EXHIBIT 4.1
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), dated as of September ___, 1997,
is made and entered into by and between Precision Systems, Inc., a Delaware
corporation ("Borrower"), and _____________________, a _______________________.
WITNESSETH:
WHEREAS, __________________________ (each a "Lender" and collectively the
"Lenders") have each agreed to loan $2,000,000 to Borrower pursuant to the terms
and conditions of a Subscription Agreement dated as of September ___, 1997 (the
"Subscription Agreement");
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
Definitions
In addition to any terms defined elsewhere in this Agreement, the
following terms have the meanings indicated for purposes of this Agreement (such
definitions being equally applicable to the singular and plural forms of the
defined term):
"Acceleration" means that the Loans (i) shall not have been paid at the
Maturity Date, or (ii) shall have become due and payable prior to the Maturity
Date pursuant to Section 5.2.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such Person;
provided, however, that neither party to this Agreement shall be deemed to be an
Affiliate of the other party.
"Agreement" or "Loan Agreement" means this Loan Agreement, as amended from
time to time.
"Borrower" shall have the meaning set forth in the heading of this
Agreement.
"Business Day" means a day when national banks located in New York City
are open for business.
"Closing Date" means September ___, 1997.
"Event of Default" shall have the meaning set forth in Article 5 hereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any state,
province or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Indebtedness" of any Person means all liabilities, obligations and
reserves, contingent or otherwise of such Person.
"Loan" and "Loans" shall have the meanings set forth in Section 2.1
hereof.
1
"Material Adverse Effect" means a material adverse effect on the business,
assets, operations or financial condition of Borrower or on the ability of
Borrower to pay the Loans in accordance with the terms of this Agreement.
"Maturity" means any date on which the Loans become due and payable,
whether as stated on the Maturity Date or by virtue of mandatory prepayment, by
Acceleration or otherwise.
"Maturity Date" means January 1, 1999.
"Maximum Rate" shall have the meaning set forth in Section 2.2 hereof.
"Note" means the promissory notes executed by Borrower in the form of
Exhibit A hereto and evidencing the Loans.
"Obligations" means all loans, advances, debts, liabilities, obligations,
covenants and duties owing to Lenders by Borrower, of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or other
instrument, arising under this Agreement, the Note and all extensions,
amendments, modifications, restructurings and refinancings of any of the above.
"Person" means any individual, corporation, partnership, trust,
association or other entity or organization, including any government, political
subdivision, agency or instrumentality thereof.
Any accounting term not defined herein shall have the meaning given to it
under GAAP.
ARTICLE 2
The Loans
2.1 Unsecured Loans. Subject to the terms and conditions of this
Agreement and in reliance on the representations and warranties of Borrower set
forth in this Agreement and the Subscription Agreement, each of the Lenders
agrees to loan (each a "Loan" and collectively the "Loans") to Borrower on the
Closing Date $2,000,000. Borrower's obligation to repay the Loans shallbe
evidenced by promissory notes of Borrower to each of the Lenders in the form
attached hereto as Exhibit A.
2.2 Interest.
(a) Interest. Each Loan shall bear interest from the Closing Date
on the unpaid principal amount thereof until such amount is paid (whether upon
Maturity, by Acceleration or otherwise) at a rate per annum equal to 8%.
Interest will be compounded quarterly at the end of each calendar quarter.
(b) Computation of Interest. Interest shall accrue daily and shall
be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days.
(c) Post-Maturity Interest. After Maturity (whether by
acceleration or otherwise) of the Loans, the Loans shall bear interest, payable
on demand, at a rate per annum equal to 12%.
(d) Maximum Interest Rate. Nothing in this Agreement shall require
Borrower to pay interest at a rate exceeding the maximum amount permitted by
applicable law to be charged by Lenders (the "Maximum Rate"). If the amount of
interest payable for the account of Lenders on any day in respect of the
immediately preceding interest computation period, computed pursuant to this
Article 2, would exceed the Maximum Rate, the amount of interest payable for its
account on such interest payment date shall automatically be reduced to the
Maximum Rate.
2.3 Payments.
(a) Payments of Loans. On the Maturity Date, Borrower shall pay to
Lenders the unpaid principal on the Loans.
(b) Payments of Interest. On September 30, 1998 and on the
Maturity Date, Borrower shall pay to Lenders all interest accrued and unpaid by
Borrower with respect to the Loans through and including the date of payment.
2
(c) Optional Prepayment. Borrower may at any time, and from time
to time, prepay the Loans in whole or in part, without penalty or premium;
provided that any such prepayment (if less than the prepayment of all unpaid
principal and interest on the Loans) shall be made in equal amounts to each of
the Lenders. Any prepayment shall be applied first to accrued and unpaid
interest and thereafter to the outstanding principal balance of the Loans.
