Exhibit 10.6
[GRAPHIC OMITED]
[GRAPHIC OMITED]
TERM
LOAN AND SECURITY AGREEMENT
TERM LOAN AND SECURITY AGREEMENT dated as of
December 19, 2007, between ORBIT
INTERNATIONAL CORP., a
corporation organized and existing under the laws of the
State of Delaware having its principal
office at 80 Cabot Court, Hauppauge, NY
11788 ("Customer"),
and MERRILL LYNCH BUSINESS FINANCIAL SERVICES INC., a
corporation organized
and existing under the laws of the State of Delaware
having its
principal office at 222 North LaSalle Street, Chicago, IL
60601
("MLBFS").
In consideration
of the mutual covenants of the parties
hereto, Customer and
MLBFS hereby
agree as follows:
ARTICLE I. DEFINITIONS
1.1 SPECIFIC
TERMS. In addition to terms defined elsewhere in this Loan
Agreement, when
used herein the following terms shall have the following
meanings:
"Acquisition Closing Conditions" shall mean the delivery of a
certificate of the
Customer, dated the Closing Date and signed by a Financial Officer
of the
Customer (i) certifying that (a) the ICS Acquisition has been
consummated in
escrow, pursuant to the Escrow Agreement, (b) the total
consideration paid in
connection with the acquisition of the shares was not more than
$7,300,000, (c)
no party to any of the ICS Acquisition Agreements has waived the
fulfillment of
any material condition precedent set forth therein to the
consummation of the
acquisition, no party has failed to perform any of its material
obligations
thereunder or under any instrument or document executed and
delivered in
connection therewith, and nothing has come to the attention of the
Customer that
would cause it to believe that any of the representations or
warranties of ICS
contained in the signed ICS Acquisition Agreements was false or
misleading in
any material respect when made, (d) neither the execution and
delivery of the
ICS Acquisition Agreements, nor the performance of the Customer's
obligations
thereunder, will violate any provision of law or will conflict with
or result in
a breach of, or create (with or without the giving of notice or
lapse of time,
or both) a default under, any material agreement to which the
Customer is a
party or by which it is bound or any of its assets is affected and
(e) upon the
satisfaction of the Escrow Conditions, the Customer will have
acquired by virtue
of the consummation of the acquisition and will have good and
marketable title
to all of the capital stock of ICS pursuant to the ICS Acquisition
Documents,
free and clear of any Lien, except (1) for Permitted Liens and (2)
for the liens
created and granted by the Loan Documents, and (f) after giving
effect to the
acquisition, there is no litigation or administrative proceeding,
or regulatory
development, that could reasonably be expected to have a material
adverse effect
on (1) the business, assets, operations, condition (financial or
otherwise) or
material agreements of the Consolidated Entities, (2) the ability
of any
Consolidated Entity to perform any of its obligations under any
Loan Document,
(3) the rights of or benefits available to MLBFS under any Loan
Document or (4)
the ability of any party to the ICS Acquisition Agreement to
perform any of its
obligations under the signed ICS Acquisition Agreement, and (ii)
attaching a
true, complete and correct copy of the ICS Acquisition
Agreement.
"Anti-Terrorism and
Anti-Money
Laundering Laws" shall
mean (a) all applicable
laws, regulations,
executive orders and government guidance on
the prevention
and detection
of money laundering
(including 18 U.S.C. 1956 and 1957),
drug
trafficking,
terrorist-related activities, or financial or other fraud; (b)
the
Bank Secrecy Act (31 U.S.C. 5311 et seq. and 12
U.S.C. 1818(s),
1829(b) and
1951-1959) and
its implementing regulations, and (c) all
regulations and any
other requirements of any governmental authority (including,
without limitation,
the United
States Department of
the Treasury Office of Foreign Assets Control)
addressing, relating
to, or attempting to eliminate drug trafficking, terrorist
acts and acts of war.
