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EXHIBIT 10
LOAN AGREEMENT
This LOAN AGREEMENT is made this 30th day of June 2005,
between DIVERSIFIED SECURITY SOLUTIONS,
INC., a corporation organized and
existing pursuant to the laws of the State
of Delaware, ("Borrower") having an
address at 280 Midland Avenue, Saddle
Brook, New Jersey 07663 and HUDSON UNITED
BANK, A New Jersey corporation, and its
successors and assigns, ("Lender") with
an office at 1000 MacArthur Boulevard,
Mahwah, New Jersey 07430.
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender extend a FOUR
MILLION and 00/100 (4,000,000.00) DOLLAR
two (2) year credit facility (the
"Revolving Loan"), the proceeds of which
will be used solely to repay the
existing indebtedness of Henry Bros.
Electronics, Inc. to the Bank, and for
working capital and acquisition
financing;
WHEREAS, Borrower has also requested Lender to extend a ONE
MILLION and 00/100 (1,000,000.00) DOLLAR
term loan (the "Term Loan"), the
proceeds of which shall be used to
refinance existing indebtedness to Lender;
and
WHEREAS, Lender is willing to extend the credit facilities on
the terms and subject to the conditions set
forth in this Agreement.
AGREEMENT
1. DEFINITIONS. As used herein, the following terms shall have
the
following meanings (terms defined in the
singular to have the same meaning when
used in the plural and vice versa):
1.1. "Account Debtor" shall mean any Person who is or may
become
obligated under or on account of any
Receivable.
1.2. "Advance" shall mean any loan or advance made by Lender in
connection with the Term Loan or the
Revolving Loan.
1.3. "Affiliate" shall mean any Person: (i) which directly or
indirectly through one or more
intermediaries controls, or is controlled by, or
is under common control with, Borrower;
(ii) which beneficially owns or holds
five (5) percent or more of any class of
the voting stock or other equity
interest in Borrower; or (iii) five (5)
percent or more of the voting stock or
other equity interest of which is
beneficially owned or held by Borrower. For
purposes hereof, "control" means the
possession, directly or indirectly, of the
power to direct or cause the direction of
the management and policies of a
Person, whether through the ownership of
voting stock or other equity interests,
by contract or otherwise. For purposes
thereof, a Subsidiary constitutes an
"Affiliate".
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1.4. "Authenticate" shall mean to sign or to execute or
otherwise
adopt a symbol, or encrypt or similarly
process a record, in whole or in part,
with the present interest of the
authenticating person to identify the person
and adopt or accept a Record.
1.5. "Bank Accounts" shall have the meaning set forth in
Section
5.20 of this Agreement.
1.6. "Banking Day" shall mean any day on which commercial banks
are not authorized or required to close in
the State of New Jersey.
1.7. "Borrower" shall mean Diversified Security Solutions, Inc.
1.8. "Capital Expenditure" shall mean, as determined in
accordance
with GAAP, the dollar amount of gross
expenditures (including obligations under
capital leases) made or incurred for fixed
assets, real property, plant and
equipment, and all renewals, improvements
and replacements thereto (but not
repairs thereof) during any period.
1.9. "Code" shall mean the Internal Revenue Code of the United
States.
1.10. "Contract Year" shall mean, during the term of the Loans,
each consecutive twelve (12) month period
commencing on the date hereof and, in
each case, ending on the date which is one
day prior to the applicable
anniversary date hereof.
1.11. "Current Ratio" shall mean the ratio of Borrower's
current
assets to Borrower's current liabilities
exclusive of the Revolving Loan.
1.12. "Debt Service Coverage Ratio" shall mean the ratio of
Borrower's net income after taxes plus
depreciation and amortization expenses to
the principal payments due on Borrower's
long-term debt for the previous four
fiscal quarters.
1.13. "Default" shall mean an event or condition the occurrence
of
which would, with the lapse of time or the
giving of notice, or both, become an
Event of Default, whether or not Lender has
declared an Event of Default to have
occurred.
1.14. "EBITDA" shall mean Borrower's total income before
interest
expense, taxes, depreciation and
amortization, all calculated in accordance with
GAAP.
