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REVOLVING CREDIT AGREEMENT
DATED
MARCH 29, 1999
BETWEEN
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
AND
COMERICA BANK
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REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT made as of the 29th day March, 1999, by
and between BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC. and COMERICA BANK.
WITNESSETH:
WHEREAS, the Borrower has requested Bank to make certain loans and
extensions of credit to Borrower; and
WHEREAS, the Bank is willing to do so subject to the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, the Borrower and the Bank agree:
1. ARTICLE 1; DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
1.1 "Account Debtor," "Accounts," "Chattel Paper," "Documents,"
"Equipment," "Fixtures," "General Intangibles," "Goods," "Instruments" and
"Inventory" shall have the meanings assigned to them in the UCC.
1.2 "Accounts Receivable" shall mean and include all Accounts, Chattel
Paper and General Intangibles (including, but not limited to tax refunds, trade
names, trade styles and goodwill, trade marks, copyrights and patents, and
applications therefor, trade and proprietary secrets, formulae, designs,
blueprints and plans, customer lists, literary rights, licenses and permits,
receivables, insurance proceeds, beneficial interests in trusts and minute books
and other books and records) now owned or hereafter acquired by Borrower.
1.3 "Affiliate" shall mean, when used with respect to any person, any
other person which, directly or indirectly, controls or is controlled by or is
under common control with such person. For purposes of this definition,
"control" (including the correlative meanings of the terms "controlled by" and
"under common control with"), with respect to any person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise.
1.4 "Agreement" shall mean this Agreement as amended from time to time
in accordance with the terms hereof.
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1.5 "Applicable Interest Rate" shall mean the Eurodollar-based Rate or
the Prime-based Rate, as selected by Borrower from time to time or otherwise
determined pursuant to the terms and conditions of this Agreement.
1.6 "Bank" shall mean Comerica Bank, a Michigan banking corporation.
1.7 "Bankruptcy Code" shall mean Title 11 of the United States Code, as
amended, or any successor act or code.
1.8 "Borrowing Base Amount" shall mean, as of any date, an amount equal
to the sum of:
(a) eighty five percent (85%) of the Eligible Time Accounts;
plus
(b) seventy five percent (75%) of the Eligible Fixed Accounts.
1.9 "Borrower" shall mean BrightStar Information Technology Group,
Inc., a Delaware corporation.
1.10 "Business Day" shall mean any day on which Bank is open for
domestic business in Detroit and (when used in connection with any provision
regarding Eurodollar-based Loans) also a day on which commercial banks are open
for international business (including dealings in dollar deposits in the
interbank market) in Detroit and London.
1.11 "Collateral" shall mean all property of the Borrower now or
hereafter in the possession of the Bank or any Affiliate of the Bank (or as to
which the Bank or any Affiliate of the Bank now or hereafter controls possession
by documents or otherwise), all amounts in all deposit or other accounts
(including without limit an account evidenced by a certificate of deposit) of
the Borrower now or hereafter with the Bank or any Affiliate of the Bank and all
of Borrower's Accounts, Chattel Paper, Documents, Equipment, Fixtures, General
Intangibles, Goods, Instruments and Inventory, wherever located and whether now
owned or hereafter acquired, together with all replacements of any of the
foregoing, substitutions therefor, accessions thereto, and all proceeds and
products of all the foregoing, and all additional property (real or personal) of
the Borrower which is now or hereafter subject to a security interest, mortgage,
lien, claim or other encumbrance granted by the Borrower to, or in favor of, the
Bank.
1.12 "Commitment Amount" shall mean Fifteen Million Dollars
($15,000,000).
1.13 "Contribution Agreement" shall mean the Contribution Agreement
among the Subsidiaries wherein the Subsidiaries allocate among themselves, the
liability to one another arising under the Guaranty.
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1.14 "Debt" shall mean, as of the date of any determination thereof,
all items of indebtedness, obligation or liability, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several of Company, that should be classified as
liabilities in accordance with GAAP.
1.15 "Debt to Tangible Net Worth Ratio" shall mean, as of the date of
any determination thereof, the ratio of (i) Debt to (ii) Tangible Net Worth.
1.16 "Default" shall mean a condition or event which, with the giving
of notice or the passage of time, or both, would become an Event of Default.
1.17 "Documents" shall mean this Agreement, the Note, the Security
Agreement, the Stock Pledge, the Guaranty, the Guarantors' Security Agreements,
the Subsidiary Security Agreement, the Financing Statements and all other
documents, agreements and instruments delivered to Bank pursuant to this
Agreement or any of the foregoing.
1.18 "EBITDA" shall mean for any period of determination thereof, Net
Income plus any amounts deducted in the calculation thereof with respect to
interest expense, taxes, non-cash compensation in the form of stock options,
depreciation or amortization of Company, all determined in accordance with GAAP.
1.19 "Eligible Time Account" shall mean an Account (not including
interest and service charges) arising from services performed and billed for
time and materials and in the ordinary course of Borrower's business which meets
each of the following requirements:
(a) it is not owing to Borrower more than ninety (90) days
after the date of invoice for same;
(b) it is not owing by an Account Debtor (as defined in the
UCC) who has failed to pay twenty five percent (25%) or more of the aggregate
amount of its Accounts owing to Debtor within ninety (90) days after the date of
the respective invoices or other writings evidencing such Accounts;
(c) it arises from the sale or lease of goods and such goods
have been shipped or delivered to the Account Debtor under such Account; or it
arises from services rendered and such services have been performed;
(d) it is evidenced by an invoice, dated not later than the
date of shipment or performance, rendered to such Account Debtor or some other
evidence of billing acceptable to Bank;
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(e) it is not evidenced by any note, trade acceptance, draft
or other negotiable instrument or by any chattel paper, unless such note or
other document or instrument previously has been endorsed and delivered by
Debtor to Bank;
(f) it is a valid, legally enforceable obligation of the
Account Debtor thereunder, and is not subject to any offset, counterclaim or
other defense on the part of such Account Debtor or to any claim on the part of
such Account Debtor denying liability thereunder in whole or in part;
(g) it is not subject to any sale of accounts, any rights of
offset, assignment, lien or security interest whatsoever other than to Bank;
(h) it is not owing by a subsidiary or affiliate of Debtor,
nor by an Account Debtor which (i) does not maintain its chief executive office
in the United States of America, (ii) is not organized under the laws of the
United States of America, or any state thereof, unless such Account Debtor is a
Canadian subsidiary of General Motors, Ford or Chrysler, or (iii) is the
government of any foreign country or sovereign state, or of any state, province,
municipality or other instrumentality thereof;
(i) it is not an account owing by the United States of America
or any state or political subdivision thereof, or by any department, agency,
public body corporate or other instrumentality of any of the foregoing, unless
all necessary steps are taken to comply with the Federal Assignment of Claims
Act of 1940, as amended, or with any comparable state law, if applicable, and
all other necessary steps are taken to perfect Bank's security interest in such
account;
(j) it is not owing by an Account Debtor for which Debtor has
received a notice of (i) the death of the Account Debtor or any partner of the
Account Debtor, (ii) the dissolution, liquidation, termination of existence,
insolvency or business failure of the Account Debtor, (iii) the appointment of a
receiver for any part of the property of the Account Debtor, or (iv) an
assignment for the benefit of creditors, the filing of a petition in bankruptcy,
or the commencement of any proceeding under any bankruptcy or insolvency laws by
or against the Account Debtor;
(k) it is not an account billed in advance, payable on
delivery, for consigned goods, for guaranteed sales, for unbilled sales, for
progress ▇▇▇▇▇▇▇▇, payable at a future date in accordance with its terms,
subject to a retainage or holdback by the Account Debtor or insured by a surety
company; and
(l) it is not owing by any Account Debtor whose obligations
Bank, acting in its sole discretion, shall have notified Debtor are not deemed
to constitute Eligible Fixed Accounts.
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An Account Receivable which is at any time an Eligible Fixed Account,
but which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Fixed Account.
1.20 "Eligible Fixed Account" shall mean an Account (not including
interest and service charges) arising from services performed on turnkey or
fixed price projects and in the ordinary course of Borrower's business which
meets each of the following requirements:
(a) it is not owing to Borrower more than ninety (90) days
after the date of invoice for same;
(b) it is not owing by an Account Debtor (as defined in the
UCC) who has failed to pay twenty five percent (25%) or more of the aggregate
amount of its Accounts owing to Debtor within ninety (90) days after the date of
the respective invoices or other writings evidencing such Accounts;
(c) it arises from the sale or lease of goods and such goods
have been shipped or delivered to the Account Debtor under such Account; or it
arises from services rendered and such services have been performed;
(d) it is evidenced by an invoice, dated not later than the
date of shipment or performance, rendered to such Account Debtor or some other
evidence of billing acceptable to Bank;
(e) it is not evidenced by any note, trade acceptance, draft
or other negotiable instrument or by any chattel paper, unless such note or
other document or instrument previously has been endorsed and delivered by
Debtor to Bank;
(f) it is a valid, legally enforceable obligation of the
Account Debtor thereunder, and is not subject to any offset, counterclaim or
other defense on the part of such Account Debtor or to any claim on the part of
such Account Debtor denying liability thereunder in whole or in part;
(g) it is not subject to any sale of accounts, any rights of
offset, assignment, lien or security interest whatsoever other than to Bank;
(h) it is not owing by a subsidiary or affiliate of Debtor,
nor by an Account Debtor which (i) does not maintain its chief executive office
in the United States of America, (ii) is not organized under the laws of the
United States of America, or any state thereof, unless such Account Debtor is a
Canadian subsidiary of General Motors, Ford or Chrysler, or (iii) is the
government of any foreign country or sovereign state, or of any state, province,
municipality or other instrumentality thereof;
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(i) it is not an account owing by the United States of America
or any state or political subdivision thereof, or by any department, agency,
public body corporate or other instrumentality of any of the foregoing, unless
all necessary steps are taken to comply with the Federal Assignment of Claims
Act of 1940, as amended, or with any comparable state law, if applicable, and
all other necessary steps are taken to perfect Bank's security interest in such
account;
(j) it is not owing by an Account Debtor for which Debtor has
received a notice of (i) the death of the Account Debtor or any partner of the
Account Debtor, (ii) the dissolution, liquidation, termination of existence,
insolvency or business failure of the Account Debtor, (iii) the appointment of a
receiver for any part of the property of the Account Debtor, or (iv) an
assignment for the benefit of creditors, the filing of a petition in bankruptcy,
or the commencement of any proceeding under any bankruptcy or insolvency laws by
or against the Account Debtor;
(k) it is not an account billed in advance, payable on
delivery, for consigned goods, for guaranteed sales, for unbilled sales, for
progress ▇▇▇▇▇▇▇▇, payable at a future date in accordance with its terms,
subject to a retainage or holdback by the Account Debtor or insured by a surety
company; and
(l) it is not owing by any Account Debtor whose obligations
Bank, acting in its sole discretion, shall have notified Debtor are not deemed
to constitute Eligible Time Accounts.
