EXHIBIT 10.7
LOAN AGREEMENT
BY AND BETWEEN
R&D SYSTEMS COMPANY
AND
FLEET BANK OF MASSACHUSETTS, N.A., AS AGENT AND A LENDER
AND
THE FIRST NATIONAL BANK OF BOSTON,
AS A LENDER AND CO-AGENT
AND
THE OTHER FINANCIAL INSTITUTIONS NOW OR
HEREAFTER PARTIES HERETO
$25,000,000 SECURED TERM LOAN
AND
$5,000,000 SECURED REVOLVING CREDIT LOAN
March 14, 1996
LOAN AGREEMENT
INDEX TO
LOAN AGREEMENT
Page
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ARTICLE 1. DEFINITIONS AND ACCOUNTING AND OTHER TERMS 1
Section 1.1. Certain Defined Terms. 1
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Section 1.2. Accounting Terms. 19
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Section 1.3. Other Terms. 19
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ARTICLE 2. AMOUNT AND TERMS OF THE LOANS 20
Section 2.1. The Loans. 20
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Section 2.1.0. The Revolving Credit Loans. 20
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Section 2.1.1. Term Loans. 21
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Section 2.2. Interest and Fees on the Loans. 22
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Section 2.2.1. Interest. 22
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Section 2.2.2. Fees. 23
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Section 2.2.3. Increased Costs - Capital. 23
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Section 2.3. Notations. 24
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Section 2.4. Computation of Interest. 25
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Section 2.5. Time of Payments and Prepayments in
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Immediately Available Funds. 25
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Section 2.5.1. Time. 25
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Section 2.5.2. Setoff, etc. 27
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Section 2.5.3. Unconditional Obligations and No
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Deductions. 27
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Section 2.6. Prepayment and Certain Payments. 28
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Section 2.6.1. Mandatory Payments. 28
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Section 2.6.2. Voluntary Prepayments. 30
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Section 2.6.3. Prepayment of Libor Loans. 30
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Section 2.6.4. Permanent Reduction of Commitment. 30
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Section 2.7. Payment on Non-Business Days. 31
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Section 2.8. Use of Proceeds. 31
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Section 2.9. Special Libor Loan Provisions. 31
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Section 2.9.1. Requests. 31
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Section 2.9.2. Libor Loans Unavailable. 31
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Section 2.9.3. Libor Lending Unlawful. 33
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Section 2.9.4. Additional Costs on Libor Loans. 34
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Section 2.9.5. Libor Funding Losses. 35
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Section 2.9.6. Banking Practices. 37
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Section 2.9.7. Borrower's Options on Unavailability or
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Increased Cost of Libor Loans. 37
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Section 2.9.8. Assumptions Concerning Funding of Libor
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Loans. 38
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Section 2.10 Interest Rate Protection 39
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ARTICLE 3. CONDITIONS OF LENDING 39
Section 3.1. Conditions Precedent to the Commitment
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and to all Loans. 39
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Section 3.1.1. The Commitment and Initial Loans. 39
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Section 3.1.2. The Commitment and the Loans. 43
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ARTICLE 4. REPRESENTATIONS AND WARRANTIES 44
Section 4.1. Representations and Warranties of the
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Borrower. 44
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Section 4.1.1. Organization and Existence. 44
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Section 4.1.2. Authorization and Absence of Defaults. 44
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Section 4.1.3. Acquisition of Consents. 45
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Section 4.1.4. Validity and Enforceability. 45
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Section 4.1.5. Financial Information. 45
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Section 4.1.6. No Litigation. 46
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Section 4.1.7. Regulation U. 46
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Section 4.1.8. Absence of Adverse Agreements. 46
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Section 4.1.9. Taxes. 47
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Section 4.1.10. ERISA. 47
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Section 4.1.11. Ownership of Properties. 47
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Section 4.1.12. Accuracy of Representations and
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Warranties. 48
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Section 4.1.13. No Investment Company. 48
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Section 4.1.14. Solvency, etc. 48
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Section 4.1.15. Approvals. 48
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Section 4.1.16. Ownership Interests. 49
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Section 4.1.17. Licenses, Registrations, Compliance with
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Laws, etc. 49
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Section 4.1.18. Principal Place of Business; Books and
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Records. 49
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Section 4.1.19. Subsidiaries. 50
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Section 4.1.20. Copyright. 50
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Section 4.1.21. Environmental Compliance. 50
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Section 4.1.22. Material Agreements, etc. 50
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Section 4.1.23. Patents, Trademarks and Other Property
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Rights. 51
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Section 4.1.24. Related Transaction Documents. 51
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ARTICLE 5. COVENANTS OF THE BORROWER 51
Section 5.1. Affirmative Covenants of the Borrower
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Other than Reporting Requirements. 51
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Section 5.1.1. Payment of Taxes, etc. 51
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Section 5.1.2. Maintenance of Insurance. 52
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Section 5.1.3. Preservation of Existence, etc. 53
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Section 5.1.4. Compliance with Laws, etc. 53
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Section 5.1.5. Visitation Rights. 53
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Section 5.1.6. Keeping of Records and Books of Account. 54
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Section 5.1.7. Maintenance of Properties, etc. 54
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Section 5.1.8. Post-Closing Items. 54
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Section 5.1.9. Other Documents, etc. 54
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Section 5.1.10. Minimum Interest Coverage Ratio. 54
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Section 5.1.11. Minimum Debt Service Coverage Ratio. 55
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2
Section 5.1.12. Maximum Ratio of Total Indebtedness for
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Borrowed Money to EBITDA. 55
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Section 5.1.13. Officer's Certificates and Requests. 56
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Section 5.1.14. Depository. 56
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Section 5.1.15. Chief Executive Officer. 56
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Section 5.1.16. Notice of Purchase of Real Estate and
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Leases. 56
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Section 5.1.17. Additional Assurances. 56
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Section 5.1.18. Appraisals. 56
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Section 5.1.19. Environmental Compliance. 57
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Section 5.1.20. Remediation. 57
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Section 5.1.21. Site Assessments. 57
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Section 5.1.22. Indemnity. 57
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Section 5.1.23. Trademarks, Copyrights, etc. 57
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Section 5.1.24. Maintenance of Escrow. 58
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Section 5.2. Negative Covenants of the Borrower. 58
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Section 5.2.1. Liens, etc. 58
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Section 5.2.2. Assumptions, Guaranties, etc. of
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Indebtedness of Other Persons. 60
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Section 5.2.3. Acquisitions, Dissolution, etc. 60
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Section 5.2.4. Change in Nature of Business. 61
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Section 5.2.5. Ownership. 61
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Section 5.2.6. Sale and Leaseback. 61
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Section 5.2.7. Sale of Accounts, etc. 61
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Section 5.2.8. Indebtedness. 61
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Section 5.2.9. Other Agreements. 62
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Section 5.2.10. Payment or Prepayment of Equity. 63
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Section 5.2.11. Dividends, Payments and Distributions. 63
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Section 5.2.12. Investments in or to Other Persons. 63
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Section 5.2.13. Transactions with Affiliates. 63
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Section 5.2.14. Change of Fiscal Year. 64
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Section 5.2.15. Subordination of Claims. 64
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Section 5.2.16. Compliance with ERISA. 64
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Section 5.2.17. Capital Expenditures. 65
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Section 5.2.18. Hazardous Waste. 65
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Section 5.3. Reporting Requirements. 65
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ARTICLE 6. EVENTS OF DEFAULT 68
Section 6.1. Events of Default. 68
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ARTICLE 7. REMEDIES OF LENDERS 70
ARTICLE 8. AGENT 71
Section 8.1. Appointment. 71
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Section 8.2. Powers; General Immunity. 72
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Section 8.2.1. Duties Specified. 72
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Section 8.2.2. No Responsibility For Certain Matters. 72
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Section 8.2.3. Exculpatory Provisions. 73
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Section 8.2.4. Agent Entitled to Act as Lender. 73
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3
Section 8.3. Representations and Warranties; No
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Responsibility for Appraisal of
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Creditworthiness. 74
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Section 8.4. Right to Indemnity. 74
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Section 8.5. Payee of Note Treated as Owner. 75
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Section 8.6. Resignation by Agent. 75
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Section 8.7. Successor Agent. 76
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ARTICLE 9. MISCELLANEOUS 76
Section 9.1. Consent to Jurisdiction and Service of
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Process. 76
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Section 9.2. Rights and Remedies Cumulative. 77
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Section 9.3. Delay or Omission not Waiver. 77
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Section 9.4. Waiver of Stay or Extension Laws. 78
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Section 9.5. Amendments, etc. 78
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Section 9.6. Addresses for Notices, etc. 79
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Section 9.7. Costs, Expenses and Taxes. 80
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Section 9.8. Participations. 81
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Section 9.9. Binding Effect; Assignment. 81
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Section 9.10. Actual Knowledge. 81
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Section 9.11. Substitutions and Assignments. 82
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Section 9.12. Payments Pro Rata. 84
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Section 9.13 Indemnification. 85
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Section 9.13. Governing Law. 86
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Section 9.14. Severability of Provisions. 86
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Section 9.15. Headings. 87
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Section 9.16. Counterparts. 87
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4
SCHEDULE OF EXHIBITS
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EXHIBIT 1.1 EQUITY INVESTMENTS, OWNERSHIP INTERESTS
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AND SUBSIDIARIES
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EXHIBIT 1.2 RELATED TRANSACTION DOCUMENTS
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EXHIBIT 1.4 FORM OF INTEREST RATE ELECTION
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EXHIBIT 1.5 FORM OF REVOLVING CREDIT NOTE
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EXHIBIT 1.6 FORM OF TERM NOTE
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EXHIBIT 1.8 PERMITTED ENCUMBRANCES
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EXHIBIT 1.9 PRO RATA SHARES AGENT'S AND LENDERS'
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NOTICE ADDRESSES AND WIRE TRANSFER INSTRUCTIONS
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EXHIBIT 1.10 FORM OF REQUEST
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EXHIBIT 1.12 PROJECTIONS
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EXHIBIT 3.1.1.8 PERMITTED INDEBTEDNESS AND CAPITALIZED
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LEASES
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EXHIBIT 3.1.1.10 FORM OF COMPLIANCE CERTIFICATE
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EXHIBIT 4.1.1 FOREIGN QUALIFICATIONS
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EXHIBIT 4.1.2 AUTHORIZATIONS
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EXHIBIT 4.1.3 CONSENTS
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EXHIBIT 4.1.6 LITIGATION
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EXHIBIT 4.1.8 ADVERSE AGREEMENTS
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EXHIBIT 4.1.9 TAXES
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EXHIBIT 4.1.11 REAL PROPERTY
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EXHIBIT 4.1.17 GOVERNMENTAL PERMITS
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EXHIBIT 4.1.20 COPYRIGHTS
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EXHIBIT 4.1.21 HAZARDOUS WASTE
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EXHIBIT 4.1.22 MATERIAL CONTRACTS
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EXHIBIT 4.1.23 INTELLECTUAL PROPERTY
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EXHIBIT 5.2.2 GUARANTIES
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EXHIBIT 5.2.13 TRANSACTIONS WITH AFFILIATES
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EXHIBIT 9.11.1 FORM OF SUBSTITUTION AGREEMENT
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5
LOAN AGREEMENT
R&D SYSTEMS COMPANY, a Delaware corporation with a principal place of
business at 0000 X. Xxxxxxx Xxxx., Xxxxx 000, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
(hereinafter the "Borrower"), FLEET BANK OF MASSACHUSETTS, N.A., a national
banking association organized under the laws of the United States and having a
head office at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter
sometimes the "Agent", sometimes "Fleet" and sometimes a "Lender") as Agent for
itself and each of the other Lenders who now and/or hereafter become parties to
this Agreement pursuant to the terms of Section 9.11 hereof, and such Lenders,
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Fleet and THE FIRST NATIONAL BANK OF BOSTON, a national banking association,
organized under the laws of the United States and having a head office at 000
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter sometimes "Bank of
Boston" and sometimes a "Lender") as Lenders and Bank of Boston as co-agent,
hereby agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adjusted Libor Rate" means, with respect to any Libor Loan to be made
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by the Lenders for the Interest Period applicable to such Libor Loan, the
interest rate per annum determined by the Agent (fixed throughout such Interest
Period (subject to adjustments for the Libor Rate Reserve Percentage)) and
rounded upwards, if necessary, to the next 1/16 of 1%) which is equal to the
quotient of (i) the rate of interest determined by the Agent to be the average
of the interest rates per annum at which Dollar deposits in immediately
available funds are offered to each Reference Lender by first-class banks in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the Business Day on which such Interest Period begins, in an
amount approximately equal to the principal amount of such Libor Loan, for a
period of time equal to such Interest Period and (ii) a number equal to the
number one minus the Libor Rate Reserve Percentage. The "Libor Rate Reserve
Percentage" applicable to any Interest Period means the average of the maximum
effective rates (expressed as a decimal) of the statutory
1
reserve requirements (without duplication, but including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to each
Reference Lender during such Interest Period under regulations of the Board of
Governors of the Federal Reserve System (or any successor), including without
limitation Regulation D or any other regulation dealing with maximum reserve
requirements which are applicable to each Reference Lender with respect to its
"Eurocurrency Liabilities", as that term may be defined from time to time by the
Board of Governors of the Federal Reserve System (or any successor) or are
otherwise imposed by the Board of Governors of the Federal Reserve System (or
any successor) and which in any other respect relate directly to the funding of
loans bearing interest at rates based on the interest rates at which Dollar
deposits in immediately available funds are offered to banks by first-class
banks in the London interbank market. If any Reference Lender fails to provide
its offered quotation to the Agent, the Adjusted Libor Rate shall be determined
on the basis of the offered quotation of the other Reference Lender. The
Adjusted Libor Rate shall be adjusted automatically on and as of the effective
date of any change in the Libor Rate Reserve Percentage.
"Advance" and "Advances" means the funding by any Lender of all or a
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portion of the Loans in accordance with this Agreement.
"Affiliate" means singly and collectively, TA, Summit and any Person
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(other than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, the Borrower. For purposes of
this definition, a Person shall be deemed to be "controlled by" the Borrower if
the Borrower possesses, directly or indirectly, power either to (i) vote 25% or
more of the securities having ordinary voting power for the election of
directors of such Person or (ii) direct or cause the direction of the management
and policies of such Person whether by contract or otherwise, and the legal
representative, successor or assign of any such Person.
"Agent" means Fleet or any other Person which is at the time in
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question serving as the agent under the terms of Article 8 hereof and the other
Financing Documents.
"Agreement" means this loan agreement, as the same may from time to
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time be amended.
"A.M." means a time from and including 12 o'clock midnight to and
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excluding 12 o'clock noon on any Business Day using Eastern Standard (Daylight
Savings) time.
2
"Applicable Margin" means for each Libor Loan, two and three quarters
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percent (2.75%) per annum; provided, however, that if, at any time on or after
the receipt by the Agent of the quarterly financial statements for the
Borrower's March 31, 1996 fiscal quarter and each subsequent Borrower fiscal
quarter provided to the Agent by the Borrower pursuant to Section 5.3.3 hereof,
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the ratio of (a) total Indebtedness for Borrowed Money of the Borrower and its
Subsidiaries on a consolidated basis as of the last day of the most recently
ended fiscal quarter of the Borrower to (b) EBITDA for such fiscal quarter and
for the three immediately preceding Borrower fiscal quarters, (i) is less than
2.75:1.0, but greater than or equal to 2.25:1.0 and if and so long as no Event
of Default or Default exists and is continuing, the Applicable Margin shall,
subject to the last sentence of this definition, be two and one half percent
(2.50%), or (ii) is less than 2.25:1.0, but greater than or equal to 1.75:1.0
and if and so long as no Event of Default or Default exists and is continuing,
the Applicable Margin shall, subject to the last sentence of this definition, be
two and one quarter percent (2.25%), or (iii) less than 1.75:1.0, but greater
than or equal to 1.25:1.0 and if and so long as no Event of Default or Default
exists and is continuing , the Applicable Margin shall, subject to the last
sentence of this definition, be two percent (2.0%), or (iv) less than 1.25:1.0
and if and so long as no Event of Default or Default exists and is continuing,
the Applicable Margin shall, subject to the next-to-last sentence of this
definition, be one and three quarters percent (1.75%); provided further,
however, that if on any date the Borrower would be entitled to an Applicable
Margin other than 2.75% except for the fact that a Default exists, the
Applicable Margin shall not change until the first to occur of (a) such Default
becoming an Event of Default and (b) waiver or cure of such Default, at which
time the Applicable Margin shall be adjusted or remain the same in accordance
with the provisions of this definition preceding this further proviso.
Any change in the Applicable Margin required pursuant to the foregoing
shall become effective on the fifth Business Day after the Agent receives the
Borrower's financial statement for the Borrower's fiscal quarter or year-end, as
the case may be, in question and only after, in the case of a decrease in the
Applicable Margin, receipt by the Agent of a written request for such rate
decrease from the Borrower; provided, however, that each of the above-referenced
interest rates shall remain in effect only so long as Borrower qualifies
therefor and provided further, however, that interest rate reductions shall
become final only on the basis of Borrower's annual audited financial statements
and in the event that such annual audited financial statements establish that
the Borrower was not entitled to a rate
3
reduction which was previously granted, the Borrower shall, upon written
demand by the Agent repay to the Agent for the account of each Lender an amount
equal to the excess of interest at the rate which should have been charged based
on such annual audited financial statements and the rate actually charged on the
basis of Borrower's quarterly financial statement(s) (provided that in the event
of a dispute as to the appropriate fiscal quarter as to which any adjustment
should be allocated, the decision of the independent accountants of the Borrower
shall be made in accordance with GAAP and shall be binding upon the Agent, the
Lenders and the Borrower absent manifest error); and provided further, however,
that in the event that Borrower fails to provide any financial statement on a
timely basis in accordance with Section 5.3.3, any interest rate increase
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payable as a result thereof shall be retroactively effective to the date on
which the financial statement in question should have been received by the Agent
in accordance with Section 5.3.3, and the Borrower shall pay any amount due as a
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result thereof upon written demand from the Agent. The Agent shall send the
Borrower written acknowledgement of each change in the Applicable Margin in
accordance with the Agent's customary procedures as in effect from time to time.
"Authorized Representative" means such senior personnel of the
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Borrower as shall be duly authorized and designated in writing by the Borrower
to execute documents, instruments and agreements on its behalf and to perform
the functions of Authorized Representative under any of the Financing Documents.
"Borrowed Money" means any obligation to repay funded Indebtedness,
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any Indebtedness evidenced by notes, bonds, debentures, guaranties or similar
obligations (excluding Indebtedness owing by the Borrower to any Subsidiary or
owing by a Subsidiary to the Borrower and excluding from "similar obligations",
Hardware Indebtedness the aggregate outstanding amount of which at any time is
less than $2,500,000 and other trade payables) including without limitation the
Loans and any obligation to pay money under a conditional sale or other title
retention agreement, the net aggregate rentals payable under any Capitalized
Lease Obligation, any reimbursement obligation for any letter of credit and any
obligations in respect of banker's and other acceptances or similar obligations.
"Borrower" has the meaning assigned in the first paragraph of this
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Agreement.
"Budget" has the meaning assigned to such term in Section 5.3.7.
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4
"Business Condition" means the financial condition, business, and
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assets of a Person.
"Business Day" means (i) for all purposes other than as covered by
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clause (ii) below, any day on which banks in Boston, Massachusetts or New York,
New York are not authorized or required by applicable law to close; and (ii)
with respect to all notices and determinations in connection with, and payments
of principal and interest on, Libor Loans, any day which is a Business Day
described in clause (i) and which is also a day for trading by and between banks
in Dollar deposits in the London interbank market.
"Capital Expenditures" means all expenditures paid or incurred by the
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Borrower or any Subsidiary in respect of (i) the acquisition, construction,
improvement or replacement of land, buildings, machinery, equipment, any other
fixed assets or leaseholds and (ii) to the extent related to and not included in
(i) above, materials, contract labor and direct labor, which expenditures have
been or should be, in accordance with GAAP, capitalized on the books of the
Borrower or such Subsidiary. Where a fixed asset is acquired by a lease which is
required to be capitalized pursuant to Statement of Financial Accounting
Standards number 13 or any successor thereto, the amount required to be
capitalized in accordance therewith shall be considered to be an expenditure in
the year such asset is first leased.
"Capitalized Lease Obligations" means all lease obligations which have
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been or should be, in accordance with GAAP, capitalized on the books of the
lessee.
"Capitalized Software Development Costs" means the Borrower's and any
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Subsidiaries' costs of software development which are capitalized on the
financial statements and books and records of the Person incurring such costs.
"Cash Equivalent Investments" means any Investment in (i) direct
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obligations of the United States or any agency, authority or instrumentality
thereof, or obligations guaranteed by the United States or any agency, authority
or instrumentality thereof, whether or not supported by the full faith and
credit of, a right to borrow from or the ability to be purchased by the United
States; (ii) commercial paper rated in the highest grade by a nationally
recognized statistical rating agency or which, if not rated, is issued or
guaranteed by any issuer with outstanding long-term debt rated A or better by
any nationally recognized statistical rating agency; (iii) demand and time
deposits with, and certificates of deposit and bankers acceptances issued by,
any office of the Agent, any Lender or any other bank or trust
5
company which is organized under the laws of the United States or any state
thereof and has capital, surplus and undivided profits aggregating at least
$200,000,000, the outstanding long-term debt of which or of the holding company
of which it is a subsidiary is rated investment grade by any nationally
recognized statistical rating agency; (iv) any short-term note which has a
rating of MIG-2 or better by Xxxxx'x Investors Service Inc. or a comparable
rating from any other nationally recognized statistical rating agency; (v) any
municipal bond or other governmental obligation (including without limitation
any industrial revenue bond or project note) which is rated A or better by any
nationally recognized statistical rating agency; (vi) any other obligation of
any issuer, the outstanding long-term debt of which is rated A or better by any
nationally recognized statistical rating agency; (vii) any repurchase agreement
with any financial institution described in clause (iii) above or with a
nationally recognized, publicly traded investment banking firm, relating to any
of the foregoing instruments and fully collateralized by such instruments; and
(viii) shares of any open-end diversified investment company that has its assets
invested only in investments of the types described in clause (i) through (vii)
above at the time of purchase and which maintains a constant net asset value per
share; provided that the purchase of any shares in any particular investment
company shall be limited to an aggregate amount owned at any one time of
$1,000,000. Each Cash Equivalent Investment shall have a maturity of less than
one year at the time of purchase; provided that the maturity of any repurchase
agreement shall be deemed to be the repurchase date and not the maturity of the
subject security and that the maturity of any variable or floating rate note
subject to prepayment at the option of the holder shall be the period remaining
(including any notice period remaining) before the holder is entitled to
prepayment.
"Change of Control" means, at any time prior to the completion of a
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Qualified Initial Public Offering, any one of the following events: (i) any
change in the ownership of the Borrower such that TA and Summit in the aggregate
own less than 51% of the equity interests in the Borrower or (ii) any decrease
in any of the voting rights in the Borrower now held by TA and Summit such that
they cease to collectively hold 51% or more of the voting rights in the
Borrower.
"Closing Date" means the date on which all of the conditions precedent
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set forth in Section 3.1 of this Agreement have been satisfied and the Term Loan
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is funded in accordance with this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time
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to time.
6
"Commitment" means the Lenders' several commitments to make or
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maintain the Loans as set forth in Section 2.1 hereof in the maximum outstanding
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amount of each Lender's Pro Rata Share of $30,000,000 less the reductions set
forth in Section 2.1 and less any reductions and prepayments or repayments of
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the Term Loan as set forth in Section 2.6.
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"Commonly Controlled Entity" means a Person, whether or not
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incorporated, which is under common control with the Borrower within the meaning
of section 414(b) or (c) of the Code.
"Default" means an event or condition which with the giving of notice
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or lapse of time or both would become an Event of Default.
"Discharged Rights and Obligations" shall have the meaning assigned to
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such term in Section 9.11.4.
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"Dollars" and the sign "$" mean lawful money of the United States of
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America.