"Applicable Margin"
shall mean, at all
times during the applicable periods set
forth below
the percentage set forth below under the heading "Applicable
Margin" and
adjacent to such period:
PERIOD APPLICABLE
MARGIN
------
-----------------
WHEN THE TOTAL FUNDED
DEBT TO EBITDA RATIO IS GREATER THAN OR EQUAL TO AND
----------------------------------------------------------------------
---
LESS THAN
---------
2.50:1.00
1.75%
---------
-----
1.75:1.00 2.50:1.00
1.50%
--------- ---------
-----
1.25:1.00 1.75:1.00
1.25%
--------- ---------
-----
1.25:1.00 1.00%
--------- -----
Changes in
the Applicable Margin resulting from a change in
the Total Funded
Debt to EBITDA Ratio shall be based upon the certificate most
recently delivered
under Section 3.2(a) and shall become effective five (5) Business
Days after the
date such certificate is delivered to MLBFS.
Notwithstanding
anything to the
contrary in this definition, (i) if Customer shall fail to deliver
to MLBFS such
a certificate on or
prior to any date required hereby, the Total Funded Debt to
EBITDA Ratio
shall be deemed to be greater than
2.50:1.00 from and including
such date to the date
that is five (5) Business Days after the date of delivery
to MLBFS of such certificate and (ii) during the period commencing on
the
Closing Date
and ending on the date
that the certificate to be delivered under
Section 3.2(a)
for the fiscal year ending December 31, 2007 is
delivered to
MLBFS, the
Applicable
Margin shall be 1.50%.
"Bankruptcy Event"
shall mean any of the
following: (i) a proceeding under any
bankruptcy,
reorganization,
arrangement,
insolvency,
readjustment of
debt,
liquidation, winding up or receivership law or statute shall be
commenced, filed
or consented to by any
Credit Party; or (ii) any such proceeding shall be filed
against any
Credit Party and shall not be dismissed
or withdrawn within sixty
(60) days after filing; or (iii) any Credit Party shall make a general
assignment for
the benefit of creditors; or (iv) any Credit Party shall
generally fail to pay or admit in writing its inability to pay its
debts as they
become due;
or (v) any Credit Party shall be adjudicated a bankrupt or
insolvent; or
(vi) any Credit Party shall take advantage
of any other law or
procedure for the
relief of debtors or shall take any action for the purpose of
or with a view towards effecting any of the foregoing; or
(vii) a receiver,
trustee, custodian, fiscal agent or similar official for any Credit
Party or for
any substantial
part of any of their respective property or
assets shall be
sought by such Credit Party or appointed.
"Business Day" shall mean any day other than a Saturday, Sunday,
federal holiday
or other day on which the New York Stock Exchange is regularly closed.
"Business Guarantor"
shall mean every Guarantor that is not a
natural person.
"Certificate of
Compliance"
shall mean, as applicable, that duly executed
certificate,
substantially the
same form as Exhibit B attached hereto
to the
extent such
certificate shall be
applicable, of the president, chief financial
officer or chief executive officer of Customer, certifying as to
the matters set
forth in such certificate.
"Closing Date" shall mean the date upon which all conditions
precedent to MLBFS'
obligation to
make the Loan shall have been met to
the satisfaction of MLBFS.
"Collateral" shall mean all Accounts, Chattel Paper, Contract
Rights, Inventory,
Equipment, Fixtures,
General Intangibles, Deposit Accounts, Documents,
Instruments,
Investment Property
and Financial Assets of Customer,
howsoever
arising, whether
now owned or existing or hereafter acquired
or arising, and
wherever located;
together with all
parts thereof (including spare parts), all
accessories and
accessions
thereto, all books and
records (including computer
records) directly
related thereto, all proceeds thereof (including,
without
limitation, proceeds
in the form of Accounts and insurance
proceeds), and the
additional collateral
described in Section 3.6 (b) hereof.
"Commitment Expiration
Date" shall mean January 31, 2008.
"Commitment Fee" shall
mean a fee of $31,500.00 due to MLBFS in connection with
this Loan Agreement.
"Consolidated
Entities" shall
mean Customer, Behlman
Electronics, Inc., Orbit
Instrument of
California,
Inc., TDL Manufacturing, Inc., Tulip Development
Laboratory, Inc.
and ICS.
"Credit Party"
and "Credit Parties" shall mean,
individually or collectively,
the Customer,
all Guarantors, and all Pledgors.
"Default" shall
mean either an "Event of Default" as defined in
Section 3.5
hereof, or
an event which with
the giving of notice, passage of time, or both,
would constitute
such an Event of Default.
