1
EXHIBIT 10.21
LOAN AGREEMENT
BY AND AMONG
BROADWAY & SEYMOUR, INC.,
ELITE INFORMATION SYSTEMS, INC.,
THE MINICOMPUTER COMPANY OF MARYLAND, INC.,
ELITE INFORMATION SYSTEMS INTERNATIONAL, INC.
AND PRAGMATIX TELEPHONY SOLUTIONS, INC.
AND
FLEET NATIONAL BANK, AS AGENT AND A LENDER
AND
THE OTHER FINANCIAL INSTITUTIONS NOW OR
HEREAFTER PARTIES HERETO
$15,000,000 SECURED REVOLVING CREDIT LOAN
JULY 23, 1997
2
INDEX TO
LOAN AGREEMENT
PAGE
----
ARTICLE 1 DEFINITIONS AND ACCOUNTING AND OTHER TERMS.........................1
SECTION 1.1 CERTAIN DEFINED TERMS...................................1
SECTION 1.2 ACCOUNTING TERMS.......................................11
SECTION 1.3 OTHER TERMS............................................12
ARTICLE 2 AMOUNT AND TERMS OF THE LOANS.....................................12
SECTION 2.1 THE LOANS..............................................12
SECTION 2.1.0 THE REVOLVING CREDIT LOANS.............................12
SECTION 2.1.1 MINIMUM ADVANCES.......................................13
SECTION 2.2 INTEREST AND FEES ON THE LOANS.........................13
SECTION 2.2.1 INTEREST...............................................13
SECTION 2.2.2 FEES...................................................14
SECTION 2.2.3 INCREASED COSTS - CAPITAL..............................14
SECTION 2.3 NOTATIONS..............................................15
SECTION 2.4 COMPUTATION OF INTEREST................................15
SECTION 2.5 TIME OF PAYMENTS AND PREPAYMENTS IN IMMEDIATELY
AVAILABLE FUNDS........................................16
SECTION 2.5.1 TIME...................................................16
SECTION 2.5.2 SETOFF, ETC............................................17
SECTION 2.5.3 UNCONDITIONAL OBLIGATIONS AND NO DEDUCTIONS............17
SECTION 2.6 PREPAYMENT AND CERTAIN PAYMENTS........................17
SECTION 2.6.1 MANDATORY PAYMENTS.....................................17
SECTION 2.6.2 VOLUNTARY PREPAYMENTS..................................18
SECTION 2.6.3 PREPAYMENT OF LIBOR LOANS..............................18
SECTION 2.6.4 PERMANENT REDUCTION OF COMMITMENT......................18
SECTION 2.7 PAYMENT ON NON-BUSINESS DAYS...........................18
SECTION 2.8 USE OF PROCEEDS........................................18
SECTION 2.9 SPECIAL LIBOR LOAN PROVISIONS..........................19
SECTION 2.9.1 REQUESTS...............................................19
SECTION 2.9.2 LIBOR LOANS UNAVAILABLE................................19
SECTION 2.9.3 LIBOR LENDING UNLAWFUL.................................20
SECTION 2.9.4 ADDITIONAL COSTS ON LIBOR LOANS........................20
SECTION 2.9.5 LIBOR FUNDING LOSSES...................................21
SECTION 2.9.6 BANKING PRACTICES......................................22
i
3
SECTION 2.9.7 BORROWER'S OPTIONS ON UNAVAILABILITY OR
INCREASED COST OF LIBOR LOANS..........................22
SECTION 2.9.8 ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS..........23
ARTICLE 3 CONDITIONS OF LENDING.............................................23
SECTION 3.1 CONDITIONS PRECEDENT TO THE COMMITMENT AND TO
ALL LOANS..............................................23
SECTION 3.1.1 THE COMMITMENT AND INITIAL LOANS.......................23
SECTION 3.1.2 THE COMMITMENT AND THE LOANS...........................25
ARTICLE 4 REPRESENTATIONS AND WARRANTIES....................................26
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER.........26
SECTION 4.1.1 ORGANIZATION AND EXISTENCE.............................26
SECTION 4.1.2 AUTHORIZATION AND ABSENCE OF DEFAULTS..................26
SECTION 4.1.3 ACQUISITION OF CONSENTS................................27
SECTION 4.1.4 VALIDITY AND ENFORCEABILITY............................27
SECTION 4.1.5 FINANCIAL INFORMATION..................................27
SECTION 4.1.6 NO LITIGATION..........................................27
SECTION 4.1.7 REGULATION U...........................................28
SECTION 4.1.8 ABSENCE OF ADVERSE AGREEMENTS..........................28
SECTION 4.1.9 TAXES..................................................28
SECTION 4.1.10 ERISA..................................................28
SECTION 4.1.11 OWNERSHIP OF PROPERTIES................................28
SECTION 4.1.12 ACCURACY OF REPRESENTATIONS AND WARRANTIES.............29
SECTION 4.1.13 NO INVESTMENT COMPANY..................................29
SECTION 4.1.14 SOLVENCY, ETC..........................................29
SECTION 4.1.15 APPROVALS..............................................29
SECTION 4.1.16 OWNERSHIP INTERESTS....................................29
SECTION 4.1.17 LICENSES, REGISTRATIONS, COMPLIANCE WITH LAWS, ETC.....29
SECTION 4.1.18 PRINCIPAL PLACE OF BUSINESS; BOOKS AND RECORDS.........30
SECTION 4.1.19 SUBSIDIARIES...........................................30
SECTION 4.1.20 COPYRIGHT..............................................30
SECTION 4.1.21 ENVIRONMENTAL COMPLIANCE...............................30
SECTION 4.1.22 MATERIAL AGREEMENTS, ETC...............................31
SECTION 4.1.23 PATENTS, TRADEMARKS AND OTHER PROPERTY RIGHTS..........31
ARTICLE 5 COVENANTS OF THE BORROWER.........................................31
SECTION 5.1 AFFIRMATIVE COVENANTS OF THE BORROWER OTHER
THAN REPORTING REQUIREMENTS ...........................31
SECTION 5.1.1 PAYMENT OF TAXES, ETC..................................31
SECTION 5.1.2 MAINTENANCE OF INSURANCE...............................31
SECTION 5.1.3 PRESERVATION OF EXISTENCE, ETC.........................32
SECTION 5.1.4 COMPLIANCE WITH LAWS, ETC..............................32
SECTION 5.1.5 VISITATION RIGHTS......................................32
SECTION 5.1.6 KEEPING OF RECORDS AND BOOKS OF ACCOUNT................32
SECTION 5.1.7 MAINTENANCE OF PROPERTIES, ETC.........................33
SECTION 5.1.8 POST-CLOSING ITEMS.....................................33
SECTION 5.1.9 OTHER DOCUMENTS, ETC...................................33
SECTION 5.1.10 MINIMUM INTEREST COVERAGE RATIO........................33
SECTION 5.1.11 MINIMUM DEBT SERVICE COVERAGE RATIO....................33
SECTION 5.1.12 MAXIMUM RATIO OF TOTAL INDEBTEDNESS FOR BORROWED
MONEY TO EBITDA........................................33
ii
4
SECTION 5.1.13 OFFICER'S CERTIFICATES AND REQUESTS....................33
SECTION 5.1.14 DEPOSITORY.............................................33
SECTION 5.1.15 CHIEF EXECUTIVE OFFICER................................34
SECTION 5.1.16 NOTICE OF PURCHASE OF REAL ESTATE AND LEASES...........34
SECTION 5.1.17 ADDITIONAL ASSURANCES..................................34
SECTION 5.1.18 APPRAISALS.............................................34
SECTION 5.1.19 ENVIRONMENTAL COMPLIANCE...............................34
SECTION 5.1.20 REMEDIATION............................................34
SECTION 5.1.21 SITE ASSESSMENTS.......................................34
SECTION 5.1.22 INDEMNITY..............................................35
SECTION 5.1.23 TRADEMARKS, COPYRIGHTS, ETC............................35
SECTION 5.1.24 MAINTENANCE OF ESCROW..................................35
SECTION 5.2 NEGATIVE COVENANTS OF THE BORROWER.....................35
SECTION 5.2.1 LIENS, ETC.............................................35
SECTION 5.2.2 ASSUMPTIONS, GUARANTIES, ETC OF INDEBTEDNESS OF
OTHER PERSONS .........................................36
SECTION 5.2.3 ACQUISITIONS, DISSOLUTION, ETC.........................36
SECTION 5.2.4 CHANGE IN NATURE OF BUSINESS...........................37
SECTION 5.2.5 OWNERSHIP..............................................37
SECTION 5.2.6 SALE AND LEASEBACK.....................................37
SECTION 5.2.7 SALE OF ACCOUNTS, ETC..................................37
SECTION 5.2.8 INDEBTEDNESS...........................................37
SECTION 5.2.9 OTHER AGREEMENTS.......................................38
SECTION 5.2.10 [INTENTIONALLY OMITTED]................................38
SECTION 5.2.11 DIVIDENDS, PAYMENTS AND DISTRIBUTIONS..................38
SECTION 5.2.12 INVESTMENTS IN OR TO OTHER PERSONS.....................38
SECTION 5.2.13 TRANSACTIONS WITH AFFILIATES...........................39
SECTION 5.2.14 CHANGE OF FISCAL YEAR..................................39
SECTION 5.2.15 SUBORDINATION OF CLAIMS................................39
SECTION 5.2.16 COMPLIANCE WITH ERISA..................................39
SECTION 5.2.17 [INTENTIONALLY OMITTED]................................39
SECTION 5.2.18 HAZARDOUS WASTE........................................39
SECTION 5.3 REPORTING REQUIREMENTS.................................39
ARTICLE 6 EVENTS OF DEFAULT.................................................41
SECTION 6.1 EVENTS OF DEFAULT......................................41
ARTICLE 7 REMEDIES OF LENDERS...............................................43
ARTICLE 8 AGENT ............................................................44
SECTION 8.1 APPOINTMENT............................................44
SECTION 8.2 POWERS; GENERAL IMMUNITY...............................44
SECTION 8.2.1 DUTIES SPECIFIED.......................................44
SECTION 8.2.2 NO RESPONSIBILITY FOR CERTAIN MATTERS..................44
SECTION 8.2.3 EXCULPATORY PROVISIONS.................................44
SECTION 8.2.4 AGENT ENTITLED TO ACT AS LENDER........................45
SECTION 8.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY
FOR APPRAISAL OF CREDITWORTHINESS .....................45
iii
5
SECTION 8.4 RIGHT TO INDEMNITY.....................................45
SECTION 8.5 PAYEE OF NOTE TREATED AS OWNER.........................46
SECTION 8.6 RESIGNATION BY AGENT...................................46
SECTION 8.7 SUCCESSOR AGENT........................................46
ARTICLE 9 MISCELLANEOUS.....................................................47
SECTION 9.1 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.........47
SECTION 9.2 RIGHTS AND REMEDIES CUMULATIVE.........................47
SECTION 9.3 DELAY OR OMISSION NOT WAIVER...........................48
SECTION 9.4 WAIVER OF STAY OR EXTENSION LAWS.......................48
SECTION 9.5 AMENDMENTS, ETC........................................48
SECTION 9.6 ADDRESSES FOR NOTICES, ETC.............................48
SECTION 9.7 COSTS, EXPENSES AND TAXES..............................49
SECTION 9.8 PARTICIPATIONS.........................................50
SECTION 9.9 BINDING EFFECT; ASSIGNMENT.............................50
SECTION 9.10 ACTUAL KNOWLEDGE.......................................50
SECTION 9.11 SUBSTITUTIONS AND ASSIGNMENTS..........................50
SECTION 9.12 PAYMENTS PRO RATA......................................52
SECTION 9.13 INDEMNIFICATION........................................53
