Exhibit 10.12
EXECUTION COPY
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$23,600,000
CREDIT AGREEMENT
between
printCafe, Inc.,
as Borrower,
and
Iris Graphics Inc.,
as Lender
Dated as of December 31, 2001
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS......................................................................................1
1.1 Defined Terms....................................................................................1
1.2 Other Definitional Provisions...................................................................12
SECTION 2. AMOUNT AND TERMS OF COMMITMENT..................................................................13
2.1 Term Commitment.................................................................................13
2.2 Procedure for Term Loan Borrowing...............................................................13
2.3 Repayment of Term Loan..........................................................................13
2.4 Optional Prepayments............................................................................13
2.5 Mandatory Prepayments and Commitment Reductions.................................................14
2.6 Conversion and Continuation Options.............................................................14
2.7 Interest Rates and Payment Dates................................................................14
2.8 Computation of Interest and Fees................................................................15
2.9 Inability to Determine Interest Rate............................................................15
2.10 Pro Rata Treatment and Payments.................................................................15
2.11 Requirements of Law.............................................................................15
2.12 Taxes...........................................................................................16
SECTION 3. REPRESENTATIONS AND WARRANTIES..................................................................17
3.1 Organization, Good Standing and Qualification...................................................17
3.2 Subsidiaries; Joint Ventures....................................................................17
3.3 Authorization...................................................................................17
3.4 Governmental Consents...........................................................................17
3.5 Litigation......................................................................................17
3.6 Intellectual Property...........................................................................18
3.7 Confidential Information and Invention Assignment Agreements....................................18
3.8 Compliance with Other Instruments...............................................................18
3.9 Agreements; Action..............................................................................18
3.10 No Conflict of Interest.........................................................................19
3.11 Title to Property and Assets....................................................................19
3.12 Financial Statements............................................................................19
3.13 Changes.........................................................................................20
3.14 Distributions...................................................................................21
3.15 Tax Returns and Payments........................................................................21
3.16 Insurance.......................................................................................21
3.17 Employee Benefit Plans..........................................................................21
3.18 Labor Agreements and Actions....................................................................21
3.19 Compliance with Environmental Requirements......................................................21
3.20 Permits.........................................................................................22
3.21 Disclosure......................................................................................22
3.22 Compliance with Other Laws......................................................................22
3.23 Federal Regulations.............................................................................22
3.24 Investment Company Act; Other Regulations.......................................................22
3.25 Use of Proceeds.................................................................................22
3.26 Security Documents..............................................................................22
3.27 Solvency........................................................................................23
3.28 Certain Documents...............................................................................23
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SECTION 4. CONDITIONS PRECEDENT............................................................................23
4.1 Conditions to Term Loan.........................................................................23
SECTION 5. AFFIRMATIVE COVENANTS...........................................................................25
5.1 Financial Statements............................................................................25
5.2 Certificates; Other Information.................................................................26
5.3 Payment of Obligations..........................................................................27
5.4 Maintenance of Existence; Compliance............................................................27
5.5 Maintenance of Property; Insurance..............................................................27
5.6 Inspection of Property; Books and Records; Discussions..........................................27
5.7 Notices.........................................................................................27
5.8 Environmental Laws..............................................................................28
5.9 Additional Collateral, etc......................................................................28
5.10 Pay-off Letters; Proof of Payment...............................................................29
SECTION 6. NEGATIVE COVENANTS..............................................................................29
6.1 Financial Condition Covenants...................................................................29
6.2 Indebtedness....................................................................................31
6.3 Product Development Costs.......................................................................31
6.4 Liens...........................................................................................31
6.5 Fundamental Changes.............................................................................31
6.6 Disposition of Property.........................................................................32
6.7 Restricted Payments.............................................................................32
6.8 Capital Expenditures............................................................................32
6.9 Investments.....................................................................................32
6.10 Certain Payments; Modifications of Certain Instruments; Synthetic Purchase Agreements...........33
6.11 Transactions with Affiliates....................................................................33
6.12 Sales and Leasebacks............................................................................33
6.13 Changes in Fiscal Periods.......................................................................33
6.14 Negative Pledge Clauses.........................................................................33
6.15 Clauses Restricting Subsidiary Distributions....................................................34
6.16 Lines of Business...............................................................................34
SECTION 7. EVENTS OF DEFAULT...............................................................................34
SECTION 8. MISCELLANEOUS...................................................................................36
8.1 Amendments and Waivers..........................................................................36
8.2 Notices.........................................................................................36
8.3 No Waiver; Cumulative Remedies..................................................................37
8.4 Survival of Representations and Warranties......................................................37
8.5 Payment of Expenses and Taxes...................................................................37
8.6 Successors and Assigns; Assignments.............................................................38
8.7 Set-off.........................................................................................38
8.8 Counterparts....................................................................................38
8.9 Severability....................................................................................38
8.10 Integration.....................................................................................39
8.11 GOVERNING LAW...................................................................................39
8.12 Submission To Jurisdiction; Waivers.............................................................39
8.13 Acknowledgements................................................................................39
8.14 Releases of Guarantees and Liens................................................................40
8.15 Confidentiality.................................................................................40
8.16 WAIVERS OF JURY TRIAL...........................................................................40
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SCHEDULES:
1.1 Shareholder Notes
3.2 Subsidiaries; Joint Ventures
3.4 Governmental Consents
3.5 Litigation
3.6 Intellectual Property
3.8 Compliance With Other Instruments
3.9 Agreements; Action
3.10 Conflicts of Interest
3.13 Changes
3.15 Tax Returns and Payments
3.17 Employee Benefit Plans
3.18 Labor Agreements and Actions
3.20 Permits
3.22 Compliance With Other Laws
3.26 Security Agreements
6.2(c) Indebtedness
6.4 Permitted Liens
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Assignment and Acceptance
E Form of Legal Opinion of Xxxxxx, Xxxxx & Xxxxxxx
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CREDIT AGREEMENT (this "AGREEMENT"), dated as of December 31, 2001,
between printCafe, Inc., a Delaware corporation (the "BORROWER") and Iris
Graphics Inc., a Delaware corporation (the "LENDER"), a wholly-owned subsidiary
of Creo Products Inc., a federally incorporated Canadian corporation.
The parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.
"ADJUSTMENT DATE": as defined in the Pricing Grid.
"AFFILIATE": as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. For purposes of this definition, "control" of a Person means the
power, directly or indirectly, either to (a) vote 10% or more of the securities
having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.
"AGREEMENT": as defined in the preamble hereto.
