CONFORMED COPY
REIMBURSEMENT AND INDEMNIFICATION AGREEMENT
This REIMBURSEMENT AND INDEMNIFICATION AGREEMENT (the
"Reimbursement Agreement") is entered into as of May 4, 1998 by and among
ADVANCED TELEMARKETING CORPORATION, a Nevada corporation ("Company"), ATC
COMMUNICATIONS GROUP, INC., a Delaware corporation ("Parent"), and XXXXXX
EQUITY INVESTORS III, L.P. ("Xxxxxx"), a Delaware limited liability company.
R E C I T A L S:
A. WHEREAS, pursuant to that certain Third Amendment to Loan and
Security Agreement dated May 4, 1998, which amends that certain Loan and
Security Agreement dated February 8, 1996 (the "Amendment") Bank One, Texas,
National Association (in its capacity as Agent or Lender, together with its
participants, successors or assigns in such capacities, "Bank") has agreed to
make certain advances of up to TWO MILLION DOLLARS ($2,000,000.00) to Company
(the "Bridge Loan").
B. WHEREAS, in order to induce Bank to execute the Amendment and
make the Bridge Loan, Bank has required Xxxxxx to arrange for a letter of
credit in the amount of TWO MILLION DOLLARS ($2,000,000.00) (the "Letter of
Credit") from The Bank of Nova Scotia ("Issuing Bank") to repay the principal
amount of the Bridge Loan in the event Company is unable to repay the Bridge
Loan.
C. WHEREAS, Xxxxxx has required that Parent and Company reimburse
and indemnify against any draws on the Letter of Credit and all expenses in
connection therewith, and Parent and Company have jointly and severally
agreed to reimburse and indemnify Xxxxxx against any draws on the Letter of
Credit and all expenses in connection therewith.
D. NOW, THEREFORE, in consideration of the premises and the
covenants contained herein and to induce Xxxxxx to provide certain financial
accommodations to Company and Parent:
A G R E E M E N T
1. DEFINITIONS. Unless otherwise defined herein, these terms
shall have the following meaning (such meanings being equally applicable to
both the singular and plural form of the terms defined). All capitalized
terms used but not otherwise defined herein have the meanings provided for by
Article 9 of the Texas Uniform Commercial Code ("Code") to the extent the
same are used or defined therein.
"ACCOUNT DEBTOR" shall mean any Person who may become
obligated to Parent or Company under, with respect to, or on account of, an
Account.
"ACCOUNTS" shall mean all "accounts," as such term is defined
in the Code, now owned or hereafter acquired by Parent or Company and, in any
event, including (a) all accounts receivable, other receivables, book debts
and other forms of obligations (other than forms of obligations evidenced by
Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to Parent or Company, whether arising out
of goods sold or services rendered by it or from any other transaction
(including any such obligations which may be characterized as an account or
contract right under the Code), (b) all of each of Parent's and Company's
rights in, to and under all purchase orders or receipts now owned or
hereafter acquired by it for goods or services, (c) all of each of Parent's
and Company's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods),
(d) all monies due or to become due to Parent and Company, under all purchase
orders and contracts for the sale of goods or the performance of services or
both by such entity or in connection with any other transaction (whether or
not yet earned by performance on the part of such entity) now or hereafter in
existence, including the right to receive the proceeds of said purchase
orders and contracts, and (e) all collateral security and guarantees of any
kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"BASIC DOCUMENTS" shall mean this Reimbursement Agreement, the
Letter of Credit, the Subordination and Intercreditor Agreement, the Note,
the Second Warrant, the Registration Agreement, the Security Agreement, the
Pledge Agreement, and the Merger Agreement.
"BUSINESS DAY" shall mean any day that is not a Saturday, a
Sunday, or a day on which banks are required or permitted to be closed in the
State of Texas.
"CHATTEL PAPER" shall mean any "chattel paper," as such term
is defined in the Code, now owned or hereafter acquired by Parent or Company,
wherever located.
"CLOSING DATE" shall mean May 4, 1998.
"COLLATERAL" shall mean (i) all Accounts; (ii) all Chattel
Paper; (iii) all Contracts; (iv) all Documents; (v) all Equipment; (vi) all
Fixtures; (vii) all General Intangibles; (viii) all Goods; (ix) all
Instruments; (x) all Inventory; (xi) all Investment Property; (xii) all
Deposit Accounts and other bank accounts and all deposits therein; (xiii) all
money, cash or cash equivalents of Grantor; (xiv) to the extent not otherwise
included, all Proceeds and products of the foregoing and all accessions to,
substitutions and replacements for, and rents and profits of, each of the
foregoing, and (xv) to the extent not otherwise included, all books, records,
software programs, computerized disks and other management and information
systems, data and technology related to any of the foregoing or to the
business of Parent or Company.
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"CONTRACTS" shall mean all "contracts," as such term is
defined in the Code, now owned or hereafter acquired by either Parent or
Company, in any event, including all contracts, undertakings, or agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in
or under which either Parent or Company may now or hereafter have any right,
title or interest, including any agreement relating to the terms of payment
or the terms of performance of any Account.
