EXHIBIT 10.12
Amended and Restated Credit Agreement November 8,1997
PSW TECHNOLOGIES, INC.
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (as amended, restated and
supplemented from time to time, this Agreement) between PSW TECHNOLOGIES, INC.
(Borrower) and TEXAS COMMERCE BANK NATIONAL ASSOCIATION (Bank) is dated as of
November 8, 1997 (the Effective Date).
PRELIMINARY STATEMENT, Borrower and Bank entered into a Credit Agreement dated
as of November 8, 1996, and have agreed to modify and replace such agreement in
its entirety, as provided hereinafter.
1. THE LOANS.
REVOLVING CREDIT NOTE 1.1.A Subject to the terms and conditions hereof, Bank
agrees to make loans (Loans) to Borrower from time to time before the
Termination Date, not to exceed at any one time outstanding the lesser of
(i) $10,000,000.00 or (ii) the greater of $7,500,000.00 or the Borrowing Base
(such amount referred to herein as the Commitment). Borrower has the right to
borrow, repay and reborrow the Loans. Each Loan and each repayment must be at
least the minimum amount required in the Note. Loans may only be used for
financing Borrower's working capital needs and for making acquisitions. Chapter
15 of the Texas Credit Code (and any successor enactment) will not apply to this
Agreement, the Note or any Loan. Loans will be evidenced by, and will bear
interest and be payable as provided in, the promissory note of Borrower dated
the Effective Date (together with any and all renewals, extensions,
modifications and replacements thereof and substitutions therefor, the Note).
Termination Date means the earlier of. (a) May 1, 1999; or (b) the date
specified by Bank pursuant to Section 6.1 hereof.
LETTERS OF CREDIT 1.1.B Upon Borrower's application on the Bank's standard form
(Application), Bank in its discretion may from time to time until the
Termination Date issue commercial and standby tenets of credit (Letters of
Credit) subject terms and conditions of this Agreement. Each Application made by
Borrower after the effective date of this Section 1.1B shall be deemed to be for
a Letter of Credit subject to this Agreement, unless such Application expressly
and prominently states otherwise. The Commitment shall be reduced by the sum of.
(a)'the face amount of all outstanding Letters of Credit; and (b) the amount of
any unreimbursed drawings or other amounts owing to the Bank under or in respect
of any Letter of Credit or Application (such sum being the "L/C Obligations"),
so that, on any date, the sum of (x)'all Loans outstanding and (y) all UC
Obligations does not exceed the Commitment. The aggregate amount of L/C
Obligations shall never exceed $5,000,000.00 at any one time. Each Application
shall be deemed to include Borrower's representation that no default under this
Agreement exists and is continuing as of the date of such application, and that
all of Borrower's representations and warranties are true as of such date. Each
Application and UC Obligation is an Obligation within the meaning of this
Agreement. Bank is entitled to all rights, powers, benefits, privileges and
remedies granted under any provision of the Loan Documents and by law or in
equity in respect of all UC Obligations. Bank's rights and interests under this
Agreement and the other Loan Documents shall be cumulative with the rights and
interests granted in each Application (which shall be included in the definition
of "Loan Documents"). Any Event of Default under this Agreement shall be a
default under each Application, and each default against the terms of any
Application is an Event of Default under this Agreement. Borrower shall pay all
fees and charges quoted by Bank to Borrower at the time of the Application is
made, or if not quoted, all of Bank's standard fees and charges as of such time.
Bank may (but is not required to) make advances under the Note without notice to
Borrower to pay any UC Obligation.
BORROWING BASE 1.2 The Borrowing Base will be the amount shown as the BORROWING
BASE on the most recent Borrowing Base Report, subject to verification by Bank
and calculated using the eligibility criteria, borrowing base factors and dollar
ceilings for various components specified in the attached Exhibit'A,
incorporated herein by reference; provided, however that REQUIRED PAYMENT 1.3 If
the unpaid amount of the Loans at any time exceeds the Borrowing Base then in
effect, Borrower must make a payment on the Note in an amount sufficient to
reduce the unpaid principal balance of the Note to an amount no more than the
greater of $7,500,000.00 or the amount of the Borrowing Base. Such payment shall
be accompanied by any prepayment charge required by the Note and shall be due
concurrently with the Borrowing Base Report.
COMMITMENT FEE; TERMINATION 1.4 Borrower will pay a commitment fee (computed on
the basis of a year comprised of 360 days of 3/16% per annum on the daily
average difference between the Commitment and the principal balance of the Note,
from the date hereof to the Termination Date. The Commitment fee shall be
computed, and be due and payable, quarterly in arrears. Borrower shall be
entitled, upon delivery of 30 days advance written notice to Bank, to terminate
its use of the unused portion of the Commitment as of the effective date of such
notice. Upon the effective date of such notice of termination, accrual of the
commitment fee shall cease; Borrower shall thereupon not have the right to
borrow or reborrow new Loans under the Commitment (notwithstanding anything in
this Agreement or the other Loan Documents to the contrary); and the amount of
such fee seemed through the effective date of such termination shall be
immediately due and payable.
