1
Exhibit 10.71
REVOLVING CREDIT AGREEMENT
DATED AS OF JULY 10, 2001
AMONG
APPLIEDTHEORY CORPORATION,
THE SUBSIDIARIES NAMED HEREIN.
AND
THE LENDERS NAMED HEREIN,
2
REVOLVING CREDIT AGREEMENT dated as of July 10, 2001, among
APPLIEDTHEORY CORPORATION, a Delaware corporation (the "Borrower") the
subsidiaries of Borrower listed on Exhibit D ("the Subsidiaries") and each of
the undersigned Lenders (the "Lenders").
Each of the Lenders has severally agreed to make Revolving Credit
Loans (such term and all other capitalized terms used in this paragraph having
the respective meanings ascribed to such herein) to Borrower and the
Subsidiaries at any time and from time to time prior to the Revolving Credit
Termination Date in an aggregate principal amount not in excess of $6 Million as
to all Lenders at any time outstanding, and as to any Lender not to exceed the
principal amount opposite its name listed on Exhibit A hereto. The obligation of
the Lenders to make Revolving Credit Loans shall be several and not joint. The
Borrower and the Subsidiaries will provide certain collateral in accordance with
the provisions of this Agreement and the Security Documents. The Subsidiaries
will guaranty the obligations of the Borrower under this Agreement and the
Revolving Credit Notes. The Borrower will guaranty the obligations of the
Subsidiaries under this Agreement and under the Revolving Credit Notes. The
Lenders are willing to extend such Revolving Credit Loans to the Borrower and
the Subsidiaries subject to the terms and conditions hereinafter set forth.
Accordingly, the Borrower and the Subsidiaries, and each of the Lenders,
severally and not jointly, hereby agree as follows:
1. DEFINITIONS
SECTION 1.1 Certain Defined Terms. For purposes hereof, the
following terms shall have the meanings specified below:
"Accounts" shall have the meaning assigned to such term in the
Security Agreement.
"Affiliates" shall mean, as to any person, any other person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with such person. For purposes of this definition, a controlled
person (a "Controlled Person") shall be deemed to be controlled by another
person (a "Controlling Person") if the Controlling Person possesses, directly or
indirectly, power to direct or cause the direction of the management and
policies of the Controlled Person whether by contract or otherwise.
"Availability" shall mean at any time (i) the lesser at such time
of (x) the Total Revolving Credit Commitment and (y) as to any Loan Obligor, the
Borrowing Base of such Loan Obligor, minus (ii) the sum at such time of the
unpaid principal balance of all of the Revolving Credit Loans to such Loan
Obligor.
"Bankruptcy Code" The Bankruptcy Reform Act of 1978, as
heretofore and hereafter amended, and codified as 11 U.S.C. Sections 101
et seq.
"Borrower" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Borrowing Base" shall mean at any time (i) that dollar amount
which is obtained by multiplying the total value of Eligible Accounts of a Loan
Obligor with respect to which
1
3
Lenders have a perfected, first (except as contemplated by Section 2.2(r) of the
Security Agreement) priority security interest at that time by the Receivables
Ratio, as such term is defined in the Security Agreement.
"Business Day" shall mean any day, other than a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or
required by law to remain closed.
"Casualty Event" shall mean with respect to an item of
collateral, any event resulting in damages, theft, disappearance, seizure,
condemnation, confiscation, governmental requisition, any divestiture of title
or any other event that results in the payment of insurance proceeds, proceeds
from a governmental entity with respect to such collateral or judgment, or other
proceeds in respect of such collateral that are not applied to repair the
Collateral or replace the Collateral such that the value and usefulness of such
item is the same as before such event.
"Change of Control" shall mean the occurrence of (x) any
consolidation or merger of the Borrower with or into any other corporation or
other entity or person (whether or not the Borrower is the surviving
corporation), or any other corporate reorganization or transaction or series of
related transactions in which in excess of 50% of the Borrower's voting power is
transferred through a merger, consolidation, tender offer or similar
transaction, or (y) any person (as defined in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), together with its
affiliates and associates (as such terms are defined in Rule 405 under the Act),
beneficially owning or being deemed to beneficially own (as described in Rule
13d-3 under the Exchange Act without regard to the 60-day exercise period) in
excess of 50% of the Borrower's voting power.
"Closing Date" shall mean the date of the first borrowing
under this Agreement.
"Code" shall mean the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder, as amended from time to time.
"Collateral" shall mean all collateral and security as
described in the Security Documents.
"Collateral Agent" shall mean Halifax Fund, L.P.
"Credit Event" shall mean each borrowing hereunder.
"Customer" shall mean and include the account debtor or
obligor with respect to any Account.
"Debentures" shall have the meaning assigned to such term in
the Security Agreement.
"Default" shall mean any condition, act or event which, with
notice or lapse of time or both, would constitute an Event of Default.
2
4
"Drawdown Date" shall mean the date on which any Revolving
Credit Loan is made or is to be made.
"Eligible Accounts" shall have the meaning assigned to such
term in the Security Agreement.
"Event of Default" shall be an Event of Default in Section 8
hereof.
"Financial Officer" shall mean, with respect to any person,
the chief financial officer of such person.
"Fiscal Year" shall mean the fiscal year of the Borrower for
accounting purposes which ends on December 31 of each year.
"Governmental Authority" shall mean the government of the
United States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
juridical, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Indebtedness" shall mean for any person: (i) obligations
incurred by such person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of property to another person subject to an
understanding or agreement, contingent or otherwise, to repurchase such property
from such person), (ii) obligations evidenced by bonds, debentures, notes or
other similar instruments, (iii) obligations to pay the deferred purchase price
of property or services, other than computer hardware (such as servers) and
software specifically required to provide managed hosting and similar services
pursuant to a contract or contracts entered into in the ordinary course of
business consistent with past practice with one or more customers, (iv)
obligations as lessee under capital leases, other than leases of computer
hardware (such as servers) and software entered into in the ordinary course of
business consistent with past practice specifically required to provide managed
hosting and similar services pursuant to a contract or contracts with one or
more customers, and (v) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses
(i)-(iv) above.
"Interest Payment Date" shall mean the last Business Day of
each March, June, September and December, commencing September 30, 2001 and on
each date a principal payment is made on the Revolving Credit Notes.
"Lien" shall mean, with respect to any asset, (i) any
mortgage, lien, pledge, encumbrance, charge or security interest of any kind in
or on such asset, (ii) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such asset, (iii) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities or (iv)
any other right of or arrangement with any creditor to have such creditor's
claim satisfied out of such assets, or the proceeds therefrom, prior to the
general creditors of the owner thereof.
3
5
"Loan Documents" shall mean this Agreement, each Security
Document, the Subsidiary Guarantees, the Parent Guarantee, the Revolving Credit
Notes and each other document, instrument, certificate or agreement now or
hereafter delivered to the Lenders in connection herewith or therewith.
"Loan Obligors" shall mean each of (i) the Borrower and (ii)
the Subsidiaries.
"Loan Party" shall mean any party to any of the Loan
Documents.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the business, assets, prospects, operations or financial or other
condition of any Loan Obligor, (ii) the ability of any Loan Obligor to perform
or pay the Obligations in accordance with the terms hereof or of any other Loan
Document, (iii) the rights of, or benefits available to, the Lenders under any
Loan Document or (iv) the Lenders' Lien on any material portion of the
Collateral or the priority of such Lien.
"Net Proceeds" shall mean (a) with respect to the sale or
other disposition of any asset by Borrower or any Loan Obligors the excess, if
any, of (i) the aggregate amount received in cash or cash equivalents (including
any cash received by way of deferred payment pursuant to a note receivable,
other non-cash consideration (but specifically excluding service credits) or
otherwise, but only as and when such cash is so received) in connection with
such sale or other disposition, over (ii) the sum of (A) the amount of any
Indebtedness which is secured by any such asset and is a Permitted Lien (that is
senior to Lenders' Lien) or which is required to be secured by any such asset
pursuant to a Permitted Lien (that is senior to Lenders' Lien), and is repaid in
connection with the sale or other disposition thereof (other than Indebtedness
to Lenders hereunder), (B) the reasonable out-of-pocket expenses and fees
incurred by such Loan Obligor to unaffiliated third parties with respect to
legal, investment banking, brokerage, advisor and accounting and other
professional fees, and sales commissions, in each case actually incurred in
connection with such sale or disposition, (C) all payments required to be made
in connection with the termination of leases and contracts in order to
effectuate such sale or disposition, (D) all transfer taxes paid or payable (as
certified by the Borrower's independent certified public accountant) by such
Loan Obligor in connection with such sale or other disposition and that is not
refundable, and (E) as certified by the Borrower's independent public
accountants, reserves (which may not extend beyond 12 months), required to be
established in accordance with GAAP or the definitive agreements relating to
such disposition, with respect to such disposition, including, without
limitation, pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any indemnification
obligations; and (b) with respect to any Casualty Event, the aggregate amount of
proceeds of insurance received by any Loan Obligor with respect to such Casualty
Event, less (i) all Indebtedness secured by any asset affected thereby pursuant
to a Permitted Lien (that is senior to Lenders' Lien) and required to be, and in
fact, repaid in connection therewith and (ii) all transfer taxes paid or payable
(as certified by the Borrower's independent certified public accountant) by any
Loan Party in connection therewith and that is not refundable. The Net Proceeds
with respect to any asset shall be computed as soon as reasonably possible after
the event giving rise thereto and in any case not longer than 90 days after such
event and the Loan Obligors shall provide the Lenders with the computation in
reasonable detail, together with all data used for such computation.
4
6
"Net Worth" shall mean (A) the sum of such entity's property
at fair valuation, exclusive of property transferred, concealed, or removed with
intent to hinder, delay or defraud such entity's creditors and property that may
be exempted from property of the estate under section 522 of the Bankruptcy
Code, less (B) the sum of such entity's debts (including contingent
liabilities). In construing this definition, words used herein that are also
used in Section 101(32) of the Bankruptcy Code shall be interpreted in the same
manner as such words are interpreted with respect to such Section.
"Obligations" shall mean the collective reference to the
unpaid principal of and interest on the Revolving Credit Loans and all other
obligations and liabilities of the Loan Obligors to the Lenders (including,
without limitation, interest accruing at the then applicable rate provided in
this Revolving Credit Agreement after the maturity of the Revolving Credit Loans
and interest accruing at the then applicable rate provided in this Revolving
Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
any Loan Obligor, if a claim for post-filing or post-petition interest is
allowed in such proceeding) whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with this Revolving Credit Agreement or any
other Loan Document, or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all reasonable fees and disbursements of counsel to the Lenders that are
required to be paid by the Loan Obligors pursuant to the terms of any of the
foregoing agreements).
"Parent Guarantee" shall mean the Parent Guarantee of the
Obligations of each of the Subsidiaries in the form of Exhibit F.
"Permitted Liens" shall mean any lien described in clauses
(1)-(11) of Section 7.1
"person" shall mean any natural person, corporation, business
trust, limited liability company, association, company, joint venture, limited
liability partnership, partnership or Governmental Authority.
"Pledged Securities" shall have the meaning assigned to such
term in the Security Agreement.
"Prime Rate" shall have the meaning assigned to such term in
Section 2.4 hereof.
"Responsible Officer" shall mean, with respect to any person,
any vice president or president, or the chief financial officer or controller,
of such person.
"Revolving Credit Commitment" shall mean each Lender's
commitment to make Revolving Credit Loans hereunder in an aggregate amount at
any time outstanding as to any Lender not in excess of the amount opposite such
Lender's name on Exhibit A.
"Revolving Credit Loan" shall mean a Revolving Credit Loan
made pursuant to Sections 2.1 and 2.2 hereof.
5
7
"Revolving Credit Note" shall mean a Revolving Credit Note of
a Loan Obligor, executed and delivered as provided in Section 2.3 hereof, in
substantially the form of Exhibit B annexed hereto, as amended, modified or
supplemented from time to time.
"Revolving Credit Termination Date" shall mean, as to a
Lender, the earlier to occur of (i) any anniversary date of this Agreement with
respect to which such Lender has given at least ninety (90) days prior written
notice to the Borrower that such Lender's Revolving Credit Commitments will not
be renewed and (ii) such date as the Revolving Credit Loans shall otherwise be
payable in full and the Revolving Credit Commitment shall terminate, expire or
be canceled in accordance with the terms of this Agreement or the Revolving
Credit Notes. The Revolving Credit Commitment of one Lender shall not be
terminated solely because another Lender has terminated its Commitment in
accordance with the foregoing provisions.
"Security Agreement" shall mean the Security Agreement dated
as of the date hereof, among the Loan Obligors, the Lenders and the Collateral
Agent, substantially in the form of Exhibit C annexed hereto, as amended,
modified or supplemented from time to time.
"Security Documents" shall mean the Security Agreement, and
each other agreement or instrument now existing or hereafter created providing
collateral security for the payment or performance of any Obligations.
"subsidiary" shall mean, with respect to any person, any
corporation, limited liability company, partnership, association or other
business entity of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or, in
the case of a partnership, more than 50% of the general partnership interests,
are, at the time as of which any determination is being made, owned or
controlled, directly or indirectly, by the parent of such person or one or more
Subsidiaries of the parent of such person.
"Subsidiary Guarantee" shall mean each guarantee of each of
the Subsidiaries substantially in the form of Exhibit E.
"Taxes" shall mean any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority.
"Total Revolving Credit Commitment" shall mean the total of
each Lender's Revolving Credit Commitments, which in the aggregate as to all
Lenders (subject to reduction after each anniversary date of this Agreement)
shall equal $6 million.
SECTION 1.2 Accounting Terms. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning given
it under generally accepted accounting principles in effect from time to time in
the United States.
2. THE LOANS
SECTION 2.1 Revolving Credit Commitments. Subject to the terms
and conditions and relying upon the representations and warranties herein set
forth, each Lender severally and not jointly agrees to make Revolving Credit
Loans to a Loan Obligor, at any time and from time to time from the date hereof
to the Revolving Credit Termination Date applicable
6
8
to such Lender, in an aggregate principal amount at any time outstanding not to
exceed such Lender's Revolving Credit Commitment. Notwithstanding the foregoing,
the aggregate principal amount of Revolving Credit Loans outstanding at any time
to (A) all Loan Obligors in the aggregate from all Lenders shall not exceed the
Total Revolving Credit Commitment and (B) a Loan Obligor, shall not exceed an
amount equal to the Borrowing Base of such Loan Obligor. The Borrowing Base of
all Loan Obligors (both individually and in the aggregate) will be computed
monthly on the final day of each month (and at such other times as may be
requested by Lenders) and a compliance certificate from a Responsible Officer of
the Borrower presenting its computation will be delivered to the Lenders in
accordance with Section 6.5 hereof. Notwithstanding the foregoing, Lenders shall
only be obligated to make loans to Loan Obligors that are parties to this
Agreement on the date hereof.
(a) Notwithstanding anything to the contrary in the Loan
Documents, the following additional restriction shall apply to a Loan Obligor's
right to borrow under this Agreement: The proceeds of any Revolving Credit Loan
made to a Subsidiary must be used by such Subsidiary in its own business and may
not be directly or indirectly applied for the benefit of another Loan Obligor.
The Borrower and all Loan Obligors agree to comply with the foregoing
restriction until the later to occur of (i) the Revolving Credit Termination
Date and (ii) the date the Loan Obligors have satisfied all of their obligations
under the Loan Documents.
(b) Subject to the foregoing and within the foregoing limits,
the Loan Obligors may borrow, repay (or, subject to the provisions of Section
2.6 hereof, prepay) and reborrow Revolving Credit Loans, on and after the date
hereof and prior to the Revolving Credit Termination Date, subject to the terms,
provisions and limitations set forth herein, including, without limitation, the
requirements in Section 5 hereof and the requirement that no Revolving Credit
Loan shall be made hereunder if after giving effect thereto either (A) the sum
of the aggregate principal amount of the Revolving Credit Loans outstanding
hereunder would exceed the Total Revolving Credit Commitment or (B) the sum of
Revolving Credit Loans outstanding with respect to a Loan Obligor would exceed
the Borrowing Base for such Loan Obligor.
(c) All borrowings, payments, prepayments and interest
payments under this Agreement shall be made by, or paid to, the Lenders pro
rata, based on their respective Revolving Credit Commitments set forth in
Exhibit A hereto.
SECTION 2.2 Revolving Credit Loans. The Revolving Credit Loans
made by the Lenders on any date shall be in integral multiples of $500,000
subject to the limitations of Section 2.1. The initial Revolving Credit Loans
shall be made by the Lenders against delivery to each Lender of its respective
Revolving Credit Notes, payable to the order of such Lender, as referred to in
Section 2.3 hereof.
SECTION 2.3 Revolving Credit Note; Requests for Revolving
Credit Loans.
(a) All Revolving Credit Loans made by a Lender to a Loan
Obligor shall be evidenced by a Revolving Credit Note issued to such Lender by
such Loan Obligors, duly executed on behalf of such Loan Obligor, dated the
Closing Date, in the form of Exhibit B annexed hereto, delivered and payable to
the Lender in the original principal amount equal to such Lender's Revolving
Credit Commitment. The outstanding balance of each Revolving
7
9
Credit Loan, as evidenced by the Revolving Credit Notes, shall mature and be due
and payable on the Revolving Credit Termination Date.
(b) The Revolving Credit Notes shall bear interest from their
date on the outstanding principal balance thereof, as provided in Section 2.4
hereof.
(c) The Lenders shall, and are hereby authorized by the Loan
Obligors to, endorse on the schedule attached to each Revolving Credit Note (or
on a continuation of such schedule attached to such Revolving Credit Note and
made a part thereof) an appropriate notation evidencing the date and amount of
each Revolving Credit Loan to such Loan Obligor from such Lender, as well as the
date and amount of each payment and prepayment with respect thereto; provided,
however, that the failure of any Lender to make such a notation on its Revolving
Credit Note shall not affect any obligations of a Loan Obligor under such
Revolving Credit Note. Any such notation shall be conclusive and binding as to
the date and amount of such Revolving Credit Loan or portion thereof, or payment
or prepayment of principal or interest thereon, absent manifest error.
(D) [INTENTIONALLY LEFT BLANK]
(e) The Loan Obligors shall give the Lenders written notice
(or telephonic notice confirmed in a writing) of each Revolving Credit Loan
requested hereunder no less than three (3) Business Day prior to the Drawdown
Date. Each such notice shall specify (i) the principal amount of the Revolving
Credit Loan requested and (ii) the proposed Drawdown Date of such Revolving
Credit Loan. Each Revolving Credit Loan request shall be in a minimum aggregate
amount of $500,000 or an integral multiple thereof subject to the limitations of
Section 2.1.
SECTION 2.4 Interest on Revolving Credit Loans. (a) Subject to
the provisions of Section 2.5 hereof, the outstanding principal balance of a
Revolving Credit Loan shall bear interest for the first sixty (60) days it is
outstanding at a rate per annum equal to two hundred basis points over the Prime
Rate ("Prime Rate") as reported by Citibank, N.A., and if such rate is no longer
reported, the Prime Rate published in the Wall Street Journal for the nation's
largest banks, and thereafter at a rate per annum equal to four hundred basis
points above Prime Rate. Monies repaid and reborrowed within 10 days of the
payment date shall be deemed continuously outstanding for purposes of
determining the interest rate. Interest on each Revolving Credit Loan shall be
payable in arrears on each applicable Interest Payment Date, and on the
Revolving Credit Termination Date.
SECTION 2.5 Interest on Overdue Amounts; Alternate Rate of
Interest. If any Loan Obligor shall default in the payment of the principal of
or interest on any Revolving Credit Loan or any other amount becoming due
hereunder, by acceleration or otherwise, then all of the Loan Obligors shall on
demand from time to time pay interest, to the extent permitted by law, on all
Obligations outstanding up to the date of actual payment of such defaulted
amount (after as well as before judgment) at a rate per annum equal to the
lesser of (i) eight hundred basis points over Prime Rate or (ii) the highest
rate permitted by law.
SECTION 2.6 Prepayment of Revolving Credit Loans.
8
10
(1) The Loan Obligors shall within three (3) days of receiving
notice from the Lenders, and in any event concurrently with the delivery of any
certificate pursuant to Section 6.5 hereof make any prepayments of the Revolving
Credit Loans necessary such that (i) the outstanding principal balance of all
Revolving Credit Loans made to all Loan Obligors does not exceed the total
Revolving Credit Commitment, (ii) the total outstanding principal balance of
Revolving Credit Loans made by any Lender does not exceed such Lender's
Revolving Credit Commitment, (iii) the outstanding principal balance of all
Revolving Credit Loans made to such Loan Obligor does not exceed the Borrowing
Base applicable to such Loan Obligor as described in Section 2.1 and (iv) the
total Eligible Accounts of all Loan Obligors exceeds the aggregate principal
balance of all outstanding Revolving Credit Loans to all Loan Obligors by not
less than $7,000,000.
(2) Except as otherwise specifically provided in the Security
Agreement, within three (3) Business Days of the sale or other disposition of
any assets of a Loan Obligor that are included in the Collateral, the Loan
Obligors shall make a mandatory prepayment of the Revolving Credit Loans in an
amount equal to 100% of the Net Proceeds received. In the case of a Casualty
Event, the applicable Loan Obligor shall notify the Lenders in writing within
seven days of the occurrence of such Event with reasonable details. Such Loan
Obligor shall diligently pursue any Net Proceeds to which it is entitled and
will keep the Lenders informed as to its progress. Within fourteen days of the
receipt of any Net Proceeds, such Loan Obligor will inform Lenders in writing
whether it will use the Net Proceeds to replace or repair the asset. If the
asset is replaced the replacement must be of equal value and utility as the
replaced asset. If the asset is repaired it must have the same value and utility
as it did prior to the Casualty Event. If the Loan Obligor elects not to repair
or replace the asset, it shall use all the Net Proceeds to prepay the Revolving
Credit Loans at the time of delivering such notice to the Lenders.
(3) Except as otherwise provided in Sections 2.6(1) and (2)
above, when making a prepayment, whether mandatory or otherwise, the Loan
Obligors shall furnish to the Lenders, not later than 11:00 a.m. (New York City
time) three (3) Business Days prior to the date of such prepayment of written,
facsimile or telephonic notice (promptly confirmed by written or facsimile
notice) of prepayment which shall specify the prepayment date and the principal
amount of each Revolving Credit Loan (or portion thereof) to be prepaid, which
notice shall be irrevocable and shall commit the Loan Obligors to prepay such
Revolving Credit Loan by the amount stated therein on the date stated therein.
SECTION 2.7 Payments and Computations. The Loan Obligors shall
make each payment hereunder and under any instrument delivered hereunder not
later than 12:00 noon (New York City time) on the day when due in lawful money
of the United States (in freely transferable dollars) to each Lender at the
account of such Lender designated in writing for such purpose, in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of such Lender, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. If at any time there is not sufficient funds available to
cover any of the payments referred to in the first sentence of this Section 2.7,
and in any event upon the occurrence of any Default, the Loan Obligors shall
make any such payments upon demand. If at any time insufficient funds are
received by and available to the Lenders to pay fully all amounts of principal
and interest then due hereunder, such funds shall be applied (i) first, to any
expenses of the Lenders and Collateral
9
11
Agent under the Loan Documents, and (ii) second, towards payment of interest
then due hereunder and (iii) third, towards payment of principal then due
hereunder.
3. COLLATERAL SECURITY
SECTION 3.1 Security Documents. The Obligations shall be
secured by the Collateral described in the Security Documents and are entitled
to the benefits thereof. The Loan Obligors shall duly execute and deliver the
Security Documents, financing statements pursuant to the Uniform Commercial Code
and other documents, all in form and substance satisfactory to the Lenders, as
may be reasonably required by the Lenders to grant to the Lenders a valid,
perfected, first priority (except as otherwise agreed to by the Lenders or as
expressly provided in the Security Documents) and enforceable Lien on and
security interest in the Collateral, including any filing in the United States
Patent and Trademark Office, on and subject to the terms contained in the
Security Documents.
SECTION 3.2 Filing and Recording. The Loan Obligors shall take
such actions as the Lenders may reasonably request, in order to assist the
Lenders to perfect and protect the Liens of the Lenders in the Collateral. The
Loan Obligors, to the extent permitted by law, hereby authorize the Lenders to
file any financing statement in respect of any Lien created pursuant to the
Security Documents which may at any time be required or which, in the opinion of
the Lenders, may at any time be desirable although the same may have been
executed only by the Lenders or, at the option of the Lenders, to sign such
financing statement or other filing on behalf of any Loan Obligors and file the
same, and the Loan Obligors hereby irrevocably designate the Lenders, its
agents, representatives and designees as its agent and attorney-in-fact for this
purpose.
4. REPRESENTATIONS AND WARRANTIES
Each Loan Obligor represents and warrants jointly and
severally to each of the Lenders as follows:
SECTION 4.1 Organization, Legal Existence. Each Loan Obligor
is a legal entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, has the requisite power and
authority to own its property and assets and to carry on its business as now
conducted and as currently proposed to be conducted and is qualified to do
business in every jurisdiction where the nature of its business so requires
except where the failure to so qualify or be in good standing would not result
in a Material Adverse Effect. Each Loan Obligor has the corporate power to
execute, deliver and perform its obligations under any Loan Document to which it
is a party and each Loan Obligor has the corporate power to borrow hereunder and
to execute and deliver its Revolving Credit Note. Exhibit D sets forth an
accurate and complete list of each of the Borrower's Subsidiaries, their
respective states of incorporation and the locations of their principal offices.
SECTION 4.2 Authorization. The execution, delivery and
performance by each Loan Obligor of the Loan Documents to which it is a party,
the borrowings hereunder by the Loan Obligors, the execution and delivery by the
Loan Obligors of the Revolving Credit Notes and the grant of security interests
in the Collateral created by the Security Documents
10
12
(collectively, the "Transactions") (a) have been duly authorized by all
requisite corporate action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation or the certificate or articles of incorporation
or other applicable constitutive documents or the by-laws of any of the Loan
Obligors, (B) any order of any Governmental Authority binding upon any of the
Loan Obligors, or (C) any provision of any indenture, agreement or other
instrument to which any of the Loan Obligors, or any of their respective
properties or assets are or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under any indenture, agreement or other instrument referred to in
(b)(i)(C) above except where any such conflict, violation, breach or default
referred to in (b)(i) or (b)(ii) above would not result in a Material Adverse
Effect or (iii) result in the creation or imposition of any Lien of any nature
whatsoever (other than in favor of the Lenders, as contemplated by this
Agreement and the Security Documents) upon any property or assets of any of the
Loan Obligors.
SECTION 4.3 Governmental Approvals. No registration or filing
with, consent or approval of, or other action by, any Governmental Authority is
or will be required in connection with the this Agreement, the Revolving Credit
Notes or the Security Documents, except for (a) such registrations, filings,
consents, approvals or actions the failure of which to obtain or make would not
have a Material Adverse Effect or (b) such as have been made or obtained or (c)
the filings necessary to perfect the Liens created by the Security Documents.
SECTION 4.4 Binding Effect. Each of the Loan Documents when
duly executed and delivered by the Loan Obligors will constitute the respective
legal, valid and binding obligation of Loan Obligors enforceable against the
Loan Obligors in accordance with their respective terms except as limited by
applicable bankruptcy, reorganization, insolvency or similar laws affecting the
enforcement of creditors' rights generally and except as limited by general
principles of equity.
SECTION 4.5 No Material Misstatements. No information, report,
financial statement, exhibit or schedule prepared or furnished by or on behalf
of any Loan Obligor to the Lenders in connection with any of this Agreement, the
Security Documents, the Revolving Credit Note or any other Loan Documents or
included therein contained or contains any material misstatement of fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 4.6 Security Interest. Each of the Security Documents
creates and grants to the Lenders a legal, valid and perfected Lien in the
Collateral identified therein. Each such Lien is a first priority Lien, other
than as disclosed in the Security Documents and other than Permitted Liens. Such
Collateral is not presently subject to any other Liens whatsoever, except liens
disclosed under the Security Documents.
SECTION 4.7 SEC Documents. No Non-Public Information;
Financial Statements. The Common Stock of the Borrower is registered pursuant to
Section 12(b) of the Exchange Act and the Borrower has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the Securities and Exchange Commission ("SEC") pursuant to the reporting
requirements of the Exchange Act, including all such proxy information,
solicitation statement and registration statements, and any amendments thereto
11
13
required to have been filed (all of the foregoing including filings incorporated
by reference therein being referred to herein as the "SEC Documents"). The Loan
Obligors have not directly or indirectly provided, and will not directly or
indirectly provide, to the Lenders any material non-public information or any
material information which, according to applicable law, rule or regulation,
should have been disclosed publicly by the Borrower but which has not been so
disclosed. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The SEC Documents contain all material information
concerning the Borrower and its Subsidiaries as of the respective dates thereof,
and no event or circumstance has occurred prior to the date hereof which would
require the Borrower to disclose such event or circumstance in order to make the
statements in the SEC Documents not misleading but which has not been so
disclosed.
SECTION 4.8 Financial Statements. The financial statements of
the Borrower and its Subsidiaries included in the SEC Documents comply as to
form and substance in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes, may be condensed or summary statements) and
fairly present in all material respects the financial position of the Borrower
and its Subsidiaries as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). The separate financial
statements of each of the Subsidiaries for the fiscal year ending December 31,
2000 and the quarter ended March 31 2001 have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto or (ii) in the case of interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the separate
financial position of each of the Subsidiaries, as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
SECTION 4.9 No Material Adverse Change. Since March 31, 2001,
no Material Adverse Effect has occurred or exists, and no event or circumstance
has occurred that with notice or the passage of time or both is reasonably
likely to result in a Material Adverse Effect with respect to any of the Loan
Obligors.
SECTION 4.10 No Undisclosed Liabilities. The Loan Obligors
have no liabilities or obligations not disclosed in the Pre-Agreement SEC
Documents (as defined below), other than those liabilities incurred in the
ordinary course of the Loan Obligors' respective
12
14
businesses since December 31, 2001, which liabilities, individually or in the
aggregate, do not or would not have a Material Adverse Effect on any of the Loan
Obligors.
SECTION 4.11 No Undisclosed Events or Circumstances. To the
best knowledge of the Loan Obligors, no material event or circumstance has
occurred or exists with respect to the Loan Obligors or their respective
businesses, properties, prospects, operations or financial condition, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Loan Obligors but which has not been so publicly announced
or disclosed.
SECTION 4.12 Intellectual Property. Each of the Loan Obligors
owns or has licenses to use certain patents, copyrights and trademarks
("intellectual property") associated with its business. The Loan Obligors have
all intellectual property rights which are needed to conduct their respective
businesses as they are now being conducted or as proposed to be conducted as
disclosed in the SEC Documents. The Loan Obligors have no reason to believe that
the material intellectual property rights which they own are invalid or
unenforceable or that the use of such intellectual property by the Loan Obligors
infringes upon or conflicts with any right of any third party, and no Loan
Obligor has received notice of any such infringement or conflict, which
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. The Loan Obligors have no knowledge of any infringement
of their intellectual property by any third party. Annexed on Exhibit G is a
list of all patents, patents pending, registered trademarks and registered
copyrights of the Loan Obligors.
SECTION 4.13 No Litigation. Except as set forth in the reports
or documents filed at least 5 Trading Days prior to the date of this Agreement
by the Borrower pursuant to Section 13(a) or 15(c) of the Exchange Act (the
"Pre-Agreement SEC Documents"), no litigation or claim (including those for
unpaid taxes) against the Loan Obligors is pending or, to the Loan Obligors'
knowledge, threatened, and no other event has occurred, which if determined
adversely could reasonably be expected to have a Material Adverse Effect on the
Loan Obligors or could reasonably be expected to materially and adversely affect
the transactions contemplated hereby. Except as described in the Pre-Agreement
SEC Documents, there is no legal proceeding that could reasonably be expected to
have a Material Adverse Effect on any of the Loan Obligors.
SECTION 4.14 Brokers. The Loan Obligors have taken no action
which would give rise to any claim by any person for brokerage commissions,
finder's fees or similar payments by the Loan Obligors or any Lender relating to
this Agreement or the transactions contemplated hereby.
SECTION 4.15 Certain Transactions. Except as disclosed in the
Pre-Agreement SEC Documents, none of the officers, directors, or key employees
of the Loan Obligors is presently a party to any transaction with the Loan
Obligors (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Loan Obligors, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
13
15
SECTION 4.16 Permits; Compliance. Each of the Loan Obligors is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Borrower Permits"), except
where failure to possess such Borrower Permits would not have a Material Adverse
Effect on any Loan Obligor and there is no action pending or, to the knowledge
of the Loan Obligors, threatened regarding suspension or cancellation of any of
the Borrower Permits except for such Borrower Permits the failure of which to
possess, or the cancellation or suspension of which, would not, individually or
in the aggregate, have a Material Adverse Effect on any Loan Obligor. To the
best of their knowledge, the Loan Obligors are not in material conflict with, or
in material default or material violation of, any of the Borrower Permits. Since
December 31, 2001, no Loan Obligor has received any notification with respect to
possible material conflicts, material defaults or material violations of
applicable laws.
SECTION 4.17 Insurance. The Loan Obligors are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Loan Obligors believes to be prudent
and customary in the businesses in which the Loan Obligors are engaged. No Loan
Obligor has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
SECTION 4.18 Internal Accounting Controls. The Loan Obligors
maintain a system of internal accounting controls sufficient, in the judgment of
the Borrower's management, to provide reasonable assurance that (i) transactions
are executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization.
SECTION 4.19 Environmental Matters. Except as otherwise
disclosed in the Pre-Agreement SEC Documents, the Loan Obligors are in
compliance in all respects with all applicable state and federal environmental
laws except where any such non-compliance would not reasonably be expected to
have a Material Adverse Effect on any of the Loan Obligors and no event or
condition has occurred that may interfere with the compliance by the Loan
Obligors with any environmental law or that may give rise to any liability under
any environmental law that, individually or in the aggregate, would have a
Material Adverse Effect.
SECTION 4.20 Bankruptcy. No Loan Obligor is subject to any
bankruptcy, insolvency or similar proceeding.
SECTION 4.21 Taxes. All federal, state, city and other tax
returns, reports and declarations required to be filed or extended by or on
behalf of the Loan Obligors have been filed or extended and all such filed
returns are complete and accurate and disclose all taxes (whether based upon
income, operations, purchases, sales, payroll, licenses, compensation, business,
capital, properties or assets or otherwise) required to be paid in the periods
covered thereby. All taxes required to be withheld by or on behalf of the Loan
Obligors or any such
14
16
Subsidiary in connection with amounts paid or owing to any employees,
independent contractor, creditor or other party have been withheld, and such
withheld taxes have either been duly and timely paid to the proper governmental
authorities or set aside in accounts for such purposes.
SECTION 4.22 Accuracy of Information. All information supplied
by the Loan Obligors to the Lenders in connection with the Loan Documents and
Security Documents is true, correct and complete in all material respects.
SECTION 4.23 Compliance with Law. Each Loan Obligor is
operating its business in compliance with all applicable laws, statutes, rules
or regulations except where the failure to do so would not result in a Material
Adverse Effect with respect to any Loan Obligor.
SECTION 4.24 Subsidiaries. Each of the Subsidiaries is
wholly-owned by Borrower and the Borrower agrees to maintain such ownership
status while any obligations under this Agreement continue.
5. CONDITIONS OF CREDIT EVENTS
The obligation of the Lenders to make Revolving Credit Loans
hereunder shall be subject to the following conditions precedent:
SECTION 5.1 All Credit Events. On each date on which a Credit
Event is to occur:
(1) The Lenders shall have received a notice of borrowing as
required by Section 2.3 hereof.
(2) The representations and warranties set forth in Article IV
hereof and in any documents delivered in connection herewith, including, without
limitation, the Loan Documents, shall be true and correct as to all Loan
Obligors with the same effect as though made on and as of such date (except
insofar as such representations and warranties relate expressly to an earlier
date, in which case they shall have been true as of such date).
(3) Each Loan Obligor shall be in compliance with all the
terms and provisions contained herein and the other Loan Documents on its part
to be observed or performed, and at the time of and immediately after such
Credit Event no Default or Event of Default shall have occurred and be
continuing.
(4) No Default or Event of Default shall have occurred and be
continuing under the Debentures. For purposes of this paragraph (4), Event of
Default shall have the meaning provided therefor in the Debentures and Default
shall be construed with reference to Event of Default as defined in the
Debentures.
(5) Neither any Revolving Credit Commitment of any Lender nor
Availability for any Loan Obligor would be exceeded if the requested Revolving
Credit Loans were made.
(6) If requested by a Lender, an updated scheduled described
in Section 5.2(6)(a) below shall be delivered to all Lenders.
15
17
(7) The Lenders shall have received a certificate signed by
the Chief Executive Officer, the Financial Officer and the General Counsel of
the Borrower in form and substance reasonably satisfactory to the Lenders (i) as
to the compliance with (2), (3), (4) and (5) above and (ii) with respect to each
Revolving Credit Loan demonstrating that after giving effect thereto the total
outstanding Revolving Credit Loans will not exceed the Borrowing Base for all
Loan Obligors. The certification of the Borrower's General Counsel may be
limited to litigation matters and compliance with law and as to litigation may
be qualified to the best of his knowledge after due inquiry.
SECTION 5.2 First Borrowing. The obligations of the Lenders in
respect of the first Credit Event hereunder are subject to the following
additional conditions precedent:
(1) The Lenders shall have received a certificate in form and
substance reasonably satisfactory to the Lenders, dated the Closing Date and
signed by each of the Chief Executive Officer, the Senior Vice President-Chief
Financial Officer and the General Counsel of the Borrower, confirming compliance
with the conditions precedent set forth in paragraphs (2), (3), (4) and (5) of
Section 5.1 hereof and the conditions set forth in this Section 5.2. The
certification of the Borrower's General Counsel may be limited to litigation
matters and compliance with law and as to litigation may be qualified to the
best of his knowledge after due inquiry.
(2) Each Lender shall have received its Revolving Credit Notes
from the Loan Obligors duly executed by the respective Loan Obligors, payable to
such Lender's order and otherwise complying with the provisions of Section 2.3
hereof.
(3) The Lenders shall have received the Subsidiary Guarantees,
the Parent Guarantee, Security Documents and certificates evidencing the Pledged
Securities, together with undated stock powers executed in blank, each duly
executed by the appropriate Loan Obligor and resolutions of such Loan Obligor
authorizing the future transfer of the Pledged Securities to Lenders and the
reissuance of such Pledged Securities in the Lenders' names pursuant to the
terms of the Security Agreement.
(4) Each document (including, without limitation, each Uniform
Commercial Code financing statement and filing in the United States Patent and
Trademark Office) required by law or requested by the Lenders to be filed,
registered or recorded in order to create in favor of the Lenders a perfected
Lien in the Collateral (first priority, except as otherwise permitted herein or
in the Security Documents) shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or recordation
thereof is so required or requested. The Lenders shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each such filing,
registration or recordation.
(5) The Lenders shall have received the results of a search of
tax and other Liens, and judgments and of the Uniform Commercial Code filings
made with respect to the Loan Obligors in the jurisdictions in which such person
is doing business and/or in which any Collateral is located, and in which
Uniform Commercial Code filings have been made against the Loan Obligors
pursuant to paragraph (4) above.
16
18
(6) The Lenders shall have received and determined to be in
form and substance satisfactory to it:
(a) the most recent (dated within ten (10) days of the Closing
Date) schedule and aging of Accounts receivable of each of the Loan Obligors
broken down between Eligible and non-Eligible accounts and in such detail as
reasonably requested by the Lenders;
(b) A disbursement authorization letter with respect to the
disbursement of the proceeds of the Credit Events made on the Closing Date, in
form and substance satisfactory to the Lenders; and
(c) The Lenders shall have received such other documents as
the Lenders or Lender's counsel shall reasonably deem necessary.
6. AFFIRMATIVE COVENANTS
Each Loan Obligor covenants and agrees with the Lenders that,
so long as this Agreement shall remain in effect or the principal of or interest
on the Revolving Credit Notes or any fee, expense or other Obligation payable
hereunder or in connection with any of the Transactions shall be unpaid, it
will:
SECTION 6.1 Legal Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
SECTION 6.2 Businesses and Properties. At all times do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect the rights, licenses, Permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; maintain
and operate such businesses in the same general manner in which they are
presently conducted and operated; comply in all material respects with all
applicable laws, rules, regulations and governmental orders (whether Federal,
state or local in all applicable jurisdictions) applicable to the operation of
such businesses whether now in effect or hereafter enacted (including, without
limitation, all applicable laws, rules, regulations and governmental orders
relating to employment matters, public and employee health and safety and all
Environmental Laws) and with any and all other applicable laws, rules,
regulations and governmental orders, the lack of compliance of any of which
would have a Material Adverse Effect; and at all times maintain, preserve and
protect all property material to the conduct of such businesses and keep such
property in good repair, working order and condition (reasonable wear and tear
excepted) and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in order that the business carried on in connection therewith may be
properly conducted at all times.
SECTION 6.3 Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers, (b)
maintain such other insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is customary with
companies similarly situated and in the same or similar businesses, provided,
however, that such insurance shall insure the property of the Loan Obligors
against all risk of physical damage, including, without limitation, loss by
fire, explosion, theft, fraud and such other casualties as may be reasonably
satisfactory to the Lenders, (c) maintain in full force
17
19
and effect public liability insurance against claims for personal injury or
death or property damage occurring upon, in, about or in connection with the use
of any properties owned, occupied or controlled by the Loan Obligors and (d)
maintain such other insurance as may be required by law or as may be reasonably
requested by the Lenders for purposes of assuring compliance with this Section
6.3. All insurance covering tangible personal property subject to a Lien in
favor of the Lenders shall provide for at least 30 days' prior written notice to
the Lenders of the cancellation or substantial modification thereof. All
insurance covering collateral shall name the Lenders as additional insured
parties.
SECTION 6.4 Taxes. Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon such
properties or any part thereof; provided, however, that such payment and
discharge shall not be required with respect to (i) any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the applicable party,
shall have set aside on its books adequate reserves with respect thereto in
accordance with GAAP and such contest operates to suspend collection of the
contested tax, assessment, charge, levy or claims and enforcement of a Lien or
(ii) any tax, assessment, charge, levy or claims, the failure to pay and
discharge when due which, individually or in the aggregate would not have a
Material Adverse Effect.
SECTION 6.5 Accounts Receivable Information. Furnish to the
Lenders within 10 days of the end of each calendar month and within 5 days of
any other request therefor:
(1) an aging schedule of the Accounts for each Loan Obligor
with details reasonably requested by Lenders;
(2) an aging schedule of the Eligible Accounts for each Loan
Obligor with details reasonably requested by Lenders; and
(3) a certificate substantially in the form of Schedule 6.5
hereto executed by the Financial Officer and Chief Executive Officer of the
Borrower (i) demonstrating compliance by each Loan Obligor as at the end of each
month (or as of the date of such certificate) with its Borrowing Base and (ii)
demonstrating in reasonable detail that the Event of Default described in
Section 8.1(16) does not exist, and also certifying that as of the date of such
certificate no Default or Event of Default exists.
SECTION 6.6 Further Assurances. Execute any and all further
documents and take all further actions which may be required under applicable
law, or which the Lenders may reasonably request, to grant, preserve, protect
and perfect the Lien created by the Security Documents in the Collateral.
SECTION 6.7 Additional Subsidiaries. Promptly inform the
Lenders of the creation or acquisition of any direct or indirect Subsidiary and
cause such Subsidiary to enter into any of the Loan Documents to which the Other
Subsidiaries are parties and deliver a Subsidiary Guarantee in the form of the
other Subsidiary Guarantees.
18
20
SECTION 6.8 Pay Obligations to Lenders and Perform Other
Covenants. (a) Make full and timely payment of the Obligations, whether now
existing or hereafter arising, without deduction for any withholding taxes or
other Taxes, (b) duly comply with all the terms and covenants contained in this
Agreement (including, without limitation, the borrowing limitations and
mandatory prepayments in accordance with Article II hereof) and in each of the
other Loan Documents, all at the times and places and in the manner set forth
therein, subject to applicable cure and grace periods, and (c) except for the
filing of continuation statements and the making of other filings by the Lenders
as secured party or assignee, at all times take all actions necessary to
maintain the Liens and security interests provided for and as contemplated under
or pursuant to this Agreement and the Security Documents and supply all
information to the Lenders necessary for such maintenance.
SECTION 6.9 Subsidiaries. Maintain the status of each of the
Subsidiaries as wholly-owned subsidiaries of the Borrower.
7. NEGATIVE COVENANTS
Each of the Loan Obligors covenants and agrees with the
Lenders that, so long as this Agreement shall remain in effect or the principal
of or interest on any of the Revolving Credit Notes shall be unpaid, it will not
and will not cause or permit any of the other Loan Obligors to, either directly
or indirectly:
SECTION 7.1 Liens. Incur, create, assume or permit to exist
any Lien on any of the Collateral, except:
(1) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security benefits (not
including any lien under ERISA including, but not limited to Section 412(m) of
the Code); provided that in each case the obligation or liability in respect of
which such Lien, pledge or deposit is created is not overdue.
(2) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and other similar liens, incurred
in good faith in the ordinary course of business and securing obligations which
are not overdue or which are being diligently contested in compliance with
Section 6.4;
(3) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being diligently
contested in compliance with Section 6.4;
(4) Zoning restrictions, easements, rights of way, licenses,
flowage rights, reservations, provisions, covenants, conditions, waivers,
restrictions on the use of property or minor defects or irregularities of title
and similar encumbrances (and with respect to leasehold interests, mortgages,
obligations, liens and other encumbrances incurred, created, assumed or
permitted to exist and arising by, through or under a landlord or owner of the
leased property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use thereof in the operation of its business;
19
21
(5) Purchase money Liens granted in connection with the
incurrence of Indebtedness to the vendor or person financing the construction or
acquisition of property, plant or equipment provided that (i) such Lien is
limited to the particular assets constructed or acquired, (ii) the debt secured
by the Lien does not exceed the amount financed for the construction or
acquisition cost (including transaction costs and indemnities customarily
secured by a Lien of such type) of the specific assets on which the Lien is
granted, (iii) such Lien arises and the Indebtedness secured thereby is created
within 30 days of the completion of such construction or of such acquisition or
are incurred to extend, renew or refinance such Liens and Indebtedness incurred
within such 30-day period and (iv) such transaction does not otherwise violate
this Agreement;
(6) Liens existing on the date of this Agreement in favor of
the Debenture holders or as set forth on Schedule 7.1(6) hereto;
(7) Liens created in favor of the Lenders pursuant to the Loan
Documents;
(8) Liens and deposits securing the performance of bids,
tenders, leases, contracts (other than for the repayment of borrowed money),
statutory obligations, contractual or warranty requirements, surety, customs and
appeal bonds, performance bonds and other obligations of like nature, incurred
as an incident to and in the ordinary course of business;
(9) Attachment or judgment Liens individually or in the
aggregate not in excess of $50,000 or while such Liens are stayed by a Court of
competent jurisdiction, provided none of the assets of any Loan Obligor has been
used as security in connection with obtaining such stay;
(10) Liens on real property or equipment prior to the
acquisition thereof by the Borrower or any Subsidiary thereof, provided that
such Lien is not created in contemplation of or in connection with such
acquisition, such Lien does not apply to any other property or secures
Indebtedness other than that incurred in the original acquisition of such
property and such Lien does not materially interfere with the use, occupancy and
operation of any property, materially reduce the fair market value of such
property but for such Lien or result in any material increase in the cost of
operating, occupying or owning (or leasing) such property; or
(11) Liens permitted by Section 2.2(e)(ii) of the Security
Agreement.
SECTION 7.2 Sales of Assets. Sell, assign, discount, transfer,
or otherwise dispose of any assets of any kind without the written consent of
Lenders except (i) for the purpose of collection or settlement in the ordinary
course of business, (ii) the sale of any such accounts to the Lenders, (iii) the
sale of general intangibles to the extent permitted by Section 2.2(e)(i) of the
Security Agreement, (iv) the sale of tangible assets with a combined sale price
of not more than $100,000 or (v) the license or sale of custom or customized
software code developed in the ordinary course of business of a Loan Obligor
pursuant to a contract with a Customer consistent with past practice.
SECTION 7.3 Indebtedness. Incur, create, assume or permit to
exist any Indebtedness, except:
(1) Indebtedness existing on the date hereof and set forth in
Schedule 7.3;
20
22
(2) Indebtedness created hereunder and under the Loan
Documents or the Debenture;
SECTION 7.4 Dividends and Distributions; Restrictions on
Ability of Subsidiaries to Pay Dividends. The Borrower will not declare or pay
any dividends, distributions or other amounts of any class of its stock (other
than amounts payable solely in its common stock) or directly or indirectly
purchase, redeem or otherwise acquire or retire any of its capital stock.
SECTION 7.5 Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates except as
disclosed in Schedule 7.5 hereto.
8. EVENTS OF DEFAULT
SECTION 8.1 If one or more of the following described "Events
of Default" shall occur:
(1) any Loan Obligor shall default in the payment of (i)
interest on a Revolving Credit Note , and such default shall continue for five
(5) business days after the due date thereof, or (ii) the principal of a
Revolving Credit Note; or
(2) any of the representations or warranties made by any Loan
Obligor in any Loan Document or in any certificate or financial or other
statements heretofore or hereafter furnished by or on behalf of any Loan Obligor
in connection with the execution, delivery or performance of any Loan Document,
including, but not limited to, the certificates required by Sections 5.1(6),
5.1(7), 5.2(1), 5.2(6) and 6.5, shall be false or misleading at the times as of
which it is made; or
(3) any Loan Obligor shall fail to materially perform or
observe any covenant or agreement in a Loan Document or any other covenant,
term, provision, condition, agreement or obligation of such Loan Obligor under a
Loan Document and such failure shall continue uncured for a period of ten (10)
business days after notice of such failure; or
(4) the Borrower and its subsidiaries shall, on a consolidated
basis, become insolvent; or
(5) any Loan Obligor shall (a) admit in writing its inability
to pay its debts generally as they mature; (b) make an assignment for the
benefit of creditors or commence proceedings for its dissolution; or (c) apply
for or consent to the appointment of a trustee, liquidator or receiver for it or
for a substantial part of its property or business; or
(6) a trustee, liquidator or receiver shall be appointed for a
Loan Obligor or for a substantial part of its property or business without its
consent and shall not be discharged within forty-five (45) days after such
appointment; or
21
23
(7) any governmental agency or any court of competent
jurisdiction shall assume custody or control of the whole or any substantial
portion of the properties or assets of a Loan Obligor and shall not be dismissed
within forty-five (45) days thereafter; or
(8) a Loan Obligor shall sell or otherwise transfer all or
substantially all of its assets; or
(9) bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings, or relief under any bankruptcy law or any law
for the relief of debt shall be instituted by or against any Loan Obligor and,
if instituted against any Loan Obligor shall not be dismissed within forty-five
(45) days after such institution, or such Loan Obligor shall by any action or
answer approve of, consent to, or acquiesce in any such proceedings or admit to
any material allegations of, or default in answering a petition filed in any
such proceeding; or
(10) any Loan Obligor shall be in default of any other of its
indebtedness exceeding $100,000, or any other event shall have occurred, and as
a result thereof the holders thereof shall have accelerated or shall have the
right (upon the giving of notice, the passage of time, or both) to accelerate
such indebtedness; or
(11) a "going private" transaction under Rule 13e-3
promulgated pursuant to the Exchange Act shall have been announced; or
(12) a tender offer by the Borrower under Rule 13e-4
promulgated pursuant to the Exchange Act shall have been announced (i) on or
before the eighteen (18) month anniversary of the Closing Date, and/or (ii) to
which the Borrower is or will be required to dedicate more than 10% of its
available cash and marketable securities; or
(13) an Event of Default shall have occurred under any other
Loan Documents, the Debenture, the Purchase Agreement (as defined in the
Debenture) or the Registration Rights Agreement (as defined in the Debenture)
all as may be amended and supplemented on or after the date hereof; or
(14) a Change in Control shall have occurred; or
(15) failure to deliver the information called for under
Section 6.5, in the form required, on or before the due date thereof; or
(16) the total value of the Eligible Accounts of the Loan
Obligors less, if any, the total outstanding principal balance of Revolving
Credit Loans to all Loan Obligors (the "Eligible Account Cushion") shall be less
than $7,000,000. If the Eligible Account Cushion is less than $7,000,000 and can
be restored to a number greater than or equal to $7,000,000 by a prepayment of
the Revolving Credit Loans, an Event of Default shall not exist by reason of
this paragraph (16) if such prepayment is made concurrently with the delivery of
the certificate required by Section 6.5 at the time required for such delivery;
or
(17) the aggregate Eligible Accounts for all Loan Obligors is
less than $7,000,000 at any time the Loan Obligors are required to determine the
Eligible Accounts pursuant to Section 6.5;
22
24
then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Lenders (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
any Lender such Lender may declare its Revolving Credit Notes issued by any and
all Loan Obligors immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything herein or in any other instruments contained to the contrary
notwithstanding, and the Lender may immediately, and without expiration of any
period of grace, enforce any and all of the Lender's rights and remedies
provided herein or any other rights or remedies afforded by law.
9. FEES AND EXPENSES.
SECTION 9.1 Fees and Expenses. The Loan Obligors shall assume
and pay to Lenders upon demand all ordinary and necessary costs and expenses
incurred by the Lenders in connection with the preparation and negotiation of
Loan Documents, the making of the Revolving Credit Loans, due diligence and the
protection and enforcement of Lenders' rights granted under the Loan Documents,
including without limitation all fees and expenses (up to $175,000 of Lenders'
legal counsel. The payment due hereunder shall be due upon execution of this
Agreement. Loan Obligors shall pay the estimated fees and expenses of Lenders'
legal counsel as provided by such counsel (up to the maximum amount); if the
actual fees and expenses are less, the excess will be returned; if the actual
fees and expenses are more, Loan Obligors shall pay the shortfall (up to the
maximum). A Lender may pay the estimated amount of such fees and expenses and
have it credited to such Lender's obligation to extend a loan (the payment to
such counsel shall be deemed loan proceeds received by the Loan Obligors).
SECTION 9.2 Costs and Expenses. The Loan Obligors agree to pay
upon demand all of Lenders' out-of-pocket expenses, including reasonable
attorneys' fees and expenses incurred in connection with the enforcement of the
Loan Documents. Lenders may pay someone else to help collect the Revolving
Credit Loans and to enforce the Loan Documents, and Loan Obligors will pay that
amount. This includes Lenders' attorneys' reasonable legal fees and expenses,
whether or not there is a lawsuit, including reasonable attorneys' fees for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection services.
Loan Obligors also will pay any court costs, in addition to all other sums
provided by law.
10. INDEMNIFICATION BY THE BORROWER.
SECTION 10.1 Each Loan Obligor agrees to indemnify and hold
each of the Lenders harmless from and against any and all damages, losses,
liabilities, deficiencies, Taxes, costs and/or expenses (including all
reasonable legal fees, expenses and other out-of-pocket costs) (collectively,
"Damages") resulting from, arising out of or in connection with (a) any
misrepresentation or breach of warranty on the part of any Loan Obligor under
any Loan Document or non-fulfillment by any Loan Obligor of any covenant or
agreement in any Loan Document, (b) the making of the loans pursuant to the Loan
Documents and the status of a Lender thereunder and (c) enforcement of this
Section 10.1.
23
25
11. MISCELLANEOUS
SECTION 11.1 Notices. All notices required to be given under
this Security Agreement shall be given in writing and shall be effective when
actually delivered or two (2) days after being deposited in the United States
mail, first class, postage prepaid, addressed to the party to whom the notice is
to be given or, if via facsimile, when sent via facsimile transmission to the
party to whom the notice is to be given and confirmation of such transmission
has been received, at the address and/or facsimile number shown below:
If to a Loan Obligor:
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
Facsimile No.: (000) 000-0000
And a copy to:
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: General Counsel
Facsimile No.: (000) 000-0000
If to the Collateral Agent:
c/o The Palladin Group, L.P.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
If to Lenders:
24
26
To each Lender at the address
and or fax number set forth on
Schedule I to the Purchase Agreement
with a copy to: Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties, specifying that
the purpose of the notice is to change the party's address. For notice purposes,
Borrower agrees to keep the Collateral Agent informed at all times of Borrower's
current addresses.
SECTION 11.2 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Obligors herein and in the
certificates or other instruments prepared or delivered in connection with this
Agreement, any of the Security Documents or any other Loan Document, shall be
considered to have been relied upon by the Lenders and shall survive the making
by the Lenders of the Revolving Credit Loans and the execution and delivery to
the Lenders of their respective Revolving Credit Notes and the occurrence of any
other Credit Event and shall continue in full force and effect as long as the
principal of or any accrued interest on the Revolving Credit Notes or any other
fee or amount payable under the Revolving Credit Note or this Agreement or any
other Loan Document is outstanding and unpaid and so long as the Revolving
Credit Commitment has not been terminated.
SECTION 11.3 Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Loan Obligors or the Lenders,
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 11.4 Applicable Law. THIS AGREEMENT AND THE NOTES AND
THE OTHER LOAN DOCUMENTS, IN ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL
OBLIGATION LAW OF THE STATE OF NEW YORK, SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION.
SECTION 11.5 Payments. Should the principal of or interest on
the Revolving Credit Notes or any fee or other amount payable hereunder become
due and payable on other than a Business Day, payment in respect thereof may be
made on the next succeeding Business Day (except as otherwise specified in the
definition of "Interest Period"), and such extension of time shall in such case
be included in computing interest, if any, in connection with
26
27
such payment. All payments by the Loan Obligors hereunder and all Revolving
Credit Loans made by the Lenders hereunder shall be made in lawful money of the
United States of America in immediately available funds. Payments to the Lenders
shall be in accordance with written wire instructions provided by such Lenders.
SECTION 11.6 Waivers; Amendments. No failure or delay of a
party in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the parties hereunder are cumulative
and not exclusive of any rights or remedies which they may otherwise have.
Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Loan Obligors and the Lenders. Notwithstanding anything to the contrary
herein, at the request of the Lenders, reasonable changes shall be made to any
certificates required to be delivered by Loan Obligors pursuant to Sections 5
and 6.5 to enable the Lenders to verify compliance by the Loan Obligors with the
terms of the Loan Documents.
SECTION 11.7 Severability. In the event any one or more of the
provisions contained in this Agreement or in the Revolving Credit Note or any of
the other Loan Documents should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein or therein shall not in any way be affected or impaired
thereby.
SECTION 11.8 Entire Agreement; WAIVER OF JURY TRIAL, etc. (a)
This Agreement, the Revolving Credit Note and the other Loan Documents
constitute the entire contract between the parties hereto relative to the
subject matter hereof. Any previous agreement among the parties hereto with
respect to the subject matter hereof is superseded by this Agreement, the
Revolving Credit Notes and the other Loan Documents. Except as expressly
provided herein or in the Revolving Credit Note or the Loan Documents (other
than this Agreement), nothing in this Agreement, the Revolving Credit Note or in
the other Loan Documents, expressed or implied, is intended to confer upon any
party, other than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, the Revolving Credit Note or
the other Loan Documents.
(1) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
26
28
(2) Except as prohibited by law, each party hereto hereby
waives any right it may have to claim or recover special, indirect, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual or direct damages.
SECTION 11.9 Confidentiality. The Lenders agrees to keep
confidential (and to cause their respective officers, directors, employees,
agents and representatives to keep confidential) any non-public information,
materials and documents that may be furnished to the Lenders (the
"Information"). Notwithstanding the foregoing, the Lenders shall be permitted to
disclose Information (i) to such of its officers, directors, employees, agents
and representatives as need to know such Information in connection with its
participation in any of the Transactions or the administration of this Agreement
or the other Loan Documents; (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
governmental agency or authority; (iii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this Agreement,
(B) becomes available to the Lenders on a non-confidential basis from a source
other than the Loan Obligors or (C) was available to the Lenders on a
non-confidential basis prior to its disclosure to the Lenders by a Loan Obligor;
(iv) to the extent the Loan Obligors shall have consented to such disclosure in
writing; or (v) in connection with the sale of any Collateral pursuant to the
provisions of any of the other Loan Documents. The trading by any of the Lenders
in any securities of Borrower, including, but not limited to options and other
derivatives with respect to Borrower's securities, while in possession of any
Information with respect to Borrower or its Subsidiaries provided by any Loan
Obligor pursuant to any of the Loan Documents, including Information provided
after the date hereof, will not constitute a misappropriation of such
Information by the Lenders and will not constitute a violation of any obligation
or duty owed by any Lender to any Loan Obligor.
SECTION 11.10 Submission to Jurisdiction. (a) Any legal action
or proceeding with respect to this Agreement or the Revolving Credit Note or any
other Loan Document may be brought in the courts of the State of New York
located in New York County or of the United States of America for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Loan Obligor hereby accept for themselves and in respect of their property,
generally and unconditionally, the jurisdiction of the aforesaid courts. The
Loan Obligors and each of the Lenders hereby irrevocably waive, in connection
with any such action or proceeding, any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which they may now or hereafter have to the bringing of
any.
SECTION 11.11 Subsidiary Liability. Anything herein or in any
other Loan Document to the contrary notwithstanding, the maximum liability of
each Subsidiary hereunder and under the other Loan Documents shall in no event
exceed the amount allowed under applicable federal and state laws, including
laws relating to the insolvency of debtors, fraudulent conveyance or transfer or
laws affecting the rights of creditors generally (after giving effect to the
right of contribution established in Section 11.12).
SECTION 11.12 Right Of Contribution. Each Loan Obligor hereby
agrees that to the extent that a Loan Obligor shall have paid more than its
proportionate share of any payment made hereunder, such Loan Obligor shall be
entitled to seek and receive contribution from and against any other Loan
Obligor hereunder which has not paid its proportionate share of
27
29
such payment. Each Loan Obligor's right of contribution shall be subject to the
terms and conditions of Section 11.13. The provisions of this Section 11.12
shall in no respect limit the obligations and liabilities of any Loan Obligor to
the Lenders, and each Loan Obligor shall remain liable to the Lenders for the
full amount for which such Loan Obligor is obligated hereunder.
SECTION 11.13 No Subrogation. Notwithstanding any payment made
by any Loan Obligor hereunder or any set-off or application of funds of any Loan
Obligor by the Lenders, no Loan Obligor shall be entitled to be subrogated to
any of the rights of the Lenders against a Loan Obligor or any collateral
security or guarantee or right of offset held by the Lenders for the payment of
the Obligations, nor shall any Loan Obligor seek or be entitled to seek any
contribution or reimbursement from another Loan Obligor in respect of payments
made by such Loan Obligor hereunder, until all amounts owing to the Lenders by
the Loan Obligors under any Loan Document or under the Debentures are paid in
full. If any amount shall be paid to any Loan Obligor on account of such
subrogation rights at any time when any such amounts shall not have been paid in
full, such amount shall be held by such Loan Obligor in trust for the Lenders,
segregated from other funds of such Loan Obligor, and shall, forthwith upon
receipt by such Loan Obligor, be turned over to the Lenders in the exact form
received by such Loan Obligor (duly indorsed by such Loan Obligor to the
Lenders, if required), to be applied against the Obligations of the Loan
Obligors under the Loan Documents and the Debentures, whether matured or
unmatured, in such order as the Lenders may determine.
SECTION 11.14 Counterparts; Facsimile Signature. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original but all of
which when taken together shall constitute but one contract. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed signature page hereto.
SECTION 11.15 Headings and Terms Generally. Article and
Section headings used herein are for convenience of reference only and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Agreement. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any person shall be construed to include such person's successors and
assigns, (c) the words "herein", "hereof' and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
28
30
IN WITNESS WHEREOF, the Borrower and the Lenders have caused
this Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
BORROWER:
APPLIEDTHEORY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
_________________________________
Xxxxx X. Xxxxxx, President
SUBSIDIARIES:
APPLIEDTHEORY GEORGIA CORPORATION
By: /s/ Xxxxx X. Xxxxxx
_________________________________
Xxxxx X. Xxxxxx, President
APPLIEDTHEORY SEATTLE CORPORATION
By: /s/ Xxxxx X. Xxxxxx
_________________________________
Xxxxx X. Xxxxxx, President
APPLIEDTHEORY CALIFORNIA CORPORATION
By: /s/ Xxxxx X. Xxxxxx
_________________________________
Xxxxx X. Xxxxxx, President
APPLIEDTHEORY VIRGINIA CORPORATION
By: /s/ Xxxxx X. Xxxxxx
_________________________________
Xxxxx X. Xxxxxx, President
[SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT]
31
APPLIEDTHEORY AUSTIN CORPORATION
By: /s/ Xxxxx X. Xxxxxx
_________________________________
Xxxxx X. Xxxxxx, President
APPLIEDTHEORY COLORADO CORPORATION
By: /s/ Xxxxx X. Xxxxxx
_________________________________
Xxxxx X. Xxxxxx, President
LENDERS:
HALIFAX FUND, L.P.
By: The Palladin Group, L.P.,
as Attorney-in-Fact
By: /s/ Xxxxxxx Xxxxxxx
________________________________
Name: Xxxxxxx Xxxxxxx
Title: Counsel
PALLADIN PARTNERS I, L.P.
By: The Palladin Group, L.P.,
as Attorney-in-Fact
By: /s/ Xxxxxxx Xxxxxxx
_________________________________
Name: Xxxxxxx Xxxxxxx
Title: Counsel
PALLADIN OVERSEAS FUND LTD.
By: The Palladin Group, L.P.,
as Attorney-in-Fact
By: /s/ Xxxxxxx Xxxxxxx
_________________________________
Name: Xxxxxxx Xxxxxxx
Title: Counsel
XxXX CONVERTIBLE ARBITRAGE FUND,LTD.
By: The Palladin Group, L.P., as
Attorney-in-Fact
By: /s/ Xxxxxxx Xxxxxxx
________________________________
Name: Xxxxxxx Xxxxxxx
Title: Counsel
[SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT]
32
LANCER SECURITIES (CAYMAN) LTD.
By: The Palladin Group, L.P.,
as Attorney-in-Fact
By: /s/ Xxxxxxx Xxxxxxx
________________________________
Name: Xxxxxxx Xxxxxxx
Title: Counsel
XXXXXXX ASSOCIATES, L.P.
By: /s/ Xxxx X. Xxxxxx
________________________________
Name: Xxxx X. Xxxxxx
Title: General Partner
XXXXXXX INTERNATIONAL, L.P.
By: Xxxxxxx International Capital
Advisors Inc., as
Attorney-in-Fact
By: s/ Xxxx X. Xxxxxx
________________________________
Name: Xxxx X. Xxxxxx,
President
[SIGNATURE PAGE TO REVOLVING CREDIT AGREEMENT]
33
LIST OF EXHIBITS AND SCHEDULES
Exhibit A - Lender's Commitments
Exhibit B - Form of Revolving Credit Note
Exhibit C - Form of Security Agreement
Exhibit D - List of Subsidiaries
Exhibit E - Form of Subsidiary Guarantee
Exhibit F - Form of Parent Guarantee
Exhibit G - Intellectual Property
Schedule 6.5 - Borrowing Base Certificate
Schedule 7.1(6) Existing Liens
Schedule 7.3 - Existing Indebtedness
Schedule 7.5 - Existing Transactions with Affiliates