An Account Receivable which is at any time an Eligible Time Account,
but which subsequently fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Time Account.
1.21 "ERISA" shall mean the Employee Retirement Income Security Act of
1974 as amended, or any successor act or code.
1.22 "Eurodollar-based Loan" shall mean a Loan at any time during which
such Loan bears interest at a Eurodollar-based Rate.
1.23 "Eurodollar-based Rate" shall mean a per annum interest rate equal
to the Eurodollar Rate, plus two and one-half (2.5%) per annum.
1.24 "Eurodollar Rate" shall mean, for any Eurodollar-based Loan:
(a) the per annum interest rate at which the Bank's eurodollar
lending office offers deposits in eurodollars to prime banks in the eurodollar
market in an amount comparable to the relevant Eurodollar-based Loan and for a
period equal to the Interest Period therefore at approximately 11:00 a.m.
Detroit time two (2) Business Days prior to the first day of such Interest
Period; divided by,
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(b) a percentage (expressed as a decimal) equal to one hundred
percent (100%) minus that percentage which is in effect on the date for an
Advance of a Eurodollar-based Loan, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirements for a member bank of the Federal Reserve System with
deposits exceeding five billion dollars in respect of "Euro-currency
Liabilities" (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar-based Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States Eurodollar Lending Office of such a bank
to United States residents).
1.25 "Event of Default" shall mean any of those conditions or events
listed in Section 8.1 of this Agreement.
1.26 "Financial Statements" shall mean all historical balance sheets
and earnings statements and other financial data which have been furnished to
the Bank for the purposes of, or in connection with, this Agreement and the
transactions contemplated hereby, including without limit balance sheets,
statements of income, retained earnings and cash flow, and all footnotes.
1.27 "Financing Statements" shall mean UCC financing statements
describing the Bank as secured party and the Borrower as debtor covering the
Collateral and otherwise in such form, for filing in such jurisdictions and with
such filing offices, and/or any financing statement(s) required to perfect any
security agreements entered into in connection with the Loan, as the Bank shall
reasonably deem necessary or advisable.
1.28 "Foreign Subsidiaries" shall mean BrightStar Information
Technology Group, Pty. Ltd., PROSAP AG, PROSAP Australia Pty., Ltd., SCS
Offshore Pty., Ltd. And SCS Consulting & Services Pte. Ltd.
1.29 "GAAP" shall mean, as of any applicable date of determination,
generally accepted accounting principles consistently applied in the country of
incorporation of the relevant Person.
1.30 "Guarantors" shall mean each of the Subsidiaries, jointly and
severally.
1.31 "Guarantors' Security Agreements" shall mean those Security
Agreements by each Guarantor pursuant to which each Guarantor grants to the Bank
a first priority security interest in all Accounts, Chattel Paper, Documents,
Equipment, Fixtures, General Intangibles, Goods, Instruments and Inventory,
Machinery and Equipment of the respective Guarantor, wherever located and
whether now owned or hereafter acquired, together with all replacements thereof,
substitutions therefor, accessions thereto and all proceeds and products of all
the foregoing.
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1.32 "Guaranty" shall mean the joint and several guaranty executed by
Guarantors to Bank guarantying payment of all principal, interest and costs due
Bank from Borrower.
1.33 "Indebtedness" shall mean all loans, advances, indebtedness,
obligations and liabilities of the Borrower to the Bank under the Notes, this
Agreement and the Documents, together with all other indebtedness, obligations
and liabilities whatsoever of the Borrower to the Bank, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising.
1.34 "Interest Coverage Ratio" shall mean, as of the date of any
calculation thereof, the ratio of (i) the EBITDA of Company for the four quarter
period most recently ended, to (ii) the Interest Expense of Company for the
period of such calculation.
1.35 "Interest Expense" shall mean the interest expense of Company,
determined in accordance with GAAP.
1.36 "Interest Period" shall mean an interest period for a
Eurodollar-based Loan of one (1), three (3), or six (6) months, provided
however, that:
(a) any Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding Business
Day unless the next succeeding Business Day falls in another calendar month, in
which case, such Interest Period shall end on the immediately preceding Business
Day; and
(b) no Interest Period may end after the Maturity Date.
1.37 "Legal Rate" shall mean at the particular time in question the
maximum rate of interest which, under applicable law, the Bank is then permitted
to charge on the Indebtedness. If the maximum rate of interest which, under
applicable law, the Bank is permitted to charge on the Indebtedness shall change
after the date hereof, the Legal Rate shall be automatically increased or
decreased, as the case may be, from time to time as of the effective time of
each change in the Legal Rate without notice to the Borrower. For purposes of
determining the Legal Rate under the Applicable Law of the State of Texas, the
applicable rate ceiling shall be (a) the indicated rate ceiling described in and
computed in accordance with the provisions of Section (a) (I) of Art. 1.04, or
(b) if the parties subsequently contract as allowed by applicable law, the
quarterly ceiling or the annualized ceiling computed pursuant to Section (d) of
Art. 1.04; provided, however, that at any time the indicated rate ceiling, the
quarterly ceiling of the annualized ceiling shall be less than 18% per annum or
more than 24% per annum, the provisions of Sections (b)(1) and (2) of said Art.
1.04 shall control for purposes of such determination, as applicable.
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1.38 "Loan" shall mean, individually and /or collectively as the
context may require, the advances evidenced by the Note.
1.39 "Maturity Date" shall mean March 29, 2001.
1.40 "Note" shall mean the promissory note executed and delivered by
Borrower to Bank pursuant to Section 2.3 of this Agreement in the form of
Exhibit "A" to this Agreement.
1.41 "PBGC" shall mean the Pension Benefit Guaranty Corporation or any
person succeeding to the present powers and functions of the Pension Benefit
Guaranty Corporation.
1.42 "Permitted Liens" shall mean:
(a) Liens and encumbrances in favor of the Bank;
(b) Liens for taxes, assessments or other governmental charges
incurred in the ordinary course of business and for which no interest, late
charge or penalty is attaching or which is being contested in good faith by
appropriate proceedings and, if requested by the Bank, bonded in an amount and
manner satisfactory to the Bank;
(c) Liens, not delinquent, created by statute in connection
with worker's compensation, unemployment insurance, social security and similar
statutory obligations;
(d) Liens of mechanics, materialmen, carriers, warehousemen or
other like statutory or common law liens securing obligations incurred in good
faith in the ordinary course of business that are not yet due and payable; and
(e) Encumbrances consisting of existing or future zoning
restrictions, existing recorded rights-of-way, existing recorded easements,
existing recorded private restrictions or existing or future public restrictions
on the use of real property, none of which materially impairs the use of such
property in the operation of the business for which it is used and none of which
is violated in any material respect by any existing or proposed structure or
land use.
1.43 "Person" or "person" shall mean any individual, corporation,
partnership, joint venture, association, trust, unincorporated association,
joint stock company, government, municipality, political subdivision or agency,
or other entity.
1.44 "Prime-based Loan" shall mean a Loan that at any time during such
Loan bears interest at a Prime-based Rate.
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1.45 "Prime-based Rate" shall mean the Prime Rate in effect from time
to time plus one-quarter percent (1/4%).
1.46 "Prime Rate" shall mean that annual rate of interest designated by
the Bank as its prime rate, which rate may not be the lowest rate of interest
charged by the Bank to any of its customers, and which rate is changed by the
Bank from time to time.
1.47 "Request for Loan" shall mean a request for loan delivered by
Borrower to Bank in the form of Exhibit "B" to this Agreement, pursuant to
Section 2.2 of this Agreement.
1.48 "Revolving Maximum" shall mean, as of any date, the lesser of: (a)
the Commitment Amount, or (b) the Borrowing Base Amount.
1.49 "Security Agreement" shall mean the Security Agreement by Borrower
pursuant to which the Borrower grants to the Bank a first priority security
interest in all Accounts, Chattel Paper, Documents, Equipment, Fixtures, General
Intangibles, Goods, Instruments and Inventory, Machinery and Equipment of the
Borrower, wherever located and whether now owned or hereafter acquired, together
with all replacements thereof, substitutions therefor, accessions thereto and
all proceeds and products of all the foregoing.
1.50 "Stock Pledge" shall mean the Stock Pledge by Borrower pursuant to
which Borrower grants to Bank a first priority pledge of one hundred percent
(100%) of the issued and outstanding stock in the Subsidiaries.