"Default Rate"
shall mean an annual interest rate equal
to the lesser of: (i)
two percentage points
over the Interest Rate; or (ii) the highest interest rate
allowed by
applicable
law.
"Escrow Agent"
shall mean Phillips Nizer LLP.
"Escrow Agreement"
shall mean the Escrow Agreement dated the Closing Date among
ICS, Customer,
Kenneth J. Ice, Michael R. Rhody and Julie A. McDearman
and
Phillps Nizer
LLP, as Escrow Agent.
"Escrow Conditions" shall mean the "Condition" in the Escrow Agreement.
"Event of Loss" shall mean the occurrence whereby any
tangible Collateral is
damaged beyond
repair, lost, totally destroyed or confiscated.
"GAAP" shall mean the
generally accepted accounting principles in effect in the
United States
of America from time to time.
"General Funding Conditions" shall mean each of the following
conditions to each
loan or advance by MLBFS hereunder: (i) no Default or
Event of Default shall
have occurred and be continuing or would result from the making of
any such loan
or advance
hereunder by MLBFS; (ii) there shall not have occurred and be
continuing any material adverse change in the business or financial
condition of
any Credit
Party since December 31, 2006; (iii) all representations and
warranties of
all of the Credit
Parties herein or in any of the Loan Documents
shall then
be true and correct in
all material respects; (iv) MLBFS shall have
received this Loan
Agreement and all of the other Loan Documents, duly executed
and filed or recorded where applicable, all of which shall be in form and
substance satisfactory
to MLBFS; (v) the Commitment Fee and
other amounts due
and payable
to MLBFS under the Loan Documents on
or prior to the date hereof,
including
reimbursement or
payment of the reasonable fees and disbursements of
counsel to
MLBFS; (vi) MLBFS shall have received, as and to the extent
applicable, copies of
invoices, bills of sale, loan payoff letters and/or other
evidence satisfactory
to it that the proceeds of the Loan will satisfy the Loan
Purpose; (vii)
MLBFS shall have
received evidence satisfactory to it as to the
ownership of the
Collateral and the perfection and priority of MLBFS' liens and
security interests
thereon, as well as
the ownership of and the perfection and
priority of MLBFS'
liens and security interests on any other collateral for the
Obligations furnished
pursuant to any of the Loan Documents; (viii) MLBFS shall
have received evidence satisfactory to it of the insurance required
hereby or by
any of the Loan Documents; (ix) Customer shall have entered into an
amendment to
the WCMA Loan and Security Agreement dated January 28, 2003 (Loan
No. 885-07587)
(the "Orbit
WCMA"), and an amendment to the Term Loan and
Security Agreement
dated June
5, 2007 (Loan No.
912914027) and an
amendment to the Term Loan and
Security Agreement
dated April 4, 2005
(Loan No. 912870864) with MLBFS and the
conditions to
the effectiveness thereof shall have been fulfilled to the
satisfaction of MLBFS,
(x) ICS shall have entered into a WCMA Loan and Security
Agreement with
MLBFS, dated as of
December 31, 2007 and shall be in a form and
substance satisfactory to MLBFS (the "ICS WCMA"), (xi) the
Guarantors shall have
confirmed their
respective
obligations
under their Guaranties and Security
Agreements in
form and substance satisfactory to MLBFS (xii) shall have
satisfied the
Acquisition
Closing Conditions, and (xiv) any additional
conditions specified
in the "Term Loan
Approval" letter executed by MLBFS with
respect to
the transactions contemplated hereby shall have been met to the
satisfaction of
MLBFS.
"Guarantor" shall
mean each Person obligated under a
guaranty, endorsement or
other undertaking
by which such Person
guarantees or assumes responsibility in
any capacity
for the payment or performance of any of the Obligations.
"ICS" shall
mean Integrated Consulting Services,
Inc., a Kentucky corporation
and wholly-owned
subsidiary
of Customer.
"ICS Acquisition"
shall mean the
purchase by Customer of all of the issued and
outstanding capital
stock of ICS pursuant to the ICS Acquisition
Agreement.