CAPITAL ADEQUACY 1.5 With respect to any Loan bearing interest at the LIBOR
Rate, if Bank determines after the date of this Agreement that any change in
applicable laws, rules or regulations regarding capital adequacy, or any change
in the interpretation or administration thereof by any appropriate governmental
agency, or compliance with any request or directive to Bank regarding capital
adequacy (whether or not having the force of law) of any such agency, increases
the capital required to be maintained with respect to any Loan bearing interest
at the LIBOR Rate and therefore reduces the rate of return on Bank's capital
below the level Bank could have achieved but for such change or compliance
(taking into consideration Bank's policies with respect to capital adequacy),
then Borrower will pay to Bank from time to time, within 15 days of Bank's
request, any additional amount required to compensate Bank for such reduction.
Bank will request any additional amount by delivering to Borrower a certificate
of Bank setting forth the amount necessary to compensate Bank. The certificate
will be conclusive and binding, absent manifest error. Bank may make any
assumptions, and may use any allocations of costs Ad expenses and any averaging
and attribution methods, which Bank in good faith finds reasonable.
2. CONDITIONS PRECEDENT.
ALL LOANS 2.1 Bank is not obligated to make any Loan unless: (a) Bank has
received the following, duly executed and in Proper Form: (1)'a Request for
Loan, substantially in the form of Exhibit B, within the time required in the
Note; provided however, Bank may accept and act upon verbal advance requests
received from Borrower's representative reasonably believed by Bank to be
authorized to make such requests; (2) if the aggregate outstanding amount of
Loans after making the requested Loan will exceed $7,500,000-00, a Borrowing
Base Report within the time required by this Agreement; and (3)'such other
documents as Bank reasonably may require; (b) no Event of Default exists; and
(e)'the making of the Loan is not prohibited by, or subjects Bank to any penalty
or onerous condition under any Legal Requirement. If Bank fails to make Loans
solely on the basis of clause (c) of the preceding sentence, then during the
period that such clause (c) applies, the commitment fee provided for in section
1.4 shall not accrue.
FIRST LOAN 2.2 In addition to the matters described in the preceding section,
Bank will not be obligated to make the first Loan unless Bank has received all
of the Loan Documents specified on Annex I in Proper Form.
3. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this Agreement
and to make the Loans, Borrower represents and warrants as of the Effective Date
that each of the following statements is true and correct:
ORGANIZATION AND STATUS 3.1 Borrower and each Subsidiary of Borrower is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; has all power and authority to conduct its
business as presently conducted, and is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such qualification desirable. Borrower has no Subsidiary other than
those listed on Annex if and each Subsidiary is owned by Borrower in the
percentage set forth on Annex II.
FINANCIAL STATEMENTS 3.2 All financial statements delivered to Bank are complete
and correct and fairly present, in accordance with generally accepted accounting
principles, consistently applied ("GAAP"), the financial condition and the
results of operations of Borrower and each Subsidiary of Borrower as at the
dates and for the periods indicated. No material adverse change has occurred in
the assets, liabilities, financial condition, business or affairs of Borrower or
any Subsidiary of Borrower since the dates of such financial statements. Neither
Borrower nor any Subsidiary of Borrower is subject to any instrument or
agreement materially and adversely affecting its financial condition, business
or affairs.
ENFORCEABILITY 3.3 The Loan Documents are legal, valid and binding obligations
of the Borrower enforceable in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency and other similar laws affecting
creditors' rights generally. The execution, delivery and performance of the Loan
Documents have all been duly authorized by all necessary action; are within the
power and authority of the Borrower; do not and will not violate any Legal
Requirement, the Organizational Documents of the Borrower or any agreement or
instrument binding or affecting the Borrower or any of its Property.
COMPLIANCE 3.4 Borrower and each Subsidiary of Borrower has filed all applicable
tax returns and paid all taxes shown thereon to be due, except those for which
extensions have been obtained and those which are being contested in good faith
and for which adequate reserves have been established. Borrower and each
Subsidiary of Borrower is in compliance with all applicable Legal Requirements
and manages and operates (and will continue to manage and operate) its business
in accordance with good industry practices. Neither Borrower nor any Subsidiary
of Borrower is in default in the payment of any other indebtedness or under any
agreement to which it is a party. The Parties have obtained all consents of and
registered with all Governmental Authorities or other Persons required to
execute, deliver and perform the Loan Documents.
LITIGATION 3.5 Except as previously disclosed to Bank in writing, there is no
litigation or administrative proceeding pending or, to the knowledge of
Borrower, threatened against, nor any outstanding judgment, order or decree
affecting Borrower or any Subsidiary of Borrower before or by any Governmental
Authority which, if determined adversely to Borrower, would have a material
adverse effect on Borrower's business or financial condition.