1.51 "Subsidiaries" shall mean BrightStar Group International, Inc.,
Mindworks Professional Education Group, Inc., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and Associates,
Inc., Integrated Controls, Inc., Cogent, Inc., Software Consulting Services
America, Inc. and Software Innovators, Inc., all wholly owned subsidiaries of
Borrower.
1.52 "Subsidiary Security Agreement" shall mean the Security Agreement
by all of the Subsidiaries pursuant to which the Subsidiaries grant to Borrower
a priority security interest in all Accounts, Chattel Paper, Documents,
Equipment, Fixtures, General Intangibles, Goods, Instruments and Inventory,
Machinery and Equipment of each respective Subsidiary, wherever located and
whether now owned or hereafter acquired, together with all replacements thereof,
substitutions therefor, accessions thereto and all proceeds and products of all
the foregoing.
1.53 "Tangible Net Worth" shall mean as of the date of any
determination, the excess of the net book value of the assets of Company (other
than patents, patent rights, trademarks, trade names, copy rights, franchises,
licenses, goodwill and other intangible assets) after all appropriate deductions
in accordance with GAAP, less all Debt of Company.
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1.54 "UCC" shall mean the Uniform Commercial Code in effect with
respect to the jurisdictions of the various Locations.
All accounting terms not specifically defined in this Agreement shall
be construed in accordance with GAAP.
Where the context herein requires, the singular number shall be deemed
to include the plural, the masculine gender shall include the feminine and
neuter genders, and vice versa.
2. ARTICLE 2; COMMITMENT, INTEREST AND FEES
2.1 Loans. Subject to the terms and conditions of this Agreement, the
Bank agrees to make Advances to the Borrower from the date hereof until the
Maturity Date, in aggregate principal amount at any time outstanding not to
exceed the Revolving Maximum.
2.2 Requests for Loans. Borrower may request an Advance by delivery to
Bank of a Request for Loan executed by an authorized officer Borrower and
subject to the following:
(a) each such Request for Loan shall set forth the information
required on the Request for Loan form;
(b) each such Request for Loan shall be delivered to Bank by
10:00 a.m. three (3) Business Days prior to the proposed date of Advance, except
if the Applicable Interest Rate for such Advance is to be the Prime-based Rate,
such Request for Loan must be delivered by 10:00 a.m. (Detroit time) on such
proposed date;
(c) if the Request for Loan is a request for a
Eurodollar-based Loan, the principal amount of the Advance requested shall be at
least Five Hundred Thousand Dollars ($500,000) or an integral multiple thereof;
and
(d) each Request for Loan shall constitute a certification by
the Borrower as of the date thereof that all of the conditions set forth in
Article 4 hereof are satisfied as of the date of such request and shall be
satisfied as of the date such Advance is requested.
2.3 Note. The Revolving Loan shall be evidenced by a Note in the form
of Exhibit "A" hereto executed by Borrower.
2.4 Payments of Principal. The principal of the Note shall be payable
(unless sooner accelerated pursuant to the terms of this Agreement) on the
Maturity Date, when
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the entire balance then outstanding and all accrued and unpaid interest thereon,
shall be due and payable.
2.5 Interest. The principal balance of each Advance from time to time
outstanding under each Note shall bear interest at its Applicable Interest Rate.
Interest shall be payable on all Prime-based Advances, monthly, on the first
Business Day of each month. Interest shall be payable on each Eurodollar-based
Advance on the last day of its Interest Period and, if such Interest Period has
a duration of longer than three (3) months, also at each three month interval
from the first day of such interest period.
2.6 Preparation, Closing & Ongoing Fees. Borrower shall pay to Bank:
(a) concurrently with the execution of this Agreement, the
amount of the expenses (including without limit reasonable attorneys' fees,
whether of inside or outside counsel, and disbursements) incurred by the Bank in
connection with the preparation and closing of this Agreement and related
instruments and/or making of advances hereunder, including but not limited to
costs to conduct audits, monitoring and appraisals;
(b) concurrently with the execution of this Agreement, a
non-refundable closing fee in the amount of Seventy Five Thousand Dollars
($75,000);
(c) on an ongoing basis, all audit costs and all collateral
monitoring costs of Bank.
2.7 Commitment Fees. Borrower shall pay Bank monthly, on the first
Business Day of each month, a commitment fee in the amount equal to the
three-eighths of one percent (3/8%) per annum on the average daily amount by
which the Commitment Amount exceeded the principal amount of outstanding
Advances during the preceding month.
2.8 Basis of Computation. The amount of all interest and fees hereunder
shall be computed for the actual number of days elapsed on the basis of a year
consisting of three hundred sixty (360) days.
2.9 Basis of Payments. All sums payable by the Borrower to the Bank
under this Agreement or the other documents contemplated hereby shall be paid
directly to the Bank at its office set forth in Section 9.10 hereof in
immediately available United States funds, without set off, deduction or
counterclaim. Borrower hereby authorizes and request Bank to debit Borrower's
checking or deposit or other accounts with the Bank for all or a part of any
such amounts when due, provided, however, that this authorization shall not
affect the Borrower's obligation to pay, when due, any Indebtedness whether or
not account balances are sufficient to pay amounts due.
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2.10 Receipt of Payments. Any payment of the Indebtedness made by mail
will be deemed tendered and received only upon actual receipt by the Bank at the
address designated for such payment, whether or not the Bank has authorized
payment by mail or any other manner, and shall not be deemed to have been made
in a timely manner unless received on the date due for such payment, time being
of the essence. The Borrower expressly assumes all risks of loss or liability
resulting from non-delivery or delay of delivery of any item of payment
transmitted by mail or in any other manner. Acceptance by the Bank of any
payment in an amount less than the amount then due shall be deemed an acceptance
on account only.
2.11 Default Interest. Notwithstanding anything herein to the contrary,
in the event and so long as an Event of Default shall exist, all principal
outstanding under the Note shall bear interest, payable on demand, from the date
of such Event of Default at a rate per annum equal to:
(a) in the case of a Prime-based Loan, three percent (3%)
above the Prime-base Rate; and
(b) in the case of a Eurodollar-based Loan, three percent (3%)
above the Eurodollar-based Rate until the end of the then current Interest
Period, at which time such Eurodollar-based Loans shall be automatically
converted into Prime-based Loans and bear interest at the rate provided for in
clause (a) above.
2.12 Conversion and Renewal of Loans. Providing that no Event of
Default shall have occurred and be continuing, the Borrower may elect to renew
or convert Applicable Interest Rates applicable to Advances from the Prime-based
Rate to the Eurodollar-based Rate or from the Eurodollar-based Rate to the
Prime-based Rate, provided that any conversion of a Eurodollar-based Loan shall
be made only on the last Business Day of the Interest Period applicable to such
Eurodollar-based Loan. If the Borrower desires such a renewal or conversion, it
shall give Bank not less than three (3) Business Days' prior notice in the
manner provided in Section 2.2 hereof, specifying the date of such renewal or
conversion, the Advances to be converted and the type of Advances elected. If
with respect to any Eurodollar-based Loan outstanding at any time the Bank does
not receive notice of the election from a Borrower not less than three (3)
Business Days prior to the last day of the Interest Period therefor, the
Borrower shall be deemed to have elected to convert such Eurodollar-based Loan
to a Prime-based Loan at the end of the then current Interest Period unless such
Eurodollar-based Loan is repaid upon the last day of such Interest Period.
2.13 Early Termination Compensation. In the event that Borrower shall
terminate this Agreement on or before the Maturity Date, Borrower shall be
obligated to pay to Bank, as a condition to such termination and prior to the
release of Bank's liens and encumbrances, the amount of: (a) One Hundred and
Fifty Thousand Dollars
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($150,000) if such termination occurs before the first anniversary hereof; or
(b) Seventy Five Thousand Dollars ($75,000) if such termination occurs on or
after the first anniversary hereof but before the second anniversary of this
Agreement. This Early Termination Compensation shall be waived if the Loan is
replaced by another credit facility with Bank.
3. ARTICLE 3; SPECIAL PROVISIONS FOR EURODOLLAR-BASED LOANS
3.1 Reimbursement of Prepayment Costs. As to any Advances, if any
prepayment thereof shall occur on any day other than the last day of an Interest
Period (in the case of a Eurodollar-based Loan) or the first day of an Interest
Period (with regard to a Prime-Based Loan) (whether pursuant to this Article, or
by acceleration, or otherwise), or if an Applicable Interest Rate shall be
changed during any Interest Period pursuant to this Article, the Borrower agrees
to reimburse Bank any costs incurred by Bank as a result of the timing thereof
including but not limited to any net costs incurred in liquidating or employing
deposits from third parties, upon Bank's delivery to Borrower of a certificate
setting forth in reasonable detail the basis for determining such costs, which
certificate shall be conclusively presumed correct save for manifest error.
3.2 Eurodollar Lending Office. For any Advance for which the Applicable
Interest Rate is the Eurodollar-based Rate, if Bank shall designate a eurodollar
lending office which maintains books separate from those of the rest of Bank,
Bank shall have the option of maintaining and carrying the relevant advance on
the books of such office.
3.3 Circumstances Affecting Eurodollar-based Availability. If Bank
determines that, by reason of circumstances affecting the foreign exchange and
interbank markets generally, deposits in eurodollars in the applicable amounts
are not being offered to Bank for an Interest Period, then Bank shall forthwith
give notice thereof to the Borrower. Thereafter, the obligation of Bank to make
Eurodollar-based Loans, and the right of Borrower to convert an Advance to or
refund an Advance as a Eurodollar-based Loan shall be suspended and all of the
Loans shall be Prime-based Loans bearing interest at the Prime-based Rate until
the Bank notifies Borrower that such circumstance no longer exists.
