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EXHIBIT 10.7
CREDIT AGREEMENT
DATED AS OF NOVEMBER 30, 1998
BETWEEN
THE CHASE MANHATTAN BANK
AND
DENDRITE INTERNATIONAL, INC.
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.................................................... 1
1.01. CERTAIN DEFINED TERMS.......................................... 1
1.02. OTHER INTERPRETIVE PROVISIONS.................................. 13
1.03. ACCOUNTING PRINCIPLES.......................................... 14
ARTICLE II - THE CREDIT.................................................... 14
2.01. AMOUNTS AND TERMS OF COMMITMENT................................ 14
2.02. REVOLVING LOAN NOTE............................................ 14
2.03. PROCEDURE FOR BORROWING........................................ 14
2.04. CONVERSION AND CONTINUATION ELECTIONS.......................... 15
2.05. VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENT............... 16
2.06. OPTIONAL PREPAYMENTS........................................... 17
2.07. REPAYMENT...................................................... 17
2.08. INTEREST....................................................... 17
2.09. FEES........................................................... 18
2.10. COMPUTATION OF FEES AND INTEREST............................... 19
2.11. PAYMENTS....................................................... 19
ARTICLE III - TAXES, YIELD PROTECTION AND ILLEGALITY....................... 20
3.01. TAXES.......................................................... 20
3.02. ILLEGALITY..................................................... 21
3.03. INCREASED COSTS AND REDUCTION OF RETURN........................ 21
3.04. FUNDING LOSSES................................................. 22
3.05. INABILITY TO DETERMINE RATES................................... 22
3.06. RESERVES ON OFFSHORE RATE LOANS................................ 23
3.07. CERTIFICATES OF BANK........................................... 23
3.08. SURVIVAL....................................................... 23
ARTICLE IV - CONDITIONS PRECEDENT.......................................... 23
4.01. CONDITIONS OF INITIAL CREDIT EXTENSIONS........................ 23
4.02. CONDITIONS TO ALL CREDIT EXTENSIONS............................ 25
ARTICLE V - REPRESENTATIONS AND WARRANTIES................................. 25
5.01. CORPORATE EXISTENCE AND POWER.................................. 25
5.02. AUTHORIZATION; NO CONTRAVENTION................................ 26
5.03. GOVERNMENTAL AUTHORIZATION..................................... 26
5.04. BINDING EFFECT................................................. 26
5.05. LITIGATION..................................................... 27
5.06. NO DEFAULT..................................................... 27
5.07. ERISA COMPLIANCE............................................... 27
5.08. USE OF PROCEEDS; MARGIN REGULATIONS............................ 28
5.09. TITLE TO PROPERTIES............................................ 28
5.10. TAXES.......................................................... 28
5.11. FINANCIAL CONDITION............................................ 28
5.12. ENVIRONMENTAL MATTERS.......................................... 29
5.13. REGULATED ENTITIES............................................. 29
5.14. NO BURDENSOME RESTRICTIONS..................................... 29
5.15. COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC.............. 29
5.16. SUBSIDIARIES................................................... 29
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5.17. INSURANCE...................................................... 29
5.18. FULL DISCLOSURE................................................ 30
5.19. YEAR 2000...................................................... 30
5.20. SUBSIDIARY GUARANTEES.......................................... 30
ARTICLE VI - AFFIRMATIVE COVENANTS......................................... 30
6.01. FINANCIAL STATEMENTS........................................... 30
6.02. CERTIFICATES; OTHER INFORMATION................................ 31
6.03. NOTICES........................................................ 32
6.04. PRESERVATION OF EXISTENCE, ETC................................. 33
6.05. MAINTENANCE OF PROPERTY........................................ 33
6.06. INSURANCE...................................................... 33
6.07. PAYMENT OF OBLIGATIONS......................................... 33
6.08. COMPLIANCE WITH LAWS........................................... 34
6.09. COMPLIANCE WITH ERISA.......................................... 34
6.10. INSPECTION OF PROPERTY AND BOOKS AND RECORDS................... 34
6.11. ENVIRONMENTAL LAWS............................................. 34
6.12. USE OF PROCEEDS................................................ 34
6.13. SUBSIDIARY GUARANTORS.......................................... 34
ARTICLE VII - NEGATIVE COVENANTS........................................... 35
7.01. LIMITATION ON LIENS............................................ 35
7.02. DISPOSITION OF ASSETS.......................................... 36
7.03. CONSOLIDATIONS AND MERGERS..................................... 37
7.04. LOANS AND INVESTMENTS.......................................... 37
7.05. LIMITATION ON INDEBTEDNESS..................................... 37
7.06. TRANSACTIONS WITH AFFILIATES................................... 38
7.07. USE OF PROCEEDS................................................ 38
7.08. CONTINGENT OBLIGATIONS......................................... 39
7.09. LEASE OBLIGATIONS.............................................. 39
7.10. CHANGE IN BUSINESS............................................. 40
7.11. ACCOUNTING CHANGES............................................. 40
7.12. FINANCIAL COVENANTS............................................ 40
7.13. OPTIONAL PAYMENTS OF SUBORDINATED DEBT AND
MODIFICATIONS OF RELATED DEBT................................. 40
7.14. NO LOSSES...................................................... 40
ARTICLE VIII - EVENTS OF DEFAULT........................................... 41
8.01. EVENT OF DEFAULT............................................... 41
8.02. REMEDIES....................................................... 43
8.03. RIGHTS NOT EXCLUSIVE........................................... 43
ARTICLE IX - MISCELLANEOUS................................................. 44
9.01. AMENDMENTS AND WAIVERS......................................... 44
9.02. NOTICES........................................................ 44
9.03. NO WAIVER; CUMULATIVE REMEDIES................................. 44
9.04. COSTS AND EXPENSES............................................. 45
9.05. COMPANY INDEMNIFICATION........................................ 45
9.06. PAYMENTS SET ASIDE............................................. 45
9.07. SUCCESSORS AND ASSIGNS......................................... 46
9.08. ASSIGNMENTS, PARTICIPATIONS, ETC............................... 46
9.09. CONFIDENTIALITY................................................ 47
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9.10. SET-OFF........................................................ 47
9.11. COUNTERPARTS................................................... 47
9.12. SEVERABILITY................................................... 48
9.13. NO THIRD PARTIES BENEFITED..................................... 48
9.14. GOVERNING LAW AND JURISDICTION................................. 48
9.15. WAIVER OF JURY TRIAL........................................... 48
9.16. TERMINATION OF EXISTING CREDIT................................. 49
9.17. ENTIRE AGREEMENT............................................... 49
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AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
November 30, 1998, between Dendrite International, Inc. (the "Company") and The
Chase Manhattan Bank (the "Bank").
WHEREAS, the Bank, the Company, and certain Subsidiaries of the Company
entered into that certain Credit Agreement dated May 5, 1995 (the "Existing
Credit Agreement") pursuant to which the Bank, among other things, agreed,
subject to the terms thereof, to make revolving credit loans from time to time
to the Company, and the Subsidiaries of the Company that were party to the
Existing Credit Agreement, in an aggregate maximum amount of $5,000,000;
WHEREAS, the Bank and the Company have agreed to amend and restate the
terms of the Existing Credit Agreement to, among other things, (i) increase the
amount of the Bank's Commitment to $15,000,000, (ii) release the security
interests granted to the Bank by the Company and certain of its Subsidiaries,
and (iii) make the Company the sole borrowing party; and
WHEREAS, the Bank has agreed to make available to the Company a
revolving credit facility upon the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I - DEFINITIONS
1.01. Certain Defined Terms.
The following terms have the following meanings:
"Acceptable Acquisition" means any Acquisition which (a) has been
either (i) approved by the Board of Directors of the corporation which is the
subject of such Acquisition or (ii) recommended by such Board to the
shareholders of such corporation; and (b) is for a business within similar or
complementary lines of business as conducted by the Company on the date hereof;
and (c) whose total purchase price is $50,000,000 or less; and (d) when added to
the purchase price of all other Acquisitions within the twelve (12) months
immediately preceding the date on which such Acquisition closes, shall not
render the aggregate purchase prices for Acquisitions in such period greater
than $50,000,000 (of which no more than $20,000,000 shall be capital
contributions or commitments to make capital contributions to any partnerships
or joint ventures in which the Company or any of its Subsidiaries owns less than
fifty percent (50%) of the partnership interests or joint venture interests).
"Acquisition" means any transaction pursuant to which the Company or
any of its Subsidiaries (a) acquires or commits to acquire equity securities (or
warrants, options or other
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rights to acquire such securities) of any corporation other than the Company or
any corporation which is not then a Subsidiary of the Company, pursuant to a
solicitation of tenders therefor, or in one or more negotiated block, market or
other transactions not involving a tender offer, or a combination of any of the
foregoing, or (b) makes or commits to make any corporation a Subsidiary of the
Company, or causes any such corporation to be merged into the Company or any of
its Subsidiaries, in any case pursuant to a merger, purchase of assets or any
reorganization providing for the delivery or issuance to the holders of such
corporation's then outstanding securities, in exchange for such securities, of
cash or securities of the Company or any of its Subsidiaries, or a combination
thereof, or (c) purchases all or substantially all of the business or assets of
any corporation or (d) makes or commits to make capital contributions to any
partnership or joint venture in exchange for a proportionate interest therein.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
"Agreement" means this Credit Agreement as such agreement may be
amended, modified or restated from time to time.
"Assignee" has the meaning specified in subsection 9.08(a).
"Attorney Costs" means and includes all fees and reasonable
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.) as amended from time to time.
"Base Rate" means, for any day, the higher of: (a) 0.50% per annum
above the latest Federal Funds Rate; and (b) the rate of interest in effect for
such day as publicly announced from time to time by the Bank as its "reference
rate." (The "reference rate" is a rate set by the Bank based upon various
factors including The Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.) Any change
in the reference rate announced by the Bank shall take effect at the opening of
business on the day specified in the public announcement of such change.
"Base Rate Loan" means a Revolving Loan that bears interest based on
the Base Rate.
"Base Rate Margin" means the percentage determined in accordance with
Section 2.08(b).
"Borrowing" means a borrowing hereunder consisting of Revolving Loans
of the same
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Type made to the Company on the same day by the Bank under ARTICLE II, and,
other than in the case of Base Rate Loans, having the same Interest Period.
"Borrowing Date" means any date on which a Borrowing occurs under
Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in New York City and are authorized or required by law
to close and, if the applicable Business Day relates to any Offshore Rate Loan,
means such a day on which dealings are carried on in the applicable offshore
dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Cash Equivalents" means (a) direct obligations of the United States of
America or any agency thereof with maturities of two years or less from the date
of acquisition; (b) obligations issued or guaranteed by any agency of the United
States of America with maturities of two years or less from the date of
acquisition; (c) repurchase agreements fully collateralized by direct
obligations of the United States of America or by any agency of the United
States of America; (d) corporate debt (commercial paper, master notes and medium
term notes) issued by a domestic corporation rated at least "A-1" or "A" by
Standard & Poor's Corporation or "P-1" or "A" by ▇▇▇▇▇'▇ Investors Service,
Inc.; (e) certificates of deposit (domestic or foreign) with maturities of one
year or less from the date of acquisition issued by any commercial bank (with a
rating of A-1 by Standard & Poor's or P-1 by Moody's) operating within the
United States of America having capital and surplus in excess of $200 million;
and (f) any money market mutual fund that invests in (a), (b), (c), (d) or (e)
above having assets of at least $500 million.