TITLE AND RIGHTS 3.6 Borrower and each Subsidiary of Borrower has good and
marketable title to its Property, free and clear of any Lien except for Liens
permitted by this Agreement and the other Loan Documents. Except as otherwise
expressly stated in the Loan Documents or permitted by this Agreement, the Liens
of the Loan Documents will constitute valid and perfected first and prior Liens
on the Property described therein, subject to no other Liens whatsoever.
Borrower and each Subsidiary of Borrower possesses all permits, licenses,
patents, trademarks and copyrights requited to conduct its business. All
casements, rights-of-way and other rights necessary to maintain and operate
Borrower's Property have been obtained and are in full force and effect.
REGULATION U; BUSINESS PURPOSE 3.7 None of the proceeds of any Loan will be used
to purchase or carry, directly or indirectly, any margin stock or for any other
purpose which would make this credit a "purpose credit" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System. All Loans
will be used for business, commercial, investment or other similar purpose and
not primarily for personal, family, or household use or primarily for
agricultural purposes as such terms are used in Chapter One of the Texas Credit
Code.
ENVIRONMENT 3.8 Borrower and each Subsidiary of Borrower have complied with
applicable Legal Requirements in each instance in which any of them have
generated, handled, used, stored or disposed of any hazardous or toxic waste or
substance, on or off its premises (whether or not owned by any of them). Neither
Borrower nor any Subsidiary of Borrower has any material contingent liability
for noncompliance with environmental or hazardous waste laws. Neither Borrower
nor any Subsidiary of Borrower has received any notice that it or any of its
Property or operations does not comply with, or that any Governmental Authority
is investigating its compliance with, any environmental or hazardous waste laws.
INVESTMENT COMPANY ACT/PUBLIC UTILITY HOLDING COMPANY ACT 3.9 Neither Borrower
nor any Subsidiary of Borrower is an investment company within the meaning of
the Investment Company Act of 1940 or a holding company or an affiliate of a
holding company or a public utility within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
STATEMENTS BY OTHERS 3.10 All material written statements and information
provided by or on behalf of Borrower, any Subsidiary of Borrower or any other of
the Parties in connection with any Loan Document constitute the representations
and warranties of Borrower hereunder.
4. AFFIRMATIVE COVENANTS. Borrower agrees to do, and if necessary cause to be
done, and cause its Subsidiaries to do, each of the following:
CORPORATE FUNDAMENTALS 4.1 (a) Pay when due all taxes and governmental charges
of every kind upon it or against its income, profits or Property, unless and
only to the extent that the same shall be contested in good faith and adequate
reserves have been established therefor; (b)'and keep in full force and effect
all of its licenses, permits and franchises as may be reasonably necessary to
conduct its business properly and efficiently; (c) Do all things necessary to
preserve its corporate existence and its qualifications and rights in all
jurisdictions where such qualification is necessary or desirable; (d)'Comply
with all applicable Legal Requirements; and (a) Protect, maintain and keep in
good repair its Property and make all replacements and additions to its Property
as may be reasonably necessary to conduct its business properly and efficiently.
INSURANCE 4.2 Maintain insurance with such reputable financially sound insurers,
on such of its Property and personnel, in such amounts and against such risks as
is customary with similar Persons or as may be reasonably required by Bank, and
furnish Bank satisfactory evidence thereof promptly upon request. These
insurance provisions are cumulative of the insurance provisions of the other
Loan Documents. Bank must be named as a beneficiary, loss payee or additional
insured of such insurance as its interest may appear and Borrower must provide
Bank with copies of the policies of insurance and a certificate of the insurer
that the insurance required by this section may not be canceled, reduced or
affected in any manner without 30 days' prior written notice to Bank.
FINANCIAL INFORMATION/BORROWING BASE REPORT 4.3 Furnish to Bank in Proper Form
(i)'the financial statements prepared in conformity with GAAP on consolidated
and consolidating bases and the other information described in, and within the
times required by, Exhibit C. Reporting Requirements, Financial Covenants and
Compliance Certificate attached hereto and incorporated herein by reference;
(ii) the Borrowing Base Report substantially in the form of, and within the time
required by, Exhibit A along with the other information required by Exhibit A to
be submitted; (iii)'within the time required by Exhibit C, Exhibit C signed and
certified by the chief financial officer or president of Borrower; (iv) promptly
after such request is submitted to the appropriate Governmental Authority, any
request for waiver of funding standards or extension of amortization periods
with respect to any employee benefit plan; (v)'copies of special audits,
studies, reports and analyses prepared for the management of Borrower by outside
parties and (vi) such other information relating to the financial condition and
affairs of the Borrower and guarantors and their Subsidiaries as Bank may
request from time to time in its discretion.
MATTERS REQUIRING NOTICE 4.4 Notify Bank immediately, upon acquiring knowledge
of (a)'the institution or threatened institution of any lawsuit or
administrative proceeding which, if adversely determined, might materially
adversely affect Borrower; (b) any material adverse change in the assets,
liabilities, financial condition, business or affairs of Borrower; (c) any Event
of Default; or (d) any reportable event or any prohibited transaction in
connection with any employee benefit plan.
