LOAN AND SECURITY AGREEMENT
DATED AS OF MAY , 2000
AMONG
GENERAL ELECTRIC CAPITAL CORPORATION
AS LENDER
AND
MANAGEMENT ALLIANCE CORPORATION,
INFORMATION SYSTEMS CONSULTING CORP.,
DATATEK CONSULTING GROUP CORPORATION,
TEXCEL SERVICES, INC.,
AND
MOUNTAIN, LTD.
AS BORROWERS
INDEX OF EXHIBITS AND SCHEDULES
Schedule A - Definitions
Schedule B - Lender's and Borrowers' Addresses for Notices
Schedule C - Letters of Credit
Schedule D - Cash Management System
Schedule E - Fees and Expenses
Schedule F - Schedule of Documents
Schedule G - Financial Covenants
Disclosure Schedule (3.2) - Places of Business; Corporate Names
Disclosure Schedule (3.6) - Real Estate
Disclosure Schedule (3.7) - Stock; Affiliates
Disclosure Schedule (3.9) - Taxes
Disclosure Schedule (3.11) - ERISA
Disclosure Schedule (3.12) - Litigation
Disclosure Schedule (3.13) - Intellectual Property
Disclosure Schedule (3.15) - Environmental Matters
Disclosure Schedule (3.16) - Insurance
Disclosure Schedule (3.18) - Contracts (Offset Risk)
Disclosure Schedule (5(b)) - Indebtedness
Disclosure Schedule (5(e)) - Liens
Disclosure Schedule (6.1) - Actions to Perfect Liens
Exhibit A - Form of Notice of Revolving Credit Advance
Exhibit B - Other Reports and Information
Exhibit C - Form of Borrowing Base Certificate
Exhibit D - Form of Accounts Payable Analysis
Exhibit E - Form of Accounts Receivable Rollforward Analysis
Exhibit F - Form of Revolving Credit Note
Exhibit G - Intentionally Left Blank
Exhibit H - Form of Secretarial Certificate
Exhibit I - Form of Power of Attorney
Exhibit J - Form of Certificate of Compliance
Exhibit K - Form of Lockbox Agreement
Exhibit L - Form of Landlord's Waiver and Consent
Exhibit M - Form of Subsidiary Joinder Agreement
Exhibit N - Form of Guarantee
Exhibit O - Form of Opinion of Counsel to Borrower
Exhibit P - Intentionally Left Blank
Exhibit Q - Form of Standard Payoff Letter
Exhibit R - Form of U.C.C. Schedule
Exhibit S - Form of Payment of Proceeds Letter
GE CAPITAL
TRANSACTION SUMMARY AS OF THE DATE OF THIS AGREEMENT
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REVOLVING CREDIT LOAN
MAXIMUM AMOUNT: $15,000,000
TERM: 3 years
REVOLVING CREDIT RATE: Index Rate plus 0.125%
LETTER OF CREDIT SUBFACILITY: n/a
BORROWING BASE: the sum of (i) 85% of the value (as
determined by Lender) of each
Borrower's Eligible Accounts
arising from the rendition of
contract staffing services;
provided, that Lender shall reduce
the foregoing percentage by one
percentage point for each
percentage point that the dilution
of such Borrower's Accounts arising
from the rendition of contract
staffing services (calculated by
Lender as the average dilution over
the most recent three months)
exceeds 5% and (ii) 75% of the
value (as determined by Lender) of
each Borrower's Eligible Accounts
arising from the rendition of
permanent placement services;
provided, that Lender shall reduce
the foregoing percentage by one
percentage point for each
percentage point that the dilution
of such Borrower's Accounts arising
from the rendition of permanent
placement services (calculated by
Lender as the average dilution over
the most recent three months)
exceeds 10%.
FEES
CLOSING FEE: n/a
UNUSED LINE FEE: 0.25%
LETTER OF CREDIT FEE: n/a
PREPAYMENT FEE: 2% in year one; 1% in year two; and
0.5% in year three.
THE LOANS DESCRIBED GENERALLY HERE ARE ESTABLISHED AND GOVERNED BY THE TERMS AND
CONDITIONS SET FORTH BELOW IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AND
IF THERE IS ANY CONFLICT BETWEEN THIS GENERAL DESCRIPTION AND THE EXPRESS TERMS
AND CONDITIONS BELOW OR ELSEWHERE IN THE LOAN DOCUMENTS, SUCH OTHER EXPRESS
TERMS AND CONDITIONS SHALL CONTROL.
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THIS LOAN AND SECURITY AGREEMENT is dated as of May ______, 2000, and
agreed to by and among MANAGEMENT ALLIANCE CORPORATION, a Texas corporation
("Leading Borrower" or "MAC"), INFORMATION SYSTEMS CONSULTING CORP., a Texas
corporation ("ISCC"), DATATEK CONSULTING GROUP CORPORATION, a Texas corporation
("DCGC"), TEXCEL SERVICES, INC., a Pennsylvania corporation ("TSI"), and
MOUNTAIN, LTD., a Maine corporation ("ML" and, together with MAC, ISCC, DCGC and
TSI, the "Borrowers" and each a "Borrower"), DIVERSIFIED CORPORATE RESOURCES,
INC., a Texas corporation ("Parent") and any other Credit Party executing this
Agreement, and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("Lender").
RECITALS
A. Borrowers desire to obtain the Loans and other financial
accommodations from Lender and Lender is willing to provide the Loans and
accommodations all in accordance with the terms of this Agreement.
B. Capitalized terms used herein shall have the meanings assigned
to them in SCHEDULE A and, for purposes of this Agreement and the other Loan
Documents, the rules of construction set forth in SCHEDULE A shall govern. All
schedules, attachments, addenda and exhibits hereto, or expressly identified to
this Agreement, are incorporated herein by reference, and taken together with
this Agreement, constitute but a single agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 LOANS. (a) Subject to the terms and conditions of this Agreement, from
the Closing Date and until the Commitment Termination Date (i) Lender agrees (A)
to make available advances (each, a "Revolving Credit Advance") and (B) to incur
Letter of Credit Obligations, in an aggregate outstanding amount for any
Borrower not to exceed the Borrowing Availability of such Borrower, and (ii) any
Borrower may at the request of Leading Borrower as agent for such Borrower from
time to time borrow, repay and reborrow, and may cause Lender to incur Letter of
Credit Obligations, under this Section 1.1.
(b) Leading Borrower, as agent for each Borrower, shall request
each Revolving Credit Advance by written notice to Lender substantially in the
form of EXHIBIT A (each a "Notice of Revolving Credit Advance") given no later
than 11:00 A.M. (New York City time) on the Business Day of the proposed
advance. Lender shall be fully protected under this Agreement in relying upon,
and shall be entitled to rely upon, (i) any Notice of Revolving Credit Advance
believed by Lender to be genuine, and (ii) the assumption that the Persons
making electronic requests or executing and delivering a Notice of Revolving
Credit Advance were duly authorized, unless the responsible individual acting
thereon for Lender shall have actual knowledge to the contrary. As an
accommodation to Borrowers, Lender may permit telephonic, electronic, or
facsimile requests for a Revolving Credit Advance and electronic or facsimile
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transmittal of instructions, authorizations, agreements or reports to Lender
by any Borrower. Unless each Borrower specifically directs Lender in writing
not to accept or act upon telephonic, facsimile or electronic communications
from any Borrower, Lender shall have no liability to any Borrower for any
loss or damage suffered by any Borrower as a result of Lender's honoring of
any requests, execution of any instructions, authorizations or agreements or
reliance on any reports communicated to it telephonically, by facsimile or
electronically and purporting to have been sent to Lender by any Borrower and
Lender shall have no duty to verify the origin of any such communication or
the identity or authority of the Person sending it. The Revolving Credit Loan
shall be evidenced by, and be repayable in accordance with the terms of, the
Revolving Credit Note and this Agreement.
(c) In making any Loan hereunder Lender, shall be entitled to rely
upon the most recent Borrowing Base Certificate delivered to Lender by such
Borrower and other information available to Lender. Lender shall be under no
obligation to make any further Revolving Credit Advance to any Borrower or incur
any other Obligation if any Borrower shall have failed to deliver a Borrowing
Base Certificate to Lender by the time specified in Section 4.1(b).
(d) Letters of Credit. Notwithstanding anything to the contrary
contained in this Agreement, including SCHEDULE C, Lender shall have no
obligations to incur Letter of Credit Obligations for the account of Borrower.
1.2 TERM AND PREPAYMENT. (a) Upon the Commitment Termination Date the
obligation of Lender to make Revolving Credit Advances and extend other credit
hereunder shall immediately terminate and Borrowers shall pay to Lender in full,
in cash: (i) all outstanding Revolving Credit Advances and all accrued but
unpaid interest thereon; (ii) an amount sufficient to enable Lender to hold cash
collateral as specified in SCHEDULE C; and (iii) all other non-contingent
Obligations due to or incurred by Lender.
(b) If the Revolving Credit Loan attributable to any Borrower
shall at any time exceed such Borrower's Borrowing Availability, then such
Borrower shall immediately repay the Revolving Credit Loan in the amount of such
excess.
(c) Borrowers shall have the right, at any time upon 30 days prior
written notice to Lender, to (i) terminate voluntarily Borrowers' right to
receive or benefit from, and Lender's obligation to make and to incur, Revolving
Credit Advances and Letter of Credit Obligations and (ii) prepay all of the
Obligations. The effective date of termination of the Revolving Credit Loan
specified in such notice shall be the Commitment Termination Date. If Borrowers
exercise their right of termination for any reason prior to the Stated Expiry
Date then in effect or if Lender terminates this Agreement as a result of the
occurrence of a Default, Borrowers shall pay to Lender the applicable Prepayment
Fee. If Lender terminates this Agreement for any reason other than the
occurrence of a Default, no Prepayment Fee shall be required.
1.3 USE OF PROCEEDS. Borrowers shall use the proceeds of the Loans as
follows: (a) on the Closing Date, a Revolving Credit Advance shall be made (i)
to ISCC which shall be used to make a lawful dividend or advance to Parent, and
to MAC, which collectively shall be used by Parent and MAC to refinance on the
Closing Date certain outstanding Indebtedness as provided in Section 2.1(b), and
(ii) to Borrowers for the payment of the fees and expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement; and (b) after the Closing Date, for working capital and other general
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corporate purposes.
1.4 SINGLE LOAN. The Loans and all of the other Obligations of any Borrower
to Lender shall constitute one general obligation of such Borrower secured by
all of the Collateral.
1.5 INTEREST (a) Each Borrower shall pay interest to Lender on the
aggregate outstanding Revolving Credit Advances attributable to such Borrower at
a floating rate equal to the Index Rate plus one hundred twenty five thousandths
percent (0.125%) per annum (the "Revolving Credit Rate"). All computations of
interest, and all calculations of the Letter of Credit Fee, shall be made by
Lender on the basis of a three hundred and sixty (360) day year, in each case
for the actual number of days occurring in the period for which such interest or
fee is payable. Each determination by Lender of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest error. In no event
will Lender charge interest at a rate that exceeds the highest rate of interest
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable.
(b) Interest shall be payable on the outstanding Revolving Credit
Advances (i) in arrears for the preceding calendar month on the first day of
each calendar month, (ii) on the Commitment Termination Date, and (iii) if any
interest accrues or remains payable after the Commitment Termination Date, upon
demand by Lender.
(c) Effective upon the occurrence of any Event of Default and for
so long as any Event of Default shall be continuing, the Revolving Credit Rate
and the Letter of Credit Fee shall automatically be increased by two percentage
points (2%) per annum (such increased rate, the "Default Rate"), and all
outstanding Obligations, including unpaid interest and Letter of Credit Fees,
shall continue to accrue interest from the date of such Event of Default at the
Default Rate applicable to such Obligations.
(d) If any interest or any other payment (including Unused Line
Fees and Collateral Monitoring Fees) to Lender under this Agreement becomes due
and payable on a day other than a Business Day, such payment date shall be
extended to the next succeeding Business Day and interest thereon shall be
payable at the then applicable rate during such extension.
1.6 CASH MANAGEMENT SYSTEM. On or prior to the Closing Date and until the
Termination Date, each Borrower will establish and maintain the cash management
system described in SCHEDULE D. All payments in respect of the Collateral shall
be made to or deposited in the blocked or lockbox accounts described in
SCHEDULE D in accordance with the terms thereof.
1.7 FEES. Borrowers agree to pay to Lender the Fees set forth in
Schedule E.
1.8 RECEIPT OF PAYMENTS. Each Borrower shall make each payment under this
Agreement (not otherwise made pursuant to Section 1.9) without set-off,
counterclaim or deduction and free and clear of all Taxes not later than 11:00
A.M. (New York City time) on the day when due in lawful money of the United
States of America in immediately available funds to the Collection Account. If
any Borrower shall be required by law to deduct any Taxes from any payment to
Lender under any Loan Document, then the amount payable to Lender shall be
increased so that, after making all required deductions, Lender receives an
amount equal to that which it would have received had no such deductions been
made. For purposes of
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computing interest and Fees, all payments shall be deemed received by Lender
1 Business Day following receipt of immediately available funds in the
Collection Account. For purposes of determining the Borrowing Availability,
payments shall be deemed received by Lender upon receipt of immediately
available funds in the Collection Account.
1.9 APPLICATION AND ALLOCATION OF PAYMENTS. Each Borrower irrevocably
agrees that Lender shall have the continuing and exclusive right to apply any
and all payments against the then due and payable Obligations in such order as
Lender may deem advisable. Lender is authorized to, and at its option may
(without prior notice or precondition and at any time or times), but shall not
be obligated to, make or cause to be made Revolving Credit Advances on behalf of
any Borrower for: (a) payment of all Fees, expenses, indemnities, charges,
costs, principal, interest, or other Obligations owing by such Borrower under
this Agreement or any of the other Loan Documents, (b) the payment, performance
or satisfaction of any of such Borrower's obligations with respect to
preservation of the Collateral, or (c) any premium in whole or in part required
in respect of any of the policies of insurance required by this Agreement, even
if the making of any such Revolving Credit Advance causes the outstanding
balance of the Revolving Credit Loan attributable to any Borrower to exceed such
Borrower's Borrowing Availability, and each Borrower agrees to repay
immediately, in cash, any amount by which the Revolving Credit Loan attributable
to such Borrower exceeds its Borrowing Availability.
1.10 ACCOUNTING. Lender is authorized to record on its books and records the
date and amount of each Loan and each payment of principal thereof and such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded. Lender shall provide Borrowers on a monthly basis a
statement and accounting of such recordations but any failure on the part of the
Lender to keep any such recordation (or any errors therein) or to send a
statement thereof to any Borrower shall not in any manner affect the obligation
of any Borrower to repay any of the Obligations.. Except to the extent that any
Borrower shall, within 30 days after such statement and accounting is sent,
notify Lender in writing of any objection such Borrower may have thereto
(stating with particularity the basis for such objection), such statement and
accounting shall be deemed final, binding and conclusive upon such Borrower,
absent manifest error.
1.11 INDEMNITY. Each Borrower and each other Credit Party executing this
Agreement jointly and severally agree to indemnify and hold Lender and its
Affiliates, and their respective employees, attorneys and agents (each, an
"Indemnified Person"), harmless from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses of any kind or
nature whatsoever (including attorneys' fees and disbursements and other costs
of investigation or defense, including those incurred upon any appeal) which may
be instituted or asserted against or incurred by any such Indemnified Person as
the result of credit having been extended, suspended or terminated under this
Agreement and the other Loan Documents or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement and the other Loan Documents or
any other documents or transactions contemplated by or referred to herein or
therein and any actions or failures to act with respect to any of the foregoing,
including any and all product liabilities, Environmental Liabilities, Taxes and
legal costs and expenses arising out of or incurred in connection with disputes
between or among any parties to any of the Loan Documents (collectively,
"Indemnified Liabilities"), except to the extent that any such Indemnified
Liability is finally determined by a court of competent jurisdiction to have
resulted solely from such Indemnified Person's gross negligence or willful
misconduct.
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NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY CREDIT PARTY, ANY
SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING
CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR ANY ACT OR FAILURE TO ACT UNDER
ANY POWER OF ATTORNEY OR FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL
DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED,
SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR AS
A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
1.12 BORROWING BASE; RESERVES. The Borrowing Base of each Borrower shall be
determined by Lender (including the eligibility of Accounts and Inventory) based
on the most recent Borrowing Base Certificate delivered to Lender in accordance
with Section 4.1(b) and such other information available to Lender. The
Revolving Credit Loan shall be subject to Lender's continuing right to withhold
from any Borrower's Borrowing Availability reserves, and to increase and
decrease such reserves from time to time, if and to the extent that in Lender's
good faith credit judgment such reserves are necessary, including to protect
Lender's interest in the Collateral or to protect Lender against possible
non-payment of Accounts for any reason by Account Debtors or possible diminution
of the value of any Collateral or possible non-payment of any of the Obligations
or for any Taxes or in respect of any state of facts which could constitute a
Default. Lender may, at its option, implement reserves by designating as
ineligible a sufficient amount of Accounts or Inventory which would otherwise be
Eligible Accounts or Eligible Inventory, as the case may be, so as to reduce any
Borrower's Borrowing Base by the amount of the intended reserves.
2. CONDITIONS PRECEDENT
2.1 CONDITIONS TO THE INITIAL LOANS. Lender shall not be obligated to make
any of the Loans or to perform any other action hereunder, until the following
conditions have been satisfied in a manner satisfactory to Lender in its sole
discretion, or waived in writing by Lender:
(a) the Loan Documents to be delivered on or before the Closing
Date shall have been duly executed and delivered by the appropriate parties, all
as set forth in the Schedule of Documents (SCHEDULE F);
(b) all of the obligations of Borrowers to Compass Bank under
their financing documentation as in effect immediately prior to the Closing Date
will be performed and paid in full from the proceeds of the initial Loans and
all Liens upon any of the property of any Borrower or any other Credit Party in
respect thereof shall have been terminated immediately upon such payment;
(c) Lender shall have received evidence satisfactory to it that
the insurance policies provided for in Section 3.16 are in full force and
effect, together with appropriate evidence showing loss payable or additional
insured clauses or endorsements in favor of Lender as required under such
Section;
(d) (i) as of the Closing Date Net Borrowing Availability for all
Borrowers combined shall be not less than $2,500,000 after giving effect to the
initial Revolving Credit Advance and Letter of Credit Obligations (on a pro
forma basis, with trade payables being paid currently, and expenses and
liabilities being paid in the ordinary course of business and without
acceleration of sales); (ii) effective upon the
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granting of Lender's consent to the Treasury Stock Purchase (as defined in
Schedule G hereto), Net Borrowing Availability for all Borrowers combined
shall be not less than $2,000,000; and (iii) effective upon the granting of
Lender's consent to the Target Acquisition (as defined in Schedule G hereto),
Net Borrowing Availability for all Borrowers combined shall be not less than
$1,000,000;
(e) Lender shall have received an opinion of counsel to the
Borrowers and the other Credit Parties with respect to the Loan Documents in
substantially the form of Exhibit O to this Agreement and otherwise in form and
substance satisfactory to Lender;
(f) Lender shall have received a pro forma consolidated and
consolidating balance sheet of Parent and each of its Subsidiaries, as of the
end of the month preceding the Closing Date, prepared in accordance with GAAP on
a pro forma basis, setting forth the assumptions on which such balance sheet was
prepared, in each case giving effect to the consummation of the transactions
contemplated by this Agreement and the other Loan Documents, and certified by
the chief financial officer of the Credit Parties; and
(g) Lender shall have received satisfactory evidence that certain
of the Indebtedness owing to Parent by some of the Borrowers or their respective
Subsidiaries, as more particularly set forth and described on the pro-forma
balance sheet referred in Section 2.1(f) of this Agreement, shall have been
converted to additional equity of such Borrower or Subsidiary, as the case may
be.
2.2 FURTHER CONDITIONS TO THE LOANS. Lender shall not be obligated to fund
any Loan (including the initial Loans), if, as of the date thereof:
(a) any representation or warranty by any Credit Party contained
herein or in any of the other Loan Documents shall be untrue or incorrect as of
such date, except to the extent that any such representation or warranty is
expressly stated to relate to a specific earlier date, in which case, such
representation and warranty shall be true and correct as of such earlier date;
or
(b) any event or circumstance which has had or reasonably could be
expected to have a Material Adverse Effect shall have occurred since the Closing
Date; or
(c) any Default shall have occurred and be continuing or would
result after giving effect to such Loan; or
(d) after giving effect to such Loan, the Revolving Credit Loan
attributable to any Borrower would exceed the Borrowing Availability of such
Borrower.
2.3 AGENT. The request and acceptance by Leading Borrower, as agent for
each Borrower, of the proceeds of any Loan, and the request by Leading Borrower,
as agent for each Borrower, for the incurrence by Lender of any Letter of Credit
Obligations, as the case may be, shall be deemed to constitute, as of the date
of such request and the date of such acceptance, (i) a representation and
warranty by each Borrower that the conditions in Section 2.2 have been satisfied
and (ii) a restatement by each Borrower of each of the representations and
warranties made by such Borrower in any Loan Document and a reaffirmation by
each Borrower of the granting and continuance of Lender's Liens pursuant to the
Loan Documents.
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3. REPRESENTATIONS, WARRANTIES AND AFFIRMATIVE COVENANTS
To induce Lender to enter into this Agreement and to make the Loans, each
Borrower and each other Credit Party executing this Agreement represent and
warrant to Lender (each of which representations and warranties shall survive
the execution and delivery of this Agreement), and promise to and agree with
Lender until the Termination Date as follows:
3.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each Corporate Credit Party:
(a) is, as of the Closing Date, and will continue to be (i) a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, (ii) duly qualified to do
business and in good standing in each other jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified could not reasonably be expected to
have a Material Adverse Effect, and (iii) in compliance with all Requirements of
Law and Contractual Obligations, except to the extent failure to comply
therewith could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and (b) has and will continue to have (i) the
requisite corporate power and authority and the legal right to execute, deliver
and perform its obligations under the Loan Documents, and to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now, heretofore or
proposed to be conducted, and (ii) all licenses, permits, franchises, rights,
powers, consents or approvals from or by all Persons or Governmental Authorities
having jurisdiction over such Corporate Credit Party which are necessary or
appropriate for the conduct of its business.
3.2 EXECUTIVE OFFICES; CORPORATE OR OTHER NAMES. The location of each
Corporate Credit Party's chief executive office, corporate offices, warehouses,
other locations of Collateral and locations where records with respect to
Collateral are kept (including in each case the county of such locations) are as
set forth in DISCLOSURE SCHEDULE (3.2) and, except as set forth in such
Disclosure Schedule, such locations have not changed during the preceding twelve
months. As of the Closing Date, during the prior five years, except as set forth
in DISCLOSURE SCHEDULE (3.2), no Corporate Credit Party has been known as or
conducted business in any other name (including trade names).
3.3 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution,
delivery and performance by each Credit Party of the Loan Documents to which it
is a party, and the creation of all Liens provided for herein and therein: (a)
are and will continue to be within such Credit Party's power and authority; (b)
have been and will continue to be duly authorized by all necessary or proper
action; (c) are not and will not be in violation of any Requirement of Law or
Contractual Obligation of such Credit Party; (d) do not and will not result in
the creation or imposition of any Lien (other than Permitted Encumbrances) upon
any of the Collateral; and (e) do not and will not require the consent or
approval of any Governmental Authority or any other Person. As of the Closing
Date, each Loan Document shall have been duly executed and delivered on behalf
of each Credit Party party thereto, and each such Loan Document upon such
execution and delivery shall be and will continue to be a legal, valid and
binding obligation of such Credit Party, enforceable against it in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.
3.4 FINANCIAL STATEMENTS AND PROJECTIONS; BOOKS AND RECORDS. (a) The
Financial Statements delivered
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by each Borrower to Lender for its most recently ended Fiscal Year and Fiscal
Month, are true, correct and complete and reflect fairly and accurately the
financial condition of such Borrower as of the date of each such Financial
Statement in accordance with GAAP. The Projections most recently delivered by
each Borrower to Lender have been prepared in good faith, with care and
diligence and use assumptions that are reasonable under the circumstances at the
time such Projections were prepared and as of the date delivered to Lender and
all such assumptions are disclosed in the Projections.
(b) Each Borrower and each other Corporate Credit Party shall keep
adequate Books and Records with respect to the Collateral and its business
activities in which proper entries, reflecting all consolidated and
consolidating financial transactions, and payments and credits received on, and
all other dealings with, the Collateral, will be made in accordance with GAAP
and all Requirements of Law and on a basis consistent with the Financial
Statements.
3.5 MATERIAL ADVERSE CHANGE. Between the date of each Borrower's most
recently audited Financial Statements delivered to Lender and the Closing Date:
(a) no Corporate Credit Party has incurred any obligations, contingent or
non-contingent liabilities, or liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the
Projections delivered on the Closing Date and which could, alone or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (b) there
has been no material deviation from such Projections; and (c) no events have
occurred which alone or in the aggregate has had or could reasonably be expected
to have a Material Adverse Effect. No Requirement of Law or Contractual
Obligation of any Credit Party has or have had or could reasonably be expected
to have a Material Adverse Effect. No Credit Party is in default, and to such
Credit Party's knowledge no third party is in default, under or with respect to
any of its Contractual Obligations, which alone or in the aggregate has had or
could reasonably be expected to have a Material Adverse Effect.
3.6 REAL ESTATE; PROPERTY. The real estate listed in DISCLOSURE SCHEDULE
(3.6) constitutes all of the real property owned, leased, or used by each
Corporate Credit Party in its business, and such Credit Party will not execute
any material agreement or contract in respect of such real estate after the date
of this Agreement without giving Lender prompt prior written notice thereof.
Each Corporate Credit Party holds and will continue to hold good and marketable
fee simple title to all of its owned real estate, and good and marketable title
to all of its other properties and assets, and valid and insurable leasehold
interests in all of its leases (both as lessor and lessee, sublessee or
assignee), and none of the properties and assets of any Corporate Credit Party
are or will be subject to any Liens, except Permitted Encumbrances. With respect
to each of the premises identified in DISCLOSURE SCHEDULE (3.2) on or prior the
Closing Date a bailee, landlord or mortgagee agreement acceptable to Lender has
been obtained.
3.7 VENTURES, SUBSIDIARIES AND AFFILIATES; OUTSTANDING STOCK AND
INDEBTEDNESS. Except as set forth in DISCLOSURE SCHEDULE (3.7), as of the
Closing Date no Corporate Credit Party has any Subsidiaries, is engaged in any
joint venture or partnership with any other Person, or is an Affiliate of any
other Person. All of the issued and outstanding Stock of each Corporate Credit
Party (including all rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Corporate Credit Party may be required to
issue, sell, repurchase or redeem any of its Stock) as of the Closing Date is
owned by each of the Stockholders (and in the amounts) set forth on DISCLOSURE
SCHEDULE (3.7). All outstanding Indebtedness of each Corporate Credit Party as
of the Closing Date is described in DISCLOSURE SCHEDULE (5(b)).