"APPLICABLE MARGIN": for (a) a Base Rate Loan, 8.0% and (b) a
Eurodollar Loan, 10.00%; PROVIDED, that on and after the first Adjustment Date
occurring after the completion of six full fiscal quarters of the Borrower after
the Closing Date, the Applicable Margin with respect to the Term Loan will be
determined pursuant to the Pricing Grid; and PROVIDED, FURTHER, that if an Event
of Default has occurred and is continuing, all Applicable Margins shall be
increased by 3.00% (or, if the Borrower shall be in compliance with each Minimum
Threshold Requirement and no other Event of Default shall have occurred and be
continuing, 1.50% (with an additional 1.50% accruing as PIK Interest)) and shall
be effective from the date the Lender receives notice of such Event of Default
until such Event of Default has been cured or waived.
"ASSET SALE": any Disposition of property or series of related
Dispositions of property that yields gross proceeds to any Group Member (valued
at the initial principal amount thereof in the case of non-cash proceeds
consisting of notes or other debt securities and valued at fair market value in
the case of other non-cash proceeds) in excess of $100,000.
"ASSIGNEE": as defined in Section 8.6(b).
"ASSIGNMENT AND ACCEPTANCE": an Assignment and Acceptance,
substantially in the form of EXHIBIT D.
"ASSIGNOR": as defined in Section 8.6(b).
"BASE RATE": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the rate of interest per annum
publicly announced from time to time by The Wall Street Journal as the prime
rate in effect on such day. Any change in the Base Rate shall be effective as of
the opening of business on the effective day of such change in the Base Rate.
The Base Rate shall not be less than 3.5% per annum nor greater than 6.00% per
annum.
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"BASE RATE LOAN": the Term Loan, the rate of interest applicable to
which at such time is based upon the Base Rate.
"BOARD": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"BORROWER": as defined in the preamble hereto.
"BUSINESS DAY": a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"CAPITAL EXPENDITURES": for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements, capitalized repairs and
improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.
"CAPITAL LEASE OBLIGATIONS": as to any Person, the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.
"CAPITAL STOCK": any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.
"CASH EQUIVALENTS": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any commercial bank organized under the laws of the United
States or any state thereof having combined capital and surplus of not less than
$500,000,000; (c) commercial paper of an issuer rated at least A-1 by Standard &
Poor's Ratings Services ("S&P") or P-1 by Xxxxx'x Investors Service, Inc.
("MOODY'S"), or carrying an equivalent rating by a nationally recognized rating
agency, if both of the two named rating agencies cease publishing ratings of
commercial paper issuers generally, and maturing within six months from the date
of acquisition; (d) repurchase obligations of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than 30
days, with respect to securities issued or fully guaranteed or insured by the
United States government; (e) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody's; (f) securities with maturities of six
months or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
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"CASH FLOW LEVERAGE RATIO": as at the last day of any period, the ratio
of (a) Consolidated Total Debt on such day to (b) Operating Cash Flow for such
period.
"CLOSING DATE": the date on which the conditions precedent set forth in
Section 4.1 shall have been satisfied, which date is December 31, 2001.
"CODE": the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL": all property of the Borrower, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.
"COMPLIANCE CERTIFICATE": a certificate duly executed by a Responsible
Officer substantially in the form of EXHIBIT B.
"CONFIDENTIALITY AND INVENTION ASSIGNMENT AGREEMENT": as defined in
Section 3.7.
"CONSOLIDATED NET INCOME": for any period, the consolidated net income
(or loss) of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; PROVIDED that there shall be excluded (a) the
income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries, (b) the income (or deficit) of any Person (other
than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.
"CONSOLIDATED TOTAL DEBT": at any date, the aggregate principal amount
of all Indebtedness (other than (a) $3,600,000 of the Term Loan on a PRO RATA
basis and (b) the Excluded Debt) of the Borrower and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.
"CONTRACTUAL OBLIGATION": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CSI DEBT": Indebtedness of the Borrower in an aggregate amount of
$23,604,051.24 under the promissory notes issued to the former shareholders of
Logic Associates, Inc.
"DEFAULT": any of the events specified in Section 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.
"DISPOSITION": with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof, but
shall not include the licensing of software in the ordinary course of a Group
Member's business. The terms "DISPOSE" and "DISPOSED OF" shall have correlative
meanings.
"DOLLARS" and "$": dollars in lawful currency of the United States.
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"DOMESTIC SUBSIDIARY": any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States.
"ENVIRONMENTAL LAWS": as defined in Section 3.19.
"EQUITY INVESTMENT": as defined in Section 4.1(c)(i).
"EURODOLLAR LOAN": the Term Loan, the rate of interest applicable to
which at such time is based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined on the basis of
the rate for deposits in Dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing in the Wall Street
Journal, two Business Days prior to the beginning of such Interest Period. In
the event that such rate does not appear in the Wall Street Journal, the
"EURODOLLAR RATE" shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be selected by
the Lender or, in the absence of such availability, by reference to the rate at
which a commercial bank selected by the Lender is offered Dollar deposits at or
about 11:00 A.M., New York City time, two Business Days prior to the beginning
of such Interest Period in the interbank eurodollar market where its eurodollar
and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein. The "EURODOLLAR RATE" shall not be less than 1.50% per annum
nor greater than 4.00% per annum.
"EVENT OF DEFAULT": any of the events specified in Section 7, PROVIDED
that any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"EXCLUDED DEBT": collectively, the Xxxxx Debt, the M Data Debt and the
National City Debt, in each case, together with any refinancing, refunding,
renewal or extension thereof permitted under Section 6.2(c).
"EXCLUDED FOREIGN SUBSIDIARY": any Foreign Subsidiary in respect of
which either (a) the pledge of all of the Capital Stock of such Subsidiary as
Collateral or (b) the guaranteeing by such Subsidiary of the Obligations, would,
in the good faith judgment of the Borrower, result in adverse tax consequences
to the Borrower.
"FINANCIAL STATEMENTS": as defined in Section 3.12.
"FOREIGN SUBSIDIARY": any Subsidiary of the Borrower that is not a
Domestic Subsidiary.
"FUNDED DEBT": as to any Person, all Indebtedness of such Person that
matures more than one year from the date of its creation or matures within one
year from such date but is renewable or extendible, at the option of such
Person, to a date more than one year from such date or arises under a revolving
credit or similar agreement that obligates the lender or lenders to extend
credit during a period of more than one year from such date, including all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the date of
its creation.
"GAAP": generally accepted accounting principles in the United States
as in effect from time to time, except that for purposes of Section 6.1, GAAP
shall be determined on the basis of such principles in effect on the date hereof
and consistent with those used in the preparation of the most recent audited
financial statements referred to in Section 3.12. In the event that any
"Accounting Change" (as
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defined below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
the Borrower and the Lender agree to enter into negotiations in order to amend
such provisions of this Agreement so as to equitably reflect such Accounting
Changes with the desired result that the criteria for evaluating the Borrower's
financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as such an amendment shall
have been executed and delivered by the Borrower, to the Lender, all financial
covenants, standards and terms in this Agreement shall continue to be calculated
or construed as if such Accounting Changes had not occurred. "Accounting
Changes" refers to changes in accounting principles required by the promulgation
of any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or, if
applicable, the SEC.
"GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).
"GROUP MEMBERS": the collective reference to the Borrower and its
Subsidiaries.
"GUARANTEE AND COLLATERAL AGREEMENT": the Guarantee and Collateral
Agreement to be executed and delivered by the Borrower and each Subsidiary
Guarantor, substantially in the form of EXHIBIT A.
"GUARANTEE OBLIGATION": as to any Person (the "GUARANTEEING PERSON"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "PRIMARY OBLIGATIONS")
of any other third Person (the "PRIMARY OBLIGOR") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefore, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; PROVIDED, HOWEVER, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"XXXXX DEBT": Indebtedness of the Borrower in an aggregate principal
amount of $12,000,000 (which amount shall be $8,000,000 after giving effect to
the payment described in Section 4.1(d)(iii)(C)) evidenced by that certain
Agreement, dated as of December 31, 2001, between the Borrower, printCafe
Systems and Xxxxxx X. Xxxxxxxx, Xxxxxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxx, as
the
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same may be amended, supplemented or otherwise modified from time to time as
permitted by Section 6.10.
"XXXXX NOTEHOLDERS": Xxxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxxxx
X. Xxxxxxxx.
"HAZARDOUS SUBSTANCE": as defined in Section 3.19.
"HAZARDOUS WASTE": as defined in Section 3.19.
"HEDGE AGREEMENTS": all interest rate swaps, caps or collar agreements
or similar arrangements dealing with interest rates or currency exchange rates
or the exchange of nominal interest obligations, either generally or under
specific contingencies.
"INDEBTEDNESS": of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) all Guarantee Obligations of
such Person in respect of obligations of the kind referred to in clauses (a)
through (f) above, (h) all obligations of the kind referred to in clauses (a)
through (g) above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on property
(including accounts and contract rights) owned by such Person, whether or not
such Person has assumed or become liable for the payment of such obligation, and
(i) for the purposes of Sections 6.2 and 7(e) only, all obligations of such
Person in respect of Hedge Agreements. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which
such Person is a general partner) to the extent such Person is liable therefor
as a result of such Person's ownership interest in or other relationship with
such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.
"INTELLECTUAL PROPERTY RIGHTS": as defined in Section 3.6.
"INTERCREDITOR AGREEMENT": the intercreditor agreement, dated as of the
date hereof, between the Lender and the Xxxxx Noteholders.
"INTEREST EXPENSE": for any period, total cash interest expense
(including that attributable to Capital Lease Obligations) of the Borrower and
its Subsidiaries for such period with respect to all outstanding Funded Debt
(other than (a) $3,600,000 of the Term Loan on a PRO RATA basis and (b) the
Excluded Debt) of the Borrower and its Subsidiaries (including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Hedge Agreements in respect of
interest rates to the extent such net costs are allocable to such period in
accordance with GAAP); PROVIDED that interest expense shall be annualized until
the first anniversary of the Closing Date.
"INTEREST PAYMENT DATE": (a) the last day of each March, June,
September and December to occur while the Loan is outstanding, (b) the final
maturity date of such Loan and (c) the date of any repayment or prepayment made
in respect thereof.
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"INTEREST PERIOD": as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending three months thereafter; and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending three months thereafter; PROVIDED
that the foregoing provisions relating to Interest Periods are subject to the
following: (i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period shall end
on the immediately preceding Business Day; (ii) any Interest Period that begins
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and (iii) no
Interest Period shall extend beyond the date final payment is due on the Term
Loan.
"INVESTMENTS": as defined in Section 6.9.
"LENDER": as defined in the preamble hereto.
"LIEN": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
"LOAN DOCUMENTS": this Agreement, the Security Documents and the Notes.
"LOAN PARTY": each Group Member that is a party to a Loan Document.
"M DATA DEBT": Indebtedness of printCafe Systems in an aggregate
principal amount of $4,000,000 under the Amended and Restated Subordinated
Non-Negotiable Promissory Note, dated as of December 31, 2001, issued to Xxxxxxx
X. Xxxxxx and Xxxx X. Xxxxxx, as the same may be amended, supplemented or
otherwise modified from time to time as permitted by Section 6.10.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
business, property, operations, or financial condition of the Borrower and its
Subsidiaries taken as a whole or (b) the validity or enforceability of this
Agreement or any of the other Loan Documents or the rights or remedies of the
Lender hereunder or thereunder.
"MINIMUM THRESHOLD REQUIREMENTS": (a) the Quarterly Revenue for any
fiscal quarter of the Borrower set forth below exceeds the amount set forth
below opposite such fiscal quarter:
FISCAL QUARTER MINIMUM QUARTERLY REVENUE
-------------- -------------------------
12/31/2001 $9,000,000
03/31/2002 $9,318,000
06/30/2002 $9,858,000
09/30/2002 $9,782,000
12/31/2002 $10,967,000
03/31/2003 $11,429,000
06/30/2003 $11,928,000
09/30/2003 $15,000,000
12/31/2003 through 12/31/2007 $15,500,000
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(b) (i) the Operating Cash Flow for any fiscal quarter of the Borrower
set forth below, and (ii) the Operating Cash Flow for any period of four
consecutive fiscal quarters of the Borrower (the "TRAILING FOUR-QUARTER
OPERATING CASH FLOW") ending with any fiscal quarter set forth below, exceeds
the amount set forth below opposite such fiscal quarter:
Trailing Four-quarter
Fiscal Quarter Operating Cash Flow Operating Cash Flow
-------------- ------------------- ---------------------
12/31/2001 $0 NA
03/21/2002 $254,000 NA
06/30/2002 $547,000 NA
09/30/2002 $455,000 $1,256,000
12/31/2002 $1,075,000 $2,331,000
03/31/2003 $1,269,000 $3,347,000
06/30/2003 $1,408,000 $4,208,000
09/30/2003 $3,000,000 $6,752,000
12/31/2003 $3,250,000 $8,927,000
03/31/2004 $3,500,000 $11,158,000
06/30/2004 $3,750,000 $13,500,000
09/30/2004 $4,000,000 $14,500,000
"NATIONAL CITY DEBT": Indebtedness of the Borrower in the original
principal amount of $900,000 under the Commercial Installment Note (with
Financial Covenants), dated as of June 6, 1999, issued to National City Bank of
Pennsylvania ("NCB") and in an aggregate principal amount of $2,000,000 under
the Commercial Note: Demand Line of Credit dated March 25, 2000 issued to NCB,
in each case as the same may be amended, supplemented or otherwise modified from
time to time as permitted by Section 6.10.