"ICS Acquisition
Agreement" shall mean the Stock Purchase Agreement dated as of
December 19,
2007 by and among Customer, as Buyer, ICS and the
respective
shareholders of
ICS, as the Sellers, together with all
schedules and exhibits
thereto and
all instruments, documents and
agreements delivered in connection
therewith.
"Loan" shall
mean a sixty-month term installment loan in an amount
equal to
$4,500,000.
"Loan Agreement"
shall mean this agreement as titled in
the initial paragraph
hereof and
shall specifically
include that number to be designated by MLBFS as
the Customer's
"Loan No" in reference
to this Loan Agreement, and which number
and designation
MLBFS shall provide to Customer upon the initial invoice
generated by
MLBFS. At all times thereafter, such
numerical loan number shall
be included
and be deemed to be a part of the title of this
Loan Agreement.
"Loan Documents" shall
mean this Loan Agreement, any indenture, any guaranty of
any of the Obligations and all other security and other instruments,
assignments, certificates, certifications and agreements of any
kind relating to
any of the Obligations, whether obtained,
authorized, authenticated, executed,
sent or received concurrently with or subsequent to this Loan
Agreement, or
which evidence
the creation, guaranty or collateralization of any of the
Obligations or
the granting or perfection of liens or
security interests upon
any Collateral
or any other collateral for the Obligations, including any
modifications,
amendments or
restatements
of the foregoing.
"Loan Purpose" shall mean the purpose for which the proceeds of the
Loan will be
used; to wit: to finance the ICS Acquisition.
"Location of
Tangible Collateral"
shall mean the address of Customer set forth
at the beginning of this Loan Agreement, together with any
other address or
addresses set
forth on an exhibit hereto as being a Location of Tangible
Collateral.
"Obligations" shall
mean all liabilities, indebtedness and obligations of
Customer to MLBFS, howsoever created, arising or evidenced, whether
now existing
or hereafter arising, whether direct or indirect, absolute or
contingent, due or
to become due, primary or secondary or joint
or several, and, without limiting
the generality
of the foregoing, shall include principal, accrued
interest
(including without limitation interest accruing after the filing of
any petition
in bankruptcy),
all advances made by or on behalf of MLBFS under the
Loan
Documents, collection
and other costs and expenses incurred by or on behalf of
MLBFS, whether
incurred before or after judgment, and all present
and future
liabilities,
indebtedness and
obligations
of Customer under the
Note and the
Loan Documents.
"Permitted Liens"
shall mean with respect to the Collateral: (i) liens
for
current taxes not yet due and payable, other non-consensual liens
arising in the
ordinary course
of business for sums not due, and, if MLBFS' rights to
and
interest in
the Collateral are not materially and
adversely affected thereby,
any such liens for taxes or other
non-consensual liens arising in the ordinary
course of business being contested in good faith by
appropriate proceedings;
(ii) liens
in favor of MLBFS; (iii) liens which will be
discharged with the
proceeds of the Loan; and (iv) any other liens expressly permitted
in writing by
MLBFS.
"Person" shall
mean any natural person and any corporation, partnership
(general, limited or
otherwise), limited liability company, trust, association,
joint venture,
governmental body or
agency or other entity having legal status
of any kind.
"Pledgor" shall
mean each Person who at any time provides collateral, or
otherwise now
or hereinafter agrees
to grants MLBFS a security interest in any
assets as security for Customer's Obligations.
"Term Loan
Agreements"
shall mean, collectively, the Term Loan and
Security
Agreement dated
as of April 4, 2005 between Customer and MLBFS (Loan No.
912870864), the
Term Loan and Security Agreement dated as of June 5, 2007
between Customer
and MLBFS (No.
912914027) and the Loan Agreement, as each may
be amended,
restated, supplemented or modified from time to time.
"UCC" shall
mean the Uniform Commercial Code of Illinois as in effect in
Illinois from
time to time.
1.2 OTHER TERMS. Except as otherwise defined herein, all terms used
in this Loan
Agreement which are
defined in the UCC shall have the meanings set forth in the
UCC; and (iii) accounting terms not defined herein shall have the meaning
ascribed to
them in GAAP.