"COPYRIGHTS" shall mean all of the following now owned or
hereafter acquired by either Parent or Company: (a) all copyrights and
general intangibles of like nature (whether registered or unregistered), now
owned or existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including
all registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any state or
territory thereof, or any other country or any political subdivision thereof,
and (b) all reissues, extensions or renewals thereof.
"DEFAULT" shall mean any event which, with the passage of time
or notice or both, would, unless cured or waived, become an Event of Default.
"EQUIPMENT" shall mean all "equipment," as such term is
defined in the Code, now owned or hereafter acquired by either Parent and
Company, wherever located and, in any event, including all such entity's
machinery and equipment, including processing equipment, conveyors, machine
tools, data processing and computer equipment with software and peripheral
equipment (other than software constituting part of the Accounts), and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, all whether now
owned or hereafter acquired, and wherever situated, together with all
additions and accessions thereto, replacements therefor, all parts therefor,
all substitutes for any of the foregoing, fuel therefor, and all manuals,
drawings, instructions, warranties and rights with respect thereto, and all
products and proceeds thereof and condemnation awards and insurance proceeds
with respect thereto.
"DOCUMENTS" shall mean any "documents," as such term is defined
in the Code, now owned or hereafter acquired by Parent or Company, wherever
located.
"FINANCIAL STATEMENTS" shall mean the consolidated and
consolidating income statements, statements of cash flows and balance sheets
of Parent and Company.
"FIXTURES" shall mean any "fixtures" as such term is defined
in the Code, now owned or hereafter acquired by either Parent or Company.
"GAAP" shall mean generally accepted accounting principles in
the United States of America consistently applied.
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"GENERAL INTANGIBLES" shall mean any "general intangibles," as
such term is defined in the Code, now owned or hereafter acquired by Parent
or Company, and, in any event, including all right, title and interest which
such entity may now or hereafter have in or under any Contract, all customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications
therefor and reissues, extensions or renewals thereof, rights in Intellectual
Property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software,
data bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or under insurance
policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible
rights, all liability, life, key man and business interruption insurance, and
all unearned premiums), uncertificated securities, choses in action, deposit,
checking and other bank accounts, rights to receive tax refunds and other
payments, rights of indemnification, all books and records, correspondence,
credit files, invoices and other papers, including without limitation all
tapes, cards, computer runs and other papers and documents in the possession
or under the control of such entity or any computer bureau or service company
from time to time acting for such entity.
"INSTRUMENTS" shall mean any "instrument," as such term is
defined in the Code, now owned or hereafter acquired by Parent or Company,
wherever located, and, in any event, including all certificated securities,
all certificates of deposit, and all notes and other, without limitation,
evidences of indebtedness, other than instruments that constitute, or are a
part of a group of writings that constitute, Chattel Paper.
"INTELLECTUAL PROPERTY" shall mean any and all Licenses,
Patents, Copyrights, Trademarks, trade secrets and customer lists.
"INVESTMENT PROPERTY" shall have the meaning ascribed thereto
in Section 9-115 of the Code in those jurisdictions in which such definition
has been adopted and shall include (i) all securities, whether certificated
or uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of Parent or Company,
including the rights of Parent and Company to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities
intermediary with respect to that account; (iii) all securities accounts held
by Parent or Company Party; (iv) all commodity contracts held by Parent or
Company; and (v) all commodity accounts held by Parent or Company.
"LETTER OF CREDIT" shall mean that certain Letter of Credit
dated as of the Closing Date in the amount of $2,000,000.00 issued by The
Bank of Nova Scotia in favor of Bank, for the account of Xxxxxx.
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"LICENSE" shall mean any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or
hereafter acquired by Parent or Company.
"LIEN" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"LOAN AND SECURITY AGREEMENT" shall mean that certain Loan and
Security Agreement dated February 8, 1996, by and between Bank One, Texas,
National Association and Advanced Telemarketing Corporation, as previously
amended.
"LOANS" shall mean collectively the Primary Loan and the
Bridge Loan.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse
effect on (a) the business, assets, operations, prospects or financial or
other condition of the Parent and Company, taken as a whole (b) Parent's and
Company's ability to pay any of the Obligations in accordance with the terms
of the Reimbursement Agreement, (c) the Collateral or Liens on the
Collateral or the priority of such Liens, or (d) Xxxxxx'x rights and remedies
under the Reimbursement Agreement and the other Basic Documents.
"MERGER AGREEMENT" shall mean that certain Merger Agreement
dated April 7, 1998 by and among Parent, ATC Merger Sub, Inc., a New York
corporation, and IQI, Inc., a New York corporation.
"NOTE" shall mean that certain subordinated promissory note in
the principal amount of $2,000,000.00 executed by Parent and Company in favor
of Xxxxxx.