"NET CASH PROCEEDS": in connection with any Asset Sale, the proceeds
thereof in the form of cash and Cash Equivalents (including any such proceeds
received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but
only as and when received) of such Asset Sale, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Asset Sale (other than any Lien pursuant
to a Security Document) and other customary fees and expenses actually incurred
in connection therewith and net of taxes paid or reasonably estimated to be
payable as a result thereof (after taking into account any available tax credits
or deductions and any tax sharing arrangements).
"NON-EXCLUDED TAXES": as defined in Section 2.12(a).
"NOTES": the collective reference to any promissory note evidencing the
Loan.
"OBLIGATIONS": the unpaid principal of and interest (including, without
limitation, any PIK Interest) on (including interest accruing after the maturity
of the Term Loan and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Term Loan and all
other obligations and liabilities of the Borrower to the Lender, 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
Agreement, any other Loan Document or any other document made, delivered or
given in connection herewith or therewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including
9
all fees, charges and disbursements of counsel to the Lender that are required
to be paid by the Borrower pursuant hereto) or otherwise.
"OPERATING CASH FLOW": for any period, Consolidated Net Income for such
period PLUS, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) depreciation and amortization expense, (c) amortization of
intangibles (including, but not limited to, goodwill) and organization costs,
(d) interest expense, amortization or writeoff of debt discount and debt
issuance costs and commissions, discounts and other fees and charges associated
with Indebtedness (including the Term Loan), and (e) any extraordinary, unusual
or non-recurring non-cash expenses or losses, and MINUS, (i) to the extent
included in the statement of such Consolidated Net Income for such period, the
sum of (A) interest income, (B) any extraordinary, unusual or non-recurring
income or gains (including, whether or not otherwise includable as a separate
item in the statement of such Consolidated Net Income for such period, gains on
the sales of assets outside of the ordinary course of business), (C) any other
non-cash income, capitalized software (if any), (D) capitalized Product
Development Cost (if any) and (E) capital expenditures and (ii) any cash
payments made during such period in respect of items described in clause (e)
above subsequent to the fiscal quarter in which the relevant non-cash expenses
or losses were reflected as a charge in the statement of Consolidated Net
Income, all as determined on a consolidated basis. The cumulative effect of any
accounting changes will be excluded.
"OTHER TAXES": any and all present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies arising from
any payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.
"PERMITTED LIENS": any (a) mechanics', carriers', workers' and other
similar Liens arising in the ordinary course of business which are not
delinquent and which in the aggregate are not material in amount, and do not
interfere with the present use of the assets of the Borrower or any of its
Subsidiaries to which they apply; (b) Liens for current taxes and assessments
not yet due and payable; (c) Liens and encumbrances that have arisen in the
ordinary course of business and that do not (in any case or in the aggregate)
materially detract from the value of the assets subject thereto or materially
impair the operations of the Borrower or any of its Subsidiaries; (d) with
respect to any asset of the Borrower or any of its Subsidiaries which consists
of a leasehold or other possessory interest in real property, all encumbrances,
covenants, imperfections in title, easements, restrictions and other title
matters (whether or not the same are recorded) not known to the Borrower or such
Subsidiary to which the underlying fee estate in such real property is subject
which were not created by or incurred by the Borrower or such Subsidiary; (e)
Liens securing Indebtedness of the Borrower or any other Subsidiary incurred
pursuant to Section 6.2(d) to finance the acquisition of fixed or capital
assets, PROVIDED that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased; (f) Liens created pursuant to the Security Documents; (g) existing
Liens set forth on SCHEDULE 6.4; and (h) Liens not otherwise permitted by this
Agreement so long as neither (i) the aggregate outstanding principal amount of
the obligations secured thereby nor (ii) the aggregate fair market value
(determined as of the date which Lien is incurred) of the assets subject thereto
exceed (as to the Borrower and all Subsidiaries) $250,000 at any one time.
"PERSON": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, Governmental Authority or other entity of whatever nature.
"PIK INTEREST": as defined in Section 2.7(e).
10
"PIK INTEREST RATE": as defined in Section 2.7(e).
"PREPAYMENT PENALTY": as defined in Section 2.4.
"PRICING GRID": the table set forth below:
=====================================================================================================================
Cash Flow Applicable Margin for Applicable Margin for
Leverage Ratio Eurodollar Loan Base Rate Loan
---------------------------------------------------------------------------------------------------------------------
x (greater than or equal to) 2.0 10.00% 8.00%
---------------------------------------------------------------------------------------------------------------------
2.0 (greater than) x (greater than or equal to) 1.0 8.00% 6.00%
---------------------------------------------------------------------------------------------------------------------
1.0 (greater than) x 7.00% 5.00%
=====================================================================================================================
For the purposes of the Pricing Grid, changes in the Applicable Margin resulting
from changes in the Cash Flow Leverage Ratio shall become effective on the date
(the "ADJUSTMENT DATE") that is two Business Days after the date on which
financial statements are delivered to the Lender pursuant to Section 6.1 and
shall remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified in Section 6.1, then, until the date that is
two Business Days after the date on which such financial statements are
delivered, the highest rate set forth in each column of the Pricing Grid shall
apply. Each determination of the Cash Flow Leverage Ratio pursuant to the
Pricing Grid shall be made in a manner consistent with the determination thereof
pursuant to Section 6.1.
"PRINTCAFE SYSTEMS": printCafe Systems, Inc., a Delaware corporation.
"PRODUCT DEVELOPMENTS COSTS": the dollar amount equal to that recorded
in the line item Product Development (or the equivalent as generally accepted by
other similar companies) in the Financial Statements.
"PROJECTIONS": as defined in Section 5.2(b).
"QUARTERLY REVENUE": total revenue less professional services revenues
of the Borrower and its Subsidiaries for the most recent fiscal quarter.
"REGULATION U": Regulation U of the Board as in effect from time to
time.
"REQUIREMENT OF LAW": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER": the chief executive officer, president or chief
financial officer of the Borrower, but in any event, with respect to financial
matters, the chief financial officer of the Borrower.
"RESTRICTED PAYMENTS": as defined in Section 6.7.
"SEC": the Securities and Exchange Commission, any successor thereto
and any analogous Governmental Authority.
11
"SECURITY DOCUMENTS": the collective reference to the Guarantee and
Collateral Agreement, any mortgages entered into pursuant to Section 5.9(b) and
all other security documents hereafter delivered to the Lender granting a Lien
on any property of any Person to secure the obligations and liabilities of any
Loan Party under any Loan Document.
"SERVICE PROVIDERS": as defined in Section 3.7.
"SHAREHOLDER NOTES": those certain promissory notes listed on SCHEDULE
1.1 in favor of the Borrower issued by certain shareholders of the Borrower in
connection with the purchase of the Borrower's Capital Stock.