3.4 Laws Affecting Eurodollar-based Loan Availability. If, after the
date hereof, the introduction of, or any change in, any applicable law, rule or
regulation or in the interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by Bank (or its eurodollar lending offices) with any
request or directive (whether or not having the force of law) of any such
authority, shall make it unlawful or impossible for Bank to honor its
obligations hereunder to make or maintain any Advance with interest at the
Eurodollar-based Rate, Bank shall forthwith give notice thereof to Borrower.
Thereafter: (a) the obligations to
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make Eurodollar-based Loans and the right of Borrower to convert an Advance or
refund an Advance as a Eurodollar-based Loan shall be suspended; and (b) if Bank
may not lawfully continue to maintain a Eurodollar-based Loan to the end of the
then current Interest Period, the Prime-based Rate shall be the Applicable
Interest Rate for such Eurodollar-based Loan for the remainder of such Interest
Period.
3.5 Increased Costs. In the event that any change after the date hereof
in applicable law, treaty or governmental regulation, or in the interpretation
or application thereof, or compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
financial, monetary or other authority:
(a) shall subject Bank (or its eurodollar lending office) to
any tax, duty or other charge with respect to any Advance or shall change the
basis of taxation of payments to Bank (or its eurodollar lending office) of the
principal of or interest on any Advance or any other amounts due under this
Agreement (except for changes in the rate of tax on the overall net income or
gross receipts of Bank or its eurodollar lending office imposed by the
jurisdiction in which Bank's principal executive office or eurodollar lending
office is located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System but excluding with respect to any Eurodollar-based Loan
any such requirement included in an applicable Eurodollar Reserve Requirement),
special deposit, or similar requirement against assets of, deposits with or for
the account of, or credit extended by Bank (or its eurodollar lending offices)
or shall impose on Bank (or its eurodollar lending offices) or the foreign
exchange and interbank markets or other condition affecting any Advance or any
commitment of Bank under this Agreement;
and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any Advance or its commitments hereunder or to
reduce the amount or rate of return on any sum received or receivable by Bank
under this Agreement, or under any Note, then Bank may promptly notify Borrower
of such fact and demand compensation therefor and Borrower agrees to pay to Bank
(so long as such event or circumstance continues to exist) such additional
amount or amounts as will compensate Bank for such increased costs or reduced
return within thirty (30) days of such notice; provided, however that, to the
extent doing so would eliminate or decrease Borrower's liability for increased
costs hereunder, and to the extent that doing so would not otherwise be
disadvantageous to Bank, Bank will attempt to designate a eurodollar lending
office for which the tax, duty, reserve, deposit requirement, or other
circumstance giving rise to Bank's demand for increased compensation, is not
applicable. A certificate of the Bank demanding such compensation setting forth
in reasonable detail the basis for determining such additional amount or amounts
necessary to compensate shall be conclusively presumed to be correct save for
manifest error.
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3.6 Limitation on Outstanding Advances. At no time shall there be
greater than three (3) outstanding Advances on a Eurodollar-based Loan.
4. ARTICLE 4; CONDITIONS PRECEDENT TO OBLIGATIONS OF BANK
The obligations of the Bank under this Agreement are subject to the
satisfaction of each of the following conditions:
4.1 Documents Executed and Filed. The Borrower shall have executed (or
caused to be executed) and delivered to the Bank and, as appropriate, there
shall have been filed or recorded with such filing or recording offices as the
Bank shall deem appropriate, the following:
(a) The Note;
(b) The Security Agreement;
(c) The Subsidiary Security Agreement;
(d) The Gurantors' Security Agreements;
(e) The Financing Statements;
(f) The Guaranty;
(g) The Stock Pledge;
(h) The Contribution Agreement;
(i) Acknowledgements of Borrower's landlords with respect to
each Location, together with true copies of each Lease for such Locations.
4.2 Certified Resolutions. The Borrower shall have furnished to the
Bank a copy of resolutions of the Board of Directors of the Borrower and the
Guarantors authorizing the execution, delivery and performance of this
Agreement, the borrowing hereunder, the Note and the Documents to which Borrower
and/or Guarantors are a party, which shall have been certified by the Secretary
or Assistant Secretary of the Borrower or Guarantors, as the case may be, as
being complete, accurate and in effect.
4.3 Certified Articles. The Borrower shall have furnished to the Bank a
copy of the Articles of Incorporation including all amendments thereto and
restatements thereof, and all other charter documents of the Borrower and
Guarantors, which shall have been certified by the jurisdiction of organization
of the respective parties thereto.
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4.4 Certified Bylaws. The Borrower shall have furnished to the Bank a
copy of the Bylaws of the Borrower and Guarantors, including all amendments
thereto and restatements thereof, which shall have been certified by the
Secretary or Assistant Secretary of the Borrower and Guarantors, as the case may
be, as being complete, accurate and in effect.
4.5 Certificate of Good Standing. The Borrower shall have furnished to
the Bank a certificates of good standing with respect to the Borrower and
Guarantors certified by the Secretary of State of the States in which they are
organized in.
4.6 Certificate of Incumbency. The Borrower shall have furnished to the
Bank a certificate of the Secretary or Assistant Secretary of the Borrower and
the Guarantors, as to the incumbency and signatures of the officers of the
Borrower and Guarantors, as the case may be, signing this Agreement, the Note
and Documents.
4.7 UCC Lien Search. The Bank shall have received UCC record and copy
searches, evidencing the appropriate filing and recording of the Financing
Statements and disclosing no notice of any liens or encumbrances filed against
any of the Collateral.
4.8 Casualty Insurance. The Borrower shall have furnished to the Bank,
in form, content and amounts and with companies satisfactory to the Bank,
casualty insurance policies with loss payable clauses in favor of the Bank,
relating to the assets and properties (including, but not limited to, the
Collateral) of the Borrower.
4.9 Opinion of Counsel. Borrower shall have caused its legal counsel to
deliver to Bank a legal opinion covering such matters as Bank shall require, and
otherwise in form and content satisfactory to Bank.
4.10 Approval of Bank Counsel. All actions, proceedings, instruments
and documents required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal matters shall have
been satisfactory to and approved by legal counsel for the Bank, and said
counsel shall have been furnished with such certified copies of actions and
proceedings and such other instruments and documents as they shall have
reasonably requested.
5. ARTICLE 5; WARRANTIES AND REPRESENTATIONS
On a continuing basis from the date of this Agreement until the
Indebtedness is paid in full and the Borrower has performed all of its other
obligations hereunder, the Borrower represents and warrants that:
5.1 Corporate Existence and Power. (a) The Borrower is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; (b) it has the power and authority to own its properties and
assets and to carry out its
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business as now being conducted and is qualified to do business and in good
standing in every jurisdiction wherein such qualification is necessary and (c)
the Borrower has the power and authority to execute, deliver and perform this
Agreement, to borrow money in accordance with its terms, to execute, deliver and
perform the Note and other Documents to which it is party and to grant to the
Bank liens and security interests in the Collateral as hereby contemplated and
to do any and all other things required of it hereunder.
5.2 Authorization and Approvals. The execution, delivery and
performance of this Agreement, the borrowings hereunder and the execution,
delivery and performance of the Note, the other Documents: (a) have been duly
authorized by all requisite corporate action of the Borrower (b) except for UCC
filings, do not require registration with or consent or approval of, or other
action by, any federal, state or other governmental authority or regulatory
body, (c) will not violate any provision of law, any order of any court or other
agency of government, the Certificate of Incorporation or Bylaws of the
Borrower, any provision of any indenture, note, agreement or other instrument to
which any of them are a party, or by which any of their properties or assets are
bound, (d) will not be in conflict with, result in a breach of or constitute
(with or without notice or passage of time) a default under any such indenture,
note, agreement or other instrument, and (e) will not result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the properties or assets of the Borrower, other than in favor of the Bank and
as contemplated hereby.
5.3 Valid and Binding Agreement. This Agreement and the Documents will
be, when delivered, valid and binding obligations of the Borrower, in accordance
with its respective terms except to the extent enforceability thereof may be
limited under applicable bankruptcy, moratorium, insolvency, rearrangement,
reorganization or similar debtor relief laws affecting the rights of creditors
generally from time to time in effect.
5.4 Actions, Suits or Proceedings. There are no actions, suits or
proceedings, at law or in equity, and no proceedings before any arbitrator or by
or before any governmental commission, board, bureau, or other administrative
agency, pending, or, to the best knowledge of the Borrower, threatened against
or affecting the Borrower or any properties or rights of the Borrower which, if
adversely determined, could materially impair the right of it to carry on its
business substantially as now conducted or could have a material adverse effect
upon its financial condition.
5.5 No Liens, Pledges, Mortgage or Security Interests. Except for
Permitted Liens none of the Borrower's assets and properties, including without
limit the Collateral, are subject to any mortgage, pledge, lien, security
interest or other encumbrances of any kind or character other than in favor of
Bank and Permitted Liens.
5.6 Accounting Principles. All consolidated and consolidating balance
sheets, earnings statements and other historical financial data furnished to the
Bank for the
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purposes of, or in connection with, this Agreement and the transactions
contemplated by this Agreement, have been prepared in accordance with GAAP, and
do or will fairly present the financial condition of the Borrower, as of the
dates, and the results of its operations for the periods, for which the same are
furnished to the Bank. Without limiting the generality of the foregoing, the
annual and quarterly Financial Statements have been prepared in accordance with
GAAP (except as disclosed therein) and the monthly Financial Statements have
been prepared in a manner consistent with the calculations used in quarterly
Financial Statements, and all of them fairly present the financial condition of
the Borrower as of the dates, and the results of its operations for the fiscal
periods, for which the same are furnished to the Bank. The Borrower has no
material contingent obligations, liabilities for taxes, long-term leases or
unusual forward or long-term commitments not disclosed by, or reserved against
in, the Financial Statements.