1.3 UCC FILING. Customer hereby authorizes MLBFS to file a record
or records (as
defined or
otherwise specified under the UCC),
including, without limitation,
financing statements,
in all jurisdictions and with all filing offices as MLBFS
may determine, in its sole discretion, are necessary or advisable
to perfect the
security interest
granted to MLBFS herein. Such financing statements may
describe the Collateral in the same manner as described herein or
may contain an
indication or
description
of collateral that describes such property in
any
other manner
as MLBFS may determine, in its sole discretion, is
necessary,
advisable or
prudent to ensure the perfection of the
security interest in the
Collateral granted
to the MLBFS herein.
<PAGE>
ARTICLE II. THE LOAN
2.1 COMMITMENT.
Subject to the terms and conditions hereof, MLBFS hereby agrees
to make the Loan to Customer for the Loan Purpose, and Customer
agrees to borrow
all amounts borrowed to satisfy the Loan Purpose from MLBFS. The
entire proceeds
of the Loan shall be
disbursed on the Closing Date as directed by Customer in a
Closing Certificate
to be executed by
Customer and delivered to MLBFS prior to
the Closing
Date.
2.2 NOTE. The Loan will be evidenced by and
repayable in accordance with that
certain Collateral
Installment
Note made by Customer payable to the
order of
MLBFS and issued pursuant to this Loan Agreement (the "Note"). The
Note is
hereby incorporated
as a part hereof as if fully set forth herein.
2.3 CONDITIONS
OF MLBFS' OBLIGATION.
The Closing Date and MLBFS' obligation to
make the Loan on the Closing Date are
subject to the prior fulfillment of each
of the following conditions: (a) MLBFS shall have received a
written request
from Customer
that the Loan be funded in accordance with the
terms hereof,
together with a
written direction from Customer as to the method of payment and
payee(s) of
the proceeds of the Loan, which request and
direction shall have
been received
by MLBFS not less than two Business
Days prior to any requested
funding date;
(b) the Commitment
Expiration Date shall not then have occurred;
and (c) each of the General Funding Conditions shall then have
been met or
satisfied to
the reasonable satisfaction of MLBFS.
2.4 USE OF LOAN PROCEEDS. The proceeds of the Loan
shall be used by Customer
solely for
a Loan Purpose, or, with the prior written consent
of MLBFS, for
other lawful
business purposes of Customer not prohibited hereby.
CUSTOMER
AGREES THAT
UNDER NO CIRCUMSTANCES WILL THE PROCEEDS
OF THE LOAN BE USED: (A)
FOR PERSONAL,
FAMILY OR HOUSEHOLD
PURPOSES OF ANY PERSON WHATSOEVER, OR (B) TO
PURCHASE, CARRY
OR TRADE IN SECURITIES, OR REPAY DEBT INCURRED
TO PURCHASE,
CARRY OR TRADE IN SECURITIES, OR (C) UNLESS OTHERWISE CONSENTED TO
IN WRITING BY
MLBFS, TO PAY ANY AMOUNT TO MERRILL LYNCH AND CO., INC. OR ANY OF ITS
SUBSIDIARIES, OTHER
THAN MERRILL LYNCH BANK USA, MERRILL LYNCH BANK & TRUST CO.
OR ANY SUBSIDIARY OF EITHER OF THEM (INCLUDING MLBFS
AND MERRILL LYNCH CREDIT
CORPORATION).
2.5 COMMITMENT
FEE. In consideration of the agreement by
MLBFS to extend the
Loan to Customer in accordance with and subject to
the terms hereof, Customer
has paid or shall, on or before the Closing Date pay,
the Commitment Fee to
MLBFS. Customer
acknowledges and
agrees that the Commitment Fee has been fully
earned by MLBFS, and that it will not under any
circumstances be refundable.
2.6 PREPAYMENTS.
In the event and on each occasion that
any net proceeds are
received by
or on behalf of Customer or any
Consolidated Entity in respect of
any of the following:
(i) the disposition of
any or all of the fixed assets of
any Consolidated
Entity, whether by sale, lease, transfer or otherwise
(but
excluding damage, destruction, loss or condemnation), other than in
the ordinary
course of business; (ii) any equity issuance by Customer or
any Consolidated
Entity, or (iii) the
incurrence by Customer or any of the Consolidated Entities
of any indebtedness not permitted to be incurred by any
Loan Document, then,
immediately after such net proceeds are received, Customer shall
prepay pro rata
the Loan and the term
loans outstanding under the other Term Loan Agreements in
an amount equal to such net proceeds.
