THIRD AMENDMENT DATED AS OF
JULY 6, 1995 TO THE AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
DATED AS OF JULY 15, 1994
This Third Amendment Agreement (the "Amendment") is dated as of July 6,
1995 by and among PDK LABS INC., a New York corporation having its principal
place of business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the
"Company"), PDI LABS, INC. ("PDI"), a New York corporation having its principal
place of business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000, C&C
Enterprises, Inc. ("C&C"), a Delaware corporation, having its principal place of
business at 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 (PDI and C&C, each a
"Guarantor" and collectively, the "Guarantors") and CHEMICAL BANK, a New York
banking corporation, having an office at 000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx
Xxxx 00000 (the "Bank").
WHEREAS, the Bank, the Company and PDI entered into an Amended and
Restated Revolving Credit Agreement dated as of July 15, 1994, which has been
amended from time to time (the "Agreement"); and
WHEREAS, the Bank has extended credit to the Company on a revolving
credit basis as evidenced by a promissory note of the Company, in the original
principal amount of $6,000,000.00 dated July 15, 1994 (the "Revolving Credit
Note"); and
WHEREAS, the Company has requested that the Agreement be further
amended by the Bank to (i) increase the Commitment to $7,000,000.00 and extend
the Termination Date to May 31, 1998 and (ii) extend up to a $4,000,000 Term
Loan to the Company and the Bank has agreed to such amendments provided that the
Company and the Guarantors enter into this Amendment, and provided that certain
other provisions contained herein are met.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Bank, the Company and the
Guarantors agree as follows:
1. Definitions. As used in this Amendment, capitalized terms, unless
otherwise defined, shall have the meanings ascribed to them in the Agreement.
2. Representations and Warranties. As an inducement for the Bank to
enter into this Amendment, the Company and the Guarantors each represent and
warrant as follows:
That with respect to the Agreement and the Loan Documents:
(i) On the date hereof, there are no defenses, offsets or
counterclaims to the Company's or PDI's obligations under the Agreement, the
Revolving Credit Note, the Guaranty, the Security Agreement or any of the other
Loan Documents.
(ii) All of the representations and warranties made by the
Company and PDI in the Agreement or in the other Loan Documents are true and
correct in all material respects as if made on the date hereof.
(iii) On the date hereof, no Default or Event of Default is
existing under the Agreement or the other Loan Documents.
(iv) The outstanding aggregate principal balance of the
Revolving Credit Loans evidenced by the Revolving Credit Note delivered pursuant
to the Agreement is $6,000,000.00 and interest has been paid on $5,500,000.00
through the payment due June 30, 1995 and interest has been paid on $500,000.00
through the payment due July 1, 1995.
3. Conditions. This Amendment, and the Agreement as amended and
restated below, shall be effective upon (i) the fulfillment of the conditions
precedent described in Sections 3.1 and 3.3 of the Amended and Restated Loan
Agreement to the reasonable satisfaction of the Bank, and (ii) receipt by the
Bank of a facility fee of $50,000.00.
4. Amendment. The Agreement is hereby amended and restated to read as
follows:
AMENDED AND RESTATED LOAN AGREEMENT
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings, unless the context otherwise requires:
"Accumulated Funding Deficiency" shall have the meaning set
forth in Section 302 of ERISA.
"Affiliate" shall mean any Person which, directly or
indirectly, is in control of, is controlled by, or is under common
control with, the Company. For purposes of this definition "control" of
a Person means the power, direct or indirect, either (i) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such Person or (ii) to direct or cause the direction of
the management and policies of such Person whether by contract or
otherwise.
"Agreement" shall mean this Amended and Restated Loan
Agreement and any amendments or supplements thereto.
"Board of Governors" shall mean the Board of Governors of the
Federal Reserve System of the United States of America.
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"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which the Bank is authorized to close under the laws of
the State of New York.
"Capital Expenditures" shall mean, for any Person, for a
particular period, the aggregate amount of any expenditures during such
period (including purchase money Liens) made by such Person for assets
(including fixed assets acquired under Capital Leases) which it is
contemplated will be used or usable in fiscal years subsequent to the
year of acquisition.
"Capital Lease" shall mean all leases which have been or
should be capitalized on the books of the lessee in accordance with
GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commitment" shall have the meaning set forth in Section 2.1.
"Commonly Controlled Entity" shall mean an entity, whether or
not incorporated, which is under common control with the Company within
the meaning of Section 4001 of ERISA.
"Consolidated Coverage Ratio" shall mean, for any twelve month
period, the ratio of (i) the sum of Consolidated Net Income (excluding
extraordinary gains), tax expense, depreciation expense, amortization
of intangibles, other non-cash charges and interest expense, minus any
unfunded Capital Expenditures, minus any cash dividends paid (common or
preferred) to (ii) the sum of interest expense during the preceding
four fiscal quarters plus installments of principal on all long term
Consolidated Indebtedness scheduled during the subsequent four fiscal
quarters. For purposes of this definition, all long term Consolidated
Indebtedness consisting of amounts outstanding under any revolving
credit facility shall be considered as having a seven year straight
line amortization.
"Consolidated Indebtedness" shall mean, at a particular date,
the aggregate amount of the Company's and its Subsidiaries' (i)
indebtedness or liability for borrowed money; (ii) indebtedness for the
deferred purchase price of property or services (including trade
obligations); (iii) obligations of a lessee under Capital Leases; (iv)
current liabilities in respect of unfunded vested benefits under any
Plan; (v) obligations under letters of credit issued for the account of
the Company or any Subsidiary; (vi) obligations arising under
acceptance facilities; (vii) all guaranties, endorsements (other than
for collection or deposit in the
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ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in
any Person, or otherwise to assure a creditor against loss; (viii)
obligations secured by any Lien on property owned by the Company or any
Subsidiary whether or not the obligations have been assumed; and (ix)
all other liabilities recorded as such, or which should be recorded as
such, on the consolidated financial statements of the Company and its
Subsidiaries in accordance with GAAP.
"Consolidated Intangibles" shall mean at a particular date,
the aggregate amount of all assets of the Company and its Subsidiaries,
determined on a consolidated basis at such date, that would be
classified as intangible assets in accordance with GAAP, but in any
event including, without limitation,customer lists, unamortized debt
discount expense, unamortized organization and reorganization expense,
costs in excess of the net asset value of acquired companies, patents,
trade or service marks, franchises, trade names, goodwill and the
amount of any write-up in the book value of any assets resulting from
the revaluation (other than revaluations arising out of foreign
currency valuations in accordance with GAAP) thereof.
"Consolidated Net Income" shall mean, at a particular date,
the aggregate amount which would, in accordance with GAAP, be
classified as consolidated net income, after taxes, in a consolidated
income statement of the Company and its Subsidiaries as at such date.
"Consolidated Tangible Net Worth" shall mean, at any time
outstanding, the amount by which (i) the par value (or value stated on
the books) of the capital stock of all classes of the Company plus (or
minus in the case of a deficit) the amount of the consolidated surplus,
whether capital or earned, of the Company and any Subsidiaries exceeds
(ii) the sum of the amount of Consolidated Intangibles, plus treasury
stock, plus leasehold improvements, plus loans and advances to
officers, stockholders, and employees of the Company or any Subsidiary
plus loans to, or Investments in any other Person which is not a
Guarantor.
"Default" shall mean any of the events specified in Section 7
hereof, whether or not any requirement for the giving of notice or the
lapse of time or both or any other condition has been satisfied.
"Drawdown" means a request by the Company and the funding by
the Bank of all or a portion of the Term Loan in accordance with
Section 3.3 and 3.4 of this Agreement.
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"Drawdown Date" or "Drawdown Dates" shall mean one or more
(but not more than four) of the dates selected by the Company, none of
which shall be later than November 30, 1995, when the Term Loan (or
portions thereof) shall be funded by the Bank.
"ERISA" shall mean the Employee Retirement Income Security act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) which together with any other Person would be
treated, with such Person, as a single employer under Section 4001 of
ERISA.
"Eurodollar Loan" shall mean a loan hereunder at such time as
it is made or maintained at a rate of interest based on the Eurodollar
Rate.
"Eurodollar Rate" shall mean for each Interest Period the rate
per annum, adjusted as provided in the following sentence, at which
U.S. dollar deposits are offered to the Bank's Eurodollar lending
office (the "Lending office") in the interbank eurodollar market in
which such Lending office customarily deals as at the relevant local
time of such Lending office, two (2) Working Days prior to the first
day of such Interest Period for delivery on the first day of such
Interest Period, for the number of days in such Interest Period in an
amount equal to, for each Eurodollar Loan, the amount of such
Eurodollar Loan which will be outstanding during such Interest Period.
The interest rate determined under this paragraph shall be adjusted by
dividing such interest rate by the number equal to 1.00 minus the
blended rate (expressed as a decimal fraction) of reserves which are
required to be maintained (or which will be required to be maintained),
under Regulation D as in effect on the date of determination of such
interest rate, against "Eurocurrency liabilities" (as defined in
Regulation D) from time to time during the period for which the
interest is determined. As used in this definition, "relevant local
time" shall mean 11:00 A.M. local time in London, England when the
Lending office operates on London time or 10:00 A.M. New York time when
the Lending office operates on New York time.
"Event of Default" shall mean any of the events specified in
Section 7 hereof, provided that any requirement for the giving of
notice or the lapse of time or both has been satisfied.
"Existing Term Loan" shall mean the existing loan between the
Company and the Bank dated November 30, 1992, as amended from time to
time.
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"Existing Term Loan Note" shall mean the promissory note of
the Company evidencing the Existing Term Loan.
"Fixed Rate Loans" shall mean Eurodollar Loans and Match Rate
Loans.
"GAAP" shall mean Generally Accepted Accounting Principles.
"Generally Accepted Accounting Principles" shall mean those
generally accepted accounting principles and practices which are
recognized as such by the American Institute of Certified Public
Accountants acting through the Financial Accounting Standards Board
("FASB") or through other appropriate boards or committees thereof and
which are consistently applied for all periods so as to properly
reflect the financial condition, operations and cash flows of the
Company and its Subsidiaries, except that any accounting principle or
practice required to be changed by the FASB (or other appropriate board
or committee of the FASB) in order to continue as a generally accepted
accounting principle or practice may be so changed. Any dispute or
disagreement between the Company and the Bank relating to the
determination of Generally Accepted Accounting Principles shall, in the
absence of manifest error, be conclusively resolved for all purposes
hereof by the written opinion with respect thereto, delivered to the
Bank, of the independent accountants selected by the Company and
approved by the Bank for the purpose of auditing the periodic financial
statements of the Company.
"Guarantor" or "Guarantors" shall mean PDI, C&C, any
Subsidiary hereafter formed and Futurebiotics, Inc. if required to
guaranty the obligations of the Company pursuant to Section 6.5(h).
"Guaranty" or "Guaranties" shall mean the guaranty or
guaranties executed and delivered by the Guarantors pursuant to this
Agreement.
"Hazardous Materials" shall mean, without limit, 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. Section
1801 et. seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C. Sections 9601 et. seq.), and in the regulations adopted and
publications promulgated pursuant thereto, or any other federal, state
or local environmental law, ordinance, rule or regulation.
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"Insolvency" shall mean with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of
such term as used in Section 4245 of ERISA.
"Insolvent" shall pertain to the condition of Insolvency.
"Interest Period" shall mean (i) with respect to any
Eurodollar Loan, initially, the period commencing on the date of
borrowing with respect to such Eurodollar Loan and ending one, two or
three months thereafter as selected by the Company in its notice of
borrowing as provided in Section 2.3 or 2A.2 and thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two or three months
thereafter, as selected by the Company by irrevocable notice to the
Bank not less than three (3) Working Days prior to the last day of the
then current Interest Period with respect to such Eurodollar Loan; and
(ii) with respect to any Match Rate Loan the period commencing
on the date of such Match Rate Loan and ending on such date as the
Company may elect after being advised by the Bank as to what maturities
are available with respect to the Match Rate Loan being requested at
that time;
provided that, all of the foregoing provisions relating to the
Interest Periods are subject to the following:
(A) no Interest Period shall end later than the
Termination Date or the Maturity Date, as applicable;
(B) if any Interest Period pertaining to a Match Rate
Loan would end on a day that is not a Business Day, such
Interest Period shall be extended to the next Business Day;
(C) if any Interest Period pertaining to a Eurodollar
Loan would end on a day which is not a Working Day, that
Interest Period shall be extended to the next succeeding
Working Day unless the result of such extension would be to
carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Working Day;
(D) any Interest Period pertaining to a Eurodollar
Loan that begins on the last Working Day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period)
shall end on the last Working Day of a calendar month;
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(E) if any requested Interest Period includes a day
on which an installment of principal of the Eurodollar Loan or
Match Rate Loan is due and payable but does not begin or end
on such date, then the requested Eurodollar Loan or Match Rate
Loan shall have an Interest Period (if available) ending on or
before such payment date.
"Investment" shall mean any stock, evidence of debt or other
security of any Person, any loan, advance, contribution of capital,
extension of credit or commitment therefor, including without
limitation the guaranty of loans made to others (except for current
trade and customer accounts receivable for services rendered in the
ordinary course of business and payable in accordance with customary
trade terms in the ordinary course of business), to another Person, and
any purchase of (i) any security of another Person or (ii) any business
or undertaking of any Person or any commitment or option to make any
such purchase, or any other investment.
"Letter of Credit Outstandings" shall mean the aggregate sum
of the amounts available to be drawn under letters of credit issued by
the Bank for the account of the Company and any Guarantor and the
amounts of unreimbursed drawings under such letters of credit.
"Lien" shall mean any mortgage, deed of trust, pledge,
security interest, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority, or
other security agreement or preferential arrangement, charge or
encumbrance of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement,
any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under
the Uniform Commercial Code or comparable law of any jurisdiction to
evidence any of the foregoing.
"Loan" or "Loans" shall mean one or more of the Revolving
Credit Loans or the Term Loan as the context may require and includes
Prime Rate Loans, Eurodollar Loans and Match Rate Loans.
"Loan Documents" shall mean any and all of the Agreement, the
Notes, the Security Agreement, the Guaranty, any agreements or
documents referred to in Section 3 hereof and all other documents and
instruments executed in connection herewith.
"Match Funded Rate" shall mean, with respect to any Match Rate
Loan for any Interest Period, that rate which is quoted to the Company
by the Bank, upon the Company's inquiry therefore, as the Bank's match
funded rate for the Loan.
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"Match Rate Loan" shall mean a Loan which is bearing interest
at a rate based on the Match Funded Rate in accordance with the
provisions of Section 2A.5(c) hereof.
"Material Adverse Change" shall mean, with respect to any
Person, (i) a material adverse change in the financial condition,
business, operations, properties or assets of such Person or (ii) the
occurrence of any event with respect to such Person which could have a
material adverse effect on the ability of such Person to perform its
obligations under the Loan Documents.
"Maturity Date" shall mean the last Business Day of August,
2000.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Note" or "Notes" shall mean either or both of the Revolving
Credit Note or the Term Loan Note (as the context may require) and all
attachments thereto described in Section 2.2 and 2A.3 hereof,
respectively.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Person" shall mean an individual, partnership, corporation,
business trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture, government authority or
other entity of whatever nature.
"Plan" shall mean at any particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Company or a
Commonly Controlled Entity is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an employer as
defined in Section 3(5) of ERISA.
"Prime Rate" shall mean the rate of interest announced from
time to time by the Bank at its principal office in New York as its
prime rate.
"Prime Rate Loan" shall mean a loan hereunder at such time as
it is made or maintained at a rate of interest based on the Prime Rate.
"Prohibited Transaction" shall mean any transaction set forth
in Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended from time to time.
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"Regulation D" shall mean Regulation D of the Board of
Governors, as the same may be amended and in effect from time to time.
"Regulation G" shall mean Regulation G of the Board of
Governors, as the same may be amended and in effect from time to time.
"Regulation T" shall mean Regulation T of the Board of
Governors, as the same may be amended and in effect from time to time.
"Regulation U" shall mean Regulation U of the Board of
Governors, as the same may be amended and in effect from time to time.
"Regulation X" shall mean Regulation X of the Board of
Governors, as the same may be amended and in effect from time to time.
"Reorganization" shall mean, with respect to any Multiemployer
Plan, the condition that such Plan is in reorganization within the
meaning of such term as used in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in
Section 4043(b) of ERISA, other than those events as to which the
thirty-day notice period is waived under subsections .13, .14, .16,
.18, .19 or .20 of PBGC Reg. ss.2615.
"Revolving Credit Loan" shall mean each and any of the
revolving credit loans referred to in Section 2.1 hereof.
"Revolving Credit Note" shall mean a promissory note of the
Company payable to the order of the Bank, in substantially the form of
Exhibit A annexed hereto, evidencing the indebtedness of the Company to
the Bank resulting from the Revolving Credit Loans made by the Bank to
the Company pursuant to this Agreement.
"Security Agreement" shall mean the security agreement
referred to in Section 3.1(c) and Section 3.3(c) hereof.
"Single Employer Plan" shall mean any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Subordinated Debt" shall mean all indebtedness of a Person,
the repayment of which the obligee has agreed in writing, on terms
approved in advance by the Bank in writing, shall be subordinated in
right of payment to all indebtedness of such Person to the Bank.
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"Subsidiary" shall mean with respect to any Person, any
corporation, partnership or joint venture whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of
which a majority of the securities having ordinary voting power for the
election of directors (other than securities having such power only by
reason of the happening of a contingency) are at the time owned by such
Person and/or one or more Subsidiaries of such Person or (ii) in the
case of a partnership or joint venture, of which a majority of the
partnership or other ownership interests are at the time owned by such
Person and/or one or more of its Subsidiaries.
"Termination Date" shall mean the earlier of May 31, 1998 or
the date the Commitment may be terminated.
"Term Loan" shall have the meaning assigned in Section 2A.1
hereof.
"Term Loan Note" means a promissory note of the Company
payable to the order of the Bank, in substantially the form of Exhibit
B annexed hereto, evidencing the indebtedness of the Company to the
Bank resulting from the Term Loan made by the Bank to the Company
pursuant to this Agreement.
"Working Day" shall mean any day on which dealings in foreign
currencies and exchange between banks may be carried on in the places
where the Bank's eurodollar lending office is located and in New York.
1.2 Use of Defined Terms. All terms defined in this Agreement shall
have the defined meanings when used in the Notes, the Loan Documents,
certificates, reports or other documents made or delivered pursuant to this
Agreement unless the context shall otherwise require.
1.3 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP.
SECTION 2. AMOUNT AND TERMS OF THE REVOLVING CREDIT LOANS
2.1 Revolving Credit Loans. Subject to the terms and conditions of this
Agreement, the Bank agrees to make Revolving Credit Loans to the Company at any
time and from time to time on or after the date hereof, to and including the
Termination Date, in an aggregate principal amount outstanding at any one time
up to but not exceeding the difference between (i) $7,000,000.00 (herein, as the
same may be reduced from time to time pursuant to Section 2.5 hereof, called the
"Commitment") and (ii) the Letter of Credit Outstandings. The Company may use
the Commitment by borrowing,
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repaying and reborrowing, all in accordance with the terms and conditions of
this Agreement.
2.2 The Revolving Credit Note. The Company shall execute and deliver to
the Bank a restated Note in substitution and exchange for, but not in payment of
the preceding revolving credit note, substantially in the form annexed hereto as
Exhibit A, with appropriate insertions therein. The restated Note shall be used
to evidence each borrowing, repayment and reborrowing hereunder. Interest on the
restated Note shall be payable as follows:
(a) Each Prime Rate Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum equal to the Prime Rate.
Interest on Prime Rate Loans shall be payable monthly on the first
Business Day of each month commencing on the first such date after a
Prime Rate Loan is made and upon payment or prepayment in full of the
unpaid principal amount thereof.
(b) Each Eurodollar Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum equal to 2% above the
Eurodollar Rate. Interest on each Eurodollar Loan shall be payable on
the last day of each Interest Period applicable thereto, and upon
payment or prepayment in full of the unpaid principal amount thereof.
If applicable, interest on each Eurodollar Loan with an Interest Period
greater than one month shall also be payable on the first Business Day
of each month from the date of such Eurodollar Loan, and on the first
Business Day of each month thereafter.
(c) The unpaid principal amount of all Prime Rate Loans and
Eurodollar Loans shall be payable on the Termination Date. If all or a
portion of any principal amount of any loan shall not be paid when due
(whether as stated, by acceleration or otherwise), such loan, if a
Eurodollar Loan, shall be converted to a Prime Rate Loan at the end of
the relevant Interest Period applicable thereto, and any such overdue
principal amount shall bear interest at a rate per annum which is 2%
above the rate which would otherwise be applicable pursuant to the
terms of this Section 2.2.
2.3 Notice of Borrowing. The Company shall give the Bank prior
telephonic notice followed by written, telegraphic or tested telex confirmation
of the date, the borrowing option, the applicable Interest Period, if any, and
the amount of each borrowing pursuant to the Commitment at least by 11:00 a.m.
on the borrowing date of any Prime Rate Loan, and at least three (3) Working
Days prior to the borrowing date of any Eurodollar Loan. On the date specified
in such notice, the Bank will make the amount then to be loaned by it available
to the Company by credit to an account of the Company maintained with the Bank,
in immediately available funds. Each borrowing pursuant to the Commitment shall
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be in an aggregate principal amount of $100,000 or any whole multiple thereof
for Prime Rate Loans, and $250,000 or any whole multiple thereof for Eurodollar
Loans. At least two (2) Working Days prior to the last day of any Interest
Period with respect to such Eurodollar Loan, the Company may give the Bank
notice of its election to continue such Eurodollar Loan, specifying the
resulting Interest Period. If the Company shall fail to give such notice, any
loan affected thereby shall be automatically converted to a Prime Rate Loan at
the end of such Interest Period. Upon at least three (3) Working Days' prior
written notice, the Company may give the Bank notice of its election to convert
a Prime Rate Loan to a Eurodollar Loan, specifying the resulting Interest
Period. No Eurodollar Loan may be continued as such and no Prime Rate Loan may
be converted to a Eurodollar Loan when any Default or Event of Default has
occurred and is continuing, but any such Eurodollar Loan shall be automatically
converted to a Prime Rate Loan on the last day of the Interest Period applicable
thereto, and any such Prime Rate Loan shall be continued as a Prime Rate Loan,
as the case may be.
2.4 Commitment. The Company agrees to pay to the Bank a commitment fee
for the period from and including the date hereof to and including the
Termination Date, computed at the rate of 1/4 of 1% per annum on the average
daily unused portion of the Commitment in effect during the period for which
payment is made. Such commitment fee shall be payable to the Bank on the last
day of each March, June, September and December, and on the Termination Date.
2.5 Termination or Reduction of Commitment; Acceleration of Termination
Date. The Company shall have the right, upon not less than three (3) Business
Days prior written notice to the Bank, to terminate the Commitment in whole at
any time or to reduce the Commitment in part from time to time, or to accelerate
the Termination Date, provided that (a) any reduction of the Commitment shall be
accompanied by prepayment, together with accrued interest on the amount so
prepaid and any payment required by Section 2.12(iv), to the extent, if any,
that the aggregate unpaid principal amount of the Revolving Credit Note exceeds
the Commitment as then reduced, (b) any termination of the Commitment shall be
accompanied by payment in full of the unpaid principal amount of the Revolving
Credit Note, together with accrued interest thereon and any payment required by
Section 2.12(iv), and the payment of any commitment fee then accrued hereunder,
and (c) any acceleration of the Termination Date shall be accompanied by the
payment of any commitment fee then accrued hereunder and any payment required by
Section 2.12(iv). Any partial reduction shall be in an aggregate principal
amount of $50,000 or a multiple thereof and shall reduce permanently the
Commitment then in effect hereunder. The Commitment, once reduced or terminated,
shall not be increased or reinstated, as the case may be.
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2.6 Changes in Capital Requirements. If after the date hereof, the Bank
shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof, by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on the Bank's capital as a consequence of its
obligations hereunder to a level below that which the Bank could have achieved
but for such adoption, change or compliance (taking into consideration the
Bank's policies with respect to capital adequacy) by an amount deemed by the
Bank to be material, then from time to time, within 15 days after demand by the
Bank, the Company shall pay to the Bank such additional amount or amounts as
will compensate the Bank for such reduction. The Bank will promptly notify the
Company of any event of which it has knowledge, occurring after the date hereof,
which will entitle the Bank to compensation pursuant to this Section 2.6.
2.7 Voluntary Prepayments. (a) The Company may prepay any Prime Rate
Loan without premium or penalty in whole at any time or in part from time to
time, and any Eurodollar Loan without premium or penalty in whole or in part on
the last day of any Interest Period applicable thereto. Eurodollar Loans may not
be prepaid during an Interest Period without the prior written consent of the
Bank. Partial prepayments of the Revolving Credit Note shall be in the principal
amount of $25,000 or multiples thereof if repayment is of a Prime Rate Loan, and
$250,000 or multiples thereof if repayment is of a Eurodollar Loan, together
with payment of accrued interest thereon to the date of the prepayment (and, if
applicable, the payment required by Section 2.12 (iv)).
(b) The Company shall give to the Bank at least three (3) Business Days
prior written, telegraphic or tested telex notice of any repayment or
prepayment, specifying the date and the amount thereof.
2.8 Computation of Interest and Commitment Fee; Payments. Commitment
fees, if any, and interest shall be calculated on the basis of a 360 day year
for the actual days elapsed. Any change in the interest rate on the Revolving
Credit Note resulting from a change in the Prime Rate shall become effective as
of the opening of business on the day on which such change in the Prime Rate
shall become effective. All payments (including prepayments) by the Company on
account of principal and interest on the Loans and the commitment fee and
balance deficiency fee hereunder shall be made to the Bank at its office located
at 000 Xxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 in lawful money of the
United States of America in immediately available funds. If any payment
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on a Prime Rate Loan becomes due and payable on a day other than a Business Day
the maturity thereof shall be extended to the next succeeding Business Day and
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on a day
other than a Working Day, the maturity thereof shall be extended to the next
succeeding Working Day unless the result of such extension would be to extend
such payment into another calendar month in which event such payment shall be
made on the immediately preceding Working Day.
2.9 Inability to Determine Rate. If with respect to any Interest Period
pertaining to a Eurodollar Loan, the Bank determines that extraordinary
circumstances affecting the relevant market make it impracticable to ascertain
the interest rate applicable for such Interest Period, the Bank shall promptly
notify the Company of such determination and no additional Eurodollar Loans
shall be made nor shall there be any conversions thereto until such notice is
withdrawn. If any Eurodollar Loan is outstanding on the date of such notice and
such notice has not been withdrawn on the last day of the then current Interest
Period applicable thereto, the Company may on the last day of such Interest
Period either convert such Eurodollar Loan to a loan maintained at an alternate
rate of interest available hereunder or prepay the outstanding principal balance
thereof and accrued interest thereon in full.
2.10 Illegality. Notwithstanding any other provisions herein, if any
law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, shall make it unlawful for the Bank to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
Commitment hereunder to make Eurodollar Loans or convert Prime Rate Loans to
Eurodollar Loans shall forthwith be canceled and (b) loans then outstanding as
Eurodollar Loans, if any, shall be converted to Prime Rate Loans on the last day
of the Interest Period applicable thereto or within such earlier period as
required by law. The Company hereby agrees to promptly pay to the Bank, upon its
demand, any amounts required by Section 2.12(iv) resulting from a prepayment of
a Eurodollar Loan.
2.11 Requirements of Law. In the event that any law, regulation, treaty
or directive or any change therein or in the interpretation or application
thereof or compliance by the Bank with any request or directive (whether or not
having the force of law) from any central bank or other governmental authority,
agency or instrumentality:
(i) does or shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, its Commitment, the
Revolving Credit Note or any Loans made hereunder, or change the basis
of taxation of payments to the Bank of principal,
-15-
commitment fee, interest or any other amount payable hereunder
(except for changes in the rate of any tax presently imposed
on the Bank);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of the Bank which are not
otherwise included in the determination of the Eurodollar Rate
hereunder;
(iii) does or shall impose on the Bank any other
condition;
and the result of any of the foregoing is to increase the cost to the Bank of
making, renewing or maintaining commitments, advances or extensions of credit to
the Company or to reduce any amount receivable from the Company thereunder then,
in any such case, the Company shall promptly pay to the Bank, upon its demand,
any additional amounts necessary to compensate the Bank for such additional cost
or reduced amount receivable which the Bank deems to be material as determined
by the Bank with respect to this Agreement, its Commitment, the Note or the
Loans made hereunder. If the Bank becomes entitled to claim any additional
amounts pursuant to this Section 2.11, it shall promptly notify the Company of
the event by reason of which it has become so entitled. A certificate setting
forth calculations as to any additional amounts payable pursuant to the
foregoing sentence submitted by the Bank to the Company shall be conclusive in
the absence of manifest error.
2.12 Indemnification. The Company agrees to indemnify the Bank and to
hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of (i) default by the Company in payment when due of the
principal amount of or interest on any Eurodollar Loan, (ii) default by the
Company in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Company has given a notice requesting the same in accordance
with the provisions of this Agreement, (iii) default by the Company in making
any prepayment after the Company has given a notice thereof in accordance with
the provisions of this Agreement, or (iv) the making of a prepayment of
Eurodollar Loans on a day which is not the last day of an Interest Period with
respect thereto, including, without limitation, in each case, any such loss
(including lost profits) or expense arising from the reemployment of funds
obtained by it or from fees payable to terminate the deposits from which such
funds were obtained. This covenant shall survive the termination of this
Agreement and the payment of the Revolving Credit Note and all other amounts
payable hereunder.
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2.13 Use of Proceeds. (a) No part of the proceeds of any borrowing
hereunder will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock. If
requested by the Bank, the Company will furnish to the Bank a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U and to the foregoing effect. No part of the proceeds of the
Revolving Credit Loans will be used for any purpose which violates, or which is
inconsistent with, the provisions of Regulation G, T, U or X.
(b) The proceeds of the Revolving Credit Loans shall be used for
working capital purposes (and not for acquisitions).
2.14 Balance Deficiency Fees. (a) The Company agrees to pay to the Bank
a balance deficiency fee equal to the average daily balance deficiency
percentage (as hereinafter defined) of the amount, if any, by which the average
daily amount of free available balances in non-interest bearing accounts
maintained by the Company and its Subsidiaries with the Bank is less than
$100,000; provided, that the amount of any balance deficiency fee payable
hereunder which is deemed to be interest under applicable law shall not exceed
an amount which, when taken together with any other amounts of interest under
applicable law, will exceed an amount equal to interest on the loans hereunder
computed as provided in this Agreement at the maximum rate of interest permitted
by such applicable law. Such balance deficiency fee shall be payable quarterly
on the last day of each March, June, September and December, commencing on the
first such date after the date of this Agreement, and on the last day of the
calendar month following the calendar month in which payment or prepayment in
full is made under this Agreement, for the three-month period or portion thereof
ending on the last day of the calendar month next preceding the calendar month
in which such payment is due.
(b) The term "balance deficiency percentage" as used herein shall mean
a fluctuating rate per annum equal to 3/4% above the Prime Rate.
(c) It is understood that nothing in this Agreement shall obligate the
Company to maintain balances with the Bank.
2.15 Authorization to Debit Company's Account. The Bank is hereby
authorized to debit the Company's account maintained with the Bank for (i) all
scheduled payments of principal and/or interest under the Revolving Credit Note,
and (ii) the commitment fee, the balance deficiency fee and all other amounts
due hereunder; all such debits to be made on the days such payments are due in
accordance with the terms hereof.
2.16 Default Interest. Upon the occurrence and during the continuation
of a Default, the Company shall pay interest on all
-17-
amounts owing under the Revolving Credit Note and this Agreement (after as well
as before judgment) at a rate per annum (computed on the basis of the actual
number of days elapsed and a year of 360 days) equal to 2% in excess of the
interest rate otherwise in effect hereunder.
2.17 Interest Adjustments. (a) If the provisions of this Agreement or
the Revolving Credit Note would at any time otherwise require payment by the
Company to the Bank of any amount of interest in excess of the maximum amount
then permitted by applicable law the interest payments shall be reduced to the
extent necessary so that the Bank shall not receive interest in excess of such
maximum amount. To the extent that, pursuant to the foregoing sentence, the Bank
shall receive interest payments hereunder or under the Revolving Credit Note in
an amount less than the amount otherwise provided, such deficit (hereinafter
called the "Interest Deficit") will cumulate and will be carried forward
(without interest) until the termination of this Agreement. Interest otherwise
payable to the Bank hereunder and under the Revolving Credit Note for any
subsequent period shall be increased by such maximum amount of the Interest
Deficit that may be so added without causing the Bank to receive interest in
excess of the maximum amount then permitted by applicable law.
(b) To the extent permitted by law, the amount of the Interest Deficit
shall be treated as a prepayment penalty and paid in full at the time of any
optional prepayment by the Company to the Bank of all outstanding Loans. The
amount of the Interest Deficit relating to the Revolving Credit Note at the time
of any complete payment of the Revolving Credit Note at that time outstanding
(other than an optional prepayment thereof) shall be canceled and not paid.
2.18 Participations, Etc. The Bank shall have the right at any time,
with or without notice to the Company, to sell, assign, transfer or negotiate
all or any part of the Revolving Credit Note or the Commitment or grant
participations therein to one or more banks (foreign or domestic, including an
affiliate of the Bank), insurance companies or other financial institutions,
pension funds or mutual funds. The Company and the Guarantors agree and consent
to the Bank providing financial and other information regarding their business
and operations to prospective purchasers or participants and further agree that
to the extent that the Bank should sell, assign, transfer or negotiate all or
any part of the Revolving Credit Note or the Commitment, the Bank shall be
forever released and discharged from its obligations under the Revolving Credit
Note, the Commitment and this Agreement to the extent same is sold, assigned,
transferred or negotiated. The Bank shall have the right, at any time and from
time to time, to pledge the Revolving Credit Note to any Federal Reserve Bank.
SECTION 2A. AMOUNT AND TERMS OF THE TERM LOAN
-18-
2A.1 The Term Loan. (a) The Bank agrees, on the Drawdown Dates, and on
the terms and conditions and in reliance upon the representations and warranties
hereinafter set forth in this Agreement, to lend to the Company the maximum
principal amount of Four Million ($4,000,000.00) Dollars, and the Company agrees
to borrow such amount from the Bank by executing and delivering to the Bank the
Term Loan Note. The Term Loan, or portions thereof, shall be a Prime Rate Loan
or a Fixed Rate Loan (or a combination thereof) as the Company may request
subject to and in accordance with Section 2A.2 hereof. The Bank may at its
option make any Eurodollar Loan by causing a foreign branch or affiliate to make
such Loan, provided that any exercise of such option shall not affect the
obligation of the Company to repay such Loan in accordance with the terms of the
Term Loan Note.
(b) The Company shall give the Bank irrevocable written telex,
telephonic (immediately confirmed in writing) or facsimile notice at least three
(3) Business Days prior to any Drawdown. On the date specified in such notice,
and provided the Company has satisfied all of the conditions of Sections 3.3 and
3.4, the Bank will make the Drawdown available to the Company by credit to an
account of the Company maintained with the Bank, in immediately available funds.
Each Drawdown shall be in the minimum amount of $100,000 or the remaining
available principal amount of the Term Loan, if less.
2A.2 Notice of Term Loan Designations. (a) The Company may elect to
designate the Term Loan (or a portion thereof) as a Prime Rate Loan or a Fixed
Rate Loan by so specifying in the irrevocable notice given pursuant to this
Section 2A.2; provided, however, that each Fixed Rate Loan for any specific
Interest Period shall be in the minimum principal amount of $500,000.00.
(b) The Company shall give the Bank irrevocable written, telex,
telephonic (immediately confirmed in writing) or facsimile notice (i) at least
three (3) Business Days' prior to each election to designate the Term Loan (or a
portion thereof) as a Eurodollar Loan, (ii) such notice as the Bank may, in its
sole discretion require from time to time, to designate the Term Loan (or a
portion thereof) as a Match Rate Loan (subject to availability) and (iii) prior
to 11:00 a.m. on the day of such Loan of each election to designate the Term
Loan (or a portion thereof) as a Prime Rate Loan, in each case specifying the
date (which shall be a Business Day) thereof and the aggregate principal amount
and, if any portion thereof is to consist of one or more Fixed Rate Loans, the
respective principal amounts and Interest Periods for each such Fixed Rate Loan;
provided that:
(i) if the Company shall fail to specify the duration of an
Interest Period with regard to any Eurodollar Loan in its notice, the Interest
Period shall be for a period of one month; and
-19-
(ii) if the Company shall request a Match Rate Loan when such
Loans are not available, fail to specify the duration of the Interest Period
with regard to a requested Match Rate Loan or fail to specify the type of Loan
requested, the request shall be deemed to be a request for a Prime Rate Loan.
2A.3 Term Loan Note. The Term Loan shall be evidenced by the Term Loan
Note of the Company. The Term Loan Note shall be dated as of the first Drawdown
Date and shall mature on the Maturity Date at which time the entire outstanding
principal balance and all interest thereon shall be due and payable. The Bank
shall record on the Term Loan Note the date and amount of each Drawdown, which
absent manifest error, shall be conclusive evidence of each Drawdown. The Term
Loan Note shall be entitled to the benefits and subject to the provisions of
this Agreement.
2A.4 Repayment of Term Loan Note. The principal balance of the Term
Loan Note shall be payable in twenty (20) quarterly installments, each due on
the last Business Day of each November, February, May and August of each year,
beginning on the last Business Day of November, 1995. Each of the first nineteen
(19) such quarterly principal installments shall be in the amount of Two Hundred
Thousand ($200,000.00) Dollars and the twentieth (20th) such quarterly principal
installment shall be in an amount equal to the then outstanding principal
balance of the Term Loan Note.
2A.5 Payment of Interest on the Term Loan Note. (a) In the case of a
Prime Rate Loan, interest shall be payable at a rate per annum (computed on the
basis of the actual number of days elapsed over a year of 360 days) equal to the
Prime Rate. Such interest shall be payable on the first Business Day of each
month commencing on the first such date after the date of such Prime Rate Loan,
on the Maturity Date and upon payment or prepayment of such Prime Rate Loan. Any
change in the rate of interest on the Term Loan Note due to a change in the
Prime Rate shall take effect as of the date of such change in the Prime Rate.
(b) In the case of a Eurodollar Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to 2% above the Eurodollar Rate. Such interest shall
be payable on the last day of each Interest Period applicable thereto, on the
first Business Day of each month and on the Maturity Date. The Bank shall
determine the rate of interest applicable to each requested Eurodollar Loan for
each Interest Period at 11:00 a.m., New York City time, or as soon as
practicable thereafter, two (2) Working Days prior to the commencement of such
Interest Period and shall notify the Company of the rate of interest so
determined. Such determination shall be conclusive absent manifest error.
(c) In the case of a Match Rate Loan, interest shall be payable at a
rate per annum (computed on the basis of the actual
-20-
number of days elapsed over a year of 360 days) equal to the Match Funded Rate.
Such interest shall be payable on the first Business Day of each month,
commencing with the first such date after the date of such Match Rate Loan, on
the Maturity Date and on the last day of each Interest Period applicable
thereto. In the event Match Rate Loans are available, the Bank shall determine
the Match Funded Rate applicable to each requested Match Rate Loan for each
Interest Period at 11:00 a.m., New York City time, or as soon as practicable
thereafter, on the day of the making of such Match Rate Loan, and shall notify
the Company of the Match Funded Rate so determined. Such determination shall be
conclusive absent manifest error.
2A.6 Conversion and Continuation of Loans. The Company shall have the
right, at any time, on three (3) Business Days or three (3) Working Days, as
applicable, prior irrevocable written notice to the Bank (which notice, to be
effective, must be received by the Bank not later than 10:00 a.m., New York City
time, on the third (3rd) Business Day or Working Date, as applicable, preceding
the date of any continuation or conversion), (i) to continue any Fixed Rate Loan
or portion thereof into a subsequent Interest Period (subject to availability)
or (ii) to convert any Fixed Rate Loan or portion thereof at the expiration of
an Interest Period with respect thereto into a Fixed Rate Loan of a different
type (subject to availability), and (iii) to convert a Prime Rate Loan into a
Fixed Rate Loan (subject to availability), subject to the following:
(a) no Event of Default shall have occurred and be continuing at the
time of any proposed conversion or continuation;
(b) in the case of a continuation or conversion of fewer than all
Loans, the aggregate principal amount of each Fixed Rate Loan continued or
converted shall be in the minimum amount of $500,000.00;
(c) each continuation or conversion shall be effected by the Bank
applying the proceeds of the new Loan to the Loan (or portion thereof) being
continued or converted;
(d) if the new Loan made as a result of a continuation or conversion
shall be a Fixed Rate Loan, the first Interest Period with respect thereto shall
commence on the date of continuation or conversion;
(e) each request for a Eurodollar Loan which shall fail to state an
applicable Interest Period shall be deemed to be a request for an Interest
Period of one month;
(f) unless sufficient Prime Rate Loans are outstanding or other Fixed
Rate Loans are outstanding with Interest Periods expiring prior to the next
scheduled installment payment of the Term Loan Note, and are sufficient to
enable the Company to make
-21-
such installment payment, any Fixed Rate Loan, a portion of which is required to
be repaid on any such installment payment date shall be automatically converted
at the end of such Interest Period into a Prime Rate Loan;
(g) any request for a Match Rate Loan which shall fail to state an
Interest Period or which shall be made when such Loans are not available shall
be deemed to be a request for a Prime Rate Loan; and
(h) in the event that the Company shall not give notice to continue a
Fixed Rate Loan as provided above, such Loan shall automatically be converted
into a Prime Rate Loan at the expiration of the then current Interest Period.
2A.7 Use of Proceeds. The proceeds of the Term Loan shall be used by
the Company to (i) partially refinance existing indebtedness of $3,000,000.00 of
the Revolving Credit Loan; (ii) finance leasehold improvements to be made to 000
Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx and 000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx;
(iii) partially finance the purchase of a packaging line; and (iv) replenish
approximately $250,000.00 of the Company's working capital utilized by the
Company in connection with the purchase of capital equipment. No part of the
proceed of the Term Loan will be used for any purpose which violates, or which
is inconsistent with, the provisions of Regulation G, T, U, or X.
2A.8 Voluntary Prepayment. (a) The Company shall have the right at any
time and from time to time to prepay any Prime Rate Loan, in whole or in part,
without premium or penalty on the same day on which telephonic notice is given
to the Bank (immediately confirmed in writing) of such prepayment provided,
however, that each such prepayment shall be on a Business Day and shall be in an
aggregate principal amount which is an integral multiple of $25,000.00.
(b) The Company shall have the right at any time and from time to time,
subject to the provisions hereof and of Section 2A.9, to prepay any Eurodollar
Loan, in whole or in part, on three (3) Business Days prior irrevocable written
notice to the Bank, provided, however, that such prepayment may only be made on
the last day of the applicable Interest Period and shall be in an aggregate
principal amount which is an integral multiple of $25,000.00.
(c) The Company shall have the right at any time and from time to time,
subject to the provisions hereof and of Section 2A.9, to prepay any Match Rate
Loan, in whole or in part upon at least three (3) Business Days prior
irrevocable written notice to the Bank; provided, however, that each such
prepayment shall be on a Business Day and shall be in an aggregate principal
amount which is an integral multiple of $25,000.00.
-22-
(d) The notice of prepayment under this Section 2A.8 shall set forth
the prepayment date and the principal amount of the Loan being prepaid and shall
be irrevocable and shall commit the Company to prepay such Loan by the amount
and on the date stated therein. All prepayments shall be accompanied by accrued
interest on the principal amount being prepaid to the date of prepayment. Each
prepayment under this Section 2A.8 shall be applied first towards unpaid
interest on the amount being prepaid and then towards the principal in whole or
partial prepayment of Loans by the Company. In the absence of such
specification, amounts being prepaid shall be applied first to any Prime Rate
Loan then outstanding and then to Match Rate Loans in the order of the
expiration of their respective Interest Periods. Eurodollar Loans may be prepaid
only in accordance with the provisions of paragraph (b) above. All partial
prepayments of the Term Loan shall be applied to installments of principal in
the inverse order of maturity.
2A.9 Reimbursement by Company. (a) The Company shall reimburse the Bank
upon the Bank's demand for any loss incurred or to be incurred by it in the
reemployment of the funds released by any prepayment or conversion of any Match
Rate Loan required or permitted by this Agreement, if such Loan is prepaid or
converted (whether voluntarily or by acceleration) other than on the last day of
the Interest Period for such Loan, or if the Company fails to borrow the Match
Rate Loan (or is not able to borrow because of an Event of Default or for any
other reason hereunder) after having given the irrevocable notice provided by
Sections 2A.2 and 2A.6 of this Agreement. Such loss shall be the product of (i)
the difference as determined by the Bank between (x) the rate of interest
applicable to such Match Rate Loan being prepaid or converted for the remainder
of the Interest Period and (y) the rate of interest payable on United States
Treasury obligations in an amount and with a maturity similar to such Loan or
Loans times (ii) the aggregate amount of principal so prepaid or converted times
(iii) the number of days remaining in the applicable Interest Period divided by
360 days.
(b) The Company shall reimburse the Bank upon the Bank's demand for any
loss, cost or expense incurred or to be incurred by it (in the Bank's
determination) as a result of any prepayment or conversion (whether voluntarily
or by acceleration) of any Eurodollar Loan other than on the last day of the
Interest Period for such Loan, or if the Company fails to borrow the Eurodollar
Loan (or is not able to borrow because of an Event of Default or for any other
reason hereunder) after having given the irrevocable notice provided by Sections
2A.2 or 2A.6 of this Agreement. Such reimbursement shall include, but not be
limited to, any loss, cost or expense incurred by the Bank in obtaining,
liquidating or redeploying any funds used or to be used in making or maintaining
the Eurodollar Loan.
-23-
2A.10 Requirements of Law. In the event that any law, regulation,
treaty or directive or any change therein or in the interpretation or
application thereof or compliance by the Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority, agency or instrumentality:
(i) does or shall subject the Bank to any tax of any kind
whatsoever with respect to this Agreement, the Term Loan Note or the
Term Loan made hereunder, or change the basis of taxation of payments
to the Bank of principal, interest or any other amount payable
hereunder (except for changes in the rate of any tax presently imposed
on the Bank);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of the Bank which are not
otherwise included in the determination of the Eurodollar Rate or Match
Funded Rate hereunder;
(iii) does or shall impose on the Bank any other condition;
and the result of any of the foregoing is to increase the cost to the Bank of
making, renewing or maintaining advances or extensions of credit to the Company
or to reduce any amount receivable from the Company thereunder then, in any such
case, the Company shall promptly pay to the Bank, upon its demand, any
additional amounts necessary to compensate the Bank for such additional cost or
reduced amount receivable which the Bank deems to be material as determined by
the Bank with respect to this Agreement, the Term Loan Note or the Term Loan
made hereunder. If the Bank becomes entitled to claim any additional amounts
pursuant to this Section 2A.10, it shall promptly notify the Company of the
event by reason of which it has become so entitled. A certificate setting forth
calculations as to any additional amounts payable pursuant to the foregoing
sentence submitted by the Bank to the Company shall be conclusive in the absence
of manifest error.
2A.11 Changes in Capital Requirements. If after the date hereof, the
Bank shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof, by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return
-24-
on the Bank's capital as a consequence of its obligations hereunder to a level
below that which the Bank could have achieved but for such adoption, change or
compliance (taking into consideration the Bank's policies with respect to
capital adequacy) by an amount deemed by the Bank to be material, then from time
to time, within 15 days after demand by the Bank, the Company shall pay to the
Bank such additional amount or amounts as will compensate the Bank for such
reduction. The Bank will promptly notify the Company of any event of which it
has knowledge, occurring after the date hereof, which will entitle the Bank to
compensation pursuant to this Section 2A.11.
2A.12 Illegality. Notwithstanding any other provisions herein, if any
law, regulation, treaty or directive or any change therein or in the
interpretation or application thereof, shall make it unlawful for the Bank to
make or maintain Fixed Rate Loans as contemplated by this Agreement, (a) the
Bank's obligation hereunder to make Fixed Rate Loans or convert Prime Rate Loans
to Fixed Rate Loans shall forthwith be canceled and (b) loans then outstanding
as Fixed Rate Loans, if any, shall be converted to Prime Rate Loans on the last
day of the Interest Period applicable thereto or within such earlier period as
required by law. The Company hereby agrees to promptly pay to the Bank, upon its
demand, any amounts required by Section 2A.9 resulting from a prepayment of a
Fixed Rate Loan.
2A.13 Indemnification. The Company agrees to indemnify the Bank and to
hold the Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of (i) default by the Company in payment when due of the
principal amount of or interest on any Fixed Rate Loan, (ii) default by the
Company in making a borrowing of, conversion into or continuation of Fixed Rate
Loans after the Company has given a notice requesting the same in accordance
with the provisions of this Agreement or (iii) default by the Company in making
any prepayment after the Company has given a notice thereof in accordance with
the provisions of this Agreement. This covenant shall survive the termination of
this Agreement and the payment of the Term Loan Note and all other amounts
payable hereunder.
2A.14 Inability to Determine Rate. If with respect to any Interest
Period pertaining to a Fixed Rate Loan, the Bank determines that extraordinary
circumstances affecting the relevant market make it impracticable to ascertain
the interest rate applicable for such Interest Period, the Bank shall promptly
notify the Company of such determination and no additional Fixed Rate Loans
shall be made nor shall there be any conversions thereto until such notice is
withdrawn. If any Fixed Rate Loan is outstanding on the date of such notice and
such notice has not been withdrawn on the last day of the then current Interest
Period applicable thereto, the Company may on the last day of such Interest
Period either convert such Fixed Rate Loan to a loan maintained at an alternate
rate of interest available hereunder or
-25-
prepay the outstanding principal balance thereof and accrued interest thereon in
full.
2A.15 Authorization to Debit Company's Account. The Bank is hereby
authorized to debit the Company's account maintained with the Bank for (i) all
scheduled payments of principal and/or interest under the Term Loan Note, and
(ii) all other amounts due hereunder; all such debits to be made on the days
such payments are due in accordance with the terms hereof.
2A.16 Default Interest. Upon the occurrence and during the continuation
of a Default, the Company shall pay interest on all amounts owing under the Term
Loan Note and this Agreement (after as well as before judgment) at a rate per
annum (computed on the basis of the actual number of days elapsed over a year of
360 days) equal to two (2%) percent in excess of the interest rate otherwise in
effect hereunder.
2A.17 Payments. All payments by the Company hereunder or under the Term
Loan Note shall be made in U.S. dollars in immediately available funds at the
office of the Bank by 12:00 noon, New York City time on the date on which such
payment shall be due. Interest on the Term Loan Note shall accrue from and
including the date of each Loan to but excluding the date on which such Loan is
paid in full or refinanced with a Loan of a different type.
2A.18 Interest Adjustments. (a) If the provisions of this Agreement or
the Term Loan Note would at any time otherwise require payment by the Company to
the Bank of any amount of interest in excess of the maximum amount then
permitted by applicable law the interest payments shall be reduced to the extent
necessary so that the Bank shall not receive interest in excess of such maximum
amount. To the extent that, pursuant to the foregoing sentence, the Bank shall
receive interest payments hereunder or under the Term Loan Note in an amount
less than the amount otherwise provided, such deficit (hereinafter called the
"Interest Deficit") will cumulate and will be carried forward (without interest)
until the termination of this Agreement. Interest otherwise payable to the Bank
hereunder and under the Term Loan Note for any subsequent period shall be
increased by such maximum amount of the Interest Deficit that may be so added
without causing the Bank to receive interest in excess of the maximum amount
then permitted by applicable law.
(b) To the extent permitted by law, the amount of the Interest Deficit
shall be treated as a prepayment penalty and paid in full at the time of any
optional prepayment by the Company to the Bank of all or part of the Term Loan.
The amount of the Interest Deficit relating to the Term Loan Note on the
Maturity Date shall be cancelled and not paid.
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2A.19 Participations, Etc. The Bank shall have the right at any time,
with or without notice to the Company, to sell, assign, transfer or negotiate
all or any part of the Term Loan Note or grant participations therein to one or
more banks (foreign or domestic, including an affiliate of the Bank), insurance
companies or other financial institutions, pension funds or mutual funds. The
Company and the Guarantor agree and consent to the Bank providing financial and
other information regarding their business and operations to prospective
purchasers or participants and further agree that to the extent that the Bank
should sell, assign, transfer or negotiate all or any part of the Term Loan
Note, the Bank shall be forever released and discharged from its obligations
under the Term Loan Note and this Agreement to the extent same is sold,
assigned, transferred or negotiated. Nothing herein shall prevent the Bank from
pledging the Term Loan Note with a Federal Reserve Bank.
SECTION 3. CONDITIONS OF BORROWING
3.1 Conditions of Initial Revolving Credit Loan. The obligation of the
Bank to make the initial Revolving Credit Loan hereunder shall be subject to the
fulfillment of the following conditions precedent:
(a) Legal Opinion. There shall have been delivered to the Bank
on the date of such loan an opinion of Xxxxxxxxx and Xxxxxxxxx, Esqs.,
counsel to the Company, in form and substance satisfactory to the Bank,
dated the date of the initial loan, to the same effect as Sections 4.1,
4.2, 4.3 and 4.4 hereof and to the further effect that this Agreement,
the Revolving Credit Note, the Security Agreements, the Guaranties and
any other Loan Document have been duly authorized, executed and
delivered by a duly authorized officer of the Company and each
Guarantor and, assuming due authorization and execution by the Bank,
constitute valid obligations of the Company and the Guarantors, where
applicable, legally binding upon them and enforceable (except as may be
limited by any applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally)
in accordance with their terms. The opinion shall also cover such other
matters incident to the matters contemplated by this Agreement as the
Bank shall reasonably require.
(b) Corporate Proceedings. The Company shall have furnished to
the Bank (in form and substance satisfactory to the Bank) (i) a copy,
certified by appropriate officers of the Company and the Guarantors on
the date of such loan, of the resolutions of the respective Boards of
Directors of the Company and the Guarantors authorizing all borrowings
herein provided for, the Guaranties, and the execution, delivery and
performance of this Agreement, the Revolving Credit Note, the Security
Agreement, the Guaranties and any other Loan
-27-
Document, (ii) copies of the by-laws and the certificates of
incorporation of the Company and the Guarantors; (iii) copies of the
good standing certificates for the Company and the Guarantors from the
Secretary of State or equivalent officer of their respective states of
incorporation and of each state in which the conduct of the Company's
or such Guarantor's business requires qualification; and (iv) evidence
of the authority of the Persons executing the Loan Documents on behalf
of the Company and the Guarantors.
(c) Security Agreement. The Company and the Guarantors shall
have each executed and delivered to the Bank a security agreement in
form and substance satisfactory to the Bank and appropriate UCC
financing statements as reasonably requested by Bank.
(d) Intentionally omitted.
(e) Guaranties. The Guarantors shall each have executed and
delivered to the Bank its Guaranty.
(f) Customer List. The Company shall have delivered to the
Bank a copy of the Company's customer list, certified by the President
or Chief Financial Officer of the Company to be complete and accurate
as of a date reasonably acceptable to the Bank.
3.2 Conditions of All Revolving Credit Loans. The obligation of the
Bank to make all Revolving Credit Loans to be made by it hereunder shall be
subject to the following conditions precedent:
(a) Representations and Warranties; No Default. The
representations and warranties contained in Section 4 hereof shall be
true and correct on and as of the date of the making of such Loans, and
no Default or Event of Default or event which with the passage of time
or the giving of notice of both would constitute a Default or Event of
Default shall have occurred and be continuing on such date. Each
borrowing by the Company hereunder shall constitute a representation by
the Company as of the date of each such borrowing that the conditions
contained in the foregoing sentence have been satisfied.
(b) Legal Matters. All other instruments and legal and
corporate proceedings in connection with the transactions contemplated
by this Agreement shall be satisfactory in form and substance to the
Bank and its counsel, and counsel to the Bank shall have received
copies of all documents which it may have reasonably requested in
connection therewith.
3.3 Conditions of the Initial Drawdown of the Term Loan. The
obligation of the Bank to make the initial Drawdown of the Term
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Loan hereunder shall be subject to the fulfillment of the following conditions
precedent:
(a) Legal Opinion. There shall have been delivered to the Bank
on the date of this Agreement or the date of such initial Drawdown an
opinion of Xxxxxxxxx and Xxxxxxxxx, Esqs., counsel to the Company, in
form and substance satisfactory to the Bank, dated such date, to the
same effect as Sections 4.1, 4.2, 4.3 and 4.4 hereof and to the further
effect that this Agreement, the Term Loan Note, the Security
Agreements, the Guaranties and any other Loan Document have been duly
authorized, executed and delivered by a duly authorized officer of the
Company and each Guarantor and, assuming due authorization and
execution by the Bank, constitute valid obligations of the Company and
the Guarantors, where applicable, legally binding upon them and
enforceable (except as may be limited by any applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally) in accordance with their terms. The
opinion shall also cover such other matters incident to the matters
contemplated by this Agreement as the Bank shall reasonably require.
(b) Corporate Proceedings. The Company shall have furnished to
the Bank (in form and substance satisfactory to the Bank) (i) a copy,
certified by appropriate officers of the Company and the Guarantors on
such date, of the resolutions of the respective Boards of Directors of
the Company and the Guarantors authorizing all borrowings herein
provided for, the Guaranties, and the execution, delivery and
performance of this Agreement, the Term Loan Note, the Security
Agreements, the Guaranties and any other Loan Document, (ii) copies of
the by-laws and the certificates of incorporation of the Company and
the Guarantors; (iii) copies of the good standing certificates for the
Company and the Guarantors from the Secretary of State or equivalent
officer of their respective states of incorporation and of each state
in which the conduct of the Company's or such Guarantor's business
requires qualification; and (iv) evidence of the authority of the
Person executing the Loan Documents on behalf of the Company and the
Guarantors.
(c) Security Agreements. The Company and the Guarantors shall
have each executed and delivered to the Bank a security agreement in
form and substance satisfactory to the Bank and appropriate UCC
financing statements as reasonably requested by Bank.
(d) Guaranties. The Guarantors shall each have executed and
delivered to the Bank its Guaranty.
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(e) Customer List. The Company shall have delivered to the
Bank a copy of the Company's customer list, certified by the President
or Chief Financial Officer of the Company to be complete and accurate
as of a date reasonably acceptable to the Bank.
(f) Intentionally omitted.
(g) Personal Property Insurance. The Company shall have
delivered to the Bank evidence of property damage insurance acceptable
to the Bank covering the replacement value of all personal property of
the Company and the Guarantors, in an amount satisfactory to the Bank
and naming the Bank as "loss payee".
(h) Invoices, Bills and Contracts. The Company shall have
delivered copies of all invoices, bills, contracts and paid receipts in
connection with the capital expenditures and the leasehold improvements
to be purchased, made or refinanced with the proceeds of the initial
Drawdown of the Term Loan.
(i) Leases. The Bank shall have received and satisfactorily
reviewed all lease agreements entered into by the Company and the
Guarantors, including but not limited to, the lease agreement entered
into by the Company and Park Associates in connection with the leased
property located at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx.
(x) Amendment to Existing Term Loan. The Bank shall have
received a properly executed amendment to the Existing Term Loan
Agreement or other documentation satisfactory to the Bank which
conforms the covenants therein to those contained in Article V, Article
VI and Article VII herein.
(k) Quarterly Financial Statement. The Bank shall have
received the management prepared consolidated financial statement of
the Company for the three (3) month period ended February 28, 1995,
prepared in accordance with GAAP.
(l) Intentionally omitted.
(m) Representations and Warranties; No Default. The
representations and warranties contained in Section 4 hereof shall be
true and correct on and as of the date of this Agreement and as of each
Drawdown Date, and no Default or Event of Default or event which with
the passage of time or the giving of notice of both would constitute a
Default or Event of Default shall have occurred and be continuing on
any of such dates.
(n) Legal Matters. All other instruments and legal and
corporate proceedings in connection with the transactions
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contemplated by this Agreement, shall be satisfactory in form and
substance to the Bank and its counsel, and counsel to the Bank shall
have received copies of all documents which it may have reasonably
requested in connection therewith.
3.4 Conditions of all Drawdowns. The obligation of the Bank to make all
Drawdowns to be made by it hereunder shall be subject to the following
conditions precedent:
(a) Representations and Warranties; No Default. The
representations and warranties contained in Section 4 hereof shall be true and
correct on and as of the date of the making of such Drawdown, and no Default or
Event of Default or event which with the passage of time or the giving of notice
of both would constitute a Default or Event of Default shall have occurred and
be continuing on such date. Each request for a Drawdown by the Company hereunder
shall constitute a representation by the Company as of the date of each such
Drawdown that the conditions contained in the foregoing sentence have been
satisfied.
(b) Invoices. The Bank shall have received copies of invoices,
bills, contracts and paid receipts in connection with the capital expenditures
and the leasehold improvements to be purchased, made or refinanced with the
proceeds of the requested Drawdown.
(c) Legal Matters. All other instruments and legal and
corporate proceedings in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to the Bank and its
counsel, and counsel to the Bank shall have received copies of all documents
which it may have reasonably requested in connection therewith.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to make
the Loans herein provided for, the Company and the Guarantors hereby represent
and warrant to the Bank that:
4.1 Corporate Existence. The Company and the Guarantors are each duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and each has the corporate power to own its
assets and to transact the business in which it is presently engaged, and is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction in which failure to so qualify or be in good standing could
result in a Material Adverse Change in the Company or such Guarantor.
4.2 Corporate Power and Authorization. The Company and each Guarantor
have the corporate power, authority and legal right to make, deliver and perform
the Loan Documents to which it is a party
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and, with respect to the Company, to borrow hereunder and has taken all
necessary corporate action to authorize the borrowings hereunder and the
Guaranties on the terms and conditions of this Agreement, the Notes, and the
Guaranties. No consent of any other party (including stockholders of the Company
or the Guarantors), and no consent, license, approval or authorization of, or
registration or declaration with, any governmental authority, bureau or agency
is required in connection with the execution, delivery, performance, validity or
enforceability of the Loan Documents. The Loan Documents when delivered
hereunder will have been duly executed and delivered on behalf of the Company
and the Guarantors, as the case may be, and will be legal, valid and binding
obligations of the Company and the Guarantors, as the case may be, enforceable
against the Company or the Guarantors in accordance with their respective terms.
4.3 No Legal Bar to Loans. The execution, delivery and performance of
the Loan Documents will not violate any provision of any existing law or
regulation or of any order or decree of any court or governmental
instrumentality, or of the certificates of incorporation or by-laws of the
Company or the Guarantors, or of any mortgage, indenture, contract or other
agreement to which the Company or any of the Guarantors is a party or by which
the Company or any of the Guarantors or any of their property or assets may be
bound, and will not result in the creation or imposition of any Lien on any of
its properties pursuant to the provisions of such mortgage, indenture, contract
or other agreement.
4.4 No Material Litigation. Except as set forth on Schedule 4.4 hereto,
no litigation or administrative proceedings of or before any court, tribunal or
governmental body is presently pending, or, to the knowledge of the Company,
threatened against the Company or any of the Guarantors or any of its or their
properties or with respect to the Loan Documents which, if adversely determined,
could result in, in the opinion of the Company, a Material Adverse Change in the
Company or any of the Guarantors.
4.5 No Default. Except as set forth on Schedule 4.5 hereto, neither the
Company nor any of the Guarantors is in default in any material manner in the
payment or performance of any of their obligations or in the performance of any
contract, agreement or other instrument to which any of them is a party or by
which any of them or any of their assets may be bound, and no Default hereunder
has occurred and is continuing.
4.6 Ownership of Properties; Liens. The Company and each of the
Guarantors has good and marketable title to all of their properties and assets,
real and personal, and none of such properties and assets are subject to any
Lien except as permitted in Section 6.2 hereof and except as set forth on
Schedule 4.6 hereto.
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4.7 Taxes. The Company, each of the Guarantors and each Subsidiary has
filed or caused to be filed all tax returns which to the knowledge of the
Company are required to be filed, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against them (other than
those being contested in good faith by appropriate proceedings for which
adequate reserves have been provided on the books of the Company, such Guarantor
or such Subsidiary, as the case may be), and no tax liens have been filed and,
to the best of the knowledge of the Company, no claims are being asserted with
respect to any taxes.
4.8 Financial Condition. The consolidated balance sheet of the Company
and its Subsidiaries as of November 30, 1994 and the related statements of
income and retained earnings for the fiscal year ended on said date, certified
by independent certified public accountants, heretofore furnished to the Bank,
and the consolidated balance sheet of the Company and its Subsidiaries as of
February 28, 1995, and the related statements of income and retained earnings
for the fiscal quarter ended on such date, heretofore furnished to the Bank,
each present fairly the financial condition of the Company and its Subsidiaries
as at the dates of said balance sheets, and the results of their operations for
such periods. All such financial statements have been prepared in accordance
with GAAP and since the date of the annual financial statement mentioned above,
there has been no Material Adverse Change in the Company or any of the
Guarantors from that shown by said statement as of said date and since the date
of the quarterly financial statement mentioned above, there has been no material
increase in liabilities of the Company and its Subsidiaries. Neither the Company
nor any of the Guarantors has any material obligation, liability or commitment,
direct or contingent, which is not reflected in the foregoing financial
statements (and the related notes thereto) as of said dates.
4.9 Filing of Statements and Reports. The Company and each of the
Guarantors have filed copies of all material statements and reports which, to
the knowledge of the Company or each of the Guarantors, are required to be filed
with any governmental authority, agency, commission, board or bureau.
4.10 ERISA. The Company, each of the Guarantors, each Subsidiary and
each ERISA Affiliate are in compliance in all material respects with all
applicable provisions of ERISA. Neither a Reportable Event nor a Prohibited
Transaction has occurred and is continuing with respect to any Plan; no notice
of intent to terminate a Plan has been filed nor has any Plan been terminated;
no circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate, a Plan, nor has the PBGC instituted any such proceedings;
neither the Company, any of the Guarantors, any Subsidiary, nor any ERISA
Affiliate has completely or partially withdrawn under Sections 4201 or 4204 of
ERISA from a
-33-
Multiemployer Plan; the Company, each of the Guarantors, each Subsidiary and
each ERISA Affiliate have met their minimum funding requirements under ERISA
with respect to all of their Plans and the present fair market value of all Plan
assets exceeds the present value of all vested benefits under each Plan, as
determined on the most recent valuation date of the Plan in accordance with the
provisions of ERISA for calculating the potential liability of the Company, each
of the Guarantors, any Subsidiary or any ERISA Affiliate to PBGC or the Plan
under Title IV of ERISA; and neither the Company, any of the Guarantors, any
Subsidiary nor any ERISA Affiliate has incurred any liability to the PBGC under
ERISA.
4.11 Environmental Matters. The Company, each of the Guarantors and
each Subsidiary are in compliance with all federal, state or local laws,
ordinances, rules, regulations or policies governing Hazardous Materials and
neither the Company, any Guarantor nor any Subsidiary has used Hazardous
Materials on, from, or affecting any property now owned or occupied or hereafter
owned or occupied by the Company, any Guarantor or any Subsidiary in any manner
which violates federal, state or local laws, ordinances, rules, regulations or
policies governing the use, storage, treatment, transportation, manufacture,
refinement, handling, production or disposal of Hazardous Materials, and that to
the best of the Company's, Guarantors' and Subsidiaries' knowledge, no prior
owner of any such property or any tenant, subtenant, prior tenant or prior
subtenant have used Hazardous Materials on, from or affecting such property in
any manner which violates federal, state or local laws, ordinances, rules,
regulations, or policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production or disposal of Hazardous
Materials.
4.12 Licenses, Permits, etc. The Company, each of the Guarantors and
each Subsidiary possess all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted, and neither the Company, any of the Guarantors nor any Subsidiary are
in violation of any similar rights of others.
4.13 Material Agreements. Neither the Company nor any of the Guarantors
is a party to any indenture, loan or credit agreement or any other agreement,
lease or instrument or subject to any charter or corporate restriction the
violation of which could result in a Material Adverse Change in the Company or
such Guarantor.
4.14 Margin Credit. The Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U), and no proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or
-34-
carrying any margin stock or in any other way which will cause the Company to
violate the provisions of Regulations G, T, U or X.
4.15 Use of Proceeds. The proceeds of each Loan shall be used for the
purposes set forth in Section 2.13 and Section 2A.7 of this Agreement.
4.16 Properties Affected. Neither the business nor the properties of
the Company, any of the Guarantors or any Subsidiary are affected by any fire,
explosion, accident, strike, hail, earthquake, embargo, act of God or of the
public enemy, or other casualty (whether or not covered by insurance), which
could result in a Material Adverse Change in the Company, such Guarantor or any
Subsidiary.
4.17 Guarantors. The liability of each Guarantor as a result of the
execution of its Guaranty and the execution of this Agreement shall not cause
the liabilities (including contingent liabilities) of such Guarantor to exceed
the fair saleable value of its assets. Each Guarantor acknowledges it has
derived or expects to derive a financial or other advantage from the Loans
obtained by the Company from the Bank.
4.18 Subsidiaries. As of the date hereof, the Guarantors and
Futurebiotics, Inc. are the only existing Subsidiaries of the
Company.
SECTION 5. AFFIRMATIVE COVENANTS
The Company and each of the Guarantors hereby covenant that so long as
the Notes remain outstanding and unpaid or so long as the Commitment remains
unterminated, the Company and each of the Guarantors will, and shall cause any
Subsidiary to, unless otherwise consented to in writing by the Bank:
5.1 Financial Statements. Furnish to the Bank:
(a) as soon as available, but in any event not later than 120
days after the close of each fiscal year of the Company, a copy of the
annual audit report for such fiscal year of the Company and its
Subsidiaries, including therein the consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at the end of
such fiscal year, and related consolidated and consolidating statements
of income and retained earnings of the Company and its Subsidiaries for
such fiscal year, setting forth in each case in comparative form the
corresponding figures for the preceding fiscal period, all in
reasonable detail, prepared in accordance with GAAP, such consolidated
financial statements being certified by independent certified public
accountants of recognized standing selected by the Company and
acceptable to
-35-
the Bank and such consolidating financial statements being prepared by
the chief financial officer of the Company;
(b) as soon as available, but in any event not later than 60
days after the end of each of the first three quarterly periods of each
fiscal year of the Company, the Company's 10Q reports for such fiscal
quarter;
(c) concurrently with the delivery of the financial statements
referred to in clause (a) above, a certificate of such independent
certified public accountants stating that in making the examination
necessary for certifying such financial statements no knowledge was
obtained of any Events of Default or Defaults hereunder, except as
specifically indicated;
(d) concurrently with the delivery of the financial statements
referred to in clauses (a) and (b) above, a certificate of the chief
financial officer of the Company stating that, to the best of his
knowledge, the Company during such period has kept, observed, performed
and fulfilled each and every covenant and condition contained in this
Agreement and in the Notes and that he has obtained no knowledge of any
Events of Default or Defaults hereunder except as specifically
indicated, with computations evidencing compliance with the covenants
set forth in Sections 6.10, 6.11 and 6.12;
(e) promptly after the same are sent, copies of all financial
statements and reports which the Company sends to its stockholders, and
promptly after the same are filed, copies of all financial statements
and reports which the Company may make to, or file with, any
governmental authority, agency, commission, board or bureau;
(f) as soon as possible and in any event within 30 days after
the Company knows or has reason to know of the following events: (i)
the occurrence or expected occurrence of any Reportable Event with
respect to any Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the
PBGC, the Company or any Commonly Controlled Entity, or any
Multiemployer Plan with respect to the withdrawal from, or the
terminating, Reorganization or Insolvency of, any Plan the Company
shall deliver to the Bank a certificate of the chief financial officer
of the Company setting forth the details thereof and the action the
Company or the Commonly Controlled Entity proposes to take with respect
thereto;
(g) within 30 days of the expiration date of each policy,
updated copies of all insurance coverage binders; and
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(h) promptly upon receipt thereof, copies of any reports
submitted to the Company or any of the Guarantors by independent
certified public accountants in connection with examination of the
financial statements of the Company and its Subsidiaries made by such
accountants;
(i) promptly after the furnishing thereof, copies of any
statement or report furnished to any other party pursuant to the terms
of any indenture, loan, or credit or similar agreement and not
otherwise required to be furnished to the Bank pursuant to any other
clause of this Section 5.1;
(j) no later than 30 days after the end of each fiscal quarter
of the Company, an accounts receivable aging schedule, in form and
substance satisfactory to the Bank;
(k) promptly, copies of all financial, legal or other
information and/or documentation as the Bank may require pertaining to
any acquisitions permitted under Section 6.5(d) of this Agreement in
excess of $500,000; and
(l) promptly, such additional financial and other information
as the Bank may from time to time reasonably request;
5.2 Payment and Performance of Obligations. Perform and comply with
each of the provisions of each and every agreement of which the failure to
perform or comply could result in a Material Adverse Change in the Company or
any of the Guarantors. Pay and discharge, and cause their Subsidiaries to pay
and discharge, at or before maturity all of their respective obligations and
liabilities, including without limitation tax liabilities, except where the same
may be contested in good faith, and maintain, in accordance with GAAP,
appropriate reserves for the accrual of any of the same.
5.3 Maintenance of Properties; Insurance. Keep, and cause their
Subsidiaries to keep, all properties useful and necessary in the business of the
Company, the Guarantors and their Subsidiaries in good working order and
condition; maintain, and cause their Subsidiaries to maintain, with financially
sound and reputable insurance companies, insurance on all their properties in
such amounts as are proper in accordance with sound business practices against
such risks as are usually insured against in the same general area and by
companies engaged in the same or a similar business, including but without
limitation, product liability insurance in an aggregate amount not less than (i)
$5,000,000.00 at any time, such insurance to be in form and substance
satisfactory to the Bank; pay, and cause their Subsidiaries to pay, all
insurance premiums, and, upon written request, any other information as to the
insurance carried.
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5.4 Notices. Promptly give notice in writing to the Bank of (a) the
occurrence of any Default under this Agreement or of any default under any
material instrument or other agreement of the Company, any of the Guarantors or
any Subsidiary, (b) any litigation, proceeding, investigation or dispute which
may exist at any time between the Company, any of the Guarantors or any
Subsidiary and any governmental regulatory body which could result in a Material
Adverse Change in the Company, any of the Guarantors or any Subsidiary, (c) all
litigation and proceedings affecting the Company, any of the Guarantors or any
Subsidiary in which the amount involved is $50,000 in excess of applicable
insurance coverage or in which injunctive or similar relief is sought, and (d)
the Company or any of the Guarantors establishing or contributing to any Plan.
5.5 Conduct of Business and Maintenance of Existence. Continue, and
cause their Subsidiaries to continue, to engage in business of the same general
type as now conducted by the Company, the Guarantors and their Subsidiaries, and
preserve, renew and keep in full force and effect their corporate existence and
take all reasonable action to maintain their rights, privileges and franchises
necessary or desirable in the normal conduct of business; provided that nothing
herein contained shall prevent the Company, the Guarantors or any Subsidiary
from discontinuing a part of its business which is not a substantial part of the
business of the Company, such Guarantor or such Subsidiary if such
discontinuance is in the opinion of the Board of Directors of the Company in the
interest of the Company, such Guarantor or Subsidiary, and not disadvantageous
to the Bank.
5.6 Inspection of Property, Books and Records. Permit, and cause their
Subsidiaries to permit, any representatives of the Bank to (a) visit and inspect
any of their respective properties, (b) conduct an environmental audit of any of
their respective properties and (c) except as otherwise provided in the Security
Agreement with respect to Customer Lists (as defined in the Security Agreement),
examine and make abstracts from any of the books and records of the Company, any
of the Guarantors and any Subsidiary at any reasonable time during normal
business hours and as often as may reasonably be desired.
5.7 Hazardous Material. The Company, each of the Guarantors and each
Subsidiary shall not cause or permit any property owned or occupied by the
Company, the Guarantors or any Subsidiary to be used to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce or process
Hazardous Materials, except in compliance with all applicable federal, state and
local laws or regulations nor shall the Company, the Guarantors or any
Subsidiary cause or permit, as a result of any intentional or unintentional act
or omission on the part of the Company, any of the Guarantors or any Subsidiary
or any tenant or subtenant, a release of Hazardous Materials onto any property
owned or occupied
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by the Company, the Guarantors or any Subsidiary or onto any other property. The
Company, each of the Guarantors and each Subsidiary shall comply with all
applicable federal, state and local laws, ordinances, rules and regulations,
whenever and by whomever triggered, and shall obtain and comply with, any and
all approvals, registrations or permits required thereunder. The Company and
each of the Guarantors shall execute any documentation required by the Bank in
connection with the covenants contained herein. The Company and each of the
Guarantors shall indemnify the Bank against any liability, loss, cost, damage or
expense (including, without limitation, reasonable attorneys' fees) arising from
(a) the imposition or recording of a Lien by any local, state, or federal
governments or governmental agency or authority pursuant to any federal, state
or local statute or regulation relating to Hazardous Materials or the removal
thereof; (b) claims of any private parties regarding violations of laws
regulating Hazardous Materials; and (c) costs and expenses (including, without
limitation, reasonable attorneys' fees and fees incidental to the securing of
repayment of such costs and expenses) incurred by the Company, any of the
Guarantors, a Subsidiary or the Bank in connection with the removal of any such
Lien or in connection with compliance by the Company, any of the Guarantors, a
Subsidiary or the Bank with any statute, regulation or order regulating
Hazardous Materials.
5.8 Subsidiary Guarantees. Cause any Subsidiary of the
Company or any Guarantor hereafter formed to execute and deliver to
the Bank a guarantee substantially in the form of Exhibit C hereto.
5.9 Pension Funding. Comply with the following and cause each ERISA
Affiliate of the Company, each Guarantor or any Subsidiary to comply with the
following:
(i) engage solely in transactions which would not subject any
of such entities to either a civil penalty assessed pursuant to Section
502(i) of ERISA or a tax imposed by Section 4975 of the Internal
Revenue Code in either case in an amount in excess of $25,000.00;
(ii) make full payment when due of all amounts which, under
the provisions of any Plan or ERISA, the Company, either of any
Guarantors, any Subsidiary or any ERISA Affiliate of any of same is
required to pay as contributions thereto;
(iii) all applicable provisions of the Internal Revenue Code
and the regulations promulgated thereunder, including but not limited
to Section 412 thereof, and all applicable rules, regulations and
interpretations of the Accounting Principles Board and the Financial
Accounting Standards Board;
(iv) not fail to make any payments in an aggregate amount
greater than $25,000.00 to any Multiemployer Plan that the Company, any
of the Guarantors, any Subsidiary or any ERISA
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Affiliate may be required to make under any agreement relating
to such Multiemployer Plan, or any law pertaining thereto; or
(v) not take any action regarding any Plan which could result
in the occurrence of a Prohibited Transaction.
5.10 Good Standing Certificate. Deliver to the Bank, within twenty (20)
days of the date of this Agreement, a good standing certificate for C&C
Enterprises, Inc. from the State of Delaware.
SECTION 6. NEGATIVE COVENANTS
The Company and each of the Guarantors hereby covenant that so long as
the Notes remain outstanding and unpaid or so long as the Commitment remains
unterminated, neither the Company nor any of the Guarantors will, nor will they
permit any Subsidiary to, directly or indirectly, without the prior written
consent of the Bank:
6.1 Limitation on Indebtedness. Create, incur, assume or suffer to
exist, any Consolidated Indebtedness, except (a) the Notes; (b) accounts payable
(other than for borrowed money) incurred in the ordinary course of business as
presently conducted, provided that the same shall not be overdue or, if overdue,
are being contested in good faith and by appropriate proceedings; (c)
indebtedness between Guarantors and between a Guarantor and the Company; (d)
other indebtedness owing by the Company, any Guarantor or any Subsidiary on the
date of this Agreement and which was reflected in the balance sheet referred to
in Section 4.8 hereof provided same is not extended, renewed or refinanced; (e)
Subordinated Debt; (f) other borrowings from the Bank; (g) indebtedness which
constitutes the deferred purchase price of any property or assets, not in excess
of $250,000.00 in any fiscal year of the Company (computed on a non-cumulative
basis), (h) purchase money indebtedness incurred to finance specific Capital
Expenditures, subject to the limitations of Section 6.2(g) of this Agreement
with respect to purchase money mortgages and purchase money security interests;
and (i) indebtedness resulting from notes issued by the Company in connection
with and subject to the limitations of Section 6.5(d) of this Agreement,
provided, however, that said indebtedness shall not exceed $6,000,000.00 in the
aggregate at any time.
6.2 Limitation on Liens. Create, incur, assume or suffer to exist, any
Lien of any kind upon any of their property or assets, income or profits,
whether now owned or hereafter acquired, except (a) the Liens existing as of the
date of this Agreement referred to in the financial statements referred to in
Section 4.8 hereof, provided, however, that such Liens are not spread to cover
other or additional indebtedness or property of the Company, any Guarantor or
any Subsidiary; (b) Liens for taxes not yet due or which are being contested in
good faith and by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books
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of the Company, a Guarantor or a Subsidiary, as the case may be, in accordance
with GAAP; (c) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business for sums which
are not overdue for a period of more than 45 days or which are being contested
in good faith and by appropriate proceedings; (d) pledges or deposits in
connection with worker's compensation, unemployment insurance and other social
security legislation; (e) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (f) easements, rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the Company, a
Guarantor or a Subsidiary; (g) Liens covering real or personal property in
existence at the time of acquisition thereof by the Company, a Guarantor or a
Subsidiary, and purchase money mortgages and purchase money security interests
(including the Lien or retained security title of a conditional vendor) covering
real or personal property hereafter acquired by the Company, a Guarantor or a
Subsidiary in the ordinary course of business, provided such Lien shall not
exceed 100% of the purchase price of the property so encumbered and no such Lien
covers, or is extended to cover, any other property owned by the Company, a
Guarantor or a Subsidiary; (h) Liens in favor of the Bank; and (i) Liens granted
in connection with Section 6.1(i), provided, however, that said Liens are
granted solely on customer lists hereafter acquired by the Company and do not
exceed a value of $6,000,000.00 in the aggregate during the term of this
Agreement.
6.3 Limitation on Contingent Obligations. Assume, guarantee, indorse or
otherwise in any way be or become responsible or liable for the obligations of
any Person (all such transactions being herein called "guarantees"), whether by
agreement to purchase or repurchase obligations, or by agreement to supply funds
for the purpose of paying, or enabling such entity to pay, any obligations
(whether through purchasing stock, making a loan, advance or capital
contributions or by means or agreeing to maintain or cause such Person to
maintain, a minimum working capital or net worth of any such Person, or
otherwise) in an aggregate amount exceeding $1,000,000.00, provided, however,
that the aggregate amount permitted under this Section 6.3 and Section 6.5(e) of
this Agreement shall not exceed $1,000,000.00 with respect to any one Person and
$1,500,000.00 in the aggregate at any time, except (a) guarantees by indorsement
of instruments for deposit or collection in the ordinary course of business, and
(b) guarantees in respect of indebtedness of Subsidiaries, provided that the
indebtedness in respect of which such guarantees are given is permitted by
subsection 6.1 hereof; and guarantees in favor of the Bank.
-41-
6.4 Prohibition of Fundamental Changes. Enter into any transaction of
merger or consolidation or liquidate or dissolve itself (or suffer any
liquidation or dissolution) or convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of related transactions, all or a
substantial part of its property, business, or assets, including its accounts
receivable, or stock or securities convertible into stock of any Subsidiary, or
make any material change in the present method of conducting business, except
that: (a) any Guarantor may be merged into, or consolidated with, the Company
(provided that the Company shall be the continuing or surviving corporation) or
with any one or more Guarantors and (b) any Subsidiary may sell, lease, transfer
or otherwise dispose of any of its assets to the Company.
6.5 Limitation on Investments, Loans and Advances. Make or suffer to
exist any advances or loans to, or Investments (by way of transfers of property,
contributions to capital, acquisitions of stock, or securities or evidences of
indebtedness, acquisitions of businesses or acquisitions of assets other than in
the ordinary course of business, or otherwise), in, any Person except (a)
Investments in certificates of deposit issued by any domestic commercial bank
with a capital and surplus of at least $250,000,000.00 provided, however, that
such certificates of deposit shall have a maturity of one year or less from the
date of purchase; (b) investments in direct obligations of the United States of
America or any agency thereof, or marketable obligations directly and fully
guaranteed by the United States of America, provided, however, that any such
obligations shall have a maturity of five years or less from the date of
acquisition; (c) investments in money market mutual funds having assets in
excess of $2,500,000,000.00; (d) investments in commercial paper, provided,
however, that any such commercial paper shall have a maturity of one year or
less from the date of acquisition and shall be rated at least "A-1" or the
equivalent thereof by Standard & Poors Corporation (or has a similar rating by
any similar organization which rates commercial paper); (e) investments in
repurchase obligations with a term of not more than seven days for underlying
securities of the type described in clause (b); (f) stock or obligations issued
in settlement of claims against any other Person by reason of any event of
bankruptcy or composition or readjustment of debt or reorganization of any
debtor of the Company, any Guarantor or any Subsidiary; (g) purchases or
acquisitions of the stock or assets of companies in the similar type of business
as the Company and which after giving effect to the acquisition thereof, the
nature and scope of the Company's business shall not have been materially
changed, provided, however, (i) that all such purchases shall not exceed
$6,000,000 in the aggregate during any fiscal year of the Company, and (ii) that
the purchase price of any given acquisition does not exceed $5,000,000.00 and
that not more than $5,000,000.00 of the purchase price for all such acquisitions
in
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the aggregate during any fiscal year of the Company shall be paid in cash; (h)
loans and advances to any other Person not to exceed $1,500,000.00, provided,
however, that the aggregate amount permitted under this Section 6.5(h) and
6.5(k) and Section 6.3 of this Agreement shall not exceed $1,500,000.00 with
respect to any one Person and $2,500,000.00 in the aggregate at any time, and
further provided however that the Company may make loans or advances to
Futurebiotics, Inc. ("Future") in amounts not to exceed $1,500,000.00 provided
that if (i) any such loan or advance to Future causes the aggregate of all loans
or advances made hereunder to exceed $4,000,000.00, or (ii) the aggregate
amounts of all loans made by the Company and Future exceeds $5,500,000.00,
Future shall become a Guarantor of all obligations of the Company to the Bank
and the Company shall become a Guarantor of all obligations of Future to the
Bank; (i) loans or advances to a Guarantor; (j) purchases of securities publicly
traded on a national exchange in an aggregate amount not to exceed $250,000.00;
(k) any other Investments in any Person(s) not to exceed $1,000,000.00,
provided, however, that the aggregate amount permitted under this Section 6.5(k)
and 6.5(h) and Section 6.3 of this Agreement shall not exceed $1,000,000.00 with
respect to any one Person and $1,750,000.00 in the aggregate at any time; and
(l) tax exempt securities rated A or better by Standard & Poors or Xxxxx'x
Investors Service.
6.6 Prohibition of Certain Prepayments. Make any prepayment of
principal of any debt, with a maturity of more than one year, for borrowed money
(except the Notes and the Existing Term Loan Note) or for the deferred purchase
price of property or services, except (i) at the stated maturity of such debt,
(ii) as required by mandatory prepayment provisions relating thereto (subject to
any subordination provisions applicable thereto), and (iii) with respect to
existing loans made by the Bank to the Company, according to the terms of said
loans.
6.7 Limitation on Leases. Enter into any agreement, or be or become
liable under any agreement, for the lease, hire or use of any personal property
(other than the presently outstanding lease for the Company's headquarters in
Hauppauge, New York, provided that such lease is not amended, modified or
supplemented) which would cause the aggregate maximum amount of all obligations
of the Company, the Guarantors and their Subsidiaries pursuant to such
agreements in any fiscal year of the Company to exceed $500,000. This provision
shall not apply to Capital Leases.
6.8 Sale and Leaseback. Enter into any arrangement with any person
whereby the Company, any Guarantor or any Subsidiary shall sell or transfer any
property, real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which the Company, such
Guarantor or such Subsidiary intends to use for substantially the same purpose
or purposes as the property being sold or transferred.
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6.9 Prohibitions Regarding Subordinated Debt. Make any optional
prepayment of, or purchase, redeem or otherwise acquire, or amend any provision
pertaining to the subordination or the terms of payment of, any Subordinated
Debt.
6.10 Maintenance of Consolidated Indebtedness to Consolidated Tangible
Net Worth Ratio. Permit the ratio of Consolidated Indebtedness to Consolidated
Tangible Net Worth to exceed 1.0 to 1.0 at any time.
6.11 Maintenance of Consolidated Coverage Ratio. Permit the
Consolidated Coverage Ratio to fall below 1.25 to 1.00 at any time.
6.12 Consolidated Net Income. Permit Consolidated Net Income (excluding
extraordinary gains) to be less than $250,000 in any fiscal year.
6.13 Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate, except in the ordinary course
of business and pursuant to the reasonable requirements of the Company's or a
Guarantor's business and upon fair and reasonable terms no less favorable to the
Company or a Guarantor than would obtain in a comparable arm's length
transaction with a Person not an Affiliate.
6.14 Management. Fail to retain Xxxxxxx X. Xxxxxxxx in a reasonably
active full time capacity in the management of the Company.
6.15 Change in Control. At any time from the date hereof (i) a majority
of the members of the Board of Directors of the Company have been elected,
having been nominated other than by the management or preceding Board of
Directors or (ii) fail or cease to maintain the voting control by the Company of
such classes of voting stock of Futurebiotics, Inc. which at all times will
entitle the holder thereof to elect a majority of the members of the Board of
Directors of Futurebiotics, Inc..
SECTION 7. EVENTS OF DEFAULT
7.1 Events of Default
Upon the occurrence of any of the following:
(a) failure by the Company to pay the principal of or any
installment of the principal of the Notes when due, or failure to pay
any interest on the Notes or any commitment fee or any other amount
owing hereunder or under the Security Agreement within five days after
any such interest or commitment fee becomes due;
-44-
(b) if any representation or warranty made by the Company or
any Guarantor in this Agreement, any other Loan Document or in any
certificate, financial or other statement furnished at any time under
or in connection with this Agreement shall prove to have been untrue or
misleading in any material respect;
(c) default by the Company or any Guarantor in an observance
or performance of any of the covenants or agreements contained in
Section 6 of this Agreement, in any other Loan Document or in any other
document delivered to the Bank in connection herewith;
(d) default by the Company or any Guarantor in the observance
or performance of any other covenant or agreement contained in this
Agreement, and the continuance of the same for 30 days after the
earlier of (i) the Company having knowledge of such default or (ii)
notice of such default is given to the Company by the Bank;
(e) if the Company, any Guarantor or any Subsidiary shall (i)
default in the payment of principal or interest on any obligation in
excess of $100,000 for borrowed money (other than the Notes), or for
the deferred purchase price of property, beyond the period of grace, if
any, provided with respect thereto or (ii) default in the performance
or observance of any other term, condition or agreement contained in
any such obligation or in any agreement relating thereto if the effect
thereof is to cause, or permit the holder or holders of such obligation
(or a trustee on behalf of such holder or holders) to cause, such
obligation to become due prior to its stated maturity;
(f) (i) the Company, any Guarantor or any of their
Subsidiaries shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its property, or
the Company, any Guarantor or any of their Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there
shall be commenced against the Company, any Guarantor or any of their
Subsidiaries any case, proceeding or other action of a nature referred
to in clause (i) above or seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its property,
-45-
which case, proceeding or other action (x) results in the entry of an
order for relief or (y) remains undismissed, undischarged or unbonded
for a period of 60 days; or (iii) the Company, any Guarantor or any of
their Subsidiaries shall take any action indicating its consent to,
approval of, or acquiescence in, or in furtherance of, any of the acts
set forth in clause (i) or (ii) above; or (iv) the Company, any
Guarantor or any of their Subsidiaries shall generally not, or shall be
unable to, pay its debts as they become due or shall admit in writing
its inability to pay its debts;
(g) (i) any Person shall engage in any "prohibited
transaction" (as defined in Section 406 or ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Bank, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Company or any
Commonly Controlled Entity shall, or is, in the reasonable opinion of
the Bank, likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or
exist with respect to a Plan; and in each case in clauses (i) through
(vi) above, such event or condition, together with all other such
events or conditions, if any, could subject the Company or any of its
Subsidiaries to any tax, penalty or other liabilities in the aggregate
material in relation to the business, operations, property or financial
or other condition of the Company or any of its Subsidiaries;
(h) default by any Guarantor upon its guarantee pursuant to
the terms thereof or if such guarantee shall cease to be in full force
and effect or shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by any such Guarantor or such
party shall deny that it has any further liability to the Bank with
respect thereto; or
(i) final judgment for payment of money in excess of
$50,000.00 shall be rendered against the Company, any Guarantor or any
Subsidiary, and the same shall remain undischarged for a period of 30
days during which execution of such judgment shall not be effectively
stayed.
-46-
7.2 Remedies on Default. Upon the occurrence and continuance of an
Event of Default the Bank may by notice to the Company, (i) terminate the
Commitment, (ii) declare the Notes, all interest thereon and all other amounts
payable under this Agreement to be forthwith due and payable, whereupon the
Notes, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Company and (iii) proceed to
enforce its rights whether by suit in equity or by action at law, whether for
specific performance of any covenant or agreement contained in this Agreement or
any Loan Document, or in aid of the exercise of any power granted in either this
Agreement or any Loan Document or proceed to obtain judgment or any other relief
whatsoever appropriate to the enforcement of its rights, or proceed to enforce
any other legal or equitable right which the Bank may have by reason of the
occurrence of any Event of Default hereunder or under any Loan Document,
provided, however, that upon the occurrence of an Event of Default referred to
in Section 7.1(f), the Commitment shall be automatically terminated, the Notes,
all interest thereon and all other amounts payable under this Agreement shall be
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Company. Any
amounts collected pursuant to action taken under this Section 7.2 shall be
applied first, to the payment of any costs incurred by the Bank in taking such
action, including but without limitation attorneys fees, second, to the payment
of the accrued interest on the Notes, and third, to the payment of the unpaid
principal of the Notes.
SECTION 8. MISCELLANEOUS
8.1 Limited Role of Bank. The relationship between the Company and the
Bank shall be solely that of borrower and lender, respectively. The Bank shall
not have any fiduciary responsibilities to the Company and no joint venture
exists between the Company and the Bank. The Company and the Bank each hereby
severally acknowledge that there are no representations, warranties, covenants,
undertakings or agreements by the parties hereto as to the Loan Documents except
as specifically provided herein and therein.
8.2 Choice of Law Construction. The Loan Documents (other than those
containing a contrary express choice of law provision) shall be construed in
accordance with the internal laws (and not the law of conflicts) of the State of
New York. If any provision of the Loan Documents shall be or become
unenforceable or illegal under any law, the other provisions shall remain in
full force and effect.
8.3 Consent to Jurisdiction. (a) The Company hereby irrevocably submit
to the non-exclusive jurisdiction of any United
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States federal or New York state court sitting in New York City in any action or
proceedings arising out of or relating to any Loan Documents and the Company and
the Guarantors hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in any such court and
irrevocably waives any objection it may now or hereinafter have as to the venue
of any such action or proceeding brought in such a court or the fact that such
court is an inconvenient forum.
(b) The Company and the Guarantors irrevocably and unconditionally
consent to the service of process in any such action or proceeding in any of the
aforesaid courts by the mailing of copies of such process to it, by certified or
registered mail at its address specified in Section 8.5.
8.4 WAIVER OF JURY TRIAL. THE COMPANY, THE GUARANTORS AND THE BANK
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
8.5 Notices. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when
deposited to the mail, postage prepaid, in the case of telegraphic notice, when
delivered to the telegraph company, or in the case of tested telex, upon
confirmation of receipt, addressed as set forth below or to such other address
as may be hereafter designated in writing by the respective parties hereto:
The Bank: Chemical Bank
000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: PDK Labs Inc. Account Officer
The Company or the Guarantors:
PDK LABS INC.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
with a copy to: Xxxxxxx Xxxxxxxxx, Esq.
Brandels, Xxxxxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
8.6 Entire Agreement; No Waiver; Cumulative Remedies; Amendments;
Setoff. (a) This Agreement and the other Loan Documents constitute the entire
agreement among the parties hereto and thereto as to the subject matter hereof
and thereof and
-48-
supersede any previous agreement, oral or written, as to such subject matter.
(b) No failure to exercise and to delay in exercising, on the part of
the Bank or the Company, any right, power or privilege hereunder or under the
Notes, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law. No modification or waiver of any provision
of this Agreement, or the Notes, nor consent to any departure by the Company or
the Guarantors from the provisions hereof or thereof, shall be effective unless
the same shall be in writing from the Bank and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which it is
given. No notice to the Company or the Guarantors shall entitle the Company or
the Guarantors to any other or further notice in other or similar circumstances
unless expressly provided for herein. No course of dealing between the Company
or the Guarantors and the Bank shall operate as a waiver of any of the rights of
the Bank under this Agreement.
(c) In addition to any rights or remedies of the Bank provided by law,
upon the occurrence of any Event of Default, the Bank is hereby authorized
without notice to the Company or the Guarantors to setoff and appropriate and
apply all deposits (general and special) and other indebtedness at any time held
or owing by the Bank to or for the credit or the account of the Company or the
Guarantors against and on account of all obligations, liabilities and claims of
the Company or the Guarantors to the Bank, and in such amounts as the Bank may
elect, although such obligations, liabilities and claims may be contingent or
unmatured.
8.7 Reference to Subsidiaries and Guarantors. If the Company has no
Subsidiaries and/or if there are no Guarantors, then the provisions of this
Agreement relating to Subsidiaries and/or Guarantors shall be deemed surplusage
without affecting the applicability of the provisions of this Agreement to the
Company alone.
8.8 Captions. The captions of the various sections and subsections of
this Agreement have been inserted only for the purposes of convenience, and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions of this Agreement.
8.9 Exhibits. All Exhibits and all Schedules annexed hereto shall
constitute integral parts of this Agreement.
-49-
8.10 Payment of Fees. (a) The Company agrees to pay or reimburse the
Bank for all of its reasonable costs and expenses incurred, in connection with
any subsequent amendment, supplement or modification of the Loan Documents
including, without limitation, the fees and disbursements of counsel to the
Bank, and in the case of internal counsel, allocated costs of such internal
counsel, provided that the Company shall not be responsible for any legal fees,
costs or disbursements in connection with the preparation and execution of this
Agreement. The allocated costs for the Bank's use of internal counsel shall be
an hourly rate representing salary and other overhead items. The Bank shall
request such payment or reimbursement in writing.
(b) The Company agrees to pay all costs and expenses of the Bank in
enforcing or preserving any of the rights and remedies available to the Bank
under this Agreement, the Notes, or under any other Loan Documents, instruments
or writings executed and delivered to the Bank in connection herewith including,
without limitation, reasonable legal fees, costs and disbursements.
8.11 Survival of Agreements. All agreements, representations and
warranties made herein and in any certificates delivered pursuant hereto shall
survive the execution and delivery of this Agreement, the Notes, and the making
and renewal of loans hereunder, and shall continue in full force and effect
until the indebtedness of the Company under the Notes has been paid in full.
8.12 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, the Guarantors and the Bank and their
respective successors and assigns, except that the Company and the Guarantors
may not transfer or assign any of its rights or interests hereunder without the
prior written consent of the Bank.
8.13 Interest. Anything in this Agreement or in the Notes to the
contrary notwithstanding, the Bank shall not charge, take or receive, and the
Company shall not be obligated to pay interest in excess of the maximum rate
from time to time permitted by applicable law.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
PDK LABS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
PDI LABS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
C&C ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
CHEMICAL BANK
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Vice President
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