INSPECTION 4.5 Permit Bank and its affiliates to inspect and photograph its
Property, to examine and copy its files, books and records, and to discuss its
affairs with its officers and accountants, at such times and intervals and to
such extent as Bank reasonably desires.
ASSURANCES 4.6 Promptly execute and deliver any and all further agreements,
documents, instruments, and other writings that Bank may request to cure any
defect in the execution and delivery of any Loan Document or more fully to
describe particular aspects of the agreements set forth or intended to be set
forth in the Loan Documents.
CERTAIN CHANGES 4.7 Notify Bank at least 30 days prior to the date that any of
the Parties changes its name or the location of its chief executive office or
principal place of business or the place where it keeps its books and records,
EXHIBIT C 4.8 Comply with each of the other affirmative covenants set forth in
Exhibit C.
5. NEGATIVE COVENANTS. The Borrower will not, and no Subsidiary of Borrower
will, without the prior written consent of the Bank, which Bank shall be
entitled to withhold in its sole and absolute discretion (Bank agreeing that it
will respond in writing to each written request for such consent with reasonable
promptness):
INDEBTEDNESS 5.1 Create, incur, or permit to exist, or assume or guarantee,
directly or indirectly, or become or remain liable with respect to, any
Indebtedness, contingent or otherwise, unless there is a permitted amount in
Exhibit C, except: (a)'Indebtedness to Bank, or secured by Liens permitted by
this Agreement, or otherwise approved in writing by Bank, and renewals and
extensions (but not increases) thereof-, and (b)'current accounts payable and
unsecured current liabilities, not the result of borrowing, to vendors,
suppliers and Persons providing services, for expenditures for goods and
services normally required by it in the ordinary course of business and on
ordinary trade terms.
LIENS 5.2 Create or permit to exist any Lien upon any of its Property now owned
or hereafter acquired, or acquire any Property upon any conditional sale or
other title retention device or arrangement or any purchase money security
agreement; or in any manner directly or indirectly sell, assign, pledge or
otherwise transfer any of its accounts or other Property, unless as permitted in
Exhibit C, except: (a)'Liens, not for borrowed money, arising in the ordinary
course of business; (b)'Liens for taxes not delinquent or being contested in
good faith by appropriate proceedings; (e)'Liens in effect on the date hereof
and disclosed to Bank in writing, so long as neither the principal Indebtedness
secured thereby nor the Property covered thereby increases; and (d) Liens in
favor of Bank, or otherwise approved in writing by Bank. Notwithstanding
anything to the contrary herein, Borrower will not, and no Subsidiary of
Borrower will permit any Lien on any inventory that secures the Loans unless
Bank shall provide Borrower with Bank's prior written consent.
FINANCIAL AND OTHER COVENANTS 5.3 Fail to comply with the required financial
covenants and other covenants described, and calculated as set forth, in Exhibit
C. Unless otherwise provided on Exhibit'C, all such amounts and ratios will be
calculated: (a)'on the basis of GAAP; and (b)'on a consolidated basis.
Compliance with the requirements of Exhibit C will be determined as of the dates
of the financial statements to be provided to Bank.
CORPORATE CHANGES 5.4 In any single transaction or series of transactions,
directly or indirectly: (a)'liquidate or dissolve; (b)'sell or dispose of any
interest in any of its Subsidiaries, or permit any of its Subsidiaries to issue
any additional equity other than to Borrower; (c)'sell, convey or lease all or
any substantial part of its assets, except for sale of inventory in the ordinary
course of business; or (d)'permit any change in ownership of Borrower affecting
more than 49% of the stock ownership of Borrower (as of the Effective Date).
RESTRICTED PAYMENTS 5.5 Unless otherwise provided on Exhibit C, at any time
redeem, retire or otherwise acquire, directly or indirectly, any shares of its
capital stock or other equity interest.
NATURE OF BUSINESS; MANAGEMENT 5.6 Substantially change the nature of its
business or enter into any business which is substantially different from the
business in which it is presently engaged, or permit any material change in its
management (which shall be understood to have occurred if more than one of the
persons who are President, Chief Financial Officer and the Vice President of
Finance of the Borrower are changed).
AFFILIATE TRANSACTIONS 5.7 Enter into any transaction or agreement with any
Affiliate except upon terms substantially similar to those obtainable from
wholly unrelated sources.
SUBSIDIARIES 5.8 Form, create or acquire any Subsidiary; except that Borrower
shall be permitted to do any of the foregoing in compliance with the covenants
in Exhibit C, if in advance of or substantially simultaneously with such action
such Subsidiary shall execute a continuing guaranty of the Obligations in Proper
Form.
