Exhibit 99.2
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CREDIT AGREEMENT
among
PEAPOD, INC.
and
KONINKLIJKE AHOLD NV
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Dated as of April 14, 2000
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$20,000,000
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TABLE OF CONTENTS
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SECTION 1. Amount and Terms of Credit.................................... 1
1.01 Commitment..................................................... 1
1.02 Notice of Borrowing............................................ 1
1.03 Conversions.................................................... 2
1.04 Interest....................................................... 2
1.05 Interest Periods............................................... 2
SECTION 2. Commitment.................................................... 3
2.01 [Reserved]..................................................... 3
Voluntary Termination or Reduction of Unutilized Total
2.02 Commitment..................................................... 3
2.03 Mandatory Prepayments and Commitment Reductions................ 3
SECTION 3. Payments...................................................... 4
3.01 Voluntary Prepayments.......................................... 4
3.02 Method and Place of Payment.................................... 4
3.03 Net Payments................................................... 4
SECTION 4A. Conditions Precedent to Initial Loans........................ 5
4A.01 Execution of Agreement......................................... 5
4A.02 Fees........................................................... 5
4A.03 Officer's Certificate.......................................... 5
4A.04 Opinions of Counsel............................................ 5
4A.05 Adverse Change, etc............................................ 5
4A.06 Litigation..................................................... 6
4A.07 Approvals...................................................... 6
4A.08 Transaction Documents.......................................... 6
4A.09 Previous Bridge Loan; Security Documents....................... 6
4A.10 Security Documents............................................. 6
4A.11 Warrants....................................................... 7
4A.12 Split Pea Software Liquidation................................. 7
SECTION 4B. Conditions Precedent to All Loans............................ 7
4B.01 No Default; Representations and Warranties..................... 7
4B.02 Notice of Borrowing............................................ 7
4B.03 Restrictions on Loans.......................................... 7
4B.04 Security Documents............................................. 7
4B.05 Second Opinion of Counsel...................................... 7
SECTION 5. Representations, Warranties and Agreements.................... 8
5.01 Borrower Status................................................ 8
5.02 Power and Authority............................................ 8
5.03 No Violation................................................... 8
5.04 Litigation..................................................... 8
5.05 Use of Proceeds; Margin Regulations............................ 8
5.06 Approvals...................................................... 9
5.07 Investment Company Act......................................... 9
5.08 Public Utility Holding Company Act............................. 9
5.09 True and Complete Disclosure................................... 9
(i)
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5.10 Financial Condition; Financial Statements; Projections, etc..... 9
5.11 Security Interests.............................................. 10
5.12 Compliance with Statutes, etc................................... 10
5.13 Tax Returns and Payments........................................ 10
5.14 Subsidiaries.................................................... 10
5.15 Representations and Warranties in Transaction Documents......... 10
5.16 Patents, etc.................................................... 10
SECTION 6. Affirmative Covenants.......................................... 11
6.01 Information Covenants........................................... 11
6.02 Books, Records and Inspections.................................. 12
6.03 Payment of Taxes................................................ 12
6.04 Existence; Franchises........................................... 12
6.05 Compliance with Statutes, etc................................... 13
6.06 Good Repair..................................................... 13
6.07 End of Fiscal Years; Fiscal Quarters............................ 13
6.08 Use of Proceeds................................................. 13
6.09 Corporate Formalities........................................... 13
6.10 Compliance with Environmental Laws.............................. 13
6.11 Performance of Obligations...................................... 13
SECTION 7. Negative Covenants............................................. 13
7.01 Business........................................................ 14
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc.......... 14
7.03 Liens........................................................... 14
7.04 Indebtedness.................................................... 15
7.05 Capital Expenditures............................................ 15
7.06 Advances, Investments and Loans................................. 15
7.07 Dividends, etc.................................................. 15
7.08 Transactions with Affiliates.................................... 16
7.09 Prohibition on Creation of Subsidiaries......................... 16
SECTION 8. Events of Default.............................................. 16
8.01 Payments........................................................ 16
8.02 Representations, etc............................................ 16
8.03 Covenants....................................................... 16
8.04 Default Under Other Agreements.................................. 16
8.05 Bankruptcy, etc................................................. 16
8.06 Security Documents.............................................. 17
8.07 Judgments....................................................... 17
8.08 Change of Control............................................... 17
8.09 Transaction Documents........................................... 17
SECTION 9. Definitions.................................................... 17
SECTION 10. Miscellaneous................................................. 23
10.01 Payment of Expenses, etc........................................ 23
10.02 Right of Setoff................................................. 24
10.03 Notices......................................................... 24
10.04 Assignments..................................................... 24
10.05 No Waiver; Remedies Cumulative.................................. 24
(ii)
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10.06 Calculations; Computations..................................... 24
10.07 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL; WAIVER OF CERTAIN CLAIMS........................... 25
10.08 Counterparts................................................... 25
10.09 Effectiveness.................................................. 26
10.10 Headings Descriptive........................................... 26
10.11 Amendment or Waiver............................................ 26
10.12 Survival....................................................... 26
SCHEDULE I Existing Liens
SCHEDULE 5.04 Litigation
SCHEDULE 5.10(b) Material Adverse Changes since December 31, 1999
EXHIBIT A Form of Opinion of Sidley & Austin
Form of Amended and Restated Collateral Assignment of Intellectual
EXHIBIT B Property
EXHIBIT C Form of Amended and Restated Security Agreement
(iii)
CREDIT AGREEMENT, dated as of April 14, 2000, among PEAPOD, INC., a
Delaware corporation (the "Borrower") and KONINKLIJKE AHOLD NV (the "Lender").
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 9 are used herein as so defined.
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth herein, the
Lender is willing to make available to the Borrower the credit facilities
provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 Commitment. (a) Subject to and upon the terms and conditions set forth
herein, the Lender agrees to make a revolving loan or revolving loans (each
such term loan a "Loan" and together with any revolving loans made pursuant to
clause (i) of this Section 1.01 collectively, the "Loans") to the Borrower,
which Loans (i) shall be incurred by the Borrower pursuant to one or more
drawings, at any time and from time to time during the period commencing on
the Initial Borrowing Date and ending on the Maturity Date, (ii) shall, unless
the Lender is unable to determine the Eurodollar Rate, at the option of the
Borrower, be incurred and maintained as and/or converted into Base Rate Loans
or Eurodollar Loans, (iii) may be repaid and reborrowed in accordance with the
provisions hereof and (iv) shall not exceed the Commitment in aggregate
principal amount at any one time outstanding.
(b) The Borrower may not (i) incur Loans in excess of $3,000,000 (exclusive
of Loans made to repay the Term Note or other obligations owing to the Lender
or its Affiliates) in principal amount in any calendar month (or such greater
amount as the Lender and the Borrower shall agree), (ii) incur Loans more than
four times in any calendar month and (iii) incur Loans in excess of the amount
of the budgeted cash flow requirements of the Borrower for its operations for
the two week period following the Borrowing thereof, as set forth in a budget
provided by the Borrower to the Lender and reasonably acceptable to the
Lender; provided, however, it being understood that the Lender shall not
object to the amount of the Borrowing request on the Second Borrowing Date to
the extent such request is for an amount not to exceed $1,500,000.
1.02 Notice of Borrowing. (a) Whenever the Borrower desires to incur Loans,
the Borrower shall give the Lender at its Notice Office, prior to 12:00 Noon
(New York time), at least three Business Days' (one Business Day's in the case
of a Borrowing of Base Rate Loans) prior written notice (or telephonic notice
promptly confirmed in writing) of each Borrowing of Loans to be made
hereunder. Each such notice shall specify (i) the aggregate principal amount
of the Loans to be made pursuant to such Borrowing, (ii) the date of such
Borrowing (which shall be a Business Day), (iii) whether the respective
Borrowing shall consist of Base Rate Loans or (to the extent permitted)
Eurodollar Loans and, if Eurodollar Loans, the Interest Period to be initially
applicable thereto and (iv) the proposed use of the proceeds of such Loans.
The Notice of Borrowing will certify that the use of the proceeds of the Loan,
and the timing of the use thereof, are in accordance with the cash flow budget
for the following two weeks provided by the Borrower to the Lender.
(b) The proceeds of the initial Loans hereunder shall be applied first (i)
to repay all principal, accrued interest and the amounts owing under or
evidenced by the Term Note or (ii) for the acquisition by the Lender of the
Term Note (and in the case of such acquisition, the Term Note shall be deemed
amended, restated and superseded hereby and the amount paid by the Lender to
acquire the Term Note shall constitute a Loan hereunder). The proceeds of the
Loans referred to in this Section 1.02(b) shall be remitted by the Lender
directly to the holder of the Term Note and the Borrower hereby directs such
disposition of such proceeds.
(c) Subject to the terms and conditions of this Agreement and except as
otherwise provided in Section 1.02(b) and elsewhere herein, the Lender shall
make the proceeds of each requested Loan (other than Loans to
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repay obligations owing to the Lender or its Affiliates, which may be applied
directly to such obligations) available to the Borrower by 2:00 p.m. (New York
time) on the requested date of such borrowing in immediately available funds
to the Borrower's account at the Northern Trust Company, Chicago, Illinois
pursuant to the following wire transfer instructions: ABA #000000000; For
Credit to 65781; FBO: Peapod, Inc.
1.03 Conversions. The Borrower shall have the option, unless the Lender is
unable to determine the Eurodollar Rate, to convert on any Business Day
occurring on or after the Initial Borrowing Date (but in no event may there be
more than one conversion in any one month) all of the outstanding principal
amount of Loans made pursuant to one or more Borrowings into a Borrowing or
Borrowings of another Type of Loan. In no event may less than all of the Base
Rate Loans be converted to Eurodollar Loans.
1.04 Interest. (a) The unpaid principal amount of each Base Rate Loan shall
bear interest from the date of the Borrowing thereof until the earlier of (i)
the maturity (whether by acceleration or otherwise) of such Base Rate Loan and
(ii) the conversion of such Base Rate Loan to a Eurodollar Loan pursuant to
Section 1.03, at a rate per annum which shall at all times be the Applicable
Base Rate Margin plus the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear interest
for each interest period thereof from the date of the Borrowing until the
earlier of (i) maturity (whether by acceleration or otherwise) of such
Eurodollar Loan and (ii) the conversion of such Eurodollar Loan to a Base Rate
Loan at a rate per annum which shall at all times be the Applicable Eurodollar
Margin plus the relevant Eurodollar Rate.
(c) All overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable
hereunder shall, in each case, bear interest at a rate per annum equal to the
Base Rate in effect from time to time plus the sum of (i) 2% and (ii) the
Applicable Base Rate Margin, provided that no Loan shall bear interest after
maturity (whether by acceleration or otherwise) at a rate per annum less than
2% plus the rate of interest applicable thereto at maturity. Interest which
accrues under this Section 1.04(c) shall be payable on demand.
(d) Interest shall accrue from and including the date of any Borrowing to,
but excluding the date of, any repayment thereof and shall be payable monthly
in arrears on the last Business Day of each month and on any repayment,
prepayment or conversion (on the amount repaid, prepaid or converted) and at
maturity (whether by acceleration or otherwise) and, after such maturity, on
demand.
(e) All computations of interest hereunder shall be made in accordance with
Section 10.06(b).
(f) The Lender's determination of any interest rate shall, absent manifest
error, be final and conclusive and binding on both parties.
1.05 Interest Periods. (a) At the time the Borrower gives a notice of
borrowing or notice of conversion (which must be given three Business Days
prior to the requested conversion) in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans the Borrower shall have the right to
elect, by giving the Lender written notice thereof (or telephonic notice
promptly confirmed in writing), the Interest Period applicable to such
Borrowing, which Interest Period shall, at the option of the Borrower, be a
one or three month period. Notwithstanding anything to the contrary contained
above:
(i) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period expires;
(ii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
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(iii) if any Interest Period would otherwise expire on a day which is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day; and
(iv) no Interest Period shall extend beyond the Maturity Date.
(b) If, prior to the third Business Day prior to the expiration of any
Interest Period, the Borrower has failed to elect a new Interest Period to be
applicable to the respective Borrowing of Eurodollar Loans as provided above,
the Borrower shall be deemed to have elected to convert such Borrowing into a
Borrowing of Base Rate Loans effective as of the expiration date of such
current Interest Period.
SECTION 2. Commitment.
2.01 [Reserved]
2.02 Voluntary Termination or Reduction of Unutilized Total
Commitment. Upon at least two Business Days' prior written notice (or
telephone notice promptly confirmed in writing) to the Lender at its Notice
Office, the Borrower shall have the right, at any time or from time to time,
without premium or penalty, to terminate or partially reduce the unutilized
Commitment in whole or in part.
2.03 Mandatory Prepayments and Commitment Reductions.
(A) Commitment Reductions:
(a) On the date of receipt thereof by the Borrower of Cash Proceeds from
any Asset Sale (other than Asset Sales not exceeding $250,000 in the aggregate
during the term of this Agreement), the Commitment shall be permanently
reduced by an amount equal to 100% of the Net Cash Proceeds from such Asset
Sale.
(b) On the date of the receipt thereof by the Borrower, the Commitment
shall be permanently reduced by an amount equal to 100% of the proceeds (net
of underwriting discounts, commissions and other reasonable costs associated
therewith) of the incurrence of any Indebtedness by the Borrower, other than
Indebtedness permitted by Section 7.04 as in effect on the date hereof.
(c) On the date of the receipt thereof by the Borrower, the Commitment
shall be permanently reduced by an amount equal to 100% of the cash proceeds
(net of underwriting discounts, commissions and other reasonable costs
associated therewith) of any sale or issuance of its equity (other than the
Preferred Stock and proceeds from the exercise of options not to exceed
$250,000 during any fiscal year) and 100% of any amount of cash received by
the Borrower in connection with any contribution to its capital.
(d) On the date of receipt thereof by the Borrower of cash proceeds from
any Recovery Event, the Commitment shall be permanently reduced by an amount
equal to 100% of the proceeds of such Recovery Event (after deducting
reasonable expenses in realizing such proceeds), provided that if the Borrower
intends to use such insurance proceeds or condemnation award to replace or
repair the affected property, the Borrower may use such proceeds or awards
(not exceeding $500,000 in aggregate amount during the term of this Agreement)
to purchase such replacement property or make such repairs within 30 days
after such Recovery Event and shall deliver to the Lender written evidence of
the use of such proceeds or award for such purpose.
(e) The Commitment shall be terminated in full on the earliest to occur of:
(i) the Maturity Date, (ii) if the shareholders of the Borrower disapprove of
the sale of shares pursuant to the Securities Purchase Agreement, 45 days
after such disapproval, (iii) the fourth monthly anniversary of the Effective
Date, if the shareholders of the Borrower fail, within four months after the
Effective Date, to approve or disapprove the sale of securities pursuant to
the Securities Purchase Agreement, or (iv) the fourth monthly anniversary of
the Effective Date, if
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the purchase of all securities pursuant to the Securities Purchase Agreement
does not occur on or before such fourth monthly anniversary (other than by
reason of breach by the Purchaser (as defined in the Securities Purchase
Agreement) of its obligation under the Securities Purchase Agreement).
(B) Repayments and Prepayments:
(a) If on any date the aggregate outstanding principal amount of Loans
exceeds the Commitment as then in effect, the Borrower shall repay on such
date the principal of Loans in an aggregate amount equal to such excess.
(b) Notwithstanding anything to the contrary contained elsewhere in this
Agreement all then outstanding Loans shall be repaid in full on the Maturity
Date.
(c) The outstanding Loans shall be prepaid with the net proceeds received
by the Borrower from the issuance of the Preferred Stock, but such prepayment
shall not reduce the amount of the Commitment.
SECTION 3. Payments.
3.01 Voluntary Prepayments. The Borrower shall have the right to prepay
Loans in whole or in part, without premium or penalty, from time to time on
the following terms and conditions: the Borrower shall give the Lender prior
to 12:00 noon (New York time) at the Notice Office at least one Business Day's
prior written notice (or telephonic notice promptly confirmed in writing) of
its intent to prepay the Loans and the amount of such prepayment.
3.02 Method and Place of Payment. Except as otherwise specifically provided
herein, all payments under this Agreement shall be made to the Lender not
later than 12:00 P.M. (New York time) on the date when due and shall be made
in immediately available funds and in lawful money of the United States of
America at the Payment Office. Any payments under this Agreement which are
made later than 12:00 P.M. (New York time) shall be deemed to have been made
on the next succeeding Business Day. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable during such
extension at the applicable rate in effect immediately prior to such
extension.
3.03 Net Payments. (a) All payments made by the Borrower will be made
without setoff, counterclaim or other defense. 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 or by any
political subdivision or taxing authority thereof or therein with respect to
such payments (but excluding, except as provided in the second succeeding
sentence, any tax imposed on or measured by the net income or net profits of
the Lender pursuant to the laws of the jurisdiction in which it is organized
or the jurisdiction in which the principal office or applicable lending office
of the Lender is located or any subdivision thereof or therein) and all
interest, penalties or similar liabilities with respect to such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges (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, the 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, after withholding or deduction for or on account of
any Taxes, will not be less than the amount provided for herein. If any
amounts are payable in respect of Taxes pursuant to the preceding sentence,
the Borrower agrees to reimburse the Lender, upon the written request of the
Lender, for taxes imposed on or measured by the net income or profits of the
Lender pursuant to the laws of the jurisdiction in which the Lender is
organized or in which the principal office or applicable lending office of the
Lender is located or under the laws of any political subdivision or taxing
authority of any such jurisdiction in which the Lender is organized or in
which the principal office or applicable lending office of the Lender is
located and for any withholding of taxes as the Lender shall determine in good
faith are payable by, or withheld from, the Lender, in respect of such amounts
so paid to or on behalf of the
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Lender pursuant to the preceding sentence and in respect of any amounts paid
to or on behalf of the Lender pursuant to this sentence. The Borrower will
furnish to the Lender within 45 days after the date the payment of any Taxes
is due pursuant to applicable law certified copies of tax receipts evidencing
such payment by the Borrower or, if the relevant taxing authority does not
issue such receipts, such other documents of payment as may be reasonably
satisfactory to the Lender. The Borrower agrees to indemnify, defend and hold
harmless the Lender, and reimburse the Lender upon its written request, for
the amount of any Taxes so levied or imposed and paid by the Lender and all
costs and expenses incurred in connection with same including, without
limitation, attorney's fees and interest and penalties on the Taxes.
(b) Nothwithstanding Section 3.03(a), the Borrower shall not be required to
make any payments to the Lender pursuant to Section 3.03(a) unless the Lender
complies with the following certification requirements:
(i) the Lender shall, no later than the Initial Borrowing Date, deliver
to the Borrower two accurate and complete signed originals of Internal
Revenue Service Form W-8ECI or any successor thereto (collectively, "Form
W-8ECI"), or two accurate and complete signed originals of Internal Revenue
Service Form W-8BEN or any successor thereto (collectively, "Form W-8BEN"),
as appropriate, in each case indicating that the Lender is on the date of
delivery thereof entitled to receive all payments under this Agreement free
from withholding of United States federal income tax;
(ii) the Lender shall deliver to the Borrower two further Form W-8ECIs
or Form W-8BENs, as appropriate, on or before the date that any such forms
expire or become obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower
(other than a change in law that renders such forms inapplicable or which
would prevent the Lender from duly completing and delivering any such form)
unless the Lender is precluded from delivering such forms; and
(iii) the Lender shall, to the extent it is legally entitled to do so
and the same would not be disadvantageous to it, promptly upon the
Borrower's reasonable request to that effect, and at the Borrower's cost
and expense, deliver to the Borrower such other forms or similar
documentation as may be required from time to time by any applicable law,
treaty, rule or regulation in order to establish the Lender's exemption
from withholding on payments under this Agreement.
SECTION 4A. Conditions Precedent to Initial Loans. The obligation of the
Lender to make Loans hereunder on the Initial Borrowing Date is subject, at
the time of the making of such Loans, to the satisfaction of each of the
following conditions:
4A.01 Execution of Agreement. On or prior to the Initial Borrowing Date,
this Agreement shall have become effective as provided in Section 10.09.
4A.02 Fees. On the Initial Borrowing Date, the Borrower shall have paid to
the Lender all Fees and expenses (including, without limitation, reasonable
fees and expenses of counsel) agreed upon by such parties to be paid on or
prior to such date.
4A.03 Officer's Certificate. On the Initial Borrowing Date, the Lender
shall have received a certificate dated such date signed by the President or
any Vice President of the Borrower stating that all of the applicable
conditions set forth in Sections 4A.05, 4A.06, 4A.07, and 4A.08 exist or have
been satisfied as of such date.
4A.04 Opinions of Counsel. On the Initial Borrowing Date, the Lender shall
have received an opinion, addressed to the Lender and dated the Initial
Borrowing Date, from Sidley & Austin, special counsel to the Borrower,
covering the matters contained in Exhibit A, which opinion shall be in form
and substance satisfactory to the Lender.
4A.05 Adverse Change, etc. On the Initial Borrowing Date, nothing shall
have occurred (and the Lender shall have not become aware of any facts or
conditions not previously known) which the Lender shall determine (a) has, or
is reasonably likely to have, a material adverse effect on the rights or
remedies of the Lender, or on
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the ability of the Lender to perform its obligations to the Borrower, or (b)
has, or is reasonably likely to have, a Material Adverse Effect.
4A.06 Litigation. On the Initial Borrowing Date, there shall be no actions,
suits or proceedings pending or threatened (a) with respect to this Agreement
or any other Document or the transactions contemplated hereby or thereby or
(b) which the Lender shall determine could reasonably be expected to (i) have
a Material Adverse Effect or (ii) have a material adverse effect on the rights
or remedies of the Lender hereunder or under any other Credit Document.
4A.07 Approvals. On or prior to the Initial Borrowing Date, all material
and necessary governmental and third party approvals intended to be obtained
on or prior to the Initial Borrowing Date in connection with the transactions
contemplated by this Agreement and the other Documents and otherwise referred
to herein or therein shall have been obtained and remain in effect, and all
applicable waiting periods shall have expired without any action being taken
by any competent authority which restrains or prevents such transactions or
imposes, in the reasonable judgment of the Lender, materially adverse
conditions upon the consummation of such transactions. Additionally, there
shall not exist any judgment, order, injunction or other restraint issued or
filed or a hearing seeking injunctive relief or other restraint pending or
notified prohibiting or imposing materially adverse conditions upon, or
materially delaying, or making economically unfeasible, the consummation of
the transactions contemplated by this Agreement and the other Documents or
otherwise referred to herein or therein.
4A.08 Transaction Documents. On or prior to the Initial Borrowing Date, the
Borrower and an Affiliate of the Lender shall have executed the Securities
Purchase Agreement, and all of the Transaction Documents required by the terms
of the Securities Purchase Agreement to then be executed and the Borrower
shall be in compliance with all of its obligations thereunder.
4A.09 Previous Bridge Loan; Security Documents. On or prior to the Initial
Borrowing Date, all outstanding amounts owing under the Term Note shall, as
provided in Section 1.02(b), either be (x) repaid in full, and all security
interests and liens relating thereto terminated or assigned to the Lender or
(y) purchased or otherwise obtained by the Lender from such Affiliate (in
which case the Term Note shall be deemed amended and restated by this
Agreement, and be superseded hereby). On the Initial Borrowing Date, the
Borrower shall have no Indebtedness or preferred stock outstanding other than
as permitted by Section 7.04.
4A.10 Security Documents. (a) On the Initial Borrowing Date, the Borrower
shall have duly authorized, executed and delivered an Amended and Restated
Security Agreement in the form of Exhibit C (as modified, supplemented,
extended, renewed, replaced or amended from time to time in accordance with
the terms hereof and thereof, the "Security Agreement") covering all of the
Borrower's collateral described therein, in each case together with:
(i) executed copies of financing statements (Form UCC-1) in appropriate
form for filing under the UCC of each jurisdiction as may be necessary to
perfect the security interests purported to be created by the Security
Agreement;
(ii) certified copies of Requests for Information or Copies (Form UCC-
11), or equivalent reports, each of recent date listing all effective
financing statements that name the Borrower as debtor and that are filed in
the jurisdictions referred to in clause (i) above, together with copies of
such other financing statements that name the Borrower as debtor (none of
which shall cover the collateral described in the Security Agreement);
(iii) evidence of the completion of all other recordings and filings of,
or with respect to, the Security Agreement as may be necessary or, in the
opinion of the Lender, desirable to perfect the security interests intended
to be created by the Security Agreement (including, without limitation,
filings and registrations with respect to copyrights, patents and
trademarks); and
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(iv) evidence that all other actions necessary or, in the opinion of the
Lender, desirable to perfect and protect the security interests purported
to be created by the Security Agreement have been taken;
(b) On the Initial Borrowing Date, the Borrower shall have duly authorized,
executed and delivered a Collateral Assignment of Intellectual Property in the
form of Exhibit B (as modified, supplemented, extended, renewed, replaced or
amended from time to time in accordance with the terms hereof and thereof, the
"Intellectual Property Assignment") covering all of the Borrower's
intellectual property collateral described therein, in each case together
with:
(i) evidence of the completion of all recordings and filings of, or with
respect to, the Intellectual Property Assignment as may be necessary or, in
the opinion of the Lender, desirable to perfect the security interests
intended to be created by the Intellectual Property Assignment (including,
without limitation, filings and registrations with respect to copyrights,
patents and trademarks); and
(ii) evidence that all other actions necessary or, in the opinion of the
Lender, desirable to perfect and protect the security interests purported
to be created by the Intellectual Property Assignment have been taken.
4A.11 Warrants. On or prior to the Initial Borrowing Date, the Lender shall
have received warrants exerciseable into 3,566,667 shares of common stock (at
an exercise price of $3.00 per share and otherwise in the form of Exhibit I to
the Securities Purchase Agreement).
4A.12 Split Pea Software Liquidation. On or before the second Borrowing
Date, Split Pea Software, Inc. shall have been liquidated on terms and
conditions acceptable to the Lender.
SECTION 4B. Conditions Precedent to All Loans. The obligation of the Lender
to make Loans (including Loans on the Initial Borrowing Date) is subject, at
the time of the making of each such Loan, to the satisfaction of the following
conditions:
4B.01 No Default; Representations and Warranties. At the time of each such
Loan and also after giving effect to the incurrence of Loans on such date, (i)
there shall exist no Default or Event of Default, and (ii) all representations
and warranties contained herein and in the other Credit Documents in effect at
such time shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on the date
of such Loan (it being understood and agreed that any representation or
warranty which by its terms is made of a specified date shall be true and
correct in all material respects as of such specified date).
4B.02 Notice of Borrowing. Prior to the making of each Loan, the Lender
shall have received a notice of borrowing meeting the requirements of Section
1.02.
4B.03 Restrictions on Loans. The Borrower shall be in compliance with the
restrictions on the making of Loans described in Section 1.01(b).
4B.04 Security Documents. The Security Documents shall be in full force and
effect.
4B.05 Second Opinion of Counsel. On the Second Borrowing Date, the Lender
shall have received an opinion, addressed to the Lender and dated the Second
Borrowing Date, from Sidley & Austin, special counsel to the Borrower,
covering the creation and perfection of the security interests under the
Security Documents, which opinion shall be in form and substance satisfactory
to the Lender.
The acceptance of the proceeds of each Loan by the Borrower (occurring on
the Initial Borrowing Date and thereafter) shall constitute a representation
and warranty by the Borrower to the Lender that all the conditions specified
in Section 4A (with respect to the Loans on the Initial Borrowing Date) and in
this Section 4B (with respect to Loans on and after the Initial Borrowing
Date) and applicable to such Loans exist as of that time. All
7
of the certificates, legal opinions and other documents and papers referred to
in Sections 4A and in this Section 4B, unless otherwise specified, shall be
delivered to the Lender at its Notice Office and shall be in form and
substance reasonably satisfactory to the Lender.
SECTION 5. Representations, Warranties and Agreements. In order to induce
the Lender to enter into this Agreement and to make the Loans provided for
herein, the Borrower makes the following representations and warranties to,
and agreements with, the Lender, all of which shall survive the execution and
delivery of this Agreement and the making of the Loans (with the occurrence of
the Effective Date and the incurrence by the Borrower of the Loans hereunder
on the Initial Borrowing Date being deemed to constitute a representation and
warranty that the matters specified in this Section 5 are true and correct in
all material respects on and as of each such date of such Loan unless such
representation and warranty expressly indicates that it is being made as of
any specific date, in which case such representation and warranty shall be
true and correct in all material respects as of such specific date):
5.01 Borrower Status. The Borrower (i) is a duly organized and validly
existing corporation in good standing under the laws of the jurisdiction of
its organization or formation and has the power and authority to own its
property and assets and to transact the business in which it is engaged and
(ii) has duly qualified and is authorized to do business and is in good
standing in all jurisdictions where it is required to be so qualified and
where the failure to be so qualified which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
5.02 Power and Authority. The Borrower has the power and authority to
execute, deliver and carry out and perform the terms and provisions of the
Documents to which it is a party and has taken all necessary action to
authorize the execution, delivery and performance of the Documents to which it
is a party. The Borrower has duly executed and delivered each Document to
which it is a party and each such Document constitutes the legal, valid and
binding obligation of the Borrower enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
generally affecting creditors' rights and by equitable principles (regardless
of whether enforcement is sought in equity or at law).
5.03 No Violation. Neither the execution, delivery and performance by the
Borrower of the Documents to which it is a party nor compliance by it with the
terms and provisions thereof, nor the consummation of the transactions
contemplated therein, (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with, or
result in any breach of, any of the terms, covenants, conditions or provisions
of, or constitute a default under, or (other than pursuant to the Security
Documents) result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of the Borrower
pursuant to the terms of any indenture, mortgage, deed of trust, agreement or
other instrument to which the Borrower is a party or by which it or any of its
material property or assets are bound or to which it may be subject or (iii)
will violate any provision of the certificate of incorporation or by-laws (or
equivalent organizational documents) of the Borrower.
5.04 Litigation. Except as set forth in Schedule 5.04 hereto, in regards to
which there have been no material adverse developments since April 14, 2000,
there are no actions, suits or proceedings pending or, to the Borrower's
knowledge, threatened with respect to any Credit Document or with respect to
the Borrower that are reasonably likely to have a Material Adverse Effect or
that could reasonably be expected to have a Material Adverse Effect on the
rights or remedies of the Lender or on the ability of the Borrower to perform
its obligations to them hereunder, under the other Credit Documents to which
it is, or will be, a party. None of the litigation set forth in Schedule 5.04
could reasonably be expected to have a Material Adverse Effect.
5.05 Use of Proceeds; Margin Regulations. (a) The proceeds of all Loans
shall be utilized (i) on the Initial Borrowing Date to effect the refinancing
of the bridge loan described in Section 4A.09 and (ii) after the Initial
Borrowing Date, for general corporate purposes.
8
(b) Neither the making of any Loan hereunder, nor the use of the proceeds
thereof, will be used to purchase or carry any Margin Stock or to extend
credit for the purpose of purchasing or carrying any Margin Stock. Neither the
making of any Loan nor the use of the proceeds thereof will violate or be
inconsistent with the provisions of Regulations T, U or X of the Board of
Governors of the Federal Reserve System.
5.06 Approvals. No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with (except for filings
that have been obtained or made on or prior to the Initial Borrowing Date and
which remain in full force and effect on the Initial Borrowing Date), or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with, (i) the
execution, delivery and performance of any Credit Document or (ii) the
legality, validity, binding effect or enforceability of any such Credit
Document.
5.07 Investment Company Act. The Borrower is not an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
5.08 Public Utility Holding Company Act. The Borrower is not a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
5.09 True and Complete Disclosure. All factual information (taken as a
whole) heretofore or contemporaneously furnished by or on behalf of the
Borrower in writing to the Lender for purposes of or in connection with this
Agreement or any transaction contemplated by the Documents is 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 material fact
necessary to make such information (taken as a whole) not misleading at such
time in light of the circumstances under which such information was provided.
There is no fact known to the Borrower or which would be reasonably likely to
have a Material Adverse Effect which has not been disclosed herein or in such
other documents, certificates and statements furnished to the Lender for use
in connection with the transactions contemplated hereby.
5.10 Financial Condition; Financial Statements; Projections, etc. (a) On
and as of the Initial Borrowing Date, on a pro forma basis after giving effect
to the incurrence of Loans and to all Indebtedness incurred, and to be
incurred, and Liens created, and to be created, by the Borrower in connection
therewith, (x) the sum of the assets, at a fair valuation, of the Borrower
taken as a whole will exceed its debts, (y) the Borrower will not have
incurred or intended to, or believe that they will, incur debts beyond their
ability to pay such debts as such debts mature and (z) the Borrower will not
have unreasonably small capital with which to conduct its business. For
purposes of this Section 5.10(a), "debt" means any liability on a claim, and
"claim" means (i) right to payment whether or not such a right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured; or (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured. The amount of contingent liabilities at any time shall be
computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected
to become an actual or matured liability.
(b) Except as set forth in Schedule 5.10(b), since December 31, 1999,
nothing has occurred that has had or could reasonably be expected to have a
Material Adverse Effect.
(c) On and as of the Initial Borrowing Date, the budgets, projections and
pro forma financial information delivered to the Lender prior to the Initial
Borrowing Date have been prepared in good faith and based on reasonable
assumptions, and there are no statements or conclusions in the budgets and
projections which are based upon or include information known to the Borrower
to be misleading in any material respect or which fail to take into account
material information known to the Borrower regarding the matters reported
therein. On the
9
Initial Borrowing Date, the Borrower believes that the Projections and pro
forma financial information are reasonable, it being recognized by the Lender,
however, that projections as to future events are not to be viewed as facts
and that the actual results during the period or periods covered by the
Projections may differ from the projected results and that the differences may
be material.
(d) The budgets and projections delivered to the Lender after the Initial
Borrowing Date (including each budget submitted pursuant to Section 1 in
connection with a Borrowing) will be prepared in good faith and based on
reasonable assumptions, and there will be no statements or conclusions therein
which are based upon or include information then known to the Borrower to be
misleading in any material respect or which fail to take into account material
information then known to the Borrower regarding the matters reported therein.
(e) As of the Initial Borrowing Date (i) there were no liabilities or
obligations with respect to the Borrower of a nature (whether absolute,
accrued, contingent or otherwise and whether or not due) which, either
individually or in aggregate, could reasonably be expected to be material to
the Borrower taken as a whole, and (ii) the Borrower does not know of any
basis for the assertion against it of any liability or obligation of any
nature whatsoever which, either individually or in the aggregate, could
reasonably be expected to be material to the Borrower.
5.11 Security Interests. On and after the Initial Borrowing Date, each of
the Security Documents creates, as security for the Obligations purported to
be secured thereby, a valid and enforceable perfected security interest in and
Lien on all of the Collateral subject thereto, superior to and prior to the
rights of all third Persons and subject to no other Liens (except (x) to the
extent expressly set forth in the Security Documents and (y) that the
Collateral may be subject to the security interests evidenced by Permitted
Liens).
5.12 Compliance with Statutes, etc. The Borrower is in compliance with all
applicable statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or foreign, in
respect of the conduct of its business and the ownership of its property,
except such noncompliances as could not, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.13 Tax Returns and Payments. The Borrower has filed all federal and state
income tax returns and all other material tax returns, domestic and foreign,
required to be filed by it and has paid all federal and state income taxes and
all other material taxes and assessments payable by it which have become due,
except for those contested in good faith and adequately disclosed and fully
provided for on the financial statements of the Borrower in accordance with
GAAP. The Borrower has at all times paid, or has provided adequate reserves
(in the good faith judgment of the management of the Borrower) for the payment
of, all federal, state and material local and foreign income taxes applicable
for all prior fiscal years and for the current fiscal year to date. There is
no material action, suit, proceeding, investigation, audit or claim now
pending or, to the knowledge of the Borrower threatened by any authority
regarding any taxes relating to the Borrower. As of the Initial Borrowing
Date, the Borrower has not entered into an agreement or waiver or been
requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of the Borrower, or
is aware of any circumstances that would cause the taxable years or other
taxable periods of the Borrower not to be subject to the normally applicable
statute of limitations.
5.14 Subsidiaries. Borrower has no Subsidiaries.
5.15 Representations and Warranties in Transaction Documents. Each of the
representations and warranties contained in the Transaction Documents is true
and correct (unless such representation and warranty shall be true and correct
as of a specific date, in which case such representation and warranty shall be
true and correct in all material respects as of such date).
5.16 Patents, etc. The Borrower possesses all material patents, trademarks,
service marks, trade names, copyrights and licenses, free from burdensome
restrictions, that are used for the operation of its business as presently
conducted.
10
SECTION 6. Affirmative Covenants. The Borrower hereby covenants and agrees
that as of the Effective Date and thereafter for so long as this Agreement is
in effect and until the Commitment has terminated and the Loans, together with
interest, Fees and all other monetary Obligations incurred hereunder, are paid
in full:
6.01 Information Covenants. The Borrower will furnish to the Lender:
(a) Annual Financial Statements. Within 90 days after the close of each
fiscal year of the Borrower, the consolidated balance sheet of the Borrower,
as at the end of such fiscal year and the related consolidated statements of
income and retained earnings and of cash flows for such fiscal year, in each
case setting forth comparative consolidated figures for the preceding fiscal
year, and in the case of the consolidated financial statements, examined by
one (1) of the "Big-5" independent certified public accountants of recognized
national standing whose opinion shall not be qualified as to the scope of
audit, together with a certificate of such accounting firm stating that in the
course of its regular audit of the business of the Borrower, which audit was
conducted in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge of any Default or Event of Default
which has occurred and is continuing or, if in the opinion of such accounting
firm such a Default or Event of Default has occurred and is continuing, a
statement as to the nature thereof.
(b) Quarterly Financial Statements. As soon as available and in any event
within 45 days after the close of each of the first three quarterly accounting
periods in each fiscal year of the Borrower, the consolidated balance sheet of
the Borrower, as at the end of such quarterly accounting period and the
related consolidated statements of income and retained earnings and of cash
flows for such quarterly accounting period and for the elapsed portion of the
fiscal year ended with the last day of such quarterly accounting period, and
where applicable, setting forth comparative consolidated figures for the
related periods in the prior fiscal year, all of which shall be certified by
the chief financial officer or controller of the Borrower, subject to changes
resulting from audit and normal year-end audit adjustments.
(c) Monthly Reports. As soon as practicable, and in any event within 30
days after the end of each monthly accounting period of each fiscal year of
the Borrower (other than the last monthly accounting period in such fiscal
year), monthly reports in a form reasonably satisfactory to the Lender, in
conformity with the requirements of the Section 8.2 (a) of the Securities
Purchase Agreement.
(d) Budgets. No later than the end of each fiscal year of the Borrower
commencing after the date hereof, a cash flow budget by month of the Borrower
for the following fiscal year in reasonable detail satisfactory to the Lender.
(e) Officer's Certificates. At the time of the delivery of the financial
statements provided for in Sections 6.01(a) (b) and (c), a certificate of the
chief financial officer of the Borrower to the effect that no Default or Event
of Default exists or, if any Default or Event of Default does exist,
specifying the nature and extent thereof, which certificate, in the case of
the certificate delivered pursuant to Sections 6.01(a) and (b), shall set
forth the calculations required to establish whether the Borrower was in
compliance with the provisions of Section 7.05 as at the end of such fiscal
quarter or year, as the case may be.
(f) Notice of Default or Litigation. Promptly, and in any event within five
Business Days after the Borrower obtains knowledge thereof, notice of (x) the
occurrence of any event which constitutes a Default or an Event of Default,
which notice shall specify the nature thereof, the period of existence thereof
and what action the Borrower proposes to take with respect thereto or (y) the
commencement of or any significant development in any litigation or
governmental proceeding pending against the Borrower which is likely to have a
Material Adverse Effect or is likely to have a material adverse effect on the
ability of the Borrower to perform its obligations hereunder, under any other
Credit Document or any Transaction Document.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of each final
report or "management letter" submitted to the Borrower by its independent
accountants in connection with any annual, interim or special audit made by it
of the books of the Borrower.
11
(h) Other Reports and Filings. Promptly after the filing or delivery
thereof, copies of all financial information, proxy materials and reports, if
any, which the Borrower shall publicly file with the SEC.
(i) Environmental Matters. Promptly after any senior or executive officer
of the Borrower obtains knowledge thereof, notice of one or more of the
following environmental matters, unless such environmental matters could not,
individually or when aggregated with all other such environmental matters, be
reasonably expected to have a Material Adverse Effect:
(i) any pending or threatened Environmental Claim against the Borrower
or any Real Property owned, leased or operated by the Borrower;
(ii) any condition or occurrence on or arising from any Real Property
owned, leased or operated by the Borrower that (a) results in noncompliance
by the Borrower with any applicable Environmental Law or (b) could
reasonably be expected to form the basis of an Environmental Claim against
the Borrower or any such Real Property;
(iii) any condition or occurrence on any Real Property owned, leased or
operated by the Borrower that could reasonably be expected to cause such
Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by the Borrower of such Real Property
under any Environmental Law; and
(iv) the taking of any removal or remedial action in response to the
actual or alleged presence of any Hazardous Material on any Real Property
owned, leased or operated by the Borrower as required by any Environmental
Law or any governmental or other administrative agency; provided, that in
any event the Borrower shall deliver to the Lender all notices received by
the Borrower from any government or governmental agency under, or pursuant
to, CERCLA which identify the Borrower as potentially responsible parties
for remediation costs or which otherwise notify the Borrower of potential
liability under CERCLA. All such notices shall describe in reasonable
detail the nature of the claim, investigation, condition, occurrence or
removal or remedial action and the Borrower's response thereto.
(j) Other Information. From time to time, such other information or
documents (financial or otherwise) as the Lender may reasonably request.
6.02 Books, Records and Inspections. The Borrower will permit, upon
reasonable notice to the Borrower, officers and designated representatives of
the Lender to visit and inspect any of the properties or assets of the
Borrower in whomsoever's possession, and to examine the books of account of
the Borrower and discuss the affairs, finances and accounts of the Borrower
with, and be advised as to the same by, its and their officers and independent
accountants, all at such reasonable times and intervals and to such reasonable
extent as the Lender may desire.
6.03 Payment of Taxes. The Borrower will pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, prior to the date
on which penalties attach thereto, and all lawful claims which, if unpaid,
might become a Lien not otherwise permitted pursuant to Section 7.03 or charge
upon any properties of the Borrower, provided that the Borrower shall not be
required to pay any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings if payment of same is not a
condition precedent to being able to contest same and, if not such a
condition, if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
6.04 Existence; Franchises. The Borrower will do or cause to be done, all
things necessary to preserve and keep in full force and effect its existence,
material rights, franchises, licenses, patents and authority, provided that
any transaction permitted by Section 7.02 or any failure which would not,
individually or in the aggregate, have a Material Adverse Effect will not
constitute a breach of this Section 6.04.
12
6.05 Compliance with Statutes, etc. The Borrower will comply in all
material respects with all applicable statutes (including, without limitation,
all applicable Environmental Laws), regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property except for such non-compliance which could not reasonably be expected
to have a Material Adverse Effect or could not reasonably be expected to have
a material adverse effect on the ability of the Borrower to perform its
obligations under any Credit Document and/or Transaction Document to which it
is a party.
6.06 Good Repair. The Borrower will ensure that its material properties and
equipment used or useful in its business in whomsoever's possession they may
be, are kept, in all material respects, in good repair, working order and
condition, normal wear and tear excepted.
6.07 End of Fiscal Years; Fiscal Quarters. The Borrower will, for financial
reporting and tax purposes, cause (i) each of its fiscal years to end on
December 31 of each year and (ii) each of its fiscal quarters to end on March
31, June 30, September 30 and December 31 of each year.
6.08 Use of Proceeds. All proceeds of the Loans shall be used as provided
in Section 5.05.
6.09 Corporate Formalities. The Borrower will satisfy customary corporate
formalities, including the holding of regular board of directors' and
shareholders' meetings and the maintenance of corporate offices and records.
6.10 Compliance with Environmental Laws. (a) The Borrower will comply with
all Environmental Laws applicable to the ownership or use of its Real Property
now or hereafter owned, leased or operated by the Borrower except such non-
compliances as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, and will promptly pay or cause to
be paid all costs and expenses incurred in connection with such compliance,
and will keep or cause to be kept all such Real Property free and clear of any
Liens imposed pursuant to such Environmental Laws. The Borrower will not
generate, use, treat, store, release or dispose of, or permit the generation,
use, treatment, storage, Release or disposal of Hazardous Materials on any
Real Property now or hereafter owned, leased or operated by the Borrower, or
transport or permit the transportation of Hazardous Materials to or from any
such Real Property, except for Hazardous Materials generated, used, treated,
stored, released or disposed of at any such Real Properties in compliance in
all material respects with all applicable Environmental Laws and reasonably
required in connection with the operation, use and maintenance of the business
or operations of the Borrower.
(b) At any time that the Borrower gives notice to the Lender pursuant to
Section 6.01(i), then at the reasonable written request of the Lender, the
Borrower will provide, at the sole expense of the Borrower, an environmental
site assessment report concerning any Real Property owned, leased or operated
by the Borrower, prepared by an environmental consulting firm reasonably
approved by the Lender, indicating the presence or absence of Hazardous
Materials and the potential cost of any removal or remedial action in
connection with such Hazardous Materials on such Real Property. If the
Borrower fails to provide the same within ninety (90) days after such request
was made, the Lender may order the same, the cost of which shall be borne by
the Borrower, and the Borrower shall grant and hereby grant to the Lender and
its agents access to such Real Property and specifically grant the Lender an
irrevocable non-exclusive license, subject to the rights of tenants, to
undertake such an assessment at any reasonable time upon reasonable notice to
the Borrower, all at the sole and reasonable expense of the Borrower.
6.11 Performance of Obligations. The Borrower will perform all of its
obligations under the terms of each material agreement, contract or instrument
by which it is bound, except such non-performances as could not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 7. Negative Covenants. The Borrower hereby covenants and agrees
that as of the Effective Date and thereafter for so long as this Agreement is
in effect and until the Commitment has terminated and the Loans, together with
interest, Fees and all other Obligations incurred hereunder, are paid in full:
13
7.01 Business. The Borrower will not engage (directly or indirectly) in any
business other than the type of business in which the Borrower is engaged on
the Effective Date and reasonable extensions thereof.
7.02 Consolidation, Merger, Sale or Purchase of Assets, etc. The Borrower
will not wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, or sell or otherwise dispose of all or
any part of its property or assets (other than inventory in the ordinary
course of business), or enter into any sale-leaseback transactions, or
purchase, lease or otherwise acquire all or any part of the property or assets
of any Person (other than purchases of inventory in the ordinary course of
business), or agree to do any of the foregoing at any future time, except that
the following shall be permitted:
(a) Capital Expenditures to the extent within the limitations set forth in
Section 7.05;
(b) the investments, acquisitions and transfers or dispositions of
properties permitted pursuant to Section 7.06;
(c) the Borrower may lease (as lessee) real or personal property in the
ordinary course of business (so long as such lease does not create a
Capitalized Lease Obligation not otherwise permitted by Section 7.04(b); and
(d) the transactions contemplated by the Transaction Documents.
7.03 Liens. The Borrower will not create, incur, assume or suffer to exist
any Lien upon or with respect to any property or assets of any kind (real or
personal, tangible or intangible) of the Borrower whether now owned or
hereafter acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to repurchase such
property or assets (including sales of accounts receivable or notes with
recourse to the Borrower) or assign any right to receive income, or file or
permit the filing of any financing statement under the UCC or any other
similar notice of Lien under any similar recording or notice statute; provided
that the provisions of this Section 7.03 shall not prevent the creation,
incurrence, assumption or existence of the following (with such Liens
described below being herein referred to as "Permitted Liens"):
(a) Liens for taxes, assessments or governmental charges or rules not yet
due or Liens for taxes, assessments or governmental charges or rules being
contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Borrower) have
been established in accordance with GAAP;
(b) Liens in respect of property or assets of the Borrower imposed by law
which were incurred in the ordinary course of business and do not secure
indebtedness for borrowed money, such as carriers', warehousemen's and
mechanics' Liens, statutory landlord's Liens, and other similar Liens arising
in the ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Borrower taken
as a whole or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property or asset subject to such Lien;
(c) Liens created by or pursuant to the Security Documents or other Liens
in favor of the Lender;
(d) Liens in existence on the Initial Borrowing Date which are listed, and
the property subject thereto described, in Schedule I, but only to the
respective date, if any, set forth in such Schedule I for the removal,
replacement and termination of any such Liens, plus renewals, replacements,
refinancings and extensions of such Liens to the extent set forth on Schedule
I;
(e) Liens arising from judgments, decrees or attachments (or securing of
appeal bonds with respect thereto) in circumstances not constituting an Event
of Default under Section 8.09, provided that no cash or property (other than
proceeds of insurance payable by reason of such judgments, decrees or
attachments) is deposited or delivered to secure any respective judgment or
award, or any appeal bond in respect thereof, the fair market value of which
exceeds $10,000;
14
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits made
in the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety bonds (other than appeal
bonds), bids, leases, government contracts, performance and return-of-money
bonds and other similar obligations incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for borrowed
money), provided that the aggregate amount of deposits at any time pursuant to
this clause (f) shall not exceed $25,000;
(g) easements, rights-of-way, restrictions, minor defects or irregularities
in title and other similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business of the Borrower;
and
(h) Liens arising from UCC financing statements regarding operating leases
and Liens securing Capitalized Lease Obligations permitted by this Agreement.
7.04 Indebtedness. The Borrower will not contract, create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other Credit
Documents;
(b) Capitalized Lease Obligations of the Borrower provided that the
aggregate amount of Indebtedness incurred pursuant to this clause (b) after
the date hereof shall not exceed $400,000 at any time; and
(c) A letter of credit in a stated amount not to exceed $1,200,000.
7.05 Capital Expenditures. The Borrower will not incur Capital Expenditures
in any fiscal year of the Borrower in excess of the lesser of (i) $2,000,000
or (ii) the amount set forth in the most recent cash flow budget for such year
provided by the Borrower to the Lender and acceptable to the Lender.
7.06 Advances, Investments and Loans. The Borrower will not, directly or
indirectly, lend money or give credit or make advances to any Person, or
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any other Person, or
purchase or own a futures contract or otherwise become liable for the purchase
or sale of currency or other commodities at a future date in the nature of a
futures contract, or hold cash or Cash Equivalents (each of the foregoing an
"Investment" and, collectively, "Investments"), except that the following
shall be permitted:
(a) the Borrower may acquire and hold accounts receivables owing it, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(b) loans and advances to employees in an aggregate principal amount not to
exceed $100,000 at any time outstanding shall be permitted; and
(c) the Borrower may hold cash in deposit accounts in the ordinary course
of business and Cash Equivalents provided that so long as any Loan is
outstanding such cash and Cash Equivalents may not be in excess of $500,000
(other than such cash and Cash Equivalents representing proceeds of a Loan
pending the application thereof).
7.07 Dividends, etc. The Borrower will not authorize, declare or pay any
dividends (other than dividends payable solely in capital stock of the
Borrower) or return any capital to its stockholders or authorize or make any
other distribution, payment or delivery of property or cash to its
stockholders as such, or redeem, retire, purchase or otherwise acquire,
directly or indirectly, for a consideration, any shares of any class of its
capital stock now or hereafter outstanding (or any warrants for or options or
stock appreciation rights in respect of any of such shares), or set aside any
funds for any of the foregoing purposes, as the case may be, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock) (all of the foregoing
"Dividends"), other than payments of Dividends on the Preferred Stock.
15
7.08 Transactions with Affiliates. The Borrower will not enter into any
transaction or series of transactions after the Initial Borrowing Date whether
or not in the ordinary course of business, with any Affiliate of the Borrower;
provided, that the foregoing restrictions shall not apply to (i) advances to
employees of the Borrower to the extent permitted by Section 7.06(b), (ii)
employment arrangements (including arrangements made with respect to bonuses)
entered into in the ordinary course of business, or (iii) the transactions
contemplated by the Transaction Documents.
7.09 Prohibition on Creation of Subsidiaries. The Borrower shall not be
permitted to establish, create or acquire any Subsidiary or Subsidiaries.
SECTION 8. Events of Default. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
8.01 Payments. The Borrower shall (i) default in the payment when due of
any principal of any Loan or (ii) default, and such default shall continue
unremedied for three or more Business Days, in the payment after notice of any
interest on the Loans or any Fees or any other amounts owing hereunder or
under any other Credit Document; or
8.02 Representations, etc. Any representation, warranty or statement made
by the Borrower herein or in any other Document or in any statement or
certificate delivered or required to be delivered pursuant hereto or thereto
shall prove to be untrue in any material respect on the date as of which made
or deemed made; or
8.03 Covenants. The Borrower shall (a) default in the due performance or
observance by it of any term, covenant or agreement contained in Section
6.01(e)(x) or Section 7, or (b) default in the due performance or observance
by it of any term, covenant or agreement (other than those referred to in
Section 8.01, 8.02 or clause (a) of this Section 8.03) contained in this
Agreement and such default shall continue unremedied for a period of 10 days
after notice to the Borrower by the Lender; or
8.04 Default Under Other Agreements. (a) The Borrower shall (i) default in
any payment with respect to any Indebtedness (other than the Obligations)
beyond the period of grace, if any, applicable thereto or (ii) default in the
observance or performance of any agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing, securing
or relating thereto, or any other event shall occur or condition exist, the
effect of which default or other event or condition is to cause, or to permit
the holder or holders of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause, any such Indebtedness to become due prior to
its stated maturity or (b) any such Indebtedness of the Borrower shall be
declared to be due and payable, or required to be prepaid other than by a
regularly scheduled required prepayment, prior to the stated maturity thereof,
provided that it shall not constitute a Default or an Event of Default
pursuant to this Section 8.04 unless the principal amount of any one issue of
such Indebtedness exceeds $250,000 in the aggregate; or
8.05 Bankruptcy, etc. The Borrower shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy," as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against the Borrower
and the petition is not controverted within 30 days, or is not dismissed
within 60 days, after commencement of the case; or a custodian (as defined in
the Bankruptcy Code) is appointed for, or takes charge of, all or
substantially all of the property of the Borrower; or the Borrower commences
any other proceeding under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or similar law
of any jurisdiction whether now or hereafter in effect relating to the
Borrower; or there is commenced against the Borrower any such proceeding which
remains undismissed for a period of 60 days; or the Borrower is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; the Borrower suffers any appointment of
any custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or the Borrower
makes a general assignment for the benefit of creditors; or any corporate
action is taken by the Borrower for the purpose of effecting any of the
foregoing; or
16
8.06 Security Documents. At any time after the execution and delivery
thereof, any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Lender the Liens, rights, powers and
privileges purported to be created thereby superior to and prior to the rights
of all third Persons (except as permitted by Section 7.03), and subject to no
other Liens (except as permitted by Section 7.03), or the Borrower shall
default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any such
Security Document and such default shall continue beyond the period of grace,
if any, specifically applicable thereto pursuant to the terms of such Security
Document; or
8.07 Judgments. One or more judgments or decrees shall be entered against
the Borrower involving a liability in the aggregate (not paid or fully covered
by a reputable and solvent insurance company) and such judgments and decrees
either shall be final and non-appealable or shall not be vacated, discharged
or stayed or bonded pending appeal for any period of 30 consecutive days, and
the aggregate amount of all such judgments equals or exceeds $250,000; or
8.08 Change of Control. A Change of Control shall occur; or
8.09 Transaction Documents. The Borrower shall default in the observance or
performance in any material respect of any Transaction Document; provided,
however if such default is capable of being cured such default shall not have
been remedied within 30 days of such default;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Lender may by written notice to the
Borrower, take any or all of the following actions, without prejudice to the
rights of the Lender, to enforce its claims against the Borrower, except as
otherwise specifically provided for in this Agreement (provided that, if an
Event of Default specified in Section 8.05 shall occur with respect to the
Borrower, the result which would occur upon the giving of written notice by
the Lender as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the
Commitment terminated, whereupon the Commitment shall forthwith terminate
immediately; (ii) declare the principal of and any accrued interest in respect
of all Loans and all Obligations owing hereunder to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
and (iii) enforce any or all of the Liens and security interests created
pursuant to the Security Documents.
SECTION 9. Definitions. As used herein, the following terms shall have the
meanings herein specified unless the context otherwise requires. Defined terms
in this Agreement shall include in the singular number the plural and in the
plural the singular:
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all
directors and officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control
a corporation if such Person possesses, directly or indirectly, the power (i)
to vote 5% or more of the securities having ordinary voting power for the
election of directors of such corporation or (ii) to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, for purposes of this Agreement, neither the Lender nor its
Affiliates shall be deemed Affiliates of the Borrower.
"Agreement" shall mean this Credit Agreement, as the same may be from time
to time modified, amended and/or supplemented.
"Applicable Base Rate Margin" shall mean 2.00%.
"Applicable Eurodollar Margin" shall mean 3.00%.
"Asset Sale" shall mean the sale, transfer or other disposition by the
Borrower to any Person of any asset of the Borrower (other than sales,
transfers or other dispositions (i) in the ordinary course of business of
17
inventory or (ii) made in connection with the purchase by the Borrower of
replacement equipment pursuant to Section 2.11(c) of the Security Agreement in
an amount not exceeding $500,000 during the term of this Agreement).
"Bankruptcy Code" shall have the meaning provided in Section 8.05.
"Base Rate" at any time shall mean the higher of (i) the rate which is 1/2
of 1% in excess of the Federal Funds Rate and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.04(a).
"Borrower" shall have the meaning provided in the preamble of this
Agreement.
"Borrowing" shall mean the incurrence of one Type of Loan by the Borrower
from the Lender on a given date (or resulting from conversions on a given
date).
"Business Day" shall mean (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York or Boston, Massachusetts a legal holiday or a day
on which banking institutions are authorized by law or other governmental
actions to close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar Loans,
any day which is a Business Day described in clause (i) and which is also a
day for trading by and between banks in U.S. dollar deposits in the interbank
Eurodollar market.
"Capital Expenditures" shall mean, for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including in
all events all amounts expended or capitalized under Capital Leases but
excluding any amount representing capitalized interest) by the Borrower during
that period that, in conformity with GAAP, are or are required to be included
in the property, plant or equipment reflected in the consolidated balance
sheet of the Borrower.
"Capital Lease" as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capitalized Lease Obligations" as applied to any Person, shall mean all
obligations under Capital Leases of such Person or any of its Subsidiaries in
each case taken at the amount thereof accounted for as liabilities in
accordance with GAAP.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued or
directly and fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (ii) 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 six months from
the date of acquisition thereof and, at the time of acquisition, having one of
the two highest ratings obtainable from either Standard & Poor's Ratings
Services or Xxxxx'x Investors Service, Inc., (iii) Dollar denominated time
deposits and certificates of deposit of any commercial bank having, or which
is the principal banking subsidiary of a bank holding company having, a long-
term unsecured debt rating of at least "A" or the equivalent thereof from
Standard & Poor's Ratings Services or "A2" or the equivalent thereof from
Xxxxx'x Investors Service, Inc. with maturities of not more than six months
from the date of acquisition by such Person, (iv) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iii) above, (v) commercial paper issued by
any Person incorporated in the United States rated at least A-1 or the
equivalent thereof by Standard & Poor's Ratings Services or at least P-1 or
the equivalent thereof by Xxxxx'x Investors Service, Inc. and in each case
maturing not more than six months after the date of acquisition by such Person
and (vi) investments in
18
money market funds substantially all of whose assets are comprised of
securities of the types described in clauses (i) through (v) above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the aggregate
cash payments (including any cash received by way of deferred payment pursuant
to a note receivable issued in connection with such Asset Sale, but only as
and when so received) received by the Borrower from such Asset Sale.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.
"Change of Control" shall mean (i) any Person or group (as such term is
used under the Exchange Act) of Persons (other than the Lender or its
Affiliates) owns (beneficially or of record) more than 15% of the voting
equity interest in the Borrower's capital stock, assuming the exercise of all
securities exercisable, convertible or exchangeable for or into common equity
interests held by such Person or group, and (ii) during any period of 12
consecutive calendar months after the Effective Date, individuals who at the
beginning of such period constituted the Board of Directors of the Borrower
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders or members, as the case may
be, of the Borrower was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of such Board of Directors then in
office.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of
this Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Commitment" shall mean $20,000,000, as the same may be reduced or
terminated pursuant to Sections 2.02, 2.03 or 8.
"Contingent Obligations" shall mean, as to any Person, any obligation of
such Person guaranteeing or intending to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d) otherwise to
assure or hold harmless the owner of such primary obligation against loss in
respect thereof, provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
"Credit Documents" shall mean this Agreement and, after the execution and
delivery thereof pursuant to the terms of this Agreement, each of the Security
Documents and any documents executed in connection therewith.
"Default" shall mean any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Dividends" shall have the meaning provided in Section 7.07.
19
"Documents" shall mean and include the Credit Documents and the Transaction
Documents.
"Effective Date" shall have the meaning provided in Section 10.09.
"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating
in any way to any Environmental Law or any permit issued, or any approval
given, under any such Environmental Law (hereafter, "Claims"), including,
without limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b) any
and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in
connection with alleged injury or threat of injury to health, safety or the
environment due to the presence of Hazardous Materials.
"Environmental Law" shall mean any Federal, state, foreign or local
statute, law, rule, regulation, ordinance, code, guideline, written policy and
rule of common law now or hereafter in effect and in each case as amended, and
any judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. (S) 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. (S) 2601
et seq.; the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; the Safe Drinking
Water Act, 42 U.S.C. (S) 3803 et seq.; the Oil Pollution Act of 1990, 33
U.S.C. (S) 2701 et seq.; the Emergency Planning and the Community Right-to-
Know Act of 1986, 42 U.S.C. (S) 11001 et seq.; the Hazardous Material
Transportation Act, 49 U.S.C. (S) 1801 et seq. and the Occupational Safety and
Health Act, 29 U.S.C. (S) 651 et seq.; and any state and local or foreign
counterparts or equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates
provided in Section 1.04(b).
"Eurodollar Rate" shall mean with respect to any Borrowing of Eurodollar
Loans for any Interest Period, the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Lender from time to time for purposes of providing
quotations of interest rates applicable to dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period.
"Event of Default" shall have the meaning provided in Section 8.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GAAP" shall mean generally accepted accounting principles in the United
States of America as in effect on the date of this Agreement; it being
understood and agreed that determinations in accordance with GAAP for purposes
of Section 7.09, including defined terms as used therein, are subject (to the
extent provided therein) to Section 10.06(a).
"Hazardous Materials" shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contained electric fluid containing levels of polychlorinated biphenyls and/or
radon gas; (b) any chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous waste,"
20
"hazardous materials," "extremely hazardous waste," "restricted hazardous
waste," "toxic substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar meaning and regulatory effect, under any
applicable Environmental Law; and (c) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
governmental authority.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services which in accordance with GAAP would be shown on
the liability side of the balance sheet of such Person, (iii) the face amount
of all letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder, (iv) all Indebtedness of a second
Person secured by any Lien on any property owned by such first Person, whether
or not such indebtedness has been assumed, (v) all Capitalized Lease
Obligations of such Person, (vi) all obligations of such Person to pay a
specified purchase price for goods or services whether or not delivered or
accepted, i.e., take-or-pay and similar obligations, (vii) all net obligations
of such Person under interest rate hedging agreements and similar derivatives
agreement and (viii) all Contingent Obligations of such Person, provided that
Indebtedness shall not include trade payables, deferred revenue, taxes and
accrued expenses, in each case arising in the ordinary course of business.
"Initial Borrowing Date" shall mean the date upon which the initial
Borrowing of Loans occurs.
"Intellectual Property Assignment" shall have the meaning specified in
Section 4A.10(b).
"Interest Expense" shall mean, for any period, total interest expense
(including that attributable to Capital Leases in accordance with GAAP) of the
Borrower on a consolidated basis with respect to all outstanding Indebtedness
of the Borrower, including, without limitation, all capitalized interest.
"Interest Period" with respect to any Eurodollar Loan shall mean the
interest period applicable thereto, as determined pursuant to Section 1.05.
"Investment" shall have the meaning provided in Section 7.06.
"Leasehold" of any Person shall mean all of the right, title and interest
of such Person as lessee or licensee in, to and under leases or licenses of
land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the preamble of this Agreement.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any
lease in the nature thereof).
"Loan" shall have the meaning provided in Section 1.01.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the
business, property, assets, liabilities, operations, condition (financial or
otherwise) or prospects of the Borrower.
"Maturity Date" shall mean April 14, 2003.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the Cash
Proceeds resulting therefrom net of reasonable expenses of sale (including
payment of principal, premium and interest of other Indebtedness secured by
the assets the subject of the Asset Sale and required to be, and which is,
repaid under the terms thereof as a result of such Asset Sale), and
incremental taxes paid or payable as a result thereof.
"Net Income" shall mean, for any period, the net income (or loss) of the
Borrower on a consolidated basis for such period taken as a single accounting
period determined in conformity with GAAP, provided that there
21
shall be excluded the income (or loss) of any Person in which any other Person
(other than the Borrower) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to the Borrower by
such Person during such period.
"Notice Office" shall mean the office of the Lender designated to the
Borrower in writing from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Lender pursuant to the terms of this Agreement or any other Credit Document.
"Payment Office" shall mean the office of the Lender designated to the
Borrower in writing from time to time.
"Permitted Liens" shall have the meaning provided in Section 7.03.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other enterprise
or any government or political subdivision or any agency, department or
instrumentality thereof.
"Preferred Stock" shall mean the Preferred Stock purchased by an Affiliate
of the Lender pursuant to the Securities Purchase Agreement.
"Prime Lending Rate" shall mean the rate which Bankers Trust Company
announces from time to time as its prime lending rate, the Prime Lending Rate
to change when and as such prime lending rate changes.
"RCRA" shall mean the Resource Conservation and Recovery Act, as amended,
42 U.S.C. (S) 6901 et seq.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower of any cash
insurance proceeds or condemnation award payable (i) by reason of theft, loss,
physical destruction or damage or any other similar event with respect to any
property or asset of the Borrower (including without limitation, business
interruption insurance), or (ii) by reason of any condemnation, taking,
seizing or similar event with respect to any property or asset of the
Borrower.
"Regulation T, U and X" shall mean Regulations T, U and X of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing margin requirements.
"SEC" shall mean the Securities and Exchange Commission and any successor
thereto.
"Second Borrowing Date" shall mean the date upon which the second Borrowing
of Loans occurs.
"Securities Purchase Agreement" shall mean the Purchase Agreement by and
between the Borrower and the Lender, dated as of April 14, 2000.
"Security Agreement" shall have the meaning provided in Section 4A.10(b).
"Security Documents" shall mean the Security Agreement and the Intellectual
Property Assignment.
"Service Agreement" shall have the meaning provided in the Securities
Purchase Agreement.
"Subsidiary" of any Person shall mean and include (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of
22
such corporation (irrespective of whether or not at the time stock of any
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture or other entity in which such Person directly or
indirectly through Subsidiaries, has more than a 50% equity interest at the
time. Unless otherwise expressly provided, all references herein to
"Subsidiary" shall mean a Subsidiary of the Borrower.
"Taxes" shall have the meaning provided in Section 3.03.
"Term Note" shall mean the note dated April 5th, 2000 made by the Borrower
to the order of BEW, Inc., an affiliate of the Lender.
"Transaction Documents" shall mean the Securities Purchase Agreement and
any other document or instrument entered into in connection therewith,
including without limitation the Preferred Stock and all other Documents (as
defined in the Securities Purchase Agreement).
"Type" shall mean any type of Loan determined with respect to the interest
option applicable thereto, i.e., a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code, as in effect from time to
time in the relevant jurisdiction.
SECTION 10. Miscellaneous.
10.01 Payment of Expenses, etc. The Borrower agrees to: (i) whether or not
the transactions herein contemplated are consummated, pay all reasonable out-
of-pocket costs and expenses of the Lender in connection with the negotiation,
preparation, execution and delivery of the Credit Documents and the documents
and instruments referred to therein and any amendment, waiver or consent
relating thereto (including, without limitation, the reasonable fees and
disbursements of White & Case LLP) and of the Lender in connection with the
enforcement of the Credit Documents and the documents and instruments referred
to therein (including, without limitation, the reasonable fees and
disbursements of counsel for the Lender); (ii) pay and hold the Lender
harmless from and against any and all present and future stamp and other
similar taxes with respect to the foregoing matters and save the Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to the
Lender) to pay such taxes; and (iii) indemnify the Lender, its officers,
directors, employees, representatives and agents (each an "Indemnified
Person") from and hold each of them harmless against any and all losses,
liabilities, claims, damages or expenses (collectively "Indemnified
Liabilities") incurred by any of them (whether asserted by the Borrower or
otherwise) as a result of, or arising out of, or in any way related to, or by
reason of, (a) any investigation, litigation or other proceeding (whether or
not the Lender is a party thereto) related to the entering into and/or
performance of any Credit Document or the use of the proceeds of any Loans
hereunder or the consummation of any transactions contemplated in any Credit
Document, including, without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation, litigation or
other proceeding (but excluding (i) any such losses, liabilities, claims,
damages or expenses to the extent incurred by reason of the gross negligence
or willful misconduct of the Person to be indemnified, (ii) the reimbursement
of amounts paid by an Indemnified Person on any final, non-appealable judgment
in the Borrower's favor against such Indemnified Person by a court of
competent jurisdiction, or (iii) the reimbursement of amounts paid by an
Indemnified Person seeking indemnification in any settlement of any claim
constituting Indemnified Liabilities with a party other than the Borrower
which was effected by an Indemnified Person without the prior consent of the
Borrower, unless either (x) the Borrower has had reasonable opportunity to
defend such Indemnified Person against such claim and has not promptly and
diligently prosecuted such defense by counsel reasonably satisfactory to such
Indemnified Person or (y) the Borrower has failed to provide evidence
reasonably satisfactory to the Lender of the Borrower's financial ability to
satisfy its indemnity obligations hereunder in respect of such claim) or (b)
the actual or alleged
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presence of Hazardous Materials in the air, surface water, groundwater,
surface or subsurface of any Real Property owned or at any time operated by
the Borrower, the generation, storage, transportation or disposal of Hazardous
Materials at any location whether or not owned or operated by the Borrower,
the non-compliance of any Real Property owned or at any time operated by the
Borrower with federal, state and local laws, regulations, and ordinances
(including applicable permits thereunder) applicable to any such Real
Property, or any Environmental Claim asserted against the Borrower or any such
Real Property, including, in each case, without limitation, the reasonable
fees and disbursements of counsel and other consultants incurred in connection
with any such investigation, litigation or other proceeding (but excluding any
losses, liabilities, claims, damages or expenses to the extent incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless the Lender set forth in the preceding sentence may be unenforceable
because it is violative of any law or public policy, the Borrower shall make
the maximum contribution to the payment and satisfaction of each of the
indemnified liabilities which is permissible under applicable law.
10.02 Right of Setoff. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, if an Event of Default then exists, the Lender is hereby authorized at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and apply any and
all deposits (general or special) and any other Indebtedness at any time held
or owing by the Lender to or for the credit or the account of the Borrower
against and on account of the Obligations and liabilities of the Borrower to
the Lender under this Agreement or under any of the other Credit Documents,
and all other claims of any nature or description arising out of or connected
with this Agreement or any other Credit Document, irrespective of whether or
not the Lender shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
10.03 Notices. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
facsimile communication) and mailed, faxed or delivered (a) if to the Lender,
at its address specified as the Notice Office and (b) if to the Borrower, at
the address specified next to the signature of the Borrower below. All such
notices and communications shall not be effective until received by the Lender
or the Borrower, as the case may be. Each party hereto may, by a notice to the
other party in accordance herewith, specify a different address for notices to
it hereunder.
10.04 Assignments. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto; provided, however, that the Borrower may not assign or
transfer any of its rights or obligations hereunder without the consent of the
Lender.
10.05 No Waiver; Remedies Cumulative. No failure or delay on the part of
the Lender in exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the Borrower and the
Lender shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Lender would otherwise have. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Lender to any other or further action in any
circumstances without notice or demand.
10.06 Calculations; Computations. (a) The financial statements to be
furnished to the Lender pursuant hereto shall be made and prepared in
accordance with GAAP, as in effect on the Initial Borrowing Date, consistently
applied throughout the periods involved (except as set forth in the notes
thereto or as otherwise disclosed in writing by the Borrower to the Lender),
provided that except as otherwise specifically provided herein, all
computations determining compliance with Section 7.09, including definitions
used therein shall utilize accounting principles and policies in accordance
with GAAP, as in effect on the Initial Borrowing Date.
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(b) All computations of interest and fees hereunder shall be made on the
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such
interest or fees are payable.
10.07 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL; WAIVER OF CERTAIN CLAIMS. (a) THIS AGREEMENT AND THE OTHER CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY
FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION
OVER THE BORROWER, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT
IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER
THE BORROWER. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER, AT ITS ADDRESS FOR NOTICES PURSUANT TO
SECTION 10.03, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF
PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY
ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT
THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE BORROWER IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND
HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
(d) THE BORROWER AGREES THAT IT WILL NOT ASSERT AGAINST THE LENDER, AND
HEREBY WAIVES, ANY CLAIM FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE
DAMAGES IN CONNECTION WITH THIS AGREEMENT, OR ANY OTHER CREDIT DOCUMENT OR
TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
10.08 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Lender.
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10.09 Effectiveness. This Agreement shall become effective on the date (the
"Effective Date") on which each of the Borrower and the Lender shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered (including by way of facsimile device) the same to the
Lender at its Notice Office.
10.10 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.
10.11 Amendment or Waiver. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Borrower and the Lender.
10.12 Survival. All indemnities set forth herein including, without
limitation, in Section 10.01 shall survive the execution and delivery and
termination of this Agreement and the making and repayment of the Loans.
* * *
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.
Address:
PEAPOD, INC.
0000 Xxxxx Xxxxx /s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx, XX 00000 By: ________________________________
fax no.: (000) 000-0000 Name: Xxxxxx X. Xxxxxxxxx
Attention: Xxxxxx Xxxxxxxxx Title: Chairman
KONINKLIJKE AHOLD NV
/s/ Ton van Tielraden
By: ________________________________
Name: Ton van Tielraden
Title: Senior Vice President and
General Counsel
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