1.15. "Effective Tangible Net Worth" shall mean Borrower's
total
assets minus Senior Liabilities. For
purposes of this computation, the aggregate
amount of (1) any intangible assets of
Borrower including without limitation,
goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights,
service marks and brand names, plus (2)
amounts owing, if any, from
shareholders, officers or Affiliate
entities shall be subtracted from total
assets.
1.16. "Environment" shall mean any water or water vapor, any
land
surface or subsurface, air, fish, wildlife,
biota and all other natural
resources.
1.17. "Environmental Laws" shall mean all federal, state and
local
environmental, land use, zoning, health,
chemical use, safety and sanitation
laws, statutes, ordinances and codes
relating to the protection of the
Environment and/or governing the use,
storage, treatment, generation,
transportation, processing, handling,
production or disposal of "hazardous
substances" and the rules, regulations,
policies, guidelines, interpretations,
decisions,
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orders and directives of federal, state and
local governmental agencies and
authorities with respect thereto.
1.18. "ERISA" shall mean the Employee Retirement Income
Security
Act of 1974, as amended.
1.19. "Events of Default" shall have the meaning set forth in
Article 11 of this Agreement.
1.20. "Fiscal Year" shall mean with respect to any Person, a
year
of 365 or 366 days, as the case may be,
ending on the last day of any calendar
year.
1.21. "GAAP" shall mean generally accepted accounting
principles
consistently applied and maintained
throughout the period indicated and
consistent with the prior financial
practice of Borrower, except for changes
mandated by the Financial Accounting
Standards Board or any similar accounting
authority of comparable standing. Whenever
any accounting term is used herein
which is not otherwise defined, it shall be
interpreted in accordance with GAAP.
1.22. "Governmental Rules" shall have the meaning given to such
term in Section 5.21 of this Agreement.
1.23. "Guarantor" shall mean all Guarantors (whether one or
more)
and, if more than one, each Guarantor
individually, named on Schedule 1.23
attached hereto, as well as any Person who
shall become a Guarantor pursuant to
Section 9.1 of this Agreement.
1.24. "Guaranty" shall mean the guaranty dated the date hereof
and
executed and delivered by Guarantor to
Lender in connection with this Agreement,
as well as a guaranty executed and
delivered to Lender pursuant to Section 9.1
of this Agreement.
1.25. "Indebtedness" shall mean and include all obligations for
borrowed money of any kind or nature,
including funded debt and unfunded
liabilities, contingent obligations under
guaranties or letters of credit, but
excluding performance bonds, and all
obligations for the acquisition or use of
any fixed asset, including capitalized
leases, or improvements which are payable
over a period longer than one year,
regardless of the term thereof or the Person
or Persons to whom the same is payable and
the Obligations.
1.26. "Lender" shall mean Hudson United Bank.
1.27. "Loan Documents" shall mean this Agreement, the Guaranty
and
all other documents and instruments to be
delivered by Borrower or any other
Person under this Agreement or in
connection with the Loans or any other
Indebtedness or Obligations of Borrower to
Lender, as the same may be amended,
modified or supplemented from time to
time.
1.28. "Loans" shall mean the loans and advances made by Lender
under this Agreement, including all
Advances.
1.29. "Material Adverse Effect" shall mean any material adverse
effect, as determined by Lender in the
exercise of its reasonable business
judgment, on (a) the business, assets,
operations, prospects or condition,
financial or otherwise, of Borrower or
Guarantor; (b) Borrower's ability to pay
or perform the Obligations in accordance
with their terms; (c) the validity or
enforceability of this Agreement or any of
the Loan Documents; or (d) the
practical realization of the benefits,
rights and remedies inuring to Lender
under this Agreement or under the Loan
Documents.
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1.30. "Maximum Facility" shall mean Five Million and 00/100
(5,000,000.00) Dollars.
1.31. "Notice of Borrowing" shall mean a borrowing request in a
Record substantially in the form of Exhibit
C attached hereto.