SECTION 9.14 GOVERNING LAW..........................................54
SECTION 9.15 SEVERABILITY OF PROVISIONS.............................54
SECTION 9.16 HEADINGS...............................................54
SECTION 9.17 COUNTERPARTS...........................................54
SECTION 9.18 CO-BORROWER PROVISIONS.................................54
iv
6
SCHEDULE TO EXHIBITS
EXHIBIT 1.4 - FORM OF INTEREST RATE ELECTION
EXHIBIT 1.5 - FORM OF REVOLVING CREDIT NOTE
EXHIBIT 1.8 - PERMITTED ENCUMBRANCES
EXHIBIT 1.9 - PRO RATA SHARES
EXHIBIT 1.10 - FORM OF REQUEST
EXHIBIT 1.12 - PROJECTIONS
EXHIBIT 2.1.0 - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT 3.1.1.8 - PERMITTED INDEBTEDNESS AND CAPITALIZED LEASES
EXHIBIT 3.1.1.10 - FORM OF COMPLIANCE CERTIFICATE
EXHIBIT 4.1.1 - FOREIGN QUALIFICATIONS
EXHIBIT 4.1.2 - AUTHORIZATIONS
EXHIBIT 4.1.3 - CONSENTS
EXHIBIT 4.1.6 - LITIGATION
EXHIBIT 4.1.8 - ADVERSE AGREEMENTS
EXHIBIT 4.1.9 - TAXES
EXHIBIT 4.1.11 - REAL PROPERTY
EXHIBIT 4.1.17 - GOVERNMENTAL PERMITS
EXHIBIT 4.1.20 - COPYRIGHTS
EXHIBIT 4.1.21 - HAZARDOUS WASTE
EXHIBIT 4.1.22 - INVESTMENTS IN OR TO OTHER PERSONS
EXHIBIT 4.1.23 - INTELLECTUAL PROPERTY
EXHIBIT 5.2.2 - GUARANTIES
EXHIBIT 5.2.13 - TRANSACTIONS WITH AFFILIATES
EXHIBIT 9.11.1 - FORM OF SUBSTITUTION AGREEMENT
v
7
LOAN AGREEMENT
Broadway & Seymour, Inc., a Delaware corporation ("Broadway") with a
principal place of business at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000-0000, Elite Information Systems, Inc., a California corporation ("Elite")
with a principal place of business at 0000 Xxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000, The MiniComputer Company, of Maryland, Inc., a
Maryland corporation ("TMC") with a principal place of business at Executive
Plaza I, 00000 XxXxxxxxx Xxxx, Xxxxx 000, Xxxx Xxxxxx, XX 00000-0000, Elite
Information Systems International, Inc., a California corporation ("Elite
International") with a principal place of business at 0000 Xxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Pragmatix Telephony
Solutions, Inc., a North Carolina corporation ("Pragmatix") with a principal
place of business at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000-0000 (Broadway, Elite, TMC, Elite International and Pragmatix are
hereinafter jointly and severally referred to as, the "Borrower"), Fleet
National Bank, a national banking association organized under the laws of the
United States and having an office at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000 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
(sometimes the "Agent" and sometimes "Fleet" and in its capacity as a Lender,
sometimes "Fleet" and sometimes a "Lender") and each of such Lenders, hereby
agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING AND OTHER TERMS
Section 1.1. Certain Defined Terms. As used in this Agreement, the
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
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 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
8
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.
"Adjusted Net Income" means Net Income plus the decrease resulting from
amortization (or minus the increase, as applicable) in Capitalized Software
Development Costs on an after tax basis.
"Advance" and "Advances" means the funding by any Lender of all or a
portion of the Loans in accordance with this Agreement.
"Affiliate" means singly and collectively, any Person (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 10% 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
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
time be amended.
"A.M." means a time from and including 12 o'clock midnight to and
excluding 12 o'clock noon on any Business Day using Eastern Standard (Daylight
Savings) time.
"Applicable Margin" means for each Libor Loan, two and one-half percent
(2.50%) per annum; provided, however, that if, at the end of any calendar
quarter commencing September 30, 1997, the average of the actual daily
outstanding principal balances of the Revolving Credit Loans for the quarterly
period just ended is (i) greater than or equal to $7,500,000 but less than
$11,250,000, and if and so long as no Event of Default or Default exists and is
continuing, the Applicable Margin shall be two and one-quarter percent (2.25%),
or (ii) greater than or equal to $3,750,000 but less than $7,500,000, and if and
so long as no Event of Default or Default exists and is continuing, the
Applicable Margin shall be two percent (2.00%), or (iii) is less than $3,750,000
and if and so long as no Event of Default or Default exists and is continuing,
the Applicable Margin shall 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 lower than 2.50% 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.
The Agent shall send the Borrower written acknowledgment of each change
in the Applicable Margin in accordance with the Agent's customary procedures as
in effect from time to time, but the failure to send such acknowledgment shall
have no effect on the effectiveness or applicability of the foregoing provisions
of this definition or Borrower's obligations with respect to payment and
calculation of interest on Libor Loans.
"Authorized Representative" means such senior personnel of the Borrower
as shall be duly authorized and designated in writing by the Borrower to execute
documents, instruments and
2
9
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, any
Indebtedness evidenced by notes, bonds, debentures, guaranties or similar
obligations 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
Agreement.
"Borrower's Agent" has the meaning assigned to such term in Section
9.18(g).
"Budget" has the meaning assigned to such term in Section 5.3.7.
"Business Condition" means the financial condition, business, and
assets of a Person.
"Business Day" means (i) for all purposes other than as covered by
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
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
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
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
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 company which is
organized under the laws of the United States
3
10
or any state thereof and has capital, surplus and undivided profits aggregating
at least $500,000,000, the outstanding long-term debt of which or of the holding
company of which it is a subsidiary is rated A or better 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, relating to any
of the foregoing instruments and fully collateralized by such instruments;
(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; and (ix) shares of any open-end diversified investment company registered
under the Investment Company Act of 1940, as amended, which maintains a constant
net asset value per share in accordance with regulations of the Securities &
Exchange Commission, has aggregate net assets of not less than $50,000,000 on
the date of purchase and either derives at least 95% of its gross income from
interest on or gains from the sale of investments of the type described in
clauses (i) through (vii), above or has at least 85% of the weighted average
value of its assets invested in investments of such types; 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 $500,000. 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.
"Closing Date" means the date on which all of the conditions precedent
set forth in Section 3.1 of this Agreement have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means the Lenders' several commitments to make or maintain
the Loans as set forth in Section 2.1 hereof in the maximum outstanding amount
of each Lender's Pro Rata Share of $15,000,000 less the reductions set forth in
Section 2.6.4.
"Commonly Controlled Entity" means a Person, whether or not
incorporated, which is under common control with the Borrower within the meaning
of section 414(b) or (c) of the Code.
"Consolidated Tangible Net Worth" means the excess of the total assets
of the Borrower and the Subsidiaries over Consolidated Total Liabilities,
excluding, however, from the determination of total assets Capitalized Software
Development Costs and all assets which would be classified as intangible assets
under GAAP, including, without limitation, goodwill, patents, trademarks, trade
names, copyrights and franchises, all determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Liabilities" means all liabilities of the Borrower
and the Subsidiaries which would, in accordance with GAAP on a consolidated
basis, be classified as liabilities of a corporation conducting a business the
same as or similar to that of the Borrower and any of the Subsidiaries,
including, without limitation, all lease rental payments under Capitalized Lease
4
11
Obligations and fixed prepayments of, and sinking fund payment and reserves with
respect to, Indebtedness.
"Current Liabilities" means all liabilities of the Borrower and the
Subsidiaries which would, in accordance with GAAP on a consolidated basis, be
classified as current liabilities of corporations conducting a business the same
as or similar to that of the Borrower and any Subsidiaries, including without
limitation, all lease rental payments under Capitalized Lease Obligations and
fixed prepayments of, and sinking fund payments and reserves with respect to,
Indebtedness, in each case required to be made within one year from the date of
determination.
"Default" means an event or condition which with the giving of notice
or lapse of time or both would become an Event of Default.
"Discharged Rights and Obligations" shall have the meaning assigned to
such term in Section 9.11.4.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Effective Prime" means the Prime Rate plus one-half percent (.50%);
provided, however, that if, at the end of any calendar quarter commencing
September 30, 1997, the average of the actual daily outstanding principal
balances of the Revolving Credit Loans for the quarterly period just ended is
(i) greater than or equal to $7,500,000 but less than $11,250,000, and if and so
long as no Event of Default or Default exists and is continuing, Effective Prime
shall be the Prime Rate plus one-quarter percent (.25%), or (ii) less than
$7,500,000, and if and so long as no Event of Default or Default exists and is
continuing, Effective Prime shall be the Prime Rate, provided further, however,
that if on any date the Borrower would be entitled to an Effective Prime of the
Prime Rate plus a percent lower than .50% except for the fact that a Default
exists, 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 Effective Prime shall be adjusted or remain the same in accordance
with the provisions of this definition preceding this further proviso.
