EXHIBIT 10.5
FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT
BORROWER'S NAME AND ADDRESS: DESCRIPTION OF LOAN:
Shepherd Surveillance Solutions, Inc. Revolving Line of Credit:
0 Xxxxxxxxx Xxxx, Xxxxx 0 $900,000.00
Xxxxxxxxxx, Xxx Xxxxxxxxx 00000
DATE OF THIS AGREEMENT:
February 3, 1997
REVOLVING LINE OF CREDIT INITIAL REVIEW DATE: AUGUST 15,1997
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THIS COMMERCIAL LOAN AGREEMENT (the "Agreement"), is made as of the date set
forth above, between the above named Borrower (the "BORROWER") and FLEET BANK -
NH, a bank organized under the laws of the State of New Hampshire with a place
of business at 0000 Xxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxxxxx 00000 (the "BANK").
The BANK has agreed to extend to BORROWER, at the BORROWER's request, the
Loan(s) described above, and may, from time to time hereafter extend other loans
to BORROWER (individually, a "Loan" and, collectively, the "Loans"). All of the
Loans are, together with all other debts, liabilities and obligations of
BORROWER to the BANK, direct or indirect, absolute or contingent, now existing
or hereafter arising, hereinafter sometimes collectively referred to as the
"Obligations". Each Loan is or shall be evidenced by a Promissory Note
(individually a "Note" and collectively the "Notes") and each Loan and all of
the other Obligations are secured pursuant to a Security Agreement of even date
between BORROWER and the BANK (the "Security Agreement"). The characterization
of each Loan as either a Revolving Line of Credit, Line of Credit, or Term Loan
shall be as set forth in the Note evidencing such Loan and/or the BANK's
commitment letter (if any) with respect to the same. In connection with the
Loans, the BORROWER may execute certain other documents, certificates and
agreements, all of which are, together with this Agreement, the Notes, and the
Security Agreement, and as all of the same may be hereafter amended, modified,
revised, renewed, or extended, sometimes collectively referred to herein as the
"Loan Documents". Each Loan, whether now existing or hereafter arising, is made
upon and subject to the terms and conditions set forth in the Note evidencing
such Loan, the Security Agreement, the other Loan Documents, and this Agreement.
The terms, conditions, representations, warranties, and covenants set forth in
this
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Agreement are in addition to, and not in limitation of, the terms, conditions,
representations, warranties, and covenants set forth in the other Loan
Documents. In the event of any conflict between the terms, conditions,
representations, warranties, and covenants contained in the Loan Documents, the
term, condition, representation. warranty, or covenant contained in this
Agreement shall control. Where there is more than one BORROWER or guarantor
hereunder, all of the terms, conditions, representations, warranties, and
covenants set forth herein and in the other Loan Documents shall apply to, be
binding upon, and be deemed to be made by each BORROWER and guarantor, jointly
and severally.
IN CONSIDERATION OF the Loans made or to be made by BANK to the BORROWER, and of
all other Obligations of the BORROWER to the BANK, BORROWER and BANK hereby
agree as follows:
I. REVOLVING LINE OF CREDIT. The Revolving Line of Credit Loan first described
above made available by the BANK to the BORROWER shall be upon and subject to
the terms and conditions set forth in the Revolving Line of Credit Note
evidencing such Loan, the other Loan Documents, and this Agreement.
A. Maximum Available Amount. The maximum amount available to the BORROWER from
time to time under the Revolving Line of Credit Loan shall be the LESSER of (1)
the amount set forth in the Note evidencing such Revolving Line of Credit Loan,
or (2) an amount equal to eighty percent (80%) of BORROWER's Acceptable
Accounts, all as set forth and defined on Schedule A attached hereto and by this
reference made a part hereof. The maximum amount available to BORROWER under the
Revolving Line of Credit Loan as determined from time to time under clause (2)
above is hereinafter referred to as the BORROWER's "Borrowing Base".
B. Letters of Credit. At BORROWER's request from time to time, the BANK shall
issue letters of credit (each a "Letter of Credit") under the Revolving Line of
Credit Loan in face amounts which, at the time of issuance thereof, do not
exceed Borrower's then Borrowing Base and with terms which do not extend beyond
the next Review Date (as hereinafter defined). The BANK shall be under no
obligation to issue any Letter of Credit (i) at any time or times during which
an Event of Default has occurred or is existing under this Agreement or the Loan
Documents, (ii) if any condition exists which. if not cured, would with the
passage of time or the giving of notice, or both, constitute such an Event of
Default, (iii) if the issuance of such Letter of Credit would result in an Event
of Default arising under this Agreement or the Loan Documents, or (iv) if the
Revolving Line of Credit Loan has terminated. The Borrowing Base available to
the BORROWER from time to time under the Revolving Line of Credit Loan as
determined under Section I.A. above shall be reduced by the aggregate face
amount of all such Letters of Credit then outstanding (including Letters of
Credit under which draws have been made by the beneficiary thereof and
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BORROWER has not yet reimbursed the Bank) and such Letters of Credit shall be
deemed to be outstanding direct advances under the Revolving Line of Credit Loan
for purposes of this Agreement and the Loan Documents, other than for purposes
of interest accruing thereon. Each Letter of Credit shall be issued in
accordance with the terms set forth in the letter of credit instrument
applicable thereto in favor of a single beneficiary designated by the BORROWER,
all in accordance with and subject to the BANK's customary practices and
procedures for letters of credit. BORROWER shall reimburse BANK immediately for
all payments made under each Letter of Credit issued on behalf of the BORROWER.
For purposes of the foregoing, BORROWER hereby authorizes the BANK to
automatically advance funds to BANK, at BANK's sole discretion. under the
Revolving Line of Credit to reimburse BANK for any payments made under any
Letter of Credit issued on behalf of the BORROWER or to otherwise make any
payments due to BANK by BORROWER with respect to any Letter of Credit.
Additionally, upon the occurrence of either (i) the demand or expiration of the
Revolving Line of Credit or (ii) an Event of Default hereunder, the BORROWER
shall pay to the BANK for its account on demand the full amount of the then
outstanding face amount of each Letter of Credit then outstanding. The BANK
shall be entitled to hold the full amount so paid to the BANK by BORROWER
pursuant to the preceding sentence until the sooner to occur of (1) the
termination or expiration without renewal or extension of the then current
outstanding Letters of Credit without further liability to the BANK thereunder,
whereupon the BANK shall, provided that there are no other outstanding
Obligations, pay over the amount then held by BANK hereunder to BORROWER, or (2)
the BORROWER becoming obligated to reimburse the BANK for a payment made under
the Letters of Credit, whereupon the BANK shall be authorized to pay over to
itself such amount as is required to satisfy in full the reimbursement
obligation of the BORROWER and to retain the balance of the amount held by the
BANK until the occurrence of the event specified in clause (1) above. BORROWER
further agrees to execute and deliver such further applications, documents and
agreements as may be required by BANK from time to time in connection with the
issuance of each Letter of Credit. The obligations of payment of BORROWER
outstanding from time to time hereunder shall be evidenced by the Revolving Line
of Credit Promissory Note of even date herewith.
C. Advances. The Revolving Line of Credit Loan shall be disbursed, advanced,
readvanced, and repaid as provided in the Revolving Line of Credit Note and this
Agreement. BORROWER may request advances orally or in writing from time to time
in accordance with such procedures as the BANK may from time to time specify in
an amount such that the aggregate amounts outstanding under the Revolving Line
of Credit Loan do not exceed the maximum available amount as determined under
Section I.A. above. The BANK is also authorized by BORROWER to automatically
make advances under and repayments of the Revolving Line of Credit Loan pursuant
to the Revolving Line of Credit Management provisions of Section I.F. below. The
BANK shall be under no obligation to make any advance (automatic or otherwise)
at any time
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or times during which an Event of Default has occurred or is existing under this
Agreement or the Loan Documents, or if any condition exists which, if not cured,
would with the passage of time or the giving of notice, or both, constitute such
an Event of Default. At the time of each advance and readvance under the
Revolving Line of Credit Loan, BORROWER shall immediately become indebted to the
BANK for the amount thereof. Each such advance or readvance may be credited by
the BANK to any deposit account of BORROWER with the BANK or be paid to
BORROWER.
D. Review and Repayment. All outstanding principal, accrued and unpaid interest,
and other charges payable under the Revolving Line of Credit Loan shall be due
and payable in full by BORROWER upon demand by the BANK. Pending demand, the
Revolving Line of Credit Loan shall be subject to review and, at the sole option
and discretion of the BANK, renewal on the Revolving Line of Credit Initial
Review Date set forth on the first page of this Agreement, and, if renewed,
thereafter on March 15, 1998, and if then renewed thereafter on each subsequent
anniversary of March 15th (the Initial Review Date, March 15, 1998 and each
anniversary thereof to which the Revolving Line of Credit Loan is renewed, being
a "Review Date"). BANK shall give written notice to BORROWER thirty (30) days
prior to any Review Date as to which the BANK elects not to renew the Revolving
Line of Credit Loan. IF THE REVOLVING LINE OF CREDIT LOAN IS NOT RENEWED BY THE
BANK AS AFORESAID ON ANY REVIEW DATE, THE ENTIRE AMOUNT OF OUTSTANDING
PRINCIPAL, ACCRUED INTEREST AND OTHER CHARGES PAYABLE THEREUNDER SHALL BE DUE
AND PAYABLE IN FULL BY BORROWER ON SUCH REVIEW DATE. BORROWER ACKNOWLEDGES AND
AGREES THAT THE BANK HAS NO OBLIGATION OR COMMITMENT TO RENEW THE REVOLVING LINE
OF CREDIT LOAN ON ANY REVIEW DATE. NOTWITHSTANDING THE FOREGOING, OR ANY
PROVISION OF THE REVOLVING LINE OF CREDIT NOTE, ANY OF LOAN DOCUMENTS OR HEREIN
TO THE CONTRARY, THE REVOLVING LINE OF CREDIT LOAN SHALL BE A DEMAND OBLIGATION
OF BORROWER.
E. Interest Rate. The principal balance outstanding from time to time under the
Revolving Line of Credit Loan shall bear interest at a variable rate equal to
the BANK's Base Rate, so called, plus one and one-half percent (1.5%) per annum.
The Base Rate shall be the Base Rate of the BANK as established and changed by
the BANK from time to time whether or not such rate shall be otherwise published
or BORROWER receives notice thereof. The BORROWER acknowledges that the Base
Rate is used for reference purposes only as an index and is not necessarily the
lowest interest rate charged by the BANK on commercial loans. Each time the Base
Rate changes the interest rate under the Revolving Line of Credit Loan shall
change contemporaneously with such change in the Base Rate. Interest shall be
calculated and charged daily on the basis of actual days elapsed over a three
hundred sixty (360) day banking year. Accrued interest is payable in accordance
with the provisions of the Revolving Line of Credit Note.
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F. Revolving Line of Credit Management. Set forth on Schedule A are additional
terms and conditions relating to the management of the Revolving Line of Credit
Loan.
G. Purposes. Amounts advanced to BORROWER under the Revolving Line of Credit
Loan shall be used solely for BORROWER's ordinary working capital requirements.
II. FEES. In addition to such other fees as are provided in this Agreement and
in the other Loan Documents, BORROWER agrees to pay the BANK the periodic fees
set forth on Schedule B with respect to the maintenance of each Revolving Line
of Credit Loan, Line of Credit Loan and Term Loan as is outstanding from time to
time.
III. PAYMENTS. All payments made by the BORROWER of principal and interest on
the Loans, and other sums and charges payable under the Loan Documents, shall be
made to the BANK in accordance with the terms of the respective Loan Documents
in lawful United States of America currency at its office set forth above, or by
the debiting by the BANK of the demand deposit account(s) in the name of the
BORROWER at the BANK, or in such other reasonable manner as may be designated by
the BANK in writing to the BORROWER. The BORROWER authorizes the BANK
automatically to debit the BORROWER's demand deposit account as described above
and in accordance with the Cash Management provisions set forth herein below.
IV. SECURITY. Each of the Loans and all other Obligations of the BORROWER to the
BANK, whether now existing or hereafter arising, shall at all times be secured
by first priority perfected security interests in the Collateral (as hereinafter
defined), which security interests shall continue until payment in full of all
amounts outstanding under said Loans and the other Obligations. The full and
punctual payment and performance of the Loans and all other Obligations of
BORROWER shall be guaranteed by the guarantor executing this Agreement
hereinbelow (the "Guarantor") pursuant to a Guaranty Agreement of even date (the
"Guaranty"). The term "Collateral" as used herein shall be deemed to include all
property and assets of the BORROWER secured, mortgaged, pledged, assigned, or
otherwise encumbered or covered by any of the Loan Documents, including, but not
limited to the Security Agreement. The BORROWER covenants and agrees to take
such further actions and to execute such additional documents as may be
necessary from time to time to enable the BANK to obtain and maintain the
security interests and liens arising under the Loan Documents. If the Collateral
includes accounts and account receivables of BORROWER, then, in addition to such
other rights and remedies as are provided the BANK under the Loan Documents, the
BORROWER agrees that BANK may communicate with account debtors in order to
verify the existence, amount, and terms of any such accounts and account
receivables. Upon an Event of Default and for the duration of such
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Event of Default, BANK may notify account debtors of the BANK's security
interest and require that payments on accounts and account receivables be made
directly to BANK, and upon the request of BANK upon the occurrence of an Event
of Default, BORROWER shall notify account debtors and indicate on all xxxxxxxx
that payments and returns are to be made directly to BANK. Solely in furtherance
of the foregoing, BORROWER hereby appoints BANK as attorney irrevocable with
full power to collect, compromise, endorse, sell, or otherwise deal with the
BORROWER's accounts and account receivables or proceeds thereof and to perform
the terms of any contract in order to create accounts and account receivables in
BANK's name or in the name of BORROWER.
V. SUBORDINATION AND STANDBY OF DEBT. The BORROWER and Guarantor covenant and
agree that all existing debt of BORROWER to Guarantor and all future debt if
permitted hereunder from BORROWER to Guarantor, shall be and hereby is, without
need for further writing, made subject and subordinate to the prior payment and
performance of all the Loans and other Obligations of BORROWER. The Guarantor
further covenants and agrees that any claims against the BORROWER (or any other
guarantor of the Loans), individually or jointly, to which the Guarantor may
become entitled (including, without limitation. claims by subrogation or
otherwise by reason of any payment or performance by the Guarantor, individually
or jointly, in satisfaction and discharge, in whole or in part, of his or their
obligations under the Guaranty) shall be and hereby are, without need for
further writing, subject and subordinate to the payment and performance in full
of all of the Loans and other Obligations due the BANK. In furtherance of the
foregoing, the BORROWER and Guarantor shall provide such subordinations,
certificates, and other documents, and shall xxxx its corporate books, records,
stock certificates, and ledgers, as the BANK may reasonably request from time to
time, in form and substance satisfactory to BANK and BANK's counsel, evidencing
the subordination of all debt of BORROWER to Guarantor, whether now existing or
hereafter arising, in accordance with the covenants of BORROWER and Guarantor
hereunder. Notwithstanding the foregoing, BORROWER and BANK will not increase
the principal amount of the Obligations above $3,000,000.00 or increase the
maximum available amount under Section I.A. above without the prior written
consent of the Guarantor.
VII. CONTINUING REPRESENTATIONS AND WARRANTIES. The BORROWER and the Guarantor,
as the case may be, jointly and severally warrant and represent to the BANK that
so long as any of the Obligations are outstanding:
A. Good Standing. Each of BORROWER and Guarantor is duly organized, validly
existing, and in good standing under the laws of its state of organization and
is qualified to do business in all other jurisdictions where the nature of the
business conducted or property owned by BORROWER or Guarantor, as the case may
be, require it to be so qualified and where the failure of the BORROWER or
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Guarantor, as the case may be, to be so qualified would have a material adverse
effect on the business of the BORROWER or Guarantor, as the case may be.
BORROWER has adequate corporate power to own its properties and to carry on its
business as now being conducted.
B. Authority. BORROWER and Guarantor have full corporate power and authority to
enter into this Agreement and to borrow under the Loan Documents, to execute and
deliver the Loan Documents and to incur the obligations provided for herein and
in the Loan Documents, all of which have been duly authorized by all proper and
necessary corporate or other action. The persons executing the Loan Documents on
behalf of the BORROWER and the Guarantor have been duly authorized to do so.
C. Binding Agreement. This Agreement and the Loan Documents constitute the valid
and legally binding obligations of the BORROWER and Guarantor, enforceable in
accordance with their terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other laws, affecting the enforcement of
creditors' rights generally, and except as the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding thereof may be brought.
D. Litigation. There are no suits or proceedings of any kind or nature pending
or, to the knowledge of the BORROWER and Guarantor, threatened against the
BORROWER or the Guarantor or their assets which, if adversely determined, would
have a material adverse affect on the financial condition or business of the
BORROWER or the Guarantor and which have not been disclosed in writing to the
BANK.
E. Conflicting Agreements, Consents. There is no charter, bylaw, preference
stock, or trust provision of the BORROWER or the Guarantor, and no provision(s)
of any existing mortgage, indenture. contract or agreement binding on the
BORROWER or the Guarantor or affecting their property, . which would conflict
with, have a material adverse affect upon, or in any way prevent the execution,
delivery, or performance of the terms of this Agreement or the Loan Documents.
Neither the BORROWER nor the Guarantor is required to obtain any order, consent,
approval, authorization of any person, entity, or governmental authority in
connection with or as a condition to the execution, delivery, and performance of
this Agreement or the Loan Documents or the granting of the security interests
and liens in the Collateral that has not been obtained.
F. Financial Condition. The financial statements delivered to the BANK by the
BORROWER and the Guarantor have been and shall be prepared in accordance with
generally accepted accounting principles, consistently applied, and will fairly
present the financial condition and results of the BORROWER and the Guarantor.
Other than those liabilities disclosed in writing to the BANK, there are no
material liabilities, direct or indirect, fixed or contingent, of
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the BORROWER or the Guarantor which are not reflected in the financial
statements or in the notes thereto which would be required to be disclosed
therein and there has been no material adverse change in the financial condition
or operations of the BORROWER or the Guarantor since the date of such financial
statements.
G. Taxes. BORROWER and Guarantor have filed all federal, state and local tax
returns required to be filed by them and have paid all taxes shown by such
returns to be due and payable on or before the due dates thereof.
H. Full Disclosure. None of the information with respect to the BORROWER or the
Guarantor which has been furnished to the BANK in connection with the
transactions contemplated hereby is false or misleading with respect to any
material fact, or omits to state any material fact necessary in order to make
the statements therein not misleading.
I. Employee Benefit Plans. To BORROWER's knowledge, all Plans (as hereinafter
defined) which are pension plans as defined in Section 3(2) of the Employment
Retirement Income Security Act of 1974, as amended ("ERISA"), qualify under
Section 401 of the Internal Revenue Code of 1986 (as amended, the "IRC"), and
all Plans are in compliance with the provisions of the IRC and ERISA, and have
been administered in accordance with their terms. The term "Plan" means any
pension plan, as defined in Section 3(2) of ERISA and any welfare plan, as
defined in Section 3(l) of ERISA, which is sponsored, maintained or contributed
to by BORROWER or any commonly controlled entity, or in respect of which
BORROWER or a commonly controlled entity is an "employer" as defined in Section
3(5) of ERISA. To BORROWER's knowledge, and except with respect to events which
would not have a material adverse affect on BORROWER's business or financial
condition:
(i) Prohibited Transactions. None of the Plans has participated in,
engaged in or been a party to any non-exempt "prohibited transaction" as defined
in ERISA or the IRC, and no officer, director or employee of BORROWER has
committed a breach of any of the responsibilities or obligations imposed upon
fiduciaries by Title I or ERISA.
(ii) Claims. There are no contested claims, pending or threatened,
involving any Plan which is a pension plan by a current or former employee (or
beneficiary thereof) of BORROWER, nor is there any reasonable basis to
anticipate any claims involving any such Plan.
(iii) Reporting and Disclosure Requirements. There have been no
violations of any reporting or disclosure requirements with respect to any Plan
and no such Plan has violated applicable law, including but not limited to ERISA
and the IRC.
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(iv) "Accumulated Funding Deficiency"; Reportable Event. No Plan which
is a defined benefit pension plan has (a) incurred an "accumulated funding
deficiency" (within the meaning of Section 412(a) of the IRC), whether or not
waived, (b) been a plan with respect to which a Reportable Event (to the extent
that the reporting of such events to the Pension Benefit Guaranty Corporation
(the "PBGC") within thirty (30) days of the occurrence has not been waived) has
occurred and is continuing, or (c) been a Plan with respect to which there
exists conditions or events which have occurred presenting a risk of termination
by PBGC.
(v) Multiemployer Plan. No Plan which is a multiemployer pension plan
(as defined in Section 414(f) of the IRC) to which BORROWER contributes has been
a plan with respect to which BORROWER has received any notification that such
Multiemployer Plan is in reorganization or has been terminated within the
meaning of Title IV of ERISA and no such Multiemployer Plan is reasonably
expected to be in reorganization or to be terminated within the meaning of Title
IV of ERISA. BORROWER has not withdrawn from, or incurred any withdrawal
liability to, any multiemployer plan.
(vi) COBRA. There has been no violation of the applicable requirements
of Section 4980B of the IRC pertaining to COBRA continuation coverage with
respect to any Plan.
(vii) Employee Welfare Benefit Plans. No Plan which is a medical,
dental, health, disability, insurance or other plan or arrangement, whether oral
or written, which constitutes an "employee welfare benefit plan" as defined in
Section 3 )(1) of ERISA, has any unfunded accrued liability or provides benefits
to former employees or retirees (except as may be required by COBRA).
J. Location of Records. All of the books and records or true and complete copies
thereof relating to the accounts and contracts of the BORROWER are and will be
kept at BORROWER's principal place of business located at the address first set
forth above (the "Premises").
K. Compliance with Laws. The BORROWER and the Guarantor are in compliance in all
material respects with all laws and governmental rules and regulations
applicable to the Collateral and to their businesses, properties and assets
which the failure to comply with would have a material adverse effect on the
business of the BORROWER.
L. Hazardous Waste. No Hazardous Waste (as hereinafter defined) has been
generated, stored or treated on any of the premises occupied by BORROWER, except
in compliance with all applicable laws. To the BORROWER's knowledge, no
Hazardous Waste has ever been. is being, is intended to be, or is threatened to
be spilled, released, discharged, disposed, placed or otherwise caused to be
found in the soil or water in, under, or upon any of the premises occupied by
the BORROWER. The BORROWER and the
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Guarantor agree to indemnify and hold the BANK harmless from and against any
claims, damages. liabilities (whether joint or several), losses and expenses
(including, without limitation, attorneys' fees) incurred by the BANK as a
result of the breach of these representations. For the purpose of this
Agreement, the term "Hazardous Waste" means "hazardous waste", "hazardous
material", "hazardous substance", and "oil" as presently defined in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Hazardous Material Transportation Act, the
Federal Water Pollution Control Act, and corresponding state and local statutes,
ordinances, and regulations, as such statutes, ordinances and regulations may be
amended, or as defined in any federal or state regulation adopted pursuant to
such acts.
M. Title to Collateral. BORROWER has and will at all times have good and
marketable title to the Collateral, free and clear from any liens, security
interests, mortgages, encumbrances. pledges or other right, title or interest of
any other person or entity, except those arising under the Loan Documents or
disclosed to the BANK in the Security Agreement ("Permitted Encumbrances").
N. Employees. BORROWER has complied in all material respects with all laws
relating to the employment of labor, including any provisions thereof relating
to ERISA, wages, hours, collective bargaining, the payment of social security
and similar taxes, equal employment opportunity, employment discrimination and
occupational safety and health, and is not liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing.
VIII. AFFIRMATIVE COVENANTS. Until payment in full of all indebtedness under the
Loans and the other Obligations, the BORROWER and the Guarantor, as the case may
be, jointly and severally agree that, unless the BANK shall otherwise consent in
writing, they will:
A. Prompt Payment. Pay promptly, subject to any applicable cure or grace period,
when due all amounts due and owing to the BANK.
B. Use of Proceeds. Use the proceeds of the Loans only for working capital
purposes and will furnish the BANK with such evidence as it may reasonably
require with respect to such use.
C. Financial Statements. Furnish the BANK with such financial statements of
BORROWER as are described on Schedule B attached hereto. All such statements
shall be prepared on a consistent basis in a format reasonably acceptable to the
BANK.
D. Maintenance of Existence. Take all necessary action to maintain BORROWER's
legal existence.
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X. Xxxxxxxxxxx of Business. Do or cause to be done all things reasonably
necessary to maintain and preserve BORROWER's business.
F. Maintenance of Insurance. Keep all of BORROWER's properties (specifically
including, but not limited to, the Collateral) adequately insured against loss
or damage by fire and such other casualties and hazards as the BANK may specify
from time to time; maintain adequate Xxxxxxx'x Compensation Insurance under
applicable laws and Comprehensive General Public Liability Insurance; and
maintain adequate insurance covering such other risks as the BANK may reasonably
specify from time to time hereafter. All insurance required hereunder shall be
effected by valid and enforceable policies issued by insurers of recognized
responsibility authorized to transact business within the State of New Hampshire
and shall, inter alia, (1) name the BANK as an additional insured and/or loss
payee, and (2) provide that the BANK shall be notified in writing of any
proposed cancellation of such policy at least ten (10) days in advance thereof
and will have the opportunity to correct any deficiencies justifying such
proposed cancellation. For the purposes of this Paragraph, an insurance policy
shall be deemed to be "adequate" if it provides coverage against such risks and
in such amounts as is customarily carried by owners of similar businesses and
properties.
G. Inspection by the Bank. Upon prior reasonable notice (other than upon and
during the continuation of any Event of Default when no notice shall be
required) and during normal business hours, permit any person designated by the
BANK to inspect any of its properties, including its books, records, and
accounts (and including the making of copies thereof and extracts therefrom)
during normal business hours. BORROWER also agrees that the BANK may conduct
regular field examination audits of the BORROWER's books, records, accounts,
inventory, and other property up to two (2) times during each of BORROWER's
fiscal years and that BORROWER shall pay the BANK all reasonable fees, costs,
and expenses charged or incurred by BANK for such audits.
H. Prompt Payment of Taxes. Accrue BORROWER'S tax liability (including
withholdings for employee taxes and social security) in accordance with usual
accounting practice and pay or discharge (or cause to be paid or discharged) as
they become due all taxes, assessments, and government charges upon its
property, operations, income and products (as well as all claims for labor,
materials or supplies), which, if unpaid might become a lien upon any of its
property; provided, that the BORROWER shall, prior to payment thereof, have the
right to contest such taxes, assessments and charges in good faith by
appropriate proceedings so long as, upon request of the Bank, the BANK's
interests are protected by bond, letter of credit, escrowed funds or other
appropriate security.
I. Notification of Default Under This and Other Loan or Financing Arrangements.
Promptly notify the BANK in writing of the occurrence of any
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Event of Default under this Agreement or any other loan or financing
arrangement.
J. Notification of Litigation. Promptly notify the BANK in writing of any
litigation that has been instituted or is pending or threatened which, if
determined adversely, would be reasonably likely to have a material adverse
affect on BORROWER'S continued operations or financial condition.
K. Notification of Governmental Action. Promptly notify the BANK in writing of
any governmental investigation or proceeding that has been instituted or is
pending or threatened, including without limitation, matters relating to the
federal or state tax returns of the BORROWER or the Guarantor. compliance with
the Occupational Safety and Health Act, or proceedings by the Treasury
Department, Labor Department, or Pension Benefit Guaranty Corporation with
respect to matters affecting employee welfare, benefit or retirement programs.
L. Preservation of the Collateral. Cause BORROWER to take all reasonably
necessary steps to preserve, protect and defend the Collateral and keep it in
good operating condition and repair (reasonable wear and tear excepted) and free
of unpermitted liens and give BANK access to and permit it to inspect the
Collateral upon reasonable prior notice during all business hours and other
reasonable times.
M. Maintenance of Records. Keep adequate records and books of account, in which
complete entries will be made in a manner reasonably acceptable to the BANK and
consistently applied, reflecting all financial transactions of the BORROWER.
N. Compliance With Laws. Cause BORROWER to comply in all material respects with
all applicable laws, rules, regulations, and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments, and governmental charges imposed upon it or upon its property;
provided, however, that BORROWER shall be entitled to contest the same in good
faith so long as such action, in the BANK's sole opinion, does not have an
adverse affect upon the BANK's rights hereunder or the Collateral.
O. Accounts, Deposits, and Balances. BORROWER shall maintain its primary
operating and deposit accounts with the BANK.
P. Notification of Material Adverse Changes. Promptly notify the BANK in writing
of any conditions or circumstances which would be reasonably likely to have a
material adverse effect on BORROWER's continued operations or financial
condition.
-13-
Q. Additional Financial and Other Covenants. Comply with the additional
financial and other covenants set forth on Schedule B attached hereto.
IX. NEGATIVE COVENANTS. Until payment in full of all indebtedness under the
Loans and the other Obligations, the BORROWER and the Guarantor, jointly and
severally, covenant and agree that without the express prior written consent of
the BANK:
A. Nature and Scope of Business. BORROWER will not enter into any type of
business other than that in which it is presently engaged. or otherwise
significantly change the scope or nature of its business.
B. Additional Indebtedness. BORROWER will not incur indebtedness for borrowed
money (or issue or sell any of its bonds, debentures, notes or similar
obligations) or guaranty indebtedness of others except: (1) borrowings under the
Loans; (2) other Obligations to the BANK; (3 )) borrowings used to prepay in
full the Obligations; (4) ordinary unsecured trade account payables; and (5)
indebtedness due the Guarantor which is fully subordinated in writing to all of
the Obligations upon terms and conditions acceptable to the BANK.
C. Liens and Mortgages. BORROWER will not incur, create, assume or suffer to
exist any mortgage, pledge, lien, attachment, charge or other encumbrance of any
nature whatsoever on any of the Collateral, now or hereafter owned, other than
(1) the security interests or liens granted to the BANK pursuant to the Loan
Documents; (2) deposits under Workmen's Compensation, Unemployment Insurance and
Social Security laws; (3) liens imposed by law, such as carriers, warehousemen's
or mechanic's liens incurred in good faith in the ordinary course of business,
and which do not in the aggregate have a material adverse effect on the
BORROWER's financial condition or the Collateral; and (4) the Permitted
Encumbrances.
D. Capital Structure; Acquisition of Stock. BORROWER and Guarantor will not
alter or amend the BORROWER's capital structure or permit BORROWER to purchase,
redeem or otherwise acquire for value any of its outstanding capital stock.
E. Ownership; Management. BORROWER and Guarantor will not change the current
ownership of BORROWER such that Guarantor no longer controls BORROWER through
majority ownership of the capital stock of the BORROWER.
F. Places of Business: Location of Collateral. BORROWER will not maintain or
relocate to, open or close, any other place of business or move any of the
Collateral from the Premises, except upon thirty (30) days prior written notice
to the BANK.
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X. CONDITIONS PRECEDENT TO MAKING OF LOANS. The obligation of the BANK to make
any Loan and make disbursements and advances of the proceeds of the same to the
BORROWER is subject to the satisfaction by the BORROWER or its representatives
of the following conditions precedent with respect to such Loan: (1) the
BORROWER and the Guarantor have executed and delivered all of the Loan Documents
deemed appropriate and necessary by the BANK, in form and substance satisfactory
to the BANK, including, but not limited to, the documents described on the
Closing Agenda attached hereto as Schedule C; (2) the BORROWER's and Guarantor's
warranties and representations as contained herein and in the Loan Documents
shall be accurate and complete; (3) BANK shall have received an opinion of
BORROWER's and Guarantor's legal counsel in form and substance satisfactory to
the BANK; and (4) the BORROWER and Guarantor shall not be in default under any
of the covenants, warranties, representations, terms, or conditions contained in
this Agreement or in the Loan Documents as of the date of entering into such
Loan and as of the date of each disbursement and advance thereunder.
XI. EVENTS OF DEFAULT; ACCELERATION. The occurrence of any one or more of the
following events shall constitute a default under this Agreement, each of the
Loan Documents and each of the Obligations (individually, an "Event of Default",
and collectively, "Events of Default"): (1) if any statement, representation or
warranty made by the BORROWER or Guarantor in this Agreement or in any of the
Loan Documents, or in connection with any of the same, or if any financial
statement, report, schedule, or certificate furnished by the BORROWER or
Guarantor or any of its officers or accountants to the BANK, shall prove to have
been false or misleading in any material respect when made; (2) default by the
BORROWER in payment on its due date of any principal or interest called for
under any of the Loans or the Loan Documents, or of other amounts due under any
other of the Obligations, or other event of default under the Loan Documents or
the other Obligations, provided such default is not cured within any applicable
grace period thereunder; (3) default by the BORROWER in the performance or
observance of any of the provisions, terms, conditions, warranties or covenants
of this Agreement, the Loan Documents, or any other of the Obligations; (4) the
dissolution, termination of existence, merger or consolidation of the BORROWER
other than a merger or consolidation in which the BORROWER is the surviving
entity, or a sale of BORROWER's business or the Collateral not in the ordinary
course of business; (5) the BORROWER or the Guarantor shall (a) apply for or
consent to the appointment of a receiver, trustee or liquidator of it or any of
its property, (b) make a general assignment for the benefit of creditors, (c) be
adjudicated as bankrupt or insolvent, (d) file a voluntary petition in
bankruptcy, or a petition or an answer seeking reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation under any law or
statute, or an answer admitting the material allegations of a petition filed
against it in any proceeding under any such law or statute, or (e) offer or
enter into any composition, extension or arrangement seeking relief or extension
of its debts; (6) proceedings shall be commenced or an order, judgment or decree
shall be entered, without the application, approval or
-15-
consent of the BORROWER or Guarantor, as the case may be, in or by any court of
competent jurisdiction, relating to the bankruptcy, dissolution, liquidation,
reorganization or the appointment of a receiver, trustee or liquidator of the
BORROWER or Guarantor, or of all or a substantial part of its assets. and such
proceedings, order, judgment or decree shall continue undischarged or unstayed
for a period of sixty (60) days; (7) BORROWER's inability to pay its debts as
they mature or other act of insolvency, however defined and determined by the
BANK in a commercially reasonable manner; (8) a judgment for the payment of
money shall be rendered against the BORROWER and the same shall remain
undischarged for a period of thirty (30) days, during which period execution
shall not be effectively stayed; or (9) if BANK otherwise deems itself insecure
within the meaning of New Hampshire RSA 382-A:1-208 (as amended).
Upon the occurrence of any Event of Default, the BANK's commitment to make
further Loans under the Loan Documents or any other agreement with the BORROWER,
and to make any advances or disbursements under any Loan, shall immediately
cease and terminate and, at the election of the BANK, all of the Obligations of
the BORROWER to the BANK, under any of this Agreement, the Loan Documents, or
otherwise, will immediately become due and payable without further demand,
notice or protest, all of which are hereby expressly waived. Thereafter, the
BANK may proceed to protect and enforce its rights, at law, in equity, or
otherwise, against the BORROWER, the Guarantor, and any other endorser or
guarantor of the BORROWER's Obligations, either jointly or severally, and may
proceed to liquidate and realize upon any of its Collateral in accordance with
the rights of a secured party under the Uniform Commercial Code, under any other
applicable law, under any Loan Documents, under any other agreement between the
BORROWER and the BANK, or under any agreement between any guarantor or endorser
of the BORROWER's Obligations to the BANK, and to apply the proceeds thereof to
payment of the Obligations of the BORROWER to the BANK in such order and in such
manner as the BANK, in its sole discretion, deems appropriate.
XII. MISCELLANEOUS PROVISIONS.
A. Entire Agreement; Waivers. This Agreement, the Schedules hereto, and the Loan
Documents together constitute the entire agreement between the BORROWER, the
Guarantor, and the BANK and no covenant, term, condition or other provision
thereof nor any default in connection therewith may be waived except by an
instrument in writing, signed by the BANK and delivered to the BORROWER. The
BANK's failure to exercise or enforce any of its rights, powers or privileges
under this Agreement or the Loan Documents shall not operate as a waiver
thereof.
B. Remedies Cumulative. All remedies provided under this Agreement and the Loan
Documents or afforded by law shall be cumulative and available to the BANK until
all of the BORROWER's Obligations to the BANK have been paid in full.
-16-
C. Survival of Covenants. All covenants, agreements, representations and
warranties made in this Agreement and in the Loan Documents shall be deemed to
be material and to have been relied on by the BANK, notwithstanding any
investigation made by the BANK or in its behalf, and shall survive the execution
and delivery of this Agreement and the Loan Documents. All such covenants,
agreements, representations and warranties shall bind and inure to the benefit
of the BORROWER's, the Guarantor's, and the BANK's successors and assigns,
whether so expressed or not.
D. Governing Law: Jurisdiction. This Agreement and the Loan Documents shall be
construed and their provisions interpreted under and in accordance with the laws
of the State of New Hampshire. The BORROWER and the Guarantor, to the extent
they may legally do so, hereby consent to the jurisdiction of the courts of the
State of New Hampshire and the United States District Court for the State of New
Hampshire for the purpose of any suit, action or other proceeding arising out of
any of their obligations hereunder or with respect to the transactions
contemplated hereby, and expressly waive any and all objections they may have to
venue in any such courts.
E. Assurance of Execution and Delivery of Additional Instruments. The BORROWER
and Guarantor agree to execute and deliver, or to cause to be executed and
delivered, to the BANK all such further instruments, and to do or cause to be
done all such further acts and things, as the BANK may reasonably request or as
may be necessary or desirable to effect further the purposes of this Agreement
and the Loan Documents.
F. Waivers and Assents. The BORROWER, the Guarantor, and any other guarantor or
endorser of the BORROWER's Obligations to the BANK, hereby waive, to the fullest
extent permitted by law, all rights to marshalling of assets and all rights to
demand, notice, protest, notice of acceptance of this Agreement and the Loan
Documents, notice of Loans made, credit extended, Collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description with respect both to the Loan Documents and the
Collateral. Each Guarantor further waives all defenses based upon suretyship or
impairment of collateral and all defenses which the BORROWER may assert on the
Obligations, including, but not limited to, failure of consideration, breach of
warranty, fraud, statute of frauds, bankruptcy, lack of legal capacity, statute
of limitations, lender liability, accord and satisfaction, and usury. The
BORROWER and Guarantor assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of
Collateral, to the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payments thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the BANK may deem advisable.
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G. No Duty of the Bank With Respect to the Collateral. The BANK shall have no
duty as to the collection or protection of Collateral or any income thereon, nor
as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto, beyond the safe custody thereof
and those duties required by the Uniform Commercial Code as in effect in New
Hampshire.
H. Election of the Bank. The BANK may exercise its rights with respect to
Collateral without resorting or regard to other collateral or sources of
reimbursement for the Obligations of BORROWER to the BANK.
I. Assignment. If at any time, by assignment or otherwise, the BANK transfers
its rights in any of the Obligations and its rights in Collateral therefor, in
whole or in part, such transfer shall carry with it the powers and rights of the
BANK under this Agreement. the Loan Documents, and the Collateral so transferred
and the transferee shall become vested with such powers and rights whether or
not they are specifically referred to in the instrument evidencing the transfer.
If, and to the extent that the BANK retains such rights and Collateral, the BANK
shall continue to have the rights and powers herein set forth with respect
thereto. This Agreement and the Loan Documents shall be binding upon and inure
to the benefit of the BANK, the BORROWER and the Guarantor, their successors,
assigns, heirs and personal representatives; provided, however, the rights and
obligations of the BORROWER and the Guarantor are not assignable, delegable or
transferable without the consent of the BANK. All of the rights of the BANK
under this Agreement and the Loan Documents shall inure to the benefit of any
participating bank or banks and its or their successors and assigns.
J. Expenses: Proceeds of Collateral. The BORROWER and the Guarantor covenant and
agree that they shall pay to the BANK, on demand, any and all reasonable
out-of-pocket expenses, including reasonable attorneys' fees, court costs,
sheriffs' fees, and other expenses incurred or paid by the BANK in protecting
and enforcing its rights under this Agreement, the Loan Documents, and the other
Obligations. including the costs of preparation of this Agreement and the Loan
Documents, and any amendments, modifications, consents, or waivers in respect
thereof, and all filing, auditing, accounting, and appraisal fees. After
deducting all of said expenses and the reasonable expenses of retaking, holding,
preparing for sale, selling and the like, the residue of any proceeds of
collections or sale of Collateral shall be applied to the payment of principal
of or interest on Obligations of the BORROWER to the BANK in such order or
preference as the BANK may determine, and any excess shall be returned to the
BORROWER (subject to the provisions of the Uniform Commercial Code) and the
BORROWER shall remain liable for any deficiency.
K. The Bank's Right of Offset. The BORROWER and the Guarantor hereby grant the
BANK a continuing security interest in, and the right to set off against, any
deposits or other sums at any time credited or due from the BANK
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to the BORROWER or the Guarantor, and any securities or other property of the
BORROWER or Guarantor which at any time are in the possession of the BANK, for
the payment of any Obligations due the BANK. The BANK may apply or set off such
deposits or other sums against the BORROWER's Obligations whether or not the
Collateral is considered by the BANK to be adequate. The BORROWER and the
Guarantor expressly grant to the BANK the right to set off and apply such
deposits and sums without having to resort to recourse to any other Collateral
in which the BANK has a security interest.
L. Notices. All notices, requests, demands and other communications provided for
hereunder shall be in writing (including telegraphic communication) and shall be
either mailed by certified mail, return receipt requested, or delivered by
overnight courier service, to the applicable party at the addresses set forth in
this Agreement.
M. Savings Clause. Any provision of this Agreement or any of the Loan Documents
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or thereof
or affecting the validity or enforceability of such provision in any other
jurisdiction.
N. Term of this Agreement. This Agreement shall remain in full force and effect
until all of the Obligations have been paid in full, all of the terms,
conditions and covenants under the Loan Documents have been performed, and all
commitments of the BANK advance funds under any of the Loans have terminated.
O. Interest Rate Provisions. The interest rate provisions of each of the
Obligations are subject to the condition that in no event shall the amount paid
or agreed to be paid to the holder of such Obligation which is deemed interest
under applicable law exceed the maximum rate of interest on the unpaid principal
balance of such Obligation allowed by applicable law, if any, (the "Maximum
Allowable Rate"). For purposes hereof, "applicable law" shall mean the law in
effect on the date hereof, except that if there is a change in such law which
results in a higher Maximum Allowable Rate being applicable to the Obligation
subject thereto, then such Obligation shall be governed by such amended law from
and after its effective date. In the event that fulfillment of any provisions of
any Obligation results in the interest rate thereunder being in excess of the
Maximum Allowable Rate, then amount to be paid thereunder resulting in an
excessive interest rate shall automatically be reduced to eliminate such excess.
If notwithstanding the foregoing, the holder of such Obligation receives an
amount which under applicable law would cause the interest rate thereunder to
exceed the Maximum Allowable Rate, the portion thereof which would be excessive
shall automatically be applied to and deemed a prepayment of the unpaid
principal balance under such Obligation and not a payment of interest.
-19-
P. Waiver of Jury Trial. THE BORROWER AND GUARANTOR WAIVE ANY RIGHTS THEY MAY
HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS
AGREEMENT OR ANY OF THE LOAN DOCUMENTS, AND AGREES THAT ANY SUCH DISPUTE SHALL
BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
IN WITNESS WHEREOF, the BANK and the BORROWER have executed this Agreement all
as of the day and year first above written.
WITNESS: FLEET BANK - NH
/s/ Xxxxxx XxXxxx By: /s/ Xxx X. XxXxxxx
----------------- -------------------------------
Xxx X. XxXxxxx, Assistant
Vice President
WITNESS: BORROWER:
SHEPHERD SURVEILLANCE
SOLUTIONS, INC.
/s/ Xxxxxx XxXxxx By: /s/ Xxxxxx Xxxxxxx
----------------- -------------------------------
M. Xxxxxx Xxxxxxx, President
AGREEMENT OF GUARANTOR. For and in consideration of the BANK entering into this
Agreement with the BORROWER, and extending the Loans to the BORROWER, all to the
benefit of the undersigned, the undersigned hereby become a party to this
Agreement as Guarantor, and agrees to the terms and conditions set forth above
in this Agreement, all as of the day and year first above written.
WITNESS: GUARANTOR:
TRILON DOMINION PARTNERS, LLC
BY: VC Holdings, Inc., its manager
/s/ By: /s/ Xxxx X. Xxxxx
----------------- -------------------------------
Xxxx X. Xxxxx, Vice President
STATE NEW YORK
COUNTY OF NEW YORK
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On this the 3rd day February 1997, before me, the undersigned notary
or justice, personally appeared Xxxx X. Xxxxx, who acknowledged himself to be
Vice President of VC Holdings, Inc. the manager of Trilon Dominion Partners,
L.L.C., a Delaware limited liability company, and that he, as such member being
authorized so to do, executed the foregoing instrument for the purposes therein
contained.
/s/ Xxxxxx X. Page
----------------------------------
Justice of the Peace/Notary Public
* Subject to the change being made whereby the financial covenant in III B to
Schedule B reads the net loss for the six months ending June 30, 1997 shall
not exceed $1,000,000.00
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FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT
SCHEDULE A
----------
BORROWING BASE AND CASH MANAGEMENT PROVISIONS
I. APPLICABLE PERCENTAGE OF ACCEPTABLE ACCOUNTS FOR DETERMINATION OF BORROWER'S
REVOLVING LINE OF CREDIT BORROWING BASE UNDER SECTION I.A.: EIGHTY PERCENT (80%)
DEFINITION OF ACCEPTABLE ACCOUNTS: The term "Acceptable Accounts" means those of
the BORROWER's accounts and accounts receivable as the BANK determines to be
satisfactory as set forth below. Subject to the foregoing, "Acceptable Accounts"
shall not include any service charges or sales or other taxes and shall be
accounts of the BORROWER: (i) which arise in the ordinary course of BORROWER's
business from BORROWER's performance of services or sale of goods which have
been performed or sold; (ii) which are not more than ninety (90) days old from
date of invoice (in the event that twenty percent (20%) of the accounts
receivable from a particular account debtor are over ninety (90) days old, all
of the accounts receivable from that particular account debtor shall be excluded
from Acceptable Accounts); (iii) which are not evidenced by a promissory note or
other instrument; (iv) which are payable in U.S. Dollars; (v) which are owed by
any corporation or other entity other than one which is related to the BORROWER,
or is of common ownership with the BORROWER, or could be treated as a member of
the same controlled group of corporations of which the BORROWER is a member;
(vi) which constitute valid. binding, and enforceable obligations of account
debtors which are not subject to any claim, counterclaim, set off. credit,
allowance, or chargeback; (vii) as to which the BORROWER has received no notice
and has no knowledge as to whether the account debtor (or any guarantor or
endorser thereof) is bankrupt or insolvent, or any other facts which make the
collection of the account doubtful; (viii) which are not owed by any person
employed by, or salesman of. the BORROWER; (ix) which do not arise out of the
sale by the BORROWER of goods consigned or delivered to the BORROWER on "sell or
return" terms (whether or not compliance has been made with Section 2-3326 of
the UCQ; and (x) which do not arise out of any sale made on a "xxxx and hold",
dating, or delayed shipping basis. Accounts payable by BORROWER to any account
debtor shall be netted against accounts due from such debtor.
BORROWER shall furnish the BANK within ten (10) days of each month-end with a
Borrowing Base Certificate substantially in the form attached hereto as Exhibit
A-1, which shall be accompanied by a reconciliation and aging reports for
accounts receivable, all in a form reasonably acceptable to the BANK.
The acceptance of or characterization by the BANK of any account as an
Acceptable Account shall not be deemed a determination by the Bank as to its
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actual value nor in any way obligate BANK to accept any account arising
subsequently from such debtor to be, or to continue to deem such account to be,
an Acceptable Account. All accounts of BORROWER whether Acceptable Accounts or
not shall constitute Collateral under the Security Agreement.
II. ADDITIONAL TERMS AND CONDITIONS FOR MANAGEMENT OF REVOLVING LINE OF CREDIT
LOANS.
BORROWER shall from time to time inform the BANK of the target balance which
BORROWER desires to maintain in its Demand Deposit Account with the BANK, which
shall in no event be less than any minimum balance (if any) required under this
Agreement. To maintain the desired target balance in BORROWER's Demand Deposit
Account, BORROWER hereby instructs, authorizes, and directs BANK to charge
BORROWER's Demand Deposit Account to make payments to reduce the debit balance
of BORROWER's Loan Account with the BANK and to make payment of BORROWER's other
obligations to the BANK, and to make advances under the Revolving Line of Credit
Loan increasing the debit balance in BORROWER's Loan Account and credit the same
to BORROWER's Demand Deposit Account. Notwithstanding the foregoing, BORROWER's
obligations to pay each Loan are the general obligations of the BORROWER and
shall not be deemed to be obligations to be satisfied solely from funds in the
Demand Deposit Account or by advances under the Revolving Line of Credit Loan.
BORROWER acknowledges and agrees that the target balance is only a desired goal
based upon estimates and that the BANK shall have no responsibility for
variances from the target balance as long as all charges, advances and credits
are made in good faith. All credits against BORROWER's indebtedness indicated in
the Loan Account shall be conditional upon final payment to the BANK of the
items giving rise to such credits. The amount of any item credited against
BORROWER's Loan Account which is not paid or which is charged back against the
BANK for any reason may be charged as a debit to the Loan Account or may be
charged back against the Demand Deposit Account of BORROWER, and shall be an
obligation of the BORROWER to the BANK in each instance whether or not the item
so charged back or not paid is returned. Any item received in payment towards
BORROWER's outstanding indebtedness reflected in the Loan Account which requires
clearance or payment (other than items drawn on the Bank) shall be considered to
be applied immediately for purposes of determining the maximum available amount
under BORROWER's Revolving Line of Credit under Section 1. A. of this Agreement,
but shall not be considered to have been credited to the Loan Account until two
(2) business days after receipt by the BANK of such item for purposes of
interest accruing on the outstanding indebtedness indicated by the Loan Account.
Notwithstanding any other provision hereof, no advances shall be made by BANK to
BORROWER's Demand Deposit Account at any time an Event of Default exists under
this Agreement or the Loan Documents, or any condition exists which, if not
cured, would with the passage of time or the giving of notice, or both,
constitute such an Event of Default. Except in the case of BANK's gross
negligence, willful misconduct, or failure to act in good faith,
-23-
BANK shall not be liable for any act done or omitted by it in good faith, or for
any mistake in fact or law, or for anything it may do or refrain from doing in
connection with or as required by this Section II of Schedule A. In addition,
BORROWER will reimburse and indemnify BANK for any damages, losses, liabilities,
claims, costs, or expenses, of any kind whatsoever and however caused,
including, but not limited to, reasonable attorneys' fees, paid, suffered or
incurred by BANK as a result of any third party claim against BANK arising out
of or in connection with BANK's performance of the services contemplated by this
Section 11 of Schedule A to be provided by BANK, except to the extent the same
results from the gross negligence, willful misconduct, or failure to act in good
faith by BANK.
-24-
FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT
SCHEDULE A
EXHIBIT A-1
FLEET BANK - NH
BORROWING BASE CERTIFICATE
BORROWER: SHEPHERD SURVEILLANCE SOLUTIONS, INC.
The undersigned hereby certifies to Fleet Bank - NH (the "Bank)
pursuant to Schedule A of the Commercial Loan Agreement (the "Agreement") dated
January _, 1997, as follows:
Calculation of Borrowing Base:
Accounts Receivable:
1. Total Accounts Receivable as of
_________, 199_, as per
attached Aging Report ("Certified
Accounts") $______
2. Disqualified Accounts:
Accounts over 90 days from
invoice due date $___
Other non-qualifying accounts $___
Total Disqualified Accounts $______
3. Item 1 minus item 2 ("Acceptable
Accounts") $______
4. Advance Rate on Acceptable
Accounts per Agreement 80%
5. Item 3 times item 4 $______
6. Amount of Outstanding Letters of
Credit $______
7. Amount of Outstanding Direct Advances $______
Available Commitment:
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8. Available Commitment under Revolving
Line of Credit (Lesser of Item 5 or $900,000.00,
less Item 6 and Item 7) $______
Based upon the foregoing calculation made as of the close of business on the
date indicated below, the undersigned hereby requests that the Bank make a loan
to Borrower in accordance with the provisions of Section I of Schedule A of the
Loan Agreement, which Loan, when added to the outstanding principal amount of
all other advances, interest thereon, unpaid costs, charges and expenses related
hereto and to the Agreement as of the date hereof, does not exceed the Available
Commitment. Except as set forth in the accompanying letter, the undersigned
hereby reasserts and restates all representations and warranties set forth in
the Agreement as of the date hereof and certifies that no Event of Default under
the Agreement, or any event which with the passage of time or the giving of
notice, or both, would constitute an Event of Default, has occurred and is
continuing. Each capitalized term used, but not defined herein, shall have the
respective meaning set forth in the Agreement.
WITNESS the execution hereof on the __ day ______, of 199_.
SHEPHERD SURVEILLANCE SOLUTIONS,
INC.
By:________________________________
Signature and Title
--------------------------------
[Print Name and Title]
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FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT
SCHEDULE B
ADDITIONAL TERMS AND CONDITIONS
I. Fees Payable by BORROWER
Revolving Line of Credit Loan Facility Fee: .25% per annum of full commitment
amount of $900,000.00 under Revolving Line of Credit Loan, payable quarterly in
arrears.
Revolving Line of Credit Loan Closing Fee: $10,000.00, one-half of which is
payable on the date hereof and the other half being payable on August 15, 1997
if the Revolving Line of Credit Loan is renewed on such date.
Cash Management Fees: $300.00 per month for target balance management and
additional fees to be determined in the BANK's reasonable discretion upon basis
of scope of monthly services (e.g. lockboxes, zero balance account, etc.).
Financial Covenant Waiver Fee: In the event that BORROWER fails to comply with
the financial covenants contained hereinbelow and BANK, in its sole discretion,
elects to waive said default. BORROWER shall pay BANK an amount equal to $500.00
per waiver; provided, that. the BANK shall not be entitled to collect more than
one waiver fee per month.
II. Description of Financial Statements to be Delivered:
A. Annual audited financial statements of BORROWER within ninety (90) days after
the end of each fiscal year, including balance sheets and statements of income,
retained earnings and surplus, and a statement of cash flow, together with
supporting schedules, setting forth in each case comparative figures for the
preceding fiscal year, and in each case prepared by an independent certified
public accountant reasonably acceptable to BANK The BANK acknowledges that the
firm of Ernst & Young L.L.P. is acceptable to it for the purposes of this
section..
B. Monthly financial statements of the BORROWER within ten (10) days after the
end of each month, including balance sheets and statements of income and cash
flow, together with supporting schedules, all as prepared by the BORROWER.
C. Annual audited financial statements of Guarantor within ninety (90) days
after the end of each fiscal year, including balance sheets and statements of
income, retained earnings and surplus, and a statement of cash flow, together
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with supporting schedules, setting forth in each case comparative figures for
the preceding fiscal year, and in each case prepared by an independent certified
public accountant reasonably acceptable to BANK.
D. Semi-annual financial statements of the Guarantor within sixty (60) days
after the end of each six (6) month period, including balance sheets and
statements of income and cash flow, together with supporting schedules, all as
prepared by the Guarantor.
III. Description of Additional Financial and other Covenants
A. BORROWER shall have a ratio of EBITDA (as hereinafter defined) to Interest
Expense (as hereinafter defined) of not less than (i) 1.5:1 for the month ending
June 30, 1997 and (ii) 2.0:1 for each quarter ending thereafter. "EBITDA" means
earnings for applicable period ending on the date of determination, before
reduction for interest, taxes, depreciation, and amortization expense for such
period, all as determined in accordance with generally accepted accounting
principles from BORROWER's Financial Statements. "Interest Expense" means the
aggregate interest due and payable on all outstanding indebtedness of BORROWER
during the applicable period ending on the date of determination, all as
determined in accordance with generally accepted accounting principles from
BORROWER's Financial Statements.
B. BORROWER shall report and certify to Bank its compliance with the financial
covenant in paragraph A hereinabove within ten (10) days after the end of each
fiscal quarter on the form attached hereto as Exhibit B-2.
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FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT
SCHEDULE B
EXHIBIT B-2
COMPLIANCE CERTIFICATE
Fleet Bank - NH
1155 Xxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxxxxx 00 1 01
ATTENTION: Xxx X. XxXxxxx
Ladies and Gentlemen:
Pursuant to the provisions of a certain Commercial Loan Agreement dated January
_, 1997 (the "Loan Agreement"), by and between Shepherd Surveillance Solutions,
Inc. (collectively, the "BORROWER") and Fleet Bank - NH (the "Bank"), the
undersigned hereby certifies as follows:
1. That the financial statements (the "Financial Statements") of the
BORROWER delivered to the Bank with this certificate are true and accurate in
all material respects for the periods covered therein as of the date hereof.
2. That during the periods set forth in the Financial Statements, the
BORROWER was in compliance with the Financial Covenants set forth in Section III
of Schedule B of the Loan Agreement, and, specifically, that as of the ending
date of the periods covered by the Financial Statements, the BORROWER had:
(a) A ratio of EBITDA to Interest Expense of ________:1; and
(b) Net Income (or Loss) of $__________________.
3. The representations and warranties contained in the Loan Agreement
are otherwise true and correct in all material respects on and as of the date
hereof as if made on and as of such date and all covenants contained in the Loan
Agreement have been and continue to be met.
Terms defined in the Loan Agreement and not otherwise expressly defined herein
are used herein with the meanings so defined in the Loan Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this certificate on this __ day
of _________________, 199_.
SHEPHERD SURVEILLANCE
SOLUTIONS, INC.
_____________________________ By:________________________
Witness Print name and title below
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