8
3.8 GOVERNMENT REGULATION; MARGIN REGULATIONS. No Corporate Credit Party
is subject to or regulated under or any Federal or state statute, rule or
regulation that restricts or limits such Person's ability to incur
Indebtedness, pledge its assets, or to perform its obligations under the Loan
Documents. The making of the Loans, the application of the proceeds and
repayment thereof, and the consummation of the transactions contemplated by
the Loan Documents do not and will not violate any Requirement of Law. No
Corporate Credit Party is engaged, nor will it engage in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
security" as such terms are defined in Regulation U of the Federal Reserve
Board as now and hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Corporate Credit Party owns any Margin Stock,
and none of the proceeds of the Loans or other extensions of credit under
this Agreement will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock or reducing or retiring any
Indebtedness which was originally incurred to purchase or carry any Margin
Stock. No Corporate Credit Party will take or permit to be taken any action
which might cause any Loan Document to violate any regulation of the Federal
Reserve Board.
3.9 TAXES; CHARGES. Except as disclosed on DISCLOSURE SCHEDULE (3.9) all
tax returns, reports and statements required by any Governmental Authority to
be filed by Borrower or any other Credit Party have, as of the Closing Date,
been filed and will, until the Termination Date, be filed with the
appropriate Governmental Authority and no tax Lien has been filed against any
Credit Party or any Credit Party's property. Proper and accurate amounts have
been and will be withheld by Borrower and each other Credit Party from their
respective employees for all periods in complete compliance with all
Requirements of Law and such withholdings have and will be timely paid to the
appropriate Governmental Authorities. DISCLOSURE SCHEDULE (3.9) sets forth as
of the Closing Date those taxable years for which any Credit Party's tax
returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described on Disclosure Schedule (3.9), none of the Credit Parties and their
respective predecessors are liable for any Charges: (a) under any agreement
(including any tax sharing agreements or agreement extending the period of
assessment of any Charges) or (b) to each Credit Party's knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been
requested to make any adjustment under IRC Section 481(a), by reason of a
change in accounting method or otherwise, which could reasonably be expected
to have a Material Adverse Effect
3.10 PAYMENT OF OBLIGATIONS. Each Credit Party will pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all of its Charges and other obligations of whatever nature,
except where the amount or validity thereof is currently being contested in
good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of such Credit Party and
none of the Collateral is or could reasonably be expected to become subject
to any Lien or forfeiture or loss as a result of such contest.
3.11 ERISA. No ERISA Event has occurred or is reasonably expected to
occur that, when taken together with all other existing ERISA Events, could
reasonably be expected to result in a liability of any Credit Party of more
than the Minimum Actionable Amount. The present value of all accumulated
benefit obligations of the Credit Parties under each Plan
9
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
Financial Statements reflecting such amounts, exceed the fair market value of
the assets of such Plan by more than the Minimum Actionable Amount, and the
present value of all accumulated benefit obligations of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial Account
Standards No. 87) did not, as of the date of the most recent Financial
Statements reflecting such amounts, exceed the fair market value of the
assets of such underfunded Plans by more than the Minimum Actionable Amount.
No Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any Withdrawal Liability in excess of the Minimum Actionable Amount.
3.12 LITIGATION. No Litigation is pending or, to the knowledge of any
Credit Party, threatened by or against any Credit Party or against any Credit
Party's properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby, or (b) which could
reasonably be expected to have a Material Adverse Effect. Except as set forth
on DISCLOSURE SCHEDULE (3.12), as of the Closing Date there is no Litigation
pending or threatened against any Credit Party which seeks damages in excess
of $50,000 or injunctive relief or alleges criminal misconduct of any Credit
Party. Each Credit Party shall notify Lender promptly in writing upon
learning of the existence, threat or commencement of any Litigation against
any Credit Party, any ERISA Affiliate or any Plan or any allegation of
criminal misconduct against any Credit Party.
3.13 INTELLECTUAL PROPERTY. As of the Closing Date, all material
Intellectual Property owned or used by any Corporate Credit Party is listed,
together with application or registration numbers, where applicable, in
DISCLOSURE SCHEDULE (3.13). Each Corporate Credit Party owns, or is licensed
to use, all Intellectual Property necessary to conduct its business as
currently conducted except for such Intellectual Property the failure of
which to own or license could not reasonably be expected to have a Material
Adverse Effect. Each Corporate Credit Party will maintain the patenting and
registration of all Intellectual Property with the United States Patent and
Trademark Office, the United States Copyright Office, or other appropriate
Governmental Authority and each Corporate Credit Party will promptly patent
or register, as the case may be, all new Intellectual Property and notify
Lender in writing five (5) Business Days prior to filing any such new patent
or registration.
3.14 FULL DISCLOSURE. No information contained in any Loan Document, the
Financial Statements or any written statement furnished by or on behalf of
any Credit Party under any Loan Document, or to induce Lender to execute the
Loan Documents, contains any untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were
made.
3.15 HAZARDOUS MATERIALS. Except as set forth on DISCLOSURE SCHEDULE
(3.15), as of the Closing Date, (a) each real property location owned, leased
or occupied by each Corporate Credit Party (the "Real Property") is
maintained free of contamination from any Hazardous Material, (b) no
Corporate Credit Party is subject to any Environmental Liabilities or, to any
Credit Party's knowledge, potential Environmental Liabilities, in excess of
$50,000 in the aggregate, (c) no notice has been received by any Corporate
Credit Party identifying it as a "potentially responsible party" or
requesting information under CERCLA or analogous state statutes, and to the
knowledge of any Credit Party, there are no facts, circumstances or
conditions that may result in any Corporate Credit Party being identified as
a "potentially responsible party" under CERCLA or analogous state statutes;
and (d) each Corporate Credit Party has provided to Lender copies of all
existing environmental reports, reviews and audits and all written
information pertaining to actual or potential Environmental Liabilities, in
each case relating to any Corporate Credit Party. Each Corporate Credit
Party: (i) shall comply in all material respects with all applicable
Environmental Laws and
10
environmental permits; (ii) shall notify Lender in writing within seven days
if and when it becomes aware of any Release, on, at, in, under, above, to,
from or about any of its Real Property; and (iii) shall promptly forward to
Lender a copy of any order, notice, permit, application, or any communication
or report received by it or any other Credit Party in connection with any
such Release.
3.16 INSURANCE. As of the Closing Date, DISCLOSURE SCHEDULE (3.16) lists
all insurance of any nature maintained for current occurrences by Borrowers
and each other Corporate Credit Party, as well as a summary of the terms of
such insurance. Each Corporate Credit Party shall deliver to Lender certified
copies and endorsements to all of its and those of its Subsidiaries (a) "All
Risk" and business interruption insurance policies naming Lender loss payee,
and (b) general liability and other liability policies naming Lender as an
additional insured. All policies of insurance on real and personal property
will contain an endorsement, in form and substance acceptable to Lender,
showing loss payable to Lender (Form 438 BFU or equivalent) and extra expense
and business interruption endorsements. Such endorsement, or an independent
instrument furnished to Lender, will provide that the insurance companies
will give Lender at least 30 days prior written notice before any such policy
or policies of insurance shall be altered or canceled and that no act or
default of any Borrower or any other Person shall affect the right of Lender
to recover under such policy or policies of insurance in case of loss or
damage. Each Corporate Credit Party shall direct all present and future
insurers under its "All Risk" policies of insurance to pay all proceeds
payable thereunder directly to Lender. If any insurance proceeds are paid by
check, draft or other instrument payable to any Credit Party and Lender
jointly, Lender may endorse such Credit Party's name thereon and do such
other things as Lender may deem advisable to reduce the same to cash. Lender
reserves the right at any time, upon review of each Credit Party's risk
profile, to require additional forms and limits of insurance. Each Corporate
Credit Party shall, on each anniversary of the Closing Date and from time to
time at Lender's request, deliver to Lender a report by a reputable insurance
broker, satisfactory to Lender, with respect to such Person's insurance
policies.
3.17 DEPOSIT AND DISBURSEMENT ACCOUNTS. Attachment I to SCHEDULE D lists
all banks and other financial institutions at which any Borrower or any other
Corporate Credit Party, maintains deposits and/or other accounts, including
the Disbursement Accounts, and such Attachment correctly identifies the name,
address and telephone number of each such depository, the name in which the
account is held, a description of the purpose of the account, and the
complete account number.
3.18 ACCOUNTS AND INVENTORY. As of the date of each Borrowing Base
Certificate delivered to Lender, each Account listed thereon as an Eligible
Account shall be an Eligible Account and all Inventory listed thereon as
Eligible Inventory shall be Eligible Inventory. No Borrower has made, nor
will any Borrower make, any agreement with any Account Debtor for any
extension of time for the payment of any Account, any compromise or
settlement for less than the full amount thereof, any release of any Account
Debtor from liability therefor, or any deduction therefrom except a discount
or allowance for prompt or early payment allowed by any Borrower in the
ordinary course of its business consistent with historical practice and as
previously disclosed to Lender in writing. DISCLOSURE SCHEDULE (3.18) sets
forth each Contract of any Borrower with any Account Debtor which gives such
Account Debtor the right (under such Contract, under common law or otherwise)
to offset any Accounts for such Borrower's failure to perform under such
Contract and each Borrower has obtained an offset waiver for each such
contract in form and substance satisfactory to Lender. With respect to the
Accounts pledged as collateral pursuant to any Loan Document (a) the amounts
shown on all invoices, statements and reports which may be delivered to the
Lender with
11
respect thereto are actually and absolutely owing to the relevant Credit
Party as indicated thereon and are not in any way contingent; (b) no payments
have been or shall be made thereon except payments immediately delivered to
the applicable accounts described in paragraph 1 to Schedule D or the Lender
as required hereunder; and (c) to each Borrower's knowledge all Account
Debtors have the capacity to contract. Each Borrower shall notify Lender
promptly of any event or circumstance which to such Borrower's knowledge
would cause Lender to consider any then existing Account or Inventory as no
longer constituting an Eligible Account or Eligible Inventory, as the case
may be.
3.19 CONDUCT OF BUSINESS. Each Corporate Credit Party (a) shall conduct
its business substantially as now conducted or as otherwise permitted
hereunder, and (b) shall at all times maintain, preserve and protect all of
the Collateral and such Credit Party's other property, used or useful in the
conduct of its business and keep the same in good repair, working order and
condition and make, or cause to be made, all necessary or appropriate
repairs, replacements and improvements thereto consistent with industry
practices.
3.20 FURTHER ASSURANCES. At any time and from time to time, upon the
written request of Lender and at the sole expense of Borrowers, Borrowers and
each other Credit Party shall promptly and duly execute and deliver any and
all such further instruments and documents and take such further action as
Lender may reasonably deem desirable (a) to obtain the full benefits of this
Agreement and the other Loan Documents, (b) to protect, preserve and maintain
Lender's rights in any Collateral, or (c) to enable Lender to exercise all or
any of the rights and powers herein granted.
4. FINANCIAL MATTERS; REPORTS
4.1 REPORTS AND NOTICES. From the Closing Date until the Termination
Date, each Borrower shall deliver to Lender:
(a) within 15 days following the end of each Fiscal Month, an
aged trial balance by Account Debtor and an Inventory Perpetual or Physical
(as requested by Lender) and as soon as available but in no event later than
30 days following the end of each Fiscal Month, a reconciliation of the aged
trial balance and the Inventory Perpetual or Physical (as the case may be) to
such Borrower's general ledger and from the general ledger to the Financial
Statements for such Fiscal Month accompanied by supporting detail and
documentation as Lender may request;
(b) as frequently as Lender may request and in any event no
later than 15 days following the end of each Fiscal Month, a Borrowing Base
Certificate in the form of EXHIBIT C as of the last day of the previous
Fiscal Month detailing ineligible Accounts and Inventory for adjustment to
the Borrowing Base, certified as true and correct by the Chief Financial
Officer of such Borrower or such other officer as is acceptable to Lender;
(c) within 15 days following the end of each Fiscal Month, an
Accounts Payable Analysis in the Form of EXHIBIT D (together with an accounts
payable aging) and an Accounts Receivable Roll Forward Analysis in the Form
of EXHIBIT E, each certified as true and correct by the Chief Financial
Officer of such Borrower or such other officer as is acceptable to Lender;
(d) within 45 days following the end of each Fiscal Month that
is also the end of a Fiscal Quarter,
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and within 35 days following the end of each other Fiscal Month, the
Financial Statements for such Fiscal Month, which shall provide comparisons
to budget and actual results for the corresponding period during the prior
Fiscal Year, both on a monthly and year-to-date basis, and accompanied by a
certification in the form of EXHIBIT J by the Chief Executive Officer or
Chief Financial Officer of such Borrower that such Financial Statements are
complete and correct, that there was no Default (or specifying those Defaults
of which he or she was aware), that each Borrower is able to pay all of its
Indebtedness as such Indebtedness matures and has capital sufficient to carry
on its business and transactions and all business and transactions in which
it is engaging, and showing in reasonable detail the calculations used in
determining compliance with the financial covenants hereunder;
(e) within 90 days following the close of each Fiscal Year, the
Financial Statements for such Fiscal Year certified without qualification by
an independent certified accounting firm acceptable to Lender, which shall
provide comparisons to the prior Fiscal Year, and shall be accompanied by (i)
a statement in reasonable detail showing the calculations used in determining
compliance with the financial covenants hereunder, and (ii) a report from
such Borrower's accountants to the effect that in connection with their audit
examination nothing has come to their attention to cause them to believe that
a Default resulting the failure of any Credit Party to comply with the
provisions of the financial covenants set forth In SCHEDULE G hereof has
occurred or specifying those Defaults of which they are aware; and, within
120 days following the close of each Fiscal Year, any management letter that
may be issued in connection with such audited Financial Statements;
(f) not less than 30 days prior to the close of each Fiscal
Year, the Projections, which will be prepared by such Borrower in good faith,
with care and diligence, and using assumptions which are reasonable under the
circumstances at the time such Projections are delivered to Lender and
disclosed therein when delivered;
(g) not less than 35 days following the end of each Fiscal
Month, a schedule of the principal balance of all Indebtedness owing by a
Credit Party to each other Credit Party, and accompanied by a certification
by the Chief Executive Officer or Chief Financial Officer of each Borrower
that such schedule is complete and correct;
(h) not later than September 30 of each year, a good faith
estimate of the Datatek April 15 Seller Payment that will be payable on April
15 of the following year, with such supporting detail as Lender as may
reasonably require; and
(i) all the reports and other information set forth on EXHIBIT
B in the time frames set forth therein.
4.2 FINANCIAL COVENANTS. Each Borrower shall not breach any of the
consolidated financial covenants set forth in SCHEDULE G.
4.3 OTHER REPORTS AND INFORMATION. Each Borrower shall advise Lender
promptly, in reasonable detail, of: (a) any Lien, other than Permitted
Encumbrances, attaching to or asserted against any of the Collateral or any
occurrence causing a material loss or decline in value of any Collateral and
the estimated (or actual, if available) amount of such loss or decline; (b)
any material change in the composition of the Collateral; and (c) the
occurrence of any Default or other event which has had or could reasonably be
expected to have
13
a Material Adverse Effect. Each Borrower shall, upon request of Lender,
furnish to Lender such other reports and information in connection with the
affairs, business, financial condition, operations, prospects or management
of such Borrower or any other Credit Party or the Collateral as Lender may
request, all in reasonable detail. Parent shall also deliver to Lender,
immediately upon receipt, any notice received from Compass Bank under the
Note Purchase Agreement requiring Parent to purchase the interest of Compass
Bank under the DCRI L.P. No. 2 Loan Documents.
5. NEGATIVE COVENANTS
Each Borrower and each Credit Party executing this Agreement covenants and
agrees (for itself and each other Credit Party) that, without Lender's prior
written consent, from the Closing Date until the Termination Date, neither
any Borrower nor any other Corporate Credit Party shall, directly or
indirectly, by operation of law or otherwise:
(a) form any Subsidiary or merge with, consolidate with,
acquire all or substantially all of the assets or capital stock of, or
otherwise combine with or make any investment in or, except as provided in
clause 5(c) below, loan or advance to, any Person; PROVIDED, HOWEVER, a
Borrower or a Credit Party executing this Agreement may form a new Subsidiary
after the Closing Date (each, a "New Subsidiary") if (and only if) (i)
written notice is given to Lender of the formation of such New Subsidiary no
later than ten (10) days after its formation, (ii) notwithstanding any term
or provision of this Agreement to the contrary, no assets of any kind are
transfered by, and no loans or advances of any kind are made by, a Borrower
or any other Credit Party executing this Agreement to such New Subsidiary,
and (iii) at the same time as notice of the formation of such New Subsidiary
is given to Lender pursuant to the foregoing clause (i), the following
documents are also delivered to Lender: (a) a Subsidiary Joinder Agreement
duly exected by such New Subsidiary, Borrowers and each Credit Party that is
a party to this Agreement, (b) a Guaranty duly executed by such New
Subsidiary, (c) copies of the certificate of incorporation or organization of
such New Subsidiary, and all amendments thereto, certified by the Secretary
of State or other appropriate official of its jurisdiction of incorporation
or formation, (d) good standing certificates for such New Subsidiary issued
by the Secretary of State or other appropriate official of such New
Subsidiary's jurisdiction of incorporation or formation, (e) a Secretary
Certificate in the form of Exhibit H to this Agreement duly completed and
executed by the Secretary of such New Subsidiary, together with all
attachments thereto, (f) certified copies of insurance policies described in
Section 3.16, together with evidence showing loss payable or additional
insured clauses or endorsements in favor of Lender, with respect to such New
Subsidiary and its Collateral, (g) proper financing statements (Form UCC-l)
for filing under the Code in all jurisdictions as may be necessary to perfect
Lender's Lien on the Collateral of such New Subsidiary, (h) agreements
relating to the granting to Lender of a security interest in Intellectual
Property of such New Subsidiary to the extent applicable in a form suitable
for filing with the appropriate Federal filing office, (i) a Power of
Attorney duly executed by such New Subsidiary, and (j) an opinion of counsel
to such New Subsidiary with respect to the Loan Documents executed and
delivered by such New Subsidiary in substantially the form of Exhibit O to
this Agreement and otherwise in form and substance satisfactory to Lender and
its counsel;
(b) cancel any debt owing to it or create, incur, assume or
permit to exist any Indebtedness, except: (i) the Obligations, (ii)
Indebtedness existing as of the Closing Date set forth on Disclosure Schedule
5(b),
14
(iii) deferred taxes, (iv) by endorsement of instruments or items of payment
for deposit to the general account of such Credit Party, (v) for Guaranteed
Indebtedness incurred for the benefit of a Borrower if the primary obligation
is permitted by this Agreement; (vi) additional Indebtedness (including
Purchase Money Indebtedness) incurred after the Closing Date in an aggregate
outstanding amount for all such Corporate Credit Parties combined not
exceeding $50,000; (vii) the Indebtedness under the Note Purchase Agreement;
(viii) Subordinated Debt; and (ix) the conversion of Indebtedness owing to
Parent to additional equity as contemplated by Section 2.1(f) of this
Agreement;
(c) enter into any lending, borrowing or other commercial
transaction with any of its employees, directors, Affiliates or any other
Credit Party (including upstreaming and downstreaming of cash and
intercompany advances and payments by a Credit Party on behalf of another
Credit Party which are not otherwise permitted hereunder) except for: (i)
loans or advances to employees in the ordinary course of business not to
exceed either $225,000 in an aggregate of such loans or advances made during
any Fiscal Quarter or $450,000 in an aggregate of such loans and advances
outstanding at any one time; and (ii) loans from one Borrower to another
Borrower, provided that (1) such loans are evidenced by the Subordinated
Intercompany Notes, (2) are subordinated in right of payment to the
Obligations pursuant to the express terms of the Subordinated Intercompany
Notes, (3) the Subordinated Intercompany Notes, and the Indebtedness
evidenced thereby, are assigned to Lender as additional security for the
Obligations, and (4) the amount of such loans outstanding at the end of each
month are accurately and completely set forth in the monthly certifications
to be delivered to Lender pursuant to Section 4.1(g) of this Agreement;
(d) make any changes in any of its business objectives,
purposes, or operations which could reasonably be expected to adversely
affect repayment of the Obligations or could reasonably be expected to have a
Material Adverse Effect or engage in any business other than that presently
engaged in or proposed to be engaged in the Projections delivered to Lender
on the Closing Date or amend its charter or by-laws or other organizational
documents;
(e) create or permit any Lien on any of its properties or
assets, except for Permitted Encumbrances;
(f) sell, transfer, issue, convey, assign or otherwise dispose
of any of its assets or properties, including its Accounts or any shares of
its Stock or engage in any sale-leaseback, synthetic lease or similar
transaction (provided, that the foregoing shall not prohibit the sale of
Inventory or obsolete or unnecessary Equipment in the ordinary course of its
business);
(g) change its name, chief executive office, corporate offices,
warehouses or other Collateral locations, or location of its records
concerning the Collateral, or acquire, lease or use any real estate after the
Closing Date without such Person, in each instance, giving thirty (30) days
prior written notice thereof to Lender and taking all actions deemed
necessary or appropriate by Lender to continuously protect and perfect
Lender's Liens upon the Collateral;
(h) establish any depository or other bank account of any kind
with any financial institution (other than the accounts set forth on
Attachment 1 to Schedule D) without Lender's prior written consent; or
(i) make or permit any Restricted Payment.
15
6. SECURITY INTEREST
6.1 GRANT OF SECURITY INTEREST. (a) As collateral security for the
prompt and complete payment and performance of the Obligations, each of the
Borrowers and each other Credit Party executing this Agreement hereby grants
to the Lender a security interest in and Lien upon all of its property and
assets, whether real or personal, tangible or intangible, and whether now
owned or hereafter acquired, or in which it now has or at any time in the
future may acquire any right, title, or interest, including all of the
following property in which it now has or at any time in the future may
acquire any right, title or interest: all Accounts; all bank and deposit
accounts and all funds on deposit therein; all cash and cash equivalents; all
commodity contracts; all investments, Stock and Investment Property; all
Inventory and Equipment; all Goods; all Chattel Paper, Documents and
Instruments; all Books and Records; all General Intangibles; and to the
extent not otherwise included, all Proceeds and products of all and any of
the foregoing and all collateral security and guarantees given by any Person
with respect to any of the foregoing, but excluding in all events Hazardous
Waste (all of the foregoing, together with any other collateral pledged to
the Lender pursuant to any other Loan Document, collectively, the
"Collateral").
(b) Each Borrower, Lender and each other Credit Party executing
this Agreement agree that this Agreement creates, and is intended to create,
valid and continuing Liens upon the Collateral in favor of Lender. Each
Borrower and each other Credit Party executing this Agreement represents,
warrants and promises to Lender that: (i) each Borrower and each other Credit
Party granting a Lien in Collateral is the sole owner of each item of the
Collateral upon which it purports to xxxxx x Xxxx pursuant to the Loan
Documents, and has good and marketable title thereto free and clear of any
and all Liens or claims of others, other than Permitted Encumbrances; (ii)
the security interests granted pursuant to this Agreement, upon completion of
the filings and other actions listed on DISCLOSURE SCHEDULE 6.1 (which, in
the case of all filings and other documents referred to in said Schedule,
have been delivered to the Lender in duly executed form) will constitute
valid perfected security interests in all of the Collateral in favor of the
Lender as security for the prompt and complete payment and performance of the
Obligations, enforceable in accordance with the terms hereof against any and
all creditors of and purchasers from any Credit Party (other than purchasers
of Inventory in the ordinary course of business) and such security interests
are prior to all other Liens on the Collateral in existence on the date
hereof except for Permitted Encumbrances which have priority by operation of
law; and (iii) no effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all
or any part of the Collateral is or will be on file or of record in any
public office, except those relating to Permitted Encumbrances. Each Borrower
and each other Credit Party executing this Agreement promise to defend the
right, title and interest of Lender in and to the Collateral against the
claims and demands of all Persons whomsoever, and each shall take such
actions, including (x) the prompt delivery of all original Instruments,
Chattel Paper and certificated Stock owned by such Borrower and each other
Credit Party granting a Lien on Collateral to Lender, (y) notification of
Lender's interest in Collateral at Lender's request, and (z) the institution
of litigation against third parties as shall be prudent in order to protect
and preserve each Credit Party's and Lender's respective and several
interests in the Collateral. Each Borrower (and any other Credit Party
granting a Lien in Collateral) shall xxxx its Books and Records pertaining to
the Collateral to evidence the Loan Documents and the Liens granted under the
Loan Documents. All Chattel Paper shall be marked with the following legend:
"This writing and the obligations evidenced or secured hereby are subject to
the security interest of General Electric Capital Corporation."
16
6.2 LENDER'S RIGHTS. (a) Lender may, (i) at any time in Lender's own
name or in the name of any Borrower, communicate with Account Debtors,
parties to Contracts, and obligors in respect of Instruments, Chattel Paper
or other Collateral to verify to Lender's satisfaction, the existence, amount
and terms of any such Accounts, Contracts, Instruments or Chattel Paper or
other Collateral, and (ii) at any time during the existence of an Event of
Default, and without prior notice to any Borrower or any other Credit Party,
notify Account Debtors, parties to Contracts, and obligors in respect of
Chattel Paper, Instruments, or other Collateral that the Collateral has been
assigned to Lender and that payments shall be made directly to Lender. Upon
the request of Lender, each Borrower shall so notify such Account Debtors,
parties to Contracts, and obligors in respect of Instruments, Chattel Paper
or other Collateral. Each Borrower hereby constitutes Lender or Lender's
designee as such Borrower's attorney with power to endorse such Borrower's
name upon any notes, acceptance drafts, money orders or other evidences of
payment or Collateral.
(b) Each Borrower shall remain liable under each Contract,
Instrument and License to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, and Lender shall
have no obligation or liability whatsoever to any Person under any Contract,
Instrument or License (between any Borrower or any other Credit Party and any
Person other than Lender) by reason of or arising out of the execution,
delivery or performance of this Agreement, and Lender shall not be required
or obligated in any manner (i) to perform or fulfill any of the obligations
of any Borrower, (ii) to make any payment or inquiry, or (iii) to take any
action of any kind to collect, compromise or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may
be entitled at any time or times under or pursuant to any Contract,
Instrument or License.
(c) Each Borrower and each other Credit Party shall, with
respect to each owned, leased, or controlled property, during normal business
hours and upon reasonable advance notice (unless a Default shall have
occurred and be continuing, in which event no notice shall be required and
Lender shall have access at any and all times): (i) provide access to such
property to Lender and any of its officers, employees and agents, as
frequently as Lender determines to be appropriate; (ii) permit Lender and any
of its officers, employees and agents to inspect, audit and make extracts and
copies (or take originals if reasonably necessary) from all of such
Borrower's and such Credit Party's Books and Records; and (iii) permit Lender
to inspect, review, evaluate and make physical verifications and appraisals
of the Inventory and other Collateral in any manner and through any medium
that Lender considers advisable, and each Borrower and such Credit Party
agree to render to Lender, at such Borrower's and such Credit Party's cost
and expense, such clerical and other assistance as may be reasonably
requested with regard thereto.