The Agent shall send the Borrower written acknowledgment of each change
in Effective Prime in accordance with the Agent's customary procedures as in
effect from time to time, but the failure to send such acknowledgment shall have
no effect on the effectiveness or applicability of the foregoing provisions of
this definition or Borrower's obligations with respect to payment and
calculation of interest on Prime Rate Loans.
"Eligible Receivables" means accounts receivable of the Borrower
evidencing Indebtedness of Persons to the Borrower for goods actually sold and
delivered or services actually performed in the ordinary course of business by
the Borrower to or for such Person, as to which goods or services no written
notice has been received by Borrower from such Person that alleges a breach by
the Borrower of its obligation to deliver such goods and/or services and which
accounts receivable have been outstanding for less than ninety (90) days since
their respective invoicing dates, but excluding, however, (i) accounts
receivable owing by officers, directors, shareholders or employees of Borrower,
(ii) accounts receivable with respect to which goods are placed on consignment,
guaranteed sale, "xxxx and hold" or other terms by reason of which the payment
by the account debtor may be conditional, (iii) accounts receivable owing by the
United States or any agency, department or instrumentality thereof unless such
accounts are freely assignable to the Agent under the United States Assignment
of Claims Act and the Borrower has separately assigned each such account to the
Agent in compliance with such Act, (iv) accounts receivable owing by any
Subsidiary or Affiliate of Borrower, (v) accounts receivable with respect
5
12
to which Borrower or any Subsidiary or Affiliate is liable to the account debtor
for goods sold or services provided to Borrower or any Subsidiary or Affiliate
by such account debtor to the extent of Borrower's or any Subsidiary's or
Affiliate's liability to such account debtor, (vi) accounts receivable which are
due and payable to Borrower from an account debtor located outside the United
States of America unless the Agent shall have, in its sole discretion,
specifically approved such receivable, (vii) any accounts receivable as to which
the account debtor has claimed in writing any setoff or any dispute as to the
amount owing by the account debtor to the extent of the amount in dispute,
(viii) any accounts receivable subject to any Lien other than pursuant to the
Security Documents, (ix) any accounts receivable owing by any Person which is
insolvent and/or the subject of any bankruptcy, receivership or other insolvency
proceeding, and (x) any accounts receivable deemed by the Agent in the Agent's
sole discretion exercised in good faith difficult to collect or uncollectible.
"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.
"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 .25% of the Commitment ($37,500).
"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
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 Post-Closing 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.
"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, including, without limitation,
all reimbursement obligations of said Person with respect
6
13
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, 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, (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 account of Fleet 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:
(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;
7
14
(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 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 three (3) 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 (or four (4) Business Days in the case of an Interest Rate Election as
to which the consent of the Lenders is required), 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 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.
"Lender" means Fleet 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.
8
15
"Loans" and "Loan" means at any time the outstanding principal amount
of Indebtedness owed to the Lenders or to any lender, as the context may require
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 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.
"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.
"Net Outstanding Amount of Eligible Receivables" means the net amount
of Eligible Receivables outstanding after eliminating from the aggregate amount
of outstanding Eligible Receivables all payments, adjustments and credits
applicable thereto.
"Note" means any promissory note of the Borrower payable to the order
of a Lender and substantially in the form of Exhibit 1.6 and evidencing all or a
portion of the Loan and "Notes" means all of the Notes, collectively.
"Obligations" means 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 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.
"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.
9
16
"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.
"Post-Closing Letter" means that certain letter agreement between the
Borrower and the Agent dated the Closing Date and listing certain post-closing
actions to be completed by the Borrower.
"Premises" has the meaning assigned to such term in Section 4.1.22.1.
"Prime Rate" means the higher of (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 and (ii) 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.
"Projections" means the Borrower's written projections of Borrower's
1997 performance on a consolidated basis delivered to the Agent prior to the
Closing and attached to this Agreement as Exhibit 1.12.
"Pro Rata Share" means (i) with respect to the Commitment, 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.
"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.
"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.
"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.
"Revolving Credit Loan" means the revolving credit loans to be made by
the Lenders to the Borrower from time to time in the maximum outstanding
principal amount of the Commitment, all subject and pursuant to Section 2.1.0.
"Revolving Credit Loan Formula Amount" means an amount equal to eighty
percent (80%) of the Net Outstanding Amount of Eligible Receivables.
10
17
"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) the
second anniversary of the Closing Date 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 any of the Lenders and/or the
Agent, 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 (fee, 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; security
agreements granting first Liens on all Borrower's and any Subsidiary's fixtures
and tangible and intangible personal property; conditional assignments of
Borrower's and Subsidiary's trademarks; 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 and liability 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 to the Closing Date or subsequent to the Closing Date as may be required
by this Agreement, as any of the foregoing 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.
"Single Employer Plan" means any Plan as defined in Section 4001(a)(15)
of ERISA.
"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.
"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
11
18
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. References to "Articles", "Sections",
"subsections" and "Exhibits" shall be to Sections, subsections and Exhibits and
of this Agreement unless otherwise specifically provided. In this Agreement,
"hereof," "herein," "hereto," "hereunder" and the like mean and refer to this
Agreement as a whole and not merely to the specific section, paragraph or clause
in which the respective word appears; words importing any gender include the
other genders; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to agreements and other contractual
instruments shall be deemed to include subsequent amendments, assignments, and
other modifications thereto, but only to the extent such amendments, assignments
and other modifications are not prohibited by the terms of this Agreement or any
other Financing Document; references to Persons include their respective
permitted successors and assigns or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
ARTICLE 2.
AMOUNT AND TERMS OF THE LOANS
Section 2.1. The Loans.
Section 2.1.0. The Revolving Credit Loans. Each of the Lenders
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 Formula Amount or (ii) such Lender's Pro
Rata Share of the Commitment.
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. Unless Agent shall have been notified by
12
19
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 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.
As soon as is practicable following the close of each month after the
Closing Date and in any event within fifteen (15) days thereafter, the Borrower
will submit to the Agent a borrowing base certificate in the form of Exhibit
2.1.0 or on such other form as the Agent may from time to time prescribe, which
certificate shall contain information adequate to identify accounts receivable
which the Borrower wishes to include in Eligible Receivables. During the
continuance of a Default or Event of Default, the Borrower shall also, if the
Lender so requests, accompany such information with assignments of accounts in
form and substance satisfactory to the Lender which assignments shall give the
Lender full power to collect, compromise or otherwise deal with the assigned
accounts as the sole owner thereof. Concurrently with each of such reports, and
immediately if material in amount, the Borrower shall notify the Lender of each
return or adjustment, rejection, repossession or loss, theft or damage of or to
merchandise represented by Eligible Receivables or any other collateral for any
Indebtedness of the Borrower to the Lender and of any credit, adjustment or
dispute arising in connection with the goods or services represented by Eligible
Receivables. All payments on Eligible Receivables and all adjustments and
credits with respect thereto, whether unilateral, negotiated or otherwise, shall
be immediately reflected in the Net Outstanding Amount of Eligible Receivables.
Section 2.1.1. Minimum Advances. . Each Advance of a Loan
shall be a minimum amount of not less than $25,000.
Section 2.2. Interest and Fees on the Loans.
Section 2.2.1. Interest. Interest shall accrue and be paid
currently 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%); 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.
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)
13
20
outstanding from time to time after the Closing Date, such payments to be made
on the last Business Day of each month of each year commencing July 31, 1997.
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 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 Facility Fee to the Agent for the account of Fleet. In addition, on the
last Business Day of each March, June, September and December commencing
September 30, 1997 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 .25% per annum of the amount, by which the average
actual daily amount of the 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; provided, however, that if, at
the end of any calendar quarter commencing September 30, 1997, the average of
the actual daily outstanding principal balances of the Revolving Credit Loans
for the quarterly period just ended is (i) greater than or equal to $3,750,000
but less than $7,500,000, the Borrower shall pay to the Agent for the pro rata
account of each Lender, a fee in an amount equal to .375% per annum of the
amount by which the average actual daily amount of the Commitment for the
quarterly period just ended exceeds the average of the actual daily outstanding
principal balances of the Revolving Credit Loans or (ii) greater than or equal
to $7,500,000, 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, by which
the average actual daily amount of the Commitment for the quarterly period just
ended exceeds the average of the actual daily outstanding principal balances of
the Revolving Credit Loans (the "Unused Fees").
Section 2.2.3. Increased Costs - Capital. If, after the date
hereof, 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 or such
Lender's holding company 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
14
21
such adoption, change or compliance (taking into consideration the policies of
such Lender or such Lender's holding company with respect to capital adequacy
immediately before such adoption, change or compliance and assuming that the
capital of such Lender or such Lender's holding company 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 as shall
be sufficient to compensate such Lender for such reduced return, each such
payment to be made by the Borrower within five (5) 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 180th
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 conclusive. In determining such amount, such
Lender shall act reasonably and will use any reasonable averaging and
attribution methods. If the Borrower shall, as a result of the requirements of
this Section 2.2.3 above, be required to pay any Lender the additional costs
referred to above 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 at no cost to the Agent to assist the Borrower to locate such
substitute bank. Any such substitution shall take place in accordance with
Section 9.11 and shall 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. 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 Advance
evidenced 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 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 any Note shall be computed on the basis of a year of 360 days for the actual
number of days elapsed for Libor Loans and on the basis of a year of 365 days
for the actual number of days elapsed for Prime Rate Loans.
15
22
Section 2.5. Time of Payments and Prepayments in Immediately Available
Funds.
Section 2.5.1. Time. All payments and prepayments of
principal, 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 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 in accordance with the Agent's customary procedures to give
subsequent notice of any such charge to the Borrower, 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 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 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 use reasonable
efforts to provide notice to the Borrower of such charge in accordance with the
Agent's customary procedures, 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 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 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
16
23
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 Lender(s) before 10:00 o'clock A.M. on the immediately succeeding Business
Day.
Section 2.5.2. Setoff, etc. Regardless of the adequacy of any
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 rights and
remedies (including, without limitation, other rights of setoff) which such
Lender may have and are subject to Section 9.12.
