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EXHIBIT 10.2
XXXX XXXXXXXX,
AS GUARANTOR,
VON GRAFFENRIED, VON BURG, KAUFMANN, XXXXXXXX
ASSET MANAGEMENT LTD., ZURICH, AG,
AS AGENT FOR GUARANTORS,
USD $10,000,000
GUARANTY FACILITY AND SECURITY AGREEMENT
WITH
APERIAN, INC.,
AS BORROWER, AND
XXXXX XXXXX, AN INDIVIDUAL,
AS INDEMNITOR
CLOSING DATE: JULY 31, 2001
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TABLE OF CONTENTS
PAGE
Section 1. GUARANTY FACILITY......................................... 1
1.1 Guaranty Commitment....................................... 1
1.2 Use of Proceeds........................................... 2
1.3 Reimbursement of Bank Guaranty Drawings................... 2
Section 2. FEES AND CHARGES.......................................... 3
2.1 [Intentionally Omitted]................................... 3
2.2 [Intentionally Omitted]................................... 3
2.3 [Intentionally Omitted]................................... 3
2.4 [Intentionally Omitted]................................... 3
2.5 Audit and Appraisal Fees.................................. 3
2.6 Reimbursement of Expenses................................. 3
2.7 Bank Charges.............................................. 4
2.8 Guarantee Fee............................................. 4
2.9 Closing Fee............................................... 4
2.10 [Intentionally Omitted]................................... 4
2.11 [Intentionally Omitted]................................... 4
2.12 Gross Up for Taxes........................................ 4
Section 3. TERM LOAN / GUARANTY FACILITY ADMINISTRATION.............. 5
3.1 [Intentionally omitted]................................... 5
3.2 Payments.................................................. 5
3.3 Mandatory Prepayments of Term Loan........................ 6
3.4 Application of Payments and Collections................... 6
3.5 [Intentionally Omitted]................................... 6
3.6 [Intentionally Omitted]................................... 6
3.7 Statements of Account..................................... 6
Section 4. TERM AND TERMINATION...................................... 7
4.1 Term of Agreement......................................... 7
4.2 Termination............................................... 7
Section 5. SECURITY INTERESTS........................................ 8
5.1 Security Interest in Collateral........................... 8
5.2 Security Agreements from Subsidiaries..................... 8
5.3 Lien Perfection, Further Assurances....................... 8
5.4 Lien on Realty............................................ 9
Section 6. COLLATERAL ADMINISTRATION................................. 9
6.1 General................................................... 9
6.2 Administration of Accounts................................ 10
6.3 Administration of Inventory............................... 11
6.4 Administration of Equipment............................... 12
6.5 Payment of Charges........................................ 12
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Section 7. REPRESENTATIONS AND WARRANTIES............................ 12
7.1 General Representations and Warranties.................... 12
7.2 Continuous Nature of Representations and Warranties....... 18
7.3 Survival of Representations and Warranties................ 18
Section 8. COVENANTS AND CONTINUING AGREEMENTS....................... 18
8.1 Affirmative Covenants..................................... 18
8.2 Negative Covenants........................................ 22
8.3 [Intentionally Omitted]................................... 24
Section 9. CONDITIONS PRECEDENT...................................... 25
9.1 Documentation............................................. 25
9.2 No Default................................................ 25
9.3 Other Guaranty Documents.................................. 25
9.4 Hewlett-Packard Loan...................................... 25
9.5 No Litigation............................................. 25
9.6 Opinion of Borrower's Counsel............................. 25
9.7 [Intentionally Omitted]................................... 25
9.8 [Intentionally Omitted]................................... 25
9.9 Financial Statements...................................... 25
Section 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT......... 26
10.1 Events of Default......................................... 26
10.2 Acceleration of the Obligations........................... 28
10.3 Other Remedies............................................ 28
10.4 Remedies Cumulative; No Waiver............................ 29
Section 11. THE AGENT................................................. 29
11.1 Authorization and Action.................................. 29
11.2 Agent's Reliance, Etc..................................... 30
11.3 Agent and Affiliates...................................... 30
11.4 Guarantor Credit Decision................................. 31
11.5 Indemnification........................................... 31
11.6 Successor Agent........................................... 31
Section 12. MISCELLANEOUS............................................. 32
12.1 Power of Attorney......................................... 32
12.2 INDEMNITY................................................. 33
12.3 Modification of Agreement; Sale of Interest............... 34
12.4 Severability.............................................. 36
12.5 Successors and Assigns.................................... 36
12.6 Cumulative Effect; Conflict of Terms...................... 36
12.7 Execution in Counterparts................................. 36
12.8 Notice.................................................... 36
12.9 Guarantor's Consent....................................... 37
12.10 Credit Inquiries.......................................... 37
12.11 Time of Essence........................................... 37
12.12 Entire Agreement, Appendix A, Exhibits and Schedules...... 37
12.13 Interpretation............................................ 38
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12.14 GOVERNING LAW; CONSENT TO FORUM........................... 38
12.15 WAIVERS BY LOAN PARTIES................................... 39
12.16 ORAL AGREEMENTS INEFFECTIVE............................... 39
12.17 Nonapplicability of Article 5069-15....................... 40
12.18 Certain Matters of Construction........................... 40
12.19 Governing Language........................................ 40
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GUARANTY FACILITY AND SECURITY AGREEMENT
THIS GUARANTY FACILITY AND SECURITY AGREEMENT is made this 31st day of
July, 2001, by and among Aperian, Inc., a Delaware corporation ("Borrower"), and
the firm of von Graffenried, von Burg, Kaufmann, Xxxxxxxx Asset Management Ltd.,
Zurich, AG, a company organized and existing under the laws of Switzerland, as
agent (in such capacity, "Agent") for all Guarantors, and such Persons (as
hereinafter defined in Appendix A) who are or hereafter become parties to this
Agreement as Guarantors. Capitalized terms used in this Agreement have the
meanings assigned to them in Appendix A. Accounting terms not otherwise
specifically defined herein shall be construed in accordance with GAAP
consistently applied.
WHEREAS, Borrower desires that Guarantors provide a guaranty to secure
repayment of a certain loan facility to be extended to Borrower by a Swiss Bank
to fund the repayment of certain indebtedness of Borrower; and
WHEREAS, Borrower desires to secure all of its Obligations (as
hereinafter defined) under the Guaranty Documents (as hereinafter defined) by
granting to Agent, for the benefit of all Guarantors, a security interest in and
lien upon certain of its personal and real property.
Accordingly, for and in consideration of the mutual covenants and
agreements herein contained and of the loans and commitment hereinafter referred
to, Borrower and Guarantors agree as follows:
SECTION 1.
GUARANTY FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Guaranty
Documents, Guarantors severally, but not jointly, agree to provide a bank
guaranty of up to Ten Million Dollars USD ($10,000,000) to Banque Pictet & Cie.
SA, a bank organized and existing under the laws of Switzerland (including any
assignee thereof or successor thereto, the "Lender"), guaranteeing Borrower's
repayment of a term credit facility provided by Lender to Borrower, as follows:
1.1 Guaranty Commitment. On the Closing Date, subject to the
fulfillment or waiver of all conditions precedent to the effectiveness of this
Agreement, each Guarantor shall provide one or more guarantees (collectively the
"Guaranty") to the Borrower in the aggregate amount equal to the amount set
forth below such Guarantor's name on the signature pages hereof (such
Guarantor's "Guaranty Commitment"). The percentage equal to the quotient of (x)
each Guarantor's Guaranty Commitment, divided by (y) the aggregate of all
Guaranty Commitments, is the Guarantor's "Guaranty Percentage." The aggregate
amount of the Guaranty Commitments is Ten Million Dollars USD ($10,000,000).
Such Guaranty shall guaranty Borrower's repayment of a term credit facility to
be provided to Borrower by Lender in an amount not to exceed USD $10,000,000
(the "Term Loan"), and shall be secured by one or more bank guaranties, or a
substantially similar facility, procured by Guarantors in an aggregate amount
(including, in addition to Cash Collateral and marketable Securities) not less
than the original principal amount
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of the Term Loan (collectively, including any facility substantially similar to
bank guaranties, and any agreements, instruments or other documents relating
thereto, the "Bank Guaranties"). The Bank Guaranties shall be in form and
substance acceptable to Lender in its reasonable discretion; provided, however,
in no event shall any Guarantor be obligated to provide, procure, or renew any
Bank Guaranty which would have a term extending beyond the date that is 30 days
following the expiration of the Term (as defined hereinafter).
The Term Loan shall be evidenced by a written instrument to be executed
and delivered by the Borrower to Lender on the Closing Date, substantially in
the form of which is attached hereto and made a part hereof as Exhibit A (the
"Term Note") and shall be repayable in accordance with the terms of the Term
Note and any other agreements executed by Borrower in connection with the Term
Loan (collectively, including the Term Note, the "Term Loan Documents"). Amounts
repaid with respect to the Term Loan may not be reborrowed.
1.2 Use of Proceeds. The Term Loan shall be used first to fully
extinguish all Indebtedness of Borrower in favor of Hewlett Packard Credit
Corporation, a Delaware corporation ("HPCC"); and thereafter to fully extinguish
all Indebtedness of Borrower in favor of Hewlett-Packard Company, a Delaware
corporation ("HP") and lastly, to the extent that any proceeds of the Term Loan
remain after full and final payment of all Indebtedness of Borrower in favor of
HPCC and HP, such remaining proceeds may be used solely to satisfy existing
Indebtedness of Borrower, including, without limitation, Indebtedness in favor
of TXU Energy Services, and Cisco Systems, Inc. The foregoing restrictions upon
the use of the Term Loan proceeds shall be included in an escrow agreement,
substantially in the form of Exhibit C attached hereto (the "Escrow
Instructions"), pursuant to which the Term Loan proceeds shall be transferred
from the Lender directly to the escrow agent, which, in turn, shall transfer or
otherwise dispose of such proceeds in accordance with the terms and conditions
of the Escrow Instructions. Notwithstanding anything to the contrary set forth
in the immediately preceding sentences of this Section 1.2, the Agent is hereby
authorized to direct any escrow agent holding Term Loan proceeds to make one or
more payments from such proceeds to Agent in satisfaction of any expenses, fees
or other charges due to Agent pursuant to the terms of this Agreement. In no
event shall any proceeds of the Term Loan be used to finance ongoing operations
of Borrower or any Subsidiary of Borrower or to purchase or to carry, reduce,
retire or refinance any Indebtedness incurred to purchase or carry any margin
stock (within the meaning of Regulations U or X of the Federal Reserve Board).
1.3 Reimbursement of Bank Guaranty Drawings. If at any time Lender
shall make or cause to be made any drawing against any Bank Guaranty, Borrower
shall, upon demand, reimburse such amount to Agent (for the benefit of the
applicable Guarantor(s)) together with interest accruing daily on such amount at
the rate per annum of twelve percent (12%), irrespective of any claim, off-set,
defense or other right which Borrower may have at any time against the bank
issuing such Bank Guaranty, any Guarantor, or any other Person. The
reimbursement obligation of Borrower under this Section 1.3 comprises a portion
of the Obligations of Borrower under this Agreement.
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SECTION 2.
FEES AND CHARGES
2.1 [Intentionally Omitted].
2.2 [Intentionally Omitted].
2.3 [Intentionally Omitted].
2.4 [Intentionally Omitted].
2.5 Audit and Appraisal Fees. Borrower shall reimburse Agent for
its out-of-pocket audit and appraisal costs in connection with audits and
appraisals of Borrower's books and records and such other matters as Agent shall
deem appropriate, plus all out-of-pocket expenses incurred by Agent in
connection with such audits and appraisals not to exceed USD $15,000. Such fees
shall be payable on the first (1st) day of the month following the date of
issuance by Agent of a request for payment thereof to Borrower.
2.6 Reimbursement of Expenses. If, at any time or times regardless
of whether or not an Event of Default then exists, Agent or any Guarantor incurs
legal or accounting expenses or any other costs or out-of-pocket expenses in
connection with (1) the negotiation and preparation of this Agreement or any of
the other Guaranty Documents, any amendment of or modification of this Agreement
or any of the other Guaranty Documents (including, without limitation, any fees
or expenses charged by the issuing bank for such Bank Guaranty), or any sale or
attempted sale of any interest herein by a Guarantor to a new Guarantor or to a
Participating Guarantor; (ii) the administration of this Agreement or any of the
other Guaranty Documents and the transactions contemplated hereby and thereby;
(iii) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Agent, any Guarantor, Borrower or any other Person) in any way
relating to the Collateral, this Agreement or any of the other Guaranty
Documents or Borrower's affairs except where, pursuant to a final non-appealable
order, such litigation, contest, dispute, suit, proceeding or action is
determined adversely to Agent and Guarantors; (iv) any attempt to enforce any
rights of Agent or any Guarantor against Borrower or any other Person which may
be obligated to Agent or any Guarantor by virtue of this Agreement or any of the
other Guaranty Documents, including, without limitation, the Account Debtors of
Borrower or any other Loan Party except where, pursuant to a final
non-appealable order, the attempt to enforce such right of Agent and/or any
Guarantor is determined adversely to the party seeking to enforce such right; or
(v) any attempt to inspect, verify, protect, preserve, restore, collect, sell,
liquidate or otherwise dispose of or realize upon the Collateral; then all such
legal and accounting expenses, other costs and out-of-pocket expenses of Agent
or any Guarantor shall be charged to Borrower. All amounts chargeable to
Borrower under this Section 2.6 shall be Obligations secured by all of the
Collateral, shall be payable on demand to Agent or to such Guarantor, as the
case may be, and shall bear interest from the date such demand is made until
paid in full at the rate applicable to the Term Loan from time to time. Borrower
shall also reimburse Agent or Guarantors for expenses incurred by Agent or
Guarantors in its or their administration of the Collateral to the extent and in
the manner provided in Section 6 hereof. Borrower and Guarantors agree that
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notwithstanding the foregoing, Borrower's liability for the expenses of
Guarantors' Swiss counsel shall be capped at USD $5,000.
2.7 Bank Charges. Borrower shall pay to Agent (for its own benefit
or the benefit of a Guarantor, as applicable) on demand, any and all fees, costs
or expenses which Agent or any Guarantor pays to a bank or other similar
institution (including, without limitation, any fees paid by any Guarantor to
any Participating Guarantor) arising out of or in connection with the depositing
for collection, by Agent or any Guarantor, of any check or item of payment
received or delivered to Agent or any Guarantor on account of the Obligations.
2.8 Guarantee Fee. In partial consideration for providing the
Guaranty, Borrower shall pay to the Agent for the ratable benefit of Guarantors
a recurring guaranty fee (the "Guaranty Fee") to be determined as follows:
As of the date of any determination thereof, the
Guarantee Fee shall equal the product of (a) the then
outstanding principal amount of the Term Loan
multiplied by (b) the difference of twelve percent
(12.00%) minus the rate of interest (expressed as a
percentage) currently applied to the outstanding
principal balance of the Term Loan pursuant to the
provisions of the Term Loan Documents.
The Guaranty Fee shall be calculated on each date that is three (3)
Business Days prior to the date that a payment of interest under the
Term Loan is scheduled to be made pursuant to the provisions of the
Term Loan Documents (each an "Interest Payment Date"), and shall be due
and payable on each Interest Payment Date.
2.9 Closing Fee. The Borrowers shall pay to Agent for the ratable
benefit of Guarantors a closing fee in the amount of USD $25,000.00, which fee
shall be fully earned and nonrefundable on the Closing Date and shall be paid to
the Guarantors on the Closing Date
2.10 [Intentionally Omitted].
2.11 [Intentionally Omitted].
2.12 Gross Up for Taxes. If Borrower or any Person obligated to
make any payment under the Guaranty Documents shall be required by Applicable
Law to withhold or deduct any Taxes from or in respect of any sum payable under
this Agreement or any of the other Guaranty Documents, (a) the sum payable to
the Agent, or any Guarantor shall be increased as may be necessary so that,
after making all required withholding or deductions, the Agent or such Guarantor
(as the case may be) receives an amount equal to the sum it would have received
had no such withholding or deductions (including withholdings or deductions in
respect of additional sums payable under this Section 2.12) been made, (b) such
obligor shall make such withholding or deductions, and (c) such obligor shall
pay the full amount withheld or deducted to the relevant taxation authority or
other authority in accordance with Applicable Law. In the event that a Guarantor
receives a refund of any Taxes included in a payment made by any obligor
pursuant to
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the preceding sentence, such Guarantor agrees to pay to the applicable obligor
any amount refunded to such Guarantor which shall be determined in the
Guarantor's sole discretion to be a refund in respect of such Taxes, and in no
case shall Borrower or any other Person be entitled to review any tax returns or
tax records of any Guarantor for any reason whatsoever. A certificate as to the
calculation of any additional amounts payable to a Lender under this Section
2.12 submitted to Borrower (or any other obligor under any Guaranty Document) by
such Guarantor shall, absent manifest error, be final, conclusive and binding
for all purposes upon all parties hereto. With respect to each deduction or
withholding for or on account of any Taxes, Borrower shall promptly furnish or
cause to be furnished to each Guarantor such certificates, receipts and other
documents as may be reasonably required (in the judgment of such Guarantor) to
establish any tax credit to which such Guarantor may be entitled; provided, that
no assignee or transferee of any Guarantor shall be entitled to receive any
greater payment under this Section 2.12 than such Guarantor would have been
entitled to receive with respect to the rights assigned, or otherwise
transferred unless (1) such assignment or transfer shall have been made at a
time when the circumstances (including changes in Applicable Law) giving rise to
such greater payment did not exist or had not yet occurred or (2) such
assignment or transfer shall have been at the request of the Borrower.
SECTION 3.
TERM LOAN / GUARANTY FACILITY ADMINISTRATION.
3.1 [Intentionally omitted].
3.2 Payments. Unless otherwise agreed by Agent or Required
Guarantors in writing, Borrower's Obligations and its obligations under the Term
Loan shall be payable as follows:
3.2.1 Principal and Interest under Term Loan. Principal
payable on account of the Term Loan and interest accrued thereon shall be
payable by the Borrower to Lender in accordance with the terms of the Term Loan
Documents; provided, however, notwithstanding any provision contained in any
Term Loan Document, beginning October 15, 2001, and on the 15th day (or first
Business Day thereafter if the 15th day is not a Business Day) of each calendar
month thereafter, Borrower shall make a payment in reduction of the principal
balance of the Term Loan in an amount equal to the difference of (a) USD
$500,000 minus (b) any amount of outstanding principal due and payable by
Borrower to Lender under the Term Loan Documents, if any (such payments,
collectively, being the "Mandatory Principal Payment"). For the avoidance of
confusion, the parties acknowledge that the amount of any Mandatory Principal
Payment shall not be reduced or otherwise affected by either (y) any amount of
interest due and payable by Borrower to Lender at any time, or (x) any Guaranty
Fee or amount thereof.
3.2.2 Payment in Full of the Term Loan. Notwithstanding
anything to the contrary contained in the preceding subsection 3.2.1, the Term
Loan, including all accrued and unpaid interest thereon and any other obligation
of Borrower to Lender in connection therewith, shall be paid or performed in
full prior to the expiry of the Term (as defined hereinafter). NOTWITHSTANDING
ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, NO GUARANTOR SHALL
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HAVE ANY OBLIGATION TO BORROWER HEREUNDER WITH RESPECT TO ANY INDEBTEDNESS OF
THE BORROWER TO THE LENDER EXISTING AS OF OR ARISING AFTER THE EXPIRATION OF THE
TERM.
3.2.3 Costs, Fees and Charges. Costs, fees and charges
payable pursuant to this Agreement shall be payable by Borrower as and when
provided in Section 2 hereof, to Agent for the ratable benefit of Guarantors or
to any other Person designated by Agent in writing.
3.2.4 Other Obligations. The balance of the Obligations
requiring the payment of money, if any, shall be payable by Borrower to Agent
for the ratable benefit of Guarantors as and when provided in this Agreement,
the Other Agreements or the Security Documents, or on demand, whichever is
later.
3.3 Mandatory Prepayments of Term Loan. Proceeds of Sale, Loss,
Destruction or Condemnation of Collateral. Except as provided in Section 6.1.2
or Section 6.4.2 hereof, if Borrower or any Subsidiary of any Borrower sells any
Collateral, or if any of the Collateral is lost or destroyed or taken by
condemnation, Borrower shall pay to Lender, unless otherwise agreed by Required
Guarantors, as and when received by Borrower or such Subsidiary and as a
prepayment of the Term Loan, a sum equal to the proceeds (including insurance
payments) net of any costs of sale or disposition and provisions for any income
tax expense incurred as a result of such sale or disposition received by
Borrower or such Subsidiary from such sale, loss, destruction or condemnation.
3.4 Application of Payments and Collections. All items of payment
received by Agent by 12:00 noon, Dallas, Texas time, on any Business Day shall
be deemed received on that Business Day. All items of payment received after
12:00 noon, Dallas, Texas time, on any Business Day shall be deemed received on
the following Business Day. For the purpose of computing interest hereunder, all
items of payment received by Agent shall be deemed applied by Agent on account
of the Obligations (subject to final payment of such items) on the first (1st)
Business Day after receipt of such item in immediately good funds. Borrower
irrevocably waives the right to direct the application of any and all payments
and collections at any time or times hereafter received by Agent from or on
behalf of Borrower, and Borrower does hereby irrevocably agree that Agent shall
have the continuing exclusive right to apply and reapply any and all such
payments and collections received at any time or times hereafter by Agent or its
agent against the Obligations, in such manner as Agent may deem advisable,
notwithstanding any entry by Agent upon any of its books and records.
3.5 [Intentionally Omitted].
3.6 [Intentionally Omitted].
3.7 Statements of Account. Agent will account to Borrower monthly
with a statement of charges and payments made pursuant to this Agreement, and
such account rendered by Agent shall be deemed final, binding and conclusive
upon Borrower unless Agent is notified by Borrower in writing to the contrary
within thirty (30) days of the date each accounting is mailed
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to Borrower. Such notice shall only be deemed an objection to those items
specifically objected to therein.
SECTION 4.
TERM AND TERMINATION
4.1 Term of Agreement. Subject to the right to accelerate the
Obligations as the result of an occurrence of any Default or Event of Default,
this Agreement shall be in effect for a period of one (1) year from the Closing
Date, through and including July, 31, 2002 (the "Term").
4.2 Termination.
4.2.1 [Intentionally Omitted.]
4.2.2 Termination by Borrowers. Upon at least thirty (30)
days prior written notice to Agent, the Borrower may, at its option, terminate
this Agreement; provided, however, no such termination shall be effective until
(i) Borrower has paid all of the Obligations (including the Term Loan and the
interest accrued thereon) in immediately available funds or otherwise fully
performed all Obligations, and (ii) all obligations and liabilities of any
Guarantor relating to any Bank Guaranty have been extinguished. Any notice of
termination given by the Borrower shall be irrevocable unless Required
Guarantors otherwise agree in writing. The Borrower may elect to terminate this
Agreement in its entirety only. No section of this Agreement or Obligation
hereunder may be terminated singly.
4.2.3 Effect of Termination. All of the Obligations shall
be immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Guaranty Documents
shall survive any such termination and Agent shall retain its Liens (for the
ratable benefit of Guarantors) in the Collateral and all of its rights and
remedies under the Guaranty Documents notwithstanding such termination until
Borrower has fully paid, in immediately available funds, and performed the
Obligations to Agent for the benefit of Guarantors and all obligations of
Borrower arising in connection with the Term Loan Documents. Notwithstanding the
payment in full of the Obligations and any obligations of Borrower under the
Term Loan Documents, Agent shall not be required to terminate its security
interests in the Collateral unless, (a) with respect to any loss or damage Agent
or Guarantor may incur as a result of dishonored checks or other items of
payment received by Agent from Borrower or any Account Debtor of Borrower or any
other Loan Party and applied to the Obligations, Agent shall, at its option, (i)
have received a customary written indemnity and release agreement, executed by
Borrower and by any Person whose loans or other advances to Borrower are used in
whole or in part to satisfy the Obligations, indemnifying Agent and Guarantor
from any such loss or damage; or (ii) have retained such monetary reserves and
Liens on the Collateral for such period of time as Agent, in its sole credit
judgment, may deem necessary to protect Agent and Guarantors from any such loss
or damage, and (b) all liabilities and obligations of any Guarantor relating to
any Bank Guaranty shall have been extinguished or, at the option of Required
Guarantors in their sole discretion, Borrower shall have provided Cash
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Collateral to Agent for the ratable benefit of Guarantors equal to one hundred
five percent (105%) of the aggregate maximum sum of all outstanding Bank
Guaranties.
SECTION 5.
SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment
and performance to Agent and Guarantors of the Obligations, Borrower hereby
grants to Agent for the ratable benefit of Guarantors a continuing Lien upon all
of the following Property and interests in Property of Borrower, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:
(a) Accounts;
(b) Inventory;
(c) Equipment;
(d) General Intangibles;
(e) Investment Property;
(f) All real Property;
(g) All monies and other Property of any kind now or at
any time or times hereafter in the possession or under the control of Agent or
any Guarantor or a bailee or Affiliate of Agent or any Guarantor;
(h) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (a) through (g) above,
including, without limitation, proceeds of and unearned premiums with respect to
insurance policies insuring any of the Collateral; and
(i) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other computer
materials and records) of each Borrower pertaining to any of (a) through (h)
above.
5.2 Security Agreements from Subsidiaries. To secure the prompt
payment and performance to Agent and Guarantors of the Obligations, Borrower
shall cause each of its direct or indirect Subsidiaries in existence from time
to time, to grant to Agent for the ratable benefit of Guarantors a continuing
Lien upon all of the Property of such Subsidiary (which Property shall thereupon
be included in the definition of Collateral hereunder). Such grant by any
Subsidiary of Borrower shall be evidenced by documents satisfactory in form and
substance to Agent and its counsel.
5.3 Lien Perfection, Further Assurances. Borrower shall execute
such additional UCC-1 financing statements as are required by the Code and such
other instruments, assignments
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or documents (including trademark security agreements, patent security
agreements and copyright security agreements, as applicable, in the case of
Borrower's intellectual property) as are necessary to perfect Agent's Lien (for
the ratable benefit of Guarantors) upon any of the Collateral and shall take
such other action as may be required to perfect or to continue the perfection of
Agent's Lien (for the ratable benefit of Guarantors) upon the Collateral. Unless
prohibited by applicable law, Borrower hereby authorizes Agent to execute and
file any such financing statement on Borrower's behalf. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof. At Agent's request, Borrower shall also execute and deliver to Agent
any and all documents deemed necessary or appropriate by Agent to cause Agent's
Lien to be noted on any motor vehicle, tractor or trailer title certificates for
motor vehicles, tractors or trailers forming a part of the Collateral. At
Agent's request, Borrower shall also promptly execute or cause to be executed
and shall deliver to Agent any and all other documents, instruments and
agreements deemed necessary by Agent to give effect to or carry out the terms or
intent of the Guaranty Documents.
5.4 Lien on Realty. The due and punctual payment and performance
of the Obligations shall also be secured by the Lien created by the Mortgages.
If Borrower shall acquire at any time or times hereafter any fee simple interest
in real Property, Borrower agrees promptly to execute and deliver to Agent, as
additional security and Collateral for the Obligations, deeds of trust, security
deeds, mortgages or other collateral assignments satisfactory in form and
substance to Agent and its counsel (herein collectively referred to as the
"Mortgages") covering such real Property. The Mortgages shall be duly recorded
(at Borrower's expense) in each office where such recording is required to
constitute a valid Lien on the real Property covered thereby. In respect to the
Mortgages, Borrower shall deliver or cause to be delivered to Agent, at
Borrower's expense, mortgagee title insurance policies issued by a title
insurance company satisfactory to Agent, insuring Agent, as mortgagee; such
policies shall be in form and substance satisfactory to Agent, and shall insure
a valid first Lien in favor of Agent on the Real Property covered thereby,
subject only to Permitted Liens and to those exceptions reasonably acceptable to
Agent and its counsel. Said policies shall be in form and substance satisfactory
to Agent. Borrower shall also deliver to Agent such other documents, including,
without limitation, ALTA Surveys of the real Property, as Agent and its counsel
may reasonably request relating to the real Property subject to any such
Mortgage.
SECTION 6.
COLLATERAL ADMINISTRATION
6.1 General
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6.1.1 Location of Collateral. All Collateral will at all
times be kept by each Loan Party at one or more of the business locations set
forth in Exhibit B hereto and shall not, without the prior written approval of
Agent, be moved therefrom except, prior to an Event of Default and Agent's
acceleration of the maturity of the Obligations in consequence thereof, for
removals in connection with dispositions of Equipment that are authorized by
Section 6.4.2 hereof.
6.1.2 Insurance of Collateral. Borrower shall maintain and
pay, and cause each Loan Party to maintain and pay, for insurance upon all
Collateral owned by it wherever located and with respect to such Loan Party's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Agent. No later than thirty (30) days after the Closing Date, Borrower shall
have and shall have caused each Loan Party to deliver the originals of such
policies to Agent with satisfactory Guarantor's loss payable endorsements or
collateral assignments thereof, naming Agent for the ratable benefit of
Guarantors as loss payee, assignee or additional insured, as appropriate. Each
policy of insurance or endorsement shall contain a clause requiring the insurer
to give not less than thirty (30) days prior written notice to Agent in the
event of cancellation of the policy for any reason whatsoever and a clause
specifying that the interest of Agent shall not be impaired or invalidated by
any act or neglect of any Loan Party or the owner of the Property or by the
occupation of the premises for purposes more hazardous than are permitted by
said policy. If any Loan Party fails to provide and pay for such insurance,
Agent may, at its option but shall not be required to, procure the same and
charge Borrower therefor. Borrower agrees to deliver and to cause each
Subsidiary to deliver to Agent, promptly as rendered, true copies of all
material reports made in any reporting forms to insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due and is not actively contesting such charge in
the manner described in Section 7.1.15, Agent may, at its option, but shall not
be required to, pay the same and charge Borrower therefor. Agent shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Agent's actual possession) or for any
diminution in the value thereof, or for any act or default of any Person
whomsoever, but the same shall be at Borrower's sole risk.
6.2 Administration of Accounts.
6.2.1 Records, Schedules and Assignments of Accounts.
Borrower shall, and shall cause each Subsidiary to, keep accurate and complete
records of its respective Accounts and all payments and collections thereon and
shall submit to Agent on such periodic basis as Agent shall request a sales and
collections report for the preceding period, in form satisfactory to Agent. On
or before the fifteenth (15th) day of each month from and after the date hereof,
Borrower shall deliver to Agent, in form acceptable to Agent, a summary aged
trial balance, on a Consolidated and consolidating basis, of all Accounts of
Borrower and its Subsidiaries (unless Agent requests
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full details) existing as of the last day of the preceding month, specifying, if
and to the extent requested by Agent, the names, addresses, face value, dates of
invoices and due dates for each Account Debtor obligated on an Account so listed
("Schedule of Accounts"), and, upon Agent's request therefor, copies of proof of
delivery and the original copy of all documents, including, without limitation,
repayment histories and present status reports relating to the Accounts so
scheduled and such other matters and information relating to the status of such
then existing Accounts as Agent shall reasonably request. If requested by Agent,
Borrower shall, and shall cause each Subsidiary to, execute and deliver to Agent
formal written assignments of all of its Accounts on a monthly basis or, if
requested by Agent, more frequently, which shall include all Accounts of
Borrower and its Subsidiaries that have been created since the date of the last
assignment, together with copies of invoices or invoice registers related
thereto. On or before the fifteenth (15th) day of each month from and after the
date hereof, Borrower shall deliver to Agent, in form acceptable to Agent, a
summary aged trial balance, on a Consolidated and consolidating basis, as
applicable, of all accounts payable of Borrower and its Subsidiaries (unless
Agent requests full details) existing as of the last day of the preceding month,
specifying, if and to the extent requested by Agent, the names, addresses, face
value, dates of invoices and due dates for each Account Debtor obligated on an
account payable so listed ("Schedule of Payables"), and, upon Agent's request
therefor, such other matters and information relating to the status of such then
existing account payable as Agent shall reasonably request.
6.2.2 Discounts, Allowances, Disputes. If Borrower or any
Subsidiary of Borrower grants any discounts, allowances or credits that are not
shown on the face of the invoice for the Account involved, Borrower shall report
such discounts, allowances or credits, as the case may be, to Agent as part of
the next required Schedule of Accounts. If any amounts due and owing in excess
of USD $1,000,000 are in dispute between Borrower, any Subsidiary of Borrower,
and any Account Debtor of Borrower or any Subsidiary, Borrower shall, or shall
cause the applicable Subsidiary to, provide Agent with written notice thereof at
the time of submission of the next Schedule of Accounts, explaining in detail
the reason for the dispute, all claims related thereto and the amount in
controversy. Upon and during the continuation of an Event of Default, Agent
shall have the right to settle or adjust all disputes and claims directly with
the Account Debtor and to compromise the amount or extend the time for payment
of the Accounts owing by such Account Debtor to Borrower and its Subsidiaries
upon such terms and conditions as Agent may deem advisable, and to charge the
costs and expenses thereof, including attorney's fees, to Borrower.
6.2.3 Taxes. If an Account of any Loan Party includes a
charge for any Tax payable to any governmental taxing authority and if such Tax
is not being contested in the manner described in Section 7.1.15 hereof, Agent
is authorized, in its sole discretion, to pay the amount thereof to the proper
taxing authority for the account of such Loan Party and to charge Borrower
therefor, provided, however that Agent shall not be liable for any Taxes to any
governmental taxing authority that may be due by any Loan Party.
6.2.4 [Intentionally omitted]
6.3 Administration of Inventory.
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6.3.1 Records and Reports of Inventory. Borrower shall, and
shall cause each of its Subsidiaries to, keep accurate and complete records of
its Inventory. Borrower shall furnish to Agent Inventory reports in form and
detail satisfactory to Agent at such times as Agent or Required Guarantors may
request, but at least once each month, not later than the fifteenth (15th) day
of such month. Each Loan Party shall conduct a physical inventory no less
frequently than annually and shall provide to Agent a report based on each such
physical inventory promptly thereafter, together with such supporting
information as Agent shall request.
6.3.2 Returns of Inventory. Borrower or any Subsidiary
shall not return any of its Inventory to a supplier or vendor thereof, or to any
other Person, whether for cash, credit against future purchases or then existing
payables, or otherwise unless (i) such return is in the ordinary course of
business of Borrower or any Subsidiaries and such Person, (ii) no Default or
Event of Default exists or would result therefrom, (iii) if the value of all
Inventory of Borrower and any of its Subsidiaries returned in any month exceeds
USD $1,000,000, Borrower shall promptly notify Agent thereof, and (iv) any
payment received by Borrower or any Subsidiary in connection with any such
return is promptly turned over to Agent for application to the Obligations.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall,
and shall cause each Subsidiary to, keep accurate records itemizing and
describing the kind, type, quantity and value of its Equipment and all
dispositions made in accordance with Section 6.4.2 hereof, and shall furnish
Agent with a current schedule containing the foregoing information on at least
an annual basis and more often if requested by Agent.
6.4.2 Dispositions of Equipment. Borrower will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise dispose of
or transfer any of the Equipment of Borrower or any of its Subsidiaries or any
part thereof without the prior written consent of Agent; provided, however, that
the foregoing restriction shall not apply, for so long as no Default or Event of
Default exists, to (i) dispositions of Borrower's Equipment which, in the
aggregate in respect to each such disposition by Borrower during any consecutive
twelve-month period, has a fair market value or book value, whichever is less,
of USD $500,000 or less, provided that all proceeds thereof are remitted to
Agent for application to the Term Loan pursuant to Section 3.3 or are expended
pursuant to clause (ii) of this sentence, or (ii) replacements of Equipment that
is substantially worn, damaged or obsolete with Equipment of like kind, function
and value provided that the replacement Equipment shall be acquired prior to or
concurrently with the disposition of the Equipment that is to be replaced, the
replacement Equipment shall be free and clear of Liens other than Permitted
Liens, and Borrower shall have given Agent at least five (5) days prior written
notice of such disposition.
6.5 Payment of Charges. All amounts chargeable to Borrower under
Section 6 hereof shall be Obligations secured by all of the Collateral, shall be
payable on demand and shall bear interest from the date such advance was made
until paid in full at the rate applicable to the Term Loan from time to time.
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SECTION 7.
REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Agent and
Guarantors to enter into this Agreement and to make the Guaranty available
hereunder, Borrower (AND XXXXX XXXXX, IN HIS INDIVIDUAL CAPACITY, WHERE
EXPRESSLY INDICATED) represents, warrants and covenants to Agent and Guarantors
that:
7.1.1 Organization and Qualification. Except as otherwise
disclosed on Exhibit D, each Loan Party is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Loan Party is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in each state or
jurisdiction listed on Exhibit D hereto and in all other states and
jurisdictions where the character of its Properties or the nature of its
activities make such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect.
7.1.2 Corporate Power and Authority. Each Loan Party is
duly authorized and empowered to enter into, execute, deliver and perform this
Agreement and each of the other Guaranty Documents to which it is a party. The
execution, delivery and performance of this Agreement and each of the other
Guaranty Documents have been duly authorized by all necessary corporate action
and do not and will not: (i) require any consent or approval of the shareholders
of any Loan Party; (ii) contravene any Loan Parties', articles or certificate of
incorporation or by-laws; (iii) violate, or cause any Loan Party to be in
default under, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award in effect having
applicability to such Loan Party; (iv) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other material
agreement, lease or instrument to which any Loan Party is a party or by which it
or its Properties may be bound or affected; or (v) result in, or require, the
creation or imposition of any Lien (other than Permitted Liens) upon or with
respect to any of the Properties now owned or hereafter acquired by any Loan
Party.
7.1.3 Registration of Shares and Compliance with Exchange
Act. Borrower (i) has registered its common stock pursuant to Section 12 of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), (ii) is in
full compliance with all reporting requirements of the Exchange Act, (iii) has
its common stock quoted on the NASDAQ National Market System and (iv) is in full
compliance with all listing requirements of NASDAQ.
7.1.4 Legally Enforceable Agreement. This Agreement is, and
each of the other Guaranty Documents when delivered under this Agreement will
be, a legal, valid and binding obligation of each Loan Party enforceable against
it in accordance with its respective terms (subject, as to enforcement, to
general principles of equity, and to bankruptcy, insolvency and similar rights
affecting creditors' rights generally).
7.1.5 Capital Structure. Exhibit E hereto states: (i) the
correct name of each Loan Party, its jurisdiction of incorporation and the
percentage of its Voting Securities owned by
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any other Loan Party; (ii) the name of each of Loan Party's corporate or joint
venture Affiliates and the nature of the affiliation; (iii) the number, nature
and holder of all outstanding Securities of each Loan Party; and (iv) the number
of authorized, issued and treasury shares of each Loan Party. Borrower and its
Subsidiaries have good title to all of the shares they purport to own of the
stock of each of their Subsidiaries, free and clear in each case of any Lien
other than Permitted Liens. All such shares have been duly issued and are fully
paid and non-assessable. Except as otherwise provided in Exhibit E, there are no
outstanding options to purchase, or any rights or warrants to subscribe for, or
any commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of any Loan Party. There are no outstanding agreements or instruments
binding upon any shareholders of any Loan Party relating to the ownership of its
shares of capital stock.
7.1.6 Corporate Names. No Loan Party has been known as or
used any corporate, fictitious or trade names except those listed on Exhibit F
hereto. Except as set forth on Exhibit F, no Loan Party has been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person.
7.1.7 Business Locations, Agent for Process. The chief
executive office and other places of business of each Loan Party are as listed
on Exhibit B hereto.
7.1.8 Title to Properties; Priority of Liens. EACH OF XXXXX
XXXXX, IN HIS INDIVIDUAL CAPACITY, AND BORROWER, HEREBY SEVERALLY REPRESENT,
WARRANT AND COVENANT TO AGENT AND GUARANTORS THAT (I) BORROWER AND EACH
SUBSIDIARY HAS GOOD AND INSURABLE, TITLE TO OR VALID AND SUBSISTING LEASEHOLD
ESTATE IN, AS APPLICABLE, ALL OF ITS RESPECTIVE REAL PROPERTY, AND GOOD TITLE TO
ALL OF THE COLLATERAL AND ALL OF ITS OTHER PROPERTY, IN EACH CASE, FREE AND
CLEAR OF ALL LIENS EXCEPT FOR PERMITTED LIENS AND FOR LIENS BEING CONTESTED IN
THE MANNER PROVIDED FOR IN SECTION 7.1.15; (II) BORROWER AND EACH SUBSIDIARY HAS
PAID OR DISCHARGED ALL LAWFUL CLAIMS THAT, IF UNPAID, MIGHT BECOME A LIEN
AGAINST ANY OF BORROWER'S OR BORROWER'S SUBSIDIARIES' PROPERTIES THAT IS NOT A
PERMITTED LIEN, UNLESS ANY SUCH CLAIM IS BEING CONTESTED IN THE MANNER PROVIDED
FOR IN SECTION 7.1.15; AND (III) THE LIENS GRANTED TO AGENT FOR THE RATABLE
BENEFIT OF GUARANTOR UNDER SECTION 5 HEREOF ARE FIRST PRIORITY LIENS, SUBJECT
ONLY TO PERMITTED LIENS.
7.1.9 Accounts. Unless otherwise indicated in writing to
Agent, with respect to each Account of Borrower and its Subsidiaries:
(a) It is genuine and in all respects what it
purports to be, and it is not evidenced by a judgment;
(b) It arises out of a completed, bona fide sale
and delivery of goods or rendition of services by a Loan Party in the ordinary
course of its business and in accordance with the terms and conditions of all
purchase orders, contracts or other documents relating thereto and forming a
part of the contract between such Loan Party and the Account Debtor;
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(c) It is for a liquidated amount maturing as
stated in the duplicate invoice covering such sale or rendition of services, a
copy of which has been furnished or is available to Agent;
(d) Such Account, and Agent's security interest
therein, is not, and will not be in the future, subject to any offset, Lien,
deduction, defense, dispute, counterclaim or any other adverse condition except
for disputes resulting in returned goods where the amount in controversy is
deemed by Agent to be immaterial, and each such Account is absolutely owing to a
Loan Party and is not contingent in any respect or for any reason;
(e) No Loan Party has made any agreement with
any Account Debtor thereunder for any extension, compromise, settlement or
modification of any such Account or any deduction therefrom, except discounts or
allowances which are granted by such Loan Party in the ordinary course of its
business in accordance with past practice and which are reflected in the
calculation of the net amount of each respective invoice related thereto and are
reflected in the Schedules of Accounts submitted to Agent pursuant to Section
6.2.1 hereof;
(f) To the best knowledge of Borrower, there are
no facts, events or occurrences which in any way impair the validity or
enforceability of any Accounts of any Loan Party or tend to reduce the amount
payable thereunder from the face amount of the invoice and statements delivered
to Agent with respect thereto (other than normal refunds and refunds consistent
with past practice);
(g) To the best knowledge of Borrower, the
Account Debtor thereunder (1) had the capacity to contract at the time any
contract or other document giving rise to the Account was executed and (2) such
Account Debtor is Solvent; and
(h) To the best knowledge of Borrower, there are
no proceedings or actions which are threatened or pending against any Account
Debtor thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such Account.
7.1.10 Equipment. The Equipment of Borrower and each of its
Subsidiaries is in good operating condition and repair, and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of such Equipment shall be maintained and preserved,
reasonable wear and tear excepted. Borrower will not permit any material portion
of its Equipment or the Equipment of any of its Subsidiaries to become affixed
to any real Property leased to such Loan Party so that an interest arises
therein under the real estate laws of the applicable jurisdiction unless the
landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form acceptable to Agent, and Borrower will not
permit any of the Equipment of any Loan Party to become an accession to any
personal Property other than Equipment that is subject to first priority (except
for Permitted Liens) Liens in favor of Agent.
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7.1.11 Financial Statements; Fiscal Year. The Consolidated
and consolidating balance sheets of Borrower and its Subsidiaries as of March
31, 2001, and the related statements of income, shareholders equity and cash
flow for the twelve month period ending on such date, have each been prepared in
accordance with GAAP, and present fairly, in all material respects, the
financial position of Borrower and its Subsidiaries at such dates and the
results of operations for such periods (subject to normal year-end non-material
adjustments). The Consolidated and consolidating balance sheets of Borrower and
its Subsidiaries as of June 30, 2001, and the related statements of income,
shareholder equity and cash flow for the three (3) month period ending on such
date have each been prepared in accordance with GAAP, and present fairly, in all
material respects, the financial position of Borrower and its Subsidiaries at
such dates and the results of operations for such periods (subject to normal
year-end non-material adjustments). The fiscal year of Borrower ends on December
31 of each year.
7.1.12 Full Disclosure. There is no fact or circumstance
which any Loan Party has failed to disclose to Agent and Guarantors in writing
which reasonably could be expected to have a Material Adverse Effect.
7.1.13 Solvent Financial Condition. Each Loan Party is,
after giving effect to the transactions contemplated hereunder, and at all times
will be, Solvent.
7.1.14 Surety Obligations. Except as set forth in this
Agreement, no Loan Party is obligated as surety or indemnitor under any surety
or similar bond or other contract issued or entered into any agreement to assure
payment, performance or completion of performance of any undertaking or
obligations of any Person.
7.1.15 Taxes. The federal tax identification number of each
Loan Party is shown on Exhibit G hereto. Each Loan Party has filed all federal,
state and local tax returns and other reports it is required by law to file and
has paid, or made provision for the payment of, all taxes, assessments, fees,
levies and other governmental charges upon it, its income and Properties as and
when such taxes, assessments, fees, levies and charges that are due and payable,
except to the extent any such Taxes are being Properly Contested. The provision
for Taxes on the books of Borrower and each Subsidiary of Borrower are adequate
for all years not closed by applicable statutes, and for its current fiscal
year.
7.1.16 Brokers. There are no claims for brokerage
commissions, finder's fees or investment banking fees in connection with the
transactions contemplated by this Agreement.
7.1.17 Patents, Trademarks, Copyrights and Licenses. Each
Loan Party owns or possesses all the patents, trademarks, service marks, trade
names, copyrights and licenses necessary for the present and planned future
conduct of its business without any known conflict with the rights of others.
All such patents, trademarks, service marks, trade names, copyrights, licenses
and other similar rights owned or possessed by each Loan Party are listed on
Exhibit H hereto.
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7.1.18 Governmental Consents. Each Loan Party has, and is in
good standing with respect to, all governmental consents, approvals, licenses,
authorizations, permits, certificates, inspections and franchises necessary to
continue to conduct its business as heretofore or proposed to be conducted by it
and to own or lease and operate its Properties as now owned or leased by it.
7.1.19 Compliance with Laws. Each Loan Party has duly
complied with, in all material respects, and its Properties, business operations
and leaseholds are in compliance in all material respects with, the provisions
of all Applicable Laws and there have been no citations, notices or orders of
noncompliance issued to any Loan Party under any such law, rule or regulation.
Each Loan Party has established and maintains an adequate monitoring system to
insure that it remains in compliance, in all material respects, with all
federal, state and local laws, rules and regulations applicable to it.
7.1.20 Restrictions. No Loan Party is a party or subject to
any contract, agreement, or charter or other corporate restriction, which has or
could reasonably be expected to have a Material Adverse Effect. Except as set
forth on Exhibit I no Loan Party is a party or subject to any contract or
agreement which restricts its right or ability to incur Indebtedness. No
contracts or agreements to which any Loan Party is a party or by which any of
their respective properties are bound prohibits the execution of or compliance
with this Agreement or the other Guaranty Documents by any Loan Party.
7.1.21 Litigation. Except as set forth on Exhibit J, there
are no actions, suits, proceedings or investigations pending, or to the
knowledge of any Loan Party, threatened, against or affecting any Loan Party, or
the business, operations, Properties, prospects, profits or condition of any
Loan Party. None of the actions, suits or proceedings listed on Exhibit J, if
determined adversely to any Loan Party, could reasonably be expected to have a
Material Adverse Effect. No Loan Party is in default with respect to any order,
writ, injunction, judgment, decree or rule of any court, governmental authority
or arbitration board or tribunal.
7.1.22 No Defaults. No event has occurred and no condition
exists which would, upon or after the execution and delivery of this Agreement
or the performance by any Loan Party hereunder, constitute a Default or an Event
of Default. No Loan Party is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage of time or the
giving of notice or both would constitute, a default in the payment of any
Indebtedness to any Person for Money Borrowed the amount of which, together with
the amount of any other such Indebtedness for Money Borrowed with respect to
which there has been a default in payment, exceeds USD $1,000,000. EACH OF XXXXX
XXXXX, IN HIS INDIVIDUAL CAPACITY, AND BORROWER, HEREBY SEVERALLY REPRESENT,
WARRANT AND COVENANT TO AGENT AND GUARANTORS THAT BORROWER IS NOT IN DEFAULT,
AND NO EVENT HAS OCCURRED AND NO CONDITION EXISTS WHICH CONSTITUTES, OR WHICH
WITH THE PASSAGE OF TIME OR THE GIVING OF NOTICE OR BOTH WOULD CONSTITUTE, A
DEFAULT UNDER ANY EQUIPMENT LEASE, INSTRUMENT OR ANY OTHER AGREEMENT BETWEEN
BORROWER AND HP OR TO WHICH BORROWER AND HP ARE PARTIES.
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7.1.23 Leases. EACH OF XXXXX XXXXX, IN HIS INDIVIDUAL
CAPACITY, AND BORROWER, HEREBY SEVERALLY REPRESENT, WARRANT AND COVENANT TO
AGENT AND GUARANTORS THAT (I) EXHIBIT K IS A COMPLETE LISTING OF ALL CAPITALIZED
LEASES OF BORROWER AND ITS SUBSIDIARIES, (II) EXHIBIT L SETS FORTH A COMPLETE
LISTING OF ALL OPERATING LEASES OF BORROWER AND ITS SUBSIDIARIES, AND (III) THAT
BORROWER AND ITS SUBSIDIARIES ARE IN FULL COMPLIANCE WITH ALL OF THE TERMS OF
EACH OF THEIR RESPECTIVE CAPITALIZED AND OPERATING LEASES. Borrower shall have
provided to Guarantors copies of all real property leases between the Borrower
or any subsidiary and any third party landlords prior to the Closing Date.
7.1.24 Pension Plans. Except as disclosed on Exhibit M, no
Loan Party has any Plan. Each Loan Party is in full compliance with the
requirements of ERISA and the regulations promulgated thereunder with respect to
each Plan. No fact or situation that could reasonably be expected to have a
Material Adverse Effect on any Loan Party exists in connection with any Plan. No
Loan Party has any withdrawal liability in connection with a Multiemployer Plan.
7.1.25 Trade Relations. There exists no actual or, to the
best knowledge of Borrower, threatened termination, cancellation or limitation
of, or any modification or change in, the business relationship between Borrower
or its Subsidiaries and any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of Borrower or its
Subsidiaries, or with any material supplier, and there exists no condition or
state of facts or circumstances which could reasonably be expected to have a
Material Adverse Effect or prevent any Loan Party from conducting such business
after the consummation of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been conducted by such
Loan Party.
7.1.26 Labor Relations. Except as described on Exhibit N, no
Loan Party is a party to any collective bargaining agreement. There are no
material grievances, disputes or controversies with any union or any other
organization of employees of Borrower or its Subsidiaries, or threats of
strikes, work stoppages or any asserted pending demands for collective
bargaining by any union or organization.
7.1.27 Absence of Certain Business Practices. No Loan Party,
no Loan Party's personnel, any officer, director, employee or agent of any Loan
Party, nor any other person or entity acting on behalf of any Loan Party, acting
alone or together, has (i) received, directly or indirectly, any rebates,
payments, commissions, promotional allowances or any other economic benefits,
regardless of their nature or type, from any customer, governmental employee or
other person or entity with whom or which any Loan Party has done business
directly or indirectly; or (ii) directly or indirectly, given or agreed to give
any gift or similar benefit to any customer, governmental employee or other
person or entity who is or may be in a position to help or hinder the business
of any Loan Party (or assist any Loan Party in connection with any actual or
proposed transaction) which, in the case of either clause (i) or clause (ii)
above, would reasonably be expected to subject such Loan Party to any damage or
penalty in any civil, criminal or governmental litigation or proceeding.
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7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Guaranty
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for (i)
such representations and warranties that by their nature are limited only to a
specific date in time and (ii) changes in the nature of the business or
operations of, or the addition of, any Loan Party that would render the
information in any Exhibit or Schedule either inaccurate, incomplete or
misleading; provided that Agent has consented to such changes or such changes
are expressly permitted by this Agreement.
7.3 Survival of Representations and Warranties. Except for such
representations and warranties that by their nature are limited only to a
specific date in time, all representations and warranties of each Loan Party
contained in this Agreement or any of the other Guaranty Documents shall survive
the execution, delivery and acceptance thereof by Agent and the parties thereto
and the closing of the transactions described therein or related thereto.
SECTION 8.
COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. Borrower covenants and agrees that it
will punctually pay all amounts payable with respect to the Obligations in
accordance with the terms of this Agreement and the other Guaranty Documents,
until all the Obligations have been paid or performed in full. Borrower
covenants that, unless otherwise consented to by Agent and Required Guarantors
in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of
Agent or any Guarantor, from time to time, as often as may be reasonably
requested, but only during normal business hours, to (i) visit and inspect the
Properties of Borrower and each of its Subsidiaries, and (ii) inspect, audit and
make extracts from its books and records, and discuss with its officers, its
employees, any Loan Party's business, assets, liabilities, financial condition,
business prospects and results of operations.
8.1.2 Notices. Notify Agent in writing (i) of the
occurrence of any event or the existence of any fact which renders any
representation or warranty in this Agreement or any of the other Guaranty
Documents inaccurate, incomplete or misleading, and (ii) promptly after Borrower
learning thereof, of the commencement of any litigation affecting any Loan Party
or any of their respective Properties, whether or not the claim is considered by
Borrower to be covered by insurance, and of the institution of any
administrative proceeding which if determined adversely to any Loan Party, would
have a Material Adverse Effect; (iii) at least thirty (30) days prior thereto,
of Borrower's opening of any new office or place of business or Borrower's
closing of any existing office or place of business if the value of any
Collateral to be located or located at such office or place of business exceeds
USD $1,000,000; (iv) promptly after Borrower's learning thereof, of any labor
dispute to which Borrower or any of its Subsidiaries may become a party, any
strikes or walkouts relating to any of their respective plants or other
facilities, and the expiration of any labor contract to which any of them is a
party or by which any of them is bound; (v) promptly after Borrower's learning
thereof, of any material default by any Loan Party
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under any note, indenture, loan agreement, mortgage, lease, deed, guaranty or
other similar agreement relating to any Indebtedness exceeding USD $1,000,000;
(vi) promptly after the occurrence thereof, of any Default or Event of Default;
(vii) promptly after the occurrence thereof, of any default by any obligor under
any note or other evidence of Indebtedness payable to any Borrower or its
Subsidiaries exceeding USD $500,000; and (viii) promptly after the rendition
thereof, of any judgment rendered against any Loan Party in an amount exceeding
USD $1,000,000.
8.1.3 Continued Compliance with Exchange Act Requirements.
(a) file with the Securities and Exchange
Commission, in a timely manner, all reports and other documents required of the
Borrower under the Exchange Act;
(b) maintain true books and records of account
in which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied;
(c) As soon as practicable after the end of each
fiscal year of the Borrower, and in any event within ninety (90) days
thereafter, the Borrower will furnish to Agent a consolidated balance sheet of
the Borrower, as at the end of such fiscal year, and a consolidated statement of
operations and a consolidated statement of cash flows of the Borrower, for such
year, all prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail. Such financial
statements shall be accompanied by a report and opinion thereon by independent
public accountants of national standing selected by the Borrower's Board of
Directors;
(d) furnish to Agent, as soon as practicable
after the end of each month, and in any event within thirty (30) days
thereafter, a consolidated balance sheet of the Borrower as of the end of each
such period, and a consolidated statement of operations and a consolidated
statement of cash flows of the Borrower for such period and for the current
fiscal year to date, prepared in accordance with generally accepted accounting
principles, with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made;
(e) furnish to Agent, promptly after the sending
or filing thereof, as the case may be, copies of any proxy statements, financial
statements or reports which Borrower has made available to its shareholders and
copies of any regular, periodic and special reports or registration statements
which Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any national
securities exchange;
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(f) furnish to Agent, promptly after the filing
thereof, copies of any annual report to be filed with ERISA in connection with
each Plan; and
(g) such other data and information (financial
and otherwise) as Agent or Required Guarantors, from time to time, may
reasonably request, bearing upon or related to the Collateral or financial
condition or results of operations of any Loan Party.
8.1.4 Board Representation. During such times as the
Guaranty remains in place securing the Term Loan, the Guarantors shall have the
right to nominate one (1) member of the Borrower's board of directors and
Borrower shall cause such nominee to be elected to its board of directors. Such
director shall remain as a member of Borrower's board of directors for as long
as the Guaranty remains outstanding.
8.1.5 Non-Competition Agreement of Xxxxx Xxxxx. Borrower
shall cause Xxxxx Xxxxx, Borrower's CEO, to execute a non-competition
substantially in the form of Exhibit O attached hereto, whereby Xxxxx covenants
that he will not compete with Borrower during such time as the Term Loan remains
outstanding.
8.1.6 Taxes. Pay and discharge, and cause each Subsidiary
to pay and discharge, all Taxes prior to the date on which such Taxes become
delinquent or penalties attach thereto, except and only to the extent that such
Taxes are being Properly Contested.
8.1.7 Compliance with Laws. Comply and cause each
Subsidiary to comply, with all Applicable Laws, including all laws, statutes,
regulations and ordinances regarding the collection, payment and deposit of all
Taxes, all ERISA and Environmental Laws, and all state and federal securities
laws, and obtain and keep in force any and all licenses, permits, franchises, or
other governmental authorizations necessary to the ownership of its Properties
or to the conduct of its business, which violation or failure to obtain could
reasonably be expected to have a Material Adverse Effect.
8.1.8 Certain Other Insurance. In addition to the insurance
required herein with respect to the Collateral, each Loan Party shall maintain,
with financially sound and reputable insurers, insurance with respect to its
Properties and business against such casualties and contingencies of such type
(including product liability, business interruption, larceny, embezzlement, or
other criminal misappropriation insurance) as is customary in its business and
in such amounts as is acceptable to Agent.
8.1.9 Lock-Up Agreement of Xxxxx Xxxxx. Borrower shall
cause Xxxxx Xxxxx, Borrower's CEO, to execute a lock-up agreement substantially
in the form of Exhibit P, whereby Xxxxx covenants that he will not sell, pledge,
encumber or otherwise transfer any securities of Borrower that he may now own
(whether directly or indirectly) or acquire in the future during such time as
the Term Loan remains outstanding.
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8.1.10 Performance of Obligations under the Term Loan
Documents. Borrower shall make all payments and perform all other obligations
under the Term Loan Documents in accordance with the provisions of subsection
3.2.1 above.
8.1.11 Warrants. Borrower shall issue to Guarantors
five-year warrants to purchase up to ten percent (10%) (on a fully-diluted
basis) of Borrower's Common Stock Equivalents at a strike price of $0.93 per
share (the "Warrants".) In the event the Term Loan is repaid in full within six
(6) months of the Closing Date, Guarantors agree to surrender to Borrower, for
cancellation, Warrants to purchase up to five percent (5%) of Borrower's Common
Stock Equivalents.
"Common Stock Equivalents" means all issued and outstanding shares of
the Borrower's common stock as of the Closing Date, and any Securities
convertible into or exercisable or exchangeable for the Borrower's
common stock or evidencing any right to purchase or subscribe for
shares of the Borrower's common stock existing as of the Closing Date;
provided, however, that the term "Common Stock Equivalents" shall not
include any options or warrants exercisable into shares of the
Borrower's common stock at a per share exercise price greater than USD
$30.00.
8.1.12 [Intentionally omitted]
8.1.13 S-3 Registration Statement. Within thirty (30) days
after the Closing, Borrower shall file a registration statement on Form S-3 (or
successor form) registering the issuance of the shares of common stock
underlying the Warrants issued to Guarantors in connection with the Guaranty
(the "Registration Statement"). Borrower shall keep such Registration Statement
effective as provided in the Registration Rights Agreement between Borrower and
the Guarantors subsequently in the form attached hereto as Exhibit Q.
8.1.14 Additional Nasdaq Listing. Borrower shall take all
necessary steps including the filing of an additional listing application prior
to the effectiveness of the Registration Statement, to qualify for trading and
listing on Nasdaq all shares of Borrower's common stock underlying the Warrants.
8.1.15 Key-man Insurance. Within sixty (60) days of the
Closing Date, Borrower shall put in place and pay the premiums for a USD
$5,000,000 "key-man" life insurance policy on the life of Xxxxx X. Xxxxx naming
Guarantors as the beneficiary. Such policy shall be kept effective by Borrower
during the entire time the Guaranty is in place.
8.1.16 Further Assurances. Shall cause each Loan Party to,
from time to time, execute such guaranties, financing statements, documents,
mortgages, security agreements and reports as Agent at any time may reasonably
request to evidence, perfect or otherwise implement the guaranties and security
for repayment of the Obligations contemplated by the Guaranty Documents. At
Agent's request, Borrower shall cause any Subsidiaries of Borrower promptly to
guaranty the Obligations and to grant to Agent, for the benefit of Agent and
Guarantors, a
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security interest in the real, personal and mixed Property of such Subsidiary to
secure the Obligations.
8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations or other obligations to
Agent, Lender and Guarantors, Borrower covenants that, unless Required
Guarantors have first consented thereto in writing, Borrower will not:
8.2.1 Mergers, Consolidations, Acquisitions. Merge or
consolidate, or permit any Subsidiaries to merge or consolidate, with any
Person; nor acquire, nor permit any of its Subsidiaries to acquire, all or any
substantial part of the Properties of any Person unless such merger or
acquisition shall first have been consented to in writing by Agent and each
Guarantors, which such consent shall not be unreasonably withheld. Provided,
however, that the foregoing restriction shall not apply, for so long as no
Default or Event of Default exists, to any acquisition by Borrower (i) that does
not require the payment by Borrower and any Subsidiary of Total Consideration in
excess of USD $1,000,000 (a "Proposed Acquisition"), and (ii) that, after giving
effect to such Proposed Acquisition, will not cause the Total Consideration paid
by Borrower and any Subsidiary of Borrower for all Proposed Acquisitions during
the Term to exceed USD $3,000,000, and (iii) the reasonably specific terms of
which (including, without limitation, all material financial information and
analysis relating to the target of such Proposed Acquisition in possession of
Borrower, the "Acquisition Terms") have been communicated to Agent in writing
not less than ten (10) days prior to the contemplated date of consummation of
such Proposed Acquisition, and (iv) in respect of which, following delivery to
Agent of the Acquisition Terms, each Guarantor shall have been permitted an
adequate opportunity to communicate to Borrower's President such Guarantor's
opinion of the Proposed Acquisition.
"Total Consideration" means the total consideration paid with respect
to any Proposed Acquisition, including without limitation (x) all payments made
in cash and Property, (y) the amount paid or to be paid pursuant to non-compete
agreements and consulting agreements, and (z) the amount of debt assumed (and in
the case of a stock acquisition, the amount of debt of the Person to be
acquired).
8.2.2 [Intentionally omitted]
8.2.3 Total Indebtedness. Create, incur, assume, or suffer
to exist, or permit any of their Subsidiaries to create, incur or suffer to
exist, any Indebtedness, except:
(a) Obligations owing to Agent, Guarantors and
Lender;
(b) Accounts payable to trade creditors and
current operating expenses (other than for Money Borrowed) which are not aged
more than sixty (600) days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless the same
are being Properly Contested;
(c) Obligations to pay Rentals permitted by
Section 8.2.16;
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(d) Permitted Purchase Money Indebtedness;
(e) Contingent liabilities arising out of
endorsements of checks and other negotiable instruments for deposit or
collection in the ordinary course of business;
(f) Capitalized Lease Obligations to the extent
the underlying Capital Lease is permitted by the terms of Section 0; and
(g) Indebtedness in respect to deferred Taxes.
8.2.4 Affiliate Transactions. Enter into, or be a party to,
or permit any of its Subsidiaries to enter into or be a party to, any
transaction with any Affiliate or stockholder except in the ordinary course of
and pursuant to the reasonable requirements of Borrower's or such Subsidiary's
business and upon fair and reasonable terms which are fully disclosed to Agent
and are no less favorable than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate or stockholder of Borrower or such
Subsidiary.
8.2.5 Limitation on Liens. Create or suffer to exist, or
permit any of its Subsidiaries to create or suffer to
exist, any Lien upon any of its Property, income or profits, whether now owned
or hereafter acquired, except the following ("Permitted Liens"):
(a) Liens at any time granted in favor of Agent
for the ratable benefit of Guarantors;
(b) Liens for Taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due, or being Properly
Contested;
(c) Liens arising in the ordinary course of its
business by operation of law or regulation, but only if payment in respect of
any such Lien is not at the time required or (b) such Lien does not materially
detract from the value of the Property or materially impair the use thereof in
the operation of its business;
(d) such other Liens as appear on Exhibit R
hereto; and
(e) such other Liens as Agent or Required
Guarantors may hereafter approve in writing.
8.2.6 [Intentionally Omitted].
8.2.7 [Intentionally Omitted].
8.2.8 Distributions. Declare or make, or permit any of its
Subsidiaries to declare or make, any Distributions, except (i) Distributions
from any Subsidiary of Borrower to Borrower.
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8.2.9 Capital Expenditures. Make Capital Expenditures
(including, by way of Capitalized Lease Obligations) which, in the aggregate, as
to Borrower and its Subsidiaries, exceed, in the aggregate, USD $1,000,000
during the Term.
8.2.10 Disposition of Data Center Business. Sell, lease or
otherwise dispose of all or any portion of the assets used in the operation of
Borrower's data center business (the "Data Center Business") without the prior
approval in writing of Requisite Guarantors, which approval shall not be
unreasonably withheld.
8.2.11 [Intentionally Omitted]
8.2.12 [Intentionally Omitted]
8.2.13 [Intentionally Omitted]
8.2.14 Tax Consolidation. File or consent to the filing of
any consolidated income tax return with any Person other than its Subsidiaries.
8.2.15 Leases. Become, or permit any of its Subsidiaries to
become, a lessee under any operating lease (other than a lease under which
Borrower or any of its Subsidiaries is lessor) of Property if the aggregate
Rentals payable during any current or future period of 12 consecutive months
under the lease in question and all other leases under which Borrower or any of
its Subsidiaries is then lessee would exceed USD $1,000,000.
8.2.16 [Intentionally Omitted].
8.3 [Intentionally Omitted].
SECTION 9.
CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Guaranty Documents, and without affecting in any manner the rights of
Agent and Guarantors under the other sections of this Agreement, Guarantors
shall not be required to provide any Guaranty under this Agreement unless and
until each of the following conditions has been and continues to be satisfied:
9.1 Documentation. Agent and Guarantors shall have received, in
form and substance satisfactory to Agent and Guarantors and their counsel, a
duly executed copy of this Agreement and the other Guaranty Documents, together
with such additional documents, instruments and certificates as Agent and
Guarantors and their counsel shall require in connection therewith, including
all documents, instruments, agreements and schedules listed in the Schedule of
Documents attached hereto and incorporated herein as Exhibit U, all in form and
substance satisfactory to Agent and Guarantors and their counsel.
9.2 No Default. No Default or Event of Default shall exist.
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9.3 Other Guaranty Documents. Each of the conditions precedent set
forth in the other Guaranty Documents and the Agreement between Lender and
Borrower covering the Term Loan shall have been satisfied.
9.4 Hewlett-Packard Loan. Borrower shall have entered into a
definitive agreement, acceptable to the Guarantors, with HPCC covering the terms
and conditions whereby Borrower shall retire and extinguish all indebtedness and
commitments owed by Borrower and any Subsidiary to HPCC or its Affiliates within
five (5) days after the Closing Date. Such agreement shall be attached hereto as
Exhibit S.
9.5 No Litigation. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit, or to obtain damages in respect of, or which is related to or arises
out of this Agreement or the consummation of the transactions contemplated
hereby.
9.6 Opinion of Borrower's Counsel. At the Closing, counsel to the
Borrower shall have delivered to the Agent and Guarantors its opinion, dated as
of the Closing Date substantially in the form attached hereto as Exhibit T.
9.7 [Intentionally Omitted].
9.8 [Intentionally Omitted].
9.9 Financial Statements. Agent and Guarantors shall have received
the financial statements described in Section 7.1.11 and the results thereof
shall be acceptable to Agent and Guarantors in their sole discretion.
SECTION 10.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the
following events shall constitute an "Event of Default":
10.1.1 Payment of Obligations. Borrower shall fail to pay
when due any obligation to Lender pursuant to the terms of any Term Loan
Document, or shall fail to pay or perform any of the Obligations on the due date
thereof (in either case, whether due at stated maturity, on demand, upon
acceleration or otherwise).
10.1.2 Demands Upon Guarantors. Lender, or any agent or
representative of Lender, shall either (i) make any drawing (whether partial or
full) against any Bank Guaranty, or (ii) make any demand for monies or property
upon Agent, any Guarantor, or any bank issuing a Bank Guaranty of any obligation
of Borrower under the Term Loan or any document relating thereto.
10.1.3 Misrepresentations. Any representation, warranty or
other statement made or furnished to Agent or Guarantors by or on behalf of any
Loan Party in this Agreement,
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any of the other Guaranty Documents or any instrument, certificate or financial
statement furnished in compliance with or in reference thereto proves to have
been false or misleading in any material respect when made or furnished or when
reaffirmed pursuant to Section 7.2.
10.1.4 Breach of Specific Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in subsections 3.2.1
or 3.2.2 or 3.3 on the date that Borrower is required to perform, keep or
observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail or
neglect to perform, keep or observe any covenant contained in this Agreement
(other than a covenant which is dealt with specifically elsewhere in Section
10.1.4 or 10.1.6 hereof) and the breach of such other covenant is not cured to
Required Guarantor's satisfaction within thirty (30) days after the sooner to
occur of Borrower's receipt of notice of such breach from Agent or Guarantors or
the date on which such failure or neglect first becomes known to any officer of
Borrower.
10.1.6 Default Under Security Documents/Other Agreements.
Any event of default shall occur under, or any Loan Party or Subsidiary of
Borrower shall default in the performance or observance of any term, covenant,
condition or agreement contained in, any of the Security Documents or the Other
Agreements and such default shall continue beyond any applicable grace period.
10.1.7 Other Defaults. There shall occur any default or
event of default on the part of any Loan Party under any other agreement,
document or instrument to which any Loan Party is a party or by which any Loan
Party or any Property of any Loan Party is bound, creating or relating to any
other Indebtedness (other than the Obligations) if, with respect to this Section
10.1.7, the payment or maturity of such Indebtedness is accelerated in
consequence of such event of default or demand for payment of such Indebtedness
is made.
10.1.8 Uninsured Losses. Any loss, theft, damage or
destruction of any of the Collateral with a value of USD $250,000 or more not
fully covered (subject to such deductibles as Agent shall have permitted) by
insurance.
10.1.9 Adverse Changes. There shall occur any material
adverse change in the financial condition or business prospects of Borrower
which shall, after notice from Agent, continue without being mitigated or
reversed within a period of thirty (30) days.
10.1.10 Insolvency and Related Proceedings. Any Loan Party
shall cease to be Solvent or shall suffer the appointment of a receiver,
trustee, custodian or similar fiduciary, or shall make an assignment for the
benefit of creditors, or any petition for an order for relief shall be filed by
or against any Loan Party under the Bankruptcy Code (and if, with respect to any
petition filed against any Loan Party, such proceeding shall continue for more
than thirty (30) days), or any Loan Party shall make any offer of settlement,
extension or composition to its unsecured creditors generally.
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10.1.11 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of any Loan Party for a period
which significantly affects the capacity of such Loan Party to continue its
business, on a profitable basis; or any Loan Party shall suffer the loss or
revocation of any license or permit now held or hereafter acquired by which is
necessary to the continued or lawful operation of such Loan Party's business; or
any Loan Party shall be enjoined, restrained or in any way prevented by court,
governmental or administrative order from conducting all or any material part of
its business affairs; or any material lease or agreement pursuant to which such
Loan Party's leases, uses or occupies any Property shall be canceled or
terminated prior to the expiration of its stated term and such cancellation or
termination materially and adversely affects such Loan Party's capacity to
continue business, on a profitable basis; or any part of the Collateral shall be
taken through condemnation or the value of such Property shall be impaired
through condemnation, and such condemnation or impairment of value could
reasonably be expected to have a Material Adverse Effect.
10.1.12 ERISA. A Reportable Event shall occur which Agent, in
its sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension Benefit Guaranty Corporation of any Plan or for the
appointment by the appropriate United States district court of a trustee for any
Plan, or if any Plan shall be terminated or any such trustee shall be requested
or appointed, or if any Loan Party is in "default" (as defined in Section
4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting
from such Loan Party's complete or partial withdrawal from such Plan, and such
event could reasonably be expected to have a Material Adverse Effect.
10.1.13 Judgments. Any (i) one or more money judgments, is
entered against any Loan Party or any Property of any Loan Party which exceeds,
in the aggregate, USD $250,000, and such judgment or judgments shall remain
unpaid, unsatisfied by insurance, and unstayed for more than thirty (30) days,
whether or not consecutive, or (ii) writ of attachment or similar process is
filed against any Loan Party, or any Property of any Loan Party, and such writ
of attachment or similar process is not bonded or secured in an amount and
manner reasonably satisfactory to Agent.
10.2 Acceleration of the Obligations. Without in any way limiting
the right of Agent to demand payment of any portion of the Obligations payable
on demand, upon the occurrence of an Event of Default and during the continuance
thereof, Agent may, and at request of the Required Guarantors, shall with
notice, declare all Obligations to be forthwith due and payable, whereupon all
Obligations shall become and be due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrower; provided, however, that upon the occurrence of an Event of Default
specified in Section 10.1.10 hereof, the Obligations shall become due and
payable without declaration, notice or demand by Agent. In addition to the right
afforded to Agent and Guarantors in the immediately preceding sentence, and
without in any way limiting any other right of Agent or any Guarantor, upon the
occurrence of an Event of Default and during the continuance thereof, Agent may,
and at request of the Required Guarantors, shall demand Borrower's provision of
Cash Collateral in an amount equal to one hundred five percent (105%) of the
aggregate maximum sum all outstanding Bank Guaranties.
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Agent shall take such action with respect to any Default or Event of
Default as shall be directed by the Required Guarantors; provided that, unless
and 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 and in the best
interests of Agent and Guarantors taken as a whole, including any action (or the
failure to act) pursuant to the Guaranty Documents.
10.3 Other Remedies. After the occurrence, and during the
continuation, of an Event of Default, Agent and/or Guarantors shall have and may
exercise from time to time the following rights and remedies:
10.3.1 All of the rights and remedies of a secured party
under the Code or under other applicable law, and all other legal and equitable
rights to which Agent or Guarantors may be entitled, all of which rights and
remedies shall be cumulative and shall be in addition to any other rights or
remedies contained in this Agreement or any of the other Guaranty Documents, and
none of which shall be exclusive.
10.3.2 The right to take immediate possession of the
Collateral, and to (i) require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Agent at a place designated by
Agent which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
Borrower, Borrower agrees not to charge Agent for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Agent, in
its sole discretion, may deem advisable. Borrower agrees that ten (10) days
written notice of any public or private sale or other disposition of Collateral
shall be reasonable notice thereof, and such sale shall be at such locations as
Agent may designate in said notice. Agent shall have the right to conduct such
sales on Borrower's premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with applicable law. Agent shall have
the right to sell, lease or otherwise dispose of the Collateral, or any part
thereof, for cash, credit or any combination thereof, and Agent may purchase all
or any part of the Collateral at public or, if permitted by law, private sale
and, in lieu of actual payment of such purchase price, may set off the amount of
such price against the Obligations. The proceeds realized from the sale of any
Collateral may be applied, after allowing two (2) Business Days for collection,
first to the costs, expenses and attorneys' fees incurred by Agent or any
Guarantor in collecting the Obligations, in enforcing the rights of Agent and
Guarantors under the Guaranty Documents and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and delivering any
Collateral; second to the interest due upon any of the Obligations; third, to
the principal of the Obligations; and fourth, to any remaining Obligations. If
any deficiency shall arise, Borrower and each Loan Party shall remain liable to
Agent and Guarantors therefor.
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10.3.4 Agent is hereby granted a license or other right to
use, without charge, all labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any Property
of a similar nature of any Loan Party, as it pertains to the Collateral, in
advertising for sale and selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to Agent's benefit.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Guaranty Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or contained in any other agreement between Agent and/or
Guarantors and Borrower, heretofore, concurrently, or hereafter entered into,
shall be deemed cumulative to and not in derogation or substitution of any of
the terms, covenants, conditions, or agreements of Borrower herein contained.
The failure or delay of Agent or Guarantors to require strict performance by
Borrower of any provision of this Agreement or to exercise or enforce any
rights, Liens, powers, or remedies hereunder or under any of the aforesaid
agreements or other documents or security or Collateral shall not operate as a
waiver of such performance, Liens, rights, powers and remedies, but all such
requirements, Liens, rights, powers, and remedies shall continue in full force
and effect until all Obligations, any other obligations owing or to become owing
from Borrower to Agent and/or Guarantors, and any obligations of Borrower to
Lender, shall have been fully satisfied. None of the undertakings, agreements,
warranties, covenants and representations of Borrower contained in this
Agreement or any of the other Guaranty Documents and no Event of Default by
Borrower under this Agreement or any other Guaranty Documents shall be deemed to
have been suspended or waived by Agent or Guarantors unless such suspension or
waiver is by an instrument in writing specifying such suspension or waiver and
is signed by duly authorized representatives of Agent and Required Guarantors
and directed to Borrower.
SECTION 11.
THE AGENT
11.1 Authorization and Action. Each Guarantor hereby appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement, and the other Guaranty Documents as are delegated to Agent
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement and the other Guaranty Documents (including, without limitation, any
enforcement or collection of the Term Note or any other obligation of Borrower
that may exist in favor of any Guarantor due to assignment, subrogation or
otherwise), Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Guarantors, and such instructions shall be binding upon all
Guarantors; provided, however, that Agent shall not be required to take any
action which exposes Agent to personal liability or which is contrary to this
Agreement or the other Guaranty Documents or applicable law. Agent agrees to
give each Guarantor promptly a copy of each notice given to it by Borrower
pursuant to the terms of this Agreement and the other Guaranty Documents.
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11.2 Agent's Reliance, Etc. Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or them under or in connection with this Agreement or the other
Guaranty Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, Agent: (i)
may treat the grantor of any Guaranty as the provider thereof until Agent
receives written notice of the assignment or transfer thereof signed by such
Guarantor and in form satisfactory to Agent; (ii) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representations to any Guarantor and shall not be
responsible to any Guarantor for any statements, warranties or representations
made in or in connection with this Agreement or the other Guaranty Documents;
(iv) shall not have any duty beyond Agent's customary practices to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Guaranty Documents on the part of
Borrower or to inspect the property (including the books and records) of
Borrower; (v) shall not be responsible to any Guarantor for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Guaranty Documents or any other instrument or document
furnished pursuant hereto or thereto; and (vi) shall incur no liability under or
in respect of this Agreement or the other Guaranty Documents by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed in good faith by it to be genuine
and signed or sent by the proper party or parties.
11.3 AGENT AND AFFILIATES. TO THE EXTENT THAT ANY AGENT HEREUNDER
(INCLUDING ANY SUCCESSOR THERETO PURSUANT TO THE PROVISIONS OF THIS SECTION 11)
SHALL HAVE ANY COMMITMENT HEREUNDER TO MAKE OR MAINTAIN THE GUARANTY, SUCH
PERSON SHALL HAVE THE SAME RIGHTS AND POWERS UNDER THIS AGREEMENT AND THE OTHER
GUARANTY DOCUMENTS AS ANY OTHER GUARANTOR AND MAY EXERCISE THE SAME AS THOUGH HE
WERE NOT AGENT; AND THE TERM "GUARANTOR" OR "GUARANTORS" SHALL INCLUDE SUCH
PERSON IN HIS OR ITS INDIVIDUAL CAPACITY UNLESS OTHERWISE EXPRESSLY INDICATED.
ANY SUCH PERSON AND HIS OR ITS AFFILIATES MAY LEND MONEY TO, AND GENERALLY
ENGAGE IN ANY KIND OF BUSINESS WITH, BORROWER OR ANY OF ITS SUBSIDIARIES AND ANY
PERSON WHO MAY DO BUSINESS WITH OR OWN SECURITIES OF BORROWER OR ANY SUCH
SUBSIDIARY, ALL AS IF SUCH PERSON WERE NOT AGENT AND WITHOUT ANY DUTY TO ACCOUNT
THEREFOR TO GUARANTORS.
11.4 Guarantor Credit Decision. Each Guarantor acknowledges that it
has, independently and without reliance upon Agent or any other Guarantor and
based on the financial statements referred to in Section 7.1.11 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Guarantor also
acknowledges that it will, independently and without reliance upon Agent or any
other Guarantor and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
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11.5 Indemnification. Guarantors agree to indemnify Agent (to the
extent not reimbursed by Borrower), ratably according to the respective
principal amounts of the Guarantees then provided by each of them, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any other
Guaranty Documents or any action taken or omitted by Agent under this Agreement,
provided that no Guarantor shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Guarantor agrees to
reimburse Agent promptly upon demand for its ratable shares of any out-of-pocket
expenses (including counsel fees) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
and each other Guaranty Documents, to the extent that Agent is not reimbursed
for such expenses by Borrower.
11.6 Successor Agent. Agent may resign at any time by giving
written notice thereof to Guarantors and Borrower. Upon any such resignation,
the Required Guarantors shall have the right to appoint a successor Agent which
shall be reasonably acceptable to Borrower. If no successor Agent shall have
been so appointed by the Required Guarantors, and shall have accepted such
appointment, within thirty (30) days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Guarantors, appoint a
successor Agent, which shall be reasonably acceptable to Borrower. 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 under this Agreement
and the other Guaranty Documents. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 11 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement and the other Guaranty Documents.
SECTION 12.
MISCELLANEOUS
12.1 Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
agent, may, without notice to Borrower and in Borrower's or Agent's name, but at
the cost and expense of Borrower:
12.1.1 At such time or times upon or after the occurrence,
and during the continuation, of a Default or an Event of Default as Agent or
said agent, in its sole discretion, may determine, endorse Borrower's name on
any checks, notes, acceptances, drafts, money orders or any other evidence of
payment or proceeds of the Collateral which come into the possession of Agent or
under Agent's control.
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12.1.2 At such time or times after the occurrence, and during
the continuation, of an Event of Default as Agent or its agent in its sole
discretion may determine: (i) demand payment of the Accounts owing to Borrower
and any of its Subsidiaries from the Account Debtors, enforce payment of such
Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's and any of its Subsidiaries' rights and remedies with respect to the
collection of its Accounts; (ii) settle, adjust, compromise, discharge or
release any of the Accounts owing to Borrower or any of its Subsidiaries or
other Collateral or any legal proceedings brought to collect any of the Accounts
owing to Borrower or any of its Subsidiaries or other Collateral, (iii) sell or
assign any of the Accounts owing to Borrower or any of its Subsidiaries and
other Collateral upon such terms, for such amounts and at such time or times as
Agent deems advisable, (iv) take control, in any manner, of any item of payment
or proceeds relating to any Collateral; (v) prepare, file and sign Borrower's
name to a proof of claim in bankruptcy or similar document against any Account
Debtor of any Accounts owing to Borrower and any of its Subsidiaries or to any
notice of lien, assignment or satisfaction of lien or similar document in
connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower or any of its Subsidiaries and to notify postal
authorities to change the address for delivery thereof to such address as Agent
may designate; (vii) endorse the name of Borrower upon any of the items of
payment or proceeds relating to any Collateral and deposit the same to the
account of Agent on account of the Obligations; (viii) endorse the name of
Borrower upon any chattel paper, document, instrument, invoice, freight xxxx,
xxxx of lading or similar document or agreement relating to its Accounts,
Inventory and any other Collateral; (ix) use Borrower's stationery and sign the
name of Borrower to verifications of its Accounts and notices thereof to the
Account Debtors; thereon (x) use the information recorded on or contained in any
data processing equipment and computer hardware and software relating to the
Accounts, Inventory, Investment Property and Equipment of Borrower and any of
its Subsidiaries and any other Collateral; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in
Agent's determination, to fulfill Borrower's obligations under this Agreement.
In the event that an Event of Default, as Agent or its agent in its sole
discretion may determine, has occurred, Borrower shall immediately open a
"lock-box" account under the control of and for the benefit of the Guarantors at
a bank selected by the Guarantors and Borrower shall direct all of its Account
Debtors to make payments on the Accounts to the "lock-box" account. Agent shall
also be entitled to directly notify the Account Debtors to make their payments
to this "lock-box" account.
12.2 INDEMNITY. BORROWER HEREBY INDEMNIFIES, HOLDS HARMLESS AND
SHALL DEFEND AGENT AND EACH GUARANTOR AND EACH OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, AGENTS, COUNSEL AND EMPLOYEES ("INDEMNIFIED PERSONS") FROM AND AGAINST
ANY AND ALL LOSSES, LIABILITIES, DAMAGES, COSTS, EXPENSES, SUITS, ACTIONS AND
PROCEEDINGS ("LOSSES") EVER SUFFERED OR INCURRED BY ANY INDEMNIFIED PERSON
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION
CONTEMPLATED HEREBY, INCLUDING ANY LOSSES CAUSED BY THE NEGLIGENCE OF ANY SUCH
INDEMNIFIED PERSON, BUT NOT INCLUDING ANY LOSSES CAUSED BY THE GROSS NEGLIGENCE
OR
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WILLFUL MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON, BORROWER SHALL REIMBURSE
AGENT, EACH GUARANTOR AND EACH OTHER INDEMNIFIED PERSON FOR ANY EXPENSES
(INCLUDING IN CONNECTION WITH THE INVESTIGATION OF, PREPARATION FOR OR DEFENSE
OF ANY ACTUAL OR THREATENED CLAIM, ACTION OR PROCEEDING ARISING THEREFROM,
INCLUDING ANY SUCH COSTS OF RESPONDING TO DISCOVERY REQUESTS OR SUBPOENAS,
REGARDLESS OF WHETHER AGENT OR SUCH GUARANTOR OR SUCH OTHER INDEMNIFIED PERSON
IS A PARTY THERETO). WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THIS
INDEMNITY SHALL EXTEND TO ANY CLAIMS ASSERTED AGAINST AGENT OR ANY GUARANTOR OR
ANY OTHER INDEMNIFIED PERSON BY ANY PERSON UNDER ANY ENVIRONMENTAL LAWS OR
SIMILAR LAWS BY REASON OF BORROWER'S OR ANY OTHER PERSON'S FAILURE TO COMPLY
WITH LAWS APPLICABLE TO SOLID OR HAZARDOUS WASTE MATERIALS OR OTHER TOXIC
SUBSTANCES. BORROWER MAY SELECT COUNSEL WITH RESPECT TO ANY LOSSES; PROVIDED
HOWEVER, EACH INDEMNIFIED PERSON SHALL HAVE THE RIGHT TO MONITOR THE PROGRESS OF
ANY CLAIMS, SUITS AND ADMINISTRATIVE PROCEEDINGS DEFENDED BY BORROWER HEREUNDER
WITH COUNSEL OF SUCH INDEMNIFIED PERSON'S CHOICE, OR CONDUCT ITS DEFENSE THROUGH
COUNSEL OF SUCH INDEMNIFIED PERSON'S CHOICE, IN THE EVENT THAT (I) SUCH
INDEMNIFIED PERSON DETERMINES IN GOOD FAITH THAT THE CONDUCT OF ITS DEFENSE BY
BORROWER COULD BE MATERIALLY PREJUDICIAL TO SUCH INDEMNIFIED PERSON'S INTERESTS
OR THAT OTHER REASONABLE GROUNDS EXIST WHICH DEMONSTRATE A LACK OF EFFECTIVENESS
OR HIGH LEVEL OF QUALITY IN THE CONDUCT OF SUCH DEFENSE BY BORROWER, AND (II)
PRIOR TO RETAINING SUCH COUNSEL FOR SUCH PURPOSE, SUCH INDEMNIFIED PERSON SHALL
CONSULT WITH BORROWER AND SHALL ATTEMPT IN GOOD FAITH TO AGREE UPON COUNSEL TO
CONDUCT THE DEFENSE ON BEHALF OF BORROWER AND SUCH INDEMNIFIED PERSON, AND IN
EACH CASE THE FEES AND DISBURSEMENTS OF SUCH COUNSEL SHALL BE PAID BY BORROWER;
PROVIDED, HOWEVER, THAT IF SUCH MUTUAL AGREEMENT IS NOT REACHED WITHIN A
REASONABLE TIME ON SELECTING COUNSEL, THEN SUCH INDEMNIFIED PERSON MAY RETAIN
ITS OWN COUNSEL AT BORROWER'S EXPENSE. NOTWITHSTANDING ANY CONTRARY PROVISION OF
THIS AGREEMENT, THE OBLIGATION OF BORROWER UNDER THIS SECTION 12.2 SHALL SURVIVE
THE PAYMENT IN FULL OF THE OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
12.3 Modification of Agreement; Sale of Interest.
(a) The Guaranty Documents constitute the complete
agreement between the parties with respect to the subject matter hereof and may
not be modified, altered or amended except by an agreement in writing signed by
Borrower, Required Guarantors and, if required by
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the terms hereof, Agent. Borrower may not sell, assign or transfer any of the
Guaranty Documents, or any of the Obligations, or any portion thereof, including
without limitation, Borrower's rights, title, interests, remedies, powers and
duties hereunder or thereunder. Borrower hereby consents to Agent's and any
Guarantor's sale of participation, assignment, transfer or other disposition in
accordance with the terms hereof, at any time or times, of any of the Guaranty
Documents or of any portion thereof or interest therein, including, without
limitation, Agent's and any Guarantor's rights, title, interests, remedies,
powers or duties thereunder, whether evidenced in writing or not; Borrower
agrees that it will use its best efforts to assist and cooperate with Agent and
any Guarantor in any manner reasonably requested by Agent or such Guarantor to
effect the sale of participation in or assignment of any of the Guaranty
Documents or of any portion thereof or interest therein, including, without
limitation, assistance in the preparation of appropriate disclosure documents or
placement memoranda and executing appropriate amendments to the signature pages
hereto to reflect the addition of any Guarantors and such Guarantor's respective
commitments. The foregoing notwithstanding, except with respect to sales,
assignments or transfers to Affiliates under common control pursuant to which
the selling, assigning or transferring Guarantor retains its voting rights, no
Guarantor shall sell participation or assign, transfer or otherwise dispose of
any of the Guaranty Documents or any portion thereof or interest therein,
without the prior written consent of Agent, which shall not be unreasonably
withheld.
(b) In respect to any assignment by a Guarantor of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of the Guaranty provided by it (i) each such assignment shall be of
a uniform, and not a varying, percentage of all rights and obligations, (ii)
except in the case of an assignment of all of a Guarantor's rights and
obligations under this Agreement, (A) the aggregate amount of the Guaranty
Commitments of the assigning Guarantor being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than USD $100,000, and in
integral multiples of USD $100,000 thereafter, or such lesser amount as to which
Borrower and the Agent may consent to and (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance, an
Assignment and Acceptance in the form and substance satisfactory to the
assigning Guarantor and the Agent (an "Assignment and Acceptance"), together
with any Guaranty subject to such assignment and a processing and recordation
fee of $3,500. Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Guarantor hereunder and (y) the
Guarantor assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Guarantor's rights and obligations under this Agreement,
such Guarantor shall cease to be a party hereto).
(c) Any Guarantor may at any time sell to one or more
commercial banks, financial institutions, or other Persons not Affiliates of any
Loan Party (a "Participating
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Guarantor") participating interests in any Loans, the commitments of that
Guarantor and the other interests of that Guarantor (the "Originating
Guarantor") hereunder and under the other Guaranty Documents; provided, however,
that (i) the originating Guarantor's obligations under this Agreement shall
remain unchanged, (ii) the originating Guarantor shall remain solely responsible
for the performance of such obligations, and (iii) Borrower and the Agent shall
continue to deal solely and directly with the originating Guarantor in
connection with the originating Guarantor's rights and obligations under this
Agreement and the other Guaranty Documents. In the case of any participation,
the Participating Guarantor shall not have any rights under this Agreement or
any of the other Guaranty Documents entered into in connection herewith (the
Participating Guarantor's right against such Guarantor in respect of such
participation to be those set forth in the participation or other agreement
executed by such Guarantor and the Participating Guarantor relating thereto). In
no event shall any Participating Guarantor grant a participation in its
participation interest in the Guaranty without the prior written consent of
Agent, which approval shall not be unreasonably withheld. All amounts payable by
Borrower hereunder shall be determined as if the originating Guarantor had not
sold any such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participating
Guarantor shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Guarantor under this Agreement.
(d) [Intentionally Omitted].
(e) No amendment or waiver of any provision of this
Agreement or any other Guaranty Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Required Guarantors, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however: (a) that no amendment, waiver or consent
shall, unless in writing and signed by each Guarantor affected thereby do any of
the following: (i) subject any Guarantor to any additional obligations, (ii)
increase the Guaranty Commitment or Guaranty Percentage of any Guarantor, (iii)
postpone any date fixed for any payment of any amounts payable hereunder, (iv)
reduce the number of Guarantors which shall be required for the Guarantors or
any of them to take any action hereunder, (v) release or discharge any Person
liable for the performance of any obligations of Borrower hereunder or under any
of the Guaranty Documents, (vi) to the extent Agent's or Guarantors' consent is
required by the terms hereof, release all or substantially all of the Collateral
or (viii) amend this Section 12.3; (b) that no amendment, waiver or consent
shall be effective unless in writing and signed by either Required Guarantors or
all Guarantors, as required by the terms hereof and, if such amendment, waiver
or consent affects Agent or its rights hereunder, Agent.
12.4 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be
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ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
12.5 Successors and Assigns. This Agreement, the Other Agreements
and the Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower, Agent and Guarantors permitted under Section
12.3 hereof.
12.6 Cumulative Effect; Conflict of Terms. The provisions of the
Other Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in any of the other
Guaranty Documents by specific reference to the applicable provision of this
Agreement, if any provision contained in this Agreement is in direct conflict
with, or inconsistent with, any provision in any of the other Guaranty
Documents, the provision contained in this Agreement shall govern and control.
12.7 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute but
one and the same instrument. Facsimile signature pages to this Agreement shall
be fully binding and enforceable without requiring the manually executed
signature pages to this Agreement
12.8 Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto, to be effective, shall be in
writing and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given or delivered immediately when delivered against
receipt, three (3) Business Days after deposit in the mail, postage prepaid, or
one (1) Business Day after delivery to an overnight courier or, in the case of
facsimile notice, when sent, addressed as follows:
If to Agent: von Graffenried, von Burg, Kaufmann,
Xxxxxxxx Asset Management Ltd.,
Zurich, AG
Limmat Quai 94
X.X. Xxx 000
XX-0000 Xxxxxx, Xxxxxxxxxxx
Facsimile No.: 011-41-1-267-31-90
With a copy to: Gardere Xxxxx Xxxxxx L.L.P.
0000 Xxx Xxxxxx
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: I. Xxxxx Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
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If to Borrower: Aperian, Inc.
0000 X. Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxx,
Chairman and CEO
Facsimile No.: (000) 000-0000
With copies to: Xxxxx Xxxx, LLP
Xxx Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to any Guarantor, at its address indicated on the signature pages
hereof or in a notice to Borrower of assignment of a Guaranty Commitment.
Or to such other address as each party may designate for itself by
notice given in accordance with this Section 12.8; provided, however, that any
notice, request or demand to or upon Agent or Guarantors pursuant to Section
4.2.2 hereof shall not be effective until received by Agent or Guarantors.
12.9 Guarantor's Consent. Whenever Agent's, Required Guarantors' or
Guarantors' consent is required to be obtained under this Agreement, any of the
Other Agreements or any of the Security Documents as a condition to any action,
inaction, condition or event, unless otherwise specifically provided herein,
Agent, Required Guarantors or Guarantors, as applicable, shall be authorized to
give or withhold such consent in its sole and absolute discretion and to
condition its consent upon the giving of additional collateral security for the
Obligations, the payment of money or any other matter.
12.10 Credit Inquiries. Borrower hereby authorizes and permits Agent
to respond to usual and customary credit inquiries from third parties concerning
any Loan Party.
12.11 Time of Essence. Time is of the essence of this Agreement, the
Other Agreements and the Security Documents.
12.12 Entire Agreement, Appendix A, Exhibits and Schedules. This
Agreement and other Guaranty Documents, together with all other instruments,
agreements and certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and agreement between
the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and inducements,
whether express or implied, oral and written. Appendix A and each of the
Exhibits and Schedules attached hereto are incorporated into this Agreement and
by this reference made a part hereof.
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12.13 Interpretation. No provision of this Agreement or any of the
other Guaranty Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
12.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, DALLAS COUNTY, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS: PROVIDED, HOWEVER, THAT IF
ANY OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE AND
FORECLOSURE OF AGENT'S LIEN (FOR THE RATABLE BENEFIT OF GUARANTORS) UPON SUCH
COLLATERAL AND THE ENFORCEMENT OF AGENT'S AND GUARANTORS' OTHER REMEDIES IN
RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH JURISDICTION ARE
DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF TEXAS. AS PART OF THE
CONSIDERATION, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF BORROWER OR ANY LOAN PARTY, AGENT OR ANY GUARANTOR,
BORROWER AND EACH OTHER LOAN PARTY HEREBY CONSENTS AND AGREES THAT THE DISTRICT
COURT OF DALLAS COUNTY, TEXAS, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER
AND/OR ANY OTHER LOAN PARTY AND AGENT AND/OR GUARANTORS PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER
AND EACH OF THE OTHER LOAN PARTIES EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER AND EACH OTHER LOAN PARTY HEREBY WAIVES ANY OBJECTION WHICH BORROWER
AND SUCH LOAN PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL
OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER AND EACH
OTHER LOAN PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE
SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH LOAN PARTY'S ACTUAL
RECEIPT THEREOF OR THREE (3) BUSINESS DAYS AFTER DEPOSIT IN THE US MAILS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT
THE RIGHT OF AGENT OR GUARANTORS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT
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BY AGENT OR GUARANTORS OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER
APPROPRIATE FORUM OR JURISDICTION.
12.15 WAIVERS BY LOAN PARTIES. BORROWER AND EACH OTHER LOAN PARTY
WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH AGENT AND GUARANTORS HEREBY ALSO
WAIVE IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF
OR RELATED TO ANY OF THE GUARANTY DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL:
(ii) PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST,
DEFAULT, NON PAYMENT, MATURITY, RELEASE, COMPROMISE SETTLEMENT, EXTENSION OR
RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT'S AND
GUARANTORS ON WHICH BORROWER OR ANY OTHER LOAN PARTY MAY IN ANY WAY BE LIABLE
AND HEREBY RATIFY AND CONFIRM WHATEVER AGENT OR GUARANTORS MAY DO IN THIS
REGARD; (iii) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR
ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
AGENT OR GUARANTORS TO EXERCISE ANY OF AGENT'S OR ANY GUARANTORS' REMEDIES; (iv)
THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (v) NOTICE OF
ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A
MATERIAL INDUCEMENT TO AGENT OR ANY GUARANTOR ENTERING INTO THIS AGREEMENT AND
THAT AGENT AND GUARANTORS ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE
DEALINGS WITH BORROWER AND THE OTHER LOAN PARTIES. BORROWER AND EACH OTHER LOAN
PARTY WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
12.16 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER
GUARANTY DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE
SAME MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
12.17 Nonapplicability of Article 5069-15.01 et. seq. Borrower,
Agent and Guarantors hereby agree that, except for Section 346.004 of the Texas
Finance Code, the provisions of Chapter 346 of the Texas Finance Code and except
for Section 15.10(b) thereof, the provisions of Tex. Rev. Civ. Stat. Xxx. art.
5069-15.01 et seq. (Xxxxxx 1987) (each regulating certain
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revolving credit loans and revolving tri-party accounts) shall not apply to this
Agreement or any of the other Guaranty Documents.
12.18 Certain Matters of Construction. All references to statutes
and related regulations in this Agreement, the Other Agreements and the Security
Agreements shall include any amendments of same and any successor statutes and
regulations. All references in this Agreement, the Other Agreements and the
Security Agreements to any of the Guaranty Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.
12.19 Governing Language. The English version of this Agreement,
together with the exhibits and schedules attached hereto and made an integral
part hereof shall be the governing version in the event that this Agreement is
translated into any other language.
[Indemnification Addendum Follows]
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INDEMNIFICATION OF AGENT AND GUARANTORS BY XXXXX XXXXX
Notwithstanding any provision to the contrary set forth in the above
Guaranty Facility and Security Agreement (the "Agreement") capitalized terms in
this Indemnification Addendum shall have the meaning ascribed thereto in the
Agreement) or in any other Guaranty Document, Xxxxx Xxxxx, an individual
residing in Maricopa County, Arizona ("Xxxxx"), hereby covenants to and agrees
with Agent and each Guarantor that he shall defend each of them, and each of
their respective representatives, harmless from, against, and in respect of any
and all claims, demands, lawsuits, proceedings, losses, assessments, fines,
penalties, administrative orders, obligations, costs, expenses, liabilities, and
damages, including, without limitation, interest, penalties, and reasonable
attorneys' fees and costs of investigation (all of the foregoing are hereinafter
collectively referred to as "Claims"), which arise or result from or relate to:
(a) the untruth, breach, or failure of any representation or warranty,
whether oral or written, made by Xxxxx to Agent or any Guarantor
regarding any lien of record (including, without limitation, any
liens filed of record in Delaware) against Borrower or any
Subsidiary of Borrower, or the status thereof;
(b) the untruth, breach, or failure of any representation, warranty
or covenant made by Xxxxx in his individual capacity that is set
forth in the Agreement;
(c) the Permitted Liens, as defined in the Agreement from time to
time; and
(d) any lien against Borrower or any Subsidiary of Borrower in favor of
Hewlett-Packard Credit Corporation or Hewlett-Packard Company.
Indemnification Procedures. With respect to each Claim, Agent shall notify
Xxxxx in writing pursuant to the notice instructions set forth for Borrower in
Section 12.8 of the Agreement (or to such other notice address as Xxxxx shall
direct in writing to Agent pursuant to the provisions of Section 12.8) any Claim
that is claimed to be the basis for indemnification pursuant to the immediately
preceding paragraph. Upon receipt of any such notice of Claim, Xxxxx shall, in
good faith and at his own expense, pay, defend, contest, or otherwise protect
against any such Claim with legal counsel reasonably acceptable to Required
Guarantors. The Agent and each Guarantor shall have the right, but not the
obligation, to participate, at its own expense, in the defense thereof through
counsel of its own choice and shall have the right, but not the obligation, to
assert any and all cross-claims or counterclaims it may have. So long as Xxxxx
is defending in good faith any such Claim, the Agent and each Guarantor shall at
all times fully and timely cooperate in all reasonable ways with, make its
relevant files and records available for inspection and copying by, make its
employees available, and otherwise render reasonable assistance to, Xxxxx in
connection with the defense of such Claim. If Xxxxx fails to timely defend,
contest, or otherwise protect against any such Claim, then Agent and Guarantors
shall have the right, but not the obligation, to defend, contest, assert
cross-claims or counterclaims, or otherwise protect against any such Claim and
may make any compromise or settlement thereof and recover and be indemnified for
the entire cost thereof from Xxxxx, including, without limitation, reasonable
attorneys' fees, disbursements, and all amounts paid as a result of such Claim
or any compromise or settlement thereof. Xxxxx shall not settle any Claim
without the prior written
47
consent of Required Guarantors, which consent may be withheld in the sole
discretion of the Required Guarantors, unless such settlement involves only the
payment of monetary damages by Xxxxx and includes a full and complete release of
Agent and each Guarantor, and their respective representatives.
Execution. By executing the signature pages of the Agreement, Agent,
each Guarantor and Xxxxx affirm and agrees to be bound by the provisions of
this Indemnification Addendum.
(Signature Pages Follow.)
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IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas,
Texas, on the day and year specified at the beginning of this Agreement.
BORROWER:
APERIAN, INC.
By: /s/ Xxxxx Xxxxx
---------------------------------------------
Name: XXXXX XXXXX
Title: Chairman and CEO
ACCEPTED IN DALLAS, TEXAS:
AGENT:
von Graffenried, von Burg, Kaufmann, Xxxxxxxx
Asset Management Ltd., Zurich, AG
/s/ Xxxxx X. Xxxxxxxx
----------------------------
By: Xxxxx X. Xxxxxxxx, Authorized Signatory
/s/ Xxx xxx Xxxx
----------------------------
By: Xxx xxx Xxxx, Authorized Signatory
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GUARANTOR:
By: /s/ Xxxx Xxxxxxxx
---------------------------------------------
XXXX XXXXXXXX
Guaranty Commitment: USD $10,000,000.00
Limmat Xxxx 00
X.X. Xxx 000
XX-0000 Xxxxxx, Xxxxxxxxxxx
Facsimile No.: 011-41-1-267-31-90
Affirmed and Agreed with respect to
Sections 7.1.8, 7.1.22 and 7.1.23
of the Agreement, and the Indemnification
Addendum following Section 12 of the Agreement:
/s/ Xxxxx Xxxxx
------------------------
Xxxxx Xxxxx, in his individual capacity
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APPENDIX A
GENERAL DEFINITIONS
When used in the Guaranty Facility and Security Agreement dated as
of July 31, 2001, by and among Aperian, Inc., von Graffenried, von Burg,
Kaufmann, Xxxxxxxx Asset Management Ltd., Zurich, AG, as agent for Guarantors,
and the Guarantors party thereto from time to time, the following terms shall
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
Account Debtor - with respect to any Person, any other Person who is or
may become obligated under or on account of an Account of Borrower owing to such
Person.
Accounts with respect to any Person, all accounts, accounts receivable,
contract rights, instruments, notes, drafts, acceptances, documents, chattel
paper, any right of payment for goods sold or leased or for services rendered,
or otherwise and whether or not earned by performance, and all other forms of
obligations owing to such Person, arising in relation to the data center
business, whether now existing or hereafter arising, and however evidenced or
acquired, in which such Person now has or hereafter acquires any interest or
rights.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds
five percent (5%) or more of any class of the Voting Securities of a Person; or
(iii) five percent (5%) or more of the Voting Securities (or in the case of a
Person which is not a corporation, five percent (5%) or more of the equity
interest) of which is beneficially owned or held by a Person or a Subsidiary of
a Person. For the purpose of this definition, "control" of a Person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of its management policies, whether through the ownership of Voting
Securities, by contract or otherwise.
Agreement - the Guaranty Facility and Security Agreement referred to in
the first sentence of this Appendix A, all Exhibits and Schedules thereto and
this Appendix A.
Applicable Law - all laws, rules and regulations applicable to the Person,
conduct, transaction, covenant or Guaranty Documents in question, including all
applicable common law and equitable principles; all provisions of all applicable
state and federal constitutions, statutes, rules, regulations and orders of
government bodies; and orders, judgments and decrees of all courts and
arbitrators.
ALTA Survey - a survey prepared in accordance with the standards adopted
by the American Land Title Association and the American Congress on Surveying
and Mapping in 1986, known as the "Minimum Standard Detail Requirements of Land
Title Surveys".
Assignment and Acceptance - as defined in Section 12.3 of the Agreement.
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Assignment and Acceptance Agreement - an agreement among Agent, a
Guarantor and such Guarantor's assignee regarding their respective rights and
obligations with respect to assignments of the interests under this Agreement
and the other Guaranty Documents.
Business Day - any day that is not a Saturday, a Sunday or a day on which
banks are required or permitted to be closed in Zurich, Switzerland.
Capital Expenditures - expenditures made or liabilities incurred by
Borrower for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Borrower's Capitalized Lease
Obligations.
Capital Leases - a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Cash Collateral - means collateral consisting of cash or Cash Equivalents,
or any standby letter of credit, issued upon terms and by a financial
institution reasonably acceptable to Agent and Guarantors.
Cash Equivalents - means
(a) Dollars;
(b) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof or any
state having maturities of not more than one year after the date of acquisition;
(c) certificates of deposit and Eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any Guarantor or any domestic commercial bank or US branch of
a foreign commercial bank having capital and surplus in excess of $250 million
and a Xxxxxxxx Bank Watch Rating of "B" or better;
(d) repurchase obligations with a term of not more than seven (7)
days for underlying securities of the types described in CLAUSES (b) and (c)
above entered into with any financial institution meeting the qualifications
specified in said CLAUSE (c); and
(e) commercial paper having the highest rating obtainable from
Xxxxx'x or S&P and in each case maturing within two hundred seventy (270) days
after the date of acquisition.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the Guaranty is made.
Code - the Uniform Commercial Code as adopted and in force in the State of
Texas, as from time to time in effect.
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Collateral - all of the Property and interests in Property described in
Section 5 of the Agreement, and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
Consolidated - the consolidation in accordance with GAAP of the accounts
or other items as to which such term applies.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Distribution - in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
Dollars and the sign $ - lawful money of the United States of America.
Environmental Laws - all federal, state, provincial, local and foreign
laws, rules, regulations, ordinances, programs, permits, guidances, orders and
consent decrees relating to health, safety and environmental matters.
Equipment - with respect to any Person, all machinery, apparatus,
equipment, fittings, furniture, fixtures, motor vehicles and other tangible
personal Property (other than Inventory) of every kind and description used in
the operations of such Person or owned by such Person or in which such Person
has an interest, whether now owned or hereafter acquired by such Person and
wherever located, and all parts, accessories and special tools and all increases
and accessions thereto and substitutions and replacements therefor.
Equity Interest means (i) with respect to a corporation, any and all
capital stock or warrants, options or other rights to acquire capital stock and
(ii) with respect to a partnership, limited liability company or similar Person,
any and all units, interests, rights to purchase, warrants, options or other
equivalents of, or other ownership interests in any such Person.
ERISA - the Employee Retirement Income Security Act of 1974, as amended,
and all rules and regulations from time to time promulgated thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Exchange Act - the Securities Exchange Act of 1934, as amended.
GAAP - means generally accepted accounting principles consistently applied
and maintained throughout the period indicated and, when used with reference to
Borrower or any Subsidiary of Borrower, consistent with the prior financial
practice of Borrower, as reflected on the financial statements referred to in
Section 7.1.11, PROVIDED, HOWEVER, that, in the event that changes shall be
mandated by the Financial Accounting Standards Board or any similar accounting
authority of comparable standing, or shall be recommended by Borrower's
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independent public accountants, such changes shall be included in GAAP as
applicable to the Borrower only from and after such date as the Borrower, the
Required Guarantors and the Agent have amended this Agreement to the extent
necessary to reflect any such changes in the financial covenants set forth in
Section 8.
General Intangibles - with respect to any Person, all general intangibles
of such Person, whether now owned or hereafter created or acquired by such
Person, including, without limitation, all choices in action, causes of action,
corporate or other business records, deposit accounts, inventions, designs,
patents, patent applications, trademarks, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, tax refund
claims, computer programs, all claims under guaranties, security interests or
other security held by or granted to such Person to secure payment of any of the
Accounts owing to such Person by an Account Debtor, all rights to
indemnification and all other intangible property of every kind and nature
(other than Accounts owing to such Person).
Guarantor - means any Person from time to time liable pursuant to the
Guaranty provided to Lender for the benefit of Borrower pursuant to the terms
and conditions of this Agreement.
Indebtedness - as applied to a Person means, without duplication
(a) all items which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person as at the date as of which Indebtedness is to be determined,
including, without limitation, Capitalized Lease Obligations,
(b) all obligations of other Persons which such Person has
guaranteed,
(c) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such Person,
and
(d) in the case of any Borrower (without duplication), the
Obligations.
Indemnified Persons - as defined in Section 12.2 of the Agreement.
Inventory - with respect to any Person, all inventory of such Person,
whether now owned or hereafter acquired including, but not limited to, all goods
intended for sale or lease by such Person, or for display or demonstration; all
work in process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in such Person's
business; and all documents evidencing and General Intangibles relating to any
of the foregoing, whether now owned or hereafter acquired by such Person.
Investment Property - with respect to any Person, all of such Person's
investment property, whether now owned or hereinafter acquired by such Person,
including, without
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limitation, all securities (certificated or uncertificated), securities
accounts, securities entitlements, commodity accounts and contracts.
Legal Requirement - any requirement imposed upon any Guarantor by any law
of the United States of America or the United Kingdom or by any regulation,
order, interpretation, ruling of official directive (whether or not having the
force of law) of the Federal Reserve Board or any other board, central bank or
governmental or administrative agency, institution or authority of the United
States of America or any political subdivision of either thereof.
Lien - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract. The term "Lien" shall also include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of the Agreement, each Borrower shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
Guaranty Documents - the Agreement, the Other Agreements and the
Security Documents.
Loan Parties - collectively, Borrower and each other Person (other than
Lender, Agent and each Guarantor) which is at any time a party to any Guaranty
Documents or individually, a "Loan Party").
Losses - as defined in Section 12.2 of the Agreement.
Material Adverse Effect - the effect of any event or condition which,
alone or when taken together with other events or conditions occurring or
existing concurrently therewith, (a) has a material adverse effect upon the
business, operations, Properties, condition (financial or otherwise) or business
prospects of Borrowers or any Subsidiary of Borrower, taken as a whole; (b) has
any material adverse effect whatsoever upon the validity or enforceability of
the Agreement or any of the other Guaranty Documents; (c) has or may be
reasonably expected to have any material adverse effect upon the value of the
whole or any material part of the Collateral, the Liens of Guarantor with
respect to the Collateral or any material part thereof or the priority of such
Liens; (d) materially impairs the ability of Borrower or any other Loan Party,
taken as a whole to perform their obligations under this Agreement or any of the
other Guaranty Documents, including repayment of the Obligations or realize upon
any of the Collateral in accordance with the Guaranty Documents and Applicable
Law.
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any Person to Borrower; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are
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customarily paid (other than accounts payable) or that was issued or assumed as
full or partial payment for Property; (iii) Indebtedness that constitutes a
Capitalized Lease Obligation; (iv) reimbursement obligations with respect to
letters of credit or guaranties of letters of credit and (v) Indebtedness of
Borrower under any guaranty of obligations that would constitute Indebtedness
for Money Borrowed under clauses (i) through (iii) hereof, if owed directly by
Borrower.
Mortgages - as defined in Section 5.4 of the Agreement.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3) of
ERISA.
Obligations - all advances, debts, liabilities, obligations, covenants and
duties of the Loan Parties to the Agent, any Guarantor and any Affiliate of any
Guarantor, together with all interest, fees and other charges thereon, owing,
arising, due or payable from Borrower to Agent and/or and Guarantors of any kind
or nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under the Agreement or any of the other Guaranty
Documents whether direct or indirect (including those acquired by assignment),
absolute or contingent, primary or secondary, due or to become due, now existing
or hereafter arising and however acquired, including, without limitation, the
aggregate amount of any drawings against any Bank Guaranty procured by any
Guarantor in connection with the Term Loan.
Originating Guarantor - as defined in Section 12.3(c) of the Agreement.
Other Agreements - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other third
party and delivered to Agent or any Guarantor in respect of the transactions
contemplated by the Agreement.
Participating Guarantor - shall have the meaning assigned such term in
Section 12.3(c).
Permitted Liens - any Lien of a kind specified in Section 8.2.5 of the
Agreement.
Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the principal amount of all other such
Indebtedness and Capitalized Lease Obligations of Borrower at the time
outstanding, does not exceed USD $500,000. For the purposes of this definition,
the principal amount of any Purchase Money Indebtedness consisting of
capitalized leases shall be computed as a Capitalized Lease Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Plan - an employee benefit plan now or hereafter maintained by Borrower
that is covered by Title IV of ERISA.
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Properly Contested - in the case of any Indebtedness of a Loan Party
(including any Taxes) that is not paid as and when due or payable by reason of
such Loan Party's bona fide dispute concerning its liability to pay same or
concerning the amount thereof, that (i) such Indebtedness and any Liens securing
same are being property contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, (ii) such Loan Party has
established appropriate reserves as shall be required in conformity with GAAP,
(iii) the non-payment of such Indebtedness will not have a Material Adverse
Effect and will not result in a forfeiture of any assets of such Loan Party;
(iv) no Lien is imposed upon any of such Loan Party's assets with respect to
such Indebtedness unless such Lien is at all times junior and subordinate in
priority to the Liens in favor of Guarantor (except only with respect to
property taxes that have priority as a matter of applicable state law); (v) if
the Indebtedness results from the entry, rendition or issuance against a Loan
Party or any of its assets of a judgment, writ, order or decree, such judgment,
writ, order or decree is stayed or bonded pending a timely appeal or other
judicial review; and (vi) if such contest is abandoned, settled or determined
adversely to such Loan Party, such Loan Party forthwith pays such Indebtedness
and all penalties and interest in connection therewith.
Property - any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within thirty (30) days prior to or after the acquisition of
any fixed assets for the purpose of financing all or any part of the purchase
price thereof, and (iii) any renewals, extensions or refinancings thereof, but
not any increases in the principal amounts thereof outstanding at the time.
Reportable Event - any of the events set forth in Section 4043(c) of ERISA
(other than subsections (c) 9 and (c) (11) thereof), with respect to which the
applicable notice requirements have not been waived.
Required Guarantors as of any date, the makers of Guaranty Commitments
evidencing at least fifty-one percent (51%) of the sum of the aggregate Guaranty
Commitments.
Schedule of Accounts - as defined in Section 6.2.1 of the Agreement.
Schedule of Documents - as defined in Section 9.1 of the Agreement.
Security - shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
Security Documents - any Mortgages, any Guaranty, any security agreement,
and all other instruments and agreements now or at any time hereafter securing
the whole or any part of the Obligations, including, without limitation, any
security agreement or other document executed by any Subsidiary of Borrower
pursuant to Section 5.2.
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Solvent - as to any Person, such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (ii) is able to pay all of its
Indebtedness as such Indebtedness matures and (iii) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Subsidiary - with respect to any Person, (i) a corporation a majority of
whose Voting Securities, under ordinary circumstances, to elect directors are,
at the date of determination, directly or indirectly, owned by such Person, by
one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person or (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but, in the case of a limited partner, only if such
Person or its Subsidiary is entitled to receive more than fifty percent (50%) of
the assets of such partnership upon its dissolution, or (iii) any limited
liability company or any other Person (other than a corporation or a
partnership) in which such Person, a Subsidiary of such Person or such Person
and one or more Subsidiaries of such Person, directly or indirectly, at the date
of determination, has (a) at least a majority ownership interest or (b) the
power to elect or direct the election of a majority of the directors or other
governing body of such Person. When such term is used in respect to Borrower,
Subsidiary shall mean only those Subsidiaries that are either incorporated in
any state, commonwealth or territory of the United States or have material
assets in any state, commonwealth or territory of the United States.
Tax - collectively, any present and future tax, levy, impost, duty, fee,
assessment, deduction, withholding or other charge of whatever nature, including
income, receipts, excise, property, sales, transfer, license, payroll,
withholding, social security and franchise taxes now or hereafter imposed or
levied by the United States, or any state, local or foreign government or by any
department, agency or other political subdivision or taxing authority thereof or
therein and all interest, penalties, additions to tax and similar liabilities
with respect thereto; provided, that the term "Tax" shall not include any taxes
imposed upon the net income of Agent or any Guarantor.
Term Loan Documents - the Term Loan Documents described in Section 1.1 of
the Agreement.
Voting Securities - any class of Equity Interests of a Person pursuant to
which the holders thereof have, at the time of determination, the general voting
power under ordinary circumstances to vote for the election of directors,
managers, trustees or general partners of such Person (irrespective of whether
or not at the time any other class or classes will have or might have voting
power by reason of the happening of any contingency).
Certain Matters of Construction. References to "Sections," "subsections,"
"Exhibits," "Schedules," and to the Appendix shall be to Sections, subsections,
Exhibits, Schedules and the Appendix, respectively, of or to the Agreement
unless otherwise specifically provided. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation periods of time from a
specified
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date to a later specified date, the word "from" means "from and including" and
the words "to" and "until" means "to but excluding." The section titles, table
of contents and list of exhibits appear as a matter of convenience only and
shall not affect the interpretation of the Agreement. All references to statutes
and related regulations shall include any amendments of same and any successor
statutes and regulations. All references to any of the Guaranty Documents shall
include any and all modifications thereto and any and all extensions or renewals
thereof. Whenever the phrase "including" shall appear in this Agreement, such
word shall be understood to mean "including, without limitation."
Other Terms. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing.
13
59
LIST OF EXHIBITS AND SCHEDULES
Exhibits
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Exhibit A Term Note
Exhibit B Borrower's and each Subsidiary's Business Locations
Exhibit C Escrow Instructions
Exhibit D Jurisdictions in which Borrower and each Subsidiary are
Authorized to do Business
Exhibit E Capital Structure of Borrower
Exhibit F Corporate Names
Exhibit G Tax Identification Numbers of Borrower and Subsidiaries
Exhibit H Patents, Trademarks, Copyrights and Licenses
Exhibit I Contracts Restricting Borrower's Right to Incur Debts
Exhibit J Litigation
Exhibit K Capitalized Leases
Exhibit L Operating Leases
Exhibit M Pension Plans
Exhibit N Labor Contracts
Exhibit O Non-Competition Agreement of Xxxxx Xxxxx
Exhibit P Lock-Up Agreement of Xxxxx Xxxxx
Exhibit Q Warrant and Registration Rights Agreement
Exhibit R Permitted Liens
Exhibit S Hewlett-Packard Agreement
Exhibit T Opinion of Borrower's Counsel
Exhibit U Schedule of Documents
