EXECUTION VERSION
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AMENDED AND RESTATED CREDIT AGREEMENT
among
INDUS INTERNATIONAL, INC.
and
THE BANKS NAMED HEREIN
and
SUMITOMO BANK OF CALIFORNIA
June 10, 1998
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CREDIT AGREEMENT
Table of Contents
Page
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SECTION I. INTERPRETATION ....................................... 2
1.01. Definitions .......................................... 2
1.02. GAAP ................................................. 15
1.03. Headings ............................................. 15
1.04. Plural Terms ......................................... 15
1.05. Time ................................................. 16
1.06. Governing Law ........................................ 16
1.07. Construction ......................................... 16
1.08. Entire Agreement ..................................... 16
1.09. Calculation of Interest and Fees ..................... 16
1.10. Other Interpretive Provisions ........................ 16
SECTION II. CREDIT FACILITIES .................................... 17
2.01. Loan Facility ........................................ 17
2.02. Letter of Credit Facility ............................ 20
2.03. Amount Limitations, Commitment Reductions, Etc. ...... 25
2.04. Fees ................................................. 25
2.05. Prepayments .......................................... 26
2.06. Other Payment Terms .................................. 27
2.07. Notes and Interest Account ........................... 28
2.08. Loan Funding, Etc .................................... 28
2.09. Pro Rata Treatment ................................... 29
2.10. Change of Circumstances .............................. 30
2.11. Taxes on Payments .................................... 32
2.12. Funding Loss Indemnification ......................... 34
2.13. Security ............................................. 34
SECTION III. CONDITIONS PRECEDENT ................................. 35
3.01. Initial Conditions Precedent ......................... 35
3.02. Conditions Precedent to Each Credit Event ............ 35
SECTION IV. REPRESENTATIONS AND WARRANTIES ....................... 36
4.01. Representations and Warranties ....................... 36
4.02. Reaffirmation ........................................ 40
Page
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SECTION V. COVENANTS ............................................ 40
5.01. Affirmative Covenants ................................ 40
5.02. Negative Covenants ................................... 43
5.03. Financial Covenants .................................. 49
SECTION VI. DEFAULT .............................................. 50
6.01. Events of Default .................................... 50
6.02. Remedies ............................................. 51
SECTION VII. AGENT AND RELATIONS AMONG BANKS ...................... 52
7.01. Appointment, Powers and Immunities ................... 52
7.02. Reliance by Agent .................................... 52
7.03. Defaults ............................................. 53
7.04. Indemnification ...................................... 53
7.05. Non-Reliance ......................................... 53
7.06. Resignation or Removal of Agent ...................... 54
7.07. Authorization ........................................ 54
7.08. Agent in its Individual Capacity ..................... 54
SECTION VIII. MISCELLANEOUS ........................................ 54
8.01. Notices .............................................. 54
8.02. Expenses ............................................. 55
8.03. Indemnification ...................................... 56
8.04. Waivers; Amendments .................................. 56
8.05. Successors and Assigns ............................... 57
8.06. Setoff; Security Interest ............................ 60
8.07. No Third Party Rights ................................ 60
8.08. Partial Invalidity ................................... 61
8.09. Jury Trial ........................................... 61
8.10. Counterparts ......................................... 61
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 10, 1998,
is entered into by and among:
(1) INDUS INTERNATIONAL, INC., a Delaware corporation
("Borrower");
(2) Each of the financial institutions from time to time
listed in Schedule I hereto, as amended from time to time (such
financial institutions to be referred to herein collectively as the
"Banks"); and
(3) SUMITOMO BANK OF CALIFORNIA, a California banking
corporation ("SBC"), as agent for the Banks (in such capacity,
"Agent").
RECITALS
A. The Indus Group, Inc., a California corporation and a wholly-owned
Subsidiary of Borrower (the "Indus Group"), the Banks and Agent were parties to
a certain Credit Agreement, dated as of September 2, 1997 (as amended, the
"Indus Group Credit Agreement") pursuant to which the Banks made revolving loans
to the Indus Group in an aggregate principal amount not exceeding $35,000,000
outstanding at any time.
B. Effective as of December 31, 1997, the Indus Group and TSW
International, Inc., a Georgia corporation and a wholly-owned Subsidiary of
Borrower ("TSW"), merged with and into Borrower with Borrower as the surviving
corporation (the "Merger"). Concurrent with the Merger, Borrower assumed, inter
alia, (i) all of the rights and obligations of the Indus Group arising under the
Indus Group Credit Agreement and the other credit documents to which the Indus
Group was a party pursuant to the Indus Group Credit Agreement and (ii) all of
the rights and obligations of TSW arising under that certain Security Agreement
dated as of September 2, 1997, executed by TSW in favor of Agent and teh Banks
and the other credit documents to which TSW was a party pursuant to the Indus
Group Credit Agreement. Such assumption by Borrower was evidenced by that
certain Assumption Agreement, dated as of December 31, 1997, among Borrower, the
Banks and Agent (the "Assumption Agreement").
C. Pursuant to the Assumption Agreement, Borrower agreed, inter alia,
to enter into a new credit agreement and related credit documents in form and
substance satisfactory to the Banks and Agent and substantially similar to the
Indus Group Credit Agreement and the other applicable credit documents pursuant
to which the Banks would agree to make loans to Borrower pursuant to the terms
and conditions of such new credit agreement and related credit documents and
Borrower would grant to Agent, for the benefit of Agent and the Banks, a
security interest in certain assets of Borrower to secure such loans.
D. Borrower, the Banks and Agent now wish to enter into this Amended
and Restated Credit Agreement pursuant to which Borrower, the Banks and Agent
shall amend and restate the obligations and agreements of Borrower, the Banks
and Agent arising under the Indus
Group Credit Agreement and related credit documents, as assumed by Borrower
pursuant to the Assumption Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
SECTION I. INTERPRETATION.
1.01. Definitions . Unless otherwise indicated in this Agreement or any
other Credit Document, each term set forth below, when used in this Agreement or
any other Credit Document, shall have the respective meaning given to that term
below or in the provision of this Agreement or other Credit Document referenced
below:
"Affiliate" shall mean, with respect to any Person, (a) each
Person that, directly or indirectly, owns or controls, whether
beneficially or as a trustee, guardian or other fiduciary, five percent
(5%) or more of any class of Equity Securities of such Person, (b) each
Person that controls, is controlled by or is under common control with
such Person or any Affiliate of such Person or (c) each of such
Person's officers, directors, joint venturers and partners; provided,
however, that in no case shall Agent or any Bank be deemed to be an
Affiliate of Borrower or any of its Subsidiaries for purposes of this
Agreement.
"Agent" shall have the meaning given to that term in clause
(3) of the introductory paragraph hereof.
"Agreement" shall mean this Amended and Restated Credit
Agreement, as amended, restated or otherwise modified from time to time
in accordance with this Agreement.
"Applicable Lending Office" shall mean, with respect to any
Bank, (a) initially, its office designated as such in Schedule I (or,
in the case of any Bank which becomes a Bank by an assignment pursuant
to Subparagraph 8.05(c), its office designated as such in the
applicable Assignment Agreement) and (b) subsequently, such other
office or offices as such Bank may designate to Agent as the office at
which such Bank's Loans will thereafter be maintained and for the
account of which all payments of principal of, and interest on, such
Bank's Loans will thereafter be made.
"Applicable Margin" shall mean, with respect to any LIBOR Loan
at any time, the per annum margin which is determined pursuant to the
Pricing Grid and added to the LIBO Rate for such LIBOR Loan; provided,
however, that each Applicable Margin determined pursuant to the Pricing
Grid shall be increased by two percent (2.00%) on the
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date an Event of Default of the type set forth in Subparagraph 6.01(a)
occurs and ten (10) days after the date of notification of any other
type of Event of Default occurs and remains uncured, and in each case
shall continue at such increased rate during the continuance of such
Event of Default.
"Assignee Bank" shall have the meaning given to that term in
Subparagraph 8.05(c).
"Assignment" shall have the meaning given to that term in
Subparagraph 8.05(c).
"Assignment Agreement" shall have the meaning given to that
term in Subparagraph 8.05(c).
"Assignment Effective Date" shall have, with respect to each
Assignment Agreement, the meaning set forth therein.
"Assignor Bank" shall have the meaning given to that term in
Subparagraph 8.05(c).
"Assumption Agreement" shall have the meaning given to that
term in Recital B.
"Bank Parties" shall mean, collectively, the Banks and Issuing
Bank. Unless otherwise indicated, the term "Bank Parties" shall include
any Bank acting as Issuing Bank but not in its capacity as such.
"Banks" shall have the meaning given to that term in clause
(2) of the introductory paragraph hereof. Unless otherwise indicated,
the term "Banks" shall include any Bank acting as Issuing Bank but not
in its capacity as such.
"Base Rate" shall mean, on any day, the greater of (a) the
Prime Rate in effect on such date and (b) the Federal Funds Rate for
such day plus one-half percent (0.50%); provided, however, that the
Base Rate shall be increased by two percent (2.00%) on the date an
Event of Default of the type set forth in Subparagraph 6.01(a) occurs
and ten (10) days after the date of notification of any other type of
Event of Default occurs and remains uncured, and in each case shall
continue at such increased rate during the continuance of such Event of
Default.
"Base Rate Loan" shall mean, at any time, a Loan which then
bears interest as provided in clause (i) of Subparagraph 2.01(c).
"Borrower" shall have the meaning given to that term in clause
(1) of the introductory paragraph hereof.
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"Borrower Security Agreement" shall have the meaning given to
that term in Subparagraph 2.13(a).
"Borrowing" shall mean a borrowing by Borrower consisting of
the Loans made by each of the Banks on the same date and of the same
Type pursuant to a single Notice of Borrowing.
"Business Day" shall mean any day on which (a) commercial
banks are not authorized or required to close in San Francisco,
California and (b) if such Business Day is related to a Loan which
bears or is to bear interest based on a LIBO Rate, dealings in Dollar
deposits are carried out in the London or other applicable interbank
eurodollar market.
"Capital Adequacy Requirement" shall have the meaning given to
that term in Subparagraph 2.10(d).
"Capital Leases" shall mean any and all lease obligations
that, in accordance with GAAP, are required to be capitalized on the
books of a lessee.
"Cash Equivalents" shall mean:
(a) Direct obligations of, or obligations the
principal and interest on which are unconditionally guaranteed
by, the United States of America or obligations of any agency
of the United States of America to the extent such obligations
are backed by the full faith and credit of the United States
of America, in each case maturing within twelve months from
the date of acquisition thereof;
(b) Certificates of deposit maturing within twelve
months from the date of acquisition thereof issued by a
commercial bank or trust company organized under the laws of
the United States of America or a state thereof or that is a
Bank, provided that (A) such deposits are denominated in
Dollars, (B) such bank or trust company has capital, surplus
and undivided profits of not less than $100,000,000 and (C)
such bank or trust company has certificates of deposit or
other debt obligations rated at least A-1 (or its equivalent)
by Standard and Poor's Ratings Group or P-1 (or its
equivalent) by Xxxxx'x Investors Service, Inc.; and
(c) Open market commercial paper maturing within
twenty-four months from the date of acquisition thereof issued
by a corporation organized under the laws of the United States
of America or a state thereof, provided such commercial paper
is rated at least BBB (or its equivalent) by Standard and
Poor's Ratings Group or Baa (or its equivalent) by Xxxxx'x
Investors Service, Inc.
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"Change of Control" shall mean the occurrence of any of the
following events: (a) any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall (i) acquire beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended) of fifty-one (51%) or
more of the outstanding Equity Securities of Borrower entitled to vote
for members of the board of directors, or (ii) acquire all or
substantially all of the assets of Borrower and its Subsidiaries taken
as a whole, or (b) any change in the management of Borrower which Agent
determines will have a Material Adverse Effect.
"Change of Law" shall have the meaning given to that term in
Subparagraph 2.10(b).
"Closing Date" shall mean June 10, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean all property in which Agent or any
Bank has a Lien to secure the Obligations.
"Commitment" shall mean, with respect to any Bank at any time,
such Bank's Proportionate Share at such time of the Total Commitment at
such time.
"Commitment Fee Percentage" shall mean, with respect to the
Unused Commitment at any time, a per annum rate which is determined
pursuant to the Pricing Grid.
"Commitment Fees" shall have the meaning given to that term in
Subparagraph 2.04(a).
"Commitment Reduction Date" shall mean, collectively, the
First Commitment Reduction Date and the Second Commitment Reduction
Date.
"Compliance Certificate" shall have the meaning given to that
term in Subparagraph 5.01(a).
"Contractual Obligation" of any Person shall mean, any
indenture, note, lease, loan agreement, security, deed of trust,
mortgage, security agreement, guaranty, instrument, contract, agreement
or other form of contractual obligation or undertaking to which such
Person is a party or by which such Person or any of its property is
bound.
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"Credit Documents" shall mean and include this Agreement, the
LC Applications, the Notes, and the Security Documents; all documents,
instruments and agreements delivered to any Agent or any Bank Party
pursuant to Paragraph 3.01; and all other documents, instruments and
agreements delivered by Borrower or any of its Subsidiaries to Agent or
any Bank Party in connection with this Agreement on or after the date
of this Agreement.
"Credit Event" shall mean the making of any Loan, the
conversion of any Base Rate Loan into a LIBOR Loan, the selection of a
new Interest Period for any LIBOR Loan, the issuance of any Letter of
Credit or any amendment of any Letter of Credit which increases its
stated amount or extends its expiration date.
"Default" shall have the meaning given to that term in
Paragraph 6.01.
"Dollars" and "$" shall mean the lawful currency of the United
States of America.
"Drawing Payment" shall have the meaning given to that term in
Subparagraph 2.02(c).
"Employee Benefit Plan" shall mean any employee benefit plan
within the meaning of section 3(3) of ERISA maintained or contributed
to by Borrower or any ERISA Affiliate of Borrower, other than a
Multiemployer Plan.
"Equity Securities" of any Person shall mean (a) all common
stock, preferred stock, participations, shares, partnership interests
or other equity interests in such Person (regardless of how designated
and whether or not voting or non-voting) and (b) all warrants, options
and other rights to acquire any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may from time to time be amended or supplemented,
including any rules or regulations issued in connection therewith.
"ERISA Affiliate" shall mean any Person which is treated as a
single employer with Borrower under Section 414 of the Code.
"Event of Default" shall have the meaning given to that term
in Paragraph 6.01.
"Federal Funds Rate" shall mean, for any day, the Federal
funds effective rate as set forth in the weekly statistical release
designated as H.15(519) published by the Federal Reserve Bank of New
York for such day, or in any successor publication (or, if such rate is
not so published for any day, the average rate quoted to Agent on and
for such day by three (3) Federal funds brokers of recognized standing
selected by Agent).
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"Federal Reserve Board" shall mean the Board of Governors of
the Federal Reserve System.
"Financial Statements" shall mean, with respect to any
accounting period for any Person, statements of income, shareholders'
equity and cash flows of such Person for such period, and a balance
sheet of such Person as of the end of such period, setting forth in
each case in comparative form figures for the corresponding period in
the preceding fiscal year if such period is less than a full fiscal
year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and
in accordance with GAAP.
"First Commitment Reduction Date" shall mean June 30, 1998.
"GAAP" shall mean generally accepted accounting principles and
practices as in effect in the United States of America from time to
time, consistently applied.
"Governmental Authority" shall mean any domestic or foreign
national, state or local government, any political subdivision thereof,
any department, agency, authority or bureau of any of the foregoing, or
any other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, the Federal Deposit Insurance
Corporation, the Federal Reserve Board, the Comptroller of the
Currency, any central bank or any comparable authority.
"Governmental Charges" shall mean, with respect to any Person,
all levies, assessments, fees, claims or other charges imposed by any
Governmental Authority upon such Person or any of its property or
otherwise payable by such Person.
"Governmental Rule" shall mean any law, rule, regulation,
ordinance, order, code interpretation, judgment, decree, directive,
guidelines, policy or similar form of decision of any Governmental
Authority.
"Guaranty Obligation" shall mean, with respect to any Person,
any direct or indirect liability of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of
another Person. The amount of any Guaranty Obligation shall be deemed
equal to the liability in respect thereof required to be reported as a
liability (contingent or otherwise) on either the balance sheet or in
the financial statements of such Person in accordance with GAAP.
"Hazardous Materials" shall mean all materials, substances and
wastes which are classified or regulated as "hazardous," "toxic" or
similar descriptions under any environmental law or which are
hazardous, toxic, harmful or dangerous to human health.
"Indebtedness" of any Person shall mean, without duplication:
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(a) All obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments and all
other obligations of such Person for borrowed money (including
obligations to repurchase receivables and other assets sold
with recourse);
(b) All obligations of such Person for the deferred
purchase price of property or services (including obligations
under letters of credit and other credit facilities which
secure or finance such purchase price and obligations under
"synthetic" leases);
(c) All obligations of such Person under conditional
sale or other title retention agreements with respect to
property acquired by such Person (to the extent of the value
of such property if the rights and remedies of the seller or
lender under such agreement in the event of default are
limited solely to repossession or sale of such property);
(d) All obligations of such Person as lessee under or
with respect to Capital Leases;
(e) All non-contingent payment or reimbursement
obligations of such Person under or with respect to letters of
credit, banker's acceptances or other similar instruments;
(f) All Guaranty Obligations of such Person with
respect to the obligations of other Persons of the types
described in clauses (a) - (e) above; and
(g) All obligations of other Persons of the types
described in clauses (a) - (f) above to the extent secured by
(or for which any holder of such obligations has an existing
right, contingent or otherwise, to be secured by) any Lien in
any property (including accounts and contract rights) of such
Person, even though such Person has not assumed or become
liable for the payment of such obligations.
"Indus Group" shall have the meaning given to that term in
Recital A.
"Indus Group Credit Agreement" shall have the meaning given to
that term in Recital A.
"Interest Account" shall have the meaning given to that term
in Subparagraph 2.07(b).
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"Interest Period" shall mean, with respect to any LIBOR Loan,
the time periods selected by Borrower pursuant to Subparagraph 2.01(b)
or Subparagraph 2.01(d) which commences on the first day of such Loan
or the effective date of any conversion and ends on the last day of
such time period, and thereafter, each subsequent time period selected
by Borrower pursuant to Subparagraph 2.01(e) which commences on the
last day of the immediately preceding time period and ends on the last
day of that time period.
"Investment" of any Person shall mean any loan or advance of
funds by such Person to any other Person (other than advances to
employees of such Person for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business),
any purchase or other acquisition of any Equity Securities or
Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other Person
(including any Guaranty Obligations of such Person and any Indebtedness
of such Person of the type described in clause (f) of the definition of
"Indebtedness" on behalf of any other Person); provided, however, that
Investments shall not include (a) accounts receivable or other
indebtedness owed by customers of such Person which are current assets
and arose from sales of inventory in the ordinary course of such
Person's business or (b) prepaid expenses of such Person incurred and
prepaid in the ordinary course of business.
"Issuing Bank" shall mean SBC, in its capacity as issuer of
letters of credit under Paragraph 2.02.
"LC Application" shall have the meaning given to that term in
Subparagraph 2.02(b).
"LC Commitment" shall have the meaning given to that term in
Subparagraph 2.02(a).
"LC Facility Expiration Date" shall have the meaning given to
that term in Subparagraph 2.02(a).
"LC Issuance Fees" shall have the meaning given to that term
in Subparagraph 2.04(b).
"LC Usage Fee" shall have the meaning given to that term in
Subparagraph 2.04(b).
"LC Usage Fee Rate" shall mean, with respect to Letters of
Credit, the per annum rate which is determined pursuant to the Pricing
Grid and used to calculate the LC Usage Fee.
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"Letter of Credit" shall have the meaning given to that term
in Subparagraph 2.02(a).
"Leverage Ratio" shall mean, with respect to Borrower and its
Subsidiaries at any time, the ratio, determined on a consolidated basis
in accordance with GAAP, of (a) the sum of the total liabilities of
Borrower and its Subsidiaries at such time minus cash and Cash
Equivalents in excess of Two Million Dollars ($2,000,000) to (b) the
Tangible Net Worth of Borrower and its Subsidiaries at such time.