(d) After the occurrence and during the continuance of a
Default, each Borrower at its own expense, shall cause the certified public
accountant then engaged by such Borrower to prepare and deliver to Lender at
any time and from time to time, promptly upon Lender's request, the following
reports: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts;
(iii) trial balances; and (iv) test verifications of such Accounts as Lender
may request. Lender shall be permitted to observe and consult with each
Borrower's accountants in the performance of these tasks.
6.3 LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT. On the Closing Date, each
Borrower and each other Credit Party executing this Agreement shall execute
and deliver a Power of Attorney in the form attached as EXHIBIT I. The power
of attorney granted pursuant to the Power of Attorney and all powers granted
17
under any Loan Document are powers coupled with an interest and shall be
irrevocable until the Termination Date, at which time they shall be cancelled
by Lender. The powers conferred on Lender under the Power of Attorney are
solely to protect Lender's interests in the Collateral and shall not impose
any duty upon it to exercise any such powers. Lender agrees not to exercise
any power or authority granted under the Power of Attorney unless an Event of
Default has occurred and is continuing. Each Borrower and each other Credit
Party executing this Agreement authorizes Lender to file any financing or
continuation statement without the signature of such Borrower or such Credit
Party to the extent permitted by applicable law.
6.4 GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY COLLATERAL. Each
Borrower and each other Credit Party executing this Agreement hereby grants
to Lender an irrevocable, non-exclusive license (exercisable upon the
occurrence and during the continuance of an Event of Default without payment
of royalty or other compensation to any Borrower or such Credit Party) to
use, transfer, license or sublicense any Intellectual Property now owned,
licensed to, or hereafter acquired by such Borrower or such Credit Party, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof,
and represents, promises and agrees that any such license or sublicense is
not and will not be in conflict with the contractual or commercial rights of
any third Person; provided, that such license will terminate on the
Termination Date.
7. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
7.1 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 which shall be deemed to be continuing until
waived in writing by Lender in accordance with Section 10.3:
(a) any Borrower shall fail to make any payment in respect of
any Obligations when due and payable or declared due and payable; or
(b)(i) any Borrower or any other Credit Party shall fail or
neglect to perform, keep or observe any of the covenants, promises,
agreements, requirements, conditions, or other terms or provisions contained
in Section 1, Sections 3.1, 3.2, 3.17, 3.18, 3.19, 3.20, 4.2 or Section 5 of
this Agreement; or (ii) Borrower or any other Credit Party shall fail or
neglect to perform, keep or observe any of the covenants, promises,
agreements, requirements, conditions or other terms or provisions contained
in this Agreement (other than those set forth in the Sections referred to in
clause (i) immediately above) or any of the other Loan Documents, regardless
of whether such breach involves a covenant, promise, agreement, condition,
requirement, term or provision with respect to a Credit Party, and such
breach is not remediable or, if remediable, continues unremedied for a period
of ten (10) Business Days after the earlier to occur of (x) the date on which
such breach is known or reasonably should have become known to any officer of
such Borrower or such Credit Party and (y) the date on which Lender shall
have notified such Borrower or such Credit Party of such breach; or
(c) an event of default shall occur under any Contractual
Obligation of any Borrower or any other Credit Party (other than this
Agreement and the other Loan Documents), and such event of default (i)
involves the failure to make any payment (whether or not such payment is
blocked pursuant to the terms
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of an intercreditor agreement or otherwise), whether of principal, interest
or otherwise, and whether due by scheduled maturity, required prepayment,
acceleration, demand or otherwise, in respect of any Indebtedness (other than
the Obligations) of such Person in an aggregate amount exceeding the Minimum
Actionable Amount, or (ii) causes (or permits any holder of such Indebtedness
or a trustee to cause) such Indebtedness, or a portion thereof, in an
aggregate amount exceeding the Minimum Actionable Amount to become due prior
to its stated maturity or prior to its regularly scheduled date of payment; or
(d) any representation or warranty in this Agreement or any
other Loan Document, or in any written statement pursuant hereto or thereto,
or in any report, financial statement or certificate made or delivered to
Lender by any Borrower or any other Credit Party shall be untrue or incorrect
as of the date when made or deemed made, regardless of whether such breach
involves a representation or warranty with respect to a Credit Party that has
not signed this Agreement; or
(e) there shall be commenced against any Borrower or any other
Credit Party any Litigation seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part
of its assets which results in the entry of an order for any such relief
which remains unstayed or undismissed for thirty (30) consecutive days; or
any Borrower or any other Credit Party shall have concealed, removed or
permitted to be concealed or removed, any part of its property with intent to
hinder, delay or defraud any of its creditors or made or suffered a transfer
of any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent transfer or other similar law; or
(f) a case or proceeding shall have been commenced
involuntarily against any Borrower or any other Credit Party in a court
having competent jurisdiction seeking a decree or order: (i) under the United
States Bankruptcy Code or any other applicable Federal, state or foreign
bankruptcy or other similar law, and seeking either (x) the appointment of a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) for such Person or of any substantial part of its
properties, or (y) the reorganization or winding up or liquidation of the
affairs of any such Person, and such case or proceeding shall remain
undismissed or unstayed for sixty (60) consecutive days or such court shall
enter a decree or order granting the relief sought in such case or
proceeding; or (ii) invalidating or denying any Person's right, power, or
competence to enter into or perform any of its obligations under any Loan
Document or invalidating or denying the validity or enforceability of this
Agreement or any other Loan Document or any action taken hereunder or
thereunder; or
(g) any Borrower or any other Credit Party shall (i) commence
any case, proceeding or other action under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an
order for relief entered with respect to it or seeking appointment of a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) for it or any substantial part of its properties, (ii) make
a general assignment for the benefit of creditors, (iii) consent to or take
any action in furtherance of, or, indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in paragraphs (e) or (f) of this
Section 7.1 or clauses (i) and (ii) of this paragraph (g), or (iv) shall
admit in writing its inability to, or shall be generally unable to, pay its
debts as such debts become due; or
(h) a final judgment or judgments for the payment of money in
excess of the Minimum Actionable
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Amount in the aggregate shall be rendered against any Borrower or any other
Credit Party, unless the same shall be (i) fully covered by insurance and the
issuer(s) of the applicable policies shall have acknowledged full coverage in
writing within fifteen (15) days of judgment, or (ii) vacated, stayed,
bonded, paid or discharged within a period of fifteen (15) days from the date
of such judgment; or
(i) any other event shall have occurred which has had or could
reasonably be expected to have a Material Adverse Effect; or
(j) any provision of any Loan Document shall for any reason
cease to be valid, binding and enforceable in accordance with its terms, or
any Lien granted, or intended by the Loan Documents to be granted, to Lender
shall cease to be a valid and perfected Lien having the first priority (or a
lesser priority if expressly permitted in the Loan Documents) in any of the
Collateral (or any Credit Party shall so assert any of the foregoing); or
(k) a Change of Control shall have occurred with respect to any
Corporate Credit Party; or
(l) an ERISA Event shall have occurred that, in the opinion of
the Lender, when taken together with all other ERISA Events that have
occurred and are then continuing, could reasonably be expected to result in
liability of any Credit Party in an aggregate amount exceeding the Minimum
Actionable Amount; or
(m) the giving of notice by Compass Bank to Parent under the
Note Purchase Agreement requiring Parent to purchase the interest of Compass
Bank under the DCRI L.P. No. 2 Loan Documents.
7.2 REMEDIES. (a) If any Default shall have occurred and be continuing,
then Lender may terminate or suspend its obligation to make further Revolving
Credit Advances and to incur additional Letter of Credit Obligations. In
addition, if any Event of Default shall have occurred and be continuing,
Lender may, without notice, take any one or more of the following actions:
(i) declare all or any portion of the Obligations to be forthwith due and
payable, including contingent liabilities with respect to Letter of Credit
Obligations, whereupon such Obligations shall become and be due and payable;
(ii) require that all Letter of Credit Obligations be fully cash
collateralized pursuant to SCHEDULE C; or (iii) exercise any rights and
remedies provided to Lender under the Loan Documents or at law or equity,
including all remedies provided under the Code; PROVIDED, that upon the
occurrence of any Event of Default specified in Sections 7.1 (e), (f) or (g),
the Obligations shall become immediately due and payable (and any obligation
of Lender to make further Loans, if not previously terminated, shall
immediately be terminated) without declaration, notice or demand by Lender.
(b) Without limiting the generality of the foregoing, each
Borrower and each other Credit Party executing this Agreement expressly
agrees that upon the occurrence of any Event of Default, Lender may collect,
receive, assemble, process, appropriate and realize upon the Collateral, or
any part thereof, and may forthwith sell, lease, assign, give an option or
options to purchase or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. Lender shall have the right upon any such public sale, to the extent
permitted by law, to purchase for the benefit of Lender the whole or any part
of said Collateral so sold,
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free of any right of equity of redemption, which right each Borrower and each
other Credit Party executing this Agreement hereby releases. Such sales may
be adjourned, or continued from time to time with or without notice. Lender
shall have the right to conduct such sales on any Credit Party's premises or
elsewhere and shall have the right to use any Credit Party's premises without
rent or other charge for such sales or other action with respect to the
Collateral for such time as Lender deems necessary or advisable.
(c) Upon the occurrence and during the continuance of an Event
of Default and at Lender's request, each Borrower and each other Credit Party
executing this Agreement further agrees to assemble the Collateral and make
it available to Lender at places which Lender shall reasonably select,
whether at its premises or elsewhere. Until Lender is able to effect a sale,
lease, or other disposition of the Collateral, Lender shall have the right to
complete, assemble, use or operate the Collateral or any part thereof, to the
extent that Lender deems appropriate, for the purpose of preserving such
Collateral or its value or for any other purpose. Lender shall have no
obligation to any Credit Party to maintain or preserve the rights of such
Credit Party as against third parties with respect to any Collateral while
such Collateral is in the possession of Lender. Lender may, if it so elects,
seek the appointment of a receiver or keeper to take possession of any
Collateral and to enforce any of Lender's remedies with respect thereto
without prior notice or hearing. To the maximum extent permitted by
applicable law, each Borrower and each other Credit Party executing this
Agreement waives all claims, damages, and demands against Lender, its
Affiliates, agents, and the officers and employees of any of them arising out
of the repossession, retention or sale of any Collateral except such as are
determined in a final judgment by a court of competent jurisdiction to have
arisen solely out of the gross negligence or willful misconduct of such
Person. Each Borrower and each other Credit Party executing this Agreement
agrees that ten (10) days prior notice by Lender to such Credit Party of the
time and place of any public sale or of the time after which a private sale
may take place is reasonable notification of such matters. Each Borrower and
each other Credit Party shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to pay
all amounts to which Lender is entitled.
(d) Lender's rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies which Lender may
have under any Loan Document or at law or in equity. Recourse to the
Collateral shall not be required. All provisions of this Agreement are
intended to be subject to all applicable mandatory provisions of law that may
be controlling and to be limited, to the extent necessary, so that they do
not render this Agreement invalid or unenforceable, in whole or in part.
7.3 WAIVERS BY CREDIT PARTIES. Except as otherwise provided for in this
Agreement and to the fullest extent permitted by applicable law, each
Borrower and each other Credit Party executing this Agreement waives: (a)
presentment, demand and protest, and notice of presentment, dishonor, intent
to accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all Loan Documents,
the Notes or any other notes, commercial paper, Accounts, Contracts,
Documents, Instruments, Chattel Paper and guaranties at any time held by
Lender on which such Credit Party may in any way be liable, and hereby
ratifies and confirms whatever Lender may do in this regard; (b) all rights
to notice and a hearing prior to Lender's taking possession or control of, or
to Lender's replevy, attachment or levy upon, any Collateral or any bond or
security which might be required by any court prior to allowing Lender to
exercise any of its remedies; and (c) the benefit of all valuation, appraisal
and exemption laws. Each Borrower and each other Credit Party executing this
Agreement acknowledges that it has been advised by counsel of its choices and
decisions with respect to this Agreement, the other
21
Loan Documents and the transactions evidenced hereby and thereby.
7.4 PROCEEDS. The Proceeds of any sale, disposition or other realization
upon any Collateral shall be applied by Lender upon receipt to the
Obligations in such order as Lender may deem advisable in its sole discretion
(including the cash collateralization of any Letter of Credit Obligations),
and after the indefeasible payment and satisfaction in full in cash of all of
the Obligations, and after the payment by Lender of any other amount required
by any provision of law, including Section 9-504(1)(c) of the Code (but only
after Lender has received what Lender considers reasonable proof of a
subordinate party's security interest), the surplus, if any, shall be paid to
Borrowers or their representatives or to whomsoever may be lawfully entitled
to receive the same, or as a court of competent jurisdiction may direct.
8. SUCCESSORS AND ASSIGNS
Each Loan Document shall be binding on and shall inure to the benefit of each
Borrower and each other Credit Party executing such Loan Document, Lender,
and their respective successors and assigns, except as otherwise provided
herein or therein. Neither any Borrower nor any other Credit Party may
assign, transfer, hypothecate, delegate or otherwise convey its rights,
benefits, obligations or duties under any Loan Document without the prior
express written consent of Lender. Any such purported conveyance by such
Borrower or such Credit Party without the prior express written consent of
Lender shall be void. There shall be no third party beneficiaries of any of
the terms and provisions of any of the Loan Documents. Lender reserves the
right at any time to create and sell participations in the Loans and the Loan
Documents and to sell, transfer or assign any or all of its rights in the
Loans and under the Loan Documents.
9. GUARANTOR WAIVERS BY BORROWERS
IF AND TO THE EXTENT THAT ANY OBLIGATION OF ANY BORROWER TO LENDER SHALL BE
CONSIDERED AN OBLIGATION OF GUARANTY OR SURETYSHIP, THEN THE FOLLOWING
PROVISIONS OF THIS SECTION 9 SHALL APPLY WITH RESPECT TO EACH SUCH BORROWER
SOLELY TO THE EXTENT THAT SUCH BORROWER IS DEEMED TO ACT IN THE CAPACITY OF A
GUARANTOR AND SHALL NOT EFFECT A WAIVER OF RIGHTS IN SUCH PERSON'S CAPACITY
AS A BORROWER:
(A) SUCH BORROWER EXPRESSLY WAIVES THE RIGHT TO REQUIRE LENDER FIRST
TO PURSUE ANY OTHER PERSON, THE COLLATERAL, OR ANY OTHER SECURITY OR GUARANTY
THAT MAY BE HELD FOR THE OBLIGATIONS, OR TO APPLY ANY SUCH SECURITY OR
GUARANTY TO THE OBLIGATIONS BEFORE SEEKING FROM SUCH BORROWER PAYMENT IN FULL
OF ITS LIABILITIES TO LENDER OR PROCEEDING AGAINST SUCH BORROWER FOR SAME.
(B) SUCH BORROWER ACKNOWLEDGES THAT IF LENDER MAY, UNDER APPLICABLE
LAW, PROCEED TO REALIZE ITS BENEFITS UNDER ANY OF THE LOAN DOCUMENTS GIVING
LENDER A LIEN UPON ANY COLLATERAL, WHETHER OWNED BY ANY BORROWER OR BY ANY
OTHER PERSON, EITHER BY JUDICIAL FORECLOSURE OR BY NON-JUDICIAL SALE OR
ENFORCEMENT, LENDER MAY, AT ITS SOLE OPTION, DETERMINE WHICH OF ITS REMEDIES
22
OR RIGHTS IT MAY PURSUE WITHOUT AFFECTING ANY OF ITS RIGHTS AND REMEDIES. IF,
IN THE EXERCISE OF ANY OF ITS RIGHTS AND REMEDIES, LENDER SHALL FORFEIT ANY
OF ITS RIGHTS OR REMEDIES, INCLUDING ITS RIGHT TO ENTER A DEFICIENCY JUDGMENT
AGAINST ANY BORROWER OR ANY OTHER PERSON, WHETHER BECAUSE OF ANY APPLICABLE
LAWS PERTAINING TO "ELECTION OF REMEDIES" OR THE LIKE, SUCH BORROWER HEREBY
CONSENTS TO SUCH ACTION BY LENDER AND WAIVES ANY CLAIM BASED UPON SUCH
ACTION, EVEN IF SUCH ACTION BY LENDER SHALL RESULT IN A FULL OR PARTIAL LOSS
OF ANY RIGHTS OF SUBROGATION WHICH SUCH BORROWER MIGHT OTHERWISE HAVE HAD BUT
FOR SUCH ACTION BY LENDER. ANY ELECTION OF REMEDIES WHICH RESULTS IN THE
DENIAL OR IMPAIRMENT OF THE RIGHT OF LENDER TO SEEK A DEFICIENCY JUDGMENT
AGAINST ANY BORROWER SHALL NOT IMPAIR ANY OTHER BORROWER'S OBLIGATION TO PAY
THE FULL AMOUNT OF THE OBLIGATIONS. IN THE EVENT LENDER SHALL BID AT ANY
FORECLOSURE OR TRUSTEE'S SALE OR AT ANY PRIVATE SALE PERMITTED BY LAW OR THE
LOAN DOCUMENTS, LENDER MAY BID ALL OR LESS THAN THE AMOUNT OF THE OBLIGATIONS
AND THE AMOUNT OF SUCH BID NEED NOT BE PAID BY LENDER BUT SHALL BE CREDITED
AGAINST THE OBLIGATIONS. THE AMOUNT OF THE SUCCESSFUL BID AT ANY SUCH SALE,
WHETHER LENDER OR ANY OTHER PARTY IS THE SUCCESSFUL BIDDER, SHALL BE
CONCLUSIVELY DEEMED TO BE THE FAIR MARKET VALUE OF THE COLLATERAL AND THE
DIFFERENCE BETWEEN SUCH BID AMOUNT AND THE REMAINING BALANCE OF THE
OBLIGATIONS SHALL BE CONCLUSIVELY DEEMED TO BE THE AMOUNT OF THE OBLIGATIONS
GUARANTEED BY SUCH BORROWER, NOTWITHSTANDING THAT ANY PRESENT OR FUTURE LAW
OR COURT DECISION OR RULING MAY HAVE THE EFFECT OF REDUCING THE AMOUNT OF ANY
DEFICIENCY CLAIM TO WHICH LENDER MIGHT OTHERWISE BE ENTITLED BUT FOR SUCH
BIDDING AT ANY SUCH SALE.
(C) SUCH BORROWER AGREES THAT LENDER SHALL BE UNDER NO OBLIGATION TO
(I) MARSHAL ANY ASSETS IN FAVOR OF SUCH BORROWER, (II) PROCEED FIRST AGAINST
ANY OTHER BORROWER OR PERSON OR ANY PROPERTY OF ANY OTHER BORROWER OR PERSON
OR AGAINST ANY COLLATERAL, (III) ENFORCE FIRST ANY OTHER GUARANTY OBLIGATIONS
WITH RESPECT TO, OR SECURITY FOR, THE OBLIGATIONS, OR (IV) PURSUE ANY OTHER
REMEDY IN LENDER'S POWER THAT SUCH BORROWER MAY NOT BE ABLE TO PURSUE ITSELF
AND THAT MAY LIGHTEN SUCH BORROWER'S BURDEN, ANY RIGHT TO WHICH SUCH BORROWER
HEREBY EXPRESSLY WAIVES.
(D) EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER
IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH SUCH
BORROWER. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN
THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
A TRIAL BY THE COURT.
10. MISCELLANEOUS
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10.1 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT. This Agreement and
the other Loan Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and thereof, supersede all
prior agreements, commitments, understandings or inducements (oral or
written, expressed or implied). No Loan Document may be modified, altered or
amended except by a written agreement signed by Lender, and each other Credit
Party a party to such Loan Document. Each Borrower and each other Credit
Party executing this Agreement or any other Loan Document shall have all
duties and obligations under this Agreement and such other Loan Document from
the date of its execution and delivery, regardless of whether the initial
Loan has been funded at that time.
10.2 EXPENSES. Borrower agrees to pay or reimburse Lender for all costs
and expenses (including the fees and expenses of all counsel, advisors,
consultants (including environmental and management consultants) and auditors
retained in connection therewith), incurred in connection with: (a) the
preparation, negotiation, execution, delivery, performance and enforcement of
the Loan Documents and the preservation of any rights thereunder; (b)
collection including deficiency collections; (c) the forwarding to Borrower
or any other Person on behalf of Borrower by Lender of the proceeds of any
Loan (including a wire transfer fee of $20 per wire transfer); (d) any
amendment, waiver or other modification with respect to any Loan Document or
advice in connection with the administration of the Loans or the rights
thereunder; (e) any litigation, dispute, suit, proceeding or action (whether
instituted by or between any combination of Lender, Borrower or any other
Person), and an appeal or review thereof, in any way relating to the
Collateral, any Loan Document, or any action taken or any other agreements to
be executed or delivered in connection therewith, whether as a party, witness
or otherwise; and (f) any effort (i) to monitor the Loans, (ii) to evaluate,
observe or assess Borrower or any other Credit Party or the affairs of such
Person, and (iii) to verify, protect, evaluate, assess, appraise, collect,
sell, liquidate or otherwise dispose of the Collateral.
10.3 NO WAIVER. Neither Lender's failure, at any time, to require strict
performance by any Borrower or any other Credit Party of any provision of any
Loan Document, nor Lender's failure to exercise, nor any delay in exercising,
any right, power or privilege hereunder, shall operate as a waiver thereof or
waive, affect or diminish any right of Lender thereafter to demand strict
compliance and performance therewith. No single or partial exercise of any
right, power or privilege hereunder shall preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. Any
suspension or waiver of a Default or other provision under the Loan Documents
shall not suspend, waive or affect any other Default or other provision under
any Loan Document, and shall not be construed as a bar to any right or remedy
which Lender would otherwise have had on any future occasion. None of the
undertakings, indemnities, agreements, warranties, covenants and
representations of any Borrower or any other Credit Party to Lender contained
in any Loan Document and no Default by any Borrower or any other Credit Party
under any Loan Document shall be deemed to have been suspended or waived by
Lender, unless such waiver or suspension is by an instrument in writing
signed by an officer or other authorized employee of Lender and directed to
such Borrower specifying such suspension or waiver (and then such waiver
shall be effective only to the extent therein expressly set forth), and
Lender shall not, by any act (other than execution of a formal written
waiver), delay, omission or otherwise, be deemed to have waived any of its
rights or remedies hereunder.
10.4 SEVERABILITY; SECTION TITLES. Wherever possible, each provision of
the Loan Documents shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of any
24
Loan Document shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of such Loan Document. Except as otherwise expressly
provided for in the Loan Documents, no termination or cancellation
(regardless of cause or procedure) of any financing arrangement under the
Loan Documents shall in any way affect or impair the Obligations, duties,
covenants, representations and warranties, indemnities, and liabilities of
any Borrower or any other Credit Party or the rights of Lender relating to
any unpaid Obligation (due or not due, liquidated, contingent or
unliquidated), or any transaction or event occurring prior to such
termination, or any transaction or event, the performance of which is not
required until after the Commitment Termination Date, all of which shall not
terminate or expire, but rather shall survive such termination or
cancellation and shall continue in full force and effect until the
Termination Date; provided, that all indemnity obligations of the Credit
Parties under the Loan Documents shall survive the Termination Date. The
Section titles contained in any Loan Document are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of
the agreement between the parties hereto.
10.5 AUTHORIZED SIGNATURE. Until Lender shall be notified in writing by
any Borrower or any other Credit Party to the contrary, the signature upon
any document or instrument delivered pursuant hereto and believed by Lender
or any of Lender's officers, agents, or employees to be that of an officer of
such Borrower or such other Credit Party shall bind such Borrower and such
other Credit Party and be deemed to be the act of such Borrower or such other
Credit Party affixed pursuant to and in accordance with resolutions duly
adopted by such Borrower's or such other Credit Party's Board of Directors,
and Lender shall be entitled to assume the authority of each signature and
authority of the person whose signature it is or appears to be unless the
person acting in reliance thereon shall have actual knowledge to the contrary.
10.6 NOTICES. Except as otherwise provided herein, whenever any notice,
demand, request or other communication shall or may be given to or served
upon any party by any other party, or whenever any party desires to give or
serve upon any other party any communication with respect to this Agreement,
each such communication shall be in writing and shall be deemed to have been
validly served, given or delivered (a) upon the earlier of actual receipt or
three (3) 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 10.6), (c) one (1) Business Day after deposit with a reputable
overnight courier with all charges prepaid or (d) when hand-delivered, all of
which shall be addressed to the party to be notified and sent to the address
or facsimile number indicated in SCHEDULE B or to such other address (or
facsimile number) as may be substituted by notice given as herein provided.
Failure or delay in delivering copies of any such communication to any Person
(other than any Borrower or Lender) designated in SCHEDULE B to receive
copies shall in no way adversely affect the effectiveness of communication.
10.7 COUNTERPARTS. Any Loan Document may be executed in any number of
separate counterparts by one or more of the parties thereto, and all of said
counterparts taken together shall constitute one and the same instrument.
10.8 TIME OF THE ESSENCE. Time is of the essence for performance of the
Obligations under the Loan Documents.
25
10.9 GOVERNING LAW. THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING UNDER
THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF
REGARDING CONFLICTS OF LAWS.
10.10 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. (A) EACH BORROWER
AND EACH OTHER CREDIT PARTY EXECUTING THIS AGREEMENT HEREBY CONSENT AND AGREE
THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN SUCH
BORROWER AND SUCH CREDIT PARTY AND LENDER PERTAINING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT LENDER,
SUCH BORROWER AND SUCH CREDIT PARTY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK; AND
FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE
TO PRECLUDE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF LENDER. SUCH BORROWER AND EACH OTHER CREDIT PARTY
EXECUTING THIS AGREEMENT EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND SUCH
BORROWER AND SUCH CREDIT PARTY HEREBY WAIVE ANY OBJECTION WHICH IT MAY HAVE
BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. EACH BORROWER AND EACH OTHER CREDIT PARTY EXECUTING THIS
AGREEMENT HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH BORROWER OR SUCH CREDIT PARTY AT THE ADDRESS SET FORTH
IN SCHEDULE B OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH BORROWER'S OR SUCH CREDIT PARTY'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
(B) THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING
IN CONTRACT, TORT, OR OTHERWISE BETWEEN LENDER, ANY BORROWER AND ANY CREDIT
PARTY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THE LOAN DOCUMENTS
OR THE TRANSACTIONS RELATED THERETO.
10.11 PRESS RELEASES. Neither any Credit Party nor any of its Affiliates
will in the future issue any press release or other public disclosure using
the name of General Electric Capital Corporation or its affiliates or
referring to this Agreement or the other Loan Documents without at least two
(2) Business Days' prior notice to Lender and without the prior written
consent of Lender unless (and only to the extent that) such Credit Party or
Affiliate is required to do so under law and then, in any event, such Credit
Party or
26
Affiliate will consult with Lender before issuing such press release or other
public disclosure.