"OBLIGATION" shall mean all loans, advances, debts,
liabilities and obligations, whether for indemnity, reimbursement, the
performance of covenants, tasks or duties or for payment of any monetary
amounts (whether or not such performance is then required or contingent, such
amounts are liquidated or determinable or such amounts arise under this
Reimbursement Agreement, under any other Basic Document, by subrogation or
otherwise) now or hereafter due from or owing by Parent and/or Company to
Xxxxxx, and all covenants and duties regarding such amounts, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument, including all those arising under this Reimbursement
Agreement, under any of the other Basic Documents, as a matter of law or
agreement, by subrogation or otherwise. The term "Obligation" includes all
principal, interest (including all interest which accrues after the
commencement of any case or proceeding in bankruptcy after the insolvency of,
or for the reorganization of Parent and/or Company, whether or not allowed in
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such proceeding), fees, charges, expenses, attorneys' fees and any other sum
chargeable to Parent and/or Company under the Reimbursement Agreement or any
of the other Basic Documents.
"PATENT LICENSE" shall mean rights under any written agreement
now owned or hereafter acquired by Parent or Company granting any right with
respect to any invention on which a Patent is in existence.
"PATENTS" shall mean all of the following in which Parent or
Company now holds or hereafter acquires any interest: (a) all letters patent
of the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or agency
of the United States, any State or Territory thereof, or any other country,
and (b) all reissues, continuations, continuations-in-part or extensions
thereof.
"PERMITTED ENCUMBRANCES" shall mean the following
encumbrances: (a) Liens for taxes or assessments or other governmental
charges not yet due and payable; (b) pledges or deposits of money securing
statutory obligations under workmen's compensation, unemployment insurance,
social security or public liability laws or similar legislation (excluding
Liens under ERISA); (c) pledges or deposits of money securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which
Parent and Company is a party as lessee made in the ordinary course of
business; (d) inchoate and unperfected workers', mechanics' or similar liens
arising in the ordinary course of business, so long as such Liens attach only
to Equipment, Fixtures and/or real estate; (e) carriers', warehousemen's,
suppliers' or other similar possessory liens arising in the ordinary course
of business and securing liabilities in an outstanding aggregate amount not
in excess of $ 100,000.00 at any time, so long as such Liens attach only to
Inventory; (f) presently existing or hereinafter created Liens in favor of
Xxxxxx; and (g) Liens in favor of Bank securing the Loans.
"PERSON" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit
corporation, other entity or government (whether federal, state, county,
city, municipal, local, foreign, or otherwise, including any instrumentality,
division, agency, body or department thereof).
"PLEDGE AGREEMENT" shall mean that certain Pledge dated as of
the Closing Date, by and between Parent and Xxxxxx.
"PRIMARY LOAN" shall mean the obligations owed from time to
time by Company and Parent to Bank pursuant to the Loan and Security
Agreement dated February 8, 1996, as amended through the Closing Date, by and
between Company and Bank up to the principal amount of $16,000,000.
"REGISTRATION RIGHTS AGREEMENT" shall mean that certain
Registration Rights Agreement dated as of the Closing Date, by and between
Parent and Xxxxxx.
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"SECOND WARRANT" shall mean that certain warrant dated May 4,
1998 to purchase up to one million shares of common stock, $.01 par value
issued by Parent to Xxxxxx.
"SECURITY AGREEMENT" shall mean that certain Security
Agreement dated as of the Closing Date, by and between Company and Xxxxxx.
"SUBORDINATION AND INTERCREDITOR AGREEMENT" shall mean that
certain Subordination and Intercreditor Agreement dated as of the closing
date by and between Bank and Xxxxxx.
"TRADEMARK LICENSE" shall mean rights under any written
agreement now owned or hereafter acquired by Parent or Company granting any
right to use any Trademark.
"TRADEMARKS" shall mean all of the following now owned or
hereafter acquired by Parent or Company: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the
foregoing have appeared or appear, designs and general intangibles of like
nature (whether registered or unregistered), now owned or existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated
with or symbolized by any of the foregoing.
2. INDEMNIFICATION.
(a) Parent and Company shall jointly and severally indemnify
and hold harmless Xxxxxx and its respective officers, directors, employees,
attorneys, agents, successors, assigns and representatives (each, an
"INDEMNIFIED PERSON"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including any
attorneys' fees and disbursements, expert and other witness fees, consultant
fees and other costs of investigation or defense, including those incurred
upon any appeal) (i) which may be instituted or asserted against or incurred
by any such Indemnified Person as the result of the financial accommodations
having been extended, suspended or terminated under this Reimbursement
Agreement or the other Basic Documents; (ii) incurred in connection with the
administration of enforcement of this Reimbursement Agreement or any other
Basic Document; (iii) incurred in connection with or arising out of the
transactions contemplated under this Reimbursement Agreement or any other
Basic Document or any actions or omissions in connection therewith; in each
case, including any and all legal costs and expenses arising out of or
incurred in connection with disputes between or among ANY PARTIES to any of
the Basic Documents (collectively, "INDEMNIFIED LIABILITIES"); PROVIDED, that
neither Parent nor Company shall be liable for any indemnification to an
Indemnified Person to the extent that any such suit, action, proceeding,
claim, damage, loss, liability or expense results from that Indemnified
Person's own gross negligence or willful misconduct. NO INDEMNIFIED PERSON
SHALL
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BE RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY BASIC DOCUMENT, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT
OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY BASIC
DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR
THEREUNDER.
