of this Agreement or any of the other Loan
Documents, including, without limitation, the Account Debtors; or (g) any
attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate
or otherwise dispose of or realize upon the Collateral; then, in any such event,
the reasonable attorneys' fees and expenses arising from such services and all
reasonable expenses, costs, charges and other fees of such counsel of Lender or
relating to any of the events or actions described in this Section shall be
payable by Borrower to Lender, and shall be additional Obligations hereunder
secured by the Collateral. Additionally, if any taxes (excluding taxes imposed
upon or measured by the net income of Lender, but including any intangibles tax,
stamp tax or recording tax) shall be payable on account of the execution or
delivery of this Agreement, or the execution, delivery, issuance or recording of
any of the other Loan Documents, or the creation of any of the Obligations
hereunder, by reason of any existing or hereafter enacted federal or state
statute, Borrower will pay (or will promptly reimburse Lender for the payment
of) all such taxes, including, but not limited to, any interest and penalties
thereon, and will indemnify and hold Lender harmless from and against liability
in connection therewith. Borrower shall also reimburse Lender for all other
expenses incurred by Lender in connection with the transactions contemplated
under this Agreement or the other Loan Documents,
-27-
including, without limitation, fees in connection with any bank account, the
Lockbox, wire charges, automatic clearing house fees and other similar costs and
expenses.
14.8. REIMBURSEMENTS CHARGED TO REVOLVING LOAN. With respect
to any amount advanced by Lender and required to be reimbursed by Borrower
pursuant to the foregoing provisions of Section 14.7, it is hereby agreed that
Lender may charge any such amount to Borrower's Revolving Loan on the dates such
reimbursement is made. Borrower's obligations under Section 14.7 shall survive
termination of the other provisions of this Agreement.
14.9. WAIVER OF RIGHT TO JURY TRIAL. Borrower waives the right
to trial by jury in the event of any action, suit, proceeding, counterclaim or
other litigation to which Lender and Borrower are parties in respect of any
matter arising under this Agreement or any other matter involving Borrower and
Lender, whether or not other persons are also parties thereto. Borrower
acknowledges that the foregoing waiver is a material inducement to Lender's
entering into this Agreement and that Lender is relying on the foregoing waiver
in its future dealings with Borrower. Borrower represents and warrants that
Borrower reviewed this jury waiver provision with its legal counsel, and has
made this waiver knowingly and voluntarily.
15. INDEMNIFICATION BY BORROWER/WAIVER OF CLAIMS.
15.1. INDEMNIFICATION. Borrower hereby covenants and agrees to
indemnify, defend (with counsel selected by Lender) and hold harmless Lender and
its officers, partners, employees and agents from and against any and all
claims, damages, liabilities, costs and expenses (including with limitation, the
reasonable fees and expenses of counsel) which may be incurred by or asserted
against Lender or any such other individual or entity in connection with:
(a) any investigation, action or proceeding arising out of or
in any way relating to this Agreement, any of the Loans, any of the Loan
Documents, any other agreement relating to any of the Obligations, any of the
Collateral, or any act or omission relating to any of the foregoing; or
(b) any taxes, liabilities, claims or damages relating to the
Collateral or Lender's liens thereon; or
(c) the correctness, validity or genuineness of any
instruments or documents that may be released or endorsed to Borrower by Lender
(which shall automatically be deemed to be without recourse to Lender in any
event), or the existence, character, quantity, quality, condition, value or
delivery of any goods purporting to be represented by any such documents; or
(d) any broker's commission, finder's fee or similar charge or
fee in connection with the Loans and the transactions contemplated in this
Agreement.
Notwithstanding anything contained herein to the contrary, the
foregoing indemnity obligations shall not apply to any claims, damages,
liabilities, costs and expenses solely attributable to Lender's gross negligence
or willful misconduct.