(d) Payments. All payments of interest and principal shall be in
United States dollars and immediately available funds to Lenders at the
addresses for notices set forth in this Agreement and shall be made prior to
1:00 P.M. Eastern Time on the date of the scheduled payment. All payments
received after such time shall be credited the next succeeding Business Day, and
interest shall continue to accrue.
ARTICLE 3
[Intentionally Omitted]
ARTICLE 4
Covenants
Unless each Lender shall agree to waive compliance with the following
covenants, Borrower shall comply with the following provisions so long as the
Loans are outstanding:
4.1 Accounting Records. Borrower shall maintain adequate books and
accounts in accordance with GAAP consistently applied. Borrower shall deliver to
a Lender any information regarding the business or the finances of Borrower as
such Lender may reasonably request.
4.2 Corporate Existence. Borrower shall preserve and maintain its
corporate existence in good standing in the jurisdiction of its formation and
all of its licenses, privileges and franchises and other rights necessary or
desirable in the ordinary course of its businesses, except to the extent that
the failure to do so would not have a Material Adverse Effect.
4.3 Qualification to Do Business. Borrower shall qualify to do business
and shall be and remain in good standing in each jurisdiction in which the
nature of its business requires it to be so qualified, except to the extent that
the failure to be so qualified and in good standing would not have a Material
Adverse Effect.
4.4 Compliance with Laws. Borrower will observe and comply in all
material respects with all laws, ordinances, orders, judgments, rules,
regulations, certifications, franchises, permits, licenses, directions and
requirements of all Governmental Authorities, which now or at any time may be
applicable to Borrower, a violation of which could be reasonably expected to
have a Material Adverse Effect.
4.5 Taxes and Other Liabilities. Borrower will pay and discharge prior
to the date on which penalties attach thereto all taxes, assessments and
governmental charges, license fees and levies upon or with respect to Borrower,
and upon the income, profits and property of Borrower, unless and to the extent
that such taxes, assessments, charges, license fees and levies are being
contested in good faith and by appropriate proceedings diligently conducted by
Borrower, and provided that such reserve or other appropriate provisions as are
required in accordance with GAAP will have been made therefor except to the
extent that the failure to do so would not have a Material Adverse Effect.
4.6 Maintenance of Property. Borrower shall (i) maintain, keep and
preserve all of its material properties in good repair, working order and
condition and from time to time make all necessary and proper repairs, renewals,
replacement and improvements thereto, and (ii) maintain, preserve and protect
all franchises, licenses, copyrights, patents and trademarks material to its
Business.
4.7 Notification of Events of Default and Adverse Developments. Borrower
shall promptly notify Lenders of the occurrence of (i) any Event of Default or
any event which, upon the lapse of time or the giving of notice or both, would
constitute an Event of Default hereunder; (ii) any event, development or
circumstance whereby any financial statements most recently furnished to Lenders
fail in any material respect to present fairly, in accordance with GAAP, the
financial condition and operating results of Borrower as of the date of such
financial statements; and (iii) each and every event which would be an Event of
Default (or an event which with the giving of notice or lapse of time or both
would be an Event of Default) under any Indebtedness of Borrower, such notice to
include the names and addresses of the holders of such indebtedness and the
amount thereof.
3
ARTICLE 5
Events of Default
5.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
(a) Borrower shall fail to pay when due any payment of principal
or interest or any other sum payable hereunder;
(b) Borrower shall default in the performance of any of its
material agreements under any provision of this Agreement;
(c) Any warranty or representation made by Borrower in the
Subscription Agreement shall be untrue in any material respect as of the Closing
Date;
(d) Borrower shall institute a voluntary case seeking liquidation
or reorganization under Chapter 7 or Chapter 11, respectively, of the United
States Bankruptcy Code, or shall consent to the institution of an involuntary
case thereunder against it; or Borrower shall file a petition initiating or
shall otherwise institute any similar proceeding under any other applicable
federal or state law, or shall consent thereto; or Borrower shall apply for, or
by consent or acquiescence there shall be an appointment of a receiver,
liquidator, sequestrator, trustee or other officer with similar powers; or
Borrower shall make an assignment for the benefit of creditors; or Borrower
shall admit in writing its inability to pay its debts generally as they become
due; or, if an involuntary case shall be commenced seeking the liquidation or
reorganization of Borrower under Chapter 7 or Chapter 11, respectively, of the
United States Bankruptcy Code, or any similar proceeding shall be commenced
against Borrower under any other applicable federal or state law, and (i) the
petition commencing the involuntary case is not timely controverted; or (ii) the
petition commencing the involuntary case is not dismissed within 30 days of its
filing; or (iii) an interim trustee is appointed to take possession of all or a
portion of the property, to operate all or any part of the business of Borrower,
or both; or (iv) an order for relief shall have been issued or entered therein;
or a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee or other officer;
5.2 Acceleration. If any Event of Default described in Section 5.l(a) or
(d) shall occur, all Loans shall become immediately due and payable, all without
notice of any kind. If any other Event of Default described in Section 5.1
(other than an Event of Default described in Section 5.1(a) or (d)) shall occur,
upon ten (10) days notice, any Lender may declare all Loans to be due and
payable, whereupon all Loans shall immediately become due and payable provided
that Borrower shall not have cured such Event of Default prior to the expiration
of such period. Any such declaration made pursuant to this Section 5.2 may be
rescinded by the Lender or Lenders making such declaration.