(b) To induce Xxxxxx to arrange for the Letter of Credit, if
the Letter of Credit is drawn down in whole or part, Parent and Company shall
jointly and severally indemnify and hold harmless Xxxxxx from and against all
losses, costs and expenses resulting from or arising from any of the
foregoing and from any draws under the Letter of Credit or payments made by
The Bank of Nova Scotia or Xxxxxx in connection therewith. Such
indemnification shall include any loss (including loss of margin) or expense
(including costs, fees and other charges payable to The Bank of Nova Scotia
for the Letter of Credit) arising from the reemployment of funds obtained by
Xxxxxx or from fees payable to terminate deposits from which such funds were
obtained.
(c) The indemnification and other provisions of this section
2 shall survive the termination of this Reimbursement Agreement or any other
Basic Document.
3. REIMBURSEMENT AND PAYMENT TERMS.
(a) Parent and Company shall pay to Xxxxxx:
(i) immediately after (and on the same Business Day as)
any amount drawn under the Letter of Credit in such
amount;
(ii) upon notice from Xxxxxx of the amount thereof, any
and all reasonable expenses which Xxxxxx may pay or
incur relative to the Letter of Credit; and
(iii) when due, all fees, expenses and charges payable to
The Bank of Nova Scotia for or under the Letter of
Credit.
(b) Parent and Company shall pay to Xxxxxx interest on any
and all amounts unpaid by Parent and Company when due hereunder or under the
Note (in the case of amounts in respect of interest, to the maximum extent
permitted by law) for each day from the date such amounts became due until
payment in full, payable on demand, at a rate of 12% per annum; and
(c) All payments by Parent and Company to Xxxxxx hereunder and
under the Note shall be made in lawful currency of the United States and in
immediately available funds at Xxxxxx'x principal office located at 0000
Xxxxxxxxxxxx Xxxxxx, X.X. Xxxxx 000 Xxxxxxxxxx, X.X. 00000 or, at such other
address or by such other means as may be
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designated by Xxxxxx in writing to Company and Parent. Whenever any payment
hereunder or under the Note shall be due on a day which is not a business
day, the date for payment thereof shall be extended to the next succeeding
Business Day.
4. NOTE AND SECURITY.
(a) To secure the prompt and complete payment, performance
and observance of all the Obligations, Company hereby concurrently grants to
Thayer a Lien upon all of its right, title and interest in, to and under all
of its assets and property, tangible or intangible, whether now owned by or
owing to, or hereafter acquired by or arising in favor of Company (including
under any trade names, styles or derivations thereof), and whether owned or
consigned by or to, or leased from or to, Company, and regardless of where
located, as more specifically set forth in the Security Agreement.
(b) To secure the prompt and complete payment, performance,
and observance of all of the Obligations, Parent hereby currently pledges to
Xxxxxx the stock of Company now or hereafter owned by Parent, as more
specifically set forth in the Pledge Agreement
(c) Parent and Company's obligations hereunder shall be
evidenced by the Note, in the form of Exhibit A attached hereto. Xxxxxx
shall record the date and amount of each drawing on the Letter of Credit and
the date and amount of each payment of principal by Parent and/or Company
with respect thereto; provided that, the failure of Xxxxxx to make any
recordation shall not affect the obligations of the Parent and Company
hereunder or under the Note.
5. REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in the Pledge Agreement and Security Agreement are
hereby incorporated by reference as though fully set forth herein. Company
and Parent each hereby further represent and warrant that:
(a) Each of the representations and warranties contained in
the Pledge Agreement and Security Agreement are true and correct.
(b) Parent and Company each affirm each of the
representations and warranties made by Buyer, as that term is defined in the
Merger Agreement, and warrant that those representations and warranties are
true and correct as of the date hereof.
(c) Each of Company and Parent has been duly organized, and
is existing as a corporation in good standing under the laws of the state of
its jurisdiction of incorporation, with full power and authority (corporate
and other) to own, lease, pledge, mortgage or otherwise encumber its
properties and to conduct its business as currently conducted. Each of
Company and Parent has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
jurisdiction in which the
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nature of its business or location of its properties requires such
qualification and in which the failure to so qualify would have a Material
Adverse Effect.
(c) As of the Closing Date, the current location of Company
and Parent's chief executive office and principal place of business is set
forth below:
Company: Advanced Telemarketing Corporation
0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Parent: ATC Communications Group, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
and none of such locations have changed within the twelve (12) months
preceding the Closing Date.
(d) The execution, delivery and performance by Company and
Parent of the Basic Documents to which they are a party and the creation of
all Liens provided for therein: (i) are within such Person's corporate power;
(ii) have been duly authorized by all necessary or proper corporate and
shareholder action; (iii) do not contravene any provision of such Person's
charter or bylaws; (iv) do not violate any law or regulation, or any order or
decree of any court or governmental authority; (v) do not conflict with or
result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property
is bound; (vi) do not result in the creation or imposition of any Lien upon
any of the property of such Person other than those in favor of Bank and
Xxxxxx pursuant to the Basic Documents; and (vii) do not require the consent
or approval of any governmental authority or any other Person, except that of
Bank, which has been obtained. On or prior to the Closing Date, each of the
Basic Documents shall have been duly executed and delivered by Company and
Parent thereto and each such Basic Document shall then constitute a legal,
valid and binding obligation of Company and Parent enforceable against it in
accordance with its terms.