"LIBO Rate" shall mean, with respect to any Interest Period
for the LIBOR Loans in any Borrowing, a rate per annum equal to the
quotient of (a) the arithmetic mean (rounded upward if necessary to the
nearest 1/16 of one percent) of the rates per annum appearing on the
Reuters screen LIBO page (or any successor publication) on the second
Business Day prior to the first day of such Interest Period at or about
11:00 A.M. (London time) (for delivery on the first day of such
Interest Period) for a term comparable to such Interest Period, divided
by (b) one minus the Reserve Requirement for such Loans in effect from
time to time. If for any reason rates are not available as provided in
clause (a) of the preceding sentence, the rate to be used in clause (a)
shall be, at Agent's discretion, (i) the rate per annum at which Dollar
deposits are offered to Agent in the London interbank eurodollar
currency market or (ii) the rate at which Dollar deposits are offered
to Agent in, or by Agent to major banks in, any offshore interbank
eurodollar market selected by Agent, in each case on the second
Business Day prior to the commencement of such Interest Period at or
about 10:00 A.M. (New York time) (for delivery on the first day of such
Interest Period) for a term comparable to such Interest Period and in
an amount approximately equal to the amount of the Loan to be made or
funded by Agent as part of such Borrowing.
"LIBOR Loan" shall mean, at any time, a Loan which then bears
interest as provided in clause (ii) of Subparagraph 2.01(c).
"Lien" shall mean, with respect to any property, any security
interest, mortgage, pledge, lien, charge or other encumbrance in, of,
or on such property or the income therefrom, and the filing of any
financing statement or similar instrument under the Uniform Commercial
Code or comparable law of any jurisdiction.
"Loan" shall have the meaning given to that term in
Subparagraph 2.01(a).
"Margin Stock" shall have the meaning given to that term in
Regulation U issued by the Federal Reserve Board, as amended from time
to time, and any successor regulation thereto.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, assets, operations or financial or other condition
of Borrower and its
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Subsidiaries; (b) the ability of Borrower to pay or perform the
Obligations in accordance with the terms of this Agreement and the
other Credit Documents; or (c) the the rights and remedies of Agent and
the Bank Parties under this Agreement or any other Credit Documents
taken as a whole.
"maturity" shall mean, with respect to any Loan, Reimbursement
Obligation, interest, fee or other amount payable by Borrower under
this Agreement or the other Credit Documents, the date such Loan,
interest, Reimbursement Obligation, fee or other amount becomes due,
whether upon the stated maturity or due date, upon acceleration or
otherwise.
"Maturity Date" shall have the meaning given to that term in
Subparagraph 2.01(a).
"Merger" shall have the meaning given to that term in Recital
B.
"Multiemployer Plan" shall mean any multiemployer plan within
the meaning of section 3(37) of ERISA maintained or contributed to by
Borrower or any ERISA Affiliate.
"Note" shall have the meaning given to that term in
Subparagraph 2.07(a).
"Notice of Borrowing" shall have the meaning given to that
term in Subparagraph 2.01(b).
"Notice of Conversion" shall have the meaning given to that
term in Subparagraph 2.01(d).
"Notice of Interest Period Selection" shall have the meaning
given to that term in Subparagraph 2.01(e).
"Obligations" shall mean and include, with respect to Borrower
and its Affiliates, all loans, advances, debts, liabilities, and
obligations, howsoever arising, owed by Borrower to Agent or any Bank
Party of every kind and description (whether or not evidenced by any
note or instrument and whether or not for the payment of money), direct
or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising pursuant to the terms of this Agreement or any of
the other Credit Documents, including without limitation all interest,
fees, charges, expenses, attorneys' fees and accountants' fees
chargeable to Borrower or payable by Borrower hereunder or thereunder.
"Outstanding Facilities Credit" shall have the meaning given
to that term in Subparagraph 2.03(a).
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"Participant" shall have the meaning given to that term in
Subparagraph 8.05(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor thereto.
"Permitted Indebtedness" shall have the meaning given to that
term in Subparagraph 5.02(a).
"Permitted Liens" shall have the meaning given to that term in
Subparagraph 5.02(b).
"Person" shall mean and include an individual, a partnership,
a corporation (including a business trust), a limited liability
company, a joint stock company, an unincorporated association, a joint
venture, a trust or other entity or a Governmental Authority.
"Pricing Grid shall mean Schedule II.
"Pricing Period" shall mean (a) the period commencing on the
date of this Agreement and ending on August 31, 1998, and (b) each
consecutive three-calendar month period thereafter which commences on
the day following the last day of the immediately preceding
three-calendar month period and ends on the last day of that time
period.
"Prime Rate" shall mean the per annum rate publicly announced
by Agent from time to time at its San Xxxxxxxxx Xxxxxx. The Prime Rate
is determined by Agent from time to time as a means of pricing credit
extensions to some customers and is neither directly tied to any
external rate of interest or index nor necessarily the lowest rate of
interest charged by Agent at any given time for any particular class of
customers or credit extensions. Any change in the Base Rate resulting
from a change in the Prime Rate shall become effective on the Business
Day on which each change in the Prime Rate occurs.
"Proportionate Share" shall mean, with respect to each Bank,
the percentage set forth under the caption "Proportionate Share"
opposite such Bank's name on Schedule I, or, if changed, such
percentage as may be set forth for such Bank in the Register.
"Quick Ratio" shall mean, with respect to Borrower and its
Subsidiaries at any time, the ratio, determined on a consolidated basis
in accordance with GAAP, of:
(a) The sum at such time of all (i) cash of Borrower
and its Subsidiaries; (ii) Cash Equivalents of Borrower and
its Subsidiaries; and (iii) accounts receivable of Borrower
and its Subsidiaries, less all reserves therefor;
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provided, however, that in computing the foregoing sum, there
shall be excluded therefrom any cash, Cash Equivalent or
accounts receivable subject to a security interest (except a
security interest in favor of Agent or any Bank Party securing
the Obligations);
to
(b) The sum at such time of (i) the current
liabilities of Borrower and its Subsidiaries; and (ii) to the
extent not included in such current liabilities, the
Outstanding Facilities Credit at such time.
"Register" shall have the meaning given to that term in
Subparagraph 8.05(d).
"Reimbursement Obligation" shall have the meaning given to
that term in Subparagraph 2.02(c).
"Reimbursement Payment" shall have the meaning given to that
term in Subparagraph 2.02(c).
"Reportable Event" shall have the meaning given to that term
in ERISA and applicable regulations thereunder.
"Requirement of Law" applicable to any Person shall mean (a)
the Articles or Certificate of Incorporation and By-laws, Partnership
Agreement, Operating Agreement or other organizational or governing
documents of such Person, (b) any Governmental Rule binding upon such
Person, (c) any license, permit, approval or other authorization
granted by any Governmental Authority to or for the benefit of such
Person or (d) any judgment, decision or determination of any
Governmental Authority or arbitrator, in each case applicable to or
binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Reserve Requirement" shall mean, with respect to any day in
an Interest Period for a LIBOR Loan, the aggregate of the reserve
requirement rates (expressed as a decimal) in effect on such day for
eurocurrency funding (currently referred to as "Eurocurrency
liabilities" in Regulation D of the Federal Reserve Board) maintained
by a member bank of the Federal Reserve System. As used herein, the
term "reserve requirement" shall include, without limitation, any
basic, supplemental or emergency reserve requirements imposed on Bank
by any Governmental Authority.
"Required Banks" shall mean (a) at any time Loans are
outstanding and the Banks are obligated to make Loans pursuant to their
Commitments, Banks holding seventy-five percent (75%) or more of the
aggregate principal amount of all Loans outstanding, calculated as if
Loans in the full amount of the Banks' Commitments were outstanding,
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(b) at any time Loans are outstanding and the Banks are not obligated
to make Loans pursuant to their Commitments, Banks holding seventy-five
percent or more of the aggregate principal amount of all Loans
outstanding and (c) at any time no Loans are outstanding, Banks whose
aggregate Commitments exceed seventy-five percent (75%) or more of the
Total Commitment at such time.
"SBC" shall have the meaning given to that term in clause (3)
of the introductory paragraph hereof.
"Second Commitment Reduction Date" shall mean September 30,
1998.
"Security Documents" shall mean and include the Borrower
Security Agreement, and all other instruments, agreements, certificates
and documents (including Uniform Commercial Code financing statements)
delivered to Agent or any Bank in connection with any Collateral to
secure the Obligations.
"Solvent" shall mean, with respect to any Person on any date,
that on such date (a) the fair value of the property of such Person is
greater than the fair value of the liabilities (including, without
limitation, contingent liabilities) of such Person, (b) the present
fair saleable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such
Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts
and liabilities mature and (d) such Person is not engaged in business
or a transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute an
unreasonably small capital.
"Subsidiary" of any Person shall mean (a) any corporation of
which more than 50% of the issued and outstanding Equity Securities
having ordinary voting power to elect a majority of the Board of
Directors of such corporation is at the time directly or indirectly
owned or controlled by such Person and (b) any partnership, joint
venture, or other association of which more than 50% of the equity
interest having the power to vote, direct or control the management of
such partnership, joint venture or other association is at the time
owned and controlled by such Person.
"Tangible Net Worth" shall mean, with respect to Borrower and
its Subsidiaries at any time, the remainder at such time, determined on
a consolidated basis in accordance with GAAP, of (a) the total assets
of Borrower and its Subsidiaries minus (b) the sum (without limitation
and without duplication of deductions) of (i) the Total Liabilities of
Borrower and its Subsidiaries, (ii) all reserves established by
Borrower and its Subsidiaries for anticipated losses and expenses (to
the extent not deducted in calculating total assets in clause (a)
above), and (iii) all intangible assets of Borrower and its
Subsidiaries (to the extent included in calculating total assets in
clause (a) above),
14
including, without limitation, goodwill (including any amounts, however
designated on the balance sheet, representing the cost of acquisition
of businesses and investments in excess of underlying tangible assets),
trademarks, trademark rights, trade name rights, copyrights, patents,
patent rights, licenses, unamortized debt discount, marketing expenses,
organizational expenses, non-compete agreements and deferred research
and development and (iv) all loans owed to Borrower and its
Subsidiaries by officers, directors and employees of Borrower and its
Subsidiaries.
"Taxes" shall have the meaning given to that term in
Subparagraph 2.11(a).
"Total Commitment" shall mean (a) from and after the Closing
Date up to and including the First Commitment Reduction Date,
Thirty-Five Million Dollars ($35,000,000) or, if such amount is reduced
pursuant to Subparagraph 2.03(b), the amount to which so reduced and in
effect at such time; (b) from and after July 1, 1998 through the Second
Commitment Reduction Date, Thirty Million Dollars ($30,000,000) or, if
such amount is reduced pursuant to Subparagraph 2.03(b), the amount to
which so reduced and in effect at such time; and (c) from and after the
January 1, 1999 through the Maturity Date, Twenty-Five Million Dollars
($25,000,000) or, if such amount is reduced pursuant to Subparagraph
2.03(b), the amount to which so reduced and in effect at such time.
"Total Liabilities" shall mean, with respect to Borrower and
its Subsidiaries at any time, the sum at such time, determined on a
consolidated basis in accordance with GAAP, of (a) all liabilities of
Borrower and its Subsidiaries determined in accordance with GAAP plus
(b) all Guaranty Obligations of Borrower and its Subsidiaries at such
time.
"TSW" shall have the meaning given to that term in Recital B.
"Type" shall mean, with respect to any Loan or Borrowing at
any time, the classification of such Loan or Borrowing by the type of
interest rate it then bears, whether an interest rate based on the Base
Rate or the LIBO Rate.
"UCP" shall have the meaning given to that term in
Subparagraph 2.02(a).
"Unused Commitment" shall mean, at any time after this
Agreement is executed by Borrower, Agent and Banks, the remainder of
(a) the Total Commitment at such time minus (b) the sum of the
aggregate principal amount of all Loans then outstanding and the
aggregate stated amount of all Letters of Credit then outstanding.
1.02. GAAP . Unless otherwise indicated in this Agreement or any other
Credit Document, all accounting terms used in this Agreement or any other Credit
Document shall be construed, and all accounting and financial computations
hereunder or thereunder shall be
15
computed, in accordance with GAAP. If GAAP changes during the term of this
Agreement such that any covenants contained herein would then be calculated in a
different manner or with different components, Borrower, the Banks and Agent
agree to negotiate in good faith to amend this Agreement in such respects as are
necessary to conform those covenants as criteria for evaluating Borrower's
financial condition to substantially the same criteria as were effective prior
to such change in GAAP; provided, however, that, until Borrower, the Banks and
Agent so amend this Agreement, all such covenants shall be calculated in
accordance with GAAP as in effect immediately prior to such change.
1.03. Headings . Headings in this Agreement and each of the other
Credit Documents are for convenience of reference only and are not part of the
substance hereof or thereof.
1.04. Plural Terms . All terms defined in this Agreement or any other
Credit Document in the singular form shall have comparable meanings when used in
the plural form and vice versa.
1.05. Time . All references in this Agreement and each of the other
Credit Documents to a time of day shall mean San Francisco, California time
unless otherwise indicated.
1.06. Governing Law . This Agreement and each of the other Credit
Documents (unless otherwise provided in such other Credit Documents) shall be
governed by and construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
1.07. Construction . This Agreement is the result of negotiations
among, and has been reviewed by, Borrower, each Bank, Agent and their respective
counsel. Accordingly, this Agreement shall be deemed to be the product of all
parties hereto, and no ambiguity shall be construed in favor of or against
Borrower, Agent or any Bank Party.
1.08. Entire Agreement . This Agreement and each of the other Credit
Documents, taken together, constitute and contain the entire agreement of
Borrower, the Banks and Agent and supersede any and all prior agreements,
negotiations, correspondence, understandings and communications among the
parties, whether written or oral, respecting the subject matter hereof.
1.09. Calculation of Interest and Fees . All calculations of interest
and fees under this Agreement and the other Credit Documents for any period (a)
shall include the first day of such period and exclude the last day of such
period and (b) shall be calculated on the basis of a year of 360 days for actual
days elapsed, except that during any period any Loan bears interest based upon
the Base Rate, such interest shall be calculated on the basis of a year of 365
or 366 days, as appropriate, for actual days elapsed.
1.10. Other Interpretive Provisions . References in this Agreement to
"Recitals," "Sections," "Paragraphs," "Subparagraphs," "Exhibits" and
"Schedules" are to recitals, sections, paragraphs, subparagraphs, exhibits and
schedules herein and hereto unless otherwise indicated.
16
References in this Agreement and each of the other Credit Documents to any
document, instrument or agreement (a) shall include all exhibits, schedules and
other attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof and (c) shall mean such
document, instrument or agreement, or replacement or predecessor thereto, as
amended, modified and supplemented from time to time and in effect at any given
time. The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement or any other Credit Document shall refer to this
Agreement or such other Credit Document, as the case may be, as a whole and not
to any particular provision of this Agreement or such other Credit Document, as
the case may be. The words "include" and "including" and words of similar import
when used in this Agreement or any other Credit Document shall not be construed
to be limiting or exclusive. In the event of any inconsistency between the terms
of this Agreement and the terms of any other Credit Document, the terms of this
Agreement shall govern.
SECTION II. CREDIT FACILITIES.
2.01. Loan Facility .
(a) Loan Availability. Subject to the terms and conditions of
this Agreement (including the amount limitations set forth in Paragraph
2.03), each Bank severally agrees to continue to advance to Borrower
from time to time during the period beginning on the Closing Date and
ending on July 31, 1999 (the "Maturity Date") such revolving loans as
are currently outstanding or as Borrower may request under this
Paragraph 2.01 (individually, a "Loan"); provided, however, that (i)
the aggregate principal amount of all Loans made by such Bank at any
time outstanding shall not exceed such Bank's Commitment at such time
and (ii) the aggregate principal amount of all Loans made by all Banks
at any time outstanding shall not exceed the Total Commitment at such
time. All Loans shall be made on a pro rata basis by the Banks in
accordance with their respective Proportionate Shares, with each
Borrowing to be comprised of a Loan by each Bank equal to such Bank's
Proportionate Share of such Borrowing. Except as otherwise provided
herein, Borrower may borrow, repay and reborrow Loans until the
Maturity Date.
(b) Notice of Borrowing. Borrower shall request each Borrowing
by delivering to Agent an irrevocable written notice in the form of
Exhibit A, appropriately completed (a "Notice of Borrowing"), which
specifies, among other things:
(i) The principal amount of the requested Borrowing,
which shall be in the amount of (A) $500,000 or an integral
multiple of $100,000 in excess thereof;
(ii) Whether the requested Borrowing is to consist of
Base Rate Loans or LIBOR Loans;
17
(iii) If the requested Borrowing is to consist of
LIBOR Loans, the initial Interest Period selected by Borrower
for such LIBOR Loans in accordance with Subparagraph 2.01(e);
and
(iv) The date of the requested Borrowing, which shall
be a Business Day.
Borrower shall give each Notice of Borrowing to Agent at least three
(3) Business Days before the date of the requested Borrowing in the
case of a Borrowing consisting of LIBOR Loans and at least one (1)
Business Day before the date of the requested Borrowing in the case of
a Borrowing consisting of Base Rate Loans. Each Notice of Borrowing
shall be delivered by first-class mail or facsimile to Agent at the
office or facsimile number and during the hours specified in Paragraph
8.01; provided, however, that Borrower shall promptly deliver to Agent
the original of any Notice of Borrowing initially delivered by
facsimile. Agent shall promptly notify each Bank of the contents of
each Notice of Borrowing and of the amount and Type of (and, if
applicable, the Interest Period for) each Loan to be made by such Bank
as part of the requested Borrowing.
(c) Interest Rates. Borrower shall pay interest on the unpaid
principal amount of each Loan from the date of such Loan until the
maturity thereof, at one of the following rates per annum:
(i) During such periods as such Loan is a Base Rate
Loan, at a rate per annum equal to the Base Rate, such rate to
change from time to time as the Base Rate shall change; and
(ii) During such periods as such Loan is a
LIBOR Loan, at a rate per annum equal at all times during each
Interest Period for such LIBOR Loan to the LIBO Rate for such
Interest Period plus the Applicable Margin therefor, such rate
to change from time to time during such Interest Period as the
Applicable Margin shall change;
Provided, however, that all Loans outstanding during the period
commencing on the Closing Date and ending three (3) Business Days after
the Closing Date shall be Base Rate Loans. All Loans in each Borrowing
shall, at any given time prior to maturity, bear interest at one, and
only one, of the above rates. The number of Borrowings consisting of
LIBOR Loans shall not exceed ten (10) at any time.
(d) Conversion of Loans. Borrower may convert any Borrowing
from one Type of Borrowing to the other Type; provided, however, that
any conversion of a Borrowing consisting of LIBOR Loans into a
Borrowing consisting of Base Rate Loans shall be made on, and only on,
the last day of an Interest Period for such LIBOR Loans.
18
Borrower shall request such a conversion by an irrevocable written
notice to Agent in the form of Exhibit B, appropriately completed (a
"Notice of Conversion"), which specifies, among other things:
(i) The Borrowing which is to be converted;
(ii) The Type of Loans into which such Loans are to
be converted;
(iii) If such Borrowing is to be converted into a
Borrowing consisting of LIBOR Loans, the initial Interest
Period selected by Borrower for such Loans in accordance with
Subparagraph 2.01(e); and
(iv) The date of the requested conversion, which
shall be a Business Day.
Borrower shall give each Notice of Conversion to Agent at least three
(3) Business Days before the date of the requested conversion in the
case of a conversion into a Loan consisting of LIBOR Loans and at least
one (1) Business Day before the date of the requested conversion in the
case of a conversion into a Loan consisting of Base Rate Loans. Each
Notice of Conversion shall be delivered by first-class mail or
facsimile to Agent at the office or to the facsimile number and during
the hours specified in Paragraph 8.01; provided, however, that Borrower
shall promptly deliver to Agent the original of any Notice of
Conversion initially delivered by facsimile. Agent shall promptly
notify each Bank of the contents of each Notice of Conversion.