1.32. "Obligations" shall mean and include all loans (including
the Loans), advances, debts, liabilities,
obligations, covenants and duties
owing by Borrower to Lender or any
Affiliate of Lender of any kind or nature,
present or future, whether or not evidenced
by any note, guaranty or other
instrument, whether arising under this
Agreement, the other Loan Documents or
under any other agreement or by operation
of law, whether or not for the payment
of money, whether arising by reason of an
extension of credit, opening,
guaranteeing or confirming of a letter of
credit, loan, guaranty,
indemnification or in any other manner,
whether direct or indirect, (including
those acquired by purchase or assignment),
absolute or contingent, due or to
become due, now due or hereafter arising
and howsoever acquired including,
without limitation, all interest, charges,
expenses, commitment, facility,
collateral management or other fees,
attorneys' fees and expenses, consulting
fees and expenses and any other sum
chargeable to Borrower under this Agreement,
the other Loan Documents or any other
agreement with Lender.
1.33. "Person" shall mean an individual, partnership, limited
liability company, limited liability
partnership, corporation, joint venture,
joint stock company, land trust, business
trust or unincorporated organization
or a government or agency or political
subdivision thereof.
1.34. "Plan" shall mean an employee benefit plan or other plan
now
or hereafter maintained for employees of
Borrower or any subsidiary of Borrower
and covered by Title IV of ERISA.
1.35. "Prime Rate" means the floating commercial loan rate of
Hudson United Bank announced by it from
time to time as its Prime Rate.
1.36. "Property" shall mean any interest in any kind of
property
or asset, whether real, personal or mixed,
or tangible or intangible.
1.37. "Receivables" shall mean and include all present and
future
accounts including, without limitation,
healthcare receivables, credit card
receivables, software and license fees,
contract rights, promissory notes,
chattel paper, electronic chattel paper,
instruments and documents, all tax
refunds and rights to receive tax refunds,
bonds, certificates, rights to
payment for the sale, lease or license or
equipment and policies of insurance
and insurance proceeds, investment
securities, notes and instruments, deposit
accounts, book accounts, credits and
reserves and all forms of obligations
whatsoever owing, together with all
instruments, all documents of title
representing any of the foregoing, and all
rights in any merchandise or goods
which any of the same may represent, all
files and records with respect to any
collateral or security given by Borrower to
Lender, together with all right,
title, security and guaranties with respect
to each Receivable, including any
right of stoppage in transit, whether now
owned or hereafter created or acquired
by Borrower or in which Borrower now has or
hereafter acquires any interest.
1.38. "Reconciliation Report" shall mean a report in form
satisfactory to Lender, reconciling
Borrower's quarter-end Receivable agings,
payable agings and inventory listings to
Borrower's quarterly financial
statements.
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1.39. "Record" shall mean information that is inscribed on a
tangible medium or which is stored in an
electronic or other medium and is
retrievable in perceivable form. If Lender
so specifies with respect to a
particular type of Record, that type of
Record shall be signed or otherwise
authenticated by Borrower.
1.40. "Reportable Event" shall have the meaning assigned to
that
term in Title IV of ERISA.
1.41. "Revolving Loan" shall mean the Advances to be made by
Lender to Borrower pursuant to Section 2.1
of this Agreement, and all interest
thereon and all fees, costs and expenses
payable by Borrower in connection
therewith.
1.42. "Revolving Loan Interest Rate" shall mean the Prime Rate.
1.43. "Revolving Note" shall mean, the promissory note
substantially in the form annexed hereto as
Exhibit A to be given by Borrower to
Lender to evidence the Revolving Loan.
1.44. "Senior Liabilities" shall mean the total liabilities
including capitalized leases and all
reserves for deferred taxes and other
deferred sums appearing on the liabilities
side of a balance sheet of Borrower
in accordance with GAAP but excluding debt
fully subordinated to Lender on terms
and conditions acceptable to Lender.
1.45. "Solvent" shall mean when used with respect to any
Person,
such Person (i) owns property the fair
value of which is greater than the amount
required to pay all of such Person's
Indebtedness (including contingent debts),
(ii) owns property the present fair salable
value of which is greater than the
amount that will be required to pay the
probable liabilities of such Person on
its then existing Indebtedness as such
become absolute and matured, (iii) is
able to pay all of its Indebtedness as such
Indebtedness matures, and (iv) has
capital sufficient to carry on its then
existing business.