(e) As of their respective dates, the Financial Statements of
Company and Parent and the other financial information previously delivered
to Xxxxxx or its representatives did not contain any untrue statements of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The audited
financial statements and unaudited interim financial statements of Company
and/or Parent have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as may be
indicated therein or in the notes thereto, and in the case of quarterly
financial statements, as permitted by Form 10-Q under the Exchange Act),
fairly present the consolidated financial condition, results of operations
and cash flows of
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Company and/or Parent as of the respective dates thereof and for the periods
referred to therein subject, in the case of unaudited financial statements,
to normal, recurring year-end adjustments and any other adjustments described
therein, and are consistent with the books and records of Company and Parent.
(f) Parent owns 98.94% of the issued and outstanding shares
of Company.
(g) Neither Company nor Parent has any plans qualified or
regulated under the Employee Retirement Income Securities Act of 1974, except
those disclosed in Section 4.08 of the Merger Agreement.
(h) Except as set forth in Section 4.07 of the Merger
Agreement or on Exhibit B to the opinion letter of Xxxxxx & Xxxx delivered
concurrently with this Reimbursement Agreement, there is no action, claim,
lawsuit, demand, investigation or proceeding now pending or, to the knowledge
of Company and Parent, threatened against Company or Parent, before any
governmental authority or before any arbitrator or panel of arbitrators
(collectively, "Litigation"), (a) which challenges the right or power of
Company or Parent to enter into or perform any of its obligations under the
Basic Documents to which it is a party, or the validity or enforceability of
any Basic Document or any action taken thereunder, (b) which has a
reasonable risk of being determined adversely to Company and Parent and
which, if so determined, could have a materially adverse effect on the
Collateral or the ability of either Company or Parent to satisfy its
Obligations, or (c) which seeks damages in excess of $100,000 or injunctive
relief or alleges criminal misconduct of Company or Parent.
(i) No information contained in this Reimbursement Agreement,
any of the other Basic Documents, any financial statements or other reports
from time to time delivered hereunder or any written statement furnished by
or on behalf of Company or Parent to Xxxxxx pursuant to the terms of this
Reimbursement Agreement contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading. The Liens
granted to Xxxxxx pursuant to the Security Agreement and Pledge Agreement
will at all times be fully perfected Liens in and to the Collateral described
therein, subject, as to priority, only to Permitted Encumbrances.
(j) Company and Parent each undertake and agree to transmit
to Xxxxxx copies of all borrowing base certificates, notices, projections,
reports, documents and other information transmitted to Bank, otherwise
requested by Bank, or required under the Loan and Security Agreement.
Company and Parent each undertake and agree to immediately transmit to Xxxxxx
copies of all notices received from Bank or any other Person under or
relating to the Loan and Security Agreement. Company and Parent each
undertake and agree to provide Xxxxxx with copies of any and all requests,
correspondence, proposals, commitments, drafts or documentation relating to
(i) any amendments to, modifications or extensions of the Loan and Security
Agreement; or (ii) forbearances, defaults or waivers under the Loan and
Security Agreement. Company and Parent agree to provide Xxxxxx with copies of
all of the documents
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specified in this paragraph 5(j) by facsimile and overnight delivery
contemporaneously with the transmission of such documents to Bank or within
one Business Day following the receipt of such documents from Bank.
(k) Company and Parent authorize Xxxxxx to communicate
directly with its independent certified public accountants including Price
Waterhouse, and authorizes and hereby instructs those accountants and
advisors to disclose and make available to Xxxxxx any and all Financial
Statements and other supporting financial documents, schedules and
information relating to Company and Parent (including copies of any issued
management letters) with respect to the business, financial condition and
other affairs of Company and Parent.
(l) As of the Closing Date, Parent has delivered to Xxxxxx a
complete and correct copy of the Merger Agreement (including all schedules,
exhibits, amendments, supplements, modifications, assignments and all other
documents delivered pursuant thereto or in connection therewith). Neither
the Company nor Parent and no other Person party thereto is in default in the
performance or compliance with any provisions thereof. The Merger Agreement
complies with, and the Merger has been consummated in accordance with, all
applicable laws. The Merger Agreement is in full force and effect as of the
Closing Date, has not been terminated, rescinded or withdrawn. All requisite
approvals by governmental authorities having jurisdiction over the parties
thereto, with respect to the transactions contemplated by the Merger
Agreement, have been obtained, and no such approvals impose any conditions to
the consummation of the transactions contemplated by the Merger Agreement or
to the conduct by Company and Parent of its business thereafter. To the best
of Company and Parent's knowledge, none of the Parent's representations or
warranties in the Merger Agreement contain any untrue statement of a material
fact or omit any fact necessary to make the statements therein not
misleading. Each of the representations and warranties given by each
applicable Company and Parent in the Merger Agreement is true and correct in
all material respects.