ARTICLE III. GENERAL PROVISIONS
3.1 REPRESENTATIONS
AND WARRANTIES
Customer represents
and warrants to MLBFS that:
(A)
COMPLIANCE WITH
ANTI-TERRORISM,
EMBARGO, SANCTIONS AND ANTI-MONEY
LAUNDERING LAWS.
Without limiting the generality of any other provision in this
Loan Agreement:
(i) each Credit Party has taken all reasonable
measures, in
accordance with
all applicable Anti-Terrorism and Anti-Money
Laundering Laws
with respect
to each holder of a direct or indirect interest
in such Credit
Party, to assure that funds invested by such
holders in the Credit Parties are
derived from
legal sources; (ii) to Customer's knowledge after making due
inquiry, neither
any of the Credit Parties nor any holder of a direct or
indirect interest
in the Credit Parties: (a) is under investigation by
any
governmental authority
for, or has ever been charged with, or convicted of, any
violation of
any Anti-Terrorism and Anti-Money Laundering Laws or any
other
criminal activity,
(b) has been assessed civil penalties under any
Anti-Terrorism and
Anti-Money
Laundering
Laws, (c) has had any of its funds
seized or forfeited in an action under any Anti-Terrorism and Anti-Money
Laundering Laws
or (d) is a Person
with whom a citizen of the United States is
prohibited to
engage in transactions pursuant to any Anti-Terrorism and
Anti-Money Laundering
Laws; (iii) each Credit Party has taken reasonable steps,
consistent with
industry practice for comparable organizations and in any event
as required
by law, to ensure that such Credit Parties are and
shall be in
compliance with
all Anti-Terrorism and Anti-Money Laundering Laws;
provided
--------
however, Sections
(i) and (ii) of this
provision shall not apply to the extent
----
that such Person's interest is in or through an entity whose
securities are
traded on a national securities exchange.
(B)
ORGANIZATION AND EXISTENCE. Customer is a corporation, duly
organized
and validly existing in good standing under the laws of the State
of Delaware
and is qualified to do business and in good standing in each other
state where
the nature of its business or the property owned by it make such
qualification
necessary; and, where applicable, each Business Guarantor is duly
organized,
validly existing and in good standing under the laws of the state
of its
formation and is qualified to do business and in good standing in
each other
state where the nature of its business or the property owned by it
make such
qualification necessary.
(C)
EXECUTION, DELIVERY AND PERFORMANCE. Each Credit Party has the
requisite
power and authority to enter into and perform the Loan Documents.
The Customer
holds all necessary permits, licenses, certificates of occupancy
and other
governmental authorizations and approvals required in order to own
or operate
the Customer's business. The execution, delivery and
performance by Customer of
this Loan Agreement and by each of the other Credit Parties of such
of the other
Loan Documents to which it is a party: (i) have been duly
authorized by all
requisite action, (ii) do not and will not violate or conflict with
any law,
order or other governmental requirement, or any of the agreements,
instruments
or documents which formed or govern any of the Credit Parties, and
(iii) do not
and will not breach or violate any of the provisions of, and will
not result in
a default by any of the Credit Parties under, any other agreement,
instrument or
document to which it is a party or is subject.
(D)
NOTICES AND
APPROVALS.
Except as may have been given or
obtained, no
notice to or consent
or approval of any governmental body or authority or other
third party
whatsoever
(including, without
limitation, any other creditor) is
required in connection with the execution, delivery or performance
by any Credit
Party of such of this Loan Agreement, the
Note and the other Loan Documents to
which it is a party.
(E)
ENFORCEABILITY. The
Loan Documents to which any Credit Party is a party
are the respective legal, valid and binding
obligations of such Credit Party,
enforceable against
it or them, as the case may be, in
accordance with their
respective terms,
except as enforceability may be limited by bankruptcy
and
other similar
laws affecting the rights of creditors generally
or by general
principles of
equity.