6. EVENTS OF DEFAULT AND REMEDIES.
EVENTS OF DEFAULT 6.1 Each of the following is an "Event of Default":
(a) Any Obligor fails to pay any principal of or interest on the Note or any
other obligation under any Loan Document as and when due; or
(b) Any Obligor or any Subsidiary of Borrower fails to pay at maturity, or
within any applicable period of grace, any principal of or interest on any other
borrowed money obligation (which shall not include any capital lease) in excess
of $100,000.00, or fails to observe or perform any term, covenant or agreement
contained in any agreement with respect to any such obligation; or
(c) Any representation or warranty made in connection with any Loan Document was
incorrect, false or misleading when made; or
(d) Any Obligor violates any covenant contained in any Loan Document; or
(e) An event of default occurs under any other Loan Document and any cure or
grace period with respect to such default has elapsed with such default
continuing; or
(f) Final judgment for the payment of money over $1,000,000.00 is rendered
against Obligor or any Subsidiary of Borrower and remains undischarged for a
period of 30 days during which execution is not effectively stayed; or
(g) The making of any levy, seizure, garnishment, sequestration or attachment
thereof or thereon; or the uninsured loss, theft, substantial damage, or
destruction of any material portion of Borrower's Property; or
(h) Any order is entered in any proceeding against Borrower or any Subsidiary of
Borrower decreeing the dissolution, liquidation or split-up thereof, and such
order shall remain in effect for 30 days; or
(i) Any Obligor or any subsidiary of Borrower makes a general assignment for the
benefit of creditors or shall petition or apply to any tribunal for the
appointment of a trustee, custodian, receiver or liquidator of all or any
substantial part of its business, estate or assets or shall commence any
proceeding under any bankruptcy, insolvency, dissolution or liquidation law of
any jurisdiction, whether now or hereafter in effect; or any such petition or
application shall be filed or any such proceeding shall be commenced against any
Obligor or any subsidiary of Borrower and the Obligor or such subsidiary by any
act or omission shall indicate approval thereof, consent thereto or acquiescence
therein, or an order shall be entered appointing a trustee, custodian, receiver
or liquidator of all or any substantial part of the assets of any Obligor or any
subsidiary of Borrower or granting relief to any Obligor or any subsidiary of
Borrower or approving the petition in any such proceeding, and such order shall
remain in effect for more than 30 days; or any Obligor or any subsidiary of
Borrower shall fail generally to pay its debts as they become due or suffer any
writ of attachment or execution or any similar process to be issued or levied
against it or any substantial part of its property which is not released,
stayed, handed or vacated within 30 days after its issue or levy; or
(j) Any Obligor or any Subsidiary of Borrower conceals or removes any part of
its Propeny, with intent to hinder, delay or defraud any of its creditors:
(A)'makes or permits a transfer of any of its Property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or (B)'makes any
unscheduled transfer of its Property to or for the benefit of a creditor at a
time when other creditors similarly situated have not been paid; or
(k) A material adverse change occurs in the assets, liabilities or financial
condition of any Obligor, or any Subsidiary of Borrower, which is reasonably
related to such Obligor's ability to perform its obligations under the Loan
Documents and/or usability to avoid any Event of Default; or
(1) Any change occurs in the ownership of Borrower other than as expressly
permitted by this Agreement; or (in) Any Obligor that is not an individual
dissolves.
RIGHTS AND REMEDIES 6.2 If any Event of Default defined in Section 6.1 occurs,
then Bank may do any or all of the following: (1) declare the Obligations to be
immediately due and payable without notice of acceleration or of intention to
accelerate, presentment and demand or protest, all of which are hereby expressly
waived; (2) without notice to any Obligor, terminate the Commitment and
accelerate the Termination Date; (3) set off, in any order, against the
indebtedness of Borrower under the Loan Documents any debt owing by Bank to
Borrower (whether such debt is owed individually or jointly), including, but not
limited to, any deposit account, which right is hereby granted by Borrower to
Bank; and (4) exercise any and all other rights pursuant to the Loan Documents,
at law, in equity or otherwise.
CURE PERIOD FOR CERTAIN EVENTS OF DEFAULT 6.3 Notwithstanding any other
provision of this Agreement or any other Loan Document to the contrary, the Bank
shall not take the actions described in Section'6.2 during the Cure Period (as
defined hereinafter), with respect to: (i)'any Event of Default described in
section 6.1 (a) or (b) which consists of delay in making a payment of money; or
(it) an Event of Default described in section 6.1 (b) or (d) which consists of
delay in delivering reports or documents; or (iii)'an Event of Default described
in section 6.1(d) which consists of a curable failure to maintain a financial
covenant set out in Exhibit C Part C. With respect to an Event of Default
described in clause (i)'of the preceding sentence, the "Cure Period" shall be 5
business days beginning on the first day of the Event of Default. With respect
to an Event of Default described in clause (it) or (in) of the first sentence of
this section, the "Cure Period" shall be 15 calendar days beginning on the first
day of the Event of Default. This section 6.3 shall be void and of no effect
unless Borrower shall, to the extent Borrower has actual knowledge thereof,
provide prompt notices to Bank (in writing if requested by the Bank) of (x)'the
occurrence or expected occurrence of such Event of Default, with a certification
to Bank of Borrower's good faith expectation that such Event of Default shall be
cured by Borrower before the end of the Cure Period; and (y)'the occurrence of
Borrower's cure of the Event of Default before the end of the Cure Period,
During the Cure Period, an Event of Default shall be deemed to have occurred and
be continuing until actually cured by Borrower, for all purposes including
without limitation Section 2. 1(b) hereof If the Event of Default is not cured
before the end of the Cure Period, Bank shall have all of the rights described
in Section'6.2 and each of the other Loan Documents without any restriction
imposed by this section whatsoever. This section shall not restrict the Bank
from taking any remedy with respect to any Event of Default not specified in the
first sentence of this section.