"Closing Date" means the date on which all conditions precedent set
forth in Section 4.01 are satisfied or waived by the Bank (or, in the case of
subsection 4.01(j), waived by the Person entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment" has the meaning specified in Section 2.01.
"Commitment Fee Rate" means the percentage determined in accordance
with Section 2.08(b).
"Company" has the meaning specified in the introductory clause hereto.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit D.
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"Consolidated" means the consolidation of financial reporting between
related entities in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise for the primary
purpose of assuring or holding harmless the holder of any such primary
obligation against loss in respect thereof (each, a "Guaranty Obligation"); (b)
with respect to any Surety Instrument issued for the account of that Person or
as to which that Person is otherwise liable for reimbursement of drawings or
payments; (c) to purchase any materials, supplies or other property from, or to
obtain the services of, another Person if the relevant contract or other related
document or obligation requires that payment for such materials, supplies or
other property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or tendered,
or such services are ever performed or tendered, or (d) in respect of any Swap
Contract. The amount of any Contingent Obligation shall, in the case of Guaranty
Obligations, be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made (or any lower
stated cap on such Person's liability in respect thereof) or, if not stated or
if indeterminable, the maximum reasonably anticipated liability in respect
thereof and, in the case of Contingent Obligations in respect of Swap Contracts,
shall be equal to the Swap Termination Value.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section
2.04, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Credit Extension" means and includes the making of any Revolving Loans
hereunder.
"Current Assets" means all assets of the Company treated as current
assets in accordance with GAAP, excluding, however, from the determination of
current assets any prepaid assets.
"Current Liabilities" means all liabilities of the Company treated as
current liabilities in accordance with GAAP, including without limitation (a)
all obligations payable on demand or written one year after the date in which
the determination is made and (b) installments and sinking fund payments
required to be made within one year after the date on which
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determination is made, but excluding all such liabilities or obligations which
are renewable or extendable at the option of the Company to a date more than one
year from the date of determination.
"Current Ratio" of the Company means the ratio of (i) Current Assets to
(ii) Current Liabilities each determined on a Consolidated basis.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Disclosed Claims" has the meaning specified in Section 5.05.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Domestic Subsidiary" means any Subsidiary incorporated, formed or
organized in the United States.
"EBIT" of any Person for any period means the sum of (a) Net Income of
such Person for such period; (b) all amounts treated as expenses for interest
for such period to the extent included in the determination of such Net Income;
and (c) all taxes accrued for such period on or measured by income to the extent
included in the determination of such Net Income; provided, however, that Net
Income shall be computed for the purposes of this definition without giving
effect to extraordinary non-cash losses or extraordinary gains for such period.
"EBITDA" of any Person for any period means the sum of (a) Net Income
of such Person for such period; (b) all amounts treated as expenses for
depreciation and interest and the amortization of intangibles of any kind for
such period to the extent included in the determination of such Net Income; and
(c) all taxes accrued for such period on or measured by income to the extent
included in the determination of such Net Income; provided, however, that Net
Income shall be computed for the purposes of this definition without giving
effect to extraordinary non-cash losses or extraordinary gains for such period.
"Effective Amount" means with respect to any Revolving Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to
any Borrowings and prepayments or repayments of Revolving Loans occurring on
such date.
"Eligible Assignee" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $500,000,000; and/or (b) a Person that is primarily
engaged in the business of commercial banking and that is (i) a Subsidiary of
the Bank, (ii) a Subsidiary of a Person of which the Bank is a Subsidiary, or
(iii) a Person of which the Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
common law
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duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations which is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.
"Event of Default" means any of the events or circumstances, including
the thresholds and cure periods specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning set forth in the recitals
hereto.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including any
such successor, "H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Bank of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on
that day by each of three leading brokers of Federal funds transactions in New
York City selected by the Bank.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic
Subsidiary.
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"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"Funded Debt" means (a) all indebtedness for borrowed money; (b) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the ordinary
course of business on ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all obligations
evidenced by notes, bonds, debentures or similar instruments, including
obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses; and (e) all obligations with respect to Capital
Leases.
"Further Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar charges
(including, without limitation, net income taxes and franchise taxes), and all
liabilities with respect thereto, imposed by any jurisdiction on account of
amounts payable or paid pursuant to Section 3.01.
"GAAP" means generally accepted accounting principles set forth from
time to time 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 agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the Closing Date.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Equity Sum" has the meaning specified in Section 6.13.
"Guaranty Equity Threshold" has the meaning specified in Section 6.13.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property); (f) all obligations with respect to capital leases; (g)
all indebtedness referred to in clauses (a) through (f) above secured by (or for
which the holder of such Indebtedness has an
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existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness; provided that the amount of such indebtedness shall equal the
lesser of (i) the amount secured, and (ii) the fair market value of the
collateral secured; and (h) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through (g)
above.
"Indemnified Liabilities" has the meaning specified in Section 9.05.
"Indemnified Person" has the meaning specified in Section 9.05.
"Independent Auditor" has the meaning specified in subsection 6.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or other
Governmental Authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors, or (b)
any general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy Code.
"Interest Coverage Ratio" means for any Person as of the end of any
fiscal quarter, the ratio of (i) the EBIT of such Person for the prior four
consecutive fiscal quarters, to (ii) the Interest Expense of such Person for the
prior four consecutive fiscal quarters.
"Interest Expense" shall mean for any twelve month period the aggregate
amount of interest expense of the Company and its Subsidiaries for the last
twelve months as determined on a consolidated basis in accordance with GAAP.
"Interest Payment Date" means, as to any Loan other than a Base Rate
Loan, the last day of each Interest Period applicable to such Loan and, as to
any Base Rate Loan, the last Business Day of each calendar quarter and each date
such Loan is converted into another Type of Loan, provided, however, that if any
Interest Period for an Offshore Rate Loan is greater than three months, the date
that is three months after the beginning of such Interest Period and after each
Interest Payment Date thereafter is also an Interest Payment Date.
"Interest Period" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Offshore Rate Loan,
and ending on the date one, two, three or six months thereafter (and any other
period that is 12 months or less and is consented to by the Bank in the given
instance) as selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Offshore Rate Loan,
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 preceding Business Day;
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(ii) any Interest Period pertaining to an Offshore Rate Loan that
begins on the last 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 Business Day
of the calendar month at the end of such Interest Period; and
(iii) no Interest Period for any Revolving Loan shall extend
beyond the Revolving Termination Date.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Lending Office" means, the office or offices of the Bank specified by
the Bank from time to time as its "Lending Office" with respect to this
Agreement.
"Leverage Ratio" as to any Person at the end of any fiscal quarter
means the ratio of (i) Funded Debt of such Person on such date, to (ii) EBITDA
of such Person for the four consecutive fiscal quarters then ending, all as
determined on a Consolidated basis.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the Uniform Commercial Code or any comparable law) and any
contingent or other agreement to provide any of the foregoing, but not including
the interest of a lessor under an operating lease.
"Loan" means an extension of credit by the Bank to the Company under
ARTICLE II in the form of a Revolving Loan.
"Loan Documents" means this Agreement, and all other documents
delivered by or on behalf of the Company to the Bank in connection herewith.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company or the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of the
Company or any Subsidiary to perform under any Loan Document and to avoid any
Event of Default; or (c) a material adverse effect upon the legality, validity,
binding effect or enforceability against the Company of any Loan Document.
"Material Subsidiary" means any Subsidiary Guarantor and any other
Subsidiary which, as reflected on the latest financial statements delivered to
the Bank under Section 6.01(a) or Section 6.01(b) hereof, has (i) total assets
in excess of $750,000, or (ii) EBIT during the prior
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four consecutive fiscal quarters of more than $250,000.
"Multiemployer Plan" means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate
makes, is making, or is obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make, contributions.
"Net Income" of the Company for any period shall mean the Company's
consolidated net income (or net loss) for such period determined in accordance
with GAAP.
"Net Worth" of the Company at any time shall mean all amounts which, in
accordance with GAAP, would be included under Shareholder's Equity on a
consolidated balance sheet of the Company and its Subsidiaries (excluding
foreign currency translation adjustments).
"Notice of Borrowing" means a notice in substantially the form of
Exhibit A.
"Notice of Conversion/Continuation" means a notice in substantially the
form of Exhibit B.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document owing by the Company to the
Bank, or any Indemnified Person, whether direct or indirect (including those
acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising.
"Offshore Rate" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of interest
per annum (rounded upward to the next 1/16th of 1%) at which deposits for such
Interest Period and in an amount approximately equal to the amount of the
Offshore Rate Loan during such Interest Period would be offered by the London
office of the Bank to major banks in the London eurodollar market at or about
11:00 a.m. (London time) two Business Days prior to the commencement of such
Interest Period.
"Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.
"Offshore Rate Margin" means the percentage determined in accordance
with Section 2.08(b).
"Organization Documents" means, for any corporation or limited
liability company, the certificate or articles of incorporation, or certificate
of formation, the bylaws, operating agreement, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable resolutions of
the board of directors (or any committee thereof) of such corporation or limited
liability company.
"Other Taxes" means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery,
performance, enforcement or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents (excluding in all events income taxes and
franchise taxes based on income).
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"Participant" has the meaning specified in subsection 9.08(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors, maintains, or to
which it makes, is making, or is obligated to make contributions, or in the case
of a multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"Permitted Liens" has the meaning specified in Section 7.01.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Relationship Guarantee Program" means the Company's practice of
issuing checks in amounts up to $100,000 to certain customers, payable at the
customer's discretion, as a measure of the Company's commitment to customer
satisfaction.
"Reportable Event" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event for
which the 30-day notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Required Guarantor" means (i) any Subsidiary owning trademarks or
other intangibles material to the conduct of the business of Company and its
Subsidiaries, (ii) any Domestic Subsidiary with (x) Shareholder's Equity greater
than $1,000,000 or (y) EBIT for any four consecutive fiscal quarters greater
than $1,000,000
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer, president or
chief financial officer of the Company; or, with respect to compliance with
financial covenants, the chief financial officer or the treasurer of the
Company.
"Revolving Loan" has the meaning specified in Section 2.01, and may be
a Base Rate Loan or an Offshore Rate Loan (each, a "Type" of Revolving Loan).
"Revolving Loan Note" has the meaning specified in Section 2.02.
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"Revolving Termination Date" means the earlier to occur of:
(a) November 30, 2001; provided, however, that if such date
is not a Business Day, the Termination Date shall be the next
succeeding Business Day (or, if such next succeeding Business Day
falls in the next calendar month, the immediately preceding
Business Day); and
(b) the date on which the Commitments terminate in accordance
with Section 2.05 or Section 8.02 of this Agreement.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Shareholder's Equity" of any Person has the meaning assigned to that
term by GAAP.