"SOLVENT": when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person will, as of such date, exceed the amount of all
"liabilities of such Person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state laws
governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater
than the amount that will be required to pay the liability of such Person on its
debts as such debts become absolute and matured, (c) such Person will not have,
as of such date, an unreasonably small amount of capital with which to conduct
its business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y)
right to an equitable remedy for breach of performance if such breach gives rise
to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"SUBSIDIARY": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTOR": each Subsidiary of the Borrower other than any
Excluded Foreign Subsidiary.
"SURPLUS BALANCE": as at the end of any fiscal quarter, the amount by
which the amount of cash and Cash Equivalents of the Borrower and its
Subsidiaries exceeds the outstanding principal amount of the Term Loan and any
interest accrued thereon at such time.
"SYNTHETIC PURCHASE AGREEMENT": any agreement pursuant to which any
Group Member is or may become obligated to make (a) any payment in connection
with the purchase by any third party from a Person other than a Group Member of
any Capital Stock of any Group Member or any Indebtedness referred to in Section
6.9 or (b) any payment (except as otherwise expressly permitted by Section 6.6
or 6.9) the amount of which is determined by reference to the price or value at
any time of any such Capital Stock or Indebtedness; PROVIDED, that no phantom
stock or similar plan providing for payments only to current or former
directors, officers or employees of any Group Member (or to their heirs or
estates) shall be deemed to be a Synthetic Purchase Agreement.
12
"TERM LOAN": as defined in Section 2.1.
"TERM COMMITMENT": the obligation of the Lender to make the Term Loan
to the Borrower in a principal amount equal to $23,600,000.
"TOTAL CHARGE COVERAGE RATIO": for any period, the ratio of (a)
Operating Cash Flow for such period to (b) Total Charges for such period.
"TOTAL CHARGES": for any period, the sum (without duplication) of (a)
Interest Expense for such period, (b) 85% of scheduled payments made during such
period on account of principal of Funded Debt (other than the Excluded Debt) of
the Borrower or any of its Subsidiaries (including scheduled principal payments
in respect of the Term Loan), (c) cash income taxes required to be paid by the
Borrower and its Subsidiaries during such period and (d) Capital Expenditures
made by the Borrower and its Subsidiaries during such period.
"TYPE": as to the Term Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"UNITED STATES": the United States of America.
"WARRANT": the Warrant dated the date hereof, issued to the Lender and
exercisable for shares of Series F Preferred Stock of the Borrower.
"WASTE": as defined in Section 3.19.
"WHOLLY OWNED SUBSIDIARY": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.
"WHOLLY OWNED SUBSIDIARY GUARANTOR": any Subsidiary Guarantor that is a
Wholly Owned Subsidiary of the Borrower.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any certificate
or other document made or delivered pursuant hereto or thereto, (i) accounting
terms relating to any Group Member not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP, (ii) the words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation", (iii) the word "incur" shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
"incurred" and "incurrence" shall have correlative meanings), (iv) 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, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this
13
Agreement, and Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENT
2.1 TERM COMMITMENT. Subject to the terms and conditions hereof, the
Lender agrees to make a term loan (the "TERM LOAN") to the Borrower on the
Closing Date in an amount equal to the amount of the Term Commitment of the
Lender. The Term Loan may from time to time be a Eurodollar Loan or a Base Rate
Loan, as determined by the Borrower and notified to the Lender in accordance
with Sections 2.2 and 2.6.
2.2 PROCEDURE FOR TERM LOAN BORROWING. The Borrower shall give the
Lender irrevocable notice (which notice must be received by the Lender prior to
12:00 Noon, New York City time, on the anticipated Closing Date) requesting that
the Lender make the Term Loan on the Closing Date. Not later than 3:00 P.M., New
York City time, on the Closing Date the Lender shall make available to the
Borrower (by wiring funds to the Borrower or to such other party or parties at
the direction of the Borrower) an amount in immediately available funds equal to
the Term Loan to be made by the Lender.
2.3 REPAYMENT OF TERM LOAN. The Term Loan shall mature in 12
consecutive quarterly installments, each of which shall be in an amount set
forth below opposite such installment:
Installment Principal Amount
March 31, 2005 $1,180,000.00
June 30, 2005 $1,180,000.00
September 30, 2005 $1,180,000.00
December 31, 2005 $1,180,000.00
March 31, 2006 $1,180,000.00
June 30, 2006 $1,180,000.00
September 30, 2006 $1,180,000.00
December 31, 2006 $1,180,000.00
March 31, 2007 $1,180,000.00
June 30, 2007 $1,180,000.00
September 30, 2007 $1,180,000.00
December 31, 2007 $10,620,000.00
2.4 OPTIONAL PREPAYMENTS. The Borrower may at any time after December
31, 2003 and from time to time thereafter prepay the Loan, in whole or in part,
upon irrevocable notice delivered to the Lender at least 3 Business Days prior
thereto, which notice shall specify the date and amount of prepayment and
whether the prepayment is of a Eurodollar Loan or a Base Rate Loan. If any such
notice is given, the amount specified in such notice shall be due and payable on
the date specified therein, together with (a) accrued interest to such date on
the amount prepaid and (b) in the case of any prepayment made pursuant to this
Section 2.4 during the period from January 1, 2004 through December 31, 2004, a
fee in the amount of 1% of the principal amount prepaid (the "PREPAYMENT
PENALTY"). Notwithstanding the foregoing, if the Borrower conducts an initial
public offering of its Capital Stock, the Net Cash Proceeds thereof may be used
to prepay at any time up to 50% of the amount of the Term Loan then outstanding
and interest thereof without incurring the Prepayment Penalty. Partial
prepayments of the Term Loan shall be in an aggregate principal amount of
$100,000 or a whole multiple thereof.
14
2.5 MANDATORY PREPAYMENTS AND COMMITMENT REDUCTIONS. (a) If on any date
any Group Member shall receive Net Cash Proceeds from any Asset Sale (other than
a Disposition of the Capital Stock of the Borrower) then such Net Cash Proceeds
shall be applied on such date toward the prepayment of the Term Loan as set
forth in Section 2.5(b).
(b) Each prepayment of the Term Loan under this Section 2.5 shall be
accompanied by accrued interest to the date of such prepayment on the amount
prepaid. In addition, each prepayment of the Term Loan under this Section 2.5
made during the period from January 1, 2004 through December 31, 2004, shall be
accompanied by amount equal to the Prepayment Penalty.
2.6 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower may elect
from time to time to convert the Term Loan from a Eurodollar Loan to a Base Rate
Loan by giving the Lender at least two Business Days' prior irrevocable notice
of such election. The Borrower may elect from time to time to convert the Term
Loan from a Base Rate Loan to a Eurodollar Loan by giving the Lender at least
two Business Days' prior irrevocable notice of such election.