REMEDIES CUMULATIVE 6.4 No remedy, right or power of Bank is exclusive of any
other remedy, right or power now or hereafter existing by contract, at law, in
equity, or otherwise, and all remedies, rights and powers are cumulative.
7. MISCELLANEOUS.
NO WAIVER 7.1 No waiver of any default or Event of Default will be a waiver of
any other default or Event of Default. No failure to exercise or delay in
exercising any right or power under any Loan Document will be a waiver thereof,
nor shall any single or partial exercise of any such right or power preclude any
further or other exercise thereof or the exercise of any other right or power.
The making of any Loan during either the existence of any default or Event of
Default, or subsequent to the occurrence of an Event of Default will not be a
waiver of any such default or Event of Default. No amendment, modification or
waiver of any Loan Document will be effective unless the same is in writing and
signed by the Person against whom such amendment, modification or waiver is
sought to be enforced. No notice to or demand on any Person shall entitle any
Person to any other or further notice or demand in similar or other
circumstances.
NOTICES 7.2 All notices required under the Loan Documents shall be in writing
and either delivered against receipt therefor, or mailed by registered or
certified mail, return receipt requested, in each case addressed to the address
shown on the signature page hereof or to such other address as a party may
designate. Except for the notices required by Section'2.1, which shall be given
only upon actual receipt by Bank, notices shall be deemed to have been given
(whether actually received or not) when delivered (or, if mailed, on the next
Business Day).
GOVERNING LAW/ARBITRATION 7.3 (a)'UNLESS OTHERWISE SPECIFIED THEREIN, EACH LOAN
DOCUMENT IS GOVERNED BY TEXAS LAWS AND THE APPLICABLE LAWS OF THE UNITED STATES
OF AMERICA. To the maximum extent permitted by law, any controversy or claim
arising out of or relating to the Loans or any Loan Document, including but not
limited to any claim based on or arising from an alleged tort or an alleged
breach of any agreement contained in any of the Loan Documents, shall, at the
request of any party to the Loan or Loan Documents (either before or after the
commencement of judicial proceedings), be settled by mandatory and binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA Rules") and pursuant to Title 9 of the United
States Code, or if Title 9 does not apply, the Texas General Arbitration Act. In
any arbitration proceeding: (i) all statutes of limitations which would
otherwise be applicable shall apply; and (it) the proceeding shall be conducted
in the city in which the office of Bank originating the Loans is located by a
panel of three arbitrators. Arbitrators are empowered to resolve any controversy
by summary rulings substantially similar to summary judgments and motions to
dismiss. Arbitrators may order discovery conducted in accordance with the
Federal Rules of Civil Procedures. All arbitrators will be selected by the
process of appointment from a panel, pursuant to the AAA Rules. Any award
rendered in the arbitration proceeding will be final and binding, and judgment
upon any such award may be entered in any court having jurisdiction. (b)'If any
party to the Loan or Loan Documents files a proceeding in any court to resolve
any controversy or claim, such action will not constitute a waiver of the right
of such party or a bar to the right of any other party to seek arbitration under
the provisions of this Section or that of any other claim or controversy, and
the court shall, upon motion of any party to the proceeding, direct that the
controversy or claim be arbitrated in accordance with this Section. (c) No
provision of, or the exercise of any rights under, this Section shall limit or
impair the right of any party to the Loan Documents before, during or after any
arbitration proceeding to: (i)'exercise self-help remedies including but not
limited to setoff or repossession; (ii)'foreclose any Lien on or security
interest in any Collateral; or (iii)'obtain relief from a court of competent
jurisdiction to prevent the dissipation, damage, destruction, transfer,
hypothecation, pledging or concealment of assets or Collateral including, but
not limited to attachments, garnishments, sequestrations, appointments of
receivers, injunctions or other relief to preserve the status quo, (d)'To the
maximum extent permitted by applicable law and the AAA Rules, neither Bank nor
any Obligor or any Affiliate, officer, director, employee, attorney, or agent of
either shall have any liability with respect to, and Bank and each Obligor
waives, releases, and agrees not to xxx any of them upon, any claim for any
special, indirect, incidental and consequential damages suffered or incurred by
such Person in connection with, arising out of, or in any way related to, this
Agreement or any of the other Loan Documents. Each of Bank and each Obligor
waives, releases, and agrees not to xxx each other or any of their Affiliates,
officers, directors, employees, attorneys, or agents for consequential or
punitive damages in respect of any claim in connection with, arising out of, or
in my way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the other Loan
Documents. Nothing contained herein, however, shall be construed as a waiver of
any Obligor's or the Bank's tight to compel arbitration of disputes pursuant to
subparagraphs (a) and (b), above.