"EBITDA" means, for any fiscal period, Net Income plus, to the extent
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accounted for in Net Income, Interest Expense, taxes, depreciation,
amortization, other noncash charges and non-recurring extraordinary costs
incurred by the Borrower and any Subsidiaries prior to March 31, 1996 in
connection with closing of the Loans and the Related Transactions (including
MSUIP Expense), for such period determined on an accrual and consolidated basis
in accordance with GAAP, plus, without duplication, Non-Compete Payments less,
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Capitalized Software Development Costs.
"Effective Prime" means the Prime Rate plus one percent (1.0%) per
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annum; provided, however, that if, at any time on or after the receipt by the
Agent of the quarterly financial statements for the Borrower's March 31, 1996
fiscal quarter and each subsequent Borrower fiscal quarter provided to the Agent
by the Borrower pursuant to Section 5.3.3 hereof, the ratio of (a) total
-------------
Indebtedness for Borrowed Money of the Borrower and its Subsidiaries on a
consolidated basis as of the last day of the most recently ended fiscal quarter
of the Borrower to (b) EBITDA for such fiscal quarter and for the three
immediately preceding Borrower fiscal quarters, (i) is less than 2.75:1.0, but
greater than or equal to 2.25:1.0 and if and so long as no Event of Default or
Default exists and is continuing, Effective Prime shall, subject to the last
sentence of this definition, be the Prime Rate plus three quarters of one
percent (.75%), or (ii) is less than 2.25:1.0, but greater than or equal to
1.75:1.0 and if and so long as no Event of Default or Default exists and is
7
continuing, Effective Prime shall, subject to the last sentence of this
definition, be the Prime Rate plus one half of one percent (.50%), or (iii) is
less than 1.75:1.0, but greater than or equal to 1.25:1.0 and if and so long as
no Event of Default or Default exists and is continuing, Effective Prime shall,
subject to the last sentence of this definition, be the Prime Rate plus one
quarter of one percent (.25%), or (iv) is less than 1.25:1.0 and if and so long
as no Event of Default or Default exists and is continuing, Effective Prime
shall, subject to the next-to-last sentence of this definition, be the Prime
Rate; provided, further, however, that if on any date the Borrower would be
entitled to an Effective Prime other than the Prime Rate plus 1.0% except for
the fact that a Default exists, the Effective Prime shall not change until the
first to occur of (a) such Default becoming an Event of Default and (b) waiver
or cure of such Default, at which time the Effective Prime shall be adjusted or
remain the same in accordance with the provisions of this definition preceding
this further proviso.
Any change in Effective Prime required pursuant to the foregoing shall
become effective on the fifth Business Day after the Agent receives the
Borrower's financial statement for the Borrower's fiscal quarter or year-end, as
the case may be, in question and only after, in the case of a decrease in
Effective Prime, receipt by the Agent of a written request for such rate
decrease from the Borrower; provided, however, that each of the above-referenced
interest rates shall remain in effect only so long as Borrower qualifies
therefor and provided further, however, that interest rate reductions shall
become final only on the basis of Borrower's annual audited financial statements
and in the event that such annual audited financial statements establish that
the Borrower was not entitled to a rate reduction which was previously granted,
the Borrower shall, upon written demand by the Agent repay to the Agent for the
account of each Lender an amount equal to the excess of interest at the rate
which should have been charged based on such annual audited financial statements
and the rate actually charged on the basis of Borrower's quarterly financial
statement(s) (provided that in the event of a dispute as to the appropriate
fiscal quarter as to which any adjustment should be allocated, the decision of
the independent accountants of the Borrower shall be made in accordance with
GAAP and shall be binding upon the Agent, the Lenders and the Borrower absent
manifest error); and provided further, however, that in the event that Borrower
fails to provide any financial statement on a timely basis in accordance with
Section 5.3.3, any interest rate increase payable as a result thereof shall be
-------------
retroactively effective to the date on which the financial statement in question
should have been received by the Agent in accordance with Section 5.3.3, and the
-------------
8
Borrower shall pay any amount due as a result thereof upon written demand from
the Agent. The Agent shall send the Borrower written acknowledgement of each
change in the Effective Prime in accordance with the Agent's customary
procedures as in effect from time to time.
"Equity" means the Investments in Dollars by the New Stockholders in
------
the Borrower, made on or prior to the date of this Agreement in the aggregate
amount of not less than $26,000,000 as set forth in Exhibit 1.1.
-----------
"Equity Documents" means, collectively, all documents entered into by
----------------
the Borrower, the Old Stockholders and/or any of the New Stockholders in
connection with the investment of the Equity.
"ERISA" means the Employee Retirement Income Security Act of 1974 as
-----
amended from time to time.
"Events of Default" has the meaning assigned to that term in Section
----------------- -------
6.1 of this Agreement.
---
"Excess Cash Flow" means, for any fiscal year of the Borrower, the sum
----------------
of EBITDA for each Borrower fiscal quarter in such fiscal year, minus the sum of
-----
(i) an amount equal to the sum of payments included in Total Debt Service paid
during each fiscal quarter in such fiscal year, (ii) to the extent not included
in Total Debt Service, all Capital Expenditures permitted under Section 5.2.17
--------------
and paid during each Borrower fiscal quarter in such fiscal year, (iii) Non-
Compete Payments (other than $1,500,000 paid at Closing) paid during each fiscal
quarter in such fiscal year, (iv) taxes payable during each Borrower fiscal
quarter in such fiscal year and (v) non-recurring extraordinary costs paid by
the Borrower and any Subsidiaries prior to March 31, 1996 in connection with the
closing of the Loans and the Related Transactions (including only the FICA and
other payroll tax withholdings portion of the MSUIP Expense).
"Exhibit" means, when followed by a letter, the exhibit attached to
-------
this Agreement bearing that letter and by such reference fully incorporated in
this Agreement.
"Facility Fee" means, the fee payable by the Borrower in accordance
------------
with Section 2.2.2 in an amount equal to 1.25% of the Commitment ($375,000).
-------------
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upward, if necessary, to the nearest 1/16th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by
the Federal Reserve Bank of New York, provided that (i) if such day is not a
--------
9
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next succeeding Business Day as so published, and (ii) if no
such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to the Agent on such
day on such transactions as determined by the Agent in its discretion exercised
in good faith.
"Financing Documents" means, collectively, this Agreement, each Note,
-------------------
the Security Documents, the Side Letter, any agreement with any Lender providing
any interest rate protection arrangement and each other agreement, instrument or
document now or hereafter executed in connection herewith or therewith.
"GAAP" means generally accepted accounting principles in effect from
----
time to time in the United States of America.
"Hardware Indebtedness" means Indebtedness of the Borrower and/or any
---------------------
Subsidiary incurred in the ordinary course of the Borrower's and/or any
Subsidiary's business (i) for the purchase price of computer equipment or
computer hardware, (ii) owing to a computer equipment or computer hardware
vendor pursuant to a purchase agreement or purchase order for such equipment or
hardware, (iii) to be sold by the Borrower and/or any Subsidiary to another
Person pursuant to a contract with such Person and in conjunction with the sale
or licensing by the Borrower and/or any Subsidiary of its software or any
modification or improvement thereof and (iv) as to which Indebtedness the
Borrower and/or any Subsidiary (a) are in compliance with the terms and
conditions of said purchase agreement or purchase order or (b) are disputing the
vendor's performance and any Borrower and/or Subsidiary noncompliance in good
faith and by proper proceedings and have properly reserved or made other
provision for the vendor's claims in accordance with and to the extent required
by GAAP.
"Hazardous Material" shall mean any substance or material defined or
------------------
designated as a hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any United States federal, state
or local environmental statute, regulation or ordinance.
"Indebtedness" means, without duplication for any Person, (i) all
------------
indebtedness or other obligations of said Person for Borrowed Money or for the
deferred purchase price of property or services other than accounts payable or
trade payables incurred in the ordinary course of such Person's business,
including, without limitation, all reimbursement obligations of said Person with
respect to standby and/or documentary letters of credit (ii) all indebtedness or
other obligations of any other Person ("Other Person") for Borrowed Money or for
the deferred purchase price of property or services other than accounts payable
or trade
10
payables incurred in the ordinary course of such Person's business, the
payment or collection of which said Person has guaranteed (except by reason of
endorsement for deposit or collection in the ordinary course of business) or in
respect of which said Person is liable, contingently or otherwise, including,
without limitation, liable by way of agreement to purchase or lease, to provide
funds for payment, to supply funds to purchase, sell or lease property or
services primarily to assure a creditor of such Other Person against loss or
otherwise to invest in or make a loan to the Other Person, or otherwise to
assure a creditor of such Other Person against loss, (iii) all indebtedness or
other obligations of any Person for Borrowed Money or for the deferred purchase
price of property or services secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in any property owned by said Person, whether or not said
Person has assumed or become liable for the payment of such indebtedness or
obligations; provided that if such Person has not assumed or become liable for
the payment of such indebtedness or obligations, the amount of such indebtedness
or obligations for purposes of this definition shall be limited to the higher of
the cost or fair market value of the property subject or contingently subject to
any Lien, (iv) Capitalized Lease Obligations of said Person and (v) obligations
of such Person under contracts pursuant to which such Person has agreed to
purchase interest rate protection or swap interest rate obligations.
"Interest Adjustment Date" means (i) as to any Prime Rate Loan to be
------------------------
converted to a Libor Loan the Business Day elected by the Borrower in its
applicable Interest Rate Election, but being not less than three (3) Business
Days after the receipt by the Agent before 12:00 o'clock P.M. on a Business Day
of an Interest Rate Election electing the Libor Rate as the interest rate on
such Loan; and (ii) as to any Libor Loan, the last Business Day of the Interest
Period pertaining to such Libor Loan.
"Interest Expense" means, with respect to any fiscal quarter, the
----------------
aggregate amount required to be accrued by the Borrower and any Subsidiaries in
such fiscal quarter for interest, fees (excluding, however, the Facility Fee
being paid to the Agent for the accounts of Fleet and Bank of Boston in
accordance with their Pro Rata Shares on the Closing Date), charges and
expenses, however characterized, on its Indebtedness, including, without
limitation, all such interest, fees, charges and expenses required to be accrued
with respect to Indebtedness under the Financing Documents, all determined in
accordance with GAAP.
"Interest Period" means:
---------------
With respect to each Libor Loan:
11
(i) initially, the period commencing on the date of such Libor Loan
and ending one, two, three or six months thereafter as the Borrower may
elect in the applicable Interest Rate Election and subject to Section
-------
2.9; and
---
(ii) thereafter, each period commencing on the last day of the
immediately preceding Interest Period applicable to such Libor Loan and
ending one, two, three or six months thereafter as the Borrower may
elect in the applicable Interest Rate Election and subject to Section
-------
2.9;
---
provided that clauses (i) and (ii) of this definition are subject to the
-------- ----
following:
(A) any Interest Period (other than an Interest Period determined
pursuant to clause (C) below) which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in another calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day;
(B) any Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall, subject to
clause (C) below, end on the last Business Day of a calendar month; and
(C) for the Term Loan, no Interest Period shall end after the Term
Loan Repayment Date and for the Revolving Credit Loan, no Interest Period shall
end after the Revolving Credit Repayment Date; and
(D) with respect to all Libor Loans, no more than five (5) Interest
Periods may be in effect at any time.
"Interest Rate Election" means the Borrower's irrevocable telecopied
----------------------
or telephonic notice of election, which shall be promptly confirmed by a written
notice of election that Effective Prime or the Libor Rate shall apply to all or
any portion of the Loans, which shall, subject to this Agreement, be effective
on the next Interest Adjustment Date, such telecopied or telephonic notice and
written confirmation thereof to be in the form of Exhibit 1.4 and to be received
-----------
by the Agent prior to 12:00 o'clock P.M. on a Business Day and at least three
(3) Business Days prior to an Interest Adjustment Date in the case of a Libor
Loan, and by 12:00 p.m. on an Interest Adjustment Date in the case of a Prime
Rate Loan, each such Interest Rate Election, subject to the terms of this
Agreement to apply to the Advance or the Loan referred to in such Interest Rate
Election or to effect a change in the interest rate on the applicable portion of
the Loans then outstanding, as applicable, with respect to which such
12
Interest Rate Election was made, such change to occur on the Interest
Adjustment Date next succeeding receipt of such Interest Rate Election by the
Agent. Any Interest Rate Election received by the Agent after 12 o'clock P.M.
on a Business Day shall be deemed, for all purposes of this Agreement to have
been received prior to 12 o'clock P.M. on the next succeeding Business Day.
"Investment" means any investment in any Person whether by means of a
----------
purchase of capital stock, notes, bonds, debentures or other evidences of
Indebtedness and/or by means of a capital or partnership contribution, loan,
deposit, advance or other means, excluding amounts due from customers for
services or products delivered or sold in the ordinary course of business.
"Lammle" means Xxx Xxxxxx, the chief executive officer of the
------
Borrower.
"Lender" means Fleet, Bank of Boston, or any financial institution
------
which hereafter becomes a party hereto pursuant to the terms of Section 9.11,
each in their individual capacity, and "Lenders" means Fleet and each of such
financial institutions.
"Libor Loan" means any portion of any Loan bearing interest at the
----------
Libor Rate.
"Libor Rate" means, for any Interest Period, the Adjusted Libor Rate
----------
in effect on the first day of such Interest Period (subject to adjustment as
provided in the definition of Adjusted Libor Rate) plus the Applicable Margin
for Libor Loans from time to time in effect.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other) or other security agreement
or preferential arrangement of any kind or nature whatsoever (including without
limitation any conditional sale or other title retention agreement and any
Capitalized Lease Obligation) having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the
applicable Uniform Commercial Code or comparable law of any jurisdiction in
respect of any of the foregoing.
"Loans" and "Loan" means at any time the outstanding principal amount
----- ----
of Indebtedness owed to the Lenders pursuant to this Agreement.
"Majority Lenders" means Lenders holding an aggregate Pro Rata Share
----------------
of the outstanding principal balance of the Loans in an amount equal to or in
excess of 66.67% of the total outstanding principal balance of the Loans and if
there is no outstanding principal balance of the Loans, Lenders having at
13
least 66.67% of the Commitment.
"Material Adverse Effect" means material adverse effect on (i) the
-----------------------
ability of the Borrower and any Subsidiaries taken as a whole to fulfill their
obligations under any of the Financing Documents or (ii) the Business Condition
of the Borrower and any Subsidiaries taken as a whole.
"Material Agreements" means (i) agreements of the Borrower or any
-------------------
Subsidiary which have not yet been performed by the Borrower or any such
Subsidiary where the initial license fee is $250,000 or more, (ii) agreements of
the Borrower or any Subsidiary where the annual license, maintenance or support
fees are $30,000 or more, (iii) agreements of Borrower existing on the date
hereof with each of Progress Software Corporation and VMARK Software Inc., and
(iv) the non-competition agreement between the Borrower and Lammle of even date
herewith.
"MSUIP Expense" means compensation and expenses incurred by the
-------------
Borrower in the amount of $7,000,000 in granting phantom stock options in the
Borrower pursuant to Borrower's management stock unit incentive plan.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Income" means, for any fiscal period, the net after tax income
----------
(loss) of the Borrower and any Subsidiaries for such period determined on an
accrual and consolidated basis in accordance with GAAP.
"New Stockholders" means Lammle, Lammle immediate family members and
----------------
trusts for their benefit, TA, TL and Summit.
"Noncompete Payments" means the payments to be made by the Borrower to
-------------------
Lammle pursuant to a non-competition agreement between said Persons of even date
herewith.
"Note" means any promissory note of the Borrower payable to the order
----
of a Lender and substantially in the form of Exhibit 1.5 or Exhibit 1.6 and
-------- --- -----------
evidencing all or a portion of the Loan and "Notes" means all of the Notes,
collectively.
"Obligations" mean any and all Indebtedness, obligations and
-----------
liabilities of Borrower and/or any Subsidiaries under any of the Financing
Documents to any one or more of the Lenders and/or the Agent of every kind and
description, absolute or contingent, due or to become due, whether for payment
or performance, now existing or hereafter arising, including, without
limitation, all Loans, interest, taxes, fees, charges, and expenses under the
Financing Documents and attorneys' fees chargeable to the
14
Borrower and/or any Subsidiaries or incurred by any of the Lenders and/or the
Agent under any of the Financing Documents.
"Officer's Certificate" means a certificate signed by an Authorized
---------------------
Representative and delivered to the Agent on behalf of the Lenders.
"Old Stockholders" means Lammle and Xxxxx Xxxx and their immediate
----------------
family members and/or trusts for the benefit of any of the foregoing Persons.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to subtitle A of Title IV of ERISA.
"P.M." means a time from and including 12 o'clock noon on any Business
----
Day to the end of such Business Day using Eastern Standard (Daylight Savings)
time.
"Permitted Encumbrances" means each Lien granted pursuant to any of
----------------------
the Security Documents, those Liens, security interests and defects in title
permitted under Section 5.2.1 and those Liens listed on Exhibit 1.8 hereto.
------------- -----------
"Person" means an individual, corporation, partnership, limited
------
liability company, joint venture, trust, or unincorporated organization, or a
government or any agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of
----
ERISA maintained for employees of the Borrower or any Commonly Controlled
Entity.
"Premises" has the meaning assigned to such term in Section 4.1.22.1.
-------- ----------------
"Prime Rate" means (i) the floating rate of interest per annum
----------
designated from time to time by the Agent as being its "prime rate" of interest,
such interest rate to be adjusted on the effective date of any change thereof by
the Agent, it being understood that such rate of interest may not be the lowest
rate of interest from time to time charged by the Agent or (ii) during the last
four (4) Business Days of each calendar year and the first two (2) Business Days
of the immediately succeeding calendar year, if higher than (i), the Federal
Funds Rate, such interest rate to be adjusted on the effective date of any
change thereof by the Federal Reserve Bank of New York.
"Prime Rate Loan(s)" means any portion of the Loans bearing interest
------------------
at Effective Prime.
"Pro Rata Share" means (i) with respect to the Commitment,
--------------
15
each Lender's percentage share of the Commitment as set forth immediately
opposite such Lender's name on Exhibit 1.9, and (ii) with respect to the Loans,
-----------
each Lender's percentage share of the aggregate outstanding principal balance of
the Loans and "Pro Rata Shares" means such percentage shares of the Lenders.
"Projections" means the Borrower's written projections of Borrower's
-----------
3-year future performance on a consolidated basis delivered to the Agent prior
to the Closing and attached to this Agreement as Exhibit 1.12.
------------
"Qualified Initial Public Offering" means the Borrower and/or any
---------------------------------
Subsidiary filing a Form S-1 or any other form of registration statement then
available for registration with the Securities and Exchange Commission or
otherwise conducting an initial public offering of any class of the Borrower's
or any Subsidiary's securities, which such offering generates $30,000,000 or
more in net proceeds and results in a price per share of $20.00 or more (subject
to adjustment for stock splits, stock dividends, recapitalizations and the
like).
"Reference Lender(s)" means the Agent unless the Agent resigns said
-------------------
responsibility, at which time and thereafter such term means one or two Lenders
selected by the Agent in its discretion from time to time as a reference lender
for purposes of determining the Adjusted Libor Rate.
"Related Transactions" means the Borrower's receipt of the Equity, the
--------------------
Borrower's repurchase of certain capital stock from certain of the Old
Stockholders on or prior to the Closing Date and the Borrower's issuance of
capital stock to the New Stockholders, the issuance of certain stock options by
the Borrower, the reincorporation of the Borrower in Delaware and the merger of
the Borrower's predecessor into the Borrower and any other transactions
described in the Related Transaction Documents.
"Related Transaction Documents" means the documents listed on Exhibit
----------------------------- -------
1.2.
---
"Request" means a written request for the Loans in the form of Exhibit
------- -------
1.10, received by the Agent on behalf of the Lenders from the Borrower in
----
accordance with this Agreement, specifying the date on which the Borrower
desires such Loans and the disbursement instructions of the Borrower with
respect thereto.
"Reportable Event" shall have the meaning assigned to that term in
----------------
Section 4043 of ERISA for which the requirement of 30 days' notice to the PBGC
has not been waived by the PBGC.
"Revolving Credit Loan" means the revolving credit loans to
---------------------
16
be made by the Lenders to the Borrower from time to time in the maximum
outstanding principal amount of the Revolving Credit Loan Commitment, all
subject and pursuant to Section 2.1.0.
-------------
"Revolving Credit Loan Commitment" means the Lenders' several
--------------------------------
commitments to make Revolving Credit Loans to the Borrower in accordance with
Section 2.1.0 and this Agreement and in the maximum outstanding amount of each
-------------
Lender's Pro Rata Share of $5,000,000, as such amount may be reduced pursuant to
Section 2.6.4.
-------- -----
"Revolving Credit Note" means each revolving credit note of the
---------------------
Borrower, payable to the order of a Lender in the form of Exhibit 1.5 hereto
-----------
evidencing the Indebtedness of the Borrower to such Lender with respect to the
Revolving Credit Loan.
"Revolving Credit Repayment Date" means the earlier to occur of (i)
-------------------------------
December 31, 2000 and (ii) such earlier date on which the Revolving Credit Loan
becomes due and payable pursuant to the terms hereof.
"Section" means, when followed by a number, the section or subsection
-------
of this Agreement bearing that number.
"Security Documents" means any and all documents, instruments and
------------------
agreements now or hereafter providing security for the Loans and any other
Indebtedness of the Borrower or any Subsidiary to the Lenders and/or the Agent
arising under or in connection with any of the Financing Documents, including
without limitation the following documents, instruments and agreements between
the Agent and the Borrower or any Subsidiary; any mortgages on and collateral
assignments of real property interests (leasehold and easement) of the Borrower
and any Subsidiary granting Liens thereon; landlord lien waivers and consents as
may be reasonably requested by the Agent (provided that the Borrower shall only
be required to use its best efforts to obtain such landlord waivers and consents
with respect to such leased premises in accordance with the Financing Documents)
security agreements granting first Liens on all Borrower's and any Subsidiary's
fixtures and tangible and intangible personal property; collateral assignments
of Borrower's and any Subsidiary's contracts, licenses, permits, easements and
leases; collateral assignments of Borrower's and any Subsidiary's copyrights;
conditional assignments of Borrower's and any Subsidiary's trademarks; any
Subordination Agreement; the software escrow agreement referred to in Section
-------
5.1.24; any guaranty by a Subsidiary; any pledge of the capital stock of any
------
Subsidiary; casualty insurance policies providing coverage to the Agent for the
benefit of the Lenders, UCC-1 financing statements or similar filings perfecting
the above-referenced security interests, pledges and assignments, all
as executed, delivered to and accepted by the Agent on or prior
17
to the Closing Date or subsequent to the Closing Date as may be required by
this Agreement as same may be amended in writing by the Agent and any other
party or parties thereto.
"Selling Lender" shall have the meaning assigned to such term in
--------------
Section 9.11.1.
--------------
"Side Letter" means that certain side letter of even date with this
-----------
Agreement between the Borrower and the Agent regarding certain fees payable by
the Borrower.
"Single Employer Plan" means any Plan as defined in Section
--------------------
4001(a)(15) of ERISA.
"Stockholders" means, collectively, the Old Stockholders and the New
------------
Stockholders.
"Subsidiary" means any corporation or entity other than the Borrower
----------
of which more than 50% of the outstanding capital stock or voting interests or
rights having ordinary voting power to elect a majority of the board of
directors or other managers of such entity (irrespective of whether or not at
the time capital stock or voting interests or rights of any other class or
classes of such Person shall or might have voting power upon the occurrence of
any contingency) is at the time directly or indirectly owned by the Borrower or
by the Borrower and/or one or more Subsidiaries or the management of which
corporation or entity is under control of the Borrower and/or any other
Subsidiary, directly or indirectly through one or more Persons and any other
Person which, under GAAP, should at any time for financial reporting purposes be
consolidated or combined with the Borrower and/or any other Subsidiary.
"Substituted Lender" has the meaning set forth in Section 9.11 hereof.
------------------ -----------
"Substitution Agreement" has the meaning assigned to such term in
----------------------
Section 9.11.1.
--------------
"Summit" means Summit Ventures IV, L.P., Summit Investors III, L.P. or
------
any other venture capital or investment fund managed by Summit Partners L.P.
"TA" means any venture capital or other fund or entity for which TA
--
Associates, Inc., a Delaware corporation and/or one or more general partners of
TA Associates, Inc. directly or indirectly through one or more intermediaries
serves as general partner, manager or in a like capacity.