1.46. "Subsidiary" shall mean any corporation in which more
than
fifty (50) percent of the issued and
outstanding Voting Stock is owned, directly
or indirectly, by Borrower.
1.47. "Term Loan" shall mean the Advance made to Borrower by
Lender pursuant to Section 2.2 of this
Agreement, and all interest thereon and
all fees, costs, and expenses payable by
Borrower in connection therewith.
1.48. "Term Loan Interest Rate" shall mean a fixed rate of
interest equal to 6.75%.
1.49. "Term Note" shall mean the promissory note substantially
in
the form annexed hereto as Exhibit B to be
given by Borrower to Lender to
evidence the Term Loan.
1.50. "Termination Date of Revolving Loan" shall mean the
earlier
of May 1, 2007 or the date of which Lender
terminates this Agreement pursuant to
Section 11.1 of this Agreement.
1.51. "Termination Date of Term Loan" shall mean the earlier of
June 30, 2010, or the date on which Lender
terminates this Agreement pursuant to
Section 11.1 of this Agreement.
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1.52. "UCC" means the Uniform Commercial Code as in effect from
time to time.
1.53. "Voting Stock" means securities of any class or classes of
a
corporation, the holders of which are
ordinarily, in the absence of
contingencies, entitled to elect a majority
of the corporate directors (or
individuals performing similar
functions).
2. LOANS.
2.1. Advances under the Revolving Loan. Subject to the terms
and
conditions of this Agreement and relying
upon the representations and warranties
set forth in this Agreement, for so long as
no Default or Event of Default
exists, Lender shall lend to Borrower on
its request a sum equal to the
aggregate of $4,000,000.00 and subject to
the other limitations set forth in
this Section 2.1 and limitations set forth
in this Agreement, Borrower may
borrow, repay and re-borrow Advances until
May 1, 2007 (the "Maturity Date").
Each Advance requested under the Revolving
Loan (a "Revolving Loan Advance")
shall be requested in an Authenticated
Record sent via facsimile transmission by
a Notice of Borrowing under the Revolving
Loan executed by an authorized officer
of Borrower, not later than 2:00 p.m.
Eastern Time on any Banking Day on which a
Revolving Loan Advance is requested.
Provided that Borrower shall have satisfied
all conditions precedent set forth in this
Agreement, including the
reaffirmation of the representations and
warranties and covenants as provided in
Article 5 of this Agreement, Lender shall
make the Revolving Loan Advance to
Borrower in the amount requested in the
Record by Borrower in immediately
available funds for credit to any account
of Borrower (other than a payroll
account) with Lender as Borrower may
specify. Lender shall not be responsible
for any failure of any amount so
transferred to be credited to any such account
unless such failure is due to Lender's
gross negligence or willful misconduct.
2.2. Advance under the Term Loan. Subject to the terms and
conditions of this Agreement and relying
upon the representations and warranties
set forth in this Agreement, so long as no
Default or Event of Default exists,
Lender agrees to lend Borrower a principal
sum of $1,000,000.00 for the sole
purpose of refinancing existing
indebtedness to Lender.
2.3. Overline. Borrower acknowledges that Lender has advised
Borrower that Lender does not intend to
permit Borrower to incur Obligations
under this Agreement at any time in an
outstanding principal amount exceeding
the Maximum Facility or the maximum amount
of the Revolving Loan; however, it is
agreed that should the Obligations of
Borrower to Lender incurred under the
Loans or otherwise exceed either then, such
excess Obligations shall (a)
constitute Obligations under this
Agreement, (b) be entitled to the benefit of
all security and protection under this
Agreement and the other Loan Documents,
and (c) be payable immediately without
notice or demand by Lender.
2.4. Payment on the Revolving Loan. Commencing on August 1,
2005
and continuing on the same day of each and
every month thereafter until the
Termination Date of the Revolving Loan,
Borrower shall pay all accrued but
unpaid interest only, at the Revolving Loan
Interest Rate, provided no Default
or Event of Default has occurred.
