EXHIBIT 10.5
GUARANTEE
GUARANTEE dated as of June 28, 2001 made by LIONBRIDGE TECHNOLOGIES, INC.,
a Delaware corporation (the "Guarantor"), in favor of SILICON VALLEY BANK (the
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"Bank").
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W I T N E S S E T H :
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WHEREAS, pursuant to the Loan and Security Agreement of even date herewith
among INT'X.xxx, Inc., International Language Engineering Corporation, Harvard
Translations, Inc. and Lionbridge Technologies California, Inc. (together, the
"Borrowers"), and the Bank (the "Loan Agreement"), the Bank has agreed, subject
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to the terms and conditions thereof, to make credit extensions to the Borrowers;
WHEREAS, it is a condition precedent to the obligation of the Bank to make
credit extensions to the Borrowers under the Loan Agreement that, among other
things, the Guarantor shall have executed and delivered a guarantee of the
obligations of the Borrowers under the Loan Agreement, including, without
limitation, the Borrowers' obligations under their promissory note to the Bank
issued pursuant to the Loan Agreement (the "Note");
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WHEREAS, the Guarantor is the registered and beneficial owner of 100% of
the outstanding capital stock of Harvard Translations, Inc. and Lionbridge
Technologies California, Inc. and of 100% of the outstanding capital stock of
INT'X.xxx, Inc., which in turn is the registered and beneficial owner of 100% of
the outstanding capital stock of International Language Engineering Corporation
and as a consequence the Guarantor will derive benefit from the Bank's agreement
to make Credit Extensions to the Borrowers;
WHEREAS, the Guarantor now wishes to enter into this Guarantee in order to
induce the Bank to enter into the Loan Agreement;
NOW, THEREFORE, in consideration of the premises and to induce the Bank to
make advances and other extensions of credit to the Borrowers thereunder, the
Guarantor hereby agrees with the Bank as follows:
Defined Terms. Unless otherwise defined herein, terms which are defined in the
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Loan Agreement and used herein are so used as so defined. In addition, the
following terms shall have the meanings set forth below:
"Indebtedness" of any Person at any date shall mean, (a) all
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indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (excluding current trade liabilities incurred
in the ordinary course of business and payable in accordance with customary
practices, but including any class of capital stock of such Person with
fixed payment obligations or with redemption at the option of the holder),
or which is evidenced by a note, bond, debenture or similar instrument, (b)
all obligations of such Person under leases that should be treated as
capitalized leases in accordance with GAAP, (c) all obligations of such
Person in respect of acceptances issued or created for the account of such
Person, and all reimbursement obligations (contingent or otherwise) of such
Person in respect of any letters of credit issued for the account of such
Person and (d) all liabilities secured by any Lien on any property owned by
such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Lien" means any mortgage, lien, deed of trust, charge, pledge,
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security interest or other encumbrance.
"Material Adverse Effect" means a material adverse effect on (a) the
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business, operations, property, condition (financial or otherwise) of the
Guarantor and its Subsidiaries taken as a whole, (b) the ability of the
Guarantor to perform its obligations under this Guarantee or (c) the
validity or enforceability of this Guarantee, or the rights of the Bank
hereunder.
"Obligations" shall mean all obligations of the Borrowers to the Bank,
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whether such obligations are now existing or hereafter incurred or created,
joint or several, direct or indirect, absolute or contingent, due or to
become due, matured or unmatured, liquidated or unliquidated, arising by
contract, operation of law or otherwise, including, without limitation, (a)
all principal of and interest (including, without limitation, any interest
which accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency or reorganization of the
Borrowers) on any advance to the Borrowers under the Loan Agreement or the
Note; (b) all other amounts (including, without limitation, any fees or
expenses) payable by the Borrowers under the Loan Agreement, the Note or
any other Loan Document; (c) all amounts payable to the Bank in connection
with the issuance of any letter of credit by the Bank for the account of
the Borrowers or any drawing thereunder, including without limitation, any
reimbursement obligation and letter of credit fees payable under any letter
of credit application or reimbursement agreement executed by the Borrowers
in connection with any such letter of credit; (d) all amounts payable to
the Bank in connection with foreign exchange contracts between the
Borrowers and the Bank, including without limitation, any fees payable
thereunder; and (e) any renewals, refinancings or extensions of any of the
foregoing.