18
"Term Loan" means the term loan in the aggregate principal amount of
---------
$25,000,000 to be made or maintained by the Lenders pursuant to Section 2.1.1
-------------
hereof.
"Term Note" means a term note of the Borrower payable to the order of
---------
a Lender in the form of Exhibit 1.6 hereto evidencing the Indebtedness of the
-----------
Borrower to such Lender with respect to the Term Loan.
"Term Loan Repayment Date" means the earlier to occur of (i) December
------------------------
31, 2000 and (ii) such earlier date on which the Term Loan becomes due and
payable pursuant to the terms hereof.
"TL" means Technology Leaders II L.P., Technology Leaders II Offshore
--
C.V., or any other venture capital or investment fund managed by either
Technology Leaders Management, Inc. or Technology Leaders II Management L.P.
"Total Debt Service" means, at any date of determination, the sum of
------------------
(i) Interest Expense and (ii) scheduled and mandatory principal payments for the
fiscal period in question due on account of any Indebtedness of the Borrower,
but excluding any mandatory payments of principal required pursuant to Sections
--------
2.6.1.2, 2.6.1.3, 2.6.1.4 and 2.6.1.5.
------- ------- ------- -------
"Unused Fees" has the meaning assigned to such term in Section 2.2.2.
----------- -------------
Section 1.2. Accounting Terms. All accounting terms not specifically
------------ ----------------
defined herein shall be construed in accordance with GAAP, calculations of
amounts for the purposes of calculating any financial covenants or ratios
hereunder shall be made in accordance with GAAP applied on a basis consistent
with those used in the Borrower's financial statements referred to in Section
-------
4.1.5 (other than departures therefrom not material in their impact), and all
-----
financial data submitted pursuant to this Agreement shall be prepared in
accordance with GAAP (except, in the case of unaudited financial statements, the
absence of footnotes and that such statements are subject to changes resulting
from year-end adjustments made in accordance with GAAP).
Section 1.3. Other Terms. The words "hereof," "herein" and
------------ -----------
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
19
ARTICLE 2.
AMOUNT AND TERMS OF THE LOANS
Section 2.1. The Loans.
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Section 2.1.0. The Revolving Credit Loans. Each of the Lenders
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severally agrees, subject to the terms and conditions of this Agreement, to make
Advances of Revolving Credit Loans to the Borrower from time to time after
receipt by the Agent from time to time before the Revolving Credit Repayment
Date of, and at the times provided for in, a Request and an Interest Rate
Election from the Borrower in accordance with this Agreement, during the period
commencing on the Closing Date and ending on the Business Day immediately
preceding the Revolving Credit Repayment Date, in an aggregate principal amount
at any one time outstanding not to exceed the lesser of (i) such Lender's Pro
Rata Share of the Revolving Credit Loan Commitment less (ii) in each case, such
Lender's Pro Rata Share of the aggregate amount of any reductions of the
Revolving Credit Loan Commitment made pursuant to Section 2.6.4.
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Promptly after receipt of a Request and Interest Rate Election, Agent
shall notify each Lender by telephone, telex or telecopy of the proposed
borrowing. Subject to the immediately preceding paragraph, each Lender agrees
that after its receipt of notification from Agent of Agent's receipt of a
Request and Interest Rate Election, such Lender shall send its Pro Rata Share
(or such portion thereof as may be necessary to provide Agent with such Pro Rata
Share in Dollars and in immediately available funds, without consideration or
use of any contra accounts of any Lender) of the requested Loan by wire transfer
to Agent so that Agent receives such Pro Rata Share in Dollars and in
immediately available funds not later than 12:00 P.M. (Boston, Massachusetts
time) on the first day of the Interest Period for any such requested Libor Loan
and on the Business Day for such Advance set forth in Borrower's Request for any
such requested Prime Rate Loan, and Agent shall advance funds to the Borrower by
depositing such funds in Borrower's account with the Agent upon Agent's receipt
of such Pro Rata Shares in the amount of the Pro Rata Shares of such Loan in
Agent's possession. Agent's failure to receive any Pro Rata Share from a Lender
other than Fleet shall not excuse Agent from advancing Fleet's Pro Rata Share to
the Borrower. Unless Agent shall have been notified by any Lender (which notice
may be telephonic if confirmed promptly in writing) prior to the first day of
the Interest Period in respect of any Loan which such Lender is obligated to
make under this Agreement, that such Lender does not intend to make available to
Agent such
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Lender's Pro Rata Share of such Loan on such date, Agent may assume that such
Lender has made such amount available to Agent on such date and Agent in its
sole discretion may, but shall not be obligated to, make available to the
Borrower a corresponding amount on such date. If such corresponding amount is
not in fact made available to Agent by such Lender, Agent shall be entitled to
recover such corresponding amount from such Lender promptly upon demand by Agent
together with interest thereon, for each day from such date until the date such
amount is paid to Agent, at the Federal Funds Rate for three (3) Business Days
and thereafter at the interest rate on the Loan in question. If such Lender
does not pay such corresponding amount forthwith upon Agent's demand therefor,
Agent shall promptly notify the Borrower and the Borrower shall promptly pay
such corresponding amount to Agent. Nothing contained in this Section shall be
deemed to relieve any Lender from its obligation to fulfill its obligations
hereunder or to prejudice any rights which the Borrower may have against any
Lender as a result of any default by such Lender hereunder.
Section 2.1.1. Term Loans. Each of the Lenders severally agrees,
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subject to the terms and conditions of this Agreement, to make a Term Loan to
the Borrower in the amount of its respective Pro Rata Share of $25,000,000.
Borrower shall pay on the last day of each calendar quarter ending on or in
between the dates set forth below the amount of the Term Loans set forth
immediately opposite such dates below:
Repayment Quarterly
Dates Payment Amount
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September 30, 1996 through
December 31, 1996 $1,000,000
March 31, 1997 through $1,000,000
December 31, 1997
March 31, 1998 through $1,500,000
December 31, 1998
March 31, 1999 through $1,500,000
December 31, 1999
March 31, 2000 through $1,750,000
December 31, 2000
Section 2.2. Interest and Fees on the Loans.
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Section 2.2.1. Interest. Interest shall accrue and be paid currently
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on the Loans at Effective Prime or the Libor Rate for each of the Loans'
Interest Periods in accordance with the Borrower's Interest Rate Elections for
the Loans subject to and in accordance with the terms and conditions of this
Agreement and the Note(s); provided that if a Default or an Event of Default
exists and is continuing, no Interest Rate Election electing the Libor Rate
shall be effective and any Loan or portion thereof with respect to which any
such Interest Rate Election would otherwise have been effective shall bear
interest at Effective Prime plus, so long as an Event of Default exists and is
continuing, two percent (2.0%); (provided that the Borrower may elect one-month
Interest Periods while a Default exists, so long as no Event of Default exists)
all of the foregoing being applicable until such Default or Event of Default is
cured or waived and an Interest Rate Election electing the Libor Rate for such
Loan or portion thereof which is effective in accordance with this Agreement is
submitted to the Agent; and provided further that the Borrower shall submit
Interest Rate Elections so that on any date on which under Section 2.1.1 a
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regularly scheduled payment of principal of the Term Loans is to be made, at
least the amount of the Term Loans to be so repaid is bearing interest at
Effective Prime and/or such repayment date is an Interest Adjustment Date for
outstanding Libor Loans in such amount of the Term Loans. The Borrower shall
pay such interest to the Agent for the pro rata account of each Lender in
arrears on the Loans (including without limitation Libor Loans) outstanding from
time to time after the Closing Date, such payments to be made monthly on the
last Business Day of each calendar month of each year commencing March 31, 1996.
All provisions of each Note and any other agreements between the Borrower and
the Lenders are expressly subject to the condition that in no event, whether by
reason of acceleration of maturity of the Indebtedness evidenced by any Note or
otherwise, shall the amount paid or agreed to be paid to the Lenders which is
deemed interest under applicable law exceed the maximum permitted rate of
interest under applicable law (the "Maximum Permitted Rate"), which shall mean
the law in effect on the date of this Agreement, except that if there is a
change in such law which results in a higher Maximum Permitted Rate, then each
Note shall be governed by such amended law from and after its effective date.
In the event that fulfillment of any provision of any Note, or this Agreement or
any document, instrument or agreement providing security for any Note results in
the rate of interest charged under any Note being in excess of the Maximum
Permitted Rate, the obligation to be fulfilled shall automatically be reduced to
eliminate such excess. If, notwithstanding the foregoing, any Lender receives
an amount which under applicable law would cause the interest rate under any
Note to exceed the Maximum Permitted
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Rate, the portion thereof which would be excessive shall automatically be
deemed a prepayment of and be applied to the unpaid principal balance of such
Note to the extent of then outstanding Prime Rate Loans and not a payment of
interest and to the extent said excessive portion exceeds the outstanding
principal amount of Prime Rate Loans, said excessive portion shall be repaid to
the Borrower.
Section 2.2.2. Fees. On the Closing Date the Borrower shall pay the
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Facility Fee to the Agent for the accounts of Fleet and Bank of Boston in
accordance with their Pro Rata Shares. In addition, on the last Business Day of
each March, June, September and December commencing March 31, 1996 and
continuing through the Revolving Credit Repayment Date, the Borrower shall pay
to the Agent for the pro rata account of each Lender, a fee in an amount equal
to .50% per annum of the amount, if any, by which the average actual daily
amount of the Revolving Credit Loan Commitment for the quarterly period just
ended (or in the case of the first such payment, the period from the Closing
Date to the date such payment is due) exceeds the average of the actual daily
outstanding principal balances of the Revolving Credit Loans (the "Unused
Fees"). In addition, the Borrower shall pay to the Agent for its own account
certain fees as specified in the Side Letter.
Section 2.2.3. Increased Costs - Capital. If, after the date hereof,
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any Lender shall have reasonably determined that the adoption after the date
hereof of any applicable law, governmental rule, regulation or order regarding
capital adequacy of banks or bank holding companies, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender with any policy, guideline,
directive or request regarding capital adequacy (whether or not having the force
of law and whether or not failure to comply therewith would be unlawful) of any
such authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on the capital of such Lender or such Lender's
holding company as a consequence of the obligations hereunder of such Lender to
a level below that which such Lender could have achieved but for such adoption,
change or compliance (taking into consideration the policies of such Lender with
respect to capital adequacy immediately before such adoption, change or
compliance and assuming that the capital of such Lender was fully utilized prior
to such adoption, change or compliance) by an amount reasonably deemed by such
Lender to be material, then such Lender shall notify the Agent and the Borrower
thereof and the Borrower shall pay to the Agent for the account of such Lender
from time to time as specified by such Lender such additional amounts (which
shall be deemed additional interest) as shall be sufficient to compensate such
Lender for such reduced return,
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each such payment to be made by the Borrower within ten (10) Business Days
after each demand by such Lender, provided that the liability of the Borrower to
pay such costs shall only accrue with respect to costs accruing from and after
the 90th day prior to the date of each such demand. A certificate in reasonable
detail of one of the officers of such Lender describing the event giving rise to
such reduction and setting forth the amount to be paid to such Lender hereunder
and a computation of such amount shall accompany any such demand and shall, in
the absence of manifest error, be presumed correct. In determining such amount,
such Lender shall act reasonably and will use any reasonable averaging and
attribution methods which will, to the extent such increased costs or reductions
relate to such Lender's loans bearing interest at a rate based on the Adjusted
Libor Rate in general and are not attributable solely to the Loans hereunder, be
applied generally to such Lender's loans bearing interest at a rate based on the
Adjusted Libor Rate and such Lender's Libor Loans. If the Borrower shall, as a
result of the requirements of this Section 2.2.3 above, be required to pay any
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Lender the additional costs referred to therein and the Borrower, in its sole
discretion, shall deem such additional amounts to be material, the Borrower
shall have the right to substitute another bank satisfactory to the Agent for
such Lender which has certified the additional costs to the Borrower, and the
Agent shall use reasonable efforts to assist the Borrower to locate such
substitute bank. Any such substitution shall take place in accordance with
Section 9.11 and otherwise be on terms and conditions reasonably satisfactory to
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the Agent, and until such time as such substitution shall be consummated, the
Borrower shall continue to pay such additional costs. Upon any such
substitution, the Borrower shall pay or cause to be paid to the Lender that is
being replaced, all principal, interest (to the date of such substitution) and
other amounts owing hereunder to such Lender and such Lender will be released
from liability hereunder.
Section 2.3. Notations. At the time of (i) the making of each Loan evidenced
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by any Note, (ii) each change in the interest rate under any Note effected as a
result of an Interest Rate Election; and (iii) each payment or prepayment of any
Note, each Lender may enter upon its records an appropriate notation evidencing
(a) such Lender's Pro Rata Share of the Loans and (b) the interest rate and
Interest Adjustment Date applicable thereto or (c) such payment or prepayment
(voluntary or involuntary) of principal and (d) in the case of payments or
prepayments (voluntary or involuntary) of principal, the portion of the
applicable Loan which was paid or prepaid. No failure to make
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any such notation shall affect the Borrower's unconditional obligations to
repay the Loans and all interest, fees and other sums due in connection with
this Agreement and/or any Note in full, nor shall any such failure, standing
alone, constitute grounds for disproving a payment of principal by the Borrower.
However, in the absence of manifest error, such notations and each Lender's
records containing such notations shall constitute presumptive evidence of the
facts stated therein, including, without limitation, the outstanding amount of
such Lender's Pro Rata Share of the Loans and all amounts due and owing to such
Lender at any time. Any such notations and such Lender's records containing
such notations may be introduced in evidence in any judicial or administrative
proceeding relating to this Agreement, the Loans or any Note.
Section 2.4. Computation of Interest. Interest due under this Agreement and
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any Note shall be computed on the basis of a year of 360 days for the actual
number of days elapsed.
Section 2.5. Time of Payments and Prepayments in Immediately Available Funds.
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Section 2.5.1. Time. All payments and prepayments of principal,
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fees, interest and any other amounts owed from time to time under this Agreement
and/or under each Note shall be made to the Agent for the pro rata account of
each Lender at the address referred to in Section 9.6 in Dollars and in
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immediately available funds prior to 12:00 o'clock P.M. on the Business Day that
such payment is due, provided that the Borrower hereby authorizes and instructs
the Agent to charge against the Borrower's accounts with the Agent on each date
on which a payment is due hereunder and/or under any Note and on any subsequent
date if and to the extent any such payment is not made when due an amount up to
the principal, interest and fees due and payable to the Lenders, the Agent or
any Lender hereunder and/or under any Note and such charge shall be deemed
payment hereunder and under the Note(s) in question to the extent that
immediately available funds are then in such accounts. The Agent shall use
reasonable efforts to give subsequent notice of any such charge to the Borrower
within a reasonable period, but the failure to give such notice shall not affect
the validity of any such charge. To the extent that immediately available funds
are then in such accounts, the failure of the Agent to charge any such account
or the failure of the Agent to charge any such account prior to 12 o'clock P.M.
shall not be basis for an Event of Default under Section 6.1.1 and any amount
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due on the Loans on such date shall be deemed paid; provided that the Agent
shall have the right to charge any such account on any subsequent date for such
unpaid payment and an Event of Default shall exist if
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sufficient immediately available funds are not in such accounts on the date
the Agent so charges such account after the expiration of any applicable cure
period. In the event of any charge against the Borrower's accounts by the Agent
pursuant to the immediately preceding sentence, the Agent shall provide notice
to the Borrower of such charge within a reasonable time thereafter, but the
failure to provide such notice shall not in any way be a basis for any liability
of the Agent nor shall such failure adversely affect the validity and
effectiveness of any such action by the Agent. Any such payment or prepayment
which is received by the Agent in Dollars and in immediately available funds
after 12 o'clock P.M. on a Business Day shall be deemed received for all
purposes of this Agreement on the next succeeding Business Day unless the
failure by Agent to receive such funds prior to 12 o'clock P.M. is due to
Agent's failure to charge the account of Borrower prior to 12 o'clock P.M.
except that solely for the purpose of determining whether a Default or Event of
Default has occurred under Section 6.1.1, any such payment or prepayment if
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received by the Agent prior to the close of the Agent's business on a Business
Day shall be deemed received on such Business Day. All payments of principal,
interest, fees and any other amounts which are owing to any or all of the
Lenders or the Agent hereunder and/or under any of the Notes that are received
by the Agent in immediately available Dollars prior to 12:00 o'clock P.M. on any
Business Day shall, to the extent owing to the Lenders other than the Agent, be
sent by wire transfer by the Agent to any such other Lenders (in each case,
without deduction for any claim, defense or offset of any type) before 3:00
o'clock P.M. on the same Business Day. Each such wire transfer shall be
addressed to each Lender in accordance with the wire instructions set forth in
Exhibit 1.9 hereto. The amount of each payment wired by the Agent to each such
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Lender shall be such amount as shall be necessary to provide such Lender with
its Pro Rata Share of such payment (without consideration or use of any contra
accounts of any Lender), or with such other amount as may be owing to such
Lender in accordance with this Agreement (in each case, without deduction for
any claim, defense or offset of any type). Each such wire transfer shall be
sent by the Agent only after the Agent has received immediately available
Dollars from or on behalf of the Borrower and each such wire transfer shall
provide each Lender receiving same with immediately available Dollars on receipt
by such Lender. Any such payments of immediately available Dollars received by
the Agent after 12:00 o'clock P.M. and before 3:00 o'clock P.M. on any Business
Day shall be forwarded in the same manner by the Agent to such Lender(s) as soon
as practicable on said Business Day, and if any such payments of immediately
available Dollars are received by the Agent after 3:00 o'clock P.M. on a
Business Day, the Agent shall so forward same to such
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Lender(s) before 10:00 o'clock A.M. on the immediately succeeding Business
Day. Any such wire transfer from the Agent to a Lender which is not received by
such Lender within said time frames shall not, standing alone, result in
additional interest expense or other liability to the Borrower.
Section 2.5.2. Setoff, etc. Regardless of the adequacy of any
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collateral for any of the Obligations, upon the occurrence and during the
continuance of any Event of Default, each Lender is hereby authorized at any
time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and any other Indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any and all of the Obligations of
the Borrower irrespective of whether or not such Lender shall have made any
demand under this Agreement or any Note and although such obligations may be
unmatured. Each such Lender agrees to promptly notify the Borrower and the
Agent after any such setoff and application; provided that the failure to give
such notice shall not affect the validity of such setoff and application.
Promptly following any notice of setoff received by the Agent from a Lender
pursuant to the foregoing, the Agent shall notify each other Lender thereof.
The rights of each Lender under this Section 2.5.2 are in addition to all other
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rights and remedies (including, without limitation, other rights of setoff)
which such Lender may have and are subject to Section 9.12.
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Section 2.5.3. Unconditional Obligations and No Deductions.
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Section 2.5.3.1. The Borrower's obligation to make all payments
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provided for in this Agreement and the other Financing Documents shall be
unconditional. Each such payment shall be made without deduction for any claim,
defense or offset of any type, including without limitation any withholdings and
other deductions on account of income or other taxes (except to the extent
provided in Section 2.5.3.2) and regardless of whether any claims, defenses or
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offsets of any type exist.
Section 2.5.3.2 Notwithstanding anything to the contrary
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contained in this Agreement, the Borrower shall be entitled, to the extent it is
required to do so by law, to deduct or withhold income or interest, fees or
other amounts payable hereunder for the account of any Lender other than a
Lender (i) which is a domestic corporation (as such term is defined in Section
7701 of the Code) for Federal income tax purposes or (ii) who has the prescribed
forms on file with the Borrower for the
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applicable year to the extent deduction or withholding of such taxes is not
required as a result of the filing of such prescribed forms; provided that if
Borrower shall so deduct or withhold any such taxes, it shall promptly provide a
statement to the Agent and such Lender, setting forth the amount of such taxes
so deducted or withheld, the applicable rate and any other information or
documentation which such Lender may reasonably request for assisting such Lender
to obtain any allowable credits or deductions for the taxes so deducted or
withheld in the jurisdiction or jurisdictions in which such Lender is subject to
tax.
Section 2.6. Prepayment and Certain Payments.
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Section 2.6.1. Mandatory Payments.
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Section 2.6.1.1. In addition to each other principal payment required
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hereunder, the outstanding principal balances of the Term Loans shall be repaid
on the Term Loan Repayment Date and the outstanding principal balance of the
Revolving Credit Loans shall be repaid on the Revolving Credit Repayment Date.
Section 2.6.1.2. On or before the 90th day after the end of each
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fiscal year of the Borrower commencing with the fiscal year ending December 31,
1996, the Borrower shall prepay to the Agent for the pro rata account of each
Lender an amount of the outstanding principal balances of the Term Loans equal
to (i) 75% of the amount, if any, of Excess Cash Flow for such fiscal year less
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(ii) voluntary prepayments of the Term Loan made during such fiscal year. Such
prepayments shall be in addition to any and all other mandatory and voluntary
prepayments required or permitted hereunder and shall be applied to the
principal installments of the Term Loans in accordance with Section 2.6.1.6.
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Section 2.6.1.3. In the event that the Borrower or any Subsidiary is
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entitled to receive, collectively, proceeds from any casualty insurance policies
maintained by any of them on account of any interest of the Borrower and/or any
Subsidiary in any property, which proceeds are in an amount in excess of
$100,000 with respect to any occurrence or related series of occurrences in any
12-month period, such proceeds shall be received by the Agent and, to the extent
that such proceeds result from a casualty to property of the Borrower and/or any
Subsidiary, so long as no Default or Event of Default exists and is continuing
and the Borrower elects to repair, replace or restore such property, such
proceeds shall be released to the Borrower subject to reasonable procedures and
conditions
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established by the Agent to the extent necessary to so repair, replace or
restore such property within 6 months (or as soon as reasonably practicable if
such restoration, replacement or repair is not susceptible to being completed
within 6 months) from the date of receipt of such proceeds by the Agent and to
the extent such proceeds are not so used or do not result from such a casualty,
the Borrower shall make a prepayment of the Term Loans for the pro rata account
of each Lender upon written notice from the Agent. All such payments shall be
applied to the principal installments of the Term Loans in accordance with
Section 2.6.1.6.
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Section 2.6.1.4. In the event that the Borrower and/or any Subsidiary
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sells, assigns or otherwise transfers title to any asset other than in the
ordinary course of its business for net cash proceeds in the aggregate since the
Closing Date in excess of $100,000, the Borrower and/or such Subsidiary shall
remit 100% of the net cash proceeds of such sale, assignment or other transfer
to the Agent for the pro rata account of each Lender to be applied to the
principal installments of the Term Loans in accordance with Section 2.6.1.6
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within 10 Business Days of the date of Borrower's or any Subsidiary's receipt of
such net cash proceeds; provided, however, that Borrower may sell any of its
equipment which is obsolete, worn-out or no longer used or useful in Borrower's
business and Borrower may use the proceeds of such sale to purchase other
equipment which is useful or necessary in the operation of Borrower's business.
Section 2.6.1.5. In the event that the Borrower and/or any Subsidiary
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files a Form S-1 or any other form of registration statement then available for
registration with the Securities and Exchange Commission (other than an offering
on Form S-8 in respect of employee stock options) or otherwise conducts a
Qualified Initial Public Offering of any class of the Borrower's or any
Subsidiary's securities, the Borrower and/or such Subsidiary upon receipt of the
net aggregate cash consideration from the sale of any such registered shares of
its capital stock shall prepay to the Agent for the pro rata account of each
Lender an amount of the outstanding principal balances of the Term Loans in an
amount equal to that amount necessary to reduce the outstanding principal
balance of the Term Loans plus the Revolving Credit Loan Commitment to less than
or equal to 2.00 times EBITDA for the rolling four quarter period consisting of
the fiscal quarter in which repayment is made and the three immediately
preceding fiscal quarters.
Section 2.6.1.6. Any amounts repaid by the Borrower and/or any
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Subsidiary under this Section 2.6.1 shall be paid without premium or penalty and
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shall be applied to the
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principal installments of the Term Loans under Section 2.1.1 in accordance
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with the following: the first $1,000,000 shall be applied to reduce an equal
amount of each of the four (4) quarterly payments due in the year ending
December 31, 2000; the next $3,000,000 shall be applied to reduce an equal
amount of each of the twelve (12) quarterly payments due in the years ending
December 31, 1998, December 31, 1999 and December 31, 2000, respectively;
thereafter, such amounts shall be applied on a pro-rata basis to the respective
amounts of the remaining payments to reduce such remaining quarterly payments.
