FOURTH AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the
"Agreement") made the 10th day of December, 1996, and effective as of September
30, 1996, by and between PNC BANK, NATIONAL ASSOCIATION, successor by merger to
MIDLANTIC BANK, N.A. ("Lender"), having offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; THE JUDGE GROUP, INC.. a corporation organized
under the laws of the Commonwealth of Pennsylvania, formerly known as "Judge,
Inc." ("Judge Group") having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; JUDGE, INC., a corporation organized
on September 27, 1996 under the laws of the Commonwealth of Pennsylvania ("New
Judge, Inc.") having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; JUDGE TECHNICAL SERVICES, INC., a
corporation organized under the laws of the Commonwealth of Pennsylvania ("Judge
Technical") having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; JUDGE PROFESSIONAL SERVICES, INC., a
corporation organized under the laws of the Commonwealth of Pennsylvania ("Judge
Professional") having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; THE BERKELEY ASSOCIATES CORP., a
corporation organized under the laws of the State of Delaware ("Berkeley
Associates") having its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; JUDGE ACQUISITION, INC., a corporation
organized under the laws of the State of Delaware ("Judge Acquisition") having
its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Judge Acquisition also trades under the name Systems
Automation, Inc.") JUDGE IMAGING SYSTEMS, INC., a Delaware corporation ("Judge
Imaging"), successor by merger to JUDGE COMPUTER CORPORATION, a corporation
organized under the laws of the State of New Jersey and to DATAIMAGE, INC., a
Delaware corporation ("DataImage"), having its principal place of business at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; JUDGE ELECTRONICS
SERVICES OF FLORIDA, INC., a Florida corporation ("Judge of Florida") having its
principal place of business at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇; JUDGE INC. OF NEW JERSEY, a New Jersey corporation ("Judge of New
Jersey") having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ and JUDGE TECHNICAL SERVICES OF N.J., INC. a New Jersey
corporation ("Judge Technical of NJ") having its principal place of business at
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter Judge Group,
New Judge, Inc., Judge Technical, Judge Professional, Berkeley Associates, Judge
Acquisition, Judge Imaging, Judge of Florida, Judge of New Jersey and Judge
Technical of N.J. are collectively called "Borrower or Borrowers"); and ▇▇▇▇▇▇
▇. Judge, Jr., ("Surety"), residing at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Surety") and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ("Surety"),
husband and wife, each residing at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ (each of the foregoing three Sureties being collectively called the
"Sureties").
A. BACKGROUND
Commencing on December 10, 1992, Lender loaned to Judge Group (formerly
known as Judge, Inc.) and Judge Technical a revolving line of credit loan
facility in the maximum principal sum of up to Two Million Dollars ($2,000,000)
pursuant to the terms of a Revolving Security Agreement of even date.
Thereafter, Lender loaned various amounts to the Borrowers or to some of the
Borrowers in the form of a revolving line of credit loan facility, which as of
October 1, 1995, was in the principal sum of Five Million Five Hundred Thousand
Dollars ($5,500,000). On June 2, 1995, pursuant to a Second Amended and Restated
Loan and Security Agreement of that date, all of the Borrowers became
co-borrowers for the amounts due the Lender for the revolving line of credit
loan facilities.
All of the extensions of credit by the Lender to Borrowers were secured
by a first security interest in all of the assets of the Borrowers and by the
surety agreement of the Sureties. All of the extensions of credit by the Lender
to the Borrowers were evidenced by promissory notes, by a Loan and Security
Agreement as restated and amended on October 15, 1993, March 8, 1994, February
16, 1995, June 2, 1995, October 1, 1995 and on March 1, 1996, by financing
statements filed by Lender with the applicable recording offices, and by other
Relevant Documents (hereafter defined) executed and delivered by the Borrowers
and/or Sureties to the Lender.
On September 3, 1996 the Borrowers and the Sureties requested the
Lender to renew and/or increase the principal amount of the Revolving Loan
(hereafter defined in Section 2A) to Eleven Million Dollars ($11,000,000),
subject to the terms and conditions herein and to the Relevant Documents
(hereafter defined), and the Lender, subject to the terms and conditions in the
Relevant Documents, agreed to renew and increase the principal amount of the
Revolving Loan to Eleven Million Dollars ($11,000,000).
Since September 3, 1996, certain events have occurred which added to or
changed the corporate structure or organization of the Borrowers. These
consisted of the following:
(a) On or about September 23, 1996, the then existing Pennsylvania
corporation, Judge, Inc., changed its name to The Judge Group, Inc.;
(b) On or about September 26, 1996, Judge Group acquired the issued and
outstanding capital stock of Berkeley Associates;
(c) On or about September 27, 1996, Judge Group formed the new
Pennsylvania subsidiary corporation now known as Judge, Inc.; and
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(d) On or about July 30, 1996, Judge Group formed the new Delaware
subsidiary corporation known as Judge Acquisition, Inc. On or about September
30, 1996, Judge Group acquired the assets of Systems Automation, Inc. a
Massachusetts corporation and contributed same to Judge Acquisition. For
purposes of collecting the receivables of Systems Automation, Judge Acquisition
is using the name "Systems Automation".
On or about September 9, 1996, PNC Bank, National Association, acquired
Midlantic Bank, N.A. by merger. The Lender is now known as PNC Bank, National
Association.
The Borrowers and the Sureties are desirous of participating in the
Revolving Loan under the terms and conditions previously agreed upon by the
parties in the Third Amended and Restated Loan and Security Agreement signed by
the parties on September 3, 1996, and the Lender, subject to the terms and
conditions of the Relevant Documents including this Fourth Amended and Restated
Loan and Security Agreement, has agreed to include all the Borrowers as
borrowers under the Revolving Loan, to make certain modifications to the terms
and conditions thereof, and to memorialize same, hence this Agreement to be
effective as of September 30, 1996.
B. INCORPORATION OF RECITALS
The recitals set forth in the Background section of this Agreement are
hereby incorporated by reference into this Agreement as if same had been fully
set forth at length herein.
C. REAFFIRMATION OF AMOUNT DUE
Borrower and Sureties hereby acknowledge and agree that as of December
9, 1996, there is due and owing to Lender on the Revolving Loan the principal
sum of Eight Million Seven Hundred Forty Six Thousand Four Hundred Ninety Nine
and 52/100 Dollars ($8,746,499.52) and all accrued and unpaid interest thereon.
This Fourth Amended and Restated Loan and Security Agreement restates and amends
the Third Amended and Restated Loan and Security Agreement dated September 3,
1996, and supersedes same only to the extent that this Agreement is inconsistent
with the Third Amended and Restated Loan and Security Agreement.
D. AGGREGATE PRINCIPAL SUM DUE; RENEWAL COMMITTED
LINE OF CREDIT NOTE
At the request of Borrower, the Lender on September 3, 1996, increased
the line of credit due the Lender by the Borrower from Five Million Five Hundred
Thousand Dollars ($5,500,000.00) to Eleven Million Dollars ($11,000,000)
(defined hereinbelow
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as the "Revolving Loan"). The Revolving Loan shall be evidenced by the Renewal
Committed Line of Credit Note of the Borrower of even date herewith (the
"Committed Line of Credit Note"). Anything to the contrary contained herein, in
the Committed Line of Credit Note or any other Relevant Documents
notwithstanding, at no time shall the aggregate principal amount of the
Revolving Loan and the Term Loan outstanding and due the Lender by the Borrower
exceed the principal sum of Eleven Million Dollars ($11,000,000).
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein and intending to be legally bound hereby, the parties
restate their agreements and understandings as follows:
1. DEFINITIONS
"Account" - as defined in Section 2A.1(c)(i).
"Banking Day" - any day other than a Saturday, Sunday or legal
holiday for banks under the laws of the Commonwealth of Pennsylvania.
"Capital Expenditures" as defined in Section 6.19.
"Collateral" - as defined in Section 3.2(b).
"Committed Line of Credit Note" - the Eleven Million Dollar
($11,000,000) Renewal Committed Line of Credit Note evidencing the Revolving
Loan and dated of even date herewith, when not referred to by its full title as
more fully described in Section 2A.1(a).
"Default Rate" - a rate of interest per annum in excess of the
rate otherwise applicable at the time to the Revolving Loan or the Term Loan as
set forth in the Notes.
"Equipment" - as defined in Section 3.2(c).
"ERISA" - as defined in Section 4.17.
"Event of Default" - as defined in Section 8.
"Immediately" - shall mean within three (3) business days.
"Initial Public Offering" - as described in Section 2B.
"Interest Coverage" - as defined in Section 6.18.
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"Inventory" - as defined in Section 2A.1(c)(iv).
"Liabilities" - shall mean liabilities as determined in
accordance with generally accepted accounting principles but excludes debt
subordinated to the Obligations due the Lender.
"Limitation on Compensation" - as defined in Section 6.20.
"Loans" - the Revolving Loan and the Term Loan.
"Notes" - The Committed Line of Credit Note and the Term
Loan Note.
"Obligations" - as defined in Section 3.2(a).
"Prime Rate" - the rate of interest announced from time to
time by Lender as its "prime rate" or "prime lending rate," which rate is
determined from time to time by Lender as a means of pricing some loans to its
customers and is neither tied to any external rate of interest or index nor
necessarily reflects the lowest rate of interest actually charged by Lender to
any particular class or category of customers. The prime rate of the Lender may
not necessarily be the same rate of interest as charged by other lenders as
their prime or base rate of interest.
"Qualified Accounts" - as defined in Section 2A.1(c)(ii).
"Ratio of Liabilities" - as defined in Section 5.15.
"Related Entity" - any corporate subsidiary of Borrower, and
any unincorporated association or other entity through which Borrower conducts
any part of its business.
"Relevant Documents" - any and all documents and instruments
delivered to Lender pursuant or incident to this Agreement or the Loans (a) by
Borrower or any Related Entity, (b) by any pledgor or grantor of a lien,
security interest or other right, or (c) by any guarantor of any of the
Obligations, including without limitation the guaranty of the Obligations of
Borrower executed by the Sureties on even date and the prior Relevant Documents
which continue in full force and legal effect not superseded hereby.
"Revolving Loan" - as defined in Section 2A.
"Revolving Loan Limit" - as defined in Section 2A.1(b).
"Sureties" shall mean ▇▇▇▇▇▇ ▇. Judge, Jr., individually;
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, individually and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, individually, husband and
wife.
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"Tangible Net Worth" - as defined in Section 5.15.
"Term Loan" - as defined in Section 2D.
"Term Loan Note" - the promissory Commercial Term Note dated
September 3, 1996, evidencing the Term Loan of Lender to Borrower.
"UCC" - the Uniform Commercial Code as in effect from time to
time in the Commonwealth of Pennsylvania.
"Unbilled Receivables" shall mean amounts which are due for
services rendered for which an invoice has not as yet been issued to a customer.
"Working Capital" - as defined in Section 6.18.
2A. REVOLVING LOAN; ACCOUNTS; LETTERS OF CREDIT;
INVENTORY
2A.1 Amount and Certain Definitions.
(a) Lender may at its discretion, upon the request of
Borrower, make loans hereunder to Borrower ("Revolving Loan") from time to time
on a revolving loan basis in an aggregate principal amount not in excess at any
time outstanding of the Borrower's Revolving Loan Limit; provided that, if the
outstanding amount of the Revolving Loan should exceed the Revolving Loan Limit
at any time, such excess (i) shall nevertheless be secured by the Collateral and
be subject to the terms of this Agreement, and (ii) shall be payable immediately
upon demand by Lender. No out-of-formula overadvances shall be permitted at any
time. The Revolving Loan shall be payable (i) on the maturity date of the
Revolving Loan as set forth in the Committed Line of Credit Note, or (ii) at
such other time as is provided in Section 9 or elsewhere in this Agreement,
whichever of (i) or (ii) shall first occur. The Revolving Loan shall be
evidenced by the Committed Line of Credit Note; except as may be otherwise
provided in the Committed Line of Credit Note, the Revolving Loan shall be
payable in accordance with the terms of this Agreement.
(b) Definition of Revolving Loan Limit. Borrower's
Revolving Loan Limit shall, subject to Sections 2A.1(d) and 2D hereinbelow, be
the lesser of:
(i) Eleven Million Dollars ($11,000,000) less the
principal balance due by the Borrower on the Term Loan described in Section 2D
below and the outstanding principal balance due by the Borrower on the Letters
of Credit described in Section 2A.1(d) below; or
(ii) The value of the following Collateral determined
as follows:
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(A) Eighty (80%) percent of the Qualified Accounts (less
reserves determined by Lender for advertising allowances, warranty claims and
other contingencies) of Judge Group, New Judge, Inc., Judge Technical, Berkeley
Associates, Judge Acquisition, Judge Professional, Judge of Florida, Judge of
New Jersey, Judge Technical of NJ and Judge Imaging; plus
(B) Subject to Section 2B hereinbelow, sixty (60%) percent
of the Unbilled Receivables of Judge Technical, but in no event may advances to
be made by the Lender against said Unbilled Receivables exceed One Million Five
Hundred Thousand Dollars ($1,500,000); less
(C) Fifty percent (50%) of the outstanding principal
balance due Lender at any given time on the Term Loan.
Anything to the contrary contained herein below
notwithstanding, the Lender may increase or decrease the stated advance rates
with respect to Qualified Accounts and Unbilled Receivables of the Borrower as
Lender in its sole and absolute discretion may determine. As provided in Section
2A.1(d) and in Section 2D below, as the Borrower commences making monthly
payments to the Lender on the Term Loan, subject to the terms of this Agreement,
the Borrower's availability under the Revolving Loan Limit shall increase in an
amount equal to the principal reduction made by the Borrower on the Term Loan as
of the date said principal payment is made by the Borrower, but in no event
shall the Revolving Loan Limit exceed Eleven Million Dollars ($11,000,000.00).
Notwithstanding anything herein to the contrary, Borrower
acknowledges that the Revolving Loan matures on May 31, 1998 and that during the
time the Revolving Loan is outstanding, the aforementioned advance rate of
eighty (80%) percent may be reduced by the Lender at its sole discretion and
that the Lender may establish reserves or reduce advance rates with respect to
Qualified Accounts or limit advances in the nature of letters of credit, at its
sole and absolute discretion; provided, however, the Lender agrees to notify the
Borrower in writing at least fifteen (15) days in advance of any decrease in the
advance rate.
Lender, upon fifteen (15) days prior written notice to the
Borrower, shall have the right to increase or decrease the Revolving Loan Limit
from time to time.
(c) Definitions of Account; Qualified Account; Inventory;
Qualified Inventory; Net Value of Qualified Inventory.
(i) The term "Account" shall mean all items described
in the UCC definition thereof and all of the following, whether or not so
described (in all cases whether now existing or hereafter created): all
obligations of any kind at any time due or owing to Borrower and all rights of
Borrower to receive payment or any other
7
consideration (whether classified under the UCC or the law of any other state as
accounts, accounts receivable, contract rights, chattel paper, general
intangibles, or otherwise) including without limitation invoices, contract
rights, accounts receivable, general intangibles, choses-in-action, notes,
drafts, acceptances, instruments and all other debts, obligations and
liabilities in whatever form owing to Borrower from any person, firm,
corporation, governmental authority or other entity, together with all security
for any thereof, and all of Borrower's rights to goods sold (whether delivered,
undelivered, in transit or returns), represented by any thereof, together with
all proceeds and products of any of the foregoing.
(ii) The term "Qualified Account" shall mean an
account or accounts which have been identified and described to Lender's
satisfaction, are represented by Borrower (by its acceptance of the Revolving
Loan thereon) as meeting all of the following criteria on its origination date
and thereafter until collected, and is in all other respects acceptable to
Lender:
(A) Borrower is the sole owner of the account and
has not sold, assigned or otherwise transferred it, and the Account is not
subject to any claim, lien or security interest;
(B) The Account is bona fide and legally
enforceable and owing to Borrower for the sale of goods or performance of
services in the United States and in the ordinary course of business and the
Account does not require any further act on the part of Borrower to make it
owing by the Account debtor, and Borrower has delivered to Lender (or, at the
time of origination of the Account, if required by Lender, will deliver to
Lender) invoices, ▇▇▇▇▇▇▇▇, shipping documents and other documents evidencing
the obligation to pay the account;
(C) The Account does not represent a conditional
sale, consignment or other sale on a basis other than that of absolute sale, is
not evidenced by any note, instrument, chattel paper or like document, and does
not arise out of a contract with the United States or any of its departments,
agencies or instrumentalities;
(D) The Account is invoiced for payment within
five (5) days of the date services are rendered or Inventory or other goods
represented thereby are shipped to the Account debtor, and the Borrower's
invoice has not been outstanding for more than ninety (90) days, except with
respect to Accounts due Judge Imaging by municipalities or school districts
where the Borrower's invoice has not been outstanding thirty (30) days after the
actual due date up to a maximum of one hundred twenty (120) days;
8
(E) The amount of the Account included in
calculating the Revolving Loan Limit does not exceed twenty (20%) percent of
Borrower's total Qualified Account at the time outstanding;
(F) The Account is not subject to any defense,
offset, counterclaim, credit, allowance or adjustment except usual and customary
prompt payment discounts, nor has the Account debtor returned the goods or
indicated any dispute or complaint concerning them;
(G) No other Account of the Account debtor is
overdue in payment, the Borrower has not received any notice, nor has it any
knowledge, of any facts which adversely affect the credit of the Account debtor;
(H) The Account debtor is not a Related Entity or
other affiliate of Borrower nor a director or officer of Borrower or an
affiliate of any director or officer; and
(I) Any contracted imaging sale by Borrower
assigned to the Lender must be accompanied by a signed customer acceptance
criteria sheet.
(d) Letters of Credit.
Lender, at its sole discretion, may issue for the account of
Borrower merchandise or stand-by letters of credit in form and content
satisfactory to Lender, at its sole discretion, with a term not to extend beyond
May 31, 1998. Notwithstanding the foregoing, at no time shall the aggregate face
amount of all outstanding letters of credit issued under the Revolving Loan
exceed the amount of One Hundred Thousand Dollars ($100,000). Borrower's ability
to borrow under the Revolving Loan from time to time shall be reduced by an
amount equal to the aggregate face amount of outstanding letters of credit. In
the event the Lender is required to fund any letters of credit, the amount
advanced by the Lender shall bear interest at the Default Rate of interest
applicable in the Committed Line of Credit Note.
In the event the Revolving Loan is terminated for any reason
or demand is made thereunder, Borrower will deposit with Lender an amount equal
to the face amount of all letters of credit then outstanding which have been
issued under the Revolving Loan, plus all fees related thereto or to accrue
thereunder. Such funds will be held by Lender as cash collateral to secure
Borrower's obligations hereunder.
(e) The term "Inventory" shall mean all items
described in the UCC definition thereof and all of the following, whether or not
so described (in all cases whether now owned or hereafter acquired by Borrower
and wherever located): all goods,
9
merchandise or other personal property held by Borrower for sale or lease or to
be furnished under labels and other devices, names or marks affixed thereto for
purposes of selling or identifying the same or the seller or manufacturer
thereof, and all right, title and interest of Borrower therein and thereto; all
raw materials, work or goods in process; and all materials and supplies of any
kind or description used or usable in connection with the manufacture,
packaging, shipping, advertisement, sale or finishing of any of the foregoing,
together with all proceeds and products of any of the foregoing.
2A.2 Interest Rate. Except in the event of the occurrence of
an Event of Default as provided in the Committed Line of Credit Note and subject
to Section 2B.2(b)(iii) below, the Revolving Loan portion of the Loan (i.e.,
excluding any principal balance due by the Borrowers to the Lender on the Term
Loan) shall bear interest at a fluctuating interest rate per annum equal at all
times to one (1%) percent above Lender's Prime Rate in effect from time to time,
each change in such fluctuating rate to take effect simultaneously with the
corresponding change in the Lender's Prime Rate, without notice to Borrower;
provided, however, upon the occurrence of an Event of Default, the Revolving
Loan shall bear interest at the default rate of interest set forth in the
Committed Line of Credit Note.
2A.3 Payment of Interest. Interest on the Revolving Loan shall
be debited, on the due date from any account maintained by Borrower with Lender.
Otherwise, Borrower will be obligated to make such payments directly to Lender.
All payments are to be made in immediately available funds. If Lender accepts
payment in any other form, such payments shall not be deemed to have been made
until the funds comprising such payment have actually been received by or made
available to Lender.
2A.4 Collection and Remittance.
(a) Borrower shall collect its accounts receivable only in
the ordinary course of Business. All accounts receivable collections of Borrower
will be deposited in a non-interest bearing cash collateral account maintained
at Lender (the "Collection Account"). Lender will have sole dominion and control
over all items and funds in the Collection Account and such items and funds may
be withdrawn only by Lender. Lender will have the right to apply all or any part
of such funds towards payment of any of the indebtedness of Borrower to Lender
under the Revolving Loan; provided, however, upon the occurrence of a default or
an event with which the giving of notice or the passage of time or both would be
a default hereunder or under the Loan Documents, Lender may apply all or any
part of such funds towards payment of any indebtedness of Borrower to Lender.
(b) All items deposited into the Collection Account will
be credited by Lender as payments of the principal balance of the Revolving Loan
on the day on which such items are deposited into the Collection Account. As
compensation for the foregoing arrangement, Borrower will pay to Lender a sum
equal to three (3) Banking
10
Days interest on all such deposits at the interest rate for the Revolving Loan.
Borrower will reimburse Lender on demand for the amount of any items credited as
provided above and subsequently returned unpaid. Lender may terminate the
foregoing arrangement upon notice to Borrower.
(c) Borrower agrees that all monies, checks, notes,
instruments, drafts or other payments relating to or constituting proceeds of
any accounts receivable of Borrower which come into the possession or under the
control of Borrower or any employees, agents or other persons acting for or in
concert with Borrower, shall be received and held in trust for Lender and such
items shall be the sole and exclusive property of Lender. Immediately upon
receipt thereof, Borrower and such other persons shall remit the same or cause
the same to be remitted, in kind, to Lender. Borrower shall deliver or cause to
be delivered to Lender, with appropriate endorsement and assignment to Lender
with full recourse to Borrower, all instruments, notes and chattel paper
constituting an account receivable. Lender is hereby authorized to open all mail
addressed to Borrower and endorse all checks, drafts or other items for payment
on behalf of Borrower. Lender is granted a power of attorney by Borrower with
full power of substitution to execute on behalf of Borrower and in Borrower's
name or to endorse Borrower's name on any check, draft, instrument, note or
other item of payment or to take any other action or sign any document in order
to effectuate the foregoing. Such power of attorney being coupled with an
interest is irrevocable.
2A.5 Determination of Balance of Revolving Loan.
(a) In determining the outstanding balance of the
Revolving Loan, (i) domestic checks received by Lender's Asset Based Secured
Lending Department before three o'clock p.m. (3:00 p.m.) of a Banking Day will
be credited on that Banking Day, and thereafter on the following Banking Day;
(ii) any other form of funds received by Lender's Asset Based Secured Lending
Department will be credited on the Banking Day when that Department has received
notification of collection if before three o'clock p.m. (3:00 p.m.), and
thereafter on the following Banking Day; and (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.
(b) For the purpose of computing interest on the Revolving
Loan and other Obligations, interest shall continue to accrue on the amount of
any payment received by Lender's Asset Based Secured Lending Department for a
period of three (3) Banking Days after it is credited.
2A.6 Monthly and Interim Statements. Once each month
Lender shall render a statement of account to Borrower showing the current
status of principal, interest and service charges with respect to the Revolving
Loan. If these statements or any interim statements indicate that the
outstanding balance of the Revolving Loan
11
exceeds the Revolving Loan Limit, Borrower, at Lender's option, forthwith shall
either furnish additional Collateral satisfactory to Lender or pay the
difference in cash. The statement of account rendered by Lender shall be
considered correct, accepted by Borrower and conclusively binding upon Borrower,
unless Borrower gives Lender written notice to the contrary within ten (10)
Banking Days after the sending of the statement by Lender. If Borrower disputes
the correctness of Lender's statement, Borrower's notice shall specify in detail
the particulars of its basis for contending that Lender's statement is
incorrect.
2A.7 Overdrafts. In the event Lender honors a check of
Borrower resulting in Borrower's checking account being overdrawn, then Lender
shall be deemed to have loaned the amount of such overdraft to Borrower,
pursuant to the terms of this Section 2A, on the Lender's Banking Day
immediately preceding the day on which the Borrower's check is tendered to
Lender for collection. Lender shall not be obligated to honor any overdraft of
Borrower, whether or not it has done so in the past.
2A.8 Audit Fees. There will be an annual audit fee of One
Thousand Five Hundred Dollars ($1,500) due and payable in advance on December
31, 1996, and on December 31 of each calendar year thereafter while the
Revolving Loan remains outstanding.