"Subordinated Debt" means Indebtedness of the Borrowers that is
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subordinated to the Indebtedness of the Borrowers owing to the Bank either
(a) pursuant to a subordination agreement in form and substance
satisfactory to the Bank between the Bank and the holder(s) of such
Indebtedness or (b) pursuant to the terms thereof, where the Bank has
confirmed in writing that such terms are satisfactory to it.
"Subsidiary" means with respect to any Person, any Person (other than
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an individual) of which more than 50% of the voting stock or other equity
interests is owned or controlled, directly or indirectly, by that Person or
one or more Affiliate of that Person.
"Tangible Net Worth" means, at any time, the excess of total assets
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over total liabilities, determined in accordance with generally accepted
accounting principles, with the following adjustments:
(A) there shall be excluded from assets: (i) notes, accounts
receivable and other obligations owing to the Guarantor or its Subsidiaries
from their respective officers or other Affiliates, and (ii) all assets
which would be classified as intangible assets under GAAP, including
without limitation goodwill, licenses, patents, trademarks, trade names,
copyrights, capitalized software and organizational costs, licenses and
franchises
(B) there shall be excluded from liabilities: all indebtedness which
is subordinated to the Obligations under a subordination agreement in form
specified by or acceptable to the Bank or by language in the instrument
evidencing the indebtedness which is acceptable to the Bank in its
discretion.
Guarantee. The Guarantor hereby unconditionally and irrevocably guarantees to
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the Bank the prompt and complete payment and performance by the Borrowers when
due (whether at stated maturity, by acceleration or otherwise) of the
Obligations. The Guarantor further agrees to pay any and all expenses
(including, without limitation, all reasonable fees and disbursements of counsel
to the Bank) which may be paid or incurred by the Bank in enforcing, or
obtaining advice of counsel in respect of, any of its rights under this
Guarantee. The Guarantee shall remain in full force and effect until the
Obligations are paid in full and the Bank's obligation to make advances or other
credit extensions under the Loan Agreement is terminated, notwithstanding that
from time to time prior thereto the Borrowers may be free from any Obligations.
Right of Set-off. Regardless of the adequacy of any collateral or other means of
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obtaining repayment of the Obligations, any deposits (general or special, time
or demand, provisional or final, including, but not limited to indebtedness
evidenced by a certificate of deposit, whether matured or unmatured) and any
other indebtedness at any time held by the Bank or owing by the Bank to the
Guarantor may, at any time and from time to time during the existence of an
Event of Default, without prior notice to the Guarantor or compliance with any
other condition precedent now or hereafter imposed by statute, rule of law or
otherwise (all of which are hereby expressly waived to the extent permitted by
law) be set off, appropriated and applied by the Bank against any and all
obligations of the Guarantor to the Bank then due and payable in such manner as
the Bank in its sole discretion may determine, and
the Guarantor hereby grants the Bank a continuing security interest in such
deposits and indebtedness for the payment and performance of such obligations.
Subrogation and Contribution. Until payment and performance in full of all the
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Obligations, the Guarantor irrevocably and unconditionally waives any and all
rights to which it may be entitled, by operation of law or otherwise, (a) to be
subrogated, with respect to any payment made by the Guarantor hereunder, to the
rights of the Bank against the Borrowers, or otherwise to be reimbursed,
indemnified or exonerated by the Borrowers in respect thereof or (b) to receive
any payment, in the nature of contribution or for any other reason, from any
other guarantor of the Obligations with respect to any payment made by the
Guarantor hereunder.
Effect of Bankruptcy Stay. If acceleration of the time for payment or
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performance of any of the Obligations is stayed upon the insolvency, bankruptcy
or reorganization of the Borrowers or any other Person or otherwise, all such
amounts otherwise subject to acceleration shall nonetheless be payable by the
Guarantor under this Guarantee forthwith upon demand.
Receipt of Loan Documents, Etc. The Guarantor confirms, represents and warrants
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to the Bank that (i) it has received true and complete copies of the Loan
Agreement, the Note and the other Loan Documents entered into as of the date
hereof from the Borrowers, has read the contents thereof and reviewed the same
with legal counsel of its choice, (ii) no representations or agreements of any
kind have been made to the Guarantor which would limit or qualify in any way the
terms of this Guarantee, (iii) the Bank has made no representation to the
Guarantor as to the creditworthiness of the Borrowers and (iv) the Guarantor has
established adequate means of obtaining from the Borrowers on a continuing basis
information regarding the Borrowers' financial condition. The Guarantor agrees
to keep adequately informed from such means of any facts, events, or
circumstances which might in any way affect the Guarantor's risks under this
Guarantee, and the Guarantor further agrees that the Bank shall have no
obligation to disclose to the Guarantor any information or documents acquired by
the Bank in the course of its relationship with the Borrowers.