Section 2.5.3. Unconditional Obligations and No Deductions.
The Borrower's obligation to make all payments 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 and regardless of whether any claims, defenses or offsets
of any type exist.
Section 2.6. Prepayment and Certain Payments.
Section 2.6.1. Mandatory Payments.
Section 2.6.1.1. In addition to each other principal
payment required hereunder, the outstanding principal balances of the Revolving
Credit Loans shall be repaid on the Revolving Credit Repayment Date.
Section 2.6.1.2. [Intentionally Omitted]
Section 2.6.1.3. In the event that the Borrower or
any Subsidiary is 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, 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,
or if no Obligations are then outstanding or to the extent that the amount of
such proceeds exceeds the then-outstanding amount of the Obligations, such
proceeds shall be released to the Borrower subject to reasonable procedures and
conditions established by the Agent to the extent necessary to so repair,
replace or restore such property within 3 months (or as soon as reasonably
practicable if such restoration, replacement or repair is not susceptible to
being completed within 3 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 Revolving Credit
Loans
17
24
for the accounts of the Lenders in accordance with their Pro Rata Shares upon
written notice from the Agent.
Section 2.6.1.4. In the event that the Borrower
and/or any Subsidiary sells, assigns or otherwise transfers title to any asset
other than in the ordinary course of its business for net cash proceeds in any
single transaction exceeding $25,000 or in the aggregate since the Closing Date
in excess of $250,000, the Borrower and/or such Subsidiary shall remit 100% of
the net cash proceeds of such sale, assignment or other transfer (but in any
event, not in excess of the outstanding amount of the Obligations) to the Agent
for the accounts of the Lenders in accordance with their Pro Rata Shares to be
applied to the Revolving Credit Loans 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. If at any time the aggregate
principal amount of the Revolving Credit Loans shall exceed the Revolving Credit
Loan Formula Amount, the Borrower shall immediately pay to the Agent in
immediately available Dollars the amount of such excess.
Section 2.6.2. Voluntary Prepayments. All or any portion of
the 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 accounts of the Lenders in
accordance with their Pro Rata Shares 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 $10,000 in excess thereof.
Section 2.6.3. Prepayment of Libor Loans.Notwithstanding
anything 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 2.9 hereof.
Section 2.6.4. Permanent Reduction of Commitment. At the
Borrower's option the Commitment may be permanently and irrevocably reduced in
whole or in part by an amount of at least $100,000 and to the extent in excess
thereof in integral multiples of $10,000 at any time; provided that (i) the
Borrower gives the Agent written notice of the exercise of such option at least
three (3) Business Days prior to the effective date thereof, (ii) the aggregate
outstanding balance of the Revolving Credit Loans, if any, does not exceed the
Commitment, 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 reduction shall
concurrently reduce the Dollar amount of each Lender's Pro Rata Share of the
Commitment.
Section 2.7. Payment on Non-Business Days. Whenever any payment to be
made 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 Revolving Credit Loans for Borrower's working capital needs and for
Investments permitted by Section 5.2.12.
18
25
Section 2.9. Special Libor Loan Provisions. The Libor Loans shall be
subject to and governed by the following terms and conditions:
Section 2.9.1. Requests. Each Request accompanied by an
Interest 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 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,
(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. After receipt of such notice, the Agent shall
promptly forward written notice thereof to 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.
19
26
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. After receipt of such notice, the Agent shall
promptly forward written notice thereof 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.
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 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
20
27
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 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 10 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 conclusive. In determining any such
amount, the Lender(s) may use any reasonable averaging and attribution methods.
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 one hundred and eightieth (180th) 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 one hundred and eighty (180) 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 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 end of the then current Interest
Period, at which time the Agent shall apply such payment or prepayment, for the
accounts of the Lenders in accordance with their Pro Rata Shares, to the
outstanding Libor Loans. Notwithstanding the foregoing, in the event any of the
Lenders shall incur any loss or expense (including, without limitation, any loss
or 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
21
28
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 such amount as will (in the reasonable
determination of such Lender, which shall be correct in the absence of manifest
error) reimburse such Lender for such loss or expense. 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
Increased 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 2.2.3, 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 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
22
29
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 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
assumption shall be utilized solely for the calculation of amounts payable under
this Section 2.9.
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 that 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:
Section 3.1.1.1. The Financing Documents, including,
without limitation, those hereinafter set forth and the Borrower's and any
Subsidiary's certificate of incorporation or other organizational documents.
Section 3.1.1.2. Certificate of the secretary of the
Borrower and each Subsidiary certifying as to the resolutions of the
shareholders or board of directors of the
23
30
Borrower and each Subsidiary authorizing and approving each of the Financing
Documents to which the Borrower and each Subsidiary is a party and other matters
contemplated hereby and certifying as to the names and signatures of the
Authorized Representative(s) of the Borrower and each Subsidiary authorized to
sign each Financing Document to be executed and delivered by or on behalf of the
Borrower and each Subsidiary. The Agent and the Lenders may conclusively rely on
each such certificate until the Agent shall receive a further certificate
canceling 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 Xxxxxxxx,
Xxxxxxxx & Xxxxxx, 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 except to the extent any such representation or warranty
speaks as of a date other than the Closing Date, in which case such
representation or warranty is correct 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. Certificates of good standing or
legal existence of the secretaries of state of the states of organization and
qualification of and covering the Borrower and any Subsidiaries dated reasonably
near the Closing Date.
Section 3.1.1.6. [Intentionally omitted].
Section 3.1.1.7. [Intentionally omitted].
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 any Subsidiary 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 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 any Subsidiary 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 (for which such financial
information is then available), adjusted to give effect to the Loans made on the
Closing
24
31
Date and completion of the Related Transactions to be completed 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, and other
information provided pursuant to Section 4.1.5 and certification by the Borrower
of the Projections.
Section 3.1.1.13. Certificates of fire, business
interruption, liability and extended coverage insurance policies, each such
policy to name the Agent as mortgagee and loss payee and, on all liability
policies, as additional insured.
Section 3.1.1.14. True descriptions of any pending or
threatened litigation against or by Borrower or any Subsidiary.
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.
Section 3.1.1.16. The financial statements described
in Section 4.1.5. 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 the date of the Borrower's most recent audited financial statements
delivered to the Lenders 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. A true copy of the Price Waterhouse
management letter for the period ending December 31, 1996.
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 for any representations and warranties that speak
as of a date other than the Closing Date and except as altered hereafter by
actions not prohibited hereunder. The Borrower's delivery of each Note to the
Lenders and of each Request to the Agent shall be deemed to be a representation
and warranty to such effect by the Borrower as of the date thereof.
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 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:
25
32
(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 of each Request to the Agent 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 Sections 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, 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 is
duly qualified to do business in all jurisdictions in which such qualification
is required, all as noted on Exhibit 4.1.1, except where failure to so qualify
would not 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.
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 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), order, writ, judgment, injunction, decree,
determination 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 other agreement, lease or instrument to which the Borrower
and/or any Subsidiary is or are a party or parties or by which it or they or its
or their properties may be bound or affected; or (iv) result in, or require, the
26
33
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, order, writ, judgment, injunction, decree, determination or award or
any such indenture, other agreement, lease or instrument, except where the
failure to be in compliance does not have a Material Adverse Effect.
Section 4.1.3. Acquisition of Consents. Except as noted on
Exhibit 4.1.3, no 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 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, 1995 and December 31, 1996;
and
Section 4.1.5.2. The Projections.
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
Section 4.1.5.1 fairly presents the financial condition 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,
will (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.
27
34
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.
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 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 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. Neither Borrower nor any Commonly
Controlled Entity maintains, 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,
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
could not 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.
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.
28
35
Section 4.1.11.4. Except as set forth in Exhibit
4.1.11, 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 and any Budget and Projections speak as of the dates prepared.
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 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 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 from all Persons including without limitation all
governmental authorities with respect to the Borrower's execution, delivery and
performance of the Financing Documents have been obtained.
Section 4.1.16. Ownership Interests. The schedule of ownership
interests in the Borrower (excluding, for the purposes of this Section 4.1.16
only, Broadway & Seymour, Inc.) and any Subsidiaries set forth in Exhibit 1.1 is
true, accurate and complete.
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
as 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 authorizations, licenses and permits are in full
force and effect, are
29
36
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.
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 current 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 only the
Subsidiaries identified on Exhibit 1.1.
Section 4.1.20. Copyright. 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 filed all
registration statements, notices and statements of account and all necessary
supplements and adjustment schedules thereto with the United States Copyright
Office and has made all payments to the United States Copyright Office that are
required. 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. The Borrower
has received no notice of and has no actual knowledge of any inquiries regarding
any such filings having been received by the Copyright Office. The Borrower has
not allocated revenues in any manner inconsistent with the rules and regulations
of 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 facilities owned, leased or used 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 any of 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, or any other property which was included in the property
description of the Premises or such other real property within the preceding
three years except as disclosed to the Agent.
30
37
Section 4.1.22. Material Agreements, etc. All of the material
agreements to which Borrower or any Subsidiary is a party, 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 patents of the Borrower and/or any of the
Subsidiaries, and pending applications therefor. 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.
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 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 could not result in 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) $3,000,000 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 $1,000,000. 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 mortgagee 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 One Million Dollars ($1,000,000) per
accident, together with an excess liability policy in the amount of Six Million
Dollars ($6,000,000) 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.
31
38
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 later than the
expiration date of the policy to be renewed or replaced, accompanied by evidence
satisfactory to the Agent that all premiums then due and 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 upon the occurrence of a Default or an Event of
Default 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, 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 in accordance with reasonable
procedures established by the Agent 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 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 judgment,
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.
Notwithstanding the foregoing, any Borrower may merge into any other Borrower
upon written 15 days' prior written notice to the Agent and execution and
delivery of any Financing Documents reasonably requested by Agent to ensure
perfection and priority of Liens granted to the Agent on the Borrower's assets.
Section 5.1.4. Compliance with Laws, etc. Comply with the
requirements of all present and future applicable laws, rules, regulations and
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 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
Borrower's cost and expense) 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 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
32
39
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.
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; 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 Consolidated Tangible Net Worth.