In the event that any payment or prepayment of a Libor Loan under this Section
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2.6.1 is received on a date other than the last day of an Interest Period, such
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payment or prepayment shall be held by the Agent in a separate interest-bearing
account and be pledged to the Agent as collateral for the Obligations of the
Borrower arising in connection with this Agreement, the Notes and the other
Financing Documents until the last day of the then current Interest Period, at
which time the Agent shall apply such payment or prepayment, pro rata for the
Lenders, to the outstanding Libor Loans, for which such day is an Interest
Adjustment Date.
Section 2.6.2. Voluntary Prepayments. All or any portion of the
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unpaid principal balance of the Loans (other than portions of any Loans
constituting Libor Loans) may be prepaid at any time, without premium or
penalty, by giving the Agent at least 3 days' prior written notice of such
prepayment and by a payment to the Agent for the pro rata account of each Lender
of such prepayment in immediately available Dollars by the Borrower; provided
that each such partial payment or prepayment of principal of the Loans shall be
in a principal amount of at least $100,000 or an integral multiple of $50,000 in
excess thereof and provided further that each such prepayment of the Term Loans
shall be applied to the principal installments of the Term Loans in the manner
set forth in Section 2.6.1.6.
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Section 2.6.3. Prepayment of Libor Loans.__Notwithstanding anything
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to the contrary contained in any Note or in any other agreement executed in
connection herewith or therewith, the Borrower shall be permitted to prepay any
portion of the Loans constituting Libor Loans only in accordance with Section
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2.9 hereof.
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Section 2.6.4. Permanent Reduction of Commitment. At the Borrower's
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option the Commitment and the Revolving Credit Loan Commitment may be
permanently and irrevocably reduced in whole or in part by an amount of at least
$250,000 and to the extent in excess thereof in integral multiples of $100,000
at any time; provided that (i) the Borrower gives the Agent written notice of
the exercise of such option at least three (3) Business
30
Days prior to the effective date thereof, (ii) the aggregate outstanding
balance of the Loans, if any, does not exceed the Commitment and the aggregate
outstanding balance of the Revolving Credit Loans, if any, does not exceed the
Revolving Credit Loan Commitment, both as so reduced in any such case on the
effective date of such reduction and (iii) the Borrower is not, and after giving
effect to such reduction, would not be in violation of Section 2.6.3. Any such
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reduction shall concurrently reduce the Dollar amount of each Lender's Pro Rata
Share of the Commitment and the Revolving Credit Loan Commitment.
Section 2.7. Payment on Non-Business Days. Whenever any payment to be made
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hereunder or under any Note shall be stated to be due on a day other than a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
payment of fees, if any, and interest under this Agreement and under such Note.
Section 2.8. Use of Proceeds. The Borrower shall use the proceeds of the Term
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Loans to repurchase capital stock from the Old Stockholders and to pay costs
incurred by the Borrower in connection with the closing of the Loans, including
without limitation, the Facility Fee and costs incurred in connection with the
Related Transactions and shall use the proceeds of the Revolving Credit Loans to
repurchase such capital stock, pay such costs and for Borrower's working capital
needs and for Investments permitted by Section 5.2.12.
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Section 2.9. Special Libor Loan Provisions. The Libor Loans shall be subject
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to and governed by the following terms and conditions:
Section 2.9.1. Requests. Each Request accompanied by an Interest
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Rate Election selecting the Libor Rate must be received by the Agent in
accordance with the definition of Interest Rate Election.
Section 2.9.2. Libor Loans Unavailable. Notwithstanding any other
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provision of this Agreement, if, prior to or on the date on which all or any
portion of the Loans is to be made as or converted into a Libor Loan, any of the
Lenders (or the Agent with respect to (ii) below) shall reasonably determine
(which determination shall be conclusive and binding on the Borrower), that
(i) Dollar deposits in the relevant amounts and for the relevant
Interest Period are not offered to such Lender in the London interbank
market,
31
(ii) by reason of circumstances affecting the London interbank
market, adequate and reasonable means do not exist for ascertaining the
Adjusted Libor Rate, or
(iii) the Adjusted Libor Rate shall no longer represent the effective
cost to such Lender for Dollar deposits in the London interbank market for
reasons other than the fact, standing alone, that the Adjusted Libor Rate
is based on an averaging of rates determined by the Agent and that such
Lender's rate may exceed such average,
such Lender may elect not to accept any Interest Rate Election electing a Libor
Loan and such Lender shall notify the Agent by telephone or telex thereof,
stating the reasons therefor, not later than the close of business on the second
Business Day prior to the date on which such Libor Loan is to be made. The
Agent shall promptly give notice of such determination and the reason therefor
to the Borrower, and all or such portion of the Loans, as the case may be, which
are subject to any of Section 2.9.2 (i), (ii) through (iii) as a result of such
--------------
Lender's determination shall be made as or converted into, as the case may be,
Prime Rate Loans and such Lender shall have no further obligation to make Libor
Loans, until further written notice to the contrary is given by the Agent to the
Borrower. If such circumstances subsequently change so that such Lender shall
no longer be so affected, such Lender's obligation to make or maintain its Pro
Rata Share of all or any portion of the Loans as Libor Loans shall be reinstated
when such Lender obtains actual knowledge of such change of circumstances and
promptly after obtaining such actual knowledge such Lender shall forward written
notice thereof to the Agent and the Borrower. Upon or after receipt by the
Borrower of such written notice, the Borrower may submit an Interest Rate
Election in accordance with this Agreement electing an Interest Period ending no
later than the Interest Adjustment Date for the then current Interest Period for
the other Lenders' Pro Rata Shares of Libor Loans and electing the Libor Rate
for such Lenders' or Lender's Pro Rata Share(s) of the Loans as to which such
Lender's or Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro Rata Share(s)
shall be converted to Libor Loans in accordance with this Agreement. During any
period throughout which any of the Lenders has or have no obligation to make or
maintain its or their Pro Rata Share(s) of the Loans as Libor Loans, no Interest
Rate Elections electing the Libor Rate shall be effective with regard to the
Loans to the extent of the Pro Rata Share(s) of such Lender(s), but shall be
effective as to the other Lenders.
32
Section 2.9.3. Libor Lending Unlawful. In the event that any change
------------- ----------------------
in applicable laws or regulations (including the introduction of any new
applicable law or regulation) or in the interpretation thereof (whether or not
having the force of law) by any governmental or other regulatory authority
charged with the administration thereof, shall make it unlawful for any of the
Lenders to make or continue to maintain its Pro Rata Share of all or any portion
of the Loans as Libor Loans, each such Lender shall promptly notify the Agent by
telephone or telex thereof, and of the reasons therefor, and the obligation of
such Lender to make or maintain its Pro Rata Share of the Loans or such portion
thereof as Libor Loans shall, upon the happening of such event, terminate and
the Agent shall, by telephonic notice to the Borrower, declare that such
obligation has so terminated with respect to such Lender, and such Pro Rata
Share of the Loans or any portion thereof to the extent then maintained as Libor
Loans, shall, on the last day on which such Lender can lawfully continue to
maintain such Pro Rata Share of the Loans or any portion thereof as Libor Loans,
automatically convert into Prime Rate Loans without additional cost to the
Borrower. If circumstances subsequently change so that such Lender shall no
longer be so affected, such Lender's obligation to make or maintain its Pro Rata
Share of all or any portion of the Loans as Libor Loans shall be reinstated when
such Lender obtains actual knowledge of such_change of circumstances, and
promptly after obtaining such actual knowledge such Lender shall forward written
notice thereof to the Agent and the Borrower. Upon or after receipt by the
Borrower of such written notice, the Borrower may submit an Interest Rate
Election in accordance with this Agreement electing an Interest Period ending no
later than the Interest Adjustment Date for the then current Interest Period for
the other Lenders' Pro Rata Shares of Libor Loans and electing the Libor Rate
for such Lenders' or Lender's Pro Rata Share(s) of the Loans as to which such
Lender's or Lenders' obligation(s) to make or maintain its or their Pro Rata
Share(s) of the Loans as Libor Loans was suspended and such Pro Rata Share(s)
shall be converted to Libor Loans in accordance with this Agreement. During any
period throughout which any of the Lenders has or have no obligation to make or
maintain its or their Pro Rata Share(s) of the Loans as Libor Loans, (i) no
Interest Rate Elections electing the Libor Rate shall be effective with regard
to the Loans to the extent of the Pro Rata Share(s) of such Lender(s), but shall
be effective as to the other Lenders and (ii) any of the Lenders which has or
have no_obligation to make or maintain its or their Pro Rata Share(s) of the
Loans as Libor Loans shall use reasonable efforts to make available to the
Borrower an alternative index for establishing a fixed interest rate facility
providing a yield to such Lenders equal to the Libor Rate, but only to the
extent that any such Lenders, independently and without regard to this
33
Agreement or the Libor Loans, are generally providing such alternative index to
similarly situated customers of such Lenders in the ordinary course of such
Lenders' business.
Section 2.9.4. Additional Costs on Libor Loans. The Borrower further
------------- -------------------------------
agrees to pay to the Agent for the account of the applicable Lender or Lenders
such amounts (which shall be deemed additional interest) as will compensate any
of the Lenders for any increase in the cost to such Lender of making or
maintaining (or of its obligation to make or maintain) all or any portion of its
Pro Rata Share of the Loans as Libor Loans and for any reduction in the amount
of any sum receivable by such Lender under this Agreement in respect of making
or maintaining all or any portion of such Lender's Pro Rata Share of the Loans
as Libor Loans, in either case, from time to time by reason of:
(i) any reserve, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, such
Lender, under or pursuant to any law, treaty, rule, regulation (including,
without limitation, any Regulations of the Board of Governors of the Federal
Reserve System) or requirement in effect on or after the date hereof, any
interpretation thereof by any governmental authority charged with
administration thereof or by any central bank or other fiscal or monetary
authority or other authority, or any requirement imposed by any central bank
or such other authority whether or not having the force of law; or
(ii) any change in (including the introduction of any new)
applicable law, treaty, rule, regulation or requirement or in the
interpretation thereof by any official authority, or the imposition of any
requirement of any central bank, whether or not having the force of law,
which shall subject such Lender to any tax (other than taxes on net income
imposed on such Lender), levy, impost, charge, fee, duty, deduction or
withholding of any kind whatsoever or change the taxation of such Lender
with respect to making or maintaining all or any portion of its Pro Rata
Share of the Loans as Libor Loans and the interest thereon (other than any
change which affects, and to the extent that it affects, the taxation of net
income of such Lender); provided, that with respect to any withholding the
foregoing shall not apply to any withholding tax described in sections 1441,
1442 or 3406 of the Code, or any succeeding provision of any legislation
that amends, supplements or replaces any such section, or to any tax, levy,
impost, duty, charge, fee, deduction or withholding that results from any
noncompliance by a Lender with any federal, state or foreign law or from any
failure by
34
a Lender to file or furnish any report, return, statement or form the filing
or furnishing of which would not have an adverse effect on such Lender and
would eliminate such tax, impost, duty, deduction or withholding;
In any such event, such Lender shall promptly notify the Agent thereof, and of
the reasons therefor, and the Agent shall promptly notify the Borrower thereof
in writing stating the reasons provided to the Agent by such Lender therefor and
the additional amounts required to fully compensate such Lender for such
increased or new cost or reduced amount as reasonably determined by such Lender.
Such additional amounts shall be payable on each date on which interest is to be
paid hereunder or, if there is no outstanding principal amount under any of the
Notes, within 20 Business Days after the Borrower's receipt of said notice.
Such Lender's certificate as to any such increased or new cost or reduced amount
(including calculations, in reasonable detail, showing how such Lender computed
such cost or reduction) shall be submitted by the Agent to the Borrower and
shall, in the absence of manifest error, be presumptive. In determining any
such amount, the Lender(s) shall act reasonably and will use reasonable
averaging and attribution methods which will, to the extent such increased costs
or reductions relate to such Lender's loans bearing interest at a rate based on
the Adjusted Libor Rate in general and are not attributable solely to the Loans
hereunder, be applied generally to such Lender's loans bearing interest at a
rate based on the Adjusted Libor Rate and such Lender's Libor Loans.
Notwithstanding anything to the contrary set forth above, the Borrower shall not
be obligated to pay any amounts pursuant to this Section 2.9.4 as a result of
-------------
any requirement or change referenced above with respect to any period prior to
the ninetieth (90th) day prior to the date on which the Borrower is first
notified thereof (other than any amounts which relate to any such requirement or
change which is adopted with retroactive effect in which case the Borrower shall
be obligated to pay all such amounts accrued from the date as of which such
requirement or change is retroactively effective) unless the failure to give
such notice within such ninety (90) day period resulted from reasonable
circumstances beyond such Lender's reasonable control.
Section 2.9.5. Libor Funding Losses. In the event that any payment or
------------- --------------------
prepayment of a Libor Loan is received on a date other than the last day of an
Interest Period, such payment or prepayment shall be held by the Agent in a
separate account and considered pledged to the Agent as collateral for the
obligations of the Borrower arising in connection with this Agreement, the Notes
and the other Financing Documents until the end of the then current Interest
Period, at which time the Agent shall apply
35
such payment or prepayment, pro rata for the Lenders, to the outstanding Libor
Loans. Notwithstanding the foregoing, in the event any of the Lenders shall
incur any loss or reasonable expense (including, without limitation, any loss or
reasonable expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund or maintain all or any
portion of the Loans as Libor Loans) as a result of:
(i) payment or prepayment by the Borrower of all or any portion
of any Libor Loan on a date other than the Interest Adjustment Date for such
Libor Loan, for any reason; provided, however that this clause shall not be
deemed to grant the Borrower any right to convert a Libor Loan to a Prime
Rate Loan prior to the end of any Interest Period or to imply such right;
(ii) conversion of all or any portion of any Libor Loan on a day
other than the last day of an Interest Period applicable to such Loan to a
Prime Rate Loan for any reason including, without limitation, acceleration
of the Loans upon or after an Event of Default, any Interest Rate Election
or any other cause whether voluntary or involuntary and whether or not
referred to or described in this Agreement, other than any such conversion
resulting solely from application of Sections 2.9.2 or 2.9.3 by any Lender;
--------------- -----
or
(iii) any failure by the Borrower to borrow the Loans as Libor
Loans on the date specified in any Interest Rate Election selecting the
Libor Rate, other than any such failure resulting solely from application of
Sections 2.9.2 or 2.9.3 by any Lender;
-------------- -----
such Lender shall promptly notify the Agent thereof, and of the reasons
therefor. Upon the request of the Agent, the Borrower shall pay directly to the
Agent for the account of such Lender the amount of Dollars for each Libor Loan
as to which an event described in any of clauses (i) through (iii) of this
Section 2.9.5 occurred, calculated as follows: the current rate for United
-------------
States Treasury securities (Bills on a discounted basis shall be converted to a
bond equivalent) with a maturity date closest to the Interest Adjustment Date
for any Libor Loan as to which an event described in any of clauses (i) through
(iii) above in this Section 2.9.5 occurred shall be subtracted from the Adjusted
-------------
Libor Rate component of the Libor Rate in effect for such Libor Loan at the time
of occurrence of any such event. If the result is zero or a negative number,
there shall be no such amount. If the result is a positive number, then the
resulting percentage shall be multiplied by the amount of the principal
36
balance of such Libor Loan. The resulting amount shall be divided by 360 and
multiplied by the number of days remaining in the Interest Period as to which an
event described in any of clauses (i) through (iii) above in this Section 2.9.5
-------------
occurred. Said amount shall be reduced to present value calculated by using the
number of days remaining in such Interest Period and using the above referenced
United States Treasury security rate and the number of days remaining in such
Interest Period. The resulting amount shall be the amount due to such Lender on
account of such Libor Loan upon occurrence of an event described in any of
clauses (i) through (iii) above in this Section 2.9.5 as to such Libor Loan.
-------------
Each Lender shall furnish to the Borrower, upon written request from the
Borrower received by the Agent, a written statement setting forth the
computation of any such amounts payable to such Lender under this Section 2.9.5.
-------------
Section 2.9.6. Banking Practices. Each Lender agrees that upon the
------------- -----------------
occurrence of any of the events described in Sections 2.2.3 and/or 2.9.2, 2.9.4
--------------- ----- -----
or 2.9.5, such Lender will exercise all reasonable efforts to take such
-----
reasonable actions at no expense to such Lender (other than reasonable expenses
which are covered by the Borrower's advance deposit of funds with such Lender
for such purpose, or if such Lender agrees, which the Borrower has agreed to pay
or reimburse to such Lender in full upon demand), in accordance with such
Lender's usual banking practices in such situations and subject to any statutory
or regulatory requirements applicable to such Lender, as such Lender may take
without the consent or participation of any other Person to, in the case of an
event described in Sections 2.2.3 and/or 2.9.4 or 2.9.5, mitigate the cost of
-------------- ----- -----
such events to the Borrower and, in the case of an event described in Sections
--------
2.9.2(i), (ii) or (iii), to seek Dollar deposits in any other interbank Libor
-------- ---- -----
market in which such Lender regularly participates and in which the applicable
determination(s) described in Sections 2.9.2(i), (ii) or (iii), as the case may
----------------- ---- -----
be, does not apply.
Section 2.9.7. Borrower's Options on Unavailability or Increase Cost
------------- -----------------------------------------------------
of Libor Loans. In the event of any conversion of all or any portion of any
--------------
Lender's Pro Rata Share of any Libor Loans to a Prime Rate Loan for reasons
beyond the Borrower's control or in the event that any Lender's Pro Rata Share
of all or any portion of the Libor Loans becomes subject, under Sections 2.9.4
--------------
or 2.9.5, to additional costs, the Borrower shall have the option, subject to
-----
the other terms and conditions of this Agreement, to convert such Lender's Pro
Rata Share to a Prime Rate Loan by making Interest Rate Elections for Interest
Periods which (i) end on the Interest Adjustment Date for such Libor Loan or
(ii) end on Business Days occurring prior to such Interest Adjustment Date, in
which case, at the end of the last
37
of such Interest Periods any such Libor Rate Loan shall automatically convert
to a Prime Rate Loan and the Borrower shall have no further right to make an
Interest Rate Election with respect to such Prime Rate Loan other than an
Interest Rate Election which is effective on the Interest Adjustment Date for
such Libor Loan. The Borrower's options set forth in this Section 2.9.7 may be
-------------
exercised, if and only if the Borrower pays, concurrently with delivery to the
Agent of each such Interest Rate Election and thereafter in accordance with
Sections 2.9.4, 2.9.5 and 2.9.6 all amounts provided for therein to the Agent in
-------------- ----- -----
accordance with this Agreement.
If the Borrower shall, as a result of the requirements of Section
-------
2.9.4 above, be required to pay any Lender the additional costs referred to
-----
therein, but not be required to pay such additional costs to the other Lender or
Lenders and the Borrower, in its sole discretion, shall deem such additional
amounts to be material or in the event that Libor Loans from a Lender are
unavailable to the Borrower as a result solely of the provisions of Sections
--------
2.9.2, 2.9.3 or 2.9.4, but are available from the other Lender or Lenders, the
----- ----- -----
Borrower shall have the right to substitute another bank satisfactory to the
Agent for such Lender which is entitled to such additional costs or which is
relieved from making Libor Loans and such Lender hereby agrees to such
substitution, and the Agent shall use reasonable efforts (with all reasonable
costs of such efforts by the Agent to be borne by the Borrower) to assist the
Borrower to locate such substitute bank. Any such substitution shall take place
in accordance with Section 9.11 and otherwise be on terms and conditions
------------
reasonably satisfactory to the Agent, and until such time as such substitution
shall be consummated, the Borrower shall continue to pay such additional costs
and comply with the above-referenced Sections. Upon any such substitution, the
Borrower shall pay or cause to be paid to the Lender that is being replaced, all
principal, interest (to the date of such substitution) and other amounts owing
hereunder to such Lender and such Lender will be released from liability
hereunder.
Section 2.9.8. Assumptions Concerning Funding of Libor Loans. The
------------- ---------------------------------------------
calculation of all amounts payable to the Lenders under this Section 2.9 shall
-----------
be made as though each Lender actually funded its relevant Libor Loans through
the purchase of a deposit in the London interbank market bearing interest at the
Libor Rate in an amount equal to that Libor Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such
deposit from an offshore office of such Lender to a domestic office of such
Lender in the United States of America; provided, however, that each Lender may
fund each of its Libor Loans in any manner it sees fit and the foregoing
38
assumption shall be utilized solely for the calculation of amounts payable
under this Section 2.9, but in no event shall Borrower be liable for any
-----------
additional tax as a result of such Lender's funding decisions.
Section 2.10 Interest Rate Protection. On or before March 31, 1996, the
------------ ------------------------
Borrower shall enter into an interest rate protection arrangement covering
not less than $12,500,000 of the then outstanding Term Loans. Such interest
rate protection arrangement may consist of any one or a combination of the
following: (i) the purchase of an interest rate swap arrangement from a
financial institution or nationally recognized investment banking firm, in each
case, reasonably acceptable to the Majority Lenders covering such Loans
effectively converting the Borrower's interest payment obligations with respect
to such portion of the Term Loans to a fixed rate per annum equal to the Libor
Rate as of the Closing Date, plus two percent (2%) for a term expiring not
earlier than March 31, 1998 or (ii) the purchase of an interest rate cap from a
financial institution or nationally recognized investment banking firm, in each
case, reasonably acceptable to the Majority Lenders covering such Loans at a cap
rate per annum equal to the Libor Rate as of the Closing Date, plus two percent
(2%)for a term expiring not earlier than March 31, 1998. The other terms and
conditions of any such interest rate swap or interest rate cap shall be
reasonably satisfactory to the Majority Lenders.
ARTICLE 3.
CONDITIONS OF LENDING
Section 3.1. Conditions Precedent to the Commitment and to all Loans
----------- -------------------------------------------------------
Section 3.1.1. The Commitment and Initial Loans. The Commitment and
------------- --------------------------------
the obligation of the Lenders to make the initial Advances of the Loans are
subject to performance by the Borrower of all of its obligations under this
Agreement and to the satisfaction of the conditions precedent that all legal
matters incident to the transactions contemplated hereby or incidental to the
Loans shall be reasonably satisfactory to counsel for the Agent and the Lenders
shall have received on or before the Closing Date all of the following, each
dated the Closing Date or another date acceptable to the Lenders and each to be
in form and substance reasonably satisfactory to the Agent or if any of the
following is not a deliverable, the satisfaction of such condition in form and
substance reasonably satisfactory to the Agent:
39
Section 3.1.1.1. The Financing Documents, including, without
---------------
limitation, those hereinafter set forth and the Borrower's certificate of
incorporation or other organizational documents.
Section 3.1.1.2. Certificate of the secretary of the Borrower
---------------
certifying as to the resolutions of the shareholders or board of directors of
the Borrower authorizing and approving each of the Financing Documents to which
the Borrower is a party and other matters contemplated hereby and certifying as
to the names and signatures of the Authorized Representative(s) of the Borrower
authorized to sign each Financing Document to be executed and delivered by or on
behalf of the Borrower. The Agent and the Lenders may conclusively rely on each
such certificate until the Agent shall receive a further certificate cancelling
or amending the prior certificate and submitting the signatures of the
Authorized Representative(s) named in such further certificate.
Section 3.1.1.3. Favorable opinions of Messrs. Holland & Xxxx,
---------------
counsel for the Borrower, in form and substance reasonably satisfactory to the
Agent.
Section 3.1.1.4. An Officer's Certificate stating that:
---------------
Section 3.1.1.4.1. The representations and warranties contained
-----------------
in Section 4.1 and/or contained in any of the other Financing Documents are
-----------
correct on and as of the Closing Date as though made on and as of such date; and
Section 3.1.1.4.2. No Default or Event of Default has occurred
-----------------
and is continuing, or would result from the making of the Loans.
Section 3.1.1.5. A copy of the Borrower's Certificate of
---------------
Incorporation, certified by the Delaware Secretary of State, and, to the extent
available, a qualification application for Colorado and an amended application
for qualification in all other states where Borrower does business (i.e.,
California, Georgia, Illinois, Minnesota, New Jersey and Texas) which will be
signed on the Closing Date or as soon as available and, whether or not available
on the Closing Date, will be filed within 10 days after the Closing Date.