(e) LIBOR Loan Interest Periods.
(i) The initial and each subsequent Interest Period
selected by Borrower for a LIBOR Loan shall be one (1), two
(2), three (3), four (4), five (5), six (6), nine (9) or
twelve (12) months as Borrower may specify; provided, however,
that (A) any Interest Period which would otherwise end on a
day which is not a Business Day shall be extended to the next
succeeding Business Day unless such next Business Day falls in
another calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day; (B) any
Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a
calendar month; (C) no Interest Period for any Borrowing shall
end after a Commitment Reduction Date, if, as a result of the
selection of such Interest Period, the Outstanding Facilities
Credit as of such Commitment Reduction Date shall exceed the
Total Commitment as of such Commitment Reduction Date; and (D)
no Interest Period shall end after the Maturity Date.
19
(ii) Borrower shall notify Agent by an irrevocable
written notice in the form of Exhibit C, appropriately
completed (a "Notice of Interest Period Selection"), at least
three (3) Business Days prior to the last day of each Interest
Period for LIBOR Loans of the Interest Period selected by
Borrower for the next succeeding Interest Period for such
Loans. Each Notice of Interest Period Selection shall be given
by first-class mail or facsimile to the office or the
facsimile number and during the hours specified in Paragraph
8.01; provided, however, that Borrower shall promptly deliver
to Agent the original of any Notice of Interest Period
Selection initially delivered by facsimile. If Borrower fails
to notify Agent of the next Interest Period for LIBOR Loans in
accordance with this Subparagraph 2.01(e), such LIBOR Loans
shall automatically convert to Base Rate Loans on the last day
of the current Interest Period therefor.
(f) Scheduled Loan Payments. Borrower shall repay the unpaid
principal amount of all Loans on the Maturity Date. Borrower shall pay
accrued interest on the unpaid principal amount of the Loans in arrears
(i) in the case of Base Rate Loans, on the last Business Day in each
month; (ii) in the case of LIBOR Loans, on the last day of each
Interest Period thereof (and, if any such Interest Period is longer
than one (1) month, on the last Business Day in each month after the
first day of such Interest Period); and (iii) in the case of all Loans,
upon prepayment (to the extent thereof) and at maturity.
(g) Purpose. Borrower shall use the proceeds of the Loans to
finance Borrower's working capital and general corporate needs.
2.02. Letter of Credit Facility .
(a) Letter of Credit Availability. Subject to the terms and
conditions of this Agreement (including the amount limitations set
forth in Paragraph 2.03, Issuing Bank shall issue on behalf of Borrower
from time to time during the period beginning on the Closing Date and
ending on the date which is fifteen (15) days prior to the Maturity
Date (the "LC Facility Expiration Date") such letters of credit as
Borrower may request under this Paragraph 2.02 (individually, a "Letter
of Credit"); provided, however, as follows:
(i) The aggregate amount available for drawing under
all Letters of Credit at any time outstanding shall not exceed
Five Million Dollars ($5,000,000) (such amount, as reduced
from time to time pursuant to this Agreement, to be referred
to herein as the "LC Commitment").
(ii) Each Letter of Credit shall expire on or prior
to the LC Facility Expiration Date (or if such Letter of
Credit shall extend beyond the Expiration Date, Borrower shall
agree in connection with the issuance of such Letter of Credit
that on or prior to the Expiration Date Borrower shall deposit
with Agent an amount equal to the face amount of such Letter
of Credit as cash
20
collateral for the Obligations of Borrower under such Letter
of Credit to be applied to repay any draws after the
Expiration Date on such Letter of Credit).
(iii) Each Letter of Credit shall be governed by the
Uniform Customs and Practices for Documentary Credits as most
recently published by the International Chamber of Commerce
(the "UCP") prior to the date of issuance of such Letter of
Credit and the terms of the UCP are hereby incorporated by
reference with respect to each Letter of Credit.
(iv) Each Letter of Credit shall be in a form
reasonably acceptable to Issuing Bank.
Except as otherwise provided herein, Borrower may request Letters of
Credit, cause or allow Letters of Credit to expire and request
additional Letters of Credit until the LC Facility Expiration Date.
(b) LC Application. Borrower shall request each Letter of
Credit by delivering to Agent and Issuing Bank an irrevocable written
application in a form reasonably acceptable to Issuing Bank (it being
understood that such form shall not contain terms inconsistent with the
terms set forth in this Agreement), appropriately completed (an "LC
Application"), which specifies, among other things:
(i) The stated amount of the requested Letter of
Credit;
(ii) The name and address of the beneficiary of the
requested Letter of Credit;
(iii) The expiration date of the requested Letter of
Credit;
(iv) The documentary conditions for drawing under the
requested Letter of Credit;
(v) The date of issuance for the requested Letter of
Credit, which shall be a Business Day; and
(vi) The aggregate amount available for drawing under
all Letters of Credit then outstanding.
Borrower shall give each LC Application to Issuing Bank at least three
(3) Business Days before the proposed date of issuance of the requested
Letter of Credit. Each LC Application shall be delivered by an
established express courier service, first-class mail or facsimile to
Agent and Issuing Bank at their respective offices or facsimile numbers
and during the hours specified in Paragraph 8.01; provided, however,
that Borrower shall promptly deliver to Issuing Bank the original of
any LC Application initially delivered by
21
facsimile. Agent shall promptly notify each Bank of the contents of
each LC Application. In the event of any conflict between the terms of
this Agreement and the terms of any LC Application, the terms of this
Agreement shall control.
(c) Disbursement and Reimbursement.
(i) Disbursement. Issuing Bank will notify Borrower
by facsimile forthwith upon receipt of the presentment of any
demand for payment under any Letter of Credit, together with
notice of the amount of such payment and the date such payment
shall be made. Subject to the terms and provisions of such
Letter of Credit, Issuing Bank shall make such payment (a
"Drawing Payment") to the appropriate beneficiary.
(ii) Time of Reimbursement. Not later than 11:00 a.m.
on the day each Drawing Payment is to be made by Issuing Bank,
Borrower shall make or cause to be made to Issuing Bank a
payment in the amount of such Drawing Payment (a
"Reimbursement Payment"); provided, however, that Borrower
shall make such Reimbursement Payment to, or cause such
Reimbursement Payment to be made to, Agent for the benefit of
the Banks if, prior to the time such Reimbursement Payment is
made, Issuing Bank has notified Borrower that it has requested
the Banks pursuant to clause (ii) of Subparagraph 2.02(d) to
pay to Issuing Bank their respective Proportionate Shares of
the Drawing Payment made by Issuing Bank. If any such
Reimbursement Payment is made to Agent, Agent shall promptly
pay to each Bank which has paid its Proportionate Share of the
Drawing Payment, such Bank's Proportionate Share of the
Reimbursement Payment and shall promptly pay to Issuing Bank
the balance of such Reimbursement Payment.
(iii) Reimbursement Obligation Absolute. The
obligation of Borrower to reimburse Issuing Bank or the Banks,
as the case may be, for Drawing Payments (such obligation to
be referred to herein collectively as a "Reimbursement
Obligation") shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms
of this Agreement under and without regard to any
circumstances, including, without limitation (A) any lack of
validity or enforceability of any of the Credit Documents, (B)
the existence of any claim, setoff, defense or other right
which Borrower may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Persons for
whom any such beneficiary or transferee may be acting),
Issuing Bank, Agent, any Bank Party or any other Person,
whether in connection with this Agreement, the transactions
contemplated herein or in the other Credit Documents, or in
any unrelated transaction, (C) any breach of contract or
dispute between Borrower, any beneficiary or any transferee of
any Letter of Credit (or any Persons for whom any such
beneficiary or transferee may be acting), Issuing
22
Bank, Agent, any Bank Party or any other Person, (D) any
demand, statement or other document presented under any Letter
of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being
untrue or inaccurate in any respect, (E) payment by Issuing
Bank under any Letter of Credit against presentation of a
demand for payment which does not comply with the terms of
such Letter of Credit, (F) any non-application or
misapplication by any beneficiary or any transferee of any
Letter of Credit (or any Persons for whom any such beneficiary
or transferee may be acting) of the proceeds of any drawing
under such Letter of Credit or (G) any delay, extension of
time, renewal, compromise or other indulgence or modification
granted or agreed to by Issuing Bank, Agent or any Bank Party,
with or without notice to or approval by Borrower, with
respect to Borrower's indebtedness under this Agreement;
provided, that this Subparagraph 2.02(b) shall not abrogate
any right which Borrower may have to seek to enjoin any
drawing under any Letter of Credit or to recover damages from
Issuing Bank pursuant to Subparagraph 2.02(e).
(d) Bank Participations; Loan Funding.
(i) Participation Agreement. Each Bank severally,
unconditionally and irrevocably agrees with Issuing Bank to
participate in the extension of credit arising from the
issuance of each Letter of Credit in an amount equal to such
Bank's Proportionate Share of the stated amount of such Letter
of Credit from time to time, and the issuance of each Letter
of Credit shall be deemed a confirmation by Issuing Bank of
such participation in such amount.
(ii) Participation Funding. Issuing Bank may request
the Banks to fund their participations in Letters of Credit by
paying to Issuing Bank all or any portion of any Drawing
Payment made or to be made by Issuing Bank under any Letter of
Credit. Issuing Bank shall make such a request by delivering
to Agent (with a copy to Borrower), at any time after the
drawing for which such payment is requested has been made upon
Issuing Bank, a written request for such payment which
specifies the amount of such Drawing Payment and the date on
which such Drawing Payment is to be made or was made;
provided, however, that Issuing Bank shall not request the
Banks to make any payment under this Subparagraph 2.02(d) in
connection with any portion of a Drawing Payment for which
Issuing Bank has been reimbursed from a Reimbursement Payment
by Borrower unless such Reimbursement Payment has been
thereafter recovered by Borrower. Agent shall promptly notify
each Bank of the contents of each such request and of such
Bank's Proportionate Share of the applicable portion of such
Drawing Payment. Promptly following receipt of such notice
from Agent, each Bank shall pay to Agent, for the benefit of
Issuing Bank, such Bank's Proportionate Share of the
applicable portion of such Drawing Payment.
23
(iii) Funding Through Loans. At any time any
Reimbursement Obligations are outstanding, Agent may or, upon
the written request of Issuing Bank (if Borrower is not then
the subject of a bankruptcy proceeding), shall (subject to the
terms and conditions of this Subparagraph 2.02(d)), initiate a
Borrowing in an amount not exceeding the aggregate amount of
such outstanding Reimbursement Obligations and use the
proceeds of such Loan to repay all or a portion of such
Reimbursement Obligations. Agent shall initiate such a
Borrowing by delivering to each Bank (with a copy to Borrower)
a written notice which specifies the aggregate amount of
outstanding Reimbursement Obligations, the amount of the
Borrowing, the date of such Borrowing and the amount of the
Loan to be made by such Bank as part of such Borrowing. Each
Bank shall make available to Agent funds in the amount of its
Proportionate Share of such Loan as provided in Subparagraph
2.08(a). After receipt of such funds, Agent shall promptly
disburse such funds to Issuing Bank and the Banks, as
appropriate, in payment of the outstanding Reimbursement
Obligations.
(iv) Obligations Absolute. Each Bank's obligations to
fund its participations under this Subparagraph 2.02(d) shall
be absolute, unconditional and irrevocable and shall not be
affected by (A) the occurrence or existence of any Default or
Event of Default, (B) any failure to satisfy any condition set
forth in Section III, (C) any event or condition which might
have a Material Adverse Effect, (D) the failure of any other
Bank to make any payment under this Subparagraph 2.02(d), (E)
any right of offset, abatement, withholding or reduction which
such Bank may have against Issuing Bank, Agent, any other Bank
Party or Borrower, (F) any event, circumstance or condition
set forth in Subparagraph 2.02(c) or Subparagraph 2.02(e), or
(G) any other event, circumstance or condition whatsoever,
whether or not similar to any of the foregoing; provided, that
nothing in this Paragraph 2.02 shall prejudice any right which
any Bank may have against Issuing Bank for any action by
Issuing Bank which constitutes gross negligence or willful
misconduct.
(e) Liability of Issuing Bank, Etc. Borrower agrees that none
of Issuing Bank, Agent or any other Bank Party (nor any of their
respective directors, officers or employees) shall be liable or
responsible for (i) the use which may be made of any Letter of Credit
or for any acts or omissions of any beneficiary or transferee thereof
in connection therewith; (ii) any reference which may be made to this
Agreement or to any Letter of Credit in any agreements, instruments or
other documents relating to obligations secured by such Letter of
Credit; (iii) the validity, sufficiency or genuineness of documents, or
of any endorsement(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or
forged or any statement therein prove to be untrue or inaccurate in any
respect whatsoever; (iv) payment by Issuing Bank against presentation
of documents which do not comply with the terms of any Letter of
Credit, including failure of any documents to bear any reference or
adequate reference to any Letter of Credit; or (v) any other
circumstances
24
whatsoever in making or failing to make payment under any Letter of
Credit, except only that Issuing Bank shall be liable to Borrower for
acts or events described in clauses (i) through (v) above, to the
extent, but only to the extent, of any damages suffered by Borrower
(excluding consequential damages) which Borrower proves were caused by
(A) Issuing Bank's willful misconduct, bad faith or gross negligence in
determining whether a drawing made under any Letter of Credit complies
with the terms and conditions therefor stated in such Letter of Credit
or (B) Issuing Bank's willful misconduct, bad faith or gross negligence
in failing to pay under any Letter of Credit after a drawing by the
beneficiary thereof strictly complying with the terms and conditions of
such Letter of Credit. Without limiting the foregoing, Issuing Bank may
accept a drawing that appears on its face to be in order, without
responsibility for further investigation. The determination of whether
a drawing has been made under any Letter of Credit prior to its
expiration or whether a drawing made under any Letter of Credit is in
proper and sufficient form shall be made by Issuing Bank in its sole
discretion, which determination shall be conclusive and binding upon
Borrower to the extent permitted by law. Borrower hereby waives any
right to object to any payment made under any Letter of Credit with
regard to a drawing that is in the form provided in such Letter of
Credit but which varies with respect to punctuation, capitalization,
spelling or similar matters of form.
(f) Reports of Issuing Bank. While any Letter of Credit is
outstanding, Issuing Bank shall on a monthly basis provide to Agent or
any Bank such information regarding the Letters of Credit as Agent or
such Bank may reasonably request, including the Letters of Credit
outstanding, the stated amounts of outstanding Letters of Credit, the
expiration dates of outstanding Letters of Credit, the names of the
beneficiaries of outstanding Letters of Credit, the amounts of unpaid
Reimbursement Obligations and the amounts and times of Drawing Payments
and Reimbursement Payments.
(g) Purpose. Borrower shall use the Letters of Credit solely
as provided in clause (ii) of Subparagraph 2.02(a).
2.03. Amount Limitations, Commitment Reductions, Etc.
(a) Total Commitments. The sum of the aggregate principal
amount of all Loans outstanding at any time, the aggregate amount
available for drawing under all Letters of Credit then outstanding and
the aggregate amount of all Reimbursement Obligations then outstanding
(such sum to be referred to herein as the "Outstanding Facilities
Credit") shall not exceed the Total Commitment at such time.
25
(b) Optional Reduction or Cancellation of Commitments.
Borrower may, upon three (3) Business Days written notice to Agent
(and, in the case of the LC Commitment, to Issuing Bank), permanently
reduce the Total Commitment by the amount of $20,000,000 or integral
multiples of $5,000,000 in excess thereof or cancel the Total
Commitment in its entirety; provided, however, that:
(i) Borrower may not reduce the Total Commitment if,
after giving effect to such reduction, the Outstanding
Facilities Credit would exceed the Total Commitment at such
time as so reduced; and
(ii) Borrower may not cancel the Total Commitment if,
after giving effect to such cancellation, any Loan or Letter
of Credit would remain outstanding.
(c) Effect of Commitment Reductions. From the effective date
of any reduction of the Total Commitment, the Commitment Fees payable
pursuant to Subparagraph 2.04(b) shall be computed on the basis of the
Total Commitment as so reduced. Any reduction of the Total Commitment
shall be applied ratably to reduce each Bank's Commitment in accordance
with clause (i) of Subparagraph 2.09(a).
2.04. Fees.
(a) Commitment Fees. Borrower shall pay to Agent, for the
ratable benefit of the Banks as provided in clause (v) of Subparagraph
2.09(a), nonrefundable commitment fees (the "Commitment Fees") equal to
the Commitment Fee Percentage on the daily average Unused Commitment
for the period beginning on the date of this Agreement and ending on
the Maturity Date. The Commitment Fee Percentage shall be determined as
provided in the Pricing Grid and may change for each Pricing Period.
Borrower shall pay the Commitment Fees quarterly in arrears on the last
Business Day in each calendar quarter and on the Maturity Date (or if
the Total Commitment is cancelled on a date prior to the Maturity Date,
on such prior date).
26
(b) Letter of Credit Fees.
(i) Letter of Credit Usage Fees. Borrower shall pay
to Agent, for the ratable benefit of the Banks as provided in
clause (v) of Subparagraph 2.09(a), nonrefundable usage fees
for the Letters of Credit (the "LC Usage Fees") equal to one
percent (1%) per annum on the daily average available amount
of each Letter of Credit for the period beginning on the date
such Letter of Credit is issued and ending on the date such
Letter of Credit expires. Borrower shall pay the LC Usage Fees
quarterly in arrears on the last Business Day in each quarter
(commencing at the end of the first calendar quarter after the
issuance of the initial Letter of Credit) and on the Maturity
Date.
(ii) Letter of Credit Issuance Fees. Borrower shall
pay to Agent, for the sole benefit of Issuing Bank,
nonrefundable issuance fees for the Letters of Credit (the "LC
Issuance Fees") as agreed to between Borrower and Issuing
Bank.
(iii) Other Letter of Credit Fees. In addition to the
LC Issuance Fees, Borrower shall pay to Agent, for the sole
benefit of Issuing Bank, other standard reasonable fees of
Issuing Bank for drawings under, transfers of and amendments
to any Letter of Credit and other administrative actions
performed by Issuing Bank in connection with any Letter of
Credit, payable at such times and in such amounts as are
consistent with Issuing Bank's standard fee policy at the time
of such amendment or other action.
2.05. Prepayments.
(a) Terms of all Prepayments. Upon the prepayment of any Loan
(whether such prepayment is an optional prepayment under Subparagraph
2.05(b), a mandatory prepayment required by Subparagraph 2.05(c) or a
mandatory prepayment required by any other provision of this Agreement
or the other Credit Documents, including, without limitation, a
prepayment upon acceleration), Borrower shall pay to Agent for the
benefit of the Bank Party which made such Loan (i) all accrued interest
to the date of such prepayment on the amount prepaid and (ii) if such
prepayment is the prepayment of a LIBOR Loan on a day other than the
last day of an Interest Period for such Loan, all amounts payable to
such Bank Party pursuant to Paragraph 2.12.
(b) Optional Prepayments. At its option, Borrower may, upon
three (3) Business Days notice to Agent for LIBOR Loans and one (1)
Business Day notice to Agent for Base Rate Loans, prepay any Borrowing
in part, in an aggregate principal amount of $100,000 or more, or in
whole.
27
(c) Mandatory Prepayments. If, at any time, the Outstanding
Facilities Credit exceeds the Total Commitment at such time (including,
without limitation, as a result of the occurrence of a Commitment
Reduction Date), Borrower shall immediately prepay Loans in an
aggregate principal amount equal to such excess.
(d) Application of Loan Prepayments. All prepayments of the
Loans shall, to the extent possible, be first applied to prepay Base
Rate Loans and then, if any funds remain, to prepay LIBOR Loans.