Maintain a Consolidated Tangible Net Worth in an amount not less than the sum of
(i) $17,500,000 plus (ii) eighty-five percent (85%) of Adjusted Net Income for
the period beginning as of the Closing Date without any reduction for losses
plus (iii) eighty-five (85%) percent of the gross proceeds of any offering or
sale of a security, note or other instrument of the Borrower or any Subsidiaries
after the Closing Date, to be measured at each Borrower fiscal quarter end on a
cumulative basis from the Closing Date.
Section 5.1.11. Minimum Quick Ratio. Maintain at the end of
each fiscal quarter of the Borrower a ratio of (i) the sum of (w) cash on hand
or on deposit in any bank or trust company which has not suspended business, (x)
Cash Equivalent Investments (without duplication with (w)) and (y) net
outstanding amount of accounts receivable to (ii) (x) Current Liabilities plus
the outstanding amount of the Revolving Credit Loan less the amount of any
deferred revenue of not less than 1.25:1.00. Each item described in clauses (i)
and (ii) of this Section 5.1.11 shall be calculated as of the last day of the
Borrower fiscal quarter and include only the item(s) in question of the Borrower
and its Subsidiaries on a consolidated basis.
Section 5.1.12. Maximum Ratio of Consolidated Total
Liabilities to Consolidated Tangible Net Worth. Maintain at the end of each
fiscal quarter of the Borrower a ratio of (i) Consolidated Total Liabilities as
of the last day of such fiscal quarter less the amount of any deferred revenue
to (ii) Consolidated Tangible Net Worth of not greater than 1.25:1.00.
Section 5.1.13. Minimum Adjusted Net Income. Maintain a
Minimum Adjusted Net Income at each Borrower fiscal quarter end for the
immediately preceding Borrower fiscal quarter, in an amount not less than (i)
$125,000 for the Borrower fiscal quarter ending June 30, 1997 and (ii)
$1,000,000 thereafter. Maintain a Minimum Adjusted Net Income at each Borrower
fiscal year end for the immediately preceding Borrower fiscal year in an amount
not less than (i) $2,500,000 for the Borrower fiscal year ending December 31,
1997 and (ii) $4,000,000 thereafter.
Section 5.1.14. 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.
33
40
Section 5.1.15. Depository. Use the Agent as a depository of
Borrower's funds.
Section 5.1.15. Chief Executive Officer. Maintain Xxxx X.
Xxxxxxxx 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 reasonably satisfactory to the Majority Lenders 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,
mortgage, assignment or other document, 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, provided that the Borrower may enter into leases having terms not to
exceed one year for aggregate rentals not to exceed $5,000 per month without
complying with the foregoing provisions of this Section 5.1.16.
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. Permit the Agent and its agents,
at any time and in the sole discretion of the Agent or at the request of the
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 to the extent required by
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
34
41
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
(including without limitation consequential damages), 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 (among other events), 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 trademark, tradename, copyright, patent or service xxxx
collaterally assign and grant a first priority perfected 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 about
the Closing Date by and among Borrower and Fort Xxxx Escrow Services, Inc. and
the Agent, 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
35
42
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 5.2.1.3. 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.
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 (other than a Borrower), 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,
36
43
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, 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 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)
consideration not to exceed $5,000,000 and any Borrower may merge into another
Borrower upon compliance with Section 5.1.3. At the time of any such acquisition
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. Upon acquisition of
any Subsidiary of which the Borrower owns at least 80% of the ownership
interests, such Subsidiary shall become a Borrower and all parties to this
Agreement shall execute and deliver such Financing Documents as the Agent may
request to cause such Subsidiary to become a Borrower with all obligations and
rights then possessed by any other Borrower. 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, 5.1.12 and 5.1.13 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. [Intentionally Omitted].
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;
37
44
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 $500,000; 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 not otherwise
permitted hereunder 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.
Section 5.2.8.8. Indebtedness outstanding as a
refinancing of Indebtedness permitted under another clause of this Section 5.2.8
other than Sections 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 its certificate of incorporation, if any, any subordination
agreement or any indenture, agreement, document, note or other instrument
evidencing, securing or relating to any other Indebtedness permitted under
Section 5.2.8.
Section 5.2.10. [Intentionally Omitted].
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.
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 $20,000 in the aggregate outstanding for any one employee
and not to exceed $250,000 in the aggregate outstanding at any one time to all
such employees, (ii) other employee loans not to exceed $150,000 in the
aggregate outstanding at any one time to all such employees, (iii) Cash
Equivalent Investments, (iv),
38
45
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 (v) Investments described on Exhibit 5.2.12.
Section 5.2.13. Transactions with Affiliates. 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 or 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 (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 sections 412 and/or 418 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 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
liability of the Borrower or any Commonly Controlled Entity, (e) permit the
assets held under any Plan to be insufficient to protect all accrued benefits,
(f) 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 (g) cause
or permit any Plan maintained by Borrower and/or any Commonly Controlled Entity
to be out of compliance with ERISA. For purposes of this Section 5.2.16
"material liability" shall be deemed to mean any liability of Fifty Thousand
Dollars ($50,000) or more in the aggregate.
Section 5.2.17. [Intentionally Omitted].
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:
39
46
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;
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 consolidated 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, as soon as same is provided to the Borrower (but in
any event, not later than 30 days after transmittal of the above financial
information to Agent), and to contain a statement to the effect that such
accountants have examined this Agreement and that no Default or Event of Default
exists on account of Borrower's failure to have been in compliance with Sections
5.1.10 through 5.1.13 on the date of such statement;
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,
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 prepared 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, agency or instrumentality, domestic or
foreign, affecting the Borrower and/or any Subsidiary;
Section 5.3.6. The borrowing base certificates required
pursuant to Section 2.1 hereof;
Section 5.3.7. On or before January 31 of each fiscal year of
the Borrower, an updated proposed income statement and balance sheet budget,
prepared on a quarterly basis, and updated financial projections for the
Borrower and any Subsidiaries on a consolidated basis
40
47
(together, the "Budget") for such fiscal year, setting forth in detail
consistent with the Borrower's past practices 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 and within 30
days after making any material revision to a Budget, a copy of such revision;
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 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 (as reasonably determined by the Borrower) 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 or expected occurrence of any
Reportable Event with respect to any Plan, or (ii) the institution of
proceedings or the taking or expected 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 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;
41
48
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 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 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 thirty (30) 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 exceeding in the
aggregate $10,000 (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, 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 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 of this
Agreement or under any covenant, representation or warranty contained in any of
the Security Documents for which no cure period is provided in such Security
Document; 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, 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 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
42
49
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 $10,000, 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 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.
43
50
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
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.
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 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
44
51
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 National Bank in its individual
capacity as a Lender hereunder. With respect to its participation in the Loans
and the Commitment, Fleet National Bank shall have the same rights and powers
hereunder as any other Lender and may exercise the same as though it were not
performing the 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 National Bank 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 for
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
45
52
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 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 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
46
53
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.
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 The Commonwealth of Massachusetts as its registered agent, and, in
the absence thereof, the Secretary of State of The Commonwealth of Massachusetts
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
47
54
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.
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 willful 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. 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
48
55
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:
c/o Broadway & Seymour, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
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, Xxxxxxxx & Xxxxxx, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: (000) 000-0000
If to Fleet National Bank as the Agent and/or a Lender:
Xxxxxxx X. Xxxxxxx, Assistant Vice President
Fleet National Bank
00 Xxxxx Xxxxxx, Xxxx Xxxx XX BO F04M
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy No: (000)-000-0000
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, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx III, Esquire
Telecopy No: (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 not to exceed $25,000, of
Messrs. Xxxxxxxx, Xxxxx & Xxxxxx, counsel for the Agent and of any local counsel
retained by the Agent in connection with the preparation, execution and delivery
(excluding expenses of any Lender's sale of a
49
56
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 Sections 2.2.3 or
2.9.7) of the Financing Documents and the Loans and the reasonable fees and
out-of-pocket expenses of Agent's counsel and any local counsel incurred
subsequent to the Closing Date in connection with the administration of the
Financing Documents and the Loans. 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.
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 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.
Section 9.11. Substitutions and Assignments. Upon the request of any
Lender, the Agent and such Lender may assign all or any portion of its Pro Rata
Share of the Commitment and the
50
57
Loans to a Federal Reserve Bank and 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 National Bank and/or its Affiliates shall retain for their
own account at least 66.67% of the 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 such 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.
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 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
51
58
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 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. 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 due to
all of the Lenders immediately prior to
52
59
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 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 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 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
53
60
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 9.14. Governing Law. This Agreement and each Note shall be
governed by, and construed in accordance with, the laws of The Commonwealth of
Massachusetts without regard to such state's conflict of laws rules.
Section 9.15. 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.
Section 9.16. 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 9.17. 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.
Section 9.18. Co-Borrower Provisions.
(a) Consents. Each Borrower, as the guarantor of the
Obligations directly incurred by the other Borrowers authorizes Agent, without
giving notice to such Borrower or obtaining such Borrower's consent and without
affecting the liability of such Borrower for the Obligations directly incurred
by the other Borrower, from time to time to:
(i) compromise, settle, renew, extend the time for
payment, change the manner of terms of payment, discharge the performance of,
decline to enforce, or release all or any of the Obligations; grant other
indulgences to the other Borrower in respect thereof; or modify in any manner
any documents relating to the Obligations;
(ii) declare all Obligations due and payable upon the
occurrence and during the continuance of an Event of Default;
(iii) take and hold security for the performance of
the Obligations of the other Borrower and exchange, enforce, waive and release
any such security;
(iv) apply and reapply such security and direct the
order or manner of sale thereof as Agent, in its sole discretion, may determine;
(v) release, surrender or exchange any deposits or
other property securing the Obligations or on which Agent at any time may have a
lien; release, substitute or add any one or more endorsers or guarantors of the
Obligations of the other Borrower of such Borrower; or compromise, settle,
renew, extend the time for payment,
54
61
discharge the performance of, decline to enforce, or release all or any
obligations of any such endorser or guarantor or other Person who is now or may
hereafter be liable on any Obligations or release, surrender or exchange any
deposits or other property of any such Person;
(vi) apply payments received by Agent from either
Borrowers to any Obligations, in such order as Agent shall determine, in its
sole discretion; and
(vii) assign this Agreement in whole or in part.