Evidence of qualification of the Borrower to do business in such states shall be
provided to the Agent within 15 days after the Closing Date.
Section 3.1.1.6. Evidence that (i) the ownership interests
---------------
in the Borrower are as set forth in Exhibit 1.1, (ii)
-----------
40
the New Stockholders have invested the Equity in the Borrower on or prior to
the Closing Date, as set forth on Exhibit 1.1 and (iii) that except for receipt
-----------
and application of the proceeds of the Term Loans, the Related Transactions have
been completed in accordance with the Related Transaction Documents.
Section 3.1.1.7. A Request and an Interest Rate Election.
---------------
Section 3.1.1.8. All documents, instruments and agreements necessary
---------------
to terminate, cancel and discharge the documents, instruments and agreements
evidencing or securing any and all existing Indebtedness of the Borrower and
Liens securing such Indebtedness other than those listed in Exhibit 3.1.1.8.
---------------
Section 3.1.1.9. Payment to the Agent and the Lenders of the fees
---------------
specified in this Agreement or the Side Letter as being payable on the Closing
Date and all reasonable out-of-pocket costs and expenses incurred by the Agent
and Fleet in connection with the transactions contemplated hereby, including,
but not limited to, reasonable outside legal expenses and any accounting fees,
auditing fees, appraisal fees, and other fees associated with any independent
analyses of the Borrower and evidence that all other reasonable fees and costs
payable by the Borrower in connection with the transactions contemplated by this
Agreement and completed on the Closing Date have been paid in full.
Section 3.1.1.10. An Officer's Certificate in the form of Exhibit
---------------- -------
3.1.1.10, duly completed and reflecting, inter alia, compliance by the Borrower
-------- ----- ----
as of the opening of business on the first Business Day after the Closing Date
but based on the Borrower's financial information as of the last day of the
Borrower's most recent fiscal quarter, adjusted to give effect to the Loans made
on the Closing Date and the Equity to be received by Borrower on or prior to the
Closing Date, with the financial covenants provided for herein.
Section 3.1.1.11. Such other information about the Borrower and/or
----------------
its Business Condition as the Lenders may reasonably request.
Section 3.1.1.12. True copies of, and/or true copies of any
----------------
revisions to, the financial statements, the Projections, the pro forma March 8,
1996 financial statements giving effect to the Loans and the Equity to be
received on or prior to the Closing Date, and other information provided
pursuant to Section 4.1.5 and certification by the Borrower of the Projections.
-------------
41
Section 3.1.1.13. Certificates of fire, business interruption,
----------------
liability and extended coverage insurance policies, each such policy to name the
Agent as loss payee and, on all liability policies, as additional insured.
Section 3.1.1.14. True descriptions of any pending or, to Borrower's
----------------
knowledge, threatened litigation against or by Borrower which is not disclosed
on Exhibit 4.1.6.
-------------
Section 3.1.1.15. Evidence that all necessary material third party
----------------
consents have been obtained and all required filings with any governmental
authority have been duly completed other than (i) any consent, with respect to
Borrower's assignment of its interest in any contract or agreement, by any other
party thereto, (ii) the consent of the landlords of the premises leased by the
Borrower in Colorado Springs, Colorado and Dallas, Texas, which consent the
Borrower shall not be required to provide until 7 Business Days after the date
hereof, (iii) any Uniform Commercial Code ("UCC") filings necessary to release
the Liens not otherwise permitted hereunder encumbering those assets of Ultimate
Data Systems, Inc. ("UDS") acquired by the Borrower, (iv) any filings necessary
to release the Liens encumbering, or the assignment of, the SHIMS trademark, (v)
any UCC filings to be made by Lenders pursuant to the terms of the Financing
Documents and not yet made on the date hereof, (vi) any UCC filing necessary to
release the UCC-1 financing statement no. 952043101 filed with the Colorado
Secretary of State on June 7, 1995 naming the Borrower as debtor and
International Business Machines Corporation as secured party, and (vii) the
filing of Borrower's application for authority to transact business in Colorado
and Borrower's amended application for authority to transact business in each of
California, Georgia, Illinois, Minnesota, New Jersey and Texas.
Section 3.1.1.16. The financial statements described in Section 4.1.5
---------------- -------------
together with the Borrower's pro forma balance sheet as of March 8, 1996. Such
financial statements shall be accompanied by an Officer's Certificate of the
chief financial officer of the Borrower to the effect that (i) the
representations of the Borrower set forth in Section 4.1.14 are accurate as of
--------------
the Closing Date and (ii) that no Material Adverse Effect has occurred since
December 31, 1995 except as set forth or reflected in the financial statements
described in Section 4.1.5 or otherwise disclosed in writing and acceptable to
-------- -----
the Agent.
Section 3.1.1.17. True copies of the Equity Documents and all
----------------
documents, instruments and agreements relating to the Borrower's capital
structure and the Related Transaction Documents.
42
Section 3.1.1.18. The fact that the representations and warranties of
----------------
the Borrower contained in Article 4, infra, and in each of the other Financing
-----
Documents are true and correct in all material respects on and as of the Closing
Date except as altered hereafter by actions not prohibited hereunder. The
Borrower's delivery of each Note to the Lenders shall be deemed to be a
representation and warranty by the Borrower as of the date thereof to such
effect.
Section 3.1.1.19. That there has been no enactment of any law by any
----------------
governmental authority having jurisdiction over the Agent or any Lender which
would make it unlawful in any respect for such Lender to make the Loans and no
Material Adverse Effect has occurred.
Section 3.1.2. The Commitment and the Loans. The Commitment and the
------------- ----------------------------
obligation of each Lender to make or maintain its Pro Rata Share of any Advance
or Loan are subject to performance by the Borrower of all its obligations under
this Agreement and to the satisfaction of the following further conditions
precedent:
(a) The fact that, immediately prior to and upon the making of each
Loan, no Event of Default or Default shall have occurred and be continuing;
(b) The fact that the representations and warranties of the Borrower
contained in Article 4, infra and in each of the other Financing Documents, are
-----
true and correct in all material respects on and as of the date of each Advance
or Loan except as altered hereafter by actions consented to or not prohibited
hereunder. The Borrower's delivery of the Notes to the Lenders and each of the
Borrower's Requests shall be deemed to be a representation and warranty by the
Borrower as of the date of such Advance or Loan as to the facts specified in
Section 3.1.2(a) and (b);
---------------- ---
(c) Receipt by Agent on or prior to the Business Day specified in the
definition of Interest Rate Election of a written Request stating the amount
requested for the Loan or Advance in question and an Interest Rate Election for
such Loan or Advance, all signed by a duly authorized officer of the Borrower on
behalf of the Borrower;
(d) That there exists no law or regulation by any governmental
authority having jurisdiction over the Agent or any of the Lenders which would
make it unlawful in any respect for such Lender to make its Pro Rata Share of
the Loan or Advance,
43
including, without limitation, Regulations U, T, G and X of the Board of
Governors of the Federal Reserve System and no Material Adverse Effect has
occurred.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties of the Borrower. The
----------- ----------------------------------------------
Borrower represents and warrants to the Agent and the Lenders that, after giving
effect to the Loans and the application of the proceeds thereof (which
representations and warranties shall survive the making of the Loans) as
follows:
Section 4.1.1. Organization and Existence. The Borrower and any
------------- --------------------------
Subsidiary is a corporation, duly organized, validly existing and in good
standing under the laws of the state of its incorporation or organization and
the Borrower's predecessor was duly qualified to do business in all
jurisdictions in which such qualification was required prior to the merger of
the Borrower's predecessor with the Borrower, all as noted on Exhibit 4.1.1,
-------------
except where failure to so qualify would not reasonably be expected to have a
Material Adverse Effect, and has all requisite power and authority to conduct
its business, to own its properties and to execute and deliver, and to perform
all of its obligations under the Financing Documents. Within 10 Business Days of
the date hereof, Borrower will be qualified to do business in the jurisdictions
listed on Exhibit 4.1.1.
-------------
Section 4.1.2. Authorization and Absence of Defaults. Except as
------------- -------------------------------------
described on Exhibit 4.1.2, the execution, delivery to the Agent and/or the
-------------
Lenders and performance by the Borrower and any Subsidiary of the Financing
Documents and Related Transaction Documents have been duly authorized by all
necessary corporate and governmental action and do not and will not (i) require
any consent or approval of the shareholders or board of directors of the
Borrower or any Subsidiary which has not been obtained, (ii) violate any
provision of any law, rule, regulation (including, without limitation,
Regulations U and X of the board of governors of the federal reserve system),
written order, writ, judgment, injunction, decree, or award presently in effect
having applicability to the Borrower and/or any Subsidiary and/or the articles
of organization or by-laws, as applicable, of the Borrower and/or any
Subsidiary, (iii) result in a material breach of or constitute a material
default under any indenture or loan or credit agreement or any Material
Agreement or lease to which the Borrower and/or any Subsidiary is or are a party
or parties
44
or by which it or they or its or their properties may be bound or affected;
or (iv) result in, or require, the creation or imposition of any Lien on any of
the Borrower's and/or any Subsidiary's respective properties or revenues other
than Liens granted to the Agent by any of the Financing Documents securing the
Obligations. The Borrower and any Subsidiary are in compliance with any such
applicable law, rule, regulation, written order, writ, judgment, injunction,
decree, or award or any such indenture, Material Agreement or lease, except
where the failure to be in compliance could not reasonably be expected to have a
Material Adverse Effect.
Section 4.1.3. Acquisition of Consents. Except as noted on Exhibit
------------- ----------------------- -------
4.1.3, no material authorization, consent, approval, license, exemption of or
-----
filing or registration with any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, other than those
which have been obtained, is or will be necessary to the valid execution and
delivery to the Agent and/or the Lenders or performance by the Borrower or any
Subsidiary of any Financing Documents and each of the foregoing which has been
obtained is in full force and effect.
Section 4.1.4. Validity and Enforceability. Each of the Financing
------------- ---------------------------
Documents when delivered hereunder will constitute the legal, valid and binding
obligations of each of the Borrower and any Subsidiary which is or are a party
thereto enforceable against the Borrower, and any Subsidiary which is or are a
party thereto in accordance with their respective terms except as the
enforceability thereof may be limited by the effect of general principles of
equity and bankruptcy, reorganization, moratorium and similar laws affecting the
rights and remedies of creditors generally.
Section 4.1.5. Financial Information. The following information with
------------- ---------------------
respect to the Borrower has heretofore been furnished to the Agent:
Section 4.1.5.1. Audited annual financial statements of the
---------------
Borrower for the periods ended December 31, 1994 and December 31, 1995; and
Section 4.1.5.2. The Projections.
---------------
Section 4.1.5.3. The pro forma financial statements of the
---------------
Borrower as of the Closing Date provided pursuant to Section 3.1.1.12.
----------------
45
Each of the financial statements referred to above in Section 4.1.5.1
---------------
was prepared in accordance with GAAP (subject, in the case of interim
statements, to the absence of footnotes and normal year-end adjustments) applied
on a consistent basis, except as stated therein. To the best of the Borrower's
knowledge, each of the financial statements referred to above in Sections
--------
4.1.5.1 and 4.1.5.3 fairly presents the financial condition or pro forma
------- -------
financial condition, as the case may be, of the Person being reported on at such
dates and is complete and correct in all material respects and no Material
Adverse Effect has occurred since the date thereof. The Projections were
prepared by the Borrower in good faith.
Section 4.1.6. No Litigation. There are no actions, suits or
------------- -------------
proceedings pending or, to the knowledge of the Borrower, threatened against or
affecting the Borrower and/or any Subsidiary or any of their properties before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which if determined adversely to the
Borrower and/or any Subsidiary would draw into question the legal existence of
the Borrower and/or any such Subsidiary and/or the validity, authorization
and/or enforceability of any of the Financing Documents and/or any provision
thereof and/or could have a Material Adverse Effect except those matters, if
any, described on Exhibit 4.1.6 none of which, in Borrower's good faith opinion,
--------------
is likely to (i) have such Material Adverse Effect or (ii) draw into question
(a) the legal existence of the Borrower and/or any such Subsidiary or (b) the
validity, authorization and/or enforceability of any of the Financing Documents
and/or any provision thereof.
Section 4.1.7. Regulation U. The Borrower is not engaged in the
------------- ------------
business of extending credit for the purpose of purchasing or carrying "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR Part 221), does not own and has no present
intention of acquiring any such margin stock or a "margin security" within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR, Part 207). None of the proceeds of the Loans will be used directly or
indirectly by the Borrower for the purpose of purchasing or carrying, or for the
purpose of reducing or retiring any Indebtedness which was originally incurred
to purchase or carry, any such margin security or margin stock or for any other
purpose which might constitute the transaction contemplated hereby a "purpose
credit" within the meaning of said Regulation G or Regulation U, or cause this
Agreement to violate any other regulation of the Board of Governors of the
Federal Reserve System or the Securities and Exchange Act of 1934, as amended,
or any rules or regulations promulgated under either said statute.
46
Section 4.1.8. Absence of Adverse Agreements. Neither
------------- -----------------------------
the Borrower nor any Subsidiary is a party to any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
corporate or partnership restriction which would be reasonably likely to have a
Material Adverse Effect.
Section 4.1.9. Taxes. The Borrower and each Subsidiary has filed all
------------- -----
tax returns (federal, state and local) required to be filed and paid all taxes
shown thereon to be due, including interest and penalties, except for those
taxes, if any, which are being contested in good faith and by appropriate
proceedings, and for which proper reserve or other provision has been made in
accordance with GAAP and except where any failure to file or pay would not be
reasonably likely to have a Material Adverse Effect on the Borrower or any
Subsidiary and except as described in Exhibit 4.1.9.
-------------
Section 4.1.10. ERISA. Borrower and any Commonly Controlled Entity
-------------- -----
do not maintain or contribute to any Plan which is not in substantial compliance
with ERISA.
Neither Borrower nor any Commonly Controlled Entity maintain, contributes
to, or is required to make or accrue a contribution or has within any of the six
preceding years maintained, contributed to or been required to make or accrue a
contribution to any Plan subject to regulation under Title IV of ERISA, any Plan
that is subject to the minimum funding requirements of Section 412 of the Code
or Section 302 of ERISA, or any Multiemployer Plan.
Section 4.1.11. Ownership of Properties.
-------------- -----------------------
Section 4.1.11.1. Except for Permitted Encumbrances and except as
----------------
otherwise permitted by Section 5.2.1, Borrower and any Subsidiary has good title
-------------
to all of its properties and assets free and clear of all restrictions and Liens
of any kind other than those which are not reasonably likely to have a Material
Adverse Effect or a material adverse effect on the validity, authorization
and/or enforceability of the Financing Documents and/or any provision thereof.
Section 4.1.11.2. Exhibit 4.1.11 accurately and completely
---------------- --------------
lists the location of all real property owned or leased by Borrower or any
Subsidiary. Borrower and each Subsidiary enjoys quiet possession under all
material leases of real property to which it is a party as a lessee, and all of
such leases are valid, subsisting and, to Borrower's knowledge, in full force
and effect except where the failure to be in full
47
force and effect does not interfere with Borrower's quiet enjoyment or is not
reasonably likely to have a Material Adverse Effect.
Section 4.1.11.3. To Borrower's knowledge, except as specified
----------------
in Exhibit 4.1.11, none of the real property occupied by Borrower or any
--------------
Subsidiary is located within any federal, state or municipal flood plain zone.
Section 4.1.11.4. Except as set forth in Exhibit4.1.11, all of
---------------- -------------
the material properties used in the conduct of the Borrower's and each
Subsidiary's business (i) are in good repair, working order and condition
(reasonable wear and tear excepted) and reasonably suitable for use in the
operation of Borrower's, and each Subsidiary's business; and (ii) to Borrower's
knowledge are currently operated and maintained, in all material respects, in
accordance with the requirements of applicable governmental authorities.
Section 4.1.12. Accuracy of Representations and Warranties. None of
-------------- ------------------------------------------
Borrower's representations or warranties set forth in this Agreement or in any
document or certificate furnished pursuant to this Agreement or in connection
with the transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary to make any statement
of fact contained herein or therein, in light of the circumstances under which
it was made, not misleading; except that unless provided otherwise any such
document or certificate which is dated speaks as of the date stated and not the
present.
Section 4.1.13. No Investment Company. Neither the Borrower nor any
-------------- ---------------------
Subsidiary is an "investment company" or a company "controlled" by an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended, which is required to register thereunder.
Section 4.1.14. Solvency, etc. After giving effect to the
-------------- -------------
consummation of each Loan outstanding and to be made under this Agreement as of
the time this representation and warranty is given, the Borrower (a) will be
able to pay its debts as they become due, (b) will have funds and capital
sufficient to carry on its business and all businesses in which it is about to
engage, and (c) will own property (including contracts and other intangible
assets) and be entitled to proceeds from services performed in the aggregate
having a value both at fair valuation and at fair saleable value in the ordinary
course of the Borrower's business greater than the amount required to pay its
Indebtedness, including for this purpose unliquidated and
48
disputed claims. The Borrower will not be rendered insolvent by the execution
and delivery of this Agreement and the consummation of any transactions
contemplated herein.
Section 4.1.15. Approvals. Except as set forth in Exhibit 4.1.3, all
-------------- --------- -------------
approvals required of Borrower from all Persons including without limitation all
governmental authorities with respect to the Financing Documents have been
obtained except where the failure to obtain any such approval is not reasonably
likely to have a Material Adverse Effect.
Section 4.1.16. Ownership Interests. The schedule of ownership
-------------- -------------------
interests in the Borrower and any Subsidiaries set forth in Exhibit 1.1 is true,
-----------
accurate and complete and the investments to be made for all ownership interests
disclosed therein have in fact been fully paid in immediately available Dollars
after giving effect to the closing of the Related Transactions.
Section 4.1.17. Licenses, Registrations, Compliance with Laws, etc.
-------------- --------------------------------------------------
Exhibit 4.1.17 accurately and completely describes all permits, governmental
--------------
licenses, registrations and approvals, material to carrying out of Borrower's
and each of the Subsidiaries' businesses as presently conducted and required by
law or the rules and regulations of any federal, foreign governmental, state,
county or local association, corporation or governmental agency, body,
instrumentality or commission having jurisdiction over the Borrower or any of
the Subsidiaries, including but not limited to the United States Environmental
Protection Agency, the United States Department of Labor, the United States
Occupational Safety and Health Administration, the United States Equal
Employment Opportunity Commission, the Federal Trade Commission and the United
States Department of Justice and analogous and related state and foreign
agencies. All existing material authorizations, licenses and permits are in full
force and effect, are duly issued in the name of, or validly assigned to the
Borrower or a Subsidiary and the Borrower or a Subsidiary has full power and
authority to operate thereunder. There is no material violation or material
failure of compliance or, to Borrower's knowledge, allegation of such violation
or failure of compliance on the part of the Borrower or any Subsidiary with any
of the foregoing permits, licenses, registrations, approvals, rules or
regulations and there is no action, proceeding or investigation pending or to
the knowledge of the Borrower threatened nor has the Borrower or any Subsidiary
received any notice of such which might result in the termination or suspension
of any such permit, license, registration or approval which in any case could
have a Material Adverse Effect.
49
Section 4.1.18. Principal Place of Business; Books and Records. The
-------------- ----------------------------------------------
Borrower's chief executive offices are located at Borrower's addresses set forth
in Section 9.6. All of the Borrower's books and records are kept at one or more
-----------
of its addresses set forth in Section 9.6.
-----------
Section 4.1.19. Subsidiaries. The Borrower has no Subsidiaries.
-------------- ------------
Section 4.1.20. Copyright. To Borrower's knowledge except as set
-------------- ---------
forth in Exhibit 4.1.20 the Borrower has not violated any of the provisions of
--------------
the Copyright Revision Act of 1976, 17 U.S.C. 101, et seq. The Borrower has not
-- ---
filed any registration statements, notices and statements of account with the
United States Copyright Office. Exhibit 4.1.20 accurately and completely sets
--------------
forth all registered copyrights held by the Borrower or any of the Subsidiaries
and contains exceptions to the representations contained in this Section 4.1.20.
--------------
To Borrower's knowledge no inquiries regarding any such filings have been
received by the Copyright Office.
Section 4.1.21. Environmental Compliance. Neither the Borrower nor,
-------------- ------------------------
to the knowledge of the Borrower, any other Person:
Section 4.1.21.1. has ever caused, permitted, or suffered to exist
----------------
any Hazardous Material to be spilled, placed, held, located or disposed of on,
under, or about, any of the premises leased by the Borrower (the "Premises"), or
from the Premises into the atmosphere, any body of water, any wetlands, or on
any other real property, nor to Borrower's knowledge does any Hazardous Material
exist on, under or about the Premises other than as disclosed on Exhibit 4.1.21,
--------------
or in respect of Hazardous Material used or disposed of in compliance with law;
Section 4.1.21.2. has any knowledge that the Premises has ever
----------------
been used (whether by the Borrower or, to the knowledge of the Borrower, by any
other Person) as a treatment, storage or disposal (whether permanent or
temporary) site for any Hazardous Waste as defined in 42 U.S.C.A. 6901, et seq.
-- ---
(the Resource Recovery and Conservation Act); and
Section 4.1.21.3. has any knowledge of any notice of violation,
----------------
Lien or other notice issued by any governmental agency with respect to the
environmental condition of the Premises or any other property occupied by the
Borrower.
Section 4.1.22. Material Agreements, etc. Exhibit 4.1.22 attached
-------------- ------------------------- --------------
hereto accurately and completely lists all Material Agreements, all of which are
presently in effect.
50
All of the Material Agreements are legally valid, binding, and, to Borrower's
knowledge, in full force and effect and neither the Borrower, any of the
Subsidiaries nor, to Borrower's knowledge, any other parties thereto are in
material default thereunder.
Section 4.1.23. Patents, Trademarks and Other Property Rights.
-------------- ---------------------------------------------
Exhibit 4.1.23 attached hereto contains a complete and accurate schedule of all
--------------
registered trademarks, registered copyrights and patents of the Borrower and/or
any of the Subsidiaries, and pending applications therefor, and all other
intellectual property in which the Borrower and/or any of the Subsidiaries has
any rights other than "off-the shelf" software which is generally available to
the general public at retail. Except as set forth in Exhibit 4.1.23, the
--------------
Borrower and any Subsidiaries own, possess, or have licenses to use all the
patents, trademarks, service marks, trade names, copyrights and non-governmental
licenses, and all rights with respect to the foregoing, necessary for the
conduct of their respective businesses as now conducted, without, to the
Borrower's knowledge any conflict with the rights of others with respect
thereto.
Section 4.1.24. Related Transaction Documents. The Borrower has,
-------------- -----------------------------
prior to the date hereof, delivered to the Lenders true copies of the Related
Transaction Documents, and each and every amendment or modification thereto.
ARTICLE 5.
COVENANTS OF THE BORROWER
Section 5.1. Affirmative Covenants of the Borrower Other than
----------- ------------------------------------------------
Reporting Requirements. From the date hereof and thereafter for so long as
----------------------
there is Indebtedness of the Borrower to any Lender and/or the Agent under any
of the Financing Documents or any part of the Commitment is in effect, the
Borrower will, with respect to itself and, unless noted otherwise below, with
respect to each of its Subsidiaries, ensure that each Subsidiary will, unless
the Majority Lenders shall otherwise consent in writing:
Section 5.1.1. Payment of Taxes, etc. Pay and discharge all taxes
------------- ---------------------
and assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and all lawful claims for the same which, if
unpaid, might become a Lien upon any of its properties, provided that (unless
and until foreclosure, restraint, sale or any similar proceeding is pending and
is not stayed, discharged or
51
bonded within 30 days after commencement) the Borrower shall not be required
to pay any such tax, assessment, charge, levy or claim which is being contested
in good faith and by proper proceedings and for which proper reserve or other
provision has been made in accordance with GAAP, unless failure to pay would not
be reasonably likely to have a Material Adverse Effect.