Notwithstanding anything herein to the
contrary, the entire outstanding principal
balance of the Revolving Loan, plus
all accrued and unpaid interest thereon and
all fees and other amounts payable
under this Agreement and the Loan
Documents, shall be due and payable in full,
on the Termination Date of Revolving
Loan.
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2.5. Payment on the Term Loan. Commencing on July 30, 2005 and
continuing on the same day of each and
every month thereafter, Borrower shall
repay the Term Loan in sixty (60) equal
consecutive monthly installment payments
of principal and interest of $19,729.65
until the Termination Date of the Term
Loan on which date the entire unpaid
principal balance of the Term Loan together
with all accrued but unpaid interest shall
be immediately due and payable. Any
prepayment of principal or interest, or
prepayment of principal, howsoever
designated by Borrower, shall be applied
first to accrued interest and the
balance, if any, to the principal balance
outstanding.
2.6. Evidence of Borrower's Obligations. Borrower's obligation
to
pay the principal of, and interest on, the
Advances made to Borrower shall be
evidenced by the Term Note and the
Revolving Note, respectively, executed by
Borrower and delivered to Lender.
2.7. Prepayment. Borrower shall be permitted to prepay, in full
or
in part, at any time, without premium or
penalty, the principal balance of the
Revolving Loan or the Term Loan or both.
Each such prepayment shall be not less
than five thousand (5,000.00) dollars. Any
partial prepayments made by Borrower
on the Term Loan will be applied against
the remaining unpaid principal payments
due on the Term Loan in the inverse order
of the maturity of such payments.
3. LENDER'S COMPENSATION.
3.1. Interest on Advances. Borrower shall pay interest, in
arrears, on the first day of each month
commencing August 1, 2005, on the
average daily unpaid principal amount of
the Revolving Loan at the Revolving
Loan Interest Rate until the Termination
Date of the Revolving Loan. Borrower
shall pay principal and interest, in
arrears, on the first day of each month
commencing July 30, 2005 at the Term Loan
Interest Rate until the Termination
Date of the Term Loan. Notwithstanding the
foregoing, on and after the
occurrence of a Default or an Event of
Default, Borrower shall pay interest on
the Revolving Loan and the Term Loan at a
rate which is three (3) percent per
annum above the Revolving Loan Interest
Rate or the Term Loan Interest Rate, as
the case may be; provided, however, in no
event shall any interest to be paid
under this Agreement or under any Loan
Document exceed the maximum rate
permitted by law.
3.2. Computation of Interest and Fees. All interest and fees
under
this Agreement shall be computed on the
basis of a year consisting of three
hundred sixty (360) days for the number of
days actually elapsed.
3.3. Payments. All payments of principal and interest with
respect
to the Obligations shall be charged by
Lender to Borrower's operating account
maintained with Lender, which operating
account shall be maintained throughout
the term of the Revolving Loan and the Term
Loan. In the event that Borrower's
operating account contains insufficient
collected funds, Lender may at its
discretion deem any such payment as an
Advance or require Borrower to pay to
Lender in U.S. currency the amount of such
payment. All such payments shall be
without any defense, offset or counterclaim
of any kind. Any such payment made
to Lender shall be paid to Lender at Hudson
United Bank, Attn: Loan Operations,
1000 MacArthur Boulevard, Mahwah, New
Jersey or at such other address as Lender
shall specify, by 2:00 p.m. New York, New
York time on the date when due.
Whenever any payment to be made shall
otherwise be due on a day that is not a
Banking Day, such payment shall be made on
the next succeeding Banking Day and
such extension of time shall be included in
computing interest in
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connection with any such payment. Lender
may make an Advance to reimburse itself
for any payments on the Obligations
(including fees and expenses payable by
Borrower), which are not paid when due,
without notice or demand to Borrower.
Any delay or failure by Lender in
submitting any invoice for such interest or
fee or in the making of an Advance under
the Revolving Loan or the Term Loan
shall not discharge or relieve Borrower of
its obligation to make such interest
or fee payment.