ARTICLE 6
Miscellaneous
6.1 Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon, and the benefits thereof shall inure to, the parties
hereto and their respective permitted successors and assigns.
6.2 Sale of Interests. Lenders agree that they shall not be entitled to
sell, assign, transfer, negotiate or grant participations in all or any part of
or any interest in, its rights and obligations under this Agreement without the
prior written consent of Borrower.
6.3 Lost Promissory Note. Upon receipt of evidence reasonably
satisfactory to Borrower of the ownership of and the loss, theft, destruction or
mutilation of a Note and indemnification reasonably satisfactory to Borrower or,
in the case of any mutilation, upon the surrender of such Note for cancellation
to Borrower at its principal office, Borrower at its expense (except as provided
below) will execute and deliver to a Lender, in lieu thereof a new Note of like
tenor, dated so that there will be no loss of interest on such lost, stolen,
destroyed or mutilated Note. Borrower may require payment by Lender of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such replacement. Any Note in lieu of which any such new Note has been so
executed and delivered by Borrower shall not be deemed to be an outstanding Note
for any purpose of this Agreement.
4
6.4 No Implied Waiver. No delay or omission to exercise any right, power
or remedy accruing to Lenders upon any breach or default of Borrower under this
Agreement shall impair any such right, power or remedy of Lenders, nor shall it
be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default occurring thereafter, nor
shall any waiver of any single breach or default be deemed a wavier of any other
breach or default occurring theretofore or thereafter.
6.5 Amendments; Waivers. No amendments, modification or waiver of or
consent with respect to, any provision of this Agreement, shall be effective
unless the same shall be in writing and signed and delivered by Lenders and
Borrower. Any amendment, modification, waiver or consent hereunder shall be
effective only in the specific instance and for the specific purpose for which
given.
6.6 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall be, only as to such jurisdiction,
ineffective to the extent of such prohibition or unenforceability, but all the
remaining provisions of this Agreement shall remain valid.
6.7 Notices. Any notice which a Lender or Borrower may be required or
may desire to give to the other parties under any provision of this Agreement
shall be in writing by overnight delivery service, certified mail, telex or
electronic facsimile transmission and shall be deemed to have been given or made
when received and addressed as follows:
To Lenders:
If to Borrower, at:
Precision Systems, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy similarly addressed to:
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Esquire
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Any party may change the address to which all notices, requests and other
communications are to be sent to it by giving written notice of such address
change to the otherparties in conformity with this paragraph, but such change
shall not be effective until notice of such change has been received by the
other parties.
6.8 Interpretation. This Agreement, together with the Exhibit to this
Agreement and the Subscription Agreement, is intended by Lender and Borrower as
a final expression of their agreement with respect to the subject matter hereof
and is intended as a complete statement of the terms and conditions of such
agreement.
5
6.9 No Right of Set Off. Borrower will not be entitled to offset against
any of its financial obligations to Lenders under this Agreement, any obligation
owed to it or any of its Affiliates by or for Lender or any Affiliates of
Lender.
6.10 Governing Law. THE VALIDITY, CONSTRUCTION AND EFFECT OF THIS
AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS. AT THE OPTION OF LENDER, AN ACTION MAY BE
BROUGHT TO ENFORCE THE OBLIGATIONS AND THIS AGREEMENT IN ANY COURT LOCATED IN
THE STATE OF DELAWARE, U.S.A. OR IN ANY OTHER COURT IN WHICH VENUE AND
JURISDICTION ARE PROPER.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
6.12 Headings and Sections. Captions, headings and the table of contents
in this Agreement are for convenience only, and are not to be deemed part of
this Agreement. Unless otherwise specified, references in this Agreement to
Sections, Articles, Exhibits or Schedules are references to sections and
articles of and Exhibits and Schedules to, this Agreement.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
LENDERS: __________________________
a ________________________
By: ______________________
Its: _____________________
BORROWER: Precision Systems, Inc.,
a Delaware corporation
By:_________________________________
Its:________________________________
7