(b) Any Eurodollar Loan may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Lender, in accordance with the applicable provisions
of the term "Interest Period" set forth in Section 1.1.
2.7 INTEREST RATES AND PAYMENT DATES. (a) A Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.
(b) A Base Rate Loan shall bear interest at a rate per annum equal to
the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of the Term Loan
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section PLUS 5%, and (ii) if all or a portion of any interest
payable on the Term Loan or any fee or other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum equal to the rate
then applicable to a Base Rate Loan PLUS 5%, in each case, with respect to
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
(d) Except as otherwise set forth in Section 2.7(e), interest shall be
payable in arrears on each Interest Payment Date, PROVIDED that interest
accruing pursuant to paragraph (c) of this Section shall be payable from time to
time on demand.
(e) In addition, the Term Loan shall also bear interest (the "PIK
INTEREST") at the rate per annum equal to (a) 7.00%, if the Cash Flow Leverage
Ratio is equal to or greater than 1.0: 1.0, or (b) 6.00%, if the Cash Flow
Leverage Ratio is less than 1.0: 1.0 (in each case, the "PIK INTEREST RATE"), on
the then outstanding amount of the Term Loan; PROVIDED that until the first
Adjustment Date, the PIK Interest Rate shall be equal to a rate per annum equal
to 7.00%. Any PIK Interest accrued pursuant to this Section 2.7(e) or the
definition of Applicable Margin shall be compounded monthly and shall be payable
(a) on the earliest to occur of (i) an Event of Default (other than an Event of
Default under Section 7(c) caused by a breach of Section 6.1), (ii) December 31,
2007 or (iii) repayment in full of the Term Loan and (b) on any date the Term
Loan shall be prepaid pursuant to Section 2.4 with respect to the portion of any
principal amount so prepaid.
15
2.8 COMPUTATION OF INTEREST AND FEES. (a) Interest and fees payable
pursuant hereto shall be calculated on the basis of a 365- (or 366-, as the case
may be) day year for the actual days elapsed. The Lender shall as soon as
practicable notify the Borrower of each determination of a Eurodollar Rate. Any
change in the interest rate on a Base Rate Loan resulting from a change in the
Base Rate shall become effective as of the opening of business on the day on
which such change becomes effective. The Lender shall as soon as practicable
notify the Borrower of the effective date and the amount of each such change in
interest rate.
(b) Each determination of an interest rate by the Lender pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
in the absence of manifest error. The Lender shall, at the request of the
Borrower, deliver to the Borrower a statement showing the quotations used by the
Lender in determining any interest rate pursuant to Section 2.7(a).
2.9 INABILITY TO DETERMINE INTEREST RATE. If prior to the first day of
any Interest Period, the Lender shall have determined (which determination shall
be conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Lender shall give
telecopy or telephonic notice thereof to the Borrower as soon as practicable
thereafter. If such notice is given (x) a Base Rate Loan that was to have been
converted on the first day of such Interest Period to a Eurodollar Loan shall be
continued as a Base Rate Loan and (y) any outstanding Eurodollar Loan shall be
converted, on the last day of the then-current Interest Period, to a Base Rate
Loan. Until such notice has been withdrawn by the Lender, no further Eurodollar
Loan shall be made or continued as such, nor shall the Borrower have the right
to convert a Base Rate Loan to a Eurodollar Loan.
2.10 PRO RATA TREATMENT AND PAYMENTS.
(a) The amount of each principal prepayment of the Term Loan shall be
applied to reduce the then remaining installments of the Term Loan in inverse
order of maturity. Amounts prepaid on account of the Term Loan may not be
reborrowed.
(b) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Lender an account specified
by the Lender, in Dollars and in immediately available funds. If any payment
hereunder becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day.
2.11 REQUIREMENTS OF LAW. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by the Lender with any request or directive (whether or not having the force of
law) from any Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever
with respect to this Agreement or change the basis of taxation of
payments to the Lender in respect thereof (except for Non-Excluded
Taxes covered by Section 2.12 and changes in the rate of tax on the
overall net income of the Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by,
16
any office of the Lender that is not otherwise included in the
determination of the Eurodollar Rate; or
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount that the Lender deems to be material, of making, converting into,
continuing or maintaining a Eurodollar Loan or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay the Lender, upon its demand, any additional amounts necessary to
compensate the Lender for such increased cost or reduced amount receivable. If
the Lender becomes entitled to claim any additional amounts pursuant to this
paragraph, it shall promptly notify the Borrower of the event by reason of which
it has become so entitled.
(b) A certificate as to any additional amounts payable pursuant to this
Section submitted by the Lender to the Borrower shall be conclusive in the
absence of manifest error. The obligations of the Borrower pursuant to this
Section shall survive the termination of this Agreement and the payment of the
Term Loan and all other amounts payable hereunder.
2.12 TAXES. (a) All payments made by the Borrower under this Agreement
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Lender as a result of a present or former connection between the
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("NON-EXCLUDED
TAXES") or Other Taxes are required to be withheld from any amounts payable to
the Lender hereunder, the amounts so payable to the Lender shall be increased to
the extent necessary to yield to the Lender (after payment of all Non-Excluded
Taxes and Other Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement, PROVIDED, however, that
the Borrower shall not be required to increase any such amounts payable to the
Lender with respect to any Non-Excluded Taxes imposed on amounts payable to the
Lender at the time the Lender becomes a party to this Agreement, except to the
extent that the Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
Non-Excluded Taxes pursuant to this paragraph.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Lender a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes or
Other Taxes when due to the appropriate taxing authority or fails to remit to
the Lender the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lender for any incremental taxes, interest or
penalties that may become payable by the Lender as a result of any such failure.
(d) The agreements in this Section shall survive the termination of
this Agreement and the payment of the Term Loan and all other amounts payable
hereunder.
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SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make the Term
Loan, the Borrower represents and warrants to the Lender that:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each Group Member is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to carry on its business. Each Group Member is duly qualified as a
foreign corporation or is otherwise duly qualified to transact business and is
in good standing in each jurisdiction in which the failure so to qualify would,
either individually or in the aggregate, have a Material Adverse Effect.
3.2 SUBSIDIARIES; JOINT VENTURES. The Borrower does not currently own
or control, directly or indirectly, any interest in any other corporation,
association, or other business entity other than the Subsidiaries set forth on
SCHEDULE 3.2. The Borrower, either directly or through one of its Subsidiaries,
holds all of the issued and outstanding capital stock of each of the
Subsidiaries. The Borrower is not a participant in any joint venture,
partnership or similar arrangement.