(m) As of the Closing Date, Parent has delivered to Xxxxxx a
complete and correct copy of the Loan and Security Agreement (including all
schedules, exhibits, amendments, supplements, modifications, assignments and
all other documents delivered pursuant thereto or in connection therewith).
Neither the Company nor Parent and no other Person party thereto is in
default in the performance or compliance with any provisions thereof, and no
"Default" or "Event of Default" (as defined in the Loan and Security
Agreement) exists as of the Closing Date. The Loan and Security Agreement is
in full force and effect as of the Closing Date, has not been terminated,
rescinded or withdrawn, and the Primary Loan amount outstanding thereunder is
not in excess of $13,000,000.00.
6. COVENANTS. The covenants contained in the Security Agreement
and Pledge Agreement are hereby incorporated by reference as though fully set
forth herein. Company and Parent, each hereby further covenant and agree:
(a) Each of Company and Parent will comply with all
provisions of the Basic Documents and the Loan and Security Agreement
applicable to it.
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(b) Neither Company nor Parent shall create, incur, assume
or permit to exist any Lien on or with respect to its Accounts or any of its
other properties or assets (whether now owned or hereafter acquired) except
for Permitted Encumbrances. In addition, neither Company and Parent shall
become a party to any agreement, note, indenture or instrument, or take any
other action, which would prohibit the creation of a Lien on any of its
properties or other assets in favor of Xxxxxx as additional collateral for
the Obligations, except leases or Licenses which prohibit Liens upon the
assets that are subject thereto. Company and Parent will not create, permit
or suffer to exist, and will defend the Collateral against, and take such
other action as is necessary to remove, any Lien on the Collateral except
Permitted Encumbrances.
(c) Neither Company nor Parent shall authorize, negotiate, or
agree to modify, alter or amend any provision of the Loan and Security
Agreement without Xxxxxx'x prior written consent.
(d) Neither Parent nor Company will cause or permit any
distributions, dividends, or stock issuances to be made except as expressly
provided in the Merger Agreement and dividends not to exceed an aggregate of
$11,000 per year.
(e) Neither Company nor Parent shall (1) change its corporate
name, or (2) change its chief executive office, principal place of business,
corporate offices or warehouses or locations at which Collateral is held or
stored, or the location of its records concerning the Collateral, in any case
without at least thirty (30) days prior written notice to Xxxxxx and after
Xxxxxx'x written acknowledgment that any reasonable action requested by
Xxxxxx in connection therewith, including to continue the perfection of any
Liens in favor of Xxxxxx in any Collateral, has been completed or taken.
Without limiting the foregoing, neither Company nor Parent shall change its
name, identity or corporate structure in any manner which might make any
financing or continuation statement filed in connection herewith seriously
misleading within the meaning of Section 9-402(7) of the Code or any other
then applicable provision of the Code except upon prior written notice to
Xxxxxx and after Xxxxxx'x written acknowledgment that any reasonable action
requested by Xxxxxx in connection therewith, including to continue the
perfection of any Liens in favor of Xxxxxx in any Collateral, has been
completed or taken.
(f) Except as expressly permitted by the Merger Agreement,
neither Company nor Parent shall make any changes in any of its business
objectives, purposes or operations which could in any way materially
adversely affect the repayment of the Obligations or could reasonably be
expected to have or result in a materially adverse effect on the repayment of
the Obligations.
(g) Each of Company and Parent shall: (1) do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and its rights and franchises; (2) continue to conduct
its business substantially as now conducted or as
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otherwise permitted hereunder; and (3) at all times maintain, preserve and
protect all of its assets and properties used or useful in the conduct of its
business, and keep the same in good repair, working order and condition in
all material respects (taking into consideration ordinary wear and tear) and
from time to time make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry
practices.
(h) Each of Company and Parent shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP.
(i) Company and Parent shall comply with all federal, state,
local and foreign laws and regulations applicable to it.
(j) From time to time as may be requested by Xxxxxx, Company
and Parent shall supplement any representation herein or in any other Basic
Document with respect to any matter hereafter arising which, if existing or
occurring at the date of this Reimbursement Agreement, would be an exception
to such representation or which is necessary to correct any information in
such representation which has been rendered inaccurate thereby; provided that
(1) no such supplement to any such representation shall be or be deemed a
waiver of any Default or Event of Default resulting from the matters
disclosed therein, except as consented to by Xxxxxx in writing; and (2) no
supplement shall be required as to representations and warranties that relate
solely to the Closing Date.
(k) Company and Parent executing this Reimbursement Agreement
agrees that it shall and shall cause each other, at Company's and Parent's
expense and upon request of Xxxxxx, duly execute and deliver, or cause to be
duly executed and delivered, to Xxxxxx such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Xxxxxx to carry out more effectively the provisions and
purposes of this Reimbursement Agreement or any other Basic Document.