10.12 REINSTATEMENT. This Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any part of
the Obligations is rescinded or must otherwise be returned or restored by
Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Borrower or any other Credit Party, or otherwise, all
as though such payments had not been made.
11. CROSS-GUARANTY
11.1 CROSS-GUARANTY. Each Borrower hereby absolutely and unconditionally
guarantees to Lender and its successors and assigns the full and prompt
payment (whether at stated maturity, by acceleration or otherwise) and
performance of all Obligations owed or hereafter owing to Lender by each
other Borrower, including that portion of the Revolving Credit Loan
attributable to each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance and
not of collection, and that its obligations under this Section 11 shall be
absolute and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or
any future amendment of, or change in, this Agreement, any other Loan
Document or any other agreement, document or instrument to which any Borrower
is or may become a party;
(b) the absence of any action to enforce this Agreement
(including this Section 11) or any other Loan Document or the waiver or
consent by Lender with respect to any of the provisions hereof or thereof;
(c) the existence, value or condition of, or failure to perfect
its Lien against, any security for the Obligations or any action, or the
absence of any action, by Lender in respect thereof (including the release of
any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or guarantor,
it being agreed by each Borrower that its obligations under this Section 11
shall not be discharged until the payment and performance, in full, of the
Obligations has occurred. Each Borrower shall be regarded, and shall be in
the same position, as principal debtor with respect to the Obligations
guaranteed hereunder.
11.2 WAIVERS BY BORROWERS. Each Borrower expressly waives all rights it
may have now or in the future under any statute, or at common law, or at law
or in equity, or otherwise, to compel Lender to xxxxxxxx assets or to proceed
in respect of the Obligations guaranteed hereunder against any other Credit
Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition
to proceeding against, such Borrower. It is agreed among each Borrower and
Lender that the foregoing waivers are of the essence of the transactions
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 11 and such waivers, Lender would decline to
enter into this Agreement.
11.3 BENEFIT OF GUARANTY. Each Borrower agrees that the provisions of
this Section 11 are for the benefit
27
of Lender and its successors, transferees, endorsees and assigns, and nothing
herein contained shall impair, as between any other Borrower and Lender, the
obligations of such other Borrower under the Loan Documents.
11.4 SUBORDINATION OF SUBROGATION. Notwithstanding anything to the
contrary in this Agreement or in any other Loan Document, and except as set
forth in Section 11.7, each Borrower hereby expressly and irrevocably
subordinates to payment of the Obligations any and all rights at law or in
equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off and any and all defenses available to a surety,
guarantor or accommodation co-obligor until the Obligations are indefeasibly
paid in full in cash. Each Borrower acknowledges and agrees that this waiver
is intended to benefit Lender and shall not limit or otherwise affect such
Borrower's liability hereunder or the enforceability of this Section 11, and
that Lender and its successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 11.4.
11.5 ELECTION OF REMEDIES. If Lender may, under applicable law, proceed
to realize its benefits under any of the Loan Documents giving Lender a Lien
upon any Collateral, whether owned by any Borrower or by any other Person,
either by judicial foreclosure or by non-judicial sale or enforcement, Lender
may, at its sole option, determine which of its remedies or rights it may
pursue without affecting any of its rights and remedies under this Section
11. If, in the exercise of any of its rights and remedies, Lender shall
forfeit any of its rights or remedies, including its right to enter a
deficiency judgment against any Borrower or any other Person, whether because
of any applicable laws pertaining to "election of remedies" or the like, each
Borrower hereby consents to such action by Lender and waives any claim based
upon such action, even if such action by Lender shall result in a full or
partial loss of any rights of subrogation which such Borrower might otherwise
have had but for such action by Lender. Any election of remedies which
results in the denial or impairment of the right of Lender to seek a
deficiency judgment against any Borrower shall not impair any other
Borrower's obligation to pay the full amount of the Obligations. In the event
Lender shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or the Loan Documents, Lender may bid all or less than the
amount of the Obligations and the amount of such bid need not be paid by
Lender but may be credited against the Obligations. The amount of the
successful bid at any such sale, whether Lender or any other party is the
successful bidder, shall be conclusively deemed to be the fair market value
of the Collateral and the difference between such bid amount and the
remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Section 11, notwithstanding
that any present or future law or court decision or ruling may have the
effect of reducing the amount of any deficiency claim to which Lender might
otherwise be entitled but for such bidding at any such sale.
11.6 LIMITATION. Notwithstanding any provision herein contained to the
contrary, each Borrower's liability under this Section 11 (which liability is
in any event in addition to amounts for which such Borrower is primarily
liable under Section 1) shall be limited to an amount not to exceed as of any
date of determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower
under this Agreement and then re-loaned or otherwise transferred to, or for
the benefit of, such Borrower; and
(b) the amount which could be claimed by Lender from such
Borrower under this Section 11
28
without rendering such claim voidable or avoidable under Section 548 of
Chapter 11 of the United States Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar
statute or common law after taking into account, among other things, such
Borrower's right of contribution and indemnification from each other Borrower
under Section 11.7.
11.7 CONTRIBUTION WITH RESPECT TO GUARANTY OBLIGATIONS. (a) To the extent
that any Borrower shall make a payment under this Section 11 of all or any of
the Obligations (other than Loans made to that Borrower for which it is
primarily liable) (a "Guarantor Payment") which, taking into account all
other Guarantor Payments then previously or concurrently made by any other
Borrower, exceeds the amount which such Borrower would otherwise have paid if
each Borrower had paid the aggregate Obligations satisfied by such Guarantor
Payment in the same proportion that such Borrower's "Allocable Amount" (as
defined below) (as determined immediately prior to such Guarantor Payment)
bore to the aggregate Allocable Amounts of each of the Borrowers as
determined immediately prior to the making of such Guarantor Payment, then,
following indefeasible payment in full in cash of the Obligations and
termination of the Commitments, such Borrower shall be entitled to receive
contribution and indemnification payments from, and be reimbursed by, each
other Borrower for the amount of such excess, pro rata based upon their
respective Allocable Amounts in effect immediately prior to such Guarantor
Payment.
(b) As of any date of determination, the "Allocable Amount" of
any Borrower shall be equal to the maximum amount of the claim which could
then be recovered from such Borrower under this Section 11 without rendering
such claim voidable or avoidable under Section 548 of Chapter 11 of the
United States Bankruptcy Code or under any applicable state Uniform
Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute
or common law.
(c) This Section 11.7 is intended only to define the relative
rights of Borrowers and nothing set forth in this Section 11.7 is intended to
or shall impair the obligations of each Borrower to pay any amounts as and
when the same shall become due and payable in accordance with the terms of
this Agreement, including Section 11.1. Nothing contained in this Section
11.7 shall limit the liability of any Borrower to pay the Loans made directly
or indirectly to that Borrower and accrued interest, Fees and expenses with
respect thereto for which such Borrower shall be primarily liable.
(d) The parties hereto acknowledge that the rights of
contribution and indemnification hereunder shall constitute assets of
Borrower to which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other
Credit Parties under this Section 11.7 shall be exercisable upon the full and
indefeasible payment of the Obligations and the termination of Lender's
obligation to extend any credit under this Agreement.
11.8 LIABILITY CUMULATIVE. The liability of Borrowers under this Section
11 is in addition to and shall be cumulative with all liabilities of each
Borrower to Lender under this Agreement and the other Loan Documents to which
such Borrower is a party or in respect of any Obligations or obligation of
the other Borrower, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
29
IN WITNESS WHEREOF, this Loan and Security Agreement has been duly
executed as of the date first written above.
BORROWERS:
MANAGEMENT ALLIANCE CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
INFORMATION SYSTEMS CONSULTING CORP.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
DATATEK CONSULTING GROUP CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
TEXCEL SERVICES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MOUNTAIN, LTD.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
30
OTHER CREDIT PARTIES:
DIVERSIFIED CORPORATE RESOURCES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
PREFERRED FUNDING CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MAGIC NORTHEAST, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
LENDER:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Duly Authorized Signatory
31
SCHEDULE A - DEFINITIONS
Capitalized terms used in this Agreement and the other Loan Documents shall have
(unless otherwise provided elsewhere in this Agreement or in the other Loan
Documents) the following respective meanings:
"Account Debtor" shall mean any Person who is or may become obligated 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 any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper, Documents or Instruments),
whether arising out of goods sold or services rendered or from any other
transaction (including any such obligations which may be characterized as an
account or contract right under the Code); (ii) all of such Person's rights in,
to and under all purchase orders or receipts for goods or services; (iii) all of
such Person'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); (iv) all moneys
due or to become due to such Person under all purchase orders and contracts for
the sale of goods or the performance of services or both by such Person or in
connection with any other transaction (whether or not yet earned by performance
on the part of such Person), including the right to receive the proceeds of said
purchase orders and contracts; and (v) all collateral security and guarantees of
any kind given by any other Person with respect to any of the foregoing.
"Accounts Payable Analysis" shall mean a certificate in the form of Exhibit D
"Accounts Receivable Roll Forward Analysis" shall mean a certificate in the form
of Exhibit E.
"Affiliate" shall mean, with respect to any Person: (i) each other Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, ten percent (10%) or more of the Stock having
ordinary voting power for the election of directors of such Person; (ii) each
other Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person; or (iii) each of such Person's
officers, directors, joint venturers and partners. For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise. "Affiliate" shall not include, however, any institutional shareholder
of Parent that may own more than ten percent (10%) of its issued and outstanding
Stock.
"Agreement" shall mean this Agreement including all appendices, exhibits or
schedules attached or otherwise identified thereto, restatements and
modifications and supplements thereto, and any appendices, exhibits or schedules
to any of the foregoing, each as in effect at the time such reference becomes
operative; provided, that except as specifically set forth in this Agreement,
any reference to the Disclosure Schedules to this Agreement shall be deemed a
reference to the Disclosure Schedules as in effect on the Closing Date or in a
written amendment thereto executed by Borrower and Lender.
"Books and Records" shall mean all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software
32
storage and media devices, accounting books and records, financial statements
(actual and pro forma), filings with Governmental Authorities and any and all
records and instruments relating to the Collateral or any Borrower's business.
"Borrower" and "Borrowers" shall have the meanings assigned to them in the
preamble of this Agreement.
"Borrowing Availability" shall mean, at any time with respect to any
Borrower, the lesser of (i) the Maximum Amount less the sum of the aggregate
Revolving Credit Loans attributable to the other Borrowers or (ii) such
Borrower's Borrowing Base, in each case less reserves established by Lender
from time to time.
"Borrowing Base" shall mean at any time with respect to any Borrower, an
amount equal to the sum at such time of:
(a) eighty five percent (85%) of the value (as determined by Lender)
of such Borrower's Eligible Accounts arising from the rendition of contract
staffing services; provided that Lender shall reduce the foregoing percentage
by one percentage point for each percentage point that the dilution of such
Borrower's Accounts arising from the rendition of contract staffing services
(calculated by Lender as the average dilution over the most recent 12 months)
exceeds five percent (5%); PLUS
(b) seventy-five percent (75%) of the value (as determined by
Lender) of such Borrower's Eligible Accounts arising from the rendition of
permanent placement services; provided that Lender shall reduce the foregoing
percentage by one percentage point for each percentage point that the
dilution of such Borrower's Accounts arising from the rendition of permanent
placement services (calculated by Lender as the average dilution over the
most recent 12 months) exceeds ten percent (10%); LESS
(c) the amount of the Seller Payment Reserve at such time.
"Borrowing Base Certificate" shall mean a certificate in the form of Exhibit
C.
"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 New
York.
"Capital Expenditures" shall mean all payments or accruals (including Capital
Lease Obligations) for any fixed assets or improvements or for replacements,
substitutions or additions thereto, that have a useful life of more than one
year and that are required to be capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise would
be disclosed as such in a note to such balance sheet, other than, in the case
of any Borrower, any such lease under which such Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with
GAAP, would appear on a balance sheet of such lessee in
33
respect of such Capital Lease or otherwise be disclosed in a note to such
balance sheet.
"Cash Collateral Account" shall have the meaning assigned to it in Schedule C.
"Change of Control" shall mean, with respect to any Person on or after the
Closing Date, that any change in the composition of such Person's
stockholders as of the Closing Date shall occur which would result in any
stockholder or group acquiring 49.9% or more of any class of Stock of such
Person, or that any Person (or group of Persons acting in concert) shall
otherwise acquire, directly or indirectly (including through Affiliates), the
power to elect a majority of the Board of Directors of such Person or
otherwise direct the management or affairs of such Person by obtaining
proxies, entering into voting agreements or trusts, acquiring securities or
otherwise.
"Charges" shall mean all Federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to PBGC at the time
due and payable), levies, customs or other duties, assessments, charges,
liens, and all additional charges, interest, penalties, expenses, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the Obligations,
(iii) the employees, payroll, income or gross receipts of any Credit Party,
(iv) the ownership or use of any assets by any Credit Party, or (v) any other
aspect of any Credit Party's business.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by any Person, wherever located.
"Closing Date" shall mean the Business Day on which the conditions precedent
set forth in Section 2 have been satisfied or specifically waived in writing
by Lender, and the initial Loan has been made.
"Closing Fee" shall have the meaning assigned to it in Schedule E.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Lender's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term "Code" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
of this Agreement relating to such attachment, perfection or priority and for
purposes of definitions related to such provisions.
"Collateral" shall have the meaning assigned to it in Section 6.1.
"Collection Account" shall mean that certain account of Lender, account
number 00-000-000 in the name of GECC CAF Depository at Bankers Trust
Company, 0 Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, XXX number 000-000-000.
"Commitment Termination Date" shall mean the earliest of (i) the Stated
Expiry Date, (ii) the date Lender's obligation to advance funds is terminated
pursuant to Section 7.2, and (iii) the date of indefeasible prepayment in
full by Borrowers of the Obligations in accordance with the provisions of
Section 1.2(c).
34
"Contracts" shall mean all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person 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.
"Contractual Obligation" shall mean as to any Person, any provision of any
security issued by such Person or of any agreement, instrument, or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyright License" shall mean rights under any written agreement now owned
or hereafter acquired by any Person granting the right to use any Copyright
or Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter acquired
by any Person: (i) all copyrights in any original work of authorship fixed in
any tangible medium of expression, now known or later developed, all
registrations and applications for registration of any such copyrights in the
United States or any other country, including registrations, recordings and
applications, and supplemental registrations, recordings, and applications in
the United States Copyright Office; and (ii) all Proceeds of the foregoing,
including license royalties and proceeds of infringement suits, the right to
xxx for past, present and future infringements, all rights corresponding
thereto throughout the world and all renewals and extensions thereof.
"Corporate Credit Party" shall mean any Credit Party that is a corporation,
partnership or limited liability company.
"Credit Party" shall mean each Borrower, Parent, and each other Person (other
than Lender) that is or may become a party to this Agreement or any other
Loan Document.
"DCRI L.P." shall mean DCRI L.P. No. 2, Inc., a Texas corporation.
"DCRI L.P. No. 2 Loan Documents" shall mean the two promissory notes, dated
January 12, 1999, executed by DCRI L.P. payable to the order of Compass Bank
in the aggregate principal amount of $500,000 and all instruments securing
such notes, including a pledge agreement related to 165,000 shares of
Parent's common Stock and a guarantor of J. Xxxxxxx Xxxxx.
"DCRI L.P. No. 2 Note Purchase Agreement" shall mean the Note Purchase
Agreement, dated January 12, 1999, among Parent, DCRI L.P., Compass Bank, and
J. Xxxxxxx Xxxxx, pursuant to which Parent agreed to purchase from Compass
Bank, upon the terms set forth therein, the DCRI L.P. No. 2 Loan Documents
for a purchase price equal of the amount owing by DCRI L.P. thereunder.
"Datatek Purchase Agreement" shall mean the Purchase Agreement, dated March ___,
2000, among the Datatek Seller, as the seller, DCGC, as the purchaser, and the
other parties thereto, providing for the sale by the Datatek Seller, and the
purchase by DCGC, of the Datatek Seller's business of providing staffing
services.
"Datatek Seller" shall mean Datatek Corporation, a Delaware corporation.
35
"Datatek January 1 Seller Payments" shall mean the sum of $170,625 which is an
estimate of the amount to be payable by DCGC to the Datatek Seller on January 1
of the years 2001, 2002, 2003 and 2004 as required by Section 2.1(b)(2) of the
Datatek Purchase Agreement.
"Datatek April 15 Seller Payments" shall mean the amount payable by DCGC to
the Datatek Seller on April 15, 2001, 2002, 2003, 2004 and 2005 as required
by Section 2.1(b)(3) of the Datatek Purchase Agreement
"Datatek January 1 Payment Reserve" shall be in the amount of $71,094 on the
Closing Date but shall thereafter (a) increase by the sum of $14,219 on the
first day of each month, commencing on the first day of the month next
following the Closing Date, and (b) decrease by the amount of each Datatek
Seller January 1 Payment made after the Closing Date for which Lender shall
have received satisfactory evidence of the payment thereof. At such time as
the Datatek January 1 Seller Payment due on January 1, 2001 and on January 1
of each year thereafter have been paid in full and Lender shall have received
satisfactory evidence thereof, the amount of the Datatek January 1 Payment
Reserve in effect as of January 1 of such year shall be reduced to zero. At
such time as all of the Datatek Seller January 1 Payments have been paid in
full and Lender shall have received satisfactory evidence of the payment
thereof, the Datatek January 1 Payment Reserve shall be permanently reduced
to zero.
"Datatek April 15 Payment Reserve" shall initially be in the amount of zero,
but the amount of the Datatek April 15 Payment Reserve shall thereafter (a)
increase, commencing on September 1 of each year and continuing on the first
day of each month thereafter through April 1 of the following year, by an
amount equal to (i) the product obtained by multiplying the amount of the
Datatek April 15 Seller Payment due to be paid on the following April 15, as
determined by Lender, TIMES seven (7), and (ii) dividing the product so
obtained by twelve (12), and (b) decrease by the amount of each Datatek April
15 Seller Payment for which Lender shall have received satisfactory evidence
of the payment thereof. At such time as the Datatek April 15 Seller Payment
in each year has been paid in full and Lender shall have received
satisfactory evidence thereof, the amount of the Datatek April 15 Payment
Reserve in effect as of April 15 of each year shall be reduced to zero. At
such time as all of the Datatek April 15 Seller Payments have been paid in
full and Lender shall have received satisfactory evidence of the payment
thereof, the Datatek April 15 Payment Reserve shall be permanently reduced to
zero.
"Default" shall mean any Event of Default or any event which, with the
passage of time or notice or both, would, unless cured or waived, become an
Event of Default.
"Default Rate" shall have the meaning assigned to it in Section 1.5(c).
"Documents" shall mean all "documents," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including
all bills of lading, dock warrants, dock receipts, warehouse receipts, and
other documents of title, whether negotiable or non-negotiable.
"Eligible Accounts" shall mean as at the date of determination with respect
to any Borrower, all Accounts of such Borrower except any Account:
(a) that does not arise from the sale of goods or the performance of
services by such Borrower in
36
the ordinary course of such Borrower's business;
(b) upon which (i) such Borrower's right to receive payment is not
absolute or is contingent upon the fulfillment of any condition whatsoever or
(ii) such Borrower is not able to bring suit or otherwise enforce its
remedies against the Account Debtor through judicial process;
(c) against which any defense, counterclaim or setoff, whether
well-founded or otherwise, is asserted or which is a "contra" Account;
(d) that is not a true and correct statement of a bona fide
indebtedness incurred in the amount of the Account for merchandise sold or
services performed and accepted by the Account Debtor obligated upon such
Account;
(e) with respect to which an invoice, acceptable to Lender in form
and substance, has not been sent;
(f) that is not owned by such Borrower or is subject to any right,
claim, or interest of another Person, other than the Lien in favor of Lender;
(g) that arises from a sale to or performance of services for an
employee, Affiliate, Subsidiary or Stockholder of any Borrower or any other
Credit Party, or an entity which has common officers or directors with any
Borrower or any other Credit Party;
(h) that is the obligation of an Account Debtor that is the Federal
(or local) government or a political subdivision thereof, unless Lender has
agreed to the contrary in writing and such Borrower has complied with the
Federal Assignment of Claims Act of 1940 (or the state equivalent thereof, if
any) with respect to such obligation;
(i) that is the obligation of an Account Debtor located in a foreign
country unless such Account is supported by a letter of credit in which
Lender has a first priority perfected security interest by possession or
credit insurance acceptable to Lender (and naming Lender as loss payee);
(j) that is the obligation of an Account Debtor to whom any Borrower
is or may become liable for goods sold or services rendered by the Account
Debtor to any Borrower, to the extent of any Borrower's liability to such
Account Debtor;
(k) that arises with respect to goods which are delivered or
services rendered on a cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the Account
Debtor may be conditional, except in the case of those Accounts arising from
the rendition of permanent placement services for which a Borrower may extend
to the Account Debtor a guarantee of placement in the event that employment
is terminated no more than sixty (60) days after the commencement of
employment;
(l) that is an obligation for which the total unpaid Accounts of the
Account Debtor exceed 20% of the aggregate of all Accounts, to the extent of
such excess;
37
(m) that is not paid within 60 days from its due date or 90 days
from its invoice date or that are Accounts of an Account Debtor if 50% or
more of the Accounts owing from such Account Debtor remain unpaid within such
time periods;
(n) is an obligation of an Account Debtor that has suspended
business, made a general assignment for the benefit of creditors, is unable
to pay its debts as they become due or as to which a petition has been filed
(voluntary or involuntary) under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors;
(o) that arises from any xxxx-and-hold or other sale of goods which
remain in any Borrower's possession or under any Borrower's control;
(p) as to which Lender's interest therein is not a first priority
perfected security interest;
(q) to the extent that such Account exceeds any credit limit
established by Lender in Lender's good faith credit judgement;
(r) as to which any of such Borrower's representations or warranties
pertaining to Accounts are untrue;
(s) that represents interest payments, late or finance charges, or
service charges owing to such Borrower; or
(t) that is not otherwise acceptable in the good faith discretion of
Lender, provided, that Lender shall have the right to create and adjust
eligibility standards and related reserves from time to time in its good
faith credit judgment..
"Environmental Laws" shall mean all Federal, state and local laws, statutes,
ordinances and regulations, now or hereafter in effect, and in each case as
amended or supplemented from time to time, and any applicable judicial or
administrative interpretation thereof relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation).
"Environmental Liabilities" shall mean all liabilities, obligations,
responsibilities, remedial actions, removal costs, losses, damages of
whatever nature, costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim, suit, action or demand of
whatever nature by any Person, and which relate to any health or safety
condition regulated under any Environmental Law, environmental permits or in
connection with any Release, threatened Release, or the presence of a
Hazardous Material.
"Equipment" shall mean all "equipment" as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including
any and all machinery, apparatus, equipment, fittings, furniture, fixtures,
motor vehicles and other tangible personal property (other than Inventory) of
every kind and description which may be now or hereafter used in such
Person's operations or which are owned by
38
such Person or in which such Person may have an interest, and all parts,
accessories and accessions thereto and substitutions and replacements
therefor.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or
any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with any Credit Party, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the IRC, or, solely for the
purposes of Section 302 of ERISA and Section 412 of the IRC, is treated as a
single employer under Section 414 of the IRC.
"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan
(other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the IRC or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(b) of the IRC or Section
303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by any Credit Party or
any ERISA Affiliate of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by any Credit Party or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or to appoint a trustee to administer any
Plan; (f) the incurrence by any Credit Party or any ERISA Affiliate of any
liability with respect to any withdrawal or partial withdrawal from any Plan
or Multiemployer Plan; or (g) the receipt by any Credit Party or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from any
Credit Party or any ERISA Affiliate of any notice, concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or
is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.
"Event of Default" shall have the meaning assigned to it in Section 7.1.
"Fees" shall mean the fees due to Lender as set forth in Schedule E.
"Financial Statements" shall mean the consolidated and consolidating income
statement, balance sheet and statement of cash flows of each Borrower and its
Subsidiaries, internally prepared for each Fiscal Month, and audited for each
Fiscal Year, prepared in accordance with GAAP; PROVIDED, HOWEVER, in the case
of interim statements for each Fiscal Month, (i) the statement of cash flows
shall only be on a consolidated basis and (ii) footnotes may be omitted.
"Fiscal Month" shall mean any of the monthly accounting periods of Borrowers.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrowers.
"Fiscal Year" shall mean the 12 month period of Borrowers ending December 31
of each year. Subsequent changes of the fiscal year of Borrowers shall not
change the term "Fiscal Year" unless Lender shall consent in writing to such
change.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect
39
from time to time, consistently applied.
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all right, title and interest which such Person may now or hereafter have in
or under any Contract, Intellectual Property, interests in partnerships,
joint ventures and other business associations, permits, 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, Books and Records, Goodwill (including the Goodwill associated
with any Intellectual Property), 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-person, and business interruption insurance,
and all unearned premiums), uncertificated securities, choses in action,
deposit accounts, rights to receive tax refunds and other payments and rights
of indemnification.
"Goods" shall mean all "goods," as such term is defined in the Code, now
owned or hereafter acquired by any Person, wherever located, including
movables, fixtures, equipment, inventory, or other tangible personal property.
"Goodwill" shall mean all goodwill, trade secrets, proprietary or
confidential information, technical information, procedures, formulae,
quality control standards, designs, operating and training manuals, customer
lists, and distribution agreements now owned or hereafter acquired by any
Person.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation of
such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such
guaranteeing Person (whether or not contingent): (i) to purchase or
repurchase any such primary obligation; (ii) to advance or supply funds (a)
for the purchase or payment of any such primary obligation or (b) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency or any balance sheet condition of the
primary obligor; (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation; or
(iv) to indemnify the owner of such primary obligation against loss in
respect thereof.
"Guarantor" shall mean each Person which executes a guaranty or a support,
put or other similar agreement in favor of Lender in connection with the
transactions contemplated by this Agreement.
"Guaranty" shall mean any agreement to perform all or any portion of the
Obligations on behalf of Borrower or any other Credit Party, in favor of, and
in form and substance satisfactory to, Lender, together with all amendments,
modifications and supplements thereto, and shall refer to such Guaranty as
the same may be in effect at the time such reference becomes operative.
40
"Hazardous Material" shall mean any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Hazardous Waste" shall have the meaning ascribed to such term in the
Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et. seq.).
"Indebtedness" of any Person shall mean: (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property or services
(including reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured,
but not including obligations to trade creditors incurred in the ordinary
course of business and not more than 45 days past due); (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments; (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of such
property); (iv) all Capital Lease Obligations; (v) all Guaranteed
Indebtedness; (vi) all Indebtedness referred to in clauses (i), (ii), (iii),
(iv) or (v) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien
upon or in property (including accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; (vii) the Obligations; and (viii) all
liabilities under Title IV of ERISA.
"Indemnified Liabilities" and "Indemnified Person" shall have the meaning
assigned to such terms in Section 1.11.