Section 5.1.2. Maintenance of Insurance. Maintain on the collateral
------------- ------------------------
under any of the Security Documents insurance against loss by fire, hazards
included within the term "extended coverage", and such other hazards, casualties
and contingencies as the Agent may from time to time require, in an amount equal
to the greater of (i) $3,200,000 or (ii) one hundred percent (100%) of the
replacement cost of the collateral under any of the Security Documents and
business interruption insurance in the amount of at least $4,000,000. All
policies of such insurance and all renewals thereof shall be in form and
substance acceptable to Agent, shall be made payable in case of loss to the
Agent as loss payee and as its interest may appear and shall contain an
endorsement requiring thirty (30) days prior written notice to the Agent prior
to cancellation or change in the coverage, scope or amount of any such policies.
Borrower shall also keep in full force and effect a policy of public liability
insurance against claims of bodily injury, death or property damage occurring in
any building in which the limits of liability shall not be less than One Million
Dollars ($1,000,000) per person and Two Million Dollars ($2,000,000) per
accident, together with an excess liability policy in the amount of Five Million
Dollars ($5,000,000) which shall be in addition to the limits above set forth.
Borrower shall increase the limits of such liability insurance to such higher
amounts as the Agent may from time to time reasonably require. Certificates of
all such insurance shall be delivered to the Agent concurrently with the
execution and delivery of this Agreement, and thereafter all renewal or
replacement certificates shall be delivered to the Agent not less than thirty
(30) days prior to the expiration date of the policy to be renewed or replaced,
accompanied by evidence satisfactory to the Agent that all premiums payable with
respect to such policies have been paid by Borrower. Borrower shall have the
right of free choice in the selection of the agent or the insurer through or by
which the insurance required hereunder is to be placed; provided, however, said
insurer has at all times a general policyholder's rating of A or A+ in Best's
latest rating guide. Furthermore, the Agent shall have the right and is hereby
constituted and appointed the true and lawful attorney irrevocable of Borrower,
in the name and stead of Borrower, but in the uncontrolled discretion of said
attorney, (i) to adjust,
52
xxx for, compromise and collect any amounts due under such insurance policies
in the event of loss and (ii) to give releases for any and all amounts received
in settlement of losses under such policies; and the same shall, subject to
Section 2.6.1.3 of this Agreement, at the option of the Agent, be applied, after
---------------
first deducting the costs of collection, on account of any Indebtedness the
payment of which is secured by any of the Financing Documents, whether or not
then due, or, notwithstanding the claims of any subsequent lienor, be used or
paid over to Borrower for use in repairing or replacing any damaged or destroyed
collateral under any of the Security Documents.
Section 5.1.3. Preservation of Existence, etc. Preserve and maintain
------------- ------------------------------
in full force and effect its legal existence, and all material rights,
franchises and privileges in the jurisdiction of its organization, preserve and
maintain (except for sales, licenses or other scopes of use granted in the
ordinary course of Borrower's business consistent with past practice) all
material licenses, governmental approvals, trademarks, patents, trade secrets,
copyrights and trade names owned or possessed by it and which are necessary or,
in the reasonable business judgment of the Borrower, desirable in view of its
business and operations or the ownership of its properties and qualify or remain
qualified as a foreign corporation in each jurisdiction in which such
qualification is necessary or, in its reasonable business judgement, desirable
in view of its business and operations and ownership of its properties except
where the failure to so qualify will not have a Material Adverse Effect.
Section 5.1.4. Compliance with Laws, etc. Comply with the
------------- -------------------------
requirements of all present and future applicable laws, rules, regulations and
written orders of any governmental authority having jurisdiction over it and/or
its business including, without limitation, regulations of the United States
Copyright Office and the Copyright Royalty Tribunal, except where the failure to
comply would not be reasonably likely to have a Material Adverse Effect.
Section 5.1.5. Visitation Rights. Permit, during normal business
-------------- -----------------
hours and upon the giving of reasonable notice, the Agent, the Lenders and any
agents or representatives thereof, to examine and make copies of (at their cost
and expense prior to a Default or Event of Default and at Borrower's cost and
expense during the continuance of a Default or Event of Default) and abstracts
from the records and books of account of, and visit the properties of the
Borrower and any Subsidiary to discuss the affairs, finances and accounts of the
Borrower or any Subsidiary with any of their partners, officers or management
level
53
employees and/or any independent certified public accountant of the Borrower
and/or any Subsidiary.
Section 5.1.6. Keeping of Records and Books of Account. Keep
------------- ---------------------------------------
adequate records and books of account, in which complete entries will be made in
accordance with GAAP and with applicable requirements of any governmental
authority having jurisdiction over the Borrower and/or any Subsidiary in
question, reflecting all financial transactions.
Section 5.1.7. Maintenance of Properties, etc. Maintain and preserve
------------- ------------------------------
all of its properties necessary or useful in the proper conduct of its business,
in good working order and condition, ordinary wear and tear excepted, and in
accordance with each of the Security Documents.
Section 5.1.8. Post-Closing Items. Complete in a timely fashion all
------------- ------------------
actions required in the post-closing letter between the Borrower and the Agent
dated the Closing Date.
Section 5.1.9. Other Documents, etc. Except as otherwise required by
------------- --------------------
this Agreement, pay, perform and fulfill all of its obligations and covenants
under each material document, instrument or agreement to which it is a party
including, without limitation, the Related Transaction Documents; provided that
so long as the Borrower or any Subsidiary is contesting any claimed default by
it or them under any of the foregoing by proper proceedings conducted in good
faith and for which any proper reserve or other provision in accordance with and
to the extent required by GAAP has been made, such default shall not be deemed a
violation of this covenant.
Section 5.1.10. Minimum Interest Coverage Ratio. Maintain a ratio of
-------------- -------------------------------
EBITDA to Interest Expense of not less than 4.0:1.0, such ratio to be measured
(i) at each Borrower fiscal quarter end on or prior to December 31, 1996 for the
period commencing January 1, 1996 and ending on such fiscal quarter end and (ii)
at each Borrower fiscal quarter end thereafter for the rolling four Borrower
fiscal quarter period consisting of the Borrower fiscal quarter then ending and
the three immediately preceding Borrower fiscal quarters.
54
Section 5.1.11. Minimum Debt Service Coverage Ratio. Maintain a
-------------- -----------------------------------
ratio of (i) EBITDA less, for the fiscal period in question, the sum of taxes
paid or payable and Capital Expenditures to (ii) the sum of Total Debt Service
and Non-Compete Payments (excluding the $1,500,000 Non-Compete Payment made on
the Closing Date) of not less than 1.20:1.00, such ratio to be measured (i) at
each Borrower fiscal quarter end on or prior to December 31, 1996 for the period
commencing January 1, 1996 and ending on such fiscal quarter end and (ii) at
each Borrower fiscal quarter end thereafter for the rolling four Borrower fiscal
quarter period consisting of the Borrower fiscal quarter then ending and the
three immediately preceding Borrower fiscal quarters.
Section 5.1.12. Maximum Ratio of Total Indebtedness for Borrowed
-------------- ------------------------------------------------
Money to EBITDA. Maintain at the end of each fiscal quarter of the Borrower in
---------------
each period set forth below a ratio of (i) total Indebtedness for Borrowed Money
of the Borrower and its Subsidiaries on a consolidated basis as of the last day
of such fiscal quarter to (ii) EBITDA for the rolling four Borrower fiscal
quarter period consisting of such fiscal quarter and the three immediately
preceding Borrower fiscal quarters of not greater than the ratio set forth below
opposite such period:
Borrower Fiscal Quarter(s) Ending Ratio
--------------------------------- -----
March 31, 1996 3.75:1.00
June 30, 1996 3.50:1.00
September 30, 1996 3.25:1.00
December 31, 1996 3.00:1.00
March 31, 1997 2.75:1.00
June 30, 1997 2.50:1.00
September 30, 1997 2.25:1.00
December 31, 1997 2.00:1.00
March 31, 1998 1.75:1.00
June 30, 1998 and 1.50:1.00
each Borrower fiscal
quarter thereafter
55
Section 5.1.13. Officer's Certificates and Requests. Provide each
-------------- -----------------------------------
Officer's Certificate required under this Agreement and each Request so that the
statements contained therein are accurate and complete in all material respects.
Section 5.1.14. Depository. Use the Agent as a depository of
-------------- ----------
Borrower's funds; provided, however, that the Borrower may maintain accounts at
Norwest Bank Colorado, Nationsbank and Bank of Boston.
Section 5.1.15. Chief Executive Officer. Maintain Xxx Xxxxxx as
-------------- -----------------------
chief executive officer of the Borrower and as the Person with principal
executive, operating and management responsibility for the Borrower's business
or obtain a replacement of comparable experience and training in the Borrower's
industry within 120 days of his ceasing to act in such capacity.
Section 5.1.16. Notice of Purchase of Real Estate and Leases.
-------------- --------------------------------------------
Promptly notify the Agent in the event that the Borrower shall purchase any real
estate or enter into any lease of real estate or of equipment material to the
operation of the Borrower's business, supply the Agent with a copy of the
related purchase agreement or of such lease, as the case may be, and if
requested by the Agent, execute and deliver, or cause to be executed and
delivered, to the Agent for the benefit of the Lenders a deed of trust or
mortgage or assignment, together with landlord consents, in the case of leased
property, reasonably satisfactory in form and substance to the Agent, granting a
valid first Lien (subject to any Liens permitted under Section 5.2.1 hereof) on
-------------
such real property or leasehold as security for the Financing Documents.
Section 5.1.17. Additional Assurances. From time to time hereafter,
-------------- ---------------------
execute and deliver or cause to be executed and delivered, such additional
instruments, certificates and documents, and take all such actions, as the Agent
shall reasonably request for the purpose of implementing or effectuating the
provisions of the Financing Documents, and upon the exercise by the Agent of any
power, right, privilege or remedy pursuant to the Financing Documents which
requires any consent, approval, registration, qualification or authorization of
any governmental authority or instrumentality, exercise and deliver all
applications, certifications, instruments and other documents and papers that
the Agent may be so required to obtain.
Section 5.1.18. Appraisals. During the continuance of an Event of
-------------- ----------
Default, permit the Agent and its agents, at any time and in the sole discretion
of the Agent or at the request of the
56
Majority Lenders, to conduct appraisals of the Borrower's business, the cost
of which shall be borne by the Borrower.
Section 5.1.19. Environmental Compliance. Comply in all material
-------------- ------------------------
respects with the requirements of all federal, state, and local environmental
laws; notify the Lenders promptly in the event of any spill of Hazardous
Material materially affecting the Premises occupied by the Borrower from time to
time; forward to the Lenders promptly any written notices relating to such
matters received from any governmental agency; and pay promptly when due any
uncontested fine or assessment against the Premises.
Section 5.1.20. Remediation. Immediately contain and remove any
-------------- -----------
Hazardous Material found on the Premises in compliance with applicable laws and
at the Borrower's expense, subject however, to the right of the Agent, at the
Agent's option but at the Borrower's expense, to have an environmental engineer
or other representative review the work being done.
Section 5.1.21. Site Assessments. Promptly upon the request of the
-------------- ----------------
Agent, based upon the Agent's reasonable belief that a material Hazardous Waste
or other environmental problem exists with respect to any Premises, provide the
Agent with a Phase I environmental site assessment report and, if Agent finds a
reasonable basis for further assessment in such Phase I assessment, a Phase II
environmental site assessment report, or an update of any existing report, all
in scope, form and content and performed by such company as may be reasonably
satisfactory to the Agent.
Section 5.1.22. Indemnity. Indemnify, defend, and hold the Agent and
-------------- ---------
the Lenders harmless from and against any claim, cost, damage, expense
(including without limitation reasonable attorneys' fees and expenses), loss,
liability, or judgment now or hereafter arising as a result of any claim for
environmental cleanup costs, any resulting damage to the environment and any
other environmental claims against the Borrower, any Subsidiary, the Lenders
and/or the Agent arising out of the transactions contemplated by this Agreement,
or any of the Premises. The provisions of this Section shall continue in effect
and shall survive, until the applicable statute of limitations has expired, any
termination of this Agreement, foreclosure, a deed in lieu transaction, payment
and satisfaction of the Obligations of Borrower, and release of any collateral
for the Loans.
Section 5.1.23. Trademarks, Copyrights, etc. Concurrently with the
-------------- ---------------------------
acquisition of any material trademark, tradename, copyright, patent or service
xxxx collaterally assign
57
and grant a first priority perfected Lien (or a second priority Lien if
Borrower or any Subsidiary acquired such item subject to an existing Lien)
thereon to the Agent pursuant to documents in form and substance reasonably
satisfactory to the Agent.
Section 5.1.24. Maintenance of Escrow. Comply with all of the terms
-------------- ---------------------
and conditions of that certain software escrow agreement dated on or prior to
June 19, 1992 by and among Borrower and National Safe Depository and the
Financing Document which is the agreement supplemental thereto between National
Safe Depository and the Agent dated on or about the Closing Date, including,
without limitation, the payment of all amounts due thereunder and the
requirement to deposit modifications, updates, new releases or documentation
related to previously deposited materials.
Section 5.2. Negative Covenants of the Borrower. From the date hereof
----------- ----------------------------------
and thereafter for so long as there is Indebtedness of the Borrower to any
Lender and/or the Agent under any of the Financing Documents or any part of
the Commitment is in effect, the Borrower will not, with respect to itself and,
unless noted otherwise below, with respect to each of the Subsidiaries, will
ensure that each such Subsidiary will not, without the prior written consent of
the Majority Lenders:
Section 5.2.1. Liens, etc. Create, incur, assume or suffer to exist
------------- ----------
any Lien of any nature, upon or with respect to any of its properties, now owned
or hereafter acquired, or assign as collateral or otherwise convey as
collateral, any right to receive income, except that the foregoing restrictions
shall not apply to any Liens:
Section 5.2.1.1. For taxes, assessments or governmental charges
---------------
or levies on property if the same shall not at the time be delinquent or
thereafter can be paid without penalty or interest, or (if foreclosure,
distraint, sale or other similar proceedings shall not have been commenced or if
commenced not stayed, bonded or discharged within 30 days after commencement)
are being contested in good faith and by appropriate proceedings diligently
conducted and for which proper reserve or other provision has been made in
accordance with and to the extent required by GAAP;
Section 5.2.1.2. Imposed by law, such as landlords', carriers',
---------------
warehousemen's and mechanics' liens, bankers' set off rights and other similar
Liens arising in the ordinary course of business for sums not yet due or being
contested in good faith and by appropriate proceedings diligently conducted and
for which proper reserve or other provision has been made in accordance with and
to the extent required by GAAP;
58
Section 5.2.1.3. Arising in the ordinary course of business out of
---------------
pledges or deposits under worker's compensation laws, unemployment insurance,
old age pensions, or other social security or retirement benefits, or similar
legislation;
Section 5.2.1.4. arising from or upon any judgment or award, provided
---------------
that such judgment or award is being contested in good faith by proper appeal
proceedings and only so long as execution thereon shall be stayed;
Section 5.2.1.5. Those set forth on Exhibit 1.8;
--------------- -----------
Section 5.2.1.6. Those now or hereafter granted pursuant to the
---------------
Security Documents or otherwise now or hereafter granted to the Agent for the
benefit of the Lenders as collateral for the Loans and/or Borrower's other
Obligations arising in connection with or under any of the Financing Documents;
Section 5.2.1.7. Deposits to secure the performance of bids, trade
---------------
contracts (other than for Borrowed Money), leases, statutory obligations, surety
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of the Borrower's or any Subsidiary's business;
Section 5.2.1.8. Easements, rights of way, restrictions and other
---------------
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of business by any Borrower or any
Subsidiary;
Section 5.2.1.9. Liens securing Indebtedness permitted to exist under
---------------
Section 5.2.8.3; provided that the Lien securing any such Indebtedness is
---------------
limited to the item of property purchased or leased in each case;
Section 5.2.1.10. UCC-1 financing statements filed solely for notice
----------------
or precautionary purposes by lessors under operating leases which do not secure
Indebtedness and which are limited to the items of equipment leased pursuant to
the lease in question; and
Section 5.2.1.11. Liens, whether recorded or unrecorded,
----------------
securing Hardware Indebtedness.
59
Section 5.2.2. Assumptions, Guaranties, etc. of Indebtedness of Other
-------------- ------------------------------------------------------
Persons. Assume, guarantee, endorse or otherwise become directly or
-------
contingently liable in connection with any obligation or Indebtedness of any
other Person, except:
Section 5.2.2.1. Guaranties by endorsement of negotiable
---------------
instruments for deposit or collection or similar transactions in the ordinary
course of business;
Section 5.2.2.2. Assumptions, guaranties, endorsements and
---------------
contingent liabilities within the definition of Indebtedness and permitted by
Section 5.2.8; and
-------------
Section 5.2.2.3. Those set forth on Exhibit 5.2.2.
--------------- -------------
Section 5.2.3. Acquisitions, Dissolution, etc. Acquire, in one or a
-------------- ------------------------------
series of transactions, all or any substantial portion of the assets or
ownership interests in another Person, or dissolve, liquidate, wind up, merge or
consolidate or combine with another Person or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) any
material assets, whether now owned or hereafter acquired, (except that Borrower
may, in the ordinary course of business, convert a license for intellectual
property for which it receives an ongoing royalty fee into a perpetual license
for which it receives a lump sum payment of Dollars and that Borrower may, under
its Agreement with the Distribution Team, Inc., exercise its option to purchase
a perpetual license to use software for a total purchase price of $500,000) or
any of the Borrower's or any Subsidiary's interests in real property other than
assets which are replaced within 30 days of any asset sale, assignment, lease or
disposition with assets of like kind, usefulness and value; provided, however,
that for so long as the Borrower shall maintain a ratio of Indebtedness for
Borrowed Money to EBITDA measured as set forth in Section 5.1.12 of less than
---------------
2.75:1.00, Borrower shall be permitted to acquire all or any portion of the
assets of or ownership interests in another Person (by merger, consolidation or
otherwise so long as the Borrower survives) having aggregate (for all such
acquisitions since the Closing Date but excluding the Related Transactions)
consideration not to exceed $2,500,000 and provided, further that for so long as
the Borrower shall maintain a ratio of Indebtedness for Borrowed Money to EBITDA
measured as set forth in Section 5.1.12 of less than 2.00:1.00, Borrower shall
--------------
be permitted to acquire all or any portion of the assets or ownership interests
in another Person (by merger, consolidation or otherwise so long as the Borrower
survives) having aggregate (for all such acquisitions since the Closing Date)
consideration not to exceed $5,000,000. At the time of any such acquisition
60
the Borrower shall provide or grant or cause to be provided or granted to the
Agent a first priority perfected Lien on the assets or ownership interests
acquired, including without limitation the assets owned by any Subsidiary, to
the extent that the Agent does not already have such a Lien. Prior to the
consummation of any such permitted transaction, Borrower shall submit to the
Agent a pro-forma Compliance Certificate on a consolidated basis (including the
to-be-acquired assets and any assumed liabilities or if ownership interests are
acquired, the to-be acquired Person if such Person is to be a Subsidiary and if
not, the to-be acquired ownership interests, all measured as set forth below in
this Section 5.2.3), which such pro-forma Compliance Certificate shall indicate
-------------
that no Default or Event of Default exists or would exist following consummation
of the permitted transaction and that the Borrower would be, in compliance with
(on a consolidated basis including the to-be-acquired assets and any assumed
liabilities or if ownership interests are acquired, the to-be acquired Person if
such Person is to be a Subsidiary and if not, the to-be acquired ownership
interests), Sections 5.1.10, 5.1.11 and 5.1.12 following consummation of the
--------------- ------ ------
permitted transaction, including the to-be-acquired assets, Person or ownership
interests and the operating results thereof on the same basis and for the same
periods as the Borrower is measured for each such covenant, respectively.
Section 5.2.4. Change in Nature of Business. Make any material
------------- ----------------------------
change in the nature of its business.
Section 5.2.5. Ownership. Cause or permit the occurrence of any
------------- ---------
Change of Control.
Section 5.2.6. Sale and Leaseback. Enter into any sale and
------------- ------------------
leaseback arrangement with any lender or investor, or enter into any leases
except in the normal course of business at reasonable rents comparable to those
paid for similar leasehold interests in the area.
Section 5.2.7. Sale of Accounts, etc. Sell, assign, discount or
------------- ---------------------
dispose in any way of any accounts receivable, promissory notes or trade
acceptances held by the Borrower or any Subsidiary, with or without recourse,
except in the ordinary course of the Borrower's or any Subsidiary's business.
Section 5.2.8. Indebtedness. Incur, create, become or be liable
------------- ------------
directly or indirectly in any manner with respect to or permit to exist any
Indebtedness except:
Section 5.2.8.1. Indebtedness under the Financing Documents;
---------------
61
Section 5.2.8.2. Indebtedness with respect to trade payable
---------------
obligations and other normal accruals and customer deposits in the ordinary
course of business not yet due and payable in accordance with customary trade
terms or with respect to which the Borrower or any Subsidiary is contesting in
good faith the amount or validity thereof by appropriate proceedings and then
only to the extent such person has set aside on its books adequate reserves
therefor in accordance with and to the extent required by GAAP;
Section 5.2.8.3. Indebtedness with respect to Capitalized Lease
---------------
Obligations and purchase money Indebtedness with respect to real or personal
property in an aggregate amount outstanding at any time not to exceed
$1,000,000; provided that the amount of any purchase money Indebtedness does not
exceed 90% of the lesser of the cost or fair market value of the asset purchased
with the proceeds of such Indebtedness;
Section 5.2.8.4. Unsecured Indebtedness in an aggregate amount
---------------
outstanding at any time not to exceed $250,000;
Section 5.2.8.5. Indebtedness listed on Exhibit 3.1.1.8;
--------------- ---------------
Section 5.2.8.6. Indebtedness owing by the Borrower to any
---------------
Subsidiary or by any Subsidiary to the Borrower or any other Subsidiary.
Section 5.2.8.7. Indebtedness permitted by Section 5.2.2 and
--------------- -------------
Indebtedness secured by Liens permitted under Section 5.2.1.4.
----------------
Section 5.2.8.8. Hardware Indebtedness in aggregate outstanding
---------------
principal amount not in excess of $2,500,000.
Section 5.2.8.9. Indebtedness outstanding as a refinancing of
---------------
Indebtedness permitted under another clause of this Section 5.2.8 other than
-------------
Section 5.2.8.2 or 5.2.8.8; provided that such Indebtedness as refinanced
--------------- -------
continues to qualify as permitted Indebtedness under the clause of this Section
-------
5.2.8 under which the refinanced Indebtedness was permitted under this Section
----- -------
5.2.8.
-----
Section 5.2.9. Other Agreements. Amend any of the terms or
-------------- ----------------
conditions of any of the Related Transaction Documents in a manner materially
adverse to the Agent or any of the Lenders, its certificate of incorporation, if
any, any subordination agreement or any indenture, agreement, document,
62
note or other instrument evidencing, securing or relating to any other
Indebtedness permitted under Section 5.2.8 in manner adverse to the interests of
-------------
the Agent or the Lenders.
Section 5.2.10. Payment or Prepayment of Equity. Make any payment or
-------------- -------------------------------
prepayment of any principal of or interest on or any payment, prepayment,
redemption, defeasance, sinking fund payment, other repayment of principal or
capital or deposit for the purpose of any of the foregoing on or in connection
with the Equity, except for payment, but not prepayment, of the Non-Compete
Payments.
Section 5.2.11. Dividends, Payments and Distributions. Declare or
-------------- -------------------------------------
pay any dividends, management fees or like fees or make any other distribution
of cash or property or both to any of the Stockholders other than compensation
for services rendered to the Borrower and/or any Subsidiary or use any of its
assets for payment, purchase, conversion, redemption, retention, acquisition or
retirement of any beneficial interest in the Borrower or set aside or reserve
assets for sinking or like funds for any of the foregoing purposes, make any
other distribution by reduction of capital or otherwise in respect of any
beneficial interest in the Borrower or permit any Subsidiary which is not a
wholly-owned Subsidiary so to do, provided however, that in the event of a
Qualified Initial Public Offering, and subject at all times to the Borrower's
compliance with the provisions of Section 2.6.1.5, the Borrower shall be
---------------
permitted to redeem or convert shares of the Borrower's convertible
participating preferred stock and/or redeemable preferred stock.
