EXHIBIT 10.24
SECOND
RESTATED AND AMENDED
LOAN AGREEMENT
BY AND AMONG
IMSL, INC.,
IMSL ACQUISITION CORP. INC.
AND
FIRST INTERSTATE BANK OF TEXAS, N.A.
December 16, 1992
TABLE OF CONTENTS
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Page
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ARTICLE 1. DEFINITIONS AND GENERAL RULES................................. 2
Section 1.1. General Rules.......................................... 2
Section 1.2. Definitions............................................ 2
ARTICLE 2. REPRESENTATIONS AND WARRANTIES................................ 12
Section 2.1. Corporate Authority.................................... 12
Section 2.2. Financial Statements................................... 13
Section 2.3. Governmental Approvals................................. 13
Section 2.4. Litigation............................................. 14
Section 2.5. No Event of Default.................................... 14
Section 2.6. Use of Proceeds........................................ 14
Section 2.7. Properties, Locations and Offices...................... 14
Section 2.8. Status................................................. 15
Section 2.9. Tax Returns............................................ 15
Section 2.10. Liens and Security Interests.......................... 15
Section 2.11. Subsidiaries.......................................... 15
Section 2.12. ERISA................................................. 16
Section 2.13. Solvency.............................................. 16
Section 2.14. Environmental Condition of the Property............... 16
Section 2.15. Compliance............................................ 17
Section 2.16. Disclosure............................................ 18
Section 2.17. Representations and Warranties contained
in the Purchase Agreement....................................... 18
ARTICLE 3. THE CREDIT FACILITY........................................... 18
Section 3.1. Term Loan.............................................. 18
Section 3.2. Term Loan.............................................. 19
Section 3.3. Revolving Line of Credit............................... 20
Section 3.4. Advances and Indemnity................................. 22
Section 3.5. Loan Formula........................................... 22
Section 3.6. Optional Prepayments................................... 22
Section 3.7. Fees................................................... 23
Section 3.8. Payments............................................... 23
Section 3.9. Computation of Interest................................ 23
Section 3.10. Security.............................................. 23
Section 3.11. No Default............................................ 25
ARTICLE 4. CONDITIONS PRECEDENT.......................................... 25
Section 4.1. Conditions Precedent to First Loans.................... 25
Section 4.2. Conditions Precedent to Each Advance under
the Revolving Note.............................................. 27
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ARTICLE 5. AFFIRMATIVE COVENANTS......................................... 28
Section 5.1. Financial Statements................................... 28
Section 5.2. Payment of Obligations................................. 30
Section 5.3. Notice; Litigation..................................... 30
Section 5.4. Maintenance of Corporate Existence and
Properties...................................................... 30
Section 5.5. Insurance.............................................. 31
Section 5.6. Payment of Taxes....................................... 31
Section 5.7. Accounts Receivable and Payable........................ 31
Section 5.8. Further Assurances..................................... 31
Section 5.9. Inspection............................................. 32
Section 5.10. Mandatory Prepayment.................................. 32
Section 5.11. Current Ratio......................................... 32
Section 5.12. Indebtedness to Net Worth Ratio....................... 32
Section 5.13. Indebtedness to Tangible Net Worth Ratio.............. 32
Section 5.14. Net Worth............................................. 32
Section 5.15. Tangible Net Worth.................................... 33
Section 5.16. Cash Flow (less Capitalized Software
Development Expenses) to Fixed Charge Ratio..................... 33
Section 5.17. Cash Flow to Fixed Charge Ratio....................... 33
Section 5.18. Environmental Compliance............................. 34
Section 5.19. Notification.......................................... 34
Section 5.20. Collateral Audit...................................... 35
Section 5.21. Copyrights, Patents, Trademarks and
Licenses, Patents, etc.......................................... 35
Section 5.22. Purchase Agreement.................................... 35
Section 5.23. Availability of Records............................... 35
Section 5.24. Regulations U and X................................... 35
ARTICLE 6. NEGATIVE COVENANTS............................................ 36
Section 6.1. Limitations on Borrowings.............................. 36
Section 6.2. Limitations on Liens................................... 36
Section 6.3. Limitations on Contingent Liabilities.................. 36
Section 6.4. Loans, Advances and Investments........................ 36
Section 6.5. Limitations on Fundamental Changes;
Disposition of Assets........................................... 37
Section 6.6. Dividends.............................................. 37
Section 6.7. Subordination of Claims................................ 37
Section 6.8. ERISA Compliance....................................... 37
Section 6.9. Nature of Business..................................... 38
Section 6.10. Supply and Purchase Contracts......................... 38
Section 6.11. Transactions with Affiliates and Other
Persons......................................................... 38
Section 6.12. Capital Expenditures.................................. 38
Section 6.13. Bonuses............................................... 38
Section 6.14. Subordinated Indebtedness............................. 39
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ARTICLE 7. DEFAULT....................................................... 39
Section 7.1. Events of Default...................................... 39
Section 7.2. Optional Acceleration.................................. 42
Section 7.3. Automatic Acceleration................................. 42
Section 7.4. Additional Remedies.................................... 42
Section 7.5. Subordination.......................................... 43
ARTICLE 8. MISCELLANEOUS................................................. 44
Section 8.1. No Waiver; Cumulative Remedies......................... 44
Section 8.2. Survival of Agreements................................. 44
Section 8.3. Successors............................................. 44
Section 8.4. Counterparts........................................... 44
Section 8.5. Severability........................................... 45
Section 8.6. Interest............................................... 45
Section 8.7. Expenses; Documentary Taxes............................ 46
Section 8.8. Notices................................................ 47
Section 8.9. Participations......................................... 48
Section 8.10. Confidentiality....................................... 48
Section 8.11. Controlling Document.................................. 49
Section 8.12. Amendment............................................. 49
Section 8.13. Table of Contents; Descriptive Headings............... 49
SECTION 8.14. GOVERNING LAW......................................... 49
SECTION 8.15. SUBMISSION TO JURISDICTION............................ 49
Section 8.16. Arbitration Program................................... 50
SECTION 8.17. NO ORAL AGREEMENTS.................................... 50
EXHIBITS:
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Exhibit A - Loan Formula Certificate
Exhibit B - Subsidiaries
Exhibit C - Hazardous Materials Contamination
Exhibit D - Term Note A
Exhibit E - Term Note B
Exhibit F - Revolving Note
Exhibit G - Indebtedness
SCHEDULES:
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Schedule I - Locations
Schedule II - Contract Disclosure
Schedule III - Certain Permitted Advances, Loans, Extensions
of Credit to Subsidiaries
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SECOND RESTATED AND AMENDED LOAN AGREEMENT
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This SECOND RESTATED AND AMENDED LOAN AGREEMENT is entered into as of
December 16, 1992, by and among IMSL, INC., a Texas corporation (the "Company"),
IMSL ACQUISITION CORP., INC. a California corporation ("IAC"), and FIRST
INTERSTATE BANK OF TEXAS, N.A., a national banking association (the "Bank").
WHEREAS, the Company has entered into an Agreement and Plan of
Reorganization ("Purchase Agreement") among the Company, IAC and Precision
Visuals, Inc., a Colorado corporation ("Acquired Company"), dated as of November
16, 1992, pursuant to which the Company has agreed to purchase all shares of
common stock of the Acquired Company, and to merge the Acquired Company into
IAC, all upon the terms therein contained;
WHEREAS, the Company and the Bank have previously entered into a Loan
Agreement dated as of March 20, 1991 (the "Initial Loan Agreement"); and
WHEREAS, the Initial Loan Agreement has been modified and amended by that
certain First Amendment to Loan Agreement ("First Amendment") dated as of
September 20, 1991 between the Company and the Bank and by that certain Amended
and Restated Loan Agreement dated as of March 17, 1992 (the "March Agreement");
and
WHEREAS, the Initial Loan Agreement, as amended by the First Amendment and
the March Agreement is referred to herein as the "Prior Loan Agreement"; and
WHEREAS, Company has requested that the Bank amend the Prior Loan Agreement
to make available to the Company two term loans and a revolving credit facility
upon the terms and conditions set forth in this Agreement to finance in part the
purchase price of the stock of the Acquired Company and to repay certain
existing indebtedness of the Acquired Company; subject to the terms and
conditions hereinafter stated, the Bank is willing to do so; and
WHEREAS, the Prior Loan Agreement is being amended and restated by this
Agreement in order to more clearly reflect the agreements of the parties hereto
and to make the requested amendments; and
WHEREAS, this Agreement is being executed in renewal and extension of the
obligations of the Company under the Prior Loan Agreement, certain of the Notes
and the Security Instruments; and
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nothing contained in this Agreement shall be construed as a substitution or
novation of the Indebtedness under the Prior Loan Agreement or the instruments
securing same, all of which shall remain in full force and effect except as
modified hereby or by any other instruments executed in connection with this
Agreement;
NOW THEREFORE, to induce the Bank to extend credit and financial
accommodations to the Company and for $1 and other such good and valuable
considerations, the receipt and sufficiency of which are acknowledged hereby,
the parties hereto agree as follows, intending to be legally bound:
ARTICLE 1. DEFINITIONS AND GENERAL RULES. The following definitions and
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general rules will apply hereto:
Section 1.1. General Rules. For the purposes of this Agreement
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(a) The terms defined in this Article 1, unless the context requires
otherwise, will have the meanings applied to them in Section 1 and will include
the plural as well as the singular. Additional definitions may be found in the
preamble and throughout this Agreement;
(b) All accounting terms not otherwise defined herein will have the
meanings assigned to them in accordance with GAAP; and
(c) The words "herein," "hereof," "hereunder" and words of similar
import refer to this Agreement as a whole and not to a particular article,
section, paragraph or other subdivision.
Section 1.2. Definitions. As used in this Agreement, the following
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terms will have the following meanings unless the context requires otherwise:
Acquisition means the acquisition of the common stock of the Acquired
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Company by the Company as contemplated by the Purchase Agreement.
Affiliate of any Person means any Person that, directly or indirectly,
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controls or is controlled by or is under common control with such Person and,
without limiting the generality of the foregoing, shall include any Person that
beneficially owns or holds five percent or more of any class of voting
securities of such Person and any Person owning or holding five percent or more
of any class or series of voting securities of such Person (or in
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the case of a Person that is not a corporation, five percent or more of the
equity interest) of which is beneficially owned or held by such Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlled by" and "under common control with"), as used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through ownership of voting securities or by contract or otherwise.
Agreement means this second restated and amended loan agreement among
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the Bank, the Company and IAC as originally executed or hereafter amended.
Basic Rate means the variable per annum rate of interest at all times
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equal to one percent plus the Prime Rate, such Basic Rate to change when and as
the Prime Rate changes.
Business Day means a day (other than Saturday, Sunday or a legal
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holiday) on which banks in Houston, Texas, are open for business.
Capital Lease means, with respect to any Person, any lease of any
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property (whether real, personal or mixed) that, in conformity with GAAP, should
be accounted for as a capital lease on the balance sheet of such Person.
Capitalized Software Development Expenses means software development
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expenses capitalized in accordance with GAAP consistently applied.
Cash Equivalents mean any of the following: (a) securities with
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maturities of one hundred eighty (180) days or less from the date of acquisition
thereof issued or fully guaranteed or insured as to payment of principal and
interest by the United States or any agency thereof, (b) certificates of deposit
with maturities of one hundred eighty (180) days or less from the date of
acquisition thereof issued by, and deposit accounts at, any commercial bank
having capital and surplus equal to or greater than $250,000,000, (c) commercial
paper of a domestic issuer rated at least either A-1 by Standard & Poor's
Corporation or P-1 by Xxxxx'x Investors Service, Inc. with maturities of one
hundred eighty (180) days or less from the date of acquisition thereof and (d)
securities of a domestic municipal issuer rated at least either AAA by Xxxxx'x
Investors Service, Inc. or AAA by Standard & Poor's Corporation with maturities
of one hundred eighty (180) days or less from the date of acquisition thereof.
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Cash Flow means, for any period, the sum of: (i) the Net Income from
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operations for such period, plus (ii) to the extent that any of the items
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referred to in any of clauses (A) and (B) below were deducted in calculating
such Net Income: (A) tax adjusted interest expense of such Person and its
Subsidiaries for such period and (B) depreciation, amortization expense and
deferred income taxes of such Person and its Subsidiaries for such period.
CERCLA means the Comprehensive Environmental Response, Compensation,
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and Liability Act of 1980, 42 U.S.C. (S) 9601, et seq., as amended.
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Closing Date means the date on which the shares of Acquired Company
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are to be purchased by the Company provided that all of the conditions precedent
stated in Article 4 hereof have been met to the Bank's satisfaction or waived by
the Bank in writing (and which in any event must occur no later than December
31, 1992).
Code means the Internal Revenue Code of 1986, as amended from time to
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time, any predecessor statute and any statute enacted in replacement thereof.
Collateral means the properties and assets described in Section 3.10
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hereof.
Contingent Liabilities means any and all liabilities of a Person,
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direct or indirect, for or in connection with the obligations, stock or payment
of dividends of any other Person, whether by guaranty, endorsement, agreement to
purchase or repurchase, agreement to lease, agreement to supply or advance funds
(including, without limitation, agreements to maintain working capital, solvency
or other balance sheet conditions or agreements to purchase stock or make
capital contributions) or otherwise.
Corporate Guarantor means IAC and any other Subsidiary of the Company
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organized under the laws of the United States of America or any state thereof
now or hereafter acquired or established by the Company.
Current Assets means, with respect to any Person, all assets of such
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Person that, in accordance with GAAP, would be included as current assets on its
balance sheet as of a date of calculation.
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Current Liabilities means, with respect to any Person, all liabilities
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of such Person that, in accordance with GAAP, would be included as current
liabilities on its balance sheet as of the date of calculation.
Default means any event specified in Section 7.1 of this Agreement,
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regardless of whether any requirement for the giving of notice or lapse of time
or any other condition has been satisfied.
Default Rate means the lesser of (i) a rate that is five percentage
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points above the Prime Rate, as it varies, or (ii) the Maximum Rate, as it
varies.
Eligible Accounts means, at any time, the amount equal to the
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aggregate unpaid amount of a Person's accounts, chattel paper, contract rights,
instruments and retail installment contracts for goods sold and actually
delivered or for services rendered by such Person for which invoices have been
issued and payment for which is due within 30 days, less any down payments;
provided, however, there shall be excluded from Eligible Accounts (i) any amount
billed and remaining unpaid more than 90 days from issuance (or due date in the
case of instruments, lease agreements and chattel paper), (ii) any amount due
from suppliers of materials or inventory to a Person but only to the extent that
such Person is indebted to such suppliers with respect to materials or supplies
purchased by such Person from such suppliers, (iii) any account, instrument,
chattel paper, contract right, or retail installment contract in which the Bank
does not have a valid and perfected first priority lien, mortgage or security
interest, (iv) any account arising from sales to or services rendered for any
Subsidiary or Affiliate of a Person, (v) any account arising from sales to or
services rendered for any Governmental Authority (unless such Governmental
Authority is a Governmental Authority of the United States of America and such
Governmental Authority has properly acknowledged the Bank's first priority
security interests in such accounts to the satisfaction of the Bank) or any
foreign Person, (vi) any account arising from sales on a "sale or return", "sale
on approval" (as such terms are defined in the UCC), consignment, or guaranteed
sale basis, (vii) any account rejected by the Bank as unsuitable, and (viii) any
account which is or may be subject to a right of setoff, claim or defense.
Environmental Laws means any and all laws, subsequent enactments,
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amendments and modifications, including without limitation, federal, state and
local laws, statutes, ordinances, rules, regulations, permits, licenses,
approvals, interpretations
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and orders of courts or Governmental Authorities relating to the protection of
human health or the environment.
EPA means the United States Environmental Protection Agency.
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ERISA means the Employment Retirement Income Security Act of 1974, as
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amended from time to time.
Event of Default means any event specified in Section 7.1 of this
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Agreement, provided that any requirement in connection with such event for the
giving of notice or lapse of time or any other condition has been satisfied.
Fixed Charges means, for any period, all principal payments on
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Indebtedness for borrowed money (other than principal payments on the Revolving
Note) for such period, plus all payments on Capitalized Leases for such period,
plus all tax adjusted interest expenses for such period.
GAAP means generally accepted accounting principles set forth in the
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Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board that are applicable to the circumstances as of the date of
determination; and the requisite that such principles be applied on a consistent
basis shall mean that the accounting principles observed in a current period are
comparable in all material respects to those applied in a preceding period.
Governmental Authority means any nation or government, any state,
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county, city or other political subdivision, agency or instrumentality
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Guarantor means Xxxxxxx X. Xxxxxxx, a resident of Racine, Wisconsin.
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Guaranty means a continuing guaranty agreement in favor of the Bank in
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form and substance acceptable to the Bank.