3.4. Late Charge. In the event that any payment on the
Revolving
Loan or the Term Loan shall become overdue
for a period of ten (10) days or
more, a late charge of five (.05) cents for
each dollar so overdue may be
charged by Lender for the purpose of
defraying the expense incident to handling
such delinquent payment.
4. APPLICATION OF PROCEEDS. The proceeds of the Advances under the
Term
Loan shall be used solely by Borrower to
refinance existing indebtedness to
Lender. The proceeds of Advances under the
Revolving Loan shall be used solely
by Borrower for working capital and
acquisition financing.
5. INDUCING REPRESENTATIONS. In order to induce Lender to make
the
Loans, Borrower makes the following
representations and warranties to Lender:
5.1. Organization and Qualifications. Borrower is and always
has
been a corporation duly organized and
existing under the laws of the State of
Delaware. Borrower's tax identification
number is 22-3690168 and its
organizational identification number is
N/A. Borrower and each Guarantor is
qualified to do business in every
jurisdiction where the nature of its business
requires it to be so qualified. Each
Guarantor is and always has been an entity
duly organized and existing under the laws
of the state set forth on Schedule
5.1. Each Guarantor's tax identification
number and organizational
identification number is set forth on
Schedule 5.1.
5.2. Name and Address. During the preceding five (5) years,
neither Borrower nor any Guarantor has been
known by nor has used any other name
whether corporate, fictitious or otherwise,
except as set forth on Schedule 5.2
attached hereto. Borrower's office is at
the address set forth above.
5.3. Structure. Borrower has no Subsidiaries or Affiliates,
except
as set forth on Schedule 5.3 attached
hereto.
5.4. Legally Enforceable Agreement. The execution, delivery and
performance of this Agreement, each and all
of the other Loan Documents and each
and all other instruments and documents to
be delivered by Borrower or its
Affiliates under this Agreement and the
creation of all liens, and security
interests provided for herein are within
Borrower's corporate power, have been
duly authorized by all necessary or proper
corporate action including the
consent of shareholders where required, are
not in contravention of any
agreement or indenture to which Borrower is
a party or by which it is bound, or
of the Certificate of Incorporation or
By-Laws of Borrower, and are not in
contravention of any provision of law and
the same do not require the consent or
approval of any governmental body, agency,
authority or any other Person which
has not been obtained and a copy thereof
furnished to Lender.
5.5. Solvent Financial Condition. Borrower and each Guarantor
is
Solvent.
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5.6. Financial Statements. The financial statements of Borrower
and Guarantor for the fiscal year ended
December 31, 2004, copies of which have
been delivered to Lender, fairly present
Borrower's and Guarantor's financial
condition and results of operations as
relevant and as of such date and there
have been no material adverse changes since
such date. Borrower and Guarantor
have no contingent liabilities, liabilities
for taxes, unusual forward or
long-term commitments, or unrealized or
unanticipated losses from any
unfavorable commitments which were not
disclosed in such financial statements or
the notes thereto.
5.7. Joint Ventures. Neither Borrower nor any Guarantor is
engaged
in any joint venture or partnership with
any other Person.
5.8. Real Estate. Attached hereto as Schedule 5.8 is a list
showing all real property owned or leased
by Borrower or any Guarantor, and if
leased, the correct name and address of the
landlord and the date and term of
the applicable lease.
5.9. Patents, Trademarks, Copyrights and Licenses. Borrower
owns
or possesses all the patents, trademarks,
service marks, trade names, copyrights
and licenses necessary for the present and
planned future conduct of its
business without any conflict with the
rights of others.
5.10. Existing Business Relationship. There exists no actual or
threatened termination, cancellation or
limitation of, or any adverse
modification or change in, the business
relationship of Borrower or any
Guarantor with any supplier, customer or
group of customers whose purchases
individually or in the aggregate could
effect the operations or the financial
condition of Borrower or any Guarantor.
5.11. Investment Company Act: Federal Reserve Board
Regulations.