"Index Rate" shall mean the latest "Prime Rate", which normally is published
in the "Money Rates" section of The Wall Street Journal (or if such rate
ceases to be so published, as quoted from such other generally available and
recognizable source as Lender may select). The Index Rate shall be determined
(i) on the first Business Day immediately prior to the Closing Date and (ii)
thereafter, on the last Business Day of each calendar month for calculation
of interest for the following month.
"Instruments" shall mean all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located,
including all certificated securities and all notes and other 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.
"Inventory" shall mean all "inventory," as such term is defined in the Code,
now or hereafter owned or acquired by any Person, wherever located, including
all inventory, merchandise, goods and other personal property which are held
by or on behalf of such Person for sale or lease or are furnished or are to
be
41
furnished under a contract of service or which constitute raw materials, work
in process or materials used or consumed or to be used or consumed in such
Person's business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including other supplies.
"Investment Property" shall mean all "investment property," as such term is
defined in the Code, now or hereafter acquired by any Person, wherever
located.
"IRC" and "IRS"shall mean respectively, the Internal Revenue Code of 1986 and
the Internal Revenue Service, and any successors thereto.
"Lender" shall mean General Electric Capital Corporation and, if at any time
Lender shall decide to assign or syndicate all or any of the Obligations,
such term shall include such assignee or such other members of the syndicate.
"Letters of Credit" shall mean any and all commercial or standby letters of
credit issued at the request and for the account of any Borrower for which
Lender has incurred Letter of Credit Obligations.
"Letter of Credit Fee" shall have the meaning assigned to it in Schedule E.
"Letter of Credit Obligations" shall mean all outstanding obligations
(including all duty, freight, taxes, costs, insurance and any other charges
and expenses) incurred by Lender, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance or guarantee, by
Lender or another, of Letters of Credit, all as further set forth in Schedule
C.
"License" shall mean any Copyright License, Patent License, Trademark License
or other license of rights or interests now held or hereafter acquired by any
Person.
"Lien" shall mean any mortgage, security deed or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, 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).
"Litigation" shall mean any claim, lawsuit, litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority.
"Loan Documents" shall mean this Agreement, the Notes, the Financial
Statements, each Guaranty, the Power of Attorney, the Lock Box Account
Agreements, each Subsidiary Joinder Agreement, and the other documents and
instruments listed in Schedule F, and all security agreements, mortgages and
all other documents, instruments, certificates, and notices at any time
delivered by any Person (other than Lender) in connection with any of the
foregoing.
"Loans" shall mean the Revolving Credit Loan including the Letter of Credit
Obligations.
42
"Lock Box Account" and "Lock Box Account Agreement" shall have the meanings
assigned to such terms in Schedule D.
"Magic" shall mean Magic Northeast, Inc., a Delaware corporation.
"Material Adverse Effect" shall mean: (i) a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition
of any Borrower or any other Credit Party or the industry within which such
Borrower or any other Credit Party operates, (b) any Borrower's or any other
Credit Party's ability to pay or perform the Obligations under the Loan
Documents to which such Credit Party is a party in accordance with the terms
thereof, (c) the Collateral or Lender's Liens on the Collateral or the
priority of any such Lien, or (d) Lender's rights and remedies under this
Agreement and the other Loan Documents.
"Maximum Amount" shall mean $15,000,000.
"Minimum Actionable Amount" shall mean $100,000.
"Mountain Purchase Agreement" shall mean the Purchase Agreement, dated August
6, 1999, among the Mountain Sellers, as the seller, Magic Northeast, Inc., as
the purchaser, and the other parties thereto, providing for the sale by the
Mountain Sellers, and the purchase by Magic Northeast, Inc., of all of the
issued and outstanding stock of ML.
"Mountain Sellers" shall mean Xxxxxx X. Xxxxxx and Xxxxxx Xxxxxx.
"Mountain Seller Payments" shall mean the sum of $1,178,490 which is an
estimate of the amount to be payable to the Mountain Sellers on October 1 of
the years 2000, 2001 and 2002 as required by Section 2.1(a)(ii) of the
Mountain Purchase Agreement.
"Mountain Payment Reserve" shall be in the amount of $687,167 on the Closing
Date but shall thereafter (a) increase by the sum of $98,167 on the first day
of each month, commencing on the first day of the month next following the
Closing Date, and (b) decrease by the amount of each Mountain Seller Payment
made after the Closing Date for which Lender shall have received satisfactory
evidence of the payment thereof. At such time as the Mountain Seller Payments
due on October 1, 2000 and on October 1 of each year thereafter have been
paid in full and Lender shall have received satisfactory evidence thereof,
the amount of the Mountain Payment Reserve in effect as of October 1 of such
year shall be reduced to zero. At such time as all of the Mountain Seller
Payments have been paid in full and Lender shall have received satisfactory
evidence of the payment thereof, the Mountain Payment Reserve shall be
permanently reduced to zero.
"Multiemployer Plan" shall mean a "multiemployer plan," as defined in Section
4001(a) (3) of ERISA, to which Borrower, any other Credit Party or any ERISA
Affiliate is making, is obligated to make, has made or been obligated to
make, contributions on behalf of participants who are or were employed by any
of them.
"Net Borrowing Availability" shall mean at any time with respect to any
Borrower, such Borrower's
43
Borrowing Availability less the Revolving Credit Loan attributable to such
Borrower.
"New Subsidiary" shall have the meaning assigned to it in Section 5(a).
"Notes" shall mean the Revolving Credit Notes.
"Notice of Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(b).
"Obligations" shall mean all loans, advances, debts, expense reimbursement,
fees, liabilities, and obligations for the performance of covenants, tasks or
duties or for payment of monetary amounts (whether or not such performance is
then required or contingent, or amounts are liquidated or determinable) owing
by any Borrower and any other Credit Party to Lender, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, whether arising under any of the Loan Documents or under any
other agreement between such Borrower, such Credit Party and Lender, and all
covenants and duties regarding such amounts. This term includes all
principal, interest (including interest accruing at the then applicable rate
provided in this Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in this Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), Fees, Charges,
expenses, attorneys' fees and any other sum chargeable to any Borrower under
any of the Loan Documents, and all principal and interest due in respect of
the Loans and all obligations and liabilities of any Guarantor under any
Guaranty.
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) 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 (ii) all
reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor
thereto.
"PFC" shall mean Preferred Funding Corporation, a Texas corporation.
"Permitted Encumbrances" shall mean the following encumbrances: (i) Liens for
taxes or assessments or other governmental Charges or levies, either not yet
due and payable or to the extent that nonpayment thereof is permitted by the
terms of Section 3.10; (ii) pledges or deposits securing obligations under
worker's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing
bids, tenders, contracts (other than contracts for the payment of money) or
leases to which any Credit Party is a party as lessee made in the ordinary
course of business; (iv) deposits securing public or statutory obligations of
any Credit Party; (v) inchoate and unperfected workers', mechanics', or
similar liens arising in the ordinary course of business so long as such
Liens
44
attach only to Equipment, fixtures or real estate; (vi) carriers',
warehouseman's', suppliers' or other similar possessory liens arising in the
ordinary course of business and securing indebtedness not yet due and payable
in an outstanding aggregate amount not in excess of $25,000 at any time so
long as such Liens attach only to Inventory; (vii) deposits of money
securing, or in lieu of, surety, appeal or customs bonds in proceedings to
which any Credit Party is a party; (viii) zoning restrictions, easements,
licenses, or other restrictions on the use of real property or other minor
irregularities in title (including leasehold title) thereto, so long as the
same do not materially impair the use, value, or marketability of such real
estate; (ix) Purchase Money Liens securing Purchase Money Indebtedness (or
rent) to the extent permitted under Section 5(b)(vi); (x) Liens in existence
on the Closing Date as disclosed on Disclosure Schedule 5(e) provided that no
such Lien is spread to cover additional property after the Closing Date and
the amount of Indebtedness secured thereby is not increased.; and (xi) Liens
in favor of Lender securing the Obligations.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public
benefit corporation, entity or government (whether Federal, state, county,
city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof), and shall include such Person's
successors and assigns.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the IRC or Section 302 of ERISA, and in respect of which any Credit
Party or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Prepayment Fee" shall mean the prepayment fee specified in Schedule E.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to any Borrower or any other Credit
Party from time to time with respect to any Collateral; (ii) any and all
payments (in any form whatsoever) made or due and payable to any Borrower or
any other Credit Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any Collateral by any
governmental body, authority, bureau or agency (or any person acting under
color of governmental authority); (iii) any claim of any Borrower or any
other Credit Party against third parties (a) for past, present or future
infringement of any Intellectual Property or (b) for past, present or future
infringement or dilution of any Trademark or Trademark License or for injury
to the goodwill associated with any Trademark, Trademark registration or
Trademark licensed under any Trademark License; (iv) any recoveries by any
Borrower or any other Credit Party against third parties with respect to any
litigation or dispute concerning any Collateral; and (v) any and all other
amounts from time to time paid or payable under or in connection with any
Collateral, upon disposition or otherwise.
45
"Projections" shall mean as of any date the consolidated and consolidating
balance sheet, statements of income and cash flow for each Borrower and its
Subsidiaries (including forecasted Capital Expenditures and Net Borrowing
Availability) (i) by month for the next Fiscal Year, and (ii) by year for the
following three Fiscal Years, in each case prepared in a manner consistent
with GAAP and accompanied by senior management's discussion and analysis of
such plan; PROVIDED, HOWEVER, the statement of cash flows included within the
Projections shall only be on a consolidated basis.
"Purchase Money Indebtedness" shall mean (i) any Indebtedness incurred for
the payment of all or any part of the purchase price of any fixed asset, (ii)
any Indebtedness incurred for the sole purpose of financing or refinancing
all or any part of the purchase price of any fixed asset, and (iii) any
renewals, extensions or refinancings thereof (but not any increases in the
principal amounts thereof outstanding at that time).
"Purchase Money Lien" shall mean any Lien upon any fixed assets which secures
the Purchase Money Indebtedness related thereto but only if such Lien shall
at all times be confined solely to the asset the purchase price of which was
financed or refinanced through the incurrence of the Purchase Money
Indebtedness secured by such Lien and only if such Lien secures only such
Purchase Money Indebtedness.
"Real Property" shall have the meaning assigned to it in Section 3.15.
"Release" shall mean, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials in the indoor or
outdoor environment by such Person, including the movement of Hazardous
Materials through or in the air, soil, surface water, ground water or
property.
"Requirement of Law" shall mean as to any Person, the Certificate or Articles
of Incorporation and ByLaws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Restricted Payment" shall mean: (i) the declaration or payment of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets on or in respect of any
Borrower's or any other Credit Party's Stock; (ii) any payment or
distribution made in respect of any subordinated Indebtedness of any Borrower
or any other Credit Party in violation of any subordination or other
agreement made in favor of Lender; (iii) any payment on account of the
purchase, redemption, defeasance or other retirement of any Borrower's or any
other Credit Party's Stock or Indebtedness or any other payment or
distribution made in respect of any thereof, either directly or indirectly;
other than (a) that arising under this Agreement or (b) interest and
principal, when due without acceleration or modification of the amortization
as in effect on the Closing Date, under Indebtedness (not including
subordinated Indebtedness, payments of which shall be permitted only in
accordance with the terms of the relevant subordination agreement made in
favor of Lender) described in Disclosure Schedule (5(b)) or otherwise
permitted under Section 5(b)(vi); or (iv) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of such Person
which is not expressly and specifically permitted in this Agreement;
provided, that no payment to Lender shall constitute a Restricted Payment.
"Revolving Credit Advance" shall have the meaning assigned to it in
Section 1.1(a).
46
"Revolving Credit Loan" shall mean at any time the sum of (i) the aggregate
amount of Revolving Credit Advances then outstanding, plus (ii) the total
Letter of Credit Obligations incurred by Lender and outstanding at such time,
plus (iii) the amount of accrued but unpaid interest thereon and Letter of
Credit Fees with respect thereto.
"Revolving Credit Note" shall mean each promissory note dated the Closing
Date, executed by a Borrower substantially in the form of Exhibit F.
"Revolving Credit Rate" shall have the meaning assigned to it in Section
1.5(a).
"Seller Payment Reserve" shall mean, as of any date of determination thereof,
the aggregate amount of the Datatek January 1 Payment Reserve, the Datatek
April 15 Payment Reserve, the Mountain Payment Reserve and the Texcel Payment
Reserve in effect at such date.
"Stated Expiry Date" shall mean May __, 2003.
"Stock" shall mean all certificated and uncertificated shares, options,
warrants, membership interests, general or limited partnership interests,
participation or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including common stock, preferred stock, or any
other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934).
"Stockholder" shall mean each holder of Stock of any Borrower or any other
Credit Party.
"Subordinated Debt" shall mean any Indedtedness of Parent or any of its
Subsidiaries which is subordinated to the prior payment in full of the
Obligations upon terms satisfactory to Lender and is subject to the terms and
provisions of a subordination agreement executed by the holder of such
subordinated Indebtedness and Lender, and acknowledged and agreed to by the
issuer of such subordinated Indebtedness, in form and substance satisfactory
to Lender.
"Subordinated Intercompany Notes" shall mean the master Subordinated Demand
Promissory Notes, each dated on or about the Closing Date, executed by each
Borrower to the order of each other Borrower, in form and substance
satisfactory to Lender, and assigned to Lender as additional security for the
Obligations.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, or with respect to which any such Person has the
right to vote or designate the vote of 50% or more of such Stock whether by
proxy, agreement, operation of law or otherwise, and (ii) any partnership or
limited liability company in which such Person or one or more Subsidiaries of
such Person has an equity interest (whether in the form of voting or
participation in profits or capital
47
contribution) of more than 50% or of which any such Person is a general
partner or manager or may exercise the powers of a general partner or manager.
"Subsidiary Joinder Agreement" shall mean a Subsidiary Joinder Agreement in
the form of Exhibit M to this Agreement.
"Taxes" shall mean taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes
imposed on or measured by the net income of Lender.
"Termination Date" shall mean the date on which all Obligations under this
Agreement are indefeasibly paid in full, in cash (other than amounts in
respect of Letter of Credit Obligations if any, then outstanding, provided
that Borrowers shall have funded such amounts in cash in full into the Cash
Collateral Account), and Borrowers shall have no further right to borrow any
moneys or obtain other credit extensions or financial accommodations under
this Agreement.
"Texcel Purchase Agreement" shall mean the Asset Purchase Agreement, dated
October 7, 1998, among the Texcel Sellers, as the seller, TSI (as the
successor to DCRI Acquisition Corporation), as the purchaser, and the other
parties thereto, providing for the sale by the Texcel Sellers, and the
purchase by DCGC, of the Texcel Sellers' business of providing staffing
services.
"Texcel Sellers" shall mean Texcel, Inc. and Texcel Technical Services, Inc.,
each a Pennsylvania corporation.
"Texcel Seller Payments" shall mean the sum of $930,000 which is an estimate
of the amount to be payable by TSI to the Texcel Sellers on October 1 of the
years 2000 and 2001 as required by Section 2.1(a)(ii) of the Texcel Purchase
Agreement.
"Texcel Payment Reserve" shall be in the amount of $542,500 on the Closing
Date but shall thereafter (a) increase by the sum of $77,500 on the first day
of each month, commencing on the first day of the month next following the
Closing Date, and (b) decrease by the amount of each Texcel Seller Payment
made after the Closing Date for which Lender shall have received satisfactory
evidence of the payment thereof. At such time as the Texcel Seller Payments
due on October 1, 2000 and on October 1 of each year thereafter have been
paid in full and Lender shall have received satisfactory evidence thereof,
the amount of the Texcel Payment Reserve in effect as of October 1 of such
year shall be reduced to zero. At such time as all of the Texcel Seller
Payments have been paid in full and Lender shall have received satisfactory
evidence of the payment thereof, the Texcel Payment Reserve shall be
permanently reduced to zero.
"Trademark License" shall mean rights under any written agreement now owned
or hereafter acquired by any Person granting any right to use any Trademark
or Trademark registration.
"Trademarks" shall mean all of the following now owned or hereafter acquired
by any Person: (i) 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, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, including all registrations,
recordings and
48
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, and (ii)
all reissues, extensions or renewals thereof.
"Unused Line Fee" shall have the meaning assigned to it in Schedule E.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
Any accounting term used in this Agreement or the other Loan Documents shall
have, unless otherwise specifically provided therein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
thereunder shall be computed, unless otherwise specifically provided therein,
in accordance with GAAP consistently applied; provided, that all financial
covenants and calculations in the Loan Documents shall be made in accordance
with GAAP as in effect on the Closing Date unless Borrower and Lender shall
otherwise specifically agree in writing. That certain items or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no
way be construed to limit the foregoing. All other undefined terms contained
in this Agreement or the other Loan Documents shall, unless the context
indicates otherwise, have the meanings provided for by the Code. The words
"herein," "hereof" and "hereunder" or other words of similar import refer to
this Agreement as a whole, including the exhibits and schedules thereto, as
the same may from time to time be amended, modified or supplemented, and not
to any particular section, subsection or clause contained in this Agreement.
For purposes of this Agreement and the other Loan Documents, the following
additional rules of construction shall apply, unless specifically indicated
to the contrary: (a) wherever from the context it appears appropriate, each
term stated in either the singular or plural shall include the singular and
the plural,; (d) all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations;
and (e) all references to any instruments or agreements, including references
to any of the Loan Documents, shall include any and all modifications or
amendments thereto and any and all extensions or renewals thereof.
49
Schedule B
LENDER'S AND BORROWERS' ADDRESSES FOR NOTICES
Lender's Address:
Address: Suite 350, 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Att'n: Diversified Corporate Resources, Inc. and Subsidiaries Account
Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
Address for each Borrower and each Credit Party:
Address: 00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Att'n: President
Telephone: 000-000-0000
Facsimile: 000-000-0000
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SCHEDULE C
LETTERS OF CREDIT
1. Lender agrees, subject to the terms and conditions hereinafter set
forth, to incur Letter of Credit Obligations in respect of the issuance of
Letters of Credit issued on terms acceptable to Lender and supporting
obligations of each Borrower incurred in the ordinary course of such
Borrower's business, in order to support the payment of such Borrower's
inventory purchase obligations, insurance premiums, or utility or other
operating expenses and obligations, as Diversified Corporate Resources, Inc.
shall request as agent for such Borrower by written notice to Lender that is
received by Lender not less than five Business Days prior to the requested
date of issuance of any such Letter of Credit; PROVIDED, that: (a) that the
aggregate amount of all Letter of Credit Obligations in favor of such
Borrower at any one time outstanding (whether or not then due and payable)
shall not exceed [n/a]; (b) no Letter of Credit shall have an expiry date
which is later than the Stated Expiry Date or one year following the date of
issuance thereof; and (c) Lender shall be under no obligation to incur any
Letter of Credit Obligation if after giving effect to the incurrence of such
Letter of Credit Obligation, the Net Borrowing Availability would be less
than zero. The maximum amount payable in respect of each Letter of Credit
requested by any Borrower will be guaranteed by Lender in favor of the
issuing bank under terms of a separate agreement between Lender and the
issuing bank. Each Borrower will enter into an application and agreement for
such Letter of Credit with the issuing bank selected by Lender (which may be
an Affiliate of Lender). The bank that issues any Letter of Credit pursuant
to this Agreement shall be determined by Lender in its sole discretion.
2. The notice to be provided to Lender requesting that Lender incur
Letter of Credit Obligations shall be in the form of a Letter of Credit
application in the form customarily employed by the issuing bank, together
with a written request by the applicable Borrower and the bank that Lender
approve such Borrower's application. Upon receipt of such notice Lender shall
establish a reserve against such Borrower's Borrowing Availability in the
amount of 100% of the face amount of the Letter of Credit Obligation to be
incurred. Approval by Lender in the written form agreed upon between Lender
and the issuing bank (a) will authorize the bank to issue the requested
Letter of Credit, and (b) will conclusively establish the existence of the
Letter of Credit Obligation as of the date of such approval.
3. In the event that Lender shall make any payment on or pursuant to
any Letter of Credit Obligation, Borrower shall be unconditionally obligated
to reimburse Lender therefor, and such payment shall then be deemed to
constitute a Revolving Credit Advance in favor of such Borrower. For purposes
of computing interest under SECTION 1.5, a Revolving Credit Advance made in
satisfaction of a Letter of Credit Obligation shall be deemed to have been
made as of the date on which the issuer or endorser makes the related payment
under the underlying Letter of Credit.
4. In the event that any Letter of Credit Obligations, whether or not
then due or payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrower will either (a) cause the underlying Letter of
Credit to be returned and canceled and each corresponding Letter of Credit
Obligation to be terminated, or (b) pay to Lender, in immediately available
funds, an amount equal to 105% of the maximum amount then available to be
drawn under all Letters of Credit in favor of such Borrower not so returned
and canceled to be held by Lender as cash collateral in an account under the
exclusive dominion and control of Lender (the "Cash Collateral Account").
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5. In the event that Lender shall incur any Letter of Credit
Obligations in favor of any Borrower, such Borrower agrees to pay the Letter
of Credit Fee to Lender as compensation to Lender for incurring such Letter
of Credit Obligations. In addition, such Borrower shall reimburse Lender for
all fees and charges paid by Lender on account of any such Letters of Credit
or Letter of Credit Obligations to the issuing bank.
6. Each Borrower's Obligations to lender with respect to any Letter of
Credit or Letter of Credit Obligation shall be evidenced by Lender's records
and shall be absolute, unconditional and irrevocable and shall not be
affected, modified or impaired by (a) any lack of validity or enforceability
of the transactions contemplated by or related to such Letter of Credit or
Letter of Credit Obligation; (b) any amendment or waiver of or consent to
depart from all or any of the terms of the transactions contemplated by or
related to such Letter of Credit or Letter of Credit Obligation; (c) the
existence of any claim, set-off, defense or other right which any Borrower or
any other Credit Party may have against Lender, the issuer or beneficiary of
such Letter of Credit, or any other Person, whether in connection with this
Agreement, any other Loan Document or such Letter of Credit or the
transactions contemplated thereby or any unrelated transactions; or (d) the
fact that any draft, affidavit, letter, certificate, invoice, xxxx of lading
or other document presented under or delivered in connection with such Letter
of Credit or any other Letter of Credit proves to have been forged,
fraudulent, invalid or insufficient in any respect or any statement therein
proves to have been untrue or incorrect in any respect.
7. In addition to any other indemnity obligations which any Borrower
may have to Lender under this Agreement and without limiting such other
indemnification provisions, Each Borrower hereby agrees to indemnify Lender
from and to hold Lender harmless against any and all claims, liabilities,
losses, costs and expenses (including, attorneys' fees and expenses) which
Lender may (other than as a result of its own gross negligence or willful
misconduct) incur or be subject to as a consequence, directly or indirectly,
of (a) the issuance of or payment of or failure to pay under any Letter of
Credit or Letter of Credit Obligation or (b) any suit, investigation or
proceeding as to which Lender is or may become a party as a consequence,
directly or indirectly, of the issuance of any Letter of Credit, the
incurring of any Letter of Credit Obligation or any payment of or failure to
pay under any Letter of Credit or Letter of Credit Obligation. The
obligations of each Borrower under this paragraph shall survive any
termination of this Agreement and the payment in full of the Obligations.
8. Each Borrower hereby assumes all risks of the acts, omissions or
misuse of each Letter of Credit by the beneficiary or issuer thereof and, in
connection therewith, Lender shall not be responsible (a) for the validity,
sufficiency, genuineness or legal effect of any document submitted in
connection with any drawing under any Letter of Credit even if it should in
fact prove in any respect to be invalid, insufficient, inaccurate, untrue,
fraudulent or forged; (b) for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or any rights or benefits thereunder or any proceeds thereof, in whole
or in part, even if it should prove to be invalid or ineffective for any
reason; (c) for the failure of any issuer or beneficiary of any Letter of
Credit to comply fully with the terms thereof, including the conditions
required in order to effect or pay a drawing thereunder; (d) for any errors,
omissions, interruptions or delays in transmission or delivery of any
messages, by mail, telecopy, telex or otherwise; (e) for any loss or delay in
the transmission or otherwise of any document or draft required in order to
make a drawing under any Letter of Credit; or (f) for any consequences
arising from causes beyond the direct control of Lender.
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Schedule D
CASH MANAGEMENT
Borrowers agree to establish, and to maintain, until the Termination Date,
the cash management system described below:
1. No Corporate Credit Party: (i) shall not (nor shall it permit any of
its Subsidiaries to) open or maintain any deposit, checking, operating or
other bank account, or similar money handling account, with any bank or other
financial institution except for those accounts identified in ATTACHMENT I
hereto (to include a xxxxx cash account not to exceed $5,000 during any
Fiscal Month, and a payroll account not to exceed an amount equal to one
regular payroll at any time); and (ii) shall close or permit to be closed any
of the accounts listed in ATTACHMENT I hereto, in each case without Lender's
prior written consent, and then only after such Credit Party has implemented
agreements with such bank or financial institution and Lender acceptable to
Lender. Notwithstanding the foregoing, any Corporate Credit Party may
maintain a miscellaneous disbursment account, provided that the balance of
any such disbursment account shall not at any time exceed $1,000 and the
aggregate balances of all such disbursment accounts maintained by all of the
Corporate Credit Parties shall not at any time exceed $10,000 in the
aggregate.
2. Commencing on the Closing Date and until the Termination Date, each
Corporate Credit Party shall cause to be deposited directly all cash, checks,
notes, drafts or other similar items relating to or constituting proceeds of or
payments made in respect of any and all Collateral into lock boxes or lock box
accounts in such Credit Party's name (collectively, the "Lock Box Accounts") set
forth in paragraph 1 of ATTACHMENT I hereto.
3. On or before the Closing Date, each bank at which the Lock Box
Accounts are held shall have entered into tri-party lock box agreements (the
"Lock Box Account Agreements") with Lender and the applicable Credit Party,
in form and substance acceptable to Lender. Each such Lock Box Account
Agreement shall provide, among other things, that (a) such bank executing
such agreement has no rights of setoff or recoupment or any other claim
against such Lock Box Account, other than for payment of its service fees and
other charges directly related to the administration of such account, and (b)
such bank agrees to sweep on a daily basis all amounts in the Lock Box
Account to the Collection Account.
4. On the Closing Date, (a) the lock box and blocked account
arrangements shall immediately become operative at the banks at which the
Lock Box Accounts are maintained, and (b) amounts outstanding under the
Revolving Credit Loan (for purposes of the Borrowing Availability) shall be
reduced through daily sweeps, by wire transfer, of the Lock Box Accounts into
the Collection Account. Borrowers acknowledge that they shall have no right
to gain access to any of the moneys in the Lock Box Accounts until after the
Termination Date.
5. Each Borrower may maintain, in its name, accounts (the "Disbursement
Accounts") at a bank or banks acceptable to Lender into which Lender shall,
from time to time, deposit proceeds of Revolving Credit Advances made
pursuant to Section 1.1 for use solely in accordance with the provisions of
Section 1.3. All of the Disbursement Accounts as of the Closing Date are
listed in paragraph 2 of ATTACHMENT I hereto.