(e) Nothing herein shall be considered a waiver of the right or protections
afforded Bank by 12 U.S.C. 9 1, Texas Banking Code Art. 342-609 or anysimilar
statute.
(f) Each party agrees that any other party may proceed against any other liable
Person, jointly or severally, or against one or more of them, less than all,
without impairing rights against any other liable Persons. A party shall not be
required to join the principal Obligor or any other liable Persons (e.g.,
sureties or guarantors) in any proceeding against any Person. A party may
release or settle with one or more liable Persons as the party deems fit without
releasing or impairing right to proceed against any Persons not so released.
SURVIVAL; PARTIES BOUND; TERM OF AGREEMENT 7.4 All representations, warranties,
covenants and agreements made by or on behalf of Borrower in connection with the
Loan Documents will survive the execution and delivery of the Loan Documents;
will not be affected by any investigation made by any Person, and will bind
Borrower and the successors, trustees, receivers and assigns of Borrower and
will benefit the successors and assigns of the Bank; provided that Bank's
agreement to make Loans to Borrower will not inure to the benefit of any
successor or assign of Borrower. Except as otherwise provided herein, the term
of this Agreement will be until the later of the final maturity of the Note and
the full and final payment of all Obligations and all amounts due under the Loan
Documents.
DOCUMENTARY MATTERS 7.5 This Agreement may be executed in several identical
counterparts, on separate counterparts; each counterpart will constitute an
original instrument, and all separate counterparts will constitute but one and
the same instrument. The headings and captions in the Loan Documents have been
included solely for convenience and should not be considered in construing the
Loan Documents. If any provision of any Loan Document is invalid, illegal or
unenforceable in any respect under any applicable law, the remaining provisions
will remain effective. The Loans and all other obligations and indebtedness of
Borrower to Bank are entitled to the benefit of the Loan Documents.
EXPENSES 7.6 Upon the execution of this Agreement, Borrower agrees to pay Bank a
$500.00 fee for Bank's preparation, negotiation and handling of this Agreement.
Following the execution of this Agreement, Borrower agrees to pay on demand all
out-of-pocket expenses (including, without limitation, the fees and expenses of
counsel for Bank) in connection with the negotiation, preparation, execution,
filing, recording, modification, supplementing and waiver of the Loan Documents
and the making, servicing and collection of the Loans. The obligations of the
Borrower under this and the following section will survive the termination of
this Agreement.
USURY NOT INTENDED 7.8 Borrower and Bank intend to conform strictly to
applicable usury laws. Therefore, the total amount of interest (as defined under
applicable law) contracted for, charged or collected under this Agreement or any
other Loan Document will never exceed the Highest Lawful Rate. If Bank contracts
for, charges or receives any excess interest, it will be deemed a mistake. Bank
will automatically reform the Loan Document or charge to conform to applicable
law, and if excess interest has been received, Bank will either refund the
excess to Borrower or credit the excess on any unpaid principal amount of the
Note or any other Loan Document. All amounts constituting interest will be
spread throughout the full term of the Loan Document or applicable Note in
determining whether interest exceeds lawful amounts.
NO COURSE OF DEALING 7.9 NO COURSE OF DEALING BY BORROWER WITH BANK, NO COURSE
OF PERFORMANCE AND NO TRADE PRACTICES OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE
MAY BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
AGREEMENT.
8. DEFINITIONS.
Unless the context otherwise requires, capitalized terms used in Loan Documents
and not defined elsewhere shall have the meanings provided by GAAP, except as
follows:
Account Debtor means any person in any way obligated on or in connection with
any Account. Affiliate means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b)'that directly
or indirectly beneficially owns or holds five percent (5%) or more of any class
of voting stock of such Person; or (c)'five percent (5%) or more of the voting
stock of which is directly or indirectly beneficially owned or held by the
Person in question. The term "control" means to possess, directly or indirectly,
the power to direct the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise. Bank is not under any
circumstances to be deemed an Affiliate of Borrower or any of its Subsidiaries.
Authority Documents means certificates of authority to transact business,
certificates of good standing, borrowing resolutions (with secretary's
certificate), secretary's certificates of incumbency, and other documents which
empower and enable Borrower or its representatives to enter into agreements
evidenced by Loan Documents or evidence such authority. Business Day means a day
when the main office of Bank is open for the conduct of commercial lending
business. Corporation means corporations, partnerships, limited liability
companies, joint ventures, joint stock associations, associations, banks,
business trusts and other business entities.
Debt means all revolving, term and other interest and non-interest bearing debt
from banks and other financial institutions excluding accounts payable and other
accruals.