Notwithstanding anything to the contrary set forth in this Agreement, the New
Stockholders may at any time convert their shares of the Borrower's convertible
participating preferred stock in accordance with the provisions of the
Borrower's Amended and Restated Certificate of Incorporation.
Section 5.2.12. Investments in or to Other Persons. Make or commit
-------------- ----------------------------------
to make any Investment in or to any other Person (including, without limitation,
any Subsidiary) other than (i) advances to employees for business expenses not
to exceed $10,000 in the aggregate outstanding for any one employee and not to
exceed $50,000 in the aggregate outstanding at any one time to all such
employees, (ii) other employee loans not to exceed $100,000 in the aggregate
outstanding at any one time to all such employees, (iii) Cash Equivalent
Investments, (iv) Investments by the Borrower in any Subsidiary (a) which is
organized under the laws of a state in the United States of America and
substantially all of the assets of which are located in the United States of
America or (b) which is organized under the laws of a nation under the laws of
which the Agent could obtain, on behalf of the
63
Lenders, a first priority perfected Lien; provided that at all times at least
85% of the higher of the cost or fair market value of the Borrower's and any
Subsidiaries' assets taken as a whole shall be at all times located in the
United States of America, all determined in accordance with GAAP, and in the
case of (iv)(a) and (b) the assets and Borrower-owned capital stock of which is
encumbered by first priority perfected Liens in form and substance satisfactory
to the Agent granted to and held by the Agent for the benefit of the Lenders,
(v) Investments in accounts, contract rights and chattel paper (as defined in
the Uniform Commercial Code) and notes receivable, arising or acquired in the
ordinary course of business and (vi) Investments described on Exhibit 5.2.2.
--------------
Section 5.2.13. Transactions with Affiliates. Except as contemplated
-------------- ----------------------------
by the Equity Documents and Related Transaction Documents and except for
Borrower's exercise of its option under its agreement with Distribution Team,
Inc. referred to in Section 5.2.3, engage in any transaction or enter into any
-------------
agreement with an Affiliate, or in the case of Affiliates or Subsidiaries, with
the Borrower or another Affiliate or Subsidiary, except in the ordinary course
of business, as permitted by any other provision of this Agreement and then only
on an arm's length basis except as set forth on Exhibit 5.2.13.
--------------
Section 5.2.14. Change of Fiscal Year. Change its fiscal year.
-------------- ---------------------
Section 5.2.15. Subordination of Claims. Subordinate any present or
-------------- -----------------------
future claim against or obligation of another Person, except as ordered in a
bankruptcy or similar creditors' remedy proceeding of such other Person.
Section 5.2.16. Compliance with ERISA. With respect to Borrower and
-------------- ---------------------
any Commonly Controlled Entity permit the occurrence of any of the following
events to the extent that any such events would result in a Material Adverse
Effect on Borrower, (a) withdraw from or cease to have an obligation to
contribute to, any Multiemployer Plan, (b) engage in any "prohibited
transaction" (as defined in Section 4975 of the Code) involving any Plan, (c)
except for any deficiency caused by a waiver of the minimum funding requirement
under section 412 of the Code, as described above, incur or suffer to exist any
material "accumulated funding deficiency" (as defined in section 302 of ERISA
and section 412 of the Code) of the Borrower or any Commonly Controlled Entity,
whether or not waived, involving any Single Employer Plan, (d) incur or suffer
to exist any Reportable Event or the appointment of a trustee or institution of
proceedings for appointment of a trustee for any Single Employer
64
Plan if, in the case of a Reportable Event, such event continues unremedied
for ten (10) days after notice of such Reportable Event pursuant to sections
4043(a), (c) or (d) of ERISA is given, if in the reasonable opinion of the
Majority Lenders any of the foregoing is likely to result in a Material Adverse
Effect, (e) allow or suffer to exist any event or condition, which presents a
material risk of incurring a material liability of the Borrower or any Commonly
Controlled Entity to PBGC by reason of termination of any such Plan or (f) cause
or permit any Plan maintained by Borrower and/or any Commonly Controlled Entity
to be out of compliance with ERISA.
Section 5.2.17. Capital Expenditures. Incur Capital Expenditures (i)
-------------- --------------------
during calendar year 1996 in excess of $1,000,000, (ii) during calendar year
1997 in excess of $1,250,000, (iii) during calendar year 1998 in excess of
$1,500,000 and (iv) during calendar year 1999 in excess of $2,000,000.
Subject to the foregoing, the Borrower shall make its Capital
Expenditures substantially in accordance with and for the purposes outlined in
the Budget for the Borrower fiscal year in question.
Section 5.2.18. Hazardous Waste. Become involved, or permit, to the
-------------- ---------------
extent reasonably possible after the exercise by the Borrower of reasonable due
diligence and preventive efforts, any tenant of its real property to become
involved, in any operations at such real property generating, storing,
disposing, or handling Hazardous Material or any other activity that could lead
to the imposition on the Borrower or the Agent or any Lender, or any such real
property of any material liability or Lien under any environmental laws.
Section 5.3. Reporting Requirements. From the date hereof and thereafter
----------- ----------------------
for so long as the Borrower is indebted to any Lender and/or the Agent under any
of the Financing Documents, the Borrower will, unless the Majority Lenders shall
otherwise consent in writing, furnish or cause to be furnished to the Agent for
distribution to the Lenders:
Section 5.3.1. As soon as possible and in any event upon acquiring
-------------
knowledge of an Event of Default or Default, continuing on the date of such
statement, the written statement of an Authorized Representative setting forth
details of such Event of Default or Default and the actions which the Borrower
has taken and proposes to take with respect thereto;
65
Section 5.3.2. As soon as practicable after the end of each Borrower
-------------
fiscal year and in any event within 90 days after the end of each such fiscal
year, consolidated and consolidating balance sheets of the Borrower and any
Subsidiaries as at the end of such year, and the related statements of income
and cash flows or shareholders' equity of the Borrower and any Subsidiaries
setting forth in each case the corresponding figures for the preceding fiscal
year, such statements to be certified by a firm of independent certified public
accountants selected by Borrower and reasonably acceptable to the Majority
Lenders, to be accompanied by a true copy of said auditors' management letter,
if one was provided to the Borrower;
Section 5.3.3. As soon as is practicable after the end of each fiscal
-------------
quarter of each Borrower fiscal year and in any event within 45 days thereafter,
consolidated balance sheets of the Borrower and any Subsidiaries as of the end
of such period and the related statements of income and cash flows and
shareholders' equity of the Borrower and any Subsidiaries, subject to changes
resulting from year-end adjustments, together, subject to Section 5.3.7, with a
-------------
comparison to the Budget for the applicable period, such balance sheets and
statements to be prepared and certified by an Authorized Representative in an
Officer's Certificate as having been prepared in accordance with GAAP except for
footnotes and year-end adjustments, and to be in form reasonably satisfactory to
the Agent;
Section 5.3.4. Simultaneously with the furnishing of each of the
-------------
year-end consolidated and consolidating financial statements of the Borrower and
any Subsidiaries to be delivered pursuant to Section 5.3.2 and each of the
-------------
consolidated quarterly statements of the Borrower and the Subsidiaries to be
delivered pursuant to Section 5.3.3 an Officer's Certificate of an Authorized
-------------
Representative which shall contain a statement in the form of Exhibit 3.1.1.10
----------------
to the effect that no Event of Default or Default has occurred, without having
been waived in writing, or if there shall have been an Event of Default not
previously waived in writing pursuant to the provisions hereof, or a Default,
such Officer's Certificate shall disclose the nature thereof and the actions the
Borrower has taken and prepare to take with respect thereto. Each such
Officer's Certificate shall also contain a calculation of and certify to the
accuracy of the amounts required to be calculated in the financial covenants of
the Borrower contained in this Agreement and described in Exhibit 3.1.1.10;
------- --------
Section 5.3.5. Promptly after the commencement thereof, notice of all
-------------
material actions, suits and proceedings before any court or governmental
department, commission, board, bureau,
66
agency or instrumentality, domestic or foreign, affecting the Borrower and/or
any Subsidiary;
Section 5.3.6. [Intentionally Omitted]
-------------
Section 5.3.7. On or before January 31 of each fiscal year of the
-------------
Borrower, an updated proposed budget, prepared on a quarterly basis, and updated
financial projections for the Borrower and any Subsidiaries on a consolidated
basis (together, the "Budget") for such fiscal year, setting forth in detail
reasonably satisfactory to the Agent the projected results of operations of the
Borrower and any Subsidiaries on a consolidated quarterly basis, detailed
Capital Expenditures plan and stating underlying assumptions and accompanied by
a written statement of an Authorized Representative certifying as to the
approval of such Budget by Borrower's board of directors.
Section 5.3.8. Such other information respecting the Business
-------------
Condition of the Borrower or any Subsidiaries as the Agent or any Lender may
from time to time reasonably request;
Section 5.3.9. Written notice of the fact and of the details of any
-------------
sale or transfer of any ownership interest in the Borrower or any Subsidiary
given promptly after the Borrower acquires knowledge thereof; provided, however,
that this clause shall not be deemed to constitute or imply any consent to any
such sale or transfer;
Section 5.3.10. Prompt written notice of loss of any key personnel or
--------------
any Material Adverse Effect and an explanation thereof and of the actions the
Borrower and/or such Subsidiary propose to take with respect thereto; and
Section 5.3.11. Written notice of the following events, as soon as
--------------
possible and in any event within 15 days after the Borrower knows or has reason
to know thereof: (i) the occurrence of any Reportable Event with respect to any
Plan, or (ii) the institution of proceedings or the taking of any other action
by PBGC or the Borrower or any Commonly Controlled Entity to terminate, withdraw
or partially withdraw from any Plan and, with respect to any Multiemployer
Plan, the Reorganization (as defined in Section 4241 of ERISA) or Insolvency (as
defined in Section 4245 of ERISA) of such Multiemployer Plan and in addition to
such notice, deliver to the Agent whichever of the following may be applicable:
(a) an Officer's Certificate setting forth details as to such Reportable Event
and the action that the Borrower or Commonly Controlled Entity proposes to take
with respect thereto, together with a copy of any notice of such Reportable
Event that may be required to be filed with PBGC, or
67
b) any notice delivered by PBGC evidencing its intent to institute such
proceedings or any notice to PBGC that such Plan is to be terminated, as the
case may be.
ARTICLE 6.
EVENTS OF DEFAULT
Section 6.1. Events of Default. The Borrower shall be in default
----------- -----------------
under each of the Financing Documents, upon the occurrence of any one or more of
the following events ("Events of Default"):
Section 6.1.1. If the Borrower shall fail to make due and punctual
-------------
payment of any principal, fees, interest and/or other amounts payable under this
Agreement as provided in any Note and/or in this Agreement when the same is due
and payable except that it shall not be an Event of Default if any interest,
fees and/or other amounts (excluding principal) is paid within 5 days after it
is due and payable, whether at the due date thereof or at a date fixed for
prepayment or if the Borrower shall fail to make any such payment of fees,
interest, principal and/or any other amount under this Agreement and/or under
any Note on the date when such payment becomes due and payable by acceleration;
Section 6.1.2. If the Borrower or any Subsidiary shall make an
-------------
assignment for the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall admit in writing its inability to pay its
debts as they become due or shall file a voluntary petition in bankruptcy, or
shall file any petition or answer seeking any reorganization, arrangement,
composition, adjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy laws or other applicable federal, state
or other statute, law or regulation, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of it or of all or any
substantial part of its properties, or if partnership or corporate action shall
be taken for the purpose of effecting any of the foregoing; or
Section 6.1.3. To the extent not described in Section 6.1.2, (i)
------------- -------------
if the Borrower or any Subsidiary shall be the subject of a bankruptcy
proceeding, or (ii) if any proceeding against any of them seeking any
reorganization, arrangement, composition, adjustment, liquidation, dissolution,
or similar relief under the present or any future federal bankruptcy law or
other applicable federal, foreign, state or other statute, law or regulation
shall be commenced, or (iii) if any trustee, receiver
68
or liquidator of any of them or of all or any substantial part of any or all
of their properties shall be appointed without their consent or acquiescence;
provided that in any of the cases described above in this Section 6.1.3, such
-------------
proceeding or appointment shall not be an Event of Default if the Borrower or
the Subsidiary in question shall cause such proceeding or appointment to be
discharged, vacated, dismissed or stayed within sixty (60) days after
commencement thereof; or
Section 6.1.4. If final unappealable judgment or judgments
-------------
aggregating more than $500,000 shall be rendered against the Borrower or any
Subsidiary and shall remain undischarged, unstayed or unpaid for an aggregate of
sixty (60) days (whether or not consecutive) after entry thereof; or
Section 6.1.5. If the Borrower or any Subsidiary shall default (after
-------------
giving effect to any applicable grace period) in the due and punctual payment of
the principal of or interest on any Indebtedness for Borrowed Money exceeding in
the aggregate $250,000 (other than the Loans), or if any default shall have
occurred and be continuing after any applicable grace period under any mortgage,
note or other agreement evidencing, securing or providing for the creation of
such Indebtedness for Borrowed Money, which results in the acceleration of such
Indebtedness or which permits, or with the giving of notice would permit, any
holder or holders of any such Indebtedness for Borrowed Money to accelerate the
stated maturity thereof; or
Section 6.1.6. If there shall be a default in the performance of the
-------------
Borrower's obligations under Section 5.1.3 (insofar as such Section requires the
-------------
preservation of the corporate existence of the Borrower or any Subsidiary), any
of Sections 5.1.2, 5.1.10, through 5.1.13 or Section 5.2 (other than Sections
-------------- ------ ------ ----------- --------
5.2.4, 5.2.9, 5.2.13, 5.2.15, 5.2.16 and 5.2.18) of this Agreement; or
----- ----- ------ ------ ------ ------
Section 6.1.7. If there shall be any Default in the performance of
-------------
any covenant or condition contained in this Agreement or in any of the other
Financing Documents to be observed or performed pursuant to the terms hereof or
any Financing Document, as the case may be, or to the extent such Default would
have a Material Adverse Effect, by the Borrower under any of the Related
Transaction Documents, other than a covenant or condition referred to in any
other subsection of this Section 6.1 and such Default shall continue unremedied
-----------
or unwaived, (i) in the case of any covenant or condition contained in Section
-------
5.3, for fifteen (15) Business Days, or (ii) in the case of any other covenant
---
or condition for which no other grace period is provided, for thirty (30) days,
or (iii) in the case of
69
any other covenant or condition for which another grace period is provided,
for such grace period, or (iv) if any of the representations and warranties made
or deemed made by the Borrower to the Agent and/or any Lender pursuant to any of
the Financing Documents proves to have been false or misleading in any material
respect when made and such falseness or misleading representation or warranty
would be reasonably likely to have a material adverse effect on the Agent or any
Lender or their rights and remedies or a Material Adverse Effect; or
Section 6.1.8. If there shall be any attachment of any deposits or
-------------
other property of the Borrower and/or any Subsidiary in the possession of any
Lender or any attachment of any other property of the Borrower and/or any
Subsidiary in an amount exceeding $250,000 other than an attachment by the
vendor owed money under Hardware Indebtedness of the item(s) of computer
equipment or computer hardware purchased with the Hardware Indebtedness in
question, if such attachment arises out of a dispute between the Borrower and/or
any Subsidiary and such vendor, which attachment and vendor claim(s) are being
contested in good faith and by proper proceedings by the Borrower and/or such
Subsidiary and for which proper reserve or other provision has been made in
accordance with and to the extent required by GAAP, which shall not be
discharged, vacated or stayed within thirty (30) days of the date of such
attachment; or
Section 6.1.9. Any certification of the financial statements,
-------------
furnished to the Agent pursuant to Section 5.3.2, shall contain any
-------------
qualification; provided, however, that such qualifications will not be deemed an
Event of Default if in each case (i) such certification shall state that the
examination of the financial statements covered thereby was conducted in
accordance with generally accepted auditing standards, including but not limited
to all such tests of the accounting records as are considered necessary in the
circumstances by the independent certified public accountants preparing such
statements, (ii) such financial statements were prepared in accordance with GAAP
and (iii) such qualification does not involve the "going concern" status of the
entity being reported upon.
ARTICLE 7.
REMEDIES OF LENDERS
Upon the occurrence and during the continuance of any one or more of
the Events of Default, the Agent, at the request of the Majority Lenders, shall,
by written notice to the Borrower, declare the obligation of the Lenders to make
or maintain the
70
Loans to be terminated, whereupon the same and the Commitment shall forthwith
terminate, and the Agent, at the request of the Majority Lenders, shall, by
notice to the Borrower, declare the entire unpaid principal amount of each Note
and all fees and interest accrued and unpaid thereon and/or under this
Agreement, and/or any of the other Financing Documents and any and all other
Indebtedness under this Agreement, each Note and/or any of the other Financing
Documents to the Agent and/or any of the Lenders and/or to any holder of all or
any portion of each Note to be forthwith due and payable, whereupon each Note,
and all such accrued fees and interest and other such Indebtedness shall become
and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that upon the occurrence of an Event of Default
under Sections 6.1.2 or 6.1.3, all of the unpaid principal amount of each Note,
-------------- -----
all fees and interest accrued and unpaid thereon and/or under this Agreement
and/or under any of the other Financing Documents and any and all other such
Indebtedness of the Borrower to any of the Lenders and/or to any such holder
shall thereupon be due and payable in full without any need for the Agent and/or
any Lender to make any such declaration or take any action and the Lenders'
obligations to make the Loans shall simultaneously terminate. The Agent shall,
in accordance with the votes of the Majority Lenders, exercise all remedies on
behalf of and for the account of each Lender and on behalf of its respective Pro
Rata Share of the Loans, its Note and Indebtedness of the Borrower owing to it
or any of the foregoing, including, without limitation, all remedies available
under or as a result of this Agreement, the Notes or any of the other Financing
Documents or any other document, instrument or agreement now or hereafter
securing any Note without any such exercise being deemed to modify in any way
the fact that each Lender shall be deemed a separate creditor of the Borrower to
the extent of its Note and Pro Rata Share of the Loans and any other amounts
payable to such Lender under this Agreement and/or any of the other Financing
Documents and the Agent shall be deemed a separate creditor of the Borrower to
the extent of any amounts owed by the Borrower to the Agent.
ARTICLE 8
AGENT
Section 8.1. Appointment. The Agent is hereby appointed as Agent, hereunder
----------- -----------
and each Lender hereby authorizes the Agent to act under the Financing
Documents as its Agent hereunder and thereunder, respectively. The Agent agrees
to act as such upon the express conditions contained in this Article 8. The
71
provisions of this Article 8 are solely for the benefit of the Agent, and,
except as expressly provided in Section 8.6, neither the Borrower nor any third
-----------
party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and the other Financing Documents to which the Agent is a party, the Agent shall
act solely as Agent of the Lenders and does not assume nor shall the Agent be
deemed to have assumed any obligation towards or relationship of agency or trust
with or for the Borrower, any of the Stockholders, any Affiliate or any
Subsidiary. Notwithstanding anything to the contrary contained herein, Bank of
Boston shall have no responsibilities, obligations or authority as an Agent, its
responsibilities, obligations or authority being limited to those it may have
solely in its capacity as a Lender.
Section 8.2. Powers; General Immunity.
----------- ------------------------
Section 8.2.1. Duties Specified. Each Lender irrevocably authorizes
------------- ----------------
the Agent to take such action on such Lender's behalf, including, without
limitation, to execute and deliver the Financing Documents to which the Agent is
a party and to exercise such powers hereunder and under the Financing Documents
and other instruments and agreements referred to herein as are specifically
delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto. The Agent shall have only those
duties and responsibilities which are expressly specified in this Agreement or
in any of the Financing Documents and may perform such duties by or through its
agents or employees. The duties of the Agent shall be mechanical and
administrative in nature; and the Agent shall not have by reason of this
Agreement or any of the Financing Documents a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or any of the Security Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement or any of the Financing
Documents or the other instruments and agreements referred to herein except as
expressly set forth herein or therein.
Section 8.2.2. No Responsibility For Certain Matters. The Agent
------------- -------------------------------------
shall not be responsible to any Lender for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of any of
the Financing Documents or any other document, instrument or agreement now or
hereafter executed in connection herewith or therewith, or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates
72
or any other documents in connection herewith or therewith by or on behalf of
the Borrower, any of the Stockholders, and/or any Subsidiary to the Agent or any
Lender, or be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained herein or therein or as to the use of the proceeds of the Loans or of
the existence or possible existence of any Default or Event of Default.
Section 8.2.3. Exculpatory Provisions. Neither the Agent nor any of
------------- ----------------------
its officers, directors, employees or agents shall be liable to any Lender for
any action taken or omitted hereunder or under any of the Financing Documents,
or in connection herewith or therewith unless caused by its or their gross
negligence or willful misconduct. If the Agent shall request instructions from
Lenders with respect to any action (including the failure to take an action) in
connection with any of the Financing Documents, the Agent shall be entitled to
refrain from taking such action unless and until the Agent, shall have received
instructions from the Majority Lenders (or all of the Lenders if the action
requires their consent). Without prejudice to the generality of the foregoing,
(i) the Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for the Borrower, any
of the Stockholders, and/or any Subsidiary), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against the Agent as a result of the Agent acting or (where so
instructed) refraining from acting under any of the Financing Documents or the
other instruments and agreements referred to herein in accordance with the
instructions of the Majority Lenders (or all of the Lenders if the action
requires their consent). The Agent shall be entitled to refrain from exercising
any power, discretion or authority vested in it under any of the Financing
Documents or the other instruments and agreements referred to herein unless and
until it has obtained the instructions of the Majority Lenders (or all of the
Lenders if the action requires their consent).
Section 8.2.4. Agent Entitled to Act as Lender. The agency hereby
------------- -------------------------------
created shall in no way impair or affect any of the rights and powers of, or
impose any duties or obligations upon, Fleet in its individual capacity as a
Lender hereunder. With respect to its participation in the Loans and the
Commitment, Fleet shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the
73
duties and functions delegated to it hereunder, and the term "Lender" or
"Lenders" or any similar term shall, unless the context clearly otherwise
indicates, include Fleet in its individual capacity. The Agent and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of banking, trust, financial advisory or other business with the Borrower,
any of the Stockholders, or any Affiliate or Subsidiary as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrower and/or any of such other Persons for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
Section 8.3. Representations and Warranties; No Responsibility or Appraisal of
----------- -----------------------------------------------------------------
Creditworthiness. Each Lender represents and warrants that it has made its own
----------------
independent investigation of the financial condition and affairs of the
Borrower, the Stockholders and any Subsidiaries of any of them in connection
with the making of the Loans hereunder and has made and shall continue to make
its own appraisal of the creditworthiness of the Borrower, the Stockholders and
the Subsidiaries. The Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to make any such investigation or any such
appraisal on behalf of Lenders or to provide any Lender with any credit or other
information with respect thereto whether coming into its possession before the
making of any Loan or any time or times thereafter (except for information
received by the Agent under Section 5.3 hereof which the Agent will promptly
-----------
forward to the Lenders), and the Agent shall further not have any responsibility
with respect to the accuracy of or the completeness of the information provided
to any of the Lenders.
Section 8.4. Right to Indemnity. Each Lender severally agrees to indemnify
----------- ------------------
the Agent proportionately to its Pro Rata Share of the Loans, to the extent the
Agent shall not have been reimbursed by or on behalf of the Borrower, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
performing its duties hereunder or in any way relating to or arising out of this
Agreement and/or any of the other Financing Documents; provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. If any
indemnity furnished to the Agent for any purpose shall, in the
74
opinion of the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
Section 8.5. Payee of Note Treated as Owner. The Agent may deem and treat
----------- ------------------------------
the payee of any Note as the owner thereof for all purposes hereof unless and
until a written notice of the assignment or transfer thereof shall have been
filed with the Agent. Any request, authority or consent of any person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee or assignee of that Note or of any Note or Notes issued in exchange
for such Note.
Section 8.6. Resignation by Agent.
----------- --------------------
Section 8.6.1. The Agent may resign from the performance of all its
-------------
functions and duties under the Financing Documents at any time by giving 30
days' prior written notice to the Borrower and each of the Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent, of
appointment pursuant to Sections 8.6.2 and 8.6.3 below or as otherwise provided
-------------- -----
below.