Hazardous Materials means any substance or material (i) which is or
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becomes defined as a hazardous waste, hazardous substance, pollutant,
contaminant or toxic substance, under any Environmental Law; (ii) which is
toxic, explosive, corrosive, flammable, infectious, radioactive, mutagenic or
otherwise hazardous
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and is or becomes regulated by any Governmental Authority; (iii) the presence of
which requires investigation or remediation under any Environmental Law or
common law; (iv) which is deemed to constitute a nuisance, a trespass or pose a
health or safety hazard to persons or neighboring properties; (v) any of the
substances referred to in clauses (i) through (iv) above contained in an under
ground or aboveground storage tank, whether empty, filled or partially filled;
or (vi) which contains, without limitation, asbestos, polychlorinated biphenyls,
urea formaldehyde foam insulation, petroleum hydrocarbons, crude oil or any
fraction thereof.
Hazardous Materials Contamination means the contamination (whether
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presently existing or hereafter occurring) of the buildings, facilities or
improvements, air, soil, groundwater, surface water or other elements of the
Property or other property as a result of the presence of Hazardous Materials on
the Property at any time.
Indebtedness means the total liabilities of a Person calculated in
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accordance with GAAP consistently applied.
Lien shall mean any interest in property securing an obligation owed
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to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting the property. For
the purposes of this Agreement, a Person shall be deemed to be the owner of any
property which it or he has acquired or holds subject to a conditional sale
agreement, financing lease or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes.
Limited Guaranty means a limited guaranty agreement in favor of the
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Bank in form and substance satisfactory to the Bank.
Line of Credit means the line of credit provided for in Section 3.3
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hereof.
Line of Credit Commitment means $2,000,000.
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Loan Documents means this Agreement, the Notes, the Security
--------------
Instruments and any and all other documents and
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instruments executed in connection therewith or contemplated thereby.
Loan Formula means at any time the amount equal to the sum of an
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amount equal to 60% of the Eligible Accounts of the Company and the Corporate
Guarantor as of the last day of the preceding month.
Loan Formula Certificate means a loan formula certificate in
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substantially the form attached hereto as Exhibit A, setting forth the
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computation of Loan Formula as of the close of business on the last day of the
month immediately preceding the day that such loan formula certificate is
delivered on behalf of the Company to the Bank pursuant to Section 5.1(f)
hereof.
Mandatory Prepayments means such payments from the Company to the Bank
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as may be necessary to reduce the aggregate principal amount of indebtedness and
liabilities of the Company under the Revolving Note to an amount permitted by
the Loan Formula and this Agreement.
Material Adverse Effect means a material adverse effect on (a) the
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business, assets, operations, or financial condition of the Company and its
Subsidiaries taken as a whole, or (b) the Company's ability to perform and pay
the Obligations in accordance with the terms thereof or the Bank's rights to
enforce or collect the Obligations.
Maximum Rate means the maximum lawful rate of interest permitted by
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applicable usury laws, now or hereafter enacted, which interest rate shall
change when and as such laws change, to the extent permitted by such laws,
effective on the day such change in such laws becomes effective; provided,
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however, that the term "Maximum Rate" shall mean a rate of interest equal to
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five percentage points above the Prime Rate, as it varies, if there is no
Maximum Rate under applicable usury laws.
Net Income means for any period, a Person's consolidated net income
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(or loss) after income and franchise taxes determined in conformity with GAAP,
but excluding: (a) the income of any other Person (other than Subsidiaries) in
which such Person or any of its Subsidiaries has an ownership interest, unless
and only to the extent received by such Person or its Subsidiary in a cash
distribution; (b) any after-tax gains or losses attributable to asset
dispositions; and (c) to the extent not included in clauses (a) and (b) above,
any after-tax extraordinary non-cash gains or extraordinary non-cash losses.
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Net Worth of a Person means, at any time, the total assets of such
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Person less the total liabilities of such Person as set forth on its balance
sheet at such date, prepared in accordance with GAAP consistently applied, plus
Subordinated Indebtedness of such Person, except that the sum of the following
shall be excluded therefrom: (i) goodwill, including any amounts (however
designated on such balance sheet) representing the cost of acquisition of
Subsidiaries in excess of underlying tangible assets, unless an appraisal of
such assets made by a reputable firm of appraisers acceptable to the Bank at the
time of acquisition indicates sufficient value to cover such excess, (ii) any
amounts by which investments in Persons appearing on the asset side of such
balance sheet exceed the proportionate share of such Person and its Subsidiaries
in the book value of the assets of such Persons, and (iii) any treasury stock.
Notes means Term Note A, Term Note B and the Revolving Note.
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Obligations means the obligations and liabilities of the Company and
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the Corporate Guarantor to the Bank evidenced by this Agreement, the Notes, the
other Loan Documents and any and all other indebtedness, liabilities and
obligations whatsoever of the Company and the Corporate Guarantor to the Bank,
whether direct or indirect, absolute or contingent, due or to become due, and
whether now existing or hereafter arising, and howsoever evidenced or acquired,
whether joint or several, and whether evidenced by note, draft, acceptance,
guaranty, open account, letter of credit, surety agreement or otherwise; it
being contemplated by the parties hereto that the Company may become indebted to
the Bank in further sum or sums.
Permitted Liens means (i) liens created by the Security Instruments or
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this Agreement, (ii) liens for taxes, assessments and other governmental charges
not yet payable, or the validity of which are being contested in good faith by
appropriate proceedings and as to which adequate reserves have been set aside on
the books of the Company, (iii) deposits or pledges to secure the payment of
workmen's compensation, unemployment insurance or other social security benefits
or obligations, public or statutory obligations, surety or appeal bonds or other
obligations of a like general nature incurred in the ordinary course of
business, (iv) landlords', mechanics', materialmen's, warehousemen's, carriers',
vendors' or other like liens arising by operation of law in the ordinary course
of business securing obligations which are not overdue for a period longer than
30 days, or which are being
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contested in good faith by appropriate proceedings and against which the Company
has provided adequate reserves in accordance with GAAP, (v) zoning restrictions,
easements, licenses, restrictions on the use of real property or minor
irregularities in title thereto which do not materially impair the use of such
property in the operation of the business of the Company or the value of such
property, (vi) inchoate liens arising under ERISA to secure current pension
liabilities as they are incurred under the provisions of Plans from time to time
in effect, (vii) liens permitted in the Security Instruments or otherwise by the
Bank in writing, (viii) security interests in the intellectual property of IAC
and the other collateral therein described in favor of the secured parties as
provided in the security agreements executed or to be executed by the Company
and IAC pursuant to the Purchase Agreement, which liens in favor of such secured
parties shall be prior to the liens of the Bank only in the intellectual
property of IAC and the real estate of the Company located in Ft. Bend County,
Texas and (ix) liens securing the purchase price of assets as long as such liens
apply only to the assets so acquired.
Person means any corporation, partnership, trust, estate, individual,
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unincorporated business entity or governmental department, administrative agency
or instrumentality.
Plan means any plan subject to Title IV of ERISA and maintained by the
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Company or any Subsidiary or any such plan to which the Company or any
Subsidiary is required to contribute on behalf of its employees.
Prime Rate means the variable per annum rate of interest most recently
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announced by the Bank as its "prime rate," with the understanding that the
Bank's "prime rate" may be one of several base rates and serves as a basis upon
which effective rates of interest from time to time are calculated for loans
making reference thereto and may not be the lowest of the Bank's base rates.
Property means any right or interest of a Person in or to property of
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any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
Regulation U means Regulation U of the Board of Governors of the
------------
Federal Reserve System, 12 C.F.R., Part 221.
Regulation X means Regulation X of the Board of Governors of the
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Federal Reserve System, 12 C.F.R., Part 224.
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Revolving Note means the promissory note issued pursuant to Section
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3.3 hereof as the same may be renewed, rearranged, modified, increased or
extended at any time, from time to time.
Security Agreement means one or more commercial security agreements in
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form and substance acceptable to the Bank as the same may be renewed, modified,
extended, supplemented or rearranged, at any time, from time to time.
Security Agreement-Pledge means one or more security agreements-
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pledges in form and substance acceptable to the Bank as the same may be renewed,
modified, extended, supplemented or rearranged, at any time, from time to time.
Security Instruments means the Guaranties, the Security Agreements and
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the Security Agreement-Pledges together with all financing statements and other
documents necessary for recordation of the same or perfection of the liens,
mortgages and security interests granted thereby, as same may be or have been
executed by the Company, IAC, the Guarantor and the wife of the Guarantor, or by
any of them.
Subordinated Indebtedness means the Indebtedness of a Person,
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calculated in accordance with generally accepted accounting principles
consistently applied, heretofore or hereafter incurred, that, by the express
terms of the instrument evidencing or creating such Indebtedness or by the terms
of a subordination agreement in form and substance satisfactory to the Bank, is
validly and effectively made subordinate and subject in right to payment, to
whatever extent the Bank may require, to the prior payment of the Obligations to
the Bank.
Subsidiary means any corporation of which more than 50 percent of the
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issued and outstanding securities having ordinary voting power for the election
of directors is owned or controlled, directly or indirectly, by a Person and,
or, one or more of its Subsidiaries.
Tangible Net Worth of a Person means, at any time, the total assets of
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such Person less the total liabilities of such Person as set forth on its
balance sheet at such date, prepared in accordance with GAAP consistently
applied, plus Subordinated Indebtedness of such Person, except that the sum of
the following shall be excluded therefrom: (i) goodwill, including any amounts
(however designated on such balance sheet) representing the cost of acquisition
of Subsidiaries in excess of underlying tangible assets, unless an appraisal of
such assets made by a reputable firm
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of appraisers acceptable to the Bank at the time of acquisition indicates
sufficient value to cover such excess, (ii) any amounts by which investments in
Persons appearing on the asset side of such balance sheet exceed the
proportionate share of such Person and its Subsidiaries in the book value of the
assets of such Persons, (iii) patents, trademarks, copyrights, deferred charges
(including, but not limited to, unamortized discount and expenses, and
Capitalized Software Development Expenses, organizational expenses, experimental
and developmental expenses, but excluding prepaid expenses), intangibles and
other similar assets, and (iv) any treasury stock.
Term Note A means the promissory note issued pursuant to Section 3.1
-----------
hereof as the same may be renewed, rearranged, modified, increased or extended
at any time, from time to time.
Term Note B means the promissory note issued pursuant to Section 3.2
-----------
hereof as the same may be renewed, rearranged, modified, increased or extended
at any time, from time to time.
Termination Date means December 15, 1993.
----------------
Unearned Revenues means revenue from sales and leased products that
-----------------
are recognized for contracted amounts when software is available for use by the
Company's and its Subsidiaries' customers but for which revenues are recognized
by the Company and its Subsidiaries ratably over the contract period or as
services are provided by the Company and its Subsidiaries, determined in
accordance with GAAP, and which are reflected as the line item "Unearned support
and maintenance revenue" on the Company's balance sheets required to be
delivered to the Bank pursuant to Section 5.1 hereof.
Working Capital means, at any time, the excess of the Current Assets
---------------
of a Person over the Current Liabilities of such Person.
UCC means the Texas Business and Commerce Code as presently enacted or
---
hereafter amended.
-12-
ARTICLE 2. REPRESENTATIONS AND WARRANTIES. The Company represents,
----------- ------------------------------
warrants and agrees as follows:
Section 2.1. Corporate Authority. The Company and each of its
-------------------
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly
licensed, qualified to do business and in good standing in each jurisdiction in
which the ownership of its property or the conduct of its business requires such
licensing and qualification, and has all corporate power and all permits,
consents and authorizations necessary to own and operate its properties and to
carry on its business as presently conducted. The execution, delivery and
performance of this Agreement by the Company and by the Corporate Guarantor,
the borrowings hereunder and the execution and delivery of the Notes and the
other Loan Documents by the Company and the Corporate Guarantor (i) have been
duly authorized by all requisite corporate proceedings, and (ii) will not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the Articles of Incorporation or Bylaws of the Company, or of
any mortgage, indenture, contract, agreement or other instrument, or any
judgment, order or decree, binding upon the Company or the Corporate Guarantor,
except the contract disclosed on Schedule II hereto. No consent of the Company's
or the Corporate Guarantor's shareholders or any holder of any Indebtedness of
the Company or the Corporate Guarantor or any other Person is required as a
condition to the validity of this Agreement or any other Loan Document except
such as has been obtained and identified to the Bank in writing. This Agreement,
the Notes, and the other Loan Documents, when duly executed and delivered in
accordance with this Agreement, will conferred stitute legal, valid and binding
obligations of the Company and the Corporate Guarantor enforceable in accordance
with their respective terms except as the enforceability thereof may be limited
by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to the enforcement of creditor's rights generally
and by general equitable principles.
Section 2.2. Financial Statements. The audited annual financial
--------------------
statements of the Company and its Subsidiaries at December 31, 1991 and the
unaudited financial statements of the Company and its Subsidiaries at October
31, 1992, and the related statements of income and retained earnings and cash
flow for the periods then ended, copies of which have been delivered to the
Bank, fairly present the financial position of the Company and its Subsidiaries
at December 31, 1991 and October 31, 1992, and the results of its operations and
the changes in its financial position for the
-13-
periods then ended in conformity with GAAP applied on a basis consistent with
the preceding period. Such financial statements are true and correct and have
been prepared in accordance with GAAP consistently followed throughout the
periods involved. No material adverse change has occurred since October 31,
1992, in the financial position or in the results of operations of the Company
and its Subsidiaries or in their business, taken as a whole.
Section 2.3. Governmental Approvals. No approvals of any Governmental
----------------------
Authority having jurisdiction over the Company or any of its Subsidiaries are
necessary to permit the Company or the Corporate Guarantor to enter into this
Agreement, the Note and the other Loan Documents, to borrow hereunder and to
grant security and guaranty as provided herein.
Section 2.4. Litigation. There is no action, suit or proceeding pending
-----------
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries before any court or Governmental Authority which, if such
action, suit or proceeding were adversely determined, (i) would subject the
Company or any of its subsidiaries to any liability not fully covered by
insurance, or (ii) would reasonably be expected to have a Material Adverse
Effect.
Section 2.5. No Event of Default. No Default or Event of Default has
-------------------
occurred and is continuing.
Section 2.6. Use of Proceeds. The proceeds of the loans made pursuant to
---------------
(i) Section 3.1 hereof will be used by the Company to renew and refinance
existing Indebtedness owing by the Company to the Bank, (ii) Section 3.2 hereof
will be used to permit Company to provide funds to the Corporate Guarantor to
repay Indebtedness of the Acquired Company to Affiliated First National Bank of
Boulder, Boulder, Colorado, and (iii) Section 3.3 hereof will be used by the
Company for working capital for general corporate operating purposes of the
Company, including up to the principal sum of $1,000,000 to be used for the
acquisition of the common stock of the Company. All loans evidenced by the
Notes are and shall be "business loans," as such term is used in the Depository
Institutions Deregulation and Monetary Control Act of 1980, as amended, and such
loans are for business or commercial purposes and not primarily for personal,
family, household or agricultural use, as such terms are used or defined in
Texas Revised Civil Statutes, Article 5069-1.04, Texas Credit Code, Regulation Z
promulgated by the Board of Governors of the Federal Reserve System, and Titles
I and V of the Consumer Credit Protection Act.
-14-
Section 2.7. Properties, Locations and Offices. The Company and the
---------------------------------
Corporate Guarantor have and will continue to have good and indefeasible title
to all of their respective assets and proper ties, free and clear of all liens,
mortgages, security interests and other encumbrances, except for Permitted
Liens. The Property descriptions contained in the Security Instruments are
true, correct, complete and sufficient to grant and create a security interest
in the Collateral for the benefit of the Bank. The chief executive office of
(i) the Company is located in Ft. Bend County, Texas and of (ii) the Corporate
Guarantor is located in Boulder County, Colorado; Schedule I hereto lists all
other offices and locations where Properties of the Company and the Corporate
Guarantor are located within the United States of America.
Section 2.8. Status. Neither the Company nor any of its Subsidiaries is
------
(i) subject to regulation as a "public utility" or the equivalent under any
applicable federal or state law, (ii) an "investment company" or a company
"controlled" by an "investment company" or an "investment advisor" within the
meaning of the Investment Company Act of 1940, as amended, or (iii) a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company" within the
meaning of the Public Utilities Holding Company Act of 1935, as amended.
Section 2.9. Tax Returns. The Company and each Subsidiary have filed all
-----------
United States tax returns and all other material tax returns required to be
filed by each of them and have paid, or made provisions for the payment of, all
taxes which have become due pursuant to any such return or pursuant to any
assessment received by the Company and each Subsidiary, except such taxes and
assessments, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with GAAP, and each such
return properly reflects the taxes of the Company or such Subsidiary, as the
case may be, for the periods covered thereby.