3.3 AUTHORIZATION. All corporate action on the part of each Loan Party,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the other Loan Documents, the
performance of all obligations of the Borrower hereunder and thereunder and, in
the case of the Borrower, the authorization of the borrowing of the Term Loan on
the terms and conditions of this Agreement has been taken or will be taken prior
to the Closing Date, and the Loan Documents, when executed and delivered by each
Loan Party party thereto, shall constitute valid and legally binding obligations
of such Loan Party, enforceable against such Loan Party in accordance with their
respective terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, and other laws of general
application affecting enforcement of creditors' rights generally, as limited by
laws relating to the availability of specific performance, injunctive relief, or
other equitable remedies. All corporate action on the part of each Loan Party
and its predecessors, officers, directors, stockholders and subsidiaries
necessary for the authorization, execution and/or delivery, as applicable, for
all past corporate actions was obtained.
3.4 GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority of the United States is required
in connection with the consummation of the transactions contemplated by this
Agreement, except for (i) consents, authorizations, filings and notices
described in SCHEDULE 3.4, which consents, authorizations, filings and notices
have been obtained or made and are in full force and effect and (ii) the filings
referred to in Section 3.26.
3.5 LITIGATION. Except as set forth on SCHEDULE 3.5, there is no
action, suit, proceeding or investigation pending or, to the Borrower's
knowledge, currently threatened against the Borrower or any of its Subsidiaries,
or any basis therefor known to the Borrower, that questions the validity of the
Loan Documents or the right of the Loan Parties to enter into them, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any Material Adverse Effect.
Except as set forth on SCHEDULE 3.5, neither the Borrower nor any of its
Subsidiaries is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. Except as set forth on SCHEDULE 3.5, there is no action, suit,
proceeding or investigation by the Borrower or any of its Subsidiaries currently
pending or which the Borrower or any of its Subsidiaries intends to initiate.
The foregoing includes, without limitation, actions pending or threatened (or
any basis therefor known to the Borrower) involving the prior employment of any
of the Borrower's or its Subsidiaries' employees, their use in connection with
18
the Borrower's or its Subsidiaries' business of any information or technologies
allegedly proprietary to any of their former employers, or their obligations
under any agreements with prior employers.
3.6 INTELLECTUAL PROPERTY. Each Group Member owns or possesses
sufficient legal rights to all patents, trademarks, service marks, tradenames,
copyrights, trade secrets, licenses, information and proprietary rights and
processes (collectively, "INTELLECTUAL PROPERTY RIGHTS") necessary for its
business without any conflict with, or infringement of, the rights of others. To
the Borrower's knowledge, no third party is infringing or violating any Group
Member's Intellectual Property Rights. The Borrower has not received any written
communications alleging that any Group Member has violated or, by conducting its
business, would violate any of the Intellectual Property Rights of any other
person or entity. Except with respect to license agreements entered into in the
ordinary course of a Group Member's business or as disclosed on SCHEDULE 3.6,
there are no outstanding options, licenses or agreements of any kind related to
the foregoing, nor is any Group Member bound by, or a party to, any options,
licenses or agreements of any kind with respect to Intellectual Property Rights
of any other forms.
3.7 CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENTS. Each
officer, independent contractor, consultant and employee of the Borrower
(collectively, "SERVICE PROVIDERS") has entered into an agreement with the
Borrower regarding confidentiality, non-solicitation of employees and customers
and assignment of all Intellectual Property Rights, technical information and
other information developed and/or worked on by such Service Provider while
employed or engaged with the Borrower (each, a "CONFIDENTIALITY AND INVENTION
ASSIGNMENT AGREEMENT"). To the Borrower's knowledge, (i) no past or present
Service Provider is in violation of any term of any Confidentiality and
Invention Assignment Agreement between the Borrower and such Service Provider;
and (ii) it is not nor will it be necessary to use any inventions of any of its
Service Providers (or persons it currently intends to hire) made prior to their
employment or engagement by the Borrower. Each Service Provider hired or engaged
by the Borrower after the date hereof shall, prior to their employment or
engagement with the Borrower, enter into a Confidentiality and Invention
Assignment Agreement with the Borrower.
3.8 COMPLIANCE WITH OTHER INSTRUMENTS. No Group Member is in violation
in any respect or default of any Requirements of Law, which violation or default
is reasonably likely to result in a Material Adverse Effect. No event has
occurred which with the passage of time or the giving of notice, or both, would
constitute a material breach of or default under any of the foregoing, which
material violation or breach or default is reasonably likely to result in a
Material Adverse Effect. Except as set forth on SCHEDULE 3.8, the execution,
delivery and performance of the Loan Documents and the consummation of the
transactions contemplated thereby will not result in any such violation or
breach or be in conflict with or constitute, with or without the passage of time
and giving of notice, either a default under any such provision, agreement,
commitment, arrangement, license, instrument, judgment, order, writ, decree or
contract or an event which results in the creation of any lien, charge or
encumbrance upon any assets of any Loan Party (other than the Liens created by
the Security Documents.) Neither the execution or delivery of this Agreement,
nor the carrying on of any Group Member's business by the employees of such
Group Member, nor the conduct of such Group Member's business as proposed, will
conflict in any material respect with or result in a material breach of the
terms, conditions, or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such Group Member's
employees is now obligated.
3.9 AGREEMENTS; ACTION.
(a) There are no agreements, understandings or proposed transactions
between the Borrower and any of its officers, directors, Affiliates or any
Affiliate thereof (other than this Agreement and the other Loan Documents).
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(b) Except as explicitly contemplated by the Loan Documents, and
agreements entered into in the ordinary course of business or set forth on
SCHEDULE 3.9, there are no agreements, understandings, instruments, contracts or
proposed transactions to which any Group Member is a party or by which it is
bound that involve (i) obligations (contingent or otherwise) of, or payments to,
any Group Member in excess of $50,000, (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from any Group Member,
or (iii) the grant of rights to manufacture, produce, assemble, license, market,
or sell its products to any other person or affect the Borrower's exclusive
right to develop, manufacture, assemble, distribute, market or sell its
products.
(c) No Group Member has (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any Indebtedness in excess of $50,000 or in
excess of $100,000 in the aggregate (other than under this Agreement and as set
forth on SCHEDULE 6.2(c)), (iii) made any loans or advances to any person, other
than ordinary advances to such Group Member's employees for business expenses,
or (iv) sold, exchanged or otherwise disposed of any of its assets or rights,
other than the sale of its inventory in the ordinary course of business.
(d) Except as disclosed in SCHEDULE 3.9 or as set out in the Loan
Documents, the Borrower has not entered into any binding letters of intent with
any corporation, partnership, association, other business entity or any
individual regarding (i) the consolidation or merger of the Borrower with or
into any such corporation or other business entity, (ii) the sale, conveyance or
disposition of all or substantially all of the assets of the Borrower or a
transaction or series of transactions in which more than 50% of the voting power
of the Borrower is disposed of, or (iii) any other form of acquisition,
liquidation, dissolution or winding-up of the Borrower.