Amendments, etc. with respect to the Obligations. The obligations of the
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Guarantor under this Guarantee shall remain in full force and effect without
regard to, and shall not be released, altered, exhausted, discharged or in any
way affected by any circumstance or condition (whether or not the Borrowers
shall have any knowledge or notice thereof), including without limitation (i)
any amendment or modification of or supplement to the Loan Agreement, the Note
or any other Loan Document, or any obligation, duty or agreement of the
Borrowers or any other Person thereunder or in respect thereof, (ii) any
assignment or transfer in whole or in part of any of the Obligations, (iii) any
furnishing or acceptance of any direct or indirect security or guaranty, or any
release of or non-perfection or invalidity of any direct or indirect security or
guaranty, for any of the Obligations, (iv) any waiver, consent, extension,
renewal, indulgence, settlement, compromise or other action or inaction under or
in respect of the Loan Agreement, the Note or any other Loan Document, or any
exercise or nonexercise of any right, remedy, power or privilege under or in
respect of any such instrument (whether by operation of law or otherwise), (v)
any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation or similar proceeding with respect to the Borrowers or
any other Person (other than the Guarantor) or any of their respective
properties or creditors or any resulting release or discharge of any
Obligations, (vi) the voluntary or involuntary sale or other disposition of all
or substantially all the assets of the Borrowers or any other Person, (vii) the
voluntary or involuntary liquidation, dissolution or termination of the
Borrowers or any other Person, (viii) any invalidity or unenforceability, in
whole or in part, of any term of this Guarantee or of the Loan Agreement, the
Note or any other Loan Document, or any obligation, duty or agreement of the
Borrowers or any other Person (other than the Guarantor) thereunder or in
respect thereof, or any provision of any applicable law or regulation purporting
to prohibit the payment or performance by the Borrowers or any other Person
(other than the Guarantor) of any Obligations, (ix) any failure on the part of
the Borrowers or any other Person for any reason to perform or comply with any
term of the Loan Agreement, the Note or any other Loan Document or any other
agreement or (x) any other act, omission or occurrence whatsoever, whether
similar or dissimilar to the foregoing. The Guarantor authorizes the Borrowers,
each other guarantor in respect of Obligations and the Bank at any time in its
discretion, as the case may be, to alter any of the terms of Obligations.
Guarantor as Principal. If for any reason the Borrowers or any other Person is
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under no legal obligation to discharge any Obligations, or if any other moneys
included in Obligations have become unrecoverable from the Borrowers or any
other Person by operation of law or for any other reason, including without
limitation, the invalidity or
irregularity in whole or in part of any Obligation or of the Loan Agreement, the
Note or any other Loan Document, the legal disability of the Borrowers or any
other obligor in respect of Obligations, any discharge of or limitation on the
liability of the Borrowers or any other person or any limitation on the method
or terms of payment under any Obligation, or of the Loan Agreement, the Note or
any other Loan Document, which may now or hereafter be caused or imposed in any
manner whatsoever (whether consensual or arising by operation of law or
otherwise), this Guarantee shall nevertheless remain in full force and effect
and shall be binding upon the Guarantor to the same extent as if the Guarantor
at all times had been the principal obligor on all Obligations.