Section 2.10. Liens and Security Interests. Upon the filing of the
----------------------------
appropriate financing statements and appropriate filings under the laws of the
United States with respect to that portion of the Collateral comprised of
patents, trademarks and copyrights registered under the laws of the United
States, the security interests, mortgages and liens attaching to the Collateral
will constitute at all times valid, perfected and enforceable first priority
security interests, mortgages and liens in favor of the Bank, subject to no
prior or superior lien, mortgage, security interest or other encumbrance, except
Permitted Liens. Before any
-15-
funding under the Notes, the Company and the Corporate Guarantor have taken, or
will have participated with the Bank in taking, all necessary action (including
making all necessary filings) to provide the Bank with first priority perfected
security interests, mortgages and liens in the Collateral under the laws of all
appli cable jurisdictions, subject to the Permitted Liens.
Section 2.11. Subsidiaries. Neither the Company nor any of its
------------
Subsidiaries owns any Subsidiary or has any investments in any Person (other
than the Subsidiaries listed in Exhibit B hereto and Cash Equivalents).
---------
Section 2.12. ERISA. The Company and each of its Subsidi aries are in
-----
compliance in all material respects with the applicable provisions of ERISA and,
to the best of the Company's knowledge, no "reportable event," as such term is
defined in Section 4043 of ERISA, has occurred with respect to any Plan of the
Company or any of its Subsidiaries.
Section 2.13. Solvency. The Company both individually and on a
--------
consolidated basis with its Subsidiaries is solvent and, after giving effect to
the transactions contemplated by this Agreement and the Other Loan Documents,
including the acquisition of the Acquired Company upon the terms set out in the
Purchase Agreement, the Company and each of its Subsidiaries will be solvent.
Each of the Company and its Subsidiaries (i) is able to and anticipates that it
will be able to meet its debts as they mature, (ii) has adequate capital to
conduct the businesses in which it is engaged, and (iii) owns and will own
property having a value, both at fair valuation and at present fair saleable
value, greater than the amount required to pay its debts and obligations.
Section 2.14. Environmental Condition of the Property.
---------------------------------------
(a) The location, construction, occupancy, operation, condition and
use of the Property do not violate any material law, statute, ordinance, rule,
regulation, order or determination of any Governmental Authority, or any
material restrictive covenant or deed restriction (recorded or otherwise)
affecting the Property, including without limitation all material zoning
ordinances and building codes, flood disaster, occupational health and safety
laws and Environmental Laws.
(b) Without limitation of (a) above, neither the Property nor the
Company or any of its Subsidiaries is in violation of or subject to any
existing, pending or threatened investigation, request for information,
administrative or consent order or
-16-
agreement, litigation or settlement by any Governmental Authority or subject to
any investigatory or remedial obligations under any Environmental Laws or the
common law with respect to the presence or suspected presence of Hazardous
Materials Contamination.
(c) Neither the Company nor any of its Subsidiaries is subject to any
liability or obligation relating to (i) the environmental conditions on, under
or about the Property, including without limitation, the air, soil, surface and
ground water conditions at the Property; or (ii) the use, management, handling,
transport, treatment, generation, storage, disposal, release or discharge of any
Hazardous Materials.
(d) Neither the Company nor any of its Subsidiaries has obtained, nor
are any of them required to obtain or make application for any permits, licenses
or similar authorizations to construct, occupy, operate or use, or relating to
the existence of any buildings, improvements, facilities, fixtures and equipment
forming a part of the Property by reason of any Environmental Laws.
(e) The Company and each of its Subsidiaries has taken all steps
reasonably necessary to determine and has determined that no Hazardous Materials
are now located on the Property or have escaped or been released into the
environment, or deposited, spilled, leaked, discharged, or disposed of at, on,
from, under or near the Property or any portion thereof, except as set forth on
Exhibit C attached hereto and made a part hereof. No portion of the Property is
---------
being used nor, to the knowledge of the Company, or its Subsidiaries, has been
used by any Person at any previous time for the generation, disposal, storage,
treatment, processing or other handling of Hazardous Materials, nor is any part
of the Property affected by any Hazardous Materials Contamination, except as
disclosed on Exhibit C hereto.
---------
(f) To the best of Company's and its Subsidiaries' knowledge, no
property adjoining or in the immediate vicinity of the Property is being used,
or has been used at any previous time, for the generation, treatment, storage,
processing, disposal or other handling of Hazardous Materials.
(g) The Property is not currently on, and to Company's and the
Subsidiaries' knowledge, has never been on, any federal or state "superfund" or
"superlien" list or registry.
Section 2.15. Compliance. The Company and each of its Subsidiaries are
----------
in compliance in all respects with all applicable governmental approvals and
laws, ordinances and regulations,
-17-
including without limitation, Environmental Laws and material zoning, land use,
and building laws, ordinances and regulations, except to the extent that such
non-compliance would not have a Material Adverse Effect; and the Company and
each of its Subsidiaries have no knowledge of any notices of violations of any
such laws, ordinances or regulations issued by any Governmental Authority having
jurisdiction over the Property or the Company or any of its Subsidiaries.
Section 2.16. Disclosure. All factual information heretofore or
----------
contemporaneously furnished in writing by or on behalf of the Company and the
Corporate Guarantor to Bank for purposes of or in connection with this
Agreement, the Notes, and the other Loan Docu ments, or any transaction
contemplated therein is, and all other such information hereafter furnished by
or on behalf of the Company and the Corporate Guarantor to the Bank will be,
true and accurate on the date as of which such information is dated or certified
and not incomplete by omitting to state any material fact necessary to make such
information not misleading at such time.
Section 2.17. Representations and Warranties contained in the Purchase
--------------------------------------------------------
Agreement. The Purchase Agreement is in full force and effect, has not been
---------
further amended and the parties thereto have performed all obligations required
to be performed by each of them thereunder on or prior to the date hereof. All
representations and warranties set forth therein are true and correct as of the
Closing Date. The Bank shall be entitled to rely on all of the representa tions
and warranties of the Company and IAC set forth therein with the same force and
effect as though they were incorporated in this Agreement and made by the
Company and IAC for the benefit of the Bank herein, and on the opinions of
counsel issued in connection therewith. At the request of the Bank, the Company
or IAC, as may be appropriate, shall assert any rights to enforce its respective
remedies upon the occurrence of a breach of representation or warranty by the
Acquired Company under the Purchase Agreement.
-18-
ARTICLE 3. THE CREDIT FACILITY.
---------- -------------------
Section 3.1. Term Loan. Subject to and upon the terms, conditions,
---------
covenants and agreements contained herein, the Bank agrees to lend to the
Company the sum of $1,100,000 to be evidenced by the Company's promissory note
payable to the order of the Bank in substantially the form of Exhibit D attached
---------
hereto ("Term Note A"). The principal amount from time to time outstanding
under Term Note A shall bear interest during each day the loan evidenced thereby
is outstanding at a variable per annum rate equal to the lesser of (i) the Basic
Rate, as it varies, or (ii) the Maximum Rate, as it varies. Notwithstanding the
foregoing, if at any time the Basic Rate shall exceed the Maximum Rate and
thereafter the Basic Rate shall become less than the Maximum Rate, the rate of
interest payable thereunder shall remain at the Maximum Rate until the Bank
shall have received the amount of interest which the Bank would have received if
the Basic Rate had not been limited by the Maximum Rate during the period of
time the Basic Rate exceeded the Maximum Rate. All past due principal and
interest hereunder and under Term Note A, whether due as the result of
acceleration of maturity or otherwise, shall bear interest at the Default Rate
from the date payment thereof shall have become due until same shall have been
discharged by payment.
The principal of and interest to accrue on Term Note A shall be due and
payable as follows:
The principal of Term Note A is due and payable in eight (8) installments,
all of such installments, except for the last, being in the amount of $137,500
each, and the last and final installment being in the amount of the then
remaining unpaid principal balance thereof, the first such installment of
principal being due and payable on March 31, 1993, and each subsequent
installment of principal being due and payable on the last day of each
succeeding June, September, December and March thereafter until December 15,
1994, when the then remaining unpaid balance of principal of Term Note A shall
become due and payable in full. Interest on said principal shall be due and
payable in monthly installments as it accrues, the first such installment being
due and payable on January 31, 1993 and on the last day of each succeeding
calendar month thereafter until December 15, 1994, when all unpaid accrued
interest and all unpaid principal owing under Term Note A shall be due and
payable.
All renewals, extensions, modifications, increases, and rearrangements of
Term Note A, if any, shall be deemed to be made
-19-
pursuant to this Agreement and, accordingly, shall be subject to the terms and
provisions hereof, and the Company shall be deemed to have ratified, as of such
renewal, extension, modification, increase, or arrangement date, all of the
representations, warranties, covenants and agreements set forth herein.
Section 3.2. Term Loan. Subject to and upon the terms, conditions,
---------
covenants and agreements contained herein, the Bank agrees to lend to the
Company the sum of $1,300,000 to be evidenced by the Company's promissory note
payable to the order of the Bank in substantially the form of Exhibit E attached
---------
hereto ("Term Note B"). The principal amount from time to time outstanding
under Term Note B shall bear interest during each day the loan evidenced thereby
is outstanding at a variable per annum rate equal to the lesser of (i) the Basic
Rate, as it varies, or (ii) the Maximum Rate, as it varies. Notwithstanding the
foregoing, if at any time the Basic Rate shall exceed the Maximum Rate and
thereafter the Basic Rate shall become less than the Maximum Rate, the rate of
interest payable thereunder shall remain at the Maximum Rate until the Bank
shall have received the amount of interest which the Bank would have received if
the Basic Rate had not been limited by the Maximum Rate during the period of
time the Basic Rate exceeded the Maximum Rate. All past due principal and
interest hereunder and under Term Note B, whether due as the result of
acceleration of maturity or otherwise, shall bear interest at the Default Rate
from the date payment thereof shall have become due until same shall have been
discharged by payment.
The principal of and interest to accrue on Term Note B shall be due and
payable as follows:
The principal of Term Note B is due and payable in eight (8) installments,
all of such installments, except for the last, being in the amount of $162,500
each, and the last and final installment being in the amount of the then
remaining unpaid principal balance thereof, the first such installment of
principal being due and payable on March 31, 1993, and each subsequent
installment of principal being due and payable on the last day of each
succeeding June, September, December and March thereafter until December 15,
1994, when the then remaining unpaid balance of principal of Term Note B shall
become due and payable in full. Interest on said principal shall be due and
payable in monthly installments as it accrues, the first such installment being
due and payable on January 31, 1993 and on the last day of each succeeding
calendar month thereafter until December 15, 1994, when all unpaid accrued
interest and all unpaid principal owing under Term Note B shall be due and
payable.
-20-
All renewals, extensions, modifications, increases, and rearrangements of
Term Note B, if any, shall be deemed to be made pursuant to this Agreement and,
accordingly, shall be subject to the terms and provisions hereof, and the
Company shall be deemed to have ratified, as of such renewal, extension,
modification, increase, or arrangement date, all of the representations,
warranties, covenants and agreements set forth herein.
Section 3.3. Revolving Line of Credit. Subject to, and upon the terms,
------------------------
conditions, covenants and agreements contained herein, the Bank agrees to lend
to the Company at any time, and from time to time, prior to the Termination
Date, such amounts as the Company may request up to, but not exceeding, an
aggregate principal amount at any one time outstanding of the lesser of the Line
of Credit Commitment or the Loan Formula (the "Line of Credit"). Prior to the
Termination Date, the Company may borrow, repay, and reborrow under the Line of
Credit so long as the outstanding principal amount owing to the Bank under the
Revolving Note (as hereinafter defined) at any one time outstanding does not
exceed the lesser of (i) the Line of Credit Commitment or (ii) the Loan Formula.
All loans under the Line of Credit shall be evidenced by the Company's
promissory note payable to the order of the Bank, in substantially the form
attached hereto as Exhibit F (the "Revolving Note"). The principal amount from
---------
time to time outstanding on the Revolving Note shall bear interest during each
day of the term of the loan evidenced thereby at a variable per annum rate equal
to the lesser of (i) the Basic Rate, as it varies, or (ii) the Maximum Rate, as
it varies. Notwithstanding the foregoing, if at any time the Basic Rate shall
exceed the Maximum Rate and thereafter the Basic Rate shall become less than the
Maximum Rate, the rate of interest payable under the Revolving Note shall remain
at the Maximum Rate until the Bank shall have received the amount of interest it
otherwise would have received if the interest payable thereunder had not been
limited by the Maximum Rate during the period of time the Basic Rate exceeded
the Maximum Rate. All past due principal and interest, whether due as a result
of acceleration of maturity or otherwise, shall bear interest at the Default
Rate from the date payment thereof shall have become due until the same have
been discharged fully by payment. All revolving loans made pursuant to this
Section and all payments of principal with respect to all loans under the Line
of Credit shall be evidenced by notations made by the Bank in its business
records. The aggregate unpaid princi pal amount of advances reflected by the
notations made in the Bank's business records shall be rebuttably presumptive
evidence of the principal amount owing and unpaid on the Revolving Note.
-21-
The principal of and interest to accrue on the Revolving Note shall be due
and payable as follows:
Interest to accrue on the Revolving Note shall be due and payable monthly
as it accrues, with the first installment to be due and payable on January 31,
1993, and with a like installment of all accrued but unpaid interest to be due
and payable on or before the last day of each succeeding calendar month
thereafter until the principal amount of the Revolving Note is paid in full; and
the outstanding principal amount of the Revolving Note then outstanding shall be
due and payable in full on the Termination Date.
All renewals, extensions, modifications, increases, and rearrangements of
the Revolving Note, if any, shall be deemed to be made pursuant to this
Agreement and, accordingly, shall be subject to the terms and provisions hereof,
and the Company shall be deemed to have ratified, as of such renewal, extension,
modification, increase, or rearrangement date, all of the representations,
warranties, covenants and agreements set forth herein.
Section 3.4. Advances and Indemnity. Advances under the Line of Credit
----------------------
may be made by written request signed by an authorized officer of the Company or
by telecopy, telex or telephone request. Each borrowing shall be made on a
Business Day. In consideration of the Bank permitting the Company to make
telecopy, telex or telephone requests for advances under the Line of Credit, the
Company covenants and agrees to assume liability for and to protect, indemnify
and save the Bank harmless from, any and all liabilities, obligations, damages,
penalties, claims, causes of action, costs, charges and expenses, including
reasonable attorneys' fees and expenses of employees, which may be imposed,
incurred by or asserted against the Bank by reason of any loss, damage or claim
howsoever arising or incurred because of, out of or in connection with (i) any
action of the Bank pursuant to telecopy, telex or telephone requests for
advances under the Line of Credit, (ii) the breach of any provisions of this
Agreement by the Company, (iii) the transfer of funds pursuant to such telecopy,
telex or telephone requests, or (iv) the Bank's honoring or failing to honor any
telecopy, telex or telephone request for any reason or no reason whatsoever;
provided, however, that the Company shall not indemnify the Bank or save the
Bank harmless from any liabilities or losses resulting from the gross negligence
or willful misconduct of the Bank. The Bank is entitled to rely upon and act
upon telecopy, telex or telephone requests made or purportedly made by any of
the officers or employees specified in the resolutions delivered to the Bank of
even date herewith, as supplemented in writing from time to time and accepted by
the Bank, and to the
-22-
extent permitted by applicable law, the Company shall be unconditionally and
absolutely estopped from denying (x) the authenticity and validity of any such
transaction so acted upon by the Bank once the Bank has advanced funds under the
Line of Credit and has deposited or transferred such funds as requested in any
such telecopy, telex or telephone request, and (y) the Company's liability and
responsibility therefor.
Section 3.5. Loan Formula. The aggregate principal amount at any time
------------
remaining unpaid on the loans made pursuant to the Line of Credit will not be in
excess of the amount arrived at by the computation provided for in the Loan
Formula.
Section 3.6. Optional Prepayments. The Company, at its option, without
--------------------
notice, premium or penalty, may prepay any Note in full at any time or from time
to time in part, upon payment of accrued interest to the date of prepayment on
the Note being so prepaid or the portion of the unpaid principal amount thereof
to be paid; provided, however, that because the Revolving Note is a master
-------- -------
revolving credit note, the Revolving Note shall remain in full force and effect
until terminated as provided therein or until, at a time when no amounts,
principal, interest or otherwise, are then owing, the Company releases the Bank
from any obligation to make loans pursuant thereto. Any such prepayment shall
be applied first to accrued interest, then to the discharge of any expenses or
damages for which the Bank may be entitled to receive reimbursement under any
agreement with the Company, and the balance remaining, if any, shall be applied
to the reduction of principal of the Note so prepaid in the inverse order of
maturity.
Section 3.7. Fees. For and in consideration of the Bank's agreement to
----
provide the credit facility hereunder, (a) the Company shall pay to the Bank, on
or before the Closing Date, as a previously agreed to nonrefundable commitment
fee, the sum of $44,000.00 in immediately available funds (of which the Company
has previously paid the Bank $10,000), and (b) the Company shall pay to the Bank
a commitment fee of one-fourth of one percent (1/4%) per annum on the difference
between (i) $2,000,000 and (ii) the average daily outstanding principal amount
of loans under the Line of Credit computed from date hereof to, but excluding,
the Maturity Date, which fee shall be calculated for each calendar quarter
quarterly in arrears beginning March 31, 1993 and paid within thirty days after
the end of each such calendar quarter, with the last payment being due and
payable on the Maturity Date.
-23-
Section 3.8. Payments.
--------
(a) All payments of principal of and interest on any Note shall be
made to the Bank at its office set forth in Section 8.8.
(b) Whenever any payment of principal of or interest on a Note shall
be due on a day which is not a Business Day, the date for payment thereof shall
be extended to the next succeeding Business Day and interest shall be payable
for such extended time at the rate of interest with respect thereto in effect at
the due date.
Section 3.9. Computation of Interest. Interest on the unpaid principal
-----------------------
amount of a Note from time to time outstanding shall be computed on the basis of
a year of 360 days and paid for the actual number of days elapsed. The Company
will not be required to maintain any deposit as a condition for the borrowings
hereunder.
Section 3.10. Security. Payment of the Notes and the Obligations and the
--------
performance of the covenants set forth in this Agreement will be secured,
directly or indirectly, by a perfected security interest, mortgage, assignment,
pledge or lien, as the case may be, of the required priorities in and upon the
following described property and assets:
(a) All of the Company's and the Corporate Guarantor's present and
future accounts, intellectual property, inventory, equipment, fixtures,
documents, instruments, general intangibles, chattel paper (as such terms are
defined in the UCC), notes receivable, drafts, acceptances and contract rights
now owned or existing and hereafter acquired or arising, wherever located, and
all the proceeds thereof, which property and assets are more particularly
described in, and which security interests will be evidenced by, one or more
Security Agreements; and
(b) 100% of the outstanding capital stock of the Corporate Guarantor,
which pledge and security interest will be evidenced by a Security Agreement-
Pledge.
All security interests, mortgages, assignments, pledges and liens in favor
of the Bank in the Property described in (a) and (b) above shall be and remain a
first priority perfected security interest, mortgage, assignment or lien, as the
case may be, subject only to the Permitted Liens, except that the security
interest, mortgage, assignment or Lien on the intellectual property of IAC
-24-
may be subordinated (upon terms and conditions acceptable to the Bank in its
sole discretion) to a security interest granted the sellers of the capital stock
of the Acquired Company as provided in the Purchase Agreement.
Payment of the Notes and the Obligations will be guaranteed by all
Corporate Guarantors including, without limitation, IAC, each such guaranty to
be evidenced by a Guaranty. Payment of $1,000,000 of the amount from time to
time outstanding under Term Note B shall be guaranteed by the Guarantor, such
guaranty to be evidenced by a Limited Guaranty and secured by pledges of
certificated stock acceptable to the Bank of a market value at all times equal
to at least $1,000,000.
Each of the Company, the Corporate Guarantor and the Guarantor agrees to
execute, acknowledge and deliver to the Bank such instruments, mortgages,
chattel mortgages, deeds of trust, security agreements, security agreement-
pledges, guaranty agreements, state ments, assignments and financing statements,
in form and substance acceptable to the Bank as in the good faith and discretion
of counsel for the Bank may be necessary to enforce, grant to the Bank and
perfect in the United States the security interests, liens, assignments and
mortgages on the Collateral; provided, however, that if any requests by the Bank
-------- -------
for execution of any such instruments shall be made after the first draw
hereunder, then such instruments shall conform as closely as possible to the
instruments executed at closing and shall not contain any terms or provisions
which require the Company, the Corporate Guarantor or the Guarantor to take any
action or perform any act which is not required by the documents executed at
closing. Each of the Company, the Corporate Guarantor and the Bank agrees that
all Collateral now or hereafter securing any of the Obligations hereunder also
shall secure any and all other indebtedness and liabilities now or hereafter
owing by the Company and the Corporate Guarantor, or either of them, to the
Bank.
Section 3.11. No Default. The Bank may, but shall not be required to,
----------
make or continue any advance under the Line of Credit or renew the Revolving
Note if an event has occurred and is continuing which constitutes an Event of
Default or breach of a covenant under this or any other agreement between the
Company, the Corporate Guarantor or the Guarantor and the Bank.
-25-
ARTICLE 4. CONDITIONS PRECEDENT.
---------- --------------------
Section 4.1. Conditions Precedent to First Loans. The obligation of the
-----------------------------------
Bank to make the loans under Term Note A and Term Note B and the initial advance
under the Revolving Note is subject to the condition precedent that on or before
the Closing Date the following shall have been delivered to the Bank in form and
substance satisfactory to the Bank:
(a) The Notes dated the Closing Date and duly executed and delivered
by the Company.
(b) The Limited Guaranty executed by the Guarantor and one or more
Security Agreements-Pledges executed by the Guarantor and the wife of the
Guarantor (together with the stock certificates and stock powers).
(c) The other Loan Documents and such evidence of filings,
acknowledgments or acceptances of any such documents as the Bank may reasonably
request or require, all duly executed and delivered by all parties thereto,
including acknowledgment copies of all UCC-1 financing statements filed,
registered or recorded to perfect the security interest of the Bank (or evidence
satisfactory to the Bank that such have been filed), termination statements or
documents necessary to release any Lien held by a third party not otherwise
permitted hereby) and all stock certificates of IAC (together with appropriate
stock powers), and evidence of filing Security Instruments with all United
States agencies necessary to perfect security interests in intellectual
property. The Security Instruments shall be effective to grant to the Bank
required priority perfected Liens and security interests in all of the
Collateral.
(d) Written opinion or opinions, dated the Closing Date, of counsel
for the Company and its Subsidiaries, in form and substance satisfactory to the
Bank covering all such matters as the Bank may require.
(e) A copy of the Company's and the Corporate Guarantor's articles or
certificates of incorporation and bylaws, including all amendments thereto, all
certified, in the case of the articles or certificates of incorporation, by the
Secretary of State of the respective Person's state of incorporation, and, in
the case the bylaws and other documents, by the President or a Vice President
and the Secretary or an Assistant Secretary of each such Person as being in full
force and effect on the Closing Date, and
-26-
all other documents the Bank may reasonably request relating to the existence,
qualification and good standing of the Company and its Subsidiaries.
(f) A copy of a resolution or resolutions passed by the Boards of
Directors of the Company and the Corporate Guarantor, certified by the President
or a Vice President and the Secretary or an Assistant Secretary of such Person
as being in full force and effect on the Closing Date, each of which corporate
resolutions authorizing the borrowings provided for herein and/or the execution,
delivery and performance of this Agreement, the Notes, and the other Loan
Documents, and any other instrument or agreement required hereunder from such
Person, as the case may be, and providing as to the incumbency, and containing
the specimen signature or signatures, of the person or persons authorized to
execute and deliver this Agreement, the Notes, and the other Loan Documents and
any other instrument or agreement required hereunder.
(g) A summary of the insurance coverage of the Company and its
Subsidiaries, which shall be in form, scope and substance reasonably
satisfactory to the Bank, together with certificates from each insurer required
pursuant to Section 5.5 hereof.
(h) Evidence satisfactory to the Bank that as of the Closing Date the
Bank has the required priority perfected Liens on the Collateral and that there
exist no Liens (other than Permitted Liens) on any property (real or personal)
of the Company or any of its Subsidiaries.
(i) The fees then payable pursuant to Section 3.7 of this Agreement
(including the reasonable fees, expenses and dis bursements of the Bank's
counsel), shall have been paid to the Bank (or such counsel, as applicable).
(j) The pro forma balance sheets of the Company and its Subsidiaries
as of the Closing Date after giving effect to the transactions contemplated by
the Purchase Agreement including the acquisition of the Acquired Company and its
merger into the Corporate Guarantor, prepared in accordance with GAAP on a basis
consistent with the financial statements previously delivered to Bank, certified
by the Chief Accounting Officer of the Company.
(k) Evidence satisfactory to the Bank that all conditions precedent to
the consummation of the Purchase Agreement have been met, that all documents to
be executed pursuant thereto shall have been fully executed and delivered, and
that the
-27-
Acquisition by the Company and the merger of the Acquired Company into IAC have
occurred.
(l) Such other evidence as the Bank may reasonably request to
establish the consummation of the transactions contemplated hereby, the taking
of all proceedings in connection herewith and compliance with the conditions set
forth in this Agreement.
Section 4.2. Conditions Precedent to Each Advance under the Revolving
--------------------------------------------------------
Note. The obligation of the Bank to make any advance under the Revolving Note
----
is subject to the following further conditions precedent:
(a) The representations, warranties and covenants con tained herein
shall be true and correct on the date of each such advance (except to the extent
such representations, warranties and covenants expressly relate to an earlier
date) and the Company shall be deemed to repeat such representations, warranties
and covenants made by it on such date.
(b) The Company shall have performed and complied with all agreements
and conditions contained in this Agreement. No Event of Default or Default
shall have occurred and be continuing.
ARTICLE 5. AFFIRMATIVE COVENANTS. During the term of this Agree ment and
---------- ---------------------
until each of the Notes and all of the Obligations have been paid in full,
unless compliance with the provisions of the following subsections shall have
been waived in writing by the Bank, the Company and, as applicable, the
Corporate Guarantor agree as follows:
Section 5.1. Financial Statements. The Company will furnish the
--------------------
following to the Bank:
(a) As soon as available, but in any event, within 90 days after the
end of each fiscal year of the Company, a copy of the Company's and its
Subsidiaries' annual audited consolidated financial statements (consisting of at
least a balance sheet and related statements of income, retained earnings and
cash flow prepared in conformity with GAAP applied on a basis consistent with
that of the preceding fiscal year), and certified (with an unquali fied opinion)
by an independent certified public accountant selected by the Company and
acceptable to the Bank;
-28-
(b) As soon as available, but in any event not later than ninety (90)
days after the end of each fiscal year of the Company, an unaudited
consolidating balance sheet of the Company and each of its Subsidiaries as at
the end of such fiscal year and the related consolidating statement of earnings
for such fiscal year, all in reasonable detail certified by a proper accounting
officer as having been used in connection with the preparation of the financial
statements referred to in paragraph (a) of this Section;
(c) As soon as available, but in any event, within 30 days of the end
of each calendar month of each fiscal year during the term hereof, unaudited
interim consolidated financial state ments of the Company and its Subsidiaries
prepared and certified by a proper accounting officer of the Company and
prepared similarly to the audited statements referred to in clause (a) above
(subject to normal year-end audit adjustments) and consisting of at least
balance sheets as of the close of such period and profit and loss statements for
the period then ended and for the period from the beginning of the fiscal year
to the close of such period;
(d) Upon the written request by the Bank, a copy of the federal income
tax return of the Company and its Subsidiaries for the current fiscal year most
recently ended, certified by a proper financial officer of the Company and its
Subsidiaries;
(e) Promptly upon their becoming available, the Company will deliver
copies of: (i) all financial statements, reports, notices and proxy statements
sent or made available by the Company or any of its Subsidiaries to their
security holders; (ii) all regular and periodic reports and all registration
statements and prospectuses, if any, filed by the Company or any of its
Subsidiaries with any securities exchange or with the U.S. Securities and
Exchange Commission or any Governmental Authority; and (iii) all press releases
and other statements made available by the Company or any of its Subsidiaries to
the public concerning the financial condition of the Company or any of its
Subsidiaries;
(f) (i) Promptly after the filing thereof with the United States
Secretary of Labor or the Pension Benefit Guaranty Corporation, copies of each
annual and other report made by the Company or any of its Subsidiaries with
respect to each Plan or any trust created thereunder, and (ii) immediately upon
becoming aware of the occurrence of any "reportable event," as such term is
defined in ERISA, or of any "prohibited transaction," as such term is defined in
the Internal Revenue Code of 1986, as amended, in connection with any Plan or
any trust created thereunder, a notice
-29-
signed by the President or a principal financial officer of the Company and its
Subsidiaries specifying the nature thereof, what action the Company or its
Subsidiary is taking or proposes to take with respect thereto and, when known,
any action taken by the Internal Revenue Service with respect thereto;
(g) As soon as available, but in any event, within 30 days after the
end of each month during the term hereof, a monthly listing and aging of
accounts receivable of the Company and the Corporate Guarantor, together with a
Loan Formula Certificate for the appropriate time period, certified by a proper
accounting officer of the Company and the Corporate Guarantor containing a
certificate of a proper financial officer of the Company and the Corporate
Guarantor stating that a review of the activities of the Company and the
Corporate Guarantor during the period covered by such certificate has been made
under his supervision with a view to determining whether the Company has kept,
observed, performed and fulfilled all of its obligations under this Agreement,
the Notes, the Security Instruments and the other Loan Documents, and that, to
the best of his knowledge, during such period, it has kept, observed, performed
and fulfilled each and every covenant in this Agreement, the Notes, the Security
Instruments and the other Loan Documents, and is not at the time in default
under any of the same, or if it shall have been or shall be in default,
specifying the same; and
(h) Such other financial and other information con cerning the Company
and its Subsidiaries as the Bank shall reasonably request from time to time.
Section 5.2. Payment of Obligations. The Company will and will cause
----------------------
each of its Subsidiaries to pay and discharge when due all of their respective
Indebtedness and all obligations, except those being contested in good faith by
appropriate proceedings, and against which the Company or the applicable
Subsidiary has set up adequate reserves, in accordance with GAAP.
Section 5.3. Notice; Litigation. The Company shall promptly give written
------------------
notice to the Bank of (i) the occurrence of any Default or Event of Default,
(ii) any legal, judicial or regulatory proceedings affecting the Company, any of
its Subsidiaries, or any of its or that properties or assets in which the amount
involved is material, is not covered (subject to normal deductibles) by insur
ance and is likely to have a material adverse effect on the busi ness or the
financial condition of the Company or any of its Sub sidiaries, (iii) any
dispute between the Company or any of its Subsidiaries and any Governmental
Authority or other Person that is
-30-
likely to interfere materially with the normal business operations of the
Company or any of its Subsidiaries, (iv) any substantial damage to any material
part of the Collateral, specifying the nature and extent of damage and whether
such damage is being repaired in due course, or total loss or destruction of any
mater ial part of the Collateral, (v) any other action, event or condi tion of
any nature of which it has knowledge which may have, or lead to, or result in,
any Material Adverse Effect, (vi) the volun tary or involuntary bankruptcy of,
or any assignment for the bene fit of creditors or the seeking of any relief
under any bankruptcy or other similar laws by, the Company or any of its
Subsidiaries, and (vii) receipt by the Company of any notice received by the
Company from or on behalf of the PVI Selling Shareholders (as such term is
hereinafter defined) or the Acquired Company under the Purchase Agreement or any
instrument issued in connection there with, including without limitation the
Software Escrow Agreement (as such term is defined in the Purchase Agreement) or
the Seller Security Agreement (as such term is hereinafter defined).
Section 5.4. Maintenance of Corporate Existence and Proper ties. The
--------------------------------------------------
Company will and will cause each Subsidiary to, (i) continue to engage in the
businesses presently being operated, (ii) maintain their respective corporate
existence and good standing in each jurisdiction in which they, or any of them,
may be required to be qualified, (iii) keep and maintain all franchises,
permits, licenses and properties useful and necessary in the conduct of its
business in good order and condition, and (iv) duly observe and conform to all
material requirements of any Governmental Author ities relative to the conduct
of its business or the operation of its properties or assets, if such failure
duly to observe and conform to such requirements would have a Material Adverse
Effect or could result in criminal prosecution.
Section 5.5. Insurance. The Company will and will cause each of its
---------
Subsidiaries to maintain insurance with financially sound and responsible
companies, in such form, in such amounts and against such risks (including,
without limitation, public liability and property damage insurance) as is
customarily carried by com panies engaged in the same or similar businesses,
operating like properties and similarly situated. The Company and its Subsidiar
ies will have the right to place any such insurance with any insur ance carrier
reasonably acceptable to the Bank. Upon execution of this Agreement, the
Company will furnish the Bank (i) a summary of the insurance coverage of the
Company and its Subsidiaries, together with certificates showing the Bank as
loss payee to the extent its interests may appear, all such policies to be non
cancellable without 15 days' prior written notice to the Bank, and
-31-
will supplement such summary from time to time as the amounts or terms of such
insurance coverage change in any material respect, and (ii) upon request, copies
of the applicable policies and proof of payment of the premiums therefor.
Section 5.6. Payment of Taxes. The Company will and will cause each of
----------------
its Subsidiaries to pay and discharge when due all taxes, assessments and other
liabilities, except those being contested in good faith by appropriate
proceedings, and against which the Company (or its appropriate Subsidiary) has
set up adequate reserves, in accordance with GAAP.
Section 5.7. Accounts Receivable and Payable. The Company will and will
-------------------------------
cause each of its Subsidiaries to pay their respec tive accounts payable and
will maintain its accounts receivable in a manner consistent with normal
business practices, including normal terms and conditions for payment, for
companies engaged in similar operations in similar jurisdictions.
Section 5.8. Further Assurances. The Company, at any time and from time
------------------
to time, will, and will cause each of its Subsidiar ies to execute and deliver
such further instruments and take such further action as may reasonably be
requested by the Bank in order to cure any defects in the execution and delivery
of, or to comply with or accomplish the covenants and agreements contained in
this Agreement, the Notes, the Security Instruments or the other Loan Documents.
Section 5.9. Inspection. The Company will and will cause each of its
----------
Subsidiaries to permit the Bank (and any Person appointed by the Bank to act for
it and on its behalf) to examine their respective corporate and financial books
and records and other records, books and properties and to discuss their
respective affairs, finances and accounts with the officers of the Company and
its Subsidiaries and the Company's and its Subsidiaries' indepen dent certified
public accountants at all reasonable times and as often as may be reasonably
requested by the Bank.
Section 5.10. Mandatory Prepayment. At the same time a Loan Formula
--------------------
Certificate is required to be delivered pursuant to Subsection 5.1(f) hereof,
the Company will pay the Mandatory Prepayment, if any.
Section 5.11. Current Ratio. The Company and its Subsidiar ies will
-------------
maintain, on a consolidated basis, a ratio of (a) Current Assets to (b) Current
Liabilities less Unearned Revenues of not less than 1.25 to 1.0 at all times
throughout the term hereof.
-32-
Section 5.12. Indebtedness to Net Worth Ratio. The Company and its
-------------------------------
Subsidiaries will maintain, on a consolidated basis, a ratio of total
Indebtedness (excluding Unearned Revenues and amounts on all Subordinated
Indebtedness that are due on and to become due more than one year from the date
as of which such deter mination is to be made) to Net Worth of not greater than
(i) 2.25 to 1.0 at all times from the date of this Agreement until December 30,
1992, (ii) 2.0 to 1.0 at all times from and after December 31, 1992 until
December 30, 1993, and (iii) 1.50 to 1.0 at all times from December 30, 1993 and
thereafter throughout the term hereof.
Section 5.13. Indebtedness to Tangible Net Worth Ratio. The Company and
----------------------------------------
its Subsidiaries will maintain, on a consolidated basis, a ratio of total
Indebtedness (excluding Unearned Revenues and amounts on all Subordinated
Indebtedness that are due on and to become due more than one year from the date
of which such determi nation is to be made) to Tangible Net Worth of not greater
than (i) 12.00 to 1.00 at all times from and after December 31, 1992 until
December 30, 1993 and not greater than (ii) 2.50 to 1.00 at all times from and
after December 31, 1993 and thereafter throughout the term hereof.
Section 5.14. Net Worth. The Company and its Subsidiaries will maintain,
---------
on a consolidated basis, a positive Net Worth of at least (i) $5,750,000 at all
times from date of this Agreement until December 30, 1992, (ii) at least
$6,000,000 from December 31, 1992, until December 30, 1993 and (iii) at least
$7,500,000 from December 31, 1993 to and thereafter throughout the term hereof.
Section 5.15. Tangible Net Worth. The Company and its Sub sidiaries will
------------------
maintain, on a consolidated basis, a positive Tangi ble Net Worth of at least
(i) $900,000 at all times from December 31, 1992, until December 30, 1993 and
(ii) $3,300,000 at all times from December 31, 1993 to and thereafter throughout
the term hereof.
Section 5.16. Cash Flow (less Capitalized Software Develop ment Expenses)
-----------------------------------------------------------
to Fixed Charge Ratio. The Company and its Subsid iaries will maintain, on a
---------------------
consolidated basis, a ratio of Cash Flow (less Capitalized Software Development
Expenses) to Fixed Charges,
(a) calculated for each period set forth below as of the last day of
such period, of not less than the ratio set forth opposite such period:
-33-
Period Ratio
------ -----
01/01/92 through 12/31/92 1.20 to 1.0
01/01/93 through 03/31/93 1.20 to 1.0
01/01/93 through 06/30/93 1.20 to 1.0
01/01/93 through 09/30/93 1.20 to 1.0
01/01/93 through 12/31/93 1.50 to 1.0
(b) after December 31, 1993, calculated for each four quarter period
ending on each March 31, June 30, September 30, and December 31, as of the last
day of such four quarter period, of not less than 1.50 to 1.0.
Section 5.17. Cash Flow to Fixed Charge Ratio. The Company and its
-------------------------------
Subsidiaries will maintain, on a consolidated basis, a ratio of Cash Flow to
Fixed Charges,
(a) calculated for each period set forth below as of the last day of
such period, of not less than the ratio set forth opposite such period:
Period Ratio
------ -----
01/01/92 through 12/31/92 1.75 to 1.0
01/01/93 through 03/31/93 1.75 to 1.0
01/01/93 through 06/30/93 1.75 to 1.0
01/01/93 through 09/30/93 1.75 to 1.0
01/01/93 through 12/31/93 2.00 to 1.0
(b) after December 31, 1993, calculated for each four quarter period
ending on each March 31, June 30, September 30, and December 31, as of the last
day of such four quarter period, of not less than 2.0 to 1.0.
Section 5.18. Environmental Compliance. The Company will, and will cause
------------------------
each of its Subsidiaries, contractors and invitees to, comply in all material
respects with the requirements of all Governmental Authorities pursuant to
Environmental Laws or the
-34-
common law. The Company shall not cause or permit any Hazardous Materials to be
brought upon or kept or used on or about its or any of its Subsidiaries Property
in violation of any Environmental Law or which results in any Hazardous
Materials Contamination.
Section 5.19. Notification. If the Company or any of its Subsidiaries
------------
shall become aware of or receive notice or other communication concerning any
actual, alleged, suspected or threatened violation of Environmental Laws, or
liability of the Company or any of its Subsidiaries for any Hazardous Materials
Contamination in connection with the Property or past or present activities of
any Person thereon, or the Company obtains actual knowledge that any
environmental representation set forth in this Agreement is not or is no longer
accurate in all material respects, including but not limited to notice or other
communication concern ing any actual or threatened investigation, inquiry,
lawsuit, claim, citation, directive, summons, proceeding, complaint, notice,
order, writ, or injunction, relating to same, then the Company or any of its
Subsidiaries shall deliver to the Bank within ten (10) days of the receipt of
such notice or communication by the Company or any of its Subsidiaries, a
written description of said xxxxx tion, liability, correcting information, or
actual or threatened event or condition, together with copies of any documents
evidenc ing same. Receipt of such notice shall not be deemed to create any
obligation on the part of the Bank to defend or otherwise respond to any such
notification.
-35-
Section 5.20. Collateral Audit. The Company and the Corpo rate Guarantor
----------------
agree to permit the Bank through its commercial finance department or other
agents employed by the Bank, to conduct at reasonable times an annual audit of
the Collateral, at the Company's expense.
Section 5.21. Copyrights, Patents, Trademarks and Licenses, Patents, etc.
----------------------------------------------------------
The Company and all of its Subsidiaries own or are licensed or otherwise have
the right to use all of the patents, trademarks, service marks, trade names,
copyrights, franchises, authorizations and other rights that are reasonably
necessary for the operations of their respective businesses, without conflict
with the rights of any other Person with respect thereto. To the best knowledge
of the Company, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed by the Company or any of its Subsidiaries infringes upon any rights
owned by any other Person; no claim or litigation regarding any of the foregoing
is pending or threatened, and no patent, invention, device, application,
principle or any statute, law, rule, regulation, standard or code is pending or,
to the knowledge of the Company, proposed, which, in either case would
reasonably be expected to result in a Material Adverse Effect.
Section 5.22. Purchase Agreement. The Company will not modify or amend
------------------
the Purchase Agreement or any agreement executed in connection with or pursuant
to the Purchase Agreement without the prior written consent of the Bank.
Section 5.23. Availability of Records. The Company and the Corporate
-----------------------
Guarantor will permit any representative, accountant, officer, employee, or
attorney of the Bank to (i) visit and inspect any of the properties of the
Company and the Corporate Guarantor, (ii) examine the books and financial
records of the Company and the Corporate Guarantor, (iii) verify the due
investment and applica tion of the proceeds of the Notes in accordance with
Section 2.6 hereof, and (iv) discuss the affairs, finances and accounts of the
Company and the Corporate Guarantor with their officers and independent
certified public accountants, all at such reasonable times and during reasonable
business hours, and as often as the Bank may deem necessary.
Section 5.24. Regulations U and X. No part of the proceeds received by
-------------------
the Company hereunder will be used, directly or indirectly, for the purpose of
purchasing or carrying, or for payment in full or in part of Indebtedness which
was incurred for
-36-
the purpose of purchasing or carrying, any "margin stock," as such term is
defined in Regulation U. No part of the proceeds received by the Company from
the loans made hereunder will be used for any purpose which violates Regulation
X.
ARTICLE 6. NEGATIVE COVENANTS.
---------- ------------------
During the term of this Agreement and until the Notes and all of the
Obligations have been paid in full, unless compliance with the following
subsections shall have been waived in writing by the Bank, the Company agrees as
follows:
Section 6.1. Limitations on Borrowings. The Company will not, and will
-------------------------
not permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Indebtedness except (i) the Indebted ness incurred under this Agreement and
other Indebtedness to the Bank, (ii) the Indebtedness (other than for borrowed
money) on open account or under trade acceptances in the ordinary course of busi
ness in connection with normal trade obligations, (iii) unsecured intercompany
accounts between the Subsidiaries of the Company, or any of them, on the one
hand, and the Company, on the other, (vii) the Indebtedness for taxes and other
charges to the extent per mitted under Sections 5.2 and 5.6 hereof and (v)
Indebtedness listed on Exhibit G hereto.
---------
Section 6.2. Limitations on Liens. The Company will not and will not
--------------------
permit any of its Subsidiaries to, create, assume or suffer to exist any
mortgage, Lien, pledge, charge, security interest or other encumbrance of any
kind upon any of its properties or assets, whether now owned or hereafter
acquired, except Permitted Liens and except security interests in favor of the
existing IMSL shareholders, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx
and Xxxxxx X. and Xxx X. Xxxx, which security interests shall be released prior
to December 31, 1992.
Section 6.3. Limitations on Contingent Liabilities. The Company will
-------------------------------------
not, and will not permit any of its Subsidiaries to create, assume or suffer to
exist any Contingent Liabilities, except (i) as permitted hereunder, (ii) for
endorsements of instruments for collection in the ordinary course of business,
(iii) any such liability in favor of the Bank, and (iv) the guaranty by IAC of
the obligations of the Company secured by the Seller Security Agreement
(hereinafter defined) such guaranty to be subordinated as provided in such
Seller Security Agreement.
-37-
Section 6.4. Loans, Advances and Investments. The Company will not, and
-------------------------------
will not permit any of its Subsidiaries to, make or permit to remain outstanding
any advances, loans or extensions of credit to, or purchase or own any stock,
bonds, notes, debentures, or other securities of, or make any investments in,
any Person except (i) accounts, instruments, chattel paper, and general
intangibles (as defined in the UCC) arising or acquired in the ordinary course
of business, (ii) advances, loans and extensions of credit to Subsidiaries
(excluding IAC) not to exceed the aggregate net amount of advances, loans and
extensions of credit outstanding as of November 30, 1992 aggregating $1,949,201
(as described on Schedule III attached hereto) plus $250,000 in the aggregate,
(iii) Cash Equivalents, (iv) expenses, advances and loans made to employees of
the Company in the ordinary course of business and not exceeding an aggregate
amount of $50,000.00 at any one time outstanding, (v) extensions of credit by
IAC to the selling Shareholders of the Acquired Company outstanding on the
Closing Date, which amount shall not exceed $430,107 in the aggregate, (vi)
funds necessary to consummate the transactions contemplated by the Purchase
Agreement in accordance with its terms, provided that the expenditures for same
shall not cause a Default hereunder.
Section 6.5. Limitations on Fundamental Changes; Disposition of Assets.
---------------------------------------------------------
The Company will not and will not permit any of its Subsidiaries to, (i) form
any new Subsidiary, (ii) enter into any transaction of merger or consolidation
except as contemplated by the Purchase Agreement, (iii) liquidate or dissolve
itself (or suffer any liquidation or dissolution), (iv) convey, sell, lease,
charter or otherwise dispose of all or any substantial part of its property,
assets or business, or (v) except in the ordinary course of business, enter into
any arrangement, directly or indirectly, whereby the Company or any of its
Subsidiaries would sell or transfer any properties, either now owned or
thereafter acquired, and then or thereafter lease as lessee such properties or
any part thereof or any other property to be used for substantially the same
purpose.
Section 6.6. Dividends. The Company will not declare or pay any dividend
---------
(other than dividends payable solely in stock) or make, or permit any of its
Subsidiaries to make, any other distribution on account of, or purchase,
acquire, retire, or redeem any stock of the Company or such Subsidiary whether
now owned or hereafter outstanding, provided the Company may purchase the stock
of the Acquired Company as contemplated by the Purchase Agreement and provided a
Subsidiary may pay dividends to the Company.
Section 6.7. Subordination of Claims. The Company will not and will not
-----------------------
permit any of its Subsidiaries to, subordinate or permit to be subordinated any
claim against, or obligation of,
-38-
another Person held or owned by it to any other claim against, or obligation of,
such other Person.
Section 6.8. ERISA Compliance. The Company will not permit, and will not
----------------
permit any of its Subsidiaries to, at any time any Plan is being maintained by
it, to
(a) Engage in any "prohibited transaction," as such term is defined in
Section 4975 of the Code;
(b) Incur any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA; or
(c) Terminate any such Plan in a manner which could result in the
imposition of a lien on the property of the Company pursuant to Section 4068 of
ERISA.
Section 6.9. Nature of Business. The Company will not, and will not
------------------
permit any of its Subsidiaries to, (i) engage in any lines of business or
business ventures other than those in which it is presently engaged or that are
directly related thereto, (ii) change in any material respect its respective
methods of operation or manner of doing business, (iii) without the prior
written consent of the Bank, carry on its respective business at any location or
locations other than those presently in existence, or (iv) change its respective
name, its identity as a corporation or its corporate structure.
Section 6.10. Supply and Purchase Contracts. The Company will not, and
-----------------------------
will not permit any of its Subsidiaries to, enter into or be a party to any
contract for the purchase of materials, supplies or other property if such
contract requires that payment for such materials, supplies or other property
shall be made regardless of whether or not delivery of such materials, supplies
or other property is ever made or tendered.
Section 6.11. Transactions with Affiliates and Other Persons. The Company
----------------------------------------------
will not, and will not permit any of its Subsidiaries to, engage in any
transaction with an Affiliate on terms less favorable to it than would be
obtainable at the time in comparable transactions with Persons not affiliated
with the Company.
Section 6.12. Capital Expenditures. The Company will not, and will not
--------------------
permit any of its Subsidiaries to, expend or enter into any commitment to expend
an amount in the aggregate for the acquisition or lease of tangible, fixed or
capital assets, including repairs, replacements and improvements, which are
-39-
capitalized under proper accounting practice, but excluding Capitalized Software
Development Expenses, which exceeds $500,000.00 in the aggregate during any
fiscal year during the term hereof.
Section 6.13. Bonuses. The Company will not, and will not permit any of
-------
its Subsidiaries to, compensate officers or directors of the Company or any of
its Subsidiaries, by way of cash bonus greater than $500,000 in the aggregate
during any year throughout the term hereof.
Section 6.14. Subordinated Indebtedness. The Company will not and will
-------------------------
not permit any of its Subsidiaries to:
(a) make any voluntary or optional payment or prepayment on any
Subordinated Indebtedness now or hereafter outstanding or make any redemption,
retirement, purchase or other acquisition, direct or indirect, of any
Subordinated Indebtedness or set aside money or securities for a sinking or
similar fund for the payment of principal of a premium or interest on any
Subordinated Indebtedness or set apart money for the defeasance of any
Subordinated Indebtedness; or
(b) amend, modify or change, or consent or agree to any amendment,
modification or change to, any of the terms relating to Subordinated
Indebtedness (other than any such amendment, modification or change which would
extend the maturity or reduce the amount of any payment of principal thereof or
which would reduce the rate or extend the date of payment of interest thereon).
ARTICLE 7. DEFAULT.
---------- -------
Section 7.1. Events of Default. The occurrence of any of the following
-----------------
events or conditions shall constitute an "Event of Default":
(a) Failure of the Company to pay any principal of or interest on any
of the Notes, any other amount payable hereunder, or to perform any of the
Obligations when due or declared due;
(b) Any representation or warranty made by either of the Company or
the Corporate Guarantor in this Agreement or by the Company, the Corporate
Guarantor, the Guarantor or the wife of the Guarantor in any of the other Loan
Documents or in any certificate, financial or other statement furnished by
either of the Company, the Corporate Guarantor or the Guarantor pursuant hereto
or thereto
-40-
or in connection herewith or therewith is untrue in any material respect as of
the date made or furnished;
(c) Failure by the Company or the Corporate Guarantor to perform any
term, covenant or agreement contained in Sections 5.3, 5.4, 5.5, 5.10 or 5.22 or
in Article 6. hereof;
(d) Failure by the Company or the Corporate Guarantor to observe or
perform of any of the other covenants, terms or agree ments of this Agreement or
any other agreements with the Bank and such default shall continue unremedied
for a period of fifteen (15) days after the earlier of (i) the date when an
officer of the Company or a Subsidiary knew or should have known of such failure
or (ii) the date upon which written notice thereof has been given to the Company
by the Bank;
(e) The Company or the Corporate Guarantor (i) is generally not paying
its Indebtedness as it becomes due, (ii) fails to pay any principal of or
interest on any obligation or obligations for borrowed money beyond the period
of grace, if any, provided for in the instrument or agreement under which the
same was created, or (iii) fails to observe or perform any other term, condition
or agreement contained in any obligation or obligations for borrowed money or in
any instrument or agreement evidencing, securing or relating thereto if the
effect thereof is to cause or permit the holder or holders of such obligation
(or a trustee or an agent on behalf of such holder or holders) to cause any such
obligation to become due prior to its stated maturity provided that the
aggregate amount of all such amounts referenced in clauses (ii) and (iii) above
as to which such default shall occur and be continuing shall exceed $25,000.00;
(f) An event of default shall occur under any of the Loan Documents;
(g) A default or event of default or a breach of covenant shall occur
under the Purchase Agreement or under any document or instrument executed by the
Company or the Corporate Guarantor or any other party pursuant thereto or in
connection therewith or the subordination provisions contained in any such
document or instrument shall not be complied with or shall be found
unenforceable or invalid; or
(h) Any Loan Document ceases to be in full force and effect and
valid, binding, and enforceable in accordance with its terms, or any of the
Security Instruments ceases to create a valid
-41-
and perfected first priority Lien as required hereby and thereby, or the Company
or the Guarantor shall so state in writing;
(i) Filing by either of the Company or the Corporate Guarantor of a
voluntary petition or any answer seeking reorganiza tion, arrangement,
readjustment of its or his debts or for any other relief under any applicable
bankruptcy act or law, or under any other insolvency act or law, now or
hereafter existing, or any action by either of the Company or the Corporate
Guarantor consenting to, approving of or acquiescing in any such petition or
proceeding; the application by either of the Company or the Corporate Guarantor
for, or the appointment by consent or acquiesc ence of, a receiver or trustee
for either of the Company or the Corporate Guarantor or for all or a substantial
part of its or his property; the making by either of the Company or the
Corporate Guarantor of an assignment for the benefit of creditors, the inability
of either of the Company or the Corporate Guarantor, or the admission by either
of the Company or the Corporate Guarantor in writing of its or his inability, to
pay its or his debts as they mature (the term "acquiescence" means the failure
to file a petition or motion in opposition to such petition or proceeding or to
vacate or discharge any order, judgment or decree providing for such appointment
within 30 days after the appointment of a receiver or trustee);
(j) Filing of an involuntary petition against either of the Company or
the Corporate Guarantor in bankruptcy or seeking reorganization, arrangement or
readjustment of its or his debts or for any other relief under any applicable
bankruptcy act or law, or under any other insolvency act or law, now or
hereafter existing and such petition remains undismissed for a period of 90 days
from such filing; or the involuntary appointment of a receiver or trustee for
either of the Company or the Guarantor for all or a substantial part of its or
his property and such appointment remains unvacated or unopposed for a period of
30 days from such appointment; or the issuance of a writ of attachment,
execution or similar process against any substantial part of the property of
either of the Company or the Corporate Guarantor and such writ remains unbonded
or undismissed for a period of 30 days from the date notice thereof is received
by either of the Company or the Corporate Guarantor, as the case may be;
(k) Final judgment for the payment of money (not covered by insurance)
shall be rendered against either of the Company or the Corporate Guarantor and
the same shall remain undischarged for a period of 30 days, during which
execution shall not be effectively stayed;
-42-
(l) Any substantial impairment of value, loss, damage or destruction
(not covered by insurance) of the Collateral occurs; or
(m) A trustee shall be appointed by an appropriate United States
District Court to administer any Plan of the Company or the Corporate Guarantor,
or the Pension Benefit Guaranty Corporation shall institute proceedings to
terminate any Plan of the Company or the Corporate Guarantor.
Section 7.2. Optional Acceleration. Upon the occurrence of any Event of
---------------------
Default set forth in Subsection 7.1(a), (b), (c), (d), (e), (f), (g), (h), (k),
(l) or (m) hereof, any obligation of the Bank to extend credit to the Company
under the Revolving Note shall immediately terminate and the holder of the
Notes, at its option, without notice to any of the Company, the Corporate
Guarantor, or the Guarantor, may declare the principal of and interest accrued
on the Notes to be forthwith due and payable, whereupon the same shall become
due and payable without any presentment, demand, protest, notice of protest,
notice of intent to accelerate, notice of acceleration, or notice of any kind
(except notice required pursuant to this Agreement or otherwise required by
applicable law), all of which are hereby waived to the extent permitted by
applicable law; provided, however, that the Bank shall give telecopy or written
-------- -------
notice to the Company promptly after taking any such action.
Section 7.3. Automatic Acceleration. Upon the occurrence of any Event of
----------------------
Default set forth in Subsection 7.1(i) or (j) hereof, any obligation of the Bank
to make advances under the Revolving Note shall automatically terminate and the
principal of and interest accrued on all of the Notes shall be immediately and
auto matically due and payable without notice or demand of any kind, and the
same shall be due and payable immediately without any presentment, acceleration,
demand, protest, notice of intent to accelerate, notice of acceleration, notice
of protest or notice of any kind (except notice required pursuant to this
Agreement or otherwise required by applicable law), all of which are hereby
waived to the extent permitted by applicable law.
Section 7.4. Additional Remedies. In case any one or more Events of
-------------------
Default shall occur, the Bank may proceed to protect and enforce the rights of
the Bank by an action at law, suit in equity or other appropriate proceeding,
whether for the specific perform ance of any agreement contained herein, in the
Notes, or in the other Loan Documents, or for an injunction against a violation
of
-43-
any of the terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law, or otherwise. In addition, the Company and
the Corporate Guarantor will pay to the Bank such further amount as shall be
sufficient to cover the cost and expenses of collection, including, without
limitation, reason able attorneys' fees, expenses and disbursements. No course
of dealing and no delay on the part of any holder of the Notes in exercising any
right, power or remedy shall to the extent permitted by applicable law, operate
as a waiver thereof or otherwise preju dice such holder's rights, powers or
remedies. No right, power or remedy conferred by this Agreement, the Notes, or
by the other Loan Documents upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.
Section 7.5. Subordination. In connection with the Acquisi tion, the
-------------
Company has issued or will issue to certain of the Shareholders of the Acquired
Company ("PVI Selling Shareholders") certain promissory notes ("Seller Notes")
pursuant to Section 2.3(b) of the Purchase Agreement, the Seller Notes to be in
substantially the form attached to the Purchase Agreement as Exhibit D, payment
of the Seller Notes to be secured by a security agreement substantially in the
form of Exhibit E to the Purchase Agreement ("Seller Security Agreement").
Payment of the Seller Notes and of the other Consideration other than from the
proceeds of the Senior Collateral (as such terms are defined in the Seller
Security Agreement) is and shall remain subordinated to payment of the
Obligations (as such term is defined in this Agreement) as provided in the
Seller Notes and the Seller Security Agreement. Upon the occurrence of an Event
of Default hereunder, no further amount shall be payable by the Company under
the Seller Notes except as may be specifically provided in the Seller Notes and
Seller Security Agreement. Further, as provided in the Seller Security
Agreement, the PVI Selling Shareholders have been granted a security interest in
the intellectual property of IAC acquired through the merger of the Acquired
Company into IAC as contemplated by the Purchase Agreement and on the real
estate of the Company located in Ft. Bend County, Texas, such security interest
being superior to the security interest of the Bank in such intellectual
property collateral, but the PVI Selling Shareholders may not foreclose on the
security interest in such intellectual property until an Event of Default shall
have occurred hereunder or pursuant to a Seller Security Agreement and the PVI
Selling Shareholders shall first have given the Bank fifteen business days prior
notice. After the occurrence of an Event of Default, the PVI Selling
Shareholders may not seek any deficiency or other additional payment from the
Company pursuant to the Seller Notes or for
-44-
application to the other Consideration or seek to enforce any remedy against any
Collateral of the Company in which the PVI Selling Shareholders possess a
security interest, other than payments from or actions in connection with the
realization of proceeds from the Senior Collateral, as defined in the Seller
Security Agreement, until the earlier of (i) all Obligations of the Company
hereunder shall have been paid in full or (ii) six months shall have elapsed
from the occurrence of an Event of Default hereunder or under a Seller Security
Agreement. The Bank hereby agrees to the provisions of Section 8(j) as such
provisions relate to the relative rights of the Bank and the PVI Selling
Shareholders.
ARTICLE 8. MISCELLANEOUS.
---------- -------------
Section 8.1. No Waiver; Cumulative Remedies. No failure to exercise and
------------------------------
no delay in exercising, on the part of the Bank, any right, power or privilege
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law or in any other agreement.
Section 8.2. Survival of Agreements. All representations and warranties,
----------------------
all covenants and all provisions for indemnification and for the payment of
expenses contained in this Agreement or made in writing by or on behalf of the
Company or any other Person in connection with the transactions contemplated by
this Agreement shall survive the execution and delivery of this Agreement and
the other Loan Documents, any investigation at any time made by the Bank or on
its behalf, the making of the loan by the Bank under this Agreement, any
transfer of title to the Property (whether by sale, foreclosure, deed in lieu of
foreclosure or otherwise) and any disposition or payment of the Notes. All
statements contained in any certificate or other instrument delivered by or on
behalf of the Company or any other Person pursuant to this Agreement and the
other Loan Documents or in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be deemed representations and
warranties of the Company under this Agreement.
Section 8.3. Successors. This Agreement shall be binding upon each of
----------
the Company and the Corporate Guarantor, and their respective successors,
assigns, heirs and legal representatives,
-45-
and shall inure to the benefit of the Bank and its successors and assigns.
Section 8.4. Counterparts. This Agreement may be executed in any number
------------
of counterparts and all of such counterparts taken to gether shall be deemed to
constitute one and the same instrument.
Section 8.5. Severability. In case any one or more of the provisions
------------
contained in this Agreement, the Notes, or any other Loan Document should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not be affected in any way thereby.
Section 8.6. Interest. It is the intention of the parties hereto to
--------
comply with applicable usury laws; accordingly, it is agreed that
notwithstanding any provisions to the contrary in this Agreement, the Notes, the
other Loan Documents or in any of the documents securing payment thereof or
otherwise relating thereto, in no event shall this Agreement or such instruments
or documents require the payment or permit the collection of interest, as
defined under applicable usury laws, in excess of the maximum amount permitted
by such laws. If any such excess of interest is contracted for, charged or
received under this Agreement, the Notes, the other Loan Documents or under the
terms of any of the documents securing payment thereof or otherwise relating
thereto or if the maturity of the indebtedness evidenced by any of the Notes is
accelerated in whole or in part, or in the event that all or part of the
principal of or interest on any of the Notes shall be prepaid, so that under any
of such circumstances the amount of interest contracted for, charged or received
under this Agreement, any of the Notes, the other Loan Documents or under any of
the documents securing payment thereof or otherwise relating thereto on the
amount of principal actually outstanding from time to time under the respective
Note shall exceed the maximum amount of interest permitted by applicable usury
laws, then in any such event (i) the provisions of this Section shall govern and
control, (ii) neither the Company nor any other Person now or hereafter liable
under this Agreement or the other Loan Documents for the payment of any of the
Notes shall be obligated to pay the amount of such interest to the extent that
it is in excess of the maximum amount of interest permitted to be contracted for
by, charged to or received from the Person obligated thereon under applicable
usury laws, (iii) any such excess which may have been collected either shall be
applied as a credit against the then unpaid principal amount on the respective
Note or refunded to the Person paying the same, at the holder's option, and (iv)
the effective rate of inter-
-46-
est shall be automatically reduced to the maximum lawful rate of interest
permitted under applicable usury laws as now or hereafter construed by the
courts having jurisdiction thereof. It is further agreed that, without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged or received under this Agreement, the Notes, the other Loan
Documents or under such other documents or instruments which are made for the
purpose of determining whether such rate exceeds the maximum lawful rate of
interest shall be made, to the extent permitted by applicable usury laws, by
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the indebtedness evidenced by the Notes, all interest
at any time contracted for, charged or received from the Company or otherwise by
the holder or holders thereof in connection with the Notes, the other Loan
Documents or this Agreement.
Section 8.7. Expenses; Documentary Taxes.
---------------------------
(a) The Company will pay (i) all out-of-pocket expenses of the Bank
(including reasonable fees, expenses and disbursements of counsel for the Bank)
in connection with the preparation, negotiation, enforcement, operation and
administration of this Agreement, the Notes, the other Loan Documents, or any
documents executed in connection therewith, or any waiver, modification or
amendment of any provision hereof or thereof; and (ii) if an Event of Default
occurs and is continuing, all court costs and costs of collection, including,
without limitation, reasonable fees, expenses and disbursements of counsel
employed in connection with any and all collection efforts; then, and in any
such event, the reasonable attorneys' fees arising from such services, including
those of any appellate proceedings, and all expenses, costs, charges and other
reasonable fees incurred by such counsel in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section together with interest thereon from the date incurred until paid by the
Company at the maximum rate allowed by applicable laws, which Company agrees to
pay on demand, shall constitute Obligations and shall be secured by and entitled
to the benefits of the Loan Documents. The Company agrees to indemnify the Bank
from and hold it harmless against any documentary taxes, assessments or charges
made by any Governmental Authority by reason of the execution and delivery by
the Company or any other Person of this Agreement, the Notes, the other Loan
Documents, and any documents executed in connection therewith.
(b) The Company shall indemnify the Bank, its officers, directors,
employees, representatives, attorneys and agents from, and hold the Bank
harmless against, any and all costs, losses,
-47-
liabilities, claims, damages or expenses incurred by it (whether or not any of
the foregoing is designated a party thereto), other than those caused by the
Bank's gross negligence or willful misconduct, arising out of or by reason of
any litigation or other similar proceeding (including preparation for such
litigation or proceeding) related to the execution, delivery, and performance of
this Agreement, the Notes, or the other Loan Documents, or any actual or
proposed use by the Company of the proceeds of the advances under the Notes or
the Company's entering into and performing of any agreement or instrument
referred to herein, including, without limitation, the reasonable fees and
disbursements of the Bank's counsel incurred in connection therewith.
(c) The Company also agrees to pay, and will save the Bank and each
holder of the Notes harmless from, all claims, demands and liabilities in
respect of the fees and commissions, if any, of brokers and finders alleged to
have been incurred in connection with any of the transactions contemplated by
this Agreement and the other Loan Documents and any expenses, including
reasonable legal fees arising in connection with such claims, demands or
liabilities.
Section 8.8. Notices. All notices, requests and demands shall be given
-------
to or made upon the respective parties hereto as follows:
If to the Company, to IMSL, Inc.
00000 Xxxxxxxxx
Xxxxxxx, Xxx. 000
Xxxxx Xxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxx
President and Chief Executive
Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Bank, to First Interstate Bank of Texas, N.A.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Corporate
Guarantor, to IMSL Acquisition Corp. Inc.
0000 Xxxxxxx Xxxx
-00-
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxx Charter
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given to any party upon receipt when delivered by telecopy, confirmation
received, or by hand, or within three (3) days of being deposited in the U. S.
mail (registered or certified mail), if by mail, in each case addressed to such
party as provided herein or in accordance with the latest unrevoked direction
from such party.
Section 8.9. Participations. The Company expressly recog nizes and
--------------
agrees that the Bank may sell to other financial institutions participations in
the loans incurred by the Company pursuant hereto (the "Participants"), and,
therefore, as security for the due payment and performance of all indebtedness
and other liabilities and obligations of the Company to the Bank under this
Agreement, the Notes, the other Loan Documents and any other obligation of the
Company to the Bank, whether now existing or hereafter arising, and to the
Participants by reason of such participation, the Company hereby grants to the
Bank and to the Participants, a lien on and security interest in any and all
deposits or other sums at any time credited by or due from the Bank and the
Participants, or either or any of them, to the Company, whether in regular
depository accounts or otherwise (except for deposits in special accounts), and
any and all money, securities and other property of the Company and the proceeds
thereof now or hereafter held or received by or in transit to the Bank and the
Participants, or either or any of them, from or for the Company, whether for
safekeeping, custody, pledge, transmission, collection or otherwise and any such
deposits, sums, money, securities and other property at any time may be set off,
appropriated and applied by the Bank and by the Participants, or either or any
of them, against any indebtedness, liabilities or other obligations, whether now
existing or hereafter arising of the Company to the Bank and to the
Participants, or either or any of them, against any indebtedness, liabilities or
other obligations whether now existing or hereafter arising of the Company to
the Bank and to the Participants, or either or any of them, under this
Agreement, the Note, the other Loan Documents or otherwise, whether or not such
indebtedness, liabilities or other obligations are then due or secured by any
collateral or if such is so secured, whether or not such collateral held by the
Bank or the Participants is considered to be adequate.