(b) Waivers. Each Borrower, as the guarantor of the
Obligations directly incurred by the other Borrower, but without affecting its
liability as a primary obligor for that portion of the Obligations for which it
is the Borrower, waives:
(i) any defense based upon any legal disability or
other defense of the other Borrower, or by reason of the cessation or limitation
of the liability of the other Borrower form any cause (other than full payment
of all Obligations), including, but not limited to, failure of consideration,
breach of warranty, statute of frauds, statue of limitations, accord and
satisfaction, and usury;
(ii) any defense based upon any legal disability or
other defense of any guarantor or other Person;
(iii) any defense based upon any lack of authority of
the officers, directors, partners or agents acting or purporting to act on
behalf of any other Borrower or any principal of the other Borrower or any
defect in the formation of the other Borrower or any principal of any other
Borrower;
(iv) any defense based upon the application by any
other Borrower of the proceeds of the Loans for purposes other than the purposes
represented by any other Borrower to Agent or intended or understood by Agent or
such Borrower;
(v) any defense based on such Borrower's rights,
under statute or otherwise, to require Agent to xxx the other Borrower or
otherwise to exhaust its rights and remedies against the other Borrower or any
other Person or against any collateral before seeking to enforce its right to
require such Borrower to satisfy the Obligations of the other Borrower;
(vi) any defense based on Agent's failure at any time
to require strict performance by any Borrower of any provision of the Financing
Documents. Such Borrower agrees that no such failure shall waive, alter or
diminish any right of Agent thereafter to demand strict compliance and
performance therewith. Nothing contained herein shall prevent Agent from
foreclosing on the Lien of any security agreement, or exercising any rights
available to Agent thereunder, and the exercise of any such rights shall not
constitute a legal or equitable discharge of such Borrower;
(vii) any defense arising from any act or omission of
Agent which changes the scope of such Borrower's risks hereunder;
(viii) any defense based upon Agent's election of any
remedy against such Borrower or the other Borrower or both; any defense on the
order in which Agent enforces its remedies;
55
62
(ix) any defense based on (A) Agent's surrender,
release, exchange, substitution, dealing with or taking any additional
collateral, (B) Agent's abstaining from taking advantage of or realizing upon
any Lien or other guaranty, and (C) any impairment of collateral securing the
Obligations, including, but not limited to, Agent's failure to perfect or
maintain a Lien in such collateral;
(x) any defense based upon Agent's failure to
disclose to such Borrower any information concerning the other Borrower's
financial condition or any other circumstances bearing on the other Borrower's
ability to pay the Obligations;
(xi) any defense based upon any statute or rule of
law which provides that the obligation o a surety must be neither larger in
amount nor in any other respects more burdensome than that of a principal;
(xii) any defense based upon Agent's election, in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code or any successor statute;
(xiii) any defense based upon any borrowing or any
grant of a security interest under Section 364 of the Bankruptcy Code;
(xiv) any defense based on Agent's failure to be
diligent or to satisfy any other standard imposed on a secured party in
exercising rights with respect to collateral securing the Obligations;
(xv) notice of acceptance hereof; notice of the
existence, creation or acquisition of any obligation; except as provided herein,
notice of any Event of Default; notice of the amount of the Obligations
outstanding from time to time; notice of any other fact which might increase
such Borrower's risk; diligence; presentment; demand of payment; protest; filing
of claims with a court in the event of the other Borrower's receivership or
bankruptcy and all other notices and demands to which such Borrower might
otherwise be entitled (and agrees the same shall not have to be made on the
other Borrower as a condition precedent to such Borrower's obligations
hereunder);
(xvi) any defense based on errors and omissions by
Agent in connection with its administration of the Loans, other than those
caused by the Agent's gross negligence or willful misconduct;
(xvii) any defense based on application of fraudulent
conveyance or transfer law or shareholder distribution law to any of the
Obligations or the security therefor;
(xviii) any defense based on Agent's failure to seek
relief from stay or adequate protection in another Borrower's bankruptcy
proceeding or any other act or omission by Agent which impairs such Borrower's
prospective subrogation rights; and
(xix) any defense based on legal prohibition of
Agent's acceleration of the maturity of the Obligations during the occurrence of
an Event of Default or any other legal prohibition on enforcement of any other
right or remedy of Agent with respect to the Obligations and the security
therefor.
56
63
(c) Additional Waivers. Each Borrower authorizes Agent to
exercise, in its sole discretion, any right, remedy or combination thereof which
may then be available to Agent, since it is such Borrower's intent that the
Obligations be absolute, independent and unconditional obligations of such
Borrower under all circumstances. Without limiting the generality of the
foregoing or any other provision hereof, each Borrower expressly waives all
benefits which might otherwise be available to such Borrower under California
Civil Code Sections 2809, 2810, 2815, 2819, 2822, 2839, 2845, 2848, 2849, 2850,
2899 and 3433 and California Code of Civil Procedure Sections 580 and 726, as
those statutory provisions are now in effect and hereafter amended, and under
any other similar statutes now and hereafter in effect deemed applicable to such
Borrower's guaranty of the Obligations directly incurred by any other Borrower
and Agent's enforcement of such guaranty. Notwithstanding any foreclosure of any
Lien with respect to any or all of any property securing the Obligations,
whether by the exercise of the power of sale contained therein, by an action for
judicial foreclosure or by an acceptance of a deed in lieu of foreclosure, each
Borrower shall remain bound under such Borrower's guaranty of the Obligations
directly incurred by the other Borrower.
(d) Subrogation Waiver. Notwithstanding anything to the
contrary contained herein, each Borrower hereby irrevocably waives, and shall
not seek to exercise, until after indefeasible payment in full in cash of the
Obligations, all of the following rights that it may have against any other
Borrower, any guarantor, or any collateral provided by any other Borrower or any
other guarantor, for any amounts paid by such Borrower, or any acts performed by
such Borrower hereunder, in each case, arising under or in respect of the
Financing Documents: (i) subrogation (including all rights arising under
Bankruptcy Code ss.409 and California Civil Code ss.ss.2848 and 2849, as now and
hereafter in effect), (ii) reimbursement (including all rights arising under
Bankruptcy Code ss.502(e) and California Civil Code ss.2847, as now and
hereafter in effect), (iii) performance (including all rights arising under
California Civil Code ss.2846, as now and hereafter in effect, (iv)
indemnification or contribution (including all rights to indemnification or
contribution arising under Bankruptcy Code ss.502(e), as now and hereafter in
effect), (v) participation in a claim, and (vi) all similar right arising under
a contract, in equity, common law, statutes or otherwise.
(e) Subordination of Claims. All present and future debts and
other obligations of the borrowers to each other are hereby postponed in favor,
and subordinated to the full indefeasible payment in cash, of the Obligation. No
payments in respect of any such intra-Borrower indebtedness may be made until
all Obligations are indefeasibly paid in full in cash.
(f) Primary Obligations. This Agreement is a primary and
original obligation of each Borrower and each Borrower shall be liable for all
existing and future Obligations of the other Borrower as fully as if such
Obligations were directly incurred by such Borrower.
(g) Borrower's Agent. Each Borrower hereby irrevocably
designates Broadway as Borrower's Agent and hereby authorizes Borrower's Agent
to act under the Financing Documents as their respective Borrower's Agent
hereunder and thereunder, respectively. Each Borrower hereby irrevocably
authorizes Borrower's Agent to take such action on each such Borrower's behalf,
including, without limitation, to execute and deliver the Financing Documents
and associated schedules and/or exhibits and to exercise such powers hereunder
and under the Financing Documents and other instruments and agreements referred
to herein, together with such powers as are necessarily incidental thereto.
57
64
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 July 23, 1997.
Attest: Broadway & Seymour, Inc.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
-------------------------- --------------------------------
Xxxx X. Xxxxxxxx, President
Attest: Elite Information Systems, Inc.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
-------------------------- --------------------------------
Xxxx X. Xxxxxxxx, Executive Vice
President
Attest: The MiniComputer Company of Maryland, Inc.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
-------------------------- --------------------------------
Xxxx X. Xxxxxxxx, Executive Vice
President
Attest: Elite Information Systems International, Inc.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
-------------------------- --------------------------------
Xxxx X. Xxxxxxxx, Executive Vice
President
Attest: Pragmatix Telephony Solutions, Inc.
/s/ Xxxxxxx Xxxxxx By: /s/ Xxxx X. Xxxxxxxx
-------------------------- --------------------------------
Xxxx X. Xxxxxxxx, President
Attest: Fleet National Bank, as Agent for the
Lenders and as a Lender
By:
-------------------------- --------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Vice President
58
65
STATE OF NORTH CAROLINA
COUNTY OF MECKLENBURG
This 22nd day of July, 1997, personally came before me Xxxx X.
Xxxxxxxx, who, being by me duly sworn, says that he is the President of Broadway
& Seymour, Inc., a Delaware corporation, the Executive Vice President of Elite
information Systems, Inc., a California corporation, the Executive Vice
President of The MiniComputer Company of Maryland, Inc., a Maryland corporation,
Executive Vice President of Elite Information Systems, International, Inc., a
California corporation, and the President of Pragmatix Telephony Solutions,
Inc., a North Carolina corporation and that the seal affixed to the foregoing
instrument in writing on behalf of each such corporation is the corporate seal
of the corporation in question, and that said writing was signed and sealed by
him, in behalf of each of said corporations, each by its authority duly given.
And the said President and Executive Vice President acknowledged the said
writing to be the act and deed of each of said corporations.
/s/ Xxxxx Xxxxxxx Xxxxx
----------------------------
Notary Public
My commission expires:
October 16, 1999
----------------------------
[NOTARIAL SEAL]
59
66
EXHIBIT 1.4 - FORM OF INTEREST RATE ELECTION
Date:
Fleet National Bank
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
Telecopy: (000) 000-0000
Re: Interest Rate Election
Gentlemen:
Reference is made to that certain Loan Agreement, dated as of July 23,
1997 by and among the undersigned, you, and the Lenders, (the "Loan Agreement").
Capitalized terms used herein shall have the same meaning as in the Loan
Agreement.
The undersigned hereby elects, pursuant to the Loan Agreement, that the
[Libor Rate or Effective Prime] shall be the interest rate applicable to that
certain [outstanding] Loan [requested pursuant to the Request attached hereto]
in the principal amount of and no/100 Dollars ($ ). [The Interest Adjustment
Date for said Loan is .] [Complete only for continuation of Libor Loan or
conversion of Prime Rate Loan to a Libor Loan.]