6. Upon the request of Lender, each Corporate Credit Party shall
forward to Lender, on a daily basis,
53
evidence of the deposit of all items of payment received by such Credit Party
into the Lock Box Accounts and copies of all such checks and other items,
together with a statement showing the application of those items relating to
payments on Accounts to outstanding Accounts and a collection report with
regard thereto in form and substance satisfactory to Lender.
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ATTACHMENT I to SCHEDULE D
LIST OF BANK ACCOUNTS
1. LOCK BOX ACCOUNTS.
2. DISBURSEMENT ACCOUNTS.
3. XXXXX CASH ACCOUNT. (not to exceed $$5,000).
4. PAYROLL ACCOUNT (not to exceed one regular payroll).
55
SCHEDULE E - FEES
1. UNUSED LINE FEE: For each day from the Closing Date, and through and
including the Termination Date, an amount equal to the product obtained by
multiplying (a) the sum of (i) until the first day of the month following any
day when the outstanding balance of the Revolving Credit Loan is more than
$10,000,000, $10,000,000, and, at all times thereafter, the Maximum Amount,
less (ii) the Revolving Credit Loan for such day, times (b) .25%, and then
dividing such product by 360. The Unused Line Fee for each month (except for
the month in which the Termination Date occurs) is payable on the first day
of each calendar month following the Closing Date; the final monthly
installment of the Unused Line Fee is payable on the Termination Date.
Notwithstanding the foregoing, any unpaid Unused Line Fee is immediately due
and payable on the Commitment Termination Date.
2. LETTER OF CREDIT FEE: For each day for which Lender maintains Letter of
Credit Obligations outstanding, an amount equal to the amount of the Letter
of Credit Obligations outstanding on such day, multiplied by [n/a]%, the
product of which is then divided by 360. The Letter of Credit Fee incurred
for each month is payable at the same time each payment of the Unused Line
Fee is due. Notwithstanding the foregoing, any unpaid Letter of Credit Fee is
immediately due and payable on the Commitment Termination Date.
3. PREPAYMENT FEE: For the Revolving Credit Loan, an amount equal to product
obtained by multiplying (a) until the first day of the month following any
day when the outstanding balance of the Revolving Credit Loan is more than
$10,000,000, $10,000,000, and, at any times thereafter, the Maximum Amount,
TIMES (b) the following percentage:
(i) 2% if Lender's obligation to make further Revolving Credit
Advances or incur additional Letter of Credit Obligations is terminated
(voluntarily by Borrowers or upon Default) on or after the Closing Date and
on or before the first anniversary of the Closing Date, payable on the
Commitment Termination Date;
(ii) 1% if Lender's obligation to make further Revolving Credit
Advances or incur additional Letter of Credit Obligations is terminated
(voluntarily by Borrowers or upon Default) after the first anniversary of the
Closing Date and on or before the second anniversary of the Closing Date,
payable on the Commitment Termination Date; or
(iii) 0.5% if Lender's obligation to make further Revolving Credit
Advances or incur additional Letter of Credit Obligations is terminated
(voluntarily by Borrowers or upon Default) after the second anniversary of
the Closing Date and on or before the Stated Expiry Date then in effect,
payable on the Commitment Termination Date.
Each Borrower acknowledges and agrees that (i) it would be difficult or
impractical to calculate Lender's actual damages from early termination of
Lender's obligation to make further Revolving Credit Advances and incur
additional Letter of Credit Obligations for any reason pursuant to Section
1.2(c) or Section 7.2, (ii) the Prepayment Fees provided above are intended
to be fair and reasonable approximations of such damages, and (iii) the
Prepayment Fees are not intended to be penalties.
5. AUDIT FEES: Borrowers jointly and severally agree to reimburse Lender at
the rate of $750 per person per day, plus out of pocket expenses, for the
audit reviews, field examinations and collateral examinations conducted by
Lender.
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Schedule F
SCHEDULE OF DOCUMENTS
The obligation of Lender to make the initial Revolving Credit Advances and
extended other credit is subject to satisfaction of the condition precedent
that Lender shall have received the following, each, unless otherwise
specified below or the context otherwise requires, dated the Closing Date, in
form and substance satisfactory to Lender and its counsel:
PRINCIPAL LOAN DOCUMENTS
1. AGREEMENT. The Loan and Security Agreement duly executed by Borrowers
and the other Credit Parties.
2. NOTES. Duly executed Notes to the order of Lender evidencing the Loans.
3. BORROWING BASE CERTIFICATE. An original Borrowing Base Certificate duly
executed by a responsible officer of Borrowers.
4. NOTICE OF REVOLVING CREDIT ADVANCE. An original Notice of Revolving
Credit Advance duly executed by a responsible officer of Leading
Borrower.
COLLATERAL DOCUMENTS.
1. ACKNOWLEDGMENT COPIES OF FINANCING STATEMENTS. Acknowledgment copies of
proper Financing Statements (Form UCC-l) (the "Financing Statements")
duly filed under the Code in all jurisdictions as may be necessary or,
in the opinion of Lender, desirable to perfect Lender's Lien on the
Collateral.
2. UCC SEARCHES. Certified copies of UCC Searches, or other evidence
satisfactory to Lender, listing all effective financing statements
which name Borrowers and the other Credit Parties (under present name,
any previous name or any trade or doing business name) as debtor and
covering all jurisdictions referred to in paragraph (1) immediately
above, together with copies of such other financing statements.
3. INTELLECTUAL PROPERTY DOCUMENTS. Agreements relating to the granting to
Lender of a security interest in Intellectual Property of Borrowers and
the other Credit Parties to the extent applicable in a form suitable
for filing with the appropriate Federal filing office.
4. OTHER RECORDINGS AND FILINGS. Evidence of the completion of all other
recordings and filings (including UCC-3 termination statements and
other Lien release documentation) as may be necessary or, in the
opinion of and at the request of Lender, desirable to perfect Lender's
Lien on the Collateral and ensure such Collateral is free and clear of
other Liens.
5. POWER OF ATTORNEY. Powers of Attorney duly executed by each Credit
Party executing the Agreement.
6. INTERCOMPANY NOTES. The originals of the Subordinated Intercompany
Notes, duly endorsed to the order of Lender.
THIRD PARTY AGREEMENTS.
1. LANDLORD AND MORTGAGEE CONSENTS. Unless otherwise agreed to in writing
by Lender, duly executed landlord and mortgagee waivers and consents
from the landlords and mortgagees of all of each Borrower's leased or
owned locations where Collateral is held, in each case, in form and
substance satisfactory to Lender.
57
2. CASH MANAGEMENT SYSTEM. Duly executed Lock Box Account Agreements and,
if required by Lender, pledged account agreements in respect of the
Disbursement Accounts as contemplated by Schedule D.
3. GUARANTEES. Guarantees executed by each Credit Party that is not a
Borrower.
OTHER DOCUMENTS.
1. SECRETARY CERTIFICATE. A Secretary Certificate in the form of Exhibit H
to the Agreement duly completed and executed by the Secretary of each
Credit Party executing the Agreement, together with all attachments
thereto.
2. FINANCIAL STATEMENTS AND PROJECTIONS. Copies of the Financial
Statements and Projections, which Projections shall include a capital
expenditures budget for Borrowers in form and substance satisfactory to
Lender.
4. INSURANCE POLICIES. Certified copies of insurance policies described in
Section 3.16, together with evidence showing loss payable or additional
insured clauses or endorsements in favor of Lender.
5. EXISTING LEASE AGREEMENTS. Copies of any existing real property leases
and equipment leases to which each Borrower is a party and any other
document or instrument evidencing or relating to existing Indebtedness
of Borrowers, together with all certificates, opinions, instruments,
security documents and other documents relating thereto, all of which
shall be satisfactory in form and substance to Lender, certified by an
authorized officer of Borrowers as true, correct and complete copies
thereof.
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Schedule G
FINANCIAL COVENANTS
A. DEFINITIONS
As used in this Agreement (including this Schedule G covenant), the following
terms shall have the following meanings:
"EBITDA" shall mean, for any period, the Net Income (Loss) of Parent and its
Subsidiaries on a consolidated basis for such period, PLUS interest expense,
income tax expense, amortization expense, depreciation expense and
extraordinary losses and MINUS extraordinary gains, in each case, of Parent
and its Subsidiaries on a consolidated basis for such period determined in
accordance with GAAP to the extent included in the determination of such Net
Income (Loss).
"FIXED CHARGE COVERAGE RATIO" shall mean, for any period, the ratio of the
following for Parent and its Subsidiaries on a consolidated basis determined
in accordance with GAAP: (a) EBITDA for such period LESS Capital Expenditures
for such period which are not financed through the incurrence of any
Indebtedness (excluding the Revolving Credit Loan) to (b) the sum of (I)
interest expense paid or accrued in respect of any Indebtedness during such
period, PLUS (ii) taxes to the extent accrued or otherwise payable with
respect to such period PLUS (iii) regularly scheduled payments of principal
paid or that were required to be paid on Funded Debt (excluding the Revolving
Credit Loan) during such period PLUS (iv) any decreases to consolidated
shareholders equity resulting from treasury stock purchases or dividends
distributed or declared.
"FUNDED DEBT" shall mean, for any Person, all of such Person's Indebtedness
which by the terms of the agreement governing or instrument evidencing such
Indebtedness matures more than one year from, or is directly or indirectly
renewable or extendible at the option of such Person under a revolving credit
or similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from, the date of creation thereof, including
current maturities of long-term debt, revolving credit, and short-term debt
extendible beyond one year at the option of such Person but excluding capital
leases.
"NET INCOME (LOSS)" shall mean with respect to any Person and for any period,
the aggregate net income (or loss) after taxes of such Person for such
period, determined in accordance with GAAP.
"TANGIBLE NET WORTH" shall mean, with respect to Parent and its Subsidiaries,
at any date, the total consolidated assets (excluding any assets attributable
to any issuances by Parent or any of its Subsidiaries of any Stock after the
Closing Date and excluding any intangible assets) minus the total
consolidated liabilities (excluding any Subordinated Debt), in each case, of
Parent and its Subsidiaries at such date determined on a consolidated basis
in accordance with GAAP.
"TREASURY STOCK PURCHASE" shall mean the purchase by a Credit Party of One
Million Dollars ($1,000,000) U.S. Treasury stock, which purchase shall be
made by Borrowers only upon the receipt of written consent from Lender, such
consent to be given or withheld by Lender in its sole and unfettered
discretion.
"TARGET ACQUISITION" shall mean the acquisition by a Credit Party of
substantially all of the assets of a target corporation, which acquisition
shall be made by Borrowers only upon the receipt of written consent from
Lender, such consent to be given or withheld by Lender in its sole and
unfettered discretion..
B. COVENANTS
1. FIXED CHARGE COVERAGE RATIO. Parent and its Subsidiaries shall
maintain a Fixed Charge Coverage Ratio of not less than the ratio shown below
for the period corresponding thereto regardless of whether Lender has granted
its consent to the Treasury Stock Purchase or the Target Acquisition:
PERIOD FIXED CHARGE COVERAGE RATIO
59
Fiscal Quarter ending March 31, 2000 1.00 to 1.0
Two Consecutive Fiscal Quarters ending June 30, 2000 1.50 to 1.0
Three Consecutive Fiscal Quarters ending
September 30, 2000 1.65 to 1.0
Fiscal Year Ending December 31, 2000 1.00 to 1.0
Four Consecutive Fiscal Quarters ending March 30, 2001
and Each Period of Four Consecutive Fiscal Quarters
Ending Thereafter 1.10 to 1.0
2. CAPITAL EXPENDITURES. Parent and its Subsidiaries on a consolidated
basis shall not make aggregate Capital Expenditures, other than Capital
Expenditures financed through the incurrence of Indebtedness (excluding the
Revolving Credit Loan), in any Fiscal Year in excess of $1,500,000 regardless
of whether Lender has granted its consent to the Treasury Stock Purchase or
the Target Acquisition.
3. MINIMUM TANGIBLE NET WORTH.
a. Until such time as the Lender shall have granted its
consent either to the Treasury Stock Purchase or the Target Acquisition, the
Parent and its Subsidiaries shall maintain, as at the date set forth below,
Tangible Net Worth on a consolidated basis of not less than the amount set
forth below as of the date corresponding thereto:
DATE MINIMUM NET WORTH
---- -----------------
March 31, 2000 $3,000,000
June 30, 2000 $3,000,000
September 30, 2000 $3,000,000
December 31, 2000 $3,000,000
March 31, 2001 and End of Each
Fiscal Quarter Thereafter $3,400,000
b. Effective upon the granting of Lender's written consent to
the Treasury Stock Purchase, the Parent and its Subsidiaries shall maintain,
as at the date set forth below, Tangible Net Worth on a consolidated basis of
not less than the amount set forth below as of the date corresponding thereto:
DATE MINIMUM NET WORTH
---- -----------------
March 31, 2000 $3,000,000
June 30, 2000 $2,750,000
September 30, 2000 $2,750,000
December 31, 2000 $2,750,000
March 31, 2001 and End of Each
Fiscal Quarter Thereafter $3,000,000
60
c. Effective upon the granting of Lender's written consent to
the Target Acquisition, the Parent and its Subsidiaries shall maintain, as at
the date set forth below, Tangible Net Worth on a consolidated basis of not
less than the amount set forth below as of the date corresponding thereto:
DATE MINIMUM NET WORTH
---- -----------------
March 31, 2000 $3,000,000
June 30, 2000 $1,200,000
September 30, 2000 $1,200,000
December 31, 2000 $1,200,000
March 31, 2001 and End of Each
Fiscal Quarter Thereafter $1,500,000
61
EXHIBIT F
FORM OF REVOLVING CREDIT NOTE
$15,000,000 MAY , 2000
For value received, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, as one of the Borrowers under and as defined
in that certain Loan and Security Agreement (as the same may be amended,
restated or supplemented from time to time, the "Agreement") of even date
herewith among this Borrower, General Electric Capital Corporation, a New
York corporation ("Lender"), and the other parties signatory thereto, hereby
promises to pay to the order of Lender the sum of $15,000,000 or such greater
or lesser amount as shall be advanced by Lender to this Borrower from time to
time, together with interest on the unpaid balance of such amount from the
date of the initial Revolving Credit Advance made to this Borrower. This note
is one of the Revolving Credit Notes issued under the Agreement to which a
reference is made for a statement of all of the terms and conditions of the
Loan evidenced hereby. Capitalized terms not defined in this Note shall have
the respective meanings assigned to them in the Agreement. This Note is
secured by the Agreement, the other Loan Documents and the Collateral, and is
entitled to the benefit of the rights and security provided thereby.
Interest on the outstanding principal balance under this Note is payable at
the Revolving Credit Rate, or, under the circumstances contemplated by the
Agreement, at the Default Rate, in immediately available United States
Dollars at the time and in the manner specified in the Agreement. The
outstanding principal and interest under this Note shall be immediately due
and payable on the Commitment Termination Date. Payments received by Lender
shall be applied against principal and interest as provided for in the
Agreement. Borrower acknowledges that (a) Lender is authorized under the
Agreement to charge to the Revolving Credit Loan unpaid Obligations of
Borrower to Lender, (b) the principal amount of the Revolving Credit Loan
will be increased by such amounts, and (c) the principal, as so increased,
will bear interest as provided for herein and in the Agreement.
To the fullest extent permitted by applicable law, Borrower waives: (a)
presentment, demand and protest, and notice of presentment, dishonor, intent
to accelerate, acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all of the Obligation,
the Loan Documents or this Note; (b) all rights to notice and a hearing prior
to Lender's taking possession or control of, or to Lender's replevy,
attachment or levy upon, the Collateral or any bond or security that might be
required by any court prior to allowing Lender to exercise any of its
remedies; and (c) the benefit of all valuation, appraisal and exemption laws.
Borrower acknowledges that this Note is executed as part of a commercial
transaction and that the proceeds of this Note will not be used for any
personal or consumer purpose.
Upon the occurrence of any one or more of the Events of Default specified in
the Agreement, all amounts then remaining unpaid on this Note shall become,
or may be declared to be, immediately due and payable, all as provided
therein.
Borrower agrees to pay to Lender all Fees and expenses described in the
Agreement.
62
BORROWER ACKNOWLEDGES THAT BORROWER HAS WAIVED THE RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING ON THIS NOTE. THIS NOTE IS GOVERNED
BY THE LAW OF THE STATE OF NEW YORK.
-----------------------------------
("Borrower")
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
63
EXHIBIT G
[INTENTIONALLY LEFT BLANK]
64
EXHIBIT H
SECRETARIAL CERTIFICATE
The undersigned hereby certifies that he or she is the duly elected and acting
Secretary or Assistant Secretary of ________________________, a __________
corporation ("Credit Party"), and as such is the custodian of Credit Party's
Books and Records and is authorized to execute and deliver this Certificate in
connection with the Loans being made to Management Alliance Corporation, a Texas
corporation, Information Systems Consulting Corp., a Texas corporation, Train
International, Inc., a Texas corporation, Preferred Funding Corporation, a Texas
corporation, Datatek Consulting Group Corporation, a Texas corporation, Texcel
Services, Inc., a Pennsylvania corporation, and Mountain, LTD., a Maine
corporation, by General Electric Capital Corporation, as Lender under the Loan
and Security Agreement ("Agreement") of even date herewith. Capitalized terms
not defined in this Certificate shall have the meanings ascribed to them in the
Agreement. In order to induce General Electric Capital Corporation to execute
the Agreement and make the Loans, the undersigned certifies (in his or her
secretarial capacity, and on behalf of Credit Party as follows:
1. Attached as ATTACHMENT 1 is a full, complete, and correct copy of Credit
Party's articles or certificate of incorporation or other creating instrument
("charter") as filed and recorded with the Secretary of State of Texas, which
Charter has not been rescinded or amended and remains in full force and
effect in its entirety.
2. Attached as ATTACHMENT 2 is a copy of a written confirmation from the
Secretary of State of Texas, dated _______, confirming that the Charter of
Credit Party in the form of ATTACHMENT I remains on file and that Credit
Party is a corporation in good standing in the State of Texas.
3. Attached as ATTACHMENT 3 is a copy of the By-Laws of Credit Party, and as
of the Closing Date the By-Laws are in full force and effect and have not
been amended or rescinded.
4. Attached as ATTACHMENT 4 are copies of good standing certificates dated
prior to the Closing Date for each state or jurisdiction in which Credit
Party does business confirming that Credit Party is qualified to engage in
business in such jurisdiction and such qualification is in good standing.
5. Attached as ATTACHMENT 5 are copies of the Resolutions of the Board of
Directors of Credit Party duly adopted by Credit Party's Board of Directors
in a meeting duly called upon proper notice, or by written consent in
conformity with the corporate and other laws of such Credit Party's state of
incorporation and with Credit Party's Charter and Bu-Laws, which Resolutions
authorize (a) Credit Party to execute and deliver the Loan Documents to which
it is a party and to borrow the funds intended to be borrowed thereunder, and
(b) the officers of Credit Party to execute and deliver the Loan Documents to
which it is a party. There is no provision of Credit Party's Charter or
By-Laws limiting or contravening the Resolutions attached as ATTACHMENT 5,
which Resolutions have not been amended, modified, revoked or rescinded and
are in full force and effect.
6. The undersigned officers and employees of Credit Party have been elected
to the positions set forth opposite their respective names below, are
qualified to act in such capacities and to execute and deliver the Loan
Documents on behalf of Credit Party, and the signature set opposite each name
is the authentic signature of such officer or employee:
65
NAME OFFICE SIGNATURE
----------------------- ----------------------- -----------------------
----------------------- ----------------------- -----------------------
IN WITNESS WHEREOF, the undersigned have executed this Certificate on May ,
2000.
-------------------------------
Secretary
The Undersigned, the ___________________________ of Credit Party, hereby
certifies that___________________________ is the Secretary of Credit Party
and is authorized to execute and deliver this Certificate.
---------------------------------
Name:
----------------------------
Date: May , 2000
66
EXHIBIT I
POWER OF ATTORNEY
This Power of Attorney is executed and delivered by
________________________ ("Credit Party"), to General Electric Capital
Corporation (hereinafter referred to as "Attorney"), as Lender, under a Loan
and Security Agreement dated of even date herewith (the "Agreement";
capitalized terms are used herein as defined in the Agreement) among
Management Alliance Corporation, a Texas corporation, Information Systems
Consulting Corp., a Texas corporation, Train International, Inc., a Texas
corporation, Preferred Funding Corporation, a Texas corporation, Datatek
Consulting Group Corporation, a Texas corporation, Texcel Services, Inc., a
Pennsylvania corporation, and Mountain, Ltd., a Maine corporation, Lender and
the other parties thereto. No person to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions
contemplated hereby, shall inquire into or seek confirmation from Credit
Party as to the authority of Attorney to take any action described below, or
as to the existence of or fulfillment of any condition to this Power of
Attorney, which is intended to grant to Attorney unconditionally the
authority to take and perform the actions contemplated herein, and Credit
Party irrevocably waives any right to commence any suit or action, in law or
equity, against any person or entity which acts in reliance upon or
acknowledges the authority granted under this Power of Attorney. The power of
attorney granted hereby is coupled with an interest, and may not be revoked
or canceled by Credit Party without Attorney's written consent upon payment
in full of all Obligations due to Attorney under the Loan Documents.
Credit Party hereby irrevocably constitutes and appoints Attorney
(and all officers, employees or agents designated by Attorney), with full
power of substitution, as Credit Party's true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of Credit
Party and in the name of Credit Party or in its own name, from time to time
in Attorney's discretion, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of the Loan Documents and,
without limiting the generality of the foregoing, Credit Party hereby grants
to Attorney the power and right, on behalf of Credit Party, without notice to
or assent by Credit Party, and at any time, to do the following: (a) change
the address for delivery of mail, open mail for Credit Party, and ask,
demand, collect, give acquittances and receipts for, take possession of,
endorse and receive payment of, any checks, drafts, notes, acceptances, or
other instruments for the payment of moneys due, and sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, and notices in
connection with any property of Credit Party; (b) effect any repairs to any
asset of Credit Party, or continue or obtain any insurance and pay all or any
part of the premiums therefor and costs thereof, and make, settle and adjust
all claims under such policies of insurance, and make all determinations and
decisions with respect to such policies; (c) pay or discharge any taxes,
liens, security interests, or other encumbrances levied or placed on or
threatened against Credit Party or its property; (d) defend any suit, action
or proceeding brought against Credit Party if Credit Party does not defend
such suit, action or proceeding or if Attorney believes that Credit Party is
not pursuing such defense in a manner that will maximize the recovery to
Attorney, and settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or
releases as Attorney may deem appropriate; (e) file or prosecute any claim,
litigation, suit or roceeding in any court of competent jurisdiction or
before any arbitrator, or take any other action otherwise deemed appropriate
by
67
Attorney for the purpose of collecting any and all such moneys due to Credit
Party whenever payable and to enforce any other right in respect of Credit
Party's property; (f) sell, transfer, pledge, compromise payment or make any
other agreement with respect to, or otherwise deal with any property of
Credit Party, and execute, in connection with such sale or action, any
endorsements, assignments or other instruments of conveyance or transfer in
connection therewith; and (g) cause the certified public accountants then
engaged by Credit Party to prepare and deliver to Attorney at any time and
from time to time, promptly upon Attorney's request, the following reports:
(1) a reconciliation of all accounts; (2) an aging of all accounts; (3) trial
balances; (4) test verifications of such accounts as Attorney may request,
and (5) the results of each physical verification of inventory, ALL as though
Attorney were the absolute owner of the property of Credit Party for all
purposes, and to do, at Attorney's option and Credit Party's expense, at any
time or from time to time, all acts and other things that Attorney reasonably
deems necessary to perfect, preserve, or realize upon Credit Party's property
or assets and Attorney's Liens thereon, all as fully and effectively as
Credit Party might do. Credit Party hereby ratifies, to the extent permitted
by law, all that said attorneys shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney is executed by Credit
Party, and Credit Party has caused its seal to be affixed on this ______ day
of May, 2000.
------------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
68
EXHIBIT J
FORM OF CERTIFICATE OF COMPLIANCE
[Use the Letterhead of Credit Parties with this Form]
[Date]
To: Account Manager
This is to certify that in accordance with Section 4.1 (d) of the Loan and
Security Agreement dated May , 2000 (the "Agreement"; capitalized terms are
used herein as defined in the Agreement) that the attached Financial
Statements are complete and true and have been prepared in conformance with
GAAP. In addition there are no Defaults or Events of Default continuing as of
such date [if there are acceptable exceptions, list them].
This is also to certify that each Borrower is able to pay all of its
Indebtedness as such Indebted ness matures and has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is engaging.
Also attached are the covenant calculations used in determining compliance
with the financial covenants contained in Schedule G to the Agreement.
Very truly yours,
-----------------------
Chief Executive Officer
69
CLIENT NAME:
FYE:
COVENANT:
CAS Mo. Rolling Rolling Rolling
EBIT CAP TOT INTER H PRINCIP TOT FIXED 3 mo. 6. mo 12 mo. Require
DA EX AL EST TAX AL AL CHARG FCC FCC FCC d
ES E
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 1
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 2
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 3
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 4
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 5
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 6
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 7
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 8
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 9
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 10
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 11
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
Month 12
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
1st Quarter
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
2nd Quarter
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
3rd Quarter
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
4th Quarter
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
ANNUAL
TOTALS
----------- ------ ---- ---- ------ ----- -------- ---- ------ -------- -------- -------- --------
70
------------------------------------------------
COVENANT: MINIMUM NET WORTH
YEAR ENDING
MINIMUM NW
ACTUAL
--------------------------------------------------------------------
COVENANT: CAPITAL EXPENDITURES
YEAR ENDING
MAXIMUM
ACTUAL
In Compliance: VP Portfolio _______________ Account Manager ________________
71
EXHIBIT K - LOCKBOX ACCOUNT AGREEMENT
THIS LOCKBOX ACCOUNT AGREEMENT ("Agreement") is made and entered
into as of May ____, 2000, by and among ___________________________ ("Bank"),
________________________________________ ("Company"), and GENERAL ELECTRIC
CAPITAL CORPORATION, a New York corporation (together with any successors and
assigns, "Lender").
A. Pursuant to that certain Loan and Security Agreement dated
as of May _____, 2000 among Management Alliance Corporation, a Texas
corporation, Information Systems Consulting Corp., a Texas corporation,
Datatek Consulting Group Corporation, a Texas corporation, Texcel Services,
Inc., a Pennsylvania corporation, and Mountain, Ltd., a Maine corporation, as
borrowers, Lender and the other parties thereto (as amended, supplemented or
otherwise modified from time to time, the "Loan Agreement"), Lender has
agreed to make loans and extend other financial accommodations to Company.
B. Pursuant to an Agreement between Company and Bank (the
"Lockbox Agreement"), Company has established a post office lockbox with Bank
(the "Lockbox") through which cash, checks, money orders and other items of
value of Company are processed by Bank for deposit in Account No. __________
established by Company with Bank (the "Lockbox Account").
C. The parties hereto desire to enter into this Agreement in
order to set forth their relative rights and duties with respect to the
Lockbox, Lockbox Account and all funds on deposit therein from time to time.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. EFFECTIVENESS. This Agreement shall take effect immediately
upon its execution by all parties hereto and shall supersede any blocked
account or similar agreement in effect with respect to the Lockbox or the
Lockbox Account.
2. SECURITY INTEREST; AGENCY. As collateral security for
Company's obligations to Lender under the Loan Agreement and the other loan
documents described therein, Company hereby grants to Lender a present and
continuing security interest in (a) the Lockbox and the Lockbox Account, (b)
all contract rights and privileges in respect of the Lockbox or the Lockbox
Account, and (c) all cash, checks, money orders and other items of value of
Company now or hereafter paid, deposited, credited, held (whether for
collection, provisionally or otherwise) or otherwise in the possession or
under the control of, or in transit to, Bank or any agent, bailee or
custodian thereof (collectively, "Receipts"), and all proceeds of the
foregoing, and Bank acknowledges that this Agreement constitutes notice, in
accordance with the Uniform Commercial Code, of Lender's security interest in
such collateral. Lender hereby appoints Bank as Lender's bailee and
pledgee-in-possession for the Lockbox, Lockbox Account and all Receipts, and
Bank hereby accepts such appointment and
72
agrees to be bound by the terms of this Agreement. Company hereby agrees to
such appointment and further agrees that Bank, on behalf of Lender, shall be
entitled to exercise, upon the written instructions of Lender, any and all
rights which Lender may have under the Loan Agreement, the other loan
documents described therein or under applicable law with respect to the
Lockbox, Lockbox Account, all Receipts and all other collateral described in
this paragraph 2.
3. CONTROL OF LOCKBOX ACCOUNT. The Lockbox and the Lockbox
Account shall be under the sole dominion and control of Lender and shall be
maintained by Bank in the name of "_________________________."
Notwithstanding anything set forth herein to the contrary, neither Company
nor any other person or entity, through or under Company, shall have any
control over the use of, or any right to withdraw any amount from, the
Lockbox Account or the Lockbox.
4. PROCEDURES FOR LOCKBOX ACCOUNT. Bank shall follow the
following procedures with respect to the Lockbox Account:
(a) Bank shall have exclusive and unrestricted access
to the Lockbox and shall have complete and exclusive authority to receive,
pickup and open all regular, registered, certified or insured mail addressed
to Company at the Lockbox (the "Mail") pursuant to the terms of the Lockbox
Agreement.
(b) Bank shall open all Mail addressed to the Lockbox
and remove and inspect the enclosures. Bank shall apply and credit for
deposit to the Lockbox Account all Receipts consisting of checks, money
orders, drafts, collection remittances and other instruments or items of
value from time to time tendered by or on behalf of Company for deposit
(collectively, "Checks") in the Lockbox Account in accordance with the
Lockbox Agreement or otherwise, and apply and credit to the Lockbox Account
all Receipts from time to time tendered by or on behalf of Company for
deposit therein, including without limitation all wire transfers and other
payments directed to the Lockbox Account. Checks bearing the legend "Payment
in Full" or words of similar import, either typed or handwritten, shall be
withheld from the clearing system and sent to Company or, at any time after
written notice by Lender, to Lender.
(c) Bank shall determine, on each business day, the
balance of all available funds on deposit in the Lockbox Account and
automatically initiate a federal funds wire transfer of all such funds not
later than 10:00 a.m. (New York Time) on such business day to the account
designated below, or to such other account as may be designated in writing
from time to time by Lender (the "Collection Account"):
Bankers Trust Company
One Bankers Trust Plaza
New York, New York
ABA No. 000-000-000
Account No. 00-000-000 in the name of GECC CAF Depository
5. STATEMENTS AND OTHER INFORMATION. Bank shall send to Lender
copies of all
73
returned and dishonored Receipts promptly upon Bank's receipt thereof, and
upon Lender's request Bank shall provide Lender with copies of the regular
monthly bank statements provided to Company and such other information
relating to the Lockbox Account as shall reasonably be requested by Lender.
Bank shall also deliver a copy of all notices and statements required to be
sent to Company pursuant to any agreement governing or related to the Lockbox
Account (including the Lockbox Agreement).
6. FEES. Company agrees to pay on demand all usual and
customary service charges, transfer fees and account maintenance fees
(collectively, "Fees") of Bank in connection with the Lockbox and Lockbox
Account. In the event Company fails to timely make a payment to Bank of any
Fees, Bank may thereafter exercise its right of set-off against the Lockbox
Account for such amounts. Lender shall not have any responsibility or
liability for the payment of any Fees.
7. UNCOLLECTED FUNDS. If any Checks or other Receipts
deposited in the Lockbox Account are returned unpaid or otherwise dishonored
Bank shall have the right to charge any and all such returned or dishonored
items against the Lockbox Account or to demand reimbursement therefor
directly from Company.
8. SET-OFF. Bank hereby agrees that, prior to the effective
date of a termination of this Agreement, Bank will not exercise or claim any
right of set-off or banker's lien against the Lockbox, Lockbox Account or any
Receipts on deposit therein, and Bank hereby further waives until such date
any such right or lien which it may have against any Receipts deposited in
the Lockbox Account, except to the extent expressly set forth in paragraphs 6
and 7 above.
9. EXCULPATION OF BANK; INDEMNIFICATION BY COMPANY. Company
and Lender agree that Bank shall have no liability to either of them for any
loss or damage that either or both may claim to have suffered or incurred,
either directly or indirectly, by reason of this Agreement or any transaction
or service contemplated by the provisions hereof, unless occasioned by the
gross negligence or willful misconduct of Bank. In no event shall Bank be
liable for losses or delays resulting from computer malfunction, interruption
of communication facilities, labor difficulties or other causes beyond Bank's
reasonable control or for indirect, special or consequential damages. Company
agrees to indemnify Bank and hold it harmless from and against any and all
claims, other than those ultimately determined to be founded on gross
negligence or willful misconduct of Bank, and from and against any damages,
penalties, judgments, liabilities, losses or expenses (including reasonable
attorney's fees and disbursements) incurred as a result of the assertion of
any claim, by any person or entity, arising out of, or otherwise related to,
any transaction conducted or service provided by Bank through the use of any
account or Lockbox at Bank pursuant to the procedures provided for or
contemplated by this Agreement.
10. TERMINATION. This Agreement may be terminated by Company
only upon delivery to Bank of a written notification thereof jointly executed
by Company and Lender. This Agreement may be terminated by Lender at any
time, with or without cause, upon its delivery of written notice thereof to
each of Company and Bank. This Agreement may be terminated by Bank at any
time on not less than 30 days prior written notice delivered to each of
Company and Lender.
74
Upon delivery or receipt of such notice of termination to or by Bank, Bank
will: (a) immediately transmit to the Collection Account (i) all funds, if
any, then on deposit in, or otherwise to the credit of, the Lockbox Account,
and (ii) upon receipt, all Receipts (other than Checks) received after such
notice for deposit in, or otherwise to the credit of, the Lockbox Account;
and (b) deliver directly to Lender all Checks, whether then in the possession
of Bank or received by Bank after such notice, without depositing such Checks
in the Lockbox Account or any other account. The provisions of paragraphs 2,
3 and 8 shall survive termination of this Agreement unless and until
specifically released by Lender in writing. All rights of Bank under
paragraphs 6, 7 and 9 shall survive any termination of this Agreement.
11. IRREVOCABLE AGREEMENTS. Company acknowledges that the
agreements made by it and the authorizations granted by it in paragraphs 2,
3, and 4 hereof are irrevocable and that the authorizations granted in
paragraphs 2, 3 and 4 hereof are powers coupled with an interest.
12. NOTICES. All notices, requests or other communications
given to Company, Lender or Bank shall be given in writing (including by
facsimile) at the address specified below:
Lender: General Electric Capital Corporation
Suite 350, 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Diversified Corporate Resources, Inc. and
Subsidiaries - Account Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
Bank:
-----------------------------
Attention:
-----------------------------
Telephone:
-----------------------------
Facsimile:
-----------------------------
Company: Diversified Corporate Resources, Inc.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
Telephone: 000-000-0000
Facsimile: 000-000-0000
Any party may change its address for notices hereunder by notice to each
other party hereunder given
75
in accordance with this paragraph 12. Each notice, request or other
communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this paragraph
12 and confirmation of receipt is made by the appropriate party, (b) if given
by overnight courier, 24 hours after such communication is deposited with the
overnight courier for delivery, addressed as aforesaid, or (c) if given by
any other means, when delivered at the address specified in this paragraph 12.
13. MISCELLANEOUS.
(a) This Agreement may be amended only by a written
instrument executed by Lender, Bank, and Company acting by their respective
duly authorized representatives.
(b) This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns, but neither Company nor Bank shall be entitled to assign or
delegate any of its rights or duties hereunder without first obtaining the
express prior written consent of Lender.
(c) This Agreement may be executed in any number of
several counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS MADE AND PERFORMED WITHIN SUCH STATE.
76
IN WITNESS WHEREOF, each of the parties has executed and delivered
this Lockbox Account Agreement as of the day and year first above set forth.
-------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By:
---------------------------------
Name: Xxxxx X. Xxxxxx
Title: Duly Authorized Signatory
77
EXHIBIT L
LANDLORD'S WAIVER AND CONSENT
THIS LANDLORD'S WAIVER AND CONSENT ("Waiver and Consent") is made
and entered into as of May _____, 2000 by and among
__________________________ ("Landlord"), ________________________________
("Company"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
(together with any successors and assigns, "Lender").
A. Landlord is the owner of the real property commonly known
as [common name of this premises], and as more fully described in APPENDIX A
attached hereto (the "Premises").
B. Landlord has entered into that certain lease agreement
dated ______________________ (together with all amendments and modifications
thereto and waivers thereof, the "Lease") with Company pursuant to which
Company has acquired a leasehold interest in all or a portion of the Premises.
C. Lender has previously entered into or is about to enter
into certain financing transactions with Company, and to secure such
financing Company has granted to Lender a security interest in and lien upon
certain of the tangible and intangible property of Company, including,
without limitation, all of Company's cash, cash equivalents, goods,
inventory, machinery, equipment, furniture and fixtures, together with all
additions, substitutions, replacements and improvements to, and proceeds of,
the foregoing (collectively, the "Collateral").
NOW, THEREFORE, in consideration of any financial accommodation
extended by Lender to Company at any time, and other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged,
the parties agree as follows:
1. Landlord acknowledges that (a) a true and correct copy of
the Lease as in effect as of the date hereof is attached hereto as APPENDIX
B, (b) the Lease is in full force and effect and (c) Landlord is not aware of
any existing default under the Lease.
2. Landlord agrees to provide Lender with (a) a copy of any
cancellation, amendment, consent, or waiver under the Lease, and (b) written
notice of any default by Company or claimed default under the Lease (a
"Default Notice") at the same time as it sends such notice to Company;
PROVIDED, that (i) Lender shall have at least 15 days following receipt of
such Default Notice to cure such default before the Lease terminates, and
(ii) Lender shall not be under any obligation to cure any default by Company
under the Lease. No action by Lender pursuant to this Waiver and Consent
shall constitute or be deemed to be an assumption by Lender of any obligation
under the Lease, and, except as provided in paragraphs 6 and 7 below, Lender
shall not have any obligation to Landlord.
78
3. Landlord acknowledges the validity of Lender's lien on the
Collateral and, until such time as the obligations of Company to Lender are
indefeasibly paid in full, Landlord waives any interest in the Collateral and
agrees not to distrain or levy upon any Collateral or to assert any landlord
lien, right of distraint or other claim against the Collateral for any reason.
4. Landlord agrees that the Collateral may be stored,
utilized, and/or installed at the Premises and shall not be deemed a fixture
or part of the real estate but shall at all times be considered personal
property, whether or not any Collateral becomes so related to the real estate
that an interest therein would otherwise arise under applicable law.
5. Prior to a termination of the Lease, Lender or its
representatives or invitees may enter upon the Premises at any time without
any interference by Landlord to inspect or remove any or all of the
Collateral, including, without limitation, by public auction or private sale
pursuant to the provisions of paragraph 7 below.
6. Upon a termination of the Lease, Landlord will permit
Lender and its representatives and invitees to occupy and remain on the
Premises; PROVIDED, that (a) such period of occupation (the "Disposition
Period") shall not exceed up to 150 days following receipt by Lender of a
Default Notice or, if the Lease has expired by its own terms (absent a
default thereunder), up to 45 days following Lender's receipt of written
notice of such expiration, (b) for the actual period of occupancy by Lender,
Lender will pay to Landlord the basic rent due under the Lease pro-rated on a
per diem basis determined on a 30-day month, and shall provide and retain
liability and property insurance coverage, electricity and heat to the extent
required by the Lease, and (c) such amounts paid by Lender to Landlord shall
exclude any rent adjustments, indemnity payments or similar amounts payable
under the Lease for default, holdover status or other similar charges.
7. During any Disposition Period, (a) Lender and its
representatives and invitees may inspect, repossess, remove and otherwise
deal with the Collateral, and Lender may advertise and conduct public
auctions or private sales of the Collateral at the Premises, in each case
without interference by Landlord or liability of Lender to Landlord, and (b)
Lender shall make the Premises available for inspection by Landlord and
prospective tenants and shall cooperate in Landlord's reasonable efforts to
re-lease the Premises. If Lender conducts a public auction or private sale of
the Collateral at the Premises, Lender shall use reasonable efforts to notify
Landlord first and to hold such auction or sale in a manner which would not
unduly disrupt Landlord's or any other tenant's use of the Premises. Lender
shall promptly repair, at Lender's expense, any physical damage to the
Premises actually caused by the conduct of such auction or sale and any
removal of Collateral by or through Lender (ordinary wear and tear excluded).
Lender shall not be liable for any diminution in value of the Premises caused
by the absence of Collateral actually removed or by any necessity of
replacing the Collateral, and Lender shall have no duty or obligation to
remove or dispose of any Collateral or any other property left on the
Premises by Company.
8. If any order or injunction is issued or stay granted which
prohibits Lender from exercising any of its rights hereunder, then, at
Lender's option, the Disposition Period shall be stayed during the period of
such prohibition and shall continue thereafter for the greater of (a) the
number
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of days remaining in the Disposition Period or (b) 90 days.
9. NOTICES. All notices hereunder shall be in writing, sent by
certified mail, return receipt requested, to the respective parties and the
following addresses:
Lender: General Electric Capital Corporation
Suite 350, 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Diversified Corporate Resources, Inc. and
Subsidiaries - Account Manager
Telephone: 000-000-0000
Facsimile: 000-000-0000
Bank:
-------------------------------------
-------------------------------------
Attention:
-------------------------------------
Telephone:
-------------------------------------
Facsimile:
-------------------------------------
Company: Diversified Corporate Resources, Inc.
00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
Telephone: 000-000-0000
Facsimile: 000-000-0000
10. MISCELLANEOUS. This Waiver and Consent may be executed in
any number of several counterparts, shall be governed and controlled by, and
interpreted under, the laws of the State of New York, and shall inure to the
benefit of Lender and its successors and assigns and shall be binding upon
Landlord and its successors and assigns (including any transferees of the
Premises). Landlord agrees and consents to the filing of this document for
recording in the land records of the county in which the Premises is located.
80
IN WITNESS WHEREOF, this Landlord's Waiver and Consent is entered
into as of the date first set forth above.
-------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-------------------------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Duly Authorized Signatory
81
APPENDIX A TO EXHIBIT L
LEGAL DESCRIPTION OF PREMISES
00
XXXXXXXX X TO EXHIBIT L
COPY OF LEASE OF PREMISES
See attached.
83
EXHIBIT M
FORM OF SUBSIDIARY JOINDER AGREEMENT
SUBSIDIARY JOINDER AGREEMENT
THIS SUBSIDIARY JOINDER AGREEMENT (this "Agreement") made and executed
this ______ day of _________________, 20__, by ________________________________,
a _____________________ (the "New Subsidiary"); MANAGEMENT ALLIANCE CORPORATION,
a Texas corporation, INFORMATION SYSTEMS CONSULTING CORP., a Texas corporation,
DATATEK CONSULTING GROUP CORPORATION, a Texas corporation, TEXCEL SERVICES,
INC., a Pennsylvania corporation, and MOUNTAIN, LTD., a Maine corporation ( the
"Borrowers" and each a "Borrower"), DIVERSIFIED CORPORATE RESOURCES, INC., a
Texas corporation ("Parent"), any other Credit Party executing the Loan
Agreement (as hereinafter described), and GENERAL ELECTRIC CAPITAL CORPORATION,
a New York corporation ("Lender").
WITNESSETH
WHEREAS, the Borrowers, the Parent, the other Credit Parties and Lender
are parties to a certain Loan and Security Agreement, dated May ___, 2000 (such
Loan and Security Agreement, as it may previously have been and may hereafter be
amended, modified, supplemented or restated from time to time, being herein
called the "Loan Agreement"), pursuant to which Lender has agreed to make loans
and extend credit to Borrowers, all as more particularly described therein;
WHEREAS, the Loan Agreement prohibits a Borrower or any other Credit
Party from forming any Subsidiary unless the conditions precedent set forth in
the Loan Agreement are first satisfied, one of which is that the New Subsidiary
execute and deliver this Agreement by which it shall join in the execution of
the Loan Agreement as an additional Credit Party, become a Guarantor of all of
the Obligations owing to Lender in connection with the Loan Agreement, and grant
Lender a Lien in all of the Collateral of the New Subsidiary;
WHEREAS, the Borrowers, the Parent, the other Credit Parties, and the
New Subsidiary share an identity of interests as members of a consolidated group
of companies engaged in substantially similar businesses, and the making of the
Loans has facilitated expansion and enhanced the overall financial strength and
stability of the Parent's corporate group, including the New Subsidiary;
WHEREAS, the New Subsidiary, the Parent, the Borrowers and the other
Credit Parties desired to execute and deliver this Agreement to satisfy one of
the conditions precedent to the formation of the New Subsidiary;
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable
84
consideration, the receipt and sufficiency of which are hereby acknowledged,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. DEFINED TERMS. Capitalized terms not otherwise defined
herein which are used in this Agreement are used herein with the meanings
specified for such terms in the Loan Agreement.
2. ADDITIONAL CREDIT PARTY. The New Subsidiary agrees that it
shall be and become a Credit Party for all purposes of the Loan Agreement and
shall be fully obligated and liable thereunder, as well as any Loan Document
to which it is or may become a party, to the same extent and with the same
effect as though the New Subsidiary had been one of the Credit Parties
originally executing and delivering the Loan Agreement. Without limiting the
generality of the foregoing, the New Subsidiary hereby grants to the Lender,
as collateral security for the prompt and complete payment and performance of
the Obligations, a security interest in and Lien upon all of its property and
assets, whether real or personal, tangible or intangible, and whether now
owned or hereafter acquired, or in which it now has or at any time in the
future may acquire any right, title, or interest, including all of the
following property in which it now has or at any time in the future may
acquire any right, title or interest: all Accounts; all bank and deposit
accounts and all funds on deposit therein; all cash and cash equivalents; all
commodity contracts; all investments, Stock and Investment Property; all
Inventory and Equipment; all Goods; all Chattel Paper, Documents and
Instruments; all Books and Records; all General Intangibles; and to the
extent not otherwise included, all Proceeds and products of all and any of
the foregoing and all collateral security and guarantees given by any Person
with respect to any of the foregoing, but excluding in all events Hazardous
Waste. All references in the Loan Agreement or any of the other Loan
Documents to the "Credit Parties" or a "Credit Party" shall be deemed to
include and to refer to the New Subsidiary.
3. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
THEREOF REGARDING CONFLICTS OF LAWS.
4. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.
(A) EACH BORROWER, THE PARENT, EACH OTHER CREDIT PARTY AND THE NEW
GUARANTOR HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS LOCATED IN
NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN SUCH BORROWER, THE PARENT, SUCH CREDIT PARTY, THE NEW
SUBSIDIARY AND THE LENDER PERTAINING TO THIS AGREEMENT, THE LOAN AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED,
THAT THE LENDER, SUCH BORROWER, THE PARENT, SUCH CREDIT PARTY AND THE NEW
SUBSIDIARY ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF NEW YORK; AND FURTHER PROVIDED, THAT NOTHING IN
THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
85
PRECLUDE THE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY
OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE LENDER. EACH BORROWER, THE PARENT, EACH OTHER
CREDIT PARTY EXECUTING THIS AGREEMENT AND THE NEW SUBSIDIARY EACH EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH BORROWER, THE PARENT, EACH OTHER CREDIT
PARTY AND THE NEW SUBSIDIARY EACH HEREBY WAIVES ANY OBJECTION WHICH IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. EACH BORROWER, THE PARENT, EACH OTHER CREDIT PARTY, AND THE NEW
SUBSIDIARY EACH HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF
SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL ADDRESSED TO SUCH BORROWER, THE PARENT OR SUCH OTHER CREDIT
PARTY AT THE ADDRESS SET FORTH IN SCHEDULE B OF THE LOAN AGREEMENT OR, IN THE
CASE OF THE NEW SUBSIDIARY, AT THE ADDRESS SET FORTH BELOW ITS SIGNATURE
BELOW, AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
SUCH PARTY'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID.
(B) THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING
IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE LENDER, ANY BORROWER, THE PARENT,
ANY OTHER CREDIT PARTY OR THE NEW SUBSIDIARY ARISING OUT OF, CONNECTED WITH,
RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH THIS AGREEMENT, THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS RELATED HERETO AND THERETO.
5. COUNTERPARTS. This Agreement may be executed in any number
of separate counterparts by one or more of the parties hereto, and all of
said counterparts taken together shall constitute one and the same instrument.
86
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto on the day and year first above written.
Address for Notices: NEW SUBSIDIARY:
__________________
__________________ ______________________________________________
__________________ [Name of New Subsidiary]
By:___________________________________________
Name:_________________________________________
Title:________________________________________
BORROWERS:
MANAGEMENT ALLIANCE CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
INFORMATION SYSTEMS CONSULTING CORP.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
DATATEK CONSULTING GROUP CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
87
TEXCEL SERVICES, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
MOUNTAIN, LTD.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
OTHER CREDIT PARTIES:
DIVERSIFIED CORPORATE RESOURCES, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
PREFERRED FUNDING CORPORATION
By:___________________________________________
Name:_________________________________________
Title:________________________________________
MAGIC NORTHEAST, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
88
[Signatures of any other Credit Parties]
LENDER:
GENERAL ELECTRIC CAPITAL CORPORATION
By____________________________________________
Name:_________________________________________
Title: Duly Authorized Signatory
89
EXHIBIT N
GUARANTEE
GUARANTEE, dated as of May ____, 2000, made by ________________ (the
"GUARANTOR"), in favor of GENERAL ELECTRIC CAPITAL CORPORATION, as Lender (the
"LENDER") under the Loan Agreement referred to below.
W I T N E S S E T H:
WHEREAS, pursuant to the Loan and Security Agreement dated as of even
date herewith (as the same may be amended, supplemented or otherwise modified
from time to time, the "LOAN AGREEMENT") among Management Alliance Corporation,
a Texas corporation, Information Systems Consulting Corp., a Texas corporation,
Datatek Consulting Group Corporation, a Texas corporation, Texcel Services,
Inc., a Pennsylvania corporation, and Mountain, Ltd., a Maine corporation (each
a "BORROWER" and, collectively, the "BORROWERS"), Lender and the parties
thereto, the Lender has agreed to make extensions of credit to the Borrowers
upon the terms and subject to the conditions set forth therein;
WHEREAS, it is a condition precedent to the effectiveness of the Loan
Agreement that the Guarantor guarantee payment and performance of the Borrowers'
obligations under the Loan Agreement and the other Loan Documents;
WHEREAS, the Guarantor is interested in the financial success of each
Borrower and it is in the best interests of the Guarantor for the Lender to make
loans and extend credit to the Borrowers under the Loan Agreement;.
NOW, THEREFORE, to induce the Lender to enter into the Loan Agreement
and to induce the Lender to make its extensions of credit to the Borrowers under
the Loan Agreement and for other consideration the receipt and sufficiency of
which is hereby acknowledged, the Guarantor hereby agrees with the Lender as
follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms defined in
the Loan Agreement and used herein shall have the meanings given to them in the
Loan Agreement.
(b) As used herein, "OBLIGATIONS" shall mean all loans, advances,
debts, expense reimbursement, fees, liabilities, and obligations, for the
performance of covenants, tasks or duties
90
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or amounts are liquidated or determinable) owing by
any Borrower and any other Credit Party to Lender, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or other
instrument, whether arising under any of the Loan Documents or under any
other agreement between any Borrower, such Credit Party and Lender, and all
covenants and duties regarding such amounts. This term includes all
principal, interest (including interest accruing at the then applicable rate
provided in the Loan Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in the Loan Agreement after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), Fees, Charges,
expenses, attorneys' fees and any other sum chargeable to any Borrower under
any of the Loan Documents, and all principal and interest due in respect of
the Loans and all obligations and liabilities of the Guarantor under this
Guarantee.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee, and section and
paragraph references are to this Guarantee unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. GUARANTEE. (a) The Guarantor hereby unconditionally and irrevocably
guarantees to the Lender and its successors, indorsees, transferees and assigns,
the prompt and complete payment and performance by the Borrowers when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
(b) The Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Lender in enforcing, or obtaining advice of counsel
in respect of, any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting against,
the Guarantor under this Guarantee.
(c) The Guarantor agrees that the Obligations may at any time and
from time to time exceed the amount of the liability of the Guarantor hereunder
without impairing this Guarantee or affecting the rights and remedies of the
Lender hereunder.
(d) No payment or payments made by any Borrower, any other
guarantor or any other Person or received or collected by the Lender from any
Borrower, any other guarantor or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Obligations shall be deemed to
modify, reduce,
91
release or otherwise affect the liability of the Guarantor hereunder which
shall, notwithstanding any such payment or payments, other than payments made
by the Guarantor in respect of the Obligations or payments received or
collected from the Guarantor in respect of the Obligations, remain liable for
the Obligations hereunder until the Obligations are indefeasibly paid in full.
(e) The Guarantor agrees that whenever, at any time, or from time
to time, it shall make any payment to the Lender on account of its liability
hereunder, it will notify the Lender in writing that such payment is made under
this Guarantee for such purpose.
3. NO SUBROGATION. Notwithstanding any payment or payments made by the
Guarantor hereunder or any set-off or application of funds of the Guarantor by
the Lender, the Guarantor shall not be entitled to be subrogated to any of the
rights of the Lender against any Borrower or any other guarantor or any
collateral security or guarantee or right of offset held by the Lender for the
payment of the Obligations, nor shall the Guarantor seek or be entitled to seek
any contribution or reimbursement from any Borrower or any other Person in
respect of payments made by the Guarantor hereunder until all amounts owing to
the Lender by the Borrowers on account of the Obligations are indefeasibly paid
in full. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all of the Obligations shall not have been
indefeasibly paid in full, such amount shall be held by the Guarantor in trust
for the Lender, segregated from other funds of the Guarantor and shall forthwith
upon receipt by the Guarantor, be turned over to the Lender in the exact form
received by the Guarantor (duly indorsed by the Guarantor to the Lender, if
required), to be applied against the Obligations, whether matured or unmatured,
in such order as the Lender may elect.
4. AMENDMENTS, ETC. WITH RESPECT TO THE OBLIGATIONS; WAIVER OF RIGHTS.
The Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against the Guarantor and without notice to or further
assent by the Guarantor, any demand for payment of any of the Obligations made
by the Lender may be rescinded and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Lender, and the Loan Agreement and the other Loan Documents and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Lender) may
deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by the Lender for the payment of the
Obligations may be sold, exchanged, waived, surrendered or released. The Lender
shall not have any obligation to protect, secure, perfect or insure any Lien at
any time held by it as security for the Obligations or for this Guarantee or any
property subject thereto. When making any demand hereunder against the
Guarantor, the Lender may, but shall be under no obligation to, make a similar
demand on the Borrowers or any other guarantor, and any failure by the Lender to
make any such demand or to collect any payments from any Borrower or any such
other guarantor or any release of any Borrower or such other or guarantor shall
not relieve the Guarantor of the obligations or liabilities hereunder, and shall
not impair or affect the rights and remedies, express or implied,
92
or as a matter of law, of the Lender against the Guarantor. For the purposes
hereof "demand" shall include the commencement and continuance of any legal
proceedings.
5. GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Guarantor waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Lender upon this Guarantee
or acceptance of this Guarantee, and the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon this Guarantee; and all dealings
between the Borrowers and the Guarantor, on the one hand, and the Lender on the
other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon this Guarantee. The Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrowers or the Guarantor with respect to the Obligations. The
Guarantor understands and agrees that this Guarantee shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
(a) the validity, regularity or enforceability of the Loan Agreement, or any
other Loan Document, any of the Obligations or any other collateral security
therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Lender (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by any Borrower against the Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of any Borrower
or the Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of any Borrower for the Obligations, or of the
Guarantor under this Guarantee, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against any Guarantor, the Lender
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against the Borrowers or any other Person or against any collateral
security or guarantee for the Obligations or any right of offset with respect
thereto, and any failure by the Lender to pursue such other rights or remedies
or to collect any payments from any Borrower or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of any Borrower or any such other Person or any
such collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Lender against the Guarantor. This Guarantee shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantor and the successors and assigns thereof, and shall inure to the benefit
of the Lender, and its successors, indorsees, transferees and assigns, until all
the Obligations and the obligations of the Guarantor under this Guarantee shall
have been satisfied by indefeasible payment in full in cash.
6. REINSTATEMENT. This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Borrower or the Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, any Borrower or the Guarantor or any substantial part of its
property, or otherwise, all as though such payments had not been made.
93
7. PAYMENTS. The Guarantor hereby guarantees that payments hereunder
will be paid to the Lender without set-off or counterclaim in U.S. Dollars at
the office of the Lender located at 0000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX
00000.
8. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and
warrants that:
(a) (i) it is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the power and
authority and the legal right to own and operate its property, to lease the
property it operates and to conduct the business in which it is currently
engaged, (ii) it has the power and authority and the legal right and capacity to
execute and deliver, and to perform its obligations under, this Guarantee and
has taken all necessary action to authorize its execution, delivery and
performance of this Guarantee;
(b) this Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, general equitable principles and an implied
covenant of good faith and fair dealing;
(c) the execution, delivery and performance of this Guarantee will
not violate any provision of any Requirement of Law or Contractual Obligation of
the Guarantor and will not result in or require the creation or imposition of
any Lien on any of the properties or revenues of the Guarantor pursuant to any
Requirement of Law or Contractual Obligation of the Guarantor;
(d) no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, any shareholder or creditor of the Guarantor) is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guarantee;
(e) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of the
Guarantor, threatened by or against the Guarantor or against any of its
properties or revenues (1) with respect to this Guarantee or any of the
transactions contemplated hereby, (2) which could have a material adverse effect
on the business, property, or financial or other condition of the Guarantor;
(f) the statements concerning the financial condition and net
worth of Guarantor previously provided to the Lender are true and correct; there
is no event, fact, circumstance or condition known to Guarantor which is
inconsistent with such statements or is required to be disclosed in order to
94
cause such statements not to be misleading.
The Guarantor agrees that the foregoing representations and warranties
shall be deemed to have been made by the Guarantor on the date of each borrowing
by any Borrower under the Loan Agreement on and as of such date of borrowing as
though made hereunder on and as of such date.
9. NOTICES. All notices, requests and demands to or upon the Lender or
the Guarantor to be effective shall be in writing (or by telex, fax or similar
electronic transfer) and shall be deemed to have been duly given or made (1)
when delivered by hand or (2) if given by mail, when deposited in the mails by
certified mail, return receipt requested, or (3) if by telex, fax or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
(a) if to the Lender, at its address or transmission number for
notices provided in the Loan Agreement; and
(b) if to the Guarantor, at its address or transmission number for
notices set forth provided in the Loan Agreement.
The Lender, and the Guarantor may change their respective addresses and
transmission numbers for notices by notice in the manner provided in this
Section.
10. SEVERABILILITY. Any provision of this Guarantee which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. INTEGRATION. This Guarantee represents the agreement of the
Guarantor with respect to the subject matter hereof and there are no promises or
representations by the Lender relative to the subject matter hereof not
reflected herein.
12. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES. (a) None of
the terms or provisions of this Guarantee may be waived, amended, supplemented
or otherwise modified except by a written instrument executed by the Guarantor
and the Lender, provided that any provision of this Guarantee may be waived by
the Lender in a letter or agreement executed by the Lender or by telex or
facsimile transmission from the Lender.
95
(b) The Lender shall not by any act (except by a written
instrument pursuant to paragraph 12(a) hereof), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by the
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Lender would otherwise have
on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
13. SECTION HEADINGS. The section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
14. SUCCESSORS AND ASSIGNS. This Guarantee shall be binding upon the
successors and assigns of the Guarantor and shall inure to the benefit of the
Lender and its successors and assigns.
15. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
16. SUBMISSION TO JURISDICTION; WAIVERS. The Guarantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Guarantee or any other Loan Document to which it is
a party, or for recognition and enforcement of any judgment in respect thereof,
to the non-exclusive general jurisdiction of the courts of the State of New
York, the courts of the United States of America located in the state of New
York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives trial by jury and any objection that it may now or
hereafter have to the venue of any such action or proceeding in any such court
or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same;
96
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such
Guarantor at its address set forth under its signature below or at such other
address of which the Lender shall have been notified pursuant to Section 9; and
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to xxx in any other jurisdiction.
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered as of the day and year first above written.
__________________________________________
By:_______________________________________
Name:_____________________________________
Title:____________________________________
97
EXHIBIT O
FORM OF OPINION OF COUNSEL TO THE CREDIT PARTIES
(Use Letterhead of Counsel to Credit Parties with this Form)
May , 2000
General Electric Capital Corporation
Suite 350, 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel to Management Alliance Corporation, a Texas
corporation, Information Systems Consulting Corp., a Texas corporation, Datatek
Consulting Group Corporation, a Texas corporation, Texcel Services, Inc., a
Pennsylvania corporation, and Mountain, Ltd., a Maine corporation (the
"Borrowers" and, individually, a "Borrower"), and Diversified Corporate
Resources, Inc., a Texas corporation, Preferred Funding Corporation, a Texas
corporation, and Mountain Northeast, Inc., a Delaware corporation (the
"Guarantor" and, together with the Borrowers, the "Credit Parties" and,
individually, a "Credit Party"), in connection with the preparation,
authorization, execution and delivery of, and the consummation of the
transactions contemplated by, the Loan and Security Agreement dated as of even
date herewith (the "Loan Agreement") among you and the Credit Parties. Terms
defined in the Loan Agreement and not otherwise defined herein are used herein
as therein defined. This opinion is delivered to you pursuant to Section 2.1 of
the Loan Agreement.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Loan Agreement, the Notes,
[list all other Loan Documents] (collectively, the "Loan Documents") and such
corporate records, agreements, documents and other instruments, and such
certificates or comparable documents of public officials and of officers and
representatives of the Borrowers and each other Credit Party, and have made such
inquiries of such officers and representatives as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures,
the authenticity of
98
all documents submitted to us as originals, the conformity to original
documents of documents submitted to us as certified or photostatic copies and
the authenticity of the originals of such latter documents. As to all
questions of fact material to this opinion that have not been independently
established, we have relied upon certificates or comparable documents of
officers and representatives of the Borrowers, and upon the representations
and warranties of the Borrowers contained in the Loan Agreement.
1. Each of the Borrowers and each other Credit Party (a)
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged and (c) is
duly qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification.
2. Each Borrower and each other Credit Party has the
power and authority, and the legal right, to make, deliver and perform the Loan
Documents to which it is a party and to grant the Liens granted by it pursuant
thereto and each Borrower has the corporate or partnership power and authority
to borrow under the Loan Agreement.
3. Each Borrower has taken all necessary corporate,
limited liability or partnership action to authorize the borrowings on the terms
and conditions of the Loan Agreement and the Notes and each Borrower and each
other Credit Party has taken all necessary action to authorize the granting of
the Liens pursuant to the Loan Documents and to authorize the execution,
delivery and performance of the Loan Documents to which it is a party.
4. To the best of our knowledge, no consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
borrowings under the Loan Agreement, the granting of the Liens under the Loan
Documents or with the execution, delivery, performance, validity or
enforceability of the Loan Documents.
5. The Loan Agreement and each other Loan Document has
been duly executed and delivered on behalf of each Credit Party party thereto.
6. Each Credit Party that is an individual has the legal
right and capacity to make deliver and perform the Loan Documents to which it is
a party.
7. The Loan Agreement and each other Loan Document
constitutes a legal,
99
valid and binding obligation of each Credit Party party thereto enforceable
against each such Credit Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
8. The execution, delivery and performance of the Loan
Documents to which each Borrower or any other Credit Party is or may be a party,
the borrowings under the Loan Agreement, the use of the proceeds thereof and the
granting of the Liens pursuant to the Loan Documents will not violate any
Requirement of Law or Contractual Obligation of any Borrower or of any other
Credit Party and will not result in, or require, the creation or imposition of
any Lien on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation, except Liens created
pursuant to the Loan Documents.
9. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the best of
our knowledge, threatened by or against any Borrower or any other Credit Party
or against any of its or their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect.
10. No Credit Party is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended. No Borrower is subject to regulation
under any Federal or State statute or regulation which limits its ability to
incur Indebtedness.
11. The provisions of the Loan Agreement are effective to
create in favor of the Lender a valid and enforceable security interest in the
Collateral. The security interest of the Lender in the Collateral in which a
security interest may be perfected by filing under Article 9 of the Uniform
Commercial Code shall constitute a perfected security interest in such
Collateral (prior to all other security interests except Permitted Encumbrances
which have priority by operation of law) upon the filing of financing statements
in the form examined by us and acceptance thereof for filing in the locations in
specified in Schedule I hereto.
12. The courts of the State of Texas will enforce those
provisions of the Loan Documents which provide that the Loan Documents will be
governed by, and construed and interpreted in accordance with, the laws of the
State of New York.
In rendering the opinion set forth in paragraph 11 as it relates to the
priority of Lender's security interest, we have examined and relied upon the
lien searches as of [date] in the jurisdictions set forth on Schedule I.
Very truly yours,
100
SCHEDULE I TO OPINION OF COUNSEL
Filing Jurisdictions
COUNTY/STATE
101
EXHIBIT Q
FORM OF STANDARD PAY-OFF CONFIRMATION LETTER
___________, 2000
Diversified Corporate Resources, Inc. and Subsidiaries
00000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
General Electric Capital Corporation
Suite 350, 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Re:[Loan and Security Agreement], dated as of May __, 2000, among
Diversified Corporate Resources, Inc., and its Subsidiaries (each a
"BORROWER"; collectively "BORROWERS") and _________________ (the
"LENDER"), as amended or supplemented from time to time (the "LOAN
AGREEMENT").
Ladies and Gentlemen:
Lender hereby certifies to each of the Borrowers and General
Electric Capital Corporation (the "NEW LENDER") that the Lender is the holder
of the Loan Agreement described above.
Lender further certifies to each of the Borrowers and the New Lender
that the total amount necessary to pay in full as of this date the outstanding
loans under the Loan Agreement (collectively, the "LOANS") and all other
liabilities or indebtedness (collectively, the "LIABILITIES") of the Borrowers
to the Lender under the Loan Agreement and the other loan or collateral
documents related thereto (collectively, the "LOAN DOCUMENTS"), is as follows:
(i) Aggregate outstanding principal balance of the Liabilities as of this
date .............................................. ____________
(ii) Accrued but unpaid interest on the Liabilities as of this date _______
102
Other (describe):
______________________ ................ _____________
______________________ ................ _____________
______________________ ................ _____________
Total pay-off amount as of this
date on the Loan(s) and the other
Liabilities (sum of (i)-(iii)) ......................... $ *
===========
--------------
* Per diem interest of $ ___________________ .
Payment of the foregoing sum (such payment being herein called the
"PAY-OFF PAYMENT") should be made to Lender by way of wire transfer in
immediately available funds directed as follow:
Bank Name:
----------------------------------
City & State:
-------------------------------
BA Routing No.:
-----------------------------
For Credit to:
------------------------------
Re: Account:
--------------------------------
Re:
-----------------------------------------
Lender hereby further certifies and confirms to each of the
Borrowers and the New Lender that, upon payment to Lender on this date of the
Pay-Off Payment in immediately available funds in accordance with the
preceding paragraph (i) Borrowers will not be indebted to Lender for any
reason under the Loan Agreement or the other Loan Documents, (ii) the Loan
Agreement, and the other Loan Documents and all of Lender's security
interests in, security titles to and other liens on all real and personal
property assets of each Borrower will be automatically terminated and
released, and (iii) Lender will execute any and all Uniform Commercial Code
financing statement terminations, mortgage releases and other such lien
release documents as any Borrower or the New Lender may request in order to
evidence or otherwise give public notice of such collateral terminations and
releases (provided, however, that any and all such termination statements,
mortgage releases and other such documents must be prepared and recorded at
Borrowers' expense).
Lender further acknowledges that each of the Borrowers and the New
Lender will rely on this letter
103
and the acknowledgments, certifications, confirmations and agreements of
Lender contained herein in connection with the financing to be provided by
the New Lender to the Borrowers.
Please note that the certifications, confirmations, acknowledgments
and agreements made by Lender in this letter are subject to and conditioned
on the Lender's receipt of not only the Pay-Off Payment described above, but
also the Lender's receipt of an agreement from the New Lender, in the form
set forth in Exhibit A attached hereto, pursuant to which the New Lender
shall agree to reimburse the Lender for certain dishonored or returned items.
104
Lender hereby requests that each of the Borrowers and the New Lender
acknowledge its receipt and acceptance of and agreement to the terms and
conditions set forth in this letter by signing a copy of it in the
appropriate space indicated below and returning it to the Lender. This letter
may be signed by each of the Borrowers and the New Lender in several
counterparts but this letter shall not become effective unless and until it
is so accepted and agreed to by each of the Borrowers and the New Lender and
returned to Lender.
Very truly yours,
LENDER:
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Each of the undersigned hereby acknowledges its receipt and acceptance of and
agreement to the terms and conditions of this letter:
BORROWERS:
DIVERSIFIED CORPORATE RESOURCES, INC. AND SUBSIDIARIES
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
NEW LENDER:
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
-------------------------------
105
Name:
-----------------------------
Title:
----------------------------
106
EXHIBIT A
REIMBURSEMENT AGREEMENT
The undersigned, GENERAL ELECTRIC CAPITAL CORPORATION (the "NEW
LENDER"), hereby acknowledges that ____________________ (the "LENDER"), in
calculating the loan balances owed to it by Diversified Corporate Resources,
Inc. and its Subsidiaries (each a "BORROWER"; collectively "BORROWERS") as of
this date, has credited to the loan accounts of the Borrowers the face amount
of all checks, drafts and other items for the payment of money from Borrowers
or their account debtors which have been heretofore received by (or on behalf
of) the Lender. The New Lender also understands that the Lender may not yet
have received full and final credit on or payment of all such checks, drafts
or other items. In consideration for the Lender's release of all of its
rights, titles and interests under the aforesaid Loan Agreement, and other
Loan Documents, the New Lender hereby agrees to reimburse and pay promptly to
the Lender, upon the Lender's demand therefore made at any time on or before
seven business days from the date hereof, in immediately available funds, the
full face amount of any checks or other instruments, whether made by
Borrowers or any of its account debtors, which have been heretofore received
by (or on behalf of) the Lender and credited to the loan accounts of
Borrowers at the Lender and which may be hereafter dishonored or returned to
the Lender or otherwise remain unpaid for any reason whatsoever. Lender
confirms and agrees that the amount for which Borrowers have been so credited
but for which Lender has not received full and final credit does not exceed
$ __________ .
NEW LENDER:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Date: May ______, 2000
107
[EXHIBIT R - FORM OF U.C.C. SCHEDULE]
SCHEDULE A TO UCC FINANCING STATEMENT
Secured Party: General Electric Capital Corporation
Commercial Finance
Xxxxx 000, 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Debtor:
The Financing Statement covers the following types or items of property:
All of Debtor's property and assets, whether real or personal, tangible or
intangible, and whether now owned or hereafter acquired, or in which it now
has or at any time in the future may acquire any right, title, or interest,
including, all of the following property in which it now has or at any time
in the future may acquire any right, title or interest: all Accounts; all
bank and deposit accounts and all funds on deposit therein; all cash and cash
equivalents; all commodity contracts; all investments and Investment
Property; all Inventory and Equipment; all Goods; all Chattel Paper,
Documents and Instruments; all Books and Records; all General Intangibles
(including all Intellectual Property, Stock, contract rights, and choses in
action); and to the extent not otherwise included, all Proceeds and products
of all and any of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing, but excluding in
all events Hazardous Waste (all of the foregoing, together with any other
collateral pledged to the Secured Party pursuant to any other Loan Document,
collectively, the "Collateral").
As used in this Financing Statement, the following terms shall have the
following meanings:
"Accounts" shall mean all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Person, including: (i) all accounts
receivable, other receivables, book debts and other forms of obligations
(other than forms of obligations evidenced by Chattel Paper, Documents or
Instruments), whether arising out of goods sold or services rendered or from
any other transaction (including any such obligations which may be
characterized as an account or contract right under the Code); (ii) all of
such Person's rights in, to and under all purchase orders or receipts for
goods or services; (iii) all of such Person's rights to any goods represented
by any of the foregoing (including
108
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods); (iv) all
moneys due or to become due to such Person under all purchase orders and
contracts for the sale of goods or the performance of services or both by
such Person or in connection with any other transaction (whether or not yet
earned by performance on the part of such Person), including the right to
receive the proceeds of said purchase orders and contracts; and (v) all
collateral security and guarantees of any kind given by any other Person with
respect to any of the foregoing.
"Books and Records" shall mean all books, records, board minutes, contracts,
licenses, insurance policies, environmental audits, business plans, files,
computer files, computer discs and other data and software storage and media
devices, accounting books and records, financial statements (actual and pro
forma), filings with Governmental Authorities and any and all records and
instruments relating to the Collateral.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired by any Person, wherever located.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Secured Party's security interest in any Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction
other than the State of New York, the term "Code" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions of this Agreement relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
"Contracts" shall mean all the contracts, undertakings, or agreements (other
than rights evidenced by Chattel Paper, Documents or Instruments) in or under
which any Person 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.
"Copyright License" shall mean rights under any written agreement now owned
or hereafter acquired by any Person granting the right to use any Copyright
or Copyright registration.
"Copyrights" shall mean all of the following now owned or hereafter acquired
by any Person: (i) all copyrights in any original work of authorship fixed in
any tangible medium of expression, now known or later developed, all
registrations and applications for registration of any such copyrights in the
United States or any other country, including registrations, recordings and
applications, and supplemental registrations, recordings, and applications in
the United States Copyright Office; and (ii) all Proceeds of the foregoing,
including license royalties and proceeds of infringement suits, the right to
xxx for past, present and future infringements, all rights corresponding
thereto throughout
109
the world and all renewals and extensions thereof.
"Credit Party" shall mean Debtor, and each other Person (other than Secured
Party) that is or may become a party to any Loan Document.
"Documents" shall mean all "documents," as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including
all bills of lading, dock warrants, dock receipts, warehouse receipts, and
other documents of title, whether negotiable or non-negotiable.
"Equipment" shall mean all "equipment" as such term is defined in the Code,
now owned or hereafter acquired by any Person, wherever located, including
any and all machinery, apparatus, equipment, fittings, furniture, fixtures,
motor vehicles and other tangible personal property (other than Inventory) of
every kind and description which may be now or hereafter used in such
Person's operations or which are owned by such Person or in which such Person
may have an interest, and all parts, accessories and accessions thereto and
substitutions and replacements therefor.
"General Intangibles" shall mean all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Person, including
all right, title and interest which such Person may now or hereafter have in
or under any Contract, Intellectual Property, interests in partnerships,
joint ventures and other business associations, permits, 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, Books and Records, Goodwill (including the Goodwill associated
with any Intellectual Property), 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-person, and business interruption insurance,
and all unearned premiums), uncertificated securities, chooses in action,
deposit accounts, rights to receive tax refunds and other payments and rights
of indemnification.
"Goods" shall mean all "goods" as such term is defined in the Code, now owned
or hereafter acquired by any Person, wherever located, including movables,
fixtures, equipment, inventory, or other tangible personal property.
"Goodwill" shall mean all goodwill, trade secrets, proprietary or
confidential information, technical information, procedures, formulae,
quality control standards, designs, operating and training manuals, customer
lists, and distribution agreements now owned or hereafter acquired by any
Person.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative,
110
judicial, regulatory or administrative functions of or pertaining to
government.
"Hazardous Waste" shall have the meaning ascribed to such term in the
Resource Conservation and Recovery Act (42 USC Sections 6901 et seq.).
"Instruments" shall mean all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Person, wherever located,
including all certificated securities and all notes and other 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.
"Inventory" shall mean all "inventory," as such term is defined in the Code,
now or hereafter owned or acquired by any Person, wherever located, including
all inventory, merchandise, goods and other personal property which are held
by or on behalf of such Person for sale or lease or are furnished or are to
be furnished under a contract of service or which constitute raw materials,
work in process or materials used or consumed or to be used or consumed in
such Person's business or in the processing, production, packaging,
promotion, delivery or shipping of the same, including other supplies.
"Investment Property" shall mean all "investment property," as such term is
defined in the Code, now or hereafter acquired by any Person, wherever
located.
"License" shall mean any Copyright License, Patent License, Trademark License
or other license of rights or interests now held or hereafter acquired by any
Person.
"Loan Documents" shall mean all agreements, notes, financial statements,
guaranties, powers of attorney, lock box agreements, and all other documents,
instruments, certificates, and notices relating to the loan made by Secured
Party to the Debtor (or any affiliate of Debtor) and any time delivered by
any Person (other than Secured Party) in connection with any of the foregoing.
"Patent License" shall mean rights under any written agreement now owned or
hereafter acquired by any Person granting any right with respect to any
invention on which a Patent is in existence.
"Patents" shall mean all of the following in which any Person now holds or
hereafter acquires any interest: (i) 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,
111
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 (ii) all
reissues, continuations, continuations-in-part or extensions thereof.
"Person" shall mean any individual, sole proprietorship, partnership, limited
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, public
benefit corporation, entity or government (whether Federal, state, county,
city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof), and shall include such Person's
successors and assigns.
"Proceeds" shall mean "proceeds," as such term is defined in the Code and, in
any event, shall include: (i) any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to Debtor or any other Credit Party
from time to time with respect to any Collateral; (ii) any and all payments
(in any form whatsoever) made or due and payable to Debtor or any other
Credit Party from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of any Collateral by any
governmental body, authority, bureau or agency (or any person acting under
color of governmental authority); (iii) any claim of Debtor or any other
Credit Party against third parties (a) for past, present or future
infringement of any Intellectual Property or (b) for past, present or future
infringement or dilution of any Trademark or Trademark License or for injury
to the goodwill associated with any Trademark, Trademark registration or
Trademark licensed under any Trademark License; (iv) any recoveries by Debtor
or any other Credit Party against third parties with respect to any
litigation or dispute concerning any Collateral; and (v) any and all other
amounts from time to time paid or payable under or in connection with any
Collateral, upon disposition or otherwise.
"Stock" shall mean all certificated and uncertificated shares, options,
warrants, general or limited partnership interests, participation or other
equivalents (regardless of how designated) of or in a corporation,
partnership, limited liability company or equivalent entity whether voting or
nonvoting, including common stock, preferred stock, or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).
"Trademark License" shall mean rights under any written agreement now owned
or hereafter acquired by any Person granting any right to use any Trademark
or Trademark registration.
"Trademarks" shall mean all of the following now owned or hereafter acquired
by any Person: (i) 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, now 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 Patent and Trademark
112
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 (ii) all reissues, extensions or renewals thereof.
A copy of the Loan and Security Agreement among Debtor, Secured Party and the
other parties thereto is on file with the Secured Party.
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EXHIBIT S
FORM FOR PAYMENT OF PROCEEDS LETTER
___________ ___, 199__
General Electric Capital Corporation
Suite 350, 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Re: Loan and Security Agreement, dated as of May ____ , 2000, (the "LOAN
AGREEMENT"), among Management Alliance Corporation, a Texas
corporation, Information Systems Consulting Corp., a Texas corporation,
a Texas corporation, Datatek Consulting Group Corporation, a Texas
corporation, Texcel Services, Inc., a Pennsylvania corporation, and
Mountain, Ltd., a Maine corporation (the "BORROWERS"), General Electric
Capital Corporation (the "LENDER") and the other parties thereto.
Ladies and Gentlemen:
All capitalized terms which are used in this letter and not otherwise
expressly defined in this letter shall have the meanings given to them in the
above-referenced Loan Agreement.
Please disburse $________________ in proceeds of the initial Revolving Credit
Loans to the Borrowers by delivering official checks or making wire or
automated clearing house transfers to the following recipients of the
following sums:
NAME OF RECIPIENT AMOUNT TO BE PAID FORM AND PURPOSE OF PAYMENT
----------------- ----------------- ---------------------------
Compass Bank $______________ Pay-Off Existing Indebtedness
Xxxxxxxxxx & Xxxx, P.A. $ _____________ Lender's Attorney Fees
114
The undersigned Borrowers hereby acknowledge and agree that the disbursement
on or about this date of the above Loan proceeds in accordance with the
foregoing instruments shall constitute the receipt on or about this date of
all such proceeds by the Borrowers.
BORROWERS:
MANAGEMENT ALLIANCE CORPORATION
INFORMATION SYSTEMS CONSULTING CORP.
DATATEK CONSULTING GROUP CORPORATION
TEXCEL SERVICES, INC.
MOUNTAIN, LTD.
By:
----------------------------------
Title:
----------------------------
115