15.2. SAVINGS CLAUSE FOR INDEMNIFICATION. To the extent that
the undertaking to indemnify, pay and hold harmless set forth in Section 15.1
above may be unenforceable because it is violative of any law or public policy,
Borrower shall contribute the maximum
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portion which it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all matters referred to under Section 15.1.
15.3. WAIVER. To the extent permitted by applicable law, no
claim may be made by Borrower or any other Person against Lender or any of its
Affiliates, partners, officers, employees, agents, attorneys or consultants for
any special, indirect, consequential or punitive damages in respect of any claim
for breach of contract, tort or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement or the other Loan
Documents or any act, omission or event occurring in connection therewith; and
Borrower hereby waives, releases and agrees not to ▇▇▇ upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor. Neither Lender nor any of its Affiliates, partners,
officers, employees or agents shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the
transactions contemplated hereby, except for its or their own gross negligence
or willful misconduct.
16. MISCELLANEOUS.
16.1. ENTIRE AGREEMENT; AMENDMENTS; LENDER'S CONSENT. This
Agreement (including the Exhibits and Schedules thereto) and the other Loan
Documents supersede, with respect to their subject matter, all prior and
contemporaneous agreements, understandings, inducements or conditions between
the respective parties, whether express or implied, oral or written. No
amendment or waiver of any provision of this Agreement or any of the Loan
Documents, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in a Record Authenticated by Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
16.2. CROSS DEFAULT; CROSS COLLATERAL. Borrower hereby agrees
that (a) all other agreements between Borrower and Lender are hereby amended so
that a default under this Agreement is a default under all such other agreements
and a default under any one of the other agreements is a default under this
Agreement, and (b) the Collateral under this Agreement secures the Obligations
now or hereafter outstanding under all other agreements between Borrower and
Lender and the Collateral pledged under any other agreement with Lender secures
the Obligations under this Agreement.
16.3. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
16.4. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement or any of the other Loan Documents that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or the other Loan Documents or affecting the
validity or enforceability of such provision in any other jurisdiction.
16.5. TABLE OF CONTENTS; HEADINGS. The table of contents and
headings preceding the text of this Agreement are inserted solely for
convenience of reference and shall not constitute a part of this Agreement or
affect its meaning, construction or effect.
16.6. EXHIBITS AND SCHEDULES. All of the Exhibits and
Schedules to this Agreement are hereby incorporated by reference herein and made
a part hereof
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17. CONSENT TO JURISDICTION. AS PART OF THE CONSIDERATION FOR NEW
VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF BORROWER OR LENDER, BORROWER HEREBY CONSENTS AND AGREES
THAT ANY FEDERAL OR STATE COURT LOCATED IN ANY COUNTY IN NEW YORK STATE, SHALL
HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER
AND LENDER PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR
RELATED TO THIS AGREEMENT; PROVIDED, HOWEVER, LENDER MAY, AT ITS OPTION,
COMMENCE ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION TO OBTAIN POSSESSION OF OR FORECLOSE UPON ANY COLLATERAL, TO OBTAIN
EQUITABLE RELIEF OR TO ENFORCE ANY JUDGMENT OR ORDER OBTAINED BY LENDER AGAINST
BORROWER OR WITH RESPECT TO ANY COLLATERAL, TO ENFORCE ANY OTHER RIGHT OR REMEDY
UNDER THIS AGREEMENT OR TO OBTAIN ANY OTHER RELIEF DEEMED APPROPRIATE BY LENDER.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS CONSENT TO JURISDICTION
PROVISION WITH ITS LEGAL COUNSEL, AND HAS MADE THIS WAIVER KNOWINGLY AND
VOLUNTARILY.
[END OF TEXT; SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers thereunto duly authorized on the day
and year first above written.