2A.9 Revolving Loan Facility Fee. The Borrower shall pay to
the Lender a fee equal to one-fourth (1/4%) percent of the unused portion of the
Revolving Loan, which fee shall be due and payable quarterly and in arrears five
(5) business days after the end of each calendar quarter (three (3) months)
commencing with the quarter ended September 30, 1996 and on the fifth (5th)
business day after the end of each December, March, June and September of each
calendar year while the Revolving Loan is outstanding.
2A.10 Prepayment. The Revolving Loan may be prepaid in full
and the Revolving Loan terminated by Borrower at any time; provided, however,
any prepayment and termination of the Revolving Loan by the Borrower shall be
accompanied by the following:
(a) One (1%) percent of the total Revolving Loan credit
facility if prepayment occurs in the first twelve (12) months after September 3,
1996 ("Year 1"); and
(b) One-half of one (.5%) percent of the total Revolving
Loan credit facility if prepayment occurs in the second twelve (12) months after
September 3, 1996 ("Year 2").
12
2B. INITIAL PUBLIC OFFERING BY BORROWER
2B.1 Borrowers' Intention To Do An Initial Public Offering.
The Borrower has advised the Lender that it intends to increase shareholders'
equity by at least Twenty Million Dollars ($20,000,000) by means of the sale of
capital stock in an initial public offering (the "Initial Public Offering"). The
Borrower anticipates that the Initial Public Offering will be completed by
January 21, 1997.
2B.2 Modification of Loan Terms Upon Completion of Public
Offering.
(a) The Lender agrees to modify the terms of the Loans as
set forth below in Section 2B.2(b), provided the following conditions precedent
are first fulfilled by the Borrower:
(i) The Borrower receives net proceeds from the
Initial Public Offering of at least Twenty Million Dollars ($20,000,000), such
net proceeds have increased the Tangible Net Worth of Borrower and the ratio of
Liabilities to Tangible Net Worth as described in Section 5.15 hereof does not
exceed 2:1;
(ii) The Term Loan due the Lender described in Section
2D below has been paid in full from the proceeds of the Initial Public Offering;
and
(iii) The Borrower is not in default on the Loans due
the Lender and is otherwise in compliance with all of the terms and conditions
of the Relevant Loan Documents.
(b) Upon receipt from the Borrower of a written request to
modify the terms of the Loans and a certification by the Chief Executive Officer
of the Borrower that the conditions precedent set forth in Section 2B.2(a) above
have been fulfilled, the Lender agrees to modify the terms of the Revolving Loan
as follows:
(i) The Unlimited Surety Agreement of the Sureties
shall be released;
(ii) The Lender shall no longer be required to make
advances for the Revolving Loan based upon the Unbilled Receivables of Judge
Technical as set forth in Section 2A1.b(ii)(B) above;
(iii) The interest rate on the Revolving Loan shall be
reduced to a fluctuating interest rate per annum equal at all times to the
Lender's Prime Rate in effect from time to time, each change in such fluctuating
rate to take effect simultaneously with the corresponding change in the Lender's
Prime Rate, without prior
13
notice to Borrower; provided, however, upon the occurrence of an Event of
Default, the Revolving Loan shall bear interest at the default rate of interest
set forth in the Committed Line of Credit Note; and
(iv) The Lender agrees to review and reset, in the
Lender's sole discretion, the financial reporting requirements in Section 5.5.,
the Financial Covenants set forth in Sections 5.15, and the Negative Covenants
in Section 6 hereinbelow.
2C. ADDITIONAL PROVISIONS RE: INTEREST AND PAYMENTS ON ALL THE LOANS
2C.1 Interest Calculation; Lawful Rate. Interest on the Loans
shall be calculated on a daily basis upon the unpaid principal balance, with
each day representing 1/360th of a year. If the interest rate calculated in
accordance with any provision of this Agreement for the Loans would at any time
exceed the maximum permitted by any law then applicable to such Loans, then for
such period as such rate would exceed the maximum permitted by such law (and no
longer), the rate of interest payable on such Loans shall be reduced to the
maximum permitted by such law.
2C.2 Charge Against Borrower. Lender may, at its discretion,
charge the amount of any payment of principal or interest on the Loans to any
checking or loan account of Borrower, deduct such amount from any future Loan to
Borrower, or apply any Collateral proceeds or other funds received by Lender
against payment of such amount.
2C.3 Non-Banking Days. If any payment pursuant to this
Agreement or any of the Relevant Documents shall be stated to be due on a day
other than a Banking Day, such payment may be made on the next succeeding
Banking Day and such extension of time shall be included in computation of the
interest or other payment due.
▇▇.▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ of Increased Cost to Lender. If any law,
regulation or guideline, or change in any law, regulation or guideline or in the
interpretation thereof, or any order or ruling by any regulatory body, court or
other governmental authority, or compliance by the Lender with any request or
directive (whether or not having the force of law) of any such regulatory body,
court or authority, shall impose, modify, or deem applicable to Lender any
reserve, capital, special deposit or other requirement or condition in respect
of this Agreement or any of the Loans, which results in an increased cost or
reduced benefit to Lender in maintaining any of the Loans (as determined by
reasonable allocation of the aggregate of such increased costs or reduced
benefits to Lender resulting from such event), then Borrower shall pay to Lender
from time to time, upon demand, additional amounts sufficient to compensate
Lender for such increased costs or reduced benefits, together with interest on
each such amount from a date ten (10) days after the date demand until payment
in full thereof, at
14
the highest rate then applicable to the Loans. A certificate setting forth in
reasonable detail such increased cost incurred or reduced benefit realized by
Lender as a result of any such event shall be conclusive as to the amount
thereof, absent manifest error.
2C.5 Name of Lender. Although some of the Relevant Documents
may bear the name of Lender's predecessor by merger, Midlantic Bank, N.A., the
term "Lender" wherever used is intended to mean PNC Bank, National Association.
2D. TERM LOAN
2D.1 Amount and Terms of Term Loan; Documents;
Collateral.
(a) Subject to Section 2B hereof, Lender loaned to
Borrower on September 3, 1996, as a Term Loan the principal sum of One Million
Dollars ($1,000,000) to refinance, in part, amounts previously borrowed by
Borrower from the Lender on the Revolving Loan. Borrower's ability to borrow
under the Revolving Loan from time to time shall be reduced by an amount equal
to the principal balance outstanding on the Term Loan; provided, however, as the
Term Loan principal is reduced (repaid), the availability for borrowing under
the Revolving Loan shall be correspondingly restored as is provided in Section
2A.1(b)(i) above.
(b) The proceeds of the Term Loan were used, in
part, by the Borrower to satisfy the indebtedness then due by the Borrower to
the Internal Revenue Service for past due withholding taxes, interest and
penalties of approximately Four Hundred Sixty-Five Thousand Dollars
($465,000.00), to repay an indebtedness then due by the Borrower in the
approximate amount of Three Hundred Twenty-Two Thousand Dollars ($322,000.00) to
▇▇▇▇ ▇▇▇▇▇▇, a prior shareholder, and to fund miscellaneous capital
expenditures. The Borrower provided evidence satisfactory to the Bank of the
disbursement of the Term Loan proceeds for such purposes (including proof of
satisfaction of the Internal Revenue Service indebtedness).
(c) Borrower executed and delivered to Lender on
September 3, 1996, the Term Loan Note and such other documents as Lender
required.
(d) The Collateral defined hereinbelow in Section
3.2(b) continues to serve as Collateral for the Term Loan and all other
Borrower's Obligations due the Lender.
2D.2. Interest Rate. Except in the event of a
default as provided in the Term Loan Note, the Term Loan bears interest at a
fluctuating interest rate per annum equal at all times to one and one-half
(1 1/2%) percent above the Lender's Prime Rate in effect from time to time, each
change in such fluctuating rate to take effect simultaneously with the
corresponding change in the Prime Rate, without notice to
15
Borrower; provided, however, upon the occurrence of an Event of Default, the
Term Loan shall bear interest at the default rate of interest set forth in the
Term Loan Note.
2D.3. Payment of Principal and Interest. The Borrower
is repaying the Term Loan to the Lender in monthly principal payments plus
interest at the interest rate set forth above and in the amounts as provided in
the Term Loan Note.
2D.4. Term of Term Loan. Subject to Section
2B.2(a)(ii) above, the Term Loan is for a term of the lesser of the remaining
term of the Term Loan Note months, or, (ii) the completion date of the Initial
Public Offering, whichever first occurs.
2D.5. Prepayment. The Term Loan may be prepaid in
full, at any time, without prepayment premium or penalty.
3. SECURITY INTEREST; ADDITIONAL DEFINITIONS
3.1 Reaffirmation of Collateral; Grant of Security Interests.
As security for the due and punctual payment and performance of all of
the Obligations (defined below), whether pursuant to this Agreement or
otherwise, on June 2, 1995 and prior thereto, some of the Borrowers executed and
delivered to the Lender their respective General Security Agreements and forms
UCC-1 or forms UCC-3, financing statements, pursuant to which those Borrowers
pledged, transferred and assigned to Lender, and granted to Lender security
interests in (a) all of the Collateral wherever located and whether now existing
or hereafter created and whether now owned or hereafter acquired by Borrower,
and (b) all accessions and additions thereto, replacements and substitutions
therefor, and proceeds and products thereof. Judge Group, New Judge, Inc.,
Berkeley Associates and Judge Acquisition have on even date herewith executed
and delivered to the Lender their Security Agreement and financing statements
(forms UCC-1) so as to pledge and grant to Lender a first security interest in
all of their assets as collateral security for the Obligations due Lender by
Borrowers (including Judge Group, New Judge, Inc., Berkeley Associates and Judge
Acquisition). All of the Borrowers hereby reaffirm, pledge, transfer grant, and
assign to Lender, and reaffirm their continuing grants to Lender of security
interests in (a) all of the Collateral wherever located and whether now existing
or hereafter created and whether now owned or hereafter acquired by Borrowers,
and (b) all accessions and additions thereto, replacements and substitutions
therefor, and proceeds and products thereof. It is the intent of the Borrowers
that the security interests of the Lender in the Collateral shall continue to
secure the Loans due the Lender by the Borrowers without the necessity on this
date of re-filing additional financing statements with respect to Borrowers
against whom financing statements have already been filed by Lender. The
security interests reaffirmed and granted hereby, and all remedies and other
rights stated or referred to in this Agreement or any of the Relevant Documents,
shall continue in full force and legal effect until full and final payment and
performance of the Loans and all other Obligations under this Agreement and the
Relevant Documents.
16
3.2 Definitions of "Obligations," "Collateral" and
"Equipment"
(a) The term "Obligations" shall mean:
(i) all principal of and interest on the Revolving
Loan or the Term Loan, and all other sums payable by Borrower or any Related
Entity under the terms of this Agreement or any of the Relevant Documents,
(ii) all other indebtedness, liabilities,
obligations and agreements of every kind and nature of Borrower or any Related
Entity to or with Lender or any affiliate of Lender,
(iii) all guaranties of any of Borrower's
Obligations, and
(iv) any participation or interest of Lender or
any affiliate of Lender in any indebtedness, liabilities, obligations or
agreements of Borrower, any Related Entity or any such guarantor to or with
others, in each case whether now existing or hereafter created, whether now or
hereafter contemplated, whether pursuant to this Agreement, any of the Relevant
Documents or otherwise, whether in the form of refinancing, letters of credit,
bankers acceptances, guaranties, loans, interest, charges, fees, expenses or
otherwise, whether direct or indirect, whether acquired outright, conditionally
or as collateral security from another, whether absolute or contingent, joint or
several, liquidated or unliquidated, secured or unsecured, and whether arising
by operation of law or otherwise, and including without limitation any future
advances, renewals, extensions, modifications or changes in form of, or
substitutions for, any of the items described in this clause and in the
preceding clauses (i) through (iii).
(b) The term "Collateral" shall mean the following,
wherever located and whether now subject to Section 2B with respect to the
Sureties, existing or hereafter created and whether now owned or hereafter
acquired: (i) the Borrower's Accounts; (ii) the Borrower's Inventory; (iii) the
Borrower's Equipment; (iv) the unlimited continuing guaranty as sureties, of
▇▇▇▇▇▇ ▇. Judge, Jr., individually; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, individually and ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇, individually, husband and wife; (v) all guaranties, security and liens
for payment of any of Borrower's Accounts, and all of Borrower's documents of
title, policies or certificates of insurance, insurance proceeds, proceeds of
condemnation or other seizure, securities, chattel paper and other documents and
instruments evidencing or pertaining to any thereof; all claims of Borrower
against third parties for loss of or damage to, or otherwise relating to, any of
the Collateral; and all files, correspondence, customer lists, computer
programs, tapes, discs and related data processing software, owned by Borrower
or in which Borrower has an interest, which contains information identifying any
of the Collateral or identifying an Account debtor or the amount owed by same,
or which would otherwise be necessary or helpful in the
17
realization on any of the Collateral; (vi) all of Borrower's moneys, securities,
drafts, notes, items, contract rights, leases, licenses and general intangibles,
and all general or special deposits, balances, sums, proceeds and credits of
Borrower; (vii) all of Borrower's trade names, trademarks, trademark
registrations, copyrights, patents, patent applications and licenses, and other
franchises and licenses in which Borrower has an interest, and all other
tangible personal property similar to any of the foregoing; (viii) all other
property of Borrower; (ix) all rights and remedies which Borrower might exercise
with respect to any of the foregoing but for the execution of this Agreement;
and (x) all accessions and additions to, replacements and substitutions for, and
proceeds and products of, the items described in the preceding clauses (i)
through (ix).
(c) The term "Equipment" shall mean all items
described in the UCC definition thereof and all of the following, whether or not
so described (in all cases whether now owned or hereafter acquired by Borrower
and wherever located): all of Borrower's equipment, machinery, furniture,
fixtures, motor vehicles, parts, supplies and tools, and all other tangible
personal property similar to any of the foregoing, and all repairs,
modifications, alterations, replacements, additions, controls and operating
accessories therefor.
3.3 Reaffirmation of Sureties. ▇▇▇▇▇▇ ▇. Judge, Jr., ▇▇▇▇▇▇▇
▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, husband and wife, who have re-executed Unlimited
Surety Agreements of payment to the Lender, hereby reaffirm their respective
Unlimited Surety Agreements as sureties as to all liabilities due the Lender by
the Borrower and agree that said Unlimited Surety Agreements will remain in full
force and effect as to all said liabilities due the Lender.
3.4 Further Assurances. Borrower shall execute and deliver
such financing statements and other documents (in form and substance
satisfactory to Lender) and take such other actions as Lender may request from
time to time in order to create, perfect or continue the security interests and
other liens provided for by this Agreement under the UCC or other laws of the
Commonwealth of Pennsylvania or under any other state or federal law.
4. REPRESENTATIONS AND WARRANTIES
All of the representations and warranties set forth in the
Relevant Documents are hereby restated and reaffirmed by the Borrowers as of the
date hereof, as if such representations and warranties were set forth at length
herein. The Borrowers hereby acknowledge that such representations and
warranties are being specifically relied upon by the Bank as an inducement to
the Bank to enter into this Agreement and as partial consideration for the terms
and conditions contained herein. In addition to the representations and
warranties already contained in the Relevant Documents, the Borrowers, as a
material inducement to the Bank to enter into this Agreement, hereby
acknowledge, confirm, represent and warrant that:
18
4.1 Organization and Qualification.
(a) Each of the entities comprising the Borrower are
corporations duly organized, validly existing and in good standing under the
laws of the respective jurisdictions stated at the beginning of this Agreement.
(b) Borrower has the power and authority, and all
necessary licenses or other authorizations, to own its properties and to carry
on its business as now conducted, and is duly qualified and in good standing in
each jurisdiction wherein the nature of the property owned or used or of the
business conducted requires such qualification.
4.2 Due Authorization; No Default.
(a) The execution, delivery and performance by
Borrower of this Agreement, the Notes and the Relevant Documents are within
Borrower's powers, have been duly authorized by all necessary action on the part
of Borrower, and do not and will not (i) violate Borrower's Certificate or
Articles of Incorporation or ByLaws, or any applicable law or regulation, or any
judgment, order or decree of any judicial or other governmental body, (ii)
constitute a breach of, or default under, any agreement, undertaking or
instrument to which Borrower is a party or by which it may be affected, or (iii)
result in the imposition of any lien, encumbrance or restriction on any assets
of Borrower.
(b) Borrower has delivered to Lender true and complete
copies of Borrower's resolutions necessary to authorize the transactions
contemplated by this Agreement, and of Borrower's Certificate or Articles of
Incorporation and ByLaws, all as in effect on the date hereof and certified by a
duly authorized officer of the Borrower.
(c) This Agreement and the Relevant Documents upon
their execution and delivery, and the Notes upon their issuance, will be legal,
valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms.
(d) The Borrowers have no defenses, charges, claims,
demands, pleas or offsets whatsoever in law or equity against the Lender or
against the enforcement of the Loan Documents;
4.3 No Governmental Consent Necessary. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance by Borrower of this Agreement, the Notes or any of the Relevant
Documents.
19
4.4 No Proceedings. There are no pending or threatened claims,
actions, proceedings or investigations before any court, arbitrator, or
governmental body or agency that may, singly or in the aggregate, have a
material adverse effect on (a) the validity or enforceability of this Agreement,
the Notes or any of the Relevant Documents, or the ability of Borrower to
perform any of its Obligations, or (b) the financial condition or the properties
or operation of Borrower.
4.5 Financial Statements.
(a) Subject to any limitation stated therein, all
balance sheets, income statements and other financial data which have been or
shall hereafter be furnished to Lender do and will truly and fairly present the
financial condition of Borrower as at the respective dates thereof and the
results of its operations for the respective dates thereof and the results of
its operations for the periods ended on such dates, in accordance with generally
accepted accounting principles consistently applied during all periods. All
other information, reports and other papers and data furnished to Lender are, or
will be at the time the same are so furnished, true, accurate and complete in
all material respects.
(b) Except as shown on the most recent financial
statements set forth on Schedule 1 to this Agreement, Borrower has no
liabilities as of the date hereof which would have an adverse effect on the
Collateral or on the financial condition, operations or other properties of
Borrower.
4.6 No Change in Financial Condition; Solvency.
(a) There has been no material change in Borrower's
financial condition since the date of its last financial statements as set forth
on Schedule 1 to this Agreement.
(b) Borrower's assets, at a fair valuation, exceed
Borrower's liabilities (including, without limitation, contingent liabilities),
Borrower is paying its debts as they become due, and Borrower has capital and
assets sufficient to carry on its business.
4.7 Compliance With Laws. Borrower is in compliance with all
federal, state and local statutes, rules, regulations, orders and other
provisions of law applicable to its ownership or use of properties or the
conduct of its business; Borrower has not received any notice of violation of
any of the foregoing; and Borrower is not in violation of any judgment, order or
decree of any judicial or other governmental body.
4.8 No Other Violation. Borrower is not in violation of any
term of its Certificate or Articles of Incorporation or ByLaws, and no event or
condition has occurred and is continuing which constitutes or results in (or
would constitute or result
20
in, with the giving of notice, lapse of time or other condition) (a) breach of,
or a default under, any material agreement, undertaking or instrument to which
Borrower is a party or by which it may be affected, or (b) the imposition of any
lien, encumbrance or restriction on any property of Borrower.
4.9 Taxes and Assessments. Borrower has filed all federal,
state and local tax returns and other reports it required to file to the date
hereof (or has obtained valid, written extensions as to any not so filed), has
paid all taxes, assessments and other governmental charges due and payable to
the date hereof except as has been reported to the Lender in writing, and has
made adequate provision for the payment of such taxes, assessments and charges
accrued but not yet payable. Borrower has no knowledge of any deficiency or
additional assessment in a materially important amount in connection with any
taxes, assessments or other governmental charges not provided for or disclosed
in the financial statements set forth on Schedule 1 to this Agreement.
Borrower's federal income tax returns for the year ended 1990 have been audited
by the Internal Revenue Service, and the tax liability of Borrower for such
periods has been fully determined by the Internal Revenue Service and satisfied.
4.10 Accounts. The list of Accounts delivered to Lender is
complete and contains an accurate aging thereof and, except as otherwise
specified by Borrower to Lender in writing, each of said Accounts meets the
criteria for a Qualified Account stated in Section 2A.1(c)(ii) of this
Agreement.
4.11 Inventory. Borrower's Inventory, as reflected by its most
recent balance sheet included on Schedule 1 to this Agreement, consists of items
of a quality and quantity usable or saleable in the ordinary course of its
business; the values of obsolete items, items below standard quality and items
in the process of repair have been written down to realizable market value, or
adequate reserves have been provided therefore; and the values carried on said
balance sheet are set at the lower cost or market, in accordance with generally
accepted accounting principles consistently applied.
4.12 Books and Records. The location of the books and records
relating to the accounts and inventory of each Borrower is set forth on Schedule
3.
4.13 Location of Tangible Collateral. None of the Inventory,
Equipment or other tangible property constituting part of the Collateral is or
will be, or has been during the six (6) months preceding execution of this
Agreement, located in or on any premises other than those identified in Schedule
2 to this Agreement. Schedule 2 contains an accurate record of all landlords of
premises leased by Borrower and of all mortgagees of premises owned by Borrower.
4.14 Principal Places of Business and Chief Executive Offices.
The principal place of business and chief executive office of each of the
Borrowers is set forth on Schedule 3 to this Agreement.
21
4.15 Other Name or Entities. Except as disclosed on Schedule 4
to this Agreement, none of Borrower's business is conducted through any
corporate subsidiary, unincorporated association or other entity and Borrower
has not, within the seven (7) years preceding the date of this Agreement (a)
changed its name, (b) used any name other than the name stated at the beginning
of this Agreement, or (c) merged or consolidated with, or acquired the assets
of, any corporation or other business. Except as set forth in this Agreement,
there are no other entities through or by which the Borrower or any affiliate of
Borrower transacts business.
4.16 Title and Liens. Borrower has good and marketable title
to all of the Collateral as sole owner thereof, free and clear of any mortgage,
security interest, assignment, pledge, hypothecation, or other lien or
encumbrance, except the liens created by this Agreement and any identified on
Schedule 5 to this Agreement. 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.
4.17 ERISA. Borrower is in compliance in all material respects
with the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the related provisions of the Internal Revenue Code, and
with all regulations and published interpretations issued thereunder by the
United States Treasury Department, the United States Department of Labor and the
Pension Benefit Guaranty Corporation ("PBGC"). Neither a reportable event as
defined in Section 1343 of ERISA, nor a prohibited transaction as defined in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code, has occurred
and is continuing with respect to any employee benefit plan subject to ERISA
established or maintained or to which contributions have been or may be made, by
Borrower or by any trade or business (whether or not incorporated) which
together with Borrower would be treated as a single employer under Section 4001
of ERISA (any such trade or business being referred to hereinafter as an "ERISA
Affiliate," and any such employee benefit plan being referred to hereinafter as
a "Plan"). No notice of intention to terminate a Plan has been filed nor has any
Plan been terminated; the PBGC has not instituted proceedings to terminate, or
to appoint a trustee to administer, and Plan, nor do circumstances exist that
constitute grounds for any such proceedings; and neither Borrower nor any ERISA
Affiliate has completely or partially withdrawn from any multiemployer Plan
described in Section 4001(a)(3) of ERISA. Borrower and each ERISA Affiliate has
met the minimum funding standards under ERISA with respect to each of its Plans;
no Plan of Borrower or of any ERISA Affiliate has an accumulated funding
deficiency or waived funding deficiency within the meaning of ERISA; and no
material liability to the PBGC under ERISA has been incurred by Borrower or any
ERISA Affiliate.
4.18 O.S.H.A. Borrower has duly complied with, and its
facilities, business, leaseholds, equipment and other property are in compliance
in all material respects with, the provisions of the federal Occupational Safety
and Health Act and all rules and regulations thereunder and all similar state
and local laws, rules and regulations;
22
and 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 law, rule or regulation.
4.19 Environmental Matters.
(a) Except as disclosed in Schedule 6 to this
Agreement, no property owned or used by Borrower and located in the State of New
Jersey is an "industrial establishment" within the meaning of the New Jersey
Environmental Cleanup Responsibility Act ("ECRA") as superseded by the
Industrial Site Recovery Act ("ISRA") or is or has been used for the generation,
manufacture, refining, transportation, treatment, storage, handling or disposal
of any "hazardous substances" or "hazardous wastes" within the meaning of ECRA
or ISRA. The following are all of the Standard Industrial Classification Codes
applicable to the properties and operations of Borrower:
6710, 7361 and 5734
(b) Except as disclosed in Schedule 6 to this
Agreement, no property owned or used by Borrower and located in the Commonwealth
of Pennsylvania has been used for the generation, manufacture, refining,
transportation, treatment, storage, handling, disposal, transfer, production or
processing of hazardous substances except in compliance with all applicable
federal, state and local laws or regulations. Without limiting the generality of
the foregoing, no property owned or used by Borrower and located in the
Commonwealth of Pennsylvania or any other property owned or operated by the
Borrower, is being used, nor has it ever been used in the past for a landfill,
surface impoundment or other area for the treatment, storage, or disposal of
solid waste (including solid waste such as sludge). For purposes of this
paragraph, "hazardous substances" shall have the meanings ascribed thereto as
set forth in Sections 101(14) and (33) of the Comprehensive Environmental
Response, Compensation and Liability Act (42 USC Section 9601(14) and (33)) or
40 CFR Part 302 of the Federal Water Pollution Control Act Amendments of 1972,
33 U.S.C. 1321, or Section 103 of the Pennsylvania Hazardous Sites Cleanup Act
(35 P.S. Section 6020.101), or Section 103 of the Pennsylvania Hazardous
Materials Emergency Planning and Responsibility Act (35 P.S. Section 6022.103),
or in any amendment thereto or any replacement thereof.
(c) Borrower is in compliance in all material respect
with all applicable federal, state and local statues, rules, regulations, orders
and other provisions of law relating to air emissions, water discharge, noise
emissions, solid and liquid disposal, hazardous waste and substances, and other
environmental, health and safety matters.
4.20 Margin Stock. No part of the proceeds of the Revolving
Loan will be used, directly or indirectly, to purchase or carry any "margin
stock" (as defined in Regulation U issued by the Board of Governors of the
Federal Reserve System), to
23
extend credit to others for the purpose of purchasing or carrying any such
margin stock, or for any purpose that violates any provision of Regulations G,
T, U or X issued by the Board of Governors of the Federal Reserve System.
4.21 Representations and Warranties True, Accurate and
Complete; Confirmation With Each Loan; Adequate
Professional Representation.
(a) None of the representations, warranties or
statements to Lender contained in this Agreement, in any of the Relevant
Documents or in any other writing delivered to Lender in connection with the
Collateral, this Agreement or any of the transactions contemplated thereby,
contains any untrue statement of a material fact or omits to state a material
fact necessary to make such representation, warranty or statement not misleading
in light of the circumstances under which it is made. All of such
representations, warranties and statements shall survive until full and final
payment and performance of the Loans and all other Obligations under this
Agreement and the Relevant Documents.
(b) Borrower's acceptance of each advance on the
Revolving Loan under this Agreement shall constitute a confirmation of the
matters set forth in the preceding Sections 4.1 through 4.21(a) as of the date
of such Loans. If requested by Lender, Borrower shall further confirm such
matters by delivery of a certificate dated the day of the Revolving Loan and
signed by a duly authorized officer of Borrower satisfactory to Lender.
(c) The Borrower and the Sureties represent to the
Lender that they have, at all times relevant to this Agreement, been represented
by advisors of their own selection including but not limited to attorneys at law
and certified public accountants; that they have not relied upon any
representation, warranty, agreement or information provided by the Lender, its
employees, agents or attorneys; that they acknowledge that they have been and
are informed of their rights, duties and obligations with respect to the Loans
due the Lender under all applicable laws; that they have no set-offs, defenses,
claims or recoupments against the Lender with respect to the Loans due the
Lender by the Borrower.
(d) The Borrower and the Sureties acknowledge and
agree that the Lender has made no representations, warranties, agreements or
provided information to them in order to induce the execution of this Agreement.
The Borrowers and the Sureties further acknowledge and agree that all agreements
of the parties are set forth in this Agreement and/or in the Relevant Loan
Documents or written documentation evidencing and/or amending the Revolving Loan
or the Term Loan.
24
5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until full and final
payment and performance of the Loans and all other Obligations under this
Agreement and the Relevant Documents, Borrower shall, unless Lender shall
otherwise consent in writing:
5.1 Maintenance of Existence and Qualifications. Maintain and
preserve in full force and effect its existence and good standing and all other
rights, powers, franchises, licenses and qualifications necessary or desirable
for its ownership or use of properties or the conduct of its business.
5.2 Payment of Taxes and Other Obligations. Pay (a) before
they become delinquent, all taxes, assessments and governmental charges imposed
upon it or any of its property or required to be collected by it, and (b) when
due, all other indebtedness and liabilities of any kind now or hereafter owing
by it.
5.3 Maintenance of Properties. Maintain its properties in good
working order and condition.
5.4 Notice of Adverse Events. Promptly notify Lender in
writing of the occurrence or existence of any of the following: (a) any Event of
Default as defined in this Agreement or any event which, with the giving of
notice, lapse of time or other condition, would become such an Event of Default;
(b) any matter or event which has resulted in, or may result in, a material
adverse change in the financial condition or any property or operations of
Borrower; (c) any material claim, action, proceeding or investigation filed or
instituted against Borrower, or any adverse determination in any material
pending action, proceeding or investigation affecting it; (d) any loss from
casualty or theft in excess of Fifty Thousand Dollars ($50,000), whether or not
insured, affecting property of Borrower; (e) whether or not otherwise reportable
under this Section 5.4, any complaint, citation, order or other notice of a
violation or a claim involving any of the following, if the liability or penalty
therefor may exceed One Hundred Thousand Dollars ($100,000) singly or in the
aggregate: any applicable federal, state or local statute, rule, regulation,
order or other provision of law relating to air emissions, water discharge,
noise emissions, solid or liquid disposal, hazardous waste or substances, or
other environmental, health or safety matters (the notice to Lender to include,
along with other relevant information, the name of the complainant or claimant
and the nature and potential amount of the claim); (f) any event or condition
described in Section 8.15 of this Agreement relating to ERISA; or (g) if any of
the representations and warranties contained in this Agreement, or in any of the
Relevant Documents or any other writing delivered to Lender by Borrower in
connection with this Agreement or any of the transactions contemplated thereby,
ceases to be true, correct and complete.
25
5.5 Information and Documents to be Furnished to Lender.
Furnish to Lender in form and substance satisfactory to it:
(a) Financial Statements:
(i) Annual Statements. As soon as available and in
any event within one hundred twenty (120) days after the end of such fiscal year
of each Borrower:
(A) The certified and audited consolidated and
consolidating income and retained earnings statements of each Borrower for each
fiscal year;
(B) The certified and audited consolidated and
consolidating balance sheet of each Borrower as at the end of such fiscal year;
and
(C) The certified and audited consolidated and
consolidating statement of cash flows of each Borrower for such fiscal year;
each setting forth in comparative form the
corresponding figures as at the end of the previous fiscal year, all in
reasonable detail, including all supporting schedules and comments. The
foregoing statements and balance sheets shall be prepared in accordance with
generally accepted accounting principles consistently applied and maintained
("GAAP") and shall be certified and audited by independent certified public
accountants of recognized standing acceptable to Lender in the reasonable
exercise of its discretion with respect to which such accountants shall deliver
their opinion.
(ii) Monthly Financial Statements. As soon as
available but in no event later than thirty (30) days after the end of each
month, a balance sheet of each Borrower as of the end of such month and
statements of income, cash flows and changes in stockholders' equity for such
month and for the period commencing at the end of the previous fiscal year and
ending with the end of such month (all in reasonable detail and with all notes
and supporting schedules), prepared on a consolidated and consolidating basis,
certified by the Chief Executive Officer or the Chief Financial Officer of
Borrower as presenting fairly the financial condition of each Borrower as of the
dates and for the periods indicated and as having been prepared in accordance
with generally accepted accounting principles consistently applied, except as
may be otherwise disclosed in such financial statements or the notes thereto.
(b) Accounts, Inventory and Accounts Payable
Reports. On or before the fifteenth (15th) day of each month as at the close of
the preceding month, and from time to time as Lender may require: certificates
and assignment schedules describing the Qualified Accounts and Inventory in
detail and total, aging reports of
26
Accounts, Accounts Payable aging reports, and Collateral and Loan Reconciliation
reports, all in such form as Lender may require.
Borrower shall at least once each week, submit a borrowing
base certificate to Lender in such form and containing such information as may
be required by the Lender.
(c) Change in Status. Immediately, notice
identifying any Inventory or Account that has ceased to be Qualified.
(d) Rejection, Delay, Claims. Immediately, notice
of the rejection of goods, delay in performance, or claims made in regard to
Accounts.
(e) ERISA Documents. As soon as filed or
distributed, all ERISA reports, notices, returns and other documents filed as
required by or in compliance with ERISA, whether to the Internal Revenue
Service, the Department of Labor, the Pension Benefit Guaranty Corporation or
any other appropriate agency.
(f) Violations. Immediately, a copy of any
complaint, citation, order or other notice of a violation or claim required to
be reported pursuant to Section 5.4(e) of this Agreement.
(g) Other Documents.
(i) Within thirty (30) days after the last day
of each calendar quarter, a certificate executed by the Chief Executive Officer
or Chief Financial Officer of Borrower satisfactory to Lender stating that there
then exists no Event of Default hereunder and no event which, with the giving of
notice or lapse of time or other condition, would constitute an Event of
Default;
(ii) Immediately upon demand of the Bank, all
original and other documents evidencing right to payment, including but not
limited to invoices, original orders, and shipping and delivery receipts; and
(iii) Immediately upon demand of the Bank, such
other documents or information as Lender may reasonably request, including
financial projections and cash flow analysis.
5.6 Access to Records and Property. At any time and from time
to time, upon request by Lender (but not in excess of four (4) times annually
unless in the opinion of Lender, the Borrower's financial condition or the
Collateral is deteriorating in which case there shall be no limitation on the
number of reviews by the Lender), give any representative of Lender access
during normal business hours to inspect any of Borrower's properties and to
examine, copy and make extracts from any and all books,
27
records and documents in the possession of Borrower or any independent
contractor relating to Borrower's affairs or the Collateral (including without
limitation returns for federal income tax and other taxes).
5.7 Insurance at Borrower's Expense.
(a) Liability and Property Insurance. Maintain at
Borrower's expense (with such insurers, in such amounts and with such
deductibles as is satisfactory to Lender) public liability and third party
property damage insurance and insurance on the Collateral (including without
limitation insurance against fire, explosion, boiler damage, theft, burglary,
spoilage, pilferage, loss in transit and all other hazards and risks ordinarily
insured against by other owners or users of such properties in similar
businesses), which insurance shall be evidenced by policies (i) in form and
substance satisfactory to Lender, (ii) designating Lender and its assigns as
additional co-insureds or loss payees as their interests may appear from time to
time, (iii) containing a "breach of warranty clause" whereby the insurer agrees
that a breach of the insuring conditions or any negligence of Borrower or any
other person shall not invalidate the insurance as to Lender and its assigns,
and (iv) requiring at least thirty (30) days prior written notice to Lender and
its assigns before cancellation or any material change shall be effective.
(b) Copies of Policies. Upon demand, deliver to Lender the
original of each policy evidencing insurance required by this Section 5.7,
together with evidence of payment of all premiums.
(c) Notice and Proof of Loss. In the event of loss or
damage, forthwith notify Lender and file proofs of loss satisfactory to Lender
with the appropriate insurer, but without limiting the rights of Lender pursuant
to Section 7.1(k).
(d) Proceeds. Forthwith upon receipt, endorse and deliver
insurance proceeds to Lender, but without limiting the rights of Lender pursuant
to Section 7.1(k).
In no event shall Lender be required either to (i)
ascertain the existence of or examine any insurance policy, or (ii) advise
Borrower in the event such insurance coverage shall not comply with the
requirements of this Agreement.
5.8 Condition of Collateral; No Liens. Maintain the Collateral
in good condition and repair at all times, preserve the Collateral from loss,
damage, or destruction of any nature whatsoever, and keep the Collateral free
and clear of any mortgage, security interest, assignment, pledge, hypothecation,
or other lien or encumbrance, except the liens created by this Agreement and any
identified on Schedule 5 to this Agreement.
28
5.9 Proceeds of Collateral. Forthwith upon receipt, pay to
Lender all proceeds of Collateral, whereupon such proceeds shall become Lender's
sole property.
5.10 Records. Maintain complete and accurate books and records
of all of its operations and properties, including records of the Collateral and
the status of each of the Accounts.
5.11 Delivery of Documents. If any proceeds of Accounts shall
include, or any of the Accounts 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, 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.
5.12 United States Contracts. If any of the Accounts arises
out of a contract with the United States or any of its departments, agencies or
instrumentalities, immediately notify Lender and execute any necessary
instruments in order that all money due or to become due under such contract
shall be assigned to Lender and proper notice of the assignment given under the
Federal Assignment of Claims Act.
5.13 Further Assurances.
(a) From time to time, execute and deliver such further
documents and take such further actions as Lender may reasonably request in
order to carry out the purposes of this Agreement, the Relevant Documents and
any other instruments, documents and agreements which shall be executed
concurrently herewith or thereafter with regard to the transactions contemplated
by this Agreement.
(b) In addition, if Judge Hospitality Services, Inc.,
Judge Electronic Services of Boston, Inc., Judge Electronic Services of
Philadelphia, Inc. or Judge Electronic Services, Inc. operate any business
activity after the date hereof, the Borrower shall immediately notify Lender of
such business activity, shall grant to Lender a first lien or security interest
in the assets of said entity, execute and deliver to Lender such further
documents and take such further actions as Lender may reasonably request, and
reimburse Lender for all costs and expenses incurred by Lender in connection
with such transactions including but not limited to reasonable attorneys fees
and costs.
5.14 Related Entities. Cause each Related Entity to comply
with the covenants stated in this Section 5, to the extent relevant to such
Entity, as if stated with reference to such Entity.
5.15 Affirmative Financial Covenants. The Borrowers shall
comply with the following financial covenants, (the "Financial Covenants") at
all times during the term of the Loans. The Financial Covenants shall be tested
by the Lender on a calendar
29
quarter basis, i.e. September 30, December 31, March 31 and June 30 of each
calendar year during the term of the Loans. The Borrower shall deliver to the
Lender within forty-five (45) days after the end of each calendar quarter,
schedules setting forth in such detail as may reasonably be required by the
Lender, a computation of the Financial Covenants and certified by the Chief
Executive Officer or the Chief Financial Officer of Borrowers to be true and
correct. The Affirmative Financial Covenants are as follows:
(a) Tangible Net Worth. "Tangible Net Worth" shall mean the
Borrowers' net worth plus subordinated debt plus Series A Preferred Stock plus
subordinated advances from shareholders less officers'/employees' receivables
less amounts due on covenants not to compete, all of the foregoing as set forth
on the Borrowers' consolidated financial statements prepared in accordance with
GAAP. Borrowers' Tangible Net Worth shall not be less than the following amounts
at the dates set forth:
As of Tangible Net Worth
----- -------------------
September 30, 1996 $1,000,000
December 31, 1996 1,021,000
March 31, 1997 1,340,000
June 30, 1997 4,000,000
September 30, 1997 6,000,000
December 31, 1997 8,500,000
March 31, 1998 at least 95% of Tangible
Net Worth as of December 31, 1997
June 30, 1998 at least 105% of Tangible
Net Worth as of December 31, 1997
September 30, 1998 at least 115% of Tangible
Net Worth as of December 31, 1997
December 31, 1998 at least 125% of Tangible
Net Worth as of December 31, 1997
Anything to the contrary contained herein notwithstanding any increase in
goodwill and any other intangibles of the Borrowers over the actual amount of
goodwill and any other intangibles on the September 30, 1996 financial
statements of the Borrowers shall become a reduction of Tangible Net Worth in
testing this covenant as of December 31, 1996 and March 31, 1997.
(b) Ratio of Liabilities to Tangible Net Worth. The ratio of
Borrowers' consolidated Liabilities to Borrowers' Tangible Net Worth shall not
exceed the following ratios at the dates indicated:
30
As of Ratio Not to Exceed
----- -------------------
September 30, 1996 15.0 to 1
December 31, 1996 19.0 to 1
March 31, 1997 14.5 to 1
June 30, 1997 4.5 to 1
September 30, 1997 3.0 to 1
December 31, 1997 and thereafter 3.0 to 1
(c) Ratio of Liabilities Service Coverages. During the terms
of the Loans, the Borrowers' Liabilities Service Coverage ratio shall be at
least 1.5 to 1, except for the period ending September 30, 1996 at which time
the Liabilities Service Coverage ratio shall be at least 1.295 to 1 for the
period ending December 31, 1996, at which time the Liabilities Service Coverage
shall be at least 1.34 to 1, and for the period ending March 31, 1997, the
Liabilities Service Coverage shall be at least 0.911 to 1, all measured on a
rolling four (4) calendar quarter basis and shall be determined as follows, all
as set forth in the Borrowers' consolidated financial statements prepared in
accordance with GAAP:
Net profit plus depreciation plus amortization less
unfunded capital expenditures less dividends paid
-------------------------------------------------
Current portion of long term Liabilities
6. NEGATIVE COVENANTS
Borrower covenants and agrees that, until full and final
payment and performance of the Loans and all other Obligations under this
Agreement and the Relevant Documents, Borrower shall not, unless Lender shall
otherwise consent in writing:
6.1 No Consolidation, Merger, Acquisition, Liquidation. Except
as provided on Schedule 6.1, enter into any merger, consolidation,
reorganization or recapitalization; take any steps in contemplation of
dissolution or liquidation; conduct any part of Borrower's business through any
corporate subsidiary, unincorporated association or other entity not disclosed
on Schedule 4 to this Agreement; or acquire the stock or assets of any person,
firm, joint venture, partnership, corporation or other entity, whether by
merger, consolidation, purchase of stock or otherwise.
6.2 Disposition of Assets or Collateral. Sell, lease, or
otherwise transfer or dispose of any or all of the Collateral or other assets of
Borrower, other than the sale of Inventory in the ordinary course of business
and the retirement of other assets in the normal course of operations.
31
6.3 Other Liens. Incur, create or permit to exist, any
mortgage, security interest, assignment, pledge, hypothecation, lien,
encumbrance, conditional sale or other title retention agreement, financing
lease having substantially the same effect as any of the foregoing, or other
preferential arrangement of any type, in each case upon or with respect to any
assets of Borrower, whether now owned or hereafter acquired, except (a) liens
for taxes not delinquent, (b) the liens created by this Agreement and the
Relevant Documents, (c) any liens identified on Schedule 5 to this Agreement, or
(d) liens in an aggregate amount at any time outstanding not exceeding Seven
Hundred Thousand Dollars ($700,000) in 1996 and thereafter.
6.4 Other Liabilities. Incur, create, assume or permit to
exist any indebtedness or liability on account of either borrowed money or the
deferred purchase price of property or services, except (a) Obligations to
Lender, (b) indebtedness subordinated to payment of the Obligations on terms
approved by Lender in writing and identified on Schedule 6.4, (c) those
liabilities existing on the date of this Agreement and shown by the financial
statements attached as Schedule 1 to this Agreement, or (d) liabilities secured
by liens permitted under Section 6.3.
6.5 Loans. Makes loans to any person or entity except for (a)
loans to each of the Borrower, inter se, and (b) loans listed on Schedule 6.5.
6.6 Guaranties; Contingent Liabilities. (a) Except as provided
on Schedule 6.6, assume, guarantee, endorse, contingently agree to purchase or
otherwise become liable upon the obligation of any person or entity, 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 or entity or to make investment in
any person or entity (except for short-term investment of excess cash), or (c)
guarantees of liabilities under Section 6.4.
6.7 Dividends and Other Distributions. Declare or pay any cash
dividend or make any distribution on, or redeem, retire or otherwise acquire
directly or indirectly, any share of its stock, or make any distribution of
assets to its stockholders.
6.8 Transactions with Affiliates. Except for transactions
among Borrower, inter se and except as provided in Schedule 6.8, enter into any
transaction with a person or entity directly or indirectly controlling,
controlled by or under the direct or indirect common control of Borrower, on a
basis less favorable in a material respect to Borrower than if such transactions
were not with such a person or entity.
6.9 Sale of Inventory. Sell any of the Inventory or a
▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale on approval or consignment
basis, or any other basis subject to a repurchase obligation or return right.
32
6.10 Removal of Collateral. Remove, or cause or permit to be
removed, any of the Collateral or other assets from the premises listed with the
Lender, except for sales of Inventory in the ordinary course of business.
6.11 Transfer of Notes or Accounts. Sell, assign, transfer,
discount or otherwise dispose of any Accounts or any promissory note or other
instrument payable to it with or without recourse, except for collection without
recourse in the ordinary course of business.
6.12 Settlements. Compromise, settle or adjust any claim in a
material amount relating to any of the Collateral.
6.13 Modification of Governing Documents. Change, alter or
modify, or permit any change, alteration or modification of, its Certificate of
Incorporation or Bylaws or other governing documents in any way that will have
any adverse effect on the Borrower's Obligations to the Lender.
6.14 Change Business. Cause or permit a material change in the
nature of its business as conducted on the date of this Agreement.
6.15 Change of Location or Name. Change any of the following:
(a) the locations stated in Section 4.12 of this Agreement for the maintenance
of the books and records relative to the Accounts and Inventory, (b) the
location of the principal place of business or chief executive office of
Borrower as stated in Section 4.14 of this Agreement, or (c) the name under
which Borrower conducts any of its business operations.
6.16 Change of Accounting Practices. Change its present
accounting principles or practices in any material respect, except as may be
required by changes in generally accepted accounting principles.
6.17 Inconsistent Agreement. Enter into any agreement
containing any provision that would be violated by the performance of Borrower's
obligations under this Agreement or any of the Relevant Documents or under any
document delivered or to be delivered by it in connection therewith.
6.18 Intentionally Omitted.
6.19 Capital Expenditures. During any fiscal year, enter into
any agreement to purchase or pay for, or become obligated to pay for, capital
expenditures, long term leases, capital leases or sale lease backs, in an amount
aggregated in excess of the following amounts:
33
As of Not to Exceed
----- -------------
January 1, 1996 to December 31,1996 $1,500,000
January 1, 1997 to December 31, 1997
and in each year thereafter 750,000
Lender shall not unreasonably withhold its consent in the event the Borrowers
request Lender's consent to permit increases in the capital expenditures limits
if necessary to accommodate acquisitions and corresponding asset upgrades.
6.20 Limitation on Compensation. Pay or become obligated to
pay in salaries, bonuses or other compensation to ▇▇▇▇▇▇ ▇. Judge, Jr., more
than $540,000 in 1996, or more than $780,000 in any year after the Initial
Public Offering.
6.21 Related Entities. Cause, suffer or permit any Related
Entity to fail to observe any covenant stated in this Section 6. as if stated
with reference to such Entity.
7. ADDITIONAL POWERS OF LENDER
7.1 Powers of Attorney. Borrower hereby constitutes and
appoints Lender (and any employee or agent of Lender, with full power of
substitution) its true and lawful attorney and agent in fact to take any or all
of the actions described below in Lender's or Borrower's name and at Borrower's
expense:
(a) Charges Against Credit Balances. Lender, without
demand, may charge and withdraw from any credit balance that Borrower may have
with Lender, or with any affiliate of Lender, any amount that shall become due
from Borrower to Lender under this Agreement or any of the Relevant Documents.
(b) Evidence of Liens. Lender may execute such financing
statements and other documents and take such other actions as Lender deems
necessary or proper in order to create, perfect or continue the security
interests and other liens provided for by this Agreement or any of the Relevant
Documents, and Lender may file the same (or a photocopy of this Agreement or of
any financing statement signed by Borrower) in any appropriate governmental
office.
(c) Preservation of Collateral. Lender may take any and
all action that it deems necessary or proper to preserve its interest in the
Collateral, including without limitation the payment of debts of Borrower that
might impair the Collateral or Lender's security interest therein, the purchase
of insurance on Collateral, the repair or safeguarding of Collateral, or the
payment of taxes, assessment or other liens thereon. All sums so expended by
Lender shall be added to the Obligations, shall be secured by the Collateral,
and shall be payable on demand with interest at the Default Rate from the
respective dates such sums are expended.
34
(d) Lender's Right to Cure. In the event Borrower fails to
perform any of its Obligations, then Lender may perform the same but shall not
be obligated to do so. All sums so expended by Lender shall be added to the
Obligations, shall be secured by the Collateral, and shall be payable on demand
with interest at the Default Rate from the respective dates such sums are
expended.
(e) Verification of Accounts. Lender may make test
verifications of any and all Accounts in any manner and through any medium
Lender considers advisable, and Borrower shall render any necessary assistance.
(f) Collections; Modifications of Terms. Upon the
occurrence and continuance of any Event of Default, Lender may demand, ▇▇▇ for,
collect and give receipts for any money, instruments or property payable or
receivable on account for or in exchange for any of the Collateral, or make any
compromises it deems necessary or proper, including without limitation,
extending the time of payment, permitting payment in installments, or otherwise
modifying the terms or rights relating to any of the Collateral, all of which
may be effected without notice to or consent by Borrower and without otherwise
discharging or affecting the Obligations, the Collateral or the security
interest granted under this Agreement or any of the Relevant Documents.
(g) Notification of Account Debtors. Borrower, at the
request of Lender, shall notify the Account Debtors of Lender's security
interest in its Accounts. Upon the occurrence and continuance of any Event of
Default, Lender may notify the Account debtors on any of the Accounts to make
payment directly to Lender, and Lender may endorse all items of payment received
by it that are payable to Borrower; until such time as Lender elects to exercise
such right of notification, Borrower is authorized to collect and enforce the
Accounts in accordance with Section 2A.4.
(h) Notification as to Inventory. Lender may notify the
bailee of any Inventory of Lender's security interest therein.
(i) Endorsements. Lender may endorse Borrower's name on
checks, notes, acceptances, drafts, invoices, bills of lading and any other
documents or instruments requiring Borrower's endorsement.
(j) Mails. Upon the occurrence and continuance of any
Event of Default, Lender may notify the postal authorities to deliver all mail,
parcels, and other material addressed to Borrower to Lender at such address as
Lender may direct, and Lender may open and deal with same as it deems necessary
or proper.
(k) Insurance. Lender may file proofs of loss and claim
with respect to any of the Collateral with the appropriate insurer, and may
endorse in its own and Borrower's name any checks or drafts constituting
insurance proceeds.
35
7.2 Irrevocability; Lender's Discretion. Borrower covenants
and agrees that any action in Section 7.1 may be taken at Lender's sole and
absolute discretion, at any time and from time to time, and (unless stated
specifically to the contrary in Section 7.1 with respect to any power) whether
prior or subsequent to an Event of Default, and Borrower hereby ratifies and
confirms all action so taken. Borrower further covenants and agrees that the
powers of attorney granted by Section 7.1 are coupled with an interest and shall
be irrevocable until full and final payment and performance of the Loans and all
other Obligations under this Agreement and the Relevant Documents; that said
powers are granted solely for the protection of Lender's interest and Lender
shall have no duty to exercise any thereof; that the decision whether to
exercise any of such powers, and the manner of exercise, shall be solely within
Lender's discretion; and that neither Lender nor any of its directors, officers,
employees or agents shall be liable for any act of omission or commission, or
for any mistake or error of judgment, in connection with any such powers.
8. EVENTS OF DEFAULT
The occurrence of any of the following shall constitute an
Event of Default:
8.1 Failure to Pay. Borrower fails to pay when due any
principal of or interest on any Revolving Loan or any other sum owing to Lender,
including without limitation any of the Obligations arising under this Agreement
or any of the Relevant Documents or under any other agreement with Lender;
8.2 Failure to Perform. Borrower fails to perform or observe
(a) any covenant, term or condition of this Agreement or any of the Relevant
Documents, and (b) any of the other Obligations;
8.3 Cross Default; Default on Other Debt. (a) Any other
default on any of the Obligations or under any of the Relevant Documents occurs,
or (b) default occurs under any indebtedness or other obligation of Borrower or
of any guarantor of any of the Obligations, or to any third party that entitles
such third party to declare such indebtedness or other obligation due prior to
its date of maturity;
8.4 False Representation or Warranty. Any representation,
warranty or statement contained in this Agreement, in any of the Relevant
Documents or in any other writing delivered to Lender in connection with the
Collateral, this Agreement or any of the transactions contemplated thereby,
proves to have been incorrect in any material respect when made;
8.5 Cessation of Business. Borrower ceases to do business as
a going concern;
36
8.6 Change in Condition. There occurs any change in the
condition or affairs, financing or otherwise, of Borrower or of any endorser,
guarantor or surety for any of the Obligations, which in the opinion of Lender
impairs Lender's security or increases its risks;
8.7 Change in Ownership. Except with respect to shares of
the outstanding voting stock sold by Borrower as part of the Initial Public
Offering and except for 3,000 shares of Judge, Inc. being transferred from
▇▇▇▇▇▇ ▇. Judge, Jr. and ▇▇▇▇▇▇▇ ▇▇▇▇ to ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, if at any time less than one hundred (100%)
percent of the issued and outstanding voting stock of Borrower is owned by
persons other than the shareholders holding voting stock of the Borrower on the
date of this Agreement; anything to the contrary in the foregoing sentence
notwithstanding, at any time, ▇▇▇▇▇▇ ▇. Judge, Jr., shall own less than forty
percent (40%) of the voting stock of Borrower;
8.8 Insecurity. At any time Lender believes that the
prospect of payment or performance of any of the Obligations is impaired;
8.9 Liquidation or Dissolution. Borrower takes any action to
authorize its liquidation or dissolution;
8.10 Inability to Pay Debts. Borrower (a) becomes unable or
fails to pay its debts generally as they become due, (b) admits in writing its
inability to pay its debts, or (c) proposes or makes a composition agreement
with creditors, a general assignment for the benefit of creditors; or a bulk
sale;
8.11 Bankruptcy; Insolvency. Any proceeding is instituted by
or against Borrower (and such proceeding is not dismissed within sixty (60) days
after it is filed) (a) seeking to adjudicate it bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of its or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or (b) seeking appointment of a receiver, trustee, or other
similar official for it or for any substantial part of its property, or Borrower
takes any action to authorize or consent to any action described in this Section
8.11;
8.12 Judgments. One or more judgment or orders for the
payment of money exceeding One Hundred Thousand Dollars ($100,000) in the
aggregate are rendered against Borrower, and such judgment or order continues
unsatisfied and not effectively stayed for a period of thirty (30) consecutive
days;
8.13 Attachment. Any substantial part of the assets of
Borrower becomes subject to attachment, execution, levy or like process which
shall not have been effectively stayed within thirty (30) days after it is
served upon the Borrower;
37
8.14 Condemnation. Any governmental agency, or other entity
with power to do so, commences proceedings to condemn, seizes or expropriates
assets of Borrower necessary for the conduct of Borrower's business as conducted
on the date of this Agreement, without material change, or Borrower abandons
such assets or suspends operation thereof for a period of thirty (30)
consecutive days;
8.15 ERISA. With respect to any Plan (as defined in Section
4.17 of this Agreement), there occurs or exists any of the events or conditions
described in the following clauses (a) through (h) and such event or condition,
together with all like events or conditions, could in the opinion of Lender,
subject Borrower to any tax, penalty or other liability that might, singly or in
the aggregate, have a material adverse effect on the financial condition or the
properties or operations of Borrower: (a) a reportable event as defined in
Section 4043 of ERISA, (b) a prohibited transaction as defined in Section 406 of
ERISA or Section 4975 of the Internal Revenue Code, (c) termination of the Plan
or filing of notice of intention to terminate, (d) institution by the Pension
Benefit Guaranty Corporation of proceedings to terminate, or to appoint a
trustee to administer, the Plan, or circumstances that constitute grounds for
any such proceedings, (e) complete or partial withdrawal from a multiemployer
Plan, or the reorganization, insolvency or termination of a multiemployer Plan,
(f) an accumulation funding deficiency within the meaning of ERISA, (g)
violation of the reporting, disclosure or fiduciary responsibility requirements
of ERISA or the Internal Revenue Code, or (h) any act or condition which could
result in direct, indirect or contingent liability to any Plan or the Pension
Benefit Guaranty Corporation; or
8.16 Guaranty. Any guaranty of any of the Obligations ceases
to be effective or any guarantor denies liability thereunder.
9. REMEDIES
9.1 Rights in General. Upon the occurrence of an Event of
Default described in Section 8.11, and at the option of Lender upon the
occurrence of any other Event of Default and upon ten (10) days written notice
of a breach of Sections 8.1, 8.4, 8.5, or 8.10, and upon thirty (30) days
written notice of a breach of Sections 8.2, 8.3, 8.6, 8.7, 8.8, 8.9, 8.11, 8.12,
8.13, 8.14, 8.15 or 8.16, (a) all provisions for additional Loans under this
Agreement shall terminate, (b) the principal and interest of the Revolving Loan
and all other amounts payable under this Agreement and all other Obligations
shall become and be immediately due and payable, without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly waived
by Borrower, and (c) Lender shall be entitled to exercise forthwith (to the
extent and in such order as Lender may elect, in its sole and absolute
discretion) any or all rights and remedies provided for in this Agreement, any
Notes, or any Relevant Documents, all rights and remedies of a secured party
under the UCC, and all other rights and remedies that may otherwise be available
to Lender by agreement or at law or in equity.
38
9.2 Specific Rights Regarding Collateral. In addition to the
rights as stated generally in Section 9.1, Borrower agrees that, upon the
occurrence of an Event of Default, Lender shall be entitled to the rights and
remedies, and Borrower shall have the obligations, set forth below:
(a) Lender may enter upon the premises where any of the
Collateral is located and take possession thereof and, at Lender's option,
remove or sell in place any or all thereof.
(b) Upon notice from Lender, Borrower shall promptly at
its expense assemble any or all of the Collateral and make it available at a
reasonably convenient place designated by Lender.
(c) Lender may, with or without judicial process, sell,
lease or otherwise dispose of any or all of the Collateral at public or private
sale or proceedings, by one or more contracts, in one or more parcels, at the
same or different times and places, with or without having the Collateral at the
place of sale or other disposition, to such persons or entities, for cash or
credit or for future delivery and upon such other terms, as Lender may in its
discretion deem best in each such matter. The purchaser of any of the Collateral
at any such sale shall hold the same free of any equity or redemption or other
right or claim of Borrower, all of which - together with all rights of stay,
exemption or appraisal under any statute or other law now or hereafter in
effect - Borrower hereby unconditionally waives to the fullest extent permitted
by law. If any of the Collateral is sold on credit or for future delivery,
Lender shall not be liable for the failure of the purchaser to pay for same and,
in the event of such failure, Lender may resell such Collateral.
(d) Borrower hereby further agrees that notice of the
time and place of any public sale, or of the time after which any private sale
or other intended disposition or action relating to any of the Collateral is to
be made or taken, shall be deemed commercially reasonable notice thereof, and
shall satisfy the requirements of any applicable statute or other law, if such
notice (i) is delivered not less than three (3) business days prior to the date
of the sale, disposition or other action to which the notice relates, or (ii) is
mailed (by ordinary first class mail, postage prepaid) not less than five (5)
business days prior thereto. Lender shall not be obligated to make any sale or
other disposition or take other action pursuant to such notice and may, without
other notice or publication, adjourn or postpone any public or private sale or
other disposition or action by announcement at the time and place previously
fixed therefor, and such sale, disposition or action may be held or accomplished
at any times or places to which the same may be so adjourned or postponed.
(e) Lender may purchase any or all of the Collateral at
any public sale and may purchase at private sale any of the Collateral that is
of a type customarily sold in a recognized market or the subject of widely
distributed price quotations or as
39
may be further permitted by law. Lender may make payment of the purchase price
for any Collateral by credit against the then outstanding amount of the
Obligations.
(f) Lender may at its discretion retain any or all of
the Collateral and apply the same in satisfaction of part or all of the
Obligations.
(g) Any cash proceeds of sale, lease or other
disposition of Collateral shall be applied as follows:
First: To the expenses of collecting,
enforcing, safeguarding, holding and disposing of
Collateral, and to other expenses of Lender in
connection with the enforcement of this Agreement,
the Notes, any of the Relevant Documents, or any
other agreement relating to any of the Obligations
(including without limitation court costs and the
fees and expenses of attorneys, accountants and
appraisers), together with interest at the Default
Rate from the respective date such sums are expended;
Second: Any surplus then remaining to the
payment of interest and principal of the Loans and
other sums payable as part of the Obligations, in
such order as Bank elects; and
Third: Any surplus then remaining to
Borrower or whomever may be lawfully entitled
thereto.
9.3 Set-Off. Borrower further agrees that:
(a) Upon the occurrence of an Event of Default, Lender
is hereby authorized at any time from time to time, without notice to Borrower
(any such notice being expressly waived by Borrower), to set off and apply (or
cause any affiliate of Lender to set off and apply) any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by Lender or such affiliate to or for the
credit or the account of Borrower, against any or all of the Obligations of
Borrower now or hereafter existing under this Agreement, the Notes or otherwise,
irrespective of whether or not Lender shall have made any demand and although
such Obligations may be unmatured.
(b) If any other lender has participated with Lender
with respect to any of the Loans, Borrower hereby authorizes such participating
lender, upon the occurrence of any Event of Default, immediately and without
notice or other action, at request of Lender, to set off against any of
Borrower's Obligations to Lender any deposits held or money owed by such
participating lender in any capacity to Borrower, whether or not due, and to
remit the money set off to Lender.
40
(c) The rights stated in this Section 9.3 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off or lien) that Lender or any participating lender may have.
9.4 Cumulative Remedies; No Waiver by Lender. No remedy
referred to in this Agreement is intended to be exclusive, but each shall be
cumulative and in addition to any other remedy referred to in this Agreement or
otherwise available to Lender by agreement or at law or in equity. No express or
implied waiver by Lender of any default or Event of Default shall in any way be,
or be construed to be, a waiver of any future or subsequent default of Event of
Default. The failure or delay of Lender in exercising any rights granted it
hereunder upon any occurrence of any of the contingencies set forth herein shall
not constitute a waiver of any such right upon the continuation or recurrence of
any such contingency or similar contingencies, and any single or partial
exercise of any particular right by Lender shall not exhaust the same or
constitute a waiver of any other right.
9.5 Waivers and Consents Relating to Remedies. In connection
with any action or proceeding arising out of or relating in any way to this
Agreement, the Notes, any of the Loans, any of the Relevant 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:
(a) BORROWER AND LENDER WAIVE THE RIGHT TO TRIAL BY JURY
AS MORE FULLY SET FORTH IN SECTION 14.15 BELOW;
(b) Borrower and Lender consent to the jurisdiction of any
court of the Commonwealth of Pennsylvania and of any federal court located in
Pennsylvania, and waive any right to object to such court as an inconvenient
forum;
(c) Borrower agrees that all of the Collateral constitutes
equal security for all of the Obligations, and agrees that Lender shall be
entitled to sell, retain or otherwise deal with any or all of the Collateral, in
any order or simultaneously as Lender shall determine in its sole and absolute
discretion, free of any requirement for the marshalling of assets or other
restriction upon Lender in dealing with the Collateral; and
(d) Borrower agrees that Lender may proceed directly
against Borrower for collection of any or all of the Obligations without first
selling, retaining or otherwise dealing with any of the Collateral.
10. ADDITIONAL WAIVERS AND CONSENTS OF BORROWER.
10.1 Waivers. Borrower waives demand, presentment, notice of
dishonor or protest of any instruments either of Borrower or others which may be
included in the Collateral.
41
10.2 Consents. Borrower consents to (a) any extension,
postponement of time of payment or other indulgence, (b) any substitution,
exchange or release of Collateral, (c) any addition to, or release of, any party
or person primarily or secondarily liable, and (d) any acceptance of partial
payment on any Accounts or instruments and the settlement, compromising or
adjustment thereof.
11. RELEASE UPON PAYMENT IN FULL
11.1 Mutual Release. Upon full and final payment and
performance of the Loans and all other Obligations under this Agreement and the
Relevant Documents, Borrower, Lender and any sureties shall thereupon
automatically each be fully, finally and forever released and discharged from
any and all claims, liabilities and obligations, whether in contract or tort,
arising out of or relating in any way to this Agreement, the Notes or Loans, or
any act or omission relating to any of the foregoing or to any of the Collateral
or Relevant Documents.
12. COSTS, EXPENSES AND TAXES
Borrower agrees to pay on demand:
(a) all costs and expenses in connection with the preparation,
execution, delivery and administration of this Agreement, the Notes, the
Relevant Documents, and the other documents to be delivered in connection with
this Agreement, or any amendments to any of the foregoing (including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for Lender
and the cost of appraisals and reappraisals of Collateral).
(b) all losses, costs and expenses incurred by Lender in
connection with the enforcement of this Agreement, the Notes, any of the
Relevant Documents, or any other agreement relating to any of the Obligations,
or in the preservation of any rights of Lender under any thereof, or in
connection with legal advice relating to the rights or responsibilities of
Lender under any thereof (including without limitation court costs and the
reasonable fees and expenses of attorneys, accountants and appraisers), and any
expenditure made by Lender in accordance with Section 7.1(b) or (c) of this
Agreement; and
(c) any and all stamp and other taxes payable or determined to
be payable in connection with the execution and delivery of this Agreement, the
Notes, or any of the Relevant Documents, and all liabilities to which Lender may
become subject as the result of delay in paying or omission to pay such taxes.
With respect to any amount advanced by Lender and required to
be reimbursed by Borrower pursuant to the foregoing provisions of this Section
12,
42
Borrower shall also pay Lender interest on such amount at the Default Rate.
Borrower's obligations under this Section 12 shall survive termination of the
other provisions of this Agreement.
13. INDEMNIFICATION BY BORROWER
Borrower hereby covenants and agrees to indemnify, defend and
hold harmless Lender and its officers, directors, employees and agents from and
against any and all claims, damages, liabilities, costs and expenses (including
without limitation, the fees and out-of-pocket 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, the Notes, the Loans, any of the Relevant
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;
(b) any taxes, liabilities, claims or damages relating to the
Collateral or Lender's liens thereon;
(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) the requirement of this Section 13 by the Borrower to
indemnify the Lender shall not apply in any litigation between the Lender and
the Borrower.
14. MISCELLANEOUS
14.1 Opinion of Counsel for Borrower and Sureties. The
Borrower shall cause its attorneys to issue an opinion to the Lender on such
matters as the Lender may require from time to time including but not limited to
the organization and existence of the Borrower and Sureties, the enforceability
and validity of the Loan Documents, the enforceability of the Loans and opinions
on such other matters as Lender may reasonably request.
14.2 Entire Agreement; Amendments; Lender's Consent. This
Agreement (including the Schedules thereto), the Notes, and the Relevant
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, the Notes or any of the
Relevant Documents, nor consent to any
43
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by Lender, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
14.3 Notices. All notices and other communications relating to
this Agreement or the Notes (or to any of the Relevant Documents, unless
otherwise specified therein) shall be in writing and addressed as follows:
If to Lender: PNC Bank, National Association
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Commercial Finance Department
If to Borrower: c/o The Judge Group, Inc., et al.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Judge, Jr.,
Chief Executive Officer
or to such other address as the respective party or its
successors or assigns may subsequently designate by proper notice.
14.4 Gender. Throughout this Agreement, the masculine shall
include the feminine and vice versa and the singular shall include the plural
and vice versa, unless the context of this Agreement indicates otherwise.
14.5 Joint Borrowers. If more than one party executes this
Agreement as Borrower, then for the purpose of this Agreement the term Borrower
shall mean each such party and each such party shall be jointly and severally
liable as Borrower for the Obligations as defined herein without regard to which
party receives the proceeds of any of the Loans. Each such party hereby
acknowledges that it expects to derive economic advantage from each of the
Loans.
14.6 Cross Default; Cross Collateral. Borrower hereby agrees
that (a) all other agreements between Borrower and Lender or any of its
affiliates is hereby amended so that a default under this Agreement is a default
under all 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 or any of its affiliates and the collateral pledged
under any other agreement with Lender or any of its affiliates secures the
Obligations under this Agreement.
14.7 Binding Effect; Governing Law. This Agreement shall be
binding upon and inure to the benefit of Borrower and Lender and their
respective
44
successors and assigns, except that Borrower shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent of
Lender. This Agreement, the Notes, the Relevant Documents and the other
documents delivered in connection with this Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Pennsylvania.
Anything to the contrary contained herein notwithstanding, this Agreement and
the Relevant Documents executed by the Borrower and/or the Sureties in
connection herewith, shall not be effective until (i) executed by the Borrower
and delivered to the Bank's offices in Pennsylvania and (ii) duly signed by two
officers of the Bank in Pennsylvania.
14.8 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.
14.9 Severability of Provisions. Any provision of this
Agreement, the Notes or any of the Relevant 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, such Notes or such Documents or
affecting the validity or enforceability of such provision in any other
jurisdiction.
14.10 Headings. The heading preceding the text of this
Agreement are inserted solely for convenience of reference and shall not
constitute a part of this Agreement nor affect its meaning, construction or
effect.
14.11 Schedules. All of the Schedules to this Agreement are
hereby incorporated by reference herein and made a part hereof.
14.12 Further Acknowledgements and Agreements of Borrower and
the Lender.
(a) General Acknowledgements.
(1) Borrower and the Lender acknowledge and agree that
they (i) have independently reviewed and approved each and every provision of
this Agreement, including the Exhibits attached hereto and any and all other
documents and items as they or their counsel have deemed appropriate, and (ii)
have entered into this Agreement and have executed the closing documents
voluntarily, without duress or coercion, and have done all of the above with the
advice of their legal counsel.
(2) Borrower and Lender acknowledge and agree that, to
the extent deemed necessary by them or their counsel, they and their counsel
have independently reviewed, investigated and/or have full knowledge of all
aspects of the
45
transaction and the basis for the transaction contemplated by this Agreement
and/or have chose not to so review and investigate (in which case, Borrower
acknowledges and agrees that it has knowingly and upon the advice of counsel
waived any claim or defense based on any fact or any aspect of the transaction
that any investigation would have disclosed), including without limitation:
(i) the risks and benefits of the various
waivers of rights contained in this
Agreement, including but not limited to,
the waiver of the right to a jury trial;
(ii) the adequacy of the consideration being
transferred under this Agreement,
including the adequacy of the
consideration for the Mutual Release as
set forth in Section 11.3 hereof;
(3) Borrower has made its own investigation or elected
not to make such investigation as to all matters it deems material to this
transaction and has not relied on any statement of fact or opinion, disclosure
or non-disclosure of the Lender, and has not been induced by the Lender in any
way, except for the consideration recited herein, in entering into this
Agreement and executing the closing documents contemplated hereby, and further
acknowledges that the Lender has not made any warranties or representations of
any kind in connection with this transaction except as specifically set forth
herein or in the documents executed in connection with this Agreement, and
Borrower is not relying on any such representations or warranties.
(4) Borrower acknowledges and agrees that, after
careful consideration, it does not deem any matter not reviewed or investigated
by it to be material to this Agreement and the transaction contemplated hereby.
14.13 Prior Agreements. This Agreement is an amendment and
restatement of the terms and conditions of the lending relationship between
Borrower and Lender as previously set forth in Relevant Documents, and any
amendments or supplements to the aforementioned agreements, and is not a new
loan agreement, and all of the terms and conditions of the aforementioned
agreements shall remain in full force and effect as though set forth herein at
length, to the extent not inconsistent with the terms of this Agreement. To the
extent of any inconsistencies, the terms of this Agreement shall control.
14.14 Liability of Sureties. By executing this Agreement, the
Lender is not releasing any existing Surety with respect to the obligations of
Borrower to the Lender.
46
14.15 WAIVER OF JURY TRIAL.
BORROWER, SURETIES AND LENDER, UPON ADVICE FROM THEIR
RESPECTIVE COUNSEL, HEREBY INTENTIONALLY, KNOWINGLY, VOLUNTARILY, EXPRESSLY AND
MUTUALLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENTS EVIDENCING THE
LOAN, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OF
THE OTHER DOCUMENTS EVIDENCING THE LOAN, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, OR (C) IN ANY LITIGATION BETWEEN THE PARTIES, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE, AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY TO THIS AGREEMENT MAY FILE THIS ORIGINAL AGREEMENT OR A COPY THEREOF WITH
ANY COURT AS WRITTEN EVIDENCE TO THE CONSENT OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO A TRIAL BY JURY.
IN WITNESS WHEREOF, the undersigned have set their hands and
seals or caused these presents to be executed by their proper corporate officers
and sealed with their seal the day and year first above written.
THE JUDGE GROUP, INC. (Borrower)
Attest:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
------------------------------------ -------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
JUDGE, INC. (Borrower)
Attest:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
------------------------------------ ------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
JUDGE TECHNICAL SERVICES, INC.
(Borrower)
Attest:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
------------------------------------ -------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
SIGNATURES CONTINUED ON PAGE 48
47
SIGNATURES CONTINUED FROM PAGE 47
THE BERKELEY ASSOCIATES CORP.
(Borrower)
Attest:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
------------------------------------ -----------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge Jr.,
(Corporate Seal) Chief Executive Officer
JUDGE PROFESSIONAL SERVICES, INC.
(Borrower)
Attest:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
------------------------------------ ------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
JUDGE IMAGING SYSTEMS, INC.
(Borrower)
Attest:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
----------------------------------- -------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
JUDGE ELECTRONICS SERVICES OF
FLORIDA, INC.
Attest: (Borrower)
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
----------------------------------- -------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
JUDGE INC. OF NEW JERSEY
Attest: (Borrower)
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
----------------------------------- -------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
JUDGE TECHNICAL SERVICES OF
N.J., INC.
Attest: (Borrower)
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
----------------------------------- -------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
48
SIGNATURES CONTINUED ON PAGE 49
JUDGE ACQUISITION, INC. (Borrower)
Attest:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Judge, Jr.
----------------------------------- -------------------------------------
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. Judge, Jr.,
(Corporate Seal) Chief Executive Officer
Witness:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. Judge, Jr. (Seal)
----------------------------------- --------------------------------------
▇▇▇▇▇▇ ▇. Judge, Jr.,
individually (Surety)
Witness:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (Seal)
----------------------------------- --------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
individually (Surety)
Witness:
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (Seal)
----------------------------------- --------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
individually (Surety)
PNC BANK, NATIONAL ASSOCIATION
(Lender)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Vice President
49