Section 8.6.2. Upon any such notice of resignation, the Majority
-------------
Lenders shall appoint a successor Agent, who shall be a Lender and, so long as
no Default or Event of Default exists and is continuing, who shall be reasonably
satisfactory to the Borrower and in any event shall be an incorporated bank or
trust company with a combined surplus and undivided capital of at least Five
Hundred Million Dollars ($500,000,000).
Section 8.6.3. If a successor Agent shall not have been so appointed
-------------
within said 30 day period, the resigning Agent, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, shall then
appoint a successor Agent, who shall be a Lender and who shall serve as the
Agent, until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent as provided above.
Section 8.6.4. If no successor Agent has been appointed pursuant to
-------------
Sections 8.6.2 or 8.6.3 by the 40th day after the date such notice of
-------------- -----
resignation was given by the resigning Agent, the resigning Agent's resignation
shall become effective and the Majority Lenders shall thereafter perform all the
duties of the resigning Agent under the Financing Documents including without
75
limitation directing the Borrower on how to submit Requests and Interest Rate
Elections and otherwise on administration of the Agent's duties under the
Financing Documents and the Borrower shall comply therewith so long as such
directions do not have a Material Adverse Effect on the Borrower or any
Subsidiary until such time, if any, as the Majority Lenders, and so long as no
Default or Event of Default exists and is continuing, with the consent of the
Borrower, which shall not be unreasonably withheld or delayed, appoint a
successor Agent, as provided above.
Section 8.7. Successor Agent. Upon the acceptance of any appointment as the
----------- ---------------
Agent hereunder by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent, shall be discharged from its
duties and obligations as the Agent under the Financing Documents. After any
retiring Agent's resignation hereunder as the Agent the provisions of this
Article 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under the Financing Documents.
ARTICLE 9.
MISCELLANEOUS
Section 9.1. Consent to Jurisdiction and Service of Process.
----------- ----------------------------------------------
Section 9.1.1. Except to the extent prohibited by applicable law,
-------------
the Borrower irrevocably:
Section 9.1.1.1. agrees that any suit, action, or other legal
---------------
proceeding arising out of any of the Financing Documents or any of the Loans may
be brought in the courts of record of The Commonwealth of Massachusetts or any
other state(s) in which any of the Borrower's assets are located or the courts
of the United States located in The Commonwealth of Massachusetts or any other
state(s) in which any of the Borrower's assets are located;
Section 9.1.1.2. consents to the jurisdiction of each such
---------------
court in any such suit, action or proceeding; and
Section 9.1.1.3. waives any objection which it may have to
---------------
the laying of venue of such suit, action or proceeding in any of such courts.
76
For such time as any of the Indebtedness of the Borrower to any Lender
and/or the Agent shall be unpaid in whole or in part and/or the Commitment is in
effect, the Borrower irrevocably designates the registered agent or agent for
service of process of the Borrower as reflected in the records of the Secretary
of State of Delaware as its registered agent, and, in the absence thereof, the
Secretary of State of Delaware as its agent to accept and acknowledge on its
behalf service of any and all process in any such suit, action or proceeding
brought in any such court and agrees and consents that any such service of
process upon such agent and written notice of such service to the Borrower by
registered or certified mail shall be taken and held to be valid personal
service upon the Borrower regardless of where the Borrower shall then be doing
business and that any such service of process shall be of the same force and
validity as if service were made upon it according to the laws governing the
validity and requirements of such service in each such state and waives any
claim of lack of personal service or other error by reason of any such service.
Any notice, process, pleadings or other papers served upon the aforesaid
designated agent shall, within three (3) Business Days after such service, be
sent by the method provided therefor under Section 9.6 to the Borrower at its
-----------
address set forth in this Agreement. EACH OF THE PARTIES HERETO HEREBY WAIVES
ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY DISPUTE BETWEEN THE BORROWER AND
THE AGENT AND/OR THE LENDERS WITH RESPECT TO THE FINANCING DOCUMENTS AND/OR ANY
OF THE TRANSACTIONS CONTEMPLATED THEREBY.
Section 9.2. Rights and Remedies Cumulative. No right or remedy conferred
----------- ------------------------------
upon or reserved to the Agent and/or the Lenders in any of the Financing
Documents is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given under any of the Financing
Documents or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy under any of the Financing
Documents, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 9.3. Delay or Omission not Waiver. No delay in exercising or
----------- ----------------------------
failure to exercise by the Agent and/or the Lenders of any right or remedy
accruing upon any Default or Event of Default shall impair any such right or
remedy or constitute a waiver of any such Default or Event of Default or an
acquiescence therein. Every right and remedy given by any of the Financing
Documents or by law to the Agent and/or any of the Lenders may be exercised
from time to time, and as often as may be deemed expedient, by the Agent and/or
any of the Lenders.
77
Section 9.4. Waiver of Stay or Extension Laws. The Borrower covenants (to the
----------- --------------------------------
extent that it may lawfully do so) that it will not at any time insist upon, or
plead or in any manner whatsoever claim or take the benefit or advantage of, any
stay or extension law wherever enacted, now or at any time hereafter in force,
which may affect the covenants or the performance of any of the Financing
Documents; and the Borrower (to the extent that it may lawfully do so) hereby
expressly waives all benefit and advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Agent and/or any of the Lenders, but will suffer and permit the execution of
every such power as though no such law had been enacted, except to the extent
the Agent or any Lender is guilty of wilful misconduct or gross negligence.
Section 9.5. Amendments, etc. No amendment, modification, termination, or
----------- ---------------
waiver of any provision of any of the Financing Documents nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in a written notice given to the Borrower by the Agent and
consented to in writing by the Majority Lenders (or by the Agent acting alone if
any specific provision of this Agreement provides that the Agent, acting alone,
may grant such amendment, modification, termination, waiver or departure) and
the Agent shall give any such notice if the Majority Lenders so consent or
direct the Agent to do so; provided, however, that any such amendment,
modification, termination, waiver or consent shall require a written notice
given to the Borrower by the Agent and consented to in writing by all of the
Lenders if the effect thereof is to (i) change any of the provisions affecting
the interest rate on the Loans, (ii) extend or modify the Commitment, (iii)
discharge or release the Borrower from its obligation to repay all principal due
under the Loans or release any collateral or guaranty for the Loans, (iv) change
any Lender's Pro Rata Share of the Commitment or the Loans, (v) modify this
Section 9.5, (vi) change the definition of Majority Lenders, (vii) extend any
------------
scheduled due date for payment of principal, interest or fees or (viii) permit
the Borrower to assign any of its rights under or interest in this Agreement,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. Any amendment or modification of
this Agreement must be signed by the Borrower, the Agent and at least all of the
Lenders consenting thereto who shall then hold the Pro Rata Shares of the Loans
required for such amendment or modification under this Section 9.5 and the Agent
-----------
shall sign any such amendment if such Lenders so consent or direct the Agent to
do so provided that any Lender dissenting therefrom shall be given an
opportunity to sign any such amendment or modification.
78
Any amendment of any of the Security Documents must be signed by each of the
parties thereto. No notice to or demand on the Borrower and no consent, waiver
or departure from the terms of this Agreement granted by the Agent and/or the
Lenders in any case shall entitle the Borrower to any other or further notice or
demand in similar or other circumstances.
Section 9.6. Addresses for Notices, etc. All notices, requests, demands and
----------- --------------------------
other communications provided for hereunder (other than those which, under the
terms of this Agreement, may be given by telephone, which shall be effective
when received verbally) shall be in writing (including telecopied communication)
and mailed (provided that in the case of items referred to in the next-to-last
sentence of Section 9.1 and the items set forth below as requiring a copy to
-----------
legal counsel for the Borrower, the Agent or a Lender, such items shall be
mailed by overnight courier for delivery the next Business Day), telecopied or
delivered to the applicable party at the addresses indicated below:
If to the Borrower:
R&D Systems Company
0000 X. Xxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxx,
Chief Administrative Officer
Telecopy: (000)000-0000
With a copy to (if given pursuant to any of Section 5.3.1, 5.3.5,
------------- -----
5.3.9, 5.3.10 and 5.3.11):
----- ------ ------
Holland & Xxxx
000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx Xxxxxx Arkell, Esquire
Telecopy: (000)000-0000
If to Fleet as the Agent and/or a Lender:
Fleet Bank of Massachusetts, N.A.
Mailstop MABOFO4M
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Vice President
Telecopy: (000) 000-0000
79
With a copy to (if given pursuant to any of Sections 5.3.1,
--------------
5.3.5, 5.3.9, 5.3.10 and 5.3.11)
----- ----- ------ ------
Xxxxxxxx, Xxxxx & Xxxxxx
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx III, Esquire
Telecopy: (000) 000-0000
If to any other Lender, to the address set forth on Exhibit 1.9.
-----------
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to the delivery with the
terms of this Section. All such notices, requests, demands and other
communications shall be effective when received. Requests, certificates, other
items provided pursuant to Section 5.3 and other routine mailings or notices
-----------
need not be accompanied by a copy to legal counsel for the Lenders or the
Borrower.
Section 9.7. Costs, Expenses and Taxes. The Borrower agrees to pay on demand
----------- -------------------------
the reasonable fees and out-of-pocket expenses of Messrs. Xxxxxxxx, Xxxxx &
Xxxxxx, counsel for the Agent and of any local counsel retained by the Agent in
connection with the preparation, execution, delivery and administration
(excluding expenses of any Lender's sale of a participation in or sale or
assignment of all or a portion of such Lender's Commitment or Loans other than
any such sale pursuant to Section 2.2.3 or 2.9.7) of the Financing Documents and
------------- -----
the Loans and Bank of Boston's commercial finance examination fee and expenses
in amount not to exceed $3,500 and incurred prior to the Closing Date. The
Borrower agrees to pay on demand all reasonable costs and expenses (including
without limitation reasonable attorneys' fees) incurred by the Agent and/or any
Lender, upon or after the occurrence and during the continuance of any Default
or Event of Default, if any, in connection with the enforcement of any of the
Financing Documents and any amendments, waivers, or consents with respect
thereto. In addition, the Borrower shall pay on demand any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution and delivery of the Financing Documents, and agrees to save the
Lenders and the Agent harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees, except those resulting from the Lenders' or Agent's gross negligence or
willful misconduct.
80
Section 9.8. Participations. Subject to compliance with the proviso in the
----------- --------------
first sentence of Section 9.11, any Lender may sell participations in all
------------
or part of the Loans made by it and/or its Pro Rata Share of the Commitment or
any other interest herein to a financial institution having at least
$500,000,000 of assets, in which event the participant shall not have any rights
under any of the Financing Documents (the participant's rights against such
Lender in respect of that participation to be those set forth in the Agreement
executed by such Lender in favor of the participant relating thereto) and all
amounts payable by the Borrower hereunder or thereunder shall be determined as
if such Lender had not sold such participation. Such Lender may furnish any
information concerning the Borrower and any Subsidiary in the possession of such
Lender from time to time to participants (including prospective participants);
provided that such Lender and any participant comply with the proviso in Section
-------
9.11.7 as if any such participant was a Substituted Lender.
------
Section 9.9. Binding Effect; Assignment. This Agreement shall be binding
----------- --------------------------
upon and inure to the benefit of the Borrower, the Agent and the Lenders and
their respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Lenders. This Agreement and all
covenants, representations and warranties made herein and/or in any of the other
Financing Documents shall survive the making of the Loans, the execution and
delivery of the Financing Documents and shall continue in effect so long as any
amounts payable under or in connection with any of the Financing Documents or
any other Indebtedness of the Borrower to the Agent and/or any Lender remains
unpaid or the Commitment remains outstanding; provided, however, that Sections
--------
2.2.3 and 9.7 shall, except to the extent agreed to in a pay-off letter by the
----- ---
Agent and the Lenders in their complete discretion, survive and remain in full
force and effect for 90 days following repayment in full of all amounts payable
under or in connection with all of the Financing Documents and any other such
Indebtedness.
Section 9.10. Actual Knowledge. For purposes of this Agreement, neither the
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Agent nor any Lender shall be deemed to have actual knowledge of any fact or
state of facts unless the senior loan officer or any other officer responsible
for the Borrower's account established pursuant to this Agreement at the Agent
or such Lender, shall, in fact, have actual knowledge of such fact or state of
facts or unless written notice of such fact shall have been received by the
Agent or such Lender in accordance with Section 9.6.
-----------
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Section 9.11. Substitutions and Assignments. Upon the request of any
------------ -----------------------------
Lender, the Agent and such Lender may, subject to the terms and conditions
hereinafter set forth, take the actions set forth below to substitute one or
more financial institutions having at least $500,000,000 in assets (a
"Substituted Lender") as a Lender or Lenders hereunder having an amount of the
Loans as specified in the relevant Substitution Agreement executed in connection
therewith; provided that no Lender, Selling Lender or Substituted Lender shall
have a Pro Rata Share of the Commitment and the Loans in the aggregate of less
than 25% and Fleet and/or its Affiliates shall retain for their own account at
least 25% of the Term Loan and 25% of the Revolving Credit Loan Commitment.
Section 9.11.1. In connection with any such substitution the
--------------
Substituted Lender and the Agent shall enter into a Substitution Agreement in
the form of Exhibit 9.11.1 hereto (a "Substitution Agreement") pursuant to which
--------------
such Substituted Lender shall be substituted for the Lender requesting the
substitution in question (any such Lender being hereinafter referred to as a
"Selling Lender") to the extent of the reduction in the Selling Lender's portion
of the Loans specified therein. In addition, such Substituted Lender shall
assume such of the obligations of each Selling Lender under the Financing
Documents as may be specified in the Substitution Agreement and this Agreement
shall be amended by execution and delivery of each Substitution Agreement to
include such Substituted Lender as a Lender for all purposes under the Financing
Documents and to substitute for the then existing Exhibit 1.9 to this Agreement
-----------
a new Exhibit 1.9 in the form of Schedule A to such Substitution Agreement
-----------
setting forth the portion of the Loans belonging to each Lender following
execution thereof. Each Lender and the Borrower hereby appoint the Agent as
Agent on its behalf to countersign and accept delivery of each Substitution
Agreement and, to the extent applicable, the provisions of Article 8 hereof
shall apply mutatis mutandis with respect to such appointment and anything done
------- --------
or omitted to be done by the Agent in pursuance thereof. The Agent shall
provide the Borrower with prior written notice of any substitution of any Lender
under this Section 9.11 including the name and Pro Rata Share of the Substituted
------------
Lender.
Section 9.11.2. Without prejudice to any other provision of this
--------------
Agreement, each Substituted Lender shall, by its execution of a Substitution
Agreement, agree that neither the Agent nor any Lender is any way responsible
for or makes any representation or warranty as to: (a) the accuracy and/or
completeness of any information supplied to such Substituted Lender in
connection therewith, (b) the financial condition, creditworthiness, affairs,
status or nature of the Borrower, any of the Stockholders and/or any of the
Subsidiaries or the
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observance by the Borrower, or any other party of any of its obligations under
this Agreement or any of the other Financing Documents or (c) the legality,
validity, effectiveness, adequacy or enforceability of any of the Financing
Documents.
Section 9.11.3. The Agent shall be entitled to rely on any
--------------
Substitution Agreement delivered to it pursuant to this Section 9.11 which is
------------
complete and regular on its face as to its contents and appears to be signed on
behalf of the Substituted Lender which is a party thereto, and the Agent shall
have no liability or responsibility to any party as a consequence of relying
thereon and acting in accordance with and countersigning any such Substitution
Agreement. The effective date of each Substitution Agreement shall be the date
specified as such therein and each Lender prior to such effective date shall,
for all purposes hereunder, be deemed to have and possess all of their
respective rights and obligations hereunder up to 12:00 o'clock Noon on the
effective date thereof.
Section 9.11.4. Upon delivery to the Agent of any Substitution
--------------
Agreement pursuant to and in accordance with this Section 9.11 and acceptance
------------
thereof by the Agent (which delivery shall be evidenced and accepted exclusively
and conclusively by the Agent's countersignature thereon pursuant to the terms
hereof without which such Substitution Agreement shall be ineffective): (i)
except as provided hereunder and in Section 9.11.5, the respective rights of
--------------
each Selling Lender and the Borrower against each other under the Financing
Documents with respect to the portion of the Loans being assigned or delegated
shall be terminated and each Selling Lender and the Borrower shall each be
released from all further obligations to the other hereunder with respect
thereto (all such rights and obligations to be so terminated or released being
referred to in this Section 9.11 as "Discharged Rights and Obligations"); and
------------
(ii) the Borrower and the Substituted Lender shall each acquire rights against
each other and assume obligations towards each other which differ from the
Discharged Rights and Obligations only in so far as the Borrower and the
Substituted Lender have assumed and/or acquired the same in place of the Selling
Lender in question; and (iii) the Agent, the Substituted Lender and the other
Lenders shall acquire the same rights and assume the same obligations between
themselves as they would have acquired and assumed had such Substituted Lender
been an original party to this Agreement as a Lender possessing the Discharged
Rights and Obligations acquired and/or assumed by it in consequence of the
delivery of such Substitution Agreement to the Agent.
Section 9.11.5. Discharged Rights and Obligations shall not include,
--------------
and there shall be no termination or release pursuant to this Section 9.11 of
------------
(i) any rights or obligations
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arising pursuant to any of the Financing Documents in respect of the period or
in respect of payments hereunder made during the period prior to the effective
date of the relevant Substitution Agreement or, (ii) any rights or obligations
relating to the payment of any amount which has fallen due and not been paid
hereunder prior to such effective date or rights or obligations for the payment
of interest, damages or other amounts becoming due hereunder as a result of such
nonpayment.
Section 9.11.6. With respect to any substitution of a
--------------
Substituted Lender taking place after the Closing Date, the Borrower shall issue
to such Substituted Lender and to such Selling Lender, new Notes reflecting the
inclusion of such Substituted Lender as a Lender and the reduction in the
respective Loans of such Selling Lender, such new Notes to be issued against
receipt by the Borrower of the existing Notes of such Lender which shall be
marked "cancelled". The Selling Lender or the Substituted Lender shall pay to
the Agent for its own account an assignment fee in the amount of $3,000 for each
assignment hereunder, which shall be payable at or before the effective date of
the assignment.
Section 9.11.7. Each Lender may furnish to any financial
--------------
institution having at least $500,000,000 in assets which such Lender proposes to
make a Substituted Lender or to a Substituted Lender any information concerning
such Lender, the Borrower, Stockholders and any Subsidiary in the possession of
that Lender from time to time; provided that any Lender providing any
confidential information about the Borrower, any of the Stockholders and/or any
Subsidiary to any such financial institution shall first obtain such financial
institution's agreement to keep confidential any such confidential information.
Section 9.12. Payments Pro Rata. The Agent agrees that promptly
------------ -----------------
after its receipt of each payment from or on behalf of the Borrower in respect
of any obligations of the Borrower hereunder it shall distribute such payment to
the Lenders pro rata based upon their respective Pro Rata Shares, if any, of the
obligations with respect to which such payment was received. Each of the Lenders
agrees that, if it should receive any amount hereunder (whether by voluntary
payment, by realization upon security, by the exercise of the right of setoff
under Section 2.5.2 or otherwise or banker's lien, by counterclaim or cross
-------------
action, by the enforcement of any right under the Financing Documents, or
otherwise), which is applicable to the payment of the Obligations of a sum which
with respect to the related sum or sums received by other Lenders is in a
greater proportion than the total amount of such Obligation then owed and due to
such Lender bears to the total amount of such Obligation then owed and
84
due to all of the Lenders immediately prior to such receipt, except for any
amounts received pursuant to Section 2.2.3, then such Lender receiving such
-------------
excess payment shall purchase for cash without recourse or warranty from the
other Lenders an interest in the Obligations of the Borrower to such Lenders in
such amount as shall result in a proportional participation by all the Lenders
in such amount; provided further, however, that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
Section 9.13 Indemnification. The Borrower irrevocably agrees to and
------------ ---------------
does hereby indemnify and hold harmless Agent and each of the Lenders, their
agents or employees and each Person, if any, who controls any of the Agent and
the Lenders within the meaning of Section 15 of the Securities Act of 1933, as
amended, and each and all and any of them (the "Indemnified Parties"), against
any and all losses, claims, actions, causes of action, damages (excluding
consequential damages) or liabilities (including any amount paid in settlement
of any action, commenced or threatened and any amount described in Section 8.4)
-----------
(collectively, the "Damages"), joint or several, to which they, or any of them,
may become subject under statutory law or at common law, and to reimburse the
Indemnified Parties for any legal or other out-of-pocket expenses reasonably
incurred by it or them in connection with investigating, preparing for or
defending against any of the Indemnified Parties, insofar as such losses,
claims, damages, liabilities or actions arise out of or are related to any act
or omission of the Borrower and/or any Subsidiary with respect to any of the
Related Transactions, this Agreement, any of the Notes, any of Loans and/or any
offering of securities by the Borrower and/or any Subsidiary after the date
hereof and/or in connection with the Securities and Exchange Act of 1933 and/or
failure to comply with any applicable federal, state or foreign governmental
law, rule, regulation, order or decree, including without limitation, any
Damages which arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact with respect to matters relative to any of
the foregoing contained in any document distributed in connection therewith, or
the omission or alleged omission to state in any of the foregoing a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, but excluding any Damages to the
extent arising from or due to the gross negligence or willful misconduct of any
of the Indemnified Parties.
Promptly upon receipt of notice of the commencement of any action, or
information as to any threatened action against any of
85
the Indemnified Parties in respect of which indemnity or reimbursement may be
sought from the Borrower on account of the agreement contained in this Section
-------
9.13, notice shall be given to the Borrower in writing of the commencement or
----
threatening thereof, together with a copy of all papers served, but the omission
so to notify the Borrower of any such action shall not release the Borrower from
any liability which it may have to such Indemnified Parties unless, and only to
the extent that, such omission materially prejudiced Borrower's ability to
defend against such action.
In case any such action shall be brought against any of the
Indemnified Parties, the Borrower shall be entitled to participate in (and, to
the extent that it shall wish, to select counsel and to direct) the defense
thereof at its own expense. Any of the Indemnified Parties shall have the right
to employ its or their own counsel in any case, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless the
employment of such counsel shall have been authorized in writing by the Borrower
in connection with the defense of such action or the Borrower shall not have
employed counsel to have charge of the defense of such action or such
Indemnified Party shall have received an opinion from an independent counsel
that there may be defenses available to it which are different from or
additional to those available to the Borrower (in which case the Borrower shall
not have the right to direct the defense of such action on behalf of such
Indemnified Party), in any of which events the same shall be borne by the
Borrower. If any Indemnified Party settles any claim or action with respect to
which the Borrower has agreed to indemnify such Indemnified Party pursuant to
the terms hereof, the Borrower shall have no liability pursuant to this Section
-------
9.13 to such Indemnified Party with respect to such claim or action unless the
----
Borrower shall have consented in writing to the terms of such settlement.
The provisions of Section 9.13 shall be effective only to the fullest
------------
extent permitted by law.
Section 9.13A. Governing Law. This Agreement and each Note shall be
------------- -------------
governed by, and construed in accordance with, the laws of The Commonwealth of
Massachusetts.
Section 9.14. Severability of Provisions. Any provision of this
------------ --------------------------
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
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Section 9.15. Headings. Article and Section headings in this
------------ --------
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 9.16. Counterparts. This Agreement may be executed and
------------ ------------
delivered in any number of counterparts each of which shall be deemed an
original, and this Agreement shall be effective when at least one counterpart
hereof has been executed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as a sealed instrument by their respective officers thereunto duly
authorized, as of March 14, 1996.
In the presence of: R&D SYSTEMS COMPANY
/s/ XXXXXXX X. XXXXX By: /s/ X X XXXXXXXXXX
---------------------- ------------------------
Name: X X Xxxxxxxxxx
Title: Chief Administrative Officer
In the presence of: FLEET BANK OF MASSACHUSETTS, N.A., as
Agent for the Lenders and as a Lender
/s/ XXXXXXX XXXXXX III By: /s/ XXXXXX X. XXXXX
---------------------- ------------------------
Name: Xxxxxx X. Xxxxx
Title: VP
In the presence of: THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
/s/ XXXXXXX XXXXXX III By: /s/ C. XXXXXXXXXXX XXXXXX
---------------------- ------------------------
Name: C. Xxxxxxxxxx XxXxxx
Title: Director
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