The undersigned hereby elects an Interest Period for such Loan of []
months. [Complete only if electing Adjusted Libor Rate].
The undersigned hereby certifies to the Lenders that as of the date
hereof:
A. No Event of Default and no Default has occurred and is continuing;
and
B. The representations and warranties of the Borrower contained in
Article 4 of the Loan Agreement and/or in any of the other Financing Documents
are true and correct in all material respects except as altered by actions
permitted under the Loan Agreement.
Broadway & Seymour, Inc.,
as Borrower's Agent for the
Borrower and a Borrower
By:
----------------------------
Name: []
Title: []
60
67
cc: Fleet National Bank
Mailstop MA BOF04M
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx,
Assistant Vice President
61
68
EXHIBIT 1.5 - FORM OF REVOLVING CREDIT NOTE
REVOLVING CREDIT NOTE
_________, 19__
[Insert Maximum Amount of
Lender's Pro Rata Share of
Revolving Credit Loan
Commitment]
FOR VALUE RECEIVED, Broadway & Seymour, Inc., a Delaware corporation
"Broadway"), Elite Information Systems, Inc., a California corporation
("Elite"), The MiniComputer Company of Maryland, Inc., a Maryland corporation
("TMC"), Elite Information Systems International, Inc., a California corporation
("Elite International"), Pragmatix Telephony Solutions, Inc., a North Carolina
corporation ("PRAGMATIX") each with a principal place of business at 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000 (Broadway, Elite, TMC, Elite
International and PRAGMATIX are hereinafter jointly and severally referred to
as, the "Borrower"), promises to pay to the order of [insert name of Lender], [a
national banking association organized and existing under the laws of the United
States of America] [a _________ banking corporation _____________] (the
"Lender"), at the Lender's head office located at [insert address] or to Fleet
National Bank or any successor agent under the Loan Agreement (defined below)
(the "Agent") in accordance with the Loan Agreement (defined below), the lesser
of (i) the principal sum of [insert Lender's Pro Rata Share of the Commitment]
($__________.00), or (ii) the aggregate unpaid principal amount of all advances
of funds under the Revolving Credit Loan made by the Lender to the Borrower or
by the Lender through the Agent to the Borrower pursuant to that certain Loan
Agreement dated as of the date hereof by and among the Borrower, the Agent, the
other Lenders party thereto and the Lender, as the same may be amended (the
"Loan Agreement").
The Borrower shall pay in full all unpaid principal, interest, fees and
other amounts due under this Note on the Revolving Credit Repayment Date.
The Borrower promises to pay to the order of the Lender interest before
and after maturity on the principal amount of this Note outstanding from time to
time from the date hereof until payment in full of all principal, interest, fees
and other sums due under this Note in accordance with the Loan Agreement.
Upon the occurrence and during the continuance of any Event of Default,
each Loan evidenced by this Note shall bear interest, payable on demand, at a
floating interest rate per annum equal to two percent (2.0%) above Effective
Prime and no Interest Rate Election electing the Libor Rate shall be effective.
In addition, in the event that the Borrower fails to pay any amount of principal
or interest hereof within ten (10) days after such payment is due, the Borrower
shall pay to the Lender upon demand by the Agent or the Lender, a late charge in
an amount equal to five percent (5%) of such amount of principal or interest.
Principal, interest, fees and other sums are payable in immediately
available Dollars to the Agent at its address set forth in the Loan Agreement or
as otherwise directed in writing from the Agent to the Borrower.
62
69
This Note is one of the Revolving Credit Notes referred to in, and is
entitled to the benefits of, the Loan Agreement. The applicable terms and
provisions of the Loan Agreement are incorporated herein by reference as if
fully set forth herein. In the event of any conflict between any provision of
this Note and any provision(s) of the Loan Agreement, such provision(s) of the
Loan Agreement shall control. Each capitalized term used in this Note and not
expressly defined in this Note shall have the meaning ascribed to such term in
the Loan Agreement. The Loan Agreement, among other things, contains provisions
for acceleration of the maturity of this Note upon the happening of certain
stated events and also for prepayments on account of principal of this Note
prior to the maturity of this Note upon the terms and conditions specified in
the Loan Agreement.
This Note is secured by the Security Documents.
If this Note shall not be paid when due and shall be placed by the
holder hereof in the hands of an attorney for collection, through legal
proceedings or otherwise, the Borrower will pay reasonable attorneys' fees to
the holder hereof together with reasonable costs and expenses of collection.
All provisions of this Note and any other agreements between the
Borrower and the Lender are expressly subject to the condition that in no event,
whether by reason of acceleration of maturity of the Indebtedness evidenced by
this Note or otherwise, shall the amount paid or agreed to be paid to the Lender
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 Note, except that if there is a
change in such law which results in a higher Maximum Permitted Rate, then this
Note shall be governed by such amended law from and after its effective date. In
the event that fulfillment of any provision of this Note, or the Loan Agreement
or any document, instrument or agreement providing security for this Note
results in the rate of interest charged hereunder 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, the Lender receives an
amount which under applicable law would cause the interest rate hereunder to
exceed the Maximum Permitted Rate, the portion thereof which would be excessive
shall automatically be deemed a prepayment of and be applied to the unpaid
principal balance of this 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.
The Borrower expressly waives presentment, notice of acceleration and
intent to accelerate, demand for payment and protest and notice of protest and
nonpayment.
This Note shall for all purposes be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
such state's conflict of laws rules.
63
70
Executed as a sealed instrument as of the date first above written.
Attest: Broadway & Seymour, Inc.
_________________________ By: _____________________________________
Xxxx X. Xxxxxxxx, President
Attest: Elite Information Systems, Inc.
_________________________ By: ______________________________________
Xxxx X. Xxxxxxxx, Executive Vice President
Attest: The MiniComputer Company of Maryland, Inc.
_________________________ By: ______________________________________
Xxxx X. Xxxxxxxx, Executive Vice President
Attest: Elite Information Systems International, Inc.
_________________________ By: ______________________________________
Xxxx X. Xxxxxxxx, Executive Vice President
Attest: Pragmatix Telephony Solutions, Inc.
_________________________ By: ______________________________________
Xxxx X. Xxxxxxxx, President
64
71
STATE OF NORTH CAROLINA
COUNTY OF ________________
This ______ day of July, 1997, personally came before me Xxxx X.
Xxxxxxxx, who, being by me duly sworn, says that he is the President of Broadway
& Seymour, Inc., a Delaware corporation, the Executive Vice President of Elite
information Systems, Inc., a California corporation, the Executive Vice
President of The MiniComputer Company of Maryland, Inc., a Maryland corporation,
Executive Vice President of Elite Information Systems, International, Inc., a
California corporation, and the President of Pragmatix Telephony Solutions,
Inc., a North Carolina corporation and that the seal affixed to the foregoing
instrument in writing on behalf of each such corporation is the corporate seal
of the corporation in question, and that said writing was signed and sealed by
him, in behalf of each of said corporations, each by its authority duly given.
And the said President and Executive Vice President acknowledged the said
writing to be the act and deed of each of said corporations.
----------------------------
Notary Public
My commission expires:
------------------------
[NOTARIAL SEAL]
65
72
EXHIBIT 1.8 - PERMITTED ENCUMBRANCES
66
73
EXHIBIT 1.9 - PRO RATA SHARES
AGENT'S AND LENDERS'
NOTICE ADDRESSES AND WIRE TRANSFER INSTRUCTIONS
Name of AGENT, address for notices and wire transfer instructions:
Fleet National Bank
Mailstop MA BOF04M
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Assistant Vice President
Wire Transfer Instructions:
Fleet National Bank
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000
ABA #: 000000000
Account: Commercial Loan Services
Account #: 0000000 G/L
Re: Broadway & Seymour, Inc.
Name of LENDER, address for notices
and wire transfer instructions: Pro Rata Share
------------------------------- --------------
Fleet National Bank 100%
Mailstop MA BOF04M
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Assistant Vice President
Wire Transfer Instructions:
Fleet National Bank
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000
ABA #: 000000000
Account: Commercial Loan Services
Account #: 0000000 G/L
Re: Broadway & Seymour, Inc.
67
74
Name of LENDER, address for notices
and wire transfer instructions: Pro Rata Share
------------------------------- --------------
[LENDER2] []%
Wire Transfer Instructions:
68
75
EXHIBIT 1.10 - FORM OF REQUEST
Date:
Fleet National Bank
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx
Telecopy: (000) 000-0000
RE: Request for Loan
Gentlemen:
Reference is made to that certain Loan Agreement dated as of July __,
1997 by and among the undersigned, you and the Lenders (the "Loan Agreement").
Capitalized terms used herein shall have the same meaning as in the Loan
Agreement.
The undersigned hereby requests a Revolving Credit Loan from the
Lenders pursuant to the Loan Agreement in the amount of _______________________
__________________________________________and no/100 Dollars ($_____________.00)
at the interest rate set forth in the Interest Rate Election pertaining to such
Loan.
The undersigned requests that each Lender fund its Pro Rata Share of
such Loan on _____________________, 19 and such date is in accordance with the
terms and conditions of the Loan Agreement.
The undersigned hereby certifies to the Lenders that as of the date
hereof:
(a) no Event of Default and no Default has occurred and is
continuing; and
(b) the representations and warranties of the Borrower
contained in Article 4 of the Loan Agreement and/or contained in any of
the other Financing Documents are true and correct in all material
respects except as altered by actions not prohibited under the Loan
Agreement.
Broadway & Seymour, Inc.,
as Borrower's Agent for the
Borrower and a Borrower
By:
---------------------------
Name: []
Title: []
cc: Fleet National Bank
Mailstop MA BOF04M
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Assistant Vice President
69
76
EXHIBIT 1.12 - PROJECTIONS
70
77
EXHIBIT 2.1.0. - FORM OF BORROWING BASE CERTIFICATE
Xxxxxxx X. Xxxxxxx
Assistant Vice President
Fleet National Bank
00 Xxxxx Xxxxxx, Xxxx Xxxx XX BO F04M
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Borrowing Base Certificate Required by Section 2.1.0 of the
Loan Agreement dated as of July 23, 1997 by and among you as
Agent, the undersigned and certain Lenders, as same may have
been amended (the "Loan Agreement")
Gentlemen:
This certificate is submitted by the undersigned (hereinafter the
"Borrower") pursuant to Section 2.1.0 of the Loan Agreement. Capitalized terms
used herein have the same meaning as in the Loan Agreement.