3.10 NO CONFLICT OF INTEREST. No Group Member is indebted, directly or
indirectly, to any of its officers or directors, in any amount whatsoever, other
than in connection with expenses or advances of expenses incurred in the
ordinary course of business or relocation expenses of employees. Except as set
forth on SCHEDULE 3.10, none of any Group Member's officers or directors are,
directly or indirectly, indebted to such Group Member (other than in connection
with purchases of such Group Member's stock) or, to the Borrower's knowledge,
have any direct or indirect ownership interest in any firm or corporation with
which any Group Member is affiliated or with which any Group Member has a
business relationship, or any firm or corporation which competes with any Group
Member (other than ownership of stock in, but not exceeding two percent (2%) of
the outstanding capital stock of, any publicly traded company that competes with
such Group Member). To the Borrower's knowledge, except as set forth on SCHEDULE
3.10, none of any Group Member's officers or directors is, directly or
indirectly, interested in any material contract with any Group Member. Except as
set forth on SCHEDULE 3.10, no Group Member is a guarantor of any Indebtedness
of any other person, firm or corporation.
3.11 TITLE TO PROPERTY AND ASSETS. Each Group Member has good and valid
title to all of its properties and assets, both real and personal, and has good
title to all its leasehold interests, in each case free and clear of all Liens,
except for Permitted Liens. Each Group Member owns or leases all properties and
assets reasonably necessary to the operation of its business as now conducted.
With respect to the property and assets it leases, each Group Member is in
compliance with such leases and, to such Group Member's knowledge, holds a valid
leasehold interest free of any Liens, except for Permitted Liens.
3.12 FINANCIAL STATEMENTS. The consolidated balance sheet, statement of
operations and statement of cash flows of the Borrower for the fiscal year ended
December 31, 2000 and the unaudited consolidated balance sheet, statement of
operations and statement of cash flows of the Borrower for the nine months ended
September 30, 2001 (collectively, the "FINANCIAL STATEMENTS") have
20
been prepared in accordance with GAAP consistently applied (except that the
unaudited financial statements do no contain footnotes and are subject to normal
year-end audit adjustments). The Financial Statements are complete in all
material respects and in accordance with the books and records of the Group
Members and fairly present the financial condition and operating results of the
Group Members as of the dates, and for the periods, indicated therein (except
that the unaudited financial statements do no contain footnotes and are subject
to normal year-end audit adjustments). Except as set forth in the Financial
Statements, no Group Member has any material liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business subsequent to September 30, 2001, (ii) obligations under contracts and
commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in the Financial
Statements, and (iii) performance obligations of the Borrower under the Equity
Investment documents.
3.13 CHANGES. Except as set forth on SCHEDULE 3.13, since September 30,
2001 there has not been:
(a) any change in the assets, liabilities, financial condition or
operating results of the Borrower from that reflected in the Financial
Statements, except changes in the ordinary course of business that have not had,
in the aggregate, a Material Adverse Effect;
(b) any damage, destruction, loss or other occurrence or development
that has had a Material Adverse Effect;
(c) any waiver or compromise by the Borrower of a valuable right or any
material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or encumbrance or
payment of any obligation by the Borrower, except in the ordinary course of
business and that is not material to the assets, business, properties or
financial condition or operating results of the Borrower;
(e) any material change or amendment to a material contract or
agreement by which the Borrower or any of its assets or properties is bound or
subject;
(f) any material change or amendment in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any officer or key
employee of the Borrower; and the Borrower, is not aware of any impending
resignation or termination of employment of any such officer or key employee;
(i) any transfer of a security interest in, or Lien, created by any
Group Member, with respect to any of its material properties or assets, except
for Permitted Liens;
(j) any loans or guarantees made by any Group Member to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
21
(k) any declaration, setting aside or payment or other distribution in
respect to any of the Borrower's capital stock, or any direct or indirect
redemption, purchase, or other acquisition of any of such stock by the Borrower;
(l) to the Borrower's knowledge, any other event or condition of any
character that might have a Material Adverse Effect; or
(m) any arrangement or commitment by the Borrower to do any of the
things described in this Section 3.13.
3.14 DISTRIBUTIONS. There has been no declaration or payment by the
Borrower of any dividend, nor any distribution by the Borrower of any assets of
any kind, to any of its stockholders.
3.15 TAX RETURNS AND PAYMENTS. Except as set forth on SCHEDULE 3.15,
each Group Member has filed all tax returns and reports as required by
applicable law and such tax returns and reports are true and correct in all
material respects. Except as set forth on SCHEDULE 3.15, each Group Member has
paid all taxes, fees, assessments and other governmental charges upon such Group
Member, or upon any of its properties, income, or franchises, shown in such
returns and on assessments received by such Group Member to be due as of the
date hereof and no such taxes or assessments are being contested.
3.16 INSURANCE. The Borrower has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed, and the Borrower has such other insurance
policies and coverages as are customary in the Borrower's industry.
3.17 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.17 sets forth all currently
effective employment contracts, deferred compensation arrangements, bonus plans,
incentive plans, profit sharing plans, retirement agreements or other employee
compensation agreements. No Group Member has any Employee Benefit Plan as
defined in the Employee Retirement Income Security Act of 1974, as amended.
3.18 LABOR AGREEMENTS AND ACTIONS. No Group Member is bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of such
Group Member, has sought to represent any of the employees, representatives or
agents of such Group Member. There is no strike or other labor dispute involving
any Group Member pending, or to the knowledge of such Group Member threatened,
which could have a Material Adverse Effect, nor is any Group Member aware of any
labor organization activity involving its employees. Except as set forth on
SCHEDULE 3.18, the employment of each officer and employee of each Group Member
is terminable at the will of such Group Member. The service of each consultant
and independent contractor is terminable by such Group Member upon not more than
thirty (30) days prior written notice. To its knowledge, each Group Member has
complied in all material respects with all applicable state and federal equal
employment opportunity laws and with other laws related to employment.
3.19 COMPLIANCE WITH ENVIRONMENTAL REQUIREMENTS. To the Borrower's
knowledge, it has obtained all material permits, licenses and other
authorizations required under federal, state and local laws relating to
pollution or protection of the environment. The Borrower has not violated any
applicable Environmental Law, the violation of which is reasonably likely to
result in a material adverse change in the financial condition, assets,
liabilities, operations or financial performance of the Borrower. To the
knowledge of the Borrower, there are no present requirements of any applicable
Environmental Law which are due to be imposed upon it which will materially
increase its cost of complying with the Environmental Laws. All past on-site
generation, treatment, storage and disposal of Waste, including
22
Hazardous Waste, by the Borrower and, to its knowledge, by its predecessors have
been done in compliance with the currently applