Exhibit 10.32
Execution Copy
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LOAN AND SECURITY AGREEMENT
BY AND AMONG
VITALWORKS INC.
AS BORROWER,
AND
FOOTHILL CAPITAL CORPORATION
AS LENDER
DATED AS OF MARCH 8, 2002
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered
into as of March 8, 2002, between FOOTHILL CAPITAL CORPORATION, a California
corporation ("Lender"), and VITALWORKS INC., a Delaware corporation
("Borrower").
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"Account Control Bank" has the meaning set forth in Section
2.7(a).
"AC Account" has the meaning set forth in Section 2.7(a).
"Account Control Agreements" means those certain account
control service agreements, in form and substance satisfactory to Lender, each
of which is among Borrower, Lender, and one of the Account Control Banks.
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel paper,
or a General Intangible.
"Accounts" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term
is defined in the Code), and any and all supporting obligations in respect
thereof.
"Additional Documents" has the meaning set forth in Section
4.4.
"Affiliate" means, as applied to any Person, any other Person
who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means
the possession, directly or indirectly, of the power to direct the management
and policies of a Person, whether through the ownership of Stock, by contract,
or otherwise; provided, however, that, for purposes of Section 7.14 hereof:
(a) any Person which owns directly or indirectly 10% or more of the securities
having ordinary voting power for the election of directors or other members of
the governing body of a Person or 10% or more of the partnership or other
ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed to control such Person, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such
Person, and (c) each partnership or joint venture in which a Person is a
partner or joint venturer shall be deemed to be an Affiliate of such Person.
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"Agreement" has the meaning set forth in the preamble hereto.
"Applicable Prepayment Premium" means, as of any date of
determination, an amount equal to (i) with respect to the Term Loan A, (a)
during the period of time from and after the date of the execution and
delivery of this Agreement up to the date that is the first anniversary of the
Closing Date, 3% times the outstanding principal balance of the Term Loan A on
the date immediately prior to the date of determination, (b) during the period
of time from and including the date that is the first anniversary of the
Closing Date up to the date that is the second anniversary of the Closing
Date, 2% times the outstanding principal balance of the Term Loan A on the
date immediately prior to the date of determination, or (c) during the period
of time from and including the date that is the second anniversary of the
Closing Date up to the third anniversary of the Closing Date, subject to
Section 2.2(a), 1% times the outstanding principal balance of the Term Loan A
on the date immediately prior to the date of determination; provided, however,
that if this Agreement is terminated as a result of the sale or transfer of
more than 50% of the Stock or assets of Borrower prior to the Maturity Date,
then the Applicable Prepayment Premium shall be deemed to be 50% of the amount
that would otherwise be due hereunder; and (ii) with respect to any payment of
the Term Loan A Deficiency or the Term Loan B, zero (0).
"Assignee" has the meaning set forth in Section 14.1(a).
"Atlanta Property" means the real property owned by Borrower
located at 0000, Xxx Xxxxxxxx, Xxxxxxx, XX.
"Bankruptcy Code" means the United States Bankruptcy Code, as
in effect from time to time.
"Base Rate" means, the rate of interest announced within Xxxxx
Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is publicly available and is one of Xxxxx
Fargo's base rates (not necessarily the lowest of such rates) and serves as
the basis upon which effective rates of interest are calculated for those
loans making reference thereto and is evidenced by the recording thereof after
its announcement in such internal publication or publications as Xxxxx Fargo
may designate.
"Base Rate Loan" means each portion of a Term Loan that bears
interest at a rate determined by reference to the Base Rate.
"Base Rate Term Loan A Margin" means 2.00 percentage points;
provided, however, that commencing on the first day next following the receipt
of the applicable Section 6.3 financial statements, "Base Rate Term Loan A
Margin" shall be reduced by the following amounts: if EBITDA for the fiscal
year ended December 31, 2002 shall equal or exceed $19,000,000, the
then-applicable Base Rate Term Loan A Margin shall be reduced by 40 basis
points; if EBITDA for the fiscal year ended December 31, 2003 shall equal or
exceed the EBITDA Projection for such fiscal year, the then-applicable Base
Rate Term
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Loan A Margin shall be reduced by 40 basis points; and if EBITDA for the
fiscal year ended December 31, 2004 shall equal or exceed the EBITDA
Projection for such fiscal year, the then-applicable Base Rate Term Loan A
Margin shall be reduced by 30 basis points; provided, further, that
adjustments (if any) pursuant to the immediately preceding proviso shall be
deemed to take effect as of January 1st of the year in which the applicable
financial statements are received by Lender, and Borrower shall receive a
credit for any interest payment made by Borrower in such year which did not
take into account this retroactive effect (such credit to be implemented by
reducing the interest payment owed by Borrower in the month next following the
receipt by Lender of the applicable Section 6.3 financial statements by an
amount equal to such credit). The determination of EBITDA for purposes of this
definition shall be based upon the fiscal year end audited financial
statements delivered to Lender pursuant to Section 6.3(b) or the Projections
delivered to Lender pursuant to Section 6.3(c)(i), as applicable.
Notwithstanding the foregoing, if Borrower fails to deliver to Lender the
financial statements required under Section 6.3 in a timely manner, then the
"Base Rate Term Loan A Margin" shall mean 2.00 percentage points for the
period beginning on the day after the date such financial statements were due
and not received by Lender and ending on the day Lender receives financial
statements complying with the requirements of Section 6.3, and thereafter the
"Base Rate Term Loan A Margin" shall be determined as set forth above using
the applicable Base Rate Term Loan A Margin in effect immediately prior to the
date such financial statements were due and not yet received.
"Base Rate Term Loan B Margin" means 1.50 percentage points.
"Benefit Plan" means a "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which Borrower or any Subsidiary or ERISA
Affiliate of Borrower has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
"Board of Directors" means the board of directors (or
comparable managers) of Borrower or any committee thereof duly authorized to
act on behalf of the board.
"Books" means Borrower's and its Subsidiaries' now owned or
hereafter acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or
liabilities, all of Borrower's or its Subsidiaries' Records relating to its or
their business operations or financial condition, and all of its or their
goods or General Intangibles related to such information).
"Borrower" has the meaning set forth in the preamble to this
Agreement.
"Borrower Intellectual Property Right" means any Intellectual
Property Right owned, held, licensed, used or held for use by Borrower.
"Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.
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"Capital Lease" means a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness
represented by obligations under a Capital Lease.
"Cash Equivalents" means (a) marketable direct obligations
issued or unconditionally guaranteed by the United States or issued by any
agency thereof and backed by the full faith and credit of the United States,
in each case maturing within one (1) year from the date of acquisition
thereof, (b) marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof maturing within one (1) year from the date of
acquisition thereof and, at the time of acquisition, having the highest rating
obtainable from either S&P or Xxxxx'x, (c) commercial paper maturing no more
than 270 days from the date of acquisition thereof and, at the time of
acquisition, having a rating of A-1 or P-1, or better, from S&P or Xxxxx'x,
and (d) certificates of deposit or bankers' acceptances maturing within one
(1) year from the date of acquisition thereof either (i) issued by any bank
organized under the laws of the United States or any state thereof which bank
has a rating of A or A2, or better, from S&P or Xxxxx'x, or (ii) certificates
of deposit less than or equal to $100,000 in the aggregate issued by any other
bank insured by the Federal Deposit Insurance Corporation.
"Change of Control" means (a) any "person" or "group" (within
the meaning of Sections 13(d) and 14(d) of the Exchange Act), becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 35%, or more, of the Stock of Borrower having the right to
vote for the election of members of the Board of Directors, or (b) a majority
of the members of the Board of Directors do not constitute Continuing
Directors, or (c) Borrower ceases to directly own and control 100% of the
outstanding capital Stock of each of its Subsidiaries extant as of the Closing
Date.
"Closing Date" means the date on which Lender sends Borrower a
written notice that each of the conditions precedent set forth in Section 3.1
either have been satisfied or have been waived.
"Closing Date Business Plan" means the set of Projections of
Borrower for calendar year 2002, on a quarterly basis, in form and substance
(including as to scope and underlying assumptions) satisfactory to Lender.
"Code" means the New York Uniform Commercial Code, as in effect
from time to time.
"Collateral" means all of Borrower's now owned or hereafter
acquired right, title, and interest in and to each of the following:
(a) Accounts,
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(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of Borrower that now or
hereafter come into the possession, custody, or control of Lender, and
(j) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment,
General Intangibles, Inventory, Investment Property, Negotiable Collateral,
Real Property, money, deposit accounts, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition
of any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.
"Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to Lender.
"Collections" means all cash, checks, notes, instruments, and
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrower.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C-1 delivered by the chief financial officer of Borrower
to Lender.
"Continuing Director" means (a) any member of the Board of
Directors who was a director (or comparable manager) of Borrower on the
Closing Date, and (b) any individual who becomes a member of the Board of
Directors after the Closing Date if such individual was appointed or nominated
for election to the Board of Directors by a majority of the Continuing
Directors, but excluding any such individual originally proposed for election
in opposition to the Board of Directors in office at the Closing Date in an
actual or threatened election contest relating to the election of the
directors (or comparable managers) of Borrower (as such terms are used in Rule
14a-11 under the Exchange Act) and whose initial assumption of office resulted
from such contest or the settlement thereof.
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"Copyright Security Agreement" means a copyright security
agreement executed and delivered by Borrower and Lender, the form and
substance of which is satisfactory to Lender.
"Copyrights" means all unregistered and registered copyrights
owned or licensed by Borrower in any and all schematics, technology, know-how,
computer software programs or applications (in both source code and object
form code), documents, items, materials and all other works that are
protectable under copyright law, and all registrations, applications for
registrations, renewals and extensions thereof, whether now existing or
acquired in the future.
"Daily Balance" means, with respect to each day during the term
of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
maintained by Borrower.
"Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.
"Designated Account" means that certain DDA of Borrower
identified on Schedule D-1 or, if Borrower notifies Lender in writing after
the date hereof, one of the DDAs of Borrower identified on Schedule D-2 or
such other DDA (located within the United States) as Borrower shall hereafter
designate as such in writing to Lender.
"Disbursement Letter" means an instructional letter executed
and delivered by Borrower to Lender regarding the extensions of credit to be
made on the Closing Date, the form and substance of which is satisfactory to
Lender.
"Dollars" or "$" means United States dollars.
"Due Diligence Letter" means the due diligence letter sent by
Lender's counsel to Borrower, together with Borrower's completed responses to
the inquiries set forth therein, the form and substance of such responses to
be satisfactory to Lender.
"EBITDA" means, with respect to any fiscal period, Borrower's
and its Subsidiaries consolidated net income (or loss), excluding
extraordinary items, plus interest expense, income taxes, depreciation,
amortization and non-recurring charges (including, but not limited to,
restructuring charges, unusual or infrequent charges, discontinued operations,
and changes in accounting principle or changes in accounting estimate) for
such period, as determined in accordance with GAAP.
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"EBITDA Projections" means, with respect to any fiscal period,
Borrower's forecasted EBITDA, as set forth in the Projections delivered to
Lender pursuant to Section 6.3(c)(i).
"Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of
Environmental Laws or releases of Hazardous Materials from (a) any assets,
properties, or businesses of Borrower or any predecessor in interest, (b) from
adjoining properties or businesses, or (c) from or onto any facilities which
received Hazardous Materials generated by Borrower or any predecessor in
interest.
"Environmental Law" means any applicable federal, state,
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline, binding and enforceable written policy, or
rule of common law now or hereafter in effect and in each case as amended, or
any judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, to the extent binding on
Borrower, relating to the environment, employee health and safety, or
Hazardous Materials, including CERCLA; RCRA; the Federal Water Pollution
Control Act, 33 USC Section 1251 et seq; the Toxic Substances Control Act, 15
USC, Section 2601 et seq; the Clean Air Act, 42 USC Section 7401 et seq.; the
Safe Drinking Water Act, 42 USC. Section 3803 et seq.; the Oil Pollution Act
of 1990, 33 USC. Section 2701 et seq.; the Emergency Planning and the
Community Right-to-Know Act of 1986, 42 USC. Section 11001 et seq.; the
Hazardous Material Transportation Act, 49 USC Section 1801 et seq.; and the
Occupational Safety and Health Act, 29 USC. Section 651 et seq. (to the extent
it regulates occupational exposure to Hazardous Materials); any state and
local or foreign counterparts or equivalents, in each case as amended from
time to time.
"Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or
consultants, and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim or demand
by any Governmental Authority or any third party, and which relate to any
Environmental Action.
"Environmental Lien" means any Lien in favor of any
Governmental Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrower's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles), tools, parts, goods (other than consumer goods, farm
products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees
of Borrower under IRC Section 414(c), (c) solely for purposes of Section 302
of ERISA and Section 412 of the IRC, any organization subject to ERISA that is
a member of an affiliated service group of which Borrower is a member under
IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and
Section 412 of the IRC, any Person subject to ERISA that is a party to an
arrangement with Borrower and whose employees are aggregated with the
employees of Borrower under IRC Section 414(o).
"Event of Default" has the meaning set forth in Section 8.
"Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
"Existing Lender" means Finova Capital Corporation, a Delaware
corporation.
"Fee Letter" means that certain fee letter, dated as of even
date herewith, between Borrower and Lender, in form and substance satisfactory
to Lender.
"FEIN" means Federal Employer Identification Number.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States, consistently applied.
"General Intangibles" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due
or recoverable from pension funds, route lists, rights to payment and other
rights under any royalty or licensing agreements, infringement claims,
computer programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, money, deposit accounts, insurance premium
rebates, tax refunds, and tax refund claims), and any and all supporting
obligations in respect thereof, and any other personal property other than
goods, Accounts, Investment Property, and Negotiable Collateral.
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"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or
other governmental or administrative body, instrumentality, department, or
agency or any court, tribunal, administrative hearing body, arbitration panel,
commission, or other similar dispute-resolving panel or body.
"Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define,
list, or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity,
or "EP toxicity", (b) oil, petroleum, or petroleum derived substances, natural
gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and
other wastes associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources, (c) any flammable substances
or explosives or any radioactive materials, and (d) asbestos in any form or
electrical equipment that contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of 50 parts per million.
"Hedge Agreement" means any and all transactions, agreements,
or documents now existing or hereafter entered into between Borrower or its
Subsidiaries and Xxxxx Fargo or its Affiliates, which provide for an interest
rate, credit, commodity or equity swap, cap, floor, collar, forward foreign
exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Borrower's or its Subsidiaries'
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security or currency valuations or commodity prices.
"Indebtedness" means (a) all obligations for borrowed money,
(b) all obligations evidenced by bonds, debentures, notes, or other similar
instruments and all reimbursement or other obligations in respect of letters
of credit, bankers acceptances, interest rate swaps, or other financial
products, (c) all obligations under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of Borrower or its
Subsidiaries, irrespective of whether such obligation or liability is assumed,
(e) all obligations for the deferred purchase price of assets, and (f) any
obligation guaranteeing or intended to guarantee (whether directly or
indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse)
any obligation of any other Person. Indebtedness shall not include (i) trade
debt and associated letters of credit and bonds and/or (ii) customer and
vendor payments, advances and deposits, in each case only to the extent such
amounts are incurred in the ordinary course of business and repayable in
accordance with customary trade practices. In addition, for the avoidance of
doubt, it is understood and agreed that the amount which represents the
balance as of the date hereof of unearned discounts to be
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recognized as an offset to the cost of maintenance and services revenues as
minimum volume commitments are fulfilled under the NDC Agreements (which
amount was $12,948,035 as of February 28, 2002 and which amount for purposes
of this Agreement shall in no event exceed $12,948,035) shall not constitute
"Indebtedness" for purposes of this Agreement.
"Indemnified Liabilities" has the meaning set forth in Section
11.3.
"Indemnified Person" has the meaning set forth in Section 11.3.
"Insolvency Proceeding" means any proceeding commenced by or
against any Person under any provision of the Bankruptcy Code or under any
other state or federal bankruptcy or insolvency law, assignments for the
benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement,
or other similar relief.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
"Intellectual Property Right" means any trademark, copyright,
service xxxx, trade name, patent (including any registrations or applications
for registration of any of the foregoing), license, or trade secret including,
but not limited to, any such legal rights included in any schematics,
technology, know-how, computer software programs or applications (in both
source code and object code form) or in other tangible or intangible
information or material.
"Inventory" means all Borrower's now owned or hereafter
acquired right, title, and interest with respect to inventory, including goods
held for sale or lease or to be furnished under a contract of service, goods
that are leased by Borrower as lessor, goods that are furnished by Borrower
under a contract of service, and raw materials, work in process, or materials
used or consumed in Borrower's business.
"Investment" means, with respect to any Person, any investment
by such Person in any other Person (including Affiliates) in the form of
loans, guarantees, advances, or capital contributions (excluding (a)
commission, travel, and similar advances to officers and employees of such
Person made in the ordinary course of business, and (b) bona fide Accounts
arising in the ordinary course of business consistent with past practices),
purchases or other acquisitions for consideration of Indebtedness or Stock,
and any other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.
"Investment Property" means all of Borrower's now owned or
hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.
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"IRC" means the Internal Revenue Code of 1986, as in effect
from time to time.
"Lender" has the meaning set forth in the preamble to this
Agreement.
"Lender Expenses" means all (a) costs or expenses (including
taxes, and insurance premiums) required to be paid by Borrower under any of
the Loan Documents that are paid or incurred by Lender, (b) fees or charges
paid or incurred by Lender in connection with Lender's transactions with
Borrower, including fees or charges for public record searches (including tax
lien, litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, and publication, and reasonable fees or charges for
photocopying, notarization, couriers and messengers, telecommunication,
appraisal (including periodic Collateral appraisals or business valuations to
the extent of the fees and charges (and up to the amount of any limitation)
contained in this Agreement), real estate surveys, real estate title policies
and endorsements, and environmental audits, (c) reasonable costs and expenses
incurred by Lender in the disbursement of funds to Borrower (by wire transfer
or otherwise), (d) charges paid or incurred by Lender resulting from the
dishonor of checks, (e) reasonable costs and expenses paid or incurred by
Lender to correct any default or enforce any provision of the Loan Documents,
or in gaining possession of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale, or advertising to sell the Collateral,
or any portion thereof, irrespective of whether a sale is consummated, (f)
reasonable audit fees and expenses of Lender related to audit examinations of
the Books to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, (g) reasonable costs and expenses of
third party claims or any other suit paid or incurred by Lender in enforcing
or defending the Loan Documents or in connection with the transactions
contemplated by the Loan Documents or Lender's relationship with Borrower or
any guarantor of the Obligations, (h) Lender's reasonable third-party fees and
expenses (including attorneys fees) incurred in advising, structuring,
drafting, reviewing, administering, or amending the Loan Documents, and (i)
Lender's reasonable third-party fees and expenses (including attorneys fees)
incurred in terminating, enforcing (including attorneys fees and expenses
incurred in connection with a "workout," a "restructuring," or an Insolvency
Proceeding concerning Borrower or in exercising rights or remedies under the
Loan Documents), or defending the Loan Documents, irrespective of whether suit
is brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means Lender, Lender's Affiliates, and
the officers, directors, employees, and agents of Lender.
"Lender's Account" means the account identified on Schedule
L-1.
"Lender's Liens" means the Liens granted by Borrower to Lender
under this Agreement or the other Loan Documents.
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"Lien" means any interest in an asset securing an obligation
owed to, or a claim by, any Person other than the owner of the asset, whether
such interest shall be based on the common law, statute, or contract, whether
such interest shall be recorded or perfected, and whether such interest shall
be contingent upon the occurrence of some future event or events or the
existence of some future circumstance or circumstances, including the lien or
security interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement,
conditional sale or trust receipt, or from a lease, consignment, or bailment
for security purposes and also including reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases, and other title exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
"Loan Documents" means this Agreement, the Account Control
Agreements, the Copyright Security Agreement, the Disbursement Letter, the Due
Diligence Letter, the Fee Letter, the Mortgages, the Officers' Certificate,
the Patent Security Agreement, the Securities Account Agreements, the
Trademark Security Agreement, any note or notes executed by Borrower in
connection with this Agreement and payable to Lender, and any other agreement
entered into, now or in the future, by Borrower and Lender in connection with
this Agreement.
"Material Adverse Change" means (a) a material adverse change
in the business, operations, or financial condition of Borrower, (b) a
material impairment of Borrower's ability to perform its obligations under the
Loan Documents to which it is a party or of Lender's ability to enforce the
Obligations or realize upon the Collateral, or (c) a material impairment of
the enforceability or priority of the Lender's Liens with respect to a
material portion of the Collateral as a result of an action or failure to act
on the part of Borrower.
"Maturity Date" has the meaning set forth in Section 3.4.
"Mortgage Policy" has the meaning set forth in Section 3.1 (w).
"Mortgages" means, individually and collectively, one or more
mortgages, deeds of trust, or deeds to secure debt, duly executed and
delivered by Borrower in favor of Lender, in recordable form and in form and
substance satisfactory to Lender, that encumber the Real Property Collateral
and the related improvements thereto.
"NDC Agreements" means, collectively, the Patient Statement
Services Agreement dated as of October 3, 2001, between Borrower and National
Data Corporation ("NDC"); the Agreement dated as of October 3, 2001, between
Borrower and NDC relating to Borrower's consent to the assignment of certain
agreements from NDC to MedUnite, Inc.; the Asset Purchase Agreement dated as
of October 3, 2001, between Borrower and NDC, relating to the sale of certain
property from Borrower to NDC; the Patient Statement Services
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Agreement dated as of August 1, 2000, between InfoCure Systems, Inc. and NDC;
the Marketing Agreement dated August 1, 2000, between InfoCure Corporation and
NDC; and the Asset Purchase Agreement dated as of August 1, 2000, among
Thoroughbred Acquisition, Inc., Infocure Systems, Inc., Infocure Corporation
and NDC; in each case as in effect on the date hereof.
"Negotiable Collateral" means all of Borrower's now owned and
hereafter acquired right, title, and interest with respect to letters of
credit, letter of credit rights, instruments, promissory notes, drafts,
documents, and chattel paper (including electronic chattel paper and tangible
chattel paper), and any and all supporting obligations in respect thereof.
"Obligations" means all loans (including the Term Loans),
debts, principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), premiums, liabilities
(including all amounts charged to Borrower's Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter),
charges, costs, Lender Expenses (including any fees or expenses that, but for
the provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by
Borrower to Lender pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter
arising, and including all interest not paid when due and all Lender Expenses
that Borrower is required to pay or reimburse by the Loan Documents, by law,
or otherwise. Any reference in this Agreement or in the Loan Documents to the
Obligations shall include all amendments, changes, extensions, modifications,
renewals replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
"Officers' Certificate" means the representations and
warranties of officers form submitted by Lender to Borrower, together with
Borrower's completed responses to the inquiries set forth therein, the form
and substance of such responses to be satisfactory to Lender.
"Participant" has the meaning set forth in Section 14.1(d).
"Patent Security Agreement" means a patent security agreement
executed and delivered by Borrower and Lender, the form and substance of which
is satisfactory to Lender.
"Pay-Off Letter" means a letter, in form and substance
satisfactory to Lender, from Existing Lender to Lender respecting the amount
necessary to repay in full all of the obligations of Borrower owing to
Existing Lender and obtain a release of all of the Liens existing in favor of
Existing Lender in and to the assets of Borrower.
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"Permitted Discretion" means a determination made in good faith
and in the exercise of reasonable (from the perspective of a secured
asset-based lender) business judgment.
"Permitted Dispositions" means (a) (i) sales or other
dispositions by Borrower or its Subsidiaries of Equipment that is
substantially worn, damaged, or obsolete in the ordinary course of business,
(ii) the sale or disposition of all or any portion of Borrower's current 12.5%
interest in the Cessna Citation V Ultra Aircraft, and (iii) any other sales or
dispositions of Equipment (x) to the extent the aggregate value of such
Equipment sold or disposed of in any calendar year does not exceed $150,000
and (y) to the extent the aggregate value of such Equipment sold or disposed
of in any calendar year exceeds $150,000 upon the prior written consent of
Lender (such consent not to be unreasonably withheld), (b) sales by Borrower
or its Subsidiaries of Inventory to buyers in the ordinary course of business,
(c) the use or transfer of money or Cash Equivalents by Borrower or its
Subsidiaries in a manner that is not prohibited by the terms of this Agreement
or the other Loan Documents, (d) the licensing by Borrower or its
Subsidiaries, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business, and
(e) subject to Borrower's compliance with the last three sentences of Section
2.2(b), the Atlanta Property.
"Permitted Investments" means (a) investments in Cash
Equivalents, (b) investments in negotiable instruments for collection, and (c)
advances made in connection with purchases of goods or services in the
ordinary course of business.
"Permitted Liens" means (a) Liens held by Lender, (b) Liens for
unpaid taxes that either (i) are not yet delinquent or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c)
Liens set forth on Schedule P-1, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset
purchased or acquired and the proceeds thereof, (f) Liens arising by operation
of law in favor of warehousemen, landlords, carriers, mechanics, materialmen,
laborers, or suppliers, incurred in the ordinary course of business and not in
connection with the borrowing of money, and which Liens either (i) are for
sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g)
Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (h) Liens or deposits to secure
performance of bids, tenders, or leases incurred in the ordinary course of
business and not in connection with the borrowing of money, (i) Liens granted
as security for surety or appeal bonds in connection with obtaining such bonds
in the ordinary course of business, (j) Liens resulting from any judgment or
award that is not an Event of Default hereunder, (k) Liens with respect to the
Real Property Collateral that are exceptions to the Mortgage Policy issued in
connection with the Mortgages, as accepted by Lender, and (l) with respect to
any Real Property that is not
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part of the Real Property Collateral, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof.
"Permitted Protest" means the right of Borrower or any of its
Subsidiaries, as applicable, to protest any Lien (other than any such Lien
that secures the Obligations), taxes (other than payroll taxes or taxes that
are the subject of a United States federal tax lien), or rental payment,
provided that (a) a reserve with respect to such obligation is established on
the Books in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Borrower or any of its
Subsidiaries, as applicable, in good faith, and (c) Lender is reasonably
satisfied that, while any such protest is pending, there will be no impairment
of the enforceability, validity, or priority of any of the Lender's Liens.
"Permitted Purchase Money Indebtedness" means Purchase Money
Indebtedness incurred after the Closing Date during any calendar year not in
excess of $2,000,000 in the aggregate per year.
"Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than
Real Property.
"Prepay" has the meaning set forth in Section 2.2(a).
"Projections" means Borrower's forecasted (a) balance sheets,
(b) profit and loss statements, and (c) cash flow statements, all prepared on
a basis consistent with Borrower's historical financial statements, together
with appropriate supporting details and a statement of underlying assumptions.
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including Capitalized Lease Obligations other than
Capitalized Lease Obligations existing as of the date hereof, provided that
such currently existing Capitalized Lease Obligations do not exceed
$1,800,000), incurred at the time of, or within 20 days after, the acquisition
of any fixed assets (including software and other intangible assets, provided
that such software and other intangible assets do not give rise to Accounts)
for the purpose of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property
now owned or hereafter acquired by Borrower and the improvements thereto.
"Real Property Collateral" means the parcel or parcels of Real
Property identified on Schedule R-1 and any Real Property hereafter acquired
by Borrower.
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"Record" means information that is inscribed on a tangible
medium or which is stored in an electronic or other medium and is retrievable
in perceivable form.
"Recurring Service & Maintenance Revenues" means, with respect
to any period, the total revenues of Borrower for such period that are derived
from ongoing hardware and software support, EDI services, business management
services and subscription services, as reflected on Borrower's financial
statements in accordance with its historical practices.
"Remedial Action" means all actions taken to (a) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate, or in any way
address Hazardous Materials in the indoor or outdoor environment, (b) prevent
or minimize a release or threatened release of Hazardous Materials so they do
not migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601.
"Required Availability" means unrestricted cash and Cash
Equivalents minus the aggregate amount, if any, of all trade payables of
Borrower aged in excess of historical levels with respect thereto and all book
overdrafts in excess of historical practices with respect thereto, in each
case as determined by Lender in its Permitted Discretion, in an amount of not
less than $5,000,000.
"SEC" means the United States Securities and Exchange
Commission and any successor thereto.
"Securities Account" means a "securities account" as that term
is defined in the Code.
"Securities Account Agreement" means a control agreement, in
form and substance satisfactory to Lender, executed and delivered by Borrower,
Lender and the applicable securities intermediary with respect to a Securities
Account or bank with respect to a deposit account.
"Solvent" means, with respect to any Person on a particular
date, that such Person is not insolvent (as such term is defined in the
Uniform Fraudulent Transfer Act).
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock,
or any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
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"Subsidiary" of a Person means a corporation, partnership,
limited liability company, or other entity in which that Person directly or
indirectly owns or controls the shares of Stock having ordinary voting power
to elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or
other entity.
"Taxes" has the meaning set forth in Section 16.5.
"Term Loan A" has the meaning set forth in Section 2.2(a).
"Term Loan A Deficiency" has the meaning set forth in Section
2.2(a).
"Term Loan A Amount" means $22,000,000.
"Term Loan B" has the meaning set forth in Section 2.2(b).
"Term Loan B Amount" means $5,450,000.
"Term Loans" means the Term Loan A and the Term Loan B.
"Trademark Security Agreement" means a trademark security
agreement executed and delivered by Borrower and Lender, the form and
substance of which is satisfactory to Lender.
"Voidable Transfer" has the meaning set forth in Section 16.8.
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a
national banking association.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower and its Subsidiaries on a
consolidated basis unless the context clearly requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in the
Code shall be construed and defined as set forth in the Code unless otherwise
defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement or any other
Loan Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including"
is not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as
the case
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may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to
any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders,
and supplements set forth herein). Any reference herein to any Person shall be
construed to include such Person's successors and assigns. Any requirement of
a writing contained herein or in the other Loan Documents shall be satisfied
by the transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 [INTENTIONALLY OMITTED]
2.2 TERM LOANS.
(a) TERM LOAN A. Subject to the terms and conditions of this
Agreement, on the Closing Date Lender agrees to make a term loan (the "Term
Loan A") to Borrower in an amount equal to the Term Loan A Amount. The Term
Loan A shall be repaid on the following dates and in the following amounts:
------------------------------------------------------------------------------
DATE INSTALLMENT AMOUNT
------------------------------------------------------------------------------
July 1, 2002 $1,250,000
------------------------------------------------------------------------------
October 1, 2002 $1,250,000
------------------------------------------------------------------------------
January 1, 2003 $1,250,000
------------------------------------------------------------------------------
April 1, 2003 $1,250,000
------------------------------------------------------------------------------
July 1, 2003 $1,250,000
------------------------------------------------------------------------------
October 1, 2003 $1,250,000
------------------------------------------------------------------------------
January 1, 2004 $1,250,000
------------------------------------------------------------------------------
April 1, 2004 $1,250,000
------------------------------------------------------------------------------
Maturity Date $12,000,000
------------------------------------------------------------------------------
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In addition, if, at any time or for any reason, the aggregate amount of
Borrower's Collections with respect to the Accounts for the preceding
105-Business Day period is less than the outstanding principal amount of the
Term Loan A at such time (such difference, the "Term Loan A Deficiency"), then
Borrower shall immediately pay to Lender, in cash, the amount of such Term
Loan A Deficiency, which amount shall be used by Lender to reduce the
principal amount of the Term Loan A. The outstanding unpaid principal balance
and all accrued and unpaid interest under the Term Loan A shall be due and
payable on the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration. All amounts outstanding under the Term Loan A
shall constitute Obligations. Notwithstanding anything to the contrary
contained in this Agreement or any other Loan Document, Borrower shall not,
and shall not cause any other Person to, voluntarily prepay, retire, redeem,
purchase, repay, defease or exchange, or make any deposits or segregation of
funds in respect of (collectively, "Prepay"), any principal in respect of the
Term Loan A, subject to Section 3.6 and except as set forth in the
amortization table above and as follows: (i) during the period from and
including the Closing Date up to the one-year anniversary of the Closing Date
(such period, "Year 1"), Borrower shall be required to pay the principal in
respect of the Term Loan A in the amount scheduled to be amortized during such
period as set forth in the table above, and Borrower shall be permitted to
Prepay an additional amount (the "Year 1 Prepayment Limit") not to exceed
$3,000,000; (ii) during the period from and including the one-year anniversary
of the Closing Date up to the two-year anniversary of the Closing Date (such
period, "Year 2"), Borrower shall be required to pay the principal in respect
of the Term Loan A in the amount scheduled to be amortized during such period
as set forth in the table above, and Borrower shall be permitted to Prepay an
additional amount (the "Year 2 Prepayment Limit") not to exceed $6,000,000
minus the amount of the principal in respect of the Term Loan A actually
Prepayed (i.e., in excess of the amount scheduled to be amortized) by Borrower
during Year 1; (iii) during the period from and including the two-year
anniversary of the Closing Date up to the three-year anniversary of the
Closing Date, Borrower shall be required to pay the principal in respect of
the Term Loan A in the amount scheduled to be amortized during such period as
set forth in the table above, and Borrower shall be permitted to Prepay an
additional amount (the "Year 3 Prepayment Limit") not to exceed $8,000,000
minus the sum of the amount of the principal in respect of the Term Loan A
actually Prepayed (i.e., in excess of the amount scheduled to be amortized) by
Borrower during Year 1 and Year 2; provided, that Borrower may elect to exceed
the Year 3 Prepayment Limit, but in such event Borrower shall pay a prepayment
premium in an amount equal to the greater of (I) $120,000 or (II) the
Applicable Prepayment Premium otherwise due hereunder; and (iv) during the
period from and including the three-year anniversary of the Closing Date to
the Maturity Date, there shall be no restrictions on the amount of principal
in respect of the Term Loan A that Borrower may Prepay.
(b) TERM LOAN B. Subject to the terms and conditions of this
Agreement, on the Closing Date Lender agrees to make a term loan (the "Term
Loan B") to Borrower in an amount equal to the Term Loan B Amount. The Term
Loan B shall be repaid in equal
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monthly installments of principal in the amount of $65,476.19 each, plus
accrued and unpaid interest on such amounts, such installments to be due and
payable on the first day of each month commencing on the first day of the
twelfth (12th) month immediately succeeding the Closing Date and ending on the
Maturity Date, with the outstanding unpaid principal balance and all accrued
and unpaid interest under the Term Loan B due and payable upon the earlier to
occur of (a) the Maturity Date or (b) the date of termination of this
Agreement, whether by its terms, by prepayment, or by acceleration. All
amounts outstanding under the Term Loan B shall constitute Obligations.
Notwithstanding anything to the contrary contained in this Agreement or any
other Loan Document, there shall be no restrictions on the amount of principal
in respect of the Term Loan B that Borrower may Prepay at any time during this
Agreement. If Borrower sells the Atlanta Property, then immediately upon
consummation of the sale Borrower shall use the proceeds therefrom (the
"Atlanta Property Proceeds") to pay to Lender, in cash, any and all amounts
then owing by Borrower under this Agreement in respect of the Term Loan B (the
"Outstanding Term Loan B Amounts"). If the Atlanta Property Proceeds are
insufficient to pay in full the Outstanding Term Loan B Amounts, then (x) such
proceeds shall be applied first, to pay all accrued and unpaid interest due in
respect of the Term Loan B until paid in full, and second, to pay all
outstanding principal in respect of the Term Loan B and (y) any remaining
unpaid Outstanding Term Loan B Amounts shall continue to remain outstanding
Obligations in accordance with the terms and provisions of this Agreement. If
the Atlanta Property Proceeds exceed the Outstanding Term Loan B Amounts, then
Borrower may retain such excess proceeds.
2.3 [INTENTIONALLY OMITTED]
2.4 PAYMENTS
(a) PAYMENTS BY BORROWER.
(i) Except as otherwise expressly provided
herein, all payments by Borrower shall be made to Lender's
Account and shall be made in immediately available funds, no
later than 11:00 a.m. (California time) on the date specified
herein. Any payment received by Lender later than 11:00 a.m.
(California time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall
continue to accrue until such following Business Day.
(b) APPLICATION AND REVERSAL OF PAYMENTS.
(i) All payments shall be remitted to Lender and all
such payments (other than payments received while no Default or
Event of Default has occurred and is continuing and which
relate to the payment of principal or interest of specific
Obligations or which relate to the payment of specific fees),
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and all proceeds of Accounts or other Collateral received by
Lender, shall be applied as follows:
(A) first, to pay any Lender Expenses then due
to Lender under the Loan Documents, until paid in full,
(B) second, to pay any fees then due to Lender
under the Loan Documents until paid in full,
(C) third, ratably to pay interest due in
respect of the Term Loans until paid in full,
(D) fourth, ratably to pay all principal
amounts then due and payable (other than as a result of
an acceleration thereof) with respect to the Term Loans
until paid in full,
(E) fifth, if an Event of Default has occurred
and is continuing, to pay the outstanding principal
balance of the Term Loans (in the inverse order of the
maturity of the installments due thereunder) until the
Term Loans are paid in full,
(F) sixth, to pay any other Obligations until
paid in full, and
(G) seventh, to Borrower (to be wired to the
Designated Account) or such other Person entitled
thereto under applicable law.
(ii) In each instance, so long as no Default or Event
of Default has occurred and is continuing, Section 2.4(b) shall
not be deemed to apply to any payment by Borrower specified by
Borrower to be for the payment of specific Obligations then due
and payable (or prepayable) under any provision of this
Agreement.
(iii) For purposes of the foregoing, "paid in full"
means payment of all amounts owing under the Loan Documents
according to the terms thereof, including loan fees, service
fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency
Proceeding), default interest, interest on interest, and
expense reimbursements, whether or not the same would be or is
allowed or disallowed in whole or in part in any Insolvency
Proceeding.
(iv) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions
contained in any other Loan Document, it is the intention of
the parties hereto that such priority provisions in such
documents shall be read together and construed, to the fullest
extent possible, to be in concert with each other. In the event
of any actual,
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irreconcilable conflict that cannot be resolved
as aforesaid, the terms and provisions of this Section 2.4
shall control and govern.
2.5 PAYMENTS IN DOLLARS. Borrower hereby promises to pay the
Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full to Lender as and when due and payable under the terms of this
Agreement and the other Loan Documents.
2.6 INTEREST RATES: RATES, PAYMENTS, AND CALCULATIONS
(a) INTEREST RATES. Except as provided in clause (c)
below, all Obligations that have been charged to the Loan Account pursuant to
the terms hereof shall bear interest on the Daily Balance thereof as follows:
(i) if the relevant Obligation is the Term Loan A, at a per annum rate equal
to the Base Rate plus the Base Rate Term Loan A Margin; (ii) if the relevant
Obligation is the Term Loan B, at a per annum rate equal to the Base Rate plus
the Base Rate Term Loan B Margin; and (iii) otherwise, at a per annum rate
equal to the Base Rate plus the Base Rate Term Loan A Margin.
(b) [INTENTIONALLY OMITTED]
(c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default, all Obligations that have been charged to
the Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to four (4) percentage points above
the per annum rate otherwise applicable hereunder, and
(d) PAYMENT. Interest and all other fees payable
hereunder shall be due and payable, in arrears, on the first day of each month
at any time that Obligations or obligation to extend credit hereunder are
outstanding. Borrower hereby authorizes Lender, from time to time without
prior notice to Borrower, to charge such interest and fees, all Lender
Expenses (as and when incurred), the fees and costs provided for in Section
2.11 (as and when accrued or incurred), and all other payments as and when due
and payable under any Loan Document (including the installments due and
payable with respect to the Term Loans) to Borrower's Loan Account, which
amounts thereafter shall constitute Obligations hereunder and shall accrue
interest at the rate then applicable to the Term Loan A. Any interest not paid
when due shall be compounded by being charged to Borrower's Loan Account and
shall thereafter constitute Obligations hereunder and shall accrue interest at
the rate then applicable to the Term Loan A.
(e) COMPUTATION. All interest and fees chargeable under
the Loan Documents shall be computed on the basis of a 360 day year for the
actual number of days elapsed. In the event the Base Rate is changed from time
to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount
equal to such change in the Base Rate.
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(f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In
no event shall the interest rate or rates payable under this Agreement, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrower and Lender, in executing and
delivering this Agreement, intend legally to agree upon the rate or rates of
interest and manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or
rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto, as of the date of this Agreement, Borrower
is and shall be liable only for the payment of such maximum as allowed by law,
and payment received from Borrower in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations
to the extent of such excess.
2.7 ACCOUNT CONTROL AGREEMENTS.
(a) Borrower shall enter into Account Control Agreements
with each of Bank of America, N.A. and The Bank of New York (each, an "Account
Control Bank") and Lender with respect to the accounts of Borrower specified
on Schedule 2.7(a) hereto (the "AC Accounts"). Each such Account Control
Agreement shall be satisfactory in form and substance to Lender, and shall
provide, among other things, that (i) each Account Control Bank will comply
with all notifications it receives directing it to transfer, redeem or permit
the withdrawal of any property in the AC Accounts originated by Lender without
further consent by Borrower and (ii) the Account Control Bank has no rights of
setoff or recoupment or any other claim against the applicable AC Account
other than for payment of normal bank charges and fees for such AC Account.
Lender agrees that it will not provide any notification to an Account Control
Bank under an Account Control Agreement directing it to transfer, redeem or
permit the withdrawal of any property in the AC Account except upon the
occurrence and continuance of an Event of Default.
(b) Borrower shall close any of its AC Accounts (and
establish replacement AC Accounts in accordance with the next sentence)
promptly and in any event within 30 days of notice from Lender that the
creditworthiness of any Account Control Bank is no longer acceptable in
Lender's reasonable judgment, or as promptly as practicable and in any event
within 60 days of notice from Lender that the operating performance, funds
transfer, or availability procedures or performance of the Account Control
Bank with respect to AC Accounts or Lender's liability under any Account
Control Agreement with such Account Control Bank is no longer acceptable in
Lender's reasonable judgment. Prior to the time of opening any replacement AC
Account in accordance with the preceding sentence, (i) the prospective
replacement Account Control Bank must be satisfactory to Lender and Lender
shall have consented in writing in advance to the opening of such AC Account
(such consent not to be unreasonably withheld) and (ii) Borrower, Lender and
such prospective replacement Account Control Bank shall have executed an
Account Control Agreement satisfactory in form and substance to Lender.
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(c) The AC Accounts shall be cash collateral accounts,
with all cash, checks and similar items of payment in such accounts securing
payment of the Obligations, and in which Borrower is hereby deemed to have
granted a Lien to Lender.
2.8 CREDITING PAYMENTS. The receipt of any payment item by Lender
(whether from transfers to Lender by the Account Control Banks pursuant to the
Account Control Agreements or otherwise) shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to the Lender's Account or unless and until such payment
item is honored when presented for payment. Should any payment item not be
honored when presented for payment, then Borrower shall be deemed not to have
made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be
deemed received by Lender only if it is received into the Lender's Account on
a Business Day on or before 11:00 a.m. (California time). If any payment item
is received into the Lender's Account on a non-Business Day or after 11:00
a.m. (California time) on a Business Day, it shall be deemed to have been
received by Lender as of the opening of business on the immediately following
Business Day.
2.9 DESIGNATED ACCOUNT. Lender is authorized to make the Term
Loans under this Agreement into the Designated Account based upon the written
instructions received from an executive officer of Borrower.
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender
shall maintain an account on its books in the name of Borrower (the "Loan
Account") on which Borrower will be charged with the Term Loans and with all
other payment Obligations hereunder or under the other Loan Documents,
including, accrued interest, fees and expenses, and Lender Expenses. In
accordance with Section 2.8, the Loan Account will be credited with all
payments received by Lender from Borrower or for Borrower's account, including
all amounts received in the Lender's Account from any Account Control Bank.
Lender shall render statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization of all
charges and expenses constituting Lender Expenses owing, and such statements
shall be conclusively presumed to be correct and accurate and constitute an
account stated between Borrower and Lender unless, within 30 days after
receipt thereof by Borrower, Borrower shall deliver to Lender written
objection thereto describing the error or errors contained in any such
statements.
2.11 FEES. Borrower shall pay to Lender the following fees and
charges, which fees and charges shall be non-refundable when paid
(irrespective of whether this Agreement is terminated thereafter):
(a) FEE LETTER FEES. As and when due and payable under
the terms of the Fee Letter, Borrower shall pay to Lender the fees set forth
in the Fee Letter, and
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(b) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit,
appraisal, and valuation fees and charges as follows (i) a fee of $850 per
day, per auditor, plus out-of-pocket expenses for each financial audit of
Borrower performed by personnel employed by Lender, (ii) the actual charges
paid or incurred by Lender for each appraisal of the Collateral performed by
personnel employed by Lender (such appraisals not to exceed one per calendar
year unless an Event of Default has occurred and is continuing, in which case
there shall be no such limit), and (iii) the actual charges paid or incurred
by Lender if it elects to employ the services of one or more third Persons to
perform financial audits of Borrower, to appraise the Collateral, or any
portion thereof, or to assess Borrower's business valuation. The aggregate
amount of all of the fees and charges in this Section 2.11(b) shall not exceed
$45,000 per calendar year unless an Event of Default has occurred, in which
case there shall be no such limit.
2.12 [INTENTIONALLY OMITTED]
2.13 [INTENTIONALLY OMITTED]
2.14 CAPITAL REQUIREMENTS. If, after the date hereof, Lender
determines that (i) the adoption of or change in any law, rule, regulation or
guideline regarding capital requirements for banks or bank holding companies,
or any change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by
Lender or its parent bank holding company with any guideline, request, or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on Lender's or such
holding company's capital as a consequence of Lender's obligations hereunder
to a level below that which Lender or such holding company could have achieved
but for such adoption, change, or compliance (taking into consideration
Lender's or such holding company's then existing policies with respect to
capital adequacy and assuming the full utilization of such entity's capital)
by any amount deemed by Lender to be material, then Lender may notify Borrower
thereof. Following receipt of such notice, Borrower agrees to pay Lender on
demand the amount of such reduction of return of capital as and when such
reduction is determined, payable within 90 days after presentation by Lender
of a statement in the amount and setting forth in reasonable detail Lender's
calculation thereof and the assumptions upon which such calculation was based
(which statement shall be deemed true and correct absent manifest error). In
determining such amount, Lender may use any reasonable averaging and
attribution methods.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to make the Term Loans (or otherwise to extend any credit
provided for hereunder), is subject to the fulfillment, to the satisfaction of
Lender, of each of the conditions precedent set forth below:
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(a) the Closing Date shall occur on or before March 11,
2002;
(b) Lender shall have received all financing
statements required by Lender, duly executed by Borrower, and Lender shall
have received searches reflecting the filing of all such financing statements;
(c) Lender shall have received each of the following
documents, in form and substance satisfactory to Lender, duly executed, and
each such document shall be in full force and effect:
(i) the Account Control Agreements,
(ii) the Copyright Security Agreement,
(iii) the Disbursement Letter,
(iv) the Due Diligence Letter,
(v) the Fee Letter,
(vi) the Officers' Certificate,
(vii) the Patent Security Agreement,
(viii) the Pay-Off Letter, including an agreement to
prepare and file UCC termination statements, mortgage releases
and other documentation evidencing the termination by Existing
Lender of its Liens in and to the properties and assets of
Borrower upon receipt of the pay-off funds,
(ix) the Trademark Security Agreement, and
(x) the Mortgage with respect to the Atlanta
Property;
(d) Lender shall have received a certificate from the
Secretary of Borrower attesting to the resolutions of Borrower's Board of
Directors authorizing its execution, delivery, and performance of this
Agreement and the other Loan Documents to which Borrower is a party and
authorizing officers of Borrower to execute the same;
(e) Lender shall have received copies of Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing
Date, certified by the Secretary of Borrower;
(f) Lender shall have received a certificate of status
with respect to Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the
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appropriate officer of the jurisdiction of organization of Borrower, which
certificate shall indicate that Borrower is in good standing in such
jurisdiction;
(g) Lender shall have received certificates of status
with respect to Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of Borrower) in which its failure
to be duly qualified or licensed would constitute a Material Adverse Change,
which certificates shall indicate that Borrower is in good standing in such
jurisdictions;
(h) Lender shall have received a certificate of
insurance, together with the endorsements thereto, as are required by Section
6.8, the form and substance of which shall be satisfactory to Lender;
(i) Lender shall have received Collateral Access
Agreements with respect to the following locations: (1) 0000 Xxxxx Xxxxxxx,
Xxxxx 000, Xxxxxxxxx, XX; (2) Inverness 44, 00 Xxxxxxxxx Xxxxxx Xxxxxxx,
Xxxxxxxxxx, XX; (3) 00 00xx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx, XX; and (4) 000 Xxxx
Xxxxxx Xxxx., Xxxxxxx Xxxxx, XX;
(j) Lender shall have received opinions of Borrower's
counsel (including opinions relating to the Mortgage with respect to the
Atlanta Property) in form and substance satisfactory to Lender;
(k) Lender shall have received satisfactory evidence
(including a certificate of the chief financial officer of Borrower,
certifying as to the best of his knowledge) that all tax returns required to
be filed by Borrower have been timely filed and all taxes upon Borrower or its
properties, assets, income, and franchises (including Real Property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
set forth on Schedule A to such certificate or that are the subject of a
Permitted Protest;
(l) Borrower shall have the Required Availability;
(m) Lender shall have completed its business, legal, and
collateral due diligence, including a collateral audit and review of
Borrower's books and records and verification of Borrower's representations
and warranties to Lender, the results of which shall be satisfactory to
Lender;
(n) Lender shall have received completed reference
checks with respect to Borrower's senior management, the results of which are
satisfactory to Lender in its sole discretion;
(o) Lender shall have received an appraisal of
Borrower's Recurring Service & Maintenance Revenues, the results of which
shall be satisfactory to Lender;
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(p) Lender shall have received Borrower's Closing Date
Business Plan;
(q) Borrower shall pay all Lender Expenses incurred in
connection with the transactions evidenced by this Agreement;
(r) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental
Authority against Borrower, Lender, or any of their Affiliates;
(s) Borrower, at its own cost and expense, shall have
filed applications and taken any and all other actions reasonably necessary to
register all material Copyrights (including, without limitation, Borrower's
top ten (10) Copyrights measured by annual revenue generated therefrom and all
other Copyrights which generate or are reasonably expected to generate at
least $2,000,000 in annual revenue), in good faith in accordance with the
procedures and regulations of the U.S. Copyright Office;
(t) Lender shall have received from Borrower
certificates of registration from the U.S. Copyright Office, or such other
evidence of registration satisfactory to Lender, to demonstrate compliance
with Section 3.1(s);
(u) Borrower shall have received all licenses, approvals
or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrower of this Agreement or
any other Loan Document or with the consummation of the transactions
contemplated hereby and thereby;
(v) Lender shall have received, to its satisfaction,
true and complete copies of each of the NDC Agreements (which agreements have
not been amended since the dates thereof);
(w) Lender shall have received (i) a mortgagee title
insurance policy (or marked commitments to issue the same) (the "Mortgage
Policy") for the Atlanta Property issued by a title insurance company
satisfactory to Lender (the "Title Company") in an amount satisfactory to
Lender assuring Lender that the Mortgage on such Real Property Collateral is a
valid and enforceable first priority mortgage Lien on such Real Property
Collateral free and clear of all defects and encumbrances except Permitted
Liens, and the Mortgage Policy otherwise shall be in form and substance
satisfactory to Lender; (ii) an as-built survey of recent date with respect to
the Atlanta Property, showing such matters as may be required by Lender,
certified to the Title Company, and the surveyors retained for such survey,
the scope of the survey, and the results thereof shall be acceptable to
Lender; and (iii) copies of permanent and unconditional certificates of
occupancy (or, if it is not the practice to issue certificates of occupancy in
the jurisdiction in which the facilities to be covered by the Mortgage are
located, then such other evidence reasonably satisfactory to Lender)
permitting the fully functioning operation and occupancy of each such facility
and of such
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other permits necessary for the use and operation of each such facility issued
by the respective governmental authorities having jurisdiction over each such
facility. In addition, Borrower shall have paid to the Title Company all
expenses and premiums of the Title Company in connection with the issuance of
the Mortgage Policy and in addition shall have paid to the Title Company an
amount equal to the recording and stamp taxes payable in connection with
recording the Mortgage in the appropriate county land offices; and Borrower
shall have paid to the surveyors all fees and expenses of the surveyors in
connection with the survey; and
(x) all other documents and legal matters in connection
with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance
satisfactory to Lender.
3.2 [INTENTIONALLY OMITTED]
3.3 [INTENTIONALLY OMITTED]
3.4 TERM. This Agreement shall become effective upon the execution
and delivery hereof by Borrower and Lender and shall continue in full force
and effect for a term ending on the fourth anniversary of the Closing Date
(the "Maturity Date"). The foregoing notwithstanding, Lender shall have the
right to terminate its obligations under this Agreement immediately and
without notice upon the occurrence and during the continuation of an Event of
Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however, shall relieve or
discharge Borrower of its duties, Obligations, or covenants hereunder and the
Lender's Liens in the Collateral shall remain in effect until all Obligations
have been fully and finally discharged and Lender's obligations to provide
additional credit hereunder have been terminated. When this Agreement has been
terminated and all of the Obligations have been fully and finally discharged
and Lender's obligations to provide additional credit under the Loan Documents
have been terminated irrevocably, Lender will, at Borrower's sole expense,
execute and deliver any UCC termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in
recordable form) as are reasonably necessary to release, as of record, the
Lender's Liens and all notices of security interests and liens previously
filed by Lender with respect to the Obligations.
3.6 EARLY TERMINATION. Borrower has the option, at any time upon 30
days prior written notice to Lender, to terminate this Agreement by paying to
Lender, in cash, the Obligations, in full, together with the Applicable
Prepayment Premium. If Borrower has sent a notice of termination pursuant to
the provisions of this Section, then Lender's obligations to extend credit
hereunder shall terminate and Borrower shall be obligated to repay the
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Obligations, in full, together with the Applicable Prepayment Premium, on the
date set forth as the date of termination of this Agreement in such notice. In
the event of the termination of this Agreement and repayment of the
Obligations in full at any time prior to the Maturity Date, for any other
reason, including (a) termination upon the election of Lender to terminate
after the occurrence of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or (d)
restructuring, reorganization or compromise of the Obligations by the
confirmation of a plan of reorganization or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to Lender or profits lost by Lender as a result of such early
termination, and by mutual agreement of the parties as to a reasonable
estimation and calculation of the lost profits or damages of Lender, Borrower
shall pay the Applicable Prepayment Premium to Lender, measured as of the date
of such termination. For purposes of this Agreement, it is understood and
agreed that the occurrence of a Change of Control in and of itself will not
trigger the payment by Borrower of a prepayment premium or the Applicable
Prepayment Premium.
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Lender a
continuing security interest in all of its right, title, and interest in all
currently existing and hereafter acquired or arising Personal Property
Collateral in order to secure prompt repayment of any and all of the
Obligations in accordance with the terms and conditions of the Loan Documents
and in order to secure prompt performance by Borrower of each of its covenants
and duties under the Loan Documents. The Lender's Liens in and to the Personal
Property Collateral shall attach to all Personal Property Collateral without
further act on the part of Lender or Borrower. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except
for Permitted Dispositions, Borrower has no authority, express or implied, to
dispose of any item or portion of the Collateral.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral, and
if and to the extent that perfection of priority of Lender's security interest
is dependent on or enhanced by possession, Borrower, immediately upon the
request of Lender, shall endorse and deliver physical possession of such
Negotiable Collateral to Lender.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. At any time after the occurrence and during the continuation of an
Event of Default, (a) Lender or Lender's designee may (i) notify Account
Debtors of Borrower that the Accounts, chattel paper, or General Intangibles
have been assigned to Lender or that Lender has a security interest therein,
or (ii) collect the Accounts, chattel paper, or General Intangibles directly
and charge the collection costs and expenses to the Loan Account; and (b)
Borrower agrees that it will hold in trust for Lender, as Lender's trustee,
any Collections that it receives
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and immediately will deliver said Collections to Lender in their original form
as received by Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon
the request of Lender, Borrower shall execute and deliver to Lender, any and
all financing statements, original financing statements in lieu of
continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents
(the "Additional Documents") that Lender may request in its Permitted
Discretion, in form and substance satisfactory to Lender, to perfect and
continue perfected or better perfect the Lender's Liens in the Collateral
(whether now owned or hereafter arising or acquired), to create and perfect
Liens in favor of Lender in any Real Property acquired after the Closing Date,
and in order to fully consummate all of the transactions contemplated hereby
and under the other Loan Documents. To the maximum extent permitted by
applicable law, Borrower authorizes Lender to execute any such Additional
Documents in Borrower's name and authorizes Lender to file such executed
Additional Documents in any appropriate filing office. In addition, on such
periodic basis as Lender shall require (but no more than quarterly so long as
no Event of Default shall have occurred and be continuing, in which case there
shall be no such limit), Borrower shall (a) provide Lender with a report of
all new patentable, copyrightable, or trademarkable materials acquired or
generated by Borrower during the prior period, (b) cause all patents,
copyrights, and trademarks acquired or generated by Borrower that are not
already the subject of a registration with the appropriate filing office (or
an application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of Borrower's ownership thereof, and (c) cause to be prepared, executed, and
delivered to Lender supplemental schedules to the applicable Loan Documents to
identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes,
constitutes, and appoints Lender (and any of Lender's officers, employees, or
agents designated by Lender) as Borrower's true and lawful attorney, with
power to (a) if Borrower refuses to, or fails timely to execute and deliver
any of the documents described in Section 4.4, sign the name of Borrower on
any of the documents described in Section 4.4, (b) at any time that an Event
of Default has occurred and is continuing, sign Borrower's name on any invoice
or xxxx of lading relating to the Collateral, drafts against Account Debtors,
or notices to Account Debtors, (c) send requests for verification of Accounts,
(d) endorse Borrower's name on any Collection item that may come into Lender's
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting
the Accounts, chattel paper, or General Intangibles directly with Account
Debtors, for amounts and upon terms that Lender determines to be reasonable,
and Lender may cause to be executed and delivered any documents and releases
that Lender determines to be necessary. The appointment of Lender
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as Borrower's attorney, and each and every one of its rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have
been fully and finally repaid and performed and Lender's obligations to extend
credit hereunder are terminated.
4.6 RIGHT TO INSPECT. Lender and its officers, employees, or agents
shall have the right, from time to time hereafter to inspect the Books and to
check, test, and appraise the Collateral in order to verify Borrower's
financial condition or the amount, quality, value, condition of, or any other
matter relating to, the Collateral in its Permitted Discretion.
4.7 SECURITIES ACCOUNT AGREEMENTS. Borrower agrees that it will not
transfer assets out of any Securities Accounts other than as permitted under
Section 7.19 and, if to another securities intermediary, unless each of
Borrower, Lender, and the substitute securities intermediary have entered into
a Securities Account Agreement. No arrangement contemplated hereby or by any
Securities Account Agreement in respect of any Securities Accounts or other
Investment Property shall be modified by Borrower without the prior written
consent of Lender. Upon the occurrence and during the continuance of an Event
of Default, Lender may notify any securities intermediary to liquidate the
applicable Securities Account or any related Investment Property maintained or
held thereby and remit the proceeds thereof to the Lender's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender to enter into this Agreement,
Borrower makes the following representations and warranties to Lender which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Borrower has good and indefeasible title to
the Collateral and the Real Property, free and clear of Liens except for
Permitted Liens.
5.2 NDC AGREEMENTS. Borrower has delivered to Lender true and
complete copies of each of the NDC Agreements and such agreements have not
been amended since the dates thereof.
5.3 [INTENTIONALLY OMITTED]
5.4 EQUIPMENT. All of the Equipment is used or held for use in
Borrower's business and is fit for such purposes.
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment are not stored with a bailee, warehouseman, or similar party and are
located only at the locations identified on Schedule 5.5.
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5.6 INVENTORY RECORDS. Borrower keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive
office of Borrower is located at the address indicated in Schedule 5.7 and
Borrower's FEIN is identified in Schedule 5.7.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified
to do business in any state where the failure to be so qualified reasonably
could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and
accurate description of the authorized capital Stock of Borrower, by class,
and, as of the Closing Date, a description of the number of shares of each
such class that are issued and outstanding. Other than as described on
Schedule 5.8(b), there are no subscriptions, options, warrants, or calls
relating to any shares of Borrower's capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument.
Borrower is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital Stock or
any security convertible into or exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and
accurate list of Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and (iii)
the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Borrower. All of the outstanding capital Stock
of each such Subsidiary has been validly issued and is fully paid and
non-assessable.
(d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. Neither Borrower
nor any of its Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of
Borrowers' Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by Borrower
of this Agreement and the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of Borrower.
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(b) The execution, delivery, and performance by Borrower
of this Agreement and the Loan Documents to which it is a party do not and
will not (i) violate any provision of federal, state, or local law or
regulation applicable to Borrower, the Governing Documents of Borrower, or any
order, judgment, or decree of any court or other Governmental Authority
binding on Borrower, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of Borrower, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets
of Borrower, other than Permitted Liens, or (iv) require any approval of
Borrower's interestholders or any approval or consent of any Person under any
material contractual obligation of Borrower.
(c) Other than the filing of financing statements,
fixture filings and the Mortgages, the execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which Borrower is a party
do not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
Person.
(d) This Agreement and the other Loan Documents to which
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by Borrower will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
(e) The Lender's Liens are validly created, perfected,
and first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Other than those matters disclosed on Schedule
5.10, there are no actions, suits, or proceedings pending or, to the best
knowledge of Borrower, threatened against Borrower, or any of its
Subsidiaries, as applicable, except for (a) matters that are fully covered by
insurance (subject to customary deductibles), and (b) matters that, if decided
adversely to Borrower, or any of its Subsidiaries, as applicable, reasonably
could not be expected to result in a Material Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements relating
to Borrower that have been delivered by Borrower to Lender have been prepared
in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, Borrower's financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Change with respect to Borrower
since the date of the latest financial statements submitted to Lender on or
before the Closing Date.
5.12 FRAUDULENT TRANSFER.
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(a) Borrower is Solvent.
(b) No transfer of property is being made by Borrower
and no obligation is being incurred by Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with
the intent to hinder, delay, or defraud either present or future creditors of
Borrower.
5.13 EMPLOYEE BENEFITS. None of Borrower, any of its Subsidiaries,
or any of their ERISA Affiliates has maintained or contributed, or currently
maintains or contributes, to any Benefit Plan.
5.14 ENVIRONMENTAL CONDITION. Except as set forth on Schedule 5.14,
(a) to Borrower's knowledge, none of Borrower's assets has ever been used by
Borrower or by previous owners or operators in the disposal of, or to produce,
store, handle, treat, release, or transport, any Hazardous Materials, where
such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrower's knowledge, none of Borrower's properties or assets has ever been
designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) Borrower has
not received notice that a Lien arising under any Environmental Law has
attached to any revenues or to any Real Property owned or operated by
Borrower, and (d) Borrower has not received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by Borrower
resulting in the releasing or disposing of Hazardous Materials into the
environment.
5.15 BROKERAGE FEES. Borrower has not utilized the services of any
broker or finder in connection with Borrower's obtaining financing from Lender
under this Agreement and no brokerage commission or finders fee is payable by
Borrower in connection herewith.
5.16 INTELLECTUAL PROPERTY
(a) Borrower owns, or holds licenses in, all
Intellectual Property Rights that are necessary to the conduct of its business
as currently conducted. Attached hereto as Schedule 5.16(a) is a true,
correct, and complete listing of all material patents, patent applications,
trademarks, trademark applications and copyrights (including copyright
registrations and applications) as to which Borrower is the owner or is an
exclusive licensee.
(b) Borrower represents and warrants that it has taken
all actions reasonably necessary to protect Borrower Intellectual Property
Rights, including, without limitation, (i) protecting the secrecy and
confidentiality of Borrower's confidential information and trade secrets by
having and enforcing a policy requiring all current and former employees,
consultants, licensees, vendors and contractors to execute appropriate
confidentiality and invention assignment agreements; (ii) taking all actions
reasonably necessary to ensure that no trade secret of Borrower falls or has
fallen into the public
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domain; and (iii) protecting the secrecy and confidentiality of the source
code of all computer software programs and applications of which Borrower is
the owner or licensee by having and enforcing a policy requiring any licensees
of such source code to enter into license agreements with appropriate use and
non-disclosure restrictions. Borrower has only entered into such source code
licenses as set forth in Schedule 5.16(b).
(c) No past or present employee or contractor of
Borrower has any ownership interest, license, permission or other Intellectual
Property Right in or to any material Borrower Intellectual Property Rights
(including, without limitation, Borrower's top ten (10) Intellectual Property
Rights measured by annual revenue generated therefrom and all other
Intellectual Property Rights which generate or are reasonably expected to
generate at least $2,000,000 in annual revenue). All such employees and
contractors have assigned to Borrower, in a valid, enforceable and irrevocable
inventions assignment agreement or similar agreement, all of their rights,
including, without limitation, all Intellectual Property Rights, in and to all
ideas, inventions, processes, works of authorship and other work products that
relate to the business of Borrower and were conceived, created, authored or
developed during the term of such employees' or contractors' employment or
engagement by Borrower, or, with regard to works protected by copyright, if no
such assignment agreement was or has been executed by a former or present
employee only, all such works by the employee were conceived, created,
authored or developed within the scope of his/her employment, and as such
constitutes a "work made for hire".
(d) Borrower has made all necessary payments, filings
and recordations to protect and maintain its interest in material Borrower
Intellectual Property Rights (including, without limitation, Borrower's top
ten (10) Intellectual Property Rights measured by annual revenue generated
therefrom and all other Intellectual Property Rights which generate or are
reasonably expected to generate at least $2,000,000 in annual revenue) in the
United States or any other jurisdiction, including, without limitation, (i)
making all necessary registration, maintenance, and renewal fee payments; and
(ii) filing all necessary documents, including, without limitation, all
applications for registration of copyrights, trademarks, and patents.
(e) No claim has been made and is continuing or
threatened that the use by Borrower of any item of General Intangibles is
invalid or unenforceable or that the use by Borrower of any General
Intangibles does or may violate the rights of any person, other than any such
claim which would not cause a Material Adverse Change. To the best of
Borrower's knowledge, there is currently no infringement or unauthorized use
of any item of Intellectual Property Rights contained on Schedule 5.16(a).
(f) Borrower has filed applications and taken any and
all other actions reasonably necessary to register all material Copyrights
(including, without limitation, Borrower's top ten (10) Copyrights measured by
annual revenue generated therefrom and all other Copyrights which generate or
are reasonably expected to generate at least $2,000,000
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in annual revenue), in good faith in accordance with the procedures and
regulations of the U.S. Copyright Office.
5.17 LEASES. Borrower enjoys peaceful and undisturbed possession
under all leases material to the business of Borrower and to which it is a
party or under which it is operating. All of such leases are valid and
subsisting and no material default by Borrower exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of Borrower's DDAs,
including, with respect to each depository (i) the name and address of such
depository, and (ii) the account numbers of the accounts maintained with such
depository.
5.19 COMPLETE DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of Borrower in writing to Lender (including all
information contained in the Schedules hereto or in the other Loan Documents)
for purposes of or in connection with this Agreement, the other Loan
Documents, or any transaction contemplated herein or therein is, and all other
such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrower in writing to Lender will be, true and accurate, in all
material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Projections represent, and as
of the date on which any other Projections are delivered to Lender, such
additional Projections represent Borrower's good faith best estimate of its
future performance for the periods covered thereby.
5.20 INDEBTEDNESS. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such
Indebtedness and the principal terms thereof.
6. AFFIRMATIVE COVENANTS.Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final payment of the
Obligations, Borrower shall and shall cause each of its Subsidiaries to do all
of the following:
6.1 ACCOUNTING SYSTEM. Maintain a system of accounting that enables
Borrower to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Lender. Borrower also shall keep an
inventory reporting system that shows all additions, sales, claims, returns,
and allowances with respect to the Inventory.
6.2 COLLATERAL REPORTING. Provide Lender with the following
documents at the following times in form satisfactory to Lender:
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Monthly (not later (a) a detailed aging, by total, of the Accounts,
than the 10th day
of each month) (b) a summary aging, by vendor, of Borrower's accounts payable and any
book overdraft,
(c) a Collections journal, by daily totals,
------------------------------------------------------------------------------------------------
Quarterly (not (d) a report regarding Borrower's accrued, but unpaid, ad valorem taxes,
later than 45 days
after the end of (e) a report providing the components of Recurring Service & Maintenance
each fiscal quarter) Revenues,
(f) a report providing a detailed calculation of EBITDA,
------------------------------------------------------------------------------------------------
Upon request by (g) copies of invoices in connection with the Accounts,
Lender in its credit memos, remittance advices, deposit slips, shipping
Permitted and delivery documents in connection with the Accounts
Discretion and, for Inventory and Equipment acquired by Borrower,
purchase orders and invoices, and
(h) such other reports as to the Collateral, or the financial
condition of Borrower, as Lender may request.
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In addition, Borrower agrees to provide electronic reporting of
each of the items set forth above except for items (g) and (h).
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Lender:
(a) as soon as available, but in any event within 30
days (45 days in the case of a month that is the end of one of the first 3
fiscal quarters in a fiscal year) after the end of each month during each of
Borrower's fiscal years,
(i) a company prepared consolidated balance sheet,
income statement, and a calendar quarter end statement of cash
flow covering Borrower's and its Subsidiaries' operations
during such period,
(ii) a certificate signed by the chief financial
officer of Borrower to the effect that, to the best of his or
her knowledge or belief: (x) the representations and warranties
of Borrower contained in Section 5 of this Agreement and in the
other Loan Documents are true and correct in all material
respects on and as of the date of such certificate, as though
made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier
date); and (y) there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the
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extent of any non-compliance, describing such non-compliance as
to which he or she may have knowledge and what action Borrower
has taken, is taking, or proposes to take with respect
thereto), and
(iii) for each month that is the date on which a
financial covenant in Section 7.20 is to be tested, a
Compliance Certificate demonstrating, in reasonable detail,
compliance at the end of such period with the applicable
financial covenants contained in Section 7.20;
(b) as soon as available, but in any event within 90
days after the end of each of Borrower's fiscal years,
(i) financial statements of Borrower and its
Subsidiaries for each such fiscal year, audited by independent
certified public accountants reasonably acceptable to Lender
and certified, without any qualifications, by such accountants
to have been prepared in accordance with GAAP (such audited
financial statements to include a balance sheet, income
statement, and statement of cash flow and, if prepared, such
accountants' management letter regarding internal accounting
controls to the audit committee of Borrower's board of
directors), and
(ii) a certificate of such accountants addressed to
Lender stating that such accountants do not have knowledge of
the existence of any Default or Event of Default under Section
7.20;
(c) as soon as available, but in any event within 30
days prior to the start of each of Borrower's fiscal years, copies of
Borrower's Projections, substantially similar in form to the form of the
Closing Date Business Plan and satisfactory in substance to Lender, in its
Permitted Discretion, for the forthcoming fiscal year, on a quarterly basis,
certified by the chief financial officer of Borrower as being Borrower's good
faith best estimate of the financial performance of Borrower during the period
covered thereby;
(d) if and when filed by Borrower,
(i) Form 10-Q quarterly reports, Form 10-K annual
reports, and Form 8-K current reports,
(ii) any other filings made by Borrower with the SEC,
(iii) copies of Borrower's federal income tax returns,
and any amendments thereto, filed with the Internal Revenue
Service, and
(iv) any other information that is provided by
Borrower to its shareholders generally;
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(e) as soon as available, but in any event within 45
days after the end of each fiscal quarter during each of Borrower's fiscal
years, a certificate signed by the chief financial officer of Borrower to the
effect that, to the best of his or her knowledge, the quarterly financial
statements delivered hereunder have been prepared in accordance with GAAP
(except for the lack of footnotes and being subject to year-end audit
adjustments) and fairly present in all material respects the financial
condition of Borrower and its Subsidiaries;
(f) if and when filed by Borrower and as requested by
Lender, satisfactory evidence of payment of all applicable excise taxes (to
the extent such taxes exceed $500,000 in the aggregate) in each jurisdiction
in which (i) Borrower is required to pay any such excise tax, (ii) where
Borrower's failure to pay any such applicable excise tax would result in a
Lien on the properties or assets of Borrower, or (iii) where Borrower's
failure to pay any such applicable excise tax reasonably could be expected to
result in a Material Adverse Change;
(g) as soon as Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof
and a statement of the curative action that Borrower proposes to take with
respect thereto; and
(h) upon the request of Lender, in its Permitted
Discretion, any other report relating to the financial condition of Borrower.
In addition to the financial statements referred to above,
Borrower agrees to deliver financial statements prepared on both a
consolidated (including, without limitation, a calendar quarter end statement
of cash flows) and consolidating (excluding statement of cash flows) basis and
agrees that no Subsidiary of Borrower will have a fiscal year different from
that of Borrower. Borrower agrees that its independent certified public
accountants are authorized to communicate with Lender and to release to Lender
whatever financial information concerning Borrower Lender reasonably may
request. Borrower waives the right to assert a confidential relationship, if
any, it may have with any accounting firm or service bureau in connection with
any reasonable information requested by Lender pursuant to or in accordance
with this Agreement, and agrees that Lender may contact directly any such
accounting firm or service bureau in order to obtain such information.
6.4 [INTENTIONALLY OMITTED]
6.5 RETURN. Cause returns and allowances, as between Borrower and
its Account Debtors, to be on the same basis and in accordance with the usual
customary practices or policies of Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of
Default has occurred and is continuing, any Account Debtor returns any
Inventory to Borrower, Borrower promptly shall determine the reason for such
return and, if Borrower accepts such return, issue a credit memorandum in the
appropriate amount to such Account Debtor. If, at a time when an Event of
Default has occurred and is continuing, any Account Debtor returns any
Inventory to Borrower,
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Borrower promptly shall determine the reason for such return and, if Lender
consents (which consent shall not be unreasonably withheld), issue a credit
memorandum (with a copy to be sent to Lender) in the appropriate amount to
such Account Debtor.
6.6 MAINTENANCE OF PROPERTIES. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct to its business
in good working order and condition, ordinary wear and tear excepted, and
comply at all times with the provisions of all leases to which it is a party
as lessee so as to prevent any material loss or forfeiture thereof or
thereunder.
6.7 TAXES. Cause all assessments and taxes, whether real, personal,
or otherwise, due or payable by, or imposed, levied, or assessed against
Borrower or any of its assets to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Lien. Borrower
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Lender with proof satisfactory to Lender
indicating that Borrower has made such payments or deposits, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Lien. Upon request by Lender, Borrower shall deliver satisfactory
evidence of payment of all applicable excise taxes in each jurisdiction in
which Borrower is required to pay any such excise tax, except to the extent
that the validity of such assessment or tax shall be the subject of a
Permitted Lien.
6.8 INSURANCE.
(a) At Borrower's expense, maintain insurance respecting
its assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against
by other Persons engaged in the same or similar businesses. Borrower also
shall maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Lender.
Borrower shall deliver copies of all such policies to Lender with a
satisfactory lender's loss payable endorsement naming Lender as sole loss
payee or additional insured, as appropriate. Each policy of insurance or
endorsement shall contain a clause requiring the insurer to give not less than
30 days prior written notice to Lender in the event of cancellation of the
policy for any reason whatsoever.
(b) Borrower shall give Lender prompt notice of any loss
covered by such insurance. Lender shall have the exclusive right to adjust any
losses payable under any such insurance policies in excess of $250,000,
without any liability to Borrower whatsoever in respect of such adjustments.
Any monies received as payment for any loss under any insurance policy
mentioned above (other than liability insurance policies) or as payment of any
award or compensation for condemnation or taking by eminent domain, shall be
paid
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over to Lender to be applied at the option of Lender either to the prepayment
of the Obligations or shall be disbursed to Borrower under staged payment
terms reasonably satisfactory to Lender for application to the cost of
repairs, replacements, or restorations. Any such repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items of property destroyed prior to
such damage or destruction.
(c) Borrower will not take out separate insurance
concurrent in form or contributing in the event of loss with that required to
be maintained under this Section 6.8, unless Lender is included thereon as
named insured with the loss payable to Lender under a lender's loss payable
endorsement or its equivalent. Borrower immediately shall notify Lender
whenever such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the same, and
copies of such policies promptly shall be provided to Lender.
(d) Within 60 days after the Closing Date, deliver to
Lender certified copies of the policies of insurance, together with the
endorsements thereto, as are required by this Section 6.8, the form and
substance of which shall be satisfactory to Lender and its counsel.
6.9 LOCATION OF INVENTORY AND EQUIPMENT. Keep the Inventory and
Equipment, in all material respects, only at the locations identified on
Schedule 5.5; provided, however, that Borrower may amend Schedule 5.5 so long
as such amendment occurs by written notice to Lender not less than 30 days
prior to the date on which Inventory or Equipment is moved to such new
location, so long as such new location is within the continental United
States, and so long as, at the time of such written notification, Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Lender's Liens on such assets and also provides to
Lender a Collateral Access Agreement.
6.10 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
including the Fair Labor Standards Act and the Americans With Disabilities
Act, other than laws, rules, regulations, and orders the non-compliance with
which, individually or in the aggregate, would not result in and reasonably
could not be expected to result in a Material Adverse Change.
6.11 LEASES. Pay when due (taking into account any applicable grace
periods) all rents and other amounts payable under any leases to which
Borrower is a party or by which Borrower's properties and assets are bound
(provided that the aggregate amount of such lease payment obligations exceeds
$100,000), unless such payments are the subject of a Permitted Protest.
6.12 BROKERAGE COMMISSIONS. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Borrower's
obtaining financing from Lender under this Agreement. Borrower agrees and
acknowledges that payment of all such
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brokerage commissions or finders fees shall be the sole responsibility of
Borrower, and Borrower agrees to indemnify, defend, and hold Lender harmless
from and against any claim of any broker or finder arising out of Borrower's
obtaining financing from Lender under this Agreement.
6.13 EXISTENCE. Preserve and keep in full force and effect Borrower's
valid existence and good standing and any rights and franchises material to
Borrower's businesses.
6.14 ENVIRONMENTAL.
(a) Keep any property either owned or operated by
Borrower free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by
such Environmental Liens, (b) comply, in all material respects, with
Environmental Laws and provide to Lender documentation of such compliance
which Lender reasonably requests, (c) promptly notify Lender of any release of
a Hazardous Material in any reportable quantity from or onto property owned or
operated by Borrower and take any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with applicable Environmental
Law, and (d) promptly provide Lender with written notice within 10 days of the
receipt of any of the following: (i) notice that an Environmental Lien has
been filed against any of the real or personal property of Borrower, (ii)
commencement of any Environmental Action or notice that an Environmental
Action will be filed against Borrower, and (iii) notice of a violation,
citation, or other administrative order which reasonably could be expected to
result in a Material Adverse Change.
6.15 DISCLOSURE UPDATES. Promptly and in no event later than 10
Business Days after obtaining knowledge thereof, (a) notify Lender if any
written information, exhibit, or report furnished to Lender contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may
be discovered therein or in any Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.
6.16 INTELLECTUAL PROPERTY RIGHTS.
(a) Borrower agrees that, should it obtain an ownership
interest in any Intellectual Property Right which is not now a part of the
Collateral, (i) any such Intellectual Property Right shall automatically
become Collateral and (ii) with respect to any ownership interest in any
Intellectual Property Right that Borrower should obtain, it shall give prompt
written notice thereof to Lender in accordance with Section 12 hereof.
Borrower authorizes Lender to modify this Agreement by amending Schedule
5.16(a) (and will cooperate reasonably with Lender in effecting any such
amendment) to include any Intellectual Property Right which becomes part of
the Collateral under this Section.
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(b) With respect to material Borrower Intellectual
Property Rights (including, without limitation, Borrower's top ten (10)
Intellectual Property Rights measured by annual revenue generated therefrom
and all other Intellectual Property Rights which generate or are reasonably
expected to generate at least $2,000,000 in annual revenue), Borrower agrees,
subject to the last sentence of this subsection, to take all necessary steps,
including, without limitation, making all necessary payments and filings in
connection with registration, maintenance, and renewal of copyrights,
trademarks, and patents in the U.S. Copyright Office, the U.S. Patent and
Trademark Office, any other appropriate government agencies in foreign
jurisdictions or in any court, to maintain each such Borrower Intellectual
Property Right. Borrower agrees to take corresponding steps with respect to
each new or acquired material Intellectual Property Right (including, without
limitation, Borrower's top ten (10) Intellectual Property Rights measured by
annual revenue generated therefrom and all other Intellectual Property Rights
which generate or are reasonably expected to generate at least $2,000,000 in
annual revenue) to which it is now or later becomes entitled. Any expenses
incurred in connection with such activities shall be borne solely by Borrower.
Borrower shall not discontinue use of or otherwise abandon any Intellectual
Property Right without the written consent of Lender, unless Borrower shall
have previously determined that such use or the pursuit or maintenance of such
registration is no longer desirable in the conduct of Borrower's business and
that the loss thereof will not cause a Material Adverse Change, in which case,
Borrower will give notice of any such abandonment to Lender pursuant to the
terms of Section 12 hereof.
(c) Borrower will continue to take all actions
reasonably necessary to protect Borrower's Intellectual Property Rights,
including, without limitation, such steps as are set forth in Sections 5.16(a)
and (b) above. Borrower further agrees to give Lender prompt written notice in
accordance with Section 12 hereof if Borrower enters into any agreements after
the Closing Date pursuant to which it grants any right to a third party to use
or access the source code of any computer software programs or applications of
which Borrower is the owner or licensee; provided that Borrower shall not be
required to provide such notice with respect to source code escrow agreements
on more than a quarterly basis (unless an Event of Default has occurred, in
which case there shall be no such limit). Borrower authorizes Lender to modify
this Agreement by amending Schedule 5.16(b) (and will cooperate reasonably
with Lender in effecting any such amendment) to include any such additional
license grant(s).
(d) Regarding any item of the Borrower Intellectual
Property Rights, Borrower agrees to notify Lender promptly and in writing if
(i) it learns (x) that any item of the Intellectual Property Rights contained
on Schedule 5.16(a) may be determined to have become abandoned or dedicated or
(y) of any adverse determination or the institution of any proceeding
(including, without limitation, the institution of any proceeding in the U.S.
Copyright Office, U.S. Patent and Trademark Office and any other appropriate
government agencies in foreign jurisdictions, or any court) and (ii) such
event would cause a Material Adverse Change.
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(e) In the event that Borrower becomes aware that any
item of the General Intangibles is infringed or misappropriated by a third
party, Borrower shall promptly notify Lender and shall take such actions as
Borrower or Lender deems appropriate under the circumstances to protect such
General Intangibles, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation, unless any such infringement or misappropriation would not
cause a Material Adverse Change. Any expense incurred in connection with such
activities shall be borne solely by Borrower.
(f) Borrower agrees that, should it obtain an ownership
interest in, or license of, material Copyrights (including, without
limitation, Borrower's top ten (10) Copyrights measured by annual revenue
generated therefrom and all other Copyrights which generate or are reasonably
expected to generate at least $2,000,000 in annual revenue) after the Closing
Date, it shall, promptly after such acquisition, file applications and take
any and all other actions reasonably necessary to register all such Copyrights
in good faith in accordance with the procedures and regulations of the U.S.
Copyright Office.
6.17 COLLATERAL ACCESS AGREEMENTS.
Within 30 days after the Closing Date, Borrower shall have
delivered to Lender Collateral Access Agreements with respect to the following
locations: (1) Nimbus Corporate Center, Building 15, 0000 XX Xxxxxx Xxxxxx,
Xxxxxxxxx, XX; (2) 000 Xxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx, XX; and (3) 0000
Xxxxxxx Xxxxxx, X.X., Xxxxxxxxxxx, XX.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not and will not permit any of its Subsidiaries to
do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the
other Loan Documents, together with Indebtedness owed to Underlying Issuers
with respect to Underlying Letters of Credit,
(b) Indebtedness set forth on Schedule 5.20,
(c) Permitted Purchase Money Indebtedness, and
(d) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this Section 7.1 (and
continuance or renewal of any Permitted Liens associated therewith) so long
as: (i) the terms and conditions of such refinancings,
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renewals, or extensions do not, in Lender's reasonable judgment, materially
impair the prospects of repayment of the Obligations by Borrower or materially
impair Borrower's creditworthiness, (ii) such refinancings, renewals, or
extensions do not result in an increase in the principal amount of, or
interest rate with respect to, the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions that, taken as a
whole, are materially more burdensome or restrictive to Borrower, and (iv) if
the Indebtedness that is refinanced, renewed, or extended was subordinated in
right of payment to the Obligations, then the terms and conditions of the
refinancing, renewal, or extension Indebtedness must include subordination
terms and conditions that are at least as favorable to Lender as those that
were applicable to the refinanced, renewed, or extended Indebtedness; and
(e) Indebtedness composing Permitted Investments.
7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only
encumber those assets that secured the refinanced, renewed, or extended
Indebtedness).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock.
(b) Liquidate, wind up, or dissolve itself (or suffer
any liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or
any substantial part of all its assets.
7.4 DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of
Borrower's assets.
7.5 CHANGE NAME. Change Borrower's name, FEIN, corporate structure,
or identity, or add any new fictitious name; provided, however, that Borrower
may change its name or FEIN upon at least 30 days prior written notice to
Lender of such change and so long as, at the time of such written
notification, Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected the Lender's Liens.
7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person (other than with respect to
guaranteed obligations which,
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in the aggregate, do not exceed $500,000) except by endorsement of instruments
or items of payment for deposit to the account of Borrower or which are
transmitted or turned over to Lender.
7.7 NATURE OF BUSINESS. Make any material change in the principal
nature of its business.
7.8 PREPAYMENTS AND AMENDMENTS.
(a) Except in connection with a refinancing permitted by
Section 7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of Borrower, other than the Obligations in accordance with this
Agreement, and
(b) Except in connection with a refinancing permitted by
Section 7.1(d), directly or indirectly, amend, modify, alter, increase, or
change any of the material terms or conditions of any agreement, instrument,
document, indenture, or other writing evidencing or concerning Indebtedness
permitted under Sections 7.1(b) or (c).
7.9 [INTENTIONALLY OMITTED]
7.10 CONSIGNMENTS. Consign any Inventory or sell any Inventory on
xxxx and hold, sale or return, sale on approval, or other conditional terms of
sale that would be material to Borrower's business, operations or financial
condition.
7.11 DISTRIBUTIONS. Make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or
purchase, acquire, redeem, or retire any of Borrower's Stock, of any class,
whether now or hereafter outstanding.
7.12 ACCOUNTING METHODS. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement currently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau (not including,
for this purpose, payroll, stock transfer, stock option and application
service providers) for the preparation or storage of Borrower's accounting
records without said accounting firm or service bureau agreeing to provide
Lender information regarding the Collateral or Borrower's financial condition.
7.13 INVESTMENTS. Except for Permitted Investments, directly or
indirectly, make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrower and its Subsidiaries shall not have Permitted
Investments (other than in the AC Accounts) in deposit accounts or Securities
Accounts in excess of $100,000 outstanding at any one time unless Borrower or
its Subsidiary, as applicable, and the applicable securities intermediary or
bank have entered into Securities Account Agreements governing such Permitted
Investments, as Lender shall
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determine in its Permitted Discretion, to perfect (and further establish) the
Lender's Liens in such Permitted Investments.
7.14 TRANSACTIONS WITH AFFILIATES. Except for any transaction that
was entered into by Borrower prior to the Closing Date (as disclosed on
Schedule 7.14), directly or indirectly enter into or permit to exist any
transaction with any Affiliate of Borrower except for transactions that are in
the ordinary course of Borrower's business, upon fair and reasonable terms,
that are fully disclosed to Lender, and that are no less favorable to Borrower
than would be obtained in an arm's length transaction with a non-Affiliate.
7.15 SUSPENSION. Suspend or go out of a substantial portion of its
business.
7.16 [INTENTIONALLY OMITTED].
7.17 USE OF PROCEEDS. Use the proceeds of the Term Loans for any
purpose other than (a) on the Closing Date, (i) to repay, in full, the
outstanding principal, accrued interest, and accrued fees and expenses owing
to Existing Lender (including amounts owing with respect to the mortgage loan
secured by the Atlanta Property), and (ii) to pay transactional fees, costs,
and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful
and permitted purposes.
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND
EQUIPMENT WITH BAILEES. Relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to Lender and so
long as, at the time of such written notification, Borrower provides any
financing statements or fixture filings necessary to perfect and continue
perfected the Lender's Liens and also provides to Lender a Collateral Access
Agreement with respect to such new location. The Inventory and Equipment
(other than old and used Inventory and Equipment that, as of the Closing Date,
is properly not recorded on Borrower's balance sheet in accordance with GAAP)
shall not at any time now or hereafter be stored with a bailee, warehouseman,
or similar party without Lender's prior written consent.
7.19 SECURITIES ACCOUNTS. Establish or maintain any Securities
Account unless Lender shall have received a Securities Account Agreement in
respect of such Securities Account. Borrower shall not transfer assets out of
any Securities Account; provided, however, that, so long as no Event of
Default has occurred and is continuing or would result therefrom, Borrower may
use such assets (and the proceeds thereof) to the extent not prohibited by
this Agreement.
7.20 FINANCIAL COVENANTS.
(a) Fail to maintain:
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(i) MINIMUM EBITDA. EBITDA, measured on a fiscal
quarter-end basis, of not less than the required amount set
forth in the following table for the applicable period set
forth opposite thereto;
--------------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------------
$3,310,000 For the 3 month period
ending March 31, 2002
--------------------------------------------------------------------------------------
$6,668,000 For the 6 month period
ending June 30, 2002
--------------------------------------------------------------------------------------
$10,641,000 For the 9 month period
ending September 30, 2002
--------------------------------------------------------------------------------------
$14,903,000 For the 12 month period
ending December 31, 2002
--------------------------------------------------------------------------------------
$15,000,000 For the 12 month period
ending each fiscal quarter thereafter
--------------------------------------------------------------------------------------
(ii) MINIMUM RECURRING SERVICE & MAINTENANCE REVENUES.
Recurring Service & Maintenance Revenues, measured on a fiscal
quarter-end basis, of not less than the required amount set
forth in the following table for the applicable period set
forth opposite thereto:
--------------------------------------------------------------------------------------
Applicable Amount Applicable Period
--------------------------------------------------------------------------------------
$15,286,000 For the 3 month period
ending March 31, 2002
--------------------------------------------------------------------------------------
$30,894,000 For the 6 month period
ending June 30, 2002
--------------------------------------------------------------------------------------
$46,900,000 For the 9 month period
ending September 30, 2002
--------------------------------------------------------------------------------------
$63,370,000 For the 12 month period
ending December 31, 2002
--------------------------------------------------------------------------------------
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--------------------------------------------------------------------------------------
$63,370,000 For the 12 month period
ending each fiscal quarter thereafter
--------------------------------------------------------------------------------------
(b) Make:
(i) CAPITAL EXPENDITURES. Capital expenditures in any
fiscal year, commencing with the fiscal year ended December 31,
2002, in excess of $9,600,000; provided that such limitation
shall be increased for each fiscal year after the fiscal year
ended December 31, 2002 by an amount equal to the amount, if
any, by which Borrower's EBITDA for each 12-month period
(beginning with the 12-month period ended December 31, 2002)
exceeded the amount of Minimum EBITDA set forth in Section
7.20(a)(i) for the corresponding period.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
event of default (each, an "Event of Default") under this Agreement:
8.1 If Borrower fails to pay when due and payable, or when declared
due and payable, all or any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due
Lender, reimbursement of Lender Expenses, or other amounts constituting
Obligations);
8.2 If Borrower fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in this Agreement or in
any of the other Loan Documents;
8.3 If any material portion of the consolidated assets of Borrower
and its Subsidiaries is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by Borrower or any of
its Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against Borrower, or
any of its Subsidiaries, and any of the following events occur: (a) Borrower
or the Subsidiary consents to the institution of such Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not
timely controverted, (c) the petition commencing the Insolvency Proceeding is
not dismissed within 45 calendar days of the date of the filing thereof;
provided, however, that, during the pendency of such period, Lender shall be
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relieved of its obligations to extend credit hereunder, (d) an interim trustee
is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all or any substantial portion of the
business of, Borrower or any of its Subsidiaries, or (e) an order for relief
shall have been entered therein;
8.6 If Borrower or any of its Subsidiaries is enjoined, restrained,
or in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record
with respect to any of the consolidated assets of Borrower and its
Subsidiaries by the United States, or any department, agency, or
instrumentality thereof, or by any state, county, municipal, or governmental
agency, or if any taxes or debts owing at any time hereafter to any one or
more of such entities becomes a Lien, whether xxxxxx or otherwise, upon any of
the consolidated assets of Borrower and its Subsidiaries and the same is not
paid before such payment is delinquent; provided that this Section 8.7 shall
not apply to Liens which are Permitted Liens;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon
any material portion of the consolidated assets of Borrower and its
Subsidiaries;
8.9 If there is a default in any material agreement to which
Borrower or any of its Subsidiaries is a party and such default (a) occurs at
the final maturity of the obligations thereunder, or (b) results in a right by
the other party thereto, irrespective of whether exercised, to accelerate the
maturity of Borrower's or its Subsidiaries' obligations thereunder, to
terminate such agreement, or to refuse to renew such agreement pursuant to an
automatic renewal right therein; provided that the aggregate amount of all
obligations in respect of such agreement equals or exceeds $1,000,000 at such
time;
8.10 If Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment
is permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to Lender
by Borrower, its Subsidiaries, or any officer, employee, agent, or director of
Borrower or any of its Subsidiaries;
8.12 If Borrower or any of its Subsidiaries shall cause, permit, or
suffer, directly or indirectly, any Change of Control;
8.13 If (a) this Agreement or any other Loan Document that purports
to create a Lien shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in
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the Collateral covered hereby or thereby and such failure or cessation would
result in a Material Adverse Change or (b) this Agreement or any other Loan
Document that purports to create a Lien shall, for any reason, fail or cease
to create a valid and perfected and, except to the extent permitted by the
terms hereof or thereof, first priority Lien on or security interest in the
Collateral covered hereby or thereby and, if such failure or cessation would
not result in a Material Adverse Change, such failure or cessation continues
for a period of five (5) days after the date on which such failure or
cessation occurs; or
8.14 Any provision of any Loan Document shall at any time for any
reason be declared by a court of competent jurisdiction to be null and void,
or the validity or enforceability thereof shall be contested by Borrower, or a
proceeding shall be commenced by Borrower, or by any Governmental Authority
having jurisdiction over Borrower, seeking to establish the invalidity or
unenforceability thereof, or Borrower shall deny that Borrower has any
liability or obligation purported to be created under any Loan Document.
9. LENDER'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default, Lender (at its election but without
notice of its election and without demand) may do any one or more of the
following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due
and payable;
(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement, under any of the Loan Documents,
or under any other agreement between Borrower and Lender;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of Lender, but without
affecting any of the Lender's Liens in the Collateral and without affecting
the Obligations;
(d) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Lender considers advisable,
and in such cases, Lender will credit Borrower's Loan Account with only the
net amounts received by Lender in payment of such disputed Accounts after
deducting all Lender Expenses incurred or expended in connection therewith;
(e) Cause Borrower to hold all returned Inventory in
trust for Lender, segregate all returned Inventory from all other assets of
Borrower or in Borrower's possession and conspicuously label said returned
Inventory as the property of Lender;
(f) Without notice to or demand upon Borrower, make such
payments and do such acts as Lender considers necessary or reasonable to
protect its security interests
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in the Collateral. Borrower agrees to assemble the Personal Property
Collateral if Lender so requires, and to make the Personal Property Collateral
available to Lender at a place that Lender may designate which is reasonably
convenient to both parties. Borrower authorizes Lender to enter the premises
where the Personal Property Collateral is located, to take and maintain
possession of the Personal Property Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien that in Lender's determination
appears to conflict with the Lender's Liens and to pay all expenses incurred
in connection therewith and to charge Borrower's Loan Account therefor. With
respect to any of Borrower's owned or leased premises, Borrower hereby grants
Lender a license to enter into possession of such premises and to occupy the
same, without charge, in order to exercise any of Lender's rights or remedies
provided herein, at law, in equity, or otherwise;
(g) Without notice to Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of Borrower
held by Lender (including any amounts received in the AC Accounts), or (ii)
Indebtedness at any time owing to or for the credit or the account of Borrower
held by Lender;
(h) Hold, as cash collateral, any and all balances and
deposits of Borrower held by Lender, and any amounts received in the AC
Accounts, to secure the full and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Personal Property Collateral. Borrower hereby grants to Lender
a license or other right to use, without charge, Borrower's labels, patents,
copyrights, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any property of a similar nature, as it pertains to the
Personal Property Collateral, in completing production of, advertising for
sale, and selling any Personal Property Collateral and Borrower's rights under
all licenses and all franchise agreements shall inure to Lender's benefit;
(j) Sell the Personal Property Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places
(including Borrower's premises) as Lender determines is commercially
reasonable. It is not necessary that the Personal Property Collateral be
present at any such sale;
(k) Lender shall give notice of the disposition of the
Personal Property Collateral as follows:
(i) Lender shall give Borrower a notice in writing of
the time and place of public sale, or, if the sale is a private
sale or some other disposition other than a public sale is to
be made of the Personal Property Collateral, then
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the time on or after which the private sale or other
disposition is to be made; and
(ii) The notice shall be personally delivered or
mailed, postage prepaid, to Borrower as provided in Section 12,
at least 10 days before the earliest time of disposition set
forth in the notice; no notice needs to be given prior to the
disposition of any portion of the Personal Property Collateral
that is perishable or threatens to decline speedily in value or
that is of a type customarily sold on a recognized market;
(l) Lender may credit bid and purchase at any public
sale; and
(m) Lender may seek the appointment of a receiver or
keeper to take possession of all or any portion of the Collateral or to
operate same and, to the maximum extent permitted by law, may seek the
appointment of such a receiver without the requirement of prior notice or a
hearing;
(n) Lender shall have all other rights and remedies
available at law or in equity or pursuant to any other Loan Document; and
(o) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by
Borrower. Any excess will be promptly returned, without interest and subject
to the rights of third Persons, by Lender to Borrower.
9.2 REMEDIES CUMULATIVE. The rights and remedies of Lender under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by
Lender of one right or remedy shall be deemed an election, and no waiver by
Lender of any Event of Default shall be deemed a continuing waiver. No delay
by Lender shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
After the occurrence and continuance of a Default, if Borrower
fails to pay any monies (whether taxes, assessments, insurance premiums, or,
in the case of leased properties or assets, rents or other amounts payable
under such leases) due to third Persons, or fails to make any deposits or
furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Lender, in its sole discretion and without
prior notice to Borrower, may do any or all of the following: (a) make payment
of the same or any part thereof, (b) set up such reserves in Borrower's Loan
Account as Lender deems necessary to protect Lender from the exposure created
by such failure, or (c) in the case of the failure to comply with Section 6.8
hereof, obtain and maintain insurance policies of the type described
-54-
in Section 6.8 and take any action with respect to such policies as Lender
deems prudent. Any such amounts paid by Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by Lender to
make similar payments in the future or a waiver by Lender of any Event of
Default under this Agreement. Lender need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by
Lender on which Borrower may in any way be liable.
11.2 LENDER'S LIABILITY FOR COLLATERAL. Borrower hereby agrees that:
(a) so long as Lender complies with its obligations, if any, under the Code,
Lender shall not in any way or manner be liable or responsible for: (i) the
safekeeping of the Collateral, (ii) any loss or damage thereto occurring or
arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other Person, and (b) all risk of loss, damage,
or destruction of the Collateral shall be borne by Borrower.
11.3 INDEMNIFICATION. Borrower shall pay, indemnify, defend, and
hold the Lender-Related Persons, each Participant, and each of their
respective officers, directors, employees, agents, and attorneys-in-fact
(each, an "Indemnified Person") harmless (to the fullest extent permitted by
law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable attorneys fees
and disbursements and other costs and expenses actually incurred in connection
therewith (as and when they are incurred and irrespective of whether suit is
brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution,
delivery, enforcement, performance, or administration of this Agreement, any
of the other Loan Documents, or the transactions contemplated hereby or
thereby, and (b) with respect to any investigation, litigation, or proceeding
related to this Agreement, any other Loan Document, or the use of the proceeds
of the credit provided hereunder (irrespective of whether any Indemnified
Person is a party thereto), or any act, omission, event, or circumstance in
any manner related thereto (all the foregoing, collectively, the "Indemnified
Liabilities"). The foregoing to the contrary notwithstanding, Borrower shall
have no obligation to any Indemnified Person under this Section 11.3 with
respect to any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or willful
misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person
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with respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified
Person making such payment is entitled to be indemnified and reimbursed by
Borrower with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY
SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES
WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR
OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
12. NOTICES. Unless otherwise provided in this Agreement, all notices or
demands by Borrower or Lender to the other relating to this Agreement or any
other Loan Document shall be in writing and (except for financial statements
and other informational documents which may be sent by first-class mail,
postage prepaid) shall be personally delivered or sent by registered or
certified mail (postage prepaid, return receipt requested), overnight courier,
electronic mail (at such email addresses as Borrower or Lender, as applicable,
may designate to each other in accordance herewith), or telefacsimile to
Borrower or Lender, as the case may be, at its address set forth below:
If to Borrower: VITALWORKS INC.
000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxx, CFO
Fax No. 000-000-0000
with copies to: CADWALADER, XXXXXXXXXX & XXXX
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx, Esq.
Fax No. 000-000-0000
If to Lender: FOOTHILL CAPITAL CORPORATION
400 Northpark Town Center
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Business Finance Division Manager
Fax No. 000-000-0000
with copies to: FOOTHILL CAPITAL CORPORATION
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, XX 00000
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Attn: Business Finance Division Manager
Fax No. 000-000-0000
with copies to: XXXXXXXX & XXXXXXXX LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax No. 000-000-0000
Lender and Borrower may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given
to the other party. All notices or demands sent in accordance with this
Section 12, other than notices by Lender in connection with enforcement rights
against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Borrower acknowledges and agrees that notices
sent by Lender in connection with the exercise of enforcement rights against
Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT
IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED
HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT,
AT LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO
BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BORROWER AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON
-57-
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION 13(b).
(c) BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND LENDER REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 ASSIGNMENTS AND PARTICIPATIONS.
(a) Lender may assign and delegate to one or more
assignees (each an "Assignee") all, or any ratable part of all, of the
Obligations and the other rights and obligations of Lender hereunder and under
the other Loan Documents in increments of not less than $5,000,000 per
assignee; provided, however, that Borrower may continue to deal solely and
directly with Lender in connection with the interest so assigned to an
Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Borrower by Lender and the Assignee, and (ii) Lender and
its Assignee have delivered to Borrower an appropriate assignment and
acceptance agreement.
(b) From and after the date that Lender provides
Borrower with such written notice and executed assignment and acceptance
agreement, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such assignment and acceptance agreement, shall have the assigned and
delegated rights and obligations of Lender under the Loan Documents, and (ii)
Lender shall, to the extent that rights and obligations hereunder and under
the other Loan Documents have been assigned and delegated by it pursuant to
such assignment and acceptance agreement, relinquish its rights (except with
respect to Section 11.3 hereof) and be released from its obligations under
this Agreement (and in the case of an assignment and acceptance covering all
or the remaining portion of Lender's rights and obligations under this
Agreement and the other Loan Documents, Lender shall cease to be a party
hereto and thereto), and such assignment shall affect a novation between
Borrower and the Assignee.
(c) Immediately upon Borrower's receipt of such fully
executed assignment and acceptance agreement, this Agreement shall be deemed
to be amended to the
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extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the rights and duties of Lender
arising therefrom.
(d) Lender may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of
such Lender (a "Participant") participating interests in the Obligations and
the other rights and interests of Lender hereunder and under the other Loan
Documents; provided, however, that (i) Lender shall remain the "Lender" for
all purposes of this Agreement and the other Loan Documents and the
Participant receiving the participating interest in the Obligations and the
other rights and interests of Lender shall not constitute a "Lender" hereunder
or under the other Loan Documents and Lender's obligations under this
Agreement shall remain unchanged, (ii) Lender shall remain solely responsible
for the performance of such obligations, (iii) Borrower and Lender shall
continue to deal solely and directly with each other in connection with
Lender's rights and obligations under this Agreement and the other Loan
Documents, (iv) Lender shall not transfer or grant any participating interest
under which the Participant has the right to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan Document,
except to the extent such amendment to, or consent or waiver with respect to
this Agreement or of any other Loan Document would (A) extend the final
maturity date of the Obligations hereunder in which such Participant is
participating, (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating, (C) release all or a
material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through Lender, or (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums, and (v) all amounts payable
by Borrower hereunder shall be determined as if Lender had not sold such
participation, except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence of an Event of Default, each Participant shall be
deemed to have the right of set-off in respect of its participating interest
in amounts owing under this Agreement to the same extent as if the amount of
its participating interest were owing directly to it as Lender under this
Agreement. The rights of any Participant only shall be derivative through
Lender and no Participant shall have any rights under this Agreement or the
other Loan Documents or any direct rights as to Borrower, the Collections, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by Lender.
(e) In connection with any such assignment or
participation or proposed assignment or participation, a Lender may disclose
all documents and information which it now or hereafter may have relating to
Borrower or Borrower's business.
(f) Any other provision in this Agreement
notwithstanding, Lender may at any time create a security interest in, or
pledge, all or any portion of its rights under
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and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
14.2 SUCCESSORS. This Agreement shall bind and inure to the benefit
of the respective successors and assigns of each of the parties; provided,
however, that Borrower may not assign this Agreement or any rights or duties
hereunder without Lender's prior written consent and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by Lender shall
release Borrower from its Obligations. Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by Borrower is required in
connection with any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by Borrower therefrom, shall be effective unless the same shall
be in writing and signed by Lender and Borrower and then any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
15.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Lender in exercising the same, will operate as a waiver
thereof. No waiver by Lender will be effective unless it is in writing, and
then only to the extent specifically stated. No waiver by Lender on any
occasion shall affect or diminish Lender's rights thereafter to require strict
performance by Borrower of any provision of this Agreement. Lender's rights
under this Agreement and the other Loan Documents will be cumulative and not
exclusive of any other right or remedy that Lender may have.
16. GENERAL PROVISIONS.
16.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and Lender.
16.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
16.3 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Lender or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has
been reviewed by all parties and shall be
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construed and interpreted according to the ordinary meaning of the words used
so as to accomplish fairly the purposes and intentions of all parties hereto.
16.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the
purpose of determining the legal enforceability of any specific provision.
16.5 WITHHOLDING TAXES. All payments made by Borrower hereunder or
under any note will be made without setoff, counterclaim, or other defense,
except as required by applicable law other than for Taxes (as defined below).
All such payments will be made free and clear of, and without deduction or
withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by
any jurisdiction (other than the United States) or by any political
subdivision or taxing authority thereof or therein (other than of the United
States) with respect to such payments (but excluding, any tax imposed by any
jurisdiction or by any political subdivision or taxing authority thereof or
therein (i) measured by or based on the net income or net profits of Lender,
or (ii) to the extent that such tax results from a change in the circumstances
of Lender, including a change in the residence, place of organization, or
principal place of business of Lender, or a change in the branch or lending
office of Lender participating in the transactions set forth herein) and all
interest, penalties or similar liabilities with respect thereto (all such
non-excluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as "Taxes"). If any Taxes are so levied
or imposed, Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any note, including any amount paid pursuant
to this Section 16.5 after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided,
however, that Borrower shall not be required to increase any such amounts
payable to Lender if the increase in such amount payable results from Lender's
own willful misconduct or gross negligence. Borrower will furnish to Lender as
promptly as possible after the date the payment of any Taxes is due pursuant
to applicable law certified copies of tax receipts evidencing such payment by
Borrower.
16.6 AMENDMENTS IN WRITING. This Agreement only can be amended by a
writing signed by Lender and Borrower.
16.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to
be an original, and all of which, when taken together, shall constitute but
one and the same Agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally as effective as delivery of an
original executed counterpart of this Agreement. Any party delivering an
executed counterpart of this Agreement by telefacsimile also shall deliver an
original executed counterpart of this Agreement but the failure to deliver an
original executed
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counterpart shall not affect the validity, enforceability, and binding effect
of this Agreement. The foregoing shall apply to each other Loan Document
mutatis mutandis.
16.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or the transfer to Lender of any
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers
of property (collectively, a "Voidable Transfer"), and if Lender is required
to repay or restore, in whole or in part, any such Voidable Transfer, or
elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that Lender is required or
elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of Lender related thereto, the liability of Borrower
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.
16.9 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or
qualified by any other agreement, oral or written, before the date hereof.
[Signature page to follow.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
VITALWORKS INC.,
a Delaware corporation
By: ______________________________
Title:
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: ______________________________
Title:
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.........................................................1
1.1 Definitions...................................................................1
1.2 Accounting Terms.............................................................17
1.3 Code.........................................................................17
1.4 Construction.................................................................17
1.5 Schedules and Exhibits.......................................................18
2. LOAN AND TERMS OF PAYMENT...........................................................18
2.1 [Intentionally Omitted]......................................................18
2.2 Term Loans...................................................................18
2.3 [Intentionally Omitted]......................................................20
2.4 Payments.....................................................................20
2.5 Payments in Dollars..........................................................22
2.6 Interest Rates: Rates, Payments, and Calculations...........................22
2.7 Account Control Agreements...................................................23
2.8 Crediting Payments...........................................................24
2.9 Designated Account...........................................................24
2.10 Maintenance of Loan Account; Statements of Obligations.......................24
2.11 Fees.........................................................................24
2.12 [Intentionally Omitted[......................................................25
2.13 [Intentionally Omitted]......................................................25
2.14 Capital Requirements.........................................................25
3. CONDITIONS; TERM OF AGREEMENT.......................................................25
3.1 Conditions Precedent to the Initial Extension of Credit......................25
3.2 [Intentionally Omitted]......................................................29
3.3 [Intentionally Omitted]......................................................29
3.4 Term.........................................................................29
3.5 Effect of Termination........................................................29
3.6 Early Termination by Borrower................................................29
4. CREATION OF SECURITY INTEREST.......................................................30
4.1 Grant of Security Interest...................................................30
4.2 Negotiable Collateral........................................................30
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.......30
4.4 Delivery of Additional Documentation Required................................31
4.5 Power of Attorney............................................................31
4.6 Right to Inspect.............................................................32
4.7 Securities Account Agreements................................................32
5. REPRESENTATIONS AND WARRANTIES......................................................32
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5.1 No Encumbrances..............................................................32
5.2 NDC Agreements...............................................................32
5.3 [Intentionally Omitted]......................................................32
5.4 Equipment....................................................................32
5.5 Location of Inventory and Equipment..........................................32
5.6 Inventory Records............................................................33
5.7 Location of Chief Executive Office; FEIN.....................................33
5.8 Due Organization and Qualification; Subsidiaries.............................33
5.9 Due Authorization; No Conflict...............................................33
5.10 Litigation...................................................................34
5.11 No Material Adverse Change...................................................34
5.12 Fraudulent Transfer..........................................................34
5.13 Employee Benefits............................................................35
5.14 Environmental Condition......................................................35
5.15 Brokerage Fees...............................................................35
5.16 Intellectual Property........................................................35
5.17 Leases.......................................................................37
5.18 DDAs.........................................................................37
5.19 Complete Disclosure..........................................................37
5.20 Indebtedness.................................................................37
6. AFFIRMATIVE COVENANTS...............................................................37
6.1 Accounting System............................................................37
6.2 Collateral Reporting.........................................................37
6.3 Financial Statements, Reports, Certificates..................................38
6.4 [Intentionally Omitted]......................................................40
6.5 Return.......................................................................40
6.6 Maintenance of Properties....................................................41
6.7 Taxes........................................................................41
6.8 Insurance....................................................................41
6.9 Location of Inventory and Equipment..........................................42
6.10 Compliance with Laws.........................................................42
6.11 Leases.......................................................................42
6.12 Brokerage Commissions........................................................42
6.13 Existence....................................................................43
6.14 Environmental................................................................43
6.15 Disclosure Updates...........................................................43
6.16 Intellectual Property Rights.................................................43
.
7. NEGATIVE COVENANTS..................................................................45
7.1 Indebtedness.................................................................45
7.2 Liens........................................................................46
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7.3 Restrictions on Fundamental Changes..........................................46
7.4 Disposal of Assets...........................................................46
7.5 Change Name..................................................................46
7.6 Guarantee....................................................................46
7.7 Nature of Business...........................................................47
7.8 Prepayments and Amendments...................................................47
7.9 [Intentionally Omitted]......................................................47
7.10 Consignments.................................................................47
7.11 Distributions................................................................47
7.12 Accounting Methods...........................................................47
7.13 Investments..................................................................47
7.14 Transactions with Affiliates.................................................48
7.15 Suspension...................................................................48
7.16 [Intentionally Omitted]......................................................48
7.17 Use of Proceeds..............................................................48
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
with Bailees.................................................................48
7.19 Securities Accounts..........................................................48
7.20 Financial Covenants..........................................................48
8. EVENTS OF DEFAULT...................................................................50
9. LENDER'S RIGHTS AND REMEDIES........................................................52
9.1 Rights and Remedies..........................................................52
9.2 Remedies Cumulative..........................................................54
10. TAXES AND EXPENSES..................................................................54
11. WAIVERS; INDEMNIFICATION............................................................55
11.1 Demand; Protest..............................................................55
11.2 Lender's Liability for Collateral............................................55
11.3 Indemnification..............................................................55
12. NOTICES.............................................................................56
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..........................................57
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..........................................58
14.1 Assignments and Participations...............................................58
14.2 Successors...................................................................60
15. AMENDMENTS; WAIVERS.................................................................60
15.1 Amendments and Waivers.......................................................60
15.2 No Waivers; Cumulative Remedies..............................................60
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16. GENERAL PROVISIONS..................................................................60
16.1 Effectiveness................................................................60
16.2 Section Headings.............................................................60
16.3 Interpretation...............................................................60
16.4 Severability of Provisions...................................................61
16.5 Withholding Taxes............................................................61
16.6 Amendments in Writing........................................................61
16.7 Counterparts; Telefacsimile Execution........................................61
16.8 Revival and Reinstatement of Obligations.....................................62
16.9 Integration..................................................................62
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EXHIBITS AND SCHEDULES
Exhibit C-1 Form of Compliance Certificate
Schedule D-1 Designated Account
Schedule D-2 Other Designated Accounts
Schedule L-1 Lender's Account
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 2.7(a) AC Accounts
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrower
Schedule 5.8(c) Capitalization of Borrower's Subsidiaries
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16(a) Intellectual Property
Schedule 5.16(b) Source Code Licenses
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 7.14 Transactions with Affiliates
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SCHEDULE D-1
DESIGNATED ACCOUNT
Account number 670-0000000 of Borrower maintained with Bank of
New York, whose office is located at 000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx
Xxxx 00000, and whose ABA number is 000000000.
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SCHEDULE D-2
OTHER DESIGNATED ACCOUNTS
Account number 0000-0000-0000 of Borrower maintained with Bank
of America, N.A., whose office is located at X.X. Xxx 0000, Xxxxxxx, XX
00000-0000, and whose ABA number is 000000000.
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SCHEDULE L-1
LENDER'S ACCOUNT
An account at a bank designated by Lender from time to time as
the account into which Borrower shall make all payments to Lender under this
Agreement and the other Loan Documents; unless and until Lender notifies
Borrower to the contrary, Lender's Account shall be that certain deposit
account bearing account number 323-266193 and maintained by Lender with
JPMorgan Chase Bank, 0 Xxx Xxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
ABA #000000000.
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