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[LOGO] EXHIBIT 10.12
LOAN AND SECURITY AGREEMENT
SECTION 1. DEFINITIONS.
All capitalized terms which are not defined herein are defined in
Rider A attached hereto and made a part hereof ("Rider A"). Accounting terms
not specifically defined shall be construed in accordance with generally
accepted accounting principles.
SECTION 2. AMOUNT AND TERMS OF LOANS; GRANT OF SECURITY INTEREST.
Subject to the terms and conditions hereof, CIT agrees to make Loans
to Debtor from time to time, in the amount described in paragraph 2 of Rider A.
Each Loan shall be evidenced by Debtor's Note, which Note shall set forth the
repayment terms and Interest Rate for such Loan.
AS security for the prompt and complete payment and performance when
due of all the Obligations and in order to induce CIT to enter into this
Agreement and make the Loans and to extend other credit from time to time to
Debtor, whether under this Agreement or otherwise, Debtor hereby grants to CIT
a first priority security interest in all Debtor's right, title and interest
in, to and under the Collateral.
SECTION 3. CONDITIONS OF BORROWING.
CIT shall not be required to make any Loan hereunder unless on the
Closing Date thereof all legal matters with respect to, and all legal documents
executed in connection with, the contemplated transactions are satisfactory to
CIT and all of the following conditions are met to the satisfaction of CIT
(except that (a) and (b) are required in connection with the initial Loan
only): (a) CIT has received a satisfactory Secretary's Certificate certified by
Debtor's Secretary or Assistant Secretary; (b) if requested by CIT, CIT shall
have received the written opinion addressed to it of counsel for Debtor
satisfactory to CIT as matters contained in Section 4(a)-(e), (g) and (i)
hereof, and as to such other matters as CIT may reasonably request; (c) Debtor
has executed and delivered to CIT the Note evidencing, and a Supplement
describing the Equipment to be financed by, such Loan; (d) the Equipment being
financed by such Loan has been delivered to, and accepted by, Debtor and CIT
has received satisfactory evidence that the Equipment is insured in accordance
with the provisions hereof and that the Cost thereof has been, or concurrently
with the making of the Loan shall be, fully paid; (e) Intentionally Left Blank;
(f) all filings, recordings and other actions (including the obtaining of
landlord and/or mortgagee waivers) deemed necessary or desirable by CIT in
order to perfect a first (and only) priority security interest in the Equipment
being financed by such Loan have been duly effected, and all fees, taxes and
other charges relating to such filings and recordings have been paid by Debtor;
(g) the representations and warranties contained in this Agreement are true and
correct with the same effect as if made on and as of such date, and no Default
or Event of Default is in existence on such date or shall occur as a result of
such Loan; (h) in the sole judgment of CIT, there has been no material adverse
change in the financial condition, business or operations of Debtor from the
date referred to in Section 4(j) hereof; (i) CIT has received from Debtor such
other documents and information as CIT has reasonably requested; (j) CIT has
inspected and appraised the Equipment and found it satisfactory in value and
condition; and (k) CIT has received and found satisfactory Debtor's most recent
quarterly financial statement.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
In order to induce CIT to enter into this Agreement and to make each
Loan, Debtor represents and warrants to CIT that: (a) Debtor is a corporation
duly organized, validly existing and in good standing under the laws of its
State of incorporation, has the necessary authority and power to own the
Equipment and its other assets and to transact the business in which it is
engaged, is duly qualified to do business in each jurisdiction where the
Equipment is located and in each other jurisdiction in which the conduct of its
business or the ownership of its assets requires such qualification, and its
chief executive office is located at the address set forth in paragraph 5 of
Rider A; (b) Debtor has
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full power, authority and legal right to execute and deliver this Agreement and
the Notes, to perform its obligations hereunder and thereunder, to borrow
hereunder and to grant the security interest created hereby; (c) this Agreement
has been (and each Note when executed and delivered shall have been) duly
authorized, executed and delivered by Debtor and constitutes (and each Note
when executed and delivered shall constitute) a legal, valid and binding
obligation of Debtor enforceable in accordance with its terms except as such
rights may be limited by bankruptcy, insolvency or other similar laws affecting
the enforcement of creditors' rights generally; (d) the execution, delivery and
performance by Debtor of this Agreement and the Notes do not and will not
violate any provision of any applicable law or regulation or of any judgment or
order of any court or governmental instrumentality, and will not violate any
provision of, or cause a default under, any loan, other agreement, contract or
judgment to which Debtor is a party and do not and will not require the
consent, license, approval or authorization of, or registration with, any
Person; (e) Debtor is not in default under any material agreement, contract or
judgment to which Debtor is a party; (f) Debtor has filed all tax returns that
are required to be filed and has paid all taxes as shown on said returns and
all assessments received by it to the extent such taxes and assessments have
become due other than those which are being contested in good faith by
appropriate proceedings and as to which appropriate reserves are being
maintained by Debtor in accordance with generally accepted accounting
principles and so long as such proceedings operate during the pendency thereof
to prevent the sale, forfeiture, or loss of the Collateral, and Debtor does not
have any knowledge of any actual or proposed deficiency or additional
assessment in connection therewith; (g) there is no action, audit,
investigation or proceeding pending or threatened against or affecting Debtor
or any of its assets which involves any of the Equipment or any of the
contemplated transactions hereunder or which, if adversely determined, could
have a material adverse effect on Debtor's business, operations or financial
condition; (h) on each Closing Date, Debtor shall have good and marketable
title to the Equipment being financed on such date and CIT shall have a
perfected first (and only) Lien on such Equipment; and (i) (i) the operations
of Debtor comply in all material respects with all applicable Environmental
Laws; and (ii) except as disclosed to CIT, (A) none of the operations of Debtor
are subject to any judicial or administrative proceeding alleging the violation
of any Environmental Laws; (B) none of the operations of Debtor is the subject
of an investigation to determine whether any remedial action is needed to
respond to a release of any Hazardous Material into the environment; and (C)
Debtor has no known material contingent liability in connection with any
release of any Hazardous Material into the environment: (j) all financial
statements of Debtor which have been delivered to CIT have been prepared in
accordance with generally accepted accounting principles consistently applied,
and present fairly Debtor's financial position as at, and the results of its
operations for, the periods ended on the dates set forth on such financial
statements, and there has been no material adverse change in Debtor's financial
condition, business or operations since May 31, 1995, as reflected in such
financial statements; and (k) Debtor has not changed its name in the last five
years or done business under any other name except as previously disclosed in
writing to CIT.
SECTION 5. COVENANTS.
Debtor covenants and agrees that from and after the date hereof and so
long as the Commitment or any of the Notes is outstanding:
A. It will: (1) promptly give written notice to CIT of the occurrence
of any Event of Loss; (2) observe all material requirements of any governmental
authorities relating to the conduct of its business, to the performance of its
obligations hereunder, to the use, operation or ownership of the Equipment, or
to its other properties or assets, maintain its existence as a legal entity and
obtain and keep in full force and effect all rights, franchises, licenses and
permits which are necessary to the proper conduct of its business, and pay all
fees, taxes, assessments and governmental charges or levies imposed upon any of
the Equipment; (3) at any reasonable time or times, and upon reasonable notice,
permit CIT or its authorized representative to inspect the Equipment and,
following the occurrence and during the continuation of an Event of Default, to
inspect the books and records of Debtor as they pertain to the Equipment; (4)
in accordance with generally accepted accounting principles, keep proper books
of record and account in which entries will be made of all dealings or
transactions in relation to its business and activities; (5) furnish to CIT the
following financial statements, all in reasonable detail, prepared in
accordance with generally accepted accounting principles applied on a basis
consistently maintained throughout the period involved, (a) not later than 120
days after the end of each fiscal year, its consolidated balance sheet as at
the end of such fiscal year, and its consolidated statements of income and
consolidated statements of cash flow and all footnotes of such fiscal year
together with comparative information for the prior fiscal year, audited by a
"Big Six" certified public accounting firm; and (b) not later than 90 days
after the end of each of the first three quarterly periods of each fiscal
year, its consolidated balance
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sheet as at the end of such quarterly period and its consolidated statements of
income and consolidated statements of cash flow for such quarterly period and
for the portion of the fiscal year then ended together with comparative
information for the prior comparable period, certified by its chief financial
officer as fairly presenting the results of operations and financial position
of Debtor for the periods then ended and as of the date thereof, respectively;
(6) (i) furnish to CIT, together with the financial statements described in
clauses 5(a) and 5(b) above, a statement signed by Debtor's chief financial
officer certifying that Debtor is in compliance with all financial covenants
contained in any documents evidencing a financial obligation to which Debtor is
a party, or if Debtor is not in compliance, the nature of such noncompliance or
default, and the status thereof (such statement shall set forth the actual
calculations of any financial covenants and the details of any amendments or
modifications of any financial covenants), and (ii) promptly, such additional
financial and other information as CIT may from time to time reasonably
request; (7) promptly, at Debtor's expense, execute and deliver to CIT such
instruments and documents, and take such action, as CIT may from time to time
reasonably request in order to carry out the intent and purpose of this
Agreement and to establish and protect the rights, interest and remedies
created, or intended to be created, in favor of CIT hereby, including, without
limitation, the execution, delivery, recordation and filing of financing
statements (hereby authorizing CIT, in such jurisdictions where such action is
authorized by law, to effect any such recordation or filing of financing
statements without Debtor's signature, and to file as valid financing
statements in the applicable financing statement records, photocopies hereof,
of the Supplements and of any other financing statement executed in connection
herewith); (8) warrant and defend its good and marketable title to the
Equipment, and CIT's perfected first (and only) priority security interest in
the Collateral, against all claims and demands whatsoever (hereby agreeing that
the Equipment shall be and at all times remain separately identifiable personal
property, and shall not become part of any real estate), and will, at its
expense, take such action as may be necessary to prevent any other Person from
acquiring any right or interest in the Equipment; (9) at Debtor's expense, if
requested by CIT in writing, attach to the Equipment a notice satisfactory to
CIT disclosing CIT's security interest in the Equipment; (10) at Debtor's
expense, maintain the Equipment in good condition and working order (and, where
applicable, in full configuration as listed on the (i) Appraisal of Fixed
Assets and Equipment, dated August 2, 1995, prepared by Asset Reliance, Inc.
for Equipment located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
and (ii) Appraisal of Fixed Assets and Equipment, dated July 28, 1995, prepared
by Asset Reliance, Inc. for Equipment located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇) and furnish all parts, replacements and servicing
required therefor so that the value, condition and operating efficiency thereof
will at all times be maintained, normal wear and tear excepted, and any
repairs, replacements and parts added to the Equipment in connection with any
repair or maintenance or with any improvement, change, addition or alteration
of a permanent nature shall immediately, without further act, become part of
the Equipment and subject to the security interest created by this Agreement;
and (11) obtain and maintain at all times on the Collateral, at Debtor's
expense, "All-Risk" physical damage and, if required by CIT, liability
insurance (including bodily injury and property damage) in such amounts,
against such risks, in such form and with such insurers as shall be reasonably
satisfactory to CIT; provided, however, that the amount of physical damage
insurance shall not be less than the then aggregate outstanding principal
amount of the Notes. All physical damage insurance policies shall be made
payable to CIT as its interest may appear; if liability insurance is required
by CIT, the liability insurance policies shall name CIT as an additional
insured. Debtor shall maintain and deliver to CIT the original certificates of
insurance or other documents reasonably satisfactory to CIT prior to policy
expiration or upon CIT's request, but CIT shall bear no duty or liability to
ascertain the existence or adequacy of such insurance. Each insurance policy
shall, among other things, require that the insurer give CIT at least 30 days'
prior written notice of any alteration in the terms of such policy or the
cancellation thereof and that the interests of CIT be continued insured
regardless of any breach of or violation by Debtor of any warranties,
declarations or conditions contained in such insurance policy. The insurance
maintained by the Debtor shall be primary with no other insurance maintained by
CIT (if any) contributory.
B. Without the prior written consent of CIT, it will not: (1) sell,
convey, transfer, exchange, lease or otherwise relinquish possession or dispose
of any of the Collateral or attempt or offer to do any of the foregoing; (2)
create, assume or suffer to exist any Lien upon the Collateral except for the
security interest created hereby; (3) liquidate or dissolve; (4) change the
form of organization of its business; or (5) without thirty (30) days prior
written notice to CIT, change its name or its chief executive office; (6) move
(or in the case of titled vehicles, change the principal base of) any of the
Equipment from the location specified on the Supplement relating thereto
without the prior written consent of CIT; or (7) make or authorize any
improvement, change, addition or alteration to the Equipment which would impair
its originally intended function or use or its value. Notwithstanding anything
set forth above, CIT hereby agrees that Debtor may substitute as Collateral for
items of Equipment that are redundant to Debtor's needs items of equipment of
similar type and value which are in as good or better condition as the items
of Equipment that are redundant to
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Debtor's needs, which substitute equipment must be acceptable to CIT.
SECTION 6. EVENTS OF DEFAULT; REMEDIES.
The following events shall each constitute an "Event of Default"
hereunder: (a) Debtor shall fail to pay any Obligation within 5 Business Days
after Debtor's receipt of notice that timely payment has not been received
(whether at the stated maturity, by acceleration or otherwise); (b) any
representation or warranty made by Debtor in this Agreement or in any document,
certificate or financial or other statement now or hereafter furnished by
Debtor in connection with this Agreement or any Loan shall at any time prove to
be untrue or misleading in any material respect as of the time when made; (c)
Debtor shall fail to observe any covenant, condition or agreement contained in
Sections 5.A(11) or 5.B hereof or in paragraph 4(b) of Rider A; (d) Debtor
shall fail to observe or perform any other covenant or condition contained in
this Agreement, and such failure shall continue unremedied for a period of 30
days after the earlier of the date on which Debtor obtains knowledge of such
failure or the date on which notice thereof shall be given by CIT to Debtor;
(e) Debtor or any affiliate of Debtor shall default in the payment of, or other
performance under, any obligation for payment or lease (whether or not
capitalized) or any guarantee (i) to CIT, any affiliate of CIT or to Debtor's
main bank, beyond the period of grace, if any, provided with respect thereto,
or (ii) to any other Person beyond the period of grace, if any, provided with
respect thereto, where such obligation or amount guaranteed is in excess of
$1,000,000.00; or (f) a complaint in bankruptcy or for arrangement or
reorganization or for relief under any insolvency law is filed by or against
Debtor (and when filed against Debtor is in effect for 60 days) or Debtor
admits its inability to pay its debts as they mature.
If an Event of Default shall occur, CIT may, by notice of default
given to Debtor, do any one or more of the following: (a) terminate the
Commitment and/or (b) declare the Notes to be due and payable, whereupon the
principal amount of the Notes, together with accrued interest thereon and all
other amounts owing under this Agreement and the Notes, shall become
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived (and in the case
of any Event of Default specified in clause (f) of the above paragraph, such
acceleration of the Notes shall be automatic, without any notice by CIT). In
addition, if an Event of Default shall occur and be continuing, CIT may
exercise all other rights and remedies available to it, whether under this
Agreement, under any other instrument or agreement securing, evidencing or
relating to the Obligations, under the Code, or otherwise available at law or
in equity. Without limiting the generality of the foregoing, Debtor agrees
that in any such event, CIT, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon Debtor or any other Person (all
and each of which demands, advertisements and notices are hereby expressly
waived), may forthwith do any one or more of the following: collect, receive,
appropriate and realize upon the Collateral or any part thereof, and sell,
lease, assign, give an option or options to purchase or otherwise dispose of
and deliver, the Collateral (or contract to do so), or any part thereof, in one
or more parcels at public or private sale or sales at such places and at such
prices as it may deem best, for cash or on credit or for future delivery
without the assumption of any credit risk. CIT shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption of Debtor, which right or
equity is hereby expressly released. Debtor further agrees, at CIT's request,
to assemble (at Debtor's expense) the Collateral and make it available to CIT
at such places which CIT shall select, whether at Debtor's premises or
elsewhere. CIT shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale (after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care,
safekeeping or otherwise of any or all of the Collateral or in any way relating
to the rights of CIT hereunder, including reasonable attorney's fees and legal
expenses) to the payment in whole or in part of the Obligations, in such order
as CIT may elect. Debtor agrees that CIT need not give more than 10 days'
notice of the time and place of any public sale or of the time after which a
private sale may take place and that such notice is reasonable notification of
such matters. Debtor shall be liable for any deficiency if the proceeds of any
sale or disposition of the Collateral are insufficient to pay all amounts to
which CIT is entitled. Debtor agrees to pay all costs of CIT, including
reasonable attorneys' fees, incurred with respect to collection of any of the
Obligations and enforcement of any of CIT's rights hereunder. To the extent
permitted by law, Debtor hereby waives presentment, demand, protest or any
notice (except as expressly provided in this Section 6) of any kind in
connection with this Agreement or any Collateral.
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SECTION 7. MISCELLANEOUS.
No failure or delay by CIT in exercising any right, remedy or
privilege hereunder or under any Note shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy or privilege
hereunder or thereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy or privilege. No right or remedy in this
Agreement is intended to be exclusive but each shall be cumulative and in
addition to any other remedy referred to herein or otherwise available to CIT
at law or in equity; and the exercise by CIT of any one or more of such
remedies shall not preclude the simultaneous or later exercise by CIT of any or
all such other remedies. No express or implied waiver by CIT of an Event of
Default shall in any way be, or be construed to be, a waiver of any other or
subsequent Event of Default. The acceptance by CIT of any regular installment
payment or any other sum owing hereunder shall not (a) constitute a waiver of
any Event of Default in existence at the time, regardless of CIT's knowledge or
lack of knowledge thereof at the time of such acceptance, or (b) constitute a
waiver of any Event of Default unless CIT shall have agreed in writing to waive
the Event of Default.
All notices, requests and demands to or upon any party hereto shall be
deemed duly given or made when sent, if given by telecopier, when delivered, if
given by personal delivery or overnight commercial carrier, upon receipt, after
deposit in the United States mail, certified mail, return receipt requested,
addressed to such party at its address (or telecopier number) set forth in
paragraph 5 of Rider A or such other address or telecopier number as may be
hereafter designated in writing by such party to the other party hereto.
Debtor agrees, whether or not the contemplated transactions are
consummated, (A) to pay or reimburse CIT for (i) all expenses of CIT in
connection with the documentation thereof; (ii) all fees, taxes and expenses of
whatever nature incurred in connection with the creation, preservation and
protection of CIT's security interest in the Collateral, including, without
limitation, all filing and lien search fees, payment or discharge of any taxes
or Liens upon, or in respect to, the Collateral, and all other fees and
expenses in connection with protecting or maintaining the Collateral or in
connection with defending or prosecuting any actions, suits or proceedings
arising out of, or related to, the Collateral; and (iii) all costs and expenses
(including reasonable legal fees and disbursements) of CIT in connection with
the enforcement of this Agreement and the Notes, and (B) to pay, and to
indemnify and hold CIT harmless from and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, suits,
out-of-pocket costs, expenses (including reasonable legal expenses) or
disbursements of any kind or nature whatsoever arising out of or with respect
to (a) this Agreement, the Collateral or CIT's interest therein, including,
without limitation, the execution, delivery, enforcement, performance or
administration of this Agreement and the Notes and the manufacture, purchase,
ownership, possession, use, selection, operation or condition of the Collateral
or any part thereof, or (b) Debtor's violation or alleged violation of any
Environmental Laws or any law or regulation relating to Hazardous Materials
(the foregoing being referred to as the "indemnified liabilities"), provided,
that Debtor shall have no obligation hereunder with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of CIT.
CIT hereby agrees that the fees, costs and expenses set forth in A(i) and (ii)
above shall not exceed $2,500.00 without Debtor's prior written consent. If
Debtor fails to perform or comply with any of its agreements contained in this
Agreement and CIT shall itself perform, comply or cause performance or
compliance, the expenses of CIT so incurred, together with interest thereon at
the Late Charge Rate, shall be payable by Debtor to CIT on demand and until
such payment is made shall constitute Obligations hereunder. The agreements
and indemnities contained in this paragraph shall survive termination of this
Agreement and payment of the Notes.
This Agreement contains the complete, final and exclusive statement of
the terms of the agreement between CIT and Debtor related to the contemplated
transactions, and neither this Agreement, nor any terms hereof, may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of a change, waiver, discharge or
termination is sought.
This Agreement shall be binding upon, and inure to the benefit of,
Debtor and CIT and their respective successors and assigns, except that Debtor
may not assign or transfer its rights hereunder or any interest herein without
the prior written consent of CIT.
Headings of sections and paragraphs are for convenience only, are not
part of this Agreement and shall not be deemed to affect the meaning or
construction of any of the provisions hereof. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
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prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Debtor hereby authorizes CIT to correct patent errors and to fill in
such blanks as serial numbers and dates herein and in the Notes, Supplements
and in any document executed in connection herewith.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
DEBTOR HEREBY IRREVOCABLY CONSENTS AND AGREES THAT ANY LEGAL ACTION IN
CONNECTION WITH THIS AGREEMENT MAY BE INSTITUTED IN THE COURTS OF THE STATE OF
NEW YORK, IN THE COUNTY OF NEW YORK OR THE UNITED STATES COURTS FOR THE
SOUTHERN DISTRICT OF NEW YORK, AS CIT MAY ELECT, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, DEBTOR HEREBY IRREVOCABLY ACCEPTS AND SUBMITS TO, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH
COURT, AND TO ALL PROCEEDINGS IN SUCH COURTS. DEBTOR AND CIT ACKNOWLEDGE THAT
JURY TRIALS OFTEN ENTAIL ADDITIONAL EXPENSES AND DELAYS NOT OCCASIONED BY
NONJURY TRIALS. DEBTOR AND CIT AGREE AND STIPULATE THAT A FAIR TRIAL MAY BE
HAD BEFORE A STATE OR FEDERAL JUDGE BY MEANS OF A BENCH TRIAL WITHOUT A JURY.
IN VIEW OF THE FOREGOING, AND AS A SPECIFICALLY NEGOTIATED PROVISION OF THIS
AGREEMENT, DEBTOR AND CIT HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT, OR
THE TRANSACTIONS RELATED HERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND DEBTOR AND CIT HEREBY
AGREE AND CONSENT THAT DEBTOR OR CIT MAY FILE AN ORIGINAL COUNTERPART OR A COPY
OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their duly authorized officers as of August 14, 1995.
