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$30,000,000.00
EQUIPMENT FACILITY AND REVOLVING CREDIT AGREEMENT
By and Between
SUMMIT BANK,
as Bank
and
VESTCOM INTERNATIONAL, INC.,
as Borrower
Dated as of August 13, 1997
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TABLE OF CONTENTS
PAGE
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BACKGROUND 1
AGREEMENT 1
I. THE CREDIT ACCOMMODATIONS 1
1.01 Equipment Facility 1
1.02 Equipment Facility Maximum Principal Amount 2
1.03 Borrowing Procedures Under Equipment
Facility 2
1.04 Interest on Equipment Loans/Term Loan 3
1.05 Equipment Loans Principal Payment Terms 3
1.06 The Revolving Credit Facility 4
1.07 Revolving Credit Facility Maximum Principal
Amount 4
1.08 Letter of Credit Sub-Facility 5
1.09 Interest on Revolving Credit Loans 5
1.10 Revolving Credit Principal Payment Terms 6
1.11 Borrowing Procedures Under the Revolving
Credit Facility 6
1.12 Revolving Credit Interest Conversion and
Continuance Options 6
1.13 Arrangement Fees 7
1.14 Commitment Fee 7
1.15 Computation 8
1.16 Payments Generally; Debiting of Account 8
II. DEFINITIONS 8
2.01 Defined Terms 8
2.02 Principles of Construction 24
III. PREPAYMENT 24
3.01 Prepayment of Revolving Credit Loans 24
3.02 Prepayments of Equipment Loans 24
3.03 Termination 25
IV. YIELD MAINTENANCE PROVISIONS 25
4.01 Inability to Determine Rate 25
4.02 Illegality 25
4.03 Requirement of Law 25
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4.04 Capital Adequacy 26
4.05 Funding Indemnity 27
4.06 Match Funding 28
V. CONDITIONS 28
5.01 Requirements for Initial Funding 28
5.02 Requirements for Any Advance or Conversion 32
5.03 Additional Requirements for Advances
Under Equipment Facility 29
VI. REPRESENTATIONS AND WARRANTIES 30
6.01 Organization; Authority 30
6.02 Subsidiaries 30
6.03 Use of Proceeds; Margin Regulation 31
6.04 Financial Statements 31
6.05 Suits 32
6.06 Burdensome Agreements 32
6.07 Defaults 32
6.08 ERISA 32
6.09 Tax Returns and Taxes 33
6.10 Compliance with Statutes, etc. 33
6.11 Not an Investment Company 33
6.12 No Authorizations or Approvals 33
6.13 Intellectual Property, etc. 33
6.14 Assets and Properties 34
6.15 Labor Matters 34
6.16 Insurance 34
6.17 True and Complete Disclosure 34
VII. AFFIRMATIVE COVENANTS 35
7.01 Financial Statements 35
7.02 Compliance Certificate 36
7.03 Notice of Certain Events 36
7.04 Preservation of Property; Insurance 36
7.05 Taxes 37
7.06 Conduct of Business and Maintenance of Existence 37
7.07 Operation of Business and Properties 37
7.08 Access to Properties, Books and Records 37
7.09 Environmental Liens 38
7.10 Removal of Hazardous Substances 38
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7.11 Further Assurances 38
VIII. NEGATIVE COVENANTS 39
8.01 Incur Indebtedness 39
8.02 Negative Pledge 40
8.03 Sale of Assets; Liquidation; Merger;
Acquisitions 42
8.04 Intentionally Omitted 43
8.05 Sale-Leaseback Transactions 43
8.06 Prepayment of Other Indebtedness 44
8.07 Investments 44
8.08 Create Subsidiaries 44
8.09 Hazardous Substances 44
8.10 Dividends, Etc 45
8.11 Redemption of Common Stock 45
8.12 Consolidated Stated Net Worth 45
8.13 Consolidated Tangible to Stated Net Worth 45
8.14 Consolidated Funded Debt to EBITDA Ratio 46
8.15 Consolidated Fixed Charges Ratio 46
8.16 Transactions with Affiliates 46
8.17 Use of Proceeds 46
8.18 Change Fiscal Year 46
IX. EVENTS OF DEFAULT 47
9.01 Payment Default 47
9.02 Negative Covenant Breach 47
9.03 Other Covenant Breaches 47
9.04 Default Under Agreements for Borrowed Money 47
9.05 Default Under Other Material Contracts 48
9.06 Voluntary Bankruptcy 48
9.07 Involuntary Bankruptcy 48
9.08 Appointment of Receiver 49
9.09 Insolvency 49
9.10 Reorganization 49
9.11 Material Misstatement 49
9.12 Entry of Judgment 49
9.13 Change of Control 49
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X. REMEDIES 50
10.01 Acceleration of Obligations; Other Remedies 50
10.02 Right of Set-off 50
10.03 Remedies Cumulative; No Waiver or Impairment 51
XI. MISCELLANEOUS 51
11.01 Notices 51
11.02 Costs and Expenses 52
11.03 Payment Due on a Day Other Than a Business Day 52
11.04 Governing Law 52
11.05 Integration 52
11.06 Amendment; Waiver 53
11.07 Successors and Assigns 53
11.08 Sale, Assignment or Participations 53
11.09 Severability 54
11.10 Consent to Jurisdiction and Service of Process 54
11.11 Indemnification 54
11.12 Inconsistencies 56
11.13 Headings 56
11.14 Schedules 56
11.15 Confidentiality 56
11.16 Judicial Proceeding; Waivers 56
11.17 Counterparts 57
EXHIBIT A FORM OF EQUIPMENT LOAN NOTE
EXHIBIT B FORM OF NOTICE OF BORROWING UNDER EQUIPMENT FACILITY
EXHIBIT C FORM OF REVOLVING CREDIT NOTE
EXHIBIT D FORM OF NOTICE OF BORROWING UNDER REVOLVING CREDIT
EXHIBIT E FORM OF CLOSING DOCUMENT INDEX
EXHIBIT F FORM OF COMPLIANCE CERTIFICATE
EXHIBIT G FORM OF SECURITY AGREEMENT
EXHIBIT H FORM OF LANDLORD CONSENT AND WAIVER
ANNEX I BORROWER DISCLOSURES
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EQUIPMENT FACILITY AND REVOLVING CREDIT AGREEMENT
This EQUIPMENT FACILITY AND REVOLVING CREDIT AGREEMENT (together with
all exhibits hereto and any amendments and modifications hereto in effect from
time to time, this "Agreement") is made as of this 13th day of August, 1997, by
and between SUMMIT BANK (the "Bank") a banking corporation organized under the
laws of the State of New Jersey, and VESTCOM INTERNATIONAL, INC., a New Jersey
corporation (the "Borrower"). All other capitalized terms used herein shall have
the meanings assigned to such terms in Article II hereof.
BACKGROUND
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WHEREAS, the Borrower has requested that the Bank make available an
equipment purchase facility in the principal amount of up to $5,000,000 for the
purpose of financing the acquisition from time to time of certain equipment to
be used or useful in the ordinary course of the integrated and related business
of the Borrower and its Subsidiaries as presently conducted (the "Financed
Equipment");
WHEREAS, the Borrower has further requested that the Bank make
available a committed revolving credit facility pursuant to which the Borrower
may request advances from time to time in an aggregate principal amount of up to
$25,000,000 outstanding at any time for the purposes herein specified; and
WHEREAS, the Bank is willing to make available to the Borrower such
equipment purchase facility and committed revolving credit facility upon the
terms and conditions herein stated;
AGREEMENT
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NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the Bank and the Borrower agree as follows:
I. THE CREDIT ACCOMMODATIONS.
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1.01 Equipment Facility. Subject to the terms and conditions herein
set forth, during the Equipment Facility Commitment Period,
the Bank agrees to make available to the Borrower an equipment
finance facility (the "Equipment Facility"), under which the
Bank shall make advances (each an "Equipment Loan" and
collectively the "Equipment Loans") to the Borrower from time
to time to finance the acquisition of the Financed Equipment.
Amounts borrowed under the Equipment Facility and repaid may
not be reborrowed. The amounts outstanding under each
Equipment Loan shall be evidenced by separate promissory
notes, substantially in the form of Exhibit A hereto (together
with any attachments thereto and amendments or modifications
thereof in effect from time to time, an "Equipment Loan Note"
and collectively the "Equipment Loan Notes"). The Equipment
Loans shall be Fixed Rate Loans.
1.02 Equipment Facility Maximum Principal Amount. The maximum
aggregate principal amount of Equipment Loans outstanding at
any time shall not exceed FIVE MILLION 00/100 DOLLARS
($5,000,000.00), such amount being hereinafter referred to as
the "Maximum Equipment Facility Principal Amount". If the
aggregate principal amount of Equipment Loans outstanding at
any time under the Equipment Facility exceeds the Maximum
Equipment Facility Principal Amount, then the Borrower shall
immediately repay to the Bank the amount of such excess.
1.03 Borrowing Procedures Under Equipment Facility. If the Borrower
desire to borrow under the Equipment Facility, the Borrower
shall give the Bank a notice of the amount and date of such
borrowing by no later than 3 Business Days prior to the
proposed funding of the relevant Equipment Loan. Such notice
shall be in the form of the "Notice of Borrowing Under
Equipment Facility" attached hereto as Exhibit B and shall be
accompanied by (i) true and complete description of the
Financed Equipment to be acquired with the proceeds of the
proposed Equipment Loan, the location (or proposed location)
of such equipment, the identity of the record owner of such
location and if title to such equipment is to be held by a
Subsidiary of the Borrower, the identity of such Subsidiary,
and (ii) a true and correct copy of the vendor's invoice or
▇▇▇▇ of sale, as the case may be, rendered in connection with
the purchase of such equipment, which shall be accompanied by
the payment instructions of such vendor to permit the Bank to
fund the proceeds of the relevant Equipment Loan directly to
such vendor. Upon receipt of any such notice, the Bank may, in
its sole discretion, request any documents or instruments
(including, without limitation, additional financing
statements, certificate or documents of title and/or
additional security agreements substantially in the form of
Exhibit G attached hereto that are necessary or advisable in
order to assure the Bank's first priority security interest in
the relevant Financed Equipment and in connection with such
request, the Bank
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may refuse or postpone the funding of the relevant Equipment
Loan until such time as the relevant Borrower has complied
therewith. Said Notice of Borrowing Under Equipment Facility
shall also specify the desired term of the relevant Equipment
Loan, which shall be either 24, 36 or 48 months in duration
(each such proposed term, an "Equipment Loan Term"). Promptly
upon receipt of said notice, the Bank shall give the Borrower
notice of the Fixed Rate to be applicable to the proposed
Equipment Loan base upon the desired Equipment Loan Term. The
principal amount of any Equipment Loan requested hereunder
shall not exceed one hundred percent (100%) of the purchase
price of the relevant Financed Equipment as stated on the
invoice or ▇▇▇▇ of sale accompanying the relevant notice of
borrowing, but in no event shall any Equipment Loan be in a
principal amount of less than $100,000. Notwithstanding
anything in this Section 1.03 to the contrary, the obligation
of the Bank to fund any Equipment Loan is subject to the
satisfaction of the conditions set forth in Section 5.03
hereof. The Borrower shall pay to, or reimburse, the Bank on
demand the costs incurred in connection with the preparation,
filing or recordation of any document or instrument requested
pursuant to this Section 1.03 as well as the reasonable costs
and expense of Bank's counsel in connection with legal
services rendered to assure the Bank's first priority security
interest in the relevant Financed Equipment. The
aforementioned payment or reimbursement obligation, as the
case may be, shall survive the funding of any particular
Equipment Loan.
1.04 Interest on Equipment Loans/Term Loan. Interest on each
Equipment Loans shall accrue at the Fixed Rate applicable
thereto and be payable monthly, in arrears, on each Payment
Date during which such Loan is outstanding, and upon payment
in full of the aggregate outstanding balance thereof.
1.05 Equipment Loans Principal Payment Terms. The outstanding
principal balance of each Equipment Loan shall be repaid in
consecutive monthly installments and payable on each Payment
Date applicable thereto. The amount of each such principal
installment will be equal to the amount necessary to amortize
the original principal amount of such Equipment Loan (on a
straight-line basis) over the Equipment Loan Term applicable
thereto. In any event, the final installment of principal
applicable thereto shall be due and payable on the applicable
Equipment Loan Maturity Date and shall be in an amount equal
to the then remaining unpaid
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principal balance thereof, together with any accrued and
unpaid interest thereon.
1.06 The Revolving Credit Facility. Subject to the terms and
conditions hereof, the Bank agrees to make available to the
Borrower, a revolving credit facility (the "Revolving Credit
Facility") under which the Bank shall make advances to the
Borrower from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount outstanding
at any one time of up to TWENTY-FIVE MILLION 00/100 DOLLARS
($25,000,000.00) (each a "Revolving Credit Loan" and
collectively the "Revolving Credit Loans"). During the
Revolving Credit Commitment Period, the Borrower may borrow,
repay and reborrow as provided herein. Revolving Credit Loans
may be made as Alternate Base Rate Loans or LIBOR Loans, as
requested by the Borrower pursuant to Section 1.12 hereof. The
Revolving Credit Loans shall be evidenced by a single
promissory note, substantially in the form of Exhibit C hereto
(together with any attachments thereto and/or amendments or
modifications thereof in effect from time to time, the
"Revolving Credit Note"). The Revolving Credit Commitment
Period may be extended for an additional period not to exceed
3 years in the sole and absolute discretion of the Bank. The
Borrower shall be notified of the Bank's decision to so extend
the Revolving Credit Commitment Period by a date occurring no
later than 14 months prior to the Revolving Credit Expiration
Date then in effect. For the avoidance of doubt, it is hereby
acknowledged that the Bank's agreement to so extend the
Revolving Credit Commitment Period may be subject to the
acceptance by the Borrower of such additional terms and
conditions, or the modification of the existing terms and
conditions, of the Revolving Credit Facility as the Bank may
impose in its sole and absolute discretion.
1.07 Revolving Credit Facility Maximum Principal Amount. The
maximum aggregate principal amount of the Revolving Credit
Loans outstanding at any time, when added to the Letter of
Credit Outstanding at such time shall not exceed TWENTY FIVE
MILLION 00/100 DOLLARS ($25,000,000.00) such amount being
hereinafter referred to as the "Maximum Revolving Credit
Principal Amount". If the aggregate outstanding principal
amount of the Revolving Credit Loans plus the Letters of
Credit Outstanding at any time exceed the Maximum Revolving
Credit Principal Amount, the Borrower shall immediately repay
to the Bank the amount of such excess.