-49-
Section 8.10. Confidentiality. The Bank agrees to take normal and
---------------
reasonable precautions and exercise due care to maintain the confidentiality of
all non-public information provided to it by the Company or any Subsidiary of
the Company in connection with this Agreement or any Loan Document and agrees
and undertakes that it will not use any such information for any purpose or in
any manner other than pursuant to the terms contemplated by this Agreement. The
Bank may disclose such information (i) at the request of any bank regulatory
authority or in connection with an examination of such Bank by any such
authority; (ii) pursuant to subpoena or other court process; (iii) when required
to do so in accordance with the provisions of any applicable law; (iv) at the
express direction of any agency of any State of the United States of America or
of any other jurisdiction in which the Bank conducts its business; and (v) to
the Bank's legal counsel, independent auditors and other professional advisors.
Notwithstanding the foregoing, the Company authorizes the Bank to disclose to
any Participant or assignee (each, a "Transferee") and any prospective
----------
Transferee such financial and other information in such Bank's possession
concerning the Company or its Subsidiaries which has been delivered to or
obtained by the Bank pursuant to this Agreement or which has been delivered to
the Bank by the Company or its Subsidiaries or obtained by the Bank from the
Company or its Subsidiaries; provided that such Transferee agrees in writing to
--------
the Bank, to keep such information confidential to the same extent required of
the Bank hereunder.
Section 8.11. Controlling Document. In the event of actual conflict in
--------------------
the terms and provisions of this Agreement, the Note and the other Loan
Documents, the terms and provisions of this Agreement will control.
Section 8.12. Amendment. This Agreement may not be amended except in
---------
writing signed by the Company, the Corporate Guarantor and the Bank.
Section 8.13. Table of Contents; Descriptive Headings. The table of
---------------------------------------
contents and the descriptive headings of the several sections of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
SECTION 8.14. GOVERNING LAW. THIS AGREEMENT, THE NOTES, THE SECURITY
-------------
INSTRUMENTS AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT TO THE
EXTENT THAT THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA MAY APPLY.
-50-
SECTION 8.15. SUBMISSION TO JURISDICTION. WITH RESPECT TO ANY AND ALL
--------------------------
DISPUTES ARISING HEREUNDER, UNDER ANY OF THE NOTES, UNDER THE OTHER LOAN
DOCUMENTS, OR UNDER ANY OF THE OTHER INSTRUMENTS AND DOCUMENTS EXECUTED IN
CONNECTION HEREWITH OR THEREWITH NOT SETTLED, OR SUBJECT TO ARBITRATION,
PURSUANT TO THE ARBITRATION PROGRAM REFERENCED IN SECTION 8.16 HEREOF, THE
COMPANY AND THE CORPORATE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, ANY NOTE AND ANY DOCUMENT TO WHICH IT IS
A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT OF ANY
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
TEXAS, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
TEXAS, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS, AND WAIVES 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;
(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 AND MAIL), POSTAGE PREPAID, TO IT AT ITS ADDRESS
SPECIFIED IN SECTION 8.8 HEREOF; 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.
Section 8.16. Arbitration Program. The parties agree to be bound by the
-------------------
terms and provisions of the current Arbitration Program of the Bank which is
incorporated by reference herein and is acknowledged as received by the parties
pursuant to which any and all disputes arising hereunder, under the Notes, under
any of the other Loan Documents, or under any of the documents and instruments
contemplated thereby, or pertaining hereto or thereto, shall be resolved by
mandatory binding arbitration upon the request of any party.
SECTION 8.17. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT, THE NOTES, THE
------------------
OTHER LOAN DOCUMENTS, AND THE INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION
HEREWITH, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY
-51-
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed in Houston, Texas, as of the date first above-mentioned.
THE BANK: THE COMPANY:
FIRST INTERSTATE BANK
OF TEXAS, N.A. IMSL, INC.
By /s/ Xxxxxxx X. Xxxxxxx By /s/ Xxxxxx X. Xxxxxxxx
----------------------------- ----------------------------
Name: Name:
Title: Title:
THE CORPORATE GUARANTOR:
IMSL ACQUISITION CORP., INC.
By /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name:
Title:
-52-
EXHIBIT A
---------
LOAN FORMULA CERTIFICATE AND
CERTIFICATE OF NO DEFAULT
IMSL, INC.
LOAN FORMULA COMPUTATION
AS OF ________________, 19__
1. Total Eligible Accounts of IMSL, INC.
(the "Company") and the Corporate Guar-
antor pursuant to the terms of that cer-
tain Second Restated and Amended Loan
Agreement (the "Agreement") dated $______________
December ___, 1992, among the Company,
IMSL Acquisition Corp., Inc. and First
Interstate Bank of Texas, N.A. (the
"Bank").
2. Loan Formula (60% of Eligible Accounts $______________
referred to in Item 1 above).
3. Aggregate amount of principal indebted-
ness owing to the Bank under the
Revolving Note. $______________
4. Excess Collateral Value (Deficiency)
(Item 2 above minus Item 3 above). $______________
A-1
The undersigned officer of the Company hereby does certify that the above
computation of Loan Formula has been prepared from the books and records of the
Company and the Corporate Guarantor and is true and correct to the best
knowledge and belief of such officer. The undersigned officer does certify
further that a review of the activities of the Company and the Corporate
Guarantor has been made under the Agreement and the Loan Documents and that, to
the best of his knowledge, the Company and the Corporate Guarantor have complied
in all material respects with each and every covenant and condition in the
Agreement and in the Loan Documents, applicable to such party and is not at this
time in default under any of the same.
The chief executive office of the Company remains at 00000 X.X. Xxxxxxx,
Xxxxx 0000, Xxxxx Xxxx, Xxxxx 00000-0000. The Company has not changed its name
from IMSL, Inc., its identity from a corporation or its corporate structure.
Capitalized terms used herein but not defined herein shall have the meaning
given them in the Loan Agreement.
The chief executive office of the Corporate Guarantor remains at 0000
Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx 00000. The Corporate Guarantor has changed its
name from IMSL Acquisition Corp., Inc. to Precision Visuals, Inc., but not
otherwise, and it has not changed its identity from a corporation or its
corporate structure.
------------------------------
Authorized Officer
A-2
EXHIBIT B
---------
SUBSIDIARIES OF IMSL, INC.:
--------------------------
IMSL Acquisition Corp., Inc., a California corporation
IMSL Europe, Inc., a Texas corporation
(a) IMSL France SARL
(b) IMSL Germany Gmbh
IMSL Japan, Inc., a Japanese corporation
IMSL International, Inc., a U.S. Virgin Islands corporation
SUBSIDIARIES OF IMSL ACQUISITION CORP., INC.:
--------------------------------------------
Precision Visuals, Ltd., UK, a United Kingdom corporation
Precision Visuals, France, a French corporation
B-1
EXHIBIT C
---------
HAZARDOUS MATERIALS CONTAMINATION
---------------------------------
NONE
C-1
EXHIBIT D
---------
D-1
TERM NOTE A
FIRST INTERSTATE BANK OF TEXAS, N.A.
NO.________ Houston, Texas December 16, 1992 $1,100,000.00
FOR VALUE RECEIVED, the undersigned, IMSL, INC., a Texas corporation
(herein called "Maker"), promises to pay to the order of FIRST INTERSTATE BANK
OF TEXAS, N.A. (herein called "Payee," which term herein in every instance shall
refer to any owner or holder of this note) the sum of ONE MILLION ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($1,100,000.00), together with interest on the
principal hereof from time to time outstanding from the date of advancement
until maturity, at the per annum rate hereinafter stated (computed on the basis
of a year of 360 days and paid for the actual number of days elapsed), said
principal and interest being payable in lawful money of the United States of
America at the banking quarters of First Interstate Bank of Texas, N.A., First
Interstate Bank Plaza, 1000 Louisiana, Houston, Xxxxxx County, Texas, or at such
other place in Xxxxxx County, Texas as Payee may designate hereafter in writing
to Maker.
D-2
The principal balance hereof advanced and outstanding from time to time
shall bear interest during each day of the term of the loan evidenced hereby at
a variable per annum rate equal to the lesser of (A) a per annum rate that is
equal to the sum (herein called the "Basic Rate") of (i) one percent (1%) per
annum plus (ii) the prime rate of interest (herein called the "Prime Rate"),
being the variable per annum rate of interest most recently announced by First
Interstate Bank of Texas, N.A. (herein sometimes called the "Bank") as its
"prime rate", with the understanding that the Bank's "prime rate" may be one of
several base rates and serves as a basis upon which effective rates of interest
are from time to time calculated for loans making reference thereto and may not
be the lowest of the Bank's base rates, which Basic Rate shall change when and
as the Prime Rate shall change, effective on the day of such change or (B) the
Maximum Rate (hereinafter defined). Notwithstanding the foregoing, if at any
time the Basic Rate shall exceed the Maximum Rate and thereafter the Basic Rate
shall become less than the Maximum Rate, the rate of interest payable hereunder
shall remain at the Maximum Rate until the Payee shall have received the amount
of interest it otherwise would have received if the interest payable hereunder
had not been limited to the Maximum Rate during the period of time the Basic
Rate exceeded the Maximum Rate.
All past due principal and interest of this note, whether due as the
result of acceleration of maturity or otherwise, shall bear interest at the
lesser of (1) a rate that is five percentage points above the Prime Rate as it
varies or (2) the maximum lawful rate of interest permitted by the applicable
usury laws, now or hereafter enacted, which interest rate (herein called the
"Maximum Rate") shall change when and as said laws shall change to the extent
permitted by said laws, effective on the day such change in said laws becomes
effective, from the date the payment thereof shall have become due until the
same have been fully discharged by payment.
D-3
The principal of this note is due and payable in quarterly installments,
all of such installments, except for the last, being in the amount of $137,500
each, and the last and final installment being in the amount of the then
remaining unpaid principal balance hereof, the first such installment of
principal being due and payable on March 31, 1993, and each subsequent in
stallment of principal being due and payable on the last day of each succeeding
June, September, December and March thereafter until December 15, 1994, when the
then remaining unpaid balance of principal of this note shall become due and
payable in full. Interest on said principal shall be due and payable in monthly
installments as it accrues, the first such installment of interest being due and
payable on January 31, 1993 and a subsequent installment of interest to be due
and payable on the last day of each calendar month thereafter until December 15,
1994, on which date all accrued interest, in addition to the principal hereof
remaining unpaid, shall be due and payable in full.
This note is issued pursuant to a Second Restated and Amended Loan
Agreement (the "Loan Agreement") dated December 16, 1992, by and among Maker,
IMSL Acquisition Corp., Inc., and Payee and reference is made hereby to the Loan
Agreement for certain rights as to the prepayment and the acceleration of the
maturity hereof.
Maker and any and all sureties, guarantors and endorsers of this note and
all other parties now or hereafter liable hereon, severally waive, to the extent
permitted by applicable law, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of dishonor, notice of
protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(a) to all extensions and partial payments, with or without notice, before or
after maturity, (b) to any substitution, exchange or release of any security now
or hereafter given for this note, (c) to the release of any party primarily or
secondarily liable hereon, and (d) that it will not be necessary for Payee, in
order to enforce payment of this note, to first institute or exhaust Payee's
remedies against Maker or any other party liable therefor or against any
security for this note.
D-4
In the event of default hereunder or under any of the instruments securing
payment hereof and this note is placed in the hands of an attorney for
collection (whether or not suit is filed), or if this note is collected by suit
or legal proceedings or through bankruptcy proceedings, Maker agrees to pay all
reasonable attorneys' fees and all expenses of collection and costs of court.
It is the intention of the parties hereto to comply with applicable usury
laws (now or hereafter enacted); accordingly, notwithstanding any provision to
the contrary in this note, or in any of the documents securing payment hereof or
otherwise relating hereto, in no event shall this note or such documents require
the payment or permit the collection of interest in excess of the maximum amount
permitted by such laws. If any such excess of interest is contracted for,
charged, taken, reserved or received under this note or under the terms of any
of the documents securing payment hereof or otherwise relating hereto, or in the
event the maturity of the indebtedness evidenced by this note is accelerated in
whole or in part, or in the event that all or part of the principal or interest
of this note shall be prepaid, so that under any of such circumstances the
amount of interest contracted for, charged, taken, reserved or received under
this note or under any of the instruments securing payment hereof or otherwise
relating hereto, on the amount of principal actually outstanding from time to
time under this note shall exceed the maximum amount of interest permitted by
applicable usury laws, now or hereafter enacted, then in any such event (i) the
provisions of this paragraph shall govern and control, (ii) any such excess
which may have been collected either shall be applied as a credit against the
then unpaid principal amount hereof or refunded to Maker, at Payee's option, and
(iii) the effective rate of interest shall be automatically reduced to the
maximum lawful rate allowed under applicable usury laws as now or hereafter
construed by the courts having jurisdiction thereof. Without limiting the
foregoing, all calculations of the rate of interest contracted for, charged,
taken, reserved or received under this note or under such other documents which
are made for the purpose of determining whether such rate exceeds the maximum
lawful rate, shall be made, to the extent permitted by law, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the loan evidenced hereby, all interest at any time contracted
for, charged, taken, reserved or received from Maker or otherwise by Payee in
connection with such indebtedness.
D-5
This note shall be governed by and construed under the applicable laws of
the State of Texas and the laws of the United States of America.
To the extent that the interest rate laws of the State of Texas are
applicable to this note and unless changed in accordance with law, the
applicable interest rate ceiling is the indicated (weekly) ceiling determined in
accordance with Article 5069-1.04(a)(1) of the Texas Revised Civil Statutes, as
amended.
Any check, draft, money order or other instrument given in payment of all
or any portion hereof may be accepted by Payee and handled in collection in the
customary manner, but the same shall not constitute payment hereunder or
diminish any rights of Payee except to the extent that actual cash proceeds of
such instrument are unconditionally received by Payee.
Maker represents and warrants to Payee and to all other owners and holders
of any indebtedness evidenced hereby that all loans evidenced by this note are
for business, commercial, investment or other similar purpose and not primarily
for personal, family, household or agricultural use, as such terms are used or
defined in Texas Revised Civil Statutes, Article 5069-1.04, Texas Credit Code
and Regulation Z promulgated by the Board of Governors of the Federal Reserve
System and under Titles I and V of the Consumer Credit Protection Act.
This note is secured as provided in the Loan Agreement and is entitled to
all of the benefits of the Loan Agreement.
This note is given in renewal, extension and rearrangement of, but not in
novation or discharge of, the unpaid principal of that certain promissory note
dated September 20, 1991, executed on behalf of Maker and made payable to the
order of Payee in the original principal amount of $1,361,115.
IMSL, INC.
By
------------------------------
Name:
Title:
- MAKER -
D-6
EXHIBIT E
---------
TERM NOTE B
FIRST INTERSTATE BANK OF TEXAS, N.A.
NO.________ Houston, Texas December 16, 1992 $1,300,000.00
FOR VALUE RECEIVED, the undersigned, IMSL, INC., a Texas corporation
(herein called "Maker"), promises to pay to the order of FIRST INTERSTATE BANK
OF TEXAS, N.A. (herein called "Payee," which term herein in every instance shall
refer to any owner or holder of this note) the sum of ONE MILLION THREE HUNDRED
THOUSAND AND NO/100 DOLLARS ($1,300,000.00), together with interest on the
principal hereof from time to time outstanding from the date of advancement
until maturity, at the per annum rate hereinafter stated (computed on the basis
of a year of 360 days and paid for the actual number of days elapsed), said
principal and interest being payable in lawful money of the United States of
America at the banking quarters of First Interstate Bank of Texas, N.A., First
Interstate Bank Plaza, 1000 Louisiana, Houston, Xxxxxx County, Texas, or at such
other place in Xxxxxx County, Texas as Payee may designate hereafter in writing
to Maker.
The principal balance hereof advanced and outstanding from time to time
shall bear interest during each day of the term of the loan evidenced hereby at
a variable per annum rate equal to the lesser of (A) a per annum rate that is
equal to the sum (herein called the "Basic Rate") of (i) one percent (1%) per
annum plus (ii) the prime rate of interest (herein called the "Prime Rate"),
being the variable per annum rate of interest most recently announced by First
Interstate Bank of Texas, N.A. (herein sometimes called the "Bank") as its
"prime rate", with the understanding that the Bank's "prime rate" may be one of
several base rates and serves as a basis upon which effective rates of interest
are from time to time calculated for loans making reference thereto and may not
be the lowest of the Bank's base rates, which Basic Rate shall change when and
as the Prime Rate shall change, effective on the day of such change or (B) the
Maximum Rate (hereinafter defined). Notwithstanding the foregoing, if at any
time the Basic Rate shall exceed the Maximum Rate and thereafter the Basic Rate
shall become less than the Maximum Rate, the rate of interest payable hereunder
shall remain at the Maximum Rate until the Payee shall have received the amount
of interest it otherwise would have received if the interest payable hereunder
had not been limited to the Maximum Rate during the period of time the Basic
Rate exceeded the Maximum Rate.
E-1
All past due principal and interest of this note, whether due as the
result of acceleration of maturity or otherwise, shall bear interest at the
lesser of (1) a rate that is five percentage points above the Prime Rate as it
varies or (2) the maximum lawful rate of interest permitted by the applicable
usury laws, now or hereafter enacted, which interest rate (herein called the
"Maximum Rate") shall change when and as said laws shall change to the extent
permitted by said laws, effective on the day such change in said laws becomes
effective, from the date the payment thereof shall have become due until the
same have been fully discharged by payment.
The principal of this note is due and payable in quarterly installments,
all of such installments, except for the last, being in the amount of $162,500
each, and the last and final in stallment being in the amount of the then
remaining unpaid principal balance hereof, the first such installment of
principal being due and payable on March 31, 1993, and each subsequent in
stallment of principal being due and payable on the last day of each succeeding
June, September, December and March thereafter until December 15, 1994, when the
then remaining unpaid balance of principal of this note shall become due and
payable in full. Interest on said principal shall be due and payable in monthly
installments as it accrues, the first such installment of interest being due and
payable on January 31, 1993 and a subse quent installment of interest to be due
and payable on the last day of each calendar month thereafter until December 15,
1994, on which date all accrued interest, in addition to the principal hereof
remaining unpaid, shall be due and payable in full.
This note is issued pursuant to a Second Restated and Amended Loan
Agreement (the "Loan Agreement") dated December 16, 1992, by and among Maker,
IMSL Acquisition Corp., Inc., and Payee, and reference is made hereby to the
Loan Agreement for certain rights as to the prepayment and the acceleration of
the maturity hereof.
Maker and any and all sureties, guarantors and endorsers of this note and
all other parties now or hereafter liable hereon, severally waive, to the extent
permitted by applicable law, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of dishonor, notice of
protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(a) to all extensions and partial payments, with or without notice, before or
after maturity, (b) to any substitution, exchange or release of any
E-2
security now or hereafter given for this note, (c) to the release of any party
primarily or secondarily liable hereon, and (d) that it will not be necessary
for Payee, in order to enforce payment of this note, to first institute or
exhaust Payee's remedies against Maker or any other party liable therefor or
against any security for this note.
In the event of default hereunder or under any of the instruments securing
payment hereof and this note is placed in the hands of an attorney for
collection (whether or not suit is filed), or if this note is collected by suit
or legal proceedings or through bankruptcy proceedings, Maker agrees to pay all
reasonable attorneys' fees and all expenses of collection and costs of court.
It is the intention of the parties hereto to comply with applicable usury
laws (now or hereafter enacted); accordingly, notwithstanding any provision to
the contrary in this note, or in any of the documents securing payment hereof or
otherwise relating hereto, in no event shall this note or such documents require
the payment or permit the collection of interest in excess of the maximum amount
permitted by such laws. If any such excess of interest is contracted for,
charged, taken, reserved or received under this note or under the terms of any
of the documents securing payment hereof or otherwise relating hereto, or in the
event the maturity of the indebtedness evidenced by this note is accelerated in
whole or in part, or in the event that all or part of the principal or interest
of this note shall be prepaid, so that under any of such circumstances the
amount of interest contracted for, charged, taken, reserved or received under
this note or under any of the instruments securing payment hereof or otherwise
relating hereto, on the amount of principal actually outstanding from time to
time under this note shall exceed the maximum amount of interest permitted by
applicable usury laws, now or hereafter enacted, then in any such event (i) the
provisions of this paragraph shall govern and control, (ii) any such excess
which may have been collected either shall be applied as a credit against the
then unpaid principal amount hereof or refunded to Maker, at Payee's option, and
(iii) the effective rate of interest shall be automatically reduced to the
maximum lawful rate allowed under applicable usury laws as now or hereafter
construed by the courts having jurisdiction thereof. Without limiting the
foregoing, all calculations of the rate of interest contracted for, charged,
taken, reserved or received under this note or under such other documents which
are made for the purpose of determining whether such rate exceeds the maximum
lawful rate, shall be made, to the extent permitted by law, by
E-3
amortizing, prorating, allocating and spreading in equal parts during the period
of the full stated term of the loan evidenced hereby, all interest at any time
contracted for, charged, taken, reserved or received from Maker or otherwise by
Payee in connection with such indebtedness.
This note shall be governed by and construed under the applicable laws of
the State of Texas and the laws of the United States of America.
To the extent that the interest rate laws of the State of Texas are
applicable to this note and unless changed in accor dance with law, the
applicable interest rate ceiling is the indicated (weekly) ceiling determined in
accordance with Article 5069-1.04(a)(1) of the Texas Revised Civil Statutes, as
amended.
Any check, draft, money order or other instrument given in payment of all
or any portion hereof may be accepted by Payee and handled in collection in the
customary manner, but the same shall not constitute payment hereunder or
diminish any rights of Payee except to the extent that actual cash proceeds of
such instrument are unconditionally received by Payee.
Maker represents and warrants to Payee and to all other owners and holders
of any indebtedness evidenced hereby that all loans evidenced by this note are
for business, commercial, investment or other similar purpose and not primarily
for personal, family, household or agricultural use, as such terms are used or
defined in Texas Revised Civil Statutes, Article 5069-1.04, Texas Credit Code
and Regulation Z promulgated by the Board of Governors of the Federal Reserve
System and under Titles I and V of the Consumer Credit Protection Act.
This note is secured as provided in the Loan Agreement and is entitled to
all of the benefits of the Loan Agreement.
IMSL, INC.
By
------------------------------
Name:
Title:
- MAKER -
E-4
EXHIBIT F
---------
REVOLVING CREDIT NOTE
FIRST INTERSTATE BANK OF TEXAS, N.A.
NO.________ Houston, Texas December 16, 1992 $2,000,000.00
FOR VALUE RECEIVED, the undersigned, IMSL, INC., a Texas corporation
(herein called "Maker"), promises to pay to the order of FIRST INTERSTATE BANK
OF TEXAS, N.A. (herein called "Payee," which term herein in every instance shall
refer to any owner or holder of this note) the sum of TWO MILLION AND NO/100
DOLLARS ($2,000,000.00), or so much thereof as may be advanced and outstanding
from time to time hereunder by Payee, together with interest on the principal
hereof from time to time outstanding from the date of advancement until
maturity, at the per annum rate hereinafter stated (computed on the basis of a
year of 360 days and paid for the actual number of days elapsed), said principal
and interest being payable in lawful money of the United States of America at
the banking quarters of First Interstate Bank of Texas, N.A., First Interstate
Bank Plaza, 1000 Louisiana, Houston, Xxxxxx County, Texas, or at such other
place in Xxxxxx County, Texas, as Payee may designate hereafter in writing to
Maker.
The principal balance hereof advanced and from time to time remaining
unpaid shall bear interest during each day of the term of the loan evidenced
hereby at a variable per annum rate equal to the lesser of (A) a per annum rate
that is equal to the sum (herein called the "Basic Rate") of (i) one percent per
annum plus (ii) the prime rate of interest (herein called the "Prime Rate"),
being the variable per annum rate of interest most recently announced by First
Interstate Bank of Texas, N.A. (herein sometimes called the "Bank") as its
"prime rate", with the understanding that the Bank's "prime rate" may be one of
several base rates and serves as a basis upon which effective rates of interest
are from time to time calculated for loans making reference thereto and may not
be the lowest of the Bank's base rates, which Basic Rate shall change when and
as the Prime Rate shall change, effective on the day of such change or (B) the
Maximum Rate (hereinafter defined). Not withstanding the foregoing, if at any
time the Basic Rate shall exceed the Maximum Rate and thereafter the Basic Rate
shall become less than the Maximum Rate, the rate of interest payable hereunder
shall remain at the Maximum Rate until Payee shall have received the amount of
interest it would have received otherwise if the interest payable hereunder had
not been limited to the Maximum Rate during the period of time the Basic Rate
exceeded the Maximum Rate.
F-1
All past due principal and interest of this note, whether due as the result
of acceleration of maturity or otherwise, shall bear interest at the lesser of
(1) a rate that is five percentage points above the Prime Rate as it varies or
(2) the maximum lawful rate of interest permitted by the applicable usury laws,
now or hereafter enacted, which interest rate (herein called the "Maximum Rate")
shall change when and as said laws shall change to the extent permitted by said
laws, effective on the day such change in said laws becomes effective, from the
date the payment thereof shall have become due until the same have been fully
discharged by payment.
The principal and interest of this note are due and payable as follows:
(a) Interest hereon shall be due and payable monthly as it accrues,
with the first installment to be due and payable on January 31, 1993, and a like
installment to be due and payable on the last day of each succeeding calendar
month thereafter until December 15, 1993, when accrued but unpaid interest shall
be due and payable in full; and
(b) The principal amount hereof then outstanding shall be due and
payable in full on December 15, 1993.
Until December 15, 1993, subject to the terms and conditions of the Loan
Agreement (hereinafter defined), the undersigned may borrow, pay, prepay in
whole or in part and reborrow hereunder, so long as not more than $2,000,000 of
principal is outstanding at any one time; it being expressly contemplated that,
by reason of prepayments hereon, there may be times when no indebtedness is
owing hereunder, but, notwithstanding such occurrences, this note shall remain
valid and shall be in full force and effect as to loans or advances made
subsequent to such occurrences; and it being understood and agreed that advances
and repayments of principal under this note are not limited to $2,000,000, but
to a maximum of $2,000,000 at any one time outstanding. Payee may advance funds
pursuant to this note from time to time, and from time to time the undersigned
will make repayments on the principal of this note, so that no more than
$2,000,000 shall be outstanding at any one time. Each advance and each payment
of principal hereunder shall be reflected by a notation made by Payee in its
business records. The aggregate unpaid principal amount of advances reflected
by the notations made in Payee's business records shall be rebuttably
presumptive evidence of the principal amount owing under this note, which amount
the undersigned unconditionally promises to pay to the order of Payee under the
terms hereof.
F-2
This note is issued pursuant to a Second Restated and Amended Loan
Agreement of even date herewith, by and among Maker, IMSL Acquisition Corp.,
Inc., and Payee (the "Loan Agreement"), and reference is made hereby to the Loan
Agreement for certain rights as to the prepayment and the acceleration of the
maturity hereof.
Maker and any and all sureties, guarantors and endorsers of this note and
all other parties now or hereafter liable hereon, severally waive, to the extent
permitted by applicable law, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of dishonor, notice of
protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(i) to all extensions and partial payments, with or without notice, before or
after maturity, (ii) to any substitution, exchange or release of any security
now or hereafter given for this note, (iii) to the release of any party
primarily or secondarily liable hereon, and (iv) that it will not be necessary
for Payee, in order to enforce payment of this note, to first institute or
exhaust Payee's remedies against Maker or any other party liable therefor or
against any security for this note.
In the event of default hereunder or under any of the instru ments securing
payment hereof and this note is placed in the hands of an attorney for
collection (whether or not suit is filed), or if this note is collected by suit
or legal proceedings or through bankruptcy proceedings, Maker agrees to pay all
reasonable attorneys' fees and all expenses of collection and costs of court.
It is the intention of the parties hereto to comply with applicable usury
laws; accordingly, notwithstanding any provision to the contrary in this note,
or in any of the documents securing payment hereof or otherwise relating hereto,
in no event shall this note or such documents require the payment or permit the
collection of interest in excess of the maximum amount permitted by such laws.
If any such excess of interest is contracted for, charged, taken, reserved or
received under this note or under the terms of any of the documents securing
payment hereof or otherwise relating
F-3
hereto, or in the event the maturity of the indebtedness evidenced by this note
is accelerated in whole or in part, or in the event that all or part of the
principal or interest of this note shall be prepaid, so that under any of such
circumstances the amount of interest con tracted for, charged or received under
this note or under any of the instruments securing payment hereof or otherwise
relating hereto, on the amount of principal actually outstanding from time to
time under this note shall exceed the maximum amount of interest permitted by
applicable usury laws, then in any such event (x) the provisions of this
paragraph shall govern and control, (y) any such excess which may have been
collected either shall be applied as a credit against the then unpaid principal
amount hereof or refunded to Maker, at Payee's option, and (z) the effective
rate of interest shall be automatically reduced to the maximum lawful rate
allowed under applicable usury laws as now or hereafter construed by the courts
having jurisdiction thereof. Without limiting the foregoing, all calculations of
the rate of interest contracted for, charged, taken, reserved or received under
this note or under such other documents which are made for the purpose of
determining whether such rate exceeds the maximum lawful rate, shall be made, to
the extent permitted by law, by amortizing, prorating, allocating and spreading
in equal parts during the period of the full stated term of the loan evidenced
hereby, all interest at any time contracted for, charged, taken, reserved or
received from Maker or otherwise by Payee in connection with such indebtedness.
Except to the extent required by federal law, this note shall be governed
by and construed under the laws of the State of Texas.
Any check, draft, money order or other instrument given in payment of all
or any portion hereof may be accepted by Payee and handled in collection in the
customary manner, but the same shall not constitute payment hereunder or
diminish any rights of Payee except to the extent that actual cash proceeds of
such instrument are unconditionally received by Payee.
Maker and Payee agree that Tex. Rev. Civ. Stat. Xxx art. 0000 Xx. 15 (which
regulates certain revolving loan accounts and revolving tri-party accounts)
shall not apply to any revolving loan accounts created under this note or
maintained in connection therewith.
To the extent that the interest rate laws of the State of Texas are
applicable to this note, the applicable interest rate ceiling is the indicated
(weekly) ceiling determined in accordance with Article 5069-1.04(a)(1) of the
Texas Revised Civil Statutes, as amended, and, to the extent that this note is
deemed an open end account as such term is defined in Article 5069-1.01(f) of
the Texas Revised Civil Statutes, as amended, the Payee retains the right to
modify the interest rate in accordance with applicable law.
F-4
Maker represents and warrants to Payee and to all other owners and holders
of any indebtedness evidenced hereby that all loans evidenced by this note are
for business, commercial, investment or other similar purpose and not primarily
for personal, family, household or agricultural use, as such terms are used or
defined in Texas Revised Civil Statutes, Article 5069-1.04, Texas Credit Code
and Regulation Z promulgated by the Board of Governors of the Federal Reserve
System and under Titles I and V of the Consumer Credit Protection Act.
This note is given in partial renewal, rearrangement, increase and
extension of, but not in novation or discharge of, that certain promissory note
dated March 17, 1992, executed by Maker and payable to the order of Payee, in
the original principal amount of $750,000.
This note is secured as provided in the Loan Agreement and is entitled to
all of the benefits of the Loan Agreement.
IMSL, INC.
By
-------------------------------
Name:
Title:
F-5
EXHIBIT G
---------
INDEBTEDNESS
------------
11/30/92
ORIGINAL BALANCE
PAYEE PRINCIPAL (includes interest)
----- --------- ------------------
Xxxxx X. Xxxxx 8,700.00 9,159.43
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxx 100,000.00 105,280.82
00 Xxxxxx Xxxxx
Xxxxx, XX 00000
Xxxxxxx X. Xxxxxxx 50,000.00 52,640.41
0000 Xxxxxxxxxx
Xxxxxx, XX 00000
Xxxxxx X. or Xxx X. Xxxx,
JTWROS 20,000.00 21,056.16
00000 Xxxxxxxxxx
Xxxxxxxx, XX 00000 _________ _________
Notes payable to PVI Selling Shareholder pursuant to Section 2.3(b) of Purchase
Agreement, not to exceed principal of $1,500,000 in the aggregate.
G-1
SCHEDULE I
----------
U.S. LOCATIONS
--------------
IMSL, INC.
Chief Executive Office: 00000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxx Xxxx, Xxxxx 00000-0000
IMSL ACQUISITION CORP., INC.
Chief Executive Office: 0000 Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Off-site warehouse: 0000 Xxxxxxxx
Xxxxxxx, Xxxxxxxx
Field Offices: 00 Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx
00000 Xxxxxx Xxxx, Xxx. 000
Xxxxx, Xxxx
2465 East Bayshore
Palo Alto, California
0000 Xxxx Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx
00000 Xxxx Road, Xxx. 000
Xxxxxx, Xxxxx
SCHEDULE I - 1
SCHEDULE II
-----------
Contract Disclosure
-------------------
Equipment Indebtedness Sub-Contract dated May 7, 1991, between
the Company and Vendor Funding Co., Inc.
SCHEDULE II - 1