5.7 Financial Condition. The Borrower is solvent, able to pay its
respective debts as they mature, has capital sufficient to carry on its business
and has assets the fair market value of which exceed its liabilities, and the
Borrower will not be rendered insolvent, under-capitalized or unable to pay
maturing debts by the execution or performance of this Agreement or the other
documents contemplated hereby. There has been no material adverse change in the
business, properties or condition (financial or otherwise) of the Borrower since
the date of the latest of the Financial Statements.
5.8 Taxes. The Borrower has filed by the due date therefor all federal,
state and local tax returns and other reports it is required by law to file, has
paid or caused to be paid all taxes, assessments and other governmental charges
that are shown to be due and payable under such returns, and has made adequate
provision for the payment of such taxes, assessments or other governmental
charges which have accrued but are not yet payable. The Borrower has no
knowledge of any deficiency or assessment in connection with any taxes,
assessments or other governmental charges not adequately disclosed in the
Financial Statements.
5.9 Compliance with Laws. The Borrower has complied with all applicable
laws, to the extent that failure to comply would materially interfere with the
conduct of the business of the Borrower as presently conducted.
5.10 Indebtedness. Except as permitted under Section 7.4 hereof, the
Borrower has no indebtedness for money borrowed or any direct or indirect
obligations under any leases (whether or not required to be capitalized under
GAAP) or any agreements of guarantee or surety except for the endorsement of
negotiable instruments by the Borrower in the ordinary course of business for
deposit or collection.
5.11 Material Agreements. Except as disclosed on Schedule 5.11 attached
hereto, the Borrower has no material contracts (as defined in the Regulations
under the
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Securities Act of 1933, as amended), which may include, without limitation,
employment agreements, collective bargaining agreements, powers of attorney,
distribution contracts, patent or trademark licenses, bonus, pension and
retirement plans, or accrued vacation pay, insurance and welfare agreements; to
the best knowledge of Borrower, all parties to such agreements have complied
with the provisions of such leases, contracts or commitments; and to the best
knowledge of the Borrower, no party to such agreements is in default thereunder,
nor has there occurred any event which with notice or the passage of time, or
both, would constitute such a default.
5.12 Margin Stock. The Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, and no part of the
proceeds of any Loan hereunder will be used, directly or indirectly, to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
5.13 Pension Funding. The Borrower has not incurred any accumulated
funding deficiency within the meaning of ERISA or incurred any liability to the
PBGC in connection with any employee benefit plan established or maintained by
the Borrower and no reportable event or prohibited transaction, as defined in
ERISA, has occurred with respect to such plans.
5.14 Misrepresentation. No warranty or representation by the Borrower
contained herein or in any certificate or other document furnished by the
Borrower pursuant hereto contains any untrue statement of material fact or omits
to state a material fact necessary to make such warranty or representation not
misleading in light of the circumstances under which it was made.
5.15 Hazardous Materials Warranties, Representations and Covenants.
(a) Borrower is not party to any litigation or administrative
proceeding, nor so far as is known by Borrower, is any litigation or
administrative proceeding threatened against it, which in either case (a)
asserts or alleges that Borrower violated any federal, state or local laws,
ordinances, statutes, rules, regulations or judgments governing the use,
storage, transportation, or disposal of Hazardous Materials ("Environmental
Laws"), (b) asserts or alleges that Borrower is required to clean up, remove, or
take remedial or other response action due to the disposal, depositing
discharge, leaking or other release of any Hazardous Materials, (c) asserts or
alleges that Borrower is required to pay all or a portion of the cost of any
past, present, or future clean up, removal or remedial or other response action
which arises out of or is related to the disposal, depositing, discharge,
leaking or other release of any Hazardous Material by any one of them.
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(b) To the best knowledge of Borrower, there are no conditions
existing currently or likely to exist during the term of this Agreement which
would subject the Borrower to damages, penalties, injunctive relief or clean up
costs under any Environmental Laws or which require or are likely to require
clean up, removal, remedial action or other response pursuant to Environmental
Laws by Borrower.
(c) The Borrower is not subject to any judgment, decree, order
or citation related to or arising under the Environmental Laws and Borrower has
not received any notice ("Environmental Complaint") of any violations of
Environmental Laws (and, within five days of receipt of any Environmental
Complaint the Borrower shall deliver to the Bank a copy thereof), and to the
best of Borrower's knowledge, there have been no actions commenced or threatened
by any party for noncompliance with any Environmental Laws.
(d) The Borrower has all permits, licenses, approvals and
other authorizations required under the Environmental Laws.
(e) The Borrower covenants and agrees that it shall not use,
introduce or maintain Hazardous Materials in any premises which they may from
time to time occupy other than in strict accordance and compliance with
Environmental Laws.
(f) Borrower agrees that it shall promptly notify Bank in
writing as soon as Borrower becomes aware of any condition or circumstance which
makes the environmental warranties, representations and covenants contained
herein incomplete or inaccurate in any material respect as of any date.
(g) In the event of any condition or circumstance that makes
any environmental representation, warranty or covenant incomplete or inaccurate
in any material respect as of any date, Borrower shall, at the request of Bank,
at the sole expense of Borrower, retain an environmental consultant acceptable
to Bank, to conduct a thorough and complete environmental assessment in respect
of any environmental concerns of Bank arising from that changed condition or
circumstance. A copy of said assessment will be addressed to Bank and promptly
delivered to Bank, Borrower upon completion.
(h) In the event of a violation of Environmental Laws, whether
discovered pursuant to an environmental consultant's assessment or otherwise,
Borrower covenants and agrees to complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions necessary to clean up
and remove all Hazardous Materials on or affecting premises or property occupied
or used by Borrower, whether caused by the Borrower or a third party, in
accordance with Environmental Laws to the satisfaction of Bank, and in
accordance with the directives of all federal, state, and local governmental
authorities.
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(i) At any time Borrower, directly or indirectly through any
professional consultant or other representative, determines to undertake an
environmental audit, assessment or investigation, Borrower shall promptly
provide Bank with written notice of the initiation of the environmental
audit/assessment, fully describing the purpose and intended scope of the said
audit/assessment. Upon receipt, Borrower shall promptly provide Bank copies of
all final findings and conclusions of any such environmental investigation.
Preliminary findings and conclusions shall be provided if final reports have not
been completed and delivered to Bank within sixty days following completion of
the preliminary findings and conclusions.
(j) Borrower hereby indemnifies, saves and holds Bank and any
of its past, present and future officers, directors, shareholders, employees,
representatives and consultants harmless from any and all loss damages, suits,
penalties, costs, liabilities and expenses (including, but not limited to
reasonable investigation, environmental audit(s), and legal expenses), arising
out of any claim, loss or damages of any property, injuries to or death of
persons, contamination of or adverse effects on the environment, or any
violation of any Environmental Laws, caused by or in any way related to the real
property of Borrower, or due to any acts of Borrower or its officers, directors,
shareholders, employees, consultants and/or representatives; provided, however,
that the foregoing indemnifications shall not be applicable when arising from
events or conditions occurring while the Bank is in sole possession (subject to
the rights of any creditors of Borrower) of the real property of Borrower. In no
event shall Borrower be liable hereunder for any loss, damages, suits,
penalties, costs, liabilities or expenses arising solely from any act or willful
misconduct or gross negligence of Bank or its agents or employees. It is
expressly agreed and understood by Borrower that the indemnifications granted
herein are intended to protect Bank, its past, present and future officers,
directors, shareholders, employees, consultants and representatives from any
claims that may arise by reason of any security interest, liens and/or mortgages
granted to Bank, or under any other document or agreement given to secure
repayment of the Indebtedness, whether or not such claims arise before or after
Bank has foreclosed upon and/or otherwise becomes the owner of any such
property, real or personal. All obligations of indemnity as provided hereunder
shall be supported and secured by any Documents executed by Borrower in favor of
Bank. The indemnifications contained herein extend to shareholders of Bank qua
shareholders only, and nothing contained herein shall be construed to prevent
Borrower from asserting any claim whatsoever against any party or entity that
occasions any adverse environmental effects or any violation of any
Environmental Laws upon or in any way related to the real property of Borrower,
whether or not such party or entity is a shareholder of Bank.
(k) In the event any mortgage securing the Indebtedness is
foreclosed or the Borrower tenders a deed in lieu of foreclosure, the Borrower
shall deliver the
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premises to the Bank free of any and all Hazardous Materials to the extent
necessary so that the condition of the premises shall not be a violation of any
Environmental Laws.
(l) The provisions of this section shall be in addition to any
and all other obligations and liabilities the Borrower may have to the Bank at
common law or pursuant to any other agreement and shall survive (i) the
repayment of the Indebtedness, (ii) the satisfaction of all of the other
obligations of the Borrower hereunder and under the other Documents, (iii) the
discharge of the Mortgage, and (iv) the foreclosure of the Mortgages or
acceptance of a deed in lieu thereof.
(m) "Hazardous Materials" includes, without limitation, any
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances or related materials defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601, et seq.), the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, et seq.), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.) and
in the regulations adopted and publications promulgated pursuant thereto, or any
other federal, state or local governmental law, ordinance, rule, or regulation.
6. ARTICLE 6; AFFIRMATIVE COVENANTS
On a continuing basis from the date of this Agreement until the
Indebtedness is paid in full and the Borrower has performed all of its other
obligations hereunder, the Borrower covenants and agrees that it will:
6.1 Financial and Other Information.
(a) Annual Financial Reports. Furnish to the Bank, in form and
reporting basis satisfactory to the Bank, not later than one hundred twenty
(120) days after the close of each fiscal year of the Borrower, financial
statements of the Borrower containing the balance sheet of the Borrower of the
close of each such fiscal year, statements of income and retained earnings and a
statement of cash flows for each such fiscal year, and such other comments and
financial details as are usually included in similar reports. Such reports shall
be prepared in accordance with GAAP by independent certified public accountants
of recognized standing selected by the Borrower and acceptable to the Bank and
shall contain unqualified opinions as to the fairness of the statements therein
contained. These statements shall be prepared on an audited basis.