CIT: DEBTOR:
THE CIT GROUP/EQUIPMENT MEGATEST CORPORATION
FINANCING, INC., A DELAWARE CO
A NEW YORK CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
--------------------------- ---------------------------
Title: Senior Vice President Title: VP Finance & CFO
----------------------- ------------------------
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[LOGO]
RIDER A TO
LOAN AND SECURITY AGREEMENT
DATED AUGUST 14, 1995
BETWEEN THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT") AND
MEGATEST CORPORATION ("DEBTOR").
1. DEFINITIONS. As used in the Loan and Security Agreement, the following
terms shall have the following defined meanings (applicable to both singular
and plural forms), unless the context otherwise requires:
"Agreement": "hereof", "hereto", "hereunder" and words of similar
meaning: the Loan and Security Agreement of even date herewith between Debtor
and CIT including this Rider A and any other rider, schedule and exhibit
executed by Debtor and CIT in connection herewith, as from time to time
amended, modified or supplemented.
"Business Day": a day other than a Saturday, Sunday or legal holiday
under the laws of the State of New York.
"Closing Date": each date on which a Loan is made.
"Code": the Uniform Commercial Code as from time to time in effect
in any applicable jurisdiction.
"Collateral": the Equipment and the Proceeds thereof.
"Commitment": CIT's obligation to make Loans in the aggregate
principal amount stated in paragraph 2 of this Rider A.
"Cost": with respect to any item of Equipment, the orderly
liquidation value of such Equipment, which orderly liquidation value shall be
set forth in the applicable Supplement.
"Default": any event which with notice, lapse of time, or both would
constitute an Event of Default.
"Equipment": any and all items of property which are listed on
Supplements, together with all now owned or hereafter acquired accessories,
parts, repairs, replacements, substitutions, attachments, modifications,
additions, improvements, upgrades and accessions of a permanent nature, to or
upon such items of property.
"Environmental Laws": the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, any
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act,
or any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect.
"Event of Default": as set forth in Section 6 of the Agreement.
"Event of Loss": with respect to any item of Equipment, (i) the actual
or constructive loss or loss of use thereof, due to theft, destruction, damage
beyond repair or to an extent which makes repair uneconomical, or (ii) the
condemnation, confiscation or seizure thereof, or requisition of title thereto,
or use thereof, by any Person.
"Hazardous Materials": any pollutant or contaminant defined as such in
(or for the purposes of) any Environmental Laws including, but not limited to,
petroleum, any radioactive material, and asbestos in any form or condition.
"Installment Payment Date": with respect to any Note, each date on
which a regular installment of principal is due.
"Interest Rate": as set forth in paragraph 3 of this Rider A.
"Late Charge Rate": a rate per annum equal to 3% over the applicable
Interest Rate, but not to exceed the highest rate permitted by applicable law.
"Liens": liens, mortgages, security interests, financing statements or
other encumbrances of any kind whatsoever.
"Loan": each loan made pursuant to the Agreement.
"Note": each promissory note executed and delivered by Debtor pursuant
hereto, satisfactory in form and substance to CIT.
"Obligations": all indebtedness, obligations, liabilities and
performance of Debtor to CIT, now existing or hereafter incurred under, arising
out of, or in connection with, the Agreement or any Note; and any and all other
present and future indebtedness, obligations, liabilities and performance of
any kind whatsoever of Debtor to CIT, whether direct or indirect, joint or
several, absolute or contingent, liquidated or unliquidated, secured or
unsecured, matured or unmatured and whether originally contracted with CIT or
otherwise acquired by CIT.
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"Person": an individual, partnership, corporation, trust,
unincorporated association, joint venture, governmental authority or other
entity of whatever nature.
"Proceeds": the meaning assigned to it in the Code, and in any event,
including, without limitation, (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Debtor from time to time with
respect to any of the Equipment; (ii) any and all payments made, or due and
payable from time to time, in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Equipment by any
Person; (iii) any and all accounts arising out of, or chattel paper evidencing
a lease of, any of the Equipment; and (iv) any and all other rents or profits
or other amounts from time to time paid or payable in connection with any of
the Equipment.
"Prohibited Transaction": a transaction in which: (i) Debtor enters
into any transaction of merger or consolidation where after giving effect to
such merger or consolidation its tangible net worth does not equal or exceed
that which existed prior to such merger or consolidation; or (ii) Debtor sells,
transfers or otherwise disposes of all or any substantial part of its assets;
or (iii) any Person, or group of Persons acting together, becomes or agrees to
become the beneficial owner (directly or indirectly) of 50% or more of Debtor's
shares of voting stock (excluding current shareholders as of the date of this
Agreement owning 50% or more of Debtor's shares of voting stock).
"Supplement": each supplement executed and delivered by Debtor
pursuant hereto, satisfactory in form and substance to CIT.
"Treasury Rate": with respect to any Loan made hereunder, the rate per
annum equal to the yield to maturity for the U.S. Treasury Security having a
remaining term to maturity closest to 4 years as at (and shall be fixed as of)
the close of business on the 3rd Business Day prior to the making of such Loan
as reported on page 5 ("U.S. Treasury and Money Markets") of the information
ordinarily provided by Telerate Systems Incorporated.
2. LOAN AND COMMITMENT. The aggregate principal amount of all Loans shall
not exceed $5,000,000.00. Each Loan shall be in a principal amount of not
less than $250,000.00. CIT's Commitment shall terminate on September 30, 1995.
3. INTEREST RATE. The interest rate per annum on the unpaid principal amount
of each Loan shall be equal to the Treasury Rate plus 3.32%.
4. PREPAYMENT. (a) Should any item of Equipment suffer an Event of Loss,
Debtor shall either (i) make a prepayment on the corresponding Note within 30
days thereafter, or (ii) substitute as Collateral for the item of Equipment
which was subject to an Event of Loss an item of equipment of similar type and
value which is in as good or better condition as the item which suffered an
Event of Loss, and is acceptable to CIT. The amount to be prepaid shall be (i)
the unpaid principal amount of such Note multiplied by a fraction the numerator
of which is the Cost of the item of Equipment which suffered the Event of Loss
and the denominator of which is the original Cost of all Equipment less the
Cost of each item of Equipment which previously suffered an Event of Loss or
for which a prepayment has otherwise previously been made (the "Prepaid
Principal Amount"), and (ii) all other amounts then due and owing
hereunder and under the Notes.
(b) Not less than twenty (20) Business Days prior to the date the
proposed Prohibited Transaction is expected to be consummated, Debtor shall
give CIT written notice of the proposed Prohibited Transaction. In the event
CIT does not consent to the Prohibited Transaction and the Prohibited
Transaction is nonetheless to be consummated, Debtor shall, on or prior to the
date the Prohibited Transaction is to be consummated, prepay the outstanding
principal under all Notes together with (1) all interest accrued thereon, and
(2) all other amounts then due and owing hereunder and under the Notes.
(c) On any Installment Payment Date occurring on or after the 13th
Installment Payment Date with respect to the Note executed hereunder, Debtor
may, at its option, on at least 30 days' prior written notice to CIT, prepay
all, or any part of, the outstanding principal under all Notes executed
hereunder together with (i) interest accrued thereon to the date of prepayment,
and (ii) all other amounts then due and owing hereunder or under the Notes. In
addition, upon any prepayment pursuant to this paragraph 4(c), Debtor shall pay
to CIT a prepayment fee in an amount equal to 3% of the principal being prepaid
at month 13 and declining rateably thereafter over the remaining Loan term.
(d) Except as provided in (a), (b) or (c) of this paragraph 4, the
Notes may not be prepaid in whole or in part.
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5. ADDRESSES FOR NOTICE PURPOSES AND DEBTOR'S CHIEF EXECUTIVE OFFICE.
CIT: DEBTOR:
THE CIT GROUP/EQUIPMENT FINANCING, INC. MEGATEST CORPORATION
Address: Address:
1211 Avenue of the Americas ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Senior Vice President/Credit Attention: Vice President - Finance
6. COMMITMENT FEE. CIT acknowledges receipt from Debtor of a commitment
fee in the amount of $10,000.00 (the "Commitment Fee"). CIT agrees to refund
to Debtor after the expiration of the commitment period hereunder and
completion by CIT of all follow-up matters related to the transactions
contemplated hereby, as the refundable portion of the Commitment Fee, the
amount determined in accordance with the following formula:
Refund = $10,000.00 Aggregate principal amount of all Loans made
X hereunder - not to exceed $5,000,000.00
--------------------------------------------
$5,000,000.00
Such refund shall be net, however, of any out-of-pocket fees, costs,
disbursements and expenses incurred by CIT (not to exceed $2,500.00) in
connection with the transactions contemplated hereby. Debtor agrees that the
difference, if any, between the amount of the Commitment Fee and the amount
determined in accordance with the foregoing formula shall be retained by CIT.
In the event no Loan is made hereunder, CIT shall retain the entire Commitment
Fee.
THE PROVISIONS SET FORTH IN THIS RIDER A ARE INCORPORATED IN AND MADE A PART OF
THE LOAN AND SECURITY AGREEMENT BETWEEN CIT AND DEBTOR DATED AS OF AUGUST 14,
1995.
CIT: DEBTOR:
THE CIT GROUP/EQUIPMENT MEGATEST CORPORATION,
FINANCING, INC., A NEW YORK CORPORATION A DELAWARE CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
------------------------------ -------------------------
Title: Senior Vice President Title: VP Finance & CFO
--------------------------- ----------------------
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PROMISSORY NOTE
$5,000,000.00 August 15, 1995
FOR VALUE RECEIVED, MEGATEST CORPORATION ("Debtor") promises to pay to
the order of THE CIT GROUP/EQUIPMENT FINANCING, INC. ("CIT"), at such address
as CIT may designate, in lawful money of the United States, the principal sum
of FIVE MILLION AND 00/100 DOLLARS ($5,000,000.00) together with interest in
like money on the principal sum remaining unpaid from time to time from the
date of this Note until due and payable (whether as stated, by acceleration or
otherwise) at the rate of nine and .4735/100 percent (9.4735%) per annum, said
principal and interest to be paid in forty-eight (48) consecutive monthly
installments, commencing on September 15, 1995 with the following installments
on the same day of each month thereafter until payment in full of this Note.
Each such installment shall be a level payment of principal and interest in the
amount of $125,552.42. Each such installment shall be applied first to the
payment of any unpaid interest on the principal sum and then to payment of
principal. Interest shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Any amount not paid when due under this
Note shall bear late charges thereon, calculated at the Late Charge Rate, from
the due date thereof until such amount shall be paid in full. Any payment
received after the maturity of any installment of principal shall be applied
first to the payment of unpaid late charges, second to the payment of any
unpaid interest on said principal, and third to the payment of principal.
This Note is one of the Notes referred to in the Loan and Security
Agreement dated as of August 14, 1995 between Debtor and CIT (herein, as the
same may from time to time be amended, supplemented or otherwise modified,
called the "Agreement"), is secured as provided in the Agreement, and is
subject to prepayment only as provided therein, and the holder hereof is
entitled to the benefits thereof.
Terms defined in the Agreement shall have the same meaning when used
in this Note, unless the context shall otherwise require.
Except as provided in the Agreement, Debtor hereby waives presentment,
demand of payment, notice of dishonor, and any and all other notices or demands
in connection with the delivery, acceptance, performance, default or
enforcement of this Note and hereby consents to any extensions of time,
renewals, releases of any party to this Note, waivers or modifications that may
be granted or consented to by the holder of this Note.
Upon the occurrence of any one or more of the Events of Default
specified in the Agreement, the amounts then remaining unpaid on this Note,
together with any interest accrued, may be declared to be (or, with respect to
certain Events of Default, automatically shall become) immediately due and
payable as provided therein.
In the event that any holder shall institute any action for the
enforcement or the collection of this Note, there shall be immediately due and
payable, in addition to the unpaid balance hereof, all late charges and all
costs and expenses of such action, including reasonable attorneys' fees. In
accordance with the provisions of the Agreement, Debtor and CIT waive trial by
jury in any litigation relating to or in connection with this Note in which
they shall be adverse parties, and
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Debtor hereby waives the right to interpose any setoff, counterclaim or defense
of any nature or description whatsoever.
Debtor agrees that its liabilities hereunder are absolute and
unconditional without regard to the liability of any other party, and that no
delay on the part of the holder hereof in exercising any power or right
hereunder shall operate a waiver thereof; nor shall any single or partial
exercise of any power or right hereunder preclude other or further exercise
thereof or the exercise of any other power or right.
If at any time this transaction would be usurious under applicable
law, then regardless of any provision contained in the Agreement, in this Note
or in any other agreement made in connection with this transaction, it is
agreed that (a) the total of all consideration which constitutes interest under
applicable law that is contracted for, charged or received upon the Agreement,
this Note or any such other agreement shall under no circumstances exceed the
maximum rate of interest authorized by applicable law and any excess shall be
credited to Debtor and (b) if CIT elects to accelerate the maturity of, or if
CIT permits Debtor to prepay the indebtedness described in, this Note, any
amounts which because of such action would constitute interest may never
include more than the maximum rate of interest authorized by applicable law and
any excess interest, if any, shall be credited to Debtor automatically as of
the date of acceleration or prepayment.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
MEGATEST CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇
--------------------------
Title: VP Finance & CFO
-----------------------
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