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REVOLVING CREDIT AGREEMENT
Dated as of September 21, 2000
by and between
TRANSACT TECHNOLOGIES INCORPORATED
and
▇▇▇▇▇▇▇ BANK
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TABLE OF CONTENTS
1. DEFINITIONS AND RULES OF INTERPRETATION ..................................................... 1
1.1. Definitions ...................................................................... 1
1.2. Rules of Interpretation .......................................................... 16
2. THE REVOLVING CREDIT FACILITY ............................................................... 17
2.1. Commitment to Lend ............................................................... 17
2.2. Commitment Fee ................................................................... 17
2.3. Unused Line Fee .................................................................. 17
2.4. Reduction of Revolving Credit Commitment ......................................... 18
2.5. The Revolving Credit Note ........................................................ 18
2.6. Interest on Revolving Credit Loans ............................................... 19
2.7. Requests for Revolving Credit Loans .............................................. 19
2.8. Conversion Options ............................................................... 20
2.8.1. Conversion to Different Type of Revolving Credit Loan ................. 20
2.8.2. Continuation of Type of Revolving Credit Loan ......................... 20
2.8.3. LIBOR Rate Loans ...................................................... 21
3. REPAYMENT OF THE REVOLVING CREDIT LOANS ..................................................... 21
3.1. Maturity ......................................................................... 21
3.2. Mandatory Repayments of Revolving Credit Loans ................................... 21
3.3. Optional Repayments of Revolving Credit Loans .................................... 21
4. CERTAIN GENERAL PROVISIONS .................................................................. 22
4.1. Funds for Payments ............................................................... 22
4.1.1. Payments to Bank ...................................................... 22
4.1.2. No Offset, etc ........................................................ 22
4.2. Computations ..................................................................... 22
4.3. Inability to Determine LIBOR Rate ................................................ 23
4.4. Illegality ....................................................................... 23
4.5. Additional Costs, etc ............................................................ 23
4.6. Capital Adequacy ................................................................. 25
4.7. Certificate ...................................................................... 25
4.8. Indemnity ........................................................................ 25
4.9. Interest After Default ........................................................... 26
4.9.1. Overdue Amounts ....................................................... 26
4.9.2. Amounts Not Overdue ................................................... 26
4.9.3. Late Charge ........................................................... 26
5. COLLATERAL SECURITY AND GUARANTIES .......................................................... 26
5.1. Security of Borrower ............................................................. 26
5.2. Guaranties of Subsidiaries ....................................................... 26
6. REPRESENTATIONS AND WARRANTIES .............................................................. 26
6.1. Corporate Authority .............................................................. 26
6.1.1. Incorporation; Good Standing .......................................... 26
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6.1.2. Subsidiaries .......................................................... 27
6.1.3. Authorization ......................................................... 27
6.1.4. Enforceability ........................................................ 27
6.2. Governmental Approvals ........................................................... 27
6.3. Title to Properties; Leases ...................................................... 27
6.4. Financial Statements and Projections ............................................. 28
6.4.1. Fiscal Year ........................................................... 28
6.4.2. Financial Statements .................................................. 28
6.4.3. Projections ........................................................... 28
6.4.4. Solvency .............................................................. 28
6.5. No Material Changes, etc ......................................................... 29
6.6. Franchises, Patents, Copyrights, etc ............................................. 29
6.7. Litigation ....................................................................... 29
6.8. No Materially Adverse Contracts, etc ............................................. 29
6.9. Compliance with Other Instruments, Laws, etc ..................................... 30
6.10. Tax Status ...................................................................... 30
6.11. No Event of Default ............................................................. 30
6.12. Holding Company and Investment Company Acts ..................................... 30
6.13. Absence of Financing Statements, etc ............................................ 30
6.14. Perfection of Security Interest ................................................. 30
6.15. Certain Transactions ............................................................ 31
6.16. Employee Benefit Plans .......................................................... 31
6.16.1. In General ........................................................... 31
6.16.2. Terminability of Welfare Plans ....................................... 31
6.16.3. Guaranteed Pension Plans ............................................. 31
6.16.4. Multiemployer Plans .................................................. 32
6.17. Use of Proceeds ................................................................. 32
6.17.1. General .............................................................. 32
6.17.2. Regulations U and X .................................................. 32
6.18. Environmental Compliance ........................................................ 33
6.19. No Joint Ventures, etc .......................................................... 34
6.20. Bank Accounts ................................................................... 34
6.21. Disclosure ...................................................................... 34
6.22. Capitalization Documents ........................................................ 35
6.23. Chief Executive Office .......................................................... 35
6.24. Insurance ....................................................................... 35
7. AFFIRMATIVE COVENANTS OF THE BORROWER ....................................................... 35
7.1. Punctual Payment ................................................................. 35
7.2. Maintenance of Office ............................................................ 35
7.3. Records and Accounts ............................................................. 35
7.4. Financial Statements, Certificates and Information ............................... 36
7.5. Notices .......................................................................... 38
7.5.1. Defaults .............................................................. 38
7.5.2. Environmental Events .................................................. 38
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7.5.3. Notification of Claim against Collateral .............................. 38
7.5.4. Notice of Litigation and Judgments .................................... 38
7.6. Corporate Existence; Maintenance of Properties ................................... 39
7.7. Insurance ........................................................................ 39
7.8. Taxes ............................................................................ 39
7.9. Inspection of Properties and Books, etc .......................................... 40
7.9.1. General ............................................................... 40
7.9.2. Field Exams ........................................................... 40
7.9.3. Communications with Accountants ....................................... 40
7.10. Compliance with Laws, Contracts, Licenses, and Permits .......................... 40
7.11. Employee Benefit Plans .......................................................... 41
7.12. Depository Bank ................................................................. 41
7.13. Guarantors ...................................................................... 41
7.14. Additional Subsidiaries ......................................................... 41
7.15. Further Assurances .............................................................. 42
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER .................................................. 42
8.1. Restrictions on Indebtedness ..................................................... 42
8.2. Restrictions on Liens ............................................................ 42
8.3. Restrictions on Investments ...................................................... 44
8.4. Restricted Payments .............................................................. 45
8.5. Merger, Consolidation and Disposition of Assets .................................. 45
8.5.1. Mergers and Acquisitions .............................................. 45
8.5.2. Disposition of Assets ................................................. 45
8.6. Sale and Leaseback ............................................................... 46
8.7. Compliance with Environmental Laws ............................................... 46
8.8. Subordinated Debt ................................................................ 46
8.9. Employee Benefit Plans ........................................................... 46
8.10. Business Activities ............................................................. 47
8.11. Fiscal Year ..................................................................... 47
8.12. Transactions with Affiliates .................................................... 47
8.13. Bank Accounts ................................................................... 47
8.14. Consignment ..................................................................... 47
9. FINANCIAL COVENANTS OF THE BORROWER ......................................................... 48
9.1. Leverage Ratio ................................................................... 48
9.2. Debt Service Coverage Ratio ...................................................... 48
9.3. Minimum Tangible Net Worth ....................................................... 48
9.4. Capital Expenditures. The ....................................................... 49
10. CLOSING CONDITIONS ......................................................................... 49
10.1. Loan Documents .................................................................. 49
10.2. Certified Copies of Charter Documents ........................................... 49
10.3. Corporate Action ................................................................ 49
10.4. Incumbency Certificate .......................................................... 49
10.5. Validity of Liens ............................................................... 50
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10.6. Perfection Certificate and UCC Search Results ................................... 50
10.7. Certificates of Insurance ....................................................... 50
10.8. Opinion of Counsel .............................................................. 50
10.9. Lessor's Agreement .............................................................. 50
10.10. Subcontractor Agreements ....................................................... 50
10.11. Litigation ..................................................................... 50
10.12. Release ........................................................................ 50
10.13. Payment of Fees and Other Amounts .............................................. 51
11. CONDITIONS TO ALL BORROWINGS ............................................................... 51
11.1. Representations True; No Event of Default ....................................... 51
11.2. No Legal Impediment ............................................................. 51
11.3. Governmental Regulation ......................................................... 51
11.4. Proceedings and Documents ....................................................... 51
12. EVENTS OF DEFAULT; ACCELERATION; ETC ....................................................... 52
12.1. Events of Default and Acceleration .............................................. 52
12.2. Termination of Revolving Credit Commitment ...................................... 55
12.3. Remedies ........................................................................ 55
13. SETOFF ..................................................................................... 56
14. EXPENSES AND INDEMNIFICATION ............................................................... 56
14.1. Expenses ........................................................................ 56
14.2. Indemnification ................................................................. 57
14.3. Survival ........................................................................ 57
15. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION .............................................. 58
16. SURVIVAL OF COVENANTS, ETC ................................................................. 58
16.1. Survival of Covenants ........................................................... 58
16.2. No Marshalling .................................................................. 58
17. ASSIGNMENT AND PARTICIPATION ............................................................... 59
17.1. Conditions to Assignment by Bank ................................................ 59
17.2. Participations .................................................................. 59
17.3. Disclosure ...................................................................... 59
17.4. Assignment by Borrower .......................................................... 59
18. NOTICES, ETC ............................................................................... 59
19. GOVERNING LAW .............................................................................. 60
20. HEADINGS ................................................................................... 60
21. COUNTERPARTS ............................................................................... 61
22. ENTIRE AGREEMENT, ETC ...................................................................... 61
23. WAIVER OF JURY TRIAL; PJR WAIVER ........................................................... 61
24. CONSENTS, AMENDMENTS, WAIVERS, ETC ......................................................... 62
25. NO OFFSET, ETC ............................................................................. 62
26. SEVERABILITY ............................................................................... 62
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REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of September 21, 2000, by and
between TRANSACT TECHNOLOGIES INCORPORATED (the "Borrower"), a Delaware
corporation having its principal place of business at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ BANK (the "Bank"), with an office at
CityPlace II, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings set forth in
thisSection1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Accounts/Inventory Ratio Condition. The Accounts/Inventory Ratio Condition
shall be satisfied at any time that the Borrowing Base, as determined by the
Bank by reference to the most recent Borrowing Base Certificate delivered to the
Bank hereunder, shows that the ratio of (a) the amount equal to 85% of the
amount of Base Accounts, to (b) the amount equal to 35% of the amount of Base
Inventory, is not less than 2.00 to 1.00, provided that, at any time that the
Borrower has failed to deliver to the Bank the most recent Borrowing Base
Certificate that is due hereunder, the Accounts/Inventory Ratio Condition shall
be deemed not to be satisfied, regardless of the amounts of Base Accounts and
Base Inventory shown on the most recent Borrowing Base Certificate delivered to
the Bank hereunder.
Accounts Receivable. All rights of the Borrower to payment for goods sold,
leased or otherwise marketed in the ordinary course of business and all rights
of the Borrower to payment for services rendered in the ordinary course of
business and all sums of money or other proceeds due thereon pursuant to
transactions with account debtors, recorded on books of account in accordance
with generally accepted accounting principles.
Affiliate. Any Person that would be considered to be an affiliate of the
Borrower under Rule 144(a) of the Rules and Regulations of the Securities and
Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Balance Sheet Date. June 24, 2000.
Bank. As defined in the preamble hereto.
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Base Accounts. The aggregate of the unpaid portions of Accounts Receivable
(net of any credits, customer deposits, rebates, offsets, holdbacks or other
adjustments or commissions payable to third parties that are adjustments to such
Accounts Receivable) (a) that the Borrower reasonably and in good faith
determines to be collectible; (b) that are owed by account debtors or other
obligors that (i) are not Affiliates of the Borrower, (ii) purchased the goods
or services giving rise to the relevant Account Receivable in an arm's length
transaction, (iii) are not insolvent or involved in any case or proceeding,
whether voluntary or involuntary, under any bankruptcy, reorganization,
arrangement, insolvency, adjustment of debt, dissolution, liquidation or similar
law of any jurisdiction; and (iv) are not creditors of the Borrower or any
Affiliate of the Borrower (which term "creditors" includes without limitation
any suppliers to which the Borrower or any Affiliate of the Borrower has an
outstanding invoice or is otherwise indebted), provided that the amount owed by
a supplier in excess of the amount owed by the Borrower (or Affiliate) to such
supplier shall not be excluded from Base Accounts pursuant to this clause
(b)(iv); (c) that are in payment of obligations that have been fully performed,
do not consist of progress ▇▇▇▇▇▇▇▇ or ▇▇▇▇ and hold invoices or other deferred
revenues and are not subject to dispute or any other similar claims that would
reduce the cash amount payable therefor; (d) that are not subject to any pledge,
restriction, security interest or other lien or encumbrance other than those
created by the Loan Documents; (e) in which the Bank has a valid and perfected
first priority security interest; (f) that are not outstanding for more than
ninety (90) days past the earlier to occur of (i) the date of the respective
invoices therefor and (ii) the date of shipment thereof in the case of goods or
the end of the calendar month following the provision thereof in the case of
services, and are not outstanding for more than sixty (60) days past their due
date; (g) that are not owed by the United States government or any agency
thereof unless the Borrower has complied with the Federal Assignment of Claims
Act; (h) that are not due from any single account debtor or other obligor if
more than fifty percent (50%) of the aggregate amount of all Accounts Receivable
owing from such account debtor or other obligor would be excluded as Base
Accounts pursuant to clause (f) of this definition; (i) that are payable in
Dollars; (j) that are not payable from an office outside of the United States,
unless (i) the payment of any such Account Receivable is backed by a letter of
credit in form and substance satisfactory to the Bank and is issued by a
financial institution acceptable to the Bank having an office in the United
States and provided that the Bank has a prior, perfected security interest in
such letter of credit or (ii) such Account Receivable is from ICL/ Pathway, OKI
Europe, or another account debtor pre-approved in writing by the Bank; and (k)
that are not secured by a letter of credit unless the Bank has a prior,
perfected security interest in such letter of credit; and (l) that are not
otherwise determined by the Bank, in its discretion to be ineligible.
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Base Inventory. With respect to the Borrower and its Subsidiaries, finished
goods and raw materials inventory owned by the Borrower or any of its
Subsidiaries; provided that Base Inventory (but not any work-in-process,
component parts or packaging inventory) shall not include any inventory (a) held
on consignment, or not otherwise owned by the Borrower, or of a type no longer
sold by the Borrower, (b) which has been returned by a customer or is damaged or
subject to any legal encumbrance other than liens permitted hereunder, (c) which
is not in the possession of the Borrower unless the Bank has received a waiver
from the party in possession of such inventory in form and substance
satisfactory to the Bank, (d) which is held by the Borrower on property leased
by the Borrower, unless the Bank has either (i) received a waiver from the
lessor of such leased property and, if any, sublessor thereof in form and
substance satisfactory to the Bank or (ii) has waived such limitation, (e) as to
which appropriate Uniform Commercial Code financing statements showing the
Borrower as debtor and the Bank as secured party have not been filed in the
proper filing office or offices in order to perfect the Bank's security interest
therein, (f) which has been shipped to a customer of the Borrower (or which is
otherwise in transit) regardless of whether such shipment is on a consignment
basis (excluding ICL/Pathway so long as such shipments are insured in accordance
with Borrower's customary practices), (g) which is not located within the United
States of America (excluding ICL/Pathway so long as such shipments are insured
in accordance with Borrower's customary practices), or (h) which the Bank in its
discretion deems to be obsolete or not marketable or not eligible to be Base
Inventory.
Base Rate. A floating rate per annum equal to the higher of (i) the rate
published as the "Prime Rate" in the section of the Wall Street Journal entitled
"Money Rates" (or, if such rate ceases to be published, such equivalent
reference rate as is selected by the Bank in its discretion), or (ii) one-half
of one percent (1/2%) above the Federal Funds Effective Rate. For the purposes
of this definition, "Federal Funds Effective Rate" shall mean for any day, the
rate per annum equal to the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day on such transactions received by
the Bank from three funds brokers of recognized standing selected by the Bank.
The Base Rate is a reference rate and does not represent the lowest or best rate
being charged to any customer.
Base Rate Loans. Any Revolving Credit Loans bearing interest calculated by
reference to the Base Rate.
Borrower. As defined in the preamble hereto.
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Borrowing Base. At the relevant time of reference thereto, the lesser of
(a) an amount determined by the Bank by reference to the most recent Borrowing
Base Certificate delivered to the Bank pursuant to Section 7.4(c) to be equal to
the sum of (i) 85% of the Base Accounts, plus (ii) the lesser of (A) the
Inventory Borrowing Base Percentage of the Base Inventory, or (B) the Maximum
Inventory Component, or (b) (i) prior to the first anniversary of the Closing
Date, $10,000,000, and (ii) on and after the first anniversary of the Closing
Date, $12,000,000. Notwithstanding the foregoing, the amount set forth in clause
(b)(i) of the first sentence of this definition shall be deemed to be
$12,000,000 during such times prior to the first anniversary of the Closing Date
as the Account/Inventory Ratio Condition is satisfied.
Borrowing Base Certificate. See Section 7.4(c).
Business Day. Any day, other than a Saturday or Sunday, on which banking
institutions in Hartford, Connecticut, are open for the transaction of banking
business and, in the case of LIBOR Rate Loans, also a day which is a LIBOR
Business Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and good will); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or Indebtedness incurred by the Borrower
or any of its Subsidiaries in connection with (a) the purchase or lease by the
Borrower or any of its Subsidiaries of Capital Assets that would be required to
be capitalized and shown on the balance sheet of such Person in accordance with
generally accepted accounting principles or (b) the lease of any assets by the
Borrower or any of its Subsidiaries as lessee under any Synthetic Lease to the
extent that such assets would have been Capital Assets had the Synthetic Lease
been treated for accounting purposes as a Capitalized Lease.
Capitalization Documents. Collectively, the certificate of incorporation
and by-laws of the Borrower and its Subsidiaries and the Preferred Stock
Purchase Agreement dated as of March 20, 2000 among the Borrower, Advance
Capital Partners, L.P., and Advance Capital Offshore Partners, L.P.
Capitalized Leases. Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with generally accepted accounting
principles.
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CERCLA. See Section 6.18(a).
Clause (b)(i) Excess. A circumstance in which the outstanding amount of the
Revolving Credit Loans exceeds the Borrowing Base solely because the outstanding
amount of Revolving Credit Loans prior to the first anniversary of the Closing
Date is more than $10,000,000 (but less than $12,000,000) at a time that the
Accounts/Inventory Ratio Condition is not satisfied.
Closing Date. The first date on which the conditions set forth in Section
10 have been satisfied and any Revolving Credit Loans are to be made.
Code. The Internal Revenue Code of 1986, as amended from time to time.
Collateral. All of the property, rights and interests of the Borrower and
its Subsidiaries that are or are intended to be subject to the security
interests created by the Security Documents.
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Net Income (or Deficit). The consolidated net income (or
deficit) of the Borrower and its Subsidiaries, after deduction of all expenses,
taxes, and other proper charges, determined in accordance with generally
accepted accounting principles, after eliminating therefrom all extraordinary
nonrecurring items of income.
Consolidated Tangible Net Worth. The result of Consolidated Total Assets
minus Consolidated Total Liabilities, and minus the sum of: -----
(a) the total book value of all assets of the Borrower and its
Subsidiaries properly classified as intangible assets under generally
accepted accounting principles, including such items as good will, the
purchase price of acquired assets in excess of the fair market value
thereof, trademarks, trade names, service marks, brand names, copyrights,
patents and licenses, and rights with respect to the foregoing; plus
(b) all amounts representing any write-up in the book value of any
assets of the Borrower or its Subsidiaries resulting from a revaluation
thereof subsequent to the Balance Sheet Date; plus
(c) to the extent otherwise includable in the computation of
Consolidated Tangible Net Worth, any subscriptions receivable.
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Consolidated Total Assets. All assets of the Borrower and its Subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles.
Consolidated Total Debt Service. For any fiscal period with respect to the
Borrower and its Subsidiaries, the sum of (a) Consolidated Total Interest
Expense for such period, plus (b) any and all mandatory or required payments of
principal in respect of Indebtedness of the Borrower and its Subsidiaries made
or required to be made during such period.
Consolidated Total Interest Expense. For any period, the aggregate amount
of interest required to be paid or accrued by the Borrower and its Subsidiaries
during such period on all Indebtedness of the Borrower and its Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including
payments consisting of interest in respect of any Capitalized Lease or any
Synthetic Lease, and including commitment fees, agency fees, facility fees,
balance deficiency fees and similar fees or expenses in connection with the
borrowing of money.
Consolidated Total Liabilities. All liabilities of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
Conversion Request. A notice given by the Borrower to the Bank of the
Borrower's election to convert or continue a Loan in accordance with Section
2.8.
Credit Agreement. This Revolving Credit Agreement, including the Schedules
and Exhibits hereto.
Debt Service Coverage Ratio. As at any date of determination, the ratio of
(a) EBITDA for the applicable number of months ended on such date to (b) the sum
of (i) Consolidated Total Debt Service for the applicable number of months ended
on such date and (ii) dividends paid in cash during any such applicable number
of months.
Default. See Section 12.1.
Distribution. The declaration or payment of any dividend on or in respect
of any shares of any class of capital stock of the Borrower, membership interest
or other equity interest, other than dividends payable solely in capital stock
of the Borrower; the purchase, redemption, or other retirement of any shares of
any class of capital stock of the Borrower or membership interests in the
Borrower, directly or indirectly through a Subsidiary of the Borrower or
otherwise; the return of capital by the Borrower to its shareholders or members,
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as such; or any other distribution on or in respect of any shares of any class
of capital stock or membership interests of the Borrower.
Dollars or $. Dollars in lawful currency of the United States of America.
Drawdown Date. The date on which any Revolving Credit Loan is made or is to
be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with Section 2.8.
EBITDA. With respect to the Borrower for any fiscal period, an amount equal
to Consolidated Net Income for such period, plus, to the extent deducted in the
calculation of Consolidated Net Income and without duplication, (a) depreciation
and amortization for such period, (b) taxes paid by the Borrower during such
period, and (c) Consolidated Total Interest Expense for such period.
Employee Benefit Plan. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Indemnity Agreement. The Environmental Indemnity Agreement,
dated or to be dated on or prior to the Closing Date, between the Borrower and
the Bank and in form and substance satisfactory to the Bank.
Environmental Laws. See Section 6.18(a).
EPA. See Section 6.18(b).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with the
Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder.
Eurocurrency Reserve Rate. For any day with respect to a LIBOR Rate Loan,
the maximum rate (expressed as a decimal) at which any lender subject thereto
would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulations
relating to such reserve requirements) against "Eurocurrency Liabilities" (as
that term is used in Regulation D), if such liabilities were outstanding. The
Eurocurrency Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Rate.
Event of Default. See Section 12.1.
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Generally accepted accounting principles. (a) When used in Section 7,
whether directly or indirectly through reference to a capitalized term used
therein, means (i) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on December 31, 1999, and (ii)
to the extent consistent with such principles, the accounting practice of the
Borrower reflected in its financial statements for the year ended on December
31, 1999, and (b) when used in general, other than as provided above, means
principles that are (i) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as in effect from
time to time, and (ii) consistently applied with past financial statements of
the Borrower adopting the same principles, provided that in each case referred
to in this definition of "generally accepted accounting principles" a certified
public accountant would, insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified opinion (other than a
qualification regarding changes in generally accepted accounting principles) as
to financial statements in which such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantor. Each Subsidiary of the Borrower existing on the Closing Date and
each other Subsidiary of the Borrower which is required to be or may become a
guarantor from time to time pursuant to Section 7.13 hereof.
Guaranties. Collectively, the Guaranties, made by each Guarantor in favor
of the Bank pursuant to which each Guarantor guaranties to the Bank the payment
and performance of the Obligations and in form and substance satisfactory to the
Bank.
Hazardous Substances. See Section 6.18(b).
Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses,
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(c) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for
the account of such Person,
(d) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements),
(e) every obligation of such Person under any Capitalized Lease,
(f) every obligation of such Person under any lease (a "Synthetic
Lease") treated as an operating lease under generally accepted accounting
principles and as a loan or financing for U.S. income tax purposes,
(g) all amounts in respect of which such Person is obligated resulting
from any and all sales by such Person of (i) accounts or general
intangibles for money due or to become due, (ii) chattel paper, instruments
or documents creating or evidencing a right to payment of money or (iii)
other receivables (collectively "receivables"), whether pursuant to a
purchase facility or otherwise, other than in connection with the
disposition of the business operations of such Person relating thereto or a
disposition of defaulted receivables for collection and not as a financing
arrangement, and together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or
other amounts in connection therewith,
(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of capital stock of any class issued by such Person, any warrants,
options or other rights to acquire any such shares or similar interests, or
any rights measured by the value of such shares, warrants, options or other
rights,
(i) every obligation of such Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices (a "derivative contract"),
(j) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to
the extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
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extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law,
(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of clauses
(a) through (j) (the "primary obligation") of another Person (the "primary
obligor"), in any manner, whether directly or indirectly, and including,
without limitation, any obligation of such Person (i) to purchase or pay
(or advance or supply funds for the purchase of) any security for the
payment of such primary obligation, (ii) to purchase property, securities
or services for the purpose of assuring the payment of such primary
obligation, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (u) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with generally accepted
accounting principles, (v) any Capitalized Lease shall be the principal
component of the aggregate of the rentals obligation under such Capitalized
Lease payable over the term thereof that is not subject to termination by the
lessee, (w) any sale of receivables shall be the amount of unrecovered capital
or principal investment of the purchaser (other than the Borrower or any of its
wholly-owned Subsidiaries) thereof, excluding amounts representative of yield or
interest earned on such investment, (x) any Synthetic Lease shall be the
stipulated loss value, termination value or other equivalent amount, (y) any
derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such derivative contract were, at
the time of determination, to be terminated by reason of any event of default or
early termination event thereunder, whether or not such event of default or
early termination event has in fact occurred and (z) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price.
Interest Payment Date. (a) As to any Base Rate Loan, the first Business Day
of the calendar month with respect to interest accrued during the preceding
calendar month, including, without limitation, the calendar month which includes
the Drawdown Date of such Base Rate Loan; and (b) as to any LIBOR Rate Loan, the
last day of the Interest Period applicable thereto.
Interest Period. With respect to each Revolving Credit Loan, (a) initially,
the period commencing on the Drawdown Date of such Loan and ending on the
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last day of one of the periods set forth below, as selected by the Borrower in a
Loan Request or as otherwise required by the terms of this Credit Agreement (i)
for any Base Rate Loan, the last day of the calendar month; (ii) for any LIBOR
Rate Loan, thirty (30), sixty (60) or ninety (90) days; and (b) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Revolving Credit Loan and ending on the last day of one of
the periods set forth above, as selected by the Borrower in a Conversion
Request; provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(a) if any Interest Period with respect to a LIBOR Rate Loan would
otherwise end on a day that is not a LIBOR Business Day, that Interest
Period shall be extended to the next succeeding LIBOR Business Day unless
the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on
the immediately preceding LIBOR Business Day;
(b) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the
next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in Section
2.8, the Borrower shall be deemed to have requested a conversion of the
affected LIBOR Rate Loan to a Base Rate Loan and the continuance of all
Base Rate Loans as Base Rate Loans on the last day of the then current
Interest Period with respect thereto;
(d) any Interest Period relating to any LIBOR Rate Loan that begins on
the last LIBOR Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last LIBOR Business Day of a
calendar month;
(e) any Interest Period that would otherwise extend beyond the
Revolving Credit Loan Maturity Date shall end on the Revolving Credit Loan
Maturity Date; and
(f) interest shall accrue from the first day of each Interest Period
and for each day thereafter up to but not including the last day of the
Interest Period, however, if an Interest Period is one day, then interest
shall accrue for such day.
Inventory Borrowing Base Percentage. Thirty-five (35%) Percent prior to
October 1, 2001 and Thirty (30%) Percent on and after October 1, 2001.
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Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock, membership interests
or similar interests or Indebtedness of, or for loans, advances, capital
contributions or transfers of property to, or in respect of any guaranties (or
other commitments as described under Indebtedness), or obligations of, any
Person (other than loans and advances to employees for travel and similar
expenses made in the ordinary course of Borrower's business). In determining the
aggregate amount of Investments outstanding at any particular time: (a) the
amount of any Investment represented by a guaranty shall be taken at not less
than the principal amount of the obligations guaranteed and still outstanding;
(b) there shall be included as an Investment all interest accrued with respect
to Indebtedness constituting an Investment unless and until such interest is
paid; (c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (d) there shall
not be deducted in respect of any Investment any amounts received as earnings on
such Investment, whether as dividends, interest or otherwise, except that
accrued interest included as provided in the foregoing clause (b) may be
deducted when paid; and (e) there shall not be deducted from the aggregate
amount of Investments any decrease in the value thereof.
Leverage Ratio. As of any date of determination, the ratio of (a) the
Consolidated Total Liabilities on such date to (b) Consolidated Tangible Net
Worth as of such date, all as determined in accordance with generally accepted
accounting principles.
LIBOR Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in the London
interbank market.
LIBOR Lending Office. The office of the Bank, if any, that shall be making
or maintaining LIBOR Rate Loans.
LIBOR Rate. For any Interest Period with respect to a LIBOR Rate Loan, the
rate of interest equal to (i) the rate determined by the Bank at which Dollar
deposits for such Interest Period are offered based on information presented on
Telerate Page 3750 as of 11:00 a.m. London time on the second LIBOR Business Day
prior to the first day of such Interest Period, divided by (ii) a number equal
to 1.00 minus the Eurocurrency Reserve Rate, if applicable; provided, however,
if the rate described above does not appear on the Telerate System on any
applicable interest determination date, the LIBOR Rate shall be the rate
(rounded upwards as described above, if necessary, for deposits in dollars for a
period substantially equal to the interest period on the Reuters Page "LIBO" (or
such other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the second LIBOR
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Business Day prior to the first day of such Interest Period. If both the
Telerate and Reuters system are unavailable, then the rate for that date will be
determined on the basis of the offered rates for deposits in Dollars for a
period of time comparable to such LIBOR Rate Loan which are offered by up to
four major banks in the London interbank markets at approximately 11:00 a.m.
London time, on the second LIBOR Business Day prior to the first day of such
Interest Period of such LIBOR Rate Loan as selected by the Bank. The principal
London office of each of the four major London banks will be requested to
provide a quotation of its Dollar deposit offered rate. If at least two such
quotations are provided, the rate for that date will be the arithmetic mean of
the quotations. If fewer than two quotations are provided as requested, the rate
for that date will be determined on the basis of the rates quoted for loans in
U.S. dollars to leading European banks for a period of time comparable to such
LIBOR Rate Loan offered by major banks in New York City at approximately 11:00
a.m. New York City time, on the day that is two (2) LIBOR Business Days
preceding the first day of such LIBOR Rate Loan. In the event that the Bank is
unable to obtain any such quotation as provided above, it will be deemed that
LIBOR pursuant to a LIBOR Rate Loan cannot be determined.
LIBOR Rate Loans. Any Revolving Credit Loans bearing interest calculated by
reference to the LIBOR Rate.
Loan Documents. This Credit Agreement, the Note, the Security Documents,
and any document, agreement and/or instrument executed and/or delivered in
connection therewith, in each case as from time to time amended, modified or
supplemented.
Loan Request. See Section 2.7.
Loans. The Revolving Credit Loans.
Maximum Inventory Component. $5,500,000 prior to October 1, 2001 and
$4,750,000 on and after October 1, 2001.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
Note. The Revolving Credit Note.
Obligations. All indebtedness, obligations and liabilities of any of the
Borrower and its Subsidiaries to the Bank, individually or collectively,
existing on the date of this Credit Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or
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otherwise, arising or incurred under this Credit Agreement or any of the other
Loan Documents or any interest rate protection arrangement or other instruments
at any time evidencing any of the aforesaid.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
Patent Assignment. The Patent Collateral Security Agreement, dated or to be
dated on or prior to the Closing Date, made by the Borrower in favor of the Bank
and in form and substance satisfactory to the Bank.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002 of
ERISA and any successor entity or entities having similar responsibilities.
Perfection Certificate. The Perfection Certificate delivered by the
Borrower to the Bank.
Permitted Liens. Liens, security interests and other encumbrances permitted
by Section 8.2.
Person. Any individual, corporation, limited liability company,
partnership, trust, unincorporated association, business, or other legal entity,
and any government or any governmental agency or political subdivision thereof.
RCRA. See Section 6.18(a).
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid, or
any other similar record, including computer records, maintained by the Bank
with respect to any Loan referred to in the Note.
Restricted Payment. In relation to the Borrower and its Subsidiaries, any
(a) Distribution or (b) payment or prepayment by the Borrower or its
Subsidiaries to any Affiliate or Subsidiary of the Borrower.
Revolving Credit Base Rate Loans. Revolving Credit Loans bearing interest
calculated by reference to the Base Rate.
Revolving Credit Commitment. The obligation of the Bank to make Revolving
Credit Loans to the Borrower up to an aggregate outstanding principal amount not
to exceed $12,000,000, as the same may be reduced from time to time; or if such
commitment is terminated pursuant to the provisions hereof, zero.
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Revolving Credit LIBOR Rate Loans. Revolving Credit Loans bearing interest
calculated by reference to the LIBOR Rate.
Revolving Credit Loan Maturity Date. September 21, 2002.
Revolving Credit Loans. Revolving credit loans made or to be made by the
Bank to the Borrower pursuant to Section 2.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
Note.
Revolving Credit Note. See Section 2.5.
▇▇▇▇. See Section 6.18(a).
Security Agreement. The Security Agreement, dated or to be dated on or
prior to the Closing Date, between the Borrower and the Bank and in form and
substance satisfactory to the Bank.
Security Documents. The Guaranties, the Security Agreement, the Patent
Assignment, the Trademark Assignment, the Lessor's Agreement, the Environmental
Indemnity Agreement and all other instruments and documents, including without
limitation Uniform Commercial Code financing statements, required to be executed
or delivered pursuant to any Security Document.
Subordinated Debt. Unsecured Indebtedness of the Borrower or any of its
Subsidiaries that is expressly subordinated and made junior to the payment and
performance in full of the Obligations, and evidenced as such written agreement
pursuant to which the Borrower incurs such unsecured subordinated Indebtedness,
in each case on terms and in form and substance satisfactory to the Bank.
Subsidiary. Any corporation, limited liability company, association, trust,
or other business entity of which the designated parent shall at any time own
directly or indirectly through a Subsidiary or Subsidiaries at least a majority
(by number of votes) of the outstanding Voting Stock.
Synthetic Lease. As defined in paragraph (f) of the definition of
"Indebtedness".
Trademark Assignment. The Trademark Collateral Security and Pledge
Agreement, dated or to be dated on or prior to the Closing Date, made by the
Borrower in favor of the Bank and in form and substance satisfactory to the
Bank.
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Type. As to any Revolving Credit Loan, its nature as a Base Rate Loan or a
LIBOR Rate Loan.
Unused Line Applicable Amount. See Section 2.3.
Unused Line Fee. See Section 2.3.
Voting Stock. Stock or similar interests, of any class or classes (however
designated), the holders of which are at the time entitled, as such holders, to
vote for the election of a majority of the directors (or persons performing
similar functions) of the corporation, limited liability company, association,
trust or other business entity involved, whether or not the right so to vote
exists by reason of the happening of a contingency.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification to
such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by generally accepted
accounting principles, which terms are defined in the Uniform Commercial
Code as in effect in the State of Connecticut, have the meanings assigned
to them therein, with the term "instrument" being that defined under
Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section" refers to that section of this
Credit Agreement unless otherwise indicated.
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(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation of
periods of time from a specified date to a later specified date, the word
"from" means "from and including," the words "to" and "until" each mean "to
but excluding," and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are, however,
cumulative and are to be performed in accordance with the terms thereof.
(l) This Credit Agreement and the other Loan Documents are the result
of negotiation among, and have been reviewed by counsel to, among others,
the Bank and the Borrower and are the product of discussions and
negotiations among all parties. Accordingly, this Credit Agreement and the
other Loan Documents are not intended to be construed against the Bank
merely on account of the Bank's involvement in the preparation of such
documents.
2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth in
this Credit Agreement, the Bank agrees to lend to the Borrower and the Borrower
may borrow, repay, and reborrow from time to time from the Closing Date up to
but not including the Revolving Credit Loan Maturity Date upon notice by the
Borrower to the Bank given in accordance with Section 2.7, such sums as are
requested by the Borrower, provided that the sum of the outstanding amount of
the Revolving Credit Loans (after giving effect to all amounts requested) shall
not at any time exceed the lesser of (a) the Revolving Credit Commitment and
(b) the Borrowing Base. Each request for a Revolving Credit Loan hereunder shall
constitute a representation and warranty by the Borrower that the conditions set
forth in Section 10 and Section 11, in the case of the initial Revolving Credit
Loans to be made on the Closing Date, and Section 11, in the case of all other
Revolving Credit Loans, have been satisfied on the date of such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to the Bank on the Closing
Date a nonrefundable commitment fee of $15,000.
2.3. UNUSED LINE FEE. The Borrower agrees to pay to the Bank an unused line
fee equal to 3/8 of 1% of the amount by which the Unused Line Applicable Amount
exceeds the average daily amount of Revolving Credit Loans
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(the "Unused Line Fee"). As used herein, the "Unused Line Applicable Amount"
means (i) prior to the first anniversary of the Closing Date, $10,000,000, and
(ii) on and after the first anniversary of the Closing Date, $12,000,000,
provided that, notwithstanding the foregoing, the amount set forth in clause (i)
of this sentence shall be deemed to be $12,000,000 during such times prior to
the first anniversary of the Closing Date as the Account/Inventory Ratio
Condition is satisfied. The Unused Line Fee shall be payable monthly in arrears
on the first Business Day of each month for the immediately preceding month
commencing on the first such date following the date hereof, with a final
payment on the Revolving Credit Maturity Date or any earlier date on which the
Revolving Credit Commitment shall terminate (with the first such payment and
last such payment to be prorated to reflect the number of days in the applicable
month).
2.4. REDUCTION OF REVOLVING CREDIT COMMITMENT. The Borrower shall have the
right at any time and from time to time upon three (3) Business Days prior
written notice to the Bank to reduce by $250,000 or an integral multiple of
$50,000 in excess thereof, or to terminate entirely, the Revolving Credit
Commitment, whereupon the Revolving Credit Commitment shall be reduced in
accordance with the amount specified in such notice or, as the case may be,
terminated. Upon the effective date of any such reduction or termination, the
Borrower shall pay to the Bank (a) the full amount of any fee then accrued on
the amount of the reduction and (b) with respect to any termination that occurs
more than thirty (30) days before the Revolving Credit Loan Maturity Date
(including termination by the Bank upon an Event of Default), a termination fee
of $10,000 together with payments of all Obligations. No reduction or
termination of the Revolving Credit Commitment may be reinstated. The
calculation of the Unused Line Fee shall take into account any reduction of the
Revolving Credit Commitment pursuant to this Section 2.4.
2.5. THE REVOLVING CREDIT NOTE. The Revolving Credit Loans shall be
evidenced by a promissory note of the Borrower in the original principal amount
of $12,000,000 (the "Revolving Credit Note"), dated as of the Closing Date and
completed with appropriate insertions. The Borrower irrevocably authorizes the
Bank to make or cause to be made, at or about the time of the Drawdown Date of
any Revolving Credit Loan or at the time of receipt of any payment of principal
on the Bank's Revolving Credit Note, an appropriate notation on the Bank's
Revolving Credit Note Record reflecting the making of such Revolving Credit Loan
or (as the case may be) the receipt of such payment. The outstanding amount of
the Revolving Credit Loans set forth on the Bank's Revolving Credit Note Record
shall be prima facie evidence of the principal amount thereof owing and unpaid
to the Bank, but the failure to record, or any error in so recording, any such
amount on the Bank's Revolving Credit Note Record shall not limit or otherwise
affect the obligations of the Borrower
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hereunder or under any Revolving Credit Note to make payments of principal of or
interest on any Revolving Credit Note when due.
2.6. INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided
in Section 4.9,
(a) Each Revolving Credit Base Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last day
of the Interest Period with respect thereto at the rate per annum equal to
the Base Rate.
(b) Each Revolving Credit LIBOR Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the last day
of the Interest Period with respect thereto at the rate per annum equal to:
(i) for the period through and including June 30, 2001 (and thereafter if
clause (ii) of this paragraph is not applicable) the LIBOR Rate determined
for such Interest Period plus 2.50%, and (ii) thereafter, if no Event of
Default has occurred and is continuing on June 30, 2001, the LIBOR Rate
determined for such Interest Period plus 2.25%, and
(c) The Borrower promises to pay interest on each Revolving Credit
Loan in arrears on each Interest Payment Date with respect thereto.
2.7. REQUESTS FOR REVOLVING CREDIT LOANS. The Borrower shall give to the
Bank written notice (or telephonic notice confirmed in a writing) of each
Revolving Credit Loan requested hereunder (a "Loan Request") no later than (a)
10:00 a.m. on the Business Day preceding the proposed Drawdown Date of any Base
Rate Loan and (b) three (3) LIBOR Business Days prior to the proposed Drawdown
Date of any LIBOR Rate Loan. Each such notice shall specify (i) the principal
amount of the Revolving Credit Loan requested, (ii) the proposed Drawdown Date
of such Revolving Credit Loan, (iii) the Interest Period for such Revolving
Credit Loan and (iv) the Type of such Revolving Credit Loan, provided, that no
LIBOR Rate Loan may be requested unless the outstanding Revolving Credit Loans
include at least $1,000,000 of Base Rate Loans and there shall be no more than
three (3) separate Interest Periods in effect at any one time with respect to
LIBOR Rate Loans. Each Loan Request shall be irrevocable and binding on the
Borrower and shall obligate the Borrower to accept the Revolving Credit Loan
requested from the Bank on the proposed Drawdown Date. Except as otherwise
provided in certain cash management arrangements between the Borrower and the
Bank or as otherwise agreed by the Bank, each Loan Request shall be in a minimum
aggregate amount of $100,000 or an integral multiple of $50,000 in excess
thereof.
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2.8. CONVERSION OPTIONS.
2.8.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN. The Borrower
may elect from time to time to convert any outstanding Revolving Credit
Loan to a Revolving Credit Loan of another Type, provided that (a) with
respect to any such conversion of a Revolving Credit Loan to a Base Rate
Loan, the Borrower shall give the Bank at least one (1) Business Day prior
written notice of such election; (b) with respect to any such conversion of
a Base Rate Loan to a LIBOR Rate Loan, the Borrower shall give the Bank at
least three (3) LIBOR Business Days prior written notice of such election;
(c) with respect to any such conversion of a LIBOR Rate Loan into a
Revolving Credit Loan of another Type, such conversion shall only be made
on the last day of the Interest Period with respect thereto; (d) no Loan
may be converted into a LIBOR Rate Loan when any Default or Event of
Default has occurred and is continuing; and (e) no Loan may be converted
into or continue as a LIBOR Rate Loan beyond the Interest Period then
applicable thereto unless, after giving effect to such conversion or
continuation, there will be outstanding at least $1,000,000 of Base Rate
Loans. All or any part of outstanding Revolving Credit Loans of any Type
may be converted into a Revolving Credit Loan of another Type as provided
herein, provided that (a) any partial conversion shall be in an aggregate
principal amount of $250,000 or a whole multiple of $50,000 in excess
thereof and (b) with respect to LIBOR Rate Loans, there shall be no more
than three (3) separate Interest Periods in effect at any one time. Each
Conversion Request relating to the conversion of a Revolving Credit Loan to
a LIBOR Rate Loan shall be irrevocable by the Borrower.
2.8.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any Revolving Credit
Loan of any Type may be continued as a Revolving Credit Loan of the same
Type upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions contained in Section
2.8.1; provided that no LIBOR Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, but shall be
automatically converted to a Base Rate Loan on the last day of the first
Interest Period relating thereto ending during the continuance of any
Default or Event of Default of which officers of the Bank active upon the
Borrower's account have actual knowledge. In the event that the Borrower
fails to provide any such notice with respect to the continuation of any
LIBOR Rate Loan as such, then such LIBOR Rate Loan shall be automatically
converted to a Base Rate Loan on the last day of the Interest Period
relating thereto.
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2.8.3. LIBOR RATE LOANS. Any conversion to or from LIBOR Rate Loans shall
be in such amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of all LIBOR Rate
Loans having the same Interest Period shall not be less than $250,000 or a
whole multiple of $50,000 in excess thereof.
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. MATURITY. The Borrower promises to pay on the Revolving Credit Loan
Maturity Date, and there shall become absolutely due and payable on the
Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time the
outstanding amount of the Revolving Credit Loans exceeds the lesser of (a) the
Revolving Credit Commitment and (b) the Borrowing Base, then the Borrower shall
immediately pay the amount of such excess to the Bank for application to the
Revolving Credit Loans; provided that, if the outstanding amount of the
Revolving Credit Loans exceeds the Borrowing Base solely due to a Clause (b)(i)
Excess, then the Borrower shall pay the amount of such Clause (b)(i) Excess to
the Bank on the earlier of (i) the date thirty (30) days after the date as of
which the Borrowing Base Certificate that reflected such Clause (b)(i) Excess
was prepared, unless within such thirty (30) day period the Borrower delivers to
the Bank another Borrowing Base Certificate, prepared as of a later date, which
shows that there is no longer a Clause (b)(i) Excess, or (ii) the date that the
outstanding amount of the Revolving Credit Loans exceeds the Borrowing Base
other than due to a Clause (b)(i) Excess.
3.3. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The Borrower may, at
its election, repay the outstanding amount of the Revolving Credit Loans, as a
whole or in part, at any time prior to the Revolving Credit Loan Maturity Date
subject to the provisions of Section 4.8. The Borrower shall give the Bank, no
later than 10:00 a.m., Hartford, Connecticut time, on the Business Day preceding
the Business Day of any proposed prepayment pursuant to this Section 3.3 of Base
Rate Loans, and three (3) LIBOR Business Days notice of any proposed prepayment
pursuant to this Section 3.3 of LIBOR Rate Loans, in each case specifying the
proposed date of prepayment of Revolving Credit Loans and the principal amount
to be prepaid. Each such partial prepayment of the Revolving Credit Loans shall
be in an amount of at least $250,000 or an integral multiple of $50,000 in
excess thereof, shall be accompanied by the payment of accrued interest on the
principal prepaid to the date of prepayment and any indemnity due under
Section 4.8 hereof and shall be applied, in the absence of instruction by the
Borrower, first to the principal of Base Rate Loans and then to the principal of
LIBOR Rate Loans.
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4. CERTAIN GENERAL PROVISIONS.
4.1. FUNDS FOR PAYMENTS.
4.1.1. PAYMENTS TO BANK. All payments of principal, interest,
commitment fees and any other amounts due hereunder or under any of the
other Loan Documents shall be made to the Bank, at CityPlace II, 5th Floor,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other location
that the Bank may from time to time designate, in each case in immediately
available Dollars, on or before 11:00 a.m. (Hartford, Connecticut time) on
the due date thereof, without counterclaim or setoff and free and clear of,
and without any deduction or withholding for, any taxes or other payments
or amounts whatsoever. The Bank shall have the right, but not the
obligation, (a) to charge any payment of principal, interest, commitment
fees and any other amounts due hereunder or under any of the other Loan
Documents to any account maintained by the Borrower with the Bank, or (b)
to deem a request to have been made by the Borrower for a Base Rate Loan in
the amount that is payable, and to deem that a Base Rate Loan has been made
in such amount in payment of such amount that is due.
4.1.2. NO OFFSET, ETC. All payments by the Borrower hereunder and
under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision thereof
or taxing or other authority therein unless the Borrower is compelled by
law to make such deduction or withholding. If any such obligation is
imposed upon the Borrower with respect to any amount payable by it
hereunder or under any of the other Loan Documents, the Borrower will pay
to the Bank, on the date on which such amount is due and payable hereunder
or under such other Loan Document, such additional amount in Dollars as
shall be necessary to enable the Bank to receive the same net amount which
it would have received on such due date had no such obligation been imposed
upon the Borrower. The Borrower will deliver promptly to the Bank
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document.
4.2. COMPUTATIONS. All computations of interest on the Loans and of
commitment fees or other fees shall, unless otherwise expressly provided herein,
be based on a 360-day year and paid for the actual number of days elapsed.
Except as otherwise provided in the definition of the term "Interest Period"
with
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respect to LIBOR Rate Loans, whenever a payment hereunder or under any of the
other Loan Documents becomes due on a day that is not a Business Day, the due
date for such payment shall be extended to the next succeeding Business Day, and
interest shall accrue during such extension.
4.3. INABILITY TO DETERMINE LIBOR RATE. In the event, prior to the
commencement of any Interest Period relating to any LIBOR Rate Loan, the Bank
shall determine that adequate and reasonable methods do not exist for
ascertaining the LIBOR Rate that would otherwise determine the rate of interest
to be applicable to any LIBOR Rate Loan during any Interest Period, the Bank
shall forthwith give notice of such determination (which shall be conclusive and
binding on the Borrower) to the Borrower. In such event (a) any Loan Request or
Conversion Request with respect to LIBOR Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each LIBOR Rate
Loan will automatically, on the last day of the then current Interest Period
relating thereto, become a Base Rate Loan, and (c) the obligations of the Bank
to make LIBOR Rate Loans shall be suspended until the Bank determines that the
circumstances giving rise to such suspension no longer exist, whereupon the Bank
shall so notify the Borrower.
4.4. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for the Bank to make or maintain
LIBOR Rate Loans, the Bank shall forthwith give prompt notice of such
circumstances to the Borrower and thereupon (a) the commitment of the Bank to
make LIBOR Rate Loans or convert Loans of another Type to LIBOR Rate Loans shall
forthwith be suspended and (b) the Bank's Revolving Credit Loans then
outstanding as LIBOR Rate Loans, if any, shall be converted automatically to
Base Rate Loans on the last day of each Interest Period applicable to such LIBOR
Rate Loans or within such earlier period as may be required by law. The Borrower
hereby agrees promptly to pay the Bank, upon demand by the Bank, any additional
amounts necessary to compensate the Bank for any costs incurred by the Bank in
making any conversion in accordance with this Section4.5, including any interest
or fees payable by the Bank to lenders of funds obtained by it in order to make
or maintain its LIBOR Rate Loans hereunder.
4.5. ADDITIONAL COSTS, ETC. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to the Bank by
any central bank or other fiscal, monetary or other authority (whether or not
having the force of law), shall:
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(a) subject the Bank to any tax, levy, impost, duty, charge, fee,
deduction or withholding of any nature with respect to this Credit
Agreement, the other Loan Documents, the Bank's Revolving Credit Commitment
or the Loans (other than taxes based upon or measured by the income or
profits of the Bank), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to the Bank of the principal of or
the interest on any Loans or any other amounts payable to the Bank under
this Credit Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or letters of credit
issued by, or commitments of an office of the Bank, or
(d) impose on the Bank any other conditions or requirements with
respect to this Credit Agreement, the other Loan Documents, the Loans, the
Bank's Revolving Credit Commitment, or any class of loans, letters of
credit or commitments of which any of the Loans or the Bank's Revolving
Credit Commitment forms a part, and the result of any of the foregoing is:
(i) to increase the cost to the Bank of making, funding, issuing,
renewing, extending or maintaining any of the Loans or the Bank's
Revolving Credit Commitment, or
(ii) to reduce the amount of principal, interest or other amount
payable to the Bank hereunder on account of the Bank's Revolving
Credit Commitment or any of the Loans, or
(iii) to require the Bank to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by the Bank from
the Borrower hereunder,
then, and in each such case, the Bank shall give prompt notice thereof to
the Borrower, and the Borrower, within 30 days of demand made by Bank at any
time and from time to time and as often as the occasion therefor may arise,
agrees to pay to the Bank such additional amounts as will be sufficient to
compensate the Bank for such additional cost, reduction, payment or foregone
interest or other sum to the extent that such additional amount is not reflected
in the Base Rate.
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4.6. CAPITAL ADEQUACY. If after the date hereof the Bank determines that
(a) the adoption of or change in any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) regarding
capital requirements for banks or bank holding companies or any change in the
interpretation or application thereof by a court or governmental authority with
appropriate jurisdiction, or (b) compliance by the Bank or any corporation
controlling the Bank with any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) of any such
entity regarding capital adequacy, has the effect of reducing the return on the
Bank's commitment with respect to any Loans to a level below that which the Bank
could have achieved but for such adoption, change or compliance (taking into
consideration the Bank's then existing policies with respect to capital adequacy
and assuming full utilization of such entity's capital) by any amount deemed by
the Bank to be material, then the Bank shall notify the Borrower of such fact.
To the extent that the amount of such reduction in the return on capital is not
reflected in the Base Rate, the Borrower and the Bank shall thereafter attempt
to negotiate in good faith, within thirty (30) days of the day on which the
Borrower receives such notice, an adjustment payable hereunder that will
adequately compensate the Bank in light of these circumstances. If the Borrower
and the Bank are unable to agree to such adjustment within thirty (30) days of
the date on which the Borrower receives such notice, then commencing on the date
of such notice (but not earlier than the effective date of any such increased
capital requirement), the fees payable hereunder shall increase by an amount
that will, in the Bank's reasonable determination, provide adequate
compensation. The Bank shall allocate such cost increases among its customers in
good faith and on an equitable basis.
4.7. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to SectionSection4.5 or 4.6 and a brief explanation of such
amounts which are due, submitted by the Bank to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing.
4.8. INDEMNITY. The Borrower agrees to indemnify the Bank and to hold it
harmless from and against any loss, cost or expense (including loss of
anticipated profits) that the Bank may sustain or incur as a consequence of (a)
default by the Borrower in payment of the principal amount of or any interest on
any LIBOR Rate Loans as and when due and payable, including any such loss or
expense arising from interest or fees payable by the Bank to lenders of funds
obtained by it in order to maintain its LIBOR Rate Loans, (b) default by the
Borrower in making a borrowing or conversion after the Borrower has given (or
are deemed to have given) a Conversion Request relating thereto in accordance
with Section2.8 or (c) the making of any payment of a LIBOR Rate Loan or the
making of any conversion of any such Loan to a Base Rate Loan on a day that is
not the last day of the applicable Interest Period with respect thereto,
including interest
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or fees payable by the Bank to lenders of funds obtained by it in order to
maintain any such Loans.
4.9. INTEREST AFTER DEFAULT.
4.9.1. OVERDUE AMOUNTS. Overdue principal and (to the extent permitted
by applicable law) interest on the Loans and all other amounts payable
hereunder or under any of the Loan Documents shall bear interest compounded
monthly and payable on demand at a rate per annum equal to three percent
(3%) above the Base Rate until such amount shall be paid in full (after as
well as before judgment).
4.9.2. AMOUNTS NOT OVERDUE. During the continuance of a Default or an
Event of Default, the principal of the Loans not overdue shall, until such
Default or Event of Default has been cured or remedied or such Default or
Event of Default has been waived by the Bank pursuant to Section24, bear
interest at a rate per annum equal to three percent (3%) above the rate of
interest otherwise applicable.
4.9.3. LATE CHARGE. In addition to any such increased interest, and
without affecting the Bank's right to exercise its remedies with respect to
any Event of Default, the Borrower shall pay to the Bank on demand a late
charge equal to five percent (5%) of the amount of any interest payment
that is not made within ten (10) days of when due hereunder (each such late
charge to be at least $15.00).
5. COLLATERAL SECURITY AND GUARANTIES.
5.1. SECURITY OF BORROWER. The Obligations shall be secured by a
perfected first priority security interest (subject only to Permitted Liens
entitled to priority under applicable law) in all of the Collateral,
whether now owned or hereafter acquired, pursuant to the terms of the
Security Documents to which the Borrower is a party.
5.2. GUARANTIES OF SUBSIDIARIES. The Obligations shall also be
guaranteed pursuant to the terms of the Guaranties.
6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Bank as follows:
6.1. CORPORATE AUTHORITY.
6.1.1. INCORPORATION; GOOD STANDING. Each of the Borrower and its
Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation, (b) has
all
32
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requisite corporate power to own its property and conduct its business
as now conducted and as presently contemplated, and (c) is in good
standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where such qualification is necessary.
6.1.2. SUBSIDIARIES. On the Closing Date (a) TransAct
Technologies Limited formerly known as Ithaca Peripherals Limited, (b)
▇▇▇▇▇▇▇▇.▇▇▇, Inc., and (c) TransAct Technologies International Ltd.
are each a Subsidiary of the Borrower and the Borrower has no other
Subsidiary.
6.1.3. AUTHORIZATION. The execution, delivery and performance of
this Credit Agreement and the other Loan Documents to which the
Borrower or any of its Subsidiaries is or is to become a party and the
transactions contemplated hereby and thereby (a) are within the
corporate authority of such Person, (b) have been duly authorized by
all necessary corporate proceedings, (c) do not conflict with or
result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower or any of its
Subsidiaries is subject or any judgment, order, writ, injunction,
license or permit applicable to the Borrower or any of its
Subsidiaries, and (d) do not conflict with any provision of the
corporate charter, bylaws, or other agreement or instrument binding
upon the Borrower or any of its Subsidiaries.
6.1.4. ENFORCEABILITY. The execution and delivery of this Credit
Agreement and the other Loan Documents to which the Borrower or any of
its Subsidiaries is or is to become a party will result in valid and
legally binding obligations of such Person enforceable against it in
accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought.
6.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by
the Borrower and any of its Subsidiaries of this Credit Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is or is to
become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained.
6.3. TITLE TO PROPERTIES; LEASES. The Borrower and its Subsidiaries own
all of the assets reflected in the consolidated balance sheet of the Borrower
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and its Subsidiaries as at the Balance Sheet Date or acquired since that date
(except property and assets sold or otherwise disposed of in the ordinary course
of business since that date), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
6.4. FINANCIAL STATEMENTS AND PROJECTIONS.
6.4.1. FISCAL YEAR. The Borrower and each of its Subsidiaries have a
fiscal year which is the twelve months ending on December 31 of each
calendar year.
6.4.2. FINANCIAL STATEMENTS. There has been furnished to the Bank a
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date, and a consolidated statement of income of the Borrower
and its Subsidiaries for the fiscal quarter then ended, certified by the
chief financial officer of the Borrower. Such balance sheet and statement
of income have been prepared in accordance with generally accepted
accounting principles and fairly present the financial condition of the
Borrower and its Subsidiaries as at the close of business on the date
thereof and the results of operations for the fiscal period then ended.
There are no contingent liabilities of the Borrower or any of its
Subsidiaries as of such date involving material amounts, known to any
officer of the Borrower, which were not disclosed in such balance sheet and
the notes related thereto.
6.4.3. PROJECTIONS. The projections of the annual operating budgets of
the Borrower and its Subsidiaries on a consolidated basis, balance sheet
and cash flow statement for the fiscal years 2000 and 2001, copies of which
have been delivered to the Bank, disclose all material assumptions made
with respect to general economic, financial and market conditions used in
formulating such projections. To the knowledge of the Borrower or any of
its Subsidiaries, no facts exist that (individually or in the aggregate)
would result in any material change in any of such projections. The
projections are based upon reasonable estimates and assumptions, have been
prepared on the basis of the assumptions stated therein and reflect the
reasonable estimates of the Borrower and its Subsidiaries of the results of
operations and other information projected therein.
6.4.4. SOLVENCY. The Borrower and its Subsidiaries, on a consolidated
and consolidating basis, both before and after giving effect to the
transactions contemplated by this Credit Agreement and the other Loan
Documents (a) are solvent; (b) have assets having a fair value in excess of
their liabilities; (c) have assets having a fair value in excess of
34
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the amount required to pay their liabilities on existing debts as such
debts become due and payable, and (d) have, and expect to continue to have,
access to adequate capital for the conduct of their business and the
ability to pay their debts from time to time incurred in connection with
the operation of their business as such debts mature.
6.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date there has
occurred no materially adverse change in the financial condition or business of
the Borrower and its Subsidiaries as shown on or reflected in the consolidated
balance sheet of the Borrower and its Subsidiaries as at the Balance Sheet Date,
or the consolidated statement of income for the fiscal quarter then ended. Since
the Balance Sheet Date, the Borrower has not made any Distributions except for
Distributions to shareholders for the payment of dividends on Series B Preferred
Stock of the Borrower.
6.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted, without known
conflict with any rights of others.
6.7. LITIGATION. Except as set forth in Schedule 6.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or any of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined, might, either in
any case or in the aggregate, materially adversely affect the properties,
assets, financial condition or business of the Borrower or of the Borrower and
its Subsidiaries, taken as a whole, or materially impair the right of the
Borrower or of the Borrower and its Subsidiaries, considered as a whole, to
carry on business substantially as now conducted by them, or result in any
substantial liability not adequately covered by insurance or for which adequate
reserves are not maintained on the consolidated balance sheet of the Borrower
and its Subsidiaries, or which question the validity of this Credit Agreement or
any of the other Loan Documents, or any action taken or to be taken pursuant
hereto or thereto.
6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any of
its Subsidiaries is subject to any charter, corporate, or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower or of the Borrower and its
Subsidiaries taken as a whole. Neither the Borrower nor any of its Subsidiaries
is a party to any contract or agreement that has or is expected, in the judgment
of the Borrower's officers, to have any materially adverse effect on the
business of the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
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6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower
nor any of its Subsidiaries is in violation of any provision of its certificate
of incorporation, bylaws or other charter documents, or any agreement or
instrument to which it may be subject or by which it or any of its properties
may be bound, or any decree, order, judgment, statute, license, rule or
regulation.
6.10. TAX STATUS. The Borrower and its Subsidiaries (a) have made or
filed or timely requested an extension for filing all federal and state income
and all other tax returns, reports and declarations required by any jurisdiction
to which any of them is subject, (b) have paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and by appropriate
proceedings and (c) have set aside on their books provisions reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the Borrower knows of no basis for any such claim.
6.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or any
rights relating thereto.
6.14. PERFECTION OF SECURITY INTEREST. All filings, assignments,
pledges and deposits of documents or instruments have been made and all other
actions have been taken that are necessary or advisable, under applicable law,
to establish and perfect the Bank's security interest in the Collateral. The
Collateral and the Bank's rights with respect to the Collateral are not subject
to any setoff, claims, withholdings or other defenses. The Borrower or a
Subsidiary of the Borrower is the owner of all of the Collateral free from any
36
-31-
lien, security interest, encumbrance and any other claim or demand, except for
Permitted Liens.
6.15. CERTAIN TRANSACTIONS. Except as set forth on Schedule 6.15, none
of the directors, officers or employees of the Borrower or any of its
Subsidiaries is presently a party to any transaction with the Borrower or any of
its Subsidiaries (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any director,
officer or employee or, to the knowledge of the Borrower, any corporation,
partnership, trust or other entity in which any director, officer or employee
has a substantial interest or is a member, director, officer, employee,
consultant, trustee, or partner, or has any other affiliation.
6.16. EMPLOYEE BENEFIT PLANS.
6.16.1. IN GENERAL. Each Employee Benefit Plan and each
Guaranteed Pension Plan has been maintained and operated in compliance
in all material respects with the provisions of ERISA and, to the
extent applicable, the Code, including but not limited to the
provisions thereunder respecting prohibited transactions and the
bonding of fiduciaries and other persons handling plan funds as
required by Section 412 of ERISA. The Borrower has heretofore delivered
to the Bank the most recently completed annual report, Form 5500, with
all required attachments, and actuarial statement required to be
submitted under Section 103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
6.16.2. TERMINABILITY OF WELFARE PLANS. Except as set forth on
Schedule 6.16 hereto, no Employee Benefit Plan, which is an employee
welfare benefit plan within the meaning of Section 3(1) or
Section 3(2)(B) of ERISA, provides benefit coverage subsequent to
termination of employment, except as required by Title I, Part 6 of
ERISA or the applicable state insurance laws. The Borrower may
terminate each such Plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) in the discretion of
the Borrower without liability to any Person other than for claims
arising prior to termination.
6.16.3. GUARANTEED PENSION PLANS. As of the Closing Date, the
Borrower does not have any Guaranteed Pension Plans. Should the
Borrower thereafter maintain any such Guaranteed Pension Plans, from
such time, each contribution required to be made to a Guaranteed
Pension Plan, whether required to be made to avoid the incurrence of an
accumulated funding deficiency, the notice or lien provisions of
Section 302(f) of ERISA, or otherwise, has been timely made. No waiver
of an accumulated
37
-32-
funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan, and neither the
Borrower nor any ERISA Affiliate is obligated to or has posted security
in connection with an amendment to a Guaranteed Pension Plan pursuant
to Section 307 of ERISA or Section 401(a)(29) of the Code. No liability
to the PBGC (other than required insurance premiums, all of which have
been paid) has been incurred by the Borrower or any ERISA Affiliate
with respect to any Guaranteed Pension Plan and there has not been any
ERISA Reportable Event (other than an ERISA Reportable Event as to
which the requirement of 30 days notice has been waived) with respect
to any Guaranteed Pension Plan, or any other event or condition which
presents a material risk of termination of any Guaranteed Pension Plan
by the PBGC. Except as set forth on Schedule 6.16, based on the latest
valuation of each Guaranteed Pension Plan (which in each case occurred
within twelve months of the date of this representation), and on the
actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans
within the meaning of Section 4001 of ERISA did not exceed the
aggregate value of the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities and assets of
any Guaranteed Pension Plan with assets in excess of benefit
liabilities.
6.16.4. MULTIEMPLOYER PLANS. As of the Closing Date, the
Borrower does not have any Multiemployer Plans. Should the Borrower
thereafter maintain any such Multiemployer Plans, from such time,
neither the Borrower nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer
Plan under Section 4201 of ERISA or as a result of a sale of assets
described in Section 4204 of ERISA. Neither the Borrower nor any ERISA
Affiliate has been notified that any Multiemployer Plan is in
reorganization or insolvent under and within the meaning of Section
4241 or Section 4245 of ERISA or is at risk of entering reorganization
or becoming insolvent, or that any Multiemployer Plan intends to
terminate or has been terminated under Section 4041A of ERISA.
6.17. USE OF PROCEEDS.
6.17.1. GENERAL. The proceeds of the Revolving Credit Loans
shall be used for working capital purposes and the refinancing of
approximately $ 5,336,079.60 debt owed by the Borrower to Fleet
National Bank.
6.17.2. REGULATIONS U AND X. No portion of any Loan is to be
used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the
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Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224.
6.18. ENVIRONMENTAL COMPLIANCE. To the best of Borrower's knowledge:
(a) none of the Borrower, its Subsidiaries or any operator of
the Real Estate or any operations thereon is in violation, or alleged
violation, in any material respect of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters,
including without limitation, those arising under the Resource
Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended ("CERCLA"),
the Superfund Amendments and Reauthorization Act of 1986 ("▇▇▇▇"), the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to health, safety or the
environment (hereinafter "Environmental Laws");
(b) neither the Borrower nor any of its Subsidiaries has
received notice from any third party including, without limitation, any
federal, state or local governmental authority, (i) that any one of
them has been identified by the United States Environmental Protection
Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R.
Part ▇▇▇ ▇▇▇▇▇▇▇▇ ▇; (ii) that any hazardous waste, as defined by 42
U.S.C. Section 6903(5), any hazardous substances as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42
U.S.C. Section 9601(33) and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by any
Environmental Laws ("Hazardous Substances") which any one of them has
generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has
conducted or has ordered that the Borrower or any of its Subsidiaries
conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, or legal
or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses
or damages of any kind whatsoever in connection with the release of
Hazardous Substances;
(c) except as set forth on Schedule 6.18 attached hereto: (i)
no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Substances except in
accordance with applicable Environmental Laws; and no underground tank
or other
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underground storage receptacle for Hazardous Substances is located on
any portion of the Real Estate which has not been abandoned in place in
accordance with applicable Environmental Laws; (ii) in the course of
any activities conducted by the Borrower, its Subsidiaries or operators
of its or their properties, no Hazardous Substances have been generated
or are being used on the Real Estate except in accordance with
applicable Environmental Laws; (iii) there have been no releases (i.e.
any past or present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing or
dumping) or threatened releases of Hazardous Substances on, upon, into
or from the properties of the Borrower or its Subsidiaries; (iv) to the
Borrower's knowledge, after due inquiry, there have been no releases
on, upon, from or into any real property in the vicinity of any of the
Real Estate which, through soil or groundwater contamination, may have
come to be located on the Real Estate; and (v) in addition, any
Hazardous Substances that have been generated on any of the Real Estate
have been transported offsite only by carriers having an identification
number issued by the EPA, treated or disposed of only by treatment or
disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities have
been and are, to the Borrower's knowledge, after due inquiry, operating
in compliance with such permits and applicable Environmental Laws; and
(d) None of the Borrower and its Subsidiaries or any Real
Estate is subject to any applicable environmental law requiring the
performance of Hazardous Substances site assessments, or the removal or
remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby.
6.19. NO JOINT VENTURES, ETC. Neither the Borrower nor any Subsidiary
of the Borrower is engaged in any joint venture or partnership with any other
Person.
6.20. BANK ACCOUNTS. Schedule 6.20 sets forth the account numbers of
all bank accounts of the Borrower or any of its Subsidiaries.
6.21. DISCLOSURE. None of this Credit Agreement or any of the other
Loan Documents contains any untrue statement of a material fact or omits to
state a material fact (known to the Borrower or any of its Subsidiaries in the
case of any document or information not furnished by it or any of its
Subsidiaries) necessary in order to make the statements herein or therein not
misleading. There is no fact known to the Borrower or any of its Subsidiaries
which materially adversely affects, or which is reasonably likely in the future
to
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materially adversely affect, the business, assets, financial condition or
prospects of the Borrower or any of its Subsidiaries, exclusive of effects
resulting from changes in general economic conditions, legal standards or
regulatory conditions.
6.22. CAPITALIZATION DOCUMENTS. The Borrower has delivered to the Bank
true and complete copies of all of the Capitalization Documents and the Borrower
has not amended any of such documents.
6.23. CHIEF EXECUTIVE OFFICE. The Borrower's chief executive office is
at Wallingford, Connecticut. The Borrower also maintains a facility in Ithaca,
New York. The Borrower's books and records are kept at these locations. Each
Guarantor's chief executive office is as set forth in its respective Guaranty.
6.24. INSURANCE. The Borrower and each of its Subsidiaries maintain
with financially sound and reputable insurers insurance with respect to their
properties and businesses against such casualties and contingencies as are, in
the reasonable opinion of the Borrower, in accordance with sound business
practices.
7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or the Bank has any obligation to make any Loans:
7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Loans, the commitment fees
and all other amounts provided for in this Credit Agreement, the other Loan
Documents to which the Borrower or any of its Subsidiaries is a party, all in
accordance with the terms of this Credit Agreement and such other Loan Documents
and the terms of such other documents.
7.2. MAINTENANCE OF OFFICE. The Borrower will maintain its chief
executive office in Wallingford, Connecticut, or at such other place in the
United States of America as it shall designate upon prior written notice to the
Bank where notices, presentations and demands to or upon the Borrower in respect
of the Loan Documents to which the Borrower is a party may be given or made.
7.3. RECORDS AND ACCOUNTS. The Borrower will (a) keep, and cause each
of its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles, (b) maintain adequate accounts and reserves for
all taxes (including income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its Subsidiaries,
contingencies, and other reserves, and (c) at all times engage
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PricewaterhouseCoopers LLC or other nationally-recognized independent certified
public accounting firm satisfactory to the Bank as the independent certified
public accountants of the Borrower and its Subsidiaries and will not permit more
than thirty (30) days to elapse between the cessation of such firm's (or any
successor firm's) engagement as the independent certified public accountants of
the Borrower and its Subsidiaries and the appointment in such capacity of a
successor firm as shall be satisfactory to the Bank.
7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower
will deliver to the Bank:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Borrower, the
audited financial statements of the Borrower and its Subsidiaries, each
as at the end of such year, including the consolidated balance sheet,
the consolidated statements of income and consolidated statement of
cash flow for such year, each setting forth in comparative form the
figures for the previous fiscal year for each fiscal year of the
Borrower commencing with the fiscal year ending December 31, 2000, all
such consolidated statements to be audited, prepared in accordance with
generally accepted accounting principles, and certified without
qualification, by PricewaterhouseCoopers LLC or another
nationally-recognized independent certified public accounting firm
satisfactory to the Bank, as fairly presenting the financial condition
and income of the Borrower in accordance with generally accepted
accounting principles, such audited financial statements to be
accompanied by a written statement from such accounting firm to the
effect that they have read a copy of this Credit Agreement, and that,
in making the examination necessary in order to provide their audit
report, they have obtained no knowledge of any Default or Event of
Default or, if such accounting firm shall have obtained knowledge of
any then existing Default or Event of Default they shall disclose in
such statement any such Default or Event of Default. The form attached
hereto as Schedule 7.4(a) has been submitted by PricewaterhouseCoopers
LLC and approved by the Bank;
(b) as soon as practicable, but in any event not later than
thirty (30) days after the end of each month, the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries and the
related unaudited consolidated statement of income and unaudited
consolidated statement of cash flow and consolidating statement of
income and consolidating statement of cash flow for the portion of the
Borrower's fiscal year then elapsed, all in reasonable detail and
prepared in accordance with generally accepted accounting principles,
together with a certification by the chief financial officer of the
Borrower that the information contained
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in such financial statements fairly presents the financial position of
the Borrower and its Subsidiaries on the date thereof (subject to
year-end adjustments and the absence of footnotes);
(c) with each Loan Request (but in any event not less than
once per week), a borrowing base certificate (a "Borrowing Base
Certificate") setting forth the Borrowing Base as of a date as may be
requested by the Bank, such report to be in form and substance
satisfactory to the Bank and accompanied by such information as the
Bank may reasonably request to support the calculation of the Borrowing
Base;
(d) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement
certified by the chief financial officer of the Borrower in form and
substance satisfactory to the Bank (the "Compliance Certificate") and
setting forth in reasonable detail computations evidencing compliance
with the covenants contained in Section 9 and (if applicable)
reconciliations to reflect changes in generally accepted accounting
principles since the Balance Sheet Date;
(e) as soon as practicable, but in any event not later than
thirty (30) days after the filing thereof (or requests for extensions
of the filing dates thereof), copies of federal and state income tax
returns of the Borrower;
(f) as soon as practicable, but in any event within thirty
(30) days after the end of each fiscal year of the Borrower, detailed
projections of the Borrower and its Subsidiaries for the next
succeeding fiscal year setting forth anticipated income, expense and
Capital Expenditures (broken out by month), such projections to be in
form and substance reasonably satisfactory to the Bank;
(g) within twenty (20) days of the close of each month,
monthly aging of Accounts Receivable and accounts payable and inventory
status (including calculations showing ineligibility of accounts
receivable and inventory) reports in form, scope and substance
satisfactory to the Bank;
(h) contemporaneously with the execution thereof, copies of
any tax sharing agreements;
(i) as soon as practicable and in any event with two (2)
Business Days following the filing thereof with the Securities and
Exchange Commission, copies of any and all filings by the Borrower with
the SEC including without limitation, all Forms 10-K, 10-Q and 8-K, and
all proxy statements and annual reports to shareholders; and
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(j) from time to time such other financial data and
information (including accountants and management letters) as the Bank
may reasonably request.
7.5. NOTICES.
7.5.1. DEFAULTS. The Borrower will promptly notify the Bank in
writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under
this Credit Agreement or any other note, evidence of Indebtedness,
indenture or other obligation to which or with respect to which the
Borrower or any of its Subsidiaries is a party or obligor, whether as
principal, guarantor, surety or otherwise having an amount outstanding
in excess of $50,000, or under any real property lease, the Borrower
shall promptly give written notice thereof to the Bank, describing the
notice or action and the nature of the claimed default.
7.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give
notice to the Bank (a) of any violation of any Environmental Law that
the Borrower or any of its Subsidiaries reports in writing or is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any federal, state or local
environmental agency and (b) upon becoming aware thereof, of any
inquiry, proceeding, investigation, or other action, including a notice
from any agency of potential environmental liability, of any federal,
state or local environmental agency or board, that has the potential to
materially affect the assets, liabilities, financial conditions or
operations of the Borrower and its Subsidiaries taken as a whole, the
Bank's mortgages or security interests pursuant to the Security
Documents.
7.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrower
will, promptly upon becoming aware thereof, notify the Bank in writing
of any setoff, claims (including, with respect to the Real Estate,
environmental claims), withholdings or other defenses to which any of
the Collateral, or the Bank's rights with respect to the Collateral,
are subject.
7.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will,
and will cause each of its Subsidiaries to, give notice to the Bank in
writing (a) within fifteen (15) days of becoming aware of any
litigation or proceedings threatened in writing or any pending
litigation and proceedings affecting the Borrower or any of its
Subsidiaries or to which the Borrower or any of its Subsidiaries is or
becomes a party involving an uninsured claim against the Borrower or
any of its Subsidiaries that could reasonably be expected to have a
materially adverse effect on the
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Borrower and its Subsidiaries taken as a whole and stating the nature
and status of such litigation or proceedings, (b) within five (5)
Business Days after (i) the termination of any material contract or
agreement to which the Borrower or any of its Subsidiaries is a party
or (ii) the amendment of any material contract or agreement in a manner
that may have an adverse effect on the financial condition, income or
business of the Borrower or any of its Subsidiaries, and (c) within ten
(10) days of any judgment not covered by insurance, final or otherwise,
against the Borrower or any of its Subsidiaries in an amount in excess
of $50,000.
7.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, rights and franchises and those of its
Subsidiaries. The Borrower (a) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Borrower may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times, and (c) will, and will cause each of its Subsidiaries to, continue
to engage primarily in the businesses now conducted by it and in related
businesses; provided that nothing in this Section 7.6 shall prevent the Borrower
from discontinuing the operation and maintenance of any of its properties or any
of those of its Subsidiaries if such discontinuance is, in the judgment of the
Borrower, desirable in the conduct of its business and that do not in the
aggregate materially adversely affect the business of the Borrower and its
Subsidiaries on a consolidated basis.
7.7. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to their properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas and in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent and in accordance with the terms of the Security
Agreements.
7.8. TAXES. The Borrower will, and will cause each of its Subsidiaries
to, duly pay and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental charges
imposed upon it and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as all claims for
labor, materials, or supplies that if unpaid might by law become a lien or
charge upon
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any of its property; provided that any such tax, assessment, charge, levy or
claim need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or such
Subsidiary shall have set aside on their books adequate reserves with respect
thereto; and provided further that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
7.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
7.9.1. GENERAL. The Borrower shall permit the Bank or any of
the Bank's representatives to visit and inspect any of the properties
of the Borrower or any of its Subsidiaries, to examine the books of
account of the Borrower and its Subsidiaries (and to make copies
thereof and extracts therefrom), and to discuss the affairs, finances
and accounts of the Borrower and its Subsidiaries with, and to be
advised as to the same by, their officers, directors and employees, all
at such times and intervals as the Bank may reasonably request.
7.9.2. FIELD EXAMS. The inspections and examinations by the
Bank of the properties and books of the Borrower and its Subsidiaries
may include field exams, with respect to which the Borrower shall pay
to the Bank $650 per day (plus out-of-pocket expenses) for each person
who performs such field exam; provided, that unless an Event of Default
has occurred and is continuing, the Borrower will not be required to
pay more than $9,100 (plus expenses) in any fiscal year for such field
exams. The obligations of the Borrower under this paragraph are in
addition to the $7,619.64 owed by the Borrower to the Bank with respect
to the Bank's initial field exams.
7.9.3. COMMUNICATIONS WITH ACCOUNTANTS. The Borrower
authorizes the Bank to communicate directly with the Borrower's
independent certified public accountants and authorize such accountants
to disclose to the Bank any and all financial statements and other
supporting financial documents and schedules including copies of any
management letter with respect to the business, financial condition and
other affairs of the Borrower or any of its Subsidiaries.
7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The
Borrower will, and will cause each of its Subsidiaries to, comply in all
material respects with (a) the applicable laws and regulations wherever their
business is conducted, including all Environmental Laws, (b) the provisions of
their certificates of incorporation, bylaws and other charter documents, (c) all
agreements and instruments by which they or any of their
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properties may be bound, and (d) all applicable decrees, orders, and judgments.
If any authorization, consent, approval, permit or license from any officer,
agency or instrumentality of any government shall become necessary or required
in order that the Borrower or any of its Subsidiaries may fulfill any of its
obligations hereunder or any of the other Loan Documents to which the Borrower
or such Subsidiary is a party, the Borrower will, or (as the case may be) will
cause such Subsidiary to, promptly take or cause to be taken all reasonable
steps within the power of the Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the Bank with
evidence thereof.
7.11. EMPLOYEE BENEFIT PLANS. The Borrower will (a) promptly upon
filing the same with the Department of Labor or Internal Revenue Service upon
request of the Bank, furnish to the Bank a copy of the most recent actuarial
statement required to be submitted under Section 103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each Guaranteed
Pension Plan and (b) promptly upon receipt or dispatch, furnish to the Bank any
notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of
ERISA, or in respect of a Multiemployer Plan, under Sections 4041A, 4202,
4219, 4242, or 4245 of ERISA.
7.12. DEPOSITORY BANK. The Borrower shall maintain its primary
operating and depository bank accounts at the Bank. All collections of Accounts
Receivable shall be promptly, and in any event within one (1) Business Day, be
deposited into a cash collateral account at the Bank (it being understood that
the Borrower may deposit certain of its collections into an account at a bank in
Ithaca, New York, so long as each such deposit is transferred to an account
maintained by the Bank within one (1) Business Day after the deposit is made in
Ithaca). Amounts deposited into such cash collateral account will be credited
the same day for the purpose of determining the availability of Revolving Credit
Loans hereunder, but interest will continue to accrue on the Revolving Credit
Loans paid thereby for one (1) Business Day after such deposit.
7.13. GUARANTORS. The Borrower will cause each Subsidiary created,
acquired or existing on or after the Closing Date to become a Guarantor promptly
and shall cause such Subsidiary to execute and deliver to the Bank a Guaranty.
7.14. ADDITIONAL SUBSIDIARIES. If, after the Closing Date, the Borrower
or any of its Subsidiaries create or acquire, either directly or indirectly, any
Subsidiary, the Borrower will promptly notify the Bank of such creation or
acquisition, as the case may be, and take all other actions required by
Section 7.13 hereof.
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7.15. FURTHER ASSURANCES. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Bank and execute such further instruments
and documents as the Bank shall reasonably request to carry out to its
satisfaction the transactions contemplated by this Credit Agreement and the
other Loan Documents.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or the Bank has any obligation to make any Loans:
8.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Bank arising under any of the Loan
Documents;
(b) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(c) Indebtedness existing on the date hereof and listed and
described on Schedule 8.1 hereto;
(d) Indebtedness incurred after the date hereof, which is not
directly or indirectly secured by any assets of the Borrower or any of
its Subsidiaries, provided that the aggregate principal amount of such
Indebtedness of the Borrower and its Subsidiaries that is incurred
pursuant to this clause (d) in any fiscal year of the Borrower shall
not exceed the aggregate amount of $150,000; and
(e) Indebtedness incurred in connection with the acquisition
after the date hereof of any real or personal property by the Borrower
or such Subsidiary or under any Capitalized or Synthetic Leases,
provided, that the aggregate principal amount of such Indebtedness of
the Borrower and its Subsidiaries shall not exceed the aggregate amount
of $150,000 at any one time.
8.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not permit
any of its Subsidiaries to, (a) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of its property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits
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therefrom; (b) transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; (c) acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; (d) suffer to exist for a period of more than
thirty (30) days after the same shall have been incurred any Indebtedness or
claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; (e) sell, assign, pledge or otherwise transfer any "receivables" as
defined in clause (g) of the definition of the term "Indebtedness," with or
without recourse; or (f) enter into or permit to exist any arrangement or
agreement, enforceable under applicable law, which directly or indirectly
prohibits the Borrower or any of its Subsidiaries from creating or incurring any
lien, encumbrance, mortgage, pledge, charge, restriction or other security
interest other than in favor of the Bank under the Loan Documents and other than
customary anti-assignment provisions in leases and licensing agreements entered
into by the Borrower or any such Subsidiary in the ordinary course of its
business, provided that the Borrower or any of its Subsidiaries may create or
incur or suffer to be created or incurred or to exist:
(i) liens in favor of the Borrower on all or part of the
assets of Subsidiaries of the Borrower securing Indebtedness owing by
Subsidiaries of the Borrower to the Borrower;
(ii) liens to secure taxes, assessments and other government
charges in respect of obligations not overdue or liens on properties to
secure claims for labor, material or supplies in respect of obligations
not overdue;
(iii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iv) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens on properties in existence less than
90 days from the date of creation thereof in respect of obligations not
overdue;
(v) encumbrances on Real Estate consisting of easements,
rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto,
landlord's or lessor's liens under leases to which the Borrower or a
Subsidiary of the Borrower is a party, and other minor liens or
encumbrances none of which interferes materially with the use of the
property affected in the ordinary conduct of business of the Borrower
and its Subsidiaries or the value of such
49
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property, which defects and irregularities do not individually or in
the aggregate have a materially adverse effect on the business or
financial condition of the Borrower individually or of the Borrower and
its Subsidiaries on a consolidated basis;
(vi) liens existing on the date hereof and listed on Schedule
8.2 hereto;
(vii) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the date hereof
to secure purchase money Indebtedness of the type and amount permitted
by Section 8.1(e), incurred in connection with the acquisition of such
property, which security interests or mortgages cover only the real or
personal property so acquired and liens in favor of lessors under any
Capitalized or Synthetic Lease on the assets subject to such
Capitalized or Synthetic Lease permitted by Section 8.1(e); and
(vii) liens in favor of the Bank under the Loan Documents.
8.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of
purchase by the Borrower;
(b) demand deposits, certificates of deposit, bankers
acceptances and time deposits of United States banks having total
assets in excess of $1,000,000,000;
(c) securities commonly known as "commercial paper" issued by
a corporation organized and existing under the laws of the United
States of America or any state thereof that at the time of purchase
have been rated and the ratings for which are not less than "P 1" if
rated by ▇▇▇▇▇'▇ Investors Service, Inc., and not less than "A 1" if
rated by Standard and Poor's Rating Group;
(d) Investments existing on the date hereof and listed on
Schedule 8.3 hereto; and
(e) repurchase agreements with banks having total assets in
excess of $1,000,000,000 with respect to Investments described in
clauses (a), (b), and (c) of this Section 8.3, which repurchase
agreements are fully
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secured by such Investments described in clauses (a), (b), and (c) of
this Section 8.3.
8.4. RESTRICTED PAYMENTS. Neither the Borrower nor any of its
Subsidiaries will make any Restricted Payments; provided, that the Borrower or
any of its Subsidiaries may pay dividends on up to 4,000 shares of Series B
Preferred Stock, but only in the year in which such dividends accrue, and only
so long as no Default or Event of Default has occurred and is continuing or
would exist as a result thereof. The determination of whether a Default or an
Event of Default would occur as a result of such Restricted Payment shall be
made on a pro forma basis based upon the financial statements of the Borrower
most recently delivered to the Bank prior to the date of such Restricted Payment
as if such Restricted Payment had been made on the last day of such fiscal
period covered by such financial statements. Prior to the making of any
Restricted Payment, the Borrower shall deliver a certificate to the Bank signed
by the Borrower's chief financial officer of the Borrower certifying (and
setting forth such officer's calculation) that if the proposed Restricted
Payment had been made on the last day of the fiscal period covered by the most
recent financial statements of the Borrower delivered to the Bank, no breach of
the financial covenants set forth in Section 9 hereof would have occurred
hereunder. Notwithstanding the foregoing, even if the calculation on a pro forma
basis does not indicate that a Restricted Payment would have caused a Default or
an Event of Default, any breach of a financial covenant or other provision of
this Credit Agreement by virtue of such Restricted Payment as determined by
financial statements subsequently delivered hereunder, shall constitute a
Default or Event of Default even if such Restricted Payment would not have
resulted in a Default or Event of Default based upon such pro forma financial
statement.
8.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
8.5.1. MERGERS AND ACQUISITIONS. The Borrower will not, and
will not permit any of its Subsidiaries to, become a party to any
merger or consolidation, or agree to or effect any asset acquisition or
stock acquisition (other than the acquisition of assets in the ordinary
course of business consistent with past practices) without the prior
written consent of the Bank, except the merger of two or more
Subsidiaries of the Borrower into each other. No assets may be sold or
transferred by the Borrower to any Subsidiary of the Borrower unless
such Subsidiary pays to the Borrower in cash at the time of the
transfer a purchase price equal to the fair market value of the assets
transferred.
8.5.2. DISPOSITION OF ASSETS. The Borrower will not, and will
not permit any of its Subsidiaries to, become a party to or agree to or
effect any disposition of assets, other than the sale of inventory and
the
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disposition of obsolete assets, in each case in the ordinary course of
business consistent with past practices.
8.6. SALE AND LEASEBACK. The Borrower will not, and will not permit any
of its Subsidiaries to, enter into any arrangement, directly or indirectly,
whereby the Borrower or any Subsidiary of the Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower or any Subsidiary of the Borrower intends
to use for substantially the same purpose as the property being sold or
transferred.
8.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not, and
will not permit any of its Subsidiaries to, (a) use any of the Real Estate or
any portion thereof for the handling, processing, storage or disposal of
Hazardous Substances, (b) cause to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real Estate, (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a release (i.e. releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing or
dumping) or threatened release of Hazardous Substances on, upon or into the Real
Estate or (e) otherwise conduct any activity at any Real Estate or use any Real
Estate, in each case in any manner that would violate any Environmental Law or
bring such Real Estate in violation of any Environmental Law.
8.8. SUBORDINATED DEBT. The Borrower will not, and will not permit any
of its Subsidiaries to, amend, supplement or otherwise modify the terms of any
Capitalization Document, any Subordinated Debt or any documents evidencing any
Subordinated Debt or, until after the Borrower has paid all of the Obligations
in full, prepay, redeem or repurchase (or offer to prepay, redeem or repurchase)
any Subordinated Debt or preferred stock.
8.9. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA
Affiliate will
(a) engage in any "prohibited transaction" within the meaning
of Section 406 of ERISA or Section 4975 of the Code which could result
in a material liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an
"accumulated funding deficiency", as such term is defined in Section
302 of ERISA, whether or not such deficiency is or may be waived; or
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(c) to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which,
could result in the imposition of a lien or encumbrance on the assets
of the Borrower or any of its Subsidiaries pursuant to Section 302(f)
or Section 4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances
requiring the posting of security pursuant to Section 307 of ERISA or
Section 401(a)(29) of the Code; or
(e) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section 4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities.
8.10. BUSINESS ACTIVITIES. The Borrower will not, and will not permit
any of its Subsidiaries to, engage directly or indirectly (whether through
Subsidiaries or otherwise) in any type of business other than the businesses
conducted or contemplated by it on the Closing Date and in related businesses.
8.11. FISCAL YEAR. The Borrower will not, and will not permit any of
its Subsidiaries to, change the date of the end of its fiscal years from that
set forth in Section 6.4.1.
8.12. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any transaction with any Affiliate
(other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such Affiliate or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any such Affiliate has a substantial interest or is a stockholder,
member, director, officer, trustee or partner, on terms more favorable to such
Person than would have been obtainable on an arm's-length basis in the ordinary
course of business.
8.13. BANK ACCOUNTS. The Borrower will not, and will not permit any of
its Subsidiaries to, (a) establish any bank accounts other than those accounts
listed on Schedule 6.20, without the Bank's prior written consent or (b) deposit
into any of the payroll accounts listed on Schedule 6.20 any amounts in excess
of amounts necessary to pay current payroll obligations from such accounts.
8.14. CONSIGNMENT. The Borrower will not, and will not permit any of
its Subsidiaries to, consign any of its inventory or any other assets, unless
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arrangements reasonably satisfactory to the Bank have been made in order to
perfect and protect the Bank's first priority security interest therein.
9. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or the Bank has any obligation to make any Loans:
9.1. LEVERAGE RATIO. The Borrower will not permit the Leverage Ratio as
of the end of any fiscal quarter to exceed 1.75 to 1.0.
9.2. DEBT SERVICE COVERAGE RATIO. The Borrower will not permit the Debt
Service Coverage Ratio to be less than:
1.25 to 1.00 for the fiscal quarter ending March 31, 2001;
1.75 to 1.00 for the six-month period ending June 30, 2001;
2.00 to 1.00 for the nine-month period ending September 30, 2001; and
2.25 to 1.00 for the twelve-month period ending at the end of any
fiscal quarter ending thereafter.
9.3. MINIMUM TANGIBLE NET WORTH. The Borrower will not permit its
Consolidated Tangible Net Worth to be less at the end of any fiscal quarter than
the sum of (a) the Base Amount applicable to such quarter plus (b) the sum of
the Net Income Additions to Net Worth for each fiscal year commencing after
December 31, 2001.
For the purposes of this Section 9.3, "Base Amount" means:
PERIOD BASE AMOUNT
Quarter ending September 23, 2000 $13,500,000
Quarters ending December 31, 2000,
March 31, 2001, and
June 30, 2001 $12,750,000
Quarters ending September 30, 2001
and thereafter $13,500,000
For the purposes of this Section 9.3, "Net Income Additions to Net
Worth" means, with respect to any fiscal year of the Borrower, 50% of the result
of (i) Consolidated Net Income of the Borrower for such fiscal year, minus (ii)
the amount of Distributions to shareholders distributed in cash as dividends
upon
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the Series B Preferred Stock of the Borrower, provided, that not more than
$280,000 may be deducted under this clause (ii) with respect to Distributions
made in any single fiscal year; further provided, that if the Borrower does not
have positive Consolidated Net Income with respect to a fiscal year, then the
Net Income Additions to Net Worth with respect to such fiscal year shall be
zero.
9.4. CAPITAL EXPENDITURES. The Borrower will not permit its Capital
Expenditures to exceed (a) $3,500,000 in the Borrower's 2000 fiscal year or (b)
$3,000,000 in any fiscal year thereafter.
10. CLOSING CONDITIONS.
The obligations of the Bank to make the initial Revolving Credit Loans
shall be subject to the satisfaction of the following conditions precedent on or
prior to the Closing Date:
10.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance reasonably satisfactory to the
Bank and all conditions precedent to making the Loans shall have been satisfied.
The Bank shall have received a fully executed copy of each such document.
10.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. The Bank shall have
received from the Borrower and each of its Subsidiaries a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (a) its charter and other organizational documents as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
10.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and each of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Bank shall have been provided to the Bank.
10.4. INCUMBENCY CERTIFICATE. The Bank shall have received from the
Borrower and each of its Subsidiaries an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of the Borrower or such
Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (a) to sign, in the name and on behalf of
the Borrower or such Subsidiary, each of the Loan Documents to which the
Borrower or such Subsidiary is or is to become a party; (b) in the case of the
Borrower, to make Loan Requests and Conversion Requests; and (c) to give notices
and to take other action on its behalf under the Loan Documents.
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10.5. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Bank a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
and lien upon the Collateral. All filings, recordings, deliveries of instruments
and other actions necessary or desirable in the opinion of the Bank to protect
and preserve such security interests shall have been duly effected. The Bank
shall have received evidence thereof in form and substance satisfactory to the
Bank.
10.6. PERFECTION CERTIFICATE AND UCC SEARCH RESULTS. The Bank shall
have received from the Borrower a completed and fully executed Perfection
Certificates and the results of UCC searches with respect to the Collateral,
indicating no liens other than Permitted Liens and otherwise in form and
substance satisfactory to the Bank.
10.7. CERTIFICATES OF INSURANCE. The Bank shall have received a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreement.
10.8. OPINION OF COUNSEL. The Bank shall have received a favorable
legal opinion addressed to the Bank, dated as of the Closing Date, in form and
substance satisfactory to the Bank, from ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ LLP, counsel to the
Borrower and its Subsidiaries.
10.9. LESSOR'S AGREEMENT. Bank shall have obtained a Lessor's Agreement
with respect to each location leased by Borrower.
10.10. SUBCONTRACTOR AGREEMENTS. Bank shall have obtained a
Subcontractor Agreement with respect to each subcontractor having possession of
any Collateral.
10.11. LITIGATION. There shall be no material litigation or proceeding
pending or threatened with respect to the Borrower or any of its Subsidiaries
before any court or agency which may, if adversely decided, have a material
adverse affect on the financial condition, operations or prospects of the
Borrower or the Borrower and its Subsidiaries taken as a whole.
10.12. RELEASE. Bank shall have received evidence satisfactory to the
Bank that all indebtedness owed by the Borrower to Fleet National Bank has been
paid in full and that all liens and encumbrances securing such indebtedness have
been released.
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10.13. PAYMENT OF FEES AND OTHER AMOUNTS. The Borrower shall have paid
the Commitment Fee pursuant to Section 2.2 hereof, the expenses payable pursuant
to Section 14.1 hereof, the $7,619.64 payable to the Bank for the initial field
exam by the Bank prior to the date hereof, the $4,000 payable to the Bank for
the inventory appraisal by the Bank prior to the date hereof, and all other fees
and amounts payable by the Borrower hereunder on or before the Closing Date,
provided that the Borrower will receive credit toward such amounts for the
$6,000 paid by the Borrower to the Bank on account prior to the date hereof.
11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Bank to make any Loan including the Revolving
Credit Loan, in each case whether on or after the Closing Date, shall also be
subject to the satisfaction of the following conditions precedent:
11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrower or its Subsidiaries contained in
this Credit Agreement, the other Loan Documents or in any document or instrument
delivered pursuant to or in connection with this Credit Agreement shall be true
as of the date as of which they were made and shall also be true at and as of
the time of the making of such Loan with the same effect as if made at and as of
that time (except to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan Documents,
and to the extent that such representations and warranties relate expressly to
an earlier date) and no Default or Event of Default shall have occurred and be
continuing.
11.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the opinion of the
Bank would make it illegal for the Bank to make such Loan.
11.3. GOVERNMENTAL REGULATION. The Bank shall have received such
statements in substance and form reasonably satisfactory to the Bank as the Bank
shall require for the purpose of compliance with any applicable regulations of
the Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
11.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Bank and its counsel, and the Bank and such counsel shall have
received all information and such counterpart originals or certified or other
copies of such documents as the Bank may reasonably request.
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12. EVENTS OF DEFAULT; ACCELERATION; ETC.