(b) Monthly Financial Statements. Furnish to the Bank not
later than fifty five (55) days after the close of each month of each fiscal
year of the Borrower, unaudited financial statements on a consolidated basis
containing the balance sheet of the Borrower as of the end of each such period,
statements of income and retained earnings
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of the Borrower and a statement of cash flows of the Borrower for the portion of
the fiscal year up to the end of such period, and such other comments and
financial details as are usually included in similar reports. The statements
shall be in such detail as the Bank may reasonably require, and the accuracy of
the statements shall be certified by the chief executive or financial officer of
the Borrower.
(c) No Default Certificate. Together with each delivery of the
financial statements required by Sections 6.1(a) and 6.1(b) of this Agreement,
furnish to the Bank a certificate of its chief executive or financial officer
stating that no Event of Default or Default has occurred, or if any such Event
of Default or Default exists, stating the nature thereof, the period of
existence thereof and what action the Borrower proposes to take with respect
thereto.
(d) Accounts. Furnish to Bank not later than fifteen (15) days
after and as of the end of each month, agings of the Accounts and any accounts
payable of Borrower, and a schedule identifying each Eligible Account and
identifying for each Eligible Account, the portions thereof which constitute
Eligible Fixed Accounts and Eligible Time Accounts. Any such schedule,
certificate or report shall be executed by a duly authorized officer of Borrower
and shall be in such form and detail as Bank may specify.
(e) Borrowing Base Report. Furnish to the Bank not later than
five (5) days after and as of the end of each week, in form, content, and
reporting basis satisfactory to the Bank, a Borrowing Base report.
(f) Reports Filed with the SEC. Furnish to the Bank copies of
all reports and information filings by Borrower required by the Securities and
Exchange Commission ("SEC") on or before the statutory filing date.
(g) Annual Financial Projections. Furnish to the Bank, in form
and reporting basis satisfactory to the Bank, prior to the commencement of each
fiscal year of the Borrower, projected financial statements of the Borrower
containing the balance sheet of the Borrower of the beginning of each such
fiscal year, statements of income and retained earnings and a statement of cash
flows for each such fiscal year, and such other comments and financial details
as are usually included in similar reports prepared by management of Borrower
utilizing their then current knowledge and reasonable expectations with respect
to the periods covered thereby.
(h) Adverse Events. Promptly inform the Bank of the occurrence
of any Event of Default or Default, or of any other occurrence which has or
could reasonably be expected to have a materially adverse effect upon the
Borrower's business, properties, or financial condition or upon the Borrower's
ability to comply with its obligations under the Documents.
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(i) Other Information As Requested. Promptly furnish to the
Bank such other information regarding the operations, business affairs and
financial condition of the Borrower and its subsidiaries as the Bank may
reasonably request from time to time and permit the Bank, its employees,
attorneys and agents, upon 72 hours prior notice (except in case of emergency or
during the existence of an Event of Default) to inspect all of the books,
records and properties of the Borrower and its subsidiaries during normal
business hours.
6.2 Compliance with Borrowing Formula. In the event that at any time,
the aggregate principal amount of Advances exceeds the Revolving Maximum,
immediately pay to Bank for application against such Advances, an amount
sufficient to eliminate such excess.
6.3 New Subsidiaries. Cause each domestic subsidiary of Borrower now or
hereafter owned or acquired by Bank which Bank determines (in its sole
discretion) to have significant assets or revenues, to guaranty the obligations
of Borrower to Bank and to secure such guaranty with liens upon and security
interests in all such subsidiary's assets.
6.4 Insurance. Keep its insurable properties (including but not limited
to the Collateral) adequately insured and maintain (a) insurance against fire
and other risks customarily insured against under an "all-risk" policy and such
additional risks customarily insured against by companies engaged in the same or
a similar business to that of the Borrower, (b) necessary worker's compensation
insurance, (c) public liability and product liability insurance, and (d) such
other insurance as may be required by law or as may be reasonably required in
writing by the Bank, all of which Insurance shall be in such amounts, containing
such terms, in such form, for such purposes, prepaid for such time period, and
written by such companies as shall be satisfactory to the Bank. All such
policies shall contain a provision whereby they may not be canceled or amended
except upon thirty (30) days' prior written notice to the Bank. The Borrower
will promptly deliver to the Bank, at the Bank's request, evidence satisfactory
to the Bank that such insurance has been so procured and, with respect to
casualty insurance, made payable to the Bank. If the Borrower fails to maintain
satisfactory insurance as herein provided, the Bank shall have the option to do
so, and the Borrower agrees to repay the Bank upon demand, with interest at the
Prime-based Rate then in effect for the Revolving, all amounts so expended by
the Bank. The Borrower hereby appoints the Bank or any employee or agent of the
Bank as the Borrower's attorney-in-fact, which appointment is coupled with an
interest and irrevocable, and authorizes the Bank or any employee or agent of
the Bank, on behalf of the Borrower, to adjust and compromise any loss under
said insurance and to endorse any check or draft payable to the Borrower in
connection with returned or unearned premiums on said insurance or the proceeds
of said insurance, and any amount so collected shall be applied toward repair
and/or replacement of the Collateral to which such casualty occurred or
satisfaction of the Indebtedness in
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accordance in accordance with the provisions governing such application in the
Documents pursuant to which Bank's Liens on such Collateral were granted.
6.5 Taxes. Pay in accordance with commercially reasonable practices and
within the time that they can be paid without late charge, penalty or interest
all taxes, assessments and similar imposts and charges of every kind and nature
lawfully levied, assessed or imposed upon the Borrower, and its property, except
to the extent being contested in good faith and, if requested by the Bank,
bonded in an amount and manner satisfactory to the Bank. If the Borrower shall
fail to pay such taxes and assessments within the time they can be paid without
penalty, late charge or interest the Bank shall have the option to do so, and
the Borrower agrees to repay the Bank upon demand, with interest at the
Prime-based Rate from time to time in effect under the Note, all amounts so
expended by the Bank.
6.6 Maintain Corporation and Business. Do or cause to be done all
things necessary to preserve and keep in full force and effect the Borrower's
corporate existence, and material rights and franchises and comply with all
material respects with applicable laws, continue to conduct and operate its
business substantially as conducted and operated during the present and
preceding calendar year, at all times maintain, preserve and protect all
material franchises and trade names and property and keep the same in good
repair, working order and condition, and from time to time make, or cause to be
made, all needed and proper repairs, renewals, replacements, betterments and
improvements thereto so that the business carried on in connection therewith may
be properly and advantageously conducted at all times.
6.7 ERISA. (a) At all times meet the minimum funding requirements of
ERISA with respect to the Borrower's employee benefit plans subject to ERISA,
(b) promptly after the Borrower knows or has reason to know (i) of the
occurrence of any event, which would constitute a reportable event or prohibited
transaction under ERISA, or (ii) that the PBGC or the Borrower has instituted or
will institute proceedings to terminate an employee pension plan, deliver to the
Bank a certificate of the chief financial officer of the Borrower setting forth
details as to such event or proceedings and the action which the Borrower
proposes to take with respect thereto, together with a copy of any notice of
such event which may be required to be filed with the PBGC, and (c) furnish to
the Bank (or cause the plan administrator to furnish the Bank) a copy of the
annual return (including all schedules and attachments) for each plan covered by
ERISA, and filed with the Internal Revenue Service by the Borrower not later
than ten (10) days after such report has been so filed.
6.8 Financial Covenants.
(a) Maintain a Tangible Net Worth of not less than:
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As of:
------
3/31/99 $2,500,000;
6/30/99 $2,500,000;
9/30/99 $4,000,000;
12/31/99 $5,500,000;
3/31/2000 $7,000,000;
6/30/2000 $8,500,000;
9/30/2000 $10,000,000;
12/31/2000 $11,500,000;
3/31/2001 $13,000,000;
(b) Maintain an Interest Coverage Ratio of not less than:
As of:
------
3/31/99 9 to 1
6/30/99 10 to 1
9/30/99 11 to 1
12/31/99 12 to 1
3/31/2000 13 to 1
6/30/2000 14 to 1
9/30/2000 15 to 1
12/31/2000 16 to 1
3/31/2001 17 to 1
(c) At all times maintain a Debt to Tangible Net Worth Ratio
of not more than 12 to 1.
6.9 Bank Accounts. Establish and maintain with Bank a general checking
account.
7. ARTICLE 7; NEGATIVE COVENANTS
On a continuing basis from the date of this Agreement until the
Indebtedness is paid in full and the Borrower has performed all of its other
obligations hereunder, the Borrower covenants and agrees that it will not,
without the Bank's prior written consent:
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7.1 Dividends. Declare or pay any cash dividends on, or make any other
cash distribution (whether by reduction of capital or otherwise) with respect to
any shares of its capital stock.
7.2 Stock Acquisition. Purchase, redeem, retire or otherwise acquire
any of the shares of its capital stock, or make any commitment to do so.
7.3 Liens and Encumbrances. Create, incur, assume or suffer to exist
any mortgage, pledge, encumbrance, security interest, lien or charge of any kind
upon any of its property or assets (including without limit any charge upon
property purchased or acquired under a conditional sales or other title
retaining agreement or lease required to be capitalized under GAAP) whether now
owned or hereafter acquired, other than:
(a) to Bank; and
(b) Permitted Liens.
7.4 Indebtedness. Incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or advances or any indebtedness
or liability for borrowed money, or any other indebtedness or liability
evidenced by notes, bonds, debentures or similar obligations, or any other
indebtedness whatsoever, except for:
(a) the Indebtedness;
(b) indebtedness secured by Permitted Liens.