Borrower is not an "investment company", or
an "affiliated person" of, or
"promoter" or "principal underwriter" for,
an "investment company", as such
terms are defined in the Investment Company
Act of 1940, as amended (15 U.S.C.
'SS' 80(a)(1), et seq.). The making of the
Loans under this Agreement by Lender,
the application of the proceeds and
repayment thereof by Borrower and the
performance of the transactions
contemplated by this Agreement will not violate
any provision of such Act, or any rule,
regulation or order issued by the
Securities and Exchange Commission
thereunder. Borrower does not own any margin
security as that term is defined in
Regulation U of the Board of Governors of
the Federal Reserve System and the proceeds
of the Loans made pursuant to this
Agreement will be used only for the
purposes contemplated under this Agreement.
None of the proceeds will be used, directly
or indirectly, for the purpose of
purchasing or carrying any margin security
or for the purpose of reducing or
retiring any Indebtedness which was
originally incurred to purchase or carry
margin security or for any other purpose
which might constitute any of the Loans
under this Agreement a "purpose credit"
within the meaning of said Regulation U
or Regulations T or X of the Federal
Reserve Board. Borrower will not take, or
permit any agent acting on its behalf to
take, any action which might cause this
Agreement or any document or instrument
delivered pursuant hereto to violate any
regulation of the Federal Reserve
Board.
5.12. Tax Returns. Borrower and each Guarantor has filed all
tax
returns (Federal, state or local) required
to be filed and paid all taxes shown
thereon to be due including interest and
penalties or has provided adequate
reserves therefor. No assessments have been
made against Borrower or any
Guarantor by any taxing authority nor has
any penalty or
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deficiency been made by any such authority.
To the best of Borrower's knowledge,
no Federal income tax return of Borrower or
any Guarantor is presently being
examined by the Internal Revenue Service
nor are the results of any prior
examination by the Internal Revenue Service
or any State or local tax authority
being contested by Borrower or any
Guarantor.
5.13. Litigation. Except as disclosed in Schedule 5.13, no
action
or proceeding is now pending or, to the
knowledge of Borrower, is threatened
against Borrower or any Guarantor, at law,
in equity or otherwise, before any
court, board, commission, agency or
instrumentality of the Federal or state
government or of any municipal government
or any agency or subdivision thereof,
or before any arbitrator or panel of
arbitrators, and Borrower or any Guarantor
has not accepted liability for any such
action or proceeding. There is no
proceeding pending against Borrower or any
Guarantor before any governmental
agency (Federal, state or local) and, to
the best of Borrower's knowledge, no
investigation has been commenced before any
such governmental agency the effect
of which, if adversely decided, would or
could, have a Material Adverse Effect.
5.14. Title/Liens. There are no existing liens on any Property
of
Borrower or any Guarantor, except for liens
described on Schedule 5.14.
5.15. Existing Indebtedness. Neither Borrower nor any Guarantor
have any existing Indebtedness except the
Indebtedness described on Schedule
5.15.
5.16. ERISA Matters. The present value of all accrued vested
benefits under any Plan (calculated on the
basis of the actuarial evaluation for
the Plan) did not exceed as of the date of
the most recent actuarial evaluation
for such Plan the fair market value of the
assets of such Plan allocable to such
benefits. Borrower is not aware of any
information since the date of such
evaluation which would affect the
information contained therein. Such Plan has
not incurred an accumulating funding
deficiency, as that term is defined in
Section 302 of ERISA or Section 412 of the
Code (whether or not waived), no
liability to the Pension Benefit Guaranty
Corporation (other than required
premiums which have become due and payable,
all of which have been paid) has
been incurred with respect to the Plan and
there has not been any Reportable
Event which presents a risk of termination
of the Plan by the Pension Benefit
Guaranty Corporation. Borrower has not
engaged in any transaction which would
subject Borrower to tax, penalty or
liability for prohibited transactions
imposed by ERISA or the Code.
5.17.
O.S.H.A. To Borrower's knowledge, Borrower and each
Guarantor have duly complied with, and its
facilities, business, leaseholds,
equipment and other property are in
compliance in all respects with, the
provisions of the federal Occupational
Safety and Health Act and all