12.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the Loans
when the same shall become due and payable, whether at the stated date
of maturity or any accelerated date of maturity or at any other date
fixed for payment;
(b) the Borrower or any of its Subsidiaries shall fail to pay
any interest on the Loans, the commitment fee or other sums due
hereunder or under any of the other Loan Documents when the same shall
become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(c) the Borrower or any of its Subsidiaries shall fail to
comply with any of the covenants contained in Sections 7.1, 7.2,
7.4, 7.5, 7.7, 7.9, 7.12, 7.13, 7.14, 8.1, 8.2, 8.3, 8.4, 8.5, 8.6,
8.8, 8.13, 8.14 or 9;
(d) the Borrower or any of its Subsidiaries shall fail to
perform for thirty (30) days any term, covenant or agreement contained
herein or in any of the other Loan Documents (other than those
specified elsewhere in this Section 12.1);
(e) any representation or warranty of the Borrower or any of
its Subsidiaries in this Credit Agreement or any of the other Loan
Documents or in any other document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been
false in any material respect upon the date when made or deemed to have
been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay
at maturity, or within any applicable period of grace, any other
obligation for borrowed money, reimbursement obligations or credit
received or in respect of any Capitalized Leases or any Subordinated
Debt in any case having an amount outstanding in the aggregate in
excess of $50,000, or shall fail to observe or perform any material
term, covenant or agreement contained in any agreement by which it is
bound which evidences or secures borrowed money, reimbursement
obligations or credit received or in respect of any Capitalized Leases,
or any Subordinated Debt in any case having an amount outstanding in
the aggregate in excess of $50,000, for such period of time as would
permit (assuming the giving of
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appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof;
(g) the Borrower or any of its Subsidiaries shall make an
assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or
become due, or shall petition or apply for the appointment of a trustee
or other custodian, liquidator or receiver of the Borrower or any of
its Subsidiaries or of any substantial part of the assets of the
Borrower or any of its Subsidiaries or shall commence any case or other
proceeding relating to the Borrower or any of its Subsidiaries under
any bankruptcy, reorganization, arrangement, insolvency, readjustment
of debt, dissolution or liquidation or similar law of any jurisdiction,
now or hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall
be commenced against the Borrower or any of its Subsidiaries and the
Borrower or any of its Subsidiaries shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within forty-five (45) days
following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any
of its Subsidiaries bankrupt or insolvent, or approving a petition in
any such case or other proceeding, or a decree or order for relief is
entered in respect of the Borrower or any Subsidiary of the Borrower in
an involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against the Borrower or any of its Subsidiaries that,
with other outstanding final judgments, undischarged, against the
Borrower or any of its Subsidiaries exceeds in the aggregate $50,000;
(j) the holders of all or any part of any Subordinated Debt
shall accelerate the maturity of all or any part of any Subordinated
Debt or the Subordinated Debt shall be (or shall be required at such
time to be) prepaid, redeemed or repurchased in whole or in part; or
the Borrower or any of its Subsidiaries shall be or become required
under any documents evidencing Subordinated Debt to prepay, redeem or
repurchase (or shall be or become required thereunder to offer to
prepay, redeem or repurchase) all or any part of such Subordinated
Debt;
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(k) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded or the Bank's security interests,
mortgages or liens in a substantial portion of the Collateral shall
cease to be perfected, or shall cease to have the priority contemplated
by the Security Documents, in each case otherwise than in accordance
with the terms thereof or with the express prior written agreement,
consent or approval of the Bank, or any action at law, in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of the Borrower or any of
its Subsidiaries party thereto or any of their respective stockholders,
as the case may be, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof;
(l) the Borrower or any ERISA Affiliate incurs any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA
in an aggregate amount exceeding $50,000, or the Borrower or any ERISA
Affiliate is assessed withdrawal liability pursuant to Title IV of
ERISA by a Multiemployer Plan requiring aggregate annual payments
exceeding $50,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to
make a required installment or other payment (within the meaning of
Section 302(f)(1) of ERISA); provided that the Bank determines in its
reasonable discretion that such event (A) could be expected to result
in liability of the Borrower or any of its Subsidiaries to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding $50,000
and (B) could constitute grounds for the termination of such Guaranteed
Pension Plan by the PBGC, for the appointment by the appropriate United
States District Court of a trustee to administer such Guaranteed
Pension Plan or for the imposition of a lien in favor of such
Guaranteed Pension Plan; (ii) the appointment by a United States
District Court of a trustee to administer such Guaranteed Pension Plan;
or (iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan;
(m) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(n) ▇▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ shall cease to remain
active in the day-to-day senior management of the Borrower (including
by reason of death or disability) and the Borrower shall fail to
replace such
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person with other senior management acceptable to the Bank within
thirty (30) days after such person ceases to remain active in the
senior management of the Borrower;
(o) there shall have been a "Change of Control", as such term
is defined in the Certificate of Designation of the Borrower with
respect to its Series B Preferred Stock; or
(p) there shall have occurred or there shall exist any other
event or circumstance pursuant to which, but for the provisions of this
Credit Agreement, the Borrower would have the obligation to redeem or
repurchase or to offer to redeem or repurchase the Series B Preferred
Stock or Series A Preferred Stock of the Borrower,
then, and in any such event, so long as the same may be continuing, the
Bank may, by notice in writing to the Borrower declare all amounts owing with
respect to this Credit Agreement, the Note and the other Loan Documents to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower; provided that in the event of any Event
of Default specified in Sections 12.1(g) and (h), all such amounts shall
become immediately due and payable automatically and without any requirement of
notice from the Bank.
12.2. TERMINATION OF REVOLVING CREDIT COMMITMENT. If any one or more of
the Events of Default specified in Section 12.1(g) and (h) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and the Bank
shall be relieved of all further obligations to make Loans to the Borrower. If
any other Event of Default shall have occurred and be continuing, the Bank may,
by notice to the Borrower, terminate the unused portion of the credit hereunder,
and upon such notice being given such unused portion of the credit hereunder
shall terminate immediately and the Bank shall be relieved of all further
obligations to make Loans. No termination of the credit hereunder shall relieve
the Borrower or any of its Subsidiaries of any of the Obligations.
12.3. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Bank shall have
accelerated the maturity of the Loans pursuant to Section 12.1, the Bank, if
owed any amount with respect to the Loans, may, proceed to protect and enforce
its rights by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Credit Agreement and the other Loan Documents or any instrument pursuant
to which the Obligations to the Bank are evidenced, including as permitted by
applicable law the obtaining of the ex parte appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the
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payment thereof or any other legal or equitable right of the Bank. No remedy
herein conferred upon the Bank is intended to be exclusive of any other remedy
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or any other provision of law.
13. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from the
Bank to the Borrower or any of its Subsidiaries and any securities or other
property of the Borrower in the possession of the Bank may be applied to or set
off by the Bank against the payment of Obligations and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of the Borrower to the Bank.
14. EXPENSES AND INDEMNIFICATION.
14.1. EXPENSES. The Borrower agrees to pay (a) the reasonable costs of
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (b) any taxes (including
any interest and penalties in respect thereto) payable by the Bank (other than
taxes based upon the Bank's net income) on or with respect to the transactions
contemplated by this Credit Agreement (the Borrower hereby agreeing to indemnify
the Bank with respect thereto), (c) the reasonable fees, expenses and
disbursements of the Bank's counsel or any local counsel to the Bank incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, any
amendments, modifications, approvals, consents or waivers hereto or hereunder
requested by the Borrower, or the cancellation of any Loan Document upon payment
in full in cash of all of the Obligations or pursuant to any terms of such Loan
Document for providing for such cancellation (provided that the Borrower will
not be responsible for more than $14,000 (plus expenses) of the fees of the
Bank's counsel incurred prior to the Closing Date in connection with the
preparation of the Loan Documents), (d) the fees, expenses and disbursements of
the Bank or any of its affiliates incurred by the Bank or such affiliate in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, (e) any fees, costs, expenses
and bank charges, including bank charges for returned checks, incurred by the
Bank in establishing, maintaining or handling agency accounts, lock box accounts
and other accounts for the collection of any of the Collateral; (f) all
reasonable out-of-pocket expenses (including without limitation reasonable
attorneys' fees and costs, which attorneys may be employees of the Bank, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) reasonably
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incurred by the Bank in connection with (i) the enforcement of or preservation
of rights under any of the Loan Documents against the Borrower or any of its
Subsidiaries or the administration thereof after the occurrence of a Default or
Event of Default and (ii) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to the Bank's or the Bank's
relationship with the Borrower or any of its Subsidiaries and (g) all reasonable
fees, expenses and disbursements of the Bank incurred in connection with UCC
searches, UCC filings or mortgage recordings.
14.2. INDEMNIFICATION. The Borrower agrees to indemnify and hold
harmless the Bank and its affiliates from and against any and all claims,
actions and suits whether groundless or otherwise, and from and against any and
all liabilities, losses, damages and expenses of every nature and character
arising out of this Credit Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (a) any actual
or proposed use by the Borrower or any of its Subsidiaries of the proceeds of
any of the Loans, (b) the reversal or withdrawal of any provisional credits
granted by the Bank upon the transfer of funds from lock box, bank agency or
concentration accounts or in connection with the provisional honoring of checks
or other items, (c) any actual or alleged infringement of any patent, copyright,
trademark, service ▇▇▇▇ or similar right of the Borrower or any of its
Subsidiaries comprised in the Collateral, (d) the Borrower or any of its
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (e) with respect to the Borrower and its Subsidiaries
and their respective properties and assets, the violation of any Environmental
Law, the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with respect to
any Hazardous Substances (including, but not limited to, claims with respect to
wrongful death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding, except to the extent that any of
the foregoing are directly and primarily caused by the gross negligence or
willful misconduct of the otherwise indemnified party. In litigation, or the
preparation therefor, the Bank and its affiliates shall be entitled to select
their own counsel and, in addition to the foregoing indemnity, the Borrower
agrees to pay promptly the reasonable fees and expenses of such counsel. If, and
to the extent that the obligations of the Borrower under this Section 14.2 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law.
14.3. SURVIVAL. The covenants contained in this Section 14 shall
survive payment or satisfaction in full of all other Obligations.
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15. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
The Bank agrees, on behalf of itself and each of its affiliates,
directors, officers, employees and representatives, to use reasonable
precautions to keep confidential, in accordance with its customary procedures
for handling confidential information of the same nature and in accordance with
safe and sound banking practices, any non-public information supplied to it by
the Borrower or any of its Subsidiaries pursuant to this Credit Agreement that
is identified by such Person as being confidential at the time the same is
delivered to the Bank, provided that nothing herein shall limit the disclosure
of any such information (a) after such information shall have become public
other than through a violation of this Section 15, (b) to the extent required by
statute, rule, regulation or judicial process, (c) to counsel for the Bank, (d)
to bank examiners or any other regulatory authority having jurisdiction over the
Bank, or to auditors or accountants, (e) in connection with any litigation to
which the Bank is a party, or in connection with the enforcement of rights or
remedies hereunder or under any other Loan Document, (f) to a Subsidiary or
affiliate of the Bank so long as such entity agrees to be bound by the
provisions of Section 17.3 or (g) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant agrees to be
bound by the provisions of Section 17.3.
16. SURVIVAL OF COVENANTS, ETC.
16.1. SURVIVAL OF COVENANTS. All covenants, agreements, representations
and warranties made herein, in the Note, in any of the other Loan Documents or
in any documents or other papers delivered by or on behalf of the Borrower or
any of its Subsidiaries pursuant hereto, including the covenant and agreement of
the Borrower to pay the Obligations when due (a) shall be deemed to have been
relied upon by the Bank, notwithstanding any investigation heretofore or
hereafter made by the Bank, and (b) shall survive the making by the Bank of any
of the Loans as herein contemplated, and shall continue in full force and effect
so long as any amount due under this Credit Agreement or the Note or any of the
other Loan Documents remains outstanding or the Bank has any obligation to make
any Loans, and for such further time as may be otherwise expressly specified in
this Credit Agreement. All statements contained in any certificate or other
paper delivered to the Bank at any time by or on behalf of the Borrower or any
of its Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrower or such Subsidiary hereunder.
16.2. NO MARSHALLING. The Bank shall not be required to marshal any
present or future claims, rights, or remedies which it has or may have against
the Borrower or any of its Subsidiaries in respect of the Obligations (or any of
them) of the Borrower under this Agreement, or to resort to such claims, rights,
or remedies in any particular order. To the extent that it lawfully may,
Borrower hereby agrees
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that it will not invoke any law which might cause delay in or impede the
enforcement of the rights of the Bank under this Agreement or any other Loan
Document, and to the fullest extent it lawfully may, Borrower hereby irrevocably
waives the benefits of all such laws.
17. ASSIGNMENT AND PARTICIPATION.
17.1. CONDITIONS TO ASSIGNMENT BY BANK. The Bank may assign all or a
portion of its interests, rights and obligations under this Credit Agreement,
including all or a portion of the Revolving Credit Commitment and the same
portion of the Loans at the time owing to it and the Note held by it at any
time.
17.2. PARTICIPATIONS. The Bank may sell participations to one or more
banks or other entities in all or a portion of the Bank's rights and obligations
under this Credit Agreement and the other Loan Documents; provided that any such
sale or participation shall not affect the rights and duties of the Bank
hereunder to the Borrower.
17.3. DISCLOSURE. The Borrower agrees that in addition to disclosures
made in accordance with standard and customary banking practices the Bank may
disclose information obtained by the Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
provided that such assignees or participants or potential assignees or
participants shall agree (a) to treat in confidence such information unless such
information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and
upon prior notice to the Borrower (provided that the failure to provide such
notice in no way exposes the Bank to any liability whatsoever) and (c) not to
make use of such information for purposes of transactions unrelated to such
contemplated assignment or participation.
17.4. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of the Bank.
18. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Note shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by telegraph or facsimile and
confirmed by delivery via courier or postal service, addressed as follows:
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(a) if to the Borrower, at Seven Laser Lane, Wallingford,
Connecticut 06492, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, fax number ▇▇▇-▇▇▇-▇▇▇▇,
or at such other address or fax number for notice as the Borrower shall
last have furnished in writing to the Person giving the notice; and
(b) if to the Bank, at CityPlace II, 5th Floor, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice
President, fax number ▇▇▇-▇▇▇-▇▇▇▇, or such other address or fax number
for notice as the Bank shall last have furnished in writing to the
Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the fourth Business Day following the mailing thereof.
19. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
STATE OF CONNECTICUT AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF SAID STATE OF CONNECTICUT (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OF LAW OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY
SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF CONNECTICUT OR ANY
FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF
SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER
BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 18. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY
SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
20. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
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21. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought. A facsimile of an executed
counterpart of this Credit Agreement or any other Loan Document shall have the
same effect as the original executed counterpart.
22. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 24.
23. WAIVER OF JURY TRIAL; PJR WAIVER.
The Borrower and the Bank hereby waive their right to a jury trial with
respect to any action or claim arising out of any dispute in connection with
this Credit Agreement, the Note or any of the other Loan Documents, any rights
or obligations hereunder or thereunder or the performance of such rights and
obligations. The Borrower hereby waives any right it may have to claim or
recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages.
The Borrower also waives its rights to notice and hearing to the extent
allowed by any law or regulation with respect to any prejudgment remedy which
holder may desire to use, and further waive its rights to request that holder
post a bond, with or without surety, to protect Borrower against damages that
may be caused by any prejudgment remedy sought or obtained by the Bank. Borrower
further waives diligence, demand, presentment for payment, notice of nonpayment,
protest and notice of protest, and notice of any renewals or extensions of the
Obligations.
The Borrower (a) certifies that no representative, agent or attorney of
the Bank has represented, expressly or otherwise, that the Bank would not, in
the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Bank has been induced to enter into this Credit Agreement,
the other Loan Documents to which it is a party by, among other things, the
waivers and certifications contained herein.
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24. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement
to be given by the Bank may be given, and any term of this Credit Agreement, the
other Loan Documents or any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Borrower or any of its
Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or
such other instrument or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the Borrower and
the written consent of the Bank. No waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the Bank in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
25. NO OFFSET, ETC.
All payments by the Borrower hereunder shall be made without setoff or
counterclaim and free and clear of and without deduction for any foreign or
domestic taxes, levies, imposts, duties, charges, fees, deductions,
withholdings, compulsory loans, restriction or conditions of any nature now or
hereafter imposed or levied by any jurisdiction or any political subdivision
thereof or taxing or other authority therein unless the Borrower is required by
law to make such deduction or withholding. Except as otherwise expressly
provided in this Section 25, if any such obligation is imposed upon Borrower
with respect to any amount payabLE By it hereunder or under any of the other
Loan Documents, the Borrower will pay to the Bank, on the date on which such
amount is due and payable hereunder or under such other Loan Documents, such
additional amount in Dollars as shall be necessary to enable the Bank to
receive the same net amount which the Bank would have received on such due date
had no such obligation been imposed upon the Borrower. The Borrower will
deliver promptly to the Bank, certificates or other valid vouchers for all taxes
or other charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
26. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
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IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as of the date first set forth above.
TRANSACT TECHNOLOGIES INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its Executive Vice President and
Chief Financial Officer
▇▇▇▇▇▇▇ BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ VP
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Vice President