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1.08 Letter of Credit Sub-Facility. Within the limitations of
the Revolving Credit Facility herein set forth, the Borrower
may from time to time request that the Bank issue irrevocable
standby or commercial letters of credit for the account of the
Borrower and in support of any obligation deemed acceptable by
the Bank in its sole discretion (any such letter of credit so
issued, a "Letter of Credit" and collectively the "Letters of
Credit"). Notwithstanding the foregoing (i) no Letter of
Credit shall be issued by the Bank in a Stated Amount which
(x) when added to the Letters of Credit Outstandings at such
time, would exceed $2,000,000.00 or (y) when added to the sum
of the aggregate outstanding principal amount of the Revolving
Credit Loans plus the Letter of Credit Outstandings, at such
time, would exceed the Maximum Revolving Credit Principal
Amount. Each Letter of Credit issued in accordance herewith
shall have an expiration date occurring no later than 1 year
from the date of issuance and in any event no later than (i) 6
months, in the case of commercial letter of credit, or (ii) 1
year, in the case of irrevocable automatically renewable
letter of credit, after the Revolving Credit Expiration Date.
Each Letter of Credit shall be denominated in U.S. dollars.
When a Borrower desires that a Letter of Credit be issued for
its account, it shall give the Bank at least 3 Business Days'
written notice (or such lesser number of days as may be agreed
to by the Bank). Each such request shall be accompanied by a
completed and executed "Letter of Credit Application/
Agreement" (or an amendment to any then effective application)
in the form furnished by the Bank to the Borrower from time to
time. The terms of each such application/agreement are
incorporated herein to the extent not consistent herewith. In
connection with the issuance of any Letters of Credit in
accordance herewith, the Borrower shall pay all letters of
credit fees and other expenses that are customarily charged by
the Bank in connection therewith.
1.09 Interest on Revolving Credit Loans. Interest on each Revolving
Credit Loan that is an Alternate Base Rate Loan shall accrue
at the Alternate Base Rate plus the Applicable Margin, if any,
and shall be payable monthly, in arrears, on each Payment Date
during which such Loan is outstanding, and upon payment in
full of the outstanding balance of such Loan. Interest on each
Revolving Credit Loan that is a LIBOR Loan shall accrue at
LIBOR plus the Applicable Margin and shall be payable, in
arrears, on each Payment Date during which
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such Loan is outstanding, and upon payment in full of the
outstanding balance of such Loan.
1.10 Revolving Credit Principal Payment Terms. The aggregate
outstanding principal balance of the Revolving Credit Loans,
together with all accrued and unpaid interest thereon, shall
be due and payable on the Revolving Expiration Date.
1.11 Borrowing Procedures Under the Revolving Credit Facility. If
the Borrower desires to borrow under the Revolving Credit
Facility, the Borrower shall give the Bank irrevocable written
notice of the amount and date of such borrowing no later than
1 Business Day prior to the date of such proposed borrowing in
the case of Alternate Base Rate Loans and 2 Business Days
prior to the date of such proposed borrowing in the case of
LIBOR Loans. Such notice shall be in the form of a "Notice of
Borrowing Under Revolving Credit" attached hereto as Exhibit
D. Each borrowing under the Revolving Credit Facility shall be
in an amount equal to $100,000 or any whole multiple thereof.
The Borrower shall not be permitted to request a Revolving
Credit Loan in the form of a LIBOR Loan, if the making of such
Loan would cause the aggregate number of LIBOR Loans
outstanding under the Revolving Credit Facility to exceed 10
at such time.
1.12 Revolving Credit Interest Conversion and Continuance Options.
(a) Subject to the limitation of the last sentence of Section
1.11 hereof, during the Revolving Credit Commitment Period,
the Borrower may elect to convert any Revolving Credit Loan to
a Loan maintained at the other rate of interest available for
Revolving Credit Loans hereunder by giving the Bank
irrevocable notice (which may be telephone notice promptly
confirmed in writing) of such election at least 2 Business
Days prior to the conversion to a LIBOR Loan and at least 1
Business Day prior to the conversion to a Alternate Base Rate
Loan. Said notice shall specify, in the case of a conversion
to a LIBOR Loan, the desired Interest Period with respect
thereto, which shall be either 1, 2, 3 or 6 months in duration
as selected by the Borrower. Conversions of LIBOR Loans to
Alternate Base Rate Loans shall be made only on the last day
of the Interest Period applicable thereto. Conversions of
Alternate Base Rate Loans to LIBOR Loans shall only be made on
a Business Day.
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(b) During the Revolving Credit Commitment Period, the
Borrower may elect to continue any Revolving Credit Loan that
is a LIBOR Loan as such type of Loan upon the expiration of
the then current Interest Period with respect thereto by
giving the Bank an irrevocable notice (which may be telephone
notice promptly confirmed in writing) of such election at
least 2 Business Days prior to the expiration of the then
current Interest Period with respect thereto. Such notice
shall also specify the desired Interest Period for the Loan so
continued, which may be 1, 2, 3 or 6 months in duration as
selected by the Borrower.
(c) If the Borrower fails to notify the Bank of the conversion
or continuance of any LIBOR Loan within the time specified in
this Section 1.13, then any such Loan shall automatically
convert to an Alternate Base Rate Loan on the last day of the
then expiring applicable Interest Period.
1.13 Arrangement Fees. The Borrower shall pay, or have paid, to the
Bank on or before the Closing Date a one time arrangement fee
in an amount equal to $75,000. The Borrower acknowledges that
such fee is a liquidated sum and, together with the amounts
payable pursuant to Section 11.02 hereof, constitute
reasonable compensation to the Bank for its expenses and
services in connection with the arrangement of the facilities
provided hereunder and the negotiation and preparation of this
Agreement and the other Credit Documents.
1.14 Commitment Fee. The Borrower shall pay to the Bank, quarterly
in arrears, a commitment fee for the period beginning from and
including the date that is 6 months from the Closing Date (the
"Commitment Fee Commencement Date") until the Revolving Credit
Expiration Date, computed for each quarter occurring in said
period at a per annum rate equal to the Applicable Commitment
Fee multiplied by the average daily amount of the Availability
for such quarter. Such commitment fee shall be payable
commencing on May 1, 1998 and continuing quarterly on the
first Business Day of February, May, August, and November
occurring thereafter and on the Revolving Credit Expiration
Date. Any such payment shall be in respect of the immediately
preceding full fiscal quarter then last ended, except for the
initial payment which shall be respect of the period
commencing on the Commitment Fee Commencement Date through the
last day of the fiscal quarter then last ended.
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1.15 Computation. Interest and any fees or compensation based upon
a per annum rate shall be calculated on the basis of a 360 day
year for the actual number of days elapsed.
1.16 Payments Generally; Debiting of Account. All payments made
hereunder shall be paid in accordance with the payment terms
set forth in the Notes. Without limiting the generality of the
foregoing, the Borrower agrees to maintain a demand deposit
account at the Bank (the "Account") continuously until the
Obligations due hereunder are paid in full. The Bank may, and
the Borrower authorizes the Bank to, debit the Account for the
amount of any payment as and when such payment becomes due
hereunder. At any time during the continuance of an Event of
Default, the Bank may, and the Borrower authorizes the Bank to
debit any other account and/or certificate of deposit
maintained by the Borrower with the Bank for the amount of any
payment, as and when such payment becomes due hereunder,
whether such payment is for accrued interest, principal or
expense, even if debiting such account results in a loss or
reduction of interest to the Borrower or the imposition of a
penalty applicable to the early withdrawal of time deposits.
Such authorization shall not affect the Borrower's obligation
to pay when due all amounts payable hereunder, whether or not
there are sufficient funds in any accounts of the Borrower.
The Borrower agrees to fund the Account from time to time in
amounts sufficient to make any regularly scheduled payments of
principal and interest hereunder as and when such payments
become due. The foregoing rights of the Bank to debit the
Borrower's accounts shall be in addition to, and not in
limitation of, any rights of set-off which the Bank may have
hereunder or under any Credit Document.
II. DEFINITIONS.
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2.01 Defined Terms. The following terms used throughout this
Agreement shall have the meanings assigned below:
Affiliate. The term "Affiliate" means, as applied to any
Person, any other Person that directly or indirectly controls,
is controlled by, or is under common control with, that
Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied
to any Person, means the possession, directly or indirectly,
of the power to vote
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twenty-five percent (25%) or more of the securities or other
ownership interests having voting power for the election of
directors (or other persons performing similar functions) of
such Person or otherwise to direct or cause the direction of
the management and policies of that Person, whether through
the ownership of voting securities or by contract or
otherwise.
Alternate Base Rate. The term "Alternate Base Rate" means the
higher of the Announced Base Rate or the Federal Funds Rate.
Alternate Base Rate Loan. The term "Alternate Base Rate Loan"
means any Loan at all times during which such Loan bears
interest based upon the Alternate Base Rate.
Announced Base Rate. The term "Announced Base Rate" means the
per annum rate of interest established by the Bank as its
reference rate in making loans, and does not reflect the rate
of interest charged to any particular borrower or class of
borrowers. The Borrower acknowledges that the Announced Base
Rate is not tied to any external rate of interest and that the
rate of interest charged hereunder (if any) which is based on
the Announced Base Rate shall change automatically and
immediately as of the date of any change in the Announced Base
Rate, without notice to the Borrower.
Applicable Commitment Fee. The term "Applicable Commitment
Fee" means from and after the first day of any Applicable
Margin Adjustment Period to and including the last day of such
Applicable Margin Adjustment Period, the Applicable Commitment
Fee determined by reference to the table appearing in the
definition of "Applicable Margin".
Applicable Margin. The term "Applicable Margin" means
initially the percentage corresponding to the Consolidated
Funded Debt to EBITDA Ratio of the Borrower set forth on the
table set forth below based on the quarterly financial
statements for the fiscal period ending as of June 30, 1997,
provided, however, that from and after the first day of any
Applicable Margin Adjustment Period to and including the last
day of such Applicable Margin Adjustment Period, the
Applicable Margin shall be determined by reference to
percentages corresponding to the Consolidated Funded Debt to
EBITDA Ratio of the Borrower for the Test Period last ended,
in accordance with the following table:
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Applicable
Applicable Margin for
If Such Ratio Margin for LIBOR Alternate Base
Is: Commitment Fee Loans Rate Loans
-------------- -------------- ---------------- ---------------
Less than 1.15 25 basis points 100 basis points
to 1.00 (.25%) (1.00%) -0-
Greater than or 25 basis points 125 basis points -0-
equal to 1.15 to (.25%) (1.25%)
1.00, but less
than 1.5 to 1.00
1.00
Greater than or 30 basis points 150 basis points 25 basis points
equal to 1.50 to (.30%) (1.50%) (.25%)
1.00, but less
than 2.00 to
1.00
Greater than or 37.5 basis points 175 basis points 50 basis points
equal to 2.0 to (.375%) (1.75%) (.50%)
1.00, but less
than 2.5 to 1.00
Greater than or 50 basis points 225 basis points 100 basis points
equal to 2.5 to (.50)% (2.25%) (1.00%)
1.00
Notwithstanding the foregoing, at all times during which there
exists an Event of Default, the Applicable Margin (A) with
respect to Alternate Base Rate Loans, shall be 100 basis
points (1.00%) and (B) with respect to LIBOR Loans, shall be
225 basis points (2.25%), and said margin shall be in addition
to any margin added to the applicable rate of interest to
calculate the "Default Rate" pursuant to the relevant Note.
Applicable Margin Adjustment Period means (A) with respect to
the determination of the Applicable Commitment Fee, initially
the period commencing 6 months from the Closing Date and
ending on the last day of the then current fiscal quarter and
thereafter each fiscal quarter occurring thereafter and (B)
with respect to the determination of the Applicable Margin,
initially the period commencing October 1, 1997 and ending
December 31, 1997 and thereafter each fiscal quarter occurring
thereafter.
Approved Subordinated Indebtedness. The term "Approved
Subordinated Indebtedness" means any Indebtedness of the
Borrower that (i) is subordinated to the Obligations on
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terms and conditions approved in writing by the Bank and (ii)
does not constitute Guaranteed Indebtedness of the Borrower or
any of its Subsidiaries or Affiliates.
Availability. The Term "Availability" means, as of any
relevant date, the amount by which the Maximum Revolving
Credit Amount exceeds the amount of the aggregate outstanding
principal amount of the Revolving Credit Loan.
Business Day. The term "Business Day" means any day other than
a Saturday, Sunday, or a day on which commercial banks are
authorized or obligated by law or executive order to be closed
in the State of New Jersey.
Capital Expenditures. The term "Capital Expenditure" means,
with respect to any Person, without duplication and for any
period, the aggregate value attributed in accordance with
GAAP, to acquisitions during such period by such Person of any
asset, tangible or intangible, or replacements or
substitutions therefor or additions thereto which such Person
treated as a non-current asset on such Person's financial
statement, including, without limitation, (x) the acquisition
or construction of assets having a useful life of more than 1
year and (y) assets acquired during such period in connection
with Capitalized Leases.
Capitalized Lease. The term "Capitalized Lease" means any
lease with respect to which the obligation to pay rent or
other amounts constitutes Capitalized Lease Obligations.
Capitalized Lease Obligations. The term "Capitalized Lease
Obligations" means obligations to pay rent or other amounts
under a lease of (or other agreement conveying the right to
use) real and/or personal property which obligations are
required to be classified and accounted for as capital leases
on a balance sheet in accordance with GAAP.
Closing Date. The term "Closing Date" means the date on which
the conditions set forth in Section 5.01 hereof have been
fulfilled to the satisfaction of the Bank.
Confidential Information. The term "Confidential Information"
means information furnished to the Bank on a confidential
basis by or on behalf of the Borrower and designated as such,
but does not include any such information that is or becomes
generally available to
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the public (other than through any breach of any
confidentiality undertaking hereunder or in connection
therewith) or that legally is or becomes available to the Bank
from a source other than the Borrower.
Consolidated. The term "Consolidated" means an accounting
presentation which includes the consolidated Subsidiaries of
the Borrower prepared in accordance with GAAP, consistently
applied.
Consolidated EBITDA. The term "Consolidated EBITDA" means the
Borrower's earnings (excluding any extraordinary or
nonrecurring items) before interest expense, taxes,
depreciation and amortization, determined for the relevant
Test Period on a Consolidated basis in accordance with GAAP,
consistently applied.
Consolidated Fixed Charges Ratio. The term "Consolidated Fixed
Charges Ratio" means the ratio of (i) the Borrower's
Consolidated EBITDA less unfinanced Capital Expenditures to
(ii) the Current Maturities of the Borrower's Funded Debt plus
all cash and non-cash interest (including, without limitation,
capitalized interest) payable during the relevant Test Period
on or in connection with any Indebtedness of the Borrower of
any type, in each case determined for the relevant Test Period
on a Consolidated basis in accordance with GAAP, consistently
applied.
Consolidated Funded Debt to EBITDA Ratio. The term
"Consolidated Funded Debt to EBITDA Ratio" means the ratio of
(A) the Borrower's Funded Debt to (B) the Borrower's
Consolidated EBITDA, in each case determined for the relevant
Test Period on a Consolidated basis in accordance with GAAP,
consistently applied.
Consolidated Stated Net Worth. The term "Consolidated Stated
Net Worth" means, at any time:
(a) the total assets of the Borrower which would be
shown as assets on a Consolidated balance sheet of
the Borrower, prepared in accordance with GAAP,
consistently applied,
minus
(b) the total liabilities of the Borrower which would
be shown as liabilities on a Consolidated
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balance sheet of the Borrower, prepared in accordance
with GAAP, consistently applied.
Consolidated Tangible Net Worth. The term "Consolidated
Tangible Net Worth" mean, at any time:
(a) the total assets of the Borrower which would be
shown as assets on a Consolidated balance sheet of
the Borrower and its Subsidiaries, prepared in
accordance with GAAP, consistently applied, after
subtracting therefrom the aggregate amount of any
capitalized research and development costs;
capitalized interest; debt discount and expense;
goodwill; patents; trademarks; copyrights;
franchises; licenses; amounts owing from officers;
directors, or other Affiliates of the Borrower; and
any investments in any Affiliate of any of the
foregoing; and such other assets as are properly
classified as "intangible assets" determined in
accordance with GAAP, consistently applied,
minus
(b) the total liabilities of the Borrower which would
be shown as liabilities on a Consolidated balance
sheet of the Borrower, prepared in accordance with
GAAP, consistently applied.
Credit Documents. The term "Credit Documents" means this
Agreement, each Equipment Loan Note, the Revolving Credit
Note, the Security Agreements, the Guaranties, any Letters of
Credits and any letter of credit agreement/application
executed in connection with the issuance thereof, each of the
other documents, referenced in the Closing Checklist attached
hereto as Exhibit E, each of the "Credit Documents" referenced
therein, and all other all credit accommodations, notes, loan
agreements, guaranties, security agreements, mortgages,
instruments, pledge agreements, assignments, acceptance
agreements, commitments, facilities, letters of credit,
reimbursement agreements and any other agreements and
documents, of the Borrower, any Guarantor, with or in favor
of, the Bank, in each case now or hereafter existing,
creating, evidencing, guarantying, securing or relating to any
or all of the Obligations, together with in each case all
amendments, modifications, renewals, or extensions thereof.
Current Maturities. The term "Current Maturities" means with
respect to any item of Indebtedness, the portion of such
Indebtedness which by the terms of such
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Indebtedness or the terms of any instrument or agreement
related thereto was due and payable during the relevant Test
Period, whether such payment is required by a demand which may
be made during such Test Period, regularly scheduled principal
payments, mandatory prepayment, sinking fund requirements or
final payment at maturity.
Environmental Laws. The term "Environmental Laws" means all
applicable laws, regulations and other requirements of
Governmental Authorities relating to pollution or protection
of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into
ambient air, surface water, ground weather, or land, or
otherwise relating to the disposal, transport, or handling of
pollutants, contaminants, or hazardous or toxic material or
wastes.
Equipment Facility. The term "Equipment Facility" shall have
the meaning assigned to such term in Section 1.01 hereof.
Equipment Facility Commitment Period. The term "Equipment
Facility Commitment Period" means the period commencing on the
Closing Date and ending on the Equipment Facility Expiration
Date.
Equipment Facility Expiration Date. The term "Equipment
Facility Expiration Date" means the date that is the earlier
to occur of (i) the third anniversary of the Closing Date,
(ii) the date on which the Maximum Equipment Facility Amount
has been funded by the Bank, or (iii) the date on which this
Agreement is terminated pursuant to Section 3.03 hereof.
Equipment Loan and Equipment Loans. The terms "Equipment Loan"
and "Equipment Loans" shall have the meanings assigned to such
terms in Section 1.01 hereof.
Equipment Loan Maturity Date. The term "Equipment Loan
Maturity Date" means, with respect to any particular Equipment
Loan, the date on which the Equipment Loan Term applicable
thereto shall have expired.
Equipment Loan Note and Equipment Loan Notes. The terms
"Equipment Loan Note" and "Equipment Loan Notes" shall have
the meaning assigned to such terms in Section 1.01 hereof.
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Equipment Loan Term. The term "Equipment Loan Term" shall have
the meaning assigned to such term in Section 1.03 hereof.
Event of Default. The term "Event of Default" shall have the
meaning assigned to such term in Article IX hereof.
Facilities Management Arrangements. The term "Facilities
Management Arrangements" means any written contractual
undertaking of the Borrower or any of its Subsidiaries
pursuant to which the Borrower or any of its Subsidiaries is
to perform services substantially similar to the services
rendered by the Borrower or any of its Subsidiary in the
ordinary course of their respective businesses at a facility
that is owned or otherwise operated by a Person other than the
Borrower or any of its Subsidiaries and in connection with the
rendition of such services, the Borrower or any of its
Subsidiaries, as the case may be, acquires title to, or
assumes Indebtedness secured by a Lien upon, the equipment and
machinery located at such facility.
Federal Funds Rate. The term "Federal Funds Rate" means, for
any period, a fluctuating interest rate equal for each day
during such period to 50 basis points (.50%) above the
weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published by the Federal
Reserve Bank of New York on the Business Day next preceding
such day for amounts in immediately available funds comparable
to the principal amount of the relevant indebtedness or, if
such rate is not so published for any day for which the next
preceding day is a Business Day, the average of the quotations
for such day on such transactions received by the Bank from
three (3) Federal Funds brokers of recognized standing
selected by the Bank.
Financed Equipment. The term "Financed Equipment" shall have
the meaning assigned to such term in the first recital clause
of this Agreement.
Fixed Rate. The term "Fixed Rate" means, for each Equipment
Loan, the per annum rate of interest equal to 200 basis points
(2.00%) above the average asked yield for "Govt. Bonds &
Notes", as set forth in the column designated "Treasury Bonds,
Notes & Bills" in The Wall Street Journal most recently
published as of the date that is 2 Business Days prior to the
proposed date of
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funding of the relevant Equipment Loan, having a maturity date
that falls in the same month applicable Equipment Loan
Maturity Date, provided that if no such yield is published for
the relevant month, yields for the published month next
succeeding and the published month next preceding such month
shall be used to determine the Fixed Rate by interpolating
such yields on a straight-line basis. If The Wall Street
Journal at the time determination of the Fixed Rate is no
longer publishing the yields described above, then the Bank
shall determine such yield based on any other nationally
recognized source for such published yields as it may select
in its reasonable discretion.
Fixed Rate Loan. The term "Fixed Rate Loan" means each
Equipment Loan at all time during which such Loan bears
interest based upon the Fixed Rate.
Funded Debt. The term "Funded Debt" means, with respect to any
Person, without duplication, (i) indebtedness of such Person
for borrowed money, (ii) obligations of such Person evidenced
by bonds, debentures, notes, or other similar instruments,
(iii) obligations of such Person to pay the deferred purchase
price of property or services (other than accounts payable to
trade creditors and current operating liabilities incurred in
the ordinary course of business), and (iv) Capitalized Lease
Obligations of such Person, as lessee.
GAAP. The term "GAAP" means generally accepted accounting
principles in effect from time to time in the United States.
Governmental Authority. The term "Governmental Authority"
means any nation or government, any state or other political
subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions
of or pertaining to government.
Guaranteed Indebtedness. The term "Guaranteed Indebtedness"
means, as to any Person, all Indebtedness of the type referred
to in clauses (i) through (ix) of the definition of
Indebtedness in this Agreement guaranteed directly or
indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person, or in effect
guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Indebtedness or to
advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee
-16-
or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make
payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) to supply funds to or in any
other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether or not
such property is received or such services are rendered), or
(iv) otherwise to assure a creditor against loss. For the
avoidance of doubt, it is acknowledged that if the Borrower or
any Guarantor is permitted to incur any Indebtedness
hereunder, it is also permitted to guaranty such Indebtedness
if incurred by the Borrower or any other Guarantor.
Guarantors. The term "Guarantors" means collectively, Computer
Output Systems, Inc., a Connecticut corporation, Comvestrix
Corp., a Delaware corporation, Electronic Imaging Services,
Inc., a Delaware corporation, Image Printing Systems, Inc., a
Wisconsin corporation, Direct Mail Services, Inc., a New
Jersey corporation, Quality Control Printing, Inc., a New
Jersey corporation, First Class Presort, Inc., a New Jersey
corporation, Mystic Graphic Systems, Inc., a Massachusetts
corporation, 504087 N.B. Inc., a New Brunswick (Canada)
corporation, Lirpaco, Inc., a Canadian corporation, Cos
Information Inc., a Canadian corporation, and any Subsidiary
of the Borrower that becomes a guarantor of the Obligations in
accordance with Section 8.08 hereof.
Guaranties. The term "Guaranties" means collectively Guaranty
and Suretyship Agreements executed by the Guarantors in favor
of the Bank on even date herewith and any other guaranty and
suretyship agreement executed and delivered by any other
Subsidiary of the Borrower pursuant to Section 8.08 hereof.
Indebtedness. The term "Indebtedness" means, as to any Person
(i) all indebtedness of such Person for borrowed money, (ii)
all obligations of such Person evidenced by bonds, debentures,
notes, or other similar instruments, (iii) all obligations of
such Person to pay the deferred purchase price of property or
services (other than accounts payable to trade creditors and
current operating liabilities incurred in the ordinary course
of business), (iv) all indebtedness created or arising under
any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such
agreement in the event of
-17-
default are limited to repossession or sale of such property),
(v) all Capitalized Lease Obligations of such Person, as
lessee, (vi) all obligations, contingent or otherwise, of such
Person under acceptances, letters of credit or similar
facilities, (vii) all obligations of such Person to purchase,
redeem, retire, defease or otherwise acquire for value any
capital stock of such person or any warrants, rights or
options to acquire such capital stock, valued, in the case of
redeemable preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid
dividends, (viii) all obligations of such Person in respect of
interest rate swap agreements (as defined in 11 U.S.C.
ss.101), currency swap agreements and other similar agreements
designed to hedge against fluctuations in interest rates or
foreign exchange rates, (ix) all obligations of production
payments from property operated by or on behalf of such Person
and other similar arrangements with respect to natural
resources, (x) all Guaranteed Indebtedness of such Person, and
(xi) all Indebtedness of the type referred to in clauses (i)
through (x) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property (including, without
limitation, accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness.
Interest Period. The term "Interest Period" means, with
respect to any LIBOR Loan:
(a) initially, the period commencing on, as the case may be,
the date of borrowing or conversion with respect to such LIBOR
Loan and ending 1, 2, 3 or 6 months thereafter as selected by
the relevant Borrower in its notice of borrowing as provided
in Section 1.11 hereof or its notice of conversion as provided
in Section 1.12(a) hereof; and
(b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such LIBOR Loan
and ending 1, 2, 3 or 6 months thereafter as selected by the
relevant Borrower in its notice of continuance as provided in
Section 1.12(b) hereof;
provided that the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period pertaining to a LIBOR Loan
would otherwise end on a day which is not a
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Business Day, that Interest Period shall be extended
to the next succeeding Business Day unless the result
of such extension would be to carry such Interest
Period into another calendar month in which even such
Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR 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 a calendar month; and
(iii) no Borrower shall select any Interest Period
that would extend such Interest Period beyond the
Revolving Credit Expiration Date.
Investments. The term "Investment" shall have the meaning
assigned to such term in Section 8.07 hereof.
Letter of Credit and Letters of Credit. The terms "Letter of
Credit" and "Letters of Credit" shall have the meanings
assigned to such terms in Section 1.08 hereof.
Letter of Credit Outstanding. The term "Letter of Credit
Outstanding" means, at any time, the sum of, without
duplication (i) the aggregate Stated Amount of all outstanding
Letters of Credit; (ii) the aggregate amount of all
unreimbursed drawing thereunder; and (iii) the Stated Amount
of all Letters of Credit requested in accordance with Section
1.08 hereof but not yet issued.
LIBOR. The term "LIBOR" means, with respect to each day during
each Interest Period, the rate (rounded to the next higher
1/100 of 1%) for U.S. dollar deposits with a maturity equal to
the relevant Interest Period in the London interbank market as
determined by the Bank from a recognized source for quotations
of the London interbank offered rate, on the second London
business day before the relevant Interest Period begins,
adjusted for reserves by dividing that rate by 1.00 minus the
LIBOR Reserve.
LIBOR Loan. The term "LIBOR Loan" means any Revolving Credit
Loan at all times during which such Loan bears interest based
upon LIBOR.
LIBOR Reserve. The term "LIBOR Reserve" means the maximum
percentage reserve requirement (rounded to the
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next higher 1/100 of 1% and expressed as a decimal) in effect
for any day during the relevant Interest Period under the
Federal Reserve Board's Regulation D for Eurocurrency
liabilities as defined therein.
Lien. The term "Lien" means any mortgage, pledge, security
interest, encumbrance, lien or other form of charge or
preferential arrangement of any kind (including, without
limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention or any lease in the
nature thereof).
Loan. The term "Loan" means a Revolving Credit Loan or an
Equipment Loan, as the context shall require, and the term
"Loans" means, collectively, the Revolving Credit Loans and
the Equipment Loans.
Material Adverse Effect. The term "Material Adverse Effect"
means a material adverse effect on (a) the business,
operations, property, condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole, (b) the
ability of the Borrower to perform its obligations under this
Agreement, the Notes or any of the other Credit Documents, or
(c) the validity or enforceability of this Agreement, the
Notes or any of the other Credit Documents, or the rights or
remedies of the Bank hereunder or thereunder.
Maximum Equipment Facility Principal Amount. The term "Maximum
Equipment Facility Principal Amount", shall have the meaning
assigned to such term in Section 1.02 hereof.
Maximum Revolving Credit Principal Amount. The term "Maximum
Revolving Credit Principal Amount" shall have the meaning
assigned to such term in Section 1.08 hereof.
Note. The term "Note" means an Equipment Loan Note or the
Revolving Credit Note, as the context shall require, and the
term "Notes" means, collectively, the Equipment Loan Notes and
the Revolving Credit Note.
Obligations. The term "Obligations" means any and all
obligations and indebtedness of every kind and description of
the Borrower owing to the Bank, whether under the Credit
Documents or other loan documents or agreements, and whether
such debts or obligations are primary or secondary, direct or
indirect, absolute or contingent, sole, joint or several,
secured or
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unsecured, due or to become due, contractual or tortious,
arising by operation of law or otherwise, or now or hereafter
existing, including, without limitation, principal interest,
fees, late fees, expenses, and/or attorneys' fees and costs
(to the extent reimbursable to the Bank by the Borrower
pursuant to Section 11.02), that have been or may hereafter be
contracted or incurred.
OEM Equipment Finance Transactions. The term "OEM Equipment
Finance Transactions" means equipment lease or purchase money
financing with respect to equipment or machinery leased or
acquired by the Borrower or any of its Subsidiaries pursuant
to which the Indebtedness incurred in connection therewith is
held by the original manufacturer of such equipment or
machinery, or an Affiliate of said original manufacturer that,
in the ordinary course of its business, provides such
financing to purchasers of such equipment or machinery.
Payment Date. The term "Payment Date" means (i) in the case of
a LIBOR Loan, the last day of each Interest Period applicable
thereto; provided, however that, if the Interest Period
applicable to any such LIBOR Loan is in excess of 3 months,
then the Payment Date with respect to such Loan shall also
include the date that is 3 months after the initial funding
thereof, (ii) in the case of a Alternate Base Rate Loan, the
first day of each month occurring after the Closing Date, and
(iii) in the case of an Equipment Loan, the date that
corresponds numerically in the next calendar month following
the funding of such Loan to the date of such funding, and the
same date of each successive month occurring thereafter,
unless such funding date is the last day of a calendar month,
in which case, such Payment Date shall be the last day of each
such successive calendar month.
Permitted Investments. The term "Permitted Investments" means
(i) readily marketable direct obligations of the Government of
the United States of America or any agency or instrumentality
thereof or any full faith and credit obligations of the United
States Government or obligations guaranteed by the United
States Government and its agencies, (ii) any investment grade
debt or equity securities issued by any other Person, (iii)
certificates of deposit of any United States commercial bank,
(iv) any investment arranged by the Bank, or an affiliate of
the Bank, on behalf of the Borrower pursuant to cash
management services provided to the Borrower by the Bank or
such affiliate, (v) instruments
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held for collection in the ordinary course of business, (vi)
any equity or debt securities or other form of debt instrument
obtained in settlement of debts previously contracted, and
(vii) any equity or debt security obtained in connection with
an acquisition permitted pursuant to Section 8.03 hereof.
Permitted Liens. The term "Permitted Liens" means those Liens
permitted to exist pursuant to Section 8.02 hereof.
Person. The term "Person" means any individual, partnership,
joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any
agency, department or instrumentality thereof.
Public Offering. The term "Public Offering" means that certain
initial public offering of no less than 3,850,000 shares of
the common stock, no par value, of the Borrower, as
contemplated in that certain Registration Statement of the
Borrower on Form S-1 (Registration No. 333-23519) on file with
the SEC, together with Amendment No. 1 through 5 thereto, as
the same has been declared effective by the SEC on July 29,
1997 and the 424(b) prospectus filed on July 30, 1997 with the
SEC.
Revolving Credit Commitment Period. The term "Revolving Credit
Commitment Period" mean the period commencing on the Closing
Date and ending on the Revolving Credit Expiration Date.
Revolving Credit Expiration Date. The term "Revolving Credit
Expiration Date" means the earlier to occur of (a) August 12,
2000, as the same may be extended from time to time in the
sole and absolute discretion of the Bank or (b) the date on
which this Agreement is terminated pursuant to Section 3.03
hereof.
Revolving Credit Facility. The term "Revolving Credit
Facility" shall have the meaning assigned to such term in
Section 1.07 hereof.
Revolving Credit Loan and Revolving Credit Loans. The terms
"Revolving Credit Loan" and "Revolving Credit Loans" shall
have the meanings assigned to such term in Section 1.07
hereof.
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Revolving Credit Note. The term "Revolving Credit Note" shall
have the meanings assigned to such term in Section 1.07
hereof.
SEC. The term "SEC" shall mean the Securities and Exchange
Commission or any Governmental Authority which may succeed to
the authority thereof or be substituted therefor.
Security Agreements. The term "Security Agreements" means
collectively each of the security agreements in favor of the
Bank executed and delivered in connection with the funding of
any Equipment Loan.
Stated Amount. The term "Stated Amount" means with respect to
any Letter of Credit, the maximum amount available to be drawn
thereunder, determined without regard to whether any
conditions to drawing could then be met.
Subsidiary. The term "Subsidiary" means, as to any Person, any
corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned
or controlled by such Person, one or more of the other
Subsidiaries of such Person or any combination thereof.
Term Loan. The term "Term Loan" shall have the meaning
assigned to such term in Section 1.04 hereof.
Term Loan Maturity Date. The term "Term Loan Maturity Date"
shall have the meaning assigned to such term in Section 1.04
hereof.
Test Period shall mean, with respect to any applicable
determination under this Agreement, a period of twelve (12)
consecutive months (taken as one accounting period) and ending
on the last day of the fiscal quarter of the Borrower then
last ended, provided that during the period immediately
following the consummation of the Public Offering, this term
shall mean the shorter period commencing on such consummation
date and ending on the last day of the latest fiscal quarter
until there has elapsed 4 complete fiscal quarters; provided,
further that for purposes of any computation hereunder during
the period contemplated in the foregoing proviso, such
computation shall be annualized by the Bank in
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accordance with methodologies customarily utilized by the Bank
for such purposes.
2.02 Principles of Construction.
(a) References. All references to articles, Sections,
schedules and exhibits are to articles, Sections, schedules
and exhibits in or to this Agreement unless otherwise
specified. The words "hereof", "herein", and "hereunder" and
words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular
provision of this Agreement.
(b) Accounting Terms. All accounting terms not specifically
defined herein or in any exhibit hereto shall be construed in
accordance with GAAP in conformity with those principles used
in the preparation of the financial statements referred to in
Section 6.04 hereof.
III. PREPAYMENT.
-----------
3.01 Prepayment of Revolving Credit Loans. The Revolving Credit
Loans may be prepaid, in whole or in part, at any time,
provided that any prepayment in respect of a LIBOR Loan shall
be made only on the last day of the Interest Period applicable
thereto, and provided, further, that any partial prepayments
of the Revolving Credit Loans shall be in a principal amount
of not less than $250,000, or any whole multiple thereof. All
prepayments shall include accrued and unpaid interest to the
date of prepayment on the principal amount prepaid. All
partial prepayments received pursuant to this Section 3.01
shall be applied to the Obligations that are in respect of the
Revolving Credit Loans in the manner determined by the Bank in
its reasonable discretion.
3.02 Prepayments of Equipment Loans. Any Equipment Loan may be
prepaid, in whole or in part at any time, without premium or
penalty; provided, that any partial prepayment of an Equipment
Loan shall be in a principal amount of not less than $250,000,
or any whole multiple thereof. All prepayments of an Equipment
Loan shall include accrued and unpaid interest to the date of
prepayment on the principal amount prepaid. All partial
prepayments of the principal balance of any Equipment Loan
shall be applied to the Equipment Loan specified by the
Borrower in inverse order of maturity of such Equipment Loan.
-24-
3.03 Termination. If the Borrower has prepaid the Revolving Credit
Loans and all Equipment Loans in full and has paid or
otherwise discharged all other Obligations, then upon written
notice to the Bank, the Borrower may irrevocably terminate
this Agreement without premium or penalty, whereupon no
further Loans will be made hereunder, such termination to be
effective as of the date set forth in said notice.
IV. YIELD MAINTENANCE PROVISIONS.
-----------------------------
4.01 Inability to Determine Rate. If with respect to any Interest
Period, the Bank determines that extraordinary and unforeseen
circumstances beyond the control of the Bank exists with
respect to the relevant market which make it impracticable to
ascertain the interest rate applicable for such Interest
Period, the Bank shall promptly notify the Borrower of such
determination. Upon such determination, no additional LIBOR
Loans shall be permitted under the Revolving Credit Facility
and no conversions to, or continuances of, LIBOR Loans shall
be permitted pursuant to Section 1.12 hereof until the notice
of such determination has been withdrawn. If such notice has
not been withdrawn by the last day of the then current
Interest Period applicable to any then outstanding LIBOR
Loans, the Borrower must elect on the last day of such
Interest Period to either convert such LIBOR Loan to an
Alternate Base Rate Loan or prepay the outstanding principal
balance thereof and accrued interest thereon in full.
4.02 Illegality. Notwithstanding any other provisions herein, if
any law, regulation, treaty or directive or any change therein
or in the interpretation or application thereof, shall make it
unlawful for the Bank to make or maintain any of the Loans as
LIBOR Loans as contemplated by this Agreement, (i) the Bank's
commitment hereunder to make LIBOR Loans under the Revolving
Credit Facility or to permit conversions to, or continuances
of, LIBOR Loans pursuant to Section 1.12 hereof shall
forthwith be suspended until the circumstances surrounding
such unlawfulness shall no longer exit and (ii) any of the
then outstanding LIBOR Loans shall be converted to a Alternate
Base Rate Loan on the last day of the Interest Period
applicable thereto or within such earlier period as may be
required by law.
4.03 Requirement of Law. In the event that any law, regulation,
treaty or directive or any change therein or in the
interpretation or application thereof or
-25-
compliance by the Bank with any request or directive (whether
or not having the force of law) from any central bank or other
Governmental Authority (a "Requirement of Law"):
(a) does or shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, the Notes or any
loan made hereunder, or change the basis of taxation of
payments to the Bank of principal, commitment fee, interest or
any other amount payable hereunder (except for changes in the
rate of any tax presently imposed on the Bank);
(b) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or
other credit extended by, or any other acquisition of funds
by, any office of the Bank which are not otherwise included in
the determination of LIBOR hereunder; or
(c) does or shall impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost
to the Bank of making, renewing or maintaining advances or
extensions of credit to the Borrower or to reduce any amount
receivable from the Borrower hereunder then, in any such case,
the Borrower shall promptly pay to the Bank, upon its demand,
any additional amounts necessary to compensate the Bank for
such additional cost or reduced amount receivable which the
Bank deems to be material as determined by the Bank with
respect to this Agreement, the Notes or the Loans made
hereunder. If the Bank becomes entitled to claim any
additional amounts pursuant to this Section 4.03, it shall
promptly notify the Borrower of the event by reason of which
it has become so entitled. A certificate setting forth
calculations as to any additional amounts payable pursuant to
the foregoing sentence submitted by the Bank to the Borrower
shall be conclusive in the absence of manifest error. The
foregoing shall in no way be construed to permit the Bank to
seek compensation or payment of additional amounts pursuant to
this Section 4.03 in connection with any Requirements of Law
imposed upon the Bank as a result of the Bank's violation of a
Requirement of Law.
4.04 Capital Adequacy. If after the date hereof, the Bank shall
have determined that the adoption of any
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applicable law, rule or regulation regarding capital adequacy
which is generally applicable to banks subject to the
jurisdiction of Governmental Authorities having jurisdiction
over the Bank, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the
Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Bank's
capital as a consequence of its obligations hereunder to a
level below that which the Bank could have achieved but for
such adoption, change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an
amount deemed by the Bank to be material, then from time to
time, within 30 days after demand by the Bank, the Borrower
shall pay to the Bank such additional amount or amounts as
will compensate the Bank for such reduction. The Bank will
promptly notify the Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle
the Bank to compensation pursuant to this Section 4.04, and
such notification of the amount due pursuant to this Section
4.04 shall be conclusive absent manifest error.
4.05 Funding Indemnity. The Borrower agrees to indemnify the Bank
and to hold the Bank harmless from any loss or expense which
the Bank may sustain or incur as a consequence of (i) default
by the Borrower in payment of the principal of or interest on
any LIBOR Loan, including, but not limited to, any such loss
or reasonable expense arising from additional interest or fees
payable by the Bank to lenders of funds obtained by it in
order to maintain any Loan as a LIBOR Loan, (ii) except for
prepayments required pursuant to Section 4.01 or 4.02, any
prepayment of any LIBOR Loan received (from any source) on any
date other than the last day of the Interest Period applicable
thereto, including, but not limited to, any such loss or
expense in connection with the employing of deposits as a
consequence thereof, (iii) default by the Borrower in making
any borrowing of a LIBOR Loan under the Revolving Credit
Facility after such Borrower has given notice thereof in
accordance with Section 1.12 hereof, of a LIBOR Loan or (iv)
default by the Borrower in making any prepayment after the
Borrower has given a notice thereof. This covenant shall
survive termination of this Agreement and payment of the
Notes.
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4.06 Match Funding. The amount payable or indemnifiable under
Sections 4.03, 4.04 and 4.05 hereof shall be determined, in
the Bank's sole discretion, based upon the assumption that the
Bank funded 100% of any affected LIBOR Loan in the applicable
London interbank market.
V. CONDITIONS.
-----------
5.01 Requirements for Initial Funding. The obligation of the Bank
to make the initial advance of any Loan available hereunder is
subject to the Bank's receipt of each of the documents listed
on the Closing Checklist attached hereto as Exhibit E, and
such other documents as the Bank may reasonably request, each,
as appropriate, duly executed and delivered by the parties
thereto and in form and substance satisfactory to the Bank.
The obligation of the Bank to make the initial advance of any
Loan available hereunder is subject to the further condition
that the Borrower shall have consummated the Public Offering
and the "Acquisitions" (as defined in the registration
statement, as amended, referred to in the definition of Public
Offering) and gross proceeds of not less than $42,000,000
shall have been received by the Borrower in connection
therewith and used for the purposes described in said
registration statement.
5.02 Requirements for Any Advance or Conversion. The obligation of
the Bank to (i) make any advance under the Revolving Credit
Facility or the Equipment Facility, or (ii) permit the
conversion of any Revolving Credit Loan to a LIBOR Loan
pursuant to Section 1.12 hereof, is subject to and conditioned
upon the following:
(a) the representations and warranties contained in
Article VI hereof are correct in all material
respects on and as of the date of each such advance,
conversion or continuation, except for
representations and warranties specifically stated to
relate to an earlier date, in which event such
representations and warranties shall be correct in
all material respects as of such earlier date;
(b) no Event of Default, and no event which, with the
giving of notice, or the passage of time, or both,
would become an Event of Default, has occurred and is
continuing; and
(c) all of the Credit Documents then in effect by their
terms remain in full force and effect.
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5.03 Additional Requirements for Advances Under Equipment Facility.
The obligation of the Bank to make any advance under the
Equipment Facility is subject to and conditioned upon, in
addition to satisfaction of the conditions specified in
Section 5.02, the satisfaction of the following conditions:
(a) the Borrower shall have complied with the procedures
set forth in Section 1.03, including, without
limitation, the furnishing of all information
required thereunder;
(b) the Borrower or the relevant Subsidiary Guarantor, as
the case may be, shall have furnished to the Bank
executed originals of (i) a Security Agreement
substantially in the form of Exhibit G attached
hereto (with such modifications thereto as may be
required by the law of the jurisdiction governing the
creation and perfection of the Bank's security
interest in the relevant Financed Equipment in order
to provide the Bank with all the right, benefits and
remedies of a secured creditor with a first priority
lien in such equipment) and (ii) such UCC-1 financing
statements (state and/or local), in each case as may
be reasonably requested by the Bank;
(c) the Borrower or the relevant Subsidiary Guarantor, as
the case may be, shall have caused to be delivered to
the Bank a landlord consent and waiver, in
substantially the form of Exhibit G hereto, from each
landlord of the premises in which the relevant
Financial Equipment is to be located;
(d) the Borrower or the relevant Subsidiary Guarantor as
the case may be, shall have authorized the Bank to
fund the proceeds of the relevant Equipment Loan
directly to the vendor of the relevant Financed
Equipment and, in that connection, the Borrower or
such Subsidiary Guarantor shall have furnished to the
Bank all such information and payment instructions as
the Bank may request to effect such funding;
(e) the Borrower or the relevant Subsidiary Guarantor,
shall have taken all such additional steps and/or, as
the case may be, provided the Bank with all such
other further assurances as the Bank may reasonably
request to assure the Bank that the Lien of the
-29-
Bank in the relevant Financed Equipment is of the
first priority, subject to no other Liens; and
(f) the Borrower shall have caused to be delivered to the
Bank an Equipment Loan Note substantially in the form
of Exhibit A hereto, appropriately completed by the
Bank to reflect the specific terms of the applicable
Equipment Loan in accordance with the terms of this
Agreement.
VI. REPRESENTATIONS AND WARRANTIES.
-------------------------------
The Borrower represents and warrants that:
6.01 Organization; Authority. The Borrower (a) is a corporation
duly organized, validly existing and in good standing under
the laws of the State of New Jersey, is duly qualified as a
foreign corporation and is in good standing under the laws of
each jurisdiction in which it is required to be qualified
because of the business it conducts or the property it owns,
and (b) has the necessary power and authority to enter into
and perform its obligations under the Credit Documents and all
other documents required by the Bank in connection therewith.
The execution and performance of the Credit Documents have
been duly authorized by all necessary proceedings on the part
of the Borrower, and, upon their execution and delivery, they
will be valid, binding, and enforceable in accordance with
their terms. The execution and performance of the Credit
Documents by the Borrower will not violate any orders, laws or
regulations applicable to it, any of its organizational
documents, or any instruments, indentures or agreements
(including any provisions pertaining to subordinated debt) to
which the Borrower is a party or by which the Borrower or any
of its properties are bound, except to the extent that any
such violation would not have a Material Adverse Effect. All
consents, approvals, licenses, franchises, trademarks and
other general intangibles that are necessary or appropriate in
connection with this Agreement, the other Credit Documents or
the operation of the business of the Borrower have been
obtained and are in full force and effect, except to the
extent that any such failure to so obtain and maintain such
general intangibles would not have a Material Adverse Effect.
6.02 Subsidiaries. The corporations listed on Annex I are the only
Subsidiaries of Borrower as of the date hereof and each such
Subsidiary is a corporation, duly organized, valid existing
and in good standing, under
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the law of the jurisdiction of its organization, is duly
qualified as a foreign corporation and is in good standing
under the law of each jurisdiction in which it is required to
be qualified because of the business it conducts or the
property it owns and have all necessary power and authority to
own its property and conduct its business as then conducted.
All consents, approvals, licenses, franchises, trademarks and
other general intangibles that are necessary or appropriate in
connection with the operation of the business of each
Subsidiary, have been obtained and are in full force and
effect, except to the extent that any such failure to so
obtain and maintain such general intangibles would not have a
Material Adverse Effect. Each such Subsidiary is a wholly
owned Subsidiary of the Borrower and no other Person has any
direct or indirect interest in such Subsidiary, other than
such interests which may exist as a result of any stock
ownership interest of any Person in the Borrower.
6.03 Use of Proceeds; Margin Regulation. The proceeds of the
Equipment Loans shall be used exclusively for purchase money
financing of Financed Equipment. The proceeds of borrowings
under the Revolving Credit Facility shall be used by the
Borrower for the following purposes: (i) to fund acquisitions
permitted pursuant to Section 8.03 hereof, (ii) to refinance
certain existing Indebtedness of the Borrower and certain of
its Subsidiaries as and to the extent disclosed in writing to
the Bank prior to the Closing Date, and (iii) working capital
and other general corporate purposes. The Borrower (nor any of
its Subsidiaries) is not engaged in the business of extending
credit for the purpose of buying or carrying "margin stock"
(within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System). Neither the making
of any Loan nor use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
6.04 Financial Statements. The financial statements included in the
Borrower's Form S-1 (as amended) as filed with the SEC in
connection with the Public Offering, were prepared in
accordance with GAAP, consistently applied, are true and
correct, and disclose all presently outstanding indebtedness
or obligations of the Borrower as of the date thereof to the
extent required under GAAP, including contingent obligations,
obligations under leases of property from others, and all
liens and encumbrances, including tax liens, against its
properties and assets; and there have been no material
-31-
adverse changes in the Borrower's financial condition or
business since the date of such statements through the Closing
Date.
6.05 Suits. Other than as disclosed on Annex I hereof, there are no
actions, suits, proceedings, or claims pending or threatened
against the Borrower, any of its Subsidiaries, or any of their
respective properties, which, if adversely determined, would
have a Material Adverse Effect.
6.06 Burdensome Agreements. Neither the Borrower nor any of its
Subsidiaries is a party to any indenture, loan or credit
agreement or any other agreement, contract or instrument, or
subject to any certificate of incorporation, by-law, or
corporate restriction, the compliance with, or the performance
of, which may reasonably be expected to have a Material
Adverse Effect.
6.07 Defaults. Neither the Borrower nor any of its Subsidiaries are
in default under any agreement to which it is a party or by
which it is or any of its properties are bound, or under any
indenture or instrument evidencing any its indebtedness and
neither the execution of nor performance by the Borrower under
the Credit Documents will create a default or any lien or
encumbrance under any such agreement, indenture or instrument
other than a lien or encumbrance in favor of the Bank, except,
in each case, to the extent that the occurrence of any such
defaults or the existence of any such liens would not have a
Material Adverse Effect.
6.08 ERISA. No employee benefit plan established or maintained by
the Borrower which is subject to the Employee Retirement
Income Security Act, 29 U.S.C. ss. 1001 et seq. ("ERISA") has
an accumulated funding deficiency (as such term is defined in
ERISA). No material liability to the Pension Benefit Guaranty
Corporation (or any successor thereto under ERISA) has been
incurred by the Borrower or any of its Subsidiaries with
respect to any such plan and no Reportable Event under ERISA
has occurred. Neither the Borrower nor any of its Subsidiaries
has an actual or anticipated liability under Section 4971 of
the Internal Revenue Code ("Code") (relating to tax on failure
to meet the minimum funding standard of Section 412 of the
Code) with respect to any employee benefit plan to which any
of them contributes but which is not maintained or established
by any of them. No proceedings have been
-32-
instituted to terminate any employee benefit plan of the type
described in this Section 6.08 and no condition exists which
presents a material risk, to the Borrower or any of its
Subsidiaries of incurring liabilities to or on account of any
such plan pursuant to the provisions of ERISA or the
applicable provisions of the Code.
6.09 Tax Returns and Taxes. Each of the Borrower and its
Subsidiaries has filed all federal, state and local tax
returns required to be filed and has paid all taxes,
assessments and governmental charges and levies thereon,
including interest and penalties, except where the same are
being contested in good faith by appropriate proceedings and
for which adequate reserves have been set aside, and no liens
for taxes have been filed by a Governmental Authority with
respect to any taxes. The charges, accruals and reserves on
the books of the Borrower or its Subsidiary, as the case may
be, with respect to taxes or other governmental charges are
adequate.
6.10 Compliance with Statutes, etc. Each of the Borrower and its
Subsidiary is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions
imposed by, any Government Authority, in respect of the
conduct of its business and the ownership of its property
(including, without limitation, any applicable Environmental
Laws), except such instances of noncompliances as would not
have a Material Adverse Effect.
6.11 Not an Investment Company. Neither the Borrower nor any of its
Subsidiaries is an "investment company" or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended.
6.12 No Authorizations or Approvals. No authorization or approval
or action by, and no notice to or filing with, any
Governmental Authority is required for the due execution,
delivery and performance by the Borrower of this Agreement and
the other Credit Documents.
6.13 Intellectual Property, etc. Each of the Borrower and its
Subsidiaries has obtained all material patents, trademarks,
servicemarks, trade names, copyrights, technology, processes,
licenses and other rights ("Intellectual Property"), free from
any burdensome restrictions, that are necessary for the
operation of
-33-
their respective businesses as presently conducted and as
proposed to be conducted. No material claim has been asserted
or threatened questioning the use of such Intellectual
Property, nor does the Borrower or any of its Subsidiaries
know of any valid basis for any such material claim.
6.14 Assets and Properties. Each of the Borrower and its
Subsidiaries has good (and, with respect to real property,
marketable) title to all of its assets and properties
(tangible and intangible) and all such assets and properties
are free and clear of all Liens (except Permitted Liens).
Substantially all of the assets and properties owned by,
leased to or used by each of the Borrower and its Subsidiaries
are in adequate operating condition and repair, ordinary wear
and tear excepted, are free and clear of known defects except
such defects as do not substantially increase with the
continued use thereof in the conduct of normal operation, and
such assets are able to serve the function for which they are
currently being used, except in each case, where the failure
of such asset or property to meet such requirements would not
have a Material Adverse Effect.
6.15 Labor Matters. Except as disclosed on Annex I, neither the
Borrower nor any of its Subsidiaries is a party to a
collective bargaining or union contract. There are no strikes,
lockouts or other disputes relating to any collective
bargaining or similar agreement to which the Borrower of any
of its Subsidiaries is a party.
6.16 Insurance. Annex I hereto lists all material insurance
contracts and binders of the Borrower and its Subsidiaries
which are in full force and effect on the date hereof. Such
contracts and binders provide coverages which are usual and
customary in the business of the Borrower and its Subsidiaries
as to amount and scope. With respect to coverages pertaining
to any Financed Equipment, each such insurance contract and
binder shall contain standard lender's endorsement and loss
payee endorsements in favor of the Bank, and subject to
cancellation or reduction in coverage only upon 30 days' prior
written notice thereto to the Bank.
6.17 True and Complete Disclosure. All factual information (taken
as a whole) heretofore or contemporaneously furnished by the
Borrower to the Bank for the purposes of or in connection with
this Agreement or any transactions contemplated herein is, and
all other such factual information (taken as a whole)
hereafter furnished by or on behalf of the Borrower in writing
-34-
to the Bank will be, true and accurate in all material
respects on the date as of which such information is dated or
certified and does not omit to state any fact necessary to
make such information (taken as a whole) not misleading at
such time in light of the circumstances under which such
information was provided.
VII. AFFIRMATIVE COVENANTS.
----------------------
The Borrower covenants and agrees that for so long as there are any
outstanding Obligations hereunder, or the Bank shall have any obligation
hereunder, the Borrower shall (and, as applicable, shall cause each of its
Subsidiaries (including the Guarantors) to):
7.01 Financial Statements. Furnish to the Bank the following
financial information: (i) as soon as available but in any
event within 90 days (or 105 days, if the Borrower is
operating under an automatic extension afforded pursuant to
the rules and regulations promulgated by the SEC) after the
close of each fiscal year of the Borrower, to the extent
prepared to comply with SEC requirements, a copy of the SEC
Form 10-K (or successor form promulgated by the SEC) filed by
the Borrower with the SEC for such fiscal year, or, if no such
form was so filed for such fiscal year, Consolidated audited
year-end financial statements for the Borrower, including, but
not limited to, statements of financial condition, income and
cash flows, a reconciliation of net worth, notes and other
supporting schedules to such financial statements and any
other information reasonably requested by the Bank that may
assist the Bank in assessing the Borrower's financial
condition (prepared in accordance with GAAP consistently
applied, and accompanied by an opinion, satisfactory in
substance to the Bank, by an independent certified public
accountant acceptable to the Bank, and certified as true,
correct and complete by the Borrower's chief financial
officer); (ii) as soon as available but in any event within 45
days (or 50 days, if the Borrower is operating under an
automatic extension afforded pursuant to the rules and
regulations promulgated by the SEC) after each interim fiscal
quarter, to the extent prepared to comply with SEC
requirements, a copy of the SEC Form 10-Q (or successor form
promulgated by the SEC) filed by the Borrower with the SEC for
such fiscal quarter; or, if no such form was so filed for such
fiscal quarter, unaudited management prepared consolidated
financial statements for the Borrower for such quarter,
including, but not limited to, statements of financial
condition, incoming cash flows, a reconciliation of net worth,
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and supporting schedules (prepared in accordance with GAAP
consistently applied, and certified as true, correct and
complete by the Borrower's chief financial officer); (iii)
promptly upon filing the same with the SEC, copies of any
filings and registrations with, and any reports to, the SEC by
the Borrower, including, but not limited to, any reports on
Form 8-K (or successor term promulgated by the SEC), or any
proxy or registration statement or any other form of public
disclosure prescribed by the SEC; and (iv) such other
information respecting the operations, financial or otherwise,
of the Borrower as the Bank may from time to time reasonably
request.
7.02 Compliance Certificate. Furnish to the Bank, together with
each set of financial statements described in clauses (i) and
(ii) of Section 7.01 hereof, a compliance certificate,
substantially in the form of Exhibit F hereto, signed by the
Borrower's chief financial officer, certifying that: (i) all
representations and warranties set forth in this Agreement and
in the other Credit Documents are true and correct in all
material respects as of the date thereof, except for
representations and warranties specifically stated to relate
to an earlier date in which event such representations and
warranties shall be correct in all material respects as of
such earlier date; (ii) none of the covenants in this
Agreement or in the other Credit Document have been breached
which breach is continuing; and (iii) no event has occurred
which, alone, or with the giving of notice or the passage of
time, or both, would constitute an Event of Default under this
Agreement or the other Credit Documents.
7.03 Notice of Certain Events. Promptly give written notice to the
Bank of: (i) the details of any Reportable Events (as defined
in ERISA) which have occurred, (ii) the occurrence of any
event which alone or with notice, the passage of time, or
both, would constitute an Event of Default, and (iii) the
commencement of any proceeding or litigation which, if
adversely determined, would have a Material Adverse Effect.
7.04 Preservation of Property; Insurance. Keep and maintain, and
require each of its Subsidiaries to keep and maintain, all of
its and their material properties and assets in good order and
repair, ordinary wear and tear excepted; maintain in all
material respects all insurance coverages described in Section
6.16 hereof and such other extended coverage, general
liability, hazard, business interruption, property and other
insurance in
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amounts reasonably satisfactory to the Bank and as is
customary for businesses similar to such corporation's
business and deliver to the Bank certificates of all such
insurance in effect; and cause all such policies covering any
of the Financed Equipment to contain loss payee endorsements
in favor of the Bank and to be subject to cancellation or
reduction in coverage only upon 30 days prior written notice
thereof to the Bank at its address set forth in this
Agreement. The foregoing insurance requirements are in
addition to any insurance requirements set forth in the
Security Agreements.
7.05 Taxes. Pay and discharge, and require each of the its
Subsidiaries to pay and discharge, when due, all taxes,
assessments or other governmental charges imposed on them or
any of their respective properties, unless the same are
currently being contested in good faith by appropriate
proceedings and adequate reserves are maintained therefor.
7.06 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted,
and preserve, renew and keep in full force and effect its
corporate existence and rights, privileges and franchises
necessary in the normal conduct of business and which are
material to the Borrower and its Subsidiaries, taken as a
whole. For the avoidance of doubt, it is hereby acknowledged
that the foregoing shall not be construed to prohibit the
corporate transactions permitted to occur under Section
8.03(A) hereof.
7.07 Operation of Business and Properties. Operate its business and
properties, and cause those of its Subsidiaries to be
operated, in compliance with all applicable orders, rules,
regulations and other requirements of any Governmental
Authority applicable thereto, and duly file or cause to be
filed such reports and/or information returns as may be
required or appropriate under applicable orders, rules,
regulations or other requirements of any Governmental
Authority, including, without limitation, any Environmental
Laws, except to the extent that such non-compliance would not
have a Material Adverse Effect.
7.08 Access to Properties, Books and Records. Keep adequate books
and records of accounts reflecting all of its financial
transactions and permit the Bank's representatives and/or
agents full and complete access to any or all of the
Borrower's properties and financial records, to make extracts
from and/or audit such records
-37-
and to examine and discuss their properties, business,
finances and affairs with the Borrower's officers and outside
accountants, provided that such access need only be provided
by the Borrower during normal business hours and on not less
than 72 hours' prior notice and the costs incurred in
connection with any such examination conducted prior to the
occurrence of an Event of Default shall be borne by the Bank.
7.09 Environmental Liens. In the event that there shall be filed a
Lien against any property of the Borrower or any of its
Subsidiaries by any Governmental Authority arising from an act
or omission of the Borrower or any of its Subsidiaries,
resulting in the discharge of hazardous substances or wastes
into the atmosphere or waters or onto lands, then, within 60
days from the date that the Borrower or any of its
Subsidiaries is given notice that the Lien has been placed
against such property or within such shorter period of time in
the event that such Governmental Authority has commenced steps
to cause such property to be sold pursuant to the lien, either
(i) pay the claim and remove the Lien from the applicable
property or (ii) furnish to such Governmental Authority with
one of the following: (x) a bond satisfactory to Governmental
Authority in the amount of the claim out of which the Lien
arises, (y) a cash deposit in the amount of the claim out of
which the Lien arises, or (z) other security reasonably
satisfactory to such Governmental Authority in an amount
sufficient to discharge the claim out of which the Lien
arises.
7.10 Removal of Hazardous Substances. Should the Borrower and any
of its Subsidiaries cause or permit any act or omission
resulting in the discharge of hazardous substances or wastes
into the atmosphere or waters, or onto the lands in violation
of any applicable Environmental Law, promptly clean up same in
accordance with all applicable Environmental Laws.
7.11 Further Assurances. Do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged and delivered, all
such further instruments, acts, deeds, and assurances as may
be reasonably requested by the Bank for the purpose of
carrying out the provisions and intent of the Credit
Documents.
-38-
VIII. NEGATIVE COVENANTS.
-------------------
So long as any Obligations are outstanding, or the Bank shall have any
obligation hereunder, without the prior written consent of the Bank (which
consent shall not be unreasonably withheld), the Borrower shall not (and shall
not, as applicable, permit any of its Subsidiaries (including the Guarantor)
to):
8.01 Incur Indebtedness. Incur, create, assume, or permit to exist
any Indebtedness at any time, except:
(a) Indebtedness of the Borrower owing to the Bank under
this Agreement and the Notes;
(b) other Indebtedness of the Borrower owing to the Bank;
(c) Indebtedness existing on the date hereof that is
described on Annex I hereof;
(d) Approved Subordinated Indebtedness;
(e) Indebtedness in respect of normal trade debt arising
in the ordinary course of business;
(f) Indebtedness secured by Liens permitted to exist
pursuant to Section 8.02(h); Notwithstanding the
foregoing provisions of this clause (f), before the
Borrower or any of its Subsidiaries incurs Indebtedness
for borrowed money under this clause (f) the Borrower
shall give the Bank written notice of the intention to
borrow, setting forth a description of the proposed
borrowing, and the Bank shall have 5 Business Days to
notify the Borrower that it elects to make the proposed
loan. If the Bank fails to make such election, then the
Borrower and its Subsidiaries shall be free to incur
the proposed Indebtedness on substantially as favorable
terms to the Borrower and its Subsidiaries, as
applicable, as proposed to the Bank free of the right
of the Bank to make such loan under this clause (f). If
the Bank elects to make the proposed loan, then the
Borrower and the Bank shall negotiate in good faith to
consummate the proposed loan within a reasonable time.
If such negotiations do not result in the closing of
the proposed loan, then the Borrower and its
Subsidiaries, as applicable, shall be entitled to
borrow on substantially as favorable terms to the
Borrower and its Subsidiaries, as applicable, as
-39-
proposed free of the right of the Bank to make the
proposed loan under this clause (f);
(g) Indebtedness that constitutes Guaranteed Indebtedness
of the Borrower or any of its Subsidiaries that has
been incurred by the Borrower or any of its
Subsidiaries solely by virtue of an endorsement of
checks or drafts negotiated in the ordinary course of
the business;
(h) Indebtedness incurred or assumed in connection with
acquisitions permitted pursuant to Section 8.03 hereof,
but only to the extent that such Indebtedness would
otherwise be permitted to exist pursuant to clauses
(d), (e), (f)(but without regard to the monetary
threshold set forth in clause (h) of Section 8.02
hereof), (g), (j) or (l) of this Section 8.01;
(i) Indebtedness owing from or to Borrower or any of its
Subsidiaries to or from any other of its Subsidiaries
or Borrower;
(j) Indebtedness arising under any OEM Equipment Finance
Transactions;
(k) Indebtedness convertible into capital stock of the
Borrower, or warrants or other rights to acquire such
capital stock; or
(l) Indebtedness incurred in connection with Facilities
Management Arrangements.
8.02 Negative Pledge. Create, permit to exist, or suffer the
creation of, any Lien, on any of its properties or assets
(real or personal, tangible or intangible), except:
(a) Liens in favor of the Bank;
(b) Liens existing on the date hereof that are listed on
Annex I hereto;
(c) Liens for taxes, assessments or governmental charges or
levies to the extent not required to be paid by Section
7.05 hereof;
(d) Liens imposed by law, such as materialmen's,
mechanics', carrier's, workmen's, and repairmen's
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Liens and other similar Liens arising in the ordinary
course of business securing obligations which are not
overdue for a period of more than 30 days;
(e) pledges or deposits to secure obligations under
workmen's compensation laws or similar legislation or
to secure public or statutory obligations of the
Borrower or any of its Subsidiaries;
(f) Liens with respect to any OEM Equipment Finance
Transaction but only in respect of the equipment
acquired therein;
(g) Liens incurred, assumed or created in connection with
Facilities Management Arrangements, but only as to
equipment and machinery that (i) is pertinent to the
performance by the Borrower or the relevant Subsidiary
of its obligations thereunder and (ii) was not an asset
of the Borrower or such relevant Subsidiary prior to
such arrangement;
(h) Liens for finance leases of equipment leased by the
Borrower or any of its Subsidiaries (including
Capitalized Leases), or purchase money Liens upon or in
equipment acquired or held by the Borrower or any of
its Subsidiaries in the ordinary course of business to
secure the purchase price of such equipment or to
secure Indebtedness incurred solely for the purpose of
financing the acquisition of any such equipment to be
subject to such Liens, or Liens existing on any such
equipment at the time of the leasing, acquisition, or
extensions, renewals or replacements of any of the
foregoing for the same or a lesser amount, provided
that no such Lien shall extend to or cover any
equipment (including, but not limited to, the Financed
Equipment) other than the equipment being leased or
acquired and no such extension, renewal or replacement
shall extend to or cover any equipment not theretofore
subject to the Lien being extended, renewed or
replaced, and provided, further, that (i) the aggregate
principal amount of the Indebtedness at any one time
outstanding secured by Liens permitted pursuant to this
clause (h) shall not exceed $5,000,000 at any one time
outstanding and (ii) any such Indebtedness shall not
otherwise be prohibited by the terms of this Agreement;
or
(i) the replacement, extension or renewal of any Lien
permitted by clauses (a) through (h) above upon or
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in the same property theretofore subject thereto or the
replacement, extension or renewal (without increase of
principal amount) of the Indebtedness secured thereby.
8.03 Sale of Assets; Liquidation; Merger; Acquisitions. (i) Convey,
lease, sell, transfer or assign any assets or properties
presently owned or hereafter acquired by it, except
dispositions of inventory in the ordinary course of business
for value received and such other dispositions of assets and
properties that are not material to the business or operations
of the Borrower or any of its Subsidiaries, if such asset or
property is replaced with reasonable promptness or is
otherwise obsolete or not needed, (ii) liquidate or
discontinue its normal operations with intent to liquidate;
(iii) enter into any merger or consolidation; (iv) acquire all
or substantially all of the assets, stock or other equity
interests of any other Person; or (v) take any action, or
enter into any agreements, to effect any of the foregoing.
Notwithstanding the foregoing or anything to the contrary set
forth in this Agreement, the following transactions shall be
permitted upon the satisfaction of the condition pertaining
thereto set forth below:
(A) The consolidation, merger or liquidation of any
Subsidiary of the Borrower with or into the Borrower or
another Subsidiary of the Borrower, if and only if, the
Borrower or such other Subsidiary shall be the
surviving or resulting entity of any such proposed
transaction.
(B) The acquisition by the Borrower of any other Person or
substantially all of the assets of such Person, if and
only if, the following conditions were fulfilled:
(i) said acquisition is of a Person or of a business or
product of such Person that is related or complimentary
to the business or products of the Borrower and its
Subsidiaries as presently conducted;
(ii) no later than 5 Business Days prior to the
consummation of any such proposed acquisition, the Bank
shall have received a true and correct copy of any and
all contractual undertakings related to the proposed
acquisition together (w) evidence of receipt of
approvals of Governmental Authorities to such
acquisition, if any such approvals are
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required, (x) with full and complete written
description of such proposed acquisition, (y) a pro
forma opening balance sheet and income statement of the
Borrower on a combined and combining basis giving
effect to such proposed acquisition, and (z) such
financial information and computations as the Bank may
deem necessary to demonstrate that, immediately after
giving effect to such proposed acquisition, none of the
covenants set forth in Sections 8.12 through 8.15
hereof shall be violated;
(iii) the Borrower or one of its Subsidiaries shall be
the surviving or resulting entity of any such proposed
acquisition, or the purchaser of any stock or assets
being acquired in such transaction;
(iv) the aggregate cash and non-cash consideration paid
or exchanged by the Borrower (including, without
limitation, any Indebtedness assumed by the Borrower,
and all amounts payable under or in respect of any
non-compete covenants or similar agreements shall not
exceed (x) $12,500,000 in any single acquisition and
(y) $30,000,000 in the aggregate for all such
acquisitions, in each cash in any period of 12
consecutive months. For the purposes of determining the
consideration paid or exchanged in any such
acquisition, the value attributed to any capital stock
of the Borrower given or exchanged shall not be
included therein; and
(v) immediately after giving effect to such proposed
acquisition and the incurrence or assumption of
Indebtedness, if any, in connection therewith, Sections
8.01, 8.02, 8,13, 8.14, 8.15, 8.16 and 8.17 hereof
shall not have been violated.
8.04 Intentionally Omitted.
8.05 Sale-Leaseback Transactions. Enter into any sale-leaseback
transaction or any transaction howsoever termed which would
have the same or substantially the same result or effect as a
sale-leaseback, except in connection with an acquisition
permitted under Section 8.03(B) hereof for the purpose of
effectively conveying or otherwise transferring real property
of the Person acquired in any such transaction, or to permit
such Person to effectively retain its interest in any real
property which is not being acquired in any such transaction.
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8.06 Prepayment of Other Indebtedness. Prepay any amounts on any
outstanding Indebtedness permitted to exist pursuant to
clauses (d) or (k) of Section 8.01 hereof, which is not
required to be prepaid by the express terms thereof, or cause
or permit the acceleration of any amounts on any outstanding
Indebtedness now existing or hereafter arising.
8.07 Investments. Purchase or make any investment in the stock,
securities or evidences of indebtedness of, or make capital
contributions or loans or advances to, or other forms of
investments in, any Person ("Investments"), except Permitted
Investments. Notwithstanding the foregoing, the Borrowers
shall be permitted to make loans to its employees for
corporate purposes; provided that the aggregate principal
amount of such loans outstanding at any one time shall not
exceed $250,000.
8.08 Create Subsidiaries. Create, permit to exist, or invest or
otherwise participate in any Subsidiaries (other than the
Subsidiaries listed on Annex I hereto) or any partnership or
other separate legal entity; provided that the foregoing shall
not apply to any new Subsidiaries that executes and delivers
in favor of the Bank a guaranty and suretyship agreement (as
well as resolutions authorizing the same), in each case
substantially the same as the guaranty executed and delivered
by the Guarantors in connection with the transactions herein
contemplated.
8.09 Hazardous Substances. Cause or permit to exist a discharge of
hazardous substances or wastes into the atmosphere or waters
or onto lands unless such discharge is pursuant to and in
compliance with the conditions of a permit issued by the
appropriate Governmental Authorities or otherwise in
compliance with applicable Environmental Law or the discharge
does not have a Material Adverse Effect and is properly being
remedied by the Borrower or one of its Subsidiaries.
8.10 Dividends, Etc. Declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of stock
of the Borrower, or purchase, redeem, or otherwise acquire for
value (or permit any of its Subsidiaries to do so) any shares
of any class of stock of the Borrower or any warrants, rights
or options to acquire any such shares, now or
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hereafter outstanding; except that the Borrower may declare
and pay quarterly cash dividends in respect of its common
stock; provided, however, that if immediately after giving
effect to any such proposed dividend payment, a violation of
any provision of Section 8.12 through 8.17 or any other Events
of Default would exist, then no such dividend payments shall
be permitted hereunder. The Borrower may from time to time
request that the Bank permit the payment of quarterly
dividends in addition to the amount set forth in this Section
8.10 by written notice to the Bank specifying the time and
amount of such additional dividends; provided, however, that
no such additional dividends shall be permitted hereunder
without the prior written consent of the Bank (which consent
may or may not be given in each Bank's sole and absolute
discretion) and any such consent shall be effective only in
the specific instance requested.
8.11 Redemption of Common Stock. Enter into any agreement to, or
purchase or retire shares of the Borrower's common stock or
pay or make other similar payments in respect thereof.
8.12 Consolidated Stated Net Worth. Permit as at the end of any
Test Period the sum of (A) the Consolidated Stated Net Worth
plus (B) if a positive number, the Borrower's net income for
the relevant Test Period (excluding any extraordinary items or
non-recurring items) to be less than 90% of said sum
determined as of the last day of the immediately preceding
Test Period, tested no less frequently than quarterly and
determined in each case on a Consolidated basis in accordance
with GAAP, consistently applied.
8.13 Consolidated Tangible to Stated Net Worth. Permit at any time,
its Consolidated Tangible Net Worth to be any less than 25% of
the Consolidated Stated Net Worth, tested no less frequently
than quarterly and determined in accordance with GAAP,
consistently applied.
8.14 Consolidated Funded Debt to EBITDA Ratio. Permit at any time
the Consolidated Funded Debt to EBITDA Ratio to exceed 3.25 to
1.00, tested no less frequently than quarterly for each Test
Period and determined in each case in accordance with GAAP,
consistently applied.
8.15 Consolidated Fixed Charges Ratio. Permit at any time its
Consolidated Fixed Charges Ratio to exceed 1.50 to 1.00,
tested no less frequently than quarterly for each
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Test Period and determined in each case in accordance with
GAAP, consistently applied.
8.16 Transactions with Affiliates. Except as expressly permitted by
this Agreement, directly or indirectly: (i) make any
Investment in an Affiliate; (ii) transfer, sell, lease, assign
or otherwise dispose of any assets to an Affiliate, (iii)
merge into or consolidate with or purchase or acquire assets
from an Affiliate; (iv) make any payments to any Affiliate or
otherwise suffer to exist any transaction with any Affiliate
or (v) enter into any other transaction directly or indirectly
with or for the benefit of any Affiliate (including, without
limitation, guarantees and assumptions of obligations of an
Affiliate); provided, however, that (a) any Affiliate who is
an individual may serve as an employee, director, consultant
or independent contractor of the Borrower or any of its
Subsidiaries and receive reasonable compensation for services
rendered in such capacity and (b) any of the Borrower's
Subsidiaries or the Borrower may enter into any transaction
with another Subsidiary or the Borrower which is not otherwise
prohibited by this Agreement or any of the other Credit
Documents, provided that the terms of any transaction pursuant
to which any Affiliate (other than Affiliates that are also
Subsidiaries of the Borrower) owes money to the Borrower shall
be at least arms length and the terms of any transaction
pursuant to which the Borrower and/or any Subsidiary owes
money to an Affiliate (other than Affiliates that are also
Subsidiaries of the Borrower) shall not be more onerous than
would obtain in an arms length transaction.
8.17 Use of Proceeds. Use the proceeds of any Loan made hereunder
for any purpose other than the purposes described in Section
6.03 hereof.
8.18 Change Fiscal Year. As to the Borrower only, change its
fiscal year to end on any date other than December 31.
IX. EVENTS OF DEFAULT.
------------------
Each of the following shall constitute an event of default ("Event of
Default") hereunder:
9.01 Payment Default. The Borrower shall (i) fail to pay any
principal of, or interest on, the Loans within 2 Business Days
of the due date thereof or (ii) default in
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the payment any other amounts owing hereunder, under the Notes
or under any other Credit Document and such default shall
continue for a period of 2 Business Days after the Bank
provides notice thereof to the Borrower;
9.02 Negative Covenant Breach. The Borrower shall default in the
due performance or observance by it of any term, covenant or
agreement contained in Article VIII hereof;
9.03 Other Covenant Breaches. The Borrower, or any Subsidiary of
the Borrower, shall default in the due performance or
observance of any term, covenant or agreement (other than
those referred to in Sections 9.01 and 9.02 above) contained
in this Agreement, the Notes or any other Credit Document, and
such default shall continue unremedied for a period of at
least 10 days after the earlier to occur of (i) the date the
Borrower obtains actual knowledge of such default or (ii) the
date notice of such default is given to the Borrower by the
Bank;
9.04 Default Under Agreements for Borrowed Money. (i) The Borrower
or any Subsidiary of the Borrower shall default in any payment
with respect to any Indebtedness in excess of $750,000
(individually or in the aggregate as to the Borrower and its
Subsidiaries) beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness was
created or default in the observance or performance of any
agreement or condition relating to any such Indebtedness or
contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such
holder or holders) to cause (determined without regard to
whether any notice or lapse of time is required), any such
Indebtedness to become due prior to its stated maturity, or
(ii) any such Indebtedness shall be declared to be due and
payable, or required to be prepaid as a mandatory prepayment,
prior to the stated maturity thereof; provided, however, that
there shall not exist an Event of Default under this Section
9.04 if immediately upon obtaining knowledge of any potential
Event of Default under this Section 9.04, the Borrower
provides the Bank written notice of the facts and
circumstances pertaining thereto and the manner in which the
Borrower intends to contest, remedy or otherwise resolve the
same and the Bank consents to such contest, remedial action or
other form of resolution, which consent shall not be
-47-
unreasonably withheld; provided, further that the consent of
the Bank may be limited in duration to any reasonable time
period under the circumstances;
9.05 Default Under Other Material Contracts. The Borrower or any
Subsidiary of the Borrower shall default in the due
performance or observance of any material term, covenant or
agreement contained in any contract, agreement, understanding
or arrangement, beyond the period of grace, if any, provided
in the relevant contract, and such default shall result, or is
reasonably expected to result, in a Material Adverse Effect;
provided, however that there shall not exist an Event of
Default under this Section 9.05 if immediately upon obtaining
knowledge of any potential Event of Default under this Section
9.05, the Borrower provides the Bank written notice of the
facts and circumstances pertaining thereto and the manner in
which the Borrower intends to contest, remedy or otherwise
resolve the same and the Bank consents to such contest,
remedial action or other form of resolution, which consent
shall not be unreasonably withheld; provided, further that the
consent of the Bank may be limited in duration to any
reasonable time period under the circumstances;
9.06 Voluntary Bankruptcy. The Borrower or any Subsidiary of the
Borrower commences any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under the United
States Bankruptcy Code or under any similar foreign, federal,
state, or local statute, or any dissolution or liquidation
proceeding, or makes a general assignment for the benefit of
creditors, or takes any action for the purpose of effecting
any of the foregoing;
9.07 Involuntary Bankruptcy. Any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under the United
States Bankruptcy Code or under similar foreign, federal,
state or local statute, or any dissolution or liquidation
proceeding, is involuntarily commenced against or in respect
of the Borrower or any of its Subsidiaries and such case or
proceeding is not dismissed or stayed within 30 days of such
commencement;
9.08 Appointment of Receiver. The appointment, or the filing of a
petition seeking the appointment of a custodian, receiver,
trustee, or liquidator for any Borrower or any of their
respective property, or the taking of possession of any part
of the property of the Borrower or of any of its Subsidiaries,
at the instance of any Governmental Authority;
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9.09 Insolvency. The Borrower or any of its Subsidiaries becomes
insolvent (however defined), is generally not paying its debts
as they become due, or has suspended transaction of its usual
business (except any suspension incidental to any corporate
transaction permitted pursuant to Section 8.03(A) hereof);
provided however that, with respect to any Subsidiary of the
Borrower, the foregoing shall not be an Event of Default
unless it shall result, or is reasonably expected to result,
in a Material Adverse Effect;
9.10 Reorganization. The dissolution, merger, consolidation, or
reorganization of the Borrower or any Subsidiary of the
Borrower; provide however that, with respect to any Subsidiary
of the Borrower, the foregoing shall not be an Event of
Default unless it shall result, or is reasonably expected to
result, in a Material Adverse Effect;
9.11 Material Misstatement. Any statement, representation or
warranty made in or pursuant to this Agreement or any other
Credit Document shall prove to be untrue or misleading in any
material respect;
9.12 Entry of Judgment. The entry or issuance of judgments, orders,
decrees or fines against the Borrower or any Subsidiary of the
Borrower which, in the aggregate, involve liabilities in
excess of the sum of $250,000 (the discharge of which is not
the obligation of any insurance company) and any such
judgments or orders involving liabilities in excess of said
sum shall have continued unbonded or unsatisfied and without
stay of execution or agreement between the parties thereon for
a period of 30 days after the entry or issuance of such
judgment; or
9.13 Change of Control. The failure of any 2 of either ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, to continue to function
as executive officers of the Borrower or its Subsidiaries in
substantially the same manner and with substantially the same
responsibilities with respect to the day-to-day operations of
the Borrower and its Subsidiaries as exists as of the Closing
Date.
X. REMEDIES.
---------
10.01 Acceleration of Obligations; Other Remedies. Upon and
following the occurrence of an Event of Default described in
Article IX hereof (other than the Events of
-49-
Default described in Sections 9.06, 9.07, and 9.08 hereof), at
the Bank's sole option, the Bank's commitment, if any, to make
any further advance or Loans hereunder shall terminate and all
Obligations shall immediately become due and payable in full,
all without protest, presentment, demand or further notice of
any kind to the Borrower, all of which are expressly waived.
Upon the occurrence of the Event of Default described in
Sections 9.06, 9.07, and 9.08 hereof, immediately and
automatically, the Bank's commitment, if any, to make any
further advances or Loans hereunder shall terminate and all
Obligations shall immediately become due and payable in full,
all without protest, presentment, demand or further notice of
any kind to the Borrower, all of which are expressly waived.
Upon and following an Event of Default, the Bank may, at its
option, exercise any and all rights and remedies it has under
this Agreement, any other Credit Document and/or applicable
law, including, without limitation, the right to charge and
collect interest on the principal portion of the Obligations
at a rate equal to the lesser of: (i) the highest rate of
interest set forth in the Credit Documents, or (ii) the
highest rate of interest allowed by law, such rate of interest
to apply to the Obligations, at the Bank's option, upon and
after an Event of Default so long as of it shall continue,
maturity, whether by acceleration or otherwise, and the entry
of a judgment in favor of the Bank with respect to any or all
of the Obligations. Upon and following an Event of Default,
the Bank may proceed to protect and enforce the Bank's rights
under any Credit Document and/or under applicable law by
action at law, in equity or other appropriate proceeding
including, without limitation, an action for specific
performance to enforce or aid in the enforcement of any
provision contained herein or in any other Credit Document.
10.02 Right of Set-off. If any of the Obligations shall be due and
payable or any one or more Events of Default shall have
occurred and be continuing, whether or not the Bank shall have
made demand under any Credit Document and regardless of the
adequacy of any collateral for the Obligations or other means
of obtaining repayment of the Obligations, the Bank shall have
the right, without notice to any Borrower, and is specifically
authorized hereby to set-off against and apply to the then
unpaid balance of the Obligations any items or funds of any
Borrower held by the Bank, any and all deposits (whether
general or special, time or demand, matured or unmatured) or
any other property of the Borrower, including, without
limitation, securities
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and/or certificates of deposit, now or hereafter maintained by
the Borrower for its or their own account with the Bank, and
any other indebtedness at any time held or owing by the Bank
to or for the credit or the account of any Borrower, even if
effecting such set-off results in a loss or reduction of
interest or the imposition of a penalty applicable to the
early withdrawal of time deposits. For such purpose, the Bank
shall have, and the Borrower hereby grants to the Bank, a lien
on and security interest in such deposits, property, funds and
accounts and the proceeds thereof.
10.03 Remedies Cumulative; No Waiver or Impairment. The rights,
powers and remedies of the Bank provided in this Agreement and
any of the Credit Documents are cumulative and not exclusive
of any right, power or remedy provided by law or equity. No
failure or delay on the part of the Bank in the exercise of
any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise preclude any other or
further exercise thereof, or the exercise of any other right,
power or remedy.
XI. MISCELLANEOUS.
--------------
11.01 Notices. Notices and communications under this Agreement and
the other Credit Documents shall be in writing and shall be
given by either (i) hand-delivery, (ii) certified mail (return
receipt requested, postage prepaid), (iii) reliable overnight
commercial courier (charges prepaid), or (iv) telecopy, to the
addresses and telecopy numbers listed in this Agreement.
Notice given by telecopy shall be deemed to have been given
and received when sent. Notice by overnight courier shall be
deemed to have been given and received on the date scheduled
for delivery. Notice by certified mail shall be deemed to have
been given and received on the dates indicated on the receipt
returned to the sender thereof. A party may change its address
and/or telecopier number by giving written notice to the other
party as specified herein.
11.02 Costs and Expenses. Whether or not the transactions
contemplated by the Credit Documents are fully consummated,
the Borrower shall promptly pay (or reimburse, as the Bank may
elect) all reasonable costs and expenses which the Bank has
incurred or may hereafter incur in connection with the
negotiation, preparation, reproduction, interpretation,
perfection, monitoring, administration and enforcement of the
Credit Documents, the collection of all amounts due under the
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Credit Documents, and all amendments, modifications, consents
or waivers, if any, to the Credit Documents. Such costs and
expenses shall include, without limitation, the reasonable
fees and disbursements of counsel to the Bank, searches of
public records, costs of filing and recording documents with
public offices, internal and/or external audit and/or
examination fees and costs (but only to the extent that the
Borrower shall be responsible for such audit and examination
fees and expenses pursuant to Section 7.08 hereof), stamp,
excise and other taxes and costs and expenses incurred by the
Bank, and the fees of the Bank's accountants, consultants or
other professionals; provided, that it is hereby acknowledged
and agreed that the Borrower shall not be responsible and the
Bank may not seek payment or reimbursement from the Borrower
for the legal fees (exclusive of reasonable disbursements) of
the Bank's outside counsel in excess of $15,000 for
professional services rendered in connection with the
negotiations and preparation of the Credit Documents executed
and delivered on the Closing Date and the consummation of the
transactions therein contemplated. The Borrower's
reimbursement obligations under this paragraph shall survive
any termination of the Credit Documents.
11.03 Payment Due on a Day Other Than a Business Day. If any payment
due or action to be taken under this Agreement or any Credit
Document falls due or is required to be taken on a day that is
not a Business Day, such payment or action shall be made or
taken on the next succeeding Business Day and such extended
time shall be included in the computation of interest.
11.04 Governing Law. This Agreement shall be construed in accordance
with and governed by the substantive laws of the State of New
Jersey without reference to conflict of laws principles.
11.05 Integration. This Agreement and the other Credit Documents
constitute the sole agreement of the parties with respect to
the subject matter hereof and thereof and supersede all oral
negotiations and prior writings with respect to the subject
matter hereof and thereof.
11.06 Amendment; Waiver. No amendment of this Agreement, and no
waiver of any one or more of the provisions hereof shall be
effective unless set forth in writing and signed by the
parties hereto.
11.07 Successors and Assigns. This Agreement (i) shall be binding
upon the Borrower and the Bank and their
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respective successors and permitted assigns, and (ii) shall
inure to the benefit of the Borrower and the Bank and their
respective successors and permitted assigns; provided,
however, that the Borrower may not assign its rights hereunder
or any interest herein without the prior written consent of
the Bank, and any such assignment or attempted assignment by
the Borrower shall be void and of no effect with respect to
the Bank.
11.08 Sale, Assignment or Participations. The Bank may from time to
time sell or assign, in whole or in part, or grant
participations in some or all of the Credit Documents and/or
the obligations evidenced thereby. The holder of any such
sale, assignment or participation, if the applicable agreement
between the Bank and such holder so provides, (i) shall be
entitled to all of the rights, obligations and benefits of the
Bank and (ii) shall be deemed to hold and may exercise the
rights of set-off or banker's lien with respect to any and all
obligations of such holder to the Borrower, in each case as
fully as though the Borrower were directly indebted to such
holder. The Bank may, in its discretion, give notice to the
Borrower of such sale, assignment or participation; however,
the failure to give such notice shall not affect any of the
Bank's or such holder's rights hereunder. The Borrower
authorizes the Bank to provide information concerning the
Borrower to any prospective purchaser, assignee or
participant, subject to such other party's agreement to the
provisions of Section 11.15 hereof. The information provided
may include, but is not limited to, amounts, terms, balances,
payment history, return item history and any financial or
other information about the Borrower. The Borrower agrees to
indemnify, defend, and hold the Bank harmless at the
Borrower's cost and expense, from and against any and all
lawsuits, claims, actions, proceedings, or suits against the
Bank or against the Borrower and the Bank, arising out of or
relating to the disclosure by the Bank of such information to
any prospective purchaser, assignee or participant to the
extent that such information does not comport with the
requirements set forth in Section 6.17 hereof as of the date
such information was furnished to the Bank by, or on behalf
of, the Borrower.
11.09 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.
In lieu of any illegal
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or unenforceable provision in this Agreement, there shall be
added automatically as a part of this Agreement a legal and
enforceable provision as similar in terms to such illegal or
unenforceable provision as may be possible.
11.10 Consent to Jurisdiction and Service of Process. The Borrower
irrevocably appoints each and every corporate officer of the
Borrower as its attorneys upon whom may be served, by regular
or certified mail at the address set forth in this Agreement,
any notice, process or pleading in any action or proceeding
against it arising out of or in connection with this Agreement
or any of the other Credit Documents. The Borrower hereby
consents that any action or proceeding against it may be
commenced and maintained in any court within the State of New
Jersey or in the United States District Court for the District
of New Jersey by service of process on any such officer. The
Borrower further agrees that such courts of the State of New
Jersey and the United States District Court for the District
of New Jersey shall have jurisdiction with respect to the
subject matter hereof and the person of the Borrower and all
collateral for the Obligations. Notwithstanding the foregoing,
the Borrower agrees that any action brought by the Borrower
shall be commenced and maintained only in a court in the
federal judicial district or county in which the Bank has its
principal place of business in New Jersey.
11.11 Indemnification.
(a) The Borrower agrees to indemnify and hold harmless the
Bank and its officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from the against any
and all claims, damages, losses, liabilities and reasonable
expenses (including, without limitation, reasonable fees and
expenses of counsel; provided, that, in the case of fees and
expenses of counsel for the Indemnified Parties, the Borrower
shall be obligated to pay only the fees and expenses of a
single counsel in any one jurisdiction) that may be incurred
by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason
of, or in connection with the preparation for a defense of any
investigation, litigation or proceeding arising out of,
related to or in connection with (i) the actual proposed use
of the proceeds or the Loan or Letter of Credit, the Credit
Documents or any of the transactions contemplated thereby,
including, without limitation, any acquisition or proposed
acquisition by the Borrower or any of its Subsidiaries in each
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case whether or not such investigation, litigation or
proceeding is brought by any Indemnified Party or any
Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated,
except to the extent such claim, damage, loss, liability or
expense is found in a final, non-appealable judgment by a
court of competent jurisdiction to have resulted from such
Indemnified Party's gross negligence or willful misconduct.
(b) If, after receipt of any payment of all or any part of the
Obligations, the Bank is compelled or (after notice to the
Borrower) agrees, for settlement purposes, to surrender such
payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void
or voidable as a preference or fraudulent conveyance, an
impermissible set-off, or a diversion of trust funds), then
this Agreement and the other Credit Documents shall continue
in full force and effect, and the Borrower shall be liable
for, and shall indemnify, defend and hold harmless the Bank
with respect to the full amount so surrendered.
(c) Without limiting the applicability of the clause (a) of
this Section 11.11, the Borrower shall indemnify, defend and
hold harmless the Bank with respect to any and all claims,
expenses, demands, losses, costs, fines or liabilities of any
kind (including, without limitation, those involving death,
personal injury or property damage and including reasonable
attorneys fees and costs) arising from or in any way related
to any hazardous materials or a dangerous environmental
condition within, on, from, related to or affecting any real
property owned or occupied by the Borrower including, without
limitation, any and all claims that may arise as a result of
an intentional or unintentional act or omission of any
Borrower, any previous owner and/or operator of real property
owned or occupied by the Borrower that resulted in the
discharge of hazardous substances or wastes into the
atmosphere or waters or onto the lands.
(d) The provisions of this Section 11.11 shall survive the
termination of this Agreement and the other Credit Documents
and shall be and remain effective notwithstanding the payment
of the Obligations, the release of any security interest, lien
or encumbrance securing the Obligations or any other action
which the Bank may have taken in reliance upon its receipt of
such payment. Any action by the Bank shall be deemed to have
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been conditioned upon any payment of the Obligations having
become final and irrevocable.
11.12 Inconsistencies. The Credit Documents are intended to be
consistent. However, in the event of any inconsistencies among
any of the Credit Documents, such inconsistency shall not
affect the validity or enforceability of each Credit Document.
The Borrower agrees that in the event of any inconsistency or
ambiguity in any of the Credit Documents, the Credit Documents
shall not be construed against any one party but shall be
interpreted consistent with the Bank's policies and
procedures.
11.13 Headings. The headings of articles, Sections and paragraphs
have been included herein for convenience only and shall not
be considered in interpreting this Agreement.
11.14 Schedules. All Schedules, Annexes and/or an Exhibits attached
hereto are incorporated herein.
11.15 Confidentiality. The Bank shall not disclose any Confidential
Information to any Person without the prior consent of the
Borrower, other than (i) to its officers, directors,
employees, agents and advisors and to actual or prospective
purchaser, assignee, or participant of or in the Loans and
participants, and then only on a confidential basis, (ii) as
required by any law, rule or regulation or judicial process
and (iii) as requested or required by any Governmental
Authority or examiner regarding banks or banking.
11.16 Judicial Proceeding; Waivers.
(a) EACH PARTY TO THIS AGREEMENT AGREES THAT ANY SUIT, ACTION
OR PROCEEDING, WHETHER CLAIM OR COUNTER-CLAIM, BROUGHT OR
INSTITUTED BY ANY PARTY HERETO OR ANY SUCCESSOR OR ASSIGN OF
ANY PARTY, ON OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE
OTHER CREDIT DOCUMENTS OR THE DEALINGS OF THE PARTIES WITH
RESPECT HERETO, OR THERETO, SHALL BE TRIED ONLY BY A COURT AND
NOT BY A JURY.
(b) EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION
OR PROCEEDING. FURTHER, EACH PARTY WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER, IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY SPECIAL, EXEMPLARY,
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PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES.
(c) THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS
A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND THAT THE
BANK WOULD NOT EXTEND CREDIT TO ANY BORROWER IF THE WAIVERS
SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
11.17 Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by
the different parties hereto on separate counterparts, each of
which, when so executed, shall be deemed an original but all
such counterparts shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties by their duly authorized
representatives have executed this Agreement as of the day and year first above
written.
WITNESS/ATTEST: VESTCOM INTERNATIONAL, INC.
By: /s/ S By: /s/ S
-------------------------------- ----------------------------------
Name: Name:
Title: Title:
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention:_________________
Telecopier:_____________________
SUMMIT BANK
By: /s/ S
----------------------------------
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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AMENDMENT NUMBER ONE
TO
EQUIPMENT FACILITY AND REVOLVING CREDIT AGREEMENT
This AMENDMENT NUMBER ONE (the "Amendment") amends the Equipment
Facility and Revolving Credit Agreement by and between Summit Bank (the "Bank")
and Vestcom International, Inc. ("Vestcom") dated as of August 13, 1997 (the
"Credit Facility"), and is entered into as of the 28th day of July, 1998.
WHEREAS, both the Bank and Vestcom desire to amend and modify the
Credit Facility to delete a covenant which is no longer required.
NOW THEREFORE, for good and valuable consideration, the parties hereto
hereby agree as follows:
1. Section 9.13, Change in Control, of the Credit Facility is hereby
amended to be deleted in its entirety and the following is to be
inserted in lieu thereof: "intentionally left blank".
2. All other terms and conditions of the Credit Facility shall remain
unchanged and in full force and affect.
IN WITNESS WHEREOF, the parties hereto by their duly authorized
representatives have executed this Amendment Number One to the Credit Facility
as of the date first written above.
VESTCOM INTERNATIONAL, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice President
and Chief Financial Officer
SUMMIT BANK
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name:
Title:
WAIVER AND AMENDMENT NUMBER TWO
TO THE
EQUIPMENT FACILITY AND REVOLVING CREDIT AGREEMENT
This WAIVER AND AMENDMENT NUMBER TWO (the "Amendment") amends the
Equipment Facility and Revolving Credit Agreement by and between Summit Bank
(the "Bank") and Vestcom International, Inc. ("Vestcom") dated as of August 13,
1997 (the "Credit Facility"), and is a waiver of a certain covenant thereof and
is entered into as of the 16th day of February, 1999.
WHEREAS, both the Bank and Vestcom desire to amend and modify the
Credit Facility to amend a certain covenant; and
WHEREAS, in addition to modifying a certain covenant, the Bank has
waived the applicability of such covenant for calendar year 1998 and the parties
desire to document such waiver.
NOW THEREFORE, for good and valuable consideration, the parties hereto
hereby agree as follows:
1. Pursuant to Article XI, Section 11.06 of the Credit Facility, the
Bank hereby waives Vestcom's compliance with Article VIII, Section
8.13, Consolidated Tangible to Stated Net Worth, for the entire
calendar year 1998.
2. In addition, pursuant to Article XI, Section 11.06 of the Credit
Facility, the current language of Article VIII, Section 8.13,
Consolidated Tangible to Stated Net Worth, is hereby deleted in
its entirety, and shall be replaced with the following in lieu
thereof:
8.13 Consolidated Tangible to Stated Net Worth. Permit at any
time, its Consolidated Tangible Net Worth to be any less than 10%
of the Consolidated Stated Net Worth, tested no less frequently
than quarterly and determined in accordance with GAAP,
consistently applied.
3. The amendment to Section 8.13 pursuant to paragraph two above
shall be effective as of January 1, 1999.
4. All other terms and conditions of the Credit Facility shall remain
unchanged and in full force and affect.
IN WITNESS WHEREOF, the parties hereto by their duly authorized
representatives have executed this Waiver and Amendment Number Two to the Credit
Facility as of the date first written above.
VESTCOM INTERNATIONAL, INC.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Executive Vice President
and Chief Financial Officer
SUMMIT BANK
By: /s/▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name:
Title:
MEMORANDUM
REGARDING EQUIPMENT FACILITY AND
REVOLVING CREDIT AGREEMENT
BY AND BETWEEN
SUMMIT BANK
AND
VESTCOM INTERNATIONAL, INC. (the "Credit Facility")
Dated as of August 13, 1997
This MEMORANDUM, dated as of March 29, 1999, is intended to memorialize
the parties understanding of an error in the Credit Facility, and to correct
such error. Both parties agree that Section 8.15 Consolidated Fixed Charges
Ratio is incorrect as currently written, and should be modified to read, in its
entirety, as follows:
"Section 8.15 Consolidated Fixed Charges Ratio. Permit at any time its
Consolidated Fixed Charges Ratio to be less than 1.50 to 1.00, tested
no less frequently than quarterly for each Test Period and determined
in each case in accordance with GAAP, consistently applied."
In addition, the parties hereby agree, Section 8.15 should
have been written as shown above from the effective date of the Credit Facility.
In WITNESS WHEREOF, the parties, by their duly authorized
representatives, have executed this Memorandum as of the day and year first
above written.
Vestcom International, Inc.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------
Name:
Title:
Summit Bank
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------
Name:
Title:
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------
Name:
Title: