EXHIBIT 10.2
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of
September 19, 2005, by and between COLOR IMAGING, INC. ("Borrower"), a Delaware
corporation, and WACHOVIA BANK, NATIONAL ASSOCIATION, SUCCESSOR BY MERGER TO
SOUTHTRUST BANK ("Bank").
R E C I T A L S:
1. CURRENT CIRCUMSTANCES. Borrower is indebted to Bank under a revolving
loan in the maximum principal amount of One Million Five Hundred Thousand
Dollars ($1,500,000) evidenced by Amended and Restated Loan and Security
Agreement (as amended and modified prior to the date hereof, the "LOAN
AGREEMENT") dated as of June 16, 2003, effective as of July 1, 2003, between
Borrower and Bank, as amended by Amendment of Loan Documents.
2. AGREEMENT. Borrower and Bank have agreed to amend the Loan Agreement and
to restate the Loan Agreement in its entirety as so amended.
NOW, THEREFORE, Borrower and Bank, intending to be legally bound, agree as
follows:
1. RECITALS. The foregoing recitals and provisions are true and correct and
are hereby incorporated herein by this reference as an integral part hereof.
2. RESTATEMENT; NO NOVATION. Borrower and Bank hereby restate, without
novation, Articles I through XII of the Loan Agreement, and the Exhibits to the
Loan Agreement as required, in their entirety as follows:
ARTICLE I
DEFINED TERMS, GENERAL MATTERS
1.1. DEFINED TERMS. As used in this Loan and Security Agreement, the
following terms shall have the following meanings:
Account - has the meaning set forth in the Code, together with any
guaranties, letters of credit, Letter-of-Credit Rights, and other security
therefor, including Supporting Obligations.
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Affiliate - any director or officer of Borrower or any Person who,
directly, indirectly or beneficially, owns 5% or more of the capital stock of
Borrower or any member of the immediate family of any such officer, director or
stockholder, or any corporation or other entity which is controlled by,
controls, or is under common control with the Borrower.
Aggregate Loan Values - the sum of the Loan Value of Accounts and the Loan
Value of Inventory.
Agreement - this Second Amended and Restated Loan and Security Agreement.
Applicable Laws - all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant or Loan Document in question, including, but not
limited to, all applicable common law and equitable principles; all provisions
of all applicable state and federal constitutions, statutes, rules, regulations
and order of governmental bodies; and all orders, judgments and decrees of all
courts and arbitrators.
Approved Foreign Accounts - Accounts arising from sales to Account Debtors
outside the United States, to Account Debtors who are not residents of the
United States or that involve shipments to addresses outside of the United
States, which Accounts are insured by insurers acceptable to Bank, or that are
supported by letters of credit issued by financial institutions acceptable to
Bank, on terms and conditions acceptable to Bank.
Average Quarterly Loan Balance - the amount obtained by adding the unpaid
balance of, as applicable, the First Term Loan or the Second Term Loan at the
end of each day for each day during the quarter in question and dividing such
sum by the number of days in such quarter.
Bank - Wachovia Bank, National Association, successor by merger to
SouthTrust Bank.
Bond Documents - collectively, the Trust Indenture dated as of June 1,
1999, between Development Authority of Gwinnett County and SouthTrust Bank,
National Association; Remarketing and Interest Services Agreement dated as of
June 1, 1999, among Borrower, Kings Brothers, Development Authority of Gwinnett
County and Bank (formerly SouthTrust Securities, Inc.); Loan Agreement dated as
of June 1, 1999, among Development Authority of Gwinnett County, Borrower and
Kings Brothers; and the Reimbursement Agreement.
Bond Equipment - the equipment described on EXHIBIT "A", all accessories,
additions and attachments thereto, all warranties and service contracts relating
thereto and all proceeds thereof.
Borrower - Color Imaging, Inc., a Delaware corporation.
Borrower's Report - the certificate or report of Borrower referred to in
Section 2. 1 (c) of this Agreement.
Business Day - a day other than Saturday, Sunday or a day on which banks
located in Atlanta, Georgia are authorized by law to close.
Capitalized Lease Obligation - any debt represented by obligations under a
lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP, the amount of which shall be the capitalized amount of
such obligations determined in accordance with GAAP.
Chattel Paper - as defined in the Code, including Electronic Chattel Paper
and Tangible Chattel Paper, together with any guaranties, letters of credit,
Letter-of-Credit Rights, and other security therefor, including Supporting
Obligations.
Code - the Uniform Commercial Code (or any successor statute), as adopted
and in force in the State of Georgia or, when the laws of any other state govern
the method or manner of the perfection or enforcement of any security interest
in any of the Collateral, the Uniform Commercial Code (or any successor statute)
of such state or jurisdiction.
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Collateral - all property of Borrower, wherever located and whether now
owned by Borrower or hereafter acquired, including but not limited to (a) all
General Intangibles; (b) all Accounts; (c) all Chattel Paper; (d) all
Instruments and Documents and any other instrument or intangible representing
payment for goods or services; (e) all Equipment; (f) all Investment Property;
(g) all Commercial Tort Claims; (h) all Letter-of-Credit Rights; (i) all Deposit
Accounts and funds on deposit therein, including but not limited to funds on
deposit with or under the control of Bank or its agents or correspondents; (j)
all parts, replacements, substitutions, profits, products, Accessions and cash
and non-cash Proceeds and Supporting Obligations of any of the foregoing
(including, but not limited to, insurance proceeds) in any form and wherever
located; and (k) all written or electronically recorded books and records
relating to any of the foregoing and other rights relating thereto.
Commitment Period - shall mean that period during which Bank is obligated
to make advances under the Revolving Loan, as provided in Section 2.1 hereof.
The Commitment Period shall commence upon satisfaction of the conditions to
lending set forth in Article III and shall continue until June 30, 2007, unless
sooner terminated according to the provisions hereof.
Covenant Compliance certificate - a certificate executed by or on behalf of
Borrower in the form attached here to as EXHIBIT"B".
Credits - collectively, all letters of credit now or hereafter issued by
Bank for the account of Borrower pursuant to Section 2.2 (a), together with all
renewals thereof and substitutions therefor and the reimbursement obligations of
Borrower in regard thereto.
Default Rate - a rate of interest equal to two percent (2%) in excess of
the rate that would otherwise be applicable under this Agreement, calculated
daily and computed on the actual days elapsed over a year of 360 days (unless
reference to a 365 or a 366-day year is necessary in order not to exceed the
highest rate permitted by Applicable Law), said rate to change as and when the
rate otherwise applicable changes.
Eligible Account - an Account arising in the ordinary course of Borrower's
business from the sale of goods or rendition of services which Bank, in its sole
credit judgment, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible Account if: (i) it
arises out of a sale made by Borrower to a Subsidiary or to an Affiliate of
Borrower or to a Person controlled by an Affiliate or Subsidiary of Borrower; or
(ii) it is unpaid for more than ninety (90) days after the original due date
shown on the invoice; or (iii) it is due or unpaid more than ninety (90) days
after the original invoice date; or (iv) twenty-five percent (25%) or more of
the Accounts from the Account Debtor are not deemed Eligible Accounts hereunder;
or (v) the total unpaid Accounts of the Account Debtor exceed twenty-five
percent (25%) of the net amount of all Accounts; or (vi) any covenant,
representation or warranty contained in this Agreement with respect to such
Account has been breached; or (vii) the Account Debtor is also Borrower's or an
Affiliate's creditor or supplier, or has disputed liability with respect to such
Account, or has made any claim with respect to any other Account due from such
Account Debtor to Borrower or an Affiliate, or the Account otherwise is or may
become subject to any right of setoff by the Account Debtor or an Affiliate of
the Account Debtor; or (viii) the Account Debtor has commenced a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter amended, or
made an assignment for the benefit of creditors, or a decree or order for relief
under the federal bankruptcy laws has been filed against the Account Debtor, or
the Account Debtor has failed, suspended business, ceased to be Solvent, or
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consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed of it or for all or a significant portion of its assets or affairs; or
(ix) it arises from a sale to an Account Debtor outside the United States or to
an Account Debtor who is not a resident of the United States or involves a
shipment to an address outside of the United States (except for Approved Foreign
Accounts, subject to applicable limitations set forth herein); or (x) it arises
from a sale to the Account Debtor on a xxxx-and-hold, guaranteed sale,
sale-or-return, sale-on-approval, consignment or any other repurchase or return
basis; or (xi) Bank believes, in its sole judgment, that collection of such
Account is insecure or that payment thereof is doubtful or will be delayed by
reason of the Account Debtor's financial condition; or (xii) the Account Debtor
is the United States of America or any department, agency or instrumentality
thereof, unless Borrower assigns its right to payment of such Account to Bank,
in form and substance satisfactory to Bank, so as to comply with the Assignment
of Claims Act of 1940, as amended; or (xiii) the Account is subject to a Lien;
or (xiv) the goods giving rise to such Account have not been delivered to and
accepted by the Account Debtor or the services giving rise to such Account have
not been performed by Borrower and accepted by the Account Debtor or the Account
otherwise does not represent a final sale; or (xv) the total unpaid Accounts of
the Account Debtor exceed a credit limit determined by Bank, in its sole
discretion, to the extent such Account exceeds such limit; or (xvi) the Account
is evidenced by chattel paper, a note, or an instrument of any kind, or has been
reduced to judgment; or (xvii) Borrower has made any agreement with the Account
Debtor for any deduction therefrom, except for discounts or allowances which are
made in the ordinary course of business for prompt payment and which discounts
or allowances are reflected in the calculation of the face value of each invoice
related to such Account; or (xviii) Borrower has made an agreement with the
Account Debtor to extend the time of payment thereof, or (xix) the Account
arises from a retail sale of goods to a Person who is purchasing same primarily
for personal, family or household purposes; or (xx) the Account is deemed
ineligible by the Bank in its sole judgment and discretion. In addition,
Eligible Accounts shall not include any portion of an Account which consists of
service charges, late charges or penalties, interest or other charges relating
to the extension of credit by the Borrower or the timing of payment by Account
Debtor. In determining the aggregate amount of Eligible Accounts, there shall be
excluded from consideration any credit balance of an Account Debtor which is
more than 90 days old as measured from the date of original posting of said
credit balance to Borrower's books and records.
Eligible Inventory - Inventory valued at the lesser of cost or current
market value, all of which Inventory is, at any given time, (a) not damaged or
defective in any way; (b) not sold or segregated for sale and reflected as an
Account of Borrower; (c) not consigned Inventory; (d) not inventory-in-transit
or located in a place other than at the locations listed in Section 5.10 of this
Agreement; (e) not work-in-process Inventory; (f) not constituting packaging
materials and supplies; (g) not Inventory evidenced by negotiable warehouse
receipts or by non-negotiable warehouse receipts or documents of title which
have not been issued in the name of Bank; (h) not subject to a document of title
such as a warehouse receipt or xxxx of lading; and (i) not Inventory deemed
ineligible by Bank in its sole discretion.
Environmental Regulations - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to the environment or to public health, safety and
environmental matters, or petroleum products, or radon radiation, or oil or
hazardous substances, including, but not limited to, the Resource Conversation
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and Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Toxic Substances Control Act, the Clean Water Act,
the Clean Air Act, the River and Harbor Act, the Water Pollution Control Act,
the Marine Protection Research and Sanctuaries Act, the Deep-Water Port Act, the
Safe Drinking Water Act, the Superfund Amendments and Reauthorization Act of
1986, the Federal Insecticide, Fungicide and Rodenticide Act, the Mineral Lands
and Leasing Act, the Surface Mining Control and Reclamation Act, the Oil
Pollution Act of 1990, state and federal superlien and environmental cleanup
programs and laws, U.S. Department Transportation regulations, laws regulating
hazardous, radioactive and toxic materials and underground petroleum products
storage tanks, and all similar state, federal and local laws and regulations.
Equipment - as defined in the Code and including, without limitation, all
equipment and fixtures of whatever kind or nature now owned or hereafter
acquired by Borrower, including, without limitation, all machinery, vehicles,
tools, dies, trade fixtures, furnishings and equipment, patterns, cranes,
furniture, furnishings, motor vehicles, tractors, trailers, rolling stock,
office machines and equipment, material handling equipment, manufacturing
equipment, conveyors, forklifts, machine systems, computers, and all other goods
used in the operation of Borrower's business, together with all accessories,
parts and additions now or hereafter affixed thereto or used in connection
therewith.
ERISA - the Employee Retirement Income Security Act of 1974 and all rules
and regulations promulgated thereunder.
Event of Default - any one of the events enumerated in Section 10.1 hereof.
First Term Loan - the term loan in the maximum principal amount of up to Five
Hundred Thousand Dollars ($500,000) evidenced by the First Term Note (and any
substitutions therefor, extensions thereof and renewals thereof).
First Term Note - the First Term Note dated as of the date hereof executed
by Borrower for the benefit of Bank in the maximum principal amount of Five
Hundred Thousand Dollars ($500,000), together with and any substitutions
therefor, extensions thereof and renewals thereof.
Fixed Charge Coverage Ratio - net income plus depreciation, amortization,
interest expense, income tax expense (or any dividends made for the income tax
liabilities of Borrower's principals) and operating lease expense (as defined by
FAS 13), divided by the current portion of the long-term debt (including but not
limited to Subordinated Debt) of Borrower as of the applicable date plus the
interest expense, income tax expense (or any dividends made for the income tax
liabilities of Borrower's principals) and operating lease expense (as defined by
FAS 13) of Borrower for the twelve (12)-month period preceding the applicable
date.
GAAP - generally accepted accounting principles in the United States of
America in effect from time to time consistently applied.
General Intangibles - as defined in the Code, and including, without
limitation, general intangibles of Borrower, whether now owned or hereafter
created or acquired by Borrower, including all choses in action, causes of
action, company or other business records, inventions, blueprints, designs,
patents, patent applications, trademarks, trademark applications, trade names,
trade secrets, service marks, goodwill, brand names, copyrights, registrations,
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licenses, franchises, customer lists, permits, tax refund claims, computer
programs, operational manuals, internet addresses and domain names, insurance
refunds and premium rebates, all claims under guaranties, security interests or
other security held by or granted to Borrower to secure payment of any of any of
Borrower's Accounts by an Account Debtor, all rights to indemnification and all
other intangible property of Borrower of every kind and nature (other than
Accounts).
Going Private Transaction - the "going private" transaction described in
and contemplated by Form 8-K filed by Borrower with the United States Securities
and Exchange Commission, dated April 19, 2005, and bearing SEC File # 1-16450.
Inventory - as defined in the Code and including, without limitation, all
Inventory of whatever kind or nature of Borrower, now owned or hereafter
acquired by Borrower, and wherever located, including, without limitation, all
goods held for sale or lease or furnished or to be furnished under contracts,
and any raw materials, goods in transit, work in process or finished goods,
supplies, returned or repossessed goods, together with all goods and materials
used or consumed in Borrower's business.
Inventory Cap - $ 1,500,000, said amount being the maximum value that can
be given to the Loan Value of Inventory pursuant to this Agreement.
Kings Brothers - King Brothers, LLC, a Georgia limited liability company.
Liabilities - the sum of (i) indebtedness for borrowed money or for the
deferred purchase price of property or services, (ii) Capitalized Lease
Obligations and (iii) all other items which in accordance with GAAP would be
included in determining total liabilities as shown on a balance sheet of a
Person as of the date as of which Liabilities is to be determined.
LIBOR Market Index Rate - for any day, the rate for 1 month U.S. dollar
deposits as reported on Telerate page 3750 as of 11:00 a.m., London time, on
such day, or if such day is not a London business day, then the immediately
preceding London business day (or if not so reported, then as determined by Bank
from another recognized source or interbank quotation).
Lien - any interest in property (real, personal or mixed, and tangible or
intangible) securing an obligation owed to, or a claim by, a Person other than
the owner of the property, whether such interest is based on the common law,
statute or contract, and including, but not limited to, the security interest,
security title or lien arising from a security agreement, mortgage, deed of
trust, deed to secure debt, encumbrance, pledge, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes. The term
"Lien" shall include covenants, conditions, restrictions, leases and other
encumbrances affecting any property. For the purpose of this Agreement, Borrower
shall be deemed to be the owner of any property which it has acquired or holds
subject to a conditional sale agreement or other arrangement pursuant to which
title to the property has been retained by or vested in some other Person for
security purposes.
Loan Account - the loan account established on the books of Bank pursuant
to Section 2.1 hereof.
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Loan Documents - this Agreement, the Notes and each and every mortgage,
deed of trust, guarantee, reimbursement agreement, credit agreement, loan
agreement, note, security agreement, financing statement or other instrument
executed and delivered to evidence or secure the Loans or any other of the
Obligations, to constitute collateral for the Loans or any other of the
Obligations, or to evidence security for the Loans or any other of the
Obligations, and any and all other agreements, instruments, and documents
heretofore, now or hereafter executed by Borrower and delivered to Bank in
respect to the transactions contemplated by this Agreement.
Loan Value of Accounts - at any time, an amount which is not more than 75%
of the aggregate Eligible Accounts of Borrower, provided that the Loan Value of
Accounts attributable to Approved Foreign Accounts shall at no time exceed
thirty-three percent (33%) of the outstanding principal balance of the Revolving
Loan and that Bank shall not advance in regard to any Approved Foreign Account
an amount greater than, as applicable, the insured amount of the Approved
Foreign Account or the face amount of the letter of credit approved by Bank
regarding such Approved Foreign Account. .
Loan Value of Inventory - an amount which is not more than 50% of
Borrower's Eligible Inventory consisting of raw materials and 50% of Borrower's
Eligible Inventory consisting of finished goods; provided, however, the Loan
Value of Inventory shall not at any time exceed the lesser of the Inventory Cap
or fifty percent (50%) of the Aggregate Loan Values.
Loans - collectively, the Revolving Loan, the First Term Loan and the
Second Term Loan.
Maximum Rate - the maximum non-usurious rate of interest permitted by
Applicable Laws that at any time, or from time to time, may be contracted for,
taken, reserved, charged or received on the debt in question or, to the extent
permitted by Applicable Laws, under such Applicable Laws that may hereafter be
in effect and which allow a higher maximum non-usurious interest rate than
Applicable Laws now allow. Notwithstanding any other provision hereof, the
Maximum Rate shall be calculated on a daily basis (computed on the actual number
of days elapsed over a year of 365 or 366 days, as the case may be).
Multiemployer Plan - has the meaning set forth in Section 4001 (a) (3) of
ERISA.
Notes - collectively, the Revolving Note, the First Term Note and the
Second Term Note.
Obligations - the Loans, Borrower's reimbursement and other obligations as
to any and all Credits and under the Standby Credit Facility, all obligations of
Borrower under the Bond Documents, and all other advances, debts, liabilities,
obligations, covenants and duties owing, arising, due or payable from Borrower
to Bank of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, whether arising under this Agreement or
any of the other Loan Documents or otherwise, whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
evidenced or acquired. The term includes, without limitation, all interest,
charges, expenses, fees, attorneys' fees and any other sums chargeable to
Borrower under any of the Loan Documents and all rights Bank may at any time or
times have to reimbursement in connection with any letter of credit or guaranty
issued for Borrower's benefit.
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Overadvance - an advance by Bank hereunder or under the Revolving Note when
an Overadvance Condition exists or would result from the making of such advance.
Overadvance Condition - at any date, a condition such that the outstanding
principal amount of the Revolving Loan on such date exceeds the lesser of
$3,000,000 or the Aggregate Loan Values on such date.
Permitted Liens - any Lien of a kind specified in Section 7.2 of this
Agreement.
Person - an individual, partnership, corporation, joint stock company,
firm, land trust, business trust, limited liability company, limited liability
partnership, unincorporated organization, or other business entity, or a
government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained for employees
of Borrower that is covered by Title IV of ERISA.
Prohibited Transaction - any transaction set forth in Section 406 of ERISA
or Section 4975 of the Internal Revenue Code of 1986.
Reimbursement Agreement - Reimbursement Agreement dated as of June 1, 1999,
among Borrower, Kings Brothers and Bank, as amended.
Reportable Event - any of the events set forth in Section 4043(b) of ERISA.
Revolving Loan - the revolving loan in the maximum principal amount of up
to $3,000,000 advanced by the Bank to the Borrower and evidenced by the
Revolving Note (and any substitutions therefor, extensions thereof and renewals
thereof).
Revolving Note - the Second Amended and Restated Revolving Note dated as of
the date hereof executed by Borrower for the benefit of Bank in the maximum
principal amount of Three Million Dollars ($3,000,000), together with and any
substitutions therefor, extensions thereof and renewals thereof.
Second Term Loan - the term loan in the maximum principal amount of up to
Five Hundred Thousand Dollars ($500,000) evidenced by the Second Term Note (and
any substitutions therefor, extensions thereof and renewals thereof).
Second Term Note - the Second Term Note dated as of the date hereof
executed by Borrower for the benefit of Bank in the maximum principal amount of
Five Hundred Thousand Dollars ($500,000), together with and any substitutions
therefor, extensions thereof and renewals thereof.
Solvent - as to any Person, means such Person (i) owns property, real,
personal, and mixed, the aggregate fair saleable value of which is greater than
the amount required to pay all of such Person's Liabilities (including
contingent debts), (ii) is able to pay all of its Liabilities as such
Liabilities mature and (iii) has capital sufficient to carry on its business and
transactions and all business and transactions in which it is about to engage.
Standby Credits- collectively, all letters of credit now or hereafter
issued by Bank for the account of Borrower pursuant to Section 2.2 (b) for the
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benefit of foreign vendors, together with all renewals thereof and substitutions
therefor and the reimbursement obligations of Borrower in regard thereto.
Subordinated Debt - the Liabilities of the Borrower owed to any officer,
owner or employee of Borrower or to any Affiliate which is fully subordinated to
the Loans (including principal, interest, and agreed charges) in a manner
satisfactory to the Bank (which may be either according to its terms or by
separate agreement) and which Liabilities arise from the Borrower's actual
receipt of cash and not from "in kind" or non-cash consideration.
Subsidiary - any corporate entity or partnership, or other business entity,
controlling interest of which is owned by the Borrower.
Tangible Net Worth - for any period, net worth in accordance with GAAP,
plus Subordinated Debt less intangible assets, which include goodwill, patents,
trademarks organizational costs, capitalized financing costs and amounts due
from officers, shareholders or Affiliates.
Traditional Leverage - the ratio of Liabilities less Subordinated Debt to
Tangible Net Worth.
USA Patriot Act - the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act
of 2001, as amended.
1.2. ACCOUNTING TERMS. All accounting terms used herein shall be construed
in accordance with GAAP.
1.3. INTERPRETATION. The terms "herein", "hereof, and "hereunder", and
other words of similar import refer to this Agreement as a whole and not to any
particular section, paragraph or subdivision. Any pronouns used shall be deemed
to cover all genders. Whenever the singular or plural number is used herein, it
shall equally include the other. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any instruments or agreements, including, without
limitation, references to any of the Loan Documents shall include any and all
modifications or amendments thereto and any and all extensions or renewals
thereof.
1.4. UNIFORM COMMERCIAL CODE. All capitalized terms contained in this
Agreement shall, unless otherwise defined herein or unless the context otherwise
indicates, have the meanings provided for by the Code.
1.5 USA PATRIOT ACT NOTICE. To help fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each Person who opens an
account. For purposes of this section, account shall be understood to include
loan accounts.
ARTICLE II
THE LOANS
2.1. REVOLVING LOAN.
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(a) Subject to all terms set forth herein but only during the Commitment
Period and for so long as no Event of Default exists, Bank agrees, from time to
time and on the terms hereinafter set forth, to loan to Borrower, when requested
by Borrower, principal amounts under the Revolving Loan aggregating up to the
lesser of (i) $3,000,000 or (ii) the Aggregate Loan Values as determined by the
Bank from the periodic reports submitted by Borrower to the Bank. Within the
aforesaid limits, the Borrower may borrow, make payments, and reborrow under the
Revolving Loan, subject to the provisions hereof. Advances made under the
Revolving Loan shall be subject to the Revolving Note.
(b) The obligation to repay the Revolving Loan shall be evidenced by the
Revolving Note payable to the order of the Bank and maturing upon the earlier to
occur of an Event of Default or the expiration of the Commitment Period. Amounts
due under the Revolving Note and otherwise under this Agreement and under the
Loan Documents in regard to the Revolving Loan shall be reflected in the Loan
Account.
(c) Borrower shall submit a Borrower's Report in the form attached hereto
as EXHIBIT "C" (or in such other form as may be furnished by Bank from time to
time) quarterly (or on such other schedule as Bank may request from time to
time) during the term of this Agreement. Bank may, in its sole discretion,
require that each advance made under the Revolving Loan be effected by
Borrower's submitting (and the Bank's receiving) a Borrower's Report at least
one Business Day prior to the date Borrower desires the advance to be made. Bank
shall, if all the terms and provisions of this Agreement have been met,
including, without limitation, the absence of an Event of Default hereunder,
make such advances. Each such Borrower's Report shall be signed by an officer or
employee of Borrower authorized by Borrower to execute such reports, whose
name(s) shall be included in a certificate furnished to the Bank.
(d) At its discretion, Bank may make advances to Borrower under the
Revolving Loan without specific request by automatic advance based on
availability in accordance with procedures established by Bank. In addition, as
an accommodation to Borrower, Bank may permit telephonic requests for advances
under the Revolving Loan and electronic transmittal of instructions,
authorizations, agreements or reports to Bank by Borrower. Unless Borrower
specifically directs Bank in writing not to accept or act upon telephonic or
electronic communications from Borrower, Bank shall have no liability to
Borrower for any loss or damage suffered by Borrower as a result of Bank's
honoring of any requests, execution of any instructions, authorizations or
agreements or reliance on any reports communicated to Bank telephonically or
electronically and purporting to have been sent to Bank by Borrower and Bank
shall have no duty to verify the origin of any such communication or the
authority of the person sending it.
(e) If the outstanding principal amount of the Revolving Loan at any time
exceeds the lesser of $3,000,000 or the Aggregate Loan Values as reflected on
the Borrower's Report, the Borrower shall immediately, upon demand by Bank, pay
the Bank an amount equal to such excess as a payment on the principal amount of
the Revolving Loan. Without limiting the foregoing, which provision may be
enforced by Bank at any time and which provision, as well as the other
provisions hereof, may not under any circumstance be waived or altered by a
course of dealing or otherwise, insofar as Borrower may request and Bank may be
willing in its sole and absolute discretion to make Overadvances, Bank shall
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enter such Overadvances as debits in the Loan Account. All Overadvances shall be
payable on demand, shall be secured by the Collateral and shall bear interest as
provided in this Agreement for the Revolving Loan generally. Bank may in its
sole discretion honor any request (or deemed request) for an advance even though
an Overadvance Condition then exists, or would exist with the making of such
advance, and without regard to the existence of, and without waiving, any
default or Event of Default.
(f) Each borrowing under the Revolving Loan shall be effected by crediting
the amount thereof to the regular checking account of Borrower maintained with
the Bank.
(g) The principal amount of the Revolving Loan shall bear interest at a
rate per annum equal to the LIBOR Market Index Rate plus one hundred eighty-five
(185) basis points. Interest shall be paid to Bank on the amount of the
Revolving Loan outstanding and shall be payable monthly in arrears on the first
day of each month beginning with November 1, 2005, and continuing on the same
day of each month thereafter through and until such time as there remains no
unpaid principal balance on the amounts advanced to the Borrower. Interest shall
be calculated based on a 360-day year (i.e., computed on the actual number of
days elapsed over a year of 360 days unless reference to a 365 or a 366-day year
is necessary in order not to exceed the highest rate permitted by Applicable
Laws). The applicable LIBOR Market Index Rate shall be initially calculated on
the date of initial applicability and shall be recalculated by Bank on each
regularly-scheduled payment date thereafter, notwithstanding that such
recalculation date is more or less than thirty (30) days from the previous
calculation date. If the recalculation date falls on a date upon which Bank is
not open for business, the recalculation shall occur on the next business day on
which Bank is open for business. From and after the occurrence of an Event of
Default, the principal amount of the Revolving Loan outstanding from time to
time shall, subject to the provisions of Section 12.16, bear interest at the
Default Rate.
(h) Bank shall enter disbursements under the Revolving Loan as debits to
the Loan Account and shall also record in the Loan Account all payments made by
Borrower and all proceeds of Collateral which are finally paid to Bank in regard
to the Revolving Loan, and may record therein, in accordance with customary
accounting practice, all charges and expenses properly chargeable to Borrower
hereunder in regard to the Revolving Loan.
(i) Borrower shall use the proceeds of the Revolving Loan for working
capital purposes only.
(j) Notwithstanding any provision in this Agreement, the Bank may, in its
sole discretion, at any time limit the amount of the Revolving Loan advanced to
the Borrower to an amount less than the lesser of $3,000,000 or the Aggregate
Loan Values. The Revolving Loan shall, notwithstanding any course of dealing or
conduct on the part of the parties hereto, or any other covenants or
undertakings of the parties hereunder, be fully due and payable without further
notice or demand from Bank upon the expiration of the Commitment Period.
(k) As a condition to the first advance under the Revolving Loan, Borrower
shall notify Bank of Borrower's intention to request such advance not less than
three (3) Business Days prior thereto. The notice shall be accompanied by a
current Borrower's Certificate and Covenant Compliance Certificate.
11
2.2 CREDITS; STANDBY CREDITS. SECURITY INTEREST IN COLLATERAL. Bank may
hereafter, at the request of and for the account of Borrower, issue Credits and
Standby Credits, subject to and in accordance with the provisions of this
Section 2.2. Borrower's reimbursement obligations in regard to all Credits at
all times shall be secured by the Collateral.
(a) Upon the request of Borrower from time to time, provided that Borrower
shall not be in default under this Agreement, Bank shall issue one or more
Credits; provided that (i) the form of each Credit, the transaction in
connection with which the Credit is issued and all other matters relating to the
Credit shall be satisfactory to Bank in its sole discretion; (ii) no Credit
shall be issued if, after issuance thereof, the sum of the aggregate amount
available to be drawn under all Credits, plus the aggregate amount of any
unreimbursed drawings under Credits, would exceed Five Hundred Thousand Dollars
($500,000); (iii) no Credit shall be issued if, after issuance thereof, the sum
of the aggregate amount available to be drawn under all Credits and Standby
Credits, plus the aggregate amount of any unreimbursed drawings under Credits
and Standby Credits, plus the principal amount outstanding under the Revolving
Loan (excluding Credits and Standby Credits) would exceed the lesser of
$3,000,000 or the Aggregate Loan Values; (iv) no Credit shall have an initial
term longer than one year; (v) if any Credit has an expiry date later than the
expiration date of the Commitment Period, Borrower shall, not later than the
expiration date of the Commitment Period deposit with Bank cash in an amount not
less than the face amount of the Credit to be held by Bank, without interest, as
additional security for Borrower's reimbursement obligations in regard to the
Credit and execute and deliver in regard thereto such documents as Bank shall
reasonably require; and (vi) Borrower shall pay to Bank annually as invoiced by
Bank a fee equal to one percent (1 %) of the sum of the aggregate amount
available to be drawn under all Credits, plus the aggregate amount of any
unreimbursed drawings under Credits. Bank shall be entitled to reimburse itself
from the cash deposit identified in (v) above for any draw made against the
Credit. Bank shall return the cash deposit to Borrower upon cancellation of the
Credit without any draw having been made thereon, provided that no default
exists under this Agreement.
(b) Upon the request of Borrower from time to time, provided that Borrower
shall not be in default under this Agreement, Bank shall issue one or more
Standby Credits for the benefit of foreign vendors, provided that (i) the form
of each Standby Credit, the transaction in connection with which the Standby
Credit is issued and all other matters relating to the Standby Credit shall be
satisfactory to Bank in its sole discretion; (ii) no Standby Credit shall be
issued if, after issuance thereof, the sum of the aggregate amount available to
be drawn under all Standby Credits, plus the aggregate amount of any
unreimbursed drawings under Standby Credits, would exceed One Million Dollars
($1,000,000); (iii) no Standby Credit shall be issued if, after issuance
thereof, the sum of the aggregate amount available to be drawn under all Credits
and Standby Credits, plus the aggregate amount of any unreimbursed drawings
under Credits and Standby Credits, plus the principal amount outstanding under
the Revolving Loan (excluding Credits and Standby Credits) would exceed the
lesser of $3,000,000 or the Aggregate Loan Values; (iv) if any Standby Credit
has an expiry date later than the expiration date of the Commitment Period,
Borrower shall, not later than the expiration date of the Commitment Period
deposit with Bank cash in an amount not less than the face amount of the Standby
Credit to be held by Bank, without interest, as additional security for
Borrower's reimbursement obligations in regard to the Standby Credit and execute
and deliver in regard thereto such documents as Bank shall reasonably require;
and (v) Borrower shall pay to Bank annually as invoiced by Bank a fee equal to
one percent (1 %) of the sum of the aggregate amount available to be drawn under
all Standby Credits, plus the aggregate amount of any unreimbursed drawings
12
under Standby Credits, or such fee as is quoted by Bank in connection with
Borrower's application for the issuance of the Standby Credit. Bank shall be
entitled to reimburse itself from the cash deposit identified in (iv) above for
any draw made against the Standby Credit. Bank shall return the cash deposit to
Borrower upon cancellation of the Credit without any draw having been made
thereon, provided that no default exists under this Agreement. Borrower shall
execute and deliver such additional documentation as Bank shall require in
regard to any Standby Credit.
(c) Borrower hereby affirms its obligation, and hereby covenants and
agrees, to pay Bank, in United States currency, the amount of each drawing under
the Credits and Standby Credits, together with interest, commissions, all
customary charges, and all other disbursements or payments by Bank pursuant to
the Credits, the Standby Credits or this Agreement, such payment to be made on
demand with interest at the rate specified herein from the date of payment under
the Credits or Standby Credits to the date of payment by Borrower to Bank. If a
drawing is payable in foreign currency, Borrower will pay Bank the equivalent of
the amount of such drawing in United States currency, at Bank's then selling
rate for cable transfers, to the place of payment or to the place of Bank's
settlement of its obligation, as Bank may require. If there is no rate of
exchange for effecting such cable transfer, Borrower will pay Bank on demand the
amount in United States currency equivalent to Bank's actual cost of settlement,
with per annum interest at the interest rate effective in regard to the
Revolving Loan from time on the amount in United States currency, payable by
Borrower from the date of settlement to the date of payment by Borrower. Bank
shall be entitled to pay and reimburse itself from the Collateral for any draw
made against any Credit or any Standby Credit and any other charges or interest
payable by Borrower hereunder.
(d) Borrower agrees to defend, indemnify and hold harmless Bank from and
against any and all suits, claims, losses, liabilities, or damages, including
reasonable attorneys' fees actually incurred, howsoever arising from or in
connection with the Credits or Standby Credits. The agreements in this
subparagraph "(d)" will survive any payment under or termination of this
Agreement. Borrower will pay Bank on demand all charges, costs and expenses,
including reasonable attorneys' fees, incurred or paid by Bank in connection
with the exercise of any right, power, or remedy hereunder, or in the
enforcement thereof. Bank shall in no way be responsible for performance by any
beneficiary of any of the Credits or Standby Credits of such beneficiary's
obligations to Borrower, nor for the form, sufficiency, correctness,
genuineness, authority of person signing, falsification or legal effect of any
documents called for under the Credits or Standby Credits if such documents on
their face appear to be in order. It is agreed that all directions and
correspondence relating to the Credits and Standby Credits are to be sent at
Borrower's risk and that Bank does not assume any responsibility for any
inaccuracy, interruption, error or delay in transmission, or delivery by post,
telegraph, cable or courier, or for any inaccuracy of translation. Bank is not
and shall not be under any obligation to extend the expiration date of any of
the Credits or Standby Credits beyond their stated expiry dates, whether by
virtue of the execution and delivery of this Agreement or otherwise.
(e) Borrower hereby authorizes Bank to (i) select an advising bank, if any,
(ii) authorize or restrict negotiation under the Credits or Standby Credits and
(iii) waive any such restriction on negotiation. Bank may honor, as complying
with the terms of the Credits and Standby Credits, any drafts or other documents
13
otherwise in order signed or issued by an administrator, executor, conservator,
trustee in bankruptcy, debtor in possession, assignee for benefit of creditors,
liquidator, receiver, or other legal representative of the party authorized
under the Credits or Standby Credits to draw or issue such drafts or other
documents. Bank's rights, powers, and remedies specified herein are cumulative
and are in addition to those otherwise created or existing by law or agreement.
(f) If Bank shall in good xxxxx xxxx itself insecure at any time, or upon
the occurrence of an Event of Default, Bank may, in addition to any other rights
and remedies at law, or in equity or under this Agreement, require Borrower to
deliver to Bank, to be held and treated as additional Collateral, additional
property equal in amount or value to one hundred twenty-five percent (125%) of
the Credits and Standby Credits, and Borrower shall promptly execute such
documentation in regard thereto as Bank shall require.
(g) Any Credit or Standby Credit issued hereunder shall be governed, as
applicable, by the Uniform Customs and Practice for Documentary Credits
International Chamber of Commerce ("ICC") Publication 500 or any subsequent
revision or restatement thereof adopted by the ICC and in use by Bank or the
International Standby Practices, ICC Publication No. 590 or any subsequent
revision or restatement thereof adopted by the ICC and in use by Bank, except to
the extent that the terms of such publication would limit or diminish rights
granted to Bank hereunder or in any other Loan Document. Subject to the
immediately preceding sentence, this Agreement is made in Georgia and shall be
deemed to be a contract under seal to be governed by and construed in accordance
with the laws of the State of Georgia.
(h) The obligations of Borrower under this Agreement shall be absolute,
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement, under all, and notwithstanding any, circumstances
whatsoever, including, without limitation, the following:
(i) any lack of validity or enforceability of the Credits or Standby
Credits;
(ii) any amendment or waiver of, or any departure from the terms of all or
any of the Credits or Standby Credits;
(iii) the existence of any claim, set-off, defense or other rights which
Borrower may have at any time against any person or entity, whether in
connection this Agreement, the Credits, the Standby Credits or any related or
unrelated transaction;
(iv) any statement or any other document presented under any of the Credits
or Standby Credits proves to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein proves to be untrue or inaccurate in any
respect whatsoever;
(v) payment by Bank under any of the Credits or Standby Credits against
presentation of a draft or certificate which does not comply with the terms of
the Credit or Standby Credit, provided such payment shall not have constituted
gross negligence or willful misconduct by Bank; and
14
(vi) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, provided the same shall not have constituted gross
negligence or willful misconduct by Bank
2.3 FIRST TERM LOAN.
(a) Upon the execution of this Agreement and provided that Borrower is in
compliance with its terms and conditions, Borrower shall borrow from Bank, and
Bank shall make to Borrower, upon the terms and conditions set forth in this
Agreement and in the First Term Note, the First Term Loan.
(b) Proceeds of the First Term Loan shall be used to fund the purchase of
new capital assets or to pay scheduled amortization payments under the Bond
Documents. All equipment must be classified as a fixed asset on Borrower's
balance sheet, be located at the locations set forth in the Loan Documents and
otherwise comply with this Agreement.
(c) The First Term Loan shall at no time exceed the lesser of the following
applicable amounts:
(i) $500,000 in the aggregate; or
(ii) the sum equal to eighty percent (80%) of the cost of new equipment
acquired with proceeds of the First Term Loan and deemed eligible by Bank, less
all "soft" costs, including but not limited taxes, licenses, freight costs and
registration fees, plus amounts advanced under the First Term Loan to pay
scheduled amortization payments under the Bond Documents.
(d) The principal amount of the First Term Loan shall bear interest at a
rate per annum equal to the LIBOR Market Index Rate plus one hundred eighty-five
(185) basis points. Interest shall be calculated based on a 360-day year (i.e.,
computed on the actual number of days elapsed over a year of 360 days unless
reference to a 365 or a 366-day year is necessary in order not to exceed the
highest rate permitted by Applicable Laws). The applicable LIBOR Market Index
Rate shall be initially calculated on the date of initial applicability and
shall be recalculated by Bank on each regularly-scheduled payment date
thereafter, notwithstanding that such recalculation date is more or less than
thirty (30) days from the previous calculation date. If the recalculation date
falls on a date upon which Bank is not open for business, the recalculation
shall occur on the next business day on which Bank is open for business. From
and after the occurrence of an Event of Default, the principal amount of the
First Term Loan outstanding from time to time shall, subject to the provisions
of Section 12.16, bear interest at the Default Rate.
(e) Interest shall be paid to Bank on the outstanding principal amount of
the First Term Loan and shall be payable monthly in arrears on the first day of
each month beginning with November 1, 2005, and continuing on the same day of
each month thereafter through and including July 1, 2006. Commencing on August
1, 2006, and continuing on the first (1st) day of each calendar month thereafter
through and including July 1, 2011, the principal amount outstanding under the
First Term Loan as of June 30, 2006, shall be payable in sixty (60) equal
monthly installments, with all remaining principal due and payable in full with
the sixtieth (60th) payment. Accrued interest shall be due and payable on each
15
date that a payment of principal is due and payable. Bank may, at its
discretion, require updated appraisals of Borrower's capital assets as a
condition to any advance (a "First Term Loan Advance") under the First Term
Loan.
(f) Borrower may request First Term Loan Advances from time to time through
June 30, 2006. Each request by Borrower for a First Term Loan Advance will be
supported by such information and documents (including invoices, receipts, bills
of lading, appraisals and other due diligence) as Bank may request and the terms
and conditions of each acquisition, financing or refinancing to be financed by
any First Term Loan Advance must be satisfactory in all material respects to
Bank. Without limiting the generality of the foregoing, and in addition to the
other conditions precedent set forth in this Agreement, each First Term Loan
Advance shall be subject to Borrower's providing to Bank, if required by Bank, a
written report of examination of the Uniform Commercial Code financing
statement, tax lien, judgment lien and suits pending indexes of such public
offices and conducted under such current and past names as are determined
necessary by Bank to assure that it is receiving a first-priority security
interest in the equipment constituting Collateral, which reports must be in form
and substance satisfactory to Bank. Bank shall be entitled to file and record
such financing statements and other security instruments as Bank shall determine
to perfect its security interest in any and all equipment constituting
Collateral. Bank may, at its discretion, require updated appraisals of
Borrower's capital assets as a condition to any First Term Loan Advance.
(g) If during the term hereof prior to June 30, 2006, the Average Quarterly
Loan Balance outstanding under the First Term Loan for any quarter is less than
$500,000, then Borrower will immediately pay to Bank, in addition to any
interest and other fees and sums due under this Agreement and under the Loan
Documents, an amount equal to (a) $500,000 less the Average Quarterly Loan
Balance for the quarter, multiplied by 0.025%. The charge due pursuant to the
terms of this paragraph shall be payable quarterly, in arrears. In no event,
however, shall any charge be payable for any quarter during which Bank
accelerates maturity of the First Term Loan or demands payment of the
Obligations by reason of the occurrence of any Event of Default or otherwise.
2.4 SECOND TERM LOAN.
(a) On or after July 1, 2006, and provided that Borrower is in compliance
with the terms and conditions of this Agreement, Borrower shall borrow from
Bank, and Bank shall make to Borrower, upon the terms and conditions set forth
in this Agreement and in the Second Term Note, the Second Term Loan.
(b) Proceeds of the Second Term Loan shall be used to fund the purchase of
new capital assets or to pay scheduled amortization payments under the Bond
Documents. All equipment must be classified as a fixed asset on Borrower's
balance sheet, be located at the locations set forth in the Loan Documents and
otherwise comply with this Agreement.
(c) The Second Term Loan shall at no time exceed the lesser of the
following applicable amounts:
(i) $500,000 in the aggregate; or
16
(ii) the sum equal to eighty percent (80%) of the cost of new equipment
acquired with proceeds of the Second Term Loan and deemed eligible by Bank, less
all "soft" costs, including but not limited taxes, licenses, freight costs and
registration fees, plus amounts advanced under the Second Term Loan to pay
scheduled amortization payments under the Bond Documents.
(d) The principal amount of the Second Term Loan shall bear interest at a
rate per annum equal to the LIBOR Market Index Rate plus one hundred eighty-five
(185) basis points. Interest shall be calculated based on a 360-day year (i.e.,
computed on the actual number of days elapsed over a year of 360 days unless
reference to a 365 or a 366-day year is necessary in order not to exceed the
highest rate permitted by Applicable Laws). The applicable LIBOR Market Index
Rate shall be initially calculated on the date of initial applicability and
shall be recalculated by Bank on each regularly-scheduled payment date
thereafter, notwithstanding that such recalculation date is more or less than
thirty (30) days from the previous calculation date. If the recalculation date
falls on a date upon which Bank is not open for business, the recalculation
shall occur on the next business day on which Bank is open for business. From
and after the occurrence of an Event of Default, the principal amount of the
Second Term Loan outstanding from time to time shall, subject to the provisions
of Section 12.16, bear interest at the Default Rate.
(e) Interest shall be paid to Bank on the outstanding principal amount of
the Second Term Loan and shall be payable monthly in arrears on the first day of
each month beginning with August 1, 2006, and continuing on the same day of each
month thereafter through and including July 1, 2007. Commencing on August 1,
2007, and continuing on the first (1st) day of each calendar month thereafter
through and including July 1, 2012, the principal amount outstanding under the
Second Term Loan as of June 30, 2007, shall be payable in sixty (60) equal
monthly installments, with all remaining principal due and payable in full with
the sixtieth (60th) payment. Accrued interest shall be due and payable on each
date that a payment of principal is due and payable. Bank may, at its
discretion, require updated appraisals of Borrower's capital assets as a
condition to any advance (a "Second Term Loan Advance") under the Second Term
Loan.
(f) Borrower may request Second Term Loan Advances from time to time
commencing July 1, 2006, and continuing through June 30, 2007. Each request by
Borrower for a Second Term Loan Advance will be supported by such information
and documents (including invoices, receipts, bills of lading, appraisals and
other due diligence) as Bank may request and the terms and conditions of each
acquisition, financing or refinancing to be financed by any Second Term Loan
Advance must be satisfactory in all material respects to Bank. Without limiting
the generality of the foregoing, and in addition to the other conditions
precedent set forth in this Agreement, each Second Term Loan Advance shall be
subject to Borrower's providing to Bank, if required by Bank, a written report
of examination of the Uniform Commercial Code financing statement, tax lien,
judgment lien and suits pending indexes of such public offices and conducted
under such current and past names as are determined necessary by Bank to assure
that it is receiving a first-priority security interest in the equipment
constituting Collateral, which reports must be in form and substance
satisfactory to Bank. Bank shall be entitled to file and record such financing
17
statements and other security instruments as Bank shall determine to perfect its
security interest in any and all equipment constituting Collateral. Bank may, at
its discretion, require updated appraisals of Borrower's capital assets as a
condition to any Second Term Loan Advance.
(g) If during the portion of the term hereof commencing on July 1, 2006,
and continuing through and including June 30, 2007, the Average Quarterly Loan
Balance outstanding under the Second Term Loan for any quarter is less than
$500,000, then Borrower will immediately pay to Bank, in addition to any
interest and other fees and sums due under this Agreement and under the Loan
Documents, an amount equal to (a) $500,000 less the Average Quarterly Loan
Balance for the quarter multiplied by 0.025%. The charge due pursuant to the
terms of this paragraph shall be payable quarterly, in arrears. In no event,
however, shall any charge be payable for any quarter during which Bank
accelerates maturity of the Second Term Loan or demands payment of the
Obligations by reason of the occurrence of any Event of Default or otherwise.
2.5. TERM. This Agreement shall remain in force and effect until the Loans
and the Obligations, and any renewals or extensions, and all interest thereon
and costs provided for herein have been indefeasibly paid or satisfied in full
and until the Bank has no further obligation to advance funds to the Borrower
hereunder. The indemnities provided for in Article XI shall survive the payment
in full of the Loans and the Obligations and the termination of this Agreement.
2.6. PAYMENTS. All sums paid to the Bank by Borrower hereunder the Notes
shall be paid directly to the Bank in immediately available funds no later than
2:00 P.M., Atlanta, Georgia time on the date on which payment is due, except if
such date is not a Business Day such payment shall then be due on the first
Business Day after such date, but interest shall continue to accrue until the
date payment is received. Any payment received after 2:00 p.m. Atlanta, Georgia,
time shall be deemed to have been received on the immediately following Business
Day for all purposes, including, without limitation, the accrual of interest on
principal. The Bank shall send Borrower statements of all amounts due hereunder,
which statements shall be considered correct and conclusively binding on the
Borrower unless the Borrower notifies the Bank to the contrary within ten (10)
days of its receipt of any statement which it deems to be incorrect. The Bank
may, in its sole discretion, without waiver of any default or Event of Default
and without prejudice to any other remedy, (a) charge against any deposit
account of the Borrower all or any part of any amount due hereunder, including,
without limitation, fees and expenses of the Bank to be paid by Borrower as
provided in this Agreement, any advances made by Bank to protect the Collateral,
and any commitment or servicing fee due the Bank, and (b) advance to Borrower,
and charge to the Revolving Loan, a sum sufficient each month to pay all
interest accrued on the Loans and fees and expenses due under this Agreement,
including, without limitation, fees and expenses of the Bank to be paid by
Borrower as provided in this Agreement, any advances made by Bank to protect the
Collateral, and any commitment or servicing fee due the Bank, during or for the
immediately preceding month or any month prior. Borrower shall be deemed to have
requested an advance under the Revolving Loan upon the occurrence of an
overdraft in any of Borrower's checking accounts maintained with the Bank.
2.7. APPLICATION OF PAYMENTS. Borrower irrevocably waives the right to
direct the application of any and all payments and collections at any time or
times hereafter received by Bank from or on behalf of Borrower or from any of
the Collateral, and Borrower does hereby irrevocably agree that Bank shall have
the continuing exclusive right to apply such payments and collections received
18
at any time or times hereafter by Bank or its agent against the Obligations, in
such manner as Bank may deem advisable, notwithstanding any entry by Bank upon
any of its books and records. If as the result of collections of Accounts or for
any other reason, a credit balance exists in the Loan Account, such credit
balance shall not accrue interest in favor of Borrower but shall be available to
Borrower at any time or times for so long as no Event of Default exists.
2.8 DEFAULT INTEREST. Borrower acknowledges and agrees that the provisions
herein and in the Notes relating to the Default Rate represent a fair and
reasonable estimate by Borrower and Bank of a fair average compensation for the
loss that may be sustained by Bank due to the failure of Borrower to make timely
payments with respect to the Obligations and for the cost and expenses that may
be incurred by Bank by reason of the occurrence of an Event of Default, the
parties recognizing that the damages caused by such extra administrative
expenses and loss of the use of funds is impracticable or extremely difficult to
ascertain or estimate. Interest at the Default Rate shall be paid without
prejudice to the rights of Bank to collect any other amounts provided to be paid
hereunder.
ARTICLE III
CONDITIONS OF LENDING
Bank shall not be obligated to make or continue the Loans, or to make any
advance under the Loans, unless at the time thereof the following conditions
shall have been met:
3.1. CORPORATE PROCEEDINGS. All proper corporate proceedings shall have
been taken by Borrower to authorize this Agreement and the transactions
contemplated hereby.
3.2. DOCUMENTATION. All instruments and proceedings in connection with the
transactions contemplated by this Agreement shall be satisfactory in form and
substance to Bank, and Bank shall have received on the date of this Agreement
copies of all documents, including records of corporate proceedings, which it
may have requested in connection therewith, including, without limitation,
certified copies of resolutions adopted by the Board of Directors of the
Borrower, certificates of good standing, and certified copies of the Articles of
Incorporation and By-Laws, and all amendments thereto, of the Borrower.
3.3. LOAN DOCUMENTS. Bank shall have received executed copies of all
instruments evidencing security for the Loans and copies of the insurance
policies and related certificates of insurance referred to in Sections 6.1 and
9.6 of this Agreement.
3.4. NO DEFAULT. No event shall have occurred or be continuing which
constitutes an Event of Default or which would constitute an Event of Default
with the giving of notice or the lapse of time or both; and neither the business
nor assets nor the condition, financial or otherwise, of Borrower shall have
been adversely affected in any material manner as the result of any fire,
explosion, accident, strike, riot, condemnation, act of God, or any other event
or development.
3.5. REPORTS. Bank shall have received all reports and information from
Borrower called for under the Agreement as and when due.
19
3.6. PAYMENT OF FEES. Payment by Borrower of all fees and expenses required
by this Agreement.
3.7. INCUMBENCY CERTIFICATE. Bank shall have received an incumbency
certificate, dated as of the date of this Loan Agreement, executed by the
Secretary or Assistant Secretary of Borrower, which shall identify by name and
title and bear the signature of the officer of such Borrower authorized to sign
this Loan Agreement and the Notes on behalf of the Borrower. The Bank shall be
entitled to rely upon such incumbency certificate in completing the transactions
contemplated herein or in any Loan Document and in all its other dealings with
Borrower.
3.8. CONSENTS. Bank shall have received consents and agreements of the
landlords of each of the premises leased by Borrower on which the Collateral is
located as provided in Section 5.10 hereof, all in form satisfactory to Bank.
3.9. LIEN SEARCH. Bank shall have received a report acceptable to Bank
indicating that there are no Liens against that portion of the Collateral
constituting personal property except Permitted Liens.
3.10. DISBURSEMENT AUTHORIZATION. Borrower shall have delivered to bank
such disbursement authorizations, draw requests, and other documents and
writings as Bank shall have requested evidencing Borrower's request for
disbursement of funds.
3.11. ADDITIONAL DOCUMENTS. Bank shall have received such additional legal
opinions, certificates, proceedings, instruments and other documents as the Bank
or its counsel may reasonably request to evidence (i) compliance by the Borrower
with legal requirements, (ii) the truth and accuracy, as of the date of this
Agreement, of the representations and warranties of Borrower contained herein,
and (iii) the due performance or satisfaction by the Borrower, at or prior to
the date hereof, of all agreements required to be performed and all conditions
required to be satisfied by the Borrower pursuant hereto, including, without
limitation, all such matters as are listed on any preliminary closing checklist
issued by Bank and furnished to Borrower.
ARTICLE IV
SECURITY FOR LOAN
The Obligations are and shall be secured by each of the following:
(a) A security interest in all Collateral subject to no other security
interests except security interests of Bank; and
(b) This Agreement and the other Loan Documents.
Notwithstanding the foregoing sentence, Bank shall have (a) as the sole
security of Bank in the assets of Borrower for Borrower's obligations under the
Reimbursement Agreement and in regard to the Bonds, a first (1st) priority
security interest in the Bond Equipment and (b) to secure all other Obligations,
a second (2nd) priority security interest in the Bond Equipment, provided that
upon the occurrence of an Event of Default, Bank shall be entitled to exercise
any and all available remedies against any and all Collateral, including but not
limited to the Bond Equipment.
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Part of the Equipment may constitute motor vehicles and other vehicles
subject to registration under the motor vehicle title registration statutes of
Georgia or other states, and with respect to which the security interest of Bank
therein is required to be registered on the vehicle title certificate. Borrower
agrees to execute and deliver on a timely basis all such title certificates and
instruments as shall be requested by Bank from time to time.
Part of the Equipment may be affixed to real estate owned or leased by
Borrower and constitute fixtures under the Uniform Commercial Code. The Borrower
agrees that any such fixtures shall be included within the meaning of Equipment
as used and defined herein and that the Bank is hereby granted a security
interest in and a lien upon such fixtures.
The Borrower agrees to execute and deliver, or cause the execution and
delivery of, such security agreements, deeds of trust, mortgages, assignments,
guaranties, consents and subordination agreements, as may be required by Bank to
evidence such security, all in form satisfactory to Bank, as well as such
consents and agreements of the landlords of each of the premises leased by
Borrower on which the Collateral is located, all in form satisfactory to Bank.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND GENERAL COVENANTS
Borrower represents, warrants and covenants to and with Bank, which
representations, warranties and covenants shall survive until the Obligations
are indefeasibly satisfied in full, that:
5.1. ORGANIZATION AND QUALIFICATION. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has the corporate power to own its properties and to carry on its
business as now being conducted; and is duly qualified to do business and is in
good standing in every jurisdiction in which the character of the properties
owned by it or in which the transaction of its business makes its qualification
necessary.
5.2. CORPORATE POWER AND AUTHORIZATION. Borrower has full power and
authority to enter into this Agreement, to borrow hereunder, to execute and
deliver the Notes and the other Loan Documents and to incur the obligations
provided for herein, all of which have been authorized by all proper and
necessary corporate action.
5.3. ENFORCEABILITY. This Agreement, the Notes and each of the other Loan
Documents constitute valid and legally binding obligations of Borrower
enforceable in accordance with their respective terms and will not violate,
conflict with, or constitute any default under any law, government regulation,
Borrower's Articles of Incorporation or By-Laws, or any other agreement or
instrument binding upon Borrower or its assets.
5.4. PENDING ACTIONS. Borrower is not a defendant, or a plaintiff against
whom a counterclaim or crossclaim has been asserted, in any civil or criminal
action, suit or litigation, and no action or investigation is pending or, so far
as Borrower's officers and directors know, threatened before or by any court or
administrative agency which might result in any material adverse change in the
financial condition, operations or prospects of Borrower.
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5.5. FINANCIAL STATEMENTS. The financial statements of Borrower dated
heretofore delivered to Bank and all other financial statements and reports
furnished by Borrower to Bank are complete and correct and fairly present the
financial condition of Borrower and the results of its operations and
transactions as of the dates and for the periods referred to and have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved. There are no liabilities, direct or indirect, fixed or
contingent, of Borrower as of the date of such financial statements which are
not reflected therein or in the notes thereto. Neither said financial statements
nor any other financial statements, reports, and information furnished by
Borrower to Bank contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein or herein not
misleading. There is no fact which Borrower has failed to disclose to Bank in
writing which materially affects adversely or, so far as Borrower can now
foresee, will materially affect adversely the Collateral, business, prospects,
profits or condition (financial or otherwise) of Borrower or the ability of
Borrower to perform this Agreement.
5.6. TITLE TO PROPERTIES. Borrower has good and marketable title to all of
its assets, subject to no Lien, mortgage, pledge, encumbrance, or charge of any
kind except inchoate Liens arising by operation of law for obligations which are
not yet due and except for Permitted Liens. Borrower enjoys peaceable and
undisturbed possession under all leases under which it is operating, and none of
such leases contain any provisions which may materially and adversely affect or
impair the operations of the Borrower, and all of such leases are valid and
subsisting and in full force and effect.
5.7. PENSION PLANS. Except as set forth on EXHIBIT "D", Borrower has not
established and is not a party to any Plan or to any stock option or deferred
compensation plan or contract for the benefit of its employees or officers, any
pension, profit sharing or retirement plan, stock redemption agreement, or any
other agreement or arrangement with any officer, director or stockholder,
members of their families, or trusts for their benefit. Borrower is in
compliance with all applicable provisions of ERISA. Neither Borrower nor any of
its Subsidiaries has received any notice to the effect that it is not in full
compliance with any of the requirements of ERISA and the regulations promulgated
thereunder. No fact or situation that could result in a material adverse change
in the financial condition of Borrower, including, but not limited to, any
Reportable Event or Prohibited Transaction, exists in connection with any Plan.
Neither Borrower nor any of its Subsidiaries has any withdrawal liability in
connection with a Multiemployer Plan.
5.8. TAXES. Borrower has filed all federal, state and local tax returns
which are required to be filed and has paid, or made adequate provision for the
payment of, all taxes which have or may become due pursuant to said returns or
to assessments received by Borrower, including, without limitation, all
applicable federal, state, and local employee withholding taxes.
5.9. TITLE TO COLLATERAL. Except for Permitted Liens, Borrower is, or as to
Collateral to be acquired after the date hereof will be, the sole owner of the
Collateral free from any adverse Liens, security interests or other
encumbrances. Borrower shall defend the Collateral against all claims and
demands of all other parties who at any time claim any interest in the
Collateral.
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5.10. PLACE OF BUSINESS. Borrower's chief executive office is located at
0000 Xxxxxxxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxx
00000. The Inventory and Equipment and other Collateral is and shall be located
only at the locations listed on EXHIBIT "E" to this Agreement. Except as
indicated on said exhibit, the real estate constituting each said location is
owned by Borrower. With respect to locations not owned by Borrower, said exhibit
sets forth the name and address of each landlord, the location of the property,
and the remaining term of the lease. Borrower has separately furnished to Bank
true and correct copies of the lease agreements for each said parcel.
5.11. FULL DISCLOSURE. All information furnished by Borrower to the Bank
concerning the Borrower, its financial condition, the Collateral, or otherwise
for the purpose of obtaining credit or an extension of credit, is, or will be at
the time the same is furnished, accurate and correct in all material respects
and complete insofar as completeness may be necessary to give the Bank a true
and accurate knowledge of the subject matter.
5.12. BORROWER'S NAME. Borrower has not changed its name or been known by
any other name within the last five (5) years, nor has it been the surviving
corporation in a merger effected within the last five (5) years. Borrower does
not now use nor has it ever used any trade or fictitious name in the conduct of
its business, except for "Color Image".
5.13. EXISTING LIABILITIES. Borrower is not in default with respect to any
of its existing Liabilities or with respect to any material agreement to which
Borrower is a party.
5.14. INSOLVENCY. Borrower is now and, after giving effect to the
transactions contemplated hereby, at all times will be, Solvent. The benefits
received by Borrower as a result of this Agreement and the Loans equal or exceed
in value the obligations incurred under this Agreement and the value of
Borrower's interest in the Collateral. The execution, delivery and performance
of this Agreement will assist Borrower in preserving its assets and continuing
its business activities.
5.15. SUBSIDIARIES. Borrower has no Subsidiaries.
5.16. ENVIRONMENTAL MATTERS. Borrower is in compliance with all
Environmental Regulations and with all other federal, state and local laws and
regulations relating to the environment and pollution, including such laws and
regulations regulating hazardous, radioactive and toxic materials and
underground petroleum products storage tanks. No assessment, notice of (primary
or secondary) liability or notice of financial responsibility, and no notice of
any action, claim, investigation, proceeding, or inquiry to determine such
liability or responsibility, or the amount thereof, or to impose civil penalties
has been received by Borrower, and there are no facts, conditions or
circumstances known to Borrower which could result in any investigation or
inquiry if all such facts, conditions, and circumstances, if any, were fully
disclosed to the applicable governmental authority. Borrower has paid any
environmental excise taxes due and payable, including without limitation, those
imposed pursuant to Sections 4611, 4661, or 4681 of the Internal Revenue Code of
1986, as amended from time to time. Borrower has not obtained and is not
required to obtain any permits, licenses, or similar authorizations to
construct, occupy, operate or use any buildings, improvements, fixtures or
equipment in connection with its business by reason of any Environmental
Regulations. No oil, toxic or hazardous substances or solid wastes have been
23
disposed of or released by Borrower in connection with the operation of its
business and Borrower will not dispose of or release oil, toxic or hazardous
substances or solid wastes at any time in its operation of its business (the
terms "hazardous substance" and "release" shall have the meanings specified in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), and the terms "solid waste" and "disposal,"
"dispose" or "disposed" shall have the meanings specified in the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), except that if such
acts are amended to broaden the meanings thereof, the broader meaning shall
apply herein).
5.17. OWNERSHIP. Borrower is a public corporation, the shares of which are
traded over the counter. Bank consents to the Going Private Transaction,
provided that the Going Private Transaction is accomplished in accordance with
all applicable laws, rules and regulations and results in stock ownership in
Borrower approved by Bank.
5.18. INVENTORY. All Inventory has been produced, and during the term
hereof will be produced, in compliance with the requirements of the Federal Fair
Labor Standards Act. No Inventory is now, nor shall any Inventory at any time or
times hereafter be, stored with a bailee, warehouseman or similar party without
Bank's prior written consent and, if Bank gives such consent, Borrower will
concurrently therewith cause any such bailee, warehouseman, or similar party to
issue and deliver to Bank, in form and substance acceptable to Bank, warehouse
receipts therefor in Bank's name. No Inventory is or will be consigned to any
Person without Bank's prior written consent, and, if such consent is given,
Borrower shall, prior to the delivery of any Inventory on consignment, (i)
provide Bank with all consignment agreements to be used in connection with any
consigned inventory, all of which shall be acceptable to Bank, (ii) prepare,
execute and file appropriate financing statements with respect to any such
consigned inventory, showing Bank as assignee, (iii) conduct a search of all
filings made against the consignee in all jurisdictions in which any consigned
Inventory is to be located and deliver to Bank copies of the results of all such
searches, (iv) notify, in writing, all the creditors of the consignee which are
or may be holders of Liens in the Inventory to be consigned that Borrower
expects to deliver certain inventory to the consignee, all of which Inventory
shall be described in such notice by item or type, and (v) do all such other
things and acts as may be necessary or desirable to fully perfect on a first
priority basis Bank's security interest in said Inventory.
5.19. LABOR RELATIONS. Neither Borrower nor any of its Subsidiaries is a
party to any collective bargaining agreement, and there are no material
grievances, disputes or controversies with any union or any other organization
of Borrower's employees, or threats of strikes, work stoppages or any asserted
pending demands for collective bargaining by any union or organization.
5.20. TRADE RELATIONS. There exists no actual or threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between Borrower and any customer or any group of customers whose
purchases individually or in the aggregate are material to the business of
Borrower, or with any material supplier, and there exists no present condition
or state of facts or circumstances which would materially affect adversely
Borrower or prevent Borrower from conducting such business after the
consummation of the transaction contemplated by this Agreement in substantially
the same manner in which it has heretofore been conducted.
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5.21. PARTNERSHIPS. Borrower is not a partner or joint venturer with any
other Person or a participant in any business enterprise other than its own for
which it is generally liable, nor does Borrower have any contingent liabilities
of any description other than as indicated in the financial statements
heretofore delivered to Bank.
5.22. SURETY OBLIGATIONS. Borrower is not obligated as guarantor, surety or
indemnitor under any indemnity, guaranty, surety or similar bond or other
contract issued or entered into or any agreement to assure payment, performance
or completion of performance of any undertaking or obligation of any Person,
except under manufacturer's warranties issued in the ordinary course of
Borrower's business.
5.23. NO APPROVAL. No authorization or approval or other action by, and no
notice to or filing with, any federal, state, or local government body, agency,
or authority is required for the due execution, delivery, and performance by
Borrower of this Agreement, the Notes, or the Loan Documents.
5.24. RACKETEERING. Borrower is not engaged in any activity that might
constitute a pattern of racketeering activity or in any other conduct that might
subject all or a material portion of Borrower's assets to forfeiture.
5.25. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Borrower owns or
possesses all the patents, trademarks, service marks, trade names, copyrights
and licenses necessary for the present and planned future conduct of its
business without any known conflict with the rights of others. All patents,
trademarks, service marks, tradenames, copyrights, licenses and other similar
rights owned or used by Borrower are listed on EXHIBIT "F" attached hereto and
made a part hereof. Where said patents are not owned outright by Borrower, said
exhibit lists the owner thereof and identifies the license or other agreement
pursuant to which they are used by Borrower.
5.26. REPRESENTATIONS TRUE. No representation or warranty by the Borrower
contained herein or in any certificate or other document furnished by the
Borrower pursuant hereto contains any untrue statement of material fact or omits
to state a material fact necessary to make such representation or warranty not
misleading in light of the circumstances under which it was made.
ARTICLE VI
GENERAL COVENANTS
Borrower agrees and covenants that until the Obligations have been
indefeasibly paid in full and until the Bank has no further obligation to make
advances under the Loans, Borrower shall:
6.1. INSURANCE. Maintain insurance with insurance companies satisfactory to
Bank on such of its properties, in such amounts and against such risks as is
customarily maintained in similar businesses operating in the same vicinity, and
shall file with Bank upon request, from time to time, a detailed list of the
insurance then in effect, stating the names of the insurance companies, the
amounts and rates of the insurance, dates of expiration thereof, and the
properties and risks covered thereby, and, within 10 days after notice in
writing from Bank, shall obtain such additional insurance as Bank may reasonably
request. All such policies shall name the Bank as a named insured and provide
that any losses payable thereunder shall (pursuant to loss payable clauses, in
25
form and content acceptable to the Bank, to be attached to each policy) be
payable to the Bank, and provide that the insurance provided thereby, as to the
interest of the Bank, shall not be invalidated by any act or neglect of the
Borrower, nor by the commencing of any proceedings by or against the Borrower in
bankruptcy, insolvency, receivership or any other proceedings for the relief of
a debtor, nor by any foreclosure, repossession or other proceedings relating to
the property insured, nor by any occupation of such property or the use of such
property for purposes more hazardous than permitted in the policy. Borrower
hereby assigns to the Bank all right to receive proceeds, directs any insurer to
pay all proceeds directly to the Bank, and authorizes the Bank to endorse any
check or draft for such proceeds and apply the same toward satisfaction of the
Obligations. The Borrower shall furnish to the Bank insurance certificates, in
form and substance satisfactory to the Bank, evidencing compliance by it with
the terms of this Section and, upon the request of the Bank at any time, the
Borrower shall furnish the Bank with photostatic copies of the policies required
by the terms of this Section. The Borrower will cause each insurer under each of
the policies to agree (either by endorsement upon such policy or by letter
addressed to the Bank) to give the Bank at least 10 days' prior written notice
of the cancellation of such policies in whole or in part or the lapse of any
coverage thereunder. Borrower agrees that it will not take any action or fail to
take any action which action or inaction would result in the invalidation of any
insurance policy required hereunder. At least 10 days prior to the date the
premiums on each such policy or policies shall become due and payable, the
Borrower shall furnish to the Bank evidence of the payment of such premiums.
Borrower shall furnish to the Bank such evidence of insurance as Bank may
require.
6.2. CORPORATE EXISTENCE: QUALIFICATION. Maintain its corporate existence
and, in each jurisdiction in which the character of the property owned by it or
in which the transaction of its business makes its qualification necessary,
maintain good standing.
6.3. TAXES. During each fiscal year, accrue all current tax liabilities of
all kinds, all required withholding of income taxes of employees, all required
old age and unemployment contributions, all required payments to employee
benefit plans, and pay the same when they become due.
6.4. COMPLIANCE WITH LAWS. Comply with all Applicable Laws, including,
without limitation, Environmental Regulations, and pay all taxes, assessments,
charges, claims for labor, supplies, rent, and other obligations. Specifically,
Borrower shall pay when due all taxes and assessments upon the Collateral, this
Agreement, the Notes, or any Loan Document, including, without limitation, any
stamp taxes or intangibles taxes imposed by virtue of the transactions outlined
herein.
6.5. ANNUAL FINANCIAL STATEMENTS. Within 120 days after the close of each
fiscal year, furnish Bank with annual audited financial statements of Borrower
consisting of balance sheets, operating statements and such other statements as
Bank may reasonably request, for the period(s) involved, prepared in accordance
with GAAP consistently applied for the period involved and for the preceding
fiscal year and certified as reviewed by independent certified public
accountants acceptable to the Bank. At the time of furnishing said financial
statements, Borrower shall furnish Bank with (i) a certificate from the
President or the chief financial officer of Borrower, or any other officer of
Borrower properly authorized as evidenced by a Secretary's Certificate,
including resolution and incumbency certificate, in form and substance
26
acceptable to Bank, stating that (A) the certifier has reviewed this Agreement
and the affairs of Borrower, (B) to the best of the certifier's knowledge and
belief the certifier is unaware of the occurrence of an event which constitutes
an Event of Default hereunder or which would constitute such an Event of Default
with the giving of notice or the lapse of time or both, and, if so, stating the
facts with respect thereto, (C) setting forth the calculations to show
compliance with the financial covenants set forth herein, as set forth in the
Covenant Compliance Certificate or as otherwise specified by Bank, and (ii) a
letter from such independent certified public accountants stating that the Bank
may rely on such financial statements and their opinion with respect thereto.
6.6. INTERIM FINANCIAL STATEMENTS. Within 45 days after the close of each
fiscal quarter, furnish Bank with a Covenant Compliance Certificate, unaudited
quarterly and year-to-date financial statements of Borrower, consisting of
balance sheets and operating statements and a listing of all contingent
liabilities of the Borrower for the periods involved and such other statements
as Bank may request, prepared in accordance with GAAP applied on a basis
consistent with the financial statement(s) previously furnished to Bank, taken
from the books and records of Borrower and certified as correct by the chief
financial officer of Borrower. At the time of furnishing such financial
statements, Borrower shall furnish Bank with a certificate from the President or
the chief financial officer of Borrower, or any other officer of Borrower
properly authorized as evidenced by a Secretary's Certificate, including
resolution and incumbency certificate, in form and substance acceptable to Bank,
stating that the certifier has reviewed this Agreement and the affairs of the
Borrower and that to the best of the certifier's knowledge and belief the
certifier is unaware of the occurrence of an event which constitutes an Event of
Default hereunder or which would constitute such an Event of Default with the
giving of notice or the lapse of time or both, and if so, stating the facts with
respect thereto. Said certificates shall further confirm that Borrower was at
the time of issuance of said financial statements, and has at all times since,
been Solvent. Unless otherwise specified by Bank, said certificate shall be in
the form of EXHIBIT "B" hereto. In addition, Borrower shall furnish to Bank upon
request by Bank from time to time all federal and state tax returns and
informational reports, including, without limitation, the Form 941 Quarterly
payroll tax information form and all other forms filed with any state, federal,
or local agency pertaining to payment of applicable payroll and other federal,
state and local taxes.
6.7. VISITS AND INSPECTIONS. Permit persons designated by Bank to inspect
any and all of the property and corporate and financial books and records of
Borrower and to discuss its affairs with its officers and employees at such
reasonable times as Bank shall request and furnish Bank with such miscellaneous
information as it may request.
6.8. PAYMENTS ON NOTES. Duly and punctually pay the principal and interest
on the Notes, in accordance with the terms of this Agreement and of the Notes,
and pay all other Liabilities of Borrower reflected on the financial statements
delivered to Bank and referred to in Section 5.5 hereof and all other
Liabilities incurred after the date hereof in accordance with the terms of such
Liabilities, it being understood, however, that this Section shall not be deemed
to permit any Liabilities in violation of the provisions of Sections 7.1 and 7.2
hereof.
27
6.9. CONDUCT OF BUSINESS. Conduct its business as now conducted and do all
things necessary to preserve, renew and keep in full force and effect its
rights, privileges and franchises necessary to continue its business.
6.10. MAINTENANCE OF PROPERTIES. Keep its properties in good repair,
working order and condition, reasonable wear and tear excepted, and from time to
time make all needed and proper repairs, renewals, replacements, additions, and
improvements thereto and comply with the provisions of all leases to which it is
a party or under which it occupies property so as to prevent any loss or
forfeiture thereof or thereunder.
6.11. ADDITIONAL DOCUMENTS. Join the Bank in executing any security
agreements, assignments, consents, financing statements or other instruments, in
form satisfactory to the Bank, as the Bank may from time to time request in
connection with the Collateral and the other security for the Loans referred to
in Article IV hereof.
6.12. NOTICE TO BANK. Immediately notify the Bank of (i) any event causing
a material loss or depreciation in value of the Collateral and the amount of
such loss or depreciation, (ii) if Borrower becomes aware of the occurrence of
any Event of Default or of any fact, condition or event that, with the giving of
notice or passage of time, or both, could become an Event of Default or of the
failure of the Borrower to observe any of its undertakings hereunder, or (iii)
any material lawsuit involving Borrower. As soon as practicable, and in any
event not less than three (3) business days prior to the consummation of the
Going Private transaction, Borrower shall notify Bank in writing of the pending
consummation and of the stock ownership in Borrower as of the consummation.
6.13. COLLATERAL REPORTS. Within 30 days after the close of each fiscal
quarter during which Borrower has not utilized the Revolving Loan, Borrower will
furnish to Bank a detailed accounts receivable aging report, a detailed accounts
payable aging report, an inventory report and a Borrower's Report, all in form
and substance, and containing such detail and information, as Bank shall
request. Within 30 days after the close of each fiscal month during which
Borrower has utilized the Revolving Loan, Borrower will furnish to Bank a
detailed accounts receivable aging report, a detailed accounts payable aging
report, an inventory report and a Borrower's Report, all in form and substance,
and containing such detail and information, as Bank shall request. At Bank's
option, as a condition to making any advance under the Revolving Loan, Borrower
shall also provide a Borrower's Report for the month immediately preceding the
first advance made under the Revolving Loan. Borrower shall furnish to Bank
copies of all physical inventory listings when prepared by Borrower. Each
Accounts receivable aging and Borrower's Report shall specifically identify
foreign Accounts and the applicable amounts of insurance pertaining to all such
foreign Accounts.
6.14. SUBORDINATION OF DEBT. Provide Bank with a debt subordination
agreement, in form and substance satisfactory to Bank, executed by Borrower and
any Person who is an officer, director, shareholder or Affiliate of Borrower to
whom Borrower may hereafter become indebted, subordinating in right of payment
and claim all debt owed by Borrower to any said Person and any future advances
thereon to the full and final payment of the Obligations.
6.15. COLLECTION OF ACCOUNTS. Diligently pursue collection of all Accounts
and other amounts due Borrower by others, including Affiliates of Borrower.
28
6.16. LANDLORD AND STORAGE AGREEMENTS. Upon request by Bank, provide Bank
with copies of all agreements between Borrower and any landlord or warehouseman
which owns any premises at which any inventory or other Collateral may, from
time to time, be kept.
6.17. AUDITORS, INSURANCE REPRESENTATIVES AND AGENTS. Furnish the Bank with
a copy of each letter written to the Borrower by its independent certified
public accountant concerning internal controls and management review immediately
upon receipt of same and any comments made by the Borrower with respect thereto
and permit Bank to communicate directly with said accountants and with
Borrower's insurance representatives and agents regarding the financial affairs
and condition of Borrower, the books and records of Borrower, and insurance
matters pertaining to Borrower's business.
6.18. ERISA COMPLIANCE. (a) At all times make prompt payment of
contributions required to meet the minimum funding standards set forth in ERISA
with respect to each Plan; (b) promptly after the filing thereof, furnish to
Bank copies of any annual report required to be filed pursuant to ERISA in
connection with each Plan and any other employee benefit plan of it and its
Affiliates; (c) notify Bank as soon as practicable of any Reportable Event and
of any additional act or condition arising in connection with any Plan which
Borrower believes might constitute grounds for the termination thereof by the
Pension Benefit Guaranty Corporation or for the appointment by the appropriate
United States district court of a trustee to administer the Plan; and (d)
furnish to Bank, promptly upon Bank's request therefor, such additional
information concerning any Plan or any other such employee benefit plan as may
be reasonably requested.
6.19. BANK ACCOUNTS. Maintain its principal depository and cash management
accounts with the Bank.
6.20. BUSINESS RECORDS. Keep, and cause each Subsidiary to keep, adequate
records and books of account with respect to its business activities in which
proper entries are made in accordance with GAAP reflecting all its financial
transactions.
6.21 FINANCIAL COVENANTS. Maintain at all times that this Agreement is in
effect the following:
(a) Fixed Charge Coverage Ratio with respect to the twelve-month period
ending on the last day of any fiscal quarter of not less than
1.25:1:00;
(b) Traditional Leverage of not more than 2.0 to 1; and
(c) Tangible Net Worth of not less than $9,000,000.
If Borrower either abandons the Going Private Transaction or fails to consummate
the Going Private Transaction by December 31, 2005, in accordance with all
applicable laws, rules and regulations and resulting in stock ownership in
Borrower approved by Bank, then the foregoing covenants, effective upon the
earlier of abandonment or December 31, 2005, shall be modified to provide that
Borrower shall at all times thereafter maintain the following:
(a) Fixed Charge Coverage Ratio with respect to the twelve-month period
ending on the last day of any fiscal quarter of not less than
1.25:1:00;
29
(b) Traditional Leverage of not more than 1.5 to 1; and
(c) Tangible Net Worth of not less than $ 10,000,000.
6.22. FILING. Deliver to Bank a copy of any filings with any governmental
body, agency or authority which regulates Borrower's business (except for tax
returns filed in the ordinary course of business).
ARTICLE VII
NEGATIVE COVENANTS
Until the Obligations have been indefeasibly repaid and satisfied in full
and until the Bank has no further obligation to make advances under the Loans,
without the prior written consent of Bank, the Borrower shall not:
7.1. INDEBTEDNESS. Except as permitted or contemplated by this Agreement,
create, incur, assume or suffer to exist any Liabilities or obligation for money
borrowed, or guarantee, or endorse, or otherwise be or become contingently
liable in connection with the obligations of any Person (including, without
limitation, any Affiliate), except
7.1.1. Indebtedness for taxes not at the time due and payable or which are
being actively contested in good faith by appropriate proceedings and against
which reserves deemed adequate by Bank have been established by Borrower, but
only if the non-payment of such taxes being contested does not result in a Lien
upon any property of Borrower that has priority over the Lien held by Bank;
7.1.2. Contingent liabilities arising out of the endorsement of negotiable
instruments in the ordinary course of collection or similar transactions in the
ordinary course of business;
7.1.3. Accounts payable to trade creditors which are not aged more than one
hundred twenty (120) days from billing date and current operating expenses
(other than for borrowed money) which are not more than sixty (60) days past
due, in each case incurred in the ordinary course of business and paid within
such time period, unless the same are actively being contested in good faith and
by appropriate and lawful proceedings and Borrower shall have set aside such
reserves, if any, with respect thereto as have been recommended by independent
public accountants;
7.1.4. Liabilities to third parties for purchase money borrowing incurred
in connection with the purchase of capital assets used in the business of
Borrower not to exceed $100,000 during any fiscal year of Borrower;
7.1.5. Liabilities for money borrowed from the Bank; and
7.1.6 Subject to Section 7.1.7, Liabilities to Affiliates provided that and
so long as (a) such Liabilities at no time exceeds One Million Dollars
($1,000,000) in outstanding principal amount in the aggregate; (b) such
Liabilities is in all respects and at all times subordinate and subject to the
Obligations pursuant to subordination agreements acceptable to Bank in its sole
discretion; (c) such Liabilities require Borrower to pay only interest thereon
so long as the Obligations or any portion thereof is outstanding, except that
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such Liabilities may require Borrower to pay principal to the extent of
additional cash equity investments actually made in Borrower, and (d) no Event
of Default exists.
7.2. LIENS AND SECURITY INTERESTS. Create, incur, assume, or suffer to
exist any mortgage, security deed, deed of trust, security interest, pledge,
encumbrance, Lien or charge of any kind (including charges on property purchased
under conditional sales or other title-retention agreements) on any of its
property or assets, now owned or hereafter acquired, except for the following
(all of which are referred to herein as "Permitted Liens"):
7.2.1. Liens for taxes not yet due or which are being contested in good
faith by appropriate proceeding and against which reserves deemed adequate by
Bank have been set up (excluding any Lien imposed pursuant to any of the
provisions of ERISA);
7.2.2. Other Liens, charges and encumbrances incidental to the conduct of
its business or the ownership of its property and assets and created by
operation of law;
7.2.3. Purchase money Liens and encumbrances created to secure the
indebtedness permitted by Section 7.1.4 hereof;
7.2.4. Liens, charges and encumbrances in favor of the Bank; and
7.2.5. Liens, charges and encumbrances reflected on EXHIBIT "G" to this
Agreement.
7.3. DIVIDENDS AND DISTRIBUTIONS. Declare any dividends on any shares of
any class of its capital stock, or apply any of its property or assets to the
purchase, redemption or other retirement of, or set apart any sum for the
payment of any dividends on, or for the purchase, retirement of, or make any
other distribution by reduction of capital or otherwise in respect of, any
shares of any class of capital stock of the Borrower, except for such
transactions that do not result in or cause a breach or violation of any of
Borrower's covenants set forth in this Agreement.
7.4. AFFILIATE TRANSACTIONS. Purchase, acquire or lease property from, or
sell, transfer or lease any inventory, materials, goods, equipment, assets,
rights or property to, any Affiliate of Borrower, except in the ordinary course
of Borrower's business and under terms and conditions which would apply if
disinterested parties were involved.
7.5. FINANCING STATEMENTS. Permit any financing statement (except Bank's
financing statements) to be on file with respect to the Collateral.
7.6. LOCATION OF COLLATERAL. Change the locations at which the Collateral
is maintained; change the name, identity, or corporate structure of Borrower;
adopt or make use of any fictitious or trade name not disclosed elsewhere in
this Agreement; or change the location of its chief executive office.
7.7. DESTRUCTION OF COLLATERAL. Waste or destroy the Collateral or use it
in violation of any statute or ordinance.
7.8. MERGER OR CONSOLIDATION. Enter into any merger or consolidation or
acquire all or substantially all of the assets of any Person; or sell, lease, or
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otherwise dispose of any of its assets in an aggregate amount exceeding $50,000
during any fiscal year, except sales in the ordinary course of its business.
7.9. LOANS OR ADVANCES. Make loans or make advances or pay any management
or similar fees to any Person.
7.10. ACQUISITIONS. Purchase or acquire the obligations or stock of or any
other interest in any Person, except direct obligations of the United States of
America or certificates of deposit or other investments issued by the Bank or by
any bank designated in writing by the Bank.
7.11. PAYMENT OF LIABILITIES. Pay any portion of the principal of, or
prepay, any Liabilities except Liabilities to the Bank; provided, however, the
Borrower may take ordinary trade discounts on purchases made in the ordinary
course of business provided that and so long as no Event of Default exists or
results from any such payment or prepayment.
7.12. LEASE TRANSACTIONS. Enter into any sale and lease-back arrangement,
either directly or indirectly.
7.13. AMENDMENTS. Amend any instrument evidencing a Permitted Lien or the
indebtedness secured thereby.
7.14. SALARIES. From and after January 1, 2006, increase the salary and
fringe benefits of any officer or director or shareholder or any Affiliate of
any officer or director or shareholder of Borrower by more than 15% in any
fiscal year from the annual amount payable as of the last day of the previous
fiscal year.
7.15. ADVERSE TRANSACTIONS. Enter into any transaction, or permit any
Subsidiary to enter into any transaction, which materially and adversely affects
or may materially and adversely affect the Collateral or Borrower's ability to
repay the Obligations or permit or agree to any material extension, compromise
or settlement or make any change or modification of any kind or nature with
respect to any Account, including any of the terms relating thereto, other than
discounts and allowances in the ordinary course of business.
7.16. SUBSIDIARY ACQUISITIONS. Hereafter create any Subsidiary or divest
itself of any material assets by transferring them to any Subsidiary.
7.17. SUBSIDIARY DIVESTITURES. Transfer, sell, pledge, encumber or
otherwise assign any shares of stock or other interest in any Subsidiary or
permit any Subsidiary to sell or otherwise dispose of all of substantially all
of its assets.
7.18 PARTNERSHIPS OR JOINT VENTURES. Become or agree to become a general or
limited partner in any general or limited partnership or a joint venturer in any
joint venture.
7.19. SUBORDINATED DEBT. Make any payment (principal or interest) with
respect to Subordinated Debt, or with respect to any Liabilities that would be
Subordinated Debt but for the absence of a subordination agreement in effect
with respect thereto.
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ARTICLE VIII
GRANT OF SECURITY INTEREST
8.1. SECURITY INTEREST. As security for the payment of the Loans and all
other Obligations, now existing or in the future incurred, and including any
extensions or renewals or changes in form of the Loans, any Overadvances, and
any other Liabilities of Borrower to the Bank, and all costs and expenses of
collection thereof, including, without limitation, attorneys' fees, Borrower
hereby assigns to Bank and grants to Bank a security interest in and Lien upon
all right, title and interest of Borrower in and to the Collateral, whether now
owned or hereafter acquired by Borrower. Notwithstanding the foregoing sentence,
Bank shall have (a) as the sole security of Bank in the assets of Borrower for
Borrower's obligations under the Reimbursement Agreement and in regard to the
Bonds, a first (1st) priority security interest in the Bond Equipment and (b) to
secure all other Obligations, a second (2nd) priority security interest in the
Bond Equipment, provided that upon the occurrence of an Event of Default, Bank
shall be entitled to exercise any and all available remedies against any and all
Collateral, including but not limited to the Bond Equipment.
8.2. SALE OF INVENTORY. Until the occurrence of an Event of Default
hereunder or until expiration of the Commitment Period, whichever occurs first,
Borrower may use and dispose of the Inventory in the ordinary course of business
where such is not inconsistent with this Agreement, provided that the ordinary
course of business does not include a transfer in partial or total satisfaction
of Liabilities nor a transfer (other than a sale on terms and conditions which
would apply if disinterested parties were involved) to an Affiliate of Borrower.
8.3. NOTICE TO ACCOUNT DEBTORS. At any time after the occurrence of an
Event of Default, but without prior notice to Borrower, except such notice as
may be required by law, Bank shall have the right to notify the Account Debtors
obligated on any or all of the Accounts to make payment thereof directly to Bank
and to take control of all proceeds of any such Accounts. Any such notice by the
Bank to such Account Debtors shall be given by an authorized representative of
the Bank. Borrower, if requested by Bank, shall stamp or cause to be stamped on
each Account item in legible letters "Pledged to Wachovia Bank, National
Association" and shall turn over physical possession of the Accounts to Bank.
Borrower authorizes Bank to sign and endorse Borrower's name upon any check,
draft, money order, or other form of payment of any Account item and to sign and
endorse satisfactions and releases of Account items in Borrower's name. Until
such time as Bank elects to exercise the right to collect and enforce said
Accounts, Borrower is authorized, as agent of the Bank, to collect and enforce
said Accounts in Borrower's name. The costs of such collection and enforcement,
including attorneys' fees and out-of-pocket expenses and all other expenses and
liabilities resulting therefrom, shall be borne solely by Borrower whether the
same are incurred by the Bank or Borrower.
8.4. VERIFICATION OF ACCOUNTS. Whether or not an Event of Default has
occurred, any of Bank's officers, authorized representatives, employees or
agents shall have the right, at any time or times hereafter, in the name of Bank
or in any trade or fictitious name selected by Bank, or in the name of any
designee of Bank or Borrower, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph, or otherwise. Borrower
shall cooperate fully with Bank in an effort to facilitate and promptly conclude
any such verification process.
8.5 CONTROL. Borrower will cooperate with Bank for Bank to obtain control
of the Collateral consisting of deposit accounts, investment property, letter of
credit rights and electronic chattel paper. Borrower will not create any
33
electronic chattel paper without taking all steps deemed necessary by Bank to
confer control of the electronic chattel paper upon Bank.
8.6. GOVERNMENTAL ACCOUNTS. If any of Borrower's Accounts in excess of $
10,000 arise out of contracts with the United States or any department, agency,
or instrumentality thereof, Borrower will immediately notify the Bank thereof in
writing and execute any instruments and take any steps required by the Bank in
order that all monies due and to become due under such Account shall be assigned
to the Bank and notice thereof given to the Government under the Federal
Assignment of Claims Act.
8.7. ACCOUNTS EVIDENCED BY INSTRUMENTS. If any of Borrower's Accounts are
or should become evidenced by promissory note, trade acceptances, chattel paper,
chattel mortgages, conditional sales contracts, or other instruments, Borrower
will immediately deliver same to Bank, endorsed or assigned with recourse to the
Bank's order and, regardless of the form of such endorsement or assignment,
Borrower hereby waives presentment, demand, notice of dishonor, protest and
notice of protest and all other notices with respect thereto.
8.8. LEASE OF RECORDS. Borrower hereby leases to the Bank, and the Bank
hires from Borrower, for a term which shall be effective so long as the Loans or
other Obligations secured hereby are owing to the Bank by Borrower and until the
Bank has no further obligation under the Agreement, all of Borrower's present
and future books of Accounts, computer printouts, magnetic, digital and laser
tapes and disks, computer and electronic storage media, computer software
programs, trial balance records, ledgers and cabinets in which they are located,
reflected or maintained, in any way relating to the Collateral, and all present
and future supporting evidence and documents relating thereto in the form of
written applications, credit information, account cards, payment records, trial
balances, correspondence, delivery receipts, certificates and the like, as well
as the past and current information stored in computer software programs for and
on Borrower's behalf by third parties. Borrower, if requested by Bank, agrees to
legend all of the foregoing to indicate the lease thereof to the Bank. If an
Event of Default occurs, then, in addition to all of the other rights and
remedies of the Bank herein, the Bank will have the right forthwith or at any
time thereafter to remove from Borrower's premises all of the foregoing and keep
and retain the same in Bank's possession until the Loans and other Obligations
secured hereby shall have been fully paid and discharged and the Bank has no
further obligation under the Agreement. The provisions of this Section shall not
be deemed to diminish or contravene the security interest of the Bank in the
Borrower's General Intangibles or in the property, materials, and interests
described in this Section but shall be deemed to be in addition to any rights
the Bank may have with respect to the Borrower's grant of a security interest in
its General Intangibles to the Bank.
8.9. LICENSE OF RIGHTS. Bank is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights, rights of use of
any name, trade secrets, tradenames, trademarks and advertising matter or any
property of a similar nature as it pertains to the Collateral, in advertising
for sale and in selling any Collateral, and Borrower's rights under all licenses
and all franchise agreements shall inure to Bank's benefit.
8.10. ATTORNEY-IN-FACT. Borrower hereby irrevocably designates, makes,
constitutes and appoints Bank (and all Persons designated by Bank) as Borrower's
true and lawful attorney (and agent-in-fact) and Bank, or Bank's agent, may,
34
without notice to Borrower and in either Borrower's or Bank's name, but at the
cost and expense of Borrower:
8.10.1. At such time or times hereafter as Bank or said agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Bank or under Bank's
control; and
8.10.2. At such time or times as Bank or its agent in its sole discretion
may determine (and irrespective of whether an Event of Default exists): (i)
demand payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral; (iii) sell or collect any of the Accounts or other Collateral
upon such terms, and for such amounts and at such time or times as Bank deems
advisable; (iv) take possession, in any manner, of any item of payment or
proceeds relating to any Collateral and apply the same to the Obligations; (v)
prepare, file and sign Borrower's name to a proof of claim in bankruptcy or
similar document against any Account Debtor or to any notice of lien, assignment
or satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to Borrower and
to notify postal authorities to change the address for delivery thereof to such
address as Bank may designate; (vii) endorse the name of Borrower upon any of
the items of payment or proceeds relating to any Collateral and deposit the same
to the account of Bank or any other bank on account of the Obligations; (viii)
endorse the name of Borrower upon any chattel paper, document, instrument,
invoice, freight xxxx, xxxx of lading or similar document or agreement relating
to the Accounts, Inventory and any other Collateral; (ix) use Borrower's
stationery and sign the name of Borrower to verifications of the Accounts and
notices thereof to Account Debtors; (x) use the information recorded on or
contained in any data processing equipment and computer hardware and software
relating to the Accounts, Inventory, and any other Collateral and to which
Borrower has access; (xi) make and adjust claims under policies of insurance;
and (xii) for and in the name of Borrower to give instructions and direct any
bank or financial institution in which proceeds of the Collateral are deposited
to turn over said proceeds to Bank; and (xiii) do all other acts and things
necessary, in Bank's determination, to fulfill Borrower's obligations under this
Agreement.
ARTICLE IX
ADDITIONAL REPRESENTATIONS, COVENANTS, AND
AGREEMENTS RELATING TO COLLATERAL
9.1. RELIANCE ON STATEMENTS. With respect to all Accounts, Borrower
represents and warrants to Bank that Bank may rely, in determining which
Accounts are Eligible Accounts, on all statements and representations made by
Borrower with respect to any Account or Accounts, and unless otherwise indicated
in writing to Bank, that with respect to each Account:
9.1.1. It is genuine and in all respects what it purports to be, and it is
not evidenced by a judgment;
9.1.2. It arises out of a completed, bona fide sale and delivery of goods
or rendition of services by Borrower in the ordinary course of its business and
in accordance with the terms and conditions of all purchase orders, contracts or
35
other documents relating thereto and forming a part of the contract between
Borrower and the Account Debtor;
9.1.3. It is for a liquidated amount maturing as stated in the duplicate
invoice covering such sale or rendition of services, a copy of which has been
furnished or is available to Bank;
9.1.4. Such Account, and Bank's security interest therein, is not, and will
not be in the future, subject to any offset, Lien, deduction, defense, dispute,
counterclaim or any other adverse condition except for disputes resulting in
returned goods where the amount in controversy is deemed by Bank to be
immaterial, and each such Account is absolutely owing to Borrower and is not
contingent in any respect or for any reason;
9.1.5. Borrower has made no agreement with any Account Debtor thereunder
for any deduction therefrom, except discounts or allowances which are granted by
Borrower in the ordinary course of its business for prompt payment and which are
reflected in the calculation of the net amount of each respective invoice
related thereto;
9.1.6. There are no facts, events or occurrences which in any way impair
the validity or enforceability thereof or tend to reduce the amount payable
thereunder from the face amount of the invoice and statements delivered to Bank
with respect thereto;
9.1.7. To the best of Borrower's knowledge, the Account Debtor thereunder
(a) had the capacity to contract at the time any contract or other document
giving rise to the Account was executed and (b) such Account Debtor was and is
Solvent;
9.1.8. Borrower has no knowledge of any fact or circumstance which would
impair the validity or collectibility of the Account, and to the best of
Borrower's knowledge there are no proceedings or actions which are threatened or
pending against any Account Debtor thereunder which might result in any material
adverse change in such Account Debtor's financial condition or the
collectibility of such Account; and
9.1.9. Borrower will have paid or provided for the payment of all taxes
arising from the transaction creating the Account.
9.2. NOTIFICATION. Borrower shall immediately notify Bank of any event,
occurrence or circumstance which causes any representation pertaining to any
Account set forth in Section 9.1 above to cease to be true in all respects, and
Borrower will promptly notify Bank (a) if any Account Debtor or any Affiliate of
any Account Debtor has or may have any right of setoff, deduction, or defense
against any Account or (b) if any such Account Debtor or Affiliate of such
Account Debtor has or may have a contractual or business relationship with
Borrower such that at any time such right may exist or be asserted or (c) if
Borrower ships any inventory or goods or furnishes any services to any Person
which has or may have any right of setoff, deduction or defense against any
asset, including any Account, of Borrower.
9.3. AFFIRMATION OF REPRESENTATIONS. Each request for a loan or advance
made by Borrower pursuant to this Agreement or any of the other Loan Documents
shall constitute (a) an automatic representation and warranty by Borrower to
Bank that there does not then exist any default or Event of Default and (b) a
reaffirmation as of the date of said request that all of the representations and
warranties of Borrower contained in this Agreement and the other Loan Documents
36
are true in all material respects except for any changes in the nature of
Borrower's business or operations that would render the information contained in
any exhibit attached hereto either inaccurate or incomplete, so long as Bank has
consented to such changes or such changes are expressly permitted by this
Agreement.
9.4. WAIVERS. Borrower hereby releases and waives any and all actions,
claims, causes of action, demands and suits which it may ever have against the
Bank as a result of any possession, collection, settlement, compromise or sale
by Bank of any of the Collateral upon the occurrence of an Event of Default
hereunder, notwithstanding the effect of such possession, collection,
settlement, compromise or sale upon the business of Borrower. Said waiver shall
include all causes of action and claims which may result from the exercise of
the power of attorney conferred upon Bank in Section 8.10. The failure at any
time or times hereafter to require strict performance by Borrower of any of the
provisions, warranties, terms and conditions contained in this Agreement or any
other agreement, document or instrument now or hereafter executed by Borrower,
and delivered to the Bank, shall not waive, affect, or diminish any right of the
Bank thereafter to demand strict compliance and performance therewith and with
respect to any other provisions, warranties, terms and conditions contained in
such agreements, documents or instruments, and any waiver of default shall not
waive or affect any other default, whether prior or subsequent thereto, and
whether the same are of a different type. None of the warranties, conditions,
provisions and terms contained in the Agreement or any other agreement, document
or instrument now or hereafter executed by Borrower and delivered to the Bank
shall be deemed to have been waived by any act or knowledge of the Bank, its
agents, representatives, officers or employees, but only by an instrument in
writing signed by an officer of the Bank and directed to the Borrower specifying
such waiver.
9.5. DISCHARGE OF TAXES AND LIENS. At its option, the Bank may discharge
taxes, Liens, security interests or other encumbrances at any time levied or
placed on the Collateral and may pay for the maintenance and preservation of the
Collateral. Borrower agrees to reimburse the Bank, on demand, for any payment
made or expense incurred by Bank pursuant to the foregoing authorization,
including, without limitation, attorneys' fees.
9.6. INSURANCE. Without limiting any other provision hereof, Borrower will
keep the Collateral insured in amounts equal to its full insurable value, with
companies, and against such risks as may be satisfactory to the Bank. Borrower
will pay the costs of all such insurance and deliver policies evidencing such
insurance to the Bank with mortgagee loss payable clauses in favor of the Bank.
Borrower hereby assigns to the Bank all right to receive proceeds, directs any
insurer to pay all proceeds directly to the Bank, and authorizes the Bank to
endorse any check or draft for such proceeds and apply the same toward
satisfaction of the Loans and other Obligations secured hereby.
9.7. COMPLETE RECORDS, INSPECTION RIGHTS. Borrower will at all times keep
accurate and complete records of the Collateral, and the Bank or its agents
shall have the right to call at Borrower's place or places of business at
intervals to be determined by Bank, upon reasonable notice and during Borrower's
regular business hours, and without hindrance or delay, to inspect and examine
the Inventory and the Equipment and to inspect, audit, check, and make abstracts
from the books, records, journals, orders, receipts, computer printouts,
correspondence and other data relating to the Collateral or to any other
37
transactions between the parties hereto. If requested by Bank, Borrower agrees
to make its books, records, journals, orders, receipts, computer printouts,
correspondence, and other data relating to the Collateral available at the
Bank's main office for inspection, audit and checking by the Bank or its agents.
9.8. U.C.C. FINANCING STATEMENT. The Borrower agrees that Bank may file
such UCC financing statements in regard to this Agreement and the Collateral as
Bank shall determine.
ARTICLE X
EVENTS OF DEFAULT; CERTAIN REMEDIES
10.1. EVENTS OF DEFAULT. The occurrence of any one or more of the following
events shall constitute an Event of Default hereunder:
10.1.1. Payment Default. If Borrower shall fail to make any payment of any
installment of principal or interest on the Notes when and as the same shall
become due and payable, whether at stated maturity, upon expiration of the
Commitment Period, by declaration, upon acceleration, or otherwise; or
10.1.2. Fees and Expenses. If Borrower shall fail to pay when due any other
expense, fee or charge provided for in this Agreement and such failure shall
continue for a period of ten (10) days; or
10.1.3. Other Defaults. If Borrower shall fail for a period of fifteen (15)
days after written notice from Bank to perform, keep, or observe any covenant,
agreement or provision of any of the following Sections of this Agreement: 6.4,
6.9, 6.10, 6.11, 6.14, 6.17 and 6.20; or if Borrower shall fail or neglect to
perform, keep or observe, or shall default with respect to, any other covenant,
agreement or provision contained in this Agreement (other than a covenant,
agreement or provision a default in the performance of which is dealt with
specifically elsewhere in this Section 10.1); or
10.1.4. Representations False. If any warranty, representation, or other
statement made or furnished to Bank by or on behalf of Borrower or in any of the
Loan Documents proves to be false or misleading in any material respect when
made or furnished; or
10.1.5. Financial Difficulties. If the Borrower shall be involved in
financial difficulties as evidenced.
(a) by its admission in writing of its inability to pay its debts generally
as they become due or of its ceasing to be Solvent;
(b) by its filing a petition in bankruptcy or for reorganization or for the
adoption of an arrangement under the U.S. Bankruptcy Code (as now or in the
future amended) or any similar law regarding debtors' rights and remedies or an
admission seeking the relief therein provided;
(c) by its making a general assignment for the benefit of its creditors;
38
(d) by its consenting to the appointment of a receiver for all or a
substantial part of its property;
(e) by its being adjudicated a bankrupt;
(f) by the entry of a court order appointing a receiver or trustee for all
or a substantial part of its property without its consent, which order shall not
be vacated, set aside or stayed within ninety (90) days from the date of entry;
or
(g) by the assumption of custody or sequestration by a court of competent
jurisdiction of all or substantially all of its property, which custody or
sequestration shall not be suspended or terminated within 60 days from its
inception; or
10.1.6. ERISA. If a Reportable Event shall occur which Bank, in its sole
discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if Borrower is in "default" (as defined in Section 4219(c) (5)
of ERISA) with respect to payments to a Multiemployer Plan resulting from
Borrower's complete or partial withdrawal from such Plan; or
10.1.7. Cancellation of Subordination Agreement. If any subordination
agreement hereafter executed by any creditor of Borrower or pertaining to any
Subordinated Debt should be canceled, terminated, or breached; or
10.1.8. Default on Other Obligations. If Borrower shall default in payment
of more than $10,000 due on any Liabilities of Borrower to others or if Borrower
shall default under any loan or security agreement with others or under any
material lease involving a payment of more than $10,000 and any such default
shall not be cured within 30 days after written notice to Borrower from Bank or
any holder; or
10.1.9. Judgments. If a final judgment for the payment of money in excess
of $10,000 shall be rendered against the Borrower and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed, unless such judgment is fully covered by collectible
insurance; or
10.1.10. Actions. If Borrower shall be criminally indicted or convicted
under any law that could lead to a forfeiture of any property of Borrower; or
10.1.11. Uninsured Losses; Unauthorized Dispositions. Any material loss,
theft, damage or destruction not fully covered by insurance (as required by this
Agreement and subject to such deductibles as Bank shall have agreed to in
writing), or sale, lease or encumbrance of any of the Collateral or the making
of any levy, seizure, or attachment thereof or thereon except in all cases as
may be specifically permitted by other provisions of this Agreement; or
10.1.12. Adverse Changes. There shall occur any material adverse change in
the financial condition or business prospects of Borrower; or
10.1.13. Collateral. If a creditor of Borrower shall obtain possession of
any of the Collateral by any legal means; or
39
10.1.14. Business Disruption; Condemnation. There shall occur a cessation
of a substantial part of the business of Borrower for a period which
significantly affects Borrower's capacity to continue its business, on a
profitable basis; or Borrower shall suffer the loss or revocation of any license
or permit now held or hereafter acquired by Borrower which is necessary to the
continued or lawful operation of its business; or Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower leases, uses or occupies
any of its properties shall be canceled or terminated prior to the expiration of
its stated term; or any part of the Collateral shall be taken through
condemnation or the value of such properties shall be impaired through
condemnation; or
10.1.15. Bank Insecurity. Bank shall reasonably and in good xxxxx xxxx
itself insecure; or
10.1.16. Change in Control. If any of the present executive officers of
Borrower should resign or be removed or if there occurs a change in majority
stock ownership of Borrower; or
10.1.17. Subordination Agreements. If a breach or default shall occur with
respect to any subordination agreement hereafter executed by any creditor of
Borrower (including any Affiliate), or if any said agreement shall otherwise
terminate or cease to have legal effect; or
10.1.18. Other Documents. If a default or event of default or breach occurs
under any Loan Document (other than the breaches enumerated in Sections 10. 1. 1
through 10. 1. 17 above), or under or with respect to any of the Obligations, or
under any other note, evidence of indebtedness, loan agreement, security
agreement, guaranty, pledge, mortgage, assignment, or security document executed
by Borrower and delivered to the Bank.
The Borrower agrees that default under any Loan Document shall constitute
default with respect to all Loan Documents and vice versa.
10.2. REMEDIES. Upon or at any time after the occurrence of any one or more
of the foregoing Events of Default, Bank or the holder of the Notes may at its
option (a) proceed to protect and enforce its rights by suit in equity, action
at law and/or the appropriate proceeding either for specific performance of any
covenant or condition contained in the Notes or in any Loan Document, (b)
terminate the Commitment Period and cease disbursing advances under the
Revolving Note, and/or (c) declare the unpaid balance of the Loans and Notes
together with all accrued interest to be forthwith due and payable, and
thereupon such balance shall become so due and payable without presentation,
protest or further demand or notice of any kind, all of which are hereby
expressly waived.
Without limiting the foregoing, upon the occurrence of any Event of
Default, and at any time thereafter, Bank shall have the rights and remedies of
a secured party under the Uniform Commercial Code in addition to the rights and
remedies provided herein or in any other instrument or paper executed by
Borrower. The Bank may require the Borrower to assemble the Equipment and the
Inventory and to make the same available to the Bank at a place to be designated
by the Bank which is reasonably convenient to both parties. Unless the
Collateral is perishable or threatens to decline speedily in value, or is of a
40
style customarily sold on a recognized market, the Bank will give Borrower
reasonable notice of the time after which any private sale or other intended
disposition thereof is to be made. The requirement of reasonable notice shall be
met if such notice is mailed postage prepaid to the Borrower at least ten (10)
days before the time of such sale or disposition. The Borrower shall pay the
Bank on demand any and all expenses, including legal expenses and reasonable
attorneys' fees, incurred or paid by the Bank in protecting or enforcing the
Loans and all other Obligations secured hereby and other rights of the Bank
hereunder, including its right to take possession of the Collateral.
The Bank shall not be liable for failure to collect the Accounts or to
enforce any contract rights or for any action or omission on the part of the
Bank, its officers, agents and employees, except willful misconduct. No remedy
herein conferred upon, or reserved to, the Bank is intended to be exclusive of
any other remedy or remedies, including those of any note or other evidence of
Liabilities held by the Bank, and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing in law or in equity. Exercise or omission to exercise any right of the
Bank shall not affect any subsequent right of the Bank to exercise the same.
Borrower waives notice prior to Bank's taking possession or control of any
of the Collateral or any bond or security that might be required by any court
prior to allowing Bank to exercise any of Bank's remedies, including, without
limitation, the issuance of an immediate writ of possession.
The Borrower agrees that the Bank may apply the net proceeds received from
the Collateral among the Loans and the Obligations toward satisfaction of the
same in its sole discretion. Any such proceeds remaining after satisfaction in
full of the Loans, the Obligations, and the other obligations and liabilities of
the Borrower to the Bank shall be distributed as required by Applicable Laws.
10.3. RIGHT OF SET-OFF. Upon and after the occurrence of any Event of
Default, Bank may, and is hereby authorized by Borrower to, at any time and from
time to time, to the fullest extent permitted by Applicable Laws, and without
advance notice to Borrower (any such notice being expressly waived by Borrower),
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and any other indebtedness at any time
owing by Bank to, or for the credit or the account of, Borrower against any or
all of the Loans and Obligations and other liabilities and obligations of
Borrower now or hereafter existing whether or not such obligations have matured
and irrespective of whether Bank has exercised any other rights that it has or
may have with respect to the Loans and Obligations and other liabilities and
obligations, including, without limitation, any acceleration rights. The
aforesaid right of set-off may be exercised by Bank against Borrower or against
any trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor of Borrower,
notwithstanding the fact that such right of set-off shall not have been
exercised by Bank prior to the making, filing or issuance, or service upon Bank
of, or of notice of, any such petition, assignment for the benefit of creditors,
41
appointment or application for the appointment of a receiver, or issuance of
execution, subpoena, order or warrant. Bank agrees to notify Borrower after any
such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
Bank under this Section are in addition to the other rights and remedies
(including, without limitation, other rights of setoff) which Bank may have.
ARTICLE XI
INDEMNIFICATION
Borrower agrees to defend, indemnify and hold harmless the Bank, its
directors, officers, employees, accountants, attorneys, and agents
(collectively, the "Indemnitees") from and against any and all claims, demands,
judgments, damages, actions, causes of action, injuries, orders, penalties,
costs and expenses (including attorneys' fees and costs of court) of any kind
whatsoever arising out of or relating to any breach or default by Borrower or
any other Person under this Agreement or any Loan Document or the failure of
Borrower to observe, perform or discharge Borrower's duties hereunder or
thereunder. Without limiting the generality of the foregoing, Borrower's
obligation to indemnify Bank shall include indemnity from any and all claims,
demands, judgments, damages, actions, causes of action, injuries, orders,
penalties, costs and expenses arising out of or in connection with the
activities of the Borrower, its predecessors in interest, third parties who have
trespassed on Borrower's property, or parties in a contractual relationship with
Borrower, whether or not occasioned wholly or in part by any condition, accident
or event caused by an act or omission of the Indemnitees, which: (a) arise out
of the actual, alleged or threatened discharge, dispersal, release, storage,
treatment, generation, disposal, or escape of radioactive materials,
radioactivity, pollutants or other toxic or hazardous substances, including any
solid, liquid, gaseous, or thermal irritant or contaminant, including smoke,
vapor, soot, fumes, acids, alkalis, chemicals, and waste (including materials to
be recycled, reconditioned or reclaimed); or (b) actually or allegedly arise out
of the use, specification, or inclusion of any product, material, or process
containing chemicals or radioactive material, the failure to detect the
existence or proportion of chemicals or radioactive material in the soil, air,
surface water or groundwater, or the performance or failure to perform the
abatement of any pollution source or the replacement or removal of any soil,
water, surface water, or groundwater containing chemicals or radioactive
material; or (c) arises out of or relates to breach by Borrower of any of the
provisions of Section 5.16 hereof relating to Environmental Regulations. In
addition, Borrower will indemnify and hold Bank harmless from and against any
liability, claim, cost or expense incurred by Bank or imposed against Bank for
any stamp tax, intangible tax, or other tax, fee or charge imposed by any
governmental entity arising out of or relating to the Notes or this Agreement or
the transactions anticipated herein.
ARTICLE XII
COSTS AND EXPENSES, MISCELLANEOUS
12.1. COSTS OF PREPARATION; BROKERS FEES. Borrower shall bear all expenses
of the Bank in connection with the Loans and with the investigation, review and
approval of this transaction, the preparation of the Agreement and the Loan
Documents, and the issuance and delivery of the Notes to Bank and also in
connection with any amendment or modification thereto, and the administration
thereof, including, without limitation, (a) all legal fees, expenses and
disbursements and other actual third-party expense reimbursements incurred or
sustained by Bank in connection with this transaction, (b) all travel,
appraisal, audit, search and filing fees incurred or sustained by Bank in
42
connection with this transaction or the administration of the Loans; (c) all
recording and filing fees, intangibles taxes, documentary and revenue stamps,
other taxes or other expenses and charges payable in connection with this
Agreement, the Notes or any Loan Document and (d) all costs, expenses (including
fees and expenses of outside consultants), related to the administration of this
Agreement or any of the other Loan Documents and the transactions contemplated
hereby and thereby and/or periodic audits and appraisals performed by Bank. The
Borrower agrees to indemnify and save Bank harmless against all broker's and
finder's fees, if any.
12.2. OTHER COSTS AND EXPENSES. If, at any time or times hereafter, whether
before or after the occurrence of an Event of Default, the Bank employs counsel
to advise or provide other representation with respect to this Agreement or any
Loan Document, or to collect the balance of the Loans, or to take any action in
or with respect to any suit or proceeding relating to this Agreement or any of
the Loan Documents, or to protect, collect, or liquidate the Collateral or to
attempt to enforce any security interest or Lien granted to the Bank by
Borrower; then in any such events, all of the reasonable attorneys' fees arising
from such services, and any expenses, costs and charges relating thereto, shall
constitute additional obligations of Borrower payable on demand of the Bank.
12.3. LEGAL COUNSEL. Borrower acknowledges and agrees that legal counsel to
Bank does not represent Borrower as Borrower's attorney, that Borrower has
retained (or has had an opportunity to retain) counsel of its own choice and has
not and will not rely upon any advice from Bank's counsel. In no event shall
Borrower's reimbursement of expenses pursuant to this Agreement (even if
effected by payment directly by Borrower to Bank's counsel) be deemed to
establish any attorney-client relationship between Borrower and Bank's counsel.
12.4. NO WAIVER. No waiver of any Event of Default hereunder, and no waiver
of any default or Event of Default under any other Loan Document shall extend to
or affect any subsequent or other then existing default or shall impair any
rights, remedies or powers of Bank. No delay or omission of Bank or any
subsequent holder of the Notes to exercise any right, remedy, power or privilege
hereunder after the occurrence of such default or Event of Default shall be
construed as a waiver of any such default, or acquiescence therein.
12.5. HEADINGS. Except for the definitions set forth in Section 1.1, the
headings of the articles, sections, paragraphs and subdivisions of this
Agreement are for convenience of reference only, are not to be considered a part
hereof, and shall not limit or otherwise affect any of the terms hereof.
12.6. MARSHALLING OF ASSETS; PAYMENTS SET ASIDE. Bank shall be under no
obligation to xxxxxxxx any assets or securities in favor of Borrower or any
other Person or against or in payment of any or all of the Obligations. To the
extent that any sum credited against the Obligations is subsequently
invalidated, declared to be fraudulent or preferential, set aside 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 Obligations or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
43
12.7. SURVIVAL OF COVENANTS. All covenants, agreements, representations and
warranties made herein and in certificates or reports delivered pursuant hereto
shall be deemed to have been material and relied on by Bank, notwithstanding any
investigation made by or on behalf of Bank, and shall survive the execution and
delivery to Bank of the Notes or Loan Document.
12.8. ADDRESSES. Any notice or demand which by any provision of this
Agreement is required or provided to be given shall be deemed to have been
sufficiently given or served for all purposes by (i) being delivered in person
to the party to whom the notice or demand is directed or (ii) by being sent as
first class mail, postage prepaid, in either event to the following address: If
to Borrower, 0000 Xxxxxxxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx
00000; or if any other address shall at any time be designated by Borrower in
writing to the holders of record of the Notes at the time of such designation to
such other address; and if to Bank, 000 00xx Xxxxxx, 0xx Xxxxx, Xxxxxxx, XX
00000; or if any other address shall at any time be designated in writing to
Borrower, to such other address. Notwithstanding the foregoing, no notice shall
be effective as to Bank until actually received by Bank. Any written notice that
is not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the noticed
party.
12.9. VENUE AND JURISDICTION. Borrower agrees that any legal action brought
by the Bank to collect the Loans or any Obligation or to assert any claim
against Borrower under any Loan Document, or any part thereof, may be brought in
any court in the State of Georgia having subject matter jurisdiction, waives its
right to object to any such action on grounds it is brought in the improper
venue, and irrevocably consents that any legal action or proceeding against it
under, arising out of, or in any manner relating to the Loans, the Obligations,
or any Loan Document may be brought in the Superior Court of Xxxxxx County,
Georgia or in any other court of jurisdiction in Xxxxxx County, Georgia or in
the U.S. District Court for the Northern District of Georgia. Borrower, by the
execution of this Agreement, expressly and irrevocably assents and submits to
the personal jurisdiction of any such court in any such action or proceeding.
Borrower consents to the service of process relating to any such action or
proceeding by mail to the address set forth in this Agreement.
12.10. CONTINUING OBLIGATION; BENEFITS. This Agreement, and each and every
provision hereof, is a continuing obligation and shall (a) be binding upon the
Borrower and the Bank, their successors and assigns, and (b) inure to the
benefit of and be enforceable by the Borrower and Bank and their successors and
assigns; provided, that the Borrower may not assign all or any part of this
Agreement without the prior written consent of Bank, which consent may be
granted or withheld in the sole discretion of Bank.
12.11. CONTROLLING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia; provided, however, that if
any of the Collateral shall be located in any jurisdiction other than Georgia,
the laws of such jurisdiction shall govern the applicable law for the method,
manner and procedure for foreclosure of Bank's lien upon such Collateral and the
enforcement of Bank's other remedies in respect of such Collateral to the extent
that the laws of such jurisdiction are different from or inconsistent with the
laws of Georgia.
44
12.12. STANDARD OF REVIEW. Any document, writing or instrument required or
permitted to be delivered to Bank under this Agreement shall be deemed
satisfactory only if approved by Bank in the exercise of its sole discretion,
and any act or approval permitted to be done by Bank under this Agreement shall
be in Bank's sole discretion. Where in this Agreement reference is made to
Bank's "discretion", or "sole discretion", said reference shall mean that with
respect to the matter so designated, Bank shall have the absolute right to make
decision with respect thereto and shall not be subject to any standard of good
faith, fair dealing, reasonableness, or any other standard implied by any court
or imposed by law, it being the intention of the parties that the decision of
the Bank with respect to said matter shall be absolutely final and binding.
12.13. PARTICIPATION. Borrower acknowledges that Bank may, at its option,
sell participation interests in the Loans to participating banks. The amounts of
any such participations shall be determined solely by the Bank. Borrower agrees
with each present and future participant in the Loans, the names and addresses
of which will be furnished to Borrower, that if an Event of Default should
occur, each present and future participant shall have all of the rights and
remedies of Bank with respect to any deposit due from any participant to
Borrower. The execution by a participant of a participation agreement with Bank,
and the execution by Borrower of this Agreement, regardless of the order of
execution, shall evidence an agreement between Borrower and said participant in
accordance with the terms of this Section.
12.14. MISCELLANEOUS. The Loan Documents, this Agreement and the agreements
and instruments executed in connection with this Agreement constitute the entire
agreement between Borrower and Bank in regard to the subject matter hereof. This
Agreement may not be varied, altered, or amended except by a written instrument
executed by an authorized officer of the Bank. This Agreement may be executed in
any number of counterparts, each of which, when executed and delivered, shall be
an original, but such counterparts shall together constitute one and the same
instrument. Any provision in this Agreement which may be unenforceable or
invalid under any law shall be ineffective to the extent of such
unenforceability or invalidity without affecting the enforceability or validity
of any other provisions hereof.
12.15. GENERAL WAIVERS. To the fullest extent permitted by Applicable Law,
Borrower waives (a presentment, demand and protest and notice of presentment,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Bank on
which Borrower may in any way be liable; (b) notice prior to Bank's taking
possession or control of any of the Collateral or any bond or security which
might be required by any court prior to allowing Bank to exercise any of Bank's
remedies, including the issuance of an immediate writ of possession; (c) the
benefit of all valuation, appraisement and exemption laws; (d) any right
Borrower may have upon payment in full of the Obligations to require Bank to
terminate its security interest in the Collateral until the execution by
Borrower of an agreement indemnifying Bank from any loss or damage Bank may
incur as the result of dishonored checks or other items of payment received by
Bank from Borrower or any Account Debtor and applied to the Obligations; and (e)
notice of Bank's acceptance hereof or of any Loan Document.
12.16. MAXIMUM INTEREST. Regardless of any provision contained in this
Agreement or any of the Loan Documents, in no event shall the aggregate of all
amounts that are contracted for, charged or collected pursuant to the terms of
this Agreement, the Notes or any of the Loan Documents, and that are deemed
interest under Applicable Laws, exceed the Maximum Rate. No provision of this
45
Agreement or in any of the Loan Documents or the exercise by Bank of any right
hereunder or under any Loan Document or the prepayment by Borrower of any of the
Obligations or the occurrence of any contingency whatsoever, shall entitle Bank
to charge or receive, or to require Borrower to pay, interest or any amounts
deemed interest by Applicable Laws (such amounts being referred to herein
collectively as "Interest") in excess of the Maximum Rate, and all provisions
hereof or in any Loan Document which may purport to require Borrower to pay
Interest exceeding the Maximum Rate shall be without binding force or effect to
the extent only of the excess of Interest over such Maximum Rate. Any Interest
charged or received in excess of the Maximum Rate ("Excess"), shall be
conclusively presumed to be the result of an accident and bona fide error, and
shall, to the extent received by Bank, at the option of Bank, either be applied
to reduce the principal amount of the Obligations or returned to Borrower. The
right to accelerate the maturity of any of the Obligations does not include the
right to accelerate unaccrued interest, and no such interest will be collected
by Bank. All monies paid to Bank hereunder or under any of the Loan Documents
shall be subject to any rebate of unearned interest as and to the extent
required by Applicable Laws. By the execution of this Agreement, Borrower
covenants that (a) the credit or return of any Excess shall constitute the
acceptance by Borrower of such Excess, and (b) Borrower shall not seek or pursue
any other remedy, legal or equitable, against Bank, based in whole or in part
upon contracting for, charging or receiving any Interest in excess of the
Maximum Rate. For the purpose of determining whether or not any Excess has been
contracted for, charged or received by Bank, all interest at any time contracted
for, charged or received from Borrower in connection with this Agreement shall,
to the extent permitted by Applicable Laws, be amortized, prorated, allocated
and spread in equal parts throughout the full term of the Obligations. Borrower
and Bank shall, to the maximum extent permitted under Applicable Laws, (a)
characterize any non-principal payment as an expense, fee or premium rather than
as Interest and (b) exclude voluntary prepayments and the effects thereof. The
provisions of this Section shall be deemed to be incorporated into the Notes and
each Loan Document (whether or not any provision of this Section is referred to
therein).
12.17. WAIVER OF RIGHT TO TRIAL BY JURY. As and to the extent allowed by
Applicable Law, Borrower and Bank hereby waive any right to trial by jury on any
claim, counterclaim, setoff, demand, action or cause of action (a) arising out
of or in any way pertaining or relating to this Agreement, the Notes, the Loan
Documents, or any other instrument, document or agreement executed or delivered
in connection with this Agreement or (b) in any way connected with or pertaining
or related to or incidental to any dealings of the parties hereto with respect
to this Agreement, the Notes, the Loan Documents, or any other instrument,
document or agreement executed or delivered in connection herewith or in
connection with the transactions related thereto or contemplated thereby or the
exercise of either party's rights and remedies thereunder, in all of the
foregoing cases whether now existing or hereafter arising, and whether sounding
in contract, tort or otherwise. Borrower and Bank agree that either or both of
them may file a copy of this paragraph with any court as written evidence of the
knowing, voluntary and bargained agreement between the parties irrevocably to
waive trial by jury, and that any dispute or controversy whatsoever between them
shall instead be tried in a court of competent jurisdiction by a judge sitting
without a jury.
46
12.18 TIME OF ESSENCE. Time is of the essence of this Agreement.
[EXECUTIONS COMMENCE ON NEXT PAGE]
47
IN WITNESS WHEREOF, each of the Borrower and the Bank has caused this instrument
to be executed under seal by its duly authorized officer as of the date first
above written.
DEBTOR, BY EXECUTING THIS AGREEMENT, HEREBY EXPRESSLY WAIVES ANY AND ALL
RIGHTS DEBTOR MAY HAVE TO NOTICE PRIOR TO THE SEIZURE OF THE COLLATERAL. THIS
WAIVER IS GIVEN BY DEBTOR TO SECURED PARTY IN ACCORDANCE WITH SECTION 00-00-000
OF THE OFFICIAL CODE OF GEORGIA IN ORDER TO ELIMINATE THE REQUIREMENT THAT
SECURED PARTY FURNISH A BOND SHOULD SECURED PARTY SEEK AN IMMEDIATE WRIT OF
POSSESSION.
BORROWER:
COLOR IMAGING, INC., a Delaware corporation
By: /S/ XXXXXXX XXXX
-----------------------------------------
Xx. Xxx-Xxxx Xxxx, President
Attest: /S/ XXXXXX XXX XXXXXXX
-------------------------------------
Xxxxxx X. Xxx Xxxxxxx
Its: Executive Vice President
[CORPORATE SEAL]
BANK:
WACHOVIA BANK, NATIONAL
ASSOCIATION
By: /S/ XXX X. HAUESMAN
-----------------------------------------
Xxx X. Xxxxxxxx
Its: Vice President
[BANK SEAL]
48
EXHIBIT "A"
BOND EQUIPMENT
SEE FOLLOWING PAGES
49
EXHIBIT "B"
COMPLIANCE CERTIFICATE
SEE FOLLOWING PAGES
B-1
COVENANT COMPLIANCE CERTIFICATE
This certificate is submitted pursuant to that Second Amended and Restated Loan
and Security Agreement (the "Loan Agreement") dated ___________, 2005, between
Color Imaging, Inc. as Borrower and Wachovia Bank, National Association ("Bank")
as Lender. When terms that are defined in the Loan Agreement are used herein,
they shall have the same meanings as assigned to them in the Loan Agreement.
The information set forth herein is as of the ___________day of
____________________________20__.
We hereby certify that the following covenants are calculated in accordance with
the Loan Agreement and that they are in compliance with the terms of the Loan
Agreement. There currently exists no default under the covenants nor any other
Event of Default. These covenants are calculated based on the financial
statement(s) dated______________________,.20__, copies of which are enclosed
with this certificate.
A. FIXED CHARGE COVERAGE RATIO
Net Income 0.00
Plus: Depreciation 0.00
Amortization 0.00
Interest Expense 0.00
Operating Lease Expense 0.00
Income Tax Expense 0.00
A. 1. Sub-Total 0.00
Current Maturities of Long-Term Debt 0.00
Plus: Interest Expense 0.00
Income Tax Expense 0.00
Operating Lease Expense 0.00
A. 2. Sub-Total 0.00
A. 3. Total of A. 1. divided by A.2. 0.00
COVENANT LEVEL NOT LESS THAN 1.25 TO 1.00. COMPLIANCE: Y/N
B. TRADITIONAL LEVERAGE; TANGIBLE NET WORTH
B. 1. Total Liabilities 0.00
Less: Subordinated Debt (0.00)
Net Liabilities 0.00
B-2
B. 2. Net Worth 0.00
Plus: Subordinated Debt
Less: Intangible Assets (0.00)
Amounts Due from Officers 0.00
Shareholders, Affiliates (0.00)
Tangible Net Worth 0.00
B. 3. B.1. divided by B.2. 0.00
TRADITIONAL LEVERAGE NOT GREATER THAN 2.0 TO 1.00 COMPLIANCE: Y/N
TANGIBLE NET WORTH NOT LESS THAN $9,000,000 COMPLIANCE: Y/N
Color Imaging, Inc. is Solvent as of the date hereof.
Color Imaging, Inc. hereby certifies the above to be true and correct to the
best of its knowledge.
COLOR IMAGING, INC.
By:____________________________________
Its:____________________________________
B-3
EXHIBIT "C"
BORROWER'S REPORT
SEE FOLLOWING PAGES
WACHOVIA BANK, NATIONAL ASSOCIATION
COLLATERAL LOAN BANK REPORT
COMPANY: Color Imaging, Inc.
Report Date: __________________________
This certifies that the information herein is true and correct and in compliance
with the Second Amended and Restated Loan and Security Agreement between the
Company and Wachovia Bank, National Association ("Bank") dated ____________,
2005. This form is subject to change.
SECTION 1: ACCOUNTS RECEIVABLE AVAILABILITY
1. Accounts Receivables forward (from line 4 prior Collateral
Loan Bank Report)
2. Additions to A/R
a. Invoices/Xxxxxxxx, Opening balance 0.00
b. Return items debited to A/R 0.00
c. Other Increases to A/R (non-A/R deposits, etc.) 0.00
d. Subtotal 0.00
3. Deductions from A/R
a. Applied collections (from _____ to ________)
b. Discounts, returns, allowances, adjustments
c. Credit memos
d. Other - Progress Xxxxxxxx
e. Subtotal 0.00
4. Total Ending A/R (line 1 plus line 2d less line 3e) 0.00
5. Ineligible A/R
a. 60 past due date on N30 invoices
b. 30 days or more past due date on datings
c. 50% Rule
d. 25% Concentration
e. Contra accounts
f. Related party accounts
g. Credit balances
h. Cash/COD
i. Other (foreign A/R not backed by L/Cs or credit
insured.)
j. Total Ineligibles 0.00
6. Eligible Receivables (Line 4 less line 5j) 0.00
7. A/R Availability (Line 6 x 75%) 0.00
SECTION 2: INVENTORY AVAILABILITY
8. Gross Inventory (including inventory in transit)
a. In House
b. In Transit
c. In Transit - L/C
d. Total Inventory (Line 8 a, b, c) 0.00
9. Ineligible Inventory
a. Obsolete Inventory and used inventory
b. Inventory at third party location
c. Packaging and shipping supplies
d. Work in process/inventory
e. Total Ineligible Inventory (Line 9a, b, c, d) 0.00
10. Eligible Inventory (Line 8d less Line 9e) 0.00
11. Inventory Availability
a. Line 10 x 50%
Inventory Cap = Lesser of $1,500,000 or 50% of Line
13 below
12. Inventory Availability - the lesser of Lines 11 a and 11 b. 0.00
SECTION 3: TOTAL AVAILABLE AND EXCESS AVAILABILITY 0.00
13. Total Availability (Line 7 Plus Line 12) 0.00
14. a. Loan balance forward
b. Deduct Payments in transit
c. Add advances requested
d. Add miscellaneous reserves
e. Add reserves for L/Cs on inventory in-transit (100%)
f. Add reserves for L/Cs on non-inventory in-transit
(50%)
g. Add reserve for Credits and Standby Credits (100%)
h. Adjusted line balance
15. Line Limit $3,000,000.00
16. Excess Availability
(OVERADVANCE)-LINE 13 LESS LINE 14 (h) 0.00
SECTION 4: CERTIFICATION
In compliance with the Second Amended Loan and Security Agreement between
Borrower and Bank, the Borrower hereby certifies that all of said inventories
are now at the below listed location(s), have the dollar values listed, are
valued in accordance with generally accepted accounting principles at the lower
of cost or market (unless otherwise specified), and are owned by the Borrower
free and clear of all claims or encumbrances, except for the security interest
of Bank. The Borrower agrees that said inventories will not be removed without
the written permission of Bank except for delivery to buyers in the ordinary
course of business or other normal business reason. The Borrower certifies that
all of said inventories have been produced in compliance with the requirements
of the Federal Fair Labor Standards Act. The Borrower understands that Bank will
rely upon these representations in making or continuing Loan under the Second
Amended and Restated Loan and Security Agreement with the Borrower, and that
Bank's security interest attaches to all such inventories through all stages of
manufacture or production, and to the finished products and goods, and to all
other inventories acquired by the Borrower from time to time in the future.
SECTION 5: LOCATION(S) OF INVENTORY
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ADDRESS WAREHOUSE INVENTORY THIRD PARTY
INVENTORY IN-TRANSIT WAREHOUSE
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Company Name: Color Imaging, Inc.
BY:
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ITS:
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DATE:
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EXHIBIT "D"
PENSION PLANS
1. The Color Imaging, Inc. 2003 Stock Incentive Plan
2. The Color Imaging, Inc 401(k) Plan
D
"EXHIBIT E"
COLLATERAL LOCATIONS EXHIBIT AND OWNERSHIP INFORMATION
Location Name and Address of Landlord
4350 Peachtree Industrial Avenue Kings Brothers, LLC
Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Office equipment and inventory are also located at 0000 Xxxxxx Xxxxxx, Xxxxx 0,
Xxxxx Xxxx, XX 00000 but are not and shall not be included in Aggregate Loan
Values.
E
EXHIBIT "F"
INTELLECTUAL PROPEORTY RIGHTS
NONE
F
EXHIBIT "G"
LIENS
NONE
G