"Subordinated Debt" means any unsecured Indebtedness of the Company (a)
no part of the principal of which is stated to be payable or is required to be
paid (whether by way of mandatory sinking fund, mandatory redemption, mandatory
prepayment or otherwise) prior to the Revolving Termination Date, and the
payment of the principal of and interest on which and other obligations of the
Company in respect thereof are subordinated to the prior payment in full of the
principal of and interest (including post-petition interest) on the Notes and
all other obligations and liabilities of the Company to the Bank hereunder on
terms and conditions first approved in writing by the Bank and (b) otherwise
containing terms, covenants and conditions satisfactory in form and substance to
the Bank, as evidenced by its prior written approval thereof.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business entity
of which more than 50% of the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Subsidiary Guarantor" means any Subsidiary that has executed and
delivered a Subsidiary Guaranty.
"Subsidiary Guaranty" means the guaranty of obligations of the Company
in the form and substance satisfactory to the Bank executed at any time by
Subsidiary Guarantors.
"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Swap Contract" means any agreement, whether or not in writing, that is
a rate swap, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap or option, bond, note or ▇▇▇▇ option,
interest rate option, forward foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap, swaption, currency option
or any other, similar transaction (including any option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing any or
all of the foregoing.
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"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
▇▇▇▇-to-market value(s) for such Swap Contracts, as determined by the Company
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Swap Contracts (which may include the Bank).
"Taxes" means any and all present or future taxes, levies, assessments,
imposts, duties, deductions, fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case of the Bank taxes
imposed on or measured by its net income by the jurisdictions (or any political
subdivision thereof) under the laws of which the Bank is organized or maintains
a lending office.
"Type" has the meaning specified in the definition of "Revolving Loan."
"Unfunded Pension Liability" means the excess of all Plans' aggregate
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of those Plans' assets, determined in accordance with the assumptions used for
funding such Pension Plans pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
"Wholly-Owned Subsidiary" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of each
class having ordinary voting power, and 100% of the capital stock of every other
class, in each case, at the time as of which any determination is being made, is
owned, beneficially and of record, by the Company, or by one or more of the
other Wholly-Owned Subsidiaries, or both.
1.02. Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) 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."
(c) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include
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all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing
or interpreting the statute or regulation.
(d) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation
of this Agreement.
1.03. Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Company.
ARTICLE II - THE CREDIT
2.01. Amounts and Terms of Commitment.
The Bank agrees, on the terms and conditions set forth herein, to make
loans to the Company (each such loan, a "Revolving Loan") from time to time on
any Business Day during the period from the Closing Date to the Revolving
Termination Date, in an aggregate amount not to exceed at any time outstanding,
$15,000,000 (such amount, as the same may be reduced under Section 2.05, the
"Commitment"); provided, however, that, after giving effect to any Borrowing of
Revolving Loans, the Effective Amount of all outstanding Revolving Loans, shall
not at any time exceed the Commitment. Within the limits of the Commitment, and
subject to the other terms and conditions hereof, the Company may borrow under
this Section 2.01, prepay under Section 2.06 and reborrow under this Section
2.01.
2.02. Revolving Loan Note.
The Loans made by the Bank shall be evidenced by a single note in the
form of Exhibit C (the "Revolving Loan Note") duly executed by the Company. The
Bank shall note on the schedules annexed to the Revolving Loan Note the date,
amount and maturity of each Loan made by it and the amount of each payment of
principal made by the Company with respect thereto. The Bank is irrevocably
authorized by the Company to make such notation on the Revolving Loan Note and
such records shall be conclusive absent manifest or proven error; provided,
however, that the failure of the Bank to make, or an error in making, a notation
thereon with respect to any Loan shall not limit or otherwise affect the
obligations of the Company hereunder or under the Revolving Loan Note to the
Bank.
2.03. Procedure for Borrowing.
(a) Each Borrowing of Revolving Loans shall be made upon the
Company's irrevocable written notice delivered to the Bank in the form
of a Notice of Borrowing
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(which notice must be received by the Bank prior to 12:00 noon New York
City time) (i) three (3) Business Days prior to the requested Borrowing
Date, in the case of Offshore Rate Loans and (ii) on the requested
Borrowing Date, in the case of Base Rate Loans, specifying:
(i) the amount of the Borrowing, which shall be (x) with
respect to Offshore Rate Loans in an aggregate minimum amount of
$500,000 or any multiple of $100,000 in excess thereof, (y) with
respect to Base Rate Loans in an aggregate principal amount of
$100,000 or a multiple of $100,000 in excess thereof;
(ii) the requested Borrowing Date, which shall be a Business
Day;
(iii) the Type of Loan; and
(iv) the duration of the Interest Period, if any, applicable
to such Loans included in such notice. If the Notice of Borrowing
fails to specify the duration of the Interest Period for any
Borrowing comprised of Offshore Rate Loans, such Interest Period
shall be three months;
provided, however, that with respect to any Borrowing to be made on the Closing
Date, the Notice of Borrowing shall be delivered to the Bank not later than
12:00 noon (New York City time) one Business Day before the Closing Date and
such Borrowing will consist of Base Rate Loans only.
(b) Not later than 1:00 p.m. New York City time on the Borrowing
Date requested by the Company the proceeds of all Loans will be made
available to the Company by the Bank by crediting the account of the
Company on the books of the Bank with the aggregate of the amounts made
available by the Bank.
(c) After giving effect to any Borrowing, unless the Bank shall
otherwise consent, there may not be more than ten different Interest
Periods in effect.
2.04. Conversion and Continuation Elections.
(a) The Company may, upon irrevocable written notice to the Bank
in accordance with subsection 2.04(b):
(i) elect, as of any Business Day, in the case of Base Rate
Loans to convert any such Loans (or any part thereof in an amount
not less than $500,000, or that is in an integral multiple of
$100,000 in excess thereof) into Offshore Rate Loans; or
(ii) elect, as of the last day of the applicable Interest
Period, to convert any Offshore Rate Loans having Interest Periods
expiring on such date (or any part thereof in an amount not less
than $500,000, or that is an integral multiple of $100,000 in
excess thereof) into Base Rate Loans; or
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(iii) elect as of the last day of the applicable Interest
Period, to continue Offshore Rate Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less
than $500,000, or that is in an integral multiple of $100,000 in
excess thereof);
provided that, if at any time the aggregate amount of Offshore Rate
Loans in respect of any Borrowing is reduced, by payment, prepayment,
or conversion of part thereof to be less than $500,000, such Offshore
Rate Loans shall automatically convert into Base Rate Loans, and on and
after such date the right of the Company to continue such Loans as, and
convert such Loans into, Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation
to be received by the Bank not later than 12:00 noon (New York City
time) at least (i) three Business Days in advance of the Conversion/
Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans and (ii) on the Conversion/Continuation Date, if
the Loans are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date, which shall be
a Business Day;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the Type of Loans resulting from the proposed conversion
or continuation; and
(D) in the case of conversions into Offshore Rate Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new
Interest Period to be applicable to such Offshore Rate Loans or if any
Default or Event of Default then exists, the Company shall be deemed to
have elected to convert such Offshore Rate Loans into Base Rate Loans
effective as of the expiration date of such Interest Period.
(d) Unless the Bank otherwise consents, during the existence of a
Default or Event of Default, the Company may not elect to have a Loan
converted into or continued as an Offshore Rate Loan.
(e) After giving effect to any conversion or continuation of
Loans, unless the Bank shall otherwise consent, there may not be more
than ten different Interest Periods in effect.
2.05. Voluntary Termination or Reduction of Commitment.
The Company may, upon not less than four (4) Business Days' prior
notice to the Bank, terminate the Commitment, or, at any time or from time to
time, permanently reduce the Commitment by an aggregate minimum amount of
$5,000,000 or any multiple of $1,000,000 in
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excess thereof; unless, after giving effect thereto and to any prepayments of
Loans made on or before the effective date thereof, the Effective Amount of all
Revolving Loans would exceed the amount of the combined Commitment then in
effect. Once reduced in accordance with this Section, the Commitment may not be
increased. All accrued commitment fees to, but not including, the effective date
of any reduction or termination of Commitment, shall be paid on the effective
date of such reduction or termination.
2.06. Optional Prepayments.
The Company may, at any time or from time to time, upon not less than
three (3) Business Days' irrevocable notice to the Bank in the case of Offshore
Rate Loans, or upon irrevocable notice given not later than 12:00 noon (New York
City time) of the date of prepayment in the case of Base Rate Loans, ratably
prepay Loans in whole or in part, in minimum amounts of $500,000 or any multiple
of $100,000 in excess thereof in the case of Offshore Rate Loans and in minimum
amounts of $100,000 or any multiple of $100,000 in excess thereof in the case of
Base Rate Loans. Such notice of prepayment shall specify the date and amount of
such prepayment and the Type(s) of Loans to be prepaid. If such notice is given
by the Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to each such date on the amount prepaid and, if
such prepayment of an Offshore Rate Loan is made on a day that is not the last
day of the applicable Interest Period, any amounts required pursuant to Section
3.04.
2.07. Repayment.
The Company shall repay to the Bank on the Revolving Termination Date
the aggregate amount of all Revolving Loans outstanding on such date.
2.08. Interest.
(a) Each Revolving Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate
per annum equal to the Offshore Rate plus the Offshore Rate Margin or
the Base Rate plus the Base Rate Margin, as the case may be (and
subject to the Company's right to convert to other Types of Loans under
Section 2.04).
(b) The Base Rate Margin and the Offshore Rate Margin shall be
determined on each Borrowing Date using the pricing grid set forth
below and determined on the basis of the Leverage Ratio as set forth in
the most recent Compliance Certificate, and shall be effective from and
including the date the Bank receives such Compliance Certificate to but
excluding the date on which the Bank receives the next Compliance
Certificate; provided, however, that if the Bank does not receive a
Compliance Certificate by the date required by Section 6.02(a), the
Commitment Fee Rate, the Base Rate Margin and the Offshore Rate Margin
shall, effective as of such date, be the highest Commitment Fee Rate,
Base Rate Margin and Offshore Rate Margin to but excluding the date the
Bank receives such Compliance Certificate. Subject to the foregoing
proviso, the initial Commitment Fee Rate, Base Rate Margin and Offshore
Rate Margin shall be 0.25%,
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0.00% and 0.50% respectively.
--------------------------------------------------------------------------------------------
Leverage Ratio Offshore Rate Margin Base Rate Margin Commitment Fee Rate
--------------------------------------------------------------------------------------------
Less than 1.0 0.50% 0.00% 0.25%
--------------------------------------------------------------------------------------------
Less than 1.75 and greater 1.00% 0.00% 0.3125%
than or equal to 1.00
--------------------------------------------------------------------------------------------
Greater than or equal to 1.50% 0.00% 0.375%
1.75
--------------------------------------------------------------------------------------------
(c) Interest on each Revolving Loan shall be paid in arrears on
each Interest Payment Date. Interest shall also be paid on the date of
any prepayment of Offshore Rate Loans under Section 2.06 for the
portion of the Loans so prepaid and upon payment (including prepayment)
in full thereof and, during the existence of any Event of Default,
interest shall be paid on demand of the Bank.