(F)
COLLATERAL. Except for priorities afforded to any Permitted Liens:
(i)
Customer has good and marketable title to the Collateral, (ii) none
of the
Collateral is subject to any lien, encumbrance or security
interest, and (iii)
upon the filing of all Uniform Commercial Code financing
statements
authenticated or otherwise authorized by Customer with respect to
the Collateral
in the appropriate jurisdiction(s) and/or the completion of any
other action
required by applicable law to perfect its liens and security
interests, MLBFS
will have valid and perfected first liens and security interests
upon all of the
Collateral.
(G)
FINANCIAL STATEMENTS. Except as expressly set forth in Customer's
or any
Business Guarantor's financial statements, all financial statements
of Customer
and each Business Guarantor furnished to MLBFS have been prepared
in conformity
with generally accepted accounting principles, consistently
applied, are true
and correct in all material respects, and fairly present the
financial condition
of it as at such dates and the results of its operations for the
periods then
ended (subject, in the case of interim unaudited financial
statements, to normal
year-end adjustments); and since the most recent date covered by
such financial
statements, there has been no material adverse change in any such
financial
condition or operation. All financial statements furnished to MLBFS
of any
Guarantor other than a Business Guarantor are true and correct in
all material
respects and fairly represent such Guarantor's financial condition
as of the
date of such financial statements, and since the most recent date
of such
financial statements, there has been no material adverse change in
such
financial condition.
(H)
LITIGATION;
COMPLIANCE
WITH ALL LAWS. No litigation, arbitration,
administrative or
governmental
proceedings are pending or, to the knowledge of
Customer, threatened
against any Credit Party, which would, if adversely
determined, materially
and adversely affect (i) such Credit Party's interest in
the Collateral
or the liens and
security interests of MLBFS hereunder or under
any of the Loan
Documents, or (ii) the financial condition of such Credit Party
or its continued operations. Each Credit Party is in compliance
in all material
respects with
all laws, regulations, requirements
and approvals applicable to
such Credit
Party.
(I)
TAX RETURNS. All federal, state and local tax returns, reports
and
statements required to be filed by any Credit Party have been filed
with the
appropriate governmental agencies and all taxes due and payable by
any Credit
Party have been timely paid (except to the extent that any such
failure to file
or pay will not materially and adversely affect (i) either the
liens and
security interests of MLBFS hereunder or under any of the Loan
Documents, (ii)
the financial condition of any Credit Party, or (iii) its continued
operations)
unless such taxes are being actively contested in good faith, and
there are
adequate reserves to timely pay any such taxes determined to be
owed.
(J)
COLLATERAL LOCATION. All of the tangible Collateral is located at
a
Location of Tangible Collateral.
(K)
NO DEFAULT. No
"Default" or "Event of Default" (each as defined in this
Loan Agreement or any of the other Loan Documents) has occurred and
is
continuing.
(L)
NO OUTSIDE BROKER. Except for employees of MLBFS, Merrill Lynch,
Pierce,
Fenner & Smith Incorporated ("MLPF&S") or one of their
affiliates, Customer has
not in connection with the transactions contemplated hereby
directly or
indirectly engaged or dealt with, and was not introduced or
referred to MLBFS
by, any broker or other loan arranger.
Each of the foregoing representations and
warranties: (i) has been and will be
relied upon
as an inducement to
MLBFS to make the Loan, and (ii) is continuing
and shall be deemed remade by Customer on the Closing Date.
3.2 FINANCIAL
AND OTHER INFORMATION
(a)
Customer shall furnish or cause to be furnished to MLBFS during the
term
of this Loan Agreement all of the following:
(i)
CERTIFICATE OF COMPLIANCE. Within 45 days after the close of each
fiscal
quarter of Customer, a Certificate of Compliance, duly executed by
an authorized
officer of
Customer, in the form of Exhibit B attached
hereto, or such other
form as reasonably required by MLBFS from time to time;
(ii)
A/R AGINGS.
Within 15 days after the close of each fiscal
month of
Customer, a
copy of the Accounts
Receivable Aging of the Consolidated Entities
as of the end of such fiscal month;
(iii) BACKLOG REPORTS.
