EXHIBIT 10.4
CREDIT AGREEMENT
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STATE STREET BANK AND TRUST COMPANY
(FOR ITSELF AND AS AGENT FOR)
CORESTATES BANK, N.A.,
BANKBOSTON, N.A.
AND
XXX-XXXX CORPORATION, XXX-XXXX SERVICES, INC. AND
INTIRION CORPORATION
$90,000,000 SENIOR SECURED
REVOLVING CREDIT AND TERM LOAN FACILITY
APRIL 23, 1998
TABLE OF CONTENTS
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PAGE
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ARTICLE I - THE CREDIT FACILITY......................................... 1
1.01. The Credit Facility............................................... 1
(a) Revolving Line of Credit and Term Loan Facility; Revolving Loans.. 1
(b) Request for Loans................................................. 2
(c) Repayment of Principal; Premium................................... 2
(d) Interest Payments................................................. 3
(e) Commitment Fee.................................................... 3
(f) Use of Loan Proceeds.............................................. 3
(g) Letters of Credit................................................. 3
(h) Amortization...................................................... 4
1.02. Interest Rate Options............................................. 4
(a) Interest Rate Options............................................. 4
(b) Rate Quotations................................................... 5
1.03. Interest Periods.................................................. 5
1.04 COF Interest Periods.............................................. 5
1.05. Interest After Default............................................ 6
1.06. LIBOR Unascertainable............................................. 6
1.07. Inadequacy of COF Loan Pricing.................................... 7
1.08. Selection of Interest Rate Options................................ 7
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1.09. Payments.......................................................... 7
1.10. Pro Rata Treatment of Banks....................................... 8
1.11. Availability...................................................... 8
1.12. Charges Against Accounts.......................................... 8
1.13. Payment on Non-Business Days...................................... 8
1.14. Security Documents................................................ 8
1.15. Additional Compensation in Certain Circumstances.................. 8
(a) Increased Costs or Reduced Return Resulting From
Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc......... 9
(b) Indemnity......................................................... 9
1.16. Renewal........................................................... 10
ARTICLE II - CONDITIONS................................................. 10
2.01. Conditions to Closing............................................. 10
(a) Documents......................................................... 10
(b) Warranties, Covenants True........................................ 10
(c) Closing Certificate............................................... 10
(d) Results of Searches............................................... 10
(e) Insurance......................................................... 11
(f) Financial Statements.............................................. 11
(g) Acquisition Documents and Approvals............................... 11
(h) Other Documents................................................... 11
(i) No Adverse Change................................................. 12
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(j) Closing Fee....................................................... 12
(k) Legal Expenses.................................................... 12
(l) Legal Opinion..................................................... 12
(m) Termination of Prior Credit Agreement............................. 12
2.02. Conditions of Making Loans........................................ 12
(a) Representations and Warranties.................................... 12
(b) Performance....................................................... 13
ARTICLE III - REPRESENTATIONS AND WARRANTIES............................ 14
3.01. Organization...................................................... 14
3.02. Authority......................................................... 14
3.03. Approvals......................................................... 14
3.04. Valid Obligations................................................. 15
3.05. Security Interest................................................. 15
3.06. Assets............................................................ 15
3.07. Agreements........................................................ 15
3.08. Insurance......................................................... 16
3.09. Litigation; Claims................................................ 16
3.10. Labor Matters..................................................... 16
3.11. ERISA............................................................. 16
3.12. Financial Statements.............................................. 17
3.13. Taxes............................................................. 17
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3.14. Investments....................................................... 17
3.15. Investment Company................................................ 17
3.16. Indebtedness...................................................... 17
3.17. Environmental Protection.......................................... 17
3.18. Margin Stock...................................................... 18
3.19. Representations Accurate.......................................... 18
ARTICLE IV - COVENANTS.................................................. 19
4.01. Affirmative Covenants Other Than Financial Covenants
and Reporting Requirements............................................ 19
(a) Property; Insurance............................................... 19
(b) Maintain Rights................................................... 19
(c) Books and Records; Inspection..................................... 19
(d) Operating Accounts................................................ 20
(e) Conduct of Business............................................... 20
(f) Financing Statements.............................................. 20
4.02. Negative Covenants................................................ 20
(a) Indebtedness...................................................... 20
(b) Liens............................................................. 21
(c) Guaranties........................................................ 21
(d) Transfers......................................................... 22
(e) Mergers........................................................... 22
(f) Investments....................................................... 22
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(g) Principal Office.................................................. 23
(h) Write Up of Assets................................................ 23
(i) Dividends......................................................... 23
(j) Environmental Matters............................................. 23
(k) ERISA............................................................. 24
(l) Waiver of Rights.................................................. 24
(m) Sale Leaseback.................................................... 24
(n) Subsidiaries; Additional Security................................. 24
(o) Agreements with Affiliated Person................................. 24
(p) Regulatory Compliance............................................. 24
4.03. Financial Covenants............................................... 24
(a) Maximum Senior Leverage........................................... 24
(b) Minimum Shareholders Equity....................................... 25
(c) Maximum Capital Expenditures...................................... 25
(e) Minimum Fixed Charge Coverage Ratio............................... 25
(e) Current Ratio..................................................... 25
4.04. Reporting Requirements............................................ 25
(a) Financial Reports................................................. 25
(b) Other Financial Reports........................................... 26
(c) Notices........................................................... 27
ARTICLE V - EVENTS OF DEFAULT; REMEDIES................................. 28
5.01. Events of Default................................................. 28
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(a) Representations and Warranties.................................... 28
(b) Covenants......................................................... 28
(c) Security Documents................................................ 28
(d) Other Defaults.................................................... 28
(e) Displacement of Management........................................ 28
(f) Liens............................................................. 28
(g) Seizure of Assets................................................. 28
(h) Judgments......................................................... 28
(i) Insolvency........................................................ 29
(j) Loss; Material Adverse Effect..................................... 29
(k) ERISA............................................................. 29
(l) Security Interest................................................. 29
5.02. Remedies.......................................................... 29
5.03. Set-off........................................................... 30
ARTICLE VI - AGENCY..................................................... 31
6.01. Authorization of Agent and Relationship........................... 31
6.02. Disclaimer of Agent............................................... 31
6.03. Bank's Funding Obligations........................................ 31
6.04. Payments by the Borrowers......................................... 32
6.05. Payments by Agent................................................. 33
6.06. Direct Payments................................................... 34
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6.07. Administration of the Loans....................................... 34
6.08. Unanimous Consent of Banks........................................ 34
6.09. Reliance by Borrowers............................................. 35
6.10. Rights of Agent................................................... 35
6.11. Acknowledgments, Representations and Covenants of Banks........... 36
6.12. Collective Action of the Banks.................................... 37
6.13. Successor Agent................................................... 37
6.14. Provisions Operative Between Banks and Agent Only................. 38
ARTICLE VII - MISCELLANEOUS............................................. 38
7.01. Further Assurances................................................ 38
7.02. Right to Cure..................................................... 39
7.03. Environmental Matters............................................. 39
7.04. Waivers; Release of Pledge Agreements of Certain Stockholders..... 39
7.05. Delays............................................................ 40
7.06. Notices........................................................... 40
7.07. Jurisdiction...................................................... 40
7.08. Execution......................................................... 40
7.09. Governing Law..................................................... 40
7.10. Fees.............................................................. 40
7.11. Binding Nature.................................................... 41
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7.12. Severability...................................................... 41
7.13. Under Seal........................................................ 41
ARTICLE VIII - DEFINITIONS.............................................. 41
8.01. Definitions....................................................... 41
8.02. Use of Defined Terms.............................................. 49
8.03. Accounting Terms.................................................. 49
EXHIBITS
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Exhibit A Form of Note
Exhibit B Form of Security Agreement
Exhibit C Form of Corporate Pledge Agreement
Exhibit D Form of Subsidiary Guaranty Agreement
Exhibit E Form of Subsidiary Security Agreement
SCHEDULES
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Schedule 3.01 Foreign Qualifications
Schedule 3.05 Liens
Schedule 3.06 Locations
Schedule 3.07 Agreements with Affiliates
Schedule 3.08 Insurance
Schedule 3.09 Litigation; Claims
Schedule 3.12 Financial Statements
Schedule 3.14 Investments
Schedule 3.16 Indebtedness
Schedule 3.17 Environmental Protection
Schedule 4.02(c) Guaranties
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This Credit Agreement (the "Agreement") is made as of April 23, 1998 between
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company with its
Principal Office at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, for itself
and as agent for the Banks (as hereinafter defined), CORESTATES BANK, N.A., a
national banking association with its head office at 0000 Xxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx, 00000 and BANKBOSTON, N.A., a national banking
association with its head office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 (each, a "Bank" and collectively, the "Banks") and XXX-XXXX CORPORATION,
XXX-XXXX SERVICES, INC. AND INTIRION CORPORATION, each a Delaware corporation
with their designated Principal Office at 00 Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx, 00000 (each a "Borrower" and collectively the "Borrowers").
WHEREAS, each Borrower has requested that the Banks provide, and subject to
the terms and conditions of this Agreement and of the other agreements and
documents referred to herein, the Banks have agreed to provide, to the Borrowers
a senior secured credit facility of up to $90,000,000 (the "Credit Facility") to
provide for the financing of acquisitions, restructurings and working capital
requirements of the Borrowers.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Borrowers, in order
to induce the Banks to provide the Credit Facility, and intending to be legally
bound, hereby jointly and severally agree with the Banks as follows:
ARTICLE I
THE CREDIT FACILITY
1.01. The Credit Facility. The Credit Facility shall consist of a revolving
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line of credit and term loan facility pursuant to which the Banks may from time
to time make Loans to the Borrowers and/or issue Letters of Credit on behalf of
the Borrowers.
(a) Revolving Line of Credit and Term Loan Facility; Revolving Loans.
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Subject to the terms and conditions hereinafter set forth, the Banks shall make
loans to the Borrowers under the Revolving Line of Credit and Term Loan Facility
(the "Revolving Loans") and/or issue Letters of Credit on behalf of the
Borrowers at the Principal Office of the Agent, on any Business Day prior to
April 23, 2001, in such amounts as the Borrowers may request; provided, however,
that the aggregate of all Revolving Loans and all Letters of Credit outstanding
shall at no time exceed $90,000,000. Within the foregoing limits, subject to
the terms and conditions of this Agreement, the Borrowers may obtain Revolving
Loans and/or Letters of Credit, repay Revolving Loans in whole or in part and
obtain Revolving Loans again on one or more occasions. Each Revolving Loan
advanced upon the Prime Rate Option shall be in the principal amount of Thirty
Thousand Dollars ($30,000) or an integral multiple thereof. Each Revolving Loan
advanced upon the LIBOR Option shall be in the principal amount of Thirty
Thousand Dollars ($30,000) or an integral multiple thereof. Each Revolving Loan
advanced upon the COF Option shall be in the principal amount of One Thousand
Dollars ($1,000) or an integral
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multiple thereof. The Revolving Loans shall be evidenced by the Revolving Note
of the Borrowers, dated as of the date on which the initial Revolving Loan is
made. The Borrowers hereby irrevocably authorize each Bank to make or cause to
be made, on a schedule attached to the Revolving Note or on the books of each
Bank, at or following the time of making each Revolving Loan and of receiving
any payment of principal, an appropriate notation reflecting such transaction
and the then aggregate unpaid principal balance of the Revolving Loans. The
amount so noted shall constitute prima facie evidence as to the amount owed by
the Borrowers with respect to principal of the Revolving Loans. Failure of any
Bank to make any such notation shall not, however, affect any obligation of the
Borrowers hereunder or under the Revolving Note.
(b) Request for Loans. The Borrowers will give the Agent at least three
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(3) Business Day's prior telephonic or written notice, specifying the amount and
date of each Loan or Letter of Credit requested, the Interest Rate Option
selected by the Borrower with respect thereto pursuant to Section 1.02 and, for
LIBOR Loans or COF Loans, the Interest Period selected by the Borrower with
respect thereto pursuant to Section 1.03 or 1.04, as applicable. Any telephonic
notice given under this Section will be followed by written notice given not
later than the next following Business Day. The Agent may rely in good faith on
the identity and authority of any person providing such telephonic notice.
(c) Repayment of Principal; Premium. The Borrowers shall repay in full
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all Loans and all interest thereon and all other charges incurred in connection
therewith upon the Termination Date. The Borrowers may prepay, at any time,
without penalty, the whole or any portion of (i) any Prime Rate Loan provided
that each such prepayment, if less than the aggregate amount of all Prime Rate
Loans then outstanding, shall be in the amount of One Thousand Dollars ($1,000)
or an integral multiple thereof or (ii) any LIBOR Loans provided at each such
payment, if less than the aggregate amount of all LIBOR Loans then outstanding,
shall be in the amount of $1,000 or an integral multiple thereof provided,
further, however, that any prepayments of LIBOR Loans other than on the last day
of the applicable LIBOR Interest Period shall be subject to the provisions of
Section 1.15(b)(i) herein. In the event that at any time the Loans outstanding
are in an amount which exceeds the aggregate amount of all Loans and Letters of
Credit permissible hereunder, the Borrowers will forthwith prepay so much of the
Loans as may be required so that the aggregate of all Loans and Letters of
Credit outstanding will not exceed the amount permissible hereunder. The Banks
may, at their discretion, renew the senior secured Credit Facility described in
this Agreement by extending the Termination Date. Neither the inclusion in this
Agreement of financial covenants relating to periods after the Termination Date
or any other terms and provisions hereof, however, will be deemed to create any
implication that the Banks are required to renew such revolving line of credit.
In the event that Borrowers prepay, without the express consent of the Banks,
all principal and all interest outstanding under this Credit Facility or
otherwise terminate this facility within the first three years after the Closing
Date following or in connection with the financing of Borrowers by one or more
lenders none of which is currently a Bank hereunder, then in such event, a
premium shall be due and payable in the amount of one half of one percent (0.5%)
of the aggregate amount of the total Credit Facility; provided, however, that
Borrowers may prepay all of the principal and interest outstanding under this
Credit Facility at any time without penalty if the funds used to make such
payment are the proceeds of a public offering of debt or equity securities of
the Borrowers or a
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private placement of debt or equity securities of the Borrowers, including a
placement in accordance with Rule 144A of the Securities Act of 1933, as
amended, provided further, however, that any prepayments of LIBOR Loans other
than on the last day of the applicable LIBOR Interest Period shall be subject to
the provisions of Section 1.15(b)(i) herein.
(a) Except as otherwise provided in this Section, the Borrowers shall
have the right at their option from time to time to prepay the Loans in whole or
part
(i) at any time with respect to any Loan to which the Prime Rate
Option applies;
(ii) on the last day of the applicable LIBOR Interest Period with
respect to Loans to which a LIBOR Option applies;
(iii) on the last day of the applicable COF Interest Period with
respect to Loans to which a COF Option applies.
(d) Interest Payments. The Borrowers will pay interest on the principal
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amount of the aggregate Loans outstanding from time to time, from the date of
the initial Loan until payment of all Loans and the Note in full and the
termination of this Agreement, such interest to be payable monthly in arrears on
each Payment Date, commencing with the first such Payment Date after the date of
this Agreement, and at the end of each LIBOR Interest Period or COF Loan period,
but not less than quarterly, with regard to LIBOR Loans, and on the date of
payment of the Loans in full.
(e) Commitment Fee. The Borrowers shall pay to the Agent, in connection
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with the establishment and maintenance of the revolving line of credit, a
commitment fee (the "Commitment Fee") equal to (i) one-half of one percent
(0.5%) per annum of the average daily unused portion of the Credit Facility
during the preceding calendar quarter (or such shorter period as has elapsed
from the Closing Date to the end of the current calendar quarter) for each
business day during such period with respect to which the aggregate balance of
the Loans outstanding as of the close of each such day was less than
$35,000,000; or (ii) one-quarter of one percent (0.25%) for each business day
during such period with respect to which the aggregate balance of the Loans
outstanding as of the close of each such day equaled or exceeded $35,000,000.
The Commitment Fee shall be payable in arrears, on the first day of each of the
months of April, July, October and January in each year, commencing July 1,
1998.
(f) Use of Loan Proceeds. The proceeds of each Revolving Loan will be
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used by the Borrowers solely to (i) refinance the secured indebtedness of Mac-
Gray Services, Inc., Sun Services of America, Inc. and X. Xxxxxx Coin-Op
Laundry, Inc.; (ii) fund the acquisitions of Amerivend Corporation and Copico,
Inc. ("Copico"); (iii) fund one or more standby or documentary letters of
credit; (iv) support general working capital needs; and (v) for Permitted
Acquisitions.
(g) Letters of Credit. As part of the Credit Facility, the Agent will
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issue on behalf of the Borrowers, at the request of the Borrowers, one or more
standby or documentary letters of credit;
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provided, however, that (a) each such letter of credit issued by the Agent on
behalf of the Borrower (individually a "Letter of Credit" and collectively the
"Letters of Credit") shall by its terms expire no later than the earlier of (i)
one year from the date of issuance thereof or (ii) 30 days prior to the
Termination Date, and (b) the aggregate amount of outstanding Letters of Credit
shall not exceed $10,000,000 at any time. Upon the issuance of any Letter of
Credit in an amount greater than $50,000 by the Agent, the Agent will promptly
notify each Bank of the date of issuance, amount and expiration date of each
such Letter of Credit. As a condition of the issuance of each such Letter of
Credit, the Borrowers shall (1) execute the Agent's prevailing letter of credit
documentation, as in effect from time to time, and (2) pay to the Agent the
Agent's prevailing letter of credit issuance, maintenance, commission and
negotiation fee(s), as in effect from time to time and (3) pay (or have paid) in
quarterly installments in advance to the Agent an annual total commission equal
to 130 basis points of the aggregate face amount of each such Letter of Credit.
Any and all amounts which the Agent is required to advance pursuant to the
Letters of Credit shall become, at the time the amounts are advanced, Prime Rate
Loans from the Banks. The Agent will notify the Banks of the amount required to
be advanced pursuant to the Letters of Credit. Before 12:00 noon (Boston time)
on the date of any advance that the Agent is required to make pursuant to the
Letters of Credit, each Bank shall make available such Bank's Proportionate
Share of such advance in immediately-available funds to the Agent. The Borrowers
agree to be bound by the terms of the Agent's application and/or agreement for
Letters of Credit and the Agent's written regulations and customary practices
relating to Letters of Credit.
(h) Amortization. On the third anniversary of the Closing, the
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principal amounts of any and all Revolving Loans then outstanding shall be
converted (the "Conversion Date") to a five-year amortization schedule with a
weighted amortization schedule in years four and five after the Closing as
follows: (i) during the first year following the Conversion Date, ten percent
(10%) of the balance of the aggregate Loans outstanding on the Conversation Date
shall be due and payable in quarterly installments in arrears on the first
business day of each calendar quarter; (ii) during the second year following the
Conversion Date, fifteen percent (15%) of the balance of the aggregate Loans
outstanding on the Conversion Date shall be due and payable in quarterly
installments in arrears on the first business date of each calendar quarter; and
(iii) a final payment of all Loans then outstanding, including all principal and
interest (as well as other fees and expenses due to the Banks) due and payable
on the second anniversary of the Conversion Date. On and after Conversion Date,
the Borrower will retain the right to select Interest Rate Options in accordance
with Section 1.02.
(i) Closing Fee. The Borrowers shall pay to the Agent for the benefit
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of the Banks at the Closing a fee in connection with the establishment of this
facility in the amount of Four Hundred Thousand Dollars ($400,000.00) which may
be paid monthly in advance by the Borrowers in twelve equal installments, with
the first such payment to be made at the Closing.
1.02. Interest Rate Options. The Borrowers shall pay interest in respect of
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the outstanding unpaid principal amount of the Loans as selected by it at the
Prime Rate Option or LIBOR Option set forth below applicable to the Loans. The
Agent's determination of a rate of interest and any change therein shall in the
absence of manifest error be conclusive and binding upon all parties hereto. If
at any time the designated rate applicable to any Loan made by any Bank exceeds
such Bank's highest lawful rate,
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the rate of interest on such Bank's Loan shall be limited to such Bank's highest
lawful rate.
(a) Interest Rate Options. The Borrowers shall have the right to
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select from the following Interest Rate Options applicable to the Loans:
(i) Prime Rate Option: A fluctuating rate per annum (computed
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on the basis of a year of 360 days, as the case may be, and actual days elapsed)
equal to the Prime Rate minus 0.5%, such interest rate to change automatically
from time to time effective as of the effective date of each change in the Prime
Rate.
(ii) LIBOR Option: A rate per annum (computed on the basis of a
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year of 360 days and actual days elapsed) equal to LIBOR plus the Applicable
Margin.
(iii) COF Option: A rate per annum (computed on the basis of a
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year of 360 days and actual days elapsed) equal to the COF Base Rate plus the
Applicable Margin.
(b) Rate Quotations. The Borrowers may call the Agent on or before
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the date on which a Loan request is to be delivered to receive an indication of
the rates then in effect, but it is acknowledged that such indication shall not
be binding on the Agent or the Banks nor affect the rate of interest which
thereafter is actually in effect when the election is made.
1.03. LIBOR Interest Periods. At any time when the Borrowers shall select,
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convert to or renew a LIBOR Loan, the Borrowers shall notify the Agent thereof
at least three (3) Business Days prior to the effective date of such LIBOR Loan
by submitting a Loan request. The loan request shall specify an interest period
during which such LIBOR Loan Option shall apply, such periods to be one, two,
three, or six months (or quarterly for periods longer than three months) or a
maximum of twelve months ("LIBOR Interest Period"), provided, that:
(a) any LIBOR Interest Period which would otherwise end on a date
which is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in the next calendar month, in which case
such LIBOR Interest Period shall end on the next preceding Business Day;
(b) any LIBOR Interest Period which begins on the last day of a
calendar month for which there is no numerically corresponding day in the
subsequent calendar month during which such LIBOR Interest Period is to end
shall end on the last Business Day of such subsequent month;
(c) the Borrowers shall not select, convert to or renew a LIBOR
Interest Period for any portion of the Loans that would end after the
Termination Date; and
(d) in the case of the renewal of a LIBOR Loan at the end of a LIBOR
Interest Period, the first day of the new LIBOR Interest Period shall be the
last day of the preceding LIBOR Interest Period, without duplication in payment
of interest for such day.
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1.04 COF Interest Periods. At any time when the Borrowers shall select,
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convert to or renew a COF Loan, the Borrowers shall notify the Agent thereof at
least three (3) Business Days prior to the effective date of such COF Loan by
delivering a Loan request. The Loan request shall specify an interest period
during which such COF Loan Option shall apply, such periods to be one to sixty
months ("COF Interest Period"), provided, that all COF Loans will terminate on
or prior to the Termination Date and provided further that:
(a) any COF Interest Period which would otherwise end on a date which
is not a Business Day shall be extended to the next succeeding Business Day
unless such Business Day falls in the next calendar month, in which case such
COF Interest Period shall end on the next preceding Business Day;
(b) any COF Interest Period which begins on the last day of a
calendar month for which there is no numerically corresponding day in the
subsequent calendar month during which such COF Interest Period is to end shall
end on the last Business Day of such subsequent month;
(c) the Borrower shall not select, convert to or renew a COF Interest
Period for any portion of the Loans that would end after the Termination Date.
(d) in the case of the renewal of a COF Loan at the end of a COF
Interest Period, the first day of the new COF Interest Period shall be the last
day of the preceding COF Interest Period, without duplication in payment of
interest for such day.
1.05. Interest After Default. To the extent permitted by applicable law,
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upon the occurrence and during the continuation of an Event of Default, any
principal, interest, fee or other amount payable hereunder shall bear interest
for each day thereafter until paid in full (before and after judgment) at a rate
per annum which shall be equal to two percentage points (2%) above the rate of
interest otherwise applicable with respect to such amount or the Prime Rate if
no rate of interest is otherwise applicable, but in no event in excess of the
highest rate permitted under applicable law. The Borrowers acknowledge that
such increased interest rate reflects, among other things, the fact that such
Loans or other amounts have become a substantially greater risk given their
default status and that the Banks are entitled to additional compensation for
such risk.
1.06. LIBOR Unascertainable. If
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(a) on any date on which LIBOR would otherwise be determined, any Bank
shall have determined (which determination shall be conclusive absent manifest
error) that:
(i) adequate and reasonable means do not exist for ascertaining
LIBOR, or
(ii) a contingency has occurred which materially and adversely
affects the London interbank market relating to LIBOR, or
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(b) if at any time any Bank shall have determined (which determination
shall be conclusive absent manifest error) that:
(i) the making, maintenance or funding of any LIBOR Loan has
been made impracticable or unlawful by compliance by such Bank in good faith
with any law or any interpretation or application thereof by any official body
or with any request or directive of any such official body (whether or not
having the force of law), or
(ii) LIBOR will not adequately and fairly reflect the cost to
such Bank of the establishment or maintenance of any LIBOR Loan, or
(iii) after making all reasonable efforts, deposits of the
relevant amount in U.S. Dollars for the relevant LIBOR Interest Period for a
LIBOR Loan are not available to such Bank with respect to a proposed LIBOR Loan
in the London interbank market,
(iv) then in the case of any event specified in subsection (a)
above, any Bank shall promptly so notify the Agent and the Borrowers thereof and
in the case of any event specified in subsection (b) above, such Bank shall
promptly so notify the Agent in writing as to the specific circumstances of such
event, and the Agent shall promptly send copies of such notice to the other
Banks and the Borrowers. Upon such date as shall be specified in such notice
(which shall not be earlier than the date such notice is given) the obligation
of (A) the Banks in the case of such notice given by the Agent or (B) such Bank
in the case of such notice given by such Bank the right of the Borrowers to
select, convert to or renew a LIBOR Loan shall be suspended until the Agent
shall have later notified the Borrowers or such Bank shall have later notified
the Agent, of the Agent's or such Bank's, as the case may be, determination
(which determination shall be conclusive absent manifest error) that the
circumstances giving rise to such previous determination no longer exist. If at
any time the Agent makes a determination under subsection (a) or (b) of this
Section 1.06, and the Borrowers have previously notified the Agent of their
selection of, conversion to or renewal of a LIBOR Loan and such LIBOR Loan has
not yet gone into effect, such notification shall be deemed to provide for
selection of, conversion to or renewal of the Prime Rate Option otherwise
available with respect to such Loans. If any Bank notifies the Agent of a
determination under subsection (b) of this Section 1.06, the Borrowers shall,
subject to the Borrowers' indemnification obligations under Section 1.15(b), as
to any LIBOR Loan of the Banks on the date specified in such notice either
convert such LIBOR Loan to a Prime Rate Loan otherwise available with respect to
such Loan or prepay such Loan in accordance with the provisions of this
Agreement. Absent due notice from the Borrower of conversion or prepayment such
Loan shall automatically be converted to a Prime Rate Loan upon such specified
date.
1.07. Inadequacy of COF Loan Pricing. If with respect to any Interest Period
------------------------------
for any COF Loan:
(i) no timely quotations of the applicable rate are offered to the
Banks by the Reference Banks for funds as contemplated herein, or
(ii) the COF Rate as determined by the Agent will not adequately and
fairly reflect the
-7-
cost to the Banks of maintaining or funding a COF Loan, then the Agent shall
forthwith give notice thereof to Borrowers, whereupon until the Agent notifies
Borrowers that the circumstances giving rise to such suspension no longer exist,
(A) the obligation of the Banks to make COF Loans shall be suspended, and (B)
Borrowers shall either (1) repay in full the then outstanding principal amount
of the COF Loans, together with accrued interest thereon on the last day of the
then current Interest Period applicable to the COF Loans, or (2) convert the COF
Loans to LIBOR Loans or Prime Rate Loans in accordance with Section 1.03 on the
------------
last day of the then-current Interest Period applicable to such COF Loans.
1.08. Selection of Interest Rate Options. If the Borrowers fail to select a
----------------------------------
LIBOR Interest Period or a COF Interest Period in accordance with the provisions
of Sections 1.03 and 1.04 in the case of renewal of a LIBOR Loan or a COF Loan,
the Borrowers shall be deemed to have converted such Loan or portion thereof to
a Prime Rate Loan commencing upon the last day of that LIBOR Interest Period or
COF Interest Period, as the case may be. If an Event of Default shall occur and
be continuing, the Agent may in its discretion limit the Borrowers to the Prime
Rate Option.
1.09. Payments. All payments and prepayments to be made in respect of
--------
principal, interest, commitment fees, closing fee, Letter of Credit fees,
Agent's fees or other fees or amounts due from the Borrowers hereunder shall be
payable prior to 12:00 noon (Boston time) on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrowers, and without setoff, counterclaim or other
deduction of any nature. Such payments shall be made to the Agent at the
Principal Office of the Agent for the ratable accounts of the Banks with respect
to the Loans in U.S. dollars and in immediately available funds, and the Agent
shall promptly distribute such amounts to the Banks in immediately available
funds in accordance with Section 6.04 hereunder. All monies received by the
Banks hereunder shall be applied (i) first to reasonable fees, charges, costs
and expenses payable to the Banks under this Agreement, any of the Security
Documents or any Letter of Credit documents; (ii) next to interest then accrued
on account of the Loans; and only thereafter (iii) to principal of the Loans;
and finally (iv) to any and all other obligations and liabilities owing to
either Bank by the Borrower, however or whenever arising. Interest shall be
calculated on the basis of the actual number of days and a year of 360 days.
1.10. Pro Rata Treatment of Banks. Each borrowing, and each selection of,
---------------------------
conversion to or renewal of any Loan or Interest Rate Option and each payment or
prepayment by the Borrower with respect to principal, interest, commitment fees,
closing fee, Letter of Credit fees, or other fees or amounts due from the
Borrower hereunder to the Banks with respect to the Loans, except for the
Agent's fees, shall be made in proportion to the Loans outstanding from each
Bank and if no such Loans are then outstanding, in proportion to the
Proportionate Share of each Bank.
1.11. Availability. The proceeds of all Loans shall be credited by the Agent
------------
to a general deposit account of any of the Borrowers with the Agent.
1.12. Charges Against Accounts. The Agent may charge any general deposit
------------------------
account of any of the Borrowers at the Agent with the amount of all payments of
interest, principal and other sums due, from time to time, under this Agreement,
the Note and/or any Letter of Credit or documents relating thereto
-8-
and will thereafter notify the Borrowers of the amount so charged. The failure
of the Agent so to charge any account or to give any such notice shall not
affect the obligation of the Borrowers to pay interest, principal or other sums
as provided herein, in the Note and/or any Letter of Credit or documents
relating thereto.
1.13. Payment on Non-Business Days. Whenever any payment to be made to the
----------------------------
Agent or any Bank hereunder or under the Note shall be stated to be due on a day
which is not a Business Day, such payment may be made on the next succeeding
Business Day, and interest payable on each such date shall include the amount
thereof which shall accrue during the period of such extension of time.
1.14. Security Documents. Payment of the principal and interest under the
------------------
Note and of all other obligations of the Borrower under this Agreement or any
Letter of Credit documents shall be secured by the following:
(a) A security interest in all assets now or hereafter owned by the
Borrowers, as more fully set forth in a Security Agreement substantially in the
form of Exhibit B hereto;
---------
(b) A pledge of the capital stock owned by Xxx-Xxxx Corporation (of
each of its Subsidiaries) as more fully set forth in the Corporate Pledge
Agreement substantially in the form of Exhibit C hereto; and
---------
(c) All such other security agreements or assignments, if any, with
respect to patents, copyrights, trademarks, and other intellectual property of
the Borrowers and any of its subsidiaries, as the Bank may now or hereafter
reasonably request to create and perfect its security interest therein.
(Collectively, all of the foregoing documents now or hereafter delivered
pursuant to the terms of this Section 1.12, together with the Note, being
referred to herein as the "Security Documents").
1.15. Additional Compensation in Certain Circumstances.
-------------------------------------------------
(a) Increased Costs or Reduced Return Resulting From Taxes, Reserves,
-----------------------------------------------------------------
Capital Adequacy Requirements, Expenses, Etc.. If any Law, guideline or
---------------------------------------------
interpretation or any change in any Law, guideline or interpretation or
application thereof by any official body charged with the interpretation or
administration thereof or compliance with any request or directive (whether or
not having the force of Law) of any central bank or other official body:
(i) subjects any Bank to any tax or changes the basis of
taxation with respect to this Agreement, the Note, the Loans or payments by the
Borrower of principal, interest, commitment fees, or other amounts due from the
Borrower hereunder or under the Note (except for taxes on the overall net income
of such Bank), imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend credit
extended by, or assets (funded or contingent) of, deposits with or for the
account of, or other acquisitions of funds by, any Bank, or
-9-
(ii) imposes, modifies or deems applicable any capital adequacy
or similar requirement (A) against assets (funded or contingent) of, or letters
of credit, other credits or commitments to extend credit extended by, any Bank,
or (B) otherwise applicable to the obligations of any Bank under this Agreement,
and
(iii) the result of any of the foregoing is to increase the cost
to, reduce the income receivable by, or impose any expense (including loss of
margin) upon any Bank with respect to this Agreement, the Note or the making,
maintenance or funding of any part of the Loans (or, in the case of any capital
adequacy or similar requirement, to have the effect of reducing the rate of
return on any Bank's capital, taking into consideration such Bank's customary
policies with respect to capital adequacy) by an amount which such Bank in its
reasonable discretion deems to be material, such Bank shall from time to time
notify the Borrower and the Agent of the amount determined in good faith (using
any averaging and attribution method employed in good faith) by such Bank (which
determination shall be conclusive absent manifest error) to be necessary to
compensate such Bank for such increase in cost, reduction of income or
additional expense. Such notice shall set forth in reasonable detail the basis
for such determination. Such amount shall be due and payable by the Borrower to
such Bank ten (10) Business Days after such notice is given.
(b) Indemnity. In addition to the compensation required by subsection
---------
(a) of this Section 1.15, the Borrowers shall indemnify each Bank against all
liabilities, losses or expenses (including loss of margin, any loss or expense
incurred in liquidating or employing deposits from third parties and any loss or
expense incurred in connection with funds acquired by a Bank to fund or maintain
LIBOR Loans subject to the LIBOR Option or COF Loans subject to the COF Option)
which such Bank sustains or incurs as a consequence of any
(i) payment, prepayment, conversion or renewal of any LIBOR
Loan on a day other than the last day of the corresponding LIBOR Interest Period
or any COF Loan (whether or not such payment or prepayment is mandatory,
voluntary or automatic and whether or not such payment or prepayment is then
due),
(ii) attempt by the Borrowers to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any notice relating to Loan
requests or prepayments; or
(iii) default by the Borrowers in the performance or observance
of any covenant or condition contained in this Agreement or any other Loan
Document, including without limitation any failure of the Borrowers to pay when
due (by acceleration or otherwise) any principal, interest, commitment fee or
any other amount due hereunder.
(iv) If any Bank sustains or incurs any such loss or expense it
shall from time to time notify the Borrowers and the Agent of the amount
determined in good faith by such Bank (which determination shall be conclusive
absent manifest error and may include such assumptions, allocations of costs and
expenses and averaging or attribution methods as such Bank shall deem
reasonable) to be necessary to indemnify such Bank for such loss or expense.
Such notice shall set forth in reasonable
-10-
detail the basis for such determination. Such amount shall be due and payable by
the Borrowers to such Bank ten (10) Business Days after such notice is given.
1.16. Renewal. The Banks may, at their discretion, renew the revolving line
-------
of credit described in this Agreement by extending the Termination Date.
Neither the inclusion in this Agreement of financial covenants relating to
periods after the Termination Date or any other terms and provisions hereof,
however, will be deemed to create any implication that the Banks are required to
renew such revolving line of credit.
ARTICLE II
CONDITIONS
2.01. Conditions to Closing. The obligations of the Banks to perform any of
---------------------
their obligations under this Agreement, any Security Document or any Letter of
Credit document is subject to the satisfaction of all of the following
conditions on or prior to Closing:
(a) Documents. The Agent shall have received this Agreement and all of
---------
the Security Documents, duly executed and delivered by all parties thereto, and
all actions contemplated by the foregoing documents shall have been accomplished
to the reasonable satisfaction of the Agent and its special counsel.
(b) Warranties, Covenants True. All representations and warranties of
--------------------------
the Borrowers in this Agreement and the Security Documents shall be true and
accurate on the Closing Date in all material respects as if then given, and the
Borrowers shall have performed or observed in all material respects all of the
terms, covenants, conditions and obligations under this Agreement and the
Security Documents which are required to be performed or observed by it or them
on or prior to the Closing Date.
(c) Closing Certificate. The Agent shall have received a certificate,
-------------------
dated as of the Closing Date and executed by the Treasurer or Chief Financial
Officer of each Borrower, in form and content satisfactory to the Bank, stating
the substance of Section 2.01(b).
(d) Results of Searches. The Agent shall have received written results
-------------------
of searches of the records of filing offices, dated as of a date as close to the
Closing Date as practicable, stating that with respect to each jurisdiction in
which Collateral is kept or maintained and with respect to each filing office
where a filing is required to perfect the Banks' security interest in the
Collateral or where a filing may be made which may affect the priority of the
Banks' security interest in such Collateral, there are no financing statements,
assignments or notices of tax liens on file against or with respect to any such
Collateral, other than financing statements in which the Banks are named as the
secured party, and financing statements as to leased equipment disclosed on
Schedule 3.05 hereto.
-------------
(e) Insurance. The Agent shall have received insurance binders or
---------
certificates of insurance coverage indicating that each Borrower has obtained
insurance as required by
-11-
Section 4.01(c) of this Agreement.
(f) Financial Statements. Each Bank shall have received copies of the
--------------------
unaudited consolidated balance sheet and statement of income for the two-month
period ended February 28, 1998, with such unaudited statement certified by the
chief financial officer or treasurer of Xxx-Xxxx Corporation as presenting
fairly the financial condition and results of operations of Xxx-Xxxx Corporation
and Xxx-Xxxx Services, Inc., in conformity with GAAP (subject to normal year-end
audit adjustments and absence of footnotes required by GAAP).
(g) Acquisition Documents and Approvals. The Agent shall have received
------------------------------------
on, or as soon as practicable after, the closing of the Amerivend and Copico
acquisitions (i) approval of the acquisition by Mac-Gray Services, Inc. of each
of Amerivend and Copico by the Board of Directors or Shareholders as applicable
of each party to the respective acquisitions; and (ii) documents satisfactory to
counsel for the Banks substantiating the completion of such acquisitions.
(h) Other Documents. The Agent shall have received all other documents
---------------
and assurances required hereunder or which it may have heretofore reasonably
requested in connection with the transactions contemplated by this Agreement,
and such documents shall be certified, when appropriate, by the proper
authorities or corporate officers, including without limitation the following,
and all such documents and all proceedings to be taken in connection with such
transactions shall be reasonably satisfactory in form and substance to the Agent
and its special counsel:
(i) Certified copies of the resolutions of the Board of
Directors of each Borrower evidencing approval of this Agreement, the Security
Documents and the other matters contemplated hereby and certified copies of all
documents evidencing other necessary corporate action or approvals, if any, with
respect to this Agreement, the Security Documents and such other matters,
including, without limitation, any required approvals of governmental
authorities and other persons or entities.
(ii) A certificate, signed by the Secretary or Assistant
Secretary of each Borrower, setting forth the names of the officers of such
Borrower authorized to sign this Agreement, the Security Documents and any and
all certificates, notices and reports referred to herein; such certificate shall
contain the true signatures of such officers.
(iii) A copy of the By-laws of each Borrower, as amended to date,
as certified by its Secretary; certificates of corporate legal existence and
good standing for each Borrower (and each of its subsidiaries) issued as of a
recent date by the appropriate public officials of the State of Delaware and
other appropriate authorities, as the case may be.
(iv) Uniform Commercial Code financing statements and any such
other documents as shall be reasonably requested by the Banks to vest in the
Banks a first priority security interest in and to all of the Collateral subject
only to Permitted Liens.
-12-
(v) Such documents which, in the reasonable opinion of the
Banks or their special counsel, are required to be obtained in connection with
the Loans under the revolving line of credit by reason of the provisions of any
law or regulation applicable to the Banks (including, without limitation,
executed Forms U-1), and the statements made in such documents shall be such as,
in the opinion of the Banks, will permit such Loans in accordance with such laws
and regulations.
A certificate from the chief financial officer of each Borrower certifying that
as of the Closing Date each Borrower has paid all applicable material taxes then
due and owing or has duly obtained extensions with respect thereto.
(i) No Adverse Change. There shall have occurred no material adverse
-----------------
change in the business, properties or financial condition of the Borrowers on a
consolidated basis, since December 31, 1997.
(j) Closing Fee. At the Closing, the Borrowers shall have paid to the
-----------
Banks, or authorized the Agent to charge against their accounts, (i) the first
of twelve equal monthly installment payments, in the amount of $33,333.33, of
the aggregate closing fee of $400,000, which is to be distributed to the Banks
based upon their Proportionate Share; and (ii) an Agent's fee in the amount of
$25,000 each year during the Credit Facility.
(k) Legal Expenses. At the Closing, the Borrowers shall have paid to
--------------
the Banks, or authorized the Agent to charge against any of their accounts, all
reasonable costs and expenses (including reasonable legal fees and disbursements
of the Banks' special counsel) of the Banks in connection with the preparation
and execution of this Agreement and the Security Documents.
(l) Legal Opinion. All legal matters incident to this Agreement shall
-------------
be reasonably satisfactory to the Banks' special counsel, and the Bank shall
have received at the Closing the legal opinion of Xxxxxxx, Procter & Xxxx LLP,
counsel to the Borrowers, in form and substance reasonably satisfactory to the
Banks and their special counsel.
(m) Termination of Prior Credit Agreement. At the Closing, the
-------------------------------------
Borrowers shall have delivered to the Agent executed Uniform Commercial Code-3
termination statements terminating the security interests of BankBoston, N.A. in
and to the property and interests of Intirion Corporation and shall have taken
all other steps which the Agent may require to terminate the BankBoston-Intirion
Credit Agreement.
2.02. Conditions of Making Loans. The obligation of the Banks to make any
--------------------------
Loans or issue any Letters of Credit on or subsequent to the Closing Date is
subject to the satisfaction of the following conditions precedent on or before
the date of making each such Loan or issuing each such Letter of Credit (the
"Borrowing Date"):
(a) Representations and Warranties. The representations and
------------------------------
warranties contained in Article III hereof and in the Security Documents and
otherwise made by the Borrowers in writing in
-13-
connection with the transactions contemplated by this Agreement shall have been
correct in all material respects as of the date on which made and shall also be
correct in all material respects at and as of such Borrowing Date with the same
effect as if made at and as of such time, except as may have been disclosed in
writing to the Banks by the Borrowers and to which the Banks have consented in
writing and to the extent that the facts upon which such representations and
warranties are based may in the ordinary course be changed by the transactions
permitted or contemplated hereby.
(b) Performance. The Borrowers shall have performed and complied in
-----------
all material respects with all terms and conditions herein required to be
performed or complied with by it prior to or on such Borrowing Date, and on such
Borrowing Date there shall exist no Event of Default or condition which would,
with either or both the giving of notice or the lapse of time, result in an
Event of Default upon consummation of the subsequent Loan to be made or Letter
of Credit to be issued on such Borrowing Date.
Each request by the Borrowers for a Loan or the issuance of a Letter of Credit
subsequent to the Closing Date shall constitute certification by the Borrowers
that the conditions specified in this Section 2.02 will be duly satisfied on the
date of the making of such Loan or the issuance of such Letter of Credit.
-14-
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Borrowers incorporate herein all of the representations and warranties set
forth in the Security Documents. In addition, the Borrowers represent and
warrant, jointly and severally, to the Banks as follows:
3.01. Organization. Each Borrower is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware. Each
Borrower: (i) is duly qualified to do business and in good standing in each
jurisdiction where such qualification is required, except those jurisdictions
where the failure to so qualify will not have a Material Adverse Effect (a list
of the jurisdictions where each Borrower is so qualified as of the date hereof
being set forth on Schedule 3.01 hereto); (ii) and it has all requisite
-------------
corporate power and authority to conduct its business as presently being
conducted and as proposed to be conducted after the Closing and to own its
properties now and after the Closing; and (iii) and it has all requisite
corporate power and authority to execute and deliver, and to perform all of its
obligations under, this Agreement and the other Loan Documents.
3.02. Authority. The execution, delivery and performance by each Borrower
---------
of this Agreement and the other Loan Documents: (i) have been duly authorized
by all necessary corporate action; (ii) do not contravene any provision of such
Borrower's Certificate of Incorporation or by-laws, each as amended to date;
(iii) do not violate any provision of any law, rule or regulation or any
judgment, determination or award applicable to such Borrower; (iv) do not and
will not result in or constitute a default (or constitute an event which with
the passage of time or giving of notice or both could constitute an event of
default) under any agreement to which such Borrower is a party or by which any
of its properties are bound, including, without limitation, any loan or credit
agreement, lease, indenture, debt instrument or mortgage except as would not
have a Material Adverse Effect; and (v) do not and will not result in or require
the creation or imposition of any lien, security interest, mortgage, deed of
trust, pledge or other charge or encumbrance of any nature upon or with respect
to any of the properties of such Borrower, except the security interests and
liens granted to the Banks under the Security Documents. Each Borrower is not
in default in any material respect under any law, rule or regulation, order,
writ, judgment, injunction, decree, determination or award referred to above, or
to such Borrower's knowledge under any loan or credit agreement, lease,
indenture, debt instrument or mortgage referred to above, and such Borrower will
not be in any such default which would have a Material Adverse Effect by virtue
of the transactions to be entered into at the Closing.
3.03. Approvals. No authorization, consent, approval, license or exemption
---------
of, or filing a registration with, any court or governmental department or
commission, board, bureau, agency, instrumentality or other person or entity,
domestic or foreign, is or will be necessary for the valid execution, delivery
or performance by each Borrower of this Agreement or any of the other Loan
Documents, other than filings which have already been made and consents or
approvals which have already been received, and filings required to perfect
under applicable law the security interests and liens granted to the Banks
pursuant to the Security Documents. As of the date hereof, each Borrower is the
lawful holder of all material licenses, permits, certificates and other
governmental authorizations
-15-
required as of the date hereof for the conduct of the business of such Borrower.
No Borrower knows of any reason that any such material license, permit,
certificate or other governmental authorization will be revoked, canceled,
rescinded, terminated, modified or lost to the extent such revocation,
cancellation, rescission, termination, modification or loss would have a
Material Adverse Effect.
3.04. Valid Obligations. This Agreement and the other Loan Documents have
-----------------
been duly executed and delivered by each Borrower and constitute legal, valid
and binding obligations of such Borrower, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and except as enforceability may be
subject to general principles of equity, whether such principles are applied in
a court of equity or at law.
3.05. Security Interest. The Banks' security interests in the Collateral
-----------------
located in the jurisdictions of Massachusetts, Florida, California, Illinois,
and Connecticut has been duly perfected to the extent that such security
interests may be perfected in such jurisdictions by filing UCC-1 financing
statements with the Secretary of State of the Commonwealth of Massachusetts and
the Clerk of the City of Cambridge, Massachusetts and the Secretary of the State
of each of Florida, California, Illinois, and Connecticut. Except as set forth
on Schedule 3.05 hereto, no security interest, lien, mortgage, deed of trust,
-------------
pledge, levy, attachment, claim or other charge or encumbrance shall exist at
the Closing with respect to any of the assets or properties of any Borrower
(including, without limitation, the Collateral), other than the security
interests granted to the Banks under the Security Documents or Permitted Liens.
3.06. Assets. Each Borrower has good and valid title to all of its assets
------
and properties (including without limitation, the Collateral), in each case
subject to no security interests, lien, mortgage, pledge, lease, encumbrance,
charge, easement, or encroachment except for Permitted Liens and for defects and
claims which, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. Each Borrower enjoys peaceful and undisturbed
possession under all leases under which it is operating, and all said leases are
valid and subsisting and in full force and effect in all material respects.
Each Borrower's principal place of business is maintained at the designated
Principal Office at the location indicated in the preamble to this Agreement.
Attached as Schedule 3.06 is a complete list of all locations where each
-------------
Borrower keeps or maintains its assets, properties, books and/or records other
than equipment loaned or consigned to customers or prospective customers in the
ordinary course of such Borrower's business.
3.07. Agreements.
----------
(a) Attached as Schedule 3.07 hereto is a list of all material
-------------
agreements (including all amendments thereto), oral or written, in effect as of
the date hereof between each Borrower and any director, officer, shareholder or
Affiliated Person of such Borrower, including without limitation, all leases and
management, maintenance, brokerage, supply and service contracts and any
contract, agreement or other arrangement providing for the employment of,
furnishing of services to or by, rental of real or personal property to or from
or otherwise requiring payments to or by such Borrower, any director, officer or
shareholder thereof, or any affiliate of any of the foregoing. True, correct and
-16-
complete copies of all of the agreements (including all amendments, exhibits and
schedules thereto) set forth on Schedule 3.07 have previously been made
-------------
available to the Bank and its special counsel.
(b) Each Borrower is not in violation of any term of its charter or by-
laws, as now in effect, or of any material term of any mortgage, indenture,
judgment, decree, order, instrument, contract or agreement or, to its knowledge,
of any term of any statute, ordinance, administrative determination, or
governmental rule or regulation applicable to it where such violation would have
a Material Adverse Effect.
3.08. Insurance. Attached hereto as Schedule 3.08 is a complete and accurate
--------- -------------
list of all insurance policies of the Borrowers covering their respective
properties and assets as of the date hereof. Each Borrower has previously made
available or on the Closing Date shall make available to the Agent complete and
accurate copies of all insurance policies (or certificates of insurance) listed
on Schedule 3.08. All insurance policies listed on Schedule 3.08 are in full
------------- -------------
force and effect, with the premiums due thereon paid, and no Borrower is in
default with respect to any such policy.
3.09. Litigation; Claims. Except as set forth on Schedule 3.09 hereto, as of
------------------ -------------
the date hereof, there are no actions, suits, proceedings or investigations
pending or, to any Borrower's knowledge, threatened against any Borrower before
any court or any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which could prevent or hinder the
consummation of the transactions contemplated hereby or purport by its terms to
challenge the validity or enforceability of this Agreement, any of the other
Loan Documents or any action taken or to be taken in connection with the
transactions contemplated hereby or thereby, or which in any single case or in
the aggregate is likely to result in any Material Adverse Effect or any
material impairment of the right or ability of the Borrowers, on a consolidated
basis, to carry on their operations as now conducted or proposed to be
conducted.
3.10. Labor Matters. Each Borrower is not a party to any collective
-------------
bargaining or similar agreement on the date hereof and has complied in all
material respects with all applicable state and federal laws respecting
employment and employment practices, terms and conditions of employment, wages
and hours and other laws related to employment of employees of such Borrower,
and there are no arrears in the payment of wages, withholding or social security
taxes, unemployment insurance premiums or other similar obligations of such
Borrower other than in the ordinary course of business where such arrears would
have a Material Adverse Effect.
3.11. ERISA.
-----
(a) Each "employee pension benefit plan" and "employee welfare benefit
plan" of each Borrower has been maintained and operated in compliance in all
material respects with its terms and with applicable provisions of ERISA, the
Code, all regulations, rulings and other authority issued thereunder, and all
other applicable governmental laws and regulations, including without limitation
bonding requirements and requirements for the filing of applicable reports,
documents, and notices with the Secretary of Labor or the Secretary of the
Treasury and the furnishing of documents to the participants and beneficiaries
of each such plan (as each of the quoted terms is defined or used in ERISA, and
the
-17-
Code) except where the failure to be in compliance therewith would not have a
Material Adverse Effect.
(b) No "prohibited transaction" or "accumulated funding deficiency" or
"reportable event" has occurred with respect to any "single employer plan" of
such Borrower which would have a Material Adverse Effect. No Borrower,
predecessor to the Borrowers or "commonly controlled entity" has ever been
included in a "multiemployer plan" as to which such Borrower or any "commonly
controlled entity" would have liability if such Borrower or any "commonly
controlled entity" were to withdraw therefrom (as each of the quoted terms is
defined or used in ERISA and the Code) which would have a Material Adverse
Effect.
3.12. Financial Statements. Attached as Schedule 3.12 hereto are the audited
-------------------- -------------
consolidated financial statements of Xxx-Xxxx Corporation, including
consolidated balance sheets, statements of income and retained earnings and cash
flows (collectively, together with the financial statements to be delivered by
the Borrower pursuant to Section 2.01(f) hereof, the "Financial Statements") for
the fiscal year ended December 31, 1997 (the "Statement Dates"). The Financial
Statements are complete and accurate in all material respects and fairly present
the financial condition and results of operations of Xxx-Xxxx Corporation as of
the respective Statement Dates and for the fiscal year then ended, in accordance
with GAAP consistently applied. Xxx-Xxxx Corporation has no liability,
contingent or otherwise, not disclosed in the Financial Statements or in any
notes thereto that could reasonably be expected to have a Material Adverse
Effect. Since the last Statement Date there has not been, nor has there been an
event which is likely to cause, a Material Adverse Effect.
3.13. Taxes. Each Borrower has filed all federal, foreign state, local and
-----
other tax returns, reports and estimates which are required to be filed and has
paid all taxes, fees and other governmental charges shown on such returns,
reports and estimates and on all assessments received by it, to the extent that
such taxes have become due, except for any tax or assessment which is being
contested by such Borrower in good faith and by appropriate proceedings and such
Borrower has set aside on its books sufficient reserves with respect thereto or
with respect to which such Borrower has duly obtained an extension. All of such
tax returns are accurate and complete in all material respects. All other taxes
and assessments of any nature with respect to which such Borrower is obligated
and which have become due are being paid or adequate accruals have been set up
therefor. Each Borrower is not delinquent in the payment of any material tax,
assessment or governmental charge and except as set forth on Schedule 3.13
-------------
attached hereto such Borrower has not requested any extension of time within
which to file any tax return, which return has not since been filed, and no
deficiencies for any material tax, assessment or governmental charge have been
asserted or assessed, and such Borrower knows of no material liability or basis
therefor.
3.14. Investments. Except as set forth on Schedule 3.14, as of the date
----------- -------------
hereof, each Borrower does not own any securities or other equity or debt
interests in any corporation, partnership or other business entity.
3.15. Investment Company. Each Borrower is not an "investment company" (as
------------------
defined in the Investment Company Act of 1940, as amended).
-18-
3.16. Indebtedness. Attached as Schedule 3.16 hereto is a list of all
------------ -------------
material Indebtedness of the Borrowers as of the Closing Date indicating, as
applicable, the outstanding principal amount of each borrowing or debt, the
current amount due thereon, the terms and schedule for payments in respect
thereof and the security given therefor or in connection therewith.
3.17. Environmental Protection. Except as disclosed in Schedule 3.17,
------------------------ -------------
(a) To their knowledge, each Borrower has not caused or allowed the
generation, use, transportation, treatment, storage, release or disposal of any
Hazardous Substances (as defined below) in connection with the operations of its
business or otherwise, at any real property that such Borrower owns, leases, or
otherwise occupies or uses (the "Premises"), nor has such Borrower released,
disposed of or transported or contracted with any party for the disposal or
transport of any Hazardous Substances at sites other than the Premises, in each
such case except in compliance with all Environmental Laws (as defined below),
except where the failure to so comply results from a minor infraction which will
not give rise to the assessment of any fine or penalty against such Borrower or
the imposition of any lien against any of the properties or assets of such
Borrower, and which could not reasonably be expected to have a Material Adverse
Effect.
(b) To their knowledge, each Borrower has not received any citation,
directive, letter or other communication, written or oral, or any notice of any
proceedings, claims or lawsuits under any Environmental Laws (each an
"Environmental Complaint"), from any person, entity or governmental authority
arising out of the ownership, occupation, or conduct of its operations on the
Premises, nor is it aware of any basis therefor.
(c) Each Borrower has obtained and maintained in full force and effect
all necessary permits, licenses and approvals required by any Environmental Laws
applicable to the business operations conducted on the Premises and is in
compliance with all such permits, licenses and approvals, except where the
failure to so comply will not give rise to the imposition of any lien against
any of the properties or assets of such Borrower and which could not reasonably
be expected to have a Material Adverse Effect.
The term "Environmental Laws" shall mean any federal, foreign, state, local or
other law, ordinance or regulation pertaining to the protection of the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Sections 9601, et seq.,
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Sections 11001, et
seq., Massachusetts Oil and Hazardous Material Release Prevention and Response
Act, M.G.L. Chapter 21E, and Massachusetts Hazardous Waste Management Act,
M.G.L. Chapter 21C.
The term "Hazardous Substance" includes oil and petroleum products, asbestos,
polychlorinated biphenyls and urea formaldehyde, and any other materials
classified as hazardous or toxic under any Environmental Laws.
3.18. Margin Stock. Each Borrower is not engaged in the business of
------------
extending credit for the
-19-
purpose of purchasing or carrying margin stock (within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System), and no part of the
proceeds of the Note will be used to purchase or carry any margin security or to
extend credit to others for the purpose of purchasing or carrying any margin
security or in any other manner which would involve a violation of any of the
regulations of the Board of Governors of the Federal Reserve System.
3.19. Representations Accurate. No representation or warranty made by any
------------------------
Borrower herein or in any other Loan Document contains any misrepresentation of
a material fact or omits to state any material fact necessary to make such
representation or warranty not misleading when made. No Borrower has knowledge
of any condition specific to the business of the Borrowers, on a consolidated
basis, which would have a Materially Adverse Effect, or which is likely in the
future to have a Material Adverse Effect, and which has not been set forth in
this Agreement or in the other Loan Documents or otherwise disclosed in writing
to the Banks on or prior to the date hereof. Each Bank hereby acknowledges that
it has received from the Borrowers Xxx-Xxxx Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1997, its Proxy Statement relating
to the 1998 Annual Meeting of Shareholders, and Registration Statement on Form
S-1 (Registration Statement No. 333-49795), filed with the Securities and
Exchange Commission on April 9, 1998, as amended.
ARTICLE IV
COVENANTS
4.01. Affirmative Covenants Other Than Financial Covenants and Reporting
------------------------------------------------------------------
Requirements. Without limiting any other covenants and provisions hereof, each
-------------
Borrower covenants and agrees that, so long as the Note, any Loan or any
obligation of any Borrower to the Banks, in any capacity, remains unpaid or any
Letter of Credit remains outstanding:
(a) Property; Insurance. Each Borrower will keep all of its property
-------------------
reasonably necessary for the continued operation of its business in good working
order and condition, ordinary wear and tear excepted. Each Borrower will
maintain with financially sound and reputable insurance companies insurance
thereon in at least such amounts and with such deductibles and against at least
such risks (including hazard) as may be reasonably requested by the Banks from
time to time, and such Borrower will furnish to the Banks, upon its written
request, full information with respect to any insurance carried. All property
damage insurance policies maintained by such Borrower shall name the Agent as
loss payee as its interest may appear. No such policy may be terminated without
at least 20 days' prior written notice to the Agent.
(b) Maintain Rights. Each Borrower (and each Subsidiary ) will, except
---------------
in contemplation of any Permitted Acquisition:
(i) keep in full force and effect its corporate existence;
(ii) keep in full force and effect all material rights, licenses,
leases and
-20-
franchises reasonably necessary to the conduct of its business except for such
rights, licenses, leases and franchises the loss of which would not have a
Material Adverse Effect; provided that nothing in this Section 4.01(d)(ii) shall
prevent the abandonment or termination of any right, license, lease or
franchise, if such Borrower shall have determined that such abandonment or
termination is in the best interest of such Borrower and not disadvantageous to
the Banks; and
(iii) duly observe and conform to all applicable material laws,
statutes, regulations, decrees, judgments, orders, writs and other requirements
of all governmental authorities in any way relating to it or the conduct of its
business, except where the failure to so comply would not have a Material
Adverse Effect.
(c) Books and Records; Inspection. Each Borrower will (i) keep proper
-----------------------------
books of record and account in which entries therein are full, true and correct
in all material respects in conformity with GAAP and all requirements of law,
and (ii) permit representatives of any Bank to visit and inspect any of its
properties and to examine and make abstracts from any of its books of record and
account upon reasonable notice, at any reasonable time during normal business
hours and as often as may reasonably be desired, and to discuss the business,
operations, properties and financial condition of such Borrower with its
officers and with its independent certified public accountants.
(d) Operating Accounts. Each Borrower will maintain the Agent as its
------------------
principal bank of deposit and account.
(e) Conduct of Business. Each Borrower will conduct in the ordinary
-------------------
course the business in which they are presently engaged. The Borrowers will not
enter into any other lines of business, businesses or ventures which are not
related to their existing business.
(f) Financing Statements. Each Borrower, at its expense, shall
--------------------
execute, file and record all such further instruments, and perform such other
acts, as the Agent may reasonably determine are necessary or advisable to
maintain the priority of the liens and security interests in favor of the Banks
purported to be created by the Security Documents to which the Borrower is a
party on all property subject thereto.
4.02. Negative Covenants. Without limiting any other covenants and
------------------
provisions hereof, each Borrower covenants and agrees that, so long as any Note,
Loan, Letter of Credit or any obligation of any Borrower to the Banks, in any
capacity, has not been fully performed:
(a) Indebtedness. Each Borrower will not create, incur, assume,
------------
agree to purchase or repurchase or provide funds in respect of or otherwise
become or be or remain liable with respect to any Indebtedness of any type
whatsoever owed to any person or entity, except:
(i) with respect to (A) any Indebtedness incurred pursuant to the
terms of this Agreement or the Loan Documents or (B) any Indebtedness
outstanding on the date hereof and listed on Schedule 3.16 hereto and any
-------------
refinancing thereof;
-21-
(ii) Indebtedness of such Borrower for taxes, assessments and
governmental charges or levies, to the extent payment thereof shall not at the
time be required under this Agreement;
(iii) unsecured Current Liabilities of such Borrower (other than
for money borrowed or for the deferred purchase of property) incurred upon
customary terms in the ordinary course of business;
(iv) Indebtedness for capital leases in a maximum cumulative
aggregate amount not to exceed $4,000,000;
(v) Indebtedness for the purchase price of capital assets
incurred in the ordinary course of business, exclusive of capital assets and
indebtedness associated with capital leases referred to in Section 4.02 (a)(iv)
hereof, and any extensions or renewals thereof, provided that such Indebtedness
is either unsecured or secured only by the capital assets so purchased, and
provided further that the aggregate amount of such Indebtedness outstanding does
not exceed $2,000,000 in any twelve-month period;
(vi) guaranties permitted under this Agreement;
(vii) Indebtedness of one Borrower with respect to another
Borrower; and
(viii) Indebtedness of any acquired entity acquired as a
Permitted Acquisition.
(b) Liens. Each Borrower will not create, incur, assume or suffer to
-----
exist any security interest, lien, mortgage, deed of trust, pledge, levy,
attachment, claim or other charge or encumbrance of any nature whatsoever upon
or with respect to any of its property, assets or revenues, whether now owned or
hereafter acquired, or assign or otherwise convey any right to receive income,
except for the following ("Permitted Liens"):
(i) liens in favor of the Banks;
(ii) liens existing on the assets or properties of such Borrower
as of the date hereof and identified on Schedule 3.05 attached hereto and
-------------
liens to secure refinancing of existing Indebtedness to the extent such
Indebtedness is presently secured by liens;
(iii) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like liens arising in the ordinary course of
business in respect of obligations not overdue for a period of more than 60 days
or which are being contested in good faith by appropriate proceedings in a
manner which will not jeopardize or diminish the interest of the Banks in any of
the Collateral subject to the Security Documents;
(iv) liens arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, social security, retirement benefits
or similar legislation;
-22-
(v) liens for taxes or assessments or governmental charges or
levies (A) that are either not due and payable or (B) that are being contested
in good faith by appropriate proceedings, so long as the enforcement of such
lien is effectively stayed within fifteen days of its imposition;
(vi) liens or encumbrances securing capital leases permitted by
Section 4.02(a)(iv) or the purchase price of capital assets to the extent such
purchase is permitted by Section 4.02(a)(v) hereof, provided that (a) each such
lien or encumbrance is given solely to secure the purchase price of such
property, does not extend to any other property, and (b) the Indebtedness
secured thereby does not exceed the cost of such property;
(vii) attachments, seizures or levies aggregating less than
$500,000 and which remain undischarged for not longer than sixty (60) days after
filing unless the Borrower shall be proceeding diligently and in good faith to
obtain discharges thereof; and
(viii) liens existing at the time of acquisition on (A) assets
or properties acquired as a Permitted Acquisition and (B) assets or properties
of an entity acquired as a Permitted Acquisition, and encumbrances consisting of
easements, rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto, landlord's or
lessor's liens under leases to which the Borrowers or any of their Subsidiaries
is a party, and other minor liens or encumbrances none of which interferes
materially with the use of the property affected in the ordinary conduct of the
business of the Borrowers and their Subsidiaries, which defects do not
individually or in the aggregate have a Material Adverse Effect.
(c) Guaranties. Except as set forth on Schedule 4.02(c), each Borrower
----------
will not assume, guarantee, endorse or otherwise become directly or contingently
liable (including without limitation, liable by way of agreement, contingent or
otherwise, to purchase, to provide funds for payments, to supply funds to or
otherwise invest in any debtor or otherwise to assure any creditor against loss)
in connection with any Indebtedness of any other person or entity, except
guaranties by endorsement or similar transactions such as bid or performance
bonds in the ordinary course of business.
(d) Transfers. Except in the case of Permitted Acquisitions, each
---------
Borrower will not sell, lease, transfer or otherwise dispose of any material
portion of the Collateral or any other assets necessary for the effective or
efficient operation or proper maintenance of its business, except (i) for sales
of inventory and obsolete, returned, replaced or worn-out equipment in the
ordinary course of such Borrower's business; and (ii) transfers of Collateral by
and between Borrowers. Each Borrower will not waste or destroy or suffer the
waste or destruction of the Collateral or any material portion thereof; and such
Borrower will not use any of the Collateral in violation of any policy of
insurance thereon. Each Borrower will not sell, assign (other than an
assignment to the Banks), discount or dispose in any way of any Receivables with
or without recourse, except for an assignment for collection in ordinary course
of business.
(e) Mergers. Except in the case of Permitted Acquisitions, each
-------
Borrower will not enter into any transaction of merger (except with another
Borrower) or consolidation, or liquidate, wind up or
-23-
dissolve itself (or suffer any liquidation or dissolution); nor will such
Borrower acquire by purchase or otherwise, all or substantially all of the
business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any person or entity, without the prior written consent of the
Banks.
(f) Investments. Except in the case of Permitted Acquisitions, each
-----------
Borrower will not make or permit to exist any investments or loans, directly or
indirectly (in the form of any acquisition of assets other than in the ordinary
course of business or in the form of any acquisition of stock, securities,
indebtedness or obligation of, or any loan, advance, capital contribution or
transfer of property to, or any guarantee or other commitment on behalf of, any
person, or otherwise), other than:
(i) marketable direct full faith and credit obligations of, and
marketable obligations guaranteed by, the United States of America, or any
agency or instrumentality thereof, which mature within one year from the date of
acquisition thereof;
(ii) marketable direct full faith and credit obligations of any
state of the United States of America, or any county, city, town, township or
other governmental subdivision of any such state, which mature within one year
from the date of acquisition thereof, provided that such obligations are
accorded a rating within one of the three highest graded by Xxxxx'x Investors
Service, Inc. or Standard & Poor's Inc.;
(iii) certificates of deposit, notes, acceptance and repurchase
agreements having a maturity of not more than one year from the date of
acquisition issued by the Banks or by any bank organized in the United States
having capital, surplus and undivided profits of at least $10,000,000,000 and
interest-bearing accounts in the Banks or any such other bank;
(iv) commercial paper which has received one of the three highest
categories of ratings from either Xxxxx'x Investors Services, Inc. or Standard &
Poor's, Inc.;
(v) accounts in any "money market" mutual fund having total
assets in excess of $1,000,000,000;
(vi) advances to the officers, employees, and salesman of the
Borrower with respect to reasonable expenses incurred by such officers,
employees and salesmen which expenses are properly reimbursable by such
Borrower;
(vii) other loans and advances to the employees of such Borrower
which do not exceed $250,000 in the aggregate outstanding at any one time;
(viii) guarantees permitted by this Agreement;
(ix) contributions to the capital of and loans to one Borrower
from another Borrower; and
-24-
(x) investments of such Borrower existing on the date hereof and
identified on Schedule 3.14 hereto.
-------------
(g) Principal Office. Each Borrower will not move its Principal Office
----------------
until no less than ten days after delivery of written notice thereof to the
Agent, provided that such Borrower shall furnish to the Agent all documentation
that the Agent reasonably requests as being necessary or desirable to obtain,
maintain, perfect and confirm the first priority security interests granted
herein.
(h) Write Up of Assets. Each Borrower will not write up (by creating
------------------
an appraisal surplus or otherwise) the value of its assets above their cost to
such Borrower less the depreciation regularly allowable thereon, without the
prior written consent of the Agent, which shall not be unreasonably withheld.
(i) Dividends. No Borrower will declare, make or pay any dividend or
---------
other distribution on any shares of its capital stock (except dividends payable
solely in shares of capital stock or rights to acquire its capital stock), or
any payment on account of the purchase, redemption, retirement or acquisition of
any shares of its capital stock or any option or warrant therefor absent the
prior written consent of the Banks, provided, however, that it may repurchase or
redeem shares or options therefor from its employees upon termination of
employment as permitted under its 1997 Stock Option and Incentive Plan, and
provided further, that Xxx-Xxxx Corporation may declare, make or pay dividends
on shares of its capital stock in an amount not to exceed in any fiscal year,
fifty percent (50%) of the consolidated Net Income of Xxx-Xxxx Corporation for
its prior fiscal year, provided that such dividend(s) shall not cause an Event
of Default hereunder.
(j) Environmental Matters. Each Borrower will not store, transport,
---------------------
release or dispose of any Hazardous Materials on the Premises except in
compliance in all material respects with all Environmental Laws. Each Borrower
shall promptly after obtaining knowledge thereof provide the Agent with written
notice of each of the following: (i) any potential or known release or threat of
release of any Hazardous Material at or from the Premises, and (ii) any
incurrence of any expense or loss by any governmental authority in connection
with the assessment, containment or removal of any Hazardous Material for which
expense or loss the Borrower may be liable.
(k) ERISA. Each Borrower will not establish any new pension or defined
-----
benefit plan or materially modify any such existing plan for employees subject
to ERISA, which plan provides any benefits based on past service, without the
prior written consent of the Banks to the amount of the aggregate past service
liability thereby created.
(l) Waiver of Rights. Each Borrower will not waive any material debt
----------------
or claim, except in the ordinary course of its business.
(m) Sale Leaseback. Each Borrower will not enter into any sale
--------------
leaseback transaction without the prior written consent of the Bank, which shall
not be unreasonably withheld.
-25-
(n) Subsidiaries; Additional Security. Except as set forth on Schedule
---------------------------------
4.02(o) hereto, each Borrower will not become a member of any new partnership or
joint venture without the prior written consent of the Agent, which shall not be
unreasonably withheld. In the event that any Borrower organizes or acquires any
new Subsidiaries, each such new Subsidiary (whether wholly or partially owned)
will execute and deliver in favor of the Banks a Subsidiary Guaranty Agreement
and Subsidiary Security Agreement Substantially in the forms of those attached
as Exhibits D and E hereto, and the Borrowers will amend the Corporate Pledge
---------- -
Agreement, Substantially in the form of Exhibit C hereto, to include the capital
---------
stock of any such new Subsidiary or Subsidiaries. In the event that any
Borrower should sell, assign, lease or otherwise transfer any property or
properties material to its business to Mac-Gray Investments, Inc., then in such
event, the Borrowers shall cause Mac-Gray Investments, Inc. to execute the
Subsidiary Guaranty Agreement substantially in the form of Exhibit D hereto and
---------
the Subsidiary Security Agreement substantially in the form of Exhibit E hereto
---------
and deliver such documents to the Agent.
(o) Agreements with Affiliated Person. Except as set forth on Schedule
---------------------------------
3.07, each Borrower shall not enter into any material agreement of any nature
whatsoever with any director, executive officer, or Affiliated Person of such
Borrower, including without limitation any agreement which constitutes or
effects a material modification of any agreement to which such Borrower is a
party as of the date hereof, other than in the ordinary course of its business
unless such agreement is on terms and conditions that are not substantially less
favorable than those that such Borrower could obtain from an unrelated third
party at such time.
(p) Regulatory Compliance. Xxx-Xxxx Corporation shall at all times
---------------------
remain and shall take all reasonable steps necessary to remain in good standing
and not in violation in any material respect of any statute, provision or
regulation promulgated by the Federal Trade Commission, the Securities and
Exchange Commission or the New York Stock Exchange to the extent applicable to
Xxx-Xxxx Corporation.
4.03. Financial Covenants. Without limiting any other covenants and
-------------------
provisions hereof, each Borrower covenants and agrees that, so long as any Loan
or Letter of Credit is outstanding or any obligation of any Borrower to the
Banks, in any capacity, remains unpaid:
(a) Maximum Senior Leverage. The Borrowers, on a consolidated basis,
-----------------------
shall maintain at all times a ratio of Senior Liabilities to EBITDA, measured as
of the end of each fiscal quarter for the prior four consecutive fiscal quarters
then completed of the Borrowers, of not more than 3.5:1 declining to 3.25:1 as
of December 31, 2001 and for all periods thereafter.
(b) Minimum Shareholders Equity. The Borrowers, on a consolidated
---------------------------
basis and measured as of the end of each fiscal quarter within each fiscal year,
shall obtain a Minimum Shareholders Equity of $47,000,000 increasing as of the
end of the first fiscal quarter of each fiscal year by (i) fifty percent (50%)
of positive Net Income for the prior fiscal year; and (ii) one hundred percent
(100%) of net proceeds, if any, of securities issued or sold by the Borrowers
during the prior fiscal year.
-26-
(c) Maximum Capital Expenditures. The aggregate Capital Expenditures
----------------------------
of the Borrowers, on a consolidated basis, for each of the fiscal years
beginning with fiscal year 1998, during the term of this Agreement, shall not
exceed $25,000.000.
(d) Minimum Fixed Charge Coverage Ratio. Borrowers will achieve on an
------------------------------------
annualized and consolidated basis, tested on the last day of each fiscal quarter
of the Borrowers (each a "Determination Date") a ratio of (x) EBITA minus taxes
actually paid in cash for the prior four consecutive fiscal quarters then
completed to (y) the sum of all scheduled principal payments (for the subsequent
twelve month period) plus all interest (for the prior twelve month period) on
any Indebtedness paid or payable by the Borrowers during such period, which
ratio shall not be less than:
Quarters During
Fiscal Year Ratio
--------------- -----
1998 .................................... 2.40:1
1999 .................................... 1.85:1
2000 .................................... 1.85:1
2001 .................................... 1.50:1
2002 .................................... 1.30:1
(e) Current Ratio. On the last day of each fiscal quarter of the
-------------
Borrowers (each a "Determination Date"), Borrowers will have on a consolidated
basis, a ratio of (x) Current Assets to (y) Current Liabilities (minus the
aggregate amount of Loans outstanding hereunder) of not less than 1.1:1.
4.04. Reporting Requirements. So long as any Loan or Letter of Credit shall
-----------------------
be outstanding or any other obligation of any Borrower to the Banks, in any
capacity, shall remain unpaid, each Borrower shall furnish to each Bank the
following reports and information:
(a) Financial Reports. Each Borrower will furnish to each Bank:
-----------------
(i) as soon as available, but in any event within 90 days after
the end of each fiscal year of Xxx-Xxxx Corporation, a copy of the audited
consolidated balance sheet of Xxx-Xxxx Corporation as at the end of such fiscal
year and the related audited consolidated statements of income, stockholders'
equity and cash flows for such fiscal year, in each case setting forth in
comparative form the figures for the previous year, reported on without
exception or qualification as to the scope of the audit by Price Waterhouse or
other independent certified public accountants of nationally recognized standing
or otherwise reasonably acceptable to the Bank, together with any letter from
the management of the Borrower prepared in connection with such Borrower's
annual audit report;
(ii) as soon as available, but in any event within 45 days after
the end of each month, copies of the unaudited consolidated balance sheet of
Xxx-Xxxx Corporation as at the end of such quarter, together with the related
unaudited consolidated statement of income for such quarter and for the
-27-
portion of the fiscal year of Xxx-Xxxx Corporation through such quarter; all
such financial statements to be complete and correct in all material respects
and prepared in reasonable detail and in conformity with GAAP applied
consistently throughout the periods reflected therein;
(iii) as soon as available, but in any event within 45 days after
the beginning of each fiscal year of Xxx-Xxxx Corporation, a budget for such
fiscal year, together with a projected consolidated and unaudited consolidating
balance sheet, projected consolidated cash flow statement and projected
consolidated profit and loss statement of Xxx-Xxxx Corporation for the
forthcoming fiscal year, in all cases setting forth such financial information
on a month by month basis for such forthcoming fiscal year provided that the
Banks covenant and agree to keep and hold all such budgets and other information
delivered under this Section 4.04(a)(iii) confidential and to share the same
only with their respective employees or agents, who shall also agree to keep all
such information confidential; and
(iv) On or before June 30, 1998, the Borrowers shall deliver the
unaudited consolidated financial statements of Xxx-Xxxx Corporation, including
consolidated balance sheets, statements of income, and retained earnings and
cash flows (the "Financial Statements") for the fiscal quarter ended March 31,
1998.
(b) Other Financial Reports. Xxx-Xxxx Corporation will also furnish to
-----------------------
each Bank :
(i) concurrently with the delivery of each set of the quarterly
financial statements referred to above, a certificate of the Chief Financial
Officer of Xxx-Xxxx Corporation stating that, to the best of such person's
knowledge, during the period covered by such set of financial statements each
Borrower has observed or performed in all material respects all of its covenants
and agreements contained in this Agreement and the other Loan Documents to be
observed, performed or satisfied by it, and that such Chief Financial Officer
has obtained no knowledge of any default or Event of Default (except as
specified in such certificate);
(ii) promptly after the same are sent and received, copies of all
financial statements, reports and notices which such Borrower sends to holders
of any class of capital stock of such Borrower generally;
(iii) promptly, such additional publicly available financial and
other information as the Bank may from time to time reasonably request; and
(iv) as soon as available, a copy of each other report submitted
to such Borrower by its certified public accountants in connection with any
annual, interim or special audit made by them of the books of such Borrower.
(c) Notices. Each Borrower will give notice to the Agent, within
-------
fifteen days of knowledge thereof, of:
-28-
(i) the occurrence of any Event of Default under this Agreement;
(ii) any default or event of default under any other contractual
obligations of any Borrower which, if not paid or remedied by such Borrower
within 30 days of such default or event of default or waived by the obligee
thereon, could result in liability to such Borrower in excess of $200,000 in any
single instance or $750,000 in the aggregate;
(iii) any pending or threatened litigation, investigation or
proceeding of which any Borrower has knowledge which may exist at any time
between any Borrower and any other party (including without limitation any
governmental authority) which may have a material adverse effect on the
business, operations, property or financial condition of the Borrowers, on a
consolidated basis, or any litigation or proceeding affecting any Borrower which
may have a material adverse effect upon the Borrowers, on a consolidated basis;
(iv) the following events, as soon as possible and in any event
within 15 days after any Borrower knows thereof: (x) the occurrence of any
"reportable event" with respect to any "single employer plan" which in the
reasonable judgment of any Borrower could be expected to have a material adverse
effect on any Borrower or its business, (y) the institution of proceedings or
the taking or expected taking of any other action by any Borrower or any
"commonly controlled entity" to terminate any "single employer plan" with
respect to which there exists any vested unfunded pension liabilities at the
time of such termination, or (z) the "reorganization" or "insolvency" of any
"multiemployer plan" which may reasonably be expected to have a material adverse
effect on the business, operations, property or financial condition of the
Borrowers, on a consolidated basis, (as each of the quoted terms is defined or
used in ERISA or the Code);
(v) a material adverse change in the business, operations,
property or financial condition of any Borrower;
(vi) the revocation, expiration or loss of any material license,
permit or other governmental authorization of any Borrower which would have a
material adverse effect on any Borrowers' consolidated business or financial
condition;
(vii) the issuance, grant or award to or on behalf of any Borrower
of any patent or letters patent, or the registration in the name of or on behalf
of any Borrower of any copyright, trademark trade name or any other form of
intellectual property whatsoever, or the filing, recording or approval of any
application by or on behalf of any Borrower for any of the foregoing; and
(viii) each notice pursuant to paragraphs (i) through (vii) of
this Section 4.04 to be accompanied by a statement of the chief financial
officer of any Borrower setting forth details of the occurrence referred to
therein and stating what action, if any, any Borrower proposes to take with
respect thereto.
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ARTICLE V
EVENTS OF DEFAULT; REMEDIES
5.01. Events of Default. The occurrence of each of the following shall
-----------------
constitute an Event of Default under this Agreement and under the Security
Documents:
(a) Representations and Warranties. Any representation or warranty made
------------------------------
by any Borrower in this Agreement or in any other Loan Document shall prove to
have been incorrect in any material respect when made, or any information
furnished in writing, whether in this Agreement or in any other Loan Document
shall prove to be untrue in any material respect on the date on which it is or
was given.
(b) Covenants. Any Borrower shall fail to perform or observe any
---------
covenant or condition contained or referred to in this Agreement, including
without limitation the failure to make any payment of principal or interest on
the Note when due or any payment of the Commitment Fee hereunder when due;
provided, however, that any failure to perform under any of Sections 4.01(b),
(c), (d), (e), (f), 4.02 (b) (with respect to involuntary encumbrances only),
4.02(k), , 4.02(a), 4.02(g), 4.02(o), 4.02(p) and 4.04 hereof shall not
constitute an Event of Default under this Agreement until such failure shall
have continued uncured for thirty days.
(c) Security Documents. Any default or event of default shall occur
------------------
under any of the Security Documents, which default or event of default is not
otherwise described in this Section 5.01 and is continuing for thirty (30) days.
(d) Other Defaults. Any default shall exist and remain unwaived or
--------------
uncured for a period of thirty days or more with respect to Indebtedness of any
Borrower in excess of $400,000 in the aggregate, or any event occurs which
permits the acceleration of the maturity of any such Indebtedness.
(e) Displacement of Management. There shall occur any seizure, vesting
--------------------------
or intervention by or under the authority of a governmental authority or other
entity by which the management of any Borrower is displaced or its authority in
the conduct of its business is materially curtailed.
(f) Liens. Any involuntary lien, levy or assessment (other than a
-----
Permitted Lien) is filed or recorded with respect to the assets of any Borrower
which causes or is likely to cause a Material Adverse Effect and is not
released, canceled, revoked, removed, repealed or otherwise terminated within
thirty (30) days after such filing or recording.
(g) Seizure of Assets. Any material portion of the Collateral becomes
-----------------
the subject of an attachment or comes within the lawful possession of any
receiver, trustee, custodian or assignee for the benefit of creditors.
(h) Judgments. Any judgment, order or writ in excess of $500,000 is
---------
rendered or entered against any Borrower and not paid, satisfied or otherwise
discharged within 90 days of the date
-30-
such judgment, order or writ becomes final and non-appealable.
(i) Insolvency. Any Borrower shall be generally unable to pay its debts
----------
as they become due; the dissolution, termination of existence, cessation of
normal business operations or insolvency of any Borrower; the appointment of a
receiver of any material part of the property of, legal or equitable assignment,
conveyance or transfer of property for the benefit of creditors by, or the
commencement of any proceedings under any bankruptcy or insolvency laws by or
against, any Borrower, provided that any Borrower shall have 45 days after the
commencement thereof to obtain a dismissal or stay of any involuntary
proceedings against such Borrower under any bankruptcy laws.
(j) Loss; Material Adverse Effect. The Borrowers, on a consolidated
-----------------------------
basis, shall suffer a Material Adverse Effect or an event likely to cause a
Material Adverse Effect.
(k) ERISA. Any Borrower shall fail to meet its minimum funding
-----
requirements under ERISA with respect to any employee benefit plan (or other
class of benefit which the Pension Benefit Guaranty Corporation has elected to
insure) or any such plan shall be the subject of termination proceedings
(whether voluntary of involuntary) and there shall result from such termination
proceedings a liability of such Borrower to the Pension Benefit Guaranty
Corporation which in the reasonable opinion of the Bank has material adverse
effect upon the business, operations or financial condition of any Borrower.
(l) Security Interest. The security interest and lien of the Banks in
-----------------
and on any material portion of the Collateral located in Massachusetts,
Connecticut, Florida, California, and Illinois shall not be in full force and
effect as a fully perfected first priority lien except as otherwise expressly
permitted herein or in the Security Agreement.
5.02. Remedies. Upon the occurrence of any Event of Default and at any time
--------
thereafter so long as such Event of Default continues uncured or unwaived, in
addition to any other rights and remedies available to the Agent on behalf of
the Banks hereunder or otherwise, the Agent on behalf of the Banks may exercise
any one or more of the following rights and remedies (all of which shall be
cumulative):
(a) Declare the entire unpaid principal amount of the Note then
outstanding, all interest accrued and unpaid thereon and all other amounts
payable under this Agreement, and all other Indebtedness of the Borrower to the
Banks, forthwith due and payable, whereupon the same shall become forthwith due
and payable, without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived by the Borrower.
(b) Terminate the revolving line of credit established by Section 1.01
of this Agreement.
(c) Exercise all of the rights and remedies of a secured party under the
Uniform Commercial Code. The Agent may enter upon the Premises or any of same
and may take physical possession of the Collateral or render the Collateral
unusable by process of law or peaceably without process of law. Each Borrower
shall peaceably surrender the Collateral and shall upon the request from
-31-
the Agent assemble it and make it available to the Agent at a place or places
designated by the Agent which is or are reasonably convenient to such Borrower
and the Agent. To the extent permitted by law, the Agent may maintain possession
of any Collateral on any property owned, leased by or licensed to such Borrower,
or remove same or any part thereof to such place or places as the Bank may
elect. The Borrowers will also deliver to the Agent upon request all documents
of title and other instruments relating to the Collateral. Each Borrower waives
all rights which it would otherwise have had under law to prohibit entry to any
premises or to require notice of any replevin or retaking, all to the extent
that the same is permitted by law. The Agent may with only such demand,
advertising or notice as may be required by law, sell and deliver any and all
Collateral held by it for its account at any time or times in one or more
private or public sales, for cash or credit or otherwise, at such price and upon
such terms as the Agent deems advisable in its sole discretion. Notice of any
public sale shall be sufficient if it describes the Collateral to be sold in
general terms, stating the amounts thereof and the location and nature of the
properties covered by the security interests and the prior liens thereon, and is
published, at least once, not less than ten (10) days prior to the sale in any
newspaper of general circulation in the greater Boston, Massachusetts
metropolitan area and such other metropolitan area which the Agent may elect.
All requirements of reasonable notice to the Borrowers shall be met if such
notice is sent to the Borrower, in the manner provided in this Agreement below,
at least ten (10) days before the time of such sale or disposition. The Banks
may be the purchasers at any such sale, if it is public, free from any right of
redemption. The proceeds of sale shall be applied first to the costs of
retaking, refurbishing, storing and selling any Collateral hereunder and to
other costs of collection, and then to the payment of obligations of the
Borrowers to the Banks. The Banks shall be entitled to apply any collections on
account of the Note first to reasonable fees, costs and charges accrued to the
date of receipt, next to accrued interest and only thereafter to principal. Any
excess shall be returned to the Borrowers, and the Borrowers shall remain
jointly and severally liable for any deficiency.
(d) Enforce the provisions of this Agreement by appropriate legal
proceedings, and the Banks may recover damages caused by any breach by any
Borrower of the provisions of this Agreement, including court costs, reasonable
attorneys' fees and other reasonable costs and expenses incurred in the
enforcement of the obligations of any Borrower hereunder.
(e) Exercise all rights and remedies hereunder, under each of the other
Loan Documents and under any other agreement with the Banks; and exercise all
other rights and remedies which the Banks may have under applicable law.
(f) Notwithstanding anything to the contrary contained herein, upon the
occurrence of an Event of Default, described in Section 5.01(i) hereof, the
entire unpaid principal amount of the Note then outstanding, together with all
interest accrued and unpaid on all such amounts, and all other amounts payable
under this Agreement, shall be immediately due and payable without presentment,
demand, protest, or notice of any kind.
5.03. Set-off. In addition to any rights now or hereafter granted under
-------
applicable law and not by way of limitation of any rights, upon the occurrence
and continuance of any Default by any Borrower, the Banks are hereby authorized
at any time or from time to time, without presentment, demand, protest
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or other notice of any kind to any Borrower or to any other person or entity,
all of which are hereby expressly waived, to set off and to appropriate and
apply any and all deposits and any other Indebtedness at any time held or owing
by either Bank to or for the credit or the account of any Borrower against and
on account of the obligations and liabilities of any Borrower to either Bank
under this Agreement or otherwise, irrespective of whether or not the Bank shall
have made any demand hereunder and although said obligations, liabilities or
claims, or any of them, may then be contingent or unmatured and without regard
for the availability or adequacy of other Collateral. Each Borrower also grants
to the Banks a security interest in and to all its deposits and all securities
or other property in the possession of the Banks from time to time, to secure
the prompt and full payment and performance of any and all obligations to the
Banks, and, upon the occurrence of any Event of Default, the Banks may exercise
all rights and remedies of a secured party under the Uniform Commercial Code.
ARTICLE VI
AGENCY
6.01. Authorization of Agent and Relationship. Each Bank hereby appoints
---------------------------------------
State Street Bank and Trust Company as Agent and State Street Bank and Trust
Company hereby accepts such appointment. The appointment may only be terminated
as expressly provided in this Agreement. Each Bank hereby authorizes the Agent
to take all action on its behalf and to exercise such powers and perform such
duties under this Agreement as are expressly delegated to the Agent by its
terms, together with all powers reasonably incidental hereto. The Agent shall
have only those duties and responsibilities which are of a solely mechanical and
administrative nature and which are expressly specified in this Agreement, and
it may perform such duties by or through its agents or employees, but shall not
by reason of this Agreement have a fiduciary duty in respect of any Bank. As to
any matters not expressly provided for by this Agreement, the Agent is not
required to exercise any discretion or to take any action, but is required to
act or to refrain from acting (and is fully protected in so acting or refraining
from acting) upon the instructions of the Banks, as the case may be. Those
instructions shall be binding upon all Banks, but the Agent is not required to
take any action which exposes the Agent to personal liability or which is
contrary to this Agreement or applicable law.
Without limiting the foregoing, each of the Banks hereby grants to the Agent a
power of attorney, and also grants to the Agent the right to delegate its
authority as attorney to any other person, whether or not an officer or employee
of the Agent.
6.02. Disclaimer of Agent. The Agent makes no representation or warranty,
-------------------
and assumes no responsibility with respect to the due execution, legality,
validity, sufficiency, enforceability or collectibility of this Agreement or any
other Security Document. The Agent assumes no responsibility for the financial
condition of the Borrower, or for the performance of the obligations of the
Borrower under this Agreement or any other Security Document. The Agent assumes
no responsibility with respect to the accuracy, authenticity, legality,
validity, sufficiency or enforceability of any documents, papers, materials or
other information furnished by the Borrower to the Agent on behalf of the Banks.
The Agent shall not be required to ascertain or inquire as to the performance or
observance of any of the
-33-
terms, conditions, provisions, covenants or agreements contained herein or as to
the use of the proceeds of the Loans or (unless the officers or employees of the
Agent acting in their capacity as officers or employees on the Borrower's
accounts have actual knowledge thereof, or have been notified thereof in writing
by the Borrower) of the existence or possible existence of any Event of Default.
Neither the Agent nor any of its directors, officers, agents or employees shall
be liable for any action taken or omitted to be taken by it or them as Agent
under or in connection with the Agreement except for its or their own negligence
or willful misconduct. The Agent shall have the same rights and powers hereunder
as any other Bank, and may exercise the same as though it were not performing
the duties and functions delegated to it as Agent hereunder.
6.03. Bank's Funding Obligations.
---------------------------
(a) Each Bank shall advance to the Agent prior to 12:00 p.m. (Boston
time), in immediately-available funds, such Bank's Proportionate Share in the
portion of the Loan to be advanced by the Agent. If such funds are not received
at such time, but all applicable conditions set forth in Article I hereof have
been satisfied, each Bank authorizes and requests the Agent to advance for the
Bank's account, pursuant to the terms hereof, the Bank's respective
Proportionate Share in such portion of the Loan and agrees to reimburse the
Agent in immediately-available funds for the amount thereof prior to 2:00 p.m.
(Boston time) on the day any portion of the Loan is advanced hereunder;
provided, however, that the Agent is not authorized to make any such advance for
the account of any Bank who has previously notified the Agent in writing that
such Bank will not be performing its obligations to make further advances
hereunder; and provided, further, that the Agent shall be under no obligation to
make any such advance.
(b) Unless the Agent has actual knowledge that a Bank has not made or
will not make available to the Agent the applicable loan amount required from
such Bank, the Agent shall be entitled to assume that such amount has been or
will be received from such Bank when so due and the Agent may (but shall not be
obligated to), in reliance upon such assumption, make available to the Borrower
a corresponding amount. If such amount is not in fact received by the Agent
from such Bank and the Agent has made available a corresponding loan amount to
the Borrower as aforesaid, such Bank shall pay to the Agent on demand an amount
equal to the product of (i) the Prime Rate per annum multiplied by (ii) the
amount that should have been paid to the Agent by such Bank on such Loan Date
and was not, multiplied by (iii) a fraction, the numerator of which is the
number of days that have elapsed from and including such Loan Date to but
excluding the date on which the amount is received by the Agent from such Bank
and the denominator of which is 360. A certificate of the Agent containing
details of the amount owing by a Bank under this Section shall be binding and
conclusive in the absence of manifest error.
(c) Notwithstanding the provisions of Section 6.03(b), if any Bank fails
to make available to the Agent its Proportionate Share of any Loan (such Bank
being herein called the "Defaulting Bank"), the Agent shall forthwith give
notice of such failure by the Defaulting Bank to the Borrower and the other
Banks. The Agent shall then forthwith give notice to the other Banks that any
Bank may make available to the Agent all or any portion of the Defaulting Bank's
Proportionate Share of
-34-
such Loan in the place of the Defaulting Bank, but in no way shall any other
Bank or the Agent be obligated to do so. If more than one Bank gives notice that
it is prepared to make funds available in the place of a Defaulting Bank in such
circumstances and the aggregate of the funds which such Banks (herein
collectively called the "Contributing Banks") and individually called the
"Contributing Bank") are prepared to make available exceeds the amount of the
Loan which the Defaulting Bank failed to make, then each Contributing Bank shall
be deemed to have given notice that it is prepared to make available its
Proportionate Share of such Loan based on the Contributing Banks' relative
commitments to advance in such circumstances. If any Contributing Bank makes
funds available in the place of a Defaulting Bank in such circumstances, then
the Defaulting Bank shall pay to any Contributing Bank making the funds
available in its place, forthwith on demand, any amount advanced on its behalf
together with interest thereon at the rate applicable to such Loan from the date
of advance to the date of payment, against payment by the Contributing Bank
making the funds available of all interest received in respect of the Loan from
the Borrower. The failure of any Bank to make available to the Agent its
Proportionate Share of any Loan as required herein shall not relieve any other
Bank of its obligations to make available to the Agent is Proportionate Share of
any Loan as required herein.
6.04. Payments by the Borrowers. All payments (except the Agent's fees) made
-------------------------
by or on behalf of the Borrowers pursuant to this Agreement shall be made to and
received by the Agent and shall be distributed by the Agent to the Banks as soon
as possible upon receipt by the Agent and in any event within five (5) business
days of receipt. Subject to Section 6.05, the Agent shall distribute:
(a) payments of interest in accordance with each Bank's Proportionate
Share of the Loans;
(b) repayments of principal in accordance with each Bank's Proportionate
Share of the Loans; or
(c) all other payments received by the Agent (except the Agent's fees)
including, without limitation, amounts received upon the realization of
Collateral, in accordance with each Bank's Proportionate Share of the Loans
provided, however, that with respect to proceeds of realization, no Bank shall
receive an amount in excess of the amounts owing to it in respect of the
Obligations.
6.05. Payments by Agent. The following provisions shall apply to any and all
-----------------
payments made by the Agent to the Banks hereunder:
(a) the Agent shall be under no obligation to make any payment (whether
in respect of principal, interest, fees or otherwise) to any Bank until an
amount in respect of such payment has been received by the Agent from the
Borrowers;
(b) If the Agent receives less than the full amount of any payment of
principal, interest, fees or other amount owing by the Borrowers under this
Agreement, the Agent shall have no obligation to remit to each Bank any amount
other than such Bank's Proportionate Share of that amount which is the amount
actually received by the Agent;
-35-
(c) if any Bank advances more or less than its Proportionate Share of
the Loans, such Bank's entitlement to such payment shall be increased or
reduced, as the case may be, in proportion to the amount actually advanced by
such Bank;
(d) the Agent acting reasonably in good faith shall, after consultation
with the Banks in the case of any dispute, determine in all cases the amount of
all payments to which each Bank is entitled and such determination shall, in the
absence of manifest effort, be binding and conclusive; and
(e) upon request, the Agent shall deliver a statement detailing any of
the payments to the Banks referred to herein.
Unless the Agent has actual knowledge that the Borrowers have not made or will
not make a payment to the Agent for value on the date in respect of which such
Borrower has notified the Agent that the payment will be made, the Agent shall
be entitled to assume that such payment has been or will be received from such
Borrower when due and the Agent may (but shall not be obliged to), in reliance
upon such assumption, pay the Banks corresponding amounts. If the payment by
such Borrower is in fact not received by the Agent on the required date and the
Agent has made available corresponding amounts to the Banks, the Borrowers
shall, without limiting their other obligations under this Agreement, indemnify
the Agent against any and liabilities, obligations, losses, damages, penalties,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on or incurred by the Agent as a result. A certificate of the Agent
with respect to any amount owing by any Borrower under this Section shall be
prima facie evidence of the amount owing in the absence of manifest error.
6.06. Direct Payments. The Banks agree among themselves that, except as
---------------
otherwise provided for in this Agreement, all sums received by a Bank relating
to this Agreement by virtue of the Collateral, whether received by voluntary
payment, by the exercise of the right of set-off or compensation or by
counterclaim, cross-action or as proceeds of realization of any Collateral or
otherwise, shall be shared by each Bank in its Proportionate Share under the
Loans and each Bank undertakes to do all such things as may be reasonable
required to give full effect to this Section, including without limitation, the
purchase from other Banks of such notes or a portion thereof by the Bank who has
received an amount in excess of the Proportionate Share under the Loans as shall
be necessary to cause such purchasing Bank to share the excess amount ratably in
its Proportionate Share under the Loans with the other Banks. If any such which
is so shares is later recovered from the Banks who originally received it, the
Bank shall restore its Proportionate Share under the Loans of such sum to such
Banks, without interest. If any Bank (a "Receiving Bank") shall obtain any
payment of monies due under this Agreement as referred to above, the Receiving
Bank shall forthwith remit such payment to the Agent and, upon receipt, the
Agent shall distribute such payment in accordance with the provisions of Section
6.05.
6.07. Administration of the Loans. The Agent may take the following actions
---------------------------
upon notice to the Banks, unless otherwise specified in this Agreement:
(a) subject to Section 6.08, exercise any and all rights of approval
conferred upon the Banks by this Agreement;
-36-
(b) give prompt and timely written notice to the Borrowers in respect of
any amounts due or overdue under the terms of this Agreement and of any other
matter in respect of which notice may be required, permitted, necessary or
desirable in accordance with or pursuant to this Agreement;
(c) amend, modify or waive any of the terms of this Agreement (including
waiver of an Event of Default) if such amendment, modification or waiver is
approved in advance by the Banks (including the Agent) holding at least two-
thirds in dollar amount of the combined total commitment to fund Loans hereunder
and if such action is not otherwise provided for in Section 6.08;
(d) engage a professional as permitted by Section 6.10(a);
(e) decide to accelerate the amounts outstanding under this Agreement or
the Security Documents as permitted thereby; and
(f) pay insurance premiums, taxes and any other sums as may be
reasonably required to protect the interests of the Banks.
6.08. Unanimous Consent of Banks. The Agent may take the following actions
--------------------------
only if the prior unanimous consent of the Banks is obtained, unless otherwise
specified herein:
(a) amend, modify, discharge, terminate or waive any of the terms of
this Agreement or the Security Documents if such amendment, modification,
discharge, termination or waiver would have a material adverse effect on the
Collateral or on the rights of the Banks under this Agreement or the Security
Agreement;
(b) amend, modify, discharge, terminate or waive any of the term of this
Agreement if such amendment, modification, discharge, termination or waiver
would increase the amount of a Loan, amend the purpose of a Loan, reduce the
interest rate applicable to a Loan, reduce the fees payable with respect to a
Loan, extend any date fixed for payment of principal or interest relating to a
Loan or extend the Maturity Date of the Loan;
(c) amend Section 6.08; and
(d) declare an Event of Default or take action to enforce performance of
the Obligations of the Borrower and to realize upon the Collateral including the
appointment of a receiver, lease or sale given by the Security Agreement or by
law and take foreclosure proceedings and/or pursue any other legal remedy
necessary provided, however, that in the event the Banks are unable to agree
-------- -------
unanimously upon any of the foregoing actions, either Bank, fifteen days
subsequent to such Bank's notification to all other Banks of such Bank's
intention to so act, may, subject to all applicable provisions to this Agreement
or, any of the Security Documents, proceed unilaterally with any of the items
described in this Section 6.08 absent the unanimous consent of the Banks.
6.09. Reliance by Borrowers. As between the Borrowers, on the one hand, and
---------------------
the Agent and the
-37-
Banks, on the other hand:
(a) all statements, certificates, consents and other documents which the
Agent purports to deliver on behalf of the Banks shall be binding on each of the
Banks, and the Borrower shall not be required to ascertain or confirm the
authority of the Agent in delivering such documents;
(b) all certificates, statements, notices and other documents which are
delivered by the Borrower to the Agent in accordance with this Agreement shall
be deemed to have been duly delivered to each of the Banks;
(c) all payments which are delivered by the Borrower to the Agent in
accordance with this Agreement shall be deemed to have been duly delivered to
each of the Banks;
(d) unless an Event of Default has occurred and is continuing, the
Borrower's consent to the appointment of any Successor Agent must be obtained,
but the Borrower's consent shall not be unreasonably withheld.
6.10. Rights of Agent.
---------------
(a) In administering the Loans, the Agent may retain, at the expense of
the Banks if such expenses are not recoverable from the Borrowers, such counsel,
auditors and other experts and agents as the Agent may select, in its sole
discretion, acting reasonably and in good faith after consultation with the
Banks.
(b) The Agent shall be entitled to rely on any communication, instrument
or document believed by it to be genuine and correct and to have been signed by
the proper individual or individuals, and shall be entitled to rely and shall be
protected in relying as to legal matters upon opinions of independent legal
advisors selected by it. The Agent may also assume that any representation made
by the Borrowers is true and that no Event of Default has occurred unless the
officers or employees of the Bank acting as Agent, acting in their capacity as
officers or employees responsible for the Borrowers' accounts have actual
knowledge to the contrary or have received notice to the contrary from any other
party to this Agreement.
(c) The Agent may, without any liability to account, accept deposits
from and lend money to and generally engage in any kind of banking, or other
business with the Borrower, as if it were not the Agent.
(d) Except in its own right as a Bank, the Agent shall not be required
to advance its own funds for any purpose, and in particular shall not be
required to pay with its own funds insurance premiums, taxes or public utility
charges or the cost of repairs or maintenance with respect to the assets which
are the subject matter of the Security Agreement, nor shall it be required to
pay with its own funds the fees of counsel, auditors, experts or agents engaged
by it as permitted hereby.
-38-
(e) The Agent shall be entitled to receive a fee for acting as Agent, as
agreed between the Agent and the Borrowers from time to time.
6.11. Acknowledgments, Representations and Covenants of Banks.
-------------------------------------------------------
(a) It is acknowledged and agreed by each Bank that it has itself been,
and will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition, creditworthiness,
property, affairs, status and nature of the Borrowers. Accordingly, each Bank
confirms to the Agent that it has not relied, and will not hereafter rely, on
the Agent (a) to check or inquire on its behalf into the adequacy or
completeness of any information provided by the Borrowers under or in connection
with this Agreement or the transactions herein contemplated (whether or not such
information has been or is hereafter distributed to such Bank by the Agent) or
(b) to assess to keep under review on its behalf the financial condition,
creditworthiness, property, affairs, status or nature of the Borrowers.
(b) Each Bank represents and warrants that it has the legal capacity to
enter into this Agreement pursuant to its charter and any applicable law and has
not violated its charter, bylaw or other documents or any applicable law by so
doing.
(c) Each Bank agrees to indemnify the Agent (to the extent not
reimbursed by the Borrowers), ratably according to its Proportionate Share from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or related
Documents or the transactions therein contemplated, provided that no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Agent's gross negligence or willful misconduct. Without limiting the
generality of the foregoing, each Bank agrees to reimburse the Agent promptly
upon demand for its Proportionate Share of any out-of-pocket expenses (including
counsel fees) incurred by the Agent in connection with the preservation of any
rights of the Agent or the Banks under, or the enforcement of, or legal advice
in respect of rights or responsibilities under this Agreement, to the extent
that the Agent is not reimbursed for such expenses by the Borrowers. The
obligation of the Banks to indemnify the Agent shall survive the termination of
this Agreement.
(d) Each of the Banks acknowledges and confirms that in the event the
Agent does not receive payment in accordance with this Agreement, it shall not
be the obligation of the Agent to maintain the Loans in good standing nor shall
any Bank have recourse to the Agent in respect of any amounts owing to such Bank
under this Agreement.
(e) Each Bank acknowledges and agrees that its obligation to advance its
Proportionate Share of Loans in accordance with the terms of this Agreement is
independent and in no way related to the obligation of any other Bank hereunder.
-39-
(f) Except to the extent recovered by the Agent from the Borrowers,
promptly following demand therefor, each Bank shall pay to the Agent an amount
equal to such Bank's Proportionate Share of any and all reasonable costs,
expenses, claims, losses and liabilities incurred by the Agent in connection
with this Agreement and the Security Documents (including, without limitation,
the collection or enforcement thereof), except for those incurred by reason of
the Agent's negligence or willful misconduct.
(g) Notwithstanding any provisions of this Credit Agreement to the
contrary, the Banks (other than the Agent) shall not be entitled to participate
to the full extent of their Proportionate Share with respect to any Revolving
Loan arising from any Letter of Credit issued for the account of the Borrowers
in an amount less than $50,000. The Banks further agree that any Letter of
Credit fees paid by the Borrowers to the Agent on account of that certain
standby Letter of Credit issued in favor of Xxxx Xxxxxxx for the account of the
Borrowers shall be shared by the Banks as follows: Agent shall receive and
retain a fee equal to 25 basis points (as an additional Agent's fee), and the
remaining basis points shall be distributed to the Banks in accordance with
their Proportionate Share.
6.12. Collective Action of the Banks. Except as otherwise provided herein,
------------------------------
each of the Banks hereby acknowledges that to the extent permitted by applicable
law, the Security Agreement and the remedies provided under the Security
Documents to the Banks are for the benefit of the Banks collectively and acting
together and not severally and further acknowledges that its rights hereunder
and under the Security Agreement are to be exercised not severally, but by the
Agent upon the decision of the Banks as required by this Agreement.
Accordingly, notwithstanding any of the provisions contained herein or in the
Security Agreement, each of the Banks hereby covenants and agrees that it shall
not be entitled to take any action hereunder or thereunder including, without
limitation, any declaration of default hereunder or thereunder but that any such
action shall be taken only by the Agent with the prior written agreement of the
Banks. Each of the Banks hereby further covenants and agrees that upon any such
written agreement being given by the Banks, it shall co-operate fully with the
Agent to the extent requested by the Agent. Notwithstanding the foregoing, in
the absence of instructions from the Banks and where in the sole opinion of the
Agent, acting reasonably and in good faith, the exigencies of the situation
warrant such action, the Agent may without notice to or consent of the Banks
take such action on behalf of the Banks as it deems appropriate or desirable in
the interest of the Banks.
6.13. Successor Agent. Subject to the appointment and acceptance of a
---------------
Successor Agent as provided in this Section, and subject to Section 6.07.4, the
Agent may resign at any time by giving 30 days' written notice thereof to the
Banks and the Borrowers, and may be removed at any time by the Banks upon 30
days' written notice. Upon receipt of notice by the Banks of the resignation of
the Agent, or upon giving notice of termination to the Agent, the Banks may,
within 21 days, appoint a successor from among the Banks or, if no Bank is
willing to accept such an appointment, from among other institutions which each
have combined capital and reserves in excess of $250,000,000. If no Successor
Agent has been so appointed and has accepted such appointment within 21 days
after the retiring Agent's giving of notice of resignation or receiving of
notice of termination, then the retiring Agent may, on behalf of the Banks,
appoint a Successor Agent. Upon the acceptance of any appointment as Agent
hereunder by a Successor Agent, the retiring Agent shall pay the Successor Agent
any unearned portion
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of any fee paid to the Agent for acting as such, and the Successor Agent shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
further duties and obligations as Agent under this Agreement and the other
Security Documents. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Article shall continue to inure to its benefit and be
binding upon it as to any actions taken or omitted to be taken by it while it
was Agent hereunder.
6.14. Provisions Operative Between Banks and Agent Only. Except as otherwise
-------------------------------------------------
provided herein, the provisions of this Article relating to the rights and
obligations of the Banks and the Agent inter se shall be operative as between
the Banks and the Agent only, and the Borrowers shall not have any rights or
obligations under or be entitled to rely for any purpose upon such provisions.
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ARTICLE VII
MISCELLANEOUS
7.01. Further Assurances. Each Borrower shall do all things and deliver all
------------------
instruments reasonably requested by the Agent to protect or perfect any security
interest granted or intended to be granted hereunder. If any Borrower fails
promptly to comply with any such request, or if any Event of Default shall have
occurred hereunder, such Borrower authorizes the Agent to execute, in the name
or on behalf of such Borrower, any financing statement or other document or
instrument that the Agent may require to perfect, protect or establish any
security interest or lien interest to which the Bank may be then entitled
hereunder and further authorizes the Agent to sign the Borrower's name on the
same. Each Borrower appoints (but only for the purposes of protecting the
Banks' interests in the Collateral or the Banks' rights to receive payments
under this Agreement or the Note or otherwise exercising any of its rights
hereunder or causing the performance and fulfillment of the obligations and
agreements intended to be performed and fulfilled by the Borrower under this
Agreement) the Agent as such Borrower's attorney-in-fact with the power: at any
time when an Event of Default has occurred and is continuing, to endorse the
name of the Borrower on any checks, notes, drafts, or other forms of payment or
security relating to any Collateral that may come into the possession of the
Banks; at any time when an Event of Default has occurred and is continuing, to
sign the name of such Borrower on invoices or bills of lading, drafts against
customers, notices of assignment, verifications and schedules; at any time when
an Event of Default has occurred and is continuing, to demand, collect, receive
payment of, receipt for, settle, compromise or adjust and give discharges and
releases in respect of the Receivables or any of them; at any time when an Event
of Default has occurred and is continuing, to commence and prosecute any suits,
actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Receivables or any of them and to enforce any other
rights in respect thereof or in respect of the goods which have given rise
thereto; at any when an Event of Default has occurred and is continuing, to
defend any suit, action or proceeding brought against such Borrower in respect
of any Receivables or the goods which have given rise thereto, to settle,
compromise or adjust any suit, action or proceeding hereinbefore described and,
in connection therewith, to give such discharges or releases as the Agent may
deem appropriate; at any time when an Event of Default has occurred and is
continuing, to notify the U.S. Postal Service authorities to change the address
of delivery of mail to an address designated by the Agent and to open and
dispose of mail addressed to such Borrower; and, generally, to do all things
necessary to carry out the intent of this Agreement. This power, being coupled
with an interest, is irrevocable, and such Borrower approves all such acts of
such attorney-in-fact. The powers conferred on the Agent by this Agreement are
solely to protect the interest of the Bank and shall not impose any duty upon
the Agent to exercise any such power, and neither the Agent nor such attorney-
in-fact shall be liable for any act or omission, error in judgment or mistake of
law, except for its gross negligence, willful misconduct or bad faith. Except
as otherwise required by applicable law with respect to the preservation of
Collateral in the possession of the Banks, the Banks shall have no duty as to
the collection or protection of any Collateral and shall have no duty as to the
preservation of rights against prior parties or any other rights pertaining
thereto, except as provided by applicable law.
7.02. Right to Cure. In the event that any Borrower shall fail to purchase
-------------
or maintain insurance, to pay any tax, assessment, governmental charge or levy,
except as the same may be otherwise permitted
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hereunder, or in the event that any lien, encumbrance or security interest
prohibited hereby shall not be paid in full or discharged, or in the event that
any Borrower shall fail to pay or comply with any other obligation hereunder,
the Banks may, but shall not be required to, pay, satisfy, perform, discharge or
bond the same for the account of such Borrower, and all moneys so paid by the
Banks shall be payable on demand and shall bear interest at the lesser of (i) a
floating rate per annum equal to five percent (5%) plus the Prime Rate with a
change in such rate of interest to become effective on the same day on which any
change in the Prime Rate is effective, or (ii) the maximum rate permitted by the
applicable law.
7.03. Environmental Matters.
---------------------
(a) The Borrowers hereby agree, jointly and severally, to indemnify the
Banks and hold the Banks harmless from and against any and all losses,
liabilities (including strict liability), damages, injuries, expenses (including
reasonable attorneys' fees, costs of any settlement or judgment) and claims of
any and every kind whatsoever paid, incurred or suffered by, or asserted or
levied against, the Banks by any person or entity for, with respect to, or in
connection with any Environmental Laws or the use, storage, transportation,
release or disposition of any Hazardous Substances or the clean-up or
remediation thereof with respect to or in connection with the Borrowers, their
business or operations or the Premises; provided, however, that notwithstanding
anything in this Section 6.03 to the contrary, the Borrowers shall not be
required to indemnify the Banks for any losses, liabilities, damages, injuries,
expenses or claims resulting from the Banks' gross negligence or willful
misconduct.
(b) After the occurrence of any environmental complaint brought against
any Borrower arising under any Environmental Laws, the Banks shall have the
right, in its sole discretion, to require the Borrowers to perform (at the
Borrowers' expense) an environmental audit and, if reasonably deemed necessary
by the Banks, an environmental risk assessment, each reasonably satisfactory to
the Bank, and to implement the recommendations set forth in such audit and/or
risk assessment.
7.04. Waivers; Release of Pledge Agreements of Certain Stockholders. This
-------------------------------------------------------------
Agreement and the other Loan Documents may not be changed, waived, discharged or
terminated orally. This Agreement or any Security Document may be amended and
the performance or observance by any Borrower of any term of this Agreement or
any other Loan Document may be waived (either generally or in a particular
instance and either retroactively or prospectively) with, but only with, the
prior written consent of the Banks. The rights and remedies expressed in this
Agreement and in the other Loan Documents are cumulative and not exclusive of
any right or remedy which the Bank may otherwise have. The Banks may release or
surrender, exchange or substitute any real estate or personal property, or both,
or other collateral security now or hereafter held as security for the payment
of the Note or any other obligations of each Borrower to the Banks under this
Agreement or however arising and may extend the time for payment or otherwise
modify the terms of payment of any part or the whole of the Note.
7.05. Delays. No delay on the part of the Banks in exercising any right,
------
power or privilege hereunder or under any other Loan Document shall operate as a
waiver thereof, nor shall any partial exercise or waiver of any privilege or
right hereunder preclude any further exercise of such privilege or
-43-
right or the exercise of any other right, power or privilege.
7.06. Notices. Any notices, consents or other communications to be given
-------
under this Agreement or under the other Loan Documents shall be in writing and
shall be deemed given when mailed to the respective parties by overnight courier
or by registered mail addressed as set forth on the first page of this
Agreement, with all such notices, consents and other communications (a) to the
Banks to be sent to the attention of Xxxxxxx St. Xxxx, Vice President, State
Street Bank, Trust Company, and Xxxx Xxxxxxxxxx, Vice President, CoreStates
Bank, N.A., FC 1-8-4-2, 0000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
and BankBoston, N.A. Xxxxx Xxxxx, Director, Boston Middle Market, 000 Xxxxxxx
Xxxxxx, Xxxxxx, XX 00000 with a copy to Xxxx X. Smith, Testa, Xxxxxxx &
Xxxxxxxxx, LLP, High Street Tower, 000 Xxxx Xxxxxx, Xxxxxx, XX 00000, (b) to
each Borrower to be sent to the attention of Xxxxxxx XxxXxxxxx, C.E.O., Mac-Gray
Co., Inc. 00 Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000 and to Xxxxxx X. Xxxxxx,
Esquire, Xxxxxxx, Xxxxxxx & Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000 or to
such other addresses as either party may from time to time designate for that
purpose. Section headings and defined terms in this Agreement and the other
Loan Documents are included for convenience only and are not intended to modify
or define any term or provision of any such instrument.
7.07. Jurisdiction. Each Borrower irrevocably submits to the jurisdiction of
------------
the courts of the Commonwealth of Massachusetts and the United States District
Court for the District of Massachusetts for the purpose of any suit, action or
other proceeding brought by the Banks arising out of or relating to this
Agreement or any other Loan Document, and each Borrower waives and agrees not to
assert by way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that each Borrower is not personally subject to the
jurisdiction of the courts of the Commonwealth of Massachusetts, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper.
7.08. Execution. This Agreement may be signed in any number of counterparts,
---------
which together will be one and the same instrument. This Agreement shall become
effective whenever each party shall have signed at least one such counterpart.
7.09. Governing Law. This Agreement shall be governed by the laws of the
-------------
Commonwealth of Massachusetts and for all purposes shall be construed in
accordance with the laws of such Commonwealth.
7.10. Fees. Whether or not any funds are disbursed hereunder, the Borrowers
----
shall pay all of the Bank's reasonable costs and expenses in connection with the
preparation, execution, delivery, review, and enforcement of this Agreement and
the other Loan Documents, and in connection with any subsequent amendments
thereto or waivers thereof, including reasonable legal fees and disbursements.
7.11. Binding Nature. This Agreement shall be binding upon and shall inure
--------------
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that the rights and obligations under this Agreement
and under any of the other Loan Documents may not be assigned by any Borrower
without the prior written consent of the Banks. Notwithstanding anything to the
contrary
-44-
herein or in any of the Loan Documents, the Banks may freely assign, pledge,
hypothecate, transfer or convey part or all of their respective interests
hereunder to the Federal Reserve without notification to the Borrowers.
7.12. Severability. In the event that any provision of this Agreement or the
------------
application hereof to any person, entity property or circumstances shall be held
to any extent to be invalid or unenforceable, the remainder of this Agreement,
and the application of such provision to persons, entities, properties or
circumstances other than those as to which it has been held invalid or
enforceable, shall not be affected thereby, and each provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law.
7.13. Under Seal. This Agreement shall be deemed to be an instrument under
----------
seal and shall continue in full force and effect so long as any Indebtedness of
the Borrowers to the Banks remains unpaid.
This Agreement shall supersede and replace all prior agreements, whether
written or oral, expressed or implied, by and among (i) State Street Bank and
Trust Company and any Borrower, or (ii) CoreStates Bank, N.A. and any Borrower,
or (iii) BankBoston, N.A. and any Borrower.
ARTICLE VIII
DEFINITIONS
8.01. Definitions. All defined terms used in this Agreement which are not
-----------
otherwise defined herein shall have the respective meanings assigned to them in
the other Loan Documents. For purposes of this Agreement and of the other Loan
Documents, the following additional definitions shall apply:
"Affiliated Person" shall mean any person or entity controlling,
controlled by or under common control with any Borrower.
"Agent" in such capacity shall mean State Street Bank and Trust Company.
"Applicable Margin" shall mean (i) one hundred fifty basis points for
Loans outstanding which aggregate less than fifty million dollars ($50,000,000)
(including any Loans to be dispersed by Agent in connection with a pending loan
request of Borrowers) or (ii) one hundred and seventy five basis points for
Loans outstanding which equal or exceed fifty million dollars ($50,000,000)
(including any Loans to be dispersed by Agent in connection with a pending loan
request of Borrowers).
"BankBoston-Intirion Credit Agreement" shall mean that certain credit
agreement between BankBoston, N.A. and Intirion Corporation dated as of May 3,
1995, as amended.
"Banks," "Bank" in the plural shall mean State Street Bank and Trust
Company, CoreStates Bank, N.A. and Bank Boston, N.A.; in the singular, each a
Bank.
-00-
"Xxxxxxxx," "Xxxxxxxxx" shall have the meaning specified in the preamble
to this Agreement.
"Borrowing Date" shall mean the date on which any advance of loans is
made by either Bank to any Borrower.
"Business Day" shall mean any day which is not a Saturday, or a Sunday or
a public holiday under the laws of the United States of America or the
Commonwealth of Massachusetts applicable to a national banking association.
"Capital Expenditure" shall mean any payment made or required to be made,
directly or indirectly, by any Borrower for the purposes of acquiring or
constructing fixed assets, real property or equipment, except for such payments
made in connection with a Permitted Acquisition, which, in accordance with GAAP,
would be added as a debit to the fixed asset account of such Borrower,
including, without limitation, amounts paid or payable under and conditional
sale or other title retention agreement or under any lease or other periodic
payment agreement which is of such a nature that payment obligations of such
Borrower thereunder would be required by GAAP to be capitalized and shown as
liabilities on the balance sheet of the Borrower.
"Cash Equivalents" shall mean those investments which, under GAAP, are
treated as equivalent to cash.
"Closing" shall mean a closing held at 11:00 a.m., in the offices of
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, High Street Tower, 000 Xxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, on April 23, 1998, or such other date, time and place as
the parties hereto mutually agree.
"Closing Date" shall mean the date on which the Closing shall occur.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
regulations issued pursuant thereto.
"COF Base Rate" shall mean, with respect to any Interest Period, the rate
of interest per annum determined by the Agent (in accordance with its customary
practices) to be the prevailing secondary funds market offering offered to the
Agent at approximately 10:00 A.M. (Boston time) (or as soon thereafter as
practicable) on the first day of such Interest Period by dealers of recognized
standing, for the purchase at face value of funds from the Agent in an amount
equal or comparable to the principal amount of the COF Loan to which such
Interest Period relates, and for a period of time equal or comparable to the
length of such Interest Period.
"COF Loans" shall mean Loans which bear interest at the COF Rate for such
Interest Period.
"Collateral" shall have the meaning specified in Section 2 of the
Security Agreement.
-46-
"Cost of Funds ("COF") Option" shall mean, with respect to each COF Loan
for each Interest Period, a fixed rate per annum (computed on the basis of a
year of 360 days, as the case may be, and actual days elapsed) equal to the COF
Base Rate plus the Applicable Margin (the "COF Rate").
"Consent" shall mean the written consent of the Agent or the Banks.
"Credit Facility" shall have the meaning specified in the preamble to
this Agreement.
"Current Assets" shall mean all assets of any corporation or other entity
which would, in accordance with generally accepted accounting principles, be
classified as current assets of an entity conducting a business the same as or
similar to that of such entity; excluding, however, (i) assets which have been
pledged, assigned, mortgaged, hypothecated or otherwise encumbered to secure any
Indebtedness which is not included in Current Liabilities and (ii) any and all
amounts due from affiliated entities.
"Current Liabilities" shall mean all liabilities of any corporation or
other entity which would, in accordance with generally accepted accounting
principles, be classified as current liabilities of an entity conducting a
business the same as or similar to that of such entity, including, without
limitation, all capitalized lease payments and other payments under capitalized
leases and fixed prepayments of, and sinking fund payments with respect to,
Indebtedness required to be made within one year from the date of determination,
plus all Indebtedness in respect of Revolving Loans without regard to the date
of maturity of any such Loans.
"EBITDA" shall mean for any period, the Net Income (or Net Loss,
expressed as a negative number) of the Borrowers (on a consolidated basis) for
such period, plus each of the following items, without duplication: (i) the
amount of the provision for depreciation and/or amortization actually deducted
on the books of the Borrowers (on a consolidated basis) for the purposes of
computation of such Net Income (or Net Loss) for the period involved, (ii) all
federal and state income taxes (but not ad valorem property taxes, sales taxes
or taxes in the nature of an excise tax) paid by the Borrowers (on a
consolidated basis) with respect to such period, and (iii) all interest on any
Indebtedness paid or accrued during such period and actually deducted on the
books of the Borrowers (on a consolidated basis) for the purposes of computation
of such Pre-Tax Net Income (or Net Loss) for the period involved provided,
however, that for the purposes of Section 4.03 (a) the meaning of "EBITDA" may
be adjusted as follows:
If the Borrowers make a Permitted Acquisition and the Banks approve of
the historical and pro forma financial statements of the business acquired in
such Permitted Acquisition, EBITDA shall be adjusted as set forth in paragraphs
(A), (B) and (C) below and the adjustments in Paragraphs (A), (B) and (C) below
shall apply to computations of the ratio in Section 4.03(a) beginning on the
date of such Permitted Acquisition and until the end of the four fiscal quarters
after such Permitted Acquisition. (The adjustments described in Paragraphs (A)
and (B) below shall not apply to computations of such ratios made as of the end
of the fiscal quarter immediately preceding the date of such Permitted
Acquisition.)
(A) Determinations of Net Income (or Net Loss) or Pre-tax Net Income
(or Net
-47-
Loss) shall include cash flow from operations for periods prior to such
Permitted Acquisition which shall include (i) the sum of net income,
depreciation, amortization, other non-cash charges to net income, interest
expense and income tax expense of the acquired business, plus the adjustment, if
any pursuant to clause (C) below, minus (ii) non-cash credits to net income of
such business, in each case as determined in accordance with GAAP;
(B) Extraordinary or nonrecurring expenses under GAAP incurred in
connection with such Permitted Acquisition shall be excluded in determining the
net income of the acquired business when computing consolidated cash flow from
operations in the preceding sentence if the Banks have agreed to such exclusion;
and
(C) To the extent, in the determination of net income of the acquired
business utilized in clause (A) above, deductions were taken in respect of
rental expense pursuant to operating leases in accordance with GAAP and
following the consummation of a Permitted Acquisition the Borrowers
appropriately amend such leases so that, in accordance with GAAP, such rental
expense pursuant to operating leases may properly be treated as rental expense
pursuant to capital leases (and the Borrower treats such leases as capital
leases for periods following the consummation by the Borrowers of such Permitted
Acquisition) then, such net income for purposes of clause (A) above shall be
increased by the deductions taken in respect of rental expense pursuant to such
operating leases during the period of determination.
"EBITA" shall mean for any period, the Net Income (or Net Loss, expressed as a
negative number) of the Borrowers (on a consolidated basis) for such period,
plus each of the following items, without duplication: (i) the amount of the
provision for amortization actually deducted on the books of the Borrowers (on a
consolidated basis) for the purposes of computation of such Net Income (or Net
Loss) for the period involved, (ii) all federal and state income taxes (but not
ad valorem property taxes, sales taxes or taxes in the nature of an excise tax)
paid by the Borrowers (on a consolidated basis) with respect to such period, and
(iii) all interest on any Indebtedness paid or accrued during such period and
actually deducted on the Consolidated books of the Borrowers (on a consolidated
basis) for the purposes of computation of such Pre-Tax Net Income (or Net Loss)
for the period involved provided, however, that for the purposes of Section 4.03
(d) the meaning of "EBITA" may be adjusted as follows:
If the Borrowers make a Permitted Acquisition and the Banks approve of
the historical and pro forma financial statements of the business acquired in
such Permitted Acquisition, EBITA shall be adjusted as set forth in paragraphs
(A), (B) and (C) below and the adjustments in Paragraphs (A), (B) and (C) below
shall apply to computations of the leverage ratio in Section 4.03(d) beginning
on the date of such Permitted Acquisition and until the end of the four fiscal
quarters after such Permitted Acquisition. (The adjustments described in
Paragraphs (A) and (B) below shall not apply to computations of such ratios made
as of the end of the fiscal quarter immediately preceding the date of such
Permitted Acquisition.)
(A) Determinations of Net Income (or Net Loss) or Pre-tax Net Income
(or Net Loss) shall include cash flow from operations for periods prior to such
Permitted Acquisition which shall
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include (i) the sum of net income, amortization, other non-cash charges to net
income, interest expense and income tax expense of the acquired business, plus
the adjustment, if any pursuant to clause (C) below, minus (ii) non-cash credits
to net income of such business, in each case as determined in accordance with
GAAP;
(B) Extraordinary or nonrecurring expenses under GAAP incurred in
connection with such Permitted Acquisition shall be excluded from the net income
of the acquired business when computing consolidated cash flow from operations
in the preceding sentence if the Banks have agreed to such exclusion; and
(C) To the extent, in the determination of net income of the acquired
business utilized in clause (A) above, deductions were taken in respect of
rental expense pursuant to operating leases in accordance with GAAP and
following the consummation of a Permitted Acquisition the Borrowers
appropriately amend such leases so that, in accordance with GAAP, such rental
expense pursuant to operating leases may properly be treated as rental expense
pursuant to capital leases (and the Borrower treats such leases as capital
leases for periods following the consummation by the Borrowers of such Permitted
Acquisition) then, such net income for purposes of clause (A) above shall be
increased by the deductions taken in respect of rental expense pursuant to such
operating leases during the period of determination.
"Environmental Laws" shall have the meaning specified in Section 3.18 of
this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the regulations issued pursuant thereto.
"Event of Default" shall have the meaning specified in Section 5.01
hereof.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect from time to time.
"Indebtedness" shall mean with respect to each Borrower (i) all
indebtedness or other obligations of such Borrower for borrowed money or for the
deferred purchase price of property or services, other than for trade accounts
payable incurred in the ordinary course of such Borrower's business, (ii) all
indebtedness or other obligations of any other person for borrowed money or for
the deferred purchase price of property or services, other than for trade
accounts payable incurred in the ordinary course of such Borrower's business, in
respect of which such Borrower is liable, contingently or otherwise, to pay or
advance money or property as guarantor, endorser or otherwise (except as
endorser for collection in the ordinary course of business), or which such
Borrower has agreed to purchase or otherwise acquire, and (iii) all lease
obligations of such Borrower which are required, in accordance with GAAP, to be
capitalized on the books of the lessee.
"Interest Period" shall mean with respect to any Loan:
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(i) initially, the period commencing on the Borrowing Date with
respect to such Loan and ending one to twelve months thereafter (provided,
however, COF Loans may have an Interest Period of one to sixty months), as
selected by the Borrowers in the notice of borrowing given with respect thereto;
and
(ii) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Loan and ending one to twelve
months thereafter (provided, however, COF Loans may have an Interest Period of
one to thirty-six months), as selected by the Borrowers by irrevocable notice to
the Banks not less than three Business Days prior to the last day of the then-
current Interest Period with respect thereto;
provided, that, all of the foregoing provisions relating to Interest
--------
Periods are subject to the following:
(a) if any Interest Period pertaining to a Loan would otherwise end on
a day that is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;
(b) any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date except as provided in Section
1.01(d); and
(c) any Interest Period pertaining to a Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month.
"Interest Rate Option" shall mean any of the LIBOR Option or the COF
Option or the Prime Rate Option.
"Letters of Credit" shall have the meaning specified in Section 1.01(h)
of this Agreement.
"Liabilities" shall mean all liabilities of each Borrower, including,
without limitation, all lease rental payments and other payments under capital
leases and fixed prepayments of, and sinking fund payments with respect to,
Indebtedness (including Indebtedness evidenced by the Note).
"LIBOR" or "LIBOR Rate" shall mean with respect to the Loans comprising
any borrowings to which the LIBOR Option applies for any LIBOR Interest Period,
which rate shall be determined by the Agent by dividing (i) the rate of interest
(as determined by the Agent in accordance with its usual procedures) at which
LIBOR deposits, in an amount equal to the portion of the Loans as to which a
LIBOR Interest Option has been elected and which have a term corresponding to
the LIBOR Interest Period in question, which are offered to the Agent by first-
class banks in the London Interbank Office on
-50-
the first day of such LIBOR Interest Period as determined by the Agent at
approximately 11:00 a.m. (London time) two Banking Days prior to the date upon
which the LIBOR Interest Period in question is to commence, (which determination
by the Agent shall, in the absence of manifest error, be conclusive,) by (ii) a
number equal to 1.00 minus the LIBOR Reserve Percentage. The LIBOR Rate may also
be expressed by the following formula:
LIBOR Rate = London Interbank Office
(by a first class bank)
-----------------------
1.00 - LIBOR Reserve Percentage
The LIBOR Rate shall be adjusted with respect to any LIBOR-Rate Option
outstanding on the effective date of any change in the LIBOR-Rate Reserve
Percentage as of such effective date. The Agent shall give prompt notice to the
Borrower of the LIBOR-Rate as determined or adjusted in accordance herewith,
which determination shall be conclusive absent manifest error.
"LIBOR Interest Period" shall have the meaning assigned to that term in
Section 1.03 hereof.
"LIBOR Loans" shall mean Loans subject to the LIBOR Option.
"LIBOR Reserve Percentage" shall mean the maximum percentage (expressed
as a decimal rounded upward to the nearest 1/100 of 1%) as determined by the
Agent (which determination shall be conclusive absent manifest error) which is
in effect during any relevant period, as prescribed by the Board of Governors of
the Federal Reserve System (or any successor) for determining the reserve
requirements (including, without limitation, supplemental, marginal, and
emergency reserve requirements) with respect to LIBOR currency funding
(currently referred to as "LIBOR Currency Liabilities") of a member bank in such
System.
"Loan Documents" shall mean this Agreement, the Note, the Security
Documents and all other agreements, instruments, documents and certificates
executed or delivered in connection with the transactions contemplated therein.
"Loans" shall mean collectively, the Revolving Loans whether such Loans
are Prime Rate Loans and/or the LIBOR Loans and/or COF Loans made by the Bank to
any Borrower pursuant to Section 1.01 of this Agreement.
"Material Adverse Effect" shall mean a material adverse change in the
business, condition, affairs, properties, or operations of the Borrowers, on a
consolidated basis.
"Net Income" or "Net Loss" for any fiscal period shall mean net income
(or net loss, expressed as a negative number), after deduction of or credit for
applicable income taxes, as such net income after taxes or net loss would be set
forth on an income statement for such fiscal period prepared in accordance with
GAAP.
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"Nominee" shall mean a business entity, formed or appointed by Agent to
own or manage any Collateral in the possession or control of Lenders.
"Note" means the Revolving Line of Credit and Term Notes in the form of
Exhibit A attached hereto.
---------
"Payment Date" shall mean the first day of each month on which the Agent
is open for business in the Commonwealth of Massachusetts from and after the
Closing Date.
"Permitted Acquisition" shall mean an acquisition (by purchase or merger)
by any Borrower or a Subsidiary (a) of all or substantially all of the assets or
100% of the outstanding capital stock or joint venture or partnership interests
of any entity engaged in a business directly related to that of the Borrowers
for which the purchase price consideration payable by any or all Borrowers is
less than $10,000,000 in the aggregate, or (b) to which the Banks have given
their prior written consent.
"Permitted Lien" shall have the meaning given that term in Section
4.02(b) hereof.
"Pledge Agreement" shall mean the Pledge Agreement of the Borrowers in
the form of Exhibit C hereto.
"Pre-Tax Net Income" for any fiscal period shall mean net income (or net
loss, expressed as a negative number), before deduction of or credit for
applicable income taxes, as such pre-tax net income or net loss would be set
forth on an income statement for such fiscal period prepared in accordance with
GAAP.
"Prime Rate Loans" shall mean Loans subject to the Prime Rate Option.
"Prime Rate" shall mean the rate of interest announced by the Agent from
time to time as its "Prime Rate" or "Base Rate"; provided, however, that such
rate is not necessarily the lowest rate charged by the Bank to its customers.
"Principal Office" of the Agent or the Borrowers shall mean the
respective office(s) located at the address set forth on the first page hereof.
"Proportionate Share" shall mean each Bank's commitment to fund Loans; in
the case of State Street Bank and Trust Company, 33.33%; and in the case of
CoreStates Bank, N.A., 33.33%; and in the case of BankBoston, N.A., 33.33%.
"Receivables" shall mean all of the present and future accounts, accounts
receivable and notes, drafts, acceptances and other instruments representing or
evidencing a right to payment for goods sold or for services rendered of any
Borrower, including all right, title and interest of any Borrower in the goods
or services which have given rise thereto and any right of stoppage in transit,
whether the same are now owned or hereafter acquired or arising.
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"Security Agreement" shall mean the Security Agreement in the form of
Exhibit B hereto.
---------
"Subsidiary Security Agreement" shall mean the Subsidiary Security
Agreement in the form of Exhibit E hereto.
---------
"Subsidiary Guaranty Agreement" shall mean the Subsidiary Guaranty
Agreement in the form of Exhibit D hereto.
---------
"Security Documents" shall have the meaning specified in Section 1.13 of
this Agreement.
"Senior Liabilities" shall mean all Liabilities of the Borrowers to the
Banks arising hereunder or under the Note and Letter(s) of Credit and any
interest bearing obligations of Borrowers incurred on account of borrowed money.
"Shareholder's Equity" shall mean shareholder's equity (determined in
accordance with GAAP), including all assets that would be considered intangibles
under GAAP including, without limitation, good will.
"Subsidiary" shall mean with respect to any Borrower, (i) any
corporation, limited liability company or trust of which more than fifty percent
(50%) (by number of shares or number of votes) of the outstanding capital stock,
member interests or shares of beneficial interests normally entitled to vote for
the election of one or more directors or trustees is at such time owned directly
or indirectly by such Borrower or one or more of such Borrower's affiliates and
(ii) any corporation, trust, limited liability company, partnership or other
entity which is controlled or capable of being controlled by such Borrower or
one or more such Borrower's affiliates.
"Tangible Net Worth" shall mean stockholders' equity (determined in
accordance with GAAP) minus all assets that would be considered intangibles
under GAAP, such intangible assets including, without limitation, such items as
goodwill, trademarks, tradenames, copyrights, patents, licenses and rights in
any thereof, unamortized debt discount, capitalized software development or
acquisition costs, costs or value of purchased software and all write-ups in the
book value of any asset.
"Termination Date" shall mean the earlier of (i) April 23, 2003, (ii)
such earlier date on which the Banks make a declaration in accordance with the
provisions of Section 5.02(a) hereof or (iii) the payment and satisfaction in
full of all obligations of any Borrower to Banks hereunder, under the Security
Documents, or in connection herewith or therewith. The Banks may, at their
discretion, renew or extend the lines of credit by extending the Termination
Date. Neither the inclusion in this Agreement of financial covenants relating
to periods after the Termination Date or any other terms and provisions hereof
shall be deemed to create any implication that the Banks are required to renew
or extend such revolving line of credit.
8.02. Use of Defined Terms. Any defined term used in the plural preceded by
--------------------
the definite article shall be taken to encompass all members of the relevant
class. Any defined term used in the singular
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preceded by "any" shall be taken to indicate any number of the members of the
relevant class.
8.03. Accounting Terms. All accounting terms not specifically defined herein
----------------
shall be construed in accordance with United States generally accepted
accounting principles consistently applied on the basis used by the concerned
entity in prior years.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the Borrowers and the Banks have caused this
Credit Agreement to be executed by their duly authorized officers as of the date
first above written.
THE BORROWERS:
XXX-XXXX CORPORATION
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
XXX-XXXX SERVICES, INC.
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
INTIRION CORPORATION
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
2
IN WITNESS WHEREOF, each of the Borrowers and the Banks have caused this
Credit Agreement to be executed by their duly authorized officers as of the date
first above written.
THE BANKS:
STATE STREET BANK AND TRUST
COMPANY, for itself and as agent for
CORESTATES BANK, N.A. and
BANKBOSTON, N.A.
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
CORESTATES BANK, N.A.
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
BANKBOSTON, N.A.
By:
-------------------------------
Name:
-------------------------
Title:
-------------------------
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