(d) Notwithstanding subsection (a) of this Section, if any amount
of principal of or interest on any Loan, or any other amount payable
hereunder or under any other Loan Document is not paid in full when due
(whether at stated maturity, by acceleration, demand or otherwise), the
Company agrees to pay interest on such unpaid principal or other
amount, from the date such amount becomes due until the date such
amount is paid in full, and after as well as before any entry of
judgment thereon to the extent permitted by law, payable on demand, at
a fluctuating rate per annum equal to the Base Rate plus 2%.
(e) Anything herein to the contrary notwithstanding, the
obligations of the Company to the Bank hereunder shall be subject to
the limitation that payments of interest shall not be required for any
period for which interest is computed hereunder, to the extent (but
only to the extent) that contracting for or receiving such payment by
the Bank would be contrary to the provisions of any law applicable to
the Bank limiting the highest rate of interest that may be lawfully
contracted for, charged or received by the Bank, and in such event the
Company shall pay the Bank interest at the highest rate permitted by
applicable law.
2.09. Fees.
(a) The Company shall pay a facility fee to the Bank in the amount
of $20,000, payable as of the Closing Date.
(b) The Company shall pay to the Bank a commitment fee on the
average daily unused portion of the Commitment, computed on a quarterly
basis in arrears on the last Business Day of each calendar quarter
based upon the daily utilization for that quarter as calculated by the
Bank using the then applicable Commitment Fee Rate. For purposes of
calculating utilization under this subsection, the Commitments shall be
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deemed used to the extent of the Effective Amount of Revolving Loans
then outstanding. Such commitment fee shall accrue from the Closing
Date to the Revolving Termination Date and shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter
commencing on December 31, 1998 through the Revolving Termination Date,
with the final payment to be made on the Revolving Termination Date;
provided that, in connection with any reduction or termination of
Commitments under Section 2.05, the accrued commitment fee calculated
for the period ending on such date shall also be paid on the date of
such reduction or termination, with the following quarterly payment
being calculated on the basis of the period from such reduction or
termination date to such quarterly payment date. The commitment fees
provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which
one or more conditions in ARTICLE IV are not met.
2.10. Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by the Bank's "reference rate" shall be made on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on
the basis of a 360-day year and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-day
year). Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the
last day thereof.
(b) Each determination of an interest rate by the Bank shall be
conclusive and binding on the Company in the absence of manifest error.
The Bank will, at the request of the Company, deliver to the Company or
the Bank, as the case may be, a statement showing the quotations used
by the Bank in determining any interest rate and the resulting interest
rate.
2.11. Payments.
(a) All payments to be made by the Company shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Company shall be made to the Bank
in Dollars and in immediately available funds, no later than 12:00 noon
(New York City time) on the date specified herein. Any payment received
by the Bank later than 12:00 noon (New York City time) shall be deemed
to have been received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other
than a Business Day, such payment shall be made on the following
Business Day, and such extension of time shall in such case be included
in the computation of interest or fees, as the case may be.
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ARTICLE III - TAXES, YIELD PROTECTION AND ILLEGALITY
3.01. Taxes.
(a) Any and all payments by the Company to the Bank under this
Agreement and any other Loan Document shall be made free and clear of,
and without deduction or withholding for, any Taxes. In addition, the
Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum
payable hereunder to the Bank, then:
(i) the sum payable shall be increased as necessary so
that, after making all required deductions and withholdings
(including deductions and withholdings applicable to additional
sums payable under this Section), the Bank receives and retains an
amount equal to the sum it would have received and retained had no
such deductions or withholdings been made;
(ii) the Company shall make such deductions and
withholdings;
(iii) the Company shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Company shall also pay to the Bank, at the time
interest is paid, Further Taxes in the amount that the Bank
specifies as necessary to preserve the after-tax yield the Bank
would have received if such Taxes, Other Taxes or Further Taxes
had not been imposed.
(c) The Company agrees to indemnify and hold harmless the Bank for
the full amount of i) Taxes, ii) Other Taxes, and iii) Further Taxes in
the amount that the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes, Other Taxes
or Further Taxes had not been imposed, and any liability (including
penalties, interest, additions to tax and expenses caused solely by the
Company's failure to pay such Taxes, Other Taxes and Further Taxes as
requested by the Bank) arising therefrom or with respect thereto.
Payment under this indemnification shall be made within 30 days after
the date the Bank makes written demand therefor.
(d) Within 30 days after the date of any payment by the Company of
Taxes, Other Taxes or Further Taxes, the Company shall furnish to the
Bank the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to the Bank.
(e) If the Company is required to pay any amount to the Bank
pursuant to subsection (b) or (c) of this Section, then the Bank shall
use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Company which may
thereafter accrue, if such change in the sole judgment of the Bank is
not otherwise disadvantageous to the Bank.
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3.02. Illegality.
(a) If the Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for the Bank or its applicable Lending
Office to make Offshore Rate Loans, then, on notice thereof by the Bank
to the Company, any obligation of the Bank to make Offshore Rate Loans
shall be suspended until the Bank notifies the Company that the
circumstances giving rise to such determination no longer exist.
(b) If the Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of
such fact and demand from the Bank, prepay in full such Offshore Rate
Loans of the Bank then outstanding, together with interest accrued
thereon and amounts required under Section 3.04, either on the last day
of the Interest Period thereof, if the Bank may lawfully continue to
maintain such Offshore Rate Loans to such day, or immediately, if the
Bank may not lawfully continue to maintain such Offshore Rate Loan. If
the Company is required to so prepay any Offshore Rate Loan, then
concurrently with such prepayment, the Company may borrow from the
Bank, in the amount of such repayment, a Base Rate Loan or prepay such
Offshore Rate Loan from funds of the Company.
(c) If the obligation of the Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect,
by giving notice to the Bank that all Loans which would otherwise be
made by the Bank as Offshore Rate Loans shall be instead Base Rate
Loans.
(d) Before giving any notice to the Company under this Section,
the Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans or assign the Loan or portion thereof to a Bank
Affiliate, if such designation or assignment will avoid the need for
giving such notice or making such demand and will not, in the judgment
of the Bank, be illegal or otherwise disadvantageous to the Bank or, in
the case of an assignment, to the Bank and its Affiliates taken as a
whole.
3.03. Increased Costs and Reduction of Return.
(a) If the Bank reasonably determines that, due to either (i) the
introduction of or any change (other than any change by way of
imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate) in or to the interpretation of any
law or regulation or (ii) the compliance by the Bank with any guideline
or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase
in the cost to the Bank of agreeing to make or making, funding or
maintaining any Offshore Rate Loans, then the Company shall either (x)
be liable for, and shall from time to time, 15 days after demand, pay
to the Bank for the account of the Bank, additional amounts as are
sufficient to compensate the Bank for such increased costs or (y)
terminate and prepay any affected Offshore Rate Loan.
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(b) If the Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank
or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Bank (or its Lending
Office) with any Capital Adequacy Regulation, affects or would affect
the amount of capital required or expected to be maintained by the Bank
or any corporation controlling the Bank and (taking into consideration
the Bank's or such corporation's policies with respect to capital
adequacy and the Bank's desired return on capital) determines that the
amount of such capital is increased as a consequence of its Commitment,
loans, credits or obligations under this Agreement, then, upon demand
of the Bank to the Company, the Company shall pay to the Bank, from
time to time as specified by the Bank, additional amounts sufficient to
compensate the Bank for such increase.
3.04. Funding Losses.
The Company shall reimburse the Bank and hold the Bank harmless from
any loss or expense arising from the liquidation or reemployment of funds
obtained by it to maintain outstanding Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained which the Bank may
sustain or incur as a consequence of:
(a) the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or convert a
Loan after the Company has given (or is deemed to have given) a Notice
of Borrowing or a Notice of Conversion/ Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.06; or
(d) the prepayment or other payment (including, without
limitation, after acceleration thereof or under Section 3.02(b)) of an
Offshore Rate Loan on a day that is not the last day of the relevant
Interest Period.
For purposes of calculating amounts payable by the Company to the Bank under
this Section and under subsection 3.03(a), each Offshore Rate Loan made by the
Bank (and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the rate of interest for deposits
used in determining the Offshore Rate for such Offshore Rate Loan by a matching
deposit or other borrowing in the interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such Offshore Rate Loan is in
fact so funded.
3.05. Inability to Determine Rates.
If the Bank determines that for any reason adequate and reasonable
means do not exist for determining the Offshore Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan, or that the Offshore Rate
applicable pursuant to subsection 2.08(a) for any
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requested Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Bank of funding such Loan, the
Bank will promptly so notify the Company. Thereafter, the obligation of the Bank
to make or maintain Offshore Rate Loans hereunder shall be suspended until the
Bank revokes such notice in writing. Upon receipt of such notice, the Company
may revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it without liability under Section 3.04. If the Company does not
revoke such Notice, the Bank shall make, convert or continue the Loans, as
proposed by the Company, in the amount specified in the applicable notice
submitted by the Company, but such Loans shall be made, converted or continued
as Base Rate Loans instead of Offshore Rate Loans.
3.06. Reserves on Offshore Rate Loans.
In the event that the Bank is required under regulations of the FRB to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), the Company shall pay to the Bank, as long as the Bank shall be
required, additional costs on the unpaid principal amount of each Offshore Rate
Loan equal to the actual costs of such reserves allocated to such Loan by the
Bank (as determined by the Bank in good faith, which determination shall be
conclusive absent manifest or proven error), payable on each date on which
interest is payable on such Loan, provided the Company shall have received at
least 15 days' prior written notice of such additional interest from the Bank.
If the Bank fails to give notice 15 days prior to the relevant Interest Payment
Date, such additional interest shall be payable 15 days from receipt of such
notice.
3.07. Certificates of the Bank.
If the Bank claims reimbursement or compensation under this ARTICLE
III, it shall deliver to the Company a certificate setting forth in reasonable
detail the amount payable to the Bank hereunder, the reason for and the
computation of such reimbursement or compensation, and such certificate shall be
conclusive and binding on the Company in the absence of manifest or proven
error.
3.08. Survival.
The agreements and obligations of the Company in this ARTICLE III shall
survive the payment of all other Obligations.