7.5 Extension of Credit. Make loans, advances or extensions of credit
to any Person, except (a) loans and advances to Foreign Subsidiaries in an
amount not to exceed $2,000,000 in the aggregate during any fiscal year; and (b)
loans and advances to Subsidiaries, provided that in both instances, promptly
upon the making of any such loan, Borrower delivers and collaterally assigns to
Bank all of Borrower's interest in a note evidencing such loan and any security
therefor.
7.6 Guarantee Obligations. Guarantee or otherwise, directly or
indirectly, in any way be or become responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of any other Person,
agreement for the furnishing of funds to any other Person through the furnishing
of goods, supplies or services, by way of stock purchase, capital contribution,
advance or loan, for the purpose of paying or discharging (or causing the
payment or discharge of) the indebtedness of any other Person, or otherwise,
except for the endorsement of negotiable instruments by the Borrower in the
ordinary course of business for deposit for collection.
7.7 Subordination of Receivables. Subordinate any indebtedness due to
it from a Person to indebtedness of other creditors of such Person.
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7.8 Property Transfer, Merger or Lease-Back. (a) Sell, lease, transfer
or otherwise dispose of properties and asset, having an aggregate book value of
more than Two Hundred Fifty Thousand Dollars ($250,000), (whether in one
transaction or in a series of transactions) except as to the sale of inventory
in the ordinary course of business; (b) change its name, consolidate with or
merge into any other corporation, permit another corporation to merge into it,
acquire all or substantially all the properties or assets of any other Person,
enter into any reorganization or recapitalization or reclassify its capital
stock, except for such merger(s) of a Subsidiary into Borrower; or (c) enter
into any sale-leaseback transaction.
7.9 Acquire Securities. Purchase or hold beneficially any stock or
other securities of, or make any investment or acquire any interest whatsoever
in, any other Person, except for certificates of deposit with maturities of one
year or less of United States commercial banks with capital, surplus and
undivided profits in excess of $100,000,000 and direct obligations of the United
States Government maturing within one year from the date of acquisition thereof.
7.10 Pension Plan. (a) Allow any fact, condition or event to occur or
exist with respect to any employee pension or profit sharing plans established
or maintained by it which might constitute grounds for termination of any such
plan or for the court appointment of a trustee to administer any such plan, or
(b) permit any such plan to be the subject of termination proceedings (whether
voluntary or involuntary) from which termination proceedings there may result a
liability of the Borrower to the PBGC which, in the opinion of the Bank, will
have a materially adverse effect upon the operations, business, property,
assets, financial condition or credit of the Borrower.
8. ARTICLE 8; EVENTS OF DEFAULT - ENFORCEMENT - APPLICATION OF PROCEEDS
8.1 Events of Default. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) Failure to Pay Monies Due. If the Borrower shall fail to
pay, when due, any principal or interest under any Note or other Indebtedness
when due or shall default in an obligation described in Section 6.1 or 6.2
hereof and such failure or default shall continue for a period in excess of
three (3) Business Days after notice by Bank to Borrower thereof.
(b) Misrepresentation. If any warranty or representation in
connection with or contained in this Agreement or any Document, or if any
Financial Statements now or hereafter furnished to the Bank by or on behalf of
the Borrower, shall prove to be false or misleading in any material respect as
of the date made or deemed made hereunder.
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31
(c) Noncompliance with Bank Agreement. If the Borrower shall
fail to perform in the time and manner required any of its obligations or
covenants under, or shall fail to comply with any of the provisions of, this
Agreement or any other Document and, in the case of a failure to perform
obligations other than those described in Section 6.4, Sections 7.1 through 7.10
hereof or Section 8.1(a) above, such failure shall continue for a period in
excess of thirty (30) days after the earlier of Bank's notice to Borrower
thereof or the date Borrower actually becomes aware thereof.
(d) Other Defaults. If the Borrower shall default in the
payment when due of any of its borrowed money indebtedness (other than to the
Bank) in amounts in excess of Five Hundred Thousand Dollars ($500,000) or in the
observance or performance of any term, covenant or condition in any agreement or
instrument evidencing, securing or relating to such indebtedness, and such
default be continued for a period sufficient to permit acceleration of the
indebtedness, irrespective of whether any such default shall be forgiven or
waived or there has been acceleration by the holder thereof.
(e) Judgments. If there shall be rendered against the Borrower
one or more judgments or decrees involving an aggregate liability of Five
Hundred Thousand Dollars ($500,000)or more, which has or have become
non-appealable and shall remain undischarged, unsatisfied by insurance and
unstayed for more than thirty (30) days, whether or not consecutive, or if a
writ of attachment or garnishment against the property of the Borrower shall be
issued and levied in an action claiming Five Hundred Thousand Dollars
($500,000)or more and not released or appealed and bonded in an amount and
manner satisfactory to the Bank within thirty (30) days after such issuance and
levy.
(f) Business Suspension Bankruptcy Etc. If the Borrower shall
voluntarily suspend transaction of its business, or if the Borrower shall not
pay its debts as they mature or shall make a general assignment for the benefit
of creditors, or proceedings in bankruptcy, or for reorganization or liquidation
of the Borrower under the Bankruptcy Code or under any other, state federal or
other applicable law for the relief of debtors shall be commenced by Borrower,
or shall be commenced against the Borrower and shall not be discharged within
sixty (60) days of commencement, or a receiver, trustee or custodian shall be
appointed for the Borrower or for any substantial portion of their respective
properties or assets.
(g) Change of Management or Ownership. If a majority of the
persons serving on the board of directors of Borrower as of the date of this
Agreement shall cease to serve on such board of directors and Bank considers (in
its reasonable discretion) such change to affect materially and adversely the
prospects of Borrower.
(h) Inadequate Funding or Termination of Employee Benefit
Plan. If the Borrower shall fail to meet its minimum funding requirements under
ERISA with respect
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32
to any employee benefit plan established or maintained by it, or if any such
plan shall be subject of termination proceedings (whether voluntary or
involuntary) and there shall result from such termination proceedings a
liability of Borrower to the PBGC which in the opinion of the Bank will have a
materially adverse effect upon the operations, business, property, assets,
financial condition or credit of the Borrower.
(i) Occurrence of Certain Reportable Events. If there shall
occur, with respect to any pension plan maintained by the Borrower any
reportable event (within the meaning of Section 4043(b) of ERISA) which the Bank
shall determine constitutes a ground for the termination of any such plan, and
if such event continues for thirty (30) days after the Bank gives written notice
to the Borrower, provided that termination of such plan or appointment of such
trustee would, in the opinion of the Bank, have a materially adverse effect upon
the operations, business, property, assets, financial condition or credit of the
Borrower, as the case may be.
(j) Repudiation of Documents. If Borrower repudiates,
contests, revokes or purports to revoke any of its obligations to Bank, or any
rights or remedies of Bank, under Documents to which they are party.
(k) Loans or Guarantees of Subsidiaries. If any Subsidiary
shall loan or advance monies to, or invest in, or guaranty a debt or obligation
of, a Foreign Subsidiary.
8.2 Acceleration of Indebtedness, Remedies. Upon the occurrence of an
Event of Default, all Indebtedness shall be due and payable in full immediately
(without notice or demand in the case of an Event of Default of the type
described in Section 8.1.(f) above, and upon written notice from Bank in the
case of any other Event of Default) without presentation, demand, protest,
notice of dishonor or other further notice of any kind, all of which are hereby
expressly waived, and Bank shall have no further commitment to make Advances.
Unless all of the Indebtedness is then immediately fully paid, the Bank shall
have and may exercise any one or more of the rights and remedies for which
provision is made for a secured party under the UCC, under the or for which
provision is provided by law or in equity, including, without limitation, the
right to take possession and sell, lease or otherwise dispose of any or all of
the Collateral and to set off against the Indebtedness any amount owing by the
Bank to the Borrower and/or any property of the Borrower in possession of the
Bank. The Borrower agrees, upon request of the Bank, to assemble the Collateral
and make it available to the Bank at any place designated by the Bank.
8.3 Application of Proceeds. All of the Indebtedness shall constitute
one loan secured by the Bank's security interest in the Collateral and by all
other security interests, mortgages, liens, claims, and encumbrances now and
from time to time hereafter granted from the Borrower to the Bank. Upon the
occurrence of an Event of Default which is not cured within the cure period, if
any, provided under Section 8.1, the Bank may in its sole
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33
discretion apply the Collateral to any portion of the Indebtedness. The proceeds
of any sale or other disposition of the Collateral authorized by this Agreement
shall be applied by the Bank, first upon all expenses authorized by the UCC or
otherwise in connection with the sale and all reasonable attorneys' fees and
legal expenses incurred by the Bank, the balance of the proceeds of such sale or
other disposition shall be applied in the payment of the Indebtedness, first to
interest, then to principal, then to other Indebtedness and the surplus, if any,
shall be paid over to the Borrower or to such other Person or Persons as may be
entitled thereto under applicable law. The Borrower shall remain liable for any
deficiency, which the Borrower shall pay to the Bank immediately upon demand.
8.4 Cumulative Remedies. The remedies provided for herein are
cumulative to the remedies for collection of the Indebtedness as provided by
law, in equity or by any Document. Nothing herein contained is intended, nor
shall it be construed, to preclude the Bank from pursuing any other remedy for
the recovery of any other sum to which the Bank may be or become entitled for
the breach of this Agreement by the Borrower.
9. ARTICLE 9; MISCELLANEOUS
9.1 Independent Rights. No single or partial exercise of any right,
power or privilege hereunder, or any delay in the exercise thereof, shall
preclude other or further exercise of the rights of the parties to this
Agreement.