Within 45 days after the close of each fiscal quarter
of Customer, a copy of the Sales Backlog Report of the Consolidated
Entities as
of the end of such fiscal quarter;
(iv)
SEC REPORTS. Customer shall furnish or cause to be furnished to
MLBFS
not later than 10 days after the date of filing with the Securities
and Exchange
Commission ("SEC"), a copy of each 10-K, 10-Q and other report
required to be
filed with the SEC during the term hereof by the Consolidated
Entities;
(v)
PROJECTIONS. Not
earlier than thirty (30) days prior to the beginning
of each fiscal year of Customer, financial projections of Customer
and the
Consolidated Entities on a consolidated basis, including cash flow,
balance
sheet and income statements, on a quarterly basis for such fiscal
year and on an
annual basis for the immediately succeeding two (2) fiscal years,
all in
reasonable detail, in form satisfactory to MLBFS, and certified by
the chief
financial officer of Customer as Customer's good faith projections
of the
matters contained therein; and
(vi)
OTHER INFORMATION. Such other information as MLBFS may from time
to
time reasonably request relating to Customer, any Credit Party or
the
Collateral.
(b)
GENERAL AGREEMENTS
WITH RESPECT TO FINANCIAL INFORMATION. Customer
agrees that
except as otherwise specified herein or otherwise agreed to
in
writing by
MLBFS: (i) all annual
financial statements required to be furnished
by Customer
to MLBFS hereunder will be prepared by either the current
independent accountants for Customer or other independent
accountants reasonably
acceptable to
MLBFS, and (ii) all other financial
information required to be
furnished by
Customer to MLBFS hereunder will be certified
as correct in all
material respects
by the party who has prepared such
information, and, in the
case of internally prepared information with respect to Customer or
any Business
Guarantor, certified
as correct by their respective chief
financial officer.
3.3 OTHER COVENANTS
Customer further
covenant s and agrees during the term of
this Loan Agreement
that:
(a)
COMPLIANCE WITH
ANTI-TERRORISM,
EMBARGO, SANCTIONS AND ANTI-MONEY
LAUNDERING LAWS.
Each
Credit Party (i) shall
take all reasonable measures in
accordance with
all applicable Anti-Terrorism and Anti-Money
Laundering Laws
with respect
to each holder of a direct or indirect interest
in such Credit
Party, to assure that funds invested by such
holders in the Credit Parties are
derived from
legal sources; (ii) shall not violate any Anti-Terrorism and
Anti-Money Laundering
Laws, and (iii) shall take reasonable
steps, consistent
with industry practice for comparable organizations and in any
event as required
by law, to ensure that such Credit Parties
are and shall be in compliance with
all Anti-Terrorism
and Anti-Money Laundering Laws;
provided however, Sections
----------------
(i) and (ii) of this
provision shall not apply to the extent that such Person's
interest is
in or through an entity whose
securities are traded on a national
securities
exchange.
(b)
FINANCIAL RECORDS; INSPECTION. Each Credit Party (other than
any
Individual Guarantor) will: (i) maintain at its principal place of
business
complete and accurate books and records, and maintain all of its
financial
records in a manner consistent with the financial statements
heretofore
furnished to MLBFS, or prepared on such other basis as may be
approved in
writing by MLBFS; and (ii) permit MLBFS or its duly authorized
representatives,
upon reasonable notice and at reasonable times, to inspect its
properties (both
real and personal), operations, books and records.
(c)
TAXES. Each Credit Party will pay when due all of its respective
taxes,
assessments and other governmental charges, howsoever designated,
and all other
liabilities and obligations, except to the extent that any such
failure to file
or pay will not materially and adversely affect either the liens
and security
interests of MLBFS hereunder or under any of the Loan Documents,
the financial
condition of any Credit Party or its continued operations.
(d)
COMPLIANCE WITH LAWS AND AGREEMENTS. No Credit Party will violate
(i)
any law, regulation or other governmental requirement, any judgment
or order of
any court or governmental agency or authority; (ii) any agreement,
instrument or
document which is material to its operations or to the operation or
use of any
Collateral, in each case as contemplated by the Loan Documents; or
(iii) any
agreement, instrument or document to which it is a party or by
which it is
bound, if any such violation will materially and adversely affect
either the
liens and security interests of MLBFS hereunder or under any of the
Loan
Documents , the financial condition of any Credit Party, or its
continued
operations.
(e)
NO USE OF MERRILL LYNCH NAME.