The Borrower hereby certifies to the Agent and the Lenders that the
following information is true, accurate and complete as of ____________, 19 ___.
I. Loan Formula Amount
(a) Net Outstanding Amount of Eligible Receivables $__________
(b) Revolving Credit Loan Commitment $15,000,000
(c) Availability equal to lesser of (i) eighty percent (80%)
of (a) or (ii) Commitment minus aggregate amount of any
reductions of the Commitment made pursuant to Section 2.6.4. $--------
The Borrower further certifies to the Lenders that as of the date
hereof no Event of Default or Default has occurred without having been waived in
writing.
Broadway & Seymour, Inc.,
as Borrower's Agent for the
Borrower and a Borrower
By:
----------------------------
Name: []
Title: []
71
78
EXHIBIT 3.1.1.8 - PERMITTED INDEBTEDNESS AND CAPITALIZED LEASES
72
79
EXHIBIT 3.1.1.10 - FORM OF COMPLIANCE CERTIFICATE
Fleet National Bank
Mailstop MA BOF04M
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Assistant Vice President
Re: Compliance Certificate Required by Sections 3.1.1.10 or 5.3.4
of the Loan Agreement dated as of July 23, 1997 by and among
you as Agent, the undersigned and certain Lenders, as same may
have been amended (the "Loan Agreement")
Gentlemen:
This certificate is submitted by the undersigned (hereinafter the
"Borrower") pursuant to Sections 3.1.1.10 or 5.3.4 of the Loan Agreement.
Capitalized terms used herein have the same meaning as in the Loan Agreement.
The Borrower hereby certifies to the Agent and the Lenders that the
following information is true, accurate and complete as of ____________, 19 ___.
I. Definitions.
1.1 Interest Expense
(a) Interest on Indebtedness under
Financing Documents $
(b) Other fees, charges and expenses
on Indebtedness under
Financing Documents (not including
Facility Fees) $
(c) Interest, fees and other charges
on other Indebtedness $_____
(d) (a)+(b)+(c) = total Interest Expense $
1.2 Consolidated Total Liabilities $
-------------------------------
1.3 Consolidated Tangible Net Worth
(a) Total Assets of Borrower $
(b) Consolidated Total Liabilities $
(c) Capitalized Software Development Costs $
(d) Intangible Assets $
73
80
(e) (a) less (c) and (d) equals $
(f) (e) less (b) = Consolidated Tangible
Net Worth $_____
1.4 Adjusted Net Income
(a) Net Income $
(b) plus the decrease (or minus the increase)
in after-tax Capitalized Software
Development Costs $
(c) (a) plus (b) = Adjusted Net Income $_____
II. Section 5.1.10. Minimum Consolidated Tangible Net Worth.
(a) Consolidated Tangible Net Worth $
(b) Positive Adjusted Net Income Since
June 30, 1997 $
(c) (b) multiplied by 85% $
(d) Equity or Subordinated Debt Raised
Since Closing Date $
(e) (d) multiplied by 85% $
(f) Minimum Consolidated Tangible
Net Worth (sum of $17,500,000 plus
(c) and (e)) $_____
III. Section 5.1.11. Minimum Quick Ratio.
(a) Cash on hand $
(b) Cash Equivalent Investments $
(c) Net outstanding amount of accounts receivable $
(d) Sum of (a) plus (b) plus (c) = $
(e) Current Liabilities $
(f) Outstanding Amount of Revolving Credit Loan $
(g) Deferred Revenue $
(h) Sum of (e) plus (f) minus (g) $
(i) Ratio of (d) to (h) ___:1.0
74
81
(j) Minimum Ratio permitted 1.25:1.0
IV. Section 5.1.12. Maximum Ratio of Consolidated Total
Liabilities to Consolidated Tangible
Net Worth.
(a) Consolidated Total Liabilities $
(b) Deferred Revenues $
(c) (a) minus (b) $
(d) Consolidated Tangible Net Worth $
(e) Ratio of (c) to (d) 1.25:1.0
V. Section 5.2.13. Minimum Adjusted Net Income.
(a) Adjusted Net Income $
(b) Minimum required - $
The Borrower further certifies to the Lenders that as of the date
hereof no Event of Default or Default has occurred without having been waived in
writing.
Broadway & Seymour, Inc.,
as Borrower's Agent for the
Borrower and a Borrower
By:
---------------------------------
Name: []
Title: []
75
82
EXHIBIT 4.1.1 - FOREIGN QUALIFICATIONS
76
83
EXHIBIT 4.1.2 - AUTHORIZATIONS
77
84
EXHIBIT 4.1.3 - CONSENTS
78
85
EXHIBIT 4.1.6 - LITIGATION
79
86
EXHIBIT 4.1.8 - ADVERSE AGREEMENTS
80
87
EXHIBIT 4.1.9 - TAXES
81
88
EXHIBIT 4.1.11 - REAL PROPERTY
82
89
EXHIBIT 4.1.17 - GOVERNMENTAL PERMITS
83
90
EXHIBIT 4.1.20 - COPYRIGHTS
84
91
EXHIBIT 4.1.21 - HAZARDOUS WASTE
85
92
EXHIBIT 4.1.23 - INTELLECTUAL PROPERTY
86
93
EXHIBIT 5.2.2 - GUARANTIES
87
94
EXHIBIT 5.2.12 - INVESTMENTS IN OR TO OTHER PERSONS
88
95
EXHIBIT 5.2.13 - TRANSACTIONS WITH AFFILIATES
89
96
EXHIBIT 9.11.1 - FORM OF SUBSTITUTION AGREEMENT
Form of Substitution Agreement
Agreement made and entered into as of _____ day of ___________, 19__ by
and between ______________________, a ___________ having a principal place of
business at _______________________ (the "Substituted Lender") and Fleet
National Bank, acting as Agent for itself in its individual capacity and for the
Borrower, [insert name(s) of Selling Lender(s)] and the other Lenders which are
parties to the Loan Agreement (defined below) (the "Agent").
1. This Agreement relates to a Loan Agreement (the "Loan
Agreement") dated July 23, 1997, as same may have been or be
amended, made between Broadway & Seymour, Inc., a Delaware
corporation (the "Borrower") and the Lenders which are parties
thereto and Fleet National Bank acting as Agent for the
Lenders thereunder, upon and subject to the terms of which the
Lenders have agreed to make available to the Borrower the
Loans in an aggregate principal amount up to $[]. Terms
defined in the Loan Agreement shall, unless otherwise defined
herein, have the same meanings herein.
2. The Substituted Lender hereby agrees to become a Lender
pursuant to the terms of Section 9.11 of the Loan Agreement
having a Pro Rata Share of the Loans and the Commitment in the
amount set forth opposite the Substituted Lender's name on
Schedule A hereto and to fund its Pro Rata Share of any
outstanding Loans in which it is purchasing a Pro Rata Share
by wire transfer to the Selling Lender in accordance with
Schedule A hereto on [insert proposed effective date].
3. [insert name of Selling Lender] hereby agrees that, effective
as the effective date of this Agreement, its Pro Rata Share of
the Loans and the Commitment shall be reduced to the Pro Rata
Share set forth opposite its name on Schedule A hereto.
4. The Substituted Lender hereby agrees (i) that its address for
notices for the purposes of Section 9.6 of the Loan Agreement
shall be the address set forth opposite its name on Schedule A
hereto and (ii) that the instructions for wire transfers of
funds to the Agent and for wire transfers of funds to the
Substituted Lender are as set forth on Schedule A hereto.
5. The Substituted Lender hereby requests the Agent to accept, on
behalf of the Borrower and the Lenders, this Agreement as a
Substitution Agreement delivered to the Agent pursuant to and
for the purposes of Section 9.11 of the Loan Agreement so as
to take effect in accordance with the terms hereof and thereof
on [insert proposed effective date].
6. The Substituted Lender hereby acknowledges (a) receipt of a
copy of the Loan Agreement and the Security Documents together
with such other documents and information as it has required
in connection herewith, (b) the provisions of Section 9.11 of
the Loan Agreement as they apply in connection with its
execution hereof and the transactions and matters to occur in
consequence hereof, and (c) the correctness of the details
specified in Schedule A hereto.
90
97
7. The Substituted Lender hereby undertakes with each of the
other parties to the Loan Agreement that it will perform in
accordance with their respective terms all those obligations
which by the terms of the Loan Agreement will be assumed by it
upon and after delivery of this Substitution Agreement to the
Agent, and agrees to be bound by the provisions of the Loan
Agreement as though it were an original signatory thereto.
8. This Agreement and the rights and obligations of the parties
hereunder shall be governed by, and construed in accordance
with the laws of [] without regard to such state's conflict of
laws rules.
[ ]
By:
---------------------------------
Name:
Title:
Fleet National Bank, as Agent for itself in
its individual capacity and as agent for the
Borrower, [insert name(s) of Selling
Lender(s)] and any other Lenders
By:
---------------------------------
91
98
SCHEDULE A
Name of AGENT, address for notices and wire transfer instructions:
Fleet National Bank
Mailstop MA BOF04M
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Assistant Vice President
Wire Transfer Instructions:
Fleet National Bank
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000
ABA #: 000000000
Account: Commercial Loan Services
Account #: 0000000 G/L
Re: Broadway & Seymour, Inc.
Name of LENDER, address for notices
and wire transfer instructions: Pro Rata Share
------------------------------- --------------
Fleet National Bank 100%
Mailstop MA BOFO4M
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Assistant Vice President
Wire Transfer Instructions:
Fleet National Bank
00 Xxxxx Xxxxxx, Xxxxxx, XX 00000
ABA #: 000000000
Account: Commercial Loan Services
Account #: 0000000 G/L
Re: Broadway & Seymour, Inc.
92
99
Name of LENDER, address for notices
and wire transfer instructions: Pro Rata Share
------------------------------- --------------
[LENDER2] []%
Wire Transfer Instructions:
[LENDER2]
93