9.2 Covenant Independence. Each covenant in this Agreement shall deemed
to be independent of any other covenant, and an exception illegality in one
covenant shall not create an exception or illegality another covenant.
9.3 Waivers and Amendments. No forbearance on the part of the Bank in
enforcing any of its rights under this Agreement or any other Document, nor any
renewal, extension or rearrangement of any payment or covenant to be made or
performed by the Borrower hereunder, shall constitute a waiver of any of the
terms of this Agreement or of any such right. No Default or Event of Default
shall be waived by the Bank except in a writing signed and delivered by an
officer of the Bank, and no waiver of any other Default or Event of Default
shall operate as a waiver of any Default or Event of Default or of the same
Default or Event of Default on a future occasion. No other amendment,
modification or waiver of, or consent with respect to, any provision of this
Agreement or any Note or other Documents shall be effective unless the same
shall be in writing and signed and delivered by an officer of the Bank.
9.4 Governing Law. This Agreement, and each and every term and
provision hereof, shall be governed by and construed in accordance with the
internal law of the State of Michigan. If any provisions of this Agreement shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this Agreement
shall be construed as if such invalid or
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34
unenforceable provisions had never been contained herein. Borrower hereby
consents to the jurisdiction of the courts of the State of Michigan and to the
Federal Courts which include the Eastern District of Michigan and their
territorial institutions, for all proceedings relating to the enforcement hereof
or any indebtedness hereunder.
9.5 Survival of Warranties, Etc. All of the Borrower's covenants,
agreements, representations and warranties made in connection with this
Agreement and any document contemplated hereby shall survive the borrowing and
the delivery of the Notes and shall be deemed to have been relied upon by the
Bank, notwithstanding any investigation heretofore or hereafter made by the
Bank. All statements contained in any certificate or other document delivered to
the Bank at any time by or on behalf of the Borrower pursuant hereto or in
connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower in connection with this
Agreement.
9.6 Costs and Expenses. The Borrower agrees that it will reimburse the
Bank, upon demand, for all reasonable costs and expenses incurred by the Bank in
connection with (i) collecting or attempting to collect the Indebtedness or any
part thereof, (ii) maintaining or defending the Bank's security interests or
liens (or the priority thereof), (iii) the enforcement of the Bank's rights or
remedies under this Agreement or the other documents contemplated hereby, (iv)
the preparation or making of any amendments, modifications, waivers or consents
with respect to this Agreement or the other documents contemplated hereby,
and/or (v) any other matters or proceedings arising out of or in connection with
any lending arrangement between the Bank and the Borrower, which costs and
expenses include without limit payments made by the Bank for taxes, insurance,
assessments, or other costs or expenses which the Borrower is required to pay
under this Agreement or the other documents contemplated hereby, expenses
related to the examination of the Collateral, audit expenses, court costs and
reasonable attorneys' fees (whether in-house or outside counsel is used, whether
legal assistants are used, and whether such costs are incurred in formal or
informal collection actions, federal bankruptcy proceedings, probate
proceedings, on appeal or otherwise), and all other costs and expenses of the
Bank incurred in connection with any of the foregoing.
9.7 Payments on Saturdays, Etc. Whenever any payment to be made
hereunder shall be stated to be due on a Saturday, Sunday or any other day which
is not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension, if any, shall be included in computing interest in
connection with such payment.
9.8 Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors and
assigns, provided, however, that the Borrower may not assign or transfer its
rights or obligations hereunder without the prior written consent of the Bank.
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35
9.9 Maintenance of Records. The Borrower will keep all of its records
concerning its business operations and accounting at its principal place of
business. The Borrower will give the Bank prompt written notice of any change in
its principal place of business, or in the location of its records.
9.10 Notices. All notices and communications provided for herein or in
any Document contemplated hereby or required by law to be given shall be in
writing (unless expressly provided to the contrary) and, if personally
delivered, effective when delivered at the address below or, in the case of
mailing, effective two (2) days after sending by first class mail, postage
prepaid, addressed as follows: (a) If to the Borrower, to:▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice
President - Finance, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and
(b) if to the Bank, to: Comerica Bank, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, or to such other address as a party shall have
designated to the other in writing in accordance with this section. The giving
of at least five (5) days notice before the Bank shall take any action described
in any notice shall conclusively be deemed reasonable for all purposes,
provided, that this shall not be deemed to require the Bank to give five day
notice or any notice if not specifically required in this Agreement.
9.11 Interest and Charges. It is not the intention of any parties to
this Agreement to make an agreement in violation of the laws of any applicable
jurisdiction relating to usury. Regardless of any provision in this Agreement,
Bank shall ever be entitled to receive, collect or apply, as interest on the
Obligations, any amount in excess of the Legal Rate. If any Bank ever receives,
collects or applies, as interest, any such excess, such amount which would be
excessive interest shall be deemed a partial repayment of principal and treated
hereunder as such; and if principal is paid in full, any remaining excess shall
be paid to the Borrower. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Legal Rate, the Borrower
and the Bank shall, to the maximum extent permitted under applicable law, (a)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effect thereof, and (c)
amortize, prorate, allocate and spread in equal parts, the total amount of
interest throughout the entire contemplated term of the Indebtedness so that the
interest rate is uniform throughout the entire term of the indebtedness;
provided; however, that if the Indebtedness are paid and performed in full prior
to the end of the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Legal Rate, the Bank
shall refund to the Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Indebtedness owing, and in
such event, the Bank shall not be subject to any penalties provided by any
Applicable Law for contracting for, charging or receiving interest in excess of
the Legal Rate. This Section shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained herein.
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36
9.12 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures were upon the same
instrument.
9.13 Headings. Article and section headings in this Agreement are
included for the convenience of reference only and shall not constitute a part
of this Agreement for any purpose.
9.14 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY IRREVOCABLY
WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR
PROCEEDINGS AT ANY TIME IN WHICH THE BORROWER AND THE BANK ARE PARTIES ARISING
OUT OF THIS AGREEMENT OR THE OTHER DOCUMENTS.
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37
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first written above.
BRIGHTSTAR INFORMATION
TECHNOLOGY GROUP, INC.
By:
----------------------------------------
Its:
----------------------------------------
COMERICA BANK
By:
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President
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38
EXHIBIT "A"
REVOLVING NOTE
$15,000,000 Detroit, Michigan
_________, 1999
FOR VALUE RECEIVED, on or before the Maturity Date, BRIGHTSTAR
INFORMATION TECHNOLOGY GROUP, INC., a Delaware corporation promises to pay to
the order of COMERICA BANK, a Michigan banking corporation ("Bank") at its main
office at One Detroit Center, Detroit, Michigan, in lawful money of the United
States of America so much of the principal sum of FIFTEEN MILLION DOLLARS
($15,000,000) as shall have been advanced and then be outstanding hereunder and
all the accrued and unpaid interest thereon.
Capitalized terms used herein and not defined to the contrary have the
meanings given them in the Revolving Credit Agreement of even date herewith
between the undersigned and Bank ("Agreement") to which reference is hereby
made.
Interest on the Advances from time to time outstanding shall bear
interest at their Applicable Interest Rates; provided, however, that in the
event and so long as there shall exist an Event of Default, the principal
balance from time to time outstanding shall bear interest at the rates provided
in Section 2.11 of the Agreement. Interest shall be computed on the basis of a
360 day year and assessed for the actual number of days elapsed.
This Note is note under which advances, repayments and readvances may
be made subject to the terms and conditions of the Agreement. This Note
evidences borrowing under, is subject to, is secured in accordance with, and may
be matured under, the terms of the Agreement, to which reference is hereby made.
As additional security for this Note, Company grants Bank a lien on all property
and assets including deposits and other credits of the Company, at any time in
possession or control of or owing by Bank for any purpose.
Company hereby waives presentment for payment, demand, protest and
notice of dishonor and nonpayment of this Note and agrees that no obligation
hereunder shall be discharged by reason of any extension, indulgence, release,
or forbearance granted by any holder of this Note to any party now or hereafter
liable hereon or any present or subsequent owner of any property, real or
personal, which is now or hereafter security for this Note. Any transferees of,
or endorser, guarantor or surety paying this Note in full may succeed to all
rights of Bank, and Bank shall be under no further responsibility for the
exercise thereof or the loan evidenced hereby. Nothing herein shall limit any
right granted Bank by other instrument or by law.
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39
This Note shall be governed by and construed in accordance with the
laws of the State of Michigan.
BRIGHTSTAR INFORMATION
TECHNOLOGY GROUP, INC.
By:
--------------------------------------
Its:
--------------------------------------
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40
EXHIBIT "B"
REQUEST FOR LOAN
The undersigned authorized officer of BRIGHTSTAR INFORMATION TECHNOLOGY
GROUP, INC. ("Borrower") hereby submits this Request for Loan to COMERICA BANK
("Bank") pursuant to Section 2.2 of the Revolving Credit Agreement ("Agreement")
dated ____________, 1999 between Company and Bank.
Capitalized terms used herein and not defined to the contrary have
meanings given them in the Agreement.
Company: (a) requests an Advance under the Note in the amount of
$____________________ to be made on _______________, ______, (b) certifies that
all of the conditions for the Advance requested hereby under the Agreement, are
satisfied as of the date hereof and shall be satisfied as of the date for the
requested Advance, and (c) directs Bank to disburse proceeds of the Advance
requested hereby as follows:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
-----------------------------------------------------------------------------(1)
Executed as of this _____ day of ____________________, _____.
BRIGHTSTAR INFORMATION
TECHNOLOGY GROUP, INC.
By:
----------------------------------------
Its:
----------------------------------------
--------
(1) If request is for the renewal or conversion of an existing Advance,
identify Advance to be converted by Applicable Interest Rate and Interest
Period.
41
SCHEDULE 5.11
MATERIAL AGREEMENTS