2.06. Other Payment Terms.
(a) Place and Manner. Except as otherwise expressly provided
herein, Borrower shall make all payments due to each Bank Party
hereunder by payments to Agent, for the account of such Bank Party and
such Bank Party's Applicable Lending Office, by Agent debiting
Borrower's account maintained with Agent, or if no such account is
currently being maintained, at Agent's office, located at the address
specified in Paragraph 8.01, in lawful money of the United States and
in same day or immediately available funds not later than 12:00 noon on
the date due. Agent shall promptly disburse to each Bank Party each
such payment received by Agent for such Bank Party.
(b) Date. Whenever any payment due hereunder shall fall due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included
in the computation of interest or fees, as the case may be.
(c) Late Payments. If any amounts required to be paid by
Borrower under this Agreement or the other Credit Documents (including,
without limitation, principal or interest payable on any Loan, any fees
or other amounts) remain unpaid after such amounts are due, Borrower
shall pay interest on the aggregate, outstanding balance of such
amounts from the date due until those amounts are paid in full at a per
annum rate equal to the Base Rate plus two percent (2.00%), such rate
to change from time to time as the Base Rate shall change.
(d) Application of Payments. All payments hereunder shall be
applied first to unpaid fees, costs and expenses then due and payable
under this Agreement or the other Credit Documents, second to accrued
interest then due and payable under this Agreement or the other Credit
Documents and finally to reduce the principal amount of outstanding
Loans.
(e) Failure to Pay Agent. Unless Agent shall have received
notice from Borrower at least one (1) Business Day prior to the date on
which any payment is due to any Bank Party hereunder that Borrower will
not make such payment in full, Agent may assume that Borrower has made
such payment in full to Agent on such date and Agent
28
may, in reliance upon such assumption, cause to be distributed to the
appropriate Bank Parties on such due date an amount equal to the amount
then due such Bank Parties. If and to the extent Borrower shall not
have so made such payment in full to Agent, each such Bank Party shall
repay to Agent forthwith on demand such amount distributed to such Bank
Party together with interest thereon, for each day from the date such
amount is distributed to such Bank Party until the date such Bank Party
repays such amount to Agent, at (i) the Federal Funds Rate for the
first three (3) days and (ii) the Base Rate thereafter. A certificate
of Agent submitted to any Bank Party with respect to any amounts owing
by such Bank Party under this Subparagraph 2.06(e) shall be conclusive
absent manifest error.
2.07. Notes and Interest Account.
(a) Notes. The obligation of Borrower to repay the Loans made
by each Bank and to pay interest thereon at the rates provided herein
shall be evidenced by a promissory note in the form of Exhibit D
(individually, a "Note") which note shall be (i) payable to the order
of such Bank, (ii) in the amount of such Bank's Commitment, (iii) dated
the Closing Date and (iv) otherwise appropriately completed. Borrower
authorizes each Bank to record on the schedule annexed to such Bank's
Note the date and amount of each Loan made by such Bank and of each
payment or prepayment of principal thereon made by Borrower, and agrees
that all such notations shall constitute prima facie evidence of the
matters noted; provided, however, that any failure by a Bank to make
any such notation shall not affect the Obligations. Borrower further
authorizes each Bank to attach to and make a part of such Bank's Note
continuations of the schedule attached thereto as necessary.
(b) Interest Account. Borrower authorizes Agent to record in
an account or accounts maintained by Agent on its books (the "Interest
Account") (i) the interest rates applicable to all Loans and the
effective dates of all changes thereto, (ii) the Interest Period for
each LIBOR Loan, (iii) the date and amount of each principal and
interest payment on each Loan and (iv) such other information as Agent
may determine is necessary for the computation of interest payable by
Borrower hereunder.
2.08. Loan Funding, Etc.
(a) Bank Funding and Disbursement to Borrower. Each Bank
shall, before 11:00 A.M. on the date of each Borrowing, make available
to Agent at its office specified in Paragraph 8.01, in same day or
immediately available funds, such Bank's Proportionate Share of such
Borrowing. After Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Section III, Agent shall
promptly disburse such funds in same day or immediately available funds
to Borrower. Unless otherwise directed by Borrower, Agent shall
disburse the proceeds of each Borrowing to Borrower by disbursement to
the account or accounts specified in the applicable Notice of
Borrowing.
29
(b) Bank Failure to Fund. Unless Agent shall have received
notice from a Bank prior to the date of any Borrowing that such Bank
will not make available to Agent such Bank's Proportionate Share of
such Borrowing, Agent may assume that such Bank has made such portion
available to Agent on the date of such Borrowing in accordance with
Subparagraph 2.08(a), and Agent may, in reliance upon such assumption,
make available to Borrower (or otherwise disburse) on such date a
corresponding amount. If any Bank does not make the amount of its
Proportionate Share of any Borrowing available to Agent on or prior to
the date of such Borrowing, such Bank shall pay to Agent, on demand,
interest which shall accrue on such amount until made available to
Agent at rates equal to (i) the daily Federal Funds Rate during the
period from the date of such Borrowing through the third Business Day
thereafter and (ii) the Base Rate thereafter. A certificate of Agent
submitted to any Bank with respect to any amounts owing under this
Subparagraph 2.08(b) shall be conclusive absent manifest error. If any
Bank's Proportionate Share of any Borrowing is not in fact made
available to Agent by such Bank within three (3) Business Days after
the date of such Borrowing, Borrower shall pay to Agent, on demand, an
amount equal to such Proportionate Share together with interest
thereon, for each day from the date such amount was made available to
Borrower until the date such amount is repaid to Agent, at the interest
rate applicable at the time to the Loans comprising such Borrowing.
(c) Banks' Obligations Several. The failure of any Bank to
make the Loan to be made by it as part of any Borrowing shall not
relieve any other Bank of its obligation hereunder to make its Loan on
the date of such Borrowing, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other
Bank on the date of any Borrowing.
2.09. Pro Rata Treatment.
(a) Borrowings, Commitment Reductions, Etc. Except as
otherwise provided herein:
(i) Each Borrowing, each reduction of the Total
Commitment and participations in each Letter of Credit shall
be made by or shared among the Banks pro rata according to
their respective Proportionate Shares;
(ii) Each payment of principal of Loans in any
Borrowing shall be shared among the Banks which made or funded
the Loans in such Borrowing pro rata according to the
respective unpaid principal amounts of such Loans so made or
funded by such Banks;
(iii) Each payment of interest on Loans in any
Borrowing shall be shared among the Banks which made or funded
the Loans in such Borrowing pro rata according to (A) the
respective unpaid principal amounts of such Loans so
30
made or funded by such Banks and (B) the dates on which such
Banks so made or funded such Loans;
(iv) Each Reimbursement Payment and interest payable
by Borrower thereon shall be shared among the Banks (including
Issuing Bank) which made or funded the applicable Drawing
Payment pro rata according to the respective amounts of such
Drawing Payment so made or funded by such Banks;
(v) Each payment of Commitment Fees shall be shared
among the Banks pro rata according to (A) their respective
Proportionate Share and (B) in the case of each Bank which
becomes a Bank hereunder after the date hereof, the date upon
which such Bank so became a Bank;
(vi) Each payment of LC Usage Fees shall be shared
among the Banks (including Issuing Bank in its capacity as a
Bank) pro rata according to (A) their respective Proportionate
Share and (B) in the case of each Bank which becomes a Bank
hereunder after the date hereof, the date upon which such Bank
so became a Bank;
(vii) Each payment of interest (other than interest
on Loans) shall be shared among the Bank Parties owed the
amount upon which such interest accrues pro rata according to
(A) the respective amounts so owed such Bank Parties and (B)
the dates on which such amounts became owing to such Bank
Parties; and
(viii) All other payments under this Agreement and
the other Credit Documents shall be for the benefit of the
Person or Persons specified.
(b) Sharing of Payments, Etc. If any Bank Party shall obtain
any payment (whether voluntary, involuntary, through the exercise of
any right of setoff, or otherwise) on account of Loans owed to it in
excess of its ratable share of payments on account of such Loans
obtained by all Banks entitled to such payments, such Bank Party shall
forthwith purchase from the other Bank Parties entitled to such
payments such participations in the Loans or Reimbursement Obligations
as shall be necessary to cause such purchasing Bank Party to share the
excess payment ratably with each of them; provided, however, that if
all or any portion of such excess payment is thereafter recovered from
such purchasing Bank Party, such purchase shall be rescinded and each
other Bank Party shall repay to the purchasing Bank Party the purchase
price to the extent of such recovery together with an amount equal to
such other Bank Party's ratable share (according to the proportion of
(i) the amount of such other Bank Party's required repayment to (ii)
the total amount so recovered from the purchasing Bank) of any interest
or other amount paid or payable by the purchasing Bank Party in respect
of the total amount so recovered. Borrower agrees that any Bank Party
so purchasing a participation from another Bank Party pursuant to this
Subparagraph 2.09(b) may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of setoff, but
only
31
as provided in Paragraph 8.06) with respect to such participation as
fully as if such Bank Party were the direct creditor of Borrower in the
amount of such participation.
2.10. Change of Circumstances.
(a) Inability to Determine Rates. If, on or before the first
day of any Interest Period for any LIBOR Loan, Agent shall determine
that (i) the LIBO Rate for such Interest Period cannot be adequately
and reasonably determined due to the unavailability of funds in or
other circumstances affecting the London interbank market or (ii) the
rates of interest for such LIBOR Loans do not adequately and fairly
reflect the cost to the Banks of making or maintaining such LIBOR
Loans, Agent shall immediately give notice of such condition to
Borrower and the Banks. After the giving of any such notice and until
Agent shall otherwise notify Borrower that the circumstances giving
rise to such condition no longer exist, Borrower's right to request the
making of or conversion to, and the Banks' obligations to make or
convert to LIBOR Loans shall be suspended. Any LIBOR Loans outstanding
at the commencement of any such suspension shall, unless fully repaid,
be converted at the end of the then current Interest Period for such
LIBOR Loans into Base Rate Loans unless such suspension has then ended.
(b) Illegality. If, after the date of this Agreement, the
adoption of any Governmental Rule, any change in any Governmental Rule
or the application or requirements thereof (whether such change occurs
in accordance with the terms of such Governmental Rule as enacted, as a
result of amendment or otherwise), any change in the interpretation or
administration of any Governmental Rule by any Governmental Authority,
or compliance by any Bank with any request or directive (whether or not
having the force of law) of any Governmental Authority (a "Change of
Law") shall make it unlawful or impossible for any Bank to make or
maintain any LIBOR Loan, such Bank shall immediately notify Agent and
Borrower of such Change of Law. Upon receipt of such notice, (i)
Borrower's right to request the making of or conversion to, and such
Bank's obligation to make or convert to, LIBOR Loans shall be
terminated, and (ii) Borrower shall, at the request of such Bank,
either (A) pursuant to Subparagraph 2.01(d), convert any such then
outstanding LIBOR Loans of such Bank into Base Rate Loans at the end of
the current Interest Period for such LIBOR Loans, or (B) immediately
repay or convert any such LIBOR Loans if such Bank shall notify
Borrower that such Bank may not lawfully continue to fund and maintain
such LIBOR Loans. Any conversion or prepayment of LIBOR Loans made
pursuant to the preceding sentence prior to the last day of an Interest
Period for such LIBOR Loans shall be deemed a prepayment thereof for
purposes of Paragraph 2.12. After any Bank notifies Agent and Borrower
of such a Change of Law and until such Bank notifies Agent and Borrower
that it is no longer unlawful or impossible for such Bank to make or
maintain any LIBOR Loan, all Loans of such Bank shall be Base Rate
Loans.
(c) Increased Costs. If, after the date of this Agreement, any
Change of Law:
32
(i) Shall subject any Bank to any tax, duty or other
charge with respect to any LIBOR Loan, or shall change the
basis of taxation of payments by Borrower to any Bank on such
a LIBOR Loan or in respect to such a LIBOR Loan under this
Agreement (except for changes in the rate of taxation on the
overall net income of any Bank imposed by its jurisdiction of
incorporation or the jurisdiction in which its principal
executive office is located); or
(ii) Shall impose, modify or hold applicable any
reserve (excluding any Reserve Requirement or other reserve to
the extent included in the calculation of the LIBO Rate for
any LIBOR Loans), special deposit or similar requirement
against assets held by, deposits or other liabilities in or
for the account of, advances or loans by, or any other
acquisition of funds by any Bank for any LIBOR Loan; or
(iii) Shall impose on any Bank any other condition
related to any LIBOR Loan or such Bank's Commitments;
And the effect of any of the foregoing is to increase the cost to such
Bank of making, renewing, or maintaining any such LIBOR Loan or such
Bank's Commitments or to reduce any amount receivable by such Bank
hereunder, then Borrower shall from time to time, within five (5) days
after demand by such Bank, pay to such Bank additional amounts
sufficient to reimburse such Bank for such increased costs or to
compensate such Bank for such reduced amounts. A certificate as to the
amount of such increased costs or reduced amounts submitted by such
Bank to Borrower shall, in the absence of manifest error, be conclusive
and binding on Borrower for all purposes. The obligations of Borrower
under this Subparagraph 2.10(c) shall survive the payment and
performance of the Obligations and the termination of this Agreement.
(d) Capital Requirements. If, after the date of this
Agreement, any Bank Party determines that (i) any Change of Law affects
the amount of capital required or expected to be maintained by such
Bank Party or any Person controlling such Bank Party (a "Capital
Adequacy Requirement") and (ii) the amount of capital maintained by
such Bank Party or such Person which is attributable to or based upon
the Loans, the Letters of Credit, the Commitments or this Agreement
must be increased as a result of such Capital Adequacy Requirement
(taking into account such Bank Party's or such Person's policies with
respect to capital adequacy), Borrower shall pay to such Bank Party or
such Person, within five (5) days after demand of such Bank Party, such
amounts as such Bank Party or such Person shall determine are necessary
to compensate such Bank Party or such Person for the increased costs to
such Bank Party or such Person of such increased capital. A certificate
of any Bank Party setting forth in reasonable detail the computation of
any such increased costs delivered by such Bank Party to Borrower
shall, in the absence of manifest error, be conclusive and binding on
Borrower for all purposes. The
33
obligations of Borrower under this Subparagraph 2.10(d) shall survive
the payment and performance of the Obligations and the termination of
this Agreement.
2.11. Taxes on Payments.
(a) Payments Free of Taxes. All payments made by Borrower
under this Agreement and the other Credit Documents shall be made free
and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority (except net income taxes and franchise taxes in
lieu of net income taxes imposed on any Agent or Bank Party by its
jurisdiction of incorporation or the jurisdiction in which its
Applicable Lending Office is located) (all such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions and withholdings
being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to any Agent or any Bank Party
hereunder or under the other Credit Documents, the amounts so payable
to Agent or such Bank Party shall be increased to the extent necessary
to yield to Agent or such Bank Party (after payment of all Taxes)
interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the other Credit Documents.
Whenever any Taxes are payable by Borrower, as promptly as possible
thereafter, Borrower shall send to Agent for its own account or for the
account of such Bank Party, as the case may be, a certified copy of an
original official receipt received by Borrower showing payment thereof.
If Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to Agent the required receipts or other
required documentary evidence, Borrower shall indemnify Agent and the
Bank Parties for any incremental taxes, interest or penalties that may
become payable by Agent or any Bank Party as a result of any such
failure. The obligations of Borrower under this Subparagraph 2.11(a)
shall survive the payment and performance of the Obligations and the
termination of this Agreement.
(b) Withholding Exemption Certificates. On or prior to the
Closing Date, each Bank which is not incorporated under the laws of the
United States of America or a state thereof shall deliver to Borrower
and Agent either two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 (or successor applicable form), as
the case may be, certifying in each case that such Bank is entitled to
receive payments under this Agreement without deduction or withholding
of any United States federal taxes. Each Bank which delivers to
Borrower and Agent a Form 1001 or 4224 pursuant to the immediately
preceding sentence further undertakes to deliver to Borrower and Agent
two further copies of Form 1001 or 4224, or successor applicable forms,
or other manner of certification or procedure, as the case may be, on
or before the date that any such letter or form expires or becomes
obsolete or after the occurrence of any event requiring a change in the
most recent letter and form previously delivered by it to Borrower and
Agent, and such extensions or renewals thereof as may reasonably be
34
requested by Borrower or Agent, certifying in the case of a Form 1001
or 4224 that such Bank is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal
taxes, unless in any such cases an event (including without limitation
any change in treaty, law or regulation) has occurred prior to the date
on which any such delivery would otherwise be required which renders
all such forms inapplicable or which would prevent a Bank from duly
completing and delivering any such letter or form with respect to it
and such Bank advises Borrower and Agent that it is not capable of
receiving payments without any deduction or withholding of United
States federal income tax.
2.12. Funding Loss Indemnification . If Borrower shall (a) repay,
prepay or convert any LIBOR Loan on any day other than the last day of an
Interest Period therefor (whether a scheduled payment, an optional prepayment or
conversion, a mandatory prepayment or conversion, a payment upon acceleration or
otherwise), (b) fail to borrow any LIBOR Loan for which a Notice of Borrowing
has been delivered to Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) or (c) fail to convert any Loans into LIBOR
Loans in accordance with a Notice of Conversion delivered to Agent (whether as a
result of the failure to satisfy any applicable conditions or otherwise),
Borrower shall, upon demand by any Bank, reimburse such Bank for and hold such
Bank harmless from all costs and losses incurred by such Bank as a result of
such repayment, prepayment or failure. Borrower understands that such costs and
losses may include, without limitation, losses incurred by a Bank as a result of
funding and other contracts entered into by such Bank to a fund a LIBOR Loan.
Each Bank demanding payment under this Paragraph 2.12 shall deliver to Borrower,
with a copy to Agent, a certificate setting forth the amount of costs and losses
for which demand is made, which certificate shall set forth in reasonable detail
the calculation of the amount demanded. Such a certificate so delivered to
Borrower shall constitute prima facie evidence of such costs and losses. The
obligations of Borrower under this Paragraph 2.12 shall survive the payment and
performance of the Obligations and the termination of this Agreement.
2.13. Security.
(a) Security Agreements, Etc. The Obligations shall be secured
by a Security Agreement in the form of Exhibit E, duly executed by
Borrower (the "Borrower Security Agreement"); provided, however, that
if during any fiscal quarter after the First Commitment Reduction Date,
Borrower maintains a Leverage Ratio of less than 0.65/1.00, the
security interests of Agent and the Bank Parties created pursuant to
the Borrower Security Agreement shall be released and discharged and
shall not be reinstated.
(b) Further Assurances. At all times while the security
interest created pursuant to the Borrower Security Agreement is in
place, Borrower shall deliver to Agent such additional security
agreements, and other instruments, agreements, certificates,
35
opinions and documents (including Uniform Commercial Code financing
statements) as Agent may reasonably request to:
(i) Grant, perfect, maintain, protect and evidence
security interests in favor of Agent, for the benefit of Agent
and the Bank Parties, in and to the Collateral prior to the
Liens or other interests of any Person, except for Permitted
Liens; and
(ii) Otherwise establish, maintain, protect and
evidence the rights provided to Agent, for the benefit of
Agents and the Banks, pursuant to the Security Documents.
Borrower shall fully cooperate with Agent and the Bank Parties and
perform all additional acts reasonably requested by Agent or any Bank
to effect the purposes of this Paragraph 2.13.
SECTION III. CONDITIONS PRECEDENT.
3.01. Initial Conditions Precedent . The obligations of the Bank
Parties to continue to make Loans or of Issuing Bank to continue to issue
Letters of Credit are subject to receipt by Agent, on or prior to the Closing
Date, of each item listed in Schedule 3.01, each in form and substance
reasonably satisfactory to the Banks, and with sufficient copies for, Agent and
each Bank.
3.02. Conditions Precedent to Each Credit Event . The occurrence of
each Credit Event is subject to the further conditions that:
(a) Borrower shall have delivered to Agent (and Issuing Bank,
in the case of an LC Application) the Notice of Borrowing, Notice of
Conversion or Notice of Interest Period Selection, as the case may be,
for such Credit Event in accordance with this Agreement;
(b) On the date such Credit Event is to occur and after giving
effect to such Credit Event, the following shall be true and correct:
(i) The representations and warranties of Borrower
and its Subsidiaries set forth in Paragraph 4.01 and in the
other Credit Documents are true and correct in all material
respects as if made on such date (except for representations
and warranties expressly made as of a specified date, which
shall be true as of such date); and
36
(ii) No Default or Event of Default has occurred and
is continuing or will result from such Credit Event; and
(c) On the date such Credit Event is to occur and after giving
effect to such Credit Event, all of the Credit Documents are in full
force and effect.
The submission by Borrower to Agent of each Notice of Borrowing, each Notice of
Conversion (other than a notice for a conversion to a Base Rate Loan), each
Notice of Interest Period Selection and each LC Application shall be deemed to
be a representation and warranty by Borrower as of the date thereon as to the
above.
37
SECTION IV. REPRESENTATIONS AND WARRANTIES.
4.01. Representations and Warranties . In order to induce Agent and the
Bank Parties to enter into this Agreement, Borrower hereby represents and
warranties to Agent and the Bank Parties as follows:
(a) Due Incorporation, Qualification, etc. Borrower (i) is a
corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation; (ii) has the power and
authority to own, lease and operate its properties and carry on its
business as now conducted; and (iii) is duly qualified, licensed to do
business and in good standing as a foreign corporation in each
jurisdiction where the failure to be so qualified or licensed is
reasonably likely to have a Material Adverse Effect.
(b) Authority. The execution, delivery and performance by
Borrower of each Credit Document executed, or to be executed, by
Borrower and the consummation of the transactions contemplated thereby
(i) are within the corporate power of Borrower and (ii) have been duly
authorized by all necessary corporate actions on the part of Borrower.
(c) Enforceability. Each Credit Document executed, or to be
executed, by Borrower has been, or will be, duly executed and delivered
by Borrower and constitutes, or will constitute, a legal, valid and
binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as limited by bankruptcy, insolvency
or other laws of general application relating to or affecting the
enforcement of creditors' rights generally and general principles of
equity.
(d) Non-Contravention. The execution and delivery by Borrower
of the Credit Documents and the performance and consummation of the
transactions contemplated thereby do not (i) violate any Requirement of
Law applicable to Borrower; (ii) violate any provision of, or result in
the breach or the acceleration of, or entitle any other Person to
accelerate (whether after the giving of notice or lapse of time or
both), any Contractual Obligations of Borrower; or (iii) result in the
creation or imposition of any Lien (or the obligation to create or
impose any Lien) upon any property, asset or revenue of Borrower
(except such Liens as may be created in favor of Agent pursuant to this
Agreement or the other Credit Documents).
(e) Approvals. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Authority or other Person (including the shareholders of Borrower) is
required in connection with the execution and delivery of the Credit
Documents executed by Borrower or the performance and consummation of
the transactions contemplated thereby, except such as have been made or
obtained and are in full force and effect.
38
(f) No Violation or Default. Borrower is not in violation of
or in default with respect to (i) any Requirement of Law applicable to
Borrower or (ii) any Contractual Obligation of Borrower, where, in each
case, such violation or default is reasonably likely to have a Material
Adverse Effect. Without limiting the generality of the foregoing,
neither Borrower nor any of its Subsidiaries (A) is in violation of any
environmental laws, (B) has any liability or potential liability under
any environmental laws or (C) has received notice or other
communication of an investigation or is under investigation by any
Governmental Authority having authority to enforce environmental laws,
where, in each case, such violation, liability or investigation could
reasonably be expected to have a Material Adverse Effect. No Event of
Default or Default has occurred and is continuing.
(g) Litigation. Except as set forth in the Schedule 4.01(g)
(with estimates of the dollar amounts involved), no actions (including,
without limitation, derivative actions), suits, proceedings or
investigations are pending or, to the knowledge of Borrower, threatened
against Borrower or any of its Subsidiaries at law or in equity in any
court or before any other Governmental Authority which (i) is
reasonably likely (alone or in the aggregate) to have a Material
Adverse Effect or (ii) seeks to enjoin, either directly or indirectly,
the execution, delivery or performance of the Credit Documents or the
transactions contemplated thereby.
(h) Title; Possession Under Leases. Borrower and its
Subsidiaries own and have good and marketable title, or a valid
leasehold interest in, all their respective properties and assets as
reflected in the most recent Financial Statements delivered to Agent
(except those assets and properties disposed of in the ordinary course
of business or otherwise in compliance with this Agreement since the
date of such Financial Statements) and all respective assets and
properties acquired by Borrower and its Subsidiaries since such date
(except those disposed of in the ordinary course of business or
otherwise in compliance with this Agreement). Such assets and
properties are subject to no Lien, except for Permitted Liens. Each of
Borrower and its Subsidiaries has complied with all material
obligations under all material leases to which it is a party and all
such leases are in full force and effect. Each of Borrower and its
Subsidiaries enjoys peaceful and undisturbed possession under such
leases.
(i) Financial Statements. The Financial Statements of Borrower
and its Subsidiaries which have been delivered to Agent in connection
with this Agreement or the Indus Group Credit Agreement, (i) are in
accordance with the books and records of Borrower, which have been
maintained in accordance with good business practice; (ii) have been
prepared in conformity with GAAP; and (iii) fairly present the
financial condition and results of operations of Borrower and its
Subsidiaries as of the date thereof and for the periods covered
thereby. As of the date of each of the Financial Statements of Borrower
and its Subsidiaries delivered pursuant to Paragraph 3.01 or clause (i)
or (ii) of Subparagraph 5.01(a), neither Borrower nor any of its
Subsidiaries has any contingent obligations, liability for taxes or
other outstanding obligations which are reasonably
39
likely, in the aggregate, to have a Material Adverse Effect, except as
disclosed in such Financial Statements.
(j) No Agreements to Sell Assets; Etc. As of the Closing Date,
neither Borrower nor any of its Subsidiaries has any legal obligation,
absolute or contingent, to any Person to sell all or any material part
of the assets of Borrower or any of its Subsidiaries (other than sales
in the ordinary course of business), or to effect any merger,
consolidation or other reorganization of Borrower or any of its
Subsidiaries or to enter into any agreement with respect thereto.
(k) Employee Benefit Plans.
(i) Based on the latest valuation of each Employee
Benefit Plan that either Borrower or any ERISA Affiliate
maintains or contributes to, or has any obligation under
(which occurred within twelve months of the date of this
representation), the aggregate benefit liabilities of such
plan within the meaning of ss. 4001 of ERISA did not exceed
the aggregate value of the assets of such plan. Neither
Borrower nor any ERISA Affiliate has any liability with
respect to any post-retirement benefit under any Employee
Benefit Plan which is a welfare plan (as defined in section
3(1) of ERISA), other than liability for health plan
continuation coverage described in Part 6 of Title I(B) of
ERISA, which liability for health plan contribution coverage
is not reasonably likely to have a Material Adverse Effect.
(ii) Each Employee Benefit Plan complies, in both
form and operation, in all material respects, with its terms,
ERISA and the Code, and no condition exists or event has
occurred with respect to any such plan which would result in
the incurrence by either Borrower or any ERISA Affiliate of
any material liability, fine or penalty. Each Employee Benefit
Plan, related trust agreement, arrangement and commitment of
Borrower or any ERISA Affiliate is legally valid and binding
and in full force and effect. No Employee Benefit Plan is
being audited or investigated by any government agency or is
subject to any pending or threatened claim or suit. Neither
Borrower nor any ERISA Affiliate nor any fiduciary of any
Employee Benefit Plan has engaged in a prohibited transaction
under section 406 of ERISA or section 4975 of the Code.
(iii) Neither Borrower nor any ERISA Affiliate has
any material contingent obligations to any Multiemployer Plan.
Neither Borrower nor any ERISA Affiliate has incurred any
material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under Section 4201 of
ERISA or as a result of a sale of assets described in Section
4204 of ERISA. Neither Borrower nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization
or
40
insolvent under and within the meaning of Section 4241 or
Section 4245 of ERISA or that any Multiemployer Plan intends
to terminate or has been terminated under Section 4041A of
ERISA.
(l) Other Regulations. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company Act
of 1940, the Public Utility Holding Company Act of 1935, the Federal
Power Act, any state public utilities code or to any other Governmental
Rule limiting its ability to incur indebtedness.
(m) Patent and Other Rights. Borrower and its Subsidiaries own
or license under validly existing agreements, and have the full right
to license without the consent of any other Person, all patents,
licenses, trademarks, trade names, trade secrets, service marks,
copyrights and all rights with respect thereto, which are material to
conduct the businesses of Borrower and its Subsidiaries (taken as a
whole) as now conducted.
(n) Governmental Charges. Borrower and its Subsidiaries have
filed or caused to be filed all material tax returns which are required
by law to be filed by them. Borrower and its Subsidiaries have paid, or
made provision for the payment of, all taxes and other Governmental
Charges which have or may have become due pursuant to said returns or
otherwise, except such Governmental Charges, if any, which are being
contested in good faith and as to which adequate reserves (determined
in accordance with GAAP) have been provided or which are not reasonably
likely to have a Material Adverse Effect if unpaid.
(o) Margin Stock. Neither Borrower nor any of its Subsidiaries
owns Margin Stock which, in the aggregate, would constitute a
substantial part of the assets of such Person, and no proceeds of any
Loan and no Letter of Credit will be used to purchase or carry,
directly or indirectly, any Margin Stock or to extend credit, directly
or indirectly, to any Person for the purpose of purchasing or carrying
any Margin Stock.
(p) Subsidiaries, etc. Set forth in Schedule 4.01(p) (as
immediately supplemented by Borrower on or immediately prior to any
change thereto) is a complete list of all of Borrower's Subsidiaries,
the jurisdiction of incorporation of each, the asset value of each and
the percentage of Borrower's consolidated total assets represented by
each. Except for such Subsidiaries, Borrower does not have any
Subsidiaries, is not a partner in any partnership or a joint venturer
in any joint venture.
(q) Capital Stock. As of April 30, 1998, 3,349,692 shares of
capital stock of Borrower have been duly issued and are outstanding.
All outstanding capital stock is duly authorized, validly issued, fully
paid and non-assessable. There are no outstanding subscriptions,
options, conversion rights, warrants or other agreements or commitments
of any nature whatsoever (firm or conditional) obligating Borrower to
issue, deliver or
41
sell, or cause to be issued, delivered or sold, any additional capital
stock of Borrower, or obligating Borrower to grant, extend or enter
into any such agreement or commitment.
(r) Solvency, Etc. Borrower and each of its Subsidiaries is
Solvent and, after the execution and delivery of the Credit Documents
and the consummation of the transactions contemplated thereby, will be
Solvent.
(s) Catastrophic Events. Neither Borrower nor any of its
Subsidiaries and none of their properties is or has been affected by
any fire, explosion, strike, lockout or other labor dispute,
earthquake, embargo or other casualty that is reasonably likely to have
a Material Adverse Effect. As of the Closing Date, there are no
disputes presently subject to grievance procedure, arbitration or
litigation under any of the collective bargaining agreements,
employment contracts or employee welfare or incentive plans to which
Borrower or any of its Subsidiaries is a party, and there are no
strikes, lockouts, work stoppages or slowdowns, or, to the best
knowledge of Borrower, jurisdictional disputes or organizing activities
occurring or threatened which alone or in the aggregate are reasonably
likely to have a Material Adverse Effect.
(t) No Material Adverse Effect. No event has occurred and no
condition exists which could reasonably be expected to have a Material
Adverse Effect.
(u) Accuracy of Information Furnished. None of the Credit
Documents and none of the other certificates, statements or information
furnished to Bank Party by or on behalf of Borrower or any of their
Subsidiaries in connection with the Credit Documents or the
transactions contemplated thereby contains or will contain any untrue
statement of a material fact or omits or will omit to state a material
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.02. Reaffirmation . Borrower shall be deemed to have reaffirmed, for
the benefit of Agent and the Bank Parties, each representation and warranty
contained in Paragraph 4.01 on and as of the date of each Credit Event (except
for representations and warranties expressly made as of a specified date, which
shall be true as of such date).
SECTION V. COVENANTS.
5.01. Affirmative Covenants . Until the termination of this Agreement
and the satisfaction in full by Borrower of all Obligations, Borrower will
comply, and will cause compliance, with the following affirmative covenants,
unless Required Banks shall otherwise consent in writing:
42
(a) Financial Statements, Reports, etc. Borrower shall furnish
to Agent (and Agent shall promptly thereupon furnish to each Bank) the
following, each in such form and such detail as Agent or the Required
Banks shall reasonably request:
(i) As soon as available and in no event later than
forty-five (45) days after the last day of each quarter, a
copy of the Financial Statements of Borrower (prepared on a
consolidated and consolidating basis) for such month and for
the fiscal year to date, certified by the Chief Financial
Officer of Borrower to present fairly the financial condition,
results of operations and other information reflected therein
and to have been prepared in accordance with GAAP (subject to
normal year-end audit adjustments);
(ii) At all times during which the Obligations of
Borrower are secured by the Collateral pledged pursuant to the
Security Agreement, as soon as available and in no event later
than thirty (30) days after the last day of each month, a
summary aging of Borrower's and its Subsidiaries' consolidated
accounts receivable as of the most recent month end, certified
by the Vice President Finance of Borrower to present fairly
the aging of such accounts receivable reflected therein;
(iii) As soon as available and in no event later than
one hundred twenty (120) days after the close of each fiscal
year of Borrower, (A) copies of the audited Financial
Statements of Borrower and its Subsidiaries (prepared on a
consolidated and consolidating basis) for such year, prepared
by independent certified public accountants of recognized
national standing acceptable to Agent, (B) copies of the
unqualified opinions (or qualified opinions reasonably
acceptable to Agent) and management letters delivered by such
accountants in connection with all such Financial Statements
and (C) certificates of such accountants to Agent stating that
in making the examination necessary for their opinion they
have reviewed this Agreement and have obtained no knowledge of
any Default which has occurred and is continuing, or if, in
the opinion of such accountants, a Default has occurred and is
continuing, a statement as to the nature thereof;
(iv) Contemporaneously with the quarterly and
year-end Financial Statements required by the foregoing
clauses (ii) and (iii), a certificate of an executive officer
of Borrower in the form of Exhibit F, appropriately completed,
together with such financial computations as Agent may
reasonably request to determine compliance with the terms of
this Agreement (a "Compliance Certificate");
(v) As soon as possible and in no event later than
five (5) Business Days after any officer of Borrower knows of
the occurrence or existence of
43
(A) any Reportable Event under any Employee Benefit Plan or
Multiemployer Plan; (B) any actual or threatened litigation,
suits, claims or disputes against Borrower or any of its
Subsidiaries involving potential monetary damages payable by
Borrower or its Subsidiaries of $1,000,000 or more (alone or
in the aggregate); (C) any other event or condition which is
reasonably likely to have a Material Adverse Effect; or (D)
any Default; the statement of the president or chief financial
officer of Borrower setting forth details of such event,
condition or Default and the action which Borrower proposes to
take with respect thereto;
(vi) If requested, copies of Borrower's and its
Subsidiaries' federal income tax returns, and if requested by
Agent, copies of any extensions with respect to the filing
thereof; and
(vii) Such other certificates, opinions, statements,
documents and information relating to the operations or
condition (financial or otherwise) of Borrower or any of its
Subsidiaries, and compliance by Borrower with the terms of
this Agreement and the other Credit Documents as any Bank
Party through Agent may from time to time reasonably request.
(b) Books and Records. Borrower and its Subsidiaries shall at
all times keep proper books of record and account in which full, true
and correct entries will be made of their transactions in accordance
with GAAP.
(c) Inspections. Borrower and its Subsidiaries shall permit
any Person designated by any Bank Party, upon reasonable notice and
during normal business hours, to visit and inspect any of the
properties and offices of Borrower and its Subsidiaries, to conduct
audits of any or all of the Collateral at Borrower's expense, to
examine the books and records of Borrower and its Subsidiaries and make
copies thereof and to discuss the affairs, finances and business of
Borrower and its Subsidiaries with, and to be advised as to the same
by, their officers, auditors and accountants, all at such times and
intervals as any Bank may reasonably request.
(d) Insurance. Borrower and its Subsidiaries shall:
(i) Carry and maintain insurance of the types and in
the amounts customarily carried from time to time during the
term of this Agreement by others engaged in substantially the
same business as such Person and operating in the same
geographic area as such Person, including, but not limited to,
fire, public liability, property damage and worker's
compensation;
(ii) Carry and maintain each policy for such
insurance with (A) a company which is rated A or better by
A.M. Best and Company at the time such policy is placed and at
the time of each annual renewal thereof or (B) any other
insurer which is reasonably satisfactory to Agent; and
44
(iii) Deliver to Agent from time to time, as Agent
may request, schedules setting forth all insurance then in
effect.
(e) Governmental Charges. Borrower and its Subsidiaries shall
promptly pay and discharge when due (i) all taxes and other
Governmental Charges prior to the date upon which penalties accrue
thereon, (ii) all indebtedness which, if unpaid, could become a Lien
upon the property of Borrower or its Subsidiaries and (iii) subject to
any subordination provisions applicable thereto, all other Indebtedness
which, if unpaid, is reasonably likely to have a Material Adverse
Effect.
(f) Use of Proceeds. Borrower shall use the proceeds of the
Loans and the Letters of Credit only for the respective purposes set
forth in Subparagraph 2.01(g) and Subparagraph 2.02(g). Borrower shall
not use any part of the proceeds of any Loan or any Letter of Credit,
directly or indirectly, for the purpose of purchasing or carrying any
Margin Stock or for the purpose of purchasing or carrying or trading in
any securities under such circumstances as to involve Borrower, any
Bank Party or Agent in a violation of Regulations G, T, U or X issued
by the Federal Reserve Board.
(g) General Business Operations. Each of Borrower and its
Subsidiaries shall (i) preserve and maintain its corporate existence
and all of its rights, privileges and franchises reasonably necessary
to the conduct of its business, (ii) conduct its business activities in
compliance with all Requirements of Law and Contractual Obligations
applicable to such Person, the violation of which is reasonably likely
to have a Material Adverse Effect, (iii) keep all property useful and
necessary in its business in good working order and condition, ordinary
wear and tear excepted, and (iv) pay and perform all Contractual
Obligations as and when due (except to the extent disputed in good
faith by Borrower or the appropriate Subsidiary and where non-payment
would not be reasonably expected to have a Material Adverse Effect).
Borrower shall maintain its chief executive office and principal place
of business in the United States and shall not relocate its chief
executive office or principal place of business outside of California
except upon not less than ninety (90) days prior written notice to
Agent.
5.02. Negative Covenants . Until the termination of this Agreement and
the satisfaction in full by Borrower of all Obligations, Borrower will comply,
and will cause compliance, with the following negative covenants, unless
Required Banks shall otherwise consent in writing:
(a) Indebtedness. On a consolidated basis, neither Borrower
nor any of its Subsidiaries shall create, incur, assume or permit to
exist any Indebtedness or any Guaranty Obligations except for the
following ("Permitted Indebtedness"):
(i) The Obligations of Borrower under the Credit
Documents;
45
(ii) Indebtedness listed in Schedule 5.02(a) existing
on the date of this Agreement;
(iii) Indebtedness of Borrower and its Subsidiaries
under purchase money loans and Capital Leases incurred by
Borrower or any of its Subsidiaries to finance the acquisition
by such Person of real property, fixtures, equipment or other
fixed assets provided that in each case, (A) such Indebtedness
is incurred by such Person at the time of, or not later than
ninety (90) days after, the acquisition by such Person of the
property so financed, (B) such Indebtedness does not exceed
the purchase price of the property so financed and (C) the
aggregate principal amount of any such Indebtedness does not
exceed $4,000,000 at any time;
(iv) Indebtedness arising from the endorsement of
instruments for collection in the ordinary course of
Borrower's or a Subsidiary's business;
(v) Indebtedness of Borrower and its Subsidiaries
with respect to surety, appeal, indemnity, performance or
other similar bonds in the ordinary course of business;
(vi) Indebtedness of Borrower and its Subsidiaries
under initial or successive refinancings of any Indebtedness
permitted by clause (ii) or (iii) above, provided that (A) the
principal amount of any such refinancing does not exceed the
principal amount of the Indebtedness being refinanced and (B)
the material terms and provisions of any such refinancing
(including maturity, redemption, prepayment, default and
subordination provisions) are no less favorable to the Banks
than the Indebtedness being refinanced;
(vii) Indebtedness of Borrower and its Subsidiaries
for trade accounts payable, provided that (A) such accounts
arise in the ordinary course of business and (B) no material
part of such account is more than ninety (90) days past due
(unless subject to a bona fide dispute and for which adequate
reserves have been established);
(viii) Guaranty Obligations of Borrower and its
Subsidiaries in respect of other Permitted Indebtedness;
(ix) Indebtedness of Borrower to any of its
Subsidiaries, Indebtedness of any of its Subsidiaries to
Borrower or Indebtedness of any of its Subsidiaries to any of
its other Subsidiaries; and
46
(x) Other Indebtedness of Borrower and its
Subsidiaries, provided that the aggregate principal amount of
all such other Indebtedness does not exceed $1,000,000 at any
time.
(b) Liens. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume or permit to exist any Lien on or with respect to
any of its assets or property of any character, whether now owned or
hereafter acquired, except for the following ("Permitted Liens"):
(i) Liens in favor of Agent or any Bank securing the
Obligations;
(ii) Liens listed in Schedule 5.02(b) existing on the
date of this Agreement;
(iii) Liens for taxes or other Governmental Charges
not at the time delinquent or thereafter payable without
penalty or being contested in good faith, provided that
adequate reserves for the payment thereof have been
established in accordance with GAAP;
(iv) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords and other similar Liens
imposed by law incurred in the ordinary course of business for
sums (A) not overdue or (B) being contested in good faith
provided that adequate reserves for the payment thereof have
been established in accordance with GAAP;
(v) Deposits under workers' compensation,
unemployment insurance and social security laws or to secure
the performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, or to secure
statutory obligations of surety or appeal bonds or to secure
indemnity, performance or other similar bonds in the ordinary
course of business;
(vi) Zoning restrictions, easements, rights-of-way,
title irregularities and other similar encumbrances, which
alone or in the aggregate are not substantial in amount and do
not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business
of Borrower or any of its Subsidiaries;
(vii) Liens securing Indebtedness which constitutes
Permitted Indebtedness under clause (iii) and (x) of
Subparagraph 5.02(a) provided that, in each case, such Lien
(A) covers only those assets, the acquisition of which was
financed by such Permitted Indebtedness, and (B) secures only
such Permitted Indebtedness;
47
(viii) Banker's Liens and similar Liens (including
set-off rights) in respect of bank deposits;
(ix) Liens incurred in connection with the extension,
renewal or refinancing of the Indebtedness secured by the
Liens described in clause (ii) or (vii) above, provided that
any extension, renewal or replacement Lien (A) is limited to
the property covered by the existing Lien and (B) secures
Indebtedness which is no greater in amount and has material
terms no less favorable to the Banks than the Indebtedness
secured by the existing Lien; and
(x) Liens on property or assets of any corporation
which becomes a Subsidiary of Borrower after the date of this
Agreement, provided that (A) such Liens exist at the time the
stock of such corporation is acquired by Borrower or any of
its Subsidiaries and (B) such Liens were not created in
contemplation of such acquisition;
(xi) Judgement Liens, provided that such Liens do not
have a value in excess of $2,000,000 or such Liens are
released, stayed, vacated or otherwise dismissed within ten
(10) days after issue or levy and, if so stayed, such stay is
not thereafter removed;
(xii) Rights of vendors or lessors under conditional
sale agreements, Capital Leases or other title retention
agreements, provided that, in each case, (A) such rights
secure or otherwise relate to Permitted Indebtedness, (B) such
rights do not extend to any property other than property
acquired with the proceeds of such Permitted Indebtedness and
(C) such rights do not secure any Indebtedness other than such
Permitted Indebtedness;
(xiii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties and in connection with the importation of goods
in the ordinary course of Borrower's and its Subsidiaries'
businesses; and
(xiv) Liens on insurance proceeds in favor of
insurance companies with respect to the financing of insurance
premiums.
(c) Asset Dispositions. Neither Borrower nor any of its
Subsidiaries shall sell, lease, transfer or otherwise dispose of all or
any of its assets or property, whether now owned or hereafter acquired,
except for the following:
(i) Sales of inventory by Borrower and its
Subsidiaries in the ordinary course of their businesses;
48
(ii) Sales of surplus, damaged, worn or obsolete
assets or properties for not less than fair market value;
(iii) Sales or other dispositions of Investments
permitted by Subparagraph 5.02(e) for not less than fair
market value;
(iv) Sales or assignments of defaulted receivables to
a collection agency in the ordinary course of business; and
(v) Other sales, leases, transfers and
disposals of assets and property, provided that the aggregate
value of all such assets and property (based upon the greater
of the fair market or book value of such assets and property)
so sold, leased, transferred or otherwise disposed of in any
fiscal year does not exceed $2,000,000 per year.
(d) Mergers, Acquisitions, Etc. Neither Borrower nor any of
its Subsidiaries shall consolidate with or merge into any other Person
or permit any other Person to merge into it, establish any new
Subsidiary, acquire any Person as a new Subsidiary or acquire all or
substantially all of the assets of any other Person, except that:
(i) Any wholly-owned Subsidiary of Borrower may merge
into any other wholly-owned Subsidiary of Borrower;
(ii) Borrower or any wholly-owned Subsidiary
of Borrower may merge into or consolidate with any other
Person, provided that (A) Borrower or any wholly-owned
Subsidiary of Borrower is the surviving corporation, (B) the
aggregate consideration paid in connection with any such
merger or acquisition does not exceed $5,000,000, of which no
more than $2,000,000 may consist of cash and/or assumed
Indebtedness and (C) the aggregate consideration paid in
connection with all such mergers in any calendar year does not
exceed $10,000,000, of which no more than $5,000,000 may
consist of cash and/or assumed Indebtedness; and
(iii) Borrower or any wholly-owned
Subsidiary of Borrower may merge into or consolidate with any
other Person with the prior written consent of the Required
Banks.
(e) Investments. Neither Borrower nor any of its Subsidiaries
shall make any Investment except for Investments of Borrower in an
aggregate amount of up to $2,000,000 outstanding at any time in the
following:
(i) Investments of Borrower and its Subsidiaries in
Cash Equivalents;
49
(ii) Any transaction permitted by Subparagraph
5.02(a);
(iii) Money market mutual funds registered with the
Securities and Exchange Commission, meeting the requirements
of Rule 2a-7 promulgated under the Investment Company Act of
1940;
(iv) Investments listed in Schedule 5.02(e) existing
on the date of this Agreement;
(v) Investments consisting of loans to officers and
directors of Borrower and its Subsidiaries, provided that the
aggregate amount of such loans shall not exceed $1,000,000
during the term of this Agreement; and
(vi) Other Investments, provided that the aggregate
amount of such other Investments does not exceed $2,000,000
during the term of this Agreement.
(f) Dividends, Redemptions, Etc. Neither Borrower nor any of
its Subsidiaries shall pay any dividends or make any distributions on
its Equity Securities; purchase, redeem, retire, defease or otherwise
acquire for value any of its Equity Securities; return any capital to
any holder of its Equity Securities as such; make any distribution of
assets, Equity Securities, obligations or securities to any holder of
its Equity Securities as such; or set apart any sum for any such
purpose; except as follows:
(i) Borrower may pay dividends on its capital stock
payable solely in Borrower's own capital stock;
(ii) Borrower may purchase or redeem shares of its
capital stock in connection with or pursuant to any of its
Employee Benefit Plans; and
(iii) Any Subsidiary or Affiliate of Borrower may pay
dividends to Borrower.
(g) Change in Business. Neither Borrower nor any of its
Subsidiaries shall engage, either directly or indirectly through
Affiliates, in any business substantially different from its present
business.
(h) Certain Indebtedness Payments, Etc. Neither Borrower nor
any of its Subsidiaries shall (i) prepay, redeem, purchase, defease or
otherwise satisfy in any manner prior to the scheduled payment thereof
any Indebtedness for
50
borrowed money (other than the Obligations) or lease obligations; or
(ii) amend, modify or otherwise change the terms of any document,
instrument or agreement evidencing Indebtedness for borrowed money
(other than the Obligations) or lease obligations so as to accelerate
the scheduled payment thereof.
(i) ERISA. Neither Borrower nor any ERISA Affiliate shall (i)
adopt or institute any Employee Benefit Plan that is an employee
pension benefit plan within the meaning of Section 3(2) of ERISA, (ii)
take any action which will result in the partial or complete
withdrawal, within the meanings of sections 4203 and 4205 of ERISA,
from a Multiemployer Plan, (iii) engage or permit any Person to engage
in any transaction prohibited by section 406 of ERISA or section 4975
of the Code involving any Employee Benefit Plan or Multiemployer Plan
which would subject either Borrower or any ERISA Affiliate to any tax,
penalty or other liability including a liability to indemnify, (iv)
incur or allow to exist any accumulated funding deficiency (within the
meaning of section 412 of the Code or section 302 of ERISA), excluding
all extensions permitted by law or contract, (v) fail to make full
payment when due of all amounts due as contributions to any Employee
Benefit Plan or Multiemployer Plan, (vi) fail to comply with the
requirements of section 4980B of the Code or Part 6 of Title I(B) of
ERISA, or (vii) adopt any amendment to any Employee Benefit Plan which
would require the posting of security pursuant to section 401(a)(29) of
the Code, if any of such actions or inactions described in clauses (i)
- (vii), either individually or cumulatively, would have a Material
Adverse Effect.
(j) Transactions With Affiliates. Neither Borrower nor any of
its Subsidiaries shall enter into any Contractual Obligation with any
Affiliate or engage in any other transaction with any Affiliate except
upon terms at least as favorable to Borrower or such Subsidiary as an
arms-length transaction with unaffiliated Persons.
(k) Accounting Changes. Neither Borrower nor any of its
Subsidiaries shall change (i) its fiscal year (currently December 31
for Borrower) or (ii) its accounting practices except as permitted by
GAAP.
5.03. Financial Covenants . Until the termination of this Agreement and
the satisfaction in full by Borrower of all Obligations, Borrower will comply,
and will cause compliance, with the following financial covenants, unless
Required Banks shall otherwise consent in writing:
(a) Quick Ratio. Borrower shall not permit the Quick Ratio of
Borrower and its Subsidiaries to be less than 1.25 to 1.00 on the last
day of each fiscal quarter.
(b) Tangible Net Worth. Borrower shall not permit its
consolidated Tangible Net Worth to be less than on any date of
determination (such date to be referred to herein as a "determination
date") which occurs after September 30, 1997 (such date to be referred
to herein as the "base date") the sum on such determination date of the
following:
51
(i) $60,000,000;
plus
(ii) Eighty percent (80%) of the sum of Borrower's
consolidated quarterly net income (ignoring any quarterly
losses) for each quarter after the base date through and
including the quarter ending immediately prior to the
determination date;
plus
(iii) One Hundred percent (100%) of the net proceeds
of all Equity Securities issued by Borrower and its
Subsidiaries during the period commencing on the base date and
ending on the determination date.
(c) Leverage Ratio. Borrower shall not permit the Leverage
Ratio of Borrower and its Subsidiaries to be greater than .90 to 1.00.
(d) Profitability. Borrower shall not permit the consolidated
net income after taxes of Borrower and its Subsidiaries for any fiscal
quarter period to be less than $1.00.
SECTION VI. DEFAULT.
6.01. Events of Default . The occurrence or existence of any one or
more of the following shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to pay when due any payment required
under the terms of this Agreement or any of the other Credit Documents;
or
(b) Borrower shall fail to observe or perform any covenant,
obligation, condition or agreement set forth in Subparagraph 5.01(d),
Paragraph 5.02 or Paragraph 5.03 of this Agreement or set forth in
Paragraph 4 of the Borrower Security Agreement; or
(c) Borrower or any of its Subsidiaries shall fail to observe
or perform any other covenant, obligation, condition or agreement
contained in this Agreement or the other Credit Documents and such
failure shall continue for ten (10) days; or
(d) Any written representation, warranty, certificate,
information or other statement (financial or otherwise) made or
furnished by Borrower or any of its Subsidiaries to Agent or any Bank
Party in or in connection with this Agreement or any
52
of the other Credit Documents shall be false, incorrect, incomplete or
misleading in any material respect when made or furnished; or
(e) (i) Borrower or any of its Subsidiaries (A) shall fail to
make a payment or payments in an aggregate amount of $100,000 or more
when due under the terms of any Indebtedness to be paid by such Person
(excluding this Agreement and the other Credit Documents or any
intercompany Indebtedness between Borrower and any of its Subsidiaries,
but including any other evidence of indebtedness of Borrower or any of
its Subsidiaries to any Bank) and such failure shall continue beyond
any period of grace provided with respect thereto, or (B) shall fail to
make any other payment or payments when due under or otherwise default
in the observance or performance of any other agreement, term or
condition contained in any such Indebtedness, and the effect of such
failure or default is to cause, or permit the holder or holders thereof
to cause, indebtedness in an aggregate amount of $100,000 or more to
become due prior to its stated date of maturity; or (ii) there shall
occur or exist any other event or condition which causes, or permits
the holder or holders of such indebtedness to cause, indebtedness in an
aggregate amount of $100,000 or more to become due prior to its stated
date of maturity (whether through holder puts, mandatory redemptions or
prepayments or otherwise); or
(f) Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property,
(ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the
benefit of its or any of its creditors, (iv) be dissolved or liquidated
in full or in part, (v) no longer be Solvent, (vi) commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or consent
to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding
commenced against it, or (vii) take any action for the purpose of
effecting any of the foregoing; or
(g) Proceedings for the appointment of a receiver, trustee,
liquidator or custodian of Borrower or any of its Subsidiaries or of
all or a substantial part of the property thereof, or an involuntary
case or other proceedings seeking liquidation, reorganization or other
relief with respect to Borrower or any of its Subsidiaries or the debts
thereof under any bankruptcy, insolvency or other similar law now or
hereafter in effect shall be commenced and an order for relief entered
or such proceeding shall not be dismissed or discharged within sixty
(60) days of commencement; or
(h) A final judgment or order for the payment of money in
excess of $1,000,000 shall be rendered against Borrower or any of its
Subsidiaries and the same
53
shall remain undischarged and unpaid for a period of thirty (30) days
during which execution shall not be effectively stayed; or
(i) Any Credit Document or any material term thereof shall
cease to be, or be asserted by Borrower or any of its Subsidiaries not
to be, a legal, valid and binding obligation of such Person enforceable
in accordance with its terms; or
(j) Any Reportable Event occurs which constitutes grounds for
the termination of any Employee Benefit Plan by the PBGC or for the
appointment of a trustee by the PBGC to administer any Employee Benefit
Plan, or any Employee Benefit Plan shall be terminated with unfunded
liabilities within the meaning of Title IV of ERISA or a trustee shall
be appointed by the PBGC to administer any Employee Benefit Plan; or
(k) Any Change of Control shall occur.
(Any of the events or conditions set forth in Subparagraphs 6.01(a)-(k), prior
to the giving of any required notice or the expiration of any specified grace
period, shall constitute a "Default" hereunder.)
6.02. Remedies. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Subparagraph 6.01(f) or
6.01(g)) and at any time thereafter during the continuance of such Event of
Default, Agent may, with the consent of the Required Banks, or shall, upon
instructions from the Required Banks, by written notice to Borrower, (a)
terminate the Commitments and the obligations of the Bank Parties to make Loans
or issue Letters of Credit (b) declare all outstanding Obligations payable by
Borrower to be immediately due and payable without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived,
anything contained herein or in the Notes to the contrary notwithstanding,
and/or (c) direct Borrower to deliver to Agent funds in an amount equal to the
aggregate stated amount of all outstanding Letters of Credit. Upon the
occurrence or existence of any Event of Default described in Subparagraph
6.01(f) or 6.01(g), immediately and without notice, (1) the Commitments and the
obligations of the Bank Parties to make Loans or issue Letters of Credit shall
automatically terminate and (2) all outstanding Obligations payable by Borrower
hereunder shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Notes to the
contrary notwithstanding. In addition to the foregoing remedies, upon the
occurrence or existence of any Event of Default, Agent may exercise any right,
power or remedy permitted to it by law, either by suit in equity or by action at
law, or both. Immediately after taking any action under this Paragraph 6.02,
Agent shall notify each Bank Party of such action.
54
SECTION VII. AGENT AND RELATIONS AMONG BANKS.
7.01. Appointment, Powers and Immunities. Each Bank Party hereby
appoints and authorizes Agent to act as its agent hereunder and under the other
Credit Documents with such powers as are expressly delegated to Agent by the
terms of this Agreement and the other Credit Documents, together with such other
powers as are reasonably incidental thereto. Agent shall not have any duties or
responsibilities except those expressly set forth in this Agreement or in any
other Credit Document, be a trustee for any Bank Party or have any fiduciary
duty to any Bank Party. Notwithstanding anything to the contrary contained
herein, Agent shall not be required to take any action which is contrary to this
Agreement or any other Credit Document or applicable law. Neither Agent nor any
Bank Party shall be responsible to Agent or any other Bank Party for any
recitals, statements, representations or warranties made by Borrower or any of
its Subsidiaries contained in this Agreement or in any other Credit Document,
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement, or any other Credit Document or for any failure
by Borrower or any of its Subsidiaries to perform its obligations hereunder or
thereunder. Agent may employ agents and attorneys-in-fact and shall not be
responsible to any Bank Party for the negligence or misconduct of any such
agents or attorneys-in-fact selected by them with reasonable care. None of the
Agent or its directors, officers, employees or agents shall be responsible to
any Bank Party for any action taken or omitted to be taken by it or them
hereunder or under any other Credit Document or in connection herewith or
therewith, except for its or their own gross negligence or willful misconduct.
Except as otherwise provided under this Agreement, Agent shall take such action
with respect to the Credit Documents as shall be directed by the Required Banks.
7.02. Reliance by Agent. Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, facsimile
or telex) believed by them in good faith to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by Agent with reasonable care. As to any other matters not
expressly provided for by this Agreement, Agent shall not be required to take
any action or exercise any discretion, but Agent shall be required to act or to
refrain from acting upon instructions of the Required Banks and shall in all
cases be fully protected by the Bank Parties in acting, or in refraining from
acting, hereunder or under any other Credit Document in accordance with the
instructions of the Required Banks, and such instructions of the Required Banks
and any action taken or failure to act pursuant thereto shall be binding on
Agent and all of the Bank Parties.
7.03. Defaults. Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default unless Agent has received a
notice from a Bank Party or Borrower, referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a "Notice of
Default". If Agent receives such a notice of the occurrence of a Default or
Event of Default, Agent shall give prompt notice thereof to the Bank
55
Parties. Agent shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks; provided,
however, that until Agent shall have received such directions, Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interest of the Bank Parties.
7.04. Indemnification. Without limiting the Obligations of Borrower
hereunder, each Bank agrees to indemnify Agent, ratably in accordance with such
Bank's Proportionate Share, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against Agent in any way relating to or arising out of this
Agreement or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or the enforcement of any of the
terms hereof or thereof or of any such other documents; provided, however, that
no Bank shall be liable for any of the foregoing to the extent they arise from
Agent's gross negligence or willful misconduct. Agent shall be fully justified
in refusing to take or to continue to take any action hereunder unless it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The obligations of each Bank under this
Paragraph 7.04 shall survive the payment and performance of the Obligations, the
termination of this Agreement and any Bank ceasing to be a party to this
Agreement.
7.05. Non-Reliance. Each Bank Party represents that it has,
independently and without reliance on Agent or any other Bank Party, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of the financial condition and affairs of Borrower and its
Subsidiaries and its own decision to enter into this Agreement and agrees that
it will, independently and without reliance upon Agent or any Bank Party, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own appraisals and decisions in taking or not taking
action under this Agreement. Neither Agent nor any Bank Party shall be required
to keep Agent or any Bank Party informed as to the performance or observance by
Borrower or its Subsidiaries of the obligations under this Agreement or any
other document referred to or provided for herein or to make inquiry of, or to
inspect the properties or books of Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the Bank
Parties by Agent hereunder, neither Agent nor any Bank Party shall have any duty
or responsibility to provide Agent or any Bank Party with any credit or other
information concerning Borrower or its Subsidiaries, which may come into the
possession of Agent or any Bank Party or any of its or their Affiliates.
7.06. Resignation or Removal of Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving notice thereof to the Banks, and Agent may be removed at any time with
or without cause by the Required Banks. Upon any such resignation or removal,
the Required Banks shall have the right to appoint a successor Agent, which
Agent shall be reasonably acceptable to Borrower. If no successor
56
Agent shall have been appointed by the Required Banks and shall have accepted
such appointment within thirty (30) days after the retiring Agent's giving of
notice of resignation or the Required Banks' removal of the retiring Agent, then
the retiring Agent may, on behalf of the Bank Parties, appoint a successor
Agent, which shall be (a) a bank having a combined capital, surplus and retained
earnings of not less than U.S. $250,000,000 and (b) shall be reasonably
acceptable to Borrower; provided, however, that Borrower shall have no right to
approve a successor Agent which is a Bank if an Event of Default has occurred
and is continuing. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Section VII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.
7.07. Authorization. Agent is hereby authorized by the Bank Parties to
execute, deliver and perform, each of the Credit Documents to which Agent is or
is intended to be a party and each Bank Party agrees to be bound by all of the
agreements of Agent contained in the Credit Documents.
7.08. Agent in its Individual Capacity. Agent and its affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with Borrower and its Subsidiaries and affiliates as though such Agent were not
an Agent hereunder. With respect to Loans made and Letters of Credit issued by
SBC as a Bank, SBC shall have the same rights and powers under this Agreement
and the other Credit Documents as any other Bank Party and may exercise the same
as though it were not Agent.
57
SECTION VIII. MISCELLANEOUS.
8.01. Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Borrower, any Bank Party or Agent under this Agreement or the other Credit
Documents shall be in writing and faxed, mailed or delivered, if to Borrower or
Agent at its respective facsimile number or address set forth below, if to any
Bank, at the address or facsimile number specified beneath the heading "Address
for Notices" under the name of such Bank in Schedule I or, if to Issuing Bank,
at the address or facsimile number indicated in the notice given by Issuing Bank
to the other parties at the time any such Issuing Bank is selected by Borrower
and approved by Agent (or to such other facsimile number or address for any
party as indicated in any notice given by that party to the other parties). All
such notices and communications shall be effective (a) when sent by Federal
Express or other overnight service of recognized standing, on the second
Business Day following the deposit with such service; (b) when mailed, first
class postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (c) when delivered by hand, upon delivery; and (d)
when faxed, upon confirmation of receipt; provided, however, that any notice
delivered to Agent or Issuing Bank under Section II shall not be effective until
received by such Person.
Agent: Sumitomo Bank of California
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Borrower: Indus International, Inc.
00 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xx-Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Each Notice of Borrowing, Notice of Conversion, Notice of Interest Period
Selection and LC Application shall be given by Borrower to Agent and, in the
case of an LC Application, to Issuing Bank, to the office of such Person located
at the address referred to above during such Person's normal business hours;
provided, however, that any such notice received by any such Person after 1:00
P.M. on any Business Day shall be deemed received by such Person on the next
Business Day. In any case where this Agreement authorizes notices, requests,
demands or other communications by Borrower to Agent or any Bank Party to be
made by telephone or facsimile, Agent or any Bank Party may conclusively presume
that anyone purporting to be a
58
person designated in any incumbency certificate or other similar document
received by Agent or such Bank Party is such a person.
8.02. Expenses. Borrower shall pay on demand, whether or not any Loan
is made or any Letter of Credit is issued hereunder, (a) all reasonable fees and
expenses payable to third parties, including Agent's out-of-pocket expenses and
reasonable attorneys' fees and expenses, incurred by Agent in connection with
the preparation, negotiation, execution and delivery of, and the exercise of
their duties under, this Agreement, and the structuring of, due diligence
relating to and syndication of the credit facilities set forth in this
Agreement; (b) all attorney costs and other reasonable fees and expenses payable
to third parties incurred by Agent in connection with the preparation,
negotiation, execution, delivery and syndication of this Agreement and the other
Credit Documents, and the preparation, negotiation, execution and delivery of
amendments and waivers hereunder and thereunder; (c) all attorney costs and
other reasonable fees and expenses payable to third parties incurred by Agent in
connection with the exercise of their rights or duties under this Agreement and
the other Credit Documents; and (d) all attorney costs and other reasonable fees
and expenses payable to third parties incurred by Agent or any Bank Party in the
enforcement or attempted enforcement of any of the Obligations or in preserving
any of Agent's or the Banks' rights and remedies (including all such fees and
expenses incurred in connection with any "workout" or restructuring affecting
the Credit Documents or the Obligations or any bankruptcy or similar proceeding
involving Borrower or any of its Subsidiaries). As used herein, the term
"reasonable attorneys' fees and expenses" shall include, without limitation,
allocable costs and expenses of Agent's and Bank's in house legal counsel and
staff. The obligations of Borrower under this Paragraph 8.02 shall survive the
payment and performance of the Obligations and the termination of this
Agreement.
8.03. Indemnification. To the fullest extent permitted by law, Borrower
agrees to protect, indemnify, defend and hold harmless Agent, the Bank Parties
and their Affiliates and their respective directors, officers, employees, agents
and advisors ("Indemnitees") from and against any and all liabilities, losses,
damages or expenses of any kind or nature and from any suits, claims or demands
(including in respect of or for reasonable attorney's fees and other expenses)
arising on account of or in connection with any matter or thing or action or
failure to act by Indemnitees, or any of them, arising out of or relating to the
Credit Documents or any transaction contemplated thereby, including without
limitation any use by Borrower of any proceeds of the Loans or any Letter of
Credit, except to the extent such liability arises from the willful misconduct
or gross negligence of such Indemnitee. Upon receiving knowledge of any suit,
claim or demand asserted by a third party that Agent or any Bank Party believes
is covered by this indemnity, Agent or such Bank Party shall give Borrower
notice of the matter and an opportunity to defend it, at Borrower's sole cost
and expense, with legal counsel satisfactory to Agent or such Bank Party, as the
case may be. Any failure or delay of Agent or any Bank Party to notify Borrower
of any such suit, claim or demand shall not relieve Borrower of its obligations
under this Paragraph 8.03 but shall reduce such obligations to the extent of any
increase in those obligations caused solely by any such failure or delay which
is unreasonable. The obligations of
59
Borrower under this Paragraph 8.03 shall survive the payment and performance of
the Obligations and the termination of this Agreement.
8.04. Waivers; Amendments. Any term, covenant, agreement or condition
of this Agreement or any other Credit Document may be amended or waived if such
amendment or waiver is in writing and is signed by Borrower and the Required
Banks; provided, however that:
(a) Any amendment, waiver or consent which (i) amends this
Paragraph 8.04, or (ii) amends the definition of Required Banks must be
in writing and signed or approved in writing by all Banks;
(b) Any amendment, waiver or consent which (i) amends the
definition of Total Commitment, (ii) extends the Maturity Date, (iii)
reduces the principal of or interest on the Loans or any fees or other
amounts payable for the account of the Banks hereunder, (iv) increases
the LC Commitment, (v) releases any substantial part of the Collateral,
except for any release otherwise authorized by Paragraph 2.13, or (vi)
postpones any date fixed for any payment of the principal of or
interest on the Loans or any fees or other amounts payable for the
account of the Banks hereunder must be in writing and signed or
approved in writing by all Banks;
(c) Any amendment, waiver or consent which increases or
decreases the Proportionate Share of any Bank must be in writing and
signed by such Bank;
(d) Any amendment, waiver or consent which increases the LC
Commitment or otherwise affects the rights or obligations of Issuing
Bank must be in writing and signed by Issuing Bank; and
(e) Any amendment, waiver or consent which affects the rights
or obligations of Agent must be in writing and signed by Agent.
No failure or delay by Agent or any Bank Party in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
8.05. Successors and Assigns.
(a) Binding Effect. This Agreement and the other Credit
Documents shall be binding upon and inure to the benefit of Borrower,
the Bank Parties, Agent, all future holders of the Notes and their
respective successors and permitted assigns, except that Borrower may
not assign or transfer any of its rights or obligations under any
Credit Document without the prior written consent of Agent and each
Bank. All references in
60
this Agreement to any Person shall be deemed to include all successors
and assigns of such Person.
(b) Participations. Any Bank may at any time sell to one or
more banks or other financial institutions ("Participants")
participating interests in any Loan owing to such Bank, any Note held
by such Bank, any Commitment of such Bank or any other interest of such
Bank under this Agreement and the other Credit Documents; provided,
however, that no Bank may sell a participating interest in its Loans or
Commitment in a principal amount of less than Ten Million Dollars
($10,000,000). In the event of any such sale by a Bank of participating
interests, such Bank's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Bank shall
remain solely responsible for the performance thereof, such Bank shall
remain the holder of any such Note for all purposes under this
Agreement, such Bank shall retain the right to approve amendments and
waivers and other voting rights hereunder and Agent and Borrower shall
continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement; provided,
however, that any agreement pursuant to which any Bank sells a
participating interest to a Participant may require the selling Bank to
obtain the consent of such Participant in order for such Bank to agree
in writing to any amendment of a type specified in clause (i), (ii),
(iii), (iv) or (v) of Subparagraph 8.04(b) or Subparagraph 8.04(c), as
appropriate. Borrower agrees that if amounts outstanding under this
Agreement and the other Credit Documents are due and unpaid, or shall
have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the
fullest extent permitted by law, be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this
Agreement and any other Credit Documents to the same extent as if the
amount of its participating interest were owing directly to it as a
Bank under this Agreement or any other Credit Documents; provided,
however, that (i) no Participant shall exercise any rights under this
sentence without the consent of Agent, (ii) no Participant shall have
any rights under this sentence which are greater than those of the
selling Bank and (iii) such rights of setoff shall be subject to the
obligation of such Participant to share with the Banks, and the Banks
agree to share with such Participant, as provided in Subparagraph
2.09(b). Borrower also agrees that any Bank which has transferred all
or part of its interests in the Commitments and the Loans to one or
more Participants shall, notwithstanding any such transfer, be entitled
to the full benefits accorded such Bank under Paragraph 2.10, Paragraph
2.11, and Paragraph 2.12, as if such Bank had not made such transfer.
(c) Assignments. Any Bank may at any time, sell and assign to
any Bank, any affiliate of a Bank or any other bank or financial
institution (individually, an "Assignee Bank") all or a portion of its
rights and obligations under this Agreement and the other Credit
Documents (such a sale and assignment to be referred to herein as an
"Assignment") pursuant to an assignment agreement in the form of
Exhibit G (an "Assignment Agreement"), executed by each Assignee Bank
and such assignor Bank (an
61
"Assignor Bank") and delivered to Agent for its acceptance and
recording in the Register; provided, however, that:
(i) Without the written consent of Borrower, Agent
and Issuing Bank (which consent of Borrower, Agent and Issuing
Bank shall not be unreasonably withheld), no Bank may make any
Assignment to any Assignee Bank which is not, immediately
prior to such Assignment, a Bank hereunder or an affiliate
which controls, is controlled by or is under common control
with a Bank hereunder;
(ii) Without the written consent of Agent and, if no
Default has occurred and is continuing, Borrower (which
consent of Agent and Borrower shall not be unreasonably
withheld), no Bank may make any Assignment to any Assignee
Bank if, after giving effect to such Assignment, the
Commitment of such Bank or such Assignee Bank would be less
than Ten Million Dollars ($10,000,000) (except that a Bank may
make an Assignment which reduces its Commitment to zero
without the written consent of Borrower and Agent); and
(iii) No Bank may make any Assignment which does not
assign and delegate an equal pro rata interest in such Bank's
Loans, Commitments and all other rights, duties and
obligations of such Bank under this Agreement and the other
Credit Documents.
Upon such execution, delivery, acceptance and recording of each
Assignment Agreement, from and after the Assignment Effective Date
determined pursuant to such Assignment Agreement, (A) each Assignee
Bank thereunder shall be a Bank hereunder with a Proportionate Share as
set forth on Attachment 1 to such Assignment Agreement and shall have
the rights, duties and obligations of such a Bank under this Agreement
and the other Credit Documents, and (B) the Assignor Bank thereunder
shall be a Bank with a Proportionate Share as set forth on Attachment 1
to such Assignment Agreement, or, if the Proportionate Share of the
Assignor Bank has been reduced to 0%, the Assignor Bank shall cease to
be a Bank; provided, however, that any such Assignor Bank which ceases
to be a Bank shall continue to be entitled to the benefits of any
provision of this Agreement which by its terms survives the termination
of this Agreement. Each Assignment Agreement shall be deemed to amend
Schedule I to the extent, and only to the extent, necessary to reflect
the addition of each Assignee Bank, the deletion of each Assignor Bank
which reduces its Proportionate Share to 0% and the resulting
adjustment of Proportionate Shares arising from the purchase by each
Assignee Bank of all or a portion of the rights and obligations of an
Assignor Bank under this Agreement and the other Credit Documents. On
or prior to the Assignment Effective Date determined pursuant to each
Assignment Agreement, Borrower, at its own expense, shall execute and
deliver to Agent, in exchange for the surrendered Note of the Assignor
Bank thereunder, a new Note to the order of each Assignee Bank
thereunder in an amount equal to the
62
Commitment assumed by such Assignee Bank and, if the Assignor Bank is
continuing as a Bank hereunder, a new Note to the order of the Assignor
Bank in an amount equal to the Commitment retained by it. Each such new
Note shall be dated the Closing Date and otherwise be in the form of
the Note replaced thereby. The Notes surrendered by the Assignor Bank
shall be returned by Agent to Borrower marked "replaced". Each Assignee
Bank which was not previously a Bank hereunder and which is not
incorporated under the laws of the United States of America or a state
thereof shall, within three (3) Business Days of becoming a Bank,
deliver to Borrower and Agent either two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224 (or successor
applicable form), as the case may be, certifying in each case that such
Bank is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes.
(d) Register. Agent shall maintain at its address referred to
in Paragraph 8.01 a copy of each Assignment Agreement delivered to it
and a register (the "Register") for the recordation of the names and
addresses of the Banks and the Proportionate Share of each Bank from
time to time. The entries in the Register shall be conclusive in the
absence of manifest error, and Borrower, Agent and the Bank Parties may
treat each Person whose name is recorded in the Register as the owner
of the Loans recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any Bank
Party at any reasonable time and from time to time upon reasonable
prior notice.
(e) Registration. Upon its receipt of an Assignment Agreement
executed by an Assignor Bank and an Assignee Bank (and, to the extent
required by Subparagraph 8.05(c), by Borrower, Agent and Issuing Bank),
together with payment to Agent by Assignor Bank of a registration and
processing fee of $3,500 if such assignment occurs more than thirty
(30) days after the Closing Date, Agent shall (i) promptly accept such
Assignment Agreement and (ii) on the Assignment Effective Date
determined pursuant thereto record the information contained therein in
the Register and give notice of such acceptance and recordation to the
Bank Parties and Borrower. Agent may, from time to time at its
election, prepare and deliver to the Bank Parties and Borrower a
revised Schedule I reflecting the names, addresses and respective
Proportionate Shares of all Banks then parties hereto.
63
8.06. Setoff; Security Interest.
(a) Setoff. In addition to any rights and remedies of the Bank
Parties provided by law, each Bank Party shall have the right, with the
prior consent of Agent, but without prior notice to or consent of
Borrower, any such notice or consent being expressly waived by Borrower
to the extent permitted by applicable law, upon the occurrence and
during the continuance of an Event of Default, to set-off and apply, or
to authorize or direct such Bank to set-off and apply, against any
indebtedness, whether matured or unmatured, of Borrower to such Bank
Party, any amount owing from such Bank Party to Borrower. The aforesaid
right of set-off may be exercised by any Bank Party against Borrower or
against any trustee in bankruptcy, debtor in possession, assignee for
the benefit of creditors, receiver or execution, judgment or attachment
creditor of Borrower or against anyone else claiming through or against
Borrower or such trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, receiver, or execution, judgment or
attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Bank Party prior to the
occurrence of an Event of Default. Each Bank Party agrees promptly to
notify Borrower after any such set-off and application made by such
Bank Party, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
(b) Security Interest. As security for the Obligations,
Borrower hereby grants to each Bank Party, for the benefit of all the
Agent and Bank Parties, a continuing security interest in any and all
deposit accounts or moneys of Borrower now or hereafter maintained with
such Bank Party. Each Bank Party shall have all of the rights of a
secured party with respect to such security interest.
8.07. No Third Party Rights . Nothing expressed in or to be implied
from this Agreement is intended to give, or shall be construed to give, any
Person, other than the parties hereto and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.
8.08. Partial Invalidity . If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.
8.09. Jury Trial. EACH OF BORROWER, THE BANK PARTIES AND AGENT, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN
64
ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY CREDIT
DOCUMENT.
8.10. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.
[The next page is the first signature page.]
65
IN WITNESS WHEREOF, Borrower, the Bank Parties and Agent have caused
this Agreement to be executed as of the day and year first above written.
BORROWER: INDUS INTERNATIONAL, INC.
By: __________________________
Name:
Title:
Agent: SUMITOMO BANK OF CALIFORNIA,
As Agent
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
BANKS: SUMITOMO BANK OF
CALIFORNIA,
As a Bank
By: __________________________
Name:
Title:
By: __________________________
Name:
Title:
00
XXXXX XXXX XX XXXXXXXXXX, N.A.,
As a Bank
By: __________________________
Name:
Title:
67
SCHEDULE I
BANKS
Banks: Proportionate Share:
------ --------------------
Sumitomo Bank of California 71.42857%
Applicable Lending Office:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address for notices:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Wiring Instructions:
[Information maintained with Agent]
1
Banks: Proportionate Share:
------ --------------------
Union Bank of California, N.A. 28.57142%
Applicable Lending Office:
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx Person
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address for notices:
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx Person
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Wiring Instructions:
Union Bank of California, N.A.
0000 Xxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Commercial Note Operations
Xxxxxxx Xxxxx
Ref. Obligor No. 4115397714
ABA No. 000000000
Acct No. 070-196431
RC No. 99251
Customer: The Indus Group, Inc.
2
SCHEDULE II
PRICING GRID
XXXXX 0 XXXXX 0
PERIOD PERIOD
------ ------
APPLICABLE MARGINS 1.25% 1.50%
COMMITMENT FEE
PERCENTAGES: .125% .200%
EXPLANATION
1. The Applicable Margin for each LIBOR Loan and the Commitment Fee
Percentage will be set for each Pricing Period and will vary depending
upon whether such period is a Level 1 Period or a Level 2 Period.
2. The first Pricing Period, which commences on the date of this Agreement
and ends on August 31, 1998, will be a Level 1 Period or a Level 2 Period
depending upon Borrower's Leverage Ratio for the fiscal quarter period
ending on March 31, 1998.
3. Each Pricing Period thereafter will be a Level 1 Period or a Level 2
Period depending upon Borrower's consolidated Leverage Ratio for the most
recent fiscal quarter period ending prior to the first day of such Pricing
Period as follows:
(a) If, during any Pricing Period, Borrower's consolidated
Leverage Ratio is less than or equal to .650 to 1.00, Borrower's
pricing will be a Level 1 Period.
(b) If, during any Pricing Period, Borrower's consolidated
Leverage Ratio is greater than or .650 to 1.00, Borrower's
pricing will be a Level 2 Period.
4. Level 2 Period will also apply during any Pricing Period in which Borrower
has failed to provide its Compliance Certificate.
3
SCHEDULE 3.01
INITIAL CONDITIONS PRECEDENT
A. Principal Credit Documents.
(1) The Credit Agreement, duly executed by Borrower, each Bank
Party and Agent;
(2) A Note payable to each Bank, each duly executed by
Borrower;
(3) The Borrower Security Agreement, duly executed by
Borrower;
B. Borrower Corporate Documents.
(1) The Certificate of Incorporation of Borrower, certified as
of a recent date on or around the Closing Date by the Secretary of
State of Delaware;
(2) A Certificate of Good Standing for Borrower (or comparable
certificate), certified as of a recent date on or around the Closing
Date by the Secretary of State of Delaware;
(3) A certificate of the Secretary or an Assistant Secretary
of Borrower certifying (a) that attached thereto is a true and correct
copy of the Bylaws of Borrower as in effect on the Closing Date; (b)
that attached thereto are true and correct copies of resolutions duly
adopted by the Board of Directors of Borrower and continuing in effect,
which authorize the execution, delivery and performance by Borrower of
the Credit Agreement and the other Credit Documents executed or to be
executed by Borrower and the consummation of the transactions
contemplated hereby and thereby; and (c) that there are no proceedings
for the dissolution or liquidation of Borrower;
(4) A certificate of the Secretary or an Assistant Secretary
of Borrower certifying the incumbency, signatures and authority of the
officers of Borrower authorized to execute, deliver and perform the
Credit Documents and all other documents, instruments or agreements
related thereto executed or to be executed by Borrower and indicating
each such officer which is an executive officer; and
(5) Certificates of Good Standing (or comparable certificate)
for Borrower, certified as of a recent date on or around the Closing
Date by the Secretaries of State (or comparable public official) of the
State of California.
1
C. Financial Statements, Financial Condition, Etc.
(1) A copy of the unaudited Financial Statements of Borrower
and its Subsidiaries for the fiscal quarter ended March 31, 1998 and
for the fiscal year to such date (prepared on a consolidated and
consolidating basis), certified by an executive officer of Borrower to
present fairly the financial condition, results of operations and other
information reflected therein and to have been prepared in accordance
with GAAP (subject to normal year-end audit adjustments);
(2) A copy of the audited consolidated Financial Statements of
Borrower for the fiscal year ended December 31, 1997, prepared by Ernst
& Young and a copy of the unqualified opinion delivered by such
accountants in connection with such Financial Statements; and
(3) Such other financial, business and other information
regarding Borrower or any of their Subsidiaries as Agent may reasonably
request, including information as to possible contingent liabilities,
tax matters, environmental matters and obligations for employee
benefits and compensation.
D. Other Items.
(1) UCC-1, UCC-2 and/or UCC-3 Financing Statements (as
applicable) filed against Borrower in connection with the Assumption
Agreement and the Security Agreement;
(2) All fees and expenses payable to Agent and the Banks
through the Closing Date;
(3) All fees and expenses of Agent's counsel through the
Closing Date;
(4) Such other evidence as Agent or any Bank Party may
reasonably request to establish the accuracy and completeness of the
representations and warranties and the compliance with the terms and
conditions contained in this Agreement and the other Credit Documents;
and
(5) A certificate of an executive officer of Borrower,
addressed to Agent and dated the Closing Date, certifying that:
(a) The representations and warranties set forth in
Paragraph 4.01 are true and correct in all material respects
as of such date (except for such
2
representations and warranties made as of a specified date,
which shall be true as of such date); and
(b) No Event of Default or Default has occurred and
is continuing as of such date.
3
SCHEDULE 4.01(g)
LITIGATION
None.
1
SCHEDULE 4.01(p)
SUBSIDIARIES
None.
1
SCHEDULE 5.02(a)
EXISTING INDEBTEDNESS
None.
1
SCHEDULE 5.02(b)
EXISTING LIENS
None.
1
SCHEDULE 5.02(e)
PERMITTED INVESTMENTS
None.
1
EXECUTION VERSION
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment"), dated as of June 30, 1998, is entered into by and among:
(1) INDUS INTERNATIONAL, INC., a Delaware corporation
("Borrower");
(2) Each of the financial institutions listed in Schedule I to
the Credit Agreement referred to in Recital A below (collectively, the
"Banks"); and
(3) SUMITOMO BANK OF CALIFORNIA, a California banking
corporation, as agent for the Lenders (in such capacity, "Agent").
RECITALS
A. Borrower, the Banks and Agent are parties to an Amended and Restated
Credit Agreement dated as of June 10, 1998 (the "Credit Agreement").
B. Borrower has requested the Banks and Agent to amend the Credit
Agreement in certain respects.
C. The Banks and Agent are willing so to amend the Credit Agreement
upon the terms and subject to the conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, the Banks and Agent hereby agree as follows:
1. Definitions, Interpretation. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Credit Agreement, as amended by
this Amendment. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Amendment, apply to this Amendment and are hereby incorporated by reference.
2. Amendments to Credit Agreement. Subject to the satisfaction of the
conditions set forth in Paragraph 4 below, the Credit Agreement is hereby
amended as follows:
(a) Paragraph 1.01 is amended by changing the "June 30, 1998"
reference contained in the definition of First Commitment Reduction
Date to "July 31, 1998".
(b) Paragraph 1.01 is hereby further amended by changing the
"July 1, 1998" reference contained in the definition of Total
Commitment to "August 1, 1998".
3. Representations and Warranties. Borrower hereby represents and
warrants to Agent and the Banks that the following are true and correct on the
date of this Amendment and that, after giving effect to the amendments set forth
in Paragraph 2 above, the following will be true and correct on the Effective
Date (as defined below):
(a) The representations and warranties of Borrower set forth
in Paragraph 4.01 of the Credit Agreement and in the other Credit
Documents are true and correct in all material respects;
(b) No Default or Event of Default has occurred and is
continuing; and
(c) Each of the Credit Documents is in full force and effect.
(Without limiting the scope of the term "Credit Documents," Borrower expressly
acknowledges in making the representations and warranties set forth in this
Paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)
4. Effective Date. The amendments effected by Paragraph 2 above shall
become effective on June 30, 1998 (the "Effective Date"), subject to receipt by
Agent and the Banks on or prior to the Effective Date of the following, each in
form and substance satisfactory to Agent, the Banks and their respective
counsel:
(a) This Amendment duly executed by Borrower, each Bank and
Agent; and
(b) Such other evidence as Agent or any Bank may reasonably
request to establish the accuracy and completeness of the
representations and warranties and the compliance with the terms and
conditions contained in this Amendment and the other Credit Documents.
5. Effect of this Amendment. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit
Agreement shall mean the Credit Agreement as amended hereby. Except as
specifically amended above, (a) the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are hereby ratified and
confirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Banks or Agent, nor constitute a waiver of any
provision of the Credit Agreement or any other Credit Document.
6. Miscellaneous.
B-2
(a) Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Amendment are for convenience
of reference only and are not part of the substance hereof.
(c) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
IN WITNESS WHEREOF, Borrower, Agent and the Banks have caused this
Amendment to be executed as of the day and year first above written.
BORROWER: INDUS INTERNATIONAL, INC
By: ________________________________
Name: ___________________________
Title: __________________________
AGENT: SUMITOMO BANK OF CALIFORNIA
By: ________________________________
Name: ___________________________
Title: __________________________
LENDERS: SUMITOMO BANK OF CALIFORNIA
By: ________________________________
Name: ___________________________
Title: __________________________
UNION BANK OF CALIFORNIA, N. A.
By: ________________________________
Name: ___________________________
Title: __________________________
B-3
EXECUTION VERSION
SECOND AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment"), dated as of August 1, 1998, is entered into by and among:
(1) INDUS INTERNATIONAL, INC., a Delaware corporation ("Borrower");
(2) Each of the financial institutions listed in Schedule I to the
Credit Agreement referred to in Recital A below (collectively, the
"Banks"); and
(3) SUMITOMO BANK OF CALIFORNIA, a California banking corporation,
as agent for the Banks (in such capacity, "Agent").
RECITALS
A. Borrower, the Banks and Agent are parties to an Amended and Restated
Credit Agreement dated as of June 10, 1998, as amended by that certain First
Amendment to Amended and Restated Credit Agreement dated as of June 30, 1998 (as
amended, the "Credit Agreement").
B. Borrower has requested the Banks and Agent to amend the Credit
Agreement in certain respects.
C. The Banks and Agent are willing so to amend the Credit Agreement
upon the terms and subject to the conditions set forth below.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, the Banks and Agent hereby agree as follows:
1. Definitions, Interpretation. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Credit Agreement, as amended by
this Amendment. The rules of construction set forth in Section I of the Credit
Agreement shall, to the extent not inconsistent with the terms of this
Amendment, apply to this Amendment and are hereby incorporated by reference.
2. Amendments to Credit Agreement. Subject to the satisfaction of the
conditions set forth in Paragraph 4 below, the Credit Agreement is hereby
amended as follows:
(a) Paragraph 1.01 is amended by deleting in their entirety
the definitions of "Commitment Reduction Date", "First Commitment
Reduction Date" and "Second Commitment Reduction Date" set forth
therein.
(b) Paragraph 1.01 is amended by changing the definition of
"Total Commitment" set forth therein to read in its entirety as
follows:
"Total Commitment" shall mean Thirty-Five Million
Dollars ($35,000,000) or, if such amount is reduced pursuant
to Subparagraph 2.03(b), the amount to which so reduced and in
effect from time to time.
(c) Subparagraph 2.01(a) is amended by changing the reference
to "July 31, 2000" set forth therein to "July 31, 2001".
(d) Clause (i) of Subparagraph 2.01(e) is amended to read in
its entirety as follows:
(i) The initial and each subsequent Interest Period
selected by Borrower for a LIBOR Loan shall be one (1), two
(2), three (3), four (4), five (5), six (6), nine (9) or
twelve (12) months as Borrower may specify; provided, however,
that (A) any Interest Period which would otherwise end on a
day which is not a Business Day shall be extended to the next
succeeding Business Day unless such next Business Day falls in
another calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day; (b) any
Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a
calendar month; and (C) no Interest Period shall end after the
Maturity Date.
(e) Subparagraph 2.05(c) is hereby amended to read in its
entirety as follows:
(c) Mandatory Prepayments. If, at any time, the
Outstanding Facilities Credit exceeds the Total Commitment at
such time, Borrower shall immediately repay Loans in an
aggregate principal amount equal to such excess.
(f) Subparagraph 2.13(a) is hereby amended to read in its
entirety as follows:
(a) Security Agreements, Etc. The Obligations shall
be secured by a Security Agreement in the form of Exhibit E,
duly executed by Borrower (the "Borrower Security Agreement");
provided, however, that if during any fiscal quarter after the
Total Commitment has been reduced to $30,000,000 or less, and
Borrower maintains a Leverage Ratio of less than 0.65/1.00,
the security interests of Agent and the Bank Parties created
pursuant to the Borrower Security Agreement shall be released
and discharged and shall not be reinstated.
2
(g) Paragraph 4.01 is amended by adding a new Subparagraph
4.01(v) thereto immediately after Subparagraph (u) to read in its
entirety as follows:
(v) Year 2000 Compatibility. Borrower and its
Subsidiaries have reviewed the areas within their business and
operations which could be adversely affected by, and have
developed or are developing a program to address on a timely
basis, the "Year 2000 Problem" (that is, the risk that
computer applications used by Borrower and its Subsidiaries
may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date on or
after December 31, 1999), and have made related appropriate
inquiry of material suppliers and vendors. Based on such
review and program, Borrower believes that the "Year 2000
Problem" will not have a Material Adverse Effect.
(h) Clause (iv) of Subparagraph 5.01(a) is hereby amended to
read in its entirety as follows:
(iv) Contemporaneously with the quarterly and
year-end Financial Statements required by the foregoing
clauses (i) and (iii), a certificate of an executive officer
of Borrower in the form of Exhibit F, appropriately completed,
which states, inter alia, that the Year 2000 remediation
efforts of Borrower and its Subsidiaries are proceeding as
scheduled and that, in the opinion of Borrower, the Year 2000
Problem will not result in a Material Adverse Effect, together
with such financial computations as Agent may reasonably
request to determine compliance with the terms of this
Agreement (a "Compliance Certificate");
(i) Clause (v) of Subparagraph 5.01(a) is hereby amended to
read in its entirety as follows:
(v) As soon as possible and in no event later than
five (5) Business Days after any officer of Borrower knows of
the occurrence or existence of (A) any Reportable Event under
any Employee Benefit Plan or Multiemployer Plan; (B) any
actual or threatened litigation, suits, claims or disputes
against Borrower or any of its Subsidiaries involving
potential monetary damages payable by Borrower or its
Subsidiaries of $1,000,000 or more (alone or in the
aggregate); (C) any event or condition which, in the opinion
of Borrower, materially adversely affects the Year 2000
remediation efforts of Borrower and its Subsidiaries; (D) any
other event or condition which is reasonably likely to have a
Material Adverse Effect; or (E) any Default; the statement of
the president or chief financial officer of Borrower setting
forth details of such event, condition or Default and the
action which Borrower proposes to take with respect thereto;
(j) Paragraph 5.01 is amended by adding a new Subparagraph
5.01(h) and a new Subparagraph 5.01(i) thereto immediately after
Subparagraph 5.01(g) to read in their entirety as follows:
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(h) Year 2000 Compatibility. Each of Borrower and its
Subsidiaries shall take all acts reasonably necessary to ensure that
all software, hardware, firmware, equipment, goods and systems utilized
by or material to their business operations or financial condition will
properly perform date sensitive functions before, during and after the
year 2000.
(i) Secretary Certificate; Incumbency Certificate. No later
than August 28, 1998, Borrower shall furnish to Agent (and Agent shall
promptly thereupon furnish to each Bank) a certificate of the Secretary
or an Assistant Secretary of Borrower certifying (A) that attached
thereto are true and correct copies of resolutions duly adopted by the
Board of Directors of Borrower and continuing in effect, which
authorize the execution, delivery and performance by Borrower of the
Credit Agreement and the other Credit Documents (each as amended,
restated or otherwise modified from time to time) executed or to be
executed by Borrower and the consummation of the transactions
contemplated hereby or thereby; and (B) the incumbency, signatures and
authority of the officers of Borrower authorized to execute, deliver
and perform the Credit Agreement and the other Credit Documents (each
as amended, restated or otherwise modified from time to time) and all
other documents, instruments or agreements related thereto executed or
to be executed by Borrower and indicating each such officer which is an
executive officer.
(k) Schedule I is amended by changing the Proportionate Share of
Sumitomo Bank of California set forth therein from "71.42857%" to "57.14290" and
changing the Proportionate Share of Union Bank of California set forth therein
from "28.57142%" to "42.85710%".
(l) Schedule II is amended by changing paragraph 3 set forth in the
"Explanation" section thereof to read in its entirety as follows:
Each Pricing Period thereafter will be a Level 1 Period or a Level 2
Period (i) in the case of the Applicable Margins, depending upon
Borrower's consolidated Leverage Ratio for the most recent fiscal
quarter period ending prior to the first day of such Pricing Period and
(ii) in the case of the Commitment Fee Percentage, depending upon
Borrower's consolidated Leverage Ratio and the average Unused
Commitment for the most recent fiscal quarter period ending prior to
the first day of such Pricing Period as follows:
(a) If, during any Pricing Period, Borrower's consolidated
Leverage Ratio is less than or equal to .650 to 1:00,
Borrower's pricing with respect to the Applicable Margin will
be a Level 1 Period.
(b) If, during any Pricing Period, Borrower's consolidated
Leverage Ratio is greater than .650 to 1:00, Borrower's
pricing with respect to the Applicable Margin will be a Level
1 Period.
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(c) If, during any Pricing Period, Borrower's consolidated
Leverage Ratio is less than or equal to .650 to 1:00 and the
average Unused Commitment for the most recent fiscal quarter
period ending prior to the first day of such Pricing Period
is less than or equal to fifty percent (50%) of the Total
Commitment, Borrower's pricing with respect to the Commitment
Fee Percentage will be a Level 1 Period.
(d) If, during any Pricing Period, (i) Borrower's consolidated
Leverage Ratio is greater than .650 to 1:00, or (ii)
Borrower's consolidated Leverage Ratio is less than or equal
to .650 to 1:00 but the average Unused Commitment for the
most recent fiscal quarter period ending prior to the first
day of such Pricing Period is greater than fifty percent
(50%) of the Total Commitment, Borrower's pricing with
respect to the Commitment Fee Percentage will be a Level 2
Period.
(m) Exhibit F is amended by adding a new subparagraph 2(d) thereto
immediately after subparagraph 2(c) thereof to read in its entirety as
follows:
(d) The Year 2000 remediation efforts of Borrower and its
Subsidiaries are proceeding as scheduled and, in the reasonable opinion
of Borrower, the Year 2000 Problem will not result in a Material
Adverse Effect, except as follows:
[State "None" or describe in detail any event or condition
in connection with the Year 2000 remediation efforts which
can not be performed and will result in a Material Adverse
Effect.]
3. Representations and Warranties. Borrower hereby represents and
warrants to Agent and the Banks that the following are true and correct on the
date of this Amendment and that, after giving effect to the amendments set forth
in Paragraph 2 above, the following will be true and correct on the Effective
Date (as defined below):
(a) The representations and warranties of Borrower set forth
in Paragraph 4.01 of the Credit Agreement and in the other Credit
Documents are true and correct in all material respects;
(b) No Default or Event of Default has occurred and is
continuing; and
(c) Each of the Credit Documents is in full force and effect.
(Without limiting the scope of the term "Credit Documents," Borrower expressly
acknowledges in making the representations and warranties set forth in this
Paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)
4. Effective Date. The amendments effected by Paragraph 2 above shall
become effective on August 1, 1998 (the "Effective Date"), subject to receipt by
Agent and the Banks on
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or prior to the Effective Date of the following, each in form and substance
satisfactory to Agent, the Banks and their respective counsel:
(a) This Amendment duly executed by Borrower, each Bank and
Agent, and new Notes duly executed by Borrower and made payable to each
Bank in the amount of each Bank's new Commitment;
(b) A Certificate of the Secretary or an Assistant Secretary
of Borrower, dated the Effective Date, certifying the incumbency,
signatures and authority of the officers of Borrower authorized to
execute, deliver and perform this Amendment and all other documents,
instruments or agreements related hereto or to the Credit Agreement (as
amended by this Amendment) and the other Credit Documents.
(b) Such other evidence as Agent or any Bank may reasonably
request to establish the accuracy and completeness of the
representations and warranties and the compliance with the terms and
conditions contained in this Amendment and the other Credit Documents.
5. Effect of this Amendment. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit
Agreement shall mean the Credit Agreement as amended hereby. Except as
specifically amended above, (a) the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are hereby ratified and
confirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Banks or Agent, nor constitute a waiver of any
provision of the Credit Agreement or any other Credit Document.
6. Miscellaneous.
(a) Counterparts. This Amendment may be executed in any number
of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for
all purposes.
(b) Headings. Headings in this Amendment are for convenience
of reference only and are not part of the substance hereof.
(c) Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of California
without reference to conflicts of law rules.
[The signature page follows]
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IN WITNESS WHEREOF, Borrower, Agent and the Banks have caused this
Amendment to be executed as of the day and year first above written.
BORROWER: INDUS INTERNATIONAL, INC
By: ________________________________
Name: ___________________________
Title: __________________________
AGENT: SUMITOMO BANK OF CALIFORNIA
By: ________________________________
Name: ___________________________
Title: __________________________
By: ________________________________
Name: ___________________________
Title: __________________________
LENDERS: SUMITOMO BANK OF CALIFORNIA
By: ________________________________
Name: ___________________________
Title: __________________________
By: ________________________________
Name: ___________________________
Title: __________________________
UNION BANK OF CALIFORNIA, N. A.
By: ________________________________
Name: ___________________________
Title: __________________________
