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REVOLVING CREDIT LOAN AGREEMENT
executed by and between
INTELLIGROUP, INC.,
as the Borrower
and
PNC BANK, NATIONAL ASSOCIATION,
as the Lender
Dated: January 29, 1999
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION AND
CONSTRUCTION; AND ACCOUNTING
Section 1.01 Definitions................................................1
Section 1.02 Rules of Interpretation and Construction..................17
Section 1.03 Accounting Principles.....................................17
ARTICLE II
AMOUNT AND TERMS FOR THE REVOLVING CREDIT FACILITY
Section 2.01 Revolving Credit Facility.................................18
Section 2.02 Interest on the Revolving Credit Loans....................19
Section 2.03 Fees......................................................22
Section 2.04 Voluntary Prepayments.....................................23
Section 2.05 Payments..................................................23
Section 2.06 Special Provisions Governing Eurodollar Rate Loans........25
Section 2.07 Increased Capital.........................................28
Section 2.08. Authorized Officers of the Borrower.......................28
Section 2.09 Taxes.....................................................29
Section 2.10 Letter Of Credit..........................................30
Section 2.11 Lender Not Liable.........................................31
ARTICLE III
CONDITIONS TO THE REVOLVING CREDIT LOAN
Section 3.01 Conditions Precedent to the Effectiveness of this
Loan Agreement............................................33
Section 3.02. Conditions Precedent to All Revolving Credit Loans........34
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Representations and Warranties on the Closing Date........35
Section 4.02. Subsequent Funding Representations and Warranties.........41
Section 4.03. SEC Filings...............................................41
ARTICLE V
REPORTING COVENANTS
Section 5.01 Statement of Accounting...................................41
Section 5.02 Reporting and Information Requirements....................42
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01 Corporate Existence, etc..................................44
Section 6.02 Corporate Powers, etc.....................................44
Section 6.03 Compliance with Laws, etc.................................45
Section 6.04 Payment of Taxes and Claims...............................45
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Section 6.05 Maintenance of Properties; Insurance......................45
Section 6.06 Inspection of Property; Books and Records; Disclosure.....45
Section 6.07 Litigation, Claims, etc...................................46
Section 6.08 Maintenance of Licenses, Permits, etc.....................46
Section 6.09 Continuation of or Change in Business.....................46
Section 6.10 Additional Corporate Guarantors...........................46
Section 6.11 Year 2000.................................................46
Section 6.12 Further Acts..............................................47
ARTICLE VII
NEGATIVE COVENANTS
Section 7.01 Additional Liens..........................................47
Section 7.02 Mergers, Consolidations, Acquisitions and Sales of Assets.48
Section 7.03 Loans and Investments.....................................49
Section 7.04 Indebtedness..............................................49
Section 7.05 ERISA.....................................................50
Section 7.06 Amendment of Articles of Incorporation or By-Laws.........51
Section 7.07 Margin Regulations........................................51
Section 7.08 Cancellation of Debt; Prepayment..........................51
Section 7.09 Environmental Liabilities.................................51
Section 7.10 Fiscal Year...............................................52
Section 7.11 Guaranties................................................52
Section 7.12 Change in Business........................................52
Section 7.13 Other Negative Pledges....................................52
ARTICLE VIII
FINANCIAL COVENANTS
Section 8.01 Maximum Consolidated Cash Flow Leverage Ratio.............52
Section 8.02 Minimum Consolidated Net Worth............................53
Section 8.03 Capital Expenditures......................................53
Section 8.04 Minimum Fixed Charge Coverage Ratio.......................53
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 9.01 Events of Default.........................................53
Section 9.02 Rights and Remedies.......................................55
Section 9.03 Application of Proceeds...................................56
Section 9.04 No Notices................................................56
Section 9.05 Agreement to Pay Attorneys' Fees and Expenses.............56
Section 9.06 No Additional Waiver Implied by One Waiver................56
Section 9.07 Failure to Exercise Rights................................57
Section 9.08 WAIVER OF JURY TRIAL......................................57
Section 9.09 Remedies Cumulative.......................................57
ARTICLE X
MISCELLANEOUS
Section 10.01.Expenses..................................................58
Section 10.02.Indemnity.................................................58
Section 10.03.Amendments and Waivers....................................59
Section 10.04.Independence of Covenants.................................59
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Section 10.05.Notices...................................................59
Section 10.06 Survival of Warranties and Agreements.....................59
Section 10.07 Marshaling; Recourse to Security; Payments Set Aside......60
Section 10.08 Severability..............................................60
Section 10.09 Governing Law.............................................60
Section 10.10 Successors and Assigns....................................60
Section 10.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS............60
Section 10.12 Counterparts; Effectiveness; Inconsistencies..............61
Section 10.13 Construction..............................................61
Section 10.14 Entire Agreement..........................................61
Section 10.15 Confidentiality...........................................61
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EXHIBITS AND SCHEDULES
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Exhibits
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Exhibit "A" List of Eurodollar Affiliates
Exhibit "B" Form of Notice of Borrowing
Exhibit "C" Form of Notice of Conversion/Continuation
Exhibit "D" Form of Officer's Certificate
Exhibit "D1" Form of Compliance Certificate
Exhibit "E" Form of Revolving Credit Loan Note
Exhibit "F" Form of Opinion Letter of Borrower's Counsel
Schedules
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Schedule 4.01(v) Material Pending Actions, Suits, Proceedings,
Governmental Investigations or Arbitrations
Schedule 4.01(xii) Material Environmental Disclosure
Schedule 4.01(xiii) ERISA
Schedule 4.01(xxi) Labor Unions/Collective Bargaining Agreements
Schedule 4.01(xxiii) Material Contracts
Schedule 6.10 List of Corporate Guarantors
Schedule 7.01 Permitted Liens
Schedule 7.04 Existing Debt
Schedule 7.11 List of Contingent Obligations
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REVOLVING CREDIT LOAN AGREEMENT
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THIS REVOLVING CREDIT LOAN AGREEMENT (hereinafter as it may be from time to
time amended, modified, extended, renewed, refinanced and/or supplemented shall
be referred to as this "Loan Agreement"), is made this 29th day of January,
1999, by and between
INTELLIGROUP, INC., a corporation duly organized, existing and in good
standing under the laws of the State of New Jersey, having its principal office
located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred
to as the "Borrower"),
AND
PNC BANK, NATIONAL ASSOCIATION, a national banking institution duly
organized and validly existing under the laws of the United States of America,
having an office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as the "Lender").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower has requested that the Lender make available to the
Borrower a senior unsecured revolving credit loan in the aggregate principal
amount of up to Thirty Million ($30,000,000.00) Dollars for the general
corporate purposes of the Borrower and to finance acquisitions (hereinafter
referred to as the "Revolving Credit Facility"); and
WHEREAS, the Lender has agreed to make the Revolving Credit Facility
available to the Borrower, subject to the terms, conditions and provisions
hereinafter set forth; and
NOW, THEREFORE, in consideration of these premises and the mutual
representations, covenants and agreements of the Borrower and the Lender, each
party, binding itself and its successors and assigns, does hereby promise,
covenant and agree as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION AND
CONSTRUCTION; AND ACCOUNTING
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SECTION 1.01 DEFINITIONS. The following terms, as used in this Loan
Agreement, shall have the following meanings, unless the context expressly
indicates and requires otherwise:
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Rate Loan
for any Eurodollar Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next highest 1/16 of 1%) equal to (i) the LIBO Rate for
such Eurodollar Interest Period multiplied by (ii) the Statutory Reserve Rate.
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"Affiliate" shall mean, with respect to a specified Person, another Person
that directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common
1
control with the Person specified. For the purposes of the preceding sentence,
"controls" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise,
and in any case shall include direct or indirect ownership (beneficially or of
record) of, or direct or indirect power to vote, ten percent (10%) or more of
the outstanding shares of any class of capital stock of such Person (or in the
case of a Person that is not a corporation, ten percent (10%) or more of any
class of equity interest).
"Agreement of Guaranty" shall mean any Agreement of Guaranty, in form and
substance reasonably acceptable to the Lender and to the Corporate Guarantors,
dated the date of execution thereof, executed by the Corporate Guarantors in
favor of the Lender, pursuant to which the Corporate Guarantors have agreed to
unconditionally guaranty, on a joint and several basis, the full, prompt and
-- - ----- --- ------- -----
complete performance of all of the Borrower's duties, covenants and obligations
under this Loan Agreement, the Revolving Credit Loan Note and the other Loan
Documents. The term "Agreement of Guaranty" shall also be deemed to mean and
refer to all amendments, modifications, extensions, renewals, refinancings
and/or supplements to said agreement made and/or entered into subsequent to the
Closing Date, including, without limitation, all amendments which are
consummated for the purposes of adding any new and/or additional Persons as
Corporate Guarantors, all as provided for in Section 6.10 of this Loan
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Agreement.
"Applicable Index" shall have the meaning set forth in Section 2.03(ii) of
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this Loan Agreement.
"Applicable Margin" shall have the meaning set forth in Section 2.02(i)(b)
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of this Loan Agreement.
"Authorized Officer" shall mean those officers of the Borrower, whose
signatures and incumbency shall have been certified to the Lender pursuant to an
Officer's Certificate delivered on the Closing Date or any other form of
resolution or certification delivered to and approved by the Lender after the
Closing Date.
"Bankruptcy Code" shall mean shall mean Title 11 of the United States
Bankruptcy Code (11 U.S.C. Section 101 et seq.), as amended from time to time,
-- ---
or any successor statute.
"Benefit Plan" shall mean a defined benefit plan as defined in Section 3
(35) of ERISA (other than a Multiemployer Plan) in respect of which the Borrower
or an ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA.
"Borrower" shall have the meaning ascribed and assigned to such term as set
forth in the preamble of this Loan Agreement.
"Borrowing" shall mean a borrowing consisting of a Revolving Credit Loan or
Revolving Credit Loans made by the Lender to the Borrower on the same day.
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"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
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legal holiday under the laws of the State of New Jersey, or is a day upon which
banking institutions located in New Jersey are required or authorized by law or
other Governmental Action to remain closed and (ii) with respect to all notices,
determinations, fundings and payments in connection with a Eurodollar Rate Loan,
any day which is a Business Day described in clause (i) above, and which is also
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a day for trading by and between banks in the London interbank market.
"Capital Expenditures" of any Person shall mean, for any period, all
expenditures (whether paid in cash or accrued as liabilities during such period)
of such Person during such period which would be classified as capital
expenditures in accordance with GAAP (including, without limitation,
expenditures for maintenance and repair which are capitalized, and Capitalized
Leases to the extent an asset is recorded in connection therewith in accordance
with GAAP), but excluding capital assets acquired as part of an acquisition.
"Capitalized Lease" and "Capitalized Leases" shall mean at any time any
lease which is, or is required under GAAP to be, capitalized on the balance
sheet of the lessee at such time.
"Capitalized Lease Obligations" of any Person, shall mean all obligations
of such Person to pay rent or other amounts under any lease (or similar
arrangement conveying the right to use) of real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as Capitalized Leases, in accordance with GAAP, and the amount of
such obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
"Capital Stock" shall mean any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"CERCLIS" shall mean the Comprehensive Environmental Response, Compensation
and Liability Information System List, as the same may be amended from time to
time.
"Change in Control" shall mean (a) the acquisition of ownership, directly
or indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than twenty-five (25%) percent of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of the
Borrower; (b) occupation of a majority of the seats (other than vacant seats) on
the board of directors of the Borrower by Persons who were neither (i) nominated
by the board of directors of the Borrower, nor (ii) appointed by directors so
nominated; or (c) the acquisition of direct or indirect Control of the Borrower
by any Person or group. "Control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise.
"Claim" or "Claims" shall mean any claim or demand, by any Person, of
whatsoever
3
kind or nature for any alleged Liabilities and Costs, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
permit, ordinance or regulation, common law or otherwise.
"Closing Date" shall mean the date upon which this Loan Agreement is
executed by the Lender and the Borrower, and the conditions set forth in Section
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3.01 of this Loan Agreement have been completed and fulfilled to the
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satisfaction of the Lender.
"Code" means the Internal Revenue Code of 1986, as amended, any successor
statute of similar import, and regulations thereunder, in each case as in effect
from time to time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Commitment" shall mean, at any particular time during the term of the
Revolving Credit Facility, the principal amount of the Revolving Credit Facility
which the Lender has committed to make available to the Borrower, as said
principal amount may be permanently reduced by the Borrower pursuant to Section
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2.01(v) of this Loan Agreement. As of the Closing Date, the initial amount
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committed is $30,000,000.00.
"Consolidated Cash Flow Leverage Ratio" shall mean with respect to the
Borrower, the Corporate Guarantors and any Subsidiary, on a consolidated basis,
as of any date of determination thereof, the ratio of (i) Consolidated Debt, as
of such date of determination to (ii) Consolidated EBITDA for the period of four
(4) consecutive Fiscal Quarters immediately preceding said date of determination
taken together as one accounting period, calculated in accordance with GAAP.
"Consolidated Debt" shall mean, as of any date of determination, with
respect to the Borrower, any of the Corporate Guarantors and any Subsidiary, the
aggregate sum of the following items as such items appear on a consolidated
balance sheet of the Borrower, any of the Corporate Guarantors and any
Subsidiary in accordance with GAAP: (i) the unpaid principal balance of all
indebtedness or liability for money borrowed or owed by the Borrower, any of the
Corporate Guarantors and/or any Subsidiary from time to time (including any
renewals, extensions and refinancings thereof), whether or not the indebtedness
was heretofore or hereafter created, issued, incurred, assumed or guarantied;
(ii) the unpaid principal balance of all indebtedness or liability for the
deferred purchase price of property or services incurred (other than current
trade liabilities incurred in the ordinary course of business and payable in
accordance with customary practices); (iii) all obligations as lessee under
leases which have been or should be recorded as Capitalized Lease Obligations;
and (iv) all obligations, contingent or otherwise relative to the face amount of
all letters of credit issued for the Borrower, Corporate Guarantors or
Subsidiaries' account, whether or not drawn.
"Consolidated EBITDA" shall mean with respect to the Borrower, the
Corporate Guarantors and any Subsidiary, as of any date of determination
thereof, the amount equal to the sum of (i) Consolidated Net Income for such
test period, plus (ii) all gross interest expense on Consolidated Debt of the
----
Borrower, the Corporate Guarantors and any Subsidiary, for such test period,
plus (iii) all charges against income of the Borrower, the Corporate Guarantors
----
and any Subsidiary for foreign, federal, state and local taxes for such test
period, plus (iv) all depreciation
4
expense for such test period, plus (v) all amortization expense for such test
----
period plus (vi) non-recurring investment banking, legal and accounting fees
----
incurred in connection with permitted acquisitions limited to the lesser of (A)
$1,000,000.00, and (B) fifteen (15%) percent of operating income for any four
quarter measurement period, provided such fees are reported to the Lender at the
time the financing statements are provided on a separate schedule with a
reconciliation to the applicable expense line items, plus (vii) all other net
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non-cash charges for such test period, after eliminating therefrom any (a)
extraordinary items, (b) gains and losses from the sale of assets in connection
with any sale/leaseback transaction or arrangement and (c) results of
discontinued operations, all as determined in accordance with GAAP.
"Consolidated Net Income" shall mean with respect to the Borrower, the
Corporate Guarantors and any Subsidiary, as of any date of determination
thereof, all amounts which, in accordance with GAAP, would be included under net
income (after the payment of all federal and state income taxes) on a
consolidated income statement of the Borrower, the Corporate Guarantors and any
Subsidiary for such test period.
"Consolidated Net Worth" shall mean as of any date of determination
thereof, the total amount of the stockholder's equity of the Borrower, the
Corporate Guarantors and any Subsidiary which, in accordance with GAAP, would be
included as such on the consolidated balance sheet of the Borrower at such date.
"Contingent Obligation" shall mean as to any Person any guarantee of
payment or performance by such Person of any Debt or other obligation of any
other Person, or any agreement to provide financial assurance with respect to
the financial condition, or the payment of the obligations of, such other Person
(including, without limitation, purchase or repurchase agreements, reimbursement
agreements with respect to letters of credit or acceptances, indemnity
arrangements, grants of security interests to support the obligations of another
Person, keepwell agreement and take-or-pay or through-put arrangements) which
has the effect of assuring or holding harmless any third Person against loss
with respect to one or more obligations of such third Person, provided, however,
-------- --------
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation of any Person shall be deemed to be the
lower of (a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made, and (b) the
maximum amount for which such contingently liable Person may be liable pursuant
to the terms of the instrument embodying such Contingent Obligation, unless such
primary obligation and the maximum amount for which such contingently liable
Person may be liable are not stated or determinable, in which case the amount of
such Contingent Obligation shall be such contingently liable Person's maximum
reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Contractual Obligation" shall mean with respect to any Person, any
provision of any securities issued by said Person or of any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement or
instrument to which said Person is a party or by which it or any of its
properties is bound, or to which it or any of its properties is subject
(including, without limitation, any restrictive covenant affecting said Person
or any of its properties).
5
"Corporate Guarantors" shall mean a collective reference to any majority
owned domestic and foreign operating subsidiary of the Borrower, whether
existing now or in the future, made a Corporate Guarantor pursuant to Section
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6.10 hereof. Each of the Corporate Guarantors may sometimes be hereinafter
----
referred to individually as a "Corporate Guarantor".
"Customary Permitted Liens" shall mean
(i) Liens (other than Environmental Liens and any Lien imposed
under ERISA) for taxes, assessments or charges of any Governmental Authority or
claims not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other like Liens (other than any Lien
imposed under ERISA) imposed by Law, including, without limitation, Liens in
favor of any Governmental Authority securing progress payments made under
government contracts created in the ordinary course of business and for amounts
not yet due or which are being contested in good faith by appropriate
proceedings which are sufficient to prevent imminent foreclosure of such Liens,
are promptly instituted and diligently conducted and with respect to which
adequate reserves or other appropriate provision are being maintained in
accordance with GAAP;
(iii) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including, without limitation,
surety bonds and appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security benefits and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements or to secure the performance of tenders, bids, leases, contracts,
statutory obligations and other similar obligations or arising as a result of
progress payments or deposits under government contracts (including foreign
government contracts);
(iv) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, variations and other restrictions, charges or
encumbrances (whether or not recorded) affecting the use of real property or
impairing the use thereof which are imposed by law or arise in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or materially
interfere with the ordinary conduct of business of the Person owning such
property; and
(v) extensions, renewals or replacements of any Lien referred to
in paragraphs (i) through (iv) above, provided (a) that, in the case of
paragraphs (i) through (iii) above, the principal amount of the obligation
secured thereby is not increased and (b) that any such extension, renewal or
replacement is limited to the property originally encumbered thereby; provided,
--------
however, to the extent that the amount of obligations of the Borrower arising
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from claims being contested in good faith secured by such Liens in paragraphs
(i) and (ii) above exceeds $25,000.00 in the aggregate, the Borrower shall have
set aside full cash reserves in the
6
amount of such obligations.
"Debt" shall mean with respect to any Person the aggregate sum of the
following items as such items appear on a balance sheet of such Person in
accordance with GAAP: (i) the unpaid principal balance of all indebtedness or
liability for money borrowed or owed by such Person from time to time (including
any renewals, extensions and refinancings thereof), whether or not the
indebtedness was heretofore or hereafter created, issued, incurred, assumed or
guarantied; (ii) the unpaid principal balance of all indebtedness or liability
for the deferred purchase price of property or services incurred (other than
current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices); (iii) all obligations as lessee
under leases which have been or should be recorded as Capitalized Lease
Obligations; and (iv) all obligations, contingent or otherwise relative to the
face amount of all letters of credit issued for such Person's account, whether
or not drawn.
"Default Rate" shall mean a rate of interest equal to two hundred basis
points (2.0%) above the Prime Rate then in effect with respect to any
outstanding Revolving Credit Loans.
"DOL" shall mean the United States Department of Labor and any successor
department or agency.
"Dollar", "Dollars" and the symbol "$" shall mean lawful money of the
United States of America.
"Dollar Equivalent" means, with respect to any amount in Dollars, such
amount.
"Environment" shall mean all air, surface water, water, vapor, groundwater,
drinking water supply or land, including land surface or subsurface, and
includes all fish, wildlife, biota and all other natural resources.
"Environmental Approval" and "Environmental Approvals" shall mean any
Governmental Action pursuant to or required under any Environmental Law.
"Environmental Concern Materials" shall mean (i) any flammable substance,
explosive, radioactive material, hazardous material, hazardous waste, toxic
substance, solid waste, pollution, contaminate or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including but not
limited to any "hazardous substance" as defined in any Environmental Law), (ii)
any toxic chemical or other substance from or related to industrial, commercial
or institutional activities, (iii) asbestos, gasoline, diesel fuel, motor oil,
waste and used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon gas and urea-formaldehyde and (iv) all other
substances or waste of any nature regulated pursuant to any Environmental Law.
"Environmental Law" and "Environmental Laws" shall mean any Law, whether
now existing or subsequently enacted or amended, relating to (i) pollution or
protection of the Environment, (ii) exposure of Persons, including but not
limited to employees, to Environmental
7
Concern Materials, (iii) protection of the public health or welfare from the
effects of products, by-products, wastes, emissions, discharges or releases of
Environmental Concern Materials or (iv) regulation of the manufacture,
generation, use or introduction into commerce of Environmental Concern Materials
including their manufacture, formulation, packaging, labeling, distribution,
treatment, transportation, handling, storage or disposal. Without limitation,
"Environmental Law" shall include (a) any Environmental Approval and the terms
and conditions thereof, (b) the following statutes: the Clean Air Act (42 U.S.C.
7401 et seq.); the Comprehensive Environmental Response Compensation and
-- ---
Liability Act of 1980 (42 U.S.C. ss.9601 et seq.); the Federal Water Pollution
-- ---
Control Act (33 U.S.C. ss.1251 et seq.); the Hazardous Material Transportation
-- ---
Act (49 U.S.C. ss.1801 et seq.); the Federal Insecticide, Fungicide and
-- ---
Rodenticide Act (7 U.S.C. ss. 136 et seq.); the Resource Conservation and
-- ---
Recovery Act of 1976 (42 U.S.C. ss.6901 et seq.) (including the Hazardous and
-- ---
Solid Waste Amendments of 1984), the Toxic Substance Control Act (15 U.S.C. ss.
2601 et seq.); the Federal Occupational Safety & Health Act of 1970 (29 U.S.C.
-- ---
ss.651 et seq.) (including ss.3101 of the Omnibus Reconciliation Act of 1990),
-- ---
and the regulations promulgated thereunder and all as amended from time to time;
and (c) any common law doctrine (including, without limitation, injunctive
relief and tort, such as negligence, nuisance, trespass and strict liability)
that may impose obligations or liabilities for personal injury or property
damage due to, or threatened as a result of, the presence of or exposure to
Environmental Concern Materials.
"Environmental Lien" shall mean a Lien in favor of any Governmental
Authority for (i) any liability under any Environmental Laws or (ii) damages
arising from, or costs incurred by such Governmental Authority in response to, a
Release or threatened Release of any Environmental Concern Materials into the
Environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute of similar import, together
with the regulations promulgated thereunder by the United States Treasury
Department, the DOL and/or the PBGC.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower and/or the Corporate Guarantors,
is treated as a "single employer" under Section 414(b) and (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a "single employer" under Section 414 of the Code.
"Eurodollar Affiliate" shall mean with respect to the Lender, the Affiliate
of the Lender, if any, set forth on Exhibit "A" attached to this Loan Agreement.
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"Eurodollar Interest Period" shall mean one or more periods of time during
which the Borrower may select, convert to or continue a Eurodollar Rate Loan,
such funding period with respect to the Revolving Credit Facility, to be either
a one, two, three or six month period(s), subject to availability, all as more
fully subject to the provisions of Section 2.06 of this Loan Agreement.
------------
"Eurodollar Interest Payment Date" shall mean, with respect to any
Eurodollar Rate Loan, the last day of each Eurodollar Interest Period applicable
to such Loan; provided, however,
-------- -------
8
if an Eurodollar Interest Period exceeds three months, then the Eurodollar
Interest Payment Date shall also mean the last day of every third month during
said Eurodollar Interest Period.
"Eurodollar Interest Rate Determination Date" shall mean the date on which
the Lender determines the Eurodollar Rate applicable to (i) a Borrowing or (ii)
the continuation or conversion of Eurodollar Rate Loans. The Eurodollar Interest
Rate Determination Date shall be the second Business Day prior to the first day
of the Eurodollar Interest Period applicable to such Borrowing, continuation or
conversion.
"Eurodollar Portion" of any Revolving Credit Loans shall mean at any time
the portion, including the whole, of such Revolving Credit Loans bearing
interest at any time under the Adjusted LIBO Rate.
"Eurodollar Rate Loan" or "Eurodollar Rate Loans" shall mean those
Revolving Credit Loans outstanding which bear interest at a rate determined by
reference to the Adjusted LIBO Rate, as provided for in Sections 2.02(i) and
-----------------
2.06 of this Loan Agreement.
----
"Eurodollar Rate Option" shall mean one of the interest rates available to
the Borrower as provided for and described in Section 2.02(i)(a) of this Loan
-------------------
Agreement.
"Eurodollar Rate Taxes" shall have the meaning ascribed to such term in
Section 2.06(vii)(a) of this Loan Agreement.
--------------------
"Event of Default" or "Events of Default" shall mean any of the events of
default as defined and described in Section 9.01 of this Loan Agreement.
------------
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"Federal Funds Effective Rate" for any day shall mean the rate per annum
(rounded upward, if necessary, to the nearest 1/100 of 1%) announced by the
Federal Reserve Bank of New York, (or any successor) on such day as being the
weighted average of the rates on overnight federal funds transactions arranged
by Federal funds brokers on the previous trading day, as computed and announced
by such Federal Reserve Bank (or any successor) in substantially the same manner
as such Federal Reserve Bank computes and announces the weighted average it
refers to as the "Federal Funds Effective Rate" as of the date of this Loan
Agreement; provided, that if such Federal Reserve Bank (or its successor) does
--------
not announce such rate on any day, the "Federal Funds Effective Rate" for such
day shall be the Federal Funds Effective Rate for the last day on which such
rate was announced.
"Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System or any governmental authority succeeding to its functions.
"Fiscal Quarter" shall mean the four (4) thirteen (13) week periods of each
Fiscal Year which with respect to the First Fiscal Quarter begins on January 1
of each Fiscal Year and with respect to the Fourth Fiscal Quarter ends on
December 31 of each Fiscal Year.
9
"Fiscal Year" shall mean that period commencing on January 1 and ending on
December 31 of the next succeeding year or such other period as the Borrower
and/or the Corporate Guarantors may designate and the Lender may approve in
writing.
"Funding Date" shall mean, with respect to any Revolving Credit Loan, the
date of the funding of such Revolving Credit Loan by the Lender.
"Funding Segment" shall mean with respect to a Eurodollar Rate Loan, the
entire principal amount of such Eurodollar Portion to which at the time in
question there is applicable a particular Eurodollar Interest Period beginning
on a particular day and ending on a particular day and all Loans to which a
Prime Rate Option applies shall constitute one Funding Segment. (By definition,
each such Eurodollar Portion is at all times composed of an integral number of
discreteFunding Segments and the sum of the principal amounts of all Funding
Segments of any such Eurodollar Portion at any time equals the principal amount
of such Eurodollar Portion at such time.)
"GAAP" shall mean generally accepted accounting principles, consistently
applied, in the United States of America, as in effect from time to time, as
developed, modified and set forth in the opinions and pronouncements of the
Accounting Principles Board, the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, or in such other
statements by such other Person as may be in general use by significant segments
of the accounting profession, which are applicable to the circumstances as of
the date of determination, subject to the terms of Section 1.03 of this Loan
-------------
Agreement.
"Governmental Action" or "Governmental Approvals" shall mean any approval,
order, consent, authorization, certificate, license, permit or validation of, or
exemption or other action by, or filing, recording or registration with or
notice to, any Governmental Authority.
"Governmental Authority" shall mean the government of the United States of
America, any other nation or any political subdivision thereof, or any agency,
authority, bureau, central bank, commission, department or instrumentality of
either, or any court, tribunal, grand jury or arbitrator, in each case whether
foreign or domestic.
"Indemnified Party" and "Indemnified Parties" shall mean the Lender and the
directors, officers, trustees, employees, agents and controlling shareholders of
the Lender.
"Independent Certified Public Accountant" shall mean any independent
certified public accounting firm selected by the Borrower which accounting firm
is satisfactory to the Lender.
"IRS" shall mean the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Law" shall mean any law (including common law), constitution, statute,
treaty, convention, regulation, rule, ordinance, code, order, injunction, writ,
decree or award of any Governmental Authority.
10
"Lender" shall have the meaning ascribed and assigned to such term as set
forth in the preamble of this Loan Agreement.
"Letter of Credit" shall mean all letters of credit issued by Lender or any
affiliate of Lender at the request of and for the account of the Borrower.
"Letter of Credit Obligations" shall mean, at any time, the sum of (i)
Reimbursement Obligations at such time for the Letter of Credit plus (ii) the
----
dollar amount of the maximum amount then available for drawing under the Letter
of Credit.
"Liabilities and Costs" shall mean all liabilities, obligations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including, without limitation, attorneys',
experts' and consulting fees and costs of investigation and feasibility
studies), fines, penalties and monetary sanctions, interest, direct or indirect,
known or unknown, absolute or contingent, past, present or future.
"LIBO Rate" shall mean, with respect to any Eurodollar Rate Loan for any
Eurodollar Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Lender from time to time for purposes of providing quotations
of interest rates applicable to dollar deposits in the London interbank market)
at approximately 11:00 A.M., London time, two (2) Business Days prior to the
commencement of such Eurodollar Interest Period, as the rate for dollar deposits
with a maturity comparable to such Eurodollar Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
---------
with respect to such Eurodollar Rate Loan for such Eurodollar Interest Period
shall be the rate rounded upwards, if necessary, to the next highest 1/16 of 1%
at which dollar deposits of $5,000,000.00 and for a maturity comparable to such
Eurodollar Interest Period are offered by major banks in immediately available
funds in the London interbank market at approximately 11:00 A.M., London time,
two (2) Business Days prior to the commencement of such Eurodollar Interest
Period.
"Lien" and "Liens" shall mean with respect to any asset, any mortgage, deed
of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other) or preference, priority, security interest or other
security agreement of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any Capitalized Lease Obligation
involving 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).
"Loan Account" shall have the meaning ascribed to such term in Section
-------
2.05(iv) hereof.
--------
"Loan Agreement" shall have the meaning ascribed and assigned to such term
as set forth in the preamble of this Loan Agreement.
"Loan Documents" shall mean any and all agreements, documents, certificates
and
11
instruments executed by the Borrower, any of the Corporate Guarantors and/or any
other Person and delivered by them to the Lender pursuant to and in connection
with the Revolving Credit Facility, including, without limitation, this Loan
Agreement, the Revolving Credit Loan Note, the Pledge Agreements and the
Agreement of Guaranty, in each case as amended, modified, extended, restated,
refinanced and/or supplemented from time to time in accordance with the
provisions hereof or thereof.
"Majority Owned Subsidiary" shall mean any Subsidiary of the Borrower or
any of the Corporate Guarantors in which more than fifty percent (50%) of the
voting capital stock of said Subsidiary is owned, legally or beneficially, by
the Borrower or any such Corporate Guarantors.
"Margin Stock" shall have the meaning ascribed and assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect upon (i) the
business, assets, financial condition, financial performance, prospects,
properties or operations of the Borrower, the Corporate Guarantors, any
Subsidiary and/or any Affiliate taken as a whole, (ii) the ability of the
Borrower and/or any of the Corporate Guarantors to perform their respective
obligations and duties under the Loan Documents or (iii) the rights of or
benefits available to the Lender under the Loan Documents.
"Multiemployer Plan" shall mean an employee benefit plan defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding six (6) years
was, contributed to by the Borrower, the Corporate Guarantors or an ERISA
Affiliate.
"Notice of Borrowing" shall mean, with respect to a proposed Borrowing
pursuant to Section 2.01(ii) hereof, a notice substantially in the form of
-----------------
Exhibit "B" attached hereto and made a part thereof.
-----------
"Notice of Conversion/Continuation" shall mean, with respect to a proposed
conversion or continuation of a Revolving Credit Loan pursuant to Section
-------
2.02(iii) hereof, a notice in the form of Exhibit "C" attached hereto and made a
--------- -----------
part hereof.
"Obligations" shall mean all present and future Debt and other liabilities
of the Borrower and/or the Corporate Guarantors due and owing to the Lender, or
any Person entitled to indemnification pursuant to Section 10.02 hereof, or any
-------------
of their respective successors, transferees or assigns, of every type and
description, whether or not evidenced by any note, guaranty or other instrument,
arising under or in connection with this Loan Agreement or any other Loan
Document, whether or not for the payment of money, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising and however acquired. The term
includes, without limitation, all interest, charges, expenses, fees, attorneys'
fees and disbursements and any other sum chargeable to the Borrower and/or the
Corporate Guarantors under this Loan Agreement or any other Loan Document.
"Officer's Certificate" shall mean a certificate for the Borrower executed
by any of the
12
Authorized Officers of the Borrower, including, without limitation, the
president, any vice-president or the chief financial officer, in the form of
Exhibit "D" attached hereto and made a part hereof.
-----------
"Operating Lease" shall mean, as applied to any Person, any lease of any
property (whether real, personal or any combination thereof) by that Person as
lessee which is not a Capitalized Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any Person succeeding to any or all of its functions and
duties under ERISA.
"Permits" shall mean any permit, approval, authorization, franchises,
license, variance, or permission required from a Governmental Authority under
any applicable Requirement of Law.
"Person" or "Persons" shall mean any natural person, employee, general or
limited partnership, corporation (including a business trust), joint stock
company, limited liability company, trust, unincorporated association, joint
venture, company, trust, bank or other organization, whether or not a legal
entity or any other non-governmental entity, or any Governmental Authority.
"Plan" shall mean any employee benefit plan within the meaning of Section
3(3) of ERISA (other than a Multiemployer Plan) of which the Borrower, the
Corporate Guarantors or any ERISA Affiliate are, or within the preceding five
years were, an "employer" as that term is defined in Section 3(5) of ERISA.
"Potential Event of Default" shall mean an event, condition or situation
which with the giving of any required notice and/or the passage of any required
grace or cure periods, or any combination of the foregoing, would constitute an
Event of Default.
"Prime Rate" or "Prime Lending Rate" shall mean for any day, a rate per
annum equal to the greater of (i) a fluctuating interest rate publicly announced
from time to time by the Lender as its prime rate in effect at its principal
office, which rate may not necessarily be the rate actually charged by the
Lender to its most creditworthy customers, and (ii) the Federal Funds Effective
Rate plus fifty basis points (.50%).
"Prime Rate Loan" or "Prime Rate Loans" shall mean all Revolving Credit
Loans outstanding which bear interest at a rate determined by reference to the
Prime Rate.
"Prime Rate Option" shall mean the interest rate available to the Borrower
as provided for and described in Section 2.02(i)(a) of this Loan Agreement.
------------------
"Property" shall mean any real or personal property, plant, building,
facility, structure, underground storage tank, equipment or unit, or other asset
owned, leased or operated by the Borrower, the Corporate Guarantors, any of
their Subsidiaries and/or Affiliates.
13
"Rating Matrix" shall mean the following matrix upon which (i) interest
rates described in Section 2.02 hereof and (ii) certain fees described in
-------------
Section 2.03 hereof are determined on the basis of the Borrower's Consolidated
------------
Cash Flow Leverage Ratio:
(All Amounts Expressed in Basis Points)
Consolidated Cash Flow Applicable Applicable
Leverage Ratio Index Margin*
---------------------------------------------------------
I less than 1.00 to 1 25.0 50.0
II less than 1.50 to 1 but
greater than or equal
to 1.00 to 1 25.0 75.0
III less than 2.00 to 1 but
greater than or equal
to 1.50 to 1 25.0 100.00
IV less than or equal to
2.50 to 1 but greater
than 2.00 to 1 25.0 125.00
* Any adjustment to the Eurodollar Rate Option as a result of a change to the
Consolidated Cash Flow Leverage Ratio shall not take effect until the first day
of the subsequent Fiscal Quarter following the receipt of the calculation of the
Consolidated Cash Flow Leverage Ratio from the Borrower.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
ss.6901 et seq. and any successor statute, and regulations promulgated
-- ---
thereunder.
"Regulation D" shall mean Regulation D of the Federal Reserve Board, or any
successor statute or regulation thereto, as in effect from time to time.
"Regulation T" shall mean Regulation T of the Federal Reserve Board, or any
successor statute or regulation thereto, as in effect from time to time.
"Regulation U" shall mean Regulation U of the Federal Reserve Board, or any
successor statute or regulation thereto, as in effect from time to time.
"Regulation X" shall mean Regulation X of the Federal Reserve Board, or any
successor statute or regulation thereto, as in effect from time to time.
"Reimbursement Obligations" shall mean the dollar amount of any and all
unpaid reimbursement or repayment obligations of the Borrower owed to the Lender
pursuant to this Loan Agreement for amounts drawn under the Letter of Credit.
14
"Release" shall mean release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor Environment or into or out of any Property, including the movement of
Environmental Concern Materials through or in the air, soil, surface water,
groundwater or Property.
"Remedial Action" shall mean actions required to (i) clean up, remove,
treat or in any other way address Environmental Concern Materials in the indoor
or outdoor environment; (ii) prevent the Release or threat of Release or
minimize the further Release of Environmental Concern Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (iii) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
"Reportable Event" shall have the meaning ascribed to, such term in Section
4043 of ERISA or regulations promulgated thereunder.
"Requirements of Law" shall mean, as to any Person, the charter and by-laws
or other organization or governing documents of such Person, and any law, rule
or regulation, Permit, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject, including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations U and X, and any certificate of occupancy, zoning
ordinance, building, environmental or land use requirement or Permit or
occupational safety or health law, rule or regulation.
"Revolving Credit Facility" shall have the meaning ascribed and assigned to
such term as set forth in the first recital of this Loan Agreement.
"Revolving Credit Loan" and "Revolving Credit Loans" shall have the meaning
ascribed and assigned to such term in Section 2.01(i) of this Loan Agreement.
---------------
"Revolving Credit Loan Note" shall mean that certain Revolving Credit Loan
Note in substantially the form attached hereto as Exhibit "E" with blanks
------------
appropriately filled, such note payable to the order of the Lender in a face
amount equal to the Revolving Credit Facility.
"Revolving Credit Termination Date" shall mean the earlier of (i) January
29, 2002, (ii) the date of termination of the Revolving Credit Facility by the
Lender pursuant to Section 9.02 of this Loan Agreement or (iii) the date the
-------------
Revolving Credit Facility is fully repaid and terminated by the Borrower.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended to the
date hereof and from time to time hereafter, and any successor statute.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended to the date hereof from time to time hereafter, and any successor
statute.
15
"Shareholder" shall mean any shareholder of the Borrower, the Corporate
Guarantors or any Subsidiary or Affiliate of the Borrower or the Corporate
Guarantors.
"Single Employer Plan" shall mean any Plan which is not a Multiemployer
Plan under Title IV of ERISA.
"Statutory Reserve Rate" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
-----
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Federal Reserve Board to which the Lender is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Rate Loans shall be deemed to constitute eurocurrency funding and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to the
Lender under such Regulation D or any comparable regulation. The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.
"Stock Pledge Agreement" shall mean the stock pledge agreements delivered
by Borrower to Lender contemporaneously herewith.
"Structuring Fee" shall mean that certain structuring fee in the amount of
$40,000.00 paid by the Borrower to the Lender as of the Closing Date ($15,000.00
of which was paid by the Borrower prior to the date hereof).
"Subsidiary" or "Subsidiaries" shall mean with respect to any Person at any
date of retention (i) a corporation a majority of whose capital stock with
voting power, under ordinary circumstances, to elect a majority of directors is
at the time, directly or indirectly, owned by said Person, (ii) any other Person
(other than a corporation) in which the said Person, directly or indirectly, at
the date of determination thereof has at least majority ownership interest
and/or (iii) any entity whose net earnings (losses) or portions thereof would be
properly included and consolidated with the net earnings of said Person;
provided, however, that the term Subsidiary shall not include any entity that is
-------- -------
not reflected on the balance sheet of said Person due to inactivity and lack of
material assets and liabilities.
"Taxes" shall have the meaning ascribed and assigned to such term as set
forth in Section 2.09 of the Loan Agreement.
------------
"Termination Event" shall mean (i) any Reportable Event with respect to any
Benefit Plan described in Section 4043 of ERISA and the regulations issued
thereunder for which the notice requirements have not been waived by the PBGC,
(ii) the withdrawal of the Borrower, the Corporate Guarantors or an ERISA
Affiliate from a Benefit Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001 (a)(2) of ERISA, (iii) the occurrence of an
obligation arising under Section 4041 of ERISA of either the Borrower, the
Corporate
16
Guarantors or an ERISA Affiliate to provide affected parties with a written
notice of an intent to terminate a Benefit Plan in a distress termination
described in Section 4041 (c) of ERISA, (iv) the institution by the PBGC of
proceedings to terminate any Benefit Plan, (v) any event or condition which
constitutes grounds under Section 4042 of ERISA for the appointment of a trustee
to administer a Benefit Plan, or (vi) the partial or complete withdrawal of the
Borrower, the Corporate Guarantors or any ERISA Affiliate from a Multiemployer
Plan.
"Uniform Customs" shall mean the Uniform Customs and Practice for
Documentary Credits (1993 Revisions), International Chamber of Commerce
Publication No. 500, as the same may be amended from time to time.
"Year 2000 Problem" shall mean the risk that computer applications used by
or for the benefit of the Borrower or any Subsidiary may be unable to recognize
or perform properly certain date sensitive functions involving certain dates
prior to and any date after December 31, 1999.
SECTION 1.02 RULES OF INTERPRETATION AND CONSTRUCTION. In this Loan
Agreement unless the context otherwise clearly requires:
(i) Words importing persons mean and include firms, associations,
partnerships (including limited partnerships), societies, trusts, corporations,
limited liability companies or other legal entities, including public or
governmental bodies, as well as natural persons; and
(ii) If any clause, provision or section of this Loan Agreement
shall bedetermined to be apparently contrary to or conflicting with any other
clause, provision or section of this Loan Agreement, then the clause, provision
or section containing the more specific provisions shall control and govern with
respect to such apparent conflict.
SECTION 1.03 ACCOUNTING PRINCIPLES.
(i) Except as otherwise provided in this Loan Agreement all
computations and determinations as to accounting or financial matters shall be
made, and all financial statements to be delivered pursuant to this Loan
Agreement shall be prepared, in accordance with GAAP (including principles of
consolidation where appropriate), and all accounting or financial terms shall
have the meanings ascribed to such term by GAAP, as established from time to
time.
(ii) Notwithstanding the provisions of Section 1.03(i) above, the
---------------
Borrower and the Lender hereby covenant and agree that for purposes of
calculating the financial covenants of the Borrower set forth in Article VIII of
------------
this Loan Agreement, the covenants shall be tested applying GAAP in effect from
time to time. The Borrower shall furnish the Lender with the necessary financial
information and calculations prepared by the Borrower required in order to
ascertain and determine compliance or non-compliance with the financial
covenants set forth in Article VIII of this Loan Agreement.
------------
(iii) All expenses of compliance with this Section 1.03 shall be paid
------------
for by the
17
Borrower.
ARTICLE II
AMOUNT AND TERMS FOR THE REVOLVING CREDIT FACILITY
--------------------------------------------------
SECTION 2.01 REVOLVING CREDIT FACILITY.
(i) Availability. (a) Subject to the terms and conditions set forth
in this Loan Agreement and provided no Event of Default shall have occurred and
be continuing, the Lender hereby agrees to make available to the Borrower from
time to time during the period from the Closing Date to the Business Day next
preceding the Revolving Credit Termination Date, revolving credit loans
(hereinafter each individually referred to as a "Revolving Credit Loan" and
collectively referred to as the "Revolving Credit Loans") in amounts which shall
not exceed, in the aggregate for all Revolving Credit Loans at any time
outstanding, the Commitment. The Revolving Credit Loans shall be evidenced by
the Revolving Credit Loan Note. The Lender is hereby authorized to record the
date and amount of each Revolving Credit Loan made by the Lender and the date
and amount of each payment or prepayment of principal thereof made by the
Borrower on the schedule annexed to and constituting a part of the Revolving
Credit Loan Note, and any such recordation shall constitute prima facie evidence
of the accuracy of the information so recorded. If the outstanding amount of the
Revolving Credit Loans shall exceed the amount of the Revolving Credit Facility
at any time, such excess shall be immediately due and payable to the Lender.
(b) Revolving Credit Loans may be voluntarily prepaid pursuant
to Section 2.04 hereof and, subject to the provisions of this Loan Agreement,
------------
any amounts so prepaid may be reborrowed, up to the amount available under this
Section 2.01(i) at the time of such Borrowing, until the Business Day next
----------------
preceding the Revolving Credit Termination Date. The Lender's commitment to make
Revolving Credit Loans shall expire, and each Revolving Credit Loan then
outstanding shall be repaid in full by the Borrower, no later than the Revolving
Credit Termination Date.
(ii) Notice of Borrowing. Whenever the Borrower desires to borrow
under this Section 2.01, the Borrower shall deliver to the Lender a Notice of
-------------
Borrowing no later than 11:00 A.M. (New York, New York time) (a) at least three
(3) Business Days in advance of the proposed Funding Date in the case of a
Borrowing as a Eurodollar Rate Loan and (b) on the proposed Funding Date in the
case of a Borrowing as a Prime Rate Loan (provided such Notice of Borrowing is
received by the Lender before 10:00 A.M.). The Notice of Borrowing shall specify
(1) the Funding Date (which shall be a Business Day) in respect of the Revolving
Credit Loan, (2) the amount of the proposed Borrowing which shall not be less
than $500,000.00, (3) the intended use of the proceeds of such Borrowing, (4)
the applicable interest rate option as described in Section 2.02(i) of this Loan
---------------
Agreement and, if applicable, (5) the Eurodollar Interest Period. In lieu of
delivering the above-described Notice of Borrowing, the Borrower may give the
Lender telephonic notice of any proposed Borrowing by the time required under
this Section 2.01(ii); provided, however, that such notice shall be confirmed in
---------------- -------- -------
writing by delivery to the Lender promptly (but in no event later than the
Funding Date of the requested Revolving Credit
18
Loan) of a Notice of Borrowing. Any Notice of Borrowing (or telephonic notice in
lieu thereof) pursuant to this Section 2.01(ii) shall be irrevocable.
------------------
(iii) Making of Revolving Credit Loans. The Lender shall make the
proceeds of such Revolving Credit Loan available to the Borrower in Edison, New
Jersey on such Funding Date by 12:00 NOON (New York, New York time) and shall
disburse such funds in Dollars and in immediately available funds to an account
of the Borrower maintained with the Lender and thereafter to any substitute
account, designated in writing by the Borrower in the Notice of Borrowing.
(iv) Use of Proceeds of Revolving Credit Loans. The proceeds of the
Revolving Credit Loans shall be used by the Borrower for financing acquisitions
and general corporate purposes. The proceeds of the Revolving Credit Loans shall
not be used for the issuance of any letters of credit or for the creation of any
bankers acceptances.
(v) Reduction of Revolving Credit Facility; Revolving Credit
Termination Date.
(a) The Borrower shall have the right, at any time and from
time to time, to terminate in whole or permanently reduce in part, the Revolving
Credit Facility in an amount up to the amount of the Commitment minus the
-----
aggregate principal amount of the Revolving Credit Loans then outstanding. Any
such prepayment may be made by the Borrower without premium or fee, except as
------
provided for in Section 2.04 of this Loan Agreement with respect to the
-------------
prepayment of a Eurodollar Rate Loan. The Borrower shall give not less than two
Business Days' prior express written notice to the Lender designating the date
(which shall be a Business Day) of such termination or reduction and the amount
of any partial reduction. Such termination or partial permanent reduction of the
Revolving Credit Facility shall be effective on the date specified in the
Borrower's notice. Any such partial permanent reduction of the Revolving Credit
Facility shall be in an aggregate minimum principal amount of $500,000.00 and
integral multiples of $500,000.00 in excess of that amount.
(b) The Revolving Credit Facility shall expire without further
action on the part of the Lender, and all then outstanding Revolving Credit
Loans shall be paid in full on the Revolving Credit Termination Date.
SECTION 2.02 INTEREST ON THE REVOLVING CREDIT LOANS.
(i) Rates of Interest. (a) All Revolving Credit Loans shall bear
interest computed daily on the outstanding principal balance thereof from the
Funding Date until repaid in full at one or more of the interest rate options
selected by the Borrower from between the two (2) interest rate options set
forth below. Subject to the provisions of this Loan Agreement, the Borrower may
select different options to apply simultaneously to different portions of the
Revolving Credit Loans and may select different Funding Segments to apply
simultaneously to different parts of the Eurodollar Rate Portion or Prime Rate
Portion of the Revolving Credit Loans. Each selection of a rate option shall
apply separately and without overlap to the Revolving Credit Loans as a class.
The aggregate number of Funding Segments applicable to the
19
Eurodollar Rate Portion and Prime Rate Portion of the Revolving Credit Loans at
any time shall not exceed five (5).
Interest Rate Options for Revolving Credit Loans:
(1) Prime Rate Option: A fluctuating rate per annum for eac
day equal to the Prime Rate of the Lender, in effect from time to time; or
(2) Eurodollar Rate Option. A fixed rate per annum for each
day during a Eurodollar Interest Period equal to the Adjusted LIBO Rate
plus the Applicable Margin for such day. The Lender shall give prompt
----
notice to the Borrower of the Adjusted LIBO Rate determined or adjusted in
accordance with the provisions hereof, which determination or adjustment
shall be conclusive (absent manifest error) if made in good faith.
(b) The Applicable Margin for Eurodollar Rate Loans with
respect to the Revolving Credit Facility for any day shall be the applicable
amount (expressed in basis points) set forth in the Rating Matrix (hereinafter
referred to as the "Applicable Margin").
(c) Notwithstanding subsections (a) and (b) above, interest
in respect of any Revolving Credit Loan shall not exceed the maximum rate
permitted by applicable Law.
(ii) Interest Payments. Subject to Section 2.02(iv) hereof, interest
----------------
accrued on all Prime Rate Loans shall be payable by the Borrower in arrears (a)
on the last day of each quarter during the term of this Loan Agreement,
commencing on the last day of the first quarter next following the making of
each such Prime Rate Loan and (b) at maturity. Interest accrued on each
Eurodollar Rate Loan shall be payable by the Borrower in arrears (1) on each
Eurodollar Interest Payment Date applicable to that Loan, (2) upon prepayment
thereof in full or in part and (3) at maturity.
(iii) Conversion or Continuation. (a) Subject to the provisions of
Section 2.06 hereof, the Borrower shall have the option (1) to convert at any
-------------
time all or any part of outstanding Revolving Credit Loans which comprise part
of the same Borrowing and which, in the aggregate, equal $500,000.00 or an
integral multiple of $500,000.00 in excess of that amount from Prime Rate Loans
to Eurodollar Rate Loans; (2) only in connection with the provisions of Section
-------------------------------------------------
2.06(v), to convert all or any part of outstanding Revolving Credit Loans from
-------
Eurodollar Rate Loans to Prime Rate Loans or (3) upon the expiration of any
Eurodollar Interest Period applicable to a Borrowing of Eurodollar Rate Loans,
to continue all or any portion of such Revolving Credit Loans equal to
$500,000.00 or an integral multiple of $500,000.00 in excess of that amount as
Eurodollar Rate Loans of the same type, and the succeeding Eurodollar Interest
Period of such continued Revolving Credit Loans shall commence on the expiration
date of the Eurodollar Interest Period applicable thereto; provided, however,
-------- -------
that no outstanding Revolving Credit Loan may be continued as, or be converted
into, a Eurodollar Rate Loan when any Event of Default or Potential Event of
Default has occurred and is continuing.
(b) In the event the Borrower shall elect to convert or
continue a
20
Revolving Credit Loan under this Section 2.02 (iii), the Borrower shall deliver
------------------
a Notice of Conversion/Continuation to the Lender no later than 11:00 A.M. (New
York, New York time) at least three (3) Business Days in advance of the proposed
conversion/continuation date in the case of a conversion to or a continuation of
a Eurodollar Rate Loan. A Notice of Conversion/Continuation shall specify (1)
the proposed conversion/continuation date (which shall be a Business Day), (2)
the amount of the Revolving Credit Loan to be converted/continued, (3) the
nature of the proposed conversion/continuation, and (4) in the case of a
conversion to, or continuation of, a Eurodollar Rate Loan, the requested
Eurodollar Interest Period. In lieu of delivering the above-described Notice of
Conversion/Continuation, the Borrower may give the Lender telephonic notice of
any proposed conversion/continuation by the time required under this Section
-------
2.02(iii); provided, however, that such notice shall be confirmed in writing by
--------- -------- -------
delivery to the Lender promptly (but in no event later than the proposed
conversion/continuation date) of a Notice of Conversion/Continuation.
(c) Any Notice of Conversion/Continuation for conversion to,
or continuation of, a Revolving Credit Loan (or telephonic notice in lieu
thereof) shall be irrevocable and the Borrower shall be bound to convert or
continue in accordance therewith.
(iv) Default Interest. Notwithstanding the rate of interest
specified in Section 2.02(i) hereof and the payment dates specified in Section
---------------- -------
2.02(ii) hereof, effective immediately upon the occurrence of any Event of
--------
Default under Section 9.01 of this Loan Agreement and for as long thereafter as
------------
any such Event of Default shall be continuing, the principal balance of all
Revolving Credit Loans then outstanding and, to the extent permitted by
applicable Law, any interest payments on the Revolving Credit Loans not paid
when due, shall bear interest payable upon demand at the Default Rate.
(v) Computation of Interest. Interest on (i) Eurodollar Rate Loans
shall be computed on the basis of the actual number of days elapsed in the
period during which interest accrues and a year of 360 days, and (ii) Prime Rate
Loans shall be computed on the basis of the actual number of days elapsed in the
period during which interest accrues and a year of 365/366 days. In computing
interest on any Revolving Credit Loan, the date of the making of the Revolving
Credit Loan or the first day of a Eurodollar Interest Period, as the case may
be, shall be included and the date of payment or the expiration date of a
Eurodollar Interest Period, as the case may be, shall be excluded; provided,
--------
however, that if a Revolving Credit Loan is repaid on the same day on which it
-------
is made, one day's interest shall be paid on that Revolving Credit Loan.
(vi) Changes; Legal Restrictions. Except as provided in Section
-------
2.06(iv) hereof with respect to certain determinations on Eurodollar Interest
--------
Rate Determination Dates, in the event that after the date hereof (a) the
adoption of or any change in any law, treaty, rule, regulation, guideline or
determination of a court or Governmental Authority or any change in the
interpretation or application thereof by a court or Governmental Authority, or
(b) compliance by the Lender with any request or directive (whether or not
having the force of law and whether or not the failure to comply therewith would
be unlawful) from any central bank or other Governmental Authority or
quasi-governmental authority:
(1) does or may impose, modify, or hold applicable, in the
21
determination of a Lender, any reserve, special deposit, compulsory loan, FDIC
insurance, capital allocation or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans by,
commitments made, or other credit extended by, or any other acquisition of funds
by, the Lender or any applicable lending office or Eurodollar Affiliate of the
Lender (except, with respect to a Eurodollar Rate Loan, to the extent that the
Statutory Reserve Rate requirements are reflected in the definition of "Adjusted
LIBO Rate"); or
(2) does or is reasonably likely to impose on the Lender any
other condition materially more burdensome in nature, extent or consequence than
those in existence as of the Closing Date;
and the result of any of the foregoing is to increase the cost to the Lender of
making, renewing or maintaining the Revolving Credit Loans, then, in any such
----
case, the Borrower shall promptly pay to the Lender, upon demand, such amount or
amounts (based upon an allocation thereof by the Lender to the financing
transactions contemplated by this Loan Agreement and effected by this Section
-------
2.02(vi)) as may be necessary to compensate the Lender for any such additional
---------
cost incurred or reduced amount received. The Lender shall deliver to the
Borrower a written statement of the costs or reductions claimed and the basis
therefore, and the allocation made by the Lender of such costs and reductions
shall be conclusive, absent manifest error, if made in good faith. If the Lender
subsequently recovers any amount previously paid by the Borrower pursuant to
this Section 2.02(vi), the Lender shall, within thirty (30) days after receipt
----------------
of such refund and to the extent permitted by applicable Law, pay to the
Borrower the amount of any such recovery.
SECTION 2.03 FEES.
(i) Structuring Fee. The Borrower shall have paid to the Lender
the Structuring Fee, in full, as of the Closing Date.
(ii) Facility Fee. The Borrower shall pay to the Lender a facility
fee from and after the Closing Date until the Obligations are paid in full and
the Revolving Credit Facility is terminated, equal to the Applicable Index
multiplied by the unused portion of the Commitment. The facility fee payable
---------- --
under this Section 2.03(ii) shall be calculated and payable quarterly in arrears
----------------
on the last Business Day in each Fiscal Quarter beginning after the Closing
Date. For the purposes of this Section 2.03(ii), the "Applicable Index" with
----------------
respect to the Revolving Credit Facility shall be the applicable amount
(expressed in basis points) set forth in the Rating Matrix (hereinafter referred
to as the "Applicable Index").
(iii) Late Charge Fee. In the event that any payment, including,
without limitation, interest or principal, required to be made by the Borrower
under the Revolving Credit Loan Note or under this Loan Agreement shall not be
received by the Lender within ten (10) days of when due, the Lender may charge,
and if so charged, the Borrower shall pay, to the extent permitted by law, a
late charge of ($0.05) for each dollar ($1.00) of each delinquent payment for
the purpose of defraying the expense incident to the handling of such delinquent
payment, which late charge shall not exceed $1,500.00 per occurrence.
22
(iv) Letter of Credit Fee. The Borrower shall pay Lender the usual
and customary fees charged by Lender's International Department for letters of
credit.
(v) Payment of Fees. The fees described in this Section 2.03
-------------
represent compensation for services rendered and to be rendered separate and
apart from the lending of money or the provision of credit, and the obligation
of the Borrower to pay each fee described herein shall be in addition to, and
not in lieu of, the obligation of the Borrower to pay interest, other fees and
expenses otherwise described in this Loan Agreement. Fees shall be payable when
due at the office of the Lender in East Brunswick, New Jersey in immediately
available funds. All fees shall be non-refundable when paid. All fees and
expenses specified or referred to in this Loan Agreement due and owing to the
Lender, including, without limitation, those referred to in this Section 2.03
------------
and in Section 10.01 hereof, shall bear interest, if not paid when due, at the
-------------
Default Rate (but not to exceed the maximum rate permitted by applicable Law),
and shall constitute Obligations. All fees described in this Section 2.03 which
------------
are expressed as a per annum charge shall be calculated on the basis of the
actual number of days elapsed in a 360-day year.
SECTION 2.04 VOLUNTARY PREPAYMENTS.
(i) Eurodollar Rate Loans. The Borrower may, at any time and from
time to time, upon the giving of at least two (2) Business Days' prior express
written notice to the Lender, voluntarily prepay any Eurodollar Rate Loan in
whole or in part, in an aggregate minimum amount of $500,000.00 and in integral
multiples of $500,000.00, subject to the following: (a) any principal prepayment
of a Eurodollar Rate Loan shall be accompanied by the payment of all unpaid
accrued interest due and owing on said Eurodollar Rate Loan and (b) the Borrower
shall pay to the Lender all amounts described in Section 2.06(vi) of this Loan
-----------------
Agreement.
(ii) Prime Rate Loans. The Borrower may, at any time and from time
to time, upon the giving of at least one (1) Business Day's prior express
written notice to the Lender, voluntarily prepay any Prime Rate Loan in whole or
in part, without premium or fee; provided, however, any principal prepayment of
-------- -------
a Prime Rate Loan shall be accompanied by the payment of all unpaid accrued
interest due and owing on said Prime Rate Loan.
(iii) Prepayments in Full. Notwithstanding any provision of this
Section 2.04 to the contrary, in the event that any prepayments of any Revolving
------------
Credit Loans are made in connection with the termination of this Loan Agreement,
such prepayments shall be made only upon five (5) Business Days' prior express
written notice to the Lender.
SECTION 2.05 PAYMENTS.
(i) Manner and Time of Payment. All payments of principal, interest
and fees hereunder payable to the Lender, including, without limitation, all
payments in connection with Revolving Credit Loans, shall be made without
condition or reservation or right, in Dollars and in immediately available
funds, delivered to the Lender not later than 12:00 NOON (New York, New York
time) on the date due, to such account of the Lender in East Brunswick, New
Jersey, as the Lender may designate. Funds received by the Lender after that
time and date shall be
23
deemed to have been paid on the next succeeding Business Day. The Lender shall
send a monthly and/or quarterly invoice, as applicable, to the Borrower
reflecting the accrued interest due and owing and all fees due and owing
hereunder. The Borrower hereby agrees that on the Business Day that any payment
of principal, interest and fees are due, the Lender shall automatically charge a
demand deposit account of the Borrower, which account shall be maintained with
the Lender at all times throughout the term of the Revolving Credit Facility.
The Borrower's authorization of the Lender to charge such account having
sufficient funds on deposit shall constitute payment of the amount so authorized
notwithstanding the Lender's failure to charge said account. Any failure or
delay by the Lender in submitting invoices for interest and fee payments shall
not discharge or relieve the Borrower of the obligation to make such payments
into the demand deposit account.
(ii) Apportionment of Payments. So long as there does not exist an
Event of Default, all payments of principal and interest in respect of
outstanding Revolving Credit Loans, all payments of the fees described herein
and all payments in respect of any other Obligation shall be allocated by the
Lender as it may be entitled thereto as provided herein. After the occurrence
and during the continuance of an Event of Default, the Lender shall, after
providing notice to the Borrower that payments and proceeds shall be so applied,
apply all payments remitted to the Lender and all amounts received by the
Lender, subject to the provisions of this Loan Agreement, (a) first, to pay
Obligations in respect of any fees, expense reimbursements or indemnities then
due and owing to the Lender from the Borrower; (b) second, to pay interest due
in respect of Revolving Credit Loans; (c) third, to pay or prepay principal of
Revolving Credit Loans and (d) fourth, to the ratable payment of all other
Obligations.
(iii) Payments on Non-Business Days. Whenever any payment to be made
by the Borrower hereunder shall be stated to be due on a day which is not a
Business Day, payments shall be made on the next succeeding Business Day and
such extension of time shall be included in the computation of the payment of
interest hereunder and of any of the fees specified in Section 2.03 hereof, as
------------
the case may be.
(iv) Lender's Accounting. The Lender shall maintain a loan account
(hereinafter referred to as the "Loan Account") on its books in which shall be
recorded (a) the principal amount of Revolving Credit Loans owing to the Lender
from time to time; (b) all other appropriate debits and credits as provided in
this Loan Agreement, including, without limitation, all interest, fees,
expenses, charges and other Obligations; and (c) all payments of Obligations
made by the Borrower or for the Borrower's account. All entries in the Loan
Account shall be made in accordance with the Lender's customary accounting
practices as in effect from time to time. The Lender will render a statement of
the Loan Account upon the request of the Borrower. Each and every such statement
shall be deemed final, binding and conclusive upon the Borrower in all respects
as to all matters reflected therein (absent manifest error), unless the
Borrower, within ten (10) days after the date such statement is rendered,
delivers to the Lender written notice of any objection which the Borrower may
have to any such statement. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by the Borrower.
Notwithstanding the foregoing, the Lender's entries in the Loan Account
evidencing Revolving Credit Loans and other financial accommodations made from
time to time shall be final, binding and conclusive upon the Borrower (absent
manifest error) as to the existence and amount of the
24
Obligations recorded in the Loan Account. The Lender, in its discretion, may
charge any or all interest, fees and expenses incurred by the Borrower hereunder
to the Loan Account.
SECTION 2.06 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
Notwithstanding other provisions of this Loan Agreement to the contrary, if any,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters described below:
(i) Amount of Eurodollar Rate Loans. Each Eurodollar Rate Loan
shall be for a minimum amount of $500,000.00 and in integral multiples of
$500,000.00 in excess of that amount.
(ii) Determination of Eurodollar Interest Period. By giving notice
as set forth in Sections 2.01(ii) and 2.02(iii) hereof (with respect to a
----------------------------------
conversion into or a continuation of Eurodollar Rate Loans), the Borrower shall
have the option, subject to the other provision of this Section 2.06, to specify
------------
a Eurodollar Interest Period to apply to the Borrowing of Eurodollar Rate Loans
described in such notice, subject to availability. The determination of
Eurodollar Interest Periods shall be subject to the following provisions:
(a) In the case of immediately successive Eurodollar Interest
Periods applicable to a Borrowing of Eurodollar Rate Loans, each successive
Eurodollar Interest Period shall commence on the day on which the next preceding
Eurodollar Interest Period expires;
(b) If any Eurodollar Interest Period would otherwise expire
on a day which is not a Business Day, the Eurodollar Interest Period shall be
extended to expire on the next succeeding Business Day; provided, however, that
-------- -------
if any such Eurodollar Interest Period applicable to a Borrowing of Eurodollar
Rate Loans would otherwise expire on a day which is not a Business Day but is a
day of the month after which no further Business Day occurs in that month, then
that Eurodollar Interest Period shall expire on the immediately preceding
Business Day;
(c) The Borrower may not select a Eurodollar Interest Period
for any Revolving Credit Loan which terminates later than the Revolving Credit
Termination Date;
(d) The Borrower may not select a Eurodollar Interest Period
with respect to any portion of principal of a Eurodollar Rate Loan which extends
beyond a date on which the Borrower is required to make a scheduled payment of
any portion of principal, it being understood and agreed that any Eurodollar
Rate Loan whose Eurodollar Interest Period ends less than one month prior to
such required principal payment date shall be deemed converted to a Prime Rate
Loan as of the last day of such Eurodollar Interest Period for purposes of
determining whether any portion of principal of any Eurodollar Rate Loan is
required in order to make a mandatory payment of principal;
(e) There shall be no more than five (5) Eurodollar Interest
Periods under this Loan Agreement in effect at any one time under the Revolving
Credit Facility; and
(f) If any Eurodollar Interest Period commences on the last
Business
25
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Eurodollar Interest Period)
then said Eurodollar Interest Period shall end on the last Business Day of the
last calendar month of such Eurodollar Interest Period.
(iii) Determination of Interest Rate. As soon as practicable after
12:00 NOON (New York, New York time) on any Eurodollar Interest Rate
Determination Date, the Lender shall determine (which determination shall,
absent manifest error, be presumptively correct) the interest rate which shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Eurodollar Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to the
Borrower.
(iv) Interest Rate Unascertainable, Inadequate or Unfair. If, with
respect to any Eurodollar Interest Period, the Lender determines that (a)
deposits in Dollars (in the applicable amounts) are not being offered in the
relevant market for such Eurodollar Interest Period, (b) adequate and reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, (c) a contingency
has occurred which materially and adversely affects the London interbank
Eurodollar market or (d) the effective cost to the Lender of funding a proposed
Funding Segment of the Eurodollar Portion from a corresponding source of funds
shall exceed the Eurodollar Rate, applicable to such Funding Segment, the Lender
shall forthwith give notice thereof to the Borrower, whereupon until the Lender
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, (1) the right of the Borrower to elect to have Revolving Credit
Loans bear interest based upon the Adjusted LIBO Rate shall be suspended and (2)
each outstanding Eurodollar Rate Loan shall be converted into a Prime Rate Loan
on the last day of the then current Eurodollar Interest Period therefor,
notwithstanding any prior election by the Borrower to the contrary.
(v) Illegality. (a) In the event that on any date the Lender shall
have determined (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties) that the making or continuation of any
Eurodollar Rate Loan has become unlawful by compliance by the Lender in good
faith with any Law, of any Governmental Authority (whether or not having the
force of Law and whether or not failure to comply therewith would be unlawful),
then, and in any such event, the Lender shall promptly give notice (by telephone
promptly confirmed in writing) to the Borrower.
(b) Upon the giving of the notice referred to in Section
-------
2.06(v)(a) hereof, (1) the Borrower's right to request of the Lender and the
----------
Lender's obligation to make Eurodollar Rate Loans shall be immediately
suspended, and the Lender shall make a Revolving Credit Loan, as part of any
requested Borrowing of Eurodollar Rate Loans, as a Prime Rate Loan, which Prime
Rate Loan shall, for all purposes, be considered a part of such Borrowing, and
(2) if the affected Eurodollar Rate Loan or Loans are then outstanding, the
Borrower shall immediately (or, if permitted by applicable Law, no later than
the date permitted thereby, upon at least one Business Day's written notice to
the Lender) convert each such Revolving Credit Loan into a Prime Rate Loan.
(c) In the event that the Lender determines at any time
following its giving of the notice referred to in Section 2.06 (iv) and Section
----------------- -------
2.06(v)(a) hereof that the Lender
----------
26
may lawfully make Eurodollar Rate Loans of the type referred to in such notice,
the Lender shall promptly give notice (by telephone confirmed in writing) to the
Borrower of that determination, whereupon the Borrower's right to request of the
Lender, and the Lender's obligation to make, Eurodollar Rate Loans shall be
restored.
(vi) Compensation. In addition to such amounts as are required to be
paid by the Borrower pursuant to Sections 2.02(iv), 2.02(vi), 2.03(iii),
------------------------------------------
2.04(i), 2.06(vii), 2.07 and 2.09 hereof, the Borrower shall compensate the
-----------------------------------
Lender, upon demand, for all losses, expenses and liabilities (including,
without limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds required by the Lender to fund or
maintain the Lender's Eurodollar Rate Loans) which losses, expenses and
liabilities the Lender may sustain (a) if for any reason a Borrowing, conversion
or continuation of Eurodollar Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing or a Notice of Conversion/Continuation or in a
telephonic request for borrowing or conversion/continuation or a successive
Eurodollar Interest Period does not commence after notice therefor is given
pursuant to Section 2.02(iii) hereof, (b) if any prepayment of an Eurodollar
------------------
Rate Loan (including, without limitation, any prepayment pursuant to Section
-------
2.04 hereof) occurs for any reason on a date which is not the last day of the
----
applicable Eurodollar Interest Period, (c) as a consequence of any required
conversion of a Eurodollar Rate Loan to a Prime Rate Loan as a result of any of
the events indicated in Section 2.06(v) on a day other than the last day of a
----------------
Eurodollar Interest Period, or (d) as a consequence of any other failure by the
Borrower to repay Eurodollar Rate Loans when required by the terms of this Loan
Agreement. The Lender shall deliver to the Borrower a written statement as to
such losses, expenses and liabilities which statement shall be conclusive as to
such amounts in the absence of manifest error.
(vii) Eurodollar Rate Tax. The Borrower agrees that:
(a) the Borrower will pay, prior to the date on which
penalties attach thereto, all present and future income, stamp and other taxes,
levies, or costs and charges whatsoever imposed, assessed, levied or collected
on or in respect of a Revolving Credit Loan solely as a result of the interest
rate being determined by reference to the Eurodollar Rate or the provisions of
this Loan Agreement relating to the Eurodollar Rate or the recording,
registration, notarization or other formalization of any thereof or any payments
of principal, interest or other amounts made on or in respect of a Revolving
Credit Loan made to the Borrower when the interest rate is determined by
reference to the Eurodollar Rate (all such taxes, levies, costs and charges
being hereinafter collectively called "Eurodollar Rate Taxes"); provided,
--------
however, that Eurodollar Rate Taxes shall not include net income or franchise
-------
taxes imposed by any jurisdiction. Promptly after the date on which payment of
any such Eurodollar Rate Tax is due pursuant to applicable law, the Borrower
will, at the request of the Lender, furnish to the Lender evidence, in form and
substance satisfactory to the Lender, that the Borrower has met its obligation
under this Section 2.06(vii); and
------------------
(b) the Borrower will indemnify the Lender against, and
reimburse the Lender on demand for, any Eurodollar Rate Taxes paid by the Lender
in respect of a Revolving Credit Loan made to the Borrower, as determined by the
Lender in its sole discretion. The Lender shall provide the Borrower with (1)
appropriate receipts for any payments or
27
reimbursements made by the Borrower pursuant to this clause (b) and (2) such
information as may reasonably be required to indicate the basis for such
Eurodollar Rate Taxes; provided, however, that if the Lender subsequently
recovers, or receives a net tax benefit with respect to, any amount of
Eurodollar Rate Taxes previously paid by the Borrower pursuant to this Section
-------
2.06(vii)(b), the Lender shall, within thirty (30) days after receipt of such
------------
refund, and to the extent permitted by applicable law, pay to the Borrower the
amount of any such recovery or permanent net tax benefit.
(viii) Booking of Eurodollar Rate Loans. The Lender may make, carry
or transfer Eurodollar Rate Loans at, to, or for the account of, any of its
branch offices, agencies or the office of an Affiliate of the Lender; provided,
--------
however, the Lender shall not be entitled to receive any greater amount under
-------
Section 2.02(vi) or Section 2.06(vii) hereof as a result of the transfer of any
---------------- ------------------
such Revolving Credit Loan than the Lender would be entitled to immediately
prior thereto unless (a) such transfer occurred at a time when circumstances
giving rise to the claim for such greater amount did not exist and were not
reasonably foreseeable in the view of the Lender and (b) such claim would have
arisen even if such transfer had not occurred.
(ix) Affiliates Not Obligated. No Eurodollar Affiliate or other
Affiliate of the Lender shall be deemed a party to this Loan Agreement or shall
have any rights, liability or obligation under this Loan Agreement.
SECTION 2.07 INCREASED CAPITAL. If either (i) the introduction of or any
change in or in the interpretation of any Law or regulation or (ii) compliance
by the Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) made subsequent to the
date hereof affects or would affect the amount of capital required or expected
to be maintained by the Lender or any corporation controlling the Lender and the
Lender determines that the amount of such capital is increased by or based upon
the existence of the Lender's commitment to make Revolving Credit Loans and
other commitments of this type, then, upon demand by the Lender, the Borrower
shall immediately pay to the Lender, from time to time as specified by the
Lender, additional amounts sufficient to compensate the Lender in the light of
such circumstances, to the extent that the Lender determines such increase in
capital to be allocable to the existence of the Lender's commitment to fund the
Revolving Credit Facility. A certificate as to such amounts submitted to the
Borrower by the Lender, shall, in the absence of manifest error, be conclusive
and binding for all purposes.
SECTION 2.08 AUTHORIZED OFFICERS OF THE BORROWER. The Borrower shall notify
the Lender in writing of the names of the officers and employees authorized to
request Revolving Credit Loans and shall provide the Lender with a specimen
signature of each such Authorized Officer. The Lender shall be entitled to rely
conclusively on such officer's or employee's authority to request such Revolving
Credit Loans until the Lender receives written notice to the contrary. The
Lender shall have no duty to verify the authenticity of the signature on any
written Notice of Borrowing or Notice of Conversion/Continuation and, with
respect to an oral request for such a Revolving Credit Loan, the Lender shall
have no duty to verify the identity of any Person representing himself as one of
the officers or employees authorized to make such request on behalf of the
Borrower. The Lender shall not incur any liability to the Borrower in acting
28
upon any telephonic notice referred to above which the Lender believes in good
faith to have been given by a duly Authorized Officer or other Person authorized
to borrow on behalf of the Borrower or for otherwise acting in good faith under
this Section 2.08.
------------
SECTION 2.09 TAXES.
(i) Payments Net of Taxes, All payments made by the Borrower under
this Loan Agreement or any other Loan Document shall be made free and clear of,
and without reduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, and all liabilities with respect
thereto, excluding
(a) in the case of the Lender, income or franchise taxes
imposed on the Lender by the jurisdiction under the laws of which the Lender is
organized or any political subdivision or taxing authority thereof or therein or
as a result of a connection between the Lender and any jurisdiction and the
transactions contemplated hereby; and
(b) in the case of the Lender, income or franchise taxes
imposed by any jurisdiction in which the Lender's lending offices which make or
book Revolving Credit Loans, are located or any political subdivision or taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
deductions, charges or withholdings being hereinafter called "Taxes"). If any
Taxes are required to be withheld or deducted from any amounts payable to the
Lender under this Loan Agreement or any other Loan Document, the Borrower shall
pay the relevant amount of such Taxes and the amounts so payable to the Lender
shall be increased to the extent necessary to yield to the Lender (after payment
of all Taxes) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Loan Agreement and the other Loan Documents.
Any foreign lender (Any lender that is organized under the laws other than that
in which the Borrower is incorporated. For the purposes herein, the United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction) that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement shall deliver to Borrower, at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate. Whenever any Taxes are paid by the Borrower with respect to
payments made in connection with this Loan Agreement or any other Loan Document,
as promptly as possible thereafter, the Borrower shall send to the Lender for
its own account a certified copy of an original official receipt received by the
Borrower showing payment thereof.
(ii) Indemnity. The Borrower hereby indemnifies the Lender for the
full amount of all Taxes attributable to payments by or on behalf of the
Borrower hereunder or under any of the other Loan Documents, any Taxes paid by
the Lender, any present or future claims, liabilities or losses with respect to
or resulting from any omission to pay or delay in paying any Taxes (including
any incremental Taxes, interest or penalties that may become payable by the
29
Lender as a result of any failure to pay such Taxes), whether or not such Taxes
were correctly or legally asserted. Such indemnification shall be made within
thirty (30) days from the date the Lender makes written demand therefor.
SECTION 2.10 LETTER OF CREDIT (a) Subject to the terms and conditions set
forth in this Loan Agreement and provided no Event of Default has occurred or is
continuing, the Lender agrees to issue, for the account of the Borrower, the
Letter of Credit. Any and all Reimbursement Obligations in respect of the Letter
of Credit shall constitute financial accommodations under the Revolving Credit
Loan. The Letter of Credit shall be subject to the Uniform Customs and, to the
extent not inconsistent therewith, the Laws of the State of New Jersey.
(b) In addition to being subject to the satisfaction of the
conditions precedent contained in Article III hereof, the obligation of the
-----------
Lender to issue the Letter of Credit is subject to the satisfaction in full of
the following conditions:
(1) the Borrower shall have delivered to the Lender such
documents and materials as the Lender may reasonably require and the terms
of the Letter of Credit shall be reasonably satisfactory to the Lender;
and
(2) as of the date of issuance, no order, judgment or decree
of any court, arbitrator or Governmental Authority shall purport by its
terms to enjoin or restrain the Lender from issuing the Letter of Credit
and no Law applicable to the Lender and no request or directive (whether
or not having the force of Law and whether or not the failure to comply
therewith would be unlawful) from any Governmental Authority with
jurisdiction over the Lender shall prohibit or request that the Lender
refrain from the issuance of letters of credit generally or the issuance
of the Letter of Credit.
(c) In connection with the Letter of Credit:
(1) the Borrower shall unconditionally reimburse the Lender
for drawings under the Letter of Credit within thirty (30) days of the
date when a draw has been made under said Letter of Credit, irrespective
of any claim, set-off, defense or other right which the Borrower may have
at any time against the Lender, except with respect to the Lender's gross
negligence or willful misconduct; and
(2) to the extent any Reimbursement Obligation is not paid
when due, such Reimbursement Obligation shall be deemed to be a Revolving
Credit Loan in the amount of such Reimbursement Obligation; and
(3) any Reimbursement Obligation with respect to the Letter of
Credit shall bear interest from the date of the relevant drawing under the
Letter of Credit at the interest rate set forth herein, until paid in
full; and
30
(4) If the Letter of Credit has not been presented for honor
on or before the Revolving Credit Termination Date, notwithstanding the
occurrence of the Revolving Credit Termination Date and the satisfaction
of all other obligations under the Loan Documents, the Borrower's
obligations under the Loan Documents shall continue until all amounts paid
by the Lender under the Letter of Credit have been reimbursed (and all
other obligations under the Loan Documents have been satisfied) and the
liens granted under and pursuant to the Loan Documents shall continue to
secure such Letter of Credit Obligations; provided, however, that the
-------- -------
Lender may release the liens under the Loan Documents (but not the other
obligations thereunder) upon (i) the deposit by the Borrower in an
interest-bearing cash collateral account opened by the Lender of an amount
in cash or cash equivalents equal to the amount of the Letter of Credit
Obligations to collateralize the Reimbursement Obligations with respect to
the Letter of Credit or (ii) an indemnification agreement from a financial
institution or "back-up" letter of credit issued by a financial
institution all in form and substance reasonably satisfactory to the
Lender. Notwithstanding, the payment of all other obligations under the
Loan Documents, the Reimbursement Obligations associated with the Letter
of Credit shall accrue interest at the Prime Rate until such Reimbursement
Obligations have been satisfied in full.
(5) With respect to any Reimbursement Obligation, such
Reimbursement Obligation shall: (A) be payable by the Borrower upon
demand, (B) be deemed to be a Revolving Credit Loan as described in
Section 2.1 herein, and (C) bear interest from the date of payment by the
Lender at the Prime Rate set forth herein, until paid in full.
(d) No action taken or omitted to be taken by the Lender under or
in connection with the Letter of Credit (except in connection with the Lender's
gross negligence or willful misconduct) shall put the Lender under any resulting
liability to the Borrower or relieve the Borrower of its obligations hereunder
to reimburse the Lender for the Reimbursement Obligations. In determining
whether to pay under the Letter of Credit, the Lender shall have no obligation
to the Borrower other than to confirm that any documents required to be
delivered under the Letter of Credit appear to have been delivered and that they
appear on their face to comply with the requirements of the Letter of Credit.
(e) The Borrower unconditionally agrees to pay to the Lender the
amount of any and all Reimbursement Obligations, interest and other amounts
payable to the Lender under or in connection with the Letter of Credit upon
demand by the Lender, irrespective of any claim, set-off, defense or other right
which the Borrower may have at any time against the Lender or any other Person.
SECTION 2.11 LENDER NOT LIABLE. (a) In addition to amounts payable as
elsewhere provided in the Loan Documents, the Borrower hereby agrees to protect,
indemnify, pay and save the Lender harmless from and against any and all
liabilities and costs which the Lender may incur or be subject to as a
consequence, direct or indirect, of (1) the issuance of the Letter of
31
Credit (other than as a result of the Lender's gross negligence or willful
misconduct, as determined by the final judgment of a court of competent
jurisdiction) or (2) the failure of the Lender to honor a drawing under the
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Authority
(all such acts or omissions hereinafter referred to as the "Governmental Acts").
(b) As between the Borrower and the Lender, subject to the second
to the last sentence of this subparagraph (b), the Borrower assumes all risks of
----------------
the acts and omissions of, or misuse of such Letter of Credit by the beneficiary
of, such Letter of Credit. In furtherance and not in limitation of the
foregoing, the Lender shall not be responsible: (1) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
the Borrower or the beneficiary in connection with the application for and
issuance of the Letter of Credit, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (2) for
the validity or sufficiency of any instrument transferring or assigning, or
purporting to transfer or assign, the Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (3) for failure of the beneficiary of the
Letter of Credit to comply duly with conditions required in order to draw upon
the Letter of Credit; (4) for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex, or
other similar form of teletransmission or otherwise, whether or not they be in
cipher; (5) for errors in interpretation of technical terms; (6) for any loss or
delay in the transmission or otherwise of any document required in order to make
a drawing under the Letter of Credit or of the proceeds thereof; (7) for the
misapplication by the beneficiary of the Letter of Credit of the proceeds of any
drawing under the Letter of Credit and (8) for any consequences arising from
causes beyond the control of the Lender including, without limitation, any
Governmental Acts. None of the above shall affect, impair or prevent the vesting
of any of the rights or powers of the Lender under this subparagraph (b);
provided, however, the Borrower may have a claim against the Lender to the
-------- -------
extent of any direct, but not consequential, damages suffered by the Borrower
that were caused by the Lender's willful misconduct or gross negligence. In
furtherance and not in limitation of the foregoing, the Lender may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by the
Lender under or in connection with the Letter of Credit in accordance with the
written directions of the Borrower, or any related certificates, if taken or
omitted in good faith, shall not, in the absence of an express violation of the
standards set forth in the Uniform Customs and subsequent revisions thereof, put
the Lender under any resulting liability to the Borrower or relieve the Borrower
of any of its obligations hereunder to any such Person.
32
ARTICLE III
CONDITIONS TO THE REVOLVING CREDIT LOANS
----------------------------------------
SECTION 3.01 CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS LOAN
AGREEMENT. This Loan Agreement shall become effective on the Closing Date when
the following conditions precedent have been satisfied (unless waived by the
Lender or unless the deadline for delivery has been extended by the Lender):
(i) Certain Documents. The Lender shall have received on or before
the Closing Date all of the following, all of which, except as otherwise
specifically described below, shall be in form and substance satisfactory to the
Lender:
(a) this Loan Agreement together with all Exhibits and
Schedules attached hereto;
(b) a Notice of Borrowing pursuant to Section 2.01 hereof
-------------
dated the Closing Date executed by the Borrower;
(c) the Revolving Credit Loan Note;
(d) the Stock Pledge Agreement;
(e) the opinions of counsel to the Borrower substantially in
the form of Exhibit "F" attached hereto;
-----------
(f) a certificate of the Secretary or Assistant Secretary of
the Borrower dated the Closing Date certifying (1) the names and true signatures
of the incumbent officers of the Borrower authorized to sign this Loan Agreement
and all other Loan Documents executed by the Borrower in connection with the
Revolving Credit Facility, (2) the By-Laws of the Borrower as in effect on the
date of such certification and (3) the resolutions of the Borrower's Board of
Directors approving and authorizing the execution, delivery and performance of
this Loan Agreement and all other Loan Documents;
(g) the Certificate of Incorporation of the Borrower, as
amended, modified or supplemented to the Closing Date, shall be certified to be
true, correct and complete by the applicable Secretary of State as of a recent
date prior to the Closing Date;
(h) Good Standing Certificate for the Borrower certified by
the Secretary of State of the State of New Jersey;
(i) a certificate of the Chief Financial Officer of the
Borrower certifying that such financial information (including any annual or
quarterly financial statements of the Borrower) as the Lender may reasonably
request are true and accurate;
(j) evidence of payment in full of all existing Debt owed
by the Borrower to the Lender pursuant to that Loan and Security Agreement dated
January 22, 1997
33
and termination of such credit facility; and
(k) such additional documentation as the Lender may
reasonably require.
(ii) Fees and Expenses Paid. The Borrower shall have paid to the
Lender, for its own account, all fees and expenses due and payable under this
Loan Agreement on the Closing Date.
(iii) Representations and Warranties. All of the representations and
warranties of the Borrower contained in subsections (i) through (xxii) of
Section 4.01 hereof and in any other Loan Document (other than for changes
-------------
permitted or contemplated by this Loan Agreement) shall be true and correct in
all material respects on and as of the Closing Date as though made on and as of
that date (except any such representations and warranties stated to be given on
a specific date other than the Closing Date).
(iv) No Default. No Event of Default or Potential Event of Default
hereunder or under the other Loan Documents shall have occurred and be
continuing on the Closing Date.
(v) No Injunction. No Requirements of Law shall prohibit, and no
order, judgment or decree of any Governmental Authority shall and, except as set
forth on Schedule 4.01(v) hereto, no litigation shall be pending or threatened
-----------------
which in the judgment of the Lender would enjoin, prohibit, restrain, impose or
result in the imposition of any material adverse condition upon the consummation
of the transactions contemplated hereby.
(vi) Consents. The Borrower shall have received all consents and
authorizations required pursuant to any material Contractual Obligation with any
other Person and shall have obtained all consents and authorizations of, and
effected all notices to and filings with, any Governmental Authority, in each
case, as may be necessary to allow it lawfully to execute, deliver and perform,
in all material respects, its obligations under this Loan Agreement and the
other Loan Documents.
(vii) No Material Adverse Change. No adverse change deemed material
by the Lender, in its sole opinion, shall have occurred since the date of the
most recent annual audited financial report of the Borrower delivered to the
Lender through the Closing Date, as to the condition (financial or otherwise),
operations, performance or properties of the Borrower, individually or taken as
a whole.
SECTION 3.02 CONDITIONS PRECEDENT TO ALL REVOLVING CREDIT LOANS. The
obligation of the Lender to make any Revolving Credit Loan requested to be made
by it on any Funding Date is subject to the following conditions precedent as of
such date:
(i) Notice of Borrowing. With respect to a request for a Revolving
Credit Loan, the Lender shall have received in accordance with the provisions
of Section 2.01(ii) hereof, on or before any Funding Date, an original Notice of
----------------
Borrowing duly executed by an Authorized Officer of the Borrower.
34
(ii) Additional Matters. As of the Funding Date for any Revolving
Credit Loan:
(a) Representations and Warranties. All of the representations
and warranties of the Borrower contained in subsections (i) through (xxii) of
Section 4.01 hereof and in any other Loan Document (other than representations
------------
and warranties which expressly speak only of a different date and other than for
changes permitted or contemplated by this Loan Agreement) shall be true and
correct in all material respects;
(b) No Default. No Event of Default or Potential Event of
Default shall have occurred and be continuing or would result from the making of
the requested Revolving Credit Loan;
(c) No Injunction. No Requirement of Law or regulations shall
prohibit, and no order, judgment or decree of any Governmental Authority shall,
and, except as set forth on Schedule 4.01(v) hereto, no litigation shall be
-----------------
pending or threatened which in the reasonable judgment of the Lender would
enjoin, prohibit, restrain, impose or result in the imposition of any material
adverse condition upon the Lender from making the Revolving Credit Loan
requested to be made on the Funding Date; and
(d) No Material Adverse Change. No adverse change deemed
material by the Lender, in its sole opinion, shall have occurred after the
Closing Date as to the condition (financial or otherwise), operations,
performance or properties of the Borrower, individually or taken as a whole.
Each submission by the Borrower to the Lender of a Notice of
Borrowing with respect to a Revolving Credit Loan and the acceptance by the
Borrower of the proceeds of each such Revolving Credit Loan made hereunder shall
constitute a representation and warranty by the Borrower as of the Funding Date
in respect of such Revolving Credit Loan that all the conditions contained in
this Section 3.02 have been satisfied.
------------
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 4.01 REPRESENTATIONS AND WARRANTIES ON THE CLOSING DATE. In order
to induce the Lender to enter into this Loan Agreement, the Borrower hereby
represents and warrants to the Lender that the following statements are true,
correct and complete on and as of the Closing Date:
(i) Organization; Corporate Powers. The Borrower (a) is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of New Jersey, (b) is duly qualified to conduct business as a foreign
corporation and in good standing under the Laws of each jurisdiction in which it
owns or leases real property or in which the nature of its business requires it
to be so qualified where the failure to obtain such qualification is reasonably
likely to result in a Material Adverse Effect, and (c) has all requisite power
and authority to own, operate
35
and encumber its property and assets and to conduct its business as presently
conducted and as proposed to be conducted in connection with and following the
consummation of the actions contemplated by the Loan Documents.
(ii) Authority. (a) The Borrower has the requisite corporate power
and authority (1) to execute, deliver and perform each of the Loan Documents
executed by it, or to be executed by it and (2) to file the Loan Documents filed
by it, or to be filed by it, with any appropriate Governmental Authority.
(b) The execution, delivery and performance (or filing, as the
case may be) of each of the Loan Documents to which the Borrower is a party and
the consummation of the transactions contemplated thereby, have been duly
authorized by the Board of Directors of the Borrower and no further corporate
proceedings on the part of the Borrower are necessary to consummate such
transactions.
(c) Each of the Loan Documents to which the Borrower is a
party has been duly executed and delivered (or filed, as the case may be) by the
Borrower and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms.
(iii) No Conflict. The execution and delivery by the Borrower of
each Loan Document to which it is party and the performance of each of the
transactions contemplated thereby do not and will not (a) constitute a tortious
interference with any Contractual Obligation of the Borrower or (b) conflict
with or violate the Borrower's Certificate of Incorporation or By-Laws or (c)
conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under any Requirement of Law or, subject to
clause (a) above, Contractual Obligation of the Borrower or require termination
of any Contractual Obligation, the consequences of which conflict or default or
termination would have or is reasonably likely to result in a Material Adverse
Effect or (d) result in or require the creation or imposition of any Lien
whatsoever upon any of the Properties or assets of the Borrower (other than
Liens permitted pursuant to Section 7.01(ii) hereof) or (e) require any approval
----------------
of stockholders.
(iv) Governmental Consents. The execution, delivery and performance
of each Loan Document (and the transactions contemplated thereby) do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by any Governmental Authority, except filings, consents
or notices which have been, or will in due course, be made, obtained or given.
(v) Litigation; Adverse Effects. (a) Except as set forth in
Schedule 4.01(v) attached hereto, there is no action, suit, proceeding,
-----------------
governmental investigation or arbitration, at law or in equity, or before or by
any Governmental Authority, pending, or, to the knowledge of the Borrower,
threatened against the Borrower or any Property of the Borrower which is
reasonably likely to (1) result in any Material Adverse Effect, (2) materially
and adversely affect the ability of the Borrower to perform its obligations
under the Law, any Contractual Obligation and/or the Loan Documents or (3)
materially and adversely affect the ability of the Borrower to perform its
Obligations or the Lender's ability to enforce such Obligations.
36
(b) The Borrower is not (1) in violation of any applicable Law
which violation has or is reasonably likely to have a Material Adverse Effect or
(2) subject to or in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or Governmental Authority
which has or is reasonably likely to have a Material Adverse Effect. There is no
action, suit, proceeding or investigation pending or, to the best knowledge of
the Borrower, threatened against or affecting the Borrower challenging the
validity or the enforceability of any of the Loan Documents.
(vi) No Material Adverse Change. Since September 30, 1998, no
material adverse change in, the condition (financial or otherwise), operations
or performance of the Borrower or the ability of the Borrower to perform its
Obligations under the Loan Documents and the transactions contemplated thereby
has occurred.
(vii) Payment of Taxes. All returns and reports of the Borrower
required to be filed, have been timely filed (or appropriate extensions of time
for the filing of same have been timely requested), and all taxes, assessments,
fees and other governmental charges thereupon and upon their Properties, assets,
income and franchises which are shown on such returns as being due and payable,
have been paid when due and payable (other than the amount or validity of which
are currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been set aside on the
books of the Borrower or its Subsidiaries, as the case may be). The Borrower has
no knowledge of any proposed tax assessment against the Borrower that is
reasonably likely to result in a Material Adverse Effect, which is not being
actively contested in good faith by the Borrower and which has not been
disclosed in writing to the Lender.
(viii) Performance. The Borrower is not in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation applicable to it, and no
condition exists which, with the giving of notice or the lapse of time or both,
would constitute a default under such Contractual Obligation in, each case,
except where the consequences, direct or indirect, of such default or defaults,
if any, would not have or are not reasonably likely to result in a Material
Adverse Effect.
(ix) Accurate and Complete Disclosure. The representations and
warranties of the Borrower or any other Person contained in the Loan Documents,
and all certificates and other documents delivered to the Lender, in connection
herewith and therewith, do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, not misleading.
(x) Requirements of Law. The Borrower has no actual knowledge of
any non-compliance with respect to all Requirements of Law applicable to the
Borrower and its business which non-compliance could reasonably be expected to
result in a Material Adverse Effect.
(xi) Patents, Trademarks, Permits, Etc. The Borrower owns, is
licensed or otherwise has the lawful right to use, or has all permits and other
governmental approvals, patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or
37
necessary for the conduct of its business as currently conducted which are
material to its condition (financial or otherwise), operations and performance,
taken as a whole. The use of such permits and other governmental approvals,
patents, trademarks, trade names, copyrights, technology, know how and processes
by the Borrower does not infringe on the rights of any Person, subject to such
claims and infringements and does not, in the aggregate, give rise to any
liability on the part of the Borrower which has or is reasonably likely to
result in a Material Adverse Effect.
(xii) Environmental Matters. Except as disclosed in Schedule
--------
4.01(xii) attached hereto and only in all material respects and to the knowledge
--------- --- ---- -- --- -------- --------
of the Borrower, (a) the operations of the Borrower comply with all applicable
environmental, health and safety Requirements of Law including, without
limitation, all Environmental Laws; (b) the Borrower's present and past
Properties and operations are not the subject of any order from or agreement
with any Governmental Authority or private party or any judicial or
administrative proceeding or investigations respecting any environmental, health
or safety Requirements of Law, and are not the subject of any Remedial Action or
other Liabilities and Costs arising from the Release or threatened Release of an
Environmental Concern Material into the Environment; (c) the Borrower has not
filed any notice under any Requirement of Law indicating past or present
treatment, storage or disposal of an Environmental Concern Material; (d) the
Borrower has not filed any notice under any applicable Requirement of Law
reporting a Release of an Environmental Concern Material into the Environment;
(e) there is not now, nor has there ever been, on or in the Property of the
Borrower any generation, treatment, recycling, storage or disposal of any
Environmental Concern Material; (f) the Borrower has not received any notice or
claim to the effect that it is or may be liable to any Person as a result of the
Release or threatened Release of an Environmental Concern Material into the
Environment, or as a result of exposure to asbestos or to cotton dust, which may
result in any liability; (g) no Environmental Lien has attached to any Property
of the Borrower; (h) the Borrower has not entered into any negotiations or
agreements with any Person (including, without limitation, the prior owner(s) of
any Property owned or leased by the Borrower) relating to any Remedial Action or
environmentally related Claim and (i) the Borrower has no material contingent
liabilities in connection with any Release or threatened Release of any
Environmental Concern Material into the Environment.
(xiii) ERISA. The Borrower and all ERISA Affiliates are in
compliance with ERISA and any and all regulations promulgated thereunder.
Neither the Borrower nor any ERISA Affiliate maintains or contributes to any
Plan other than a Plan listed on Schedule 4.01(xiii) attached hereto. Except as
-------------------
otherwise provided on Schedule 4.01(xiii), each Plan which is intended to be a
--------------------
qualified plan has been determined by the IRS to be qualified under Section
401(a), and each trust related to any such Plan has been so determined to be
exempt from federal income tax under Section 501(a) of the Code prior to its
amendment by the Tax Reform Act of 1986, and such Plan and trust are being
operated in all material respects in compliance with and will be timely amended
in accordance with the Tax Reform Act of 1986 and the Omnibus Budget
Reconciliation Act of 1987 as interpreted by the regulations promulgated
thereunder. Except as otherwise provided on Schedule 4.01(xiii) attached hereto,
-------------------
neither the Borrower nor any ERISA Affiliate maintains or contributes to any
employee welfare benefit plan within the meaning of Section 3(l) of ERISA which
provides lifetime benefits to retirees other than as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended and
interpreted by
38
regulations promulgated thereunder. No material accumulated funding deficiency
(as defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code) exists
in respect to any Benefit Plan. The Borrower and any ERISA Affiliate and any
fiduciary of any Plan (a) have not engaged in a nonexempt "prohibited
transaction" described in Section 406 of ERISA or Section 4975 of the Code and
(b) have not taken any action which would constitute or result in a Termination
Event with respect to any Plan such that actions under (a) or (b) or both would
result in a material obligation to pay money. Neither the Borrower nor any ERISA
Affiliate have incurred any material liability to the PBGC which remains
outstanding. Schedule B to the most recent annual report filed with the IRS with
respect to each Benefit Plan and furnished to the Lender is complete and
accurate. Except as provided on Schedule 4.01(xiii) attached hereto, since the
-------------------
date of each such Schedule B, there has been no change in the funding status or
financial condition of the Benefit Plan relating to such Schedule B. Neither the
Borrower nor any ERISA Affiliate have failed to make a required installment
under subsection (m) of Section 412 of the Code or any other payment required
under Section 412 of the Code on or before the due date for such installment or
other payment. Neither the Borrower nor any ERISA Affiliate are required to
provide security to a Plan under Section 401(a)(29) of the Code due to a Plan
amendment that results in an increase in current liability for the plan year.
Neither the Borrower nor any ERISA Affiliate are now contributing or have ever
contributed to or been obligated to contribute to any Multiemployer Plan, and no
employees or former employees of the Borrower and or any ERISA Affiliate have
been covered by any Multiemployer Plan in respect of their employment by the
Borrower and or any ERISA Affiliate, and, accordingly, the representations and
warranties in this subsection (xiii) do not apply to Multiemployer Plans.
-----------------
(xiv) Assets and Properties. Substantially all of the assets and
properties owned by, leased to or used by the Borrower in its business (a) are
in good operating condition and repair (ordinary wear and tear excepted), (b)
are free and clear of any known defects (except such defects as do not
substantially interfere with the continued use thereof in the conduct of normal
operations) and (c) are able to serve the function for which they are currently
being used, in each case where the failure of such asset to meet such
requirements would not have or is not reasonably likely to result in a Material
Adverse Effect.
(xv) Insurance. The Borrower maintains with financially sound and
reputable insurers, not related to or affiliated with the Borrower, insurance
with respect to its Properties and business, insured against such liabilities,
casualties and contingencies and in such types and amounts as is customary in
the case of corporations engaged in the same or a similar business or having
similar properties similarly situated.
(xvi) Title to Property. The Borrower has good and marketable title
in fee simple to all Property owned or purported to be owned by it, including,
without limitation, all property reflected in the most recent audited balance
sheet referred to in Section 4.01(xvii) hereof or submitted pursuant to Article
------------------- -------
V (except as sold or otherwise disposed of in the ordinary course of business
-
after the date of such balance sheet), in each case free and clear of all Liens,
other than Customary Permitted Liens.
(xvii) Audited Financial Statements. The Borrower has heretofore
furnished to the Lender a consolidated balance sheet of the Borrower and its
Subsidiaries dated as of
39
December 31, 1997, and the related statements of income, cash flows and changes
in stockholders' equity for the Fiscal Year then ended, as examined and reported
on by its Independent Certified Public Accountant, who delivered an unqualified
opinion in respect thereof. Such financial statements (including the notes
thereto) present fairly the financial condition of the Borrower and its
Subsidiaries as of the end of such Fiscal Year and the results of its operations
and its cash flows for the Fiscal Year then ended, all in conformity with GAAP
(except as approved by such accountants and as disclosed therein) and complied
with as to form in all material respects with the applicable published rules and
regulations of the SEC.
(xviii) Interim Financial Statements. The Borrower has heretofore
furnished to the Lender interim consolidated balance sheets of the Borrower and
its Subsidiaries as of the end of its third Fiscal Quarter of the Fiscal Year
beginning September 30, 1998, together with the related statements of income and
cash flows for the applicable fiscal periods ending on each such date. Such
financial statements present fairly the financial condition of the Borrower and
its Subsidiaries as of the end of such Fiscal Quarters and the results of their
operations and their cash flows for the fiscal periods then ended, all in
conformity with GAAP (except to the extent set forth in the notes to said
financial statements), subject to normal and recurring year-end audit
adjustments and complied with as to form in all material respects with the
applicable published rules and regulations of the SEC.
(xix) Absence of Undisclosed Liabilities. The Borrower has no
liability or obligation of any nature whatever (whether absolute, accrued,
contingent or otherwise, whether or not due), unusual forward or long-term
commitments or unrealized or anticipated losses from unfavorable commitments,
except (a) as disclosed in the financial statements referred to in Sections 4.01
-------------
(xvii) and (xviii) hereof, (b) matters that, individually or in the aggregate
------ -------
could not result in a Material Adverse Effect and (c) Contractual Obligations
incurred in the ordinary course of the Borrower's business.
(xx) Margin Regulations. No part of the proceeds of the Revolving
Credit Facility will be used for the purpose of buying or carrying any Margin
Stock, or to extend credit to others for the purpose of buying or carrying any
Margin Stock. The Borrower is not engaged in the business of extending credit to
others for the purpose of buying or carrying Margin Stock. The making of any
Revolving Credit Loan and the use of proceeds of any such Revolving Credit Loan
will not violate or conflict with the provisions of Regulation T, U or X of the
Federal Reserve Board, as amended from time to time. The Borrower is not an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, nor is the Borrower controlled by
such company.
(xxi) Labor Matters. Except as set forth on Schedule 4.01(xxi)
-------------------
attached hereto, the Borrower is not a party to any labor union or collective
bargaining agreements and is in material compliance with all applicable Laws
respecting employment and employment practices, including, without limitation,
laws, regulations, and judicial and administrative decisions relating to wages,
hours, conditions of work, collective bargaining, health and safety, payment of
social security, payroll, withholding and other taxes, worker's compensation,
insurance requirements, as well as requirements of ERISA and the Consolidated
Omnibus Budget Reconciliation Act.
40
(xxii) Year 2000 Problem. Borrower reasonably anticipates that it
will, on a timely basis, successfully resolve the Year 2000 Problem for all
material computer applications used by it and, if unable to successfully resolve
all or part of the Year 2000 Problem, the Year 2000 Problem will not result in a
Material Adverse Effect.
(xxiii) Material Contracts. Schedule 4.01(xxiii) lists all material
contracts relating to the business operations of the Borrower and Corporate
Guarantors. All such material contracts are valid, binding and enforceable upon
the Borrower and/or Corporate Guarantors and each of the other parties thereto
in accordance with their respective terms, and there is no default thereunder,
to the Borrower's and/or Corporate Guarantors' knowledge.
SECTION 4.02 SUBSEQUENT FUNDING REPRESENTATIONS AND WARRANTIES. In order to
induce the Lender to enter into this Loan Agreement and to make Revolving Credit
Loans, the Borrower hereby represents and warrants to the Lender that the
statements set forth in sections (i) through (xxiii) of Section 4.01 hereof
-------------
(except to the extent that such statements (i) are made expressly only as of the
Closing Date or (ii) other than for changes permitted or contemplated by this
Loan Agreement), are true, correct and complete in all material respects after
the Closing Date on and as of the Funding Date in respect of each Borrowing.
SECTION 4.03 SEC FILINGS. Borrower has heretofore delivered to Lender true
and complete copies of (i) Amendment No. 3 to Form SB-2, as filed with the SEC
on August 30, 1996, Form SB-2, as filed with the SEC on June 13, 1997, Amendment
No. 1 to Form SB-2, as filed with the SEC on June 17, 1997, a Prospectus dated
September 27, 1996, and a Prospectus dated June 26, 1997, all filed by the
Borrower, and (ii) all other reports or registration statements filed with the
SEC, in each case as filed with the SEC. Borrower has filed all required forms,
reports and documents with the SEC, all of which were prepared in accordance
with the requirements of the Securities Act and the Securities Exchange Act.
ARTICLE V
REPORTING COVENANTS
On and after the Closing Date and so long as the Borrower shall have any
Obligation hereunder, unless the Lender shall give its prior express written
consent to the effect otherwise, then:
SECTION 5.01 STATEMENT OF ACCOUNTING. The Borrower shall, and shall cause
each of its Subsidiaries and Affiliates, as applicable, (i) to make and to keep
books, records and accounts which, in reasonable detail, accurately and fairly
reflect their respective transactions and dispositions of their respective
assets and (ii) to maintain a system of internal accounting controls sufficient
to provide reasonable assurances that (a) transactions are executed in
accordance with management's general or specific authorization, (b) transactions
are recorded as necessary (1) to permit preparation of financial statements in
conformity with GAAP and any other accounting principles applicable thereto and
(2) to maintain accountability for assets and (c) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
41
SECTION 5.02 REPORTING AND INFORMATION REQUIREMENTS. The Borrower shall
deliver or cause to be delivered to the Lender the following financial
statements, data, reports and information, at the Borrower's own cost and
expense:
(i) Annual "Audited" Consolidated Financial Statements of the
Borrower, the Corporate Guarantors and any Subsidiary. As soon as available, but
in any event within ninety (90) days after the close of each Fiscal Year of the
Borrower, "audited" consolidated and consolidating statements of income and a
statement of cash flows and a consolidated statement of retained earnings for
the Borrower, the Corporate Guarantors and any Subsidiary for such Fiscal Year
and a consolidated and consolidating balance sheet of the Borrower, the
Corporate Guarantors and any Subsidiary as of the close of such Fiscal Year, and
notes to each, all in reasonable detail, setting forth in comparative form the
corresponding figures for the preceding Fiscal Year. Such financial statements
shall be accompanied by an opinion of the Independent Certified Public
Accountant, which opinion shall be signed by such Independent Certified Public
Accountant. The opinion of such accountants shall be free of exceptions or
qualifications not acceptable to the Lender, and in any event shall be free of
any exception or qualification which is of "going concern" or like nature or
which relates to a more limited scope of examination and shall be otherwise
acceptable to the Lender. In addition to the delivery of the annual "audited"
consolidated financial statements, the Borrower shall also deliver to the
Lender, at the same time, an "unaudited" management prepared consolidating
statement of income and retained earnings for the Borrower, the Corporate
Guarantors and any Subsidiary for such Fiscal Year and a consolidating balance
sheet for the Borrowers , the Corporate Guarantors and any Subsidiary as of the
close of such Fiscal Year, all prepared and certified to the Lender by the
Borrower's chief accounting officer in his capacity as an Authorized Officer.
(ii) Quarterly Management Prepared Consolidated Financial Statements
of the Borrower, the Corporate Guarantors and any Subsidiary. As soon as
available, but in any event within forty-five (45) days after the close of each
of the first three Fiscal Quarters of each Fiscal Year of the Borrower,
"unaudited" management prepared consolidated and consolidating statements of
income and a statement of cash flows and consolidated statements of retained
earnings and balance sheets for the Borrower, the Corporate Guarantors and any
Subsidiary for such Fiscal Quarter and for the period from the beginning of such
Fiscal Year to the end of such Fiscal Quarter, and an "unaudited" consolidated
and consolidating balance sheet of the Borrower, the Corporate Guarantors and
any Subsidiary as of the close of such Fiscal Quarter, all in reasonable detail
and with all notes and supporting schedules to the extent required to be
included in Borrower's 10-Q or 10-QSB, as applicable, setting forth in
comparative form the corresponding figures for the corresponding dates and
periods during the preceding Fiscal Year, and certified by the Chief Financial
Officer of the Borrower in his capacity as an Authorized Officer as presenting
fairly in all material respects, the financial position of the Borrower, the
Corporate Guarantors and any Subsidiary as of the end of such dates and fiscal
periods and the results of their operations and the changes in their financial
position and cash flows for such fiscal periods, in conformity with GAAP applied
in a manner consistent with that of the most recent audited financial statements
furnished to the Lender, subject to normal and recurring year-end audit
adjustments.
42
(iii) Compliance Certificates. Together with each delivery of any
financial statement pursuant to this Section 5.02(i) and Section 5.02(ii) above,
------------------------------------
an Officer's Certificate of the Borrower substantially in the form of Exhibit
-------
"D" attached hereto, (a) stating that the officer signatory thereto in his
---
capacity as an Authorized Officer has reviewed the terms of this Loan Agreement
and the principal Loan Documents, and has made, or caused to be made under his
supervision, a review in reasonable detail of the transactions and condition of
the Borrower, taken as a whole, during the accounting period covered by such
financial statements, and that such review has not disclosed the existence
during or at the end of such accounting period, and that the signer does not
have knowledge of the existence as at the date of the Officer's Certificate, of
any condition or event which constitutes an Event of Default or Potential Event
of Default, or, if any such condition or event existed or exists, specifying the
nature and period of existence thereof and what action the Borrower has taken,
is taking and proposes to take with respect thereto and (b) demonstrating in
reasonable detail compliance, during and at the end of such accounting periods,
with the financial covenants contained in Article VIII of this Loan Agreement.
------------
(iv) Accountant's Certificate. Each set of financial statements
delivered pursuant to Section 5.02(i) hereof shall be accompanied by a
----------------
certificate or report dated the date of such financial statements by the
Independent Certified Public Accountant who certified such financial statements
stating in substance that they have reviewed this Loan Agreement and that in
making the examination necessary for their certification of such financial
statements they did not become aware of any Event of Default or Potential Event
of Default, or if they did become so aware, such certificate or report shall
state the nature and period of existence thereof. Such Accountant's Certificate
shall not be required in connection with the delivery of the Borrower's 10-Q and
such Accountant's Certificate shall be deemed to be acceptable to the Lender if
contained within the notes to such financial statements.
(v) Other Reports and Information. Promptly upon their becoming
available to the Borrower and in respect of those that are material, a copy of
--- -- ------- -- ----- ---- --- --------
(a) all reports, financial statements and other information distributed
generally by the Borrower to its stockholders, bondholders or the financial
community, (b) all accountants' management letters pertaining to, all other
reports submitted by accountants in connection with any audit of, and all other
material reports from outside accountants with respect to, the Borrower, and (c)
all reports submitted to Governmental Authorities and/or with respect to Plans
under ERISA, except as prepared in the normal course of the Borrower's business
and where no material adverse action with respect thereto would result.
(vi) Further Information. The Borrower shall promptly furnish to the
Lender any business, financial or other information concerning the Borrower, the
Corporate Guarantors, any Subsidiaries and/or any Affiliates which the Lender
may reasonably request from time to time in a form acceptable to the Lender.
(vii) Notice of Event of Default; Notice of Material Adverse Change.
Promptly upon becoming aware of any Event of Default, Potential Event of Default
or the commencement, existence or threat of any action, proceeding,
investigation or arbitration against or affecting the Borrower, the Corporate
Guarantors, any Subsidiaries and/or any Affiliates which, if adversely
43
decided, would result in a Material Adverse Effect on the business, assets,
operations or financial condition of the Borrower, the Corporate Guarantors, any
Subsidiary and/or any Affiliate taken as a whole, or on the ability of the
Borrower and/or the Corporate Guarantors to perform their obligations under the
Loan Documents, the Borrower shall give the Lender written notice thereof,
together with a written statement of the President or Chief Financial Officer of
the Borrower in his capacity as an Authorized Officer setting forth the details
thereof and any action with respect thereto taken or contemplated to be taken by
the Borrower.
(viii) Notice of Pension-Related Events. The Borrower shall give the
Lender written notice within fifteen (15) days after the Borrower, any Corporate
Guarantors or an ERISA Affiliate knows, has reason to know or receives notice
concerning (a) the occurrence of any Termination Event; (b) the occurrence of a
non-exempt prohibited transaction (as defined in Section 406 of ERISA and
Section 4975 of the Code) or (c) any other ERISA-related event or action.
(ix) SEC Documents. As soon as available, true and complete copies
of any report or statement mailed by the Borrower to its stockholders generally
or filed by the Borrower with the SEC subsequent to the date hereof.
(x) Business Plans, Financial Projections. Within thirty (30) days
of the end of Borrower's Fiscal Year, Borrower shall submit to the Lender a
Board of Directors approved plan (including a projected balance sheet, income
statement and statement of cash flow) of the Borrower, which shall include the
Corporate Guarantors and Subsidiaries for the upcoming Fiscal Year in form and
substance as shall be reasonably satisfactory to Lender.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all of the Obligations, unless the Lender shall give
its prior express written consent to the effect otherwise, then:
SECTION 6.01 CORPORATE EXISTENCE, ETC. The Borrower shall, and shall cause
the Corporate Guarantors to, do or cause to be done all things necessary (i) to
maintain their respective status as a corporation duly organized, existing and
in good standing under the laws of their respective jurisdiction of
incorporation, and (ii) to preserve and to keep in full force and effect their
respective rights and franchises unless the failure to maintain such rights and
franchises would not result in a Material Adverse Effect. The Borrower shall
promptly provide the Lender with a complete up-to-date list of all Subsidiaries
and Affiliates of the Borrower and the Corporate Guarantors.
SECTION 6.02 CORPORATE POWERS, ETC. The Borrower shall, and shall cause the
Corporate Guarantors to, do or cause to be done all things necessary to qualify
and remain qualified to conduct business in each jurisdiction in which the
nature of their respective businesses or the ownership of their properties or
both requires them to be so qualified. The Borrower shall, and
44
shall cause the Corporate Guarantors to, do or cause to be done all things
necessary to transact business in their own names and shall invoice all accounts
in their own name.
SECTION 6.03 COMPLIANCE WITH LAWS, ETC. The Borrower shall, and shall cause
the Corporate Guarantors (i) to comply with all Requirements of Law, and all
restrictive covenants affecting them or their businesses, properties, assets or
operations and (ii) to obtain as needed all Permits necessary for their
operations, and maintain such Permits in good standing, except to the extent
non-compliance with this Section 6.03 would not result in a Material Adverse
-------------
Effect.
SECTION 6.04 PAYMENT OF TAXES AND CLAIMS. The Borrower shall, and shall
cause the Corporate Guarantors to, pay or cause to be paid (i) all taxes,
assessments and other governmental charges imposed upon them or on any of their
respective properties or assets or in respect of any of their respective
franchises, business, income or property before any penalty or interest accrues
thereon and (ii) all Claims (including, without limitation, claims for labor,
services, materials and supplies), for sums material in the aggregate to the
Borrower and the Corporate Guarantors, which have become due and payable and
which by Law have or may become a Lien (other than a Customary Permitted Lien)
upon their Property, prior to time when any penalty or fine shall be incurred
with respect thereto; provided, however, that no such taxes, assessments and
governmental charges referred to in clause (i) above or Claims referred to in
----------
clause (ii) above need be paid if being contested in good faith by appropriate
-----------
proceedings promptly instituted and diligently conducted and if adequate
reserves shall have been set aside therefor in accordance with GAAP.
SECTION 6.05 MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower shall, and
shall cause the Corporate Guarantors to, maintain or cause to be maintained in
good repair, working order and condition, excepting ordinary wear and tear, all
of their respective Properties material to their operations and will make or
cause to be made all appropriate repairs, renewals and replacements thereof,
consistent with past practice. The Borrower shall, and shall cause the Corporate
Guarantors, to maintain or cause to be maintained with financially sound and
reputable insurers reasonably acceptable to the Lender, insurance policies and
programs currently in place and in full force and effect or substantially
similar programs or policies and amounts or other programs, policies and amounts
acceptable to the Lender. Not later than thirty (30) days later than the
renewal, replacement or material modification of any policy or program, the
Borrower shall deliver or cause to be delivered to the Lender a certificate of
insurance setting forth for each such policy or program: (i) the amount of such
policy, (ii) the risks insured against by such policy, (iii) the name of the
insurer and each insured party under such policy and (iv) the policy number of
such policy.
SECTION 6.06 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCLOSURE. Except
for information and records which the Borrower may not under applicable Law
disseminate or disclose to the Lender, the Borrower shall, and shall cause the
Corporate Guarantors, any Subsidiary and any Affiliate to, permit any authorized
representative(s) designated by the Lender to visit, to conduct a field audit or
to otherwise inspect any of the Borrower's Properties, including their financial
and accounting records, and to make copies and take extracts therefrom, and to
discuss the Borrower's, the Corporate Guarantors', any Subsidiaries' and any
Affiliate's affairs, finances and accounts with the Lender's officers,
employees, representatives or
45
independent certified public accountants, upon reasonable notice and during
normal business hours. Each such visitation and inspection by or on behalf of
the Lender shall be at the Lender's own cost and expense, provided, however, if
an Event of Default has occurred or is continuing, the Lender may do any of the
foregoing at the Borrower's expense without notice and during normal business
hours.
SECTION 6.07 LITIGATION, CLAIMS, ETC., The Borrower shall provide the
Lender with (i) a litigation status report, in a form satisfactory to the
Lender, with respect to any new litigation (whether at law or in equity) which
is asserted against the Borrower, the Corporate Guarantors, any Subsidiary
and/or any Affiliate involving potential claims in excess of $1,000,000.00
promptly after the close of each Fiscal Quarter; (ii) notice of any suit at law
or in equity or claim brought or asserted against the Borrower, the Corporate
Guarantors, any Subsidiary and/or any Affiliate, promptly after learning thereof
with respect to any suit or claim involving money or property valued in excess
of $500,000.00 or any such suits or claims which in the aggregate involve money
----------------
or property valued in excess of $1,000,000.00; and (iii) prompt notice of any
investigation or proceeding before or by any Governmental Authority, the effect
of which is reasonably likely to result in a Material Adverse Effect.
SECTION 6.08 MAINTENANCE OF LICENSES, PERMITS, ETC., The Borrower shall,
and shall cause the Corporate Guarantors to, (i) maintain in full force and
effect all Permits or other rights necessary for the operation of their
businesses, except where the failure to obtain any of the foregoing would not
result in or is not reasonably likely to result in a Material Adverse Effect and
(ii) notify the Lender in writing, promptly after learning thereof, of the
suspension, cancellation, revocation or discontinuance of or of any pending or
threatened action or proceeding seeking to suspend, cancel, revoke or
discontinue any Permit where the result thereof could reasonably be expected to
result in a Material Adverse Effect.
SECTION 6.09 CONTINUATION OF OR CHANGE IN BUSINESS. Except as permitted
pursuant to Section 7.02, the Borrower shall, and shall cause the Corporate
-------------
Guarantors to continue to engage in their respective businesses substantially as
conducted and operated during the present and preceding Fiscal Year, and the
Borrower shall, and shall cause the Corporate Guarantors to not engage in any
other business.
SECTION 6.10 ADDITIONAL CORPORATE GUARANTORS. The Borrower shall cause each
domestic and foreign operating (i) Majority Owned Subsidiary or (ii) Affiliate
in which the Borrower is the owner (whether legal or beneficial and whether
direct or indirect) of at least fifty percent (50%) or more of the authorized,
issued and outstanding common stock of said Affiliate, or other form of
ownership interest in the event the Affiliate is not a corporation, which is
acquired or formed after the Closing Date, to enter into and execute the
Agreement of Guaranty, thereby becoming a Corporate Guarantor. Schedule 6.10
-------------
contains a current list of Corporate Guarantors as of the date hereof.
SECTION 6.11 YEAR 2000. The Borrower shall, and shall cause each Subsidiary
to, take all action necessary to assure that such Borrower's and each such
Subsidiary's computer-based systems are able to effectively process data
including dates prior to, on, and after January 1, 2000 such that there will be
no Material Adverse Effect. At the request of the Lender, the Borrower
46
shall provide the Lender with assurance reasonably acceptable to the Lender of
the Borrower's or any Subsidiary's capabilities with respect to the Year 2000
Problem.
SECTION 6.12 FURTHER ACTS. Within forty-five (45) days of the date hereof,
the Borrower shall take, at its own expense, all actions necessary to deliver to
Lender, opinions of counsel and the Agreements of Guaranty of Intelligroup
Australia Pty Limited and Intelligroup Singapore Private Ltd., acceptable in
form and substance to Lender, with respect to the Agreements of Guaranty stating
that, among other things, the Agreements of Guaranty constitute the legal, valid
and binding obligations of each Corporate Guarantor, enforceable against such
party in accordance with its terms, the Corporate Guarantors have all requisite
corporate power and authority to perform their obligations under the Agreements
of Guaranty and neither the performance of the Corporate Guarantors' obligations
or consummation of the transaction under the Loan Documents resulted or will
result in a breach of any certificate of incorporation or by-laws or comparable
document or any rules, regulations or local law to which any Corporate Guarantor
is subject. Further, the Borrower shall take all actions necessary within the
above time, to deliver the original certificates of stock to be pledged to the
Lender in accordance with the Pledge Agreements executed contemporaneously
herewith along with all instruments and agreements to effect transfer thereof to
Lender. Failure of the Borrower to comply with the terms of this Section 6.12
may, at the Lender's sole discretion, result in an Event of Default hereunder
and the Lender may avail itself of such rights and remedies provided herein
ARTICLE VII
NEGATIVE COVENANTS
------------------
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all of the Obligations, unless the Lender shall give
its prior written consent to the effect otherwise, then:
SECTION 7.01 ADDITIONAL LIENS. The Borrower shall not, and shall not permit
any of the Corporate Guarantors to, directly or indirectly create, incur, assume
or permit to exist any Lien on or with respect to any of their respective
Properties except:
(i) Liens, if any, created under the Loan Documents;
(ii) Any interest or title of a lessor or secured by a
lessor's interest under any lease permitted by this Loan Agreement;
(iii) Liens existing on the date of this Loan Agreement as set
forth on Schedule 7.01 and Liens existing on the date of this Loan Agreement
securing the existing Debt (as set forth on Schedule 7.04) permitted to be
--------------
secured (but said Liens may not be renewed, extended or increased in principal
amount);
(iv) Customary Permitted Liens;
(v) Purchase money Liens securing Debt (including the
interest of a
47
lease under a Capitalized Lease) permitted pursuant to Section 7.04(iv); and
---------------
(vi) Liens on the property or assets of a corporation which
becomes a Subsidiary after the date hereof securing Debt permitted by paragraph
7.04(vii), provided that (1) such Liens existed at the time such corporation
became a Subsidiary and were not created in anticipation of the acquisition, (2)
any such Lien does not by its terms cover any property or assets after the time
such corporation becomes a Subsidiary which were not covered immediately prior
thereto, and (3) any such Lien does not by its terms secure any Debt other than
Debt existing immediately prior to the time such corporation becomes a
Subsidiary.
SECTION 7.02 MERGERS, CONSOLIDATIONS, ACQUISITIONS AND SALES OF ASSETS.
(i) The Borrower (a) will not consolidate or merge with any Person
or acquire the stock or assets of any Person whether by merger, consolidation,
purchase of stock or otherwise, and (b) will not, and will not permit any of the
Corporate Guarantors to, sell, otherwise dispose of or lease all or any
substantial part (as defined in paragraph (ii) below) of the assets of the
Borrower and the Corporate Guarantors taken as a whole, provided, however, that
-------- -------
any Corporate Guarantor may sell, otherwise dispose of or lease its assets to
the Borrower or any other Corporate Guarantor; and provided, further, that the
Borrower may consolidate, merge or acquire (by way of acquisitions of stock or
other equity interests or transfer of property) any other entity or may sell,
otherwise dispose of or lease all or substantially all of such assets if (1)
either (A) in the case of a merger or consolidation, the Borrower shall be the
surviving or continuing corporation, or (B) the corporation formed by or
resulting from such merger or consolidation, if not the Borrower, or the
corporation to which such assets shall have been sold, otherwise disposed of or
leased, shall be a corporation organized under the laws of the United States,
any state of the United States or the District of Columbia and shall expressly
assume the obligations of the Borrower hereunder and such Persons are in
substantially the same business as the Borrower, and (2) at the time of such
consolidation, merger, acquisition or such sale, disposition or lease and before
or after giving effect thereto, on a pro forma basis, no Event of Default or
Potential Event of Default shall have occurred and be continuing.
(ii) As used in this Section 7.02, a sale, other disposition or
-------------
lease of assets shall be deemed to cover a "substantial part" of the assets of
the Borrower and the Corporate Guarantors only if, on a pro forma basis, the net
book value of such assets when added to the net book value of all other assets
sold, otherwise disposed of or leased by the Borrower and the Corporate
Guarantors during any Fiscal Year of such sale, other disposition or lease, on a
consolidated basis exceeds twenty-five (25%) percent of the consolidated assets.
-------
(iii) Not less than fifteen (15) days prior to the funding of each
such acquisition, the Borrower shall deliver to Lender a certificate from one of
the Authorized Officers certifying that after giving effect to such acquisition
and the incurrence of any indebtedness hereunder and permitted by Section 7.04
------------
in connection therewith, on a pro forma basis, as if the acquisition and such
incurrence of indebtedness had occurred on the first day of the twelve month
period ending on the last day of the Borrower's most recently completed Fiscal
Quarter, the Borrower would have been in compliance with all of the covenants
contained in this Agreement, including, without limitation, the financial
covenants set forth in Article 8.
48
Such certificate shall include a spread sheet containing the calculations for
such financial covenants and a pro forma consolidated balance sheet and
statement of earnings and retained earnings after giving effect to such
acquisition along with all documentation evidencing the nature and type of
indebtedness in conjunction with such acquisition.
SECTION 7.03 LOANS AND INVESTMENTS. Borrower shall not, and shall not
permit any of the Corporate Guarantors at any time to purchase, acquire or own
any stock, bonds, notes or securities of, or any partnership interest (whether
general or limited) in, or any other interest in, or make any capital
contribution to, any other Person, or become a joint venture partner in any
joint venture (provided that Borrower may make joint venture investments not to
exceed an aggregate of $1,000,000.00 at any one time), or agree, become or
remain liable to do any of the foregoing, except for: (a) debt securities having
a maturity of not more than one year issued or guaranteed by the United States
government or by an agency or instrumentality thereof; (b) certificates of
deposit, bankers acceptances and time deposits, which in each case mature within
one year from the date of purchase thereof and which are issued by a lender
acceptable to Lender; (c) commercial paper maturing in two hundred-seventy (270)
days or less from the date of issuance which, at the time of acquisition by
Borrower either (i) is accorded the highest rating by Standard and Poor's Rating
Group or ▇▇▇▇▇'▇ Investor's Service, Inc., or (ii) is issued by Lender, (d)
direct obligations of the United States of America or any agency or
instrumentality of the United States of America, the payment or guarantee of
which constitutes a full faith and credit obligation of the United States of
America, in each case maturing in 12 months or less from the date of
acquisition, provided that the amounts otherwise permitted under this section
shall not exceed $5,000,000.00 outstanding at any time and shall be approved by
a majority of the Board of Directors of the Borrower, (e) extensions of trade
credit to customers in the ordinary course of business, (f) loans to officers of
the Borrower in an aggregate principal amount outstanding at any time not to
exceed $250,000.00, (g) loans and advances to employees of the Borrower or its
Subsidiaries for travel, entertainment and relocation expenses in the ordinary
course of business in an aggregate amount for the Borrower and its Subsidiaries
not to exceed $250,000.00 at any one time outstanding, (h) Capital Stock of any
Subsidiary, (i) loans and advances by the Company to its wholly-owned
Subsidiaries, and (j) loans by the Borrower to its employees in connection with
management incentive plans in an aggregate amount not to exceed $250,000.00,
provided that the aggregate amount of such loans outstanding at any time may not
exceed $250,000.00.
SECTION 7.04 INDEBTEDNESS. The Borrower shall not, and shall not permit any
of its Subsidiaries to create, incur, assume or suffer to exist any Debt except:
(i) Debt under the Loan Documents;
(ii) Existing Debt as set forth on Schedule 7.04 (including any
--------------
extensions, renewals or modifications thereof provided there is no increase in
the amount thereof or other significant change in the terms thereof unless
otherwise specified on Schedule 7.04);
-------------
(iii) Debt which is subordinated to the Obligations on terms
approved by the Lender in writing;
49
(iv) additional Debt secured by purchase money security interests
having an aggregate principal amount not to exceed $2,500,000.00 at any time;
(v) other Debt having an aggregate principal amount not to exceed
$3,000,000.00 at any time provided the Debt allowed in this Subsection (v) shall
not be on terms more favorable than the material terms set forth herein and the
Borrower shall have availability under the Revolving Credit Facility equal to at
all times, the amount of such outstanding Debt;
(vi) Debt consisting of unsecured overdraft facilities to foreign
Subsidiaries not to exceed $500,000.00 in the aggregate outstanding at any time;
and
(vii) Debt of a Person which becomes a Subsidiary after the date
hereof, provided that:
(1) such Debt existed at the time such Person became a
Subsidiary and was not created in anticipation of such acquisition;
(2) immediately after giving effect to the acquisition of such
Person by the Borrower or its Subsidiaries, no Potential Event of Default or
Event of Default shall occur and be continuing;
(3) the remaining amount of all such Debt does not exceed in
the aggregate (collectively for all such Persons which became a Subsidiary after
the date hereof) ten (10%) percent of the Consolidated Net Worth of the Borrower
and Subsidiaries;
(4) liens securing such Debt (if any) shall not extend to
cash, marketable securities, accounts receivable, inventory, work in process,
contracts receivable, patents, trademarks, notes receivable or any such assets
of such Person that would be properly categorized as current assets according to
GAAP;
(5) such Debt is not guaranteed by the Borrower or any
Subsidiaries;
(6) such Debt is not payable to selling shareholders or
Persons owned by or controlled by selling shareholders or other Persons unless
subordinated to Lender on terms approved by Lender in writing; and
(7) such Debt would not be subject to acceleration of maturity
or cause an Event of Default under existing loan documents as a result of such
acquisition by the Borrower.
SECTION 7.05 ERISA. The Borrower shall not, and shall not permit any of
ERISA Affiliates to, do any of the following to the extent that such act or
failure to act would result in the aggregate, after taking into account any
other such acts or failures to act, in a obligation to pay a sum of money that
is material to the business of the Borrower and/or the Corporate Guarantors:
50
(i) Engage, or permit an ERISA Affiliate to engage, in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code for which a class exemption is not available or a private exemption has not
been obtained from the DOL;
(ii) Permit to exist any accumulated funding deficiency (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or not waived;
(iii) Fail, or permit an ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Plan;
(iv) Terminate, or permit an ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of the Borrower, the Corporate
Guarantors or an ERISA Affiliate under Title IV of ERISA; or
(v) Fail, or permit any ERISA Affiliate to fail, to pay any
required installment under section (m) of Section 412 of the Code or any other
payment required under Section 412 of the Code on or before the due date for
such installment or other payment.
SECTION 7.06 AMENDMENT OF ARTICLES OF INCORPORATION OR BY-LAWS. The
Borrower shall not, and shall not permit the Corporate Guarantors to, amend,
modify or supplement their respective articles of incorporation or By-Laws,
except upon at least ten (10) Business Days' prior express written notice to the
Lender.
SECTION 7.07 MARGIN REGULATIONS. The Borrower shall not permit any portion
of the proceeds of any Revolving Credit Loans extended to be used in any manner
which might cause the extension of credit or the application of such proceeds to
violate Regulation U or Regulation X or any other regulation of the Federal
Reserve Board or to violate the Securities Exchange Act or the Securities Act,
in each case as in effect on the date or dates of such Borrowing, such use of
proceeds, such creation or such issuance.
SECTION 7.08 CANCELLATION OF DEBT; PREPAYMENT. The Borrower shall not, and
shall not permit the Corporate Guarantors to, cancel any Claim or Debt, except
for adequate consideration and in the ordinary course of their respective
businesses, or to prepay any long-term Debt; provided, however, that the
-------- -------
foregoing shall not prohibit the prepayment of the Obligations.
SECTION 7.09 ENVIRONMENTAL LIABILITIES. The Borrower shall not, and shall
not permit the Corporate Guarantors to, become subject to any Liabilities and
Costs which the Lender deems has or is likely to have a Material Adverse Effect
arising out of or related to (i) the Release or threatened Release at any
location of any Environmental Concern Material into the Environment, or any
Remedial Action in response thereto, or (ii) any violation of any Environmental
Law, or any health or safety Requirement of Law; provided that this Section 7.09
-------- ---- ------------
shall not be violated so long as (a) the Borrower shall have notified the Lender
of the assertion of such liability or required expenditures promptly upon
receiving written notice of such assertion, (b) the Borrower shall have
continued to furnish the Lender with such information concerning such asserted
liability or required expenditure as the Lender shall have reasonably requested,
or
51
as otherwise provided herein, (c) the Borrower shall be diligently pursuing
indemnification for such liability or required expenditures from any Person
which has an obligation to provide such indemnification, and (d) the Lender is
satisfied that the imposition of such liability during the pendency of the
Borrower's pursuit of indemnification will not materially impair the Borrower's
ability to perform its financial obligations under this Loan Agreement.
SECTION 7.10 FISCAL YEAR. The Borrower shall not, and shall not permit the
Corporate Guarantors to, change their respective Fiscal Year or permit their
respective Fiscal Year to end on a day other than December 31st.
SECTION 7.11 GUARANTIES. The Borrower shall not, and shall not permit the
Corporate Guarantors to assume, guaranty, endorse or otherwise be or become
directly or contingently responsible or liable, for any Contingent Obligation of
any Person, except for:
(i) Contingent Obligations existing on the Closing Date as described
on Schedule 7.11(i) attached hereto;
----------------
(ii) Contingent Obligations by endorsement of negotiable instruments
for deposit or collection or similar transactions in the ordinary course of
business; and
(iii) Contingent Obligations incurred in the ordinary course of
business after the date hereof in an aggregate amount not to exceed $750,000.00
at any time outstanding.
SECTION 7.12 CHANGE IN BUSINESS. The Borrower shall not, and shall not
permit the Corporate Guarantors to cause or permit a material change in the
nature or scope of their businesses as conducted on the Closing Date and
businesses directly related to such businesses and their primary source of
revenue shall be derived from information technology and management consulting,
software development and associated services and products.
SECTION 7.13 OTHER NEGATIVE PLEDGES. The Borrower shall not, and shall not
permit the Corporate Guarantors to incur, create or permit to exist any negative
pledge in any other agreement entered into between the Borrower or Corporate
Guarantor(s) with any other Person except where the Borrower or Corporate
Guarantor may enter into an agreement in connection with any Lien permitted by
this Agreement when such prohibition or limitation is by its terms effective
only against the assets subject to such Lien.
ARTICLE VIII
FINANCIAL COVENANTS
-------------------
The Borrower covenants and agrees that, on and after the Closing Date and
until payment in full of all the Obligations unless the Lender shall give its
prior written consent to the effect otherwise, then:
SECTION 8.01 MAXIMUM CONSOLIDATED CASH FLOW LEVERAGE RATIO. The Borrower
shall maintain a Consolidated Cash Flow Leverage Ratio equal to or less than
2.50 to 1.0 for the
52
period of four (4) consecutive Fiscal Quarters immediately preceding said date
of determination taken together as one accounting period.
SECTION 8.02 MINIMUM CONSOLIDATED NET WORTH. The Borrower shall maintain a
Consolidated Net Worth as of not less than ninety (90%) percent of the
Consolidated Net Worth as of September 30, 1998, plus fifty (50%) percent of
----
positive net income commencing October 1, 1998 and thereafter at the end of each
Fiscal Year, to be not less than Consolidated Net Worth of the prior Fiscal Year
plus fifty (50%) percent of positive net income for such Fiscal Year.
SECTION 8.03 CAPITAL EXPENDITURES. The Borrower shall not enter into any
agreement to purchase and/or pay for, or become obligated to pay for capital
expenditures, long term leases, Capital Leases or sale lease-backs, in an amount
at any time outstanding aggregating in excess of $5,000,000.00 during any Fiscal
Year, provided however, on a one (1) year carry-forward basis, the Borrower may
incur Capital Expenditures not to exceed $8,000,000.00 during any Fiscal Year.
SECTION 8.04 MINIMUM FIXED CHARGE COVERAGE RATIO. The Borrower shall not
cause or permit the ratio, calculated on the basis of a rolling four quarters of
(a) Consolidated EBITDA to (b) the sum of cash income tax expense plus interest
----
expense (including, without limitation, the interest component of Capitalized
Lease Obligations), plus scheduled principal payments under any indebtedness
----
(including, without limitation, the principal component of Capitalized Lease
Obligations but excluding principal payments, if any, due under this Loan
Agreement), plus dividends or distributions paid or declared to be less than 1.4
----
to 1.0 as at the end of each Fiscal Quarter.
ARTICLE IX
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
--------------------------------------
SECTION 9.01 EVENTS OF DEFAULT. The occurrence of any of the following
events with the passing of any applicable notice and cure periods shall
constitute an "Event of Default" under this Loan Agreement (hereinafter referred
to as an "Event of Default"):
(i) any representation or warranty made by the Borrower or any of
the Corporate Guarantors or any other Person in any of the Loan Documents
furnished in connection with the Revolving Credit Facility, shall prove to have
been false, incorrect or misleading in any substantial and material respect on
the date as of which made;
(ii) the Borrower shall have failed to make any payment of any
installment of interest on the Revolving Credit Loan Note more than three (3)
days after its due date;
(iii) the Borrower shall have failed to make any payment of
principal on the Revolving Credit Loan Note on its due date;
(iv) the Borrower or any of the Corporate Guarantors shall have
failed to duly observe or perform any covenant, condition or agreement with
respect to the payment of moneys
53
on their part which is to be observed or performed pursuant to the terms of the
Loan Documents, other than the payment of principal and interest which shall be
governed by (ii) and (iii) above, and such default shall have remained uncured
for a period of fifteen (15) days after written notice thereof to the Borrower
or such Corporate Guarantors by the Lender;
(v) the Borrower or any of the Corporate Guarantors shall have
failed to duly observe any of the financial covenants set forth in Article VIII
------------
hereof as of any date of determination;
(vi) the Borrower or any of the Corporate Guarantors shall have
failed to duly observe or perform any covenant, condition or agreement on the
part of the Borrower or such Corporate Guarantors to be observed or performed
pursuant to the terms of the Loan Documents other than the payment of moneys
which shall be governed by Section 9.01 (ii), (iii) and (iv) above, and such
-----------------------------------
default shall have remained uncured for a period of thirty (30) days after
written notice thereof to the Borrower or such Corporate Guarantors by the
Lender;
(vii) the Borrower or any of the Corporate Guarantors shall have
applied for or consented to the appointment of a custodian, receiver, or
liquidator of all or a substantial part of their respective assets; a custodian
shall have been appointed with or without consent of the Borrower and/or any of
the Corporate Guarantors; the Borrower and/or any of the Corporate Guarantors
shall generally not be paying their respective Debts as they become due; the
Borrower and/or any of the Corporate Guarantors shall have made a general
assignment for the benefit of their respective creditors; the Borrower and/or
any of the Corporate Guarantors shall have filed a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization or an arrangement
with their respective creditors, or shall have taken advantage of any insolvency
law, or shall have filed an answer admitting the material allegations of a
petition in bankruptcy, reorganization or insolvency proceeding; a petition in
bankruptcy shall have been filed against the Borrower and/or any of the
Corporate Guarantors and shall not have been dismissed for a period of sixty
(60) consecutive days, or an order for relief shall have been entered by the
appropriate bankruptcy court against the Borrower and/or any of the Corporate
Guarantors under the Bankruptcy Code; or an order, judgment or decree shall have
been entered without the application, approval or consent of the Borrower and/or
any of the Corporate Guarantors by any court of competent jurisdiction
appointing a receiver, trustee, custodian or liquidator of the Borrower and/or
any of the Corporate Guarantors of a substantial part of its assets and such
order, judgment or decree shall have continued unstayed and in effect for any
period of sixty (60) consecutive days;
(viii) writ of execution or attachment or any similar process shall
be issued or levied against all or any part of or interest in any of the
Properties of the Borrower and/or any of the Corporate Guarantors or any
judgment involving monetary damages shall be entered against the Borrower and/or
any of the Corporate Guarantors which shall become a lien on the Borrower's or
any of said Corporate Guarantor's Properties or any portion thereof or interest
therein and such execution, attachment or similar process is not released,
bonded, satisfied, vacated or stayed within thirty (30) days after its entry or
levy, and said writ of execution, attachment, levy or judgment shall involve
monetary damages aggregating more than $1,000,000.00;
54
(ix) seizure or foreclosure of any of the Properties of the Borrower
and/or any of the Corporate Guarantors pursuant to process of law or by legal
self-help, involving monetary damages aggregating more than $1,000,000.00,
unless said seizure or foreclosure is stayed or bonded within thirty (30) days
after the occurrence of same;
(x) the voluntary permanent closing of business or ceasing of
operations of the Borrower and/or any of the Corporate Guarantors;
(xi) default by the Borrower and/or any of the Corporate Guarantors
in any of the terms or conditions of any agreement (excluding the Loan
Documents) covering the payment of borrowed money from the Lender and/or any
other creditor (which with respect to any other creditor shall be in an amount
involving not less than $1,000,000.00), which default has been declared by the
Lender or said other creditor, and said Debt with respect to any other creditor
shall have been accelerated;
(xii) the occurrence of a Reportable Event with respect to the
Borrower and/or any of the Corporate Guarantors; or
(xiii) a Change in Control shall occur.
SECTION 9.02 RIGHTS AND REMEDIES.
(i) Acceleration. Upon the occurrence and during the continuance of
any Event of Default described in the foregoing Section 9.01(vii) hereof, the
------------------
Revolving Credit Facility shall automatically and immediately terminate and the
unpaid principal amount of any and all accrued interest and fees due on the
Revolving Credit Loans outstanding shall automatically become immediately due
and payable, with all additional interest from time to time accrued thereon and
without presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration), all
of which are hereby expressly waived by the Borrower, and the obligation of the
Lender to make any Revolving Credit Loans hereunder shall thereupon terminate.
Upon the occurrence and during the continuance of any other Event of Default
described in Section 9.01 above, the Lender may by written notice to the
-------------
Borrower, (a) declare that the Revolving Credit Facility is terminated,
whereupon the obligation of the Lender to make any Revolving Credit Loans
hereunder shall immediately terminate, and/or (b) declare the unpaid principal
amount of and any and all accrued and unpaid interest on the Revolving Credit
Loans to be, and the same shall thereupon be, immediately due and payable with
all additional interest from time to time accrued thereon and without
presentment, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all of which are hereby
expressly waived by the Borrower.
(ii) Rights Under Loan Documents. Upon the occurrence and during the
continuance of any Event of Default, the Lender may take any lawful action
against the Borrower and/or any of the Corporate Guarantors to collect the
payments then due and thereafter to become
55
due under the Loan Documents, including, without limitation, the Agreement of
Guaranty.
(iii) Set-off. Upon the occurrence and during the continuance of any
Event of Default, without notice or other action (any such notice being
expressly waived by the Borrower) the Lender may set-off any money owed by the
Lender in any capacity to the Borrower or any Property of the Borrower in the
possession of the Lender against any of the monetary obligations of the Borrower
to the Lender under the Loan Documents, and the Lender shall be deemed to have
exercised such right of set-off and to have made a charge against any such money
or property immediately, even though the actual book entries may be made at some
time subsequent thereto.
SECTION 9.03 APPLICATION OF PROCEEDS.
(i) All payments and proceeds received under Section 9.02 of this
------------
Loan Agreement shall be applied in the following order of priority:
(a) First, to the payment of all reasonable fees, costs and
expenses (including reasonable attorney's fees and expenses) incurred by the
Lender and/or its agents or representatives in connection with the realization
of such payments or proceeds;
(b) Next, to the payment in full of all unpaid principal,
accrued interest and other sums, if any, due and owing under the Revolving
Credit Facility; and,
(c) Next, the balance, if any, of such payments, proceeds, or
amounts to the Borrower, or, if otherwise determined by a court of competent
jurisdiction, to whomever may be entitled thereto.
(ii) If the amount of the proceeds received in Section 9.03(i) above
---------------
shall be insufficient to satisfy in full the amounts referred to in clauses (a)
and (b) above, then the Borrower shall remain and be liable for any such
deficiency.
SECTION 9.04 NO NOTICES. In order to entitle the Lender to exercise any
remedy available to it under Section 9.02 of this Loan Agreement, it shall not
------------
be necessary for the Lender to give any notice, other than such notice as may be
required expressly in this Loan Agreement or by applicable law.
SECTION 9.05 AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. Upon the
occurrence and during the continuance of an Event of Default, as a result of
which the Lender shall require and employ attorneys or incur other expenses for
the collection of payments due or to become due or the enforcement or
performance or observance of any obligation or agreement on the part of the
Borrower contained herein, the Borrower shall, on demand, pay to the Lender, the
reasonable fees of such attorneys and such other expenses so incurred by them.
SECTION 9.06 NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event any
agreement contained in this Loan Agreement should be breached by any party and
thereafter waived by the other parties, such waiver shall be limited to the
particular breach so waived and
56
shall not be deemed to waive any other breach hereunder.
SECTION 9.07 FAILURE TO EXERCISE RIGHTS. Nothing herein contained shall
impose upon the Lender any obligation to enforce any terms, covenants or
conditions contained in this Loan Agreement and the other Loan Documents.
Failure of the Lender, in any one or more instances, to insist upon strict
performance by the Borrower of any terms, covenants or conditions of this Loan
Agreement and the other Loan Documents, shall not be considered or taken as a
waiver or relinquishment by the Lender of its right to insist upon and to
enforce in the future, by injunction or other appropriate legal or equitable
remedy, strict compliance by the Borrower with all the terms, covenants and
conditions of this Loan Agreement and the other Loan Documents. The consent of
the Lender to any act or omission by the Borrower shall not be construed to be a
consent to any other or subsequent act or omission or to waive the requirement
for the Lender's consent to be obtained in any future or other instance.
SECTION 9.08 WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY WAIVE
ANY AND ALL RIGHTS THAT THEY MAY NOW OR HEREAFTER HAVE UNDER THE LAWS OF THE
UNITED STATES OF AMERICA OR ANY STATE, TO A TRIAL BY JURY OF ANY AND ALL ISSUES
ARISING EITHER DIRECTLY OR INDIRECTLY IN ANY ACTION OR PROCEEDING BETWEEN THE
BORROWER, THE LENDER OR THEIR SUCCESSORS AND ASSIGNS, OUT OF OR IN ANY WAY
CONNECTED WITH THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. IT IS INTENDED
THAT SAID WAIVER SHALL APPLY TO ANY AND ALL DEFENSES, RIGHTS, AND/OR
COUNTERCLAIMS IN ANY ACTION OR PROCEEDING. THE BORROWER AND THE LENDER RECOGNIZE
THAT ANY DISPUTE ARISING IN CONNECTION WITH THE REVOLVING CREDIT FACILITY IS
LIKELY TO BE COMPLEX AND CONSEQUENTLY THEY WISH TO STREAMLINE AND MINIMIZE THE
COST OF THE DISPUTE RESOLUTION PROCESS BY AGREEING TO WAIVE THEIR RIGHTS TO A
JURY TRIAL.
SECTION 9.09 REMEDIES CUMULATIVE. No remedy herein conferred upon or
reserved to the Lender is intended to be exclusive of any other remedy or
remedies; but each and every such remedy shall be cumulative, and shall be in
addition to every other remedy given hereunder, or now or hereafter existing at
law or in equity or by statute. No express or implied waiver by the Lender of
any Event of Default hereunder shall in any way be, or construed to be, a waiver
of any future or subsequent Event of Default. No delay or omission to exercise
any right or power accruing upon any Event of Default continuing as aforesaid,
shall impair any such right or power or shall be construed to be a waiver of any
such Event of Default, or acquiescence therein; and every such right and power
may be exercised from time to time and as often as may be deemed expedient.
57
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.01 EXPENSES.
(i) Generally. The Borrower covenants and agrees upon demand to pay,
or reimburse the Lender for, all the Lender's reasonable external legal costs
and expenses (but not internal legal costs and expenses) and all internal and
external audit, appraisal, valuation and investigation expenses and for all
other reasonable out-of-pocket costs and expenses of every type and nature
(including, without limitation, the reasonable fees, expenses and disbursements
of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP and any other external attorneys retained by the
Lender, auditors, accountants, appraisers, insurance and environmental advisers,
and other consultants) incurred by the Lender in connection with (a) the
administration of this Loan Agreement, the other Loan Documents and the
Revolving Credit Facility including consultation with attorneys in connection
therewith and in connection with the amendment, waiver or consents required or
requested hereunder and (b) the protection, collection or enforcement of any of
the Obligations. For the purposes of this Section, the legal fees of counsel to
the Lender for the preparation and negotiation of the Loan Documents shall not
exceed $30,000.00 plus reasonable costs.
(ii) After Default. The Borrower further covenants and agrees to
pay, or reimburse the Lender for all reasonable out-of-pocket costs and
expenses, including, without limitation, reasonable external attorneys' fees and
disbursements, and costs of settlement incurred by the Lender after the
occurrence and during the continuance of an Event of Default (a) in enforcing
any Obligation or exercising or enforcing any other right or remedy available by
reason of such Event of Default, (b) in connection with any refinancing or
restructuring of the credit arrangements provided under this Loan Agreement in
the nature of a "work-out" or in any insolvency or bankruptcy proceeding, (c) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleadings in any legal proceeding relating to
the Borrower and/or any of the Corporate Guarantors and related to or arising
out of the transactions contemplated thereby or by any of the Loan Documents or
(d) in taking any other action in or with respect to any suit or proceeding
(whether in bankruptcy or otherwise).
SECTION 10.02 INDEMNITY. The Borrower further covenants and agrees to
defend, protect, indemnify, and hold harmless the Indemnified Parties from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for the Indemnified Parties in connection with any
investigative, administrative or judicial proceeding, whether or not the
Indemnified Parties shall be designated a party thereto), imposed on, incurred
by, or asserted against the Indemnified Parties (whether direct, indirect or
consequential and whether based on any Federal or state Laws or other statutory
regulations, including, without limitation, securities and commercial laws and
regulations, under common law or at equity, or on contract or otherwise,
including any liability and costs under Federal, state or local environmental,
health or safety laws, regulations, or common law principles, arising from or in
connection with the past, present or future environmental condition of the
Property or the Release or threatened Release of any
58
Environmental Concern Material into the Environment from the Property) in any
manner relating to or arising out of this Loan Agreement or the other Loan
Documents, or any act, event or transaction related or attendant thereto, the
making of and participation in the Revolving Credit Facility and the management
of such Revolving Credit Loans or the use or intended use of the proceeds of the
Revolving Credit Facility hereunder (collectively, the "Indemnified Matters");
provided, however, that the Borrower shall not have any obligation to an
-------- -------
Indemnified Party hereunder with respect to (a) matters for which such
Indemnified Party has been compensated pursuant to or for which an exemption is
provided in Section 2.06 and Section 2.07 hereof or any other provision of this
------------ ------------
Loan Agreement and (b) Indemnified Matters caused by or resulting from the
willful misconduct or gross negligence of that Indemnified Party, as determined
by a court of competent jurisdiction. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnified Parties.
SECTION 10.03 AMENDMENTS AND WAIVERS. No amendment or modification of any
provision of this Loan Agreement shall be effective without the written
agreement of the Lender and the Borrower, and no termination or waiver of any
provision of this Loan Agreement, or consent to any departure by the Borrower
therefrom, shall in any event be effective without the written concurrence of
the Lender, which the Lender shall have the right to grant or withhold at its
sole discretion.
SECTION 10.04 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default or Potential Event of Default if
such action is taken or condition exists.
SECTION 10.05 NOTICES. Unless otherwise specifically provided therein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, or sent by confirmed telecopy
transmission, nationally recognized overnight courier service or United States
mail and shall be deemed to have been given when delivered in person or by said
courier service, or upon receipt of a confirmed telecopy transmission during
normal business hours or four (4) Business Days after deposit in the United
States mail (registered or certified, with postage prepaid and properly
addressed). Notices to the Lender pursuant to Article II hereof shall not be
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effective until received by the Lender. For the purposes hereof, the addresses
of the parties hereto (until notice of a change thereof is delivered as provided
in this Section 10.05) shall be as set forth below each party's name on the
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signature pages hereof, or, as to each party, at such other address as may be
designated by such party in a written notice to the other party. A failure to
send the requisite copies does not invalidate an otherwise properly sent notice
to the Borrower and/or the Lender.
SECTION 10.06 SURVIVAL OF WARRANTIES AND AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Loan Agreement and the other Loan Documents.
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SECTION 10.07 MARSHALING; RECOURSE TO SECURITY; PAYMENTS SET ASIDE. The
Lender shall not be under any obligation to marshal any assets in favor of the
Borrower, any of the Corporate Guarantors or any other Person or against or in
payment of any or all of the Obligations. To the extent that the Borrower and/or
any of the Corporate Guarantors make a payment or payments to the Lender, or the
Lender enforces its rights and remedies under the Loan Documents or exercises
its right of set-off, and such payment or payments or the proceeds of such
enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, right and remedies therefor (to the extent permissible and
practicable under the law and the circumstances), shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or set-off had not occurred.
SECTION 10.08 SEVERABILITY. In case any provision in or obligation under
this Loan Agreement or the other Loan Documents shall be held to be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations under the Loan
Agreement or the other Loan Documents shall not in any way be affected or
impaired thereby. The invalidating, illegality or unenforceability of a
particular provision in a particular jurisdiction shall not render such
provision invalid, illegal or unenforceable in any other jurisdiction.
SECTION 10.09 GOVERNING LAW. This Loan Agreement shall be governed by, and
shall be construed and enforced in accordance with, the laws of the State of New
Jersey.
SECTION 10.10 SUCCESSORS AND ASSIGNS. This Loan Agreement and the other
Loan Documents shall be binding upon the parties hereto and their respective
successors and assigns. The Borrower's Obligations hereunder may not be assigned
to any Person without the prior express written consent of the Lender. The
Lender may assign, transfer, sell, participate or convey all or any part of the
Revolving Credit Facility to any Person without the consent of the Borrower,
provided such assignment, transfer, sale, participation or conveyance shall be
in minimum amounts of $5,000,000.00. The Lender agrees to promptly notify the
Borrower in writing of any sale or participation by the Lender of all or any
part of the Revolving Credit Facility.
SECTION 10.11 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS LOAN AGREEMENT AND
THE REVOLVING CREDIT LOAN NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF NEW JERSEY, AND BY EXECUTION AND DELIVERY
OF THIS LOAN AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS LOAN
60
AGREEMENT AND THE REVOLVING CREDIT LOAN NOTE FROM WHICH NO APPEAL HAS BEEN TAKEN
OR IS AVAILABLE. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS
NOTICE ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF, SUCH SERVICE TO BECOME
EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. THE BORROWER AND THE LENDER
IRREVOCABLY WAIVE ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION
SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING
PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 10.12 COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. This Loan
Agreement and any amendments, waivers, consents, or supplements may be executed
in counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. This Loan Agreement and each of the other Loan Documents shall
be construed to the extent reasonable to be consistent one with the other, but
to the extent that the terms and conditions of this Loan Agreement are actually
inconsistent with the terms and conditions of any other Loan Documents, this
Loan Agreement shall govern.
SECTION 10.13 CONSTRUCTION. The parties acknowledge that each party and its
counsel have reviewed and revised this Loan Agreement and that the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Loan
Agreement or any amendments or exhibits hereto.
SECTION 10.14 ENTIRE AGREEMENT. This Loan Agreement, taken together with
all of the other Loan Documents and all certificates and other documents
delivered by the Borrower or any other Person to the Lender, embody the entire
agreement and supersede all prior agreements, written and oral, relating to the
subject matter hereof.
SECTION 10.15 CONFIDENTIALITY. All information furnished to the Lender
under this Agreement shall be received and maintained by the Lender in strict
confidence and in accordance with applicable Law, and the Lender shall not
disseminate said information to any Person, except where required by and in
accordance with applicable Law or where contemplated by the Loan Documents. The
Lender agrees that it shall not take any action or omit to take any action which
would cause or result in the violation of Law (including without limitation, any
export control law) by the Borrower.
61
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be executed and delivered by their proper and duly authorized corporate officers
as appropriate, and the Borrower has caused its corporate seal to be hereunto
affixed and attested pursuant to the resolution of its Board of Directors, all
on the day and year first hereinabove written.
ATTEST: INTELLIGROUP, INC., as Borrower
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------- ------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Co-Chairman
NOTICE ADDRESS:
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[SEAL] Intelligroup, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
PNC BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Vice President
NOTICE ADDRESS:
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PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
Vice President
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
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▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Princeton, New Jersey 08540
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