KELTIC FINANCIAL PARTNERS, LP
By: KELTIC FINANCIAL SERVICES LLC,
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Partner
MMAC COMMUNICATIONS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
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EXHIBIT A
REVOLVING NOTE
$1,500,000.00 October __, 2002
FOR VALUE RECEIVED, MMAC Communications Corp., a corporation
with its principal executive office and place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Borrower"), promises to pay to the order of KELTIC
FINANCIAL PARTNERS, LP ("Lender"), at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇,
▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as Lender may from time to time in
writing designate, the principal sum of each Revolving Loan made by Lender to
Borrower under that certain
Revolving Loan Agreement dated of even date herewith
between Borrower and Lender ("Loan Agreement" and together with all of the other
documents, instruments or agreements executed in connection therewith, as the
same may be modified, amended, restated or replaced from time to time, the "Loan
Documents"). The aggregate unpaid principal balance hereof shall not exceed at
any time the sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS and 00/100
($1,500,000.00). Capitalized terms used herein but not otherwise defined shall
have the meanings set forth in the Loan Documents. The entire unpaid principal
balance hereof, together with the accrued interest thereon and accrued late
charges, if any, and all other sums due hereunder shall be due and payable on
the Termination Date.
Borrower also promises to pay interest to Lender monthly, in
arrears, on the first day of each month commencing on November 1, 2002 on the
average daily unpaid principal balance of this Note at the rate set forth in
Section 3.1 of the Loan Agreement.
This is the "Revolving Note" referred to in the Loan Agreement
and is entitled to the benefit of all of the terms and conditions and the
security of all of the security interests and liens granted by Borrower or any
other person to Lender pursuant to the Loan Agreement or any other Loan Document
including, without limitation, provisions regarding mandatory and optional
prepayment rights and premiums. Upon the occurrence of any Event of Default, the
entire unpaid principal amount owed Lender hereunder shall become immediately
due and payable hereof without further notice or demand.
Whenever any payment to be made under this Note shall be
stated to be due on a day other than a Banking Day, such payment shall be made
on the next succeeding Banking Day, and such extension of time shall be included
in the computation of any interest then due and payable hereunder.
The undersigned and all other parties who, at any time, may be
liable hereon in any capacity waive presentment, demand for payment, protest and
notice of dishonor of this Note. This Note may not be changed orally, but only
by an agreement in writing which is signed by the holder and the party or
parties against whom enforcement of any waiver, change, modification or
discharge is sought.
IN WITNESS WHEREOF, the undersigned has executed this Note the
day and year first above written.
MMAC COMMUNICATIONS CORP.
By:
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
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EXHIBIT B
FORM OF NOTICE OF BORROWING
Keltic Financial Partners, LP
555 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Avenue, Site ▇-▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Request for loan/advance
The undersigned requests a $__________ loan advance pursuant
to Section 2.1 of the Loan Agreement dated as of October 11, 2002 between Keltic
Financial Partners, LP and the undersigned ("Loan Agreement"). Capitalized terms
used herein and not otherwise defined herein shall have the meanings given to
them in the Loan Agreement.
Please wire the requested loan advance [to our operating
account number __________ at __________] or [in accordance with the following
wire instructions [insert instructions]. Please call the undersigned to confirm
receipt of this fax at _____________.
Thank you.
MMAC COMMUNICATIONS CORP.
By:
--------------------------------
(title)
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EXHIBIT C
BORROWING BASE CERTIFICATE
AS OF
---------------------
BORROWER:
PREVIOUS DAY AIR { / / } $ -
Sales: $ -
Credits: $ -
Debits: $ -
Collections: $ -
Coll. Adj's: $ -
ENDING A/R{ / / }
Ineligibles:
Past Due a/o: $ -
$ -
ELIGIBLE A/R: $ -
A/R @___%: $ -
TOTAL AVAILABLE COLLATERAL: $ -
OUTSTANDING LOAN BALANCE AS OF / / $ -
ADVANCE {//} $ -
OUTSTANDING LOAN BALANCE AS OF / / $ -
NET AVAILABILITY:
I hereby certify in connection with the Loan Agreement, dated
as of October 11, 2002 between MMAC Communications Corp. and Keltic Financial
Partners, LP ("Loan Agreement"), that the information and each calculation set
forth above is to the best of my knowledge, true, correct and complete as of the
date hereof and are calculated in accordance with the Loan Agreement. Unless
otherwise defined herein, all terms used herein shall have the meanings ascribed
to them in the Loan Agreement and General Security Agreement.
Prepared By: Dated:
---------------------------------------- -------------------
(Authorized Signature)
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EXHIBIT D
COMPLIANCE CERTIFICATE
MMAC COMMUNICATIONS CORP. ("Borrower") hereby certifies to KELTIC FINANCIAL
PARTNERS, LP in accordance with the provisions of a Loan Agreement between
Borrower and Lender dated as of the 11th day of October, 2002, as the same from
time to time may be amended, supplemented or otherwise modified ("Agreement")
that:
A. General
(i) Borrower has complied in all respects with all the terms,
covenants and conditions of the Agreement which are binding upon them;
(ii) there exists no Event of Default or Default as defined in
the Agreement;
(iii) the representations and warranties contained in the
Agreement are true in all respects with the same effect as though such
representations and warranties had been made on the date hereof; and
B. Financial Covenants
As of the date hereof or, from such period as may be
designated below, the computations, ratios and calculations as set forth below,
are true and correct:
(a) Fixed Charge Coverage Rates
(b) EBITDA
WITNESS the signature of the undersigned duly authorized
officer of Borrower on ___________,20__.
MMAC COMMUNICATIONS CORP.
By
---------------------------------
Name:
------------------------------
Title:
-----------------------------
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SCHEDULE 5.2
TRADENAMES
REGISTERED TRADENAMES:
Delta Computec Inc.
DCi
DCi Professional Services
REGISTERED SERVICE ▇▇▇▇:
PC RESERVE
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SCHEDULE 5.3
AFFILIATES AND SUBSIDIARIES
▇▇▇▇▇▇▇▇.▇▇▇, Inc. - Parent
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SCHEDULE 5.8
REAL ESTATE
LEASED FACILITIES: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
SUBLEASE: Teterboro, New Jersey - Ameriban
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SCHEDULE 5.9
PATENTS AND TRADEMARKS
Registered Service ▇▇▇▇:
PC Reserve
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SCHEDULE 5.13
LITIGATION
None.
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SCHEDULE 5.14
RECEIVABLES LOCATIONS
MMAC Communications Corp., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
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SCHEDULE 5.17
LIENS
AUTOMOBILES:
1998 Chevy G20 Van (Leases have expired, but Borrower has been charged
monthly administration costs - $25.00/per vehicle each month. Vehicles
can be returned at no charge.)
Ford Motor Credit - 2001 Lincoln
OFFICE EQUIPMENT:
Richo - 2 copiers/1 fax
Pitney ▇▇▇▇▇ postage machine
Sales Tax Lien
State Board of Equalization (California) has a sales tax lien in
California. Borrower does not have any assets in California, so
American Express charges processed for services are being withheld by
California sales tax authority to satisfy this lien.
POTENTIAL SALES AND USE TAX LIENS:
Company Jurisdiction Tax Period Amount
------- ------------ ---------- -----------
Delta Data Net New York State 5/31/96 $135,000.00
Delta Computec State Board of Equalization (California) 3/31/99 $ 2,520.00
Delta Computec Commonwealth of Pennsylvania 12/31/97 $ 11,431.00
Delta Computec Massachusetts Department of Revenue 10/31/96 $ 18,016.00
The aforesaid sales and use tax liens are subject to the provisions of
the APA.
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SCHEDULE 5.18
INDEBTEDNESS
The Indebtedness relating to the automobile and office equipment leases
referenced in Schedule 5.17.
The contingent payments due to Delta Computec Inc. pursuant to the APA.
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SCHEDULE 5.24
LIST OF BANK ACCOUNTS
None.
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