7. OBLIGATIONS ABSOLUTE. Company and Parent acknowledge and
agree that Xxxxxx has obligated itself to Issuing Bank concurrently with the
issuance of the Letter of Credit. The obligations of Parent and Company
under this Reimbursement Agreement, the Note and other Basic Documents are
and shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms hereof and thereof, under all
circumstances whatsoever, including without limitation the following:
(a) any lack of validity or enforceability of this
Reimbursement Agreement, the Note, or any of the Basic Documents; or any
lack of perfection, release, or discharge in whole or in part, of any
collateral security provided or purported to be provided to any Person by any
Person;
(b) any amendment or waiver of or any consent to departure
from the terms of this Reimbursement Agreement, the Note, or all or any of
the Basic Documents;
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(c) the existence of any claim, set-off, defense or other
rights which the Company, the Guarantor or any other Person may have at any
time against the Bank, the Issuing Bank or any other Person, whether in
connection with this Reimbursement Agreement, the Basic Documents or any
unrelated transaction;
(d) any statement or any other document presented under the
Letter of Credit proving to be forged, fraudulent or invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(e) payment by the Issuing Bank under the Letter of Credit
against presentation of a draft or certificate which does not comply with the
terms thereof; and
(f) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
8. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an
"Event of Default" hereunder:
(a) Either Parent or Company (i) fails to make any payment of
principal of, or interest on, or fees owing in respect of, the Obligations
when due and payable, or (ii) fails to pay or reimburse Xxxxxx for any
expense reimbursable hereunder or under any other Basic Document within three
(3) days following Xxxxxx'x written request for such reimbursement or payment
of expenses.
(b) Company or Parent shall fail or neglect to perform, keep
or observe any of the provisions of Section 6.
(c) Company and Parent shall fail or neglect to perform, keep
or observe any other provision of this Reimbursement Agreement or of any of
the other Basic Documents and the same shall remain unremedied for ten (10)
days or more following notice thereof.
(d) A default or breach shall occur under any other
agreement, document or instrument to which Company or Parent is a party or
the occurrence of any Event of Default as defined in the Loan and Security
Agreement which is not cured within any applicable grace period in each
instance.
(e) Any representation or warranty herein or in any
Basic Document or in any written statement, report, financial statement or
certificate made or delivered to Xxxxxx by Company and Parent is untrue or
incorrect in any material respect as of the date when made or deemed made or
any representation or warranty made herein or in any Basic Document is untrue
or incorrect as of the date of any request for an advance under the Bridge
Loan.
(f) Assets of Company or Parent with a fair market value of
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$50,000.00 or more shall be attached, seized, levied upon or subjected to a
writ or distress warrant, or come within the possession of any receiver,
trustee, custodian or assignee for the benefit of creditors of Company and
Parent and such condition continues for thirty (30) days or more.
(g) A case or proceeding shall have been commenced against
Company or Parent seeking a decree or order in respect of Company or Parent
(i) under Title 11 of the United States Code, as now constituted or hereafter
amended or any other applicable federal, state or foreign bankruptcy or other
similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for Company or Parent or of any
substantial part of any such Person's assets, or (iii) ordering the
winding-up or liquidation of the affairs of Company or Parent, and such case
or proceeding shall remain undismissed or unstayed for sixty (60) days or
more or such court shall enter a decree or order granting the relief sought
in such case or proceeding
(h) Company or Parent (i) shall file a petition seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) shall fail to contest in a timely and
appropriate manner or shall consent to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) of Company or Parent or of any substantial
part of any such Person's assets, (iii) shall make an assignment for the
benefit of creditors, (iv) shall take any corporate action in furtherance of
any of the foregoing; or (v) shall admit in writing its inability to, or
shall be generally unable to, pay its debts as such debts become due.
(i) A final judgment or judgments for the payment of money in
excess of $100,000 in the aggregate at any time outstanding shall be rendered
against Company or Parent and the same shall not, within thirty (30) days
after the entry thereof, have been discharged or execution thereof stayed or
bonded pending appeal, or shall not have been discharged prior to the
expiration of any such stay.
(j) Any material provision of any Basic Document shall for
any reason cease to be valid, binding and enforceable in accordance with its
terms (or Company or Parent shall challenge the enforceability of any Basic
Document or shall assert in writing, or engage in any action or inaction
based on any such assertion, that any provision of any of the Basic Documents
has ceased to be or otherwise is not valid, binding and enforceable in
accordance with its terms), or any security interest created under any Basic
Document shall cease to be a valid and perfected security interest or Lien
(except as otherwise permitted herein or therein) in any of the Collateral
purported to be covered thereby, with priority subject only to the Permitted
Encumbrances.
-16-
9. REMEDIES.
(a) If any Event of Default shall have occurred and be
continuing, Xxxxxx in its sole and absolute discretion may, without notice to
Company or Parent, (i) suspend or terminate the Bridge Loan facility with
respect to further advances; (ii) declare all or any portion of the
Obligations to be immediately due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
each of Company and Parent; and (iii) exercise any rights and remedies
provided to Xxxxxx under the Basic Documents and/or at law or equity,
including all remedies provided under the Code.
(b) Whether or not any Event of Default shall have occurred
or be continuing under the Reimbursement Agreement, if a Default under the
Loan and Security Agreement (as defined therein) shall have occurred and be
continuing or if the Merger Agreement is terminated, Xxxxxx in its sole and
absolute discretion may, without notice to Company or Parent, suspend or
terminate the Bridge Loan facility with respect to further advances.
(c) Except as otherwise provided for in this Reimbursement
Agreement or by applicable law, each of Company and Parent waives: (i)
presentment, demand and protest and notice of presentment, dishonor, notice
of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or renewal
of any or all commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by Xxxxxx on which
Company and Parent may in any way be liable, and hereby ratifies and confirms
whatever Xxxxxx may do in this regard, (ii) all rights to notice and a
hearing prior to Xxxxxx'x taking possession or control of, or to Xxxxxx'x
replevy, attachment or levy upon, the Collateral or any bond or security
which might be required by any court prior to allowing Xxxxxx to exercise any
of its remedies, and (iii) the benefit of all valuation, appraisal,
marshaling and exemption laws.
10. SURVIVAL. This Reimbursement Agreement shall survive, and
shall not be affected, by any modifications or amendments to the Bridge Loan
or any documents relating to the Loans.
11. SUCCESSORS AND ASSIGNS. This Reimbursement Agreement and
other Basic Documents shall be binding on and shall inure to the benefit of
each of Parent, Company and Xxxxxx and their respective successors and
assigns. Neither Parent nor Company may assign, transfer hypothecate or
otherwise convey its rights, benefits, obligations hereunder or under any of
the other Basic Documents without the prior written consent of Xxxxxx.
12. AMENDMENT AND WAIVER. No amendment, modification, termination
or waiver of any provision of this Reimbursement Agreement or any other Basic
Document, or any consent to any departure from Xxxxxx therefrom, shall in any
event be effective unless the same shall be in writing and signed by Xxxxxx,
Parent and Company.
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13. CUMULATIVE REMEDIES. Xxxxxx'x rights and remedies under this
Reimbursement Agreement shall be cumulative and nonexclusive of any other
rights and remedies which Xxxxxx may have under any other Basic Document, by
operation of law or otherwise. Recourse to the Collateral shall not be
required.
14. NO WAIVER. Xxxxxx'x failure, at any time or times, to require
strict performance by either Parent or Company of any provision of this
Reimbursement Agreement and any of the other Basic Documents shall not waive,
affect, or diminish any right of Xxxxxx thereafter to demand strict
compliance and performance therewith. Any suspension or waiver of an Event
of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or of a
different type. None of the undertakings, agreements, warranties, covenants
and representations of Parent or Company contained in this Reimbursement
Agreement or any other Basic Document and Default or Event of Default by
either Parent or Company shall be deemed to have been suspended or waived by
Xxxxxx, unless such waiver or suspension is by an instrument in writing
signed by an officer of or other authorized employee of Xxxxxx and directed
to Parent or Company specifying such suspension or waiver.
15. ADVICE OF COUNSEL. Each of the parties represents to each
other party hereto that it has discussed this Reimbursement Agreement with
its counsel
16. NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties desires
to give or serve upon any other a communication with respect to this
Agreement, each such notice, demand, request, consent, approval, declaration
or other communication shall be in writing and either shall be delivered in
person or sent by registered or certified mail, return receipt requested,
with proper postage prepaid, or by facsimile transmission and confirmed by
delivery of a copy by personal delivery or United States Mail as otherwise
provided herein:
B0 If to Xxxxxx, at:
Xxxxxx Equity Investors III, L.P.
0000 Xxxxxxxxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx Xxxxxxxxx
Fax No.: (000) 000-0000
With copies to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
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000 Xxxxx Xxxxxx Xxxxxx
Xxxxxx-Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax No.: 000-000-0000
C0 If to Pledgor, at:
ATC Communications Group, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
Fax No.: 000-000-0000/000-000-0000
With copies to:
Xxxxxx & Xxxx, LLP
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxx, Esq.
Fax No.: 000-000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration or other communication hereunder
shall be deemed to have been duly served, given or delivered (a) upon the
earlier of actual receipt and three (3) Business Days after deposit in the
United States Mail, registered or certified mail, return receipt requested,
with proper postage prepaid, (b) upon transmission, when sent by telecopy or
other similar facsimile transmission (with such telecopy or facsimile
promptly confirmed by delivery of a copy by personal delivery or United
States Mail as otherwise provided in this SECTION 16, (c) one (1) Business
Day after deposit with a reputable overnight courier with all charges
prepaid, or (d) when delivered, if hand-delivered by messenger. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
17. COUNTERPARTS. This Reimbursement Agreement may be executed in
any number of counterparts and all counterparts taken together shall
represent one and the same Reimbursement Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this
REIMBURSEMENT AND INDEMNIFICATION AGREEMENT as of the day and year first
above written.
"Company"
ADVANCED TELEMARKETING CORPORATION
By: /s/ Xxxxx X. Xxxx, Xx.
------------------------------------
Name: Xxxxx X. Xxxx, Xx.
Title: Secretary
"Parent"
ATC COMMUNICATIONS GROUP, INC.
By: /s/ Xxxxx X. Xxxx, Xx.
------------------------------------
Name: Xxxxx X. Xxxx, Xx.
Title: Senior Vice President
XXXXXX EQUITY INVESTORS III, L.P.
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Member
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