EBITDA means Borrower's earnings before interest, taxes, depreciation,
amortization and other Specified Non-Cash Charges. Government Accounts means
receivables owed by the U.S. government or by the government of any state,
county, municipality, or other political subdivision as to which Bank's security
interest or ability to obtain direct payment of the proceeds is governed by any
federal or state statutory requirements other than those of the Uniform
Commercial Code, including, without limitation, the Federal Assignment of Claims
Act of 1940, as amended. Governmental Authority means any foreign governments]
authority, the United States of America, any state of the United States and any
political subdivision of any of the foregoing, and any agency, department,
commission, board, bureau, court or other tribunal having jurisdiction over Bank
or any Obligor, or any Subsidiary of Borrower or their respective Property.
Highest Lawful Rate means the maximum nonusurious rate of interest permitted to
be charged by applicable Federal or Texas law (whichever permits the bigger
lawful rate) from time to time in effect. if Chapter One of the Texas Credit
Code establishes the Highest Lawful Rate, the Highest Lawful Rate is the
"indicated rate ceiling" as defined in that Chapter. Indebtedness means and
includes (a) all items which in accordance with GAAP, would be included on the
liability side of a balance sheet on the date as of which Indebtedness is to be
determined (excluding capital stock, surplus, surplus reserves and deferred
credits); it being understood that operating lease obligations and other such
obligations which under GAAP do not appear as liabilities on Borrower's balance
sheet are not Indebtedness; (b)'all guaranties, endorsements and other
contingent obligations in respect of, or any obligations to purchase or
otherwise acquire, Indebtedness of others, and (e)'all Indebtedness secured by
any Lien existing on any interest of the Person with respect to which
indebtedness is being determined, in Property owned subject to such Lien,
whether or not the Indebtedness secured thereby has been assumed. Legal
Requirement means any law, ordinance, decree, requirement, order, judgment,
rule, regulation (or interpretation of any of the foregoing) of, and the terms
of any license or permit issued by, any Governmental Authority. Lien shall mean
any mortgage, pledge, charge, encumbrance, security interest, collateral
assignment or other lien or restriction of any kind, whether based on common
law, constitutional provision, statute or contract. Loan Documents means this
Agreement, the agreements, documents, instruments and other writings
contemplated by this Agreement or listed on Annex 1, all other assignments,
deeds, guaranties, pledges, instruments, certificates and agreements now or
hereafter executed or delivered to the Bank pursuant to any of the foregoing,
and all amendments, modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing. Obligations
means all principal, interest and other amounts which are or become owing under
this Agreement, the Note or any other Loan Document.
Obligor means each Borrower and any guarantor, surety, co-signer, general
partner or other person who may now or hereafter be obligated to pay all or any
part of the Obligations.
Organizational Documents means, with respect to a corporation, the certificate
of incorporation, articles of incorporation and bylaws of such corporation; with
respect to a limited liability company, the articles of organization,
regulations and other documents establishing such entity, with respect to a
partnership, joint venture, or trust, the agreement, certificate or instrument
establishing such entity; in each case including all modifications and
supplements thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof which are
consented to by Bank. Parties means all Persons other than Bank executing any
Loan Document, Person means any individual, Corporation, trust, unincorporated
organization, Governmental Authority or any other form of entity. Proper Form
means in form and substance satisfactory to the Bank. Property means any
interest in any kind of property or asset, whether real, personal or mixed,
tangible or intangible. Specified Non-Cash Charges means all non-cash charges to
the Borrower's income statement (not reflected as depreciation or amortization)
(a)'resulting from stock option transactions; or (b)'as agreed in writing by
Bank in its sole discretion, upon Borrower's request.
Subordinated Debt means any Indebtedness subordinated to Indebtedness due Bank
pursuant to a written subordination agreement in Proper Form by and among Bank,
subordinated creditor and Borrower which at a minimum must prohibit: (a)'any
action by subordinated creditor which will result in an occurrence of an Event
of Default or default under this Agreement, tire subordination agreement or the
subordinated Indebtedness; and (b)'upon the happening of any Event of Default or
default under any Loan Document, the subordination agreement, or any instrument
evidencing the subordinated Indebtedness (i)'any payment of principal and
interest on the subordinated Indebtedness; (ii)'any act to compel payment of
principal or interest on subordinated Indebtedness; and (iii)'any action to
realize upon any Property securing the subordinated Indebtedness.
Subsidiary means, as to a particular parent Corporation, any Corporation of
which 50% or more of the indicia of equity rights is at the time directly or
indirectly owned by such parent Corporation or by one or more Persons controlled
by, controlling or under common control with such parent Corporation.
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN BANK AND THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF BANK AND THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN BANK AND THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
BORROWER: PSW TECHNOLOGIES, INC.
By: /s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Title: CFO, Sr. VP
BANK: TEXAS COMMERCE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Vice President
EXHIBIT'S ANNEXES
A Borrowing Base Report I Loan Documents
B Request for Loan II Subsidiaries
C Reporting Requirements, Financial Covenants,
and Compliance Certificate