ARTICLE IV - CONDITIONS PRECEDENT
4.01. Conditions of Initial Credit Extensions.
The obligation of the Bank to make its initial Credit Extension
hereunder is subject to the condition that the Bank shall have received on or
before the Closing Date all of the following, in form and substance satisfactory
to the Bank:
(a) This Agreement executed by each party thereto;
(b) A photocopy of the bylaws (including all amendments thereto)
of the
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Company, certified by the Secretary of the Company; and the Company's
certificate of incorporation (and all amendments thereto), certified by
the Department of Treasury of New Jersey;
(c) A certificate, dated the Effective Date, executed by the
Secretary of the Company, certifying (with appropriate organizational
resolutions attached thereto): (A) that all action required to be taken
by the Company in connection with the authorization, execution,
delivery and performance of this Agreement and the transactions
contemplated hereby and thereby has been taken and (B) the names and
true signatures of its respective officers authorized to execute,
deliver and perform, as applicable, this Agreement, and all other
documents and notices to be delivered by it hereunder;
(d) A good standing certificate and tax good standing for the
Company from the Department of Treasury of New Jersey and the Secretary
of State (or similar applicable Governmental Authority) of each state
where the Company is qualified to do business as a foreign corporation
as of a recent date;
(e) A photocopy of the bylaws (including all amendments thereto)
of each Subsidiary Guarantor, certified by the Secretary of such
Subsidiary Guarantor; and such Subsidiary Guarantor's certificate of
incorporation (and all amendments thereto), certified by the applicable
Governmental Authority of the state where such Subsidiary Guarantor was
organized;
(f) A certificate, dated the Effective Date, executed by the
Secretary of each Subsidiary Guarantor, certifying (with appropriate
organizational resolutions attached thereto): (A) that all action
required to be taken by such Subsidiary Guarantor in connection with
the authorization, execution, delivery and performance of the
Subsidiary Guaranty and the transactions contemplated thereby has been
taken and (B) the names and true signatures of its respective officers
authorized to execute, deliver and perform, as applicable, the
Subsidiary Guaranty, and all other documents and notices to be
delivered by it thereunder;
(g) A good standing certificate and tax good standing for each
Subsidiary Guarantor from the Secretary of State (or similar applicable
Governmental Authority) of each state where such Subsidiary Guarantor
is organized and is qualified to do business as a foreign corporation
as of a recent date;
(h) A Subsidiary Guaranty duly executed by each Required
Guarantor;
(i) An opinion of Pitney, ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, counsel to the
Company and addressed to the Bank, substantially in the form of Exhibit
E;
(j) Evidence of payment by the Company of all accrued and unpaid
reasonable fees, costs and expenses to the extent then due and payable
on the Closing Date, together with reasonable Attorney Costs (related
specifically to this Agreement, the Loan Documents and the transactions
contemplated therein) of the Bank to the extent invoiced prior to or on
the Closing Date, plus such additional amounts of reasonable Attorney
Costs as shall constitute the Bank's reasonable estimate of Attorney
Costs
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incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final
settling of accounts between the Company and the Bank); including any
such costs, fees and expenses arising under or referenced in Sections
2.09;
(k) A certificate signed by a Responsible Officer of the Company,
dated as of the Closing Date, stating that: (A) the representations and
warranties contained in ARTICLE V are true and correct on and as of
such date, as though made on and as of such date; (B) no Default or
Event of Default exists or would result from the Credit Extension, and
(C) there has occurred since June 30, 1998 no event or circumstance
that has resulted or could reasonably be expected to result in a
Material Adverse Effect; and
(l) Evidence of such other approvals, opinions, documents or
materials as the Bank may reasonably request.
4.02. Conditions to All Credit Extensions.
The obligation of the Bank to make any Revolving Loan to be made by it
(including its initial Revolving Loan) is subject to the satisfaction of the
following conditions precedent on the relevant Borrowing Date:
(a) The Bank shall have received a Notice of Borrowing or a Notice
of Conversion/Continuation, as applicable;
(b) The representations and warranties in ARTICLE V shall be true
and correct on and as of such Borrowing Date with the same effect as if
made on and as of such Borrowing Date (except to the extent such
representations and warranties expressly refer to an earlier date, in
which case they shall be true and correct as of such earlier date); and
(c) No Default or Event of Default shall exist or shall result
from such Borrowing.
Each Notice of Borrowing submitted by the Company hereunder shall
constitute a representation and warranty by the Company hereunder, as of the
date of each such notice and as of each Borrowing Date, as applicable, that the
conditions in this Section 4.02 are satisfied.
ARTICLE V - REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:
5.01. Corporate Existence and Power.
The Company and each of its Subsidiaries:
(a) is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization;
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(b) has the power and authority to execute, deliver, and perform
any of its obligations under the Loan Documents;
(c) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its
business except to the extent that the failure to have such power and
authority or such licenses, authorizations, consents and approvals
would not reasonably be expected to have a Material Adverse Effect;
(d) is duly qualified as a foreign corporation and is licensed and
in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its
business requires such qualification or license except to the extent
that the failure to be so would not reasonably be expected to have a
Material Adverse Effect; and
(e) is in compliance in all material respects with all
Requirements of Law except to the extent that the failure to be in
compliance would not reasonably be expected to have a Material Adverse
Effect.
5.02. Authorization; No Contravention.
The execution, delivery and performance by the Company and the
Subsidiary Guarantors of this Agreement and each other Loan Document to which
such Person is party, have been duly authorized by all necessary corporate
action, and do not and will not:
(a) contravene the terms of any of that Person's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien (other than Permitted Liens) under, any
document evidencing any material Contractual Obligation to which such
Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its property is subject;
or
(c) violate any Requirement of Law in any respect, the violation
of which would be reasonably be expected to result in a Material
Adverse Effect.
5.03. Governmental Authorization.
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Company or any of the Subsidiary Guarantors of this Agreement or
any other Loan Document.
5.04. Binding Effect.
This Agreement and each other Loan Document to which the Company or any
Subsidiary Guarantor is a party constitute the legal, valid and binding
obligations of the Company and such Subsidiary Guarantor to the extent it is a
party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or
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by equitable principles relating to enforceability.
5.05. Litigation.
Set forth on Schedule 5.05 are, as of the Closing Date, all actions,
suits, proceedings, claims or disputes which, to the knowledge of the Company,
if determined adversely to the Company or its Subsidiary, could reasonably be
expected to result in liability for damages in an amount exceeding $250,000 (the
"Disclosed Claims"). Including the Disclosed Claims, there are no actions,
suits, proceedings, claims or disputes pending or (to the knowledge of the
Company) threatened or contemplated, at law, in equity, in arbitration or before
any Governmental Authority, against the Company, or its Subsidiaries or any of
their respective properties:
(a) which purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or
thereby; or
(b) which, if determined adversely to the Company or its
Subsidiaries, could result in liability for damages which would be
reasonably expected to result in a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin or
restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein
not be consummated as herein or therein provided.
5.06. No Default.
No Default or Event of Default exists or would result from the
incurring of any Obligations by the Company. As of the Closing Date, neither the
Company nor any Subsidiary is in default under or with respect to any material
Contractual Obligation in any respect which, individually or together with all
such defaults, could reasonably be expected to have a Material Adverse Effect,
or that would, if such default had occurred after the Closing Date, create an
Event of Default under subsection 8.01(e).
5.07. ERISA Compliance.
(a) (i) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state
law; (ii) each Plan which is intended to qualify under Section 401(a)
of the Code has received a favorable determination letter from the IRS
and to the best knowledge of the Company, nothing has occurred which
would cause the loss of such qualification, and (iii) the Company and
each ERISA Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, and no application for a funding
waiver or an extension of any amortization period pursuant to Section
412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Company,
threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse
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Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan which has
resulted or could reasonably be expected to result in a Material
Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) no Pension Plan has any Unfunded Pension Liability which
could reasonably be expected to result in a Material Adverse Effect;
(iii) neither the Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent
under Section 4007 of ERISA) which could reasonably be expected to
result in a Material Adverse Effect; (iv) neither the Company nor any
ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan
which could reasonably be expected to result in a Material Adverse
Effect; and (v) neither the Company nor any ERISA Affiliate has engaged
in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA which could reasonably be expected to result in a Material
Adverse Effect.
5.08. Use of Proceeds; Margin Regulations.
The proceeds of the Loans are to be used solely for the purposes set
forth in and permitted by Section 6.12 and Section 7.07. Neither the Company nor
any Subsidiary is generally engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock and none of the proceeds of the Loans shall be used for the purpose
of purchasing or carrying Margin Stock.
5.09. Title to Properties.
The Company and each Subsidiary have good record and marketable title
in fee simple to, or valid leasehold interests in, all real property necessary
or used in the ordinary conduct of their respective businesses, except for such
defects in title as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. As of the Closing Date, the property
of the Company and its Subsidiaries is subject to no Liens, other than Permitted
Liens.
5.10. Taxes.
The Company and its Subsidiaries have filed all Federal and other
material tax returns and reports required to be filed, and have paid all Federal
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP. There is no proposed tax assessment against the Company or any
Subsidiary that would reasonably be expected to have a Material Adverse Effect.
5.11. Financial Condition.
Since June 30, 1998, there has been no Material Adverse Effect.
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5.12. Environmental Matters.
The Company owns no real property and is not aware of any existing
Environmental Claims on its business, operations or leased properties, except as
specifically disclosed in Schedule 5.12, which, individually or in the
aggregate, are reasonably expected to result in a Material Adverse Effect.
5.13. Regulated Entities.
None of the Company, any Person controlling the Company, or any
Subsidiary, is an "Investment Company" within the meaning of the Investment
Company Act of 1940. The Company is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, any state public
utilities code, or any other Federal or state statute or regulation limiting its
ability to incur Indebtedness.
5.14. No Burdensome Restrictions.
To the knowledge of the Company, neither the Company nor any Subsidiary
is a party to or bound by any Contractual Obligation, or subject to any
restriction in any Organization Document, or any Requirement of Law, which could
reasonably be expected to have a Material Adverse Effect.
5.15. Copyrights, Patents, Trademarks and Licenses, Etc.
The Company or its Subsidiaries own or are licensed or otherwise have
the right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict in any material respect with the rights of any other Person. To the
knowledge of the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Subsidiary infringes upon any
rights held by any other Person in any material respect. Except as specifically
disclosed in Schedule 5.05, no claim or litigation regarding any of the
foregoing is pending or to the knowledge of the Company threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
5.16. Subsidiaries.
As of the Closing Date, the Company has no Subsidiaries other than
those specifically disclosed in part (a) of Schedule 5.16 hereto and has no
equity investments in any other corporation or entity other than those
specifically disclosed in part (b) of Schedule 5.16.
5.17. Insurance.
Except as specifically disclosed in Schedule 5.17, the properties of
the Company and its Subsidiaries are insured with financially sound and
reputable insurance companies not Affiliates of the Company pursuant to
insurance policies containing amounts, deductibles and risk
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coverages that are commercially prudent for the Company.
5.18. Full Disclosure.
None of the representations or warranties made by the Company or any
Subsidiary in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Company or any Subsidiary in connection with the Loan Documents (including the
offering and disclosure materials delivered by or on behalf of the Company to
the Bank prior to the Closing Date), contains any untrue statement of a material
fact or omits any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
are made, not misleading as of the time when made or delivered.
5.19. Year 2000.
On the basis of a review and assessment of the Company's systems and
equipment and inquiry made of its material suppliers, vendors and customers, the
Company reasonably believes that the "Year 2000 problem" (that is, the inability
of computers, as well as embedded microchips in non-computing devices, to
perform properly date-sensitive functions with respect to certain dates prior to
and after December 31, 1999), including costs of remediation, will not result in
a material adverse change in the operations, business, properties, condition
(financial or otherwise) or prospects of the Company. The Company has developed
feasible contingency plans which will adequately ensure uninterrupted and
unimpaired business operation in the event of failure of its own or a third
party's systems or equipment due to the Year 2000 problem, including those of
vendors, customers, and suppliers, as well as a general failure of or
interruption in its communications and delivery infrastructure.
5.20. Subsidiary Guarantees.
All Subsidiaries which meet the criteria set forth in the definition of
Required Guarantor have authorized, executed and delivered a Subsidiary Guaranty
in favor of the Bank.
ARTICLE VI - AFFIRMATIVE COVENANTS
So long as the Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Bank waives
compliance in writing:
6.01. Financial Statements.
The Company shall deliver to the Bank, in form and detail satisfactory
to the Bank:
(a) as soon as available, but not later than 90 days after the end
of each fiscal year, a copy of the audited consolidated balance sheet
of the Company and its Subsidiaries as at the end of such year and the
related audited consolidated statements of income or operations,
shareholders' equity and cash flows for such year, setting forth in
each case in comparative form the figures for the previous fiscal year,
and accompanied by the opinion of a nationally-recognized independent
public accounting firm
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("Independent Auditor") which report shall state that such consolidated
financial statements present fairly the financial position for the
periods indicated in conformity with GAAP applied on a basis consistent
with prior years. Such opinion shall not be qualified or limited
because of a restricted or limited examination by the Independent
Auditor of any material portion of the Company's or any Subsidiary's
records and shall be delivered to the Bank pursuant to a reliance
agreement between the Bank and such Independent Auditor in form and
substance satisfactory to the Bank. If the Company has any outstanding
amounts under any Revolving Loans, then the Company shall concurrently
deliver for the same time period an unaudited consolidating balance
sheet and unaudited consolidating statements of income and operations
which present fairly the financial position for certain material
Subsidiaries of the Company in a manner reasonably satisfactory to the
Bank; and
(b) as soon as available, but not later than 45 days after the end
of each of the first three fiscal quarters of each fiscal year
(commencing with the fiscal quarter ended September 30, 1998), a copy
of the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such quarter and the related consolidated
statements of income, shareholders' equity and cash flows for the
period commencing on the first day and ending on the last day of such
quarter, and certified by a Responsible Officer as fairly presenting,
in accordance with GAAP (subject to year-end audit adjustments), the
financial position and the results of operations of the Company and the
Subsidiaries. If the Company has any outstanding amounts under any
Revolving Loans, then the Company shall concurrently deliver for the
same time period an unaudited consolidating balance sheet and the
related unaudited consolidating statements of income, shareholders'
equity and cash flows which present fairly the financial position for
certain material Subsidiaries of the Company in a manner reasonably
satisfactory to the Bank
6.02. Certificates; Other Information.
The Company shall furnish to the Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsections 6.01(a) and 6.01(b), each of (x) a
certificate of a Responsible Officer of the Company stating that in
making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default; or if knowledge of a Default or Event
of Default was obtained, then a certificate of a Responsible Officer of
the Company describing the nature of such Default or Event of Default,
together with a description of the remedy of same by the Company and
(y) a Compliance Certificate executed by a Responsible Officer with
computations demonstrating compliance with the financial covenants set
forth in Section 7.12 in a form and substance satisfactory to the Bank;
and
(b) promptly, such additional information regarding the business,
financial or corporate affairs of the Company or any Subsidiary as the
Bank may from time to time reasonably request.
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6.03. Notices.
The Company shall promptly notify the Bank:
(a) of the occurrence of any Default or Event of Default, and of
the occurrence or existence of any event or circumstance that
reasonably foreseeably will become a Default or Event of Default;
(b) of any matter that has resulted or is reasonably expected to
result in a Material Adverse Effect, including (i) breach or
non-performance of, or any default under, a Contractual Obligation of
the Company or any Subsidiary, which is reasonably expected to result
in a Material Adverse Effect; (ii) any material dispute, litigation,
investigation, proceeding or suspension between the Company or any
Subsidiary and any Governmental Authority, which is reasonably expected
to result in a Material Adverse Effect; or (iii) the commencement of,
or any material development in, any material litigation or proceeding
affecting the Company or any Subsidiary, including pursuant to any
applicable Environmental Laws, which is reasonably expected to result
in a Material Adverse Effect;
(c) of the occurrence of any of the following events affecting the
Company or any ERISA Affiliate (but in no event more than 30 days after
such event), and deliver to the Bank a copy of any notice with respect
to such event that is filed with a Governmental Authority and any
notice delivered by a Governmental Authority to the Company or any
ERISA Affiliate with respect to such event:
(i) an ERISA Event which could reasonably be expected to
have a Material Adverse Effect;
(ii) the Unfunded Pension Liability of any Pension Plan
shall increase in a manner which could reasonably be expected to
have a Material Adverse Effect;
(iii) the adoption of, or the commencement of contributions
to, any material Plan subject to Section 412 of the Code by the
Company or any ERISA Affiliate; or
(iv) the adoption of any amendment to any material Plan
subject to Section 412 of the Code, if such amendment results in a
material increase in contributions or Unfunded Pension Liability;
and
(d) of any material change in accounting policies or financial
reporting practices by the Company or any of its consolidated
Subsidiaries.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under subsection 6.03(a) shall describe with particularity any and all clauses
or provisions of this Agreement or other Loan Document that have been (or
reasonably foreseeably will be) breached or violated.
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6.04. Preservation of Existence, Etc.
The Company shall, and shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its existence
and good standing under the laws of its state or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all material
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business
except in connection with transactions permitted by Section 7.03 and
sales of assets permitted by Section 7.02, the non-preservation of
which could reasonably be expected to have a Material Adverse Effect;
(c) use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
6.05. Maintenance of Property.
The Company shall maintain, and shall cause each Subsidiary to
maintain, and preserve all its material property which is used or useful in its
business in good working order and condition, ordinary wear and tear excepted
and make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect and except as permitted by Section 7.02. The Company and
each Subsidiary shall use the standard of care typical in the industry in the
operation and maintenance of its facilities.
6.06. Insurance.
The Company shall maintain, and shall cause each Subsidiary to
maintain, with financially sound and reputable independent insurers, insurance
with respect to its material properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.
6.07. Payment of Obligations.
The Company shall, and shall cause each Material Subsidiary to, pay and
discharge as the same shall become due and payable, all their respective
obligations and liabilities, including all tax liabilities, assessments and
governmental charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings and adequate
reserves in accordance with GAAP are being maintained by the Company or such
Subsidiary.
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6.08. Compliance with Laws.
The Company shall comply, and shall cause each Subsidiary to comply, in
all material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act), except such as may be contested in good faith or as to which a
bona fide dispute may exist and except where non-compliance is not reasonably
expected to have a Material Adverse Effect.
6.09. Compliance with ERISA.
The Company shall, and shall cause each of its ERISA Affiliates to: (a)
maintain each Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law; (b) cause each
Plan which is qualified under Section 401(a) of the Code to maintain such
qualification; and (c) make all required contributions to any Plan subject to
Section 412 of the Code.
6.10. Inspection of Property and Books and Records.
The Company shall maintain and shall cause each Subsidiary to maintain
proper books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Company and
such Subsidiary. The Company shall permit, and shall cause each Subsidiary to
permit, representatives and independent contractors of the Bank to visit and
inspect any of their respective properties, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers, and independent public accountants and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Company; provided, however, when
an Event of Default exists the Bank may do any of the foregoing at the expense
of the Company at any time during normal business hours and without advance
notice.
6.11. Environmental Laws.
The Company shall, and shall cause each Subsidiary to, conduct its
operations and keep and maintain its property in compliance with all
Environmental Laws except where the failure to comply is not expected to have a
Material Adverse Effect.
6.12. Use of Proceeds.
The Company shall use the proceeds of the Loans for working capital and
for financing of Acceptable Acquisitions.
6.13. Subsidiary Guarantors.
The Company will cause any Domestic Subsidiary which meets the criteria
set forth in the definition of Required Guarantor to execute and deliver a
Subsidiary Guaranty to the Bank within ten (10) Business Days following the date
of the delivery of the consolidating financial statements reflecting the fact
that such Domestic Subsidiary meets such definition of Required
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Guarantor. In the event that the sum of the Shareholder's Equity of the Company
and each Subsidiary Guarantor as reflected in a consolidating balance sheet of
the Company (such sum hereinafter referred to as the "Guaranty Equity Sum") does
not exceed 70% of the Shareholder's Equity of the Company as determined on a
Consolidated basis (the "Guaranty Equity Threshold"), then the Company shall
cause such other Domestic Subsidiaries to execute and deliver a Subsidiary
Guaranty as may be needed to cause the Guaranty Equity Sum to exceed the
Guaranty Equity Threshold. If the Guaranty Equity Sum does not exceed the
Guaranty Equity Threshold after the execution of a Subsidiary Guaranty by all of
the Domestic Subsidiaries, then the Bank and the Company shall agree to a
mutually acceptable guaranty or security arrangement, or within thirty (30) days
after notice from the Bank to the Company, the Company shall cause such Foreign
Subsidiaries as are necessary to meet the Guaranty Equity Threshold to execute
and deliver to the Bank a Subsidiary Guaranty acceptable in form and substance
to the Bank. In the event that any Foreign Subsidiary shall have Shareholder's
Equity as determined on a consolidating balance sheet of the Company in excess
of 20% of the Shareholder's Equity of the Company as determined on a
Consolidated basis then either (i) the Company and the Bank shall agree to a
mutually acceptable guaranty or security arrangement, or (ii) within thirty (30)
days after notice from the Bank to the Company the Company shall cause such
Foreign Subsidiary to execute and deliver to the Bank a Subsidiary Guaranty
acceptable in form and substance to the Bank (for example: if Foreign Subsidiary
A has Shareholder's Equity of 21% of the Shareholder's Equity of the Company and
Foreign Subsidiary B has Shareholder's Equity of 21% of the Shareholder's Equity
of the Company, then both Foreign Subsidiary A and Foreign Subsidiary B shall be
subject to the requirements of this sentence).
ARTICLE VII - NEGATIVE COVENANTS
So long as the Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Bank waives
compliance in writing:
7.01. Limitation on Liens.
The Company shall not, and shall not suffer or permit any Subsidiary
to, directly or indirectly, make, create, incur, assume or suffer to exist any
Lien upon or with respect to any part of its property, whether now owned or
hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien existing on property of the Company or any Subsidiary
on the Closing Date and set forth in Schedule 7.01 securing
Indebtedness outstanding on such date;
(b) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or
to the extent that non-payment thereof is permitted by Section 6.07;
provided that no notice of lien has been filed or recorded under the
Code;
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not delinquent or remain payable
without penalty or which are being contested in good faith
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and by appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property subject thereto;
(d) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation;
(e) Liens on the property of the Company or its Subsidiary
securing (i) the non-delinquent performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, (ii)
contingent obligations on surety and appeal bonds, and (iii) other
non-delinquent obligations of a like nature; in each case, incurred in
the ordinary course of business;
(f) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of the Company
and its Subsidiaries;
(g) Liens securing obligations in respect of import letters of
credit incurred by the Company in the ordinary course of its business;
(h) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; provided that (i) such deposit
account is not a dedicated cash collateral account and is not subject
to restrictions against access by the Company in excess of those set
forth by regulations promulgated by the FRB, and (ii) such deposit
account is not intended by the Company or any Subsidiary to provide
collateral to the depository institution; and
(i) Liens on the property or assets of a corporation which becomes
a Subsidiary after the date hereof securing Indebtedness permitted by
Section 7.05(e), provided that (1) such Liens existing at the time such
corporation became a Subsidiary and were not created in anticipation of
the Acquisition, (2) any such Lien does not by its terms cover any type
of property or assets after the time such Person becomes a Subsidiary
which were not of a type covered immediately prior thereto, and (3) any
such Lien does not by its terms secure any Indebtedness other than
Indebtedness existing immediately prior to the existing time as such
Person becomes a Subsidiary.
7.02. Disposition of Assets.
The Company shall not, and shall not suffer or permit any Subsidiary
to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise
dispose of (whether in one or a series of transactions) any property (including
accounts and notes receivable, with or without recourse) or enter into any
agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
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(b) to the Company or a Subsidiary so long as no Default or Event
of Default shall have occurred and is continuing;
7.03. Consolidations and Mergers.
The Company shall not, and shall not suffer or permit any Subsidiary
to, merge, consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:
(a) any Subsidiary may merge with the Company; provided that the
Company shall be the continuing or surviving corporation, or with any
one or more Subsidiaries; provided that if any transaction shall be
between a Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned
Subsidiary shall be the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise), to the Company or another
Wholly-Owned Subsidiary; and
(c) the Company may effect any Acceptable Acquisition.
7.04. Loans and Investments.
The Company shall not purchase or acquire, or suffer or permit any
Subsidiary to purchase or acquire, or make any commitment therefor, any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or make or commit to make any Acquisitions, or make or
commit to make any advance, loan, extension of credit or capital contribution to
or any other investment in, any Person including any Affiliate of the Company
(together, "Investments"), except for:
(a) Investments held by the Company or Subsidiary in the form of
Cash Equivalents;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in
the ordinary course of business;
(c) extensions of credit by the Company to any of its Wholly-Owned
Subsidiaries or by any of its Wholly-Owned Subsidiaries to another of
its Wholly-Owned Subsidiaries; and
(d) Acceptable Acquisitions.
7.05. Limitation on Indebtedness.
The Company shall not, and shall not suffer or permit any Subsidiary
to, create, incur, assume, suffer to exist, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:
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(a) Indebtedness of the Company incurred pursuant to this
Agreement;
(b) Indebtedness of the Company consisting of Contingent
Obligations permitted pursuant to Section 7.08;
(c) Indebtedness of the Company existing on the Closing Date and
set forth in Schedule 7.05;
(d) Indebtedness of the Company incurred in connection with leases
permitted pursuant to Section 7.09;
(e) Subordinated Debt;
(f) Indebtedness of a Person which becomes a Subsidiary after the
date hereof, provided that (i) such Indebtedness existed at the time
such corporation became a Subsidiary and was not created in
anticipation of the acquisition and (ii) immediately after giving
effect to the acquisition of such Person by the Company no Default or
Event of Default shall have occurred and be continuing;
(g) Indebtedness of Foreign Subsidiaries consisting of
intercompany borrowings equal to an aggregate of no more than
$10,000,000 outstanding at any given time;
(h) Indebtedness of Foreign Subsidiaries to third parties equal to
an aggregate of no more than $5,000,000 outstanding at any given time;
(i) Indebtedness in respect of letters of credit issued for the
account of the Company and Subsidiaries in an aggregate face amount
outstanding of up to $2,000,000;
(j) Indebtedness in respect of the existing $400,000 letter of
credit issued by the Bank in favor of the Company's landlord; and
(k) other Indebtedness of the Company and domestic Subsidiaries
equal to an aggregate of no more than $5,000,000 outstanding at any
given time.
7.06. Transactions with Affiliates.
The Company shall not, and shall not suffer or permit any Subsidiary
to, enter into any transaction with any Affiliate of the Company, except upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would obtain in a comparable arm's-length transaction with a Person not an
Affiliate of the Company or such Subsidiary.
7.07. Use of Proceeds.
(a) The Company shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (i) to purchase or carry Margin Stock in violation of
Regulation U, (ii) to repay or otherwise refinance indebtedness of the
Company or others incurred to purchase or carry Margin Stock in
-▇▇-
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇, (▇▇▇) to extend credit for the purpose of
purchasing or carrying any Margin Stock in violation of Regulation U,
or (iv) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act.
(b) The Company shall not, and shall not suffer or permit any
Subsidiary to use any portion of the Loan proceeds, directly or
indirectly, to make any Acquisition that is not an Acceptable
Acquisition.
7.08. Contingent Obligations.
The Company shall not, and shall not suffer or permit any Subsidiary
to, create, incur, assume or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course
of business;
(b) Contingent Obligations of the Company and its Subsidiaries
existing as of the Closing Date and listed in Schedule 7.08;
(c) Contingent Obligations with respect to Surety Instruments
incurred in the ordinary course of business;
(d) Swap obligations of the Company; and
(e) Guaranty Obligations with respect to Indebtedness of
Subsidiaries permitted pursuant to Section 7.05(e).
(f) Contingent Obligations under checks issued to customers in the
ordinary course of business under the Company's Relationship Guarantee
Program not to exceed an aggregate amount at any one time outstanding
of $1,500,000.
7.09. Lease Obligations.
The Company shall not, and shall not suffer or permit any Subsidiary
to, create or suffer to exist any obligations for the payment of rent for any
property under lease or agreement to lease, except for:
(a) leases by the Company or any Subsidiary of real estate which,
in the aggregate, do not result in annual rental obligations exceeding
five percent (5%) of the annual consolidated gross revenues of the
Company and its Subsidiaries for such year;
(b) leases by the Company or any Subsidiary, other than leases of
real estate, in existence on the Closing Date and any renewal,
extension or refinancing thereof;
(c) additional operating leases, other than leases of real estate,
entered into by the Company or any Subsidiary after the Closing Date
such that the annual rental payments for such additional leases do not
exceed an aggregate of $2,000,000; or
(d) leases, other than leases of real estate or as permitted in
the clause (c)
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above, entered into by the Company or any Subsidiary after the Closing
Date pursuant to sale-leaseback transactions in an aggregate net
present value not to exceed $2,000,000.
7.10. Change in Business.
The Company shall not, and shall not suffer or permit any Subsidiary
to, engage in any material line of business substantially different from those
lines of business carried on by the Company and its Subsidiaries on the date
hereof.
7.11. Accounting Changes.
The Company shall not, and shall not suffer or permit any Subsidiary
to, make any significant change in accounting treatment or reporting practices,
except as required by GAAP, or change the fiscal year of the Company or of any
Subsidiary.
7.12. Financial Covenants.
The Company shall not:
(a) permit its Leverage Ratio as determined at the end of any
fiscal quarter to be more than 2.50 to 1.00.
(b) permit its Interest Coverage Ratio as determined at the end of
any fiscal quarter to be less than 3.00 to 1.00.
(c) permit its Current Ratio at any time to be less than 1.25 to
1.00.
(d) permit its Net Worth at any time to be less than the Net Worth
as reported on the Company's audited 1997 fiscal year end statements,
plus (i) seventy-five percent (75%) of the amount of the net proceeds
to the Company of any offering of new equity interests issued by the
Company after the date hereof, plus (ii) on a cumulative basis
commencing with the fiscal quarter ending on March 31, 1998, fifty
percent (50%) of Net Income (if positive) for any fiscal quarter ending
on or after March 31, 1998.
7.13. Optional Payments of Subordinated Debt and Modifications of
Related Debt.
The Company shall not make any optional payment or prepayment on or
redemption, defeasance or purchase of any Indebtedness, including, without
limitation, the Subordinated Debt, or amend, modify or change, or consent or
agree to any amendment, modification or change to any of the terms relating to
the payment or prepayment or principal of or interest on, any such Indebtedness,
other than any amendment, modification or change which would extend the maturity
or reduce the amount of any payment of principal thereof or which would reduce
the rate or extend the date for payment of interest thereon.
7.14. No Losses.
The Company shall not have EBIT of less than $0 during any fiscal year.
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ARTICLE VIII - EVENTS OF DEFAULT
8.01. Event of Default.
Any of the following shall constitute an "Event of Default":
(a) The Company fails to pay, (i) when and as required to be paid
herein, any amount of principal of any Loan or (ii) within three (3)
days after the same becomes due, any interest, fee or any other amount
payable hereunder or under any other Loan Document; or
(b) Any representation or warranty by the Company or any
Subsidiary made or deemed made herein, in any Loan Document or which is
contained in any certificate, document or financial or other statement
by the Company or any Responsible Officer, furnished at any time under
this Agreement, or in or under any other Loan Document, is incorrect in
any material respect on or as of the date made or deemed made; or
(c) The Company fails to perform or observe any term, covenant or
agreement contained in any of Section 6.03 or 6.09 or in ARTICLE VII;
or
(d) The Company or any Subsidiary Guarantor fails to perform or
observe any other term or covenant contained in this Agreement or any
other Loan Document, and such default shall continue unremedied for a
period of 30 days after the earlier of (i) the date upon which a
Responsible Officer knew or reasonably should have known of such
failure or (ii) the date upon which written notice thereof is given to
the Company by the Bank; or
(e) (i) The Company or any Subsidiary (A) fails to make any
payment in respect of any Indebtedness or Contingent Obligation (other
than in respect of Swap Contracts), having an aggregate principal
amount (including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $500,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and
such failure continues after the applicable grace or notice period, if
any, specified in the relevant document on the date of such failure; or
(B) fails to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Contingent Obligation,
and such failure continues after the applicable grace or notice period,
if any, specified in the relevant document on the date of such failure
if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation to become payable or cash
collateral in respect thereof to be demanded; or (ii) there occurs
under any Swap Contract an Early Termination Date (as defined in such
Swap Contract) resulting from (1) any event of default under such Swap
Contract as to which the Company or any Subsidiary is the Defaulting
Party (as defined in such Swap
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Contract) or (2) any Termination Event (as so defined) as to which the
Company or any Subsidiary is an Affected Party (as so defined), and, in
either event, the Swap Termination Value owed by the Company or such
Subsidiary as a result thereof is greater than $500,000; or
(f) The Company or any Subsidiary Guarantor (i) ceases or fails to
be solvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they become due, subject to applicable
grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course;
(iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing;
or
(g) (i) Any involuntary Insolvency Proceeding is commenced or
filed against the Company or any Material Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Company's or any
Material Subsidiary's properties, and any such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully
bonded within 60 days after commencement, filing or levy; (ii) the
Company or any Material Subsidiary admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for
relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company or any Material Subsidiary
acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or a substantial portion of its
property or business; or
(h) (i) An ERISA Event shall occur with respect to a Pension Plan
or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of the Company under Title IV of ERISA
to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate
amount in excess of $100,000 during any consecutive two year period;
(ii) the aggregate amount of Unfunded Pension Liability among all
Pension Plans at any time exceeds $100,000 during any consecutive two
year period; or (iii) the Company or any ERISA Affiliate shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount
in excess of $100,000 during any consecutive two year period; or
(i) One or more non-interlocutory judgments, non-interlocutory
orders, decrees or arbitration awards is entered against the Company or
any Material Subsidiary involving in the aggregate a liability (to the
extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series
of transactions, incidents or conditions, of $250,000 or more singly,
or $1,000,000 or more in the aggregate and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 45
days after the entry thereof; or
(j) Any non-monetary judgment, order or decree is entered against
the Company or any Subsidiary which does or would reasonably be
expected to have a Material Adverse Effect, and there shall be any
period of 45 consecutive days during
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which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(k) There shall exist any actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company, threatened
or contemplated, at law, in equity, in arbitration or before any
Governmental Authority, against the Company, or its Subsidiaries or any
of their respective properties:
(i) which purport to affect or pertain to this Agreement or
any other Loan Document, or any of the transactions contemplated
hereby or thereby; or
(ii) which, if determined adversely to the Company or its
Subsidiaries, could result in a Material Adverse Effect.
(l) any Subsidiary Guaranty shall at any time after its execution
and delivery and for any reason cease to be in full force and effect or
shall be declared null and void, or the validity and enforceability
thereof shall be contested by any Subsidiary Guarantor or any
Subsidiary Guarantor shall deny it has any further liability or
obligations thereunder and shall fail to perform its obligations
thereunder.
8.02. Remedies.
If any Event of Default occurs, the Bank may,
(a) declare the Commitment to be terminated, whereupon such
Commitment shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately
due and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Company;
and
(c) exercise on behalf of itself all rights and remedies available
to it under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in subsection
8.01(f) or 8.01(g) (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of the Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Bank.
8.03. Rights Not Exclusive.
The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
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ARTICLE IX - MISCELLANEOUS
9.01. Amendments and Waivers.
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by the Company or
any applicable Subsidiary therefrom, shall be effective unless the same shall be
in writing and signed by the Bank and the Company, and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
9.02. Notices.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that
any matter transmitted by facsimile (i) shall be immediately confirmed
by a telephone call to the recipient at the number specified on
Schedule 9.02, and (ii) shall be followed promptly by delivery of a
hard copy original thereof) and mailed, faxed or delivered, to the
address or facsimile number specified for notices on Schedule 9.02; or,
as directed to the Company or the Bank, to such other address as shall
be designated by such party in a written notice to the other party.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when
delivered for overnight (next-day) delivery, or transmitted in legible
form by facsimile machine, respectively, or if mailed, upon the third
Business Day after the date deposited into the U.S. mail, or if
delivered, upon delivery; except that notices pursuant to ARTICLE II to
the Bank shall not be effective until actually received by the Bank.
(c) Any agreement of the Bank herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request
of the Company. The Bank shall be entitled to rely on the authority of
any Person purporting to be a Person authorized by the Company to give
such notice and the Bank shall not have any liability to the Company or
other Person on account of any action taken or not taken by the Bank in
reliance upon such telephonic or facsimile notice. The obligation of
the Company to repay the Loans shall not be affected in any way or to
any extent by any failure by the Bank to receive written confirmation
of any telephonic or facsimile notice or the receipt by the Bank of a
confirmation which is at variance with the terms understood by the Bank
to be contained in the telephonic or facsimile notice.
9.03. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the part of the
Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
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9.04. Costs and Expenses.
The Company shall:
(a) whether or not the transactions contemplated hereby are
consummated, pay or reimburse The Chase Manhattan Bank within five
Business Days after demand (subject to subsection 4.01(j)) for all
reasonable costs and expenses incurred by The Chase Manhattan Bank in
connection with the development, preparation, delivery and execution
of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document
and any other documents prepared in connection herewith or therewith,
and the consummation of the transactions contemplated hereby and
thereby, including reasonable Attorney Costs incurred by The Chase
Manhattan Bank with respect thereto; and
(b) pay or reimburse the Bank within five Business Days after
demand (subject to subsection 4.01(j)) for all reasonable costs and
expenses (including Attorney Costs) incurred by it in connection with
the enforcement, attempted enforcement, or preservation of any rights
or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans
(including in connection with any "workout" or restructuring regarding
the Loans, and including in any Insolvency Proceeding or appellate
proceeding).
9.05. Company Indemnification.
Whether or not the transactions contemplated hereby are consummated,
the Company shall indemnify, defend and hold the Bank and each of its respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including reasonable Attorney Costs but
excluding costs covered by Section 9.04(a)) of any kind or nature whatsoever
which may at any time (including at any time following repayment of the Loans)
be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein, or the transactions contemplated hereby, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including
any Insolvency Proceeding or appellate proceeding) related to or arising out of
this Agreement or the Loans or the use of the proceeds thereof, whether or not
any Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities to
the extent resulting from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations.
9.06. Payments Set Aside.
To the extent that the Company makes a payment to the Bank or the Bank
exercises its right of set-off, and such payment or the proceeds of such set-off
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required
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(including pursuant to any settlement entered into by the Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then to the extent of
such recovery the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred.
9.07. Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written of the Bank.
9.08. Assignments, Participations, etc.
(a) The Bank may, with the consent of the Company (which consent
shall not be unreasonably be withheld) at any time assign and delegate
to an Eligible Assignee (an "Assignee") the Loans, the Commitment, and
the other rights and obligations of the Bank hereunder. Upon the making
of such an assignment the Assignee shall, for all purposes, be
considered the "Bank" under this Agreement.
(b) The Bank may at any time sell to one or more commercial banks
or other financial institutions not Affiliates of the Company (a
"Participant") participating interests in any ratable part (but not
all) of any Loans, the Commitment of the Bank and the other interests
of the Bank hereunder and under the other Loan Documents; provided,
however, that (i) the Bank's obligations under this Agreement shall
remain unchanged, (ii) the Bank shall remain solely responsible for the
performance of such obligations, (iii) the Company, shall continue to
deal solely and directly with the Bank in connection with the Bank's
rights and obligations under this Agreement and the other Loan
Documents, and (iv) the Bank shall not transfer or grant any
participating interest under which the Participant has rights to
approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document. In the case of any such
participation, the Participant shall not have any rights under this
Agreement, or any of the other Loan Documents, and all amounts payable
by the Company hereunder shall be determined as if the Bank had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of
its participating interest in amounts owing under this Agreement to the
same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
(c) Notwithstanding any other provision in this Agreement, the
Bank may at any time create a security interest in, or pledge, all or
any portion of its rights under and interest in this Agreement in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
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9.09. Confidentiality.
The Bank agrees to, and to take those steps reasonably required to
cause its Affiliates, representatives and independent contractors to, take
normal and reasonable precautions and exercise due care to maintain the
confidentiality of all information provided to it or on its behalf by the
Company or any Subsidiary, under this Agreement or any other Loan Document, and
neither it nor any of its Affiliates shall use any such information other than
in connection with or in enforcement of this Agreement and the other Loan
Documents or in connection with other business now or hereafter existing or
contemplated with the Company or any Subsidiary; except to the extent such
information (i) was or becomes generally available to the public other than as a
result of disclosure by the Bank, or (ii) was or becomes available on a
non-confidential basis from a source other than the Company, provided that such
source is not bound by a confidentiality agreement with the Company known to the
Bank; provided, however, that the Bank may disclose such information (A) at the
request or pursuant to any requirement of any Governmental Authority to which
the Bank is subject or in connection with an examination of the Bank by any such
authority; (B) pursuant to subpoena or other court process provided the Company
is given prior notice of such process; (C) when required to do so in accordance
with the provisions of any applicable Requirement of Law provided the Company is
given prior notice of such process; (D) to the extent reasonably required in
connection with any litigation or proceeding to the Bank or its Affiliates may
be party; (E) to the extent reasonably required in connection with the exercise
of any remedy hereunder or under any other Loan Document; (F) to the Bank's
independent auditors and other professional advisors; (G) to any Participant or
Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Bank
hereunder; (H) as to the Bank or its Affiliate, as expressly permitted under the
terms of any other document or agreement regarding confidentiality to which the
Company or any Subsidiary is party or is deemed party with the Bank or such
Affiliate; and (I) to its Affiliates.
9.10. Set-off.
In addition to any rights and remedies of the Bank provided by law, if
an Event of Default exists and the Loans have been accelerated, the Bank is
authorized at any time and from time to time, without prior notice to the
Company, any such notice being waived by the Company to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, the Bank to or for the credit or the account
of the Company against any and all Obligations owing to the Bank, now or
hereafter existing, irrespective of whether or not the Bank shall have made
demand under this Agreement or any Loan Document and although such Obligations
may be contingent or unmatured. The Bank agrees promptly to notify the Company
after any such set-off and application made by the Bank; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.
9.11. Counterparts.
This Agreement may be executed in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument.
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9.12. Severability.
The illegality or unenforceability of any provision of this Agreement
or any instrument or agreement required hereunder shall not in any way affect or
impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
9.13. No Third Parties Benefited.
This Agreement is made and entered into for the sole protection and
legal benefit of the Company and the Bank, and their permitted successors and
assigns, and no other Person shall be a direct or indirect legal beneficiary of,
or have any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
9.14. Governing Law and Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED THAT THE
BANK SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY
AND THE BANK CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY AND
THE BANK IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO. THE COMPANY AND THE BANK EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE
BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
9.15. Waiver of Jury Trial.
THE COMPANY AND THE BANK EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY
AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY
A COURT TRIAL WITHOUT A JURY. WITHOUT
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LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
9.16. Termination of Existing Credit.
This Amended and Restated Credit Agreement amends, restates and
supersedes the Existing Credit Agreement. The Bank's commitment to make loans to
the Company pursuant to the terms of the Existing Credit Agreement is hereby
terminated. The Bank releases (a) any security interests in the assets of the
Company and its Subsidiaries granted by the Company to the Bank in connection
with the Existing Credit Agreement, and (a) the guarantees in favor of the Bank
given by the Subsidiaries that executed the Unlimited Guaranty dated May 5,
1995, except for the obligations of any Subsidiary Guarantor which have been
amended and restated in connection herewith.
9.17. Entire Agreement.
This Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding among the Company and the Bank and supersedes
all prior or contemporaneous agreements and understandings of such Persons,
verbal or written, relating to the subject matter hereof and thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in New Jersey by their proper and duly authorized
officers as of the day and year first above written.
Dendrite International, Inc.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer and Senior Vice
President
The Chase Manhattan Bank
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Vice President
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