Waiver of Demand, Notice, Etc. The Guarantor hereby waives, to the extent not
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prohibited by applicable law, (i) all presentments, demands for performance,
notice of nonperformance, protests, notices of protests and notices of dishonor
in connection with the Obligations or the Loan Agreement, the Note or any other
Loan Document, including but not limited to notice of additional indebtedness
constituting Obligations or the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of the Borrowers, the Bank, any endorser or creditor of the Borrowers or any
other Person, (ii) any notice of any indulgence, extensions or renewals granted
to any obligor with respect to Obligations, (iii) any requirement of diligence
or promptness in the enforcement of rights under the Loan Agreement, the Note or
any other Loan Document, or any other agreement or instrument directly or
indirectly relating thereto or to the Obligations, (iv) any enforcement of any
present or future agreement or instrument relating directly or indirectly
thereto or to the Obligations, (v) notice of any of the matters referred to in
Paragraph 8 above, (vi) any defense of any kind which the Guarantor may now have
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with respect to his liability under this Guarantee, (vii) any right to require
the Bank, as a condition of enforcement of this Guarantee, to proceed against
the Borrowers or any other Person or to proceed against or exhaust any security
held by the Bank at any time or to pursue any other right or remedy in the
Bank's power before proceeding against the Guarantor, (viii) any defense that
may arise by reason of the incapacity, lack of authority, death or disability of
any other Person or Persons or the failure of the Bank to file or enforce a
claim against the estate (in administration, bankruptcy or any other proceeding)
of any other Person or Persons, (ix) any defense based upon an election of
remedies by the Bank, (x) any defense arising by reason of any "one action" or
"anti-deficiency" law or any other law which may prevent the Bank from bringing
any action, including a claim for deficiency, against the Guarantor, before or
after the Bank's commencement or completion of any foreclosure action, either
judicially or by exercise of a power of sale, (xi) any defense based upon any
lack of diligence by the Bank in the collection of any Obligation, (xii) any
duty on the part of the Bank to disclose to the Guarantor any facts the Bank may
now or hereafter know about the Borrowers or any other obligor in respect of
Obligations, (xiii) any defense arising because of an election made by the Bank
under Section 1111(b)(2) of the United States Bankruptcy Code, (xiv) any defense
based on any borrowing or grant of a security interest under Section 364 of the
United States Bankruptcy Code and (xv) any defense based upon or arising out of
any defense which the Borrowers or any other Person may have to the payment or
performance of Obligations (including but not limited to failure of
consideration, breach of warranty, fraud, payment, accord and satisfaction,
strict foreclosure, statute of frauds, bankruptcy, infancy, statute of
limitations, lender liability and usury). Guarantor acknowledges and agrees that
each of the waivers set forth herein on the part of the Guarantor is made with
Guarantor's full knowledge of the significance and consequences thereof and that
under the circumstances the waivers are reasonable. If any such waiver is
determined to be contrary to any applicable law or public policy, such waiver
shall be effective only to the extent permitted by such law or public policy.
Reinstatement. This Guarantee shall continue to be effective, or be reinstated,
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as the case may be, if at any time payment, or any part thereof, of any of the
Obligations is rescinded or must otherwise be restored or returned by the Bank
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrowers or upon or as a result of the appointment of a receiver,
intervenor or conservator of, or trustee or similar officer for, the Borrowers
or any substantial part of their property, or otherwise, all as though such
payments had not been made.
Payments. The Guarantor hereby agrees that the Obligations will be paid to the
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Bank without set-off or counterclaim in U.S. Dollars at the office of the Bank
located at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000, or to such other
location as the Bank shall notify the Guarantor.
Representations and Warranties. The Guarantor represents and warrants that:
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Corporate Existence. The Guarantor is a corporation duly incorporated and
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validly existing under the laws of the jurisdiction of its incorporation, and is
duly licensed or qualified as a foreign corporation in all states wherein the
nature of its property owned or business transacted by it makes such licensing
or qualification necessary, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect.
No Violation. The execution, delivery and performance of this Guarantee will not
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contravene any provision of law, statute, rule or regulation to which the
Guarantor or any of the Borrowers is subject or any judgment, decree, franchise,
order or permit applicable to the Guarantor or any of the Borrowers, or will
conflict or be inconsistent in any material respect with or will result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default in any material respect under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any material
portion of the property or assets of the Guarantor or any of the Borrowers
pursuant to the terms of any contractual obligation of the Guarantor or any of
the Borrowers, or violate any provision of the corporate charter or by-laws of
the Guarantor.
Corporate Authority and Power. The execution, delivery and performance of this
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Guarantee is within the corporate powers of the Guarantor and has been duly
authorized by all necessary corporate action on the part of the Guarantor.
Enforceability. This Guarantee constitutes a valid and binding obligation of the
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Guarantor enforceable against the Guarantor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and except as enforceability may be subject to
general principles of equity, whether such principles are applied in a court of
equity or at law.
Governmental Approvals. No order, permission, consent, approval, license,
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authorization, registration or validation of, or filing with, or exemption by,
any governmental authority is required to authorize, or is required in
connection with, the execution, delivery and performance of this Guarantee, or
the taking of any action contemplated hereby or thereby.
Audited Financial Statements. The Guarantor has heretofore furnished the Bank
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with copies of the audited consolidated balance sheet of the Guarantor and its
Subsidiaries as of December 31, 2000, and the related audited consolidated
statements of income and of cash flows for the fiscal year of the Guarantor and
its Subsidiaries ended on such date, examined by PricewaterhouseCoopers LLP (the
"Accountants"). Such financial statements (including in each case the related
schedules and notes) fairly present the consolidated financial condition of the
Guarantor and its Subsidiaries as of December 31, 2000, and the consolidated
results of their operations and their consolidated cash flows for the fiscal
year then ended.
Unaudited Interim Financial Statements. The Guarantor has heretofore furnished
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the Bank with complete and correct copies of the unaudited consolidated balance
sheet of the Guarantor and its Subsidiaries as of March 31, 2001, and the
related consolidated statements of income and of cash flows for the three-month
period ended on such date. Such financial statements (including in each case the
related schedules and notes) fairly present the consolidated financial condition
of the Guarantor and its Subsidiaries as of March 31, 2001, and the consolidated
results of their operations and their consolidated cash flows for the three-
month period ended on such date (subject to year-end audit adjustments).
No Other Liabilities, Restricted Payments, etc. Neither the Guarantor nor any of
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its Subsidiaries has any material liabilities, contingent or otherwise,
including liabilities for taxes or any unusual forward or long-term commitments
or any guarantee, which are not disclosed by or included in the financial
statements referred to above or in the notes thereto, and there has been no
development or event, nor any prospective development or event, including any
unrealized or anticipated losses from any unfavorable commitments of the
Guarantor or any of its Subsidiaries, which could reasonably be expected to have
a Material Adverse Effect. During the period from December 31, 2000 to the date
hereof: (i) there has been no sale, transfer or other disposition by the
Guarantor or any of its Subsidiaries of any material part of its business or
property and no purchase or other acquisition of any business or property
(including any capital stock of any Person) material in relation to the
consolidated financial condition of the Guarantor and its Subsidiaries at
December 31, 2000; and (ii) neither the Guarantor nor any of its Subsidiaries
has made a Restricted Payment, or agreed or committed itself to make a
Restricted Payment. For purposes hereof, "Restricted Payment" means, with
respect to the Guarantor or any Subsidiary thereof, (a) any dividend or other
distribution on any shares of capital stock of the Guarantor or such Subsidiary
(except dividends payable solely in shares of capital stock or rights to acquire
capital stock of the Guarantor, and dividends payable solely to the
Guarantor or a Subsidiary of the Guarantor), (b) any payment on account of the
purchase, redemption, retirement or acquisition of (i) any shares of the capital
stock of the Guarantor or a Subsidiary thereof or (ii) any option, warrant,
convertible security or other right to acquire shares of the capital stock of
the Guarantor or a Subsidiary thereof, other than, in either case, payments made
solely to the Guarantor or a Subsidiary of the Guarantor or (c) any required or
optional payment of any principal of, or premium or interest on, or any required
or optional purchase, redemption or other retirement or other acquisition of any
subordination debt issued by Guarantor or a Subsidiary of Guarantor.
GAAP. All financial statements (including in each case the related schedules and
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notes) referred to above have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except (i) as approved by the
Accountants and as disclosed therein and (ii) that interim financial statements
may lack footnotes and be subject to normal year-end adjustments).
Litigation. There are no actions, suits or proceedings pending before any
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governmental authority or, to the Guarantor's knowledge, threatened against or
affecting the Guarantor or any Borrower, which in any one case or in the
aggregate, if determined adversely to the interests of the Guarantor or any
Borrower, would have a Material Adverse Effect.
Compliance with Contract and Obligations. Neither the Guarantor nor any Borrower
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is in default under any contractual obligation or under any agreement relating
to Indebtedness, where such default could have a Material Adverse Effect.
Compliance with Law. Neither the Guarantor nor any Borrower thereof is in
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default with respect to any applicable statute, rule, writ, injunction, decree,
order or regulation of any governmental authority having jurisdiction over the
Guarantor or any Borrower which could reasonably be expected to have a Material
Adverse Effect.
Subsidiaries. The Guarantor has no Subsidiaries except as set forth on attached
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Schedule A. The Guarantor represents that INT'X.xxx, Inc., a Delaware
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corporation, Harvard Translations, Inc., a Massachusetts corporation, and
Lionbridge Technologies California, Inc., a Delaware corporation, are each a
wholly-owned subsidiary of the Guarantor. In addition, International Language
Engineering Corporation, a Colorado corporation, is a wholly-owned subsidiary of
INT'X.xxx. None of the Borrowers is subject to any restriction or constraint
under any agreement, contract or arrangement to which it is a party (including
without limitation in connection with any financing), or, except as described on
Schedule A, under applicable law that would impede or interfere in any material
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respects with their ability to declare and pay cash dividends to the Guarantor
or to borrow funds from or advance funds to the Guarantor (collectively, a "Cash
Transfer Restriction").
Investment Company Status; Limits on Ability to Incur Indebtedness. The
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Guarantor is not an "investment company" or a company "controlled by" an
investment company within the meaning of the Investment Company Act of 1940, as
amended. The Guarantor is not subject to regulation under any federal or state
statute or regulation which limits its ability to incur Indebtedness.
Title to Property. The Guarantor and each Borrower has good and marketable title
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to all of its properties and assets, in each case including the properties and
assets reflected in the consolidated balance sheet of the Guarantor and its
Subsidiaries as of December 31, 2000, except properties and assets disposed of
since that date in the ordinary course of business, and none of such properties
or assets is subject to (i) any Lien except for Permitted Liens or (ii) a defect
in title or other claim other than Permitted Liens and defects and claims that,
in the aggregate, would not have a Material Adverse Effect. The Guarantor and
the Borrowers enjoy peaceful and undisturbed possession under all leases
necessary in any material respect for the operation of their properties and
assets, none of which contains any unusual or burdensome provisions which could
reasonably be expected to have a Material Adverse Effect. All such leases are
valid and subsisting and are in full force and effect.
ERISA Plans. Each "employee benefit plan," "employee pension benefit plan,"
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"defined benefit plan" or "multiemployer plan" which the Guarantor has
established or maintained or to which the Guarantor is required to contribute
(collectively, the "Plans") is in compliance in all material respects with all
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applicable provisions of the Employment Retirement Income Security Act of 1974,
as amended ("ERISA"), and the Internal Revenue Code of 1986, as amended (the
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"Code"), and the rules and regulations thereunder, except where failure to so
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comply would
not have a Material Adverse Effect. There have been no "prohibited transactions"
under ERISA with respect to the Plans which would result in any material
liability to the Guarantor under ERISA or the Code. As used in this Guarantee,
the terms "employee benefit plan," "employee pension benefit plan," "defined
benefit plan," and "multiemployer plan" shall have the respective meanings
assigned to such terms in Section 3 of ERISA. The Guarantor thereof has not
incurred any material "accumulated funding deficiency" within the meaning of
ERISA or incurred any material liability to the Pension Benefit Guaranty
Corporation, or any successor entity (the "PBGC"), in connection with a Plan (or
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other class of benefit which the PBGC has elected to insure) established or
maintained by the Guarantor.
Taxes. All tax returns of the Guarantor and the Borrowers required to be filed
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have been timely filed and all taxes, fees and other governmental charges (other
than those being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves have been established and,
in the case of ad valorem taxes or betterment assessments, no proceedings to
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foreclose any lien with respect thereto have been commenced and, in all other
cases, no notice of lien has been filed or other action taken to perfect or
enforce such lien) shown thereon which are payable have been paid. The charges
and reserves on the books of the Guarantor and the Borrowers in respect of all
income and other taxes are adequate, and the Guarantor knows of no additional
assessment or any basis therefor. The federal income tax returns of the
Guarantor and the Borrowers have not been audited within the last three years,
all prior audits have been closed and there are no unpaid assessments, penalties
or other charges arising from such prior audits.
Representations of Borrowers. The representations and warranties of the
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Borrowers set forth in Sections 3 and 4 of the Loan Agreement are true and
correct as of the date thereof.
Covenants. The Guarantor hereby covenants and agrees with the Bank that, from
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and after the date of this Guarantee until the Obligations are paid in full and
the obligation of the Bank to make advances or other credit extensions is
terminated:
Borrowers' Covenants. The Guarantor shall cause the Borrowers to comply with and
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discharge all of their covenants and agreements contained in the Loan Agreement.
Tangible Net Worth. The Guarantor will not permit its Tangible Net Worth at the
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end of the following calendar months to be less than the amount set forth below
opposite such calendar month, plus 80% of the proceeds of the issuance and sale
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of any common or preferred stock or subordinated debt of the Guarantor received
from and after June 28, 2001.
Calendar Months Ending Minimum Tangible Net Worth
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June 30, 2001 - August 31, 2001 $2,400,000
September 30, 2001 - November 30, 2001 $2,750,000
December 31, 2001 and thereafter $4,000,000
Financial Statements, Reports, Certificates. The Guarantor shall deliver to
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Bank: (i) as soon as available, but in any event within thirty (30) days after
the end of each month, a company prepared consolidated balance sheet and income
statement covering the consolidated operations of the Borrowers and its
consolidated Subsidiaries during such period, in a form and certified by an
officer of the Guarantor reasonably acceptable to Bank; (ii) as soon as
available, but in any event within forty-five (45) days after the end of each
fiscal quarter of the Guarantor, a company prepared consolidated balance sheet
and income statement covering the consolidated operations of the Consolidated
Group during such period, in a form and certified by an officer of the Guarantor
reasonably acceptable to Bank; (iii) as soon as available, but in any event
within one hundred twenty (120) days after the end of the fiscal year of the
Consolidated Group, audited consolidated and consolidating financial statements
of the Consolidated Group, prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial statements of an
independent certified public accounting firm reasonably acceptable to Bank; (iv)
via electronic mail within five (5) days of filing, copies of all statements,
reports and notices sent or made available generally by the Guarantor and the
Borrowers to their security holders or to any holders of Subordinated Debt and
all reports on Form 10-K, 10-Q and 8-K or similar reports filed with the
Securities and Exchange Commission or any other public authority; (v) prompt
notice of any claim, proceeding, litigation or investigation in the future
threatened by or against the Guarantor or any Borrower involving $250,000 or
more in possible damages in any
instance or $1,000,000 or more in the aggregate; and (vi) as soon as available,
but in any event within sixty (60) days after the end of each fiscal year of the
Guarantor, annual operating budgets (including income statements, balance sheets
and cash flow statements, by month) for the upcoming fiscal year of the
Guarantor; and (vii) such budgets, sales projections, operating plans or other
financial information as Bank may reasonably request from time to time. Within
thirty (30) days after the last day of each month, the Guarantor shall deliver
to Bank with the monthly financial statements a Compliance Certificate signed by
a Responsible Officer in substantially the form of Exhibit A hereto.
---------
Inspections, etc. At reasonable times (but as long as no Event of Default
----------------
exists, not during a period of five days for the closing of the Guarantor's
books and records for any fiscal quarter), and on reasonable prior notice,
during the Guarantor's regular business hours, the Bank, or its agents, shall
have the right to audit and copy Guarantor's books and records. The Bank shall
take reasonable steps to keep confidential all information obtained in any such
audit, but the Bank shall have the right to disclose any such information to its
auditors, regulatory agencies and attorneys, and pursuant to any subpoena or
other legal process. The foregoing audits shall be at Guarantor's expense and
the charge therefor shall be $600 per person per day (or such higher amount as
shall represent the Bank's then current standard charge for the same), plus
reasonable out of pocket expenses. Guarantor will not enter into any agreement
with any accounting firm, service bureau or third party to store Guarantor's
books or records at any location other than the notice address set forth on the
signature page to this Guarantee, without first obtaining the Bank's written
consent, which may be conditioned upon such accounting firm, service bureau or
other third party agreeing to give the Bank the same rights with respect to
access to books and records and related rights as the Bank has under this
Guarantee.
No Cash Transfer Restrictions. The Guarantor shall not permit any of the
-----------------------------
Borrowers or any other direct or indirect Subsidiary of the Guarantor or the
Borrowers to become subject to any Cash Transfer Restriction.
Subordination of Claims Against Borrowers. Without limiting the provisions of
-----------------------------------------
Paragraph 4 hereof, the Guarantor hereby irrevocably agrees that any and all
-----------
claims which the Guarantor may now or hereafter have against the Borrowers or
any other guarantor of the Obligations, including, without limitation, the
benefit of any setoff or counterclaim or proof against dividend, composition or
payment by the Borrowers or such other guarantor, shall be subject and
subordinate to the prior payment in full of all of the Obligations to the Bank.
After the occurrence and during the continuation of an Event of Default, the
Guarantor shall not claim from the Borrowers or such other guarantor, or with
respect to any of their respective properties, any sums which may be owing to
the Guarantor, or have the benefit of any setoff or counterclaim or proof
against dividend, composition or payment by the Borrowers or such other
guarantor, until all the Obligations shall have been paid in full. Should any
payment or distribution or security or the benefit of proceeds thereof be
received by the Guarantor upon or with respect to amounts due to him from the
Borrowers or any other guarantor of the Obligations after an Event of Default
has occurred and is continuing and prior to the payment in full of all
Obligations, the Guarantor will forthwith deliver the same to the Bank in
precisely the form received (except for endorsement or assignment where
necessary), for application in or towards repayment of the Obligations and,
until so delivered, the same shall be held in trust as property of the Bank. In
the event of the failure of the Guarantor to make any such endorsement or
assignment, the Bank is hereby irrevocably authorized to make the same on behalf
of the Guarantor.
Severability. Any provision of this Guarantee which is prohibited or
------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Paragraph Headings. The paragraph headings used in this Guarantee are for
------------------
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
No Waiver, Cumulative Remedies. The Bank shall not by any act (except by a
------------------------------
written instrument pursuant to Paragraph 18 hereof), delay, indulgence, omission
------------
or otherwise, be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Bank, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the
Bank of any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which the Bank would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
Miscellaneous. This Guarantee constitutes the entire agreement of the Guarantor
-------------
with respect to the matters set forth herein. None of the terms or provisions of
this Guarantee may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the Guarantor and the Bank, provided that
any provision of this Guarantee may be waived by the Bank in a letter or
agreement executed by the Bank or by telecopy from the Bank. This Guarantee
shall be binding upon the successors and assigns of the Guarantor and shall
inure to the benefit of the Bank and its successors and assigns.
WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; GOVERNING LAW. THE GUARANTOR AND
------------------------------------------------------------
THE BANK BY ITS ACCEPTANCE HEREOF EACH HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY
NOW OR HEREAFTER HAVE TO A JURY TRIAL IN ANY SUIT, ACTION, PROCEEDING OR
COUNTERCLAIM WHICH ARISES OUT OF, BASED UPON OR BY REASON OF THIS GUARANTEE, ANY
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE PROVISIONS OF THIS
PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE BANK AND THE GUARANTOR, AND SHALL BE
SUBJECT TO NO EXCEPTIONS.
BY ITS EXECUTION AND DELIVERY OF THIS GUARANTEE, THE GUARANTOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT OR
PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS
GUARANTEE, ANY LOAN DOCUMENT (AS DEFINED IN THE LOAN AGREEMENT) OR THE
TRANSACTIONS CONTEMPLATED HEREBY, IN ADDITION TO ANY OTHER COURT IN WHICH SUCH
ACTION, SUIT OR PROCEEDING MAY BE BROUGHT, IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED BY ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN
WHICH IT SHALL HAVE BEEN SERVED WITH PROCESS IN THE MANNER HEREINAFTER PROVIDED,
AND TO THE EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES AND AGREES NOT TO ASSERT,
BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN SUCH ACTION, SUIT OR PROCEEDING
ANY CLAIMS THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT,
THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE
ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE
THEREOF IS IMPROPER.
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
Notices. All notices under this Guarantee shall be in writing and shall be
-------
delivered by hand, by an internationally recognized commercial overnight
delivery service, by U.S. first class mail or by telecopy, delivered, addressed
or transmitted, if to the Bank, at its address or telecopy number set forth in
the Loan Agreement, and if to the Guarantor, at its address or telecopy number
set out below its signature in this Guarantee. Such notices shall be effective
(a) in the case of hand deliveries, when received, (b) in the case of an
overnight delivery service, on the next Business Day after being placed in the
possession of such delivery service, with delivery charges prepaid, (c) in the
case of mail, three days after deposit in the U.S. postal system, first class
postage prepaid and (d) in the case of telecopy notices, when electronic
indication of receipt is received. Either party may change its address and
telecopy number by written notice to the other.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly
executed and delivered as of the date first above written.
LIONBRIDGE TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
Title: President and Chief Executive
Officer
Address for Notices:
Lionbridge Technologies, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
Accepted and agreed to:
SILICON VALLEY BANK
By: /s/ Xxxx X. Xxxxxxx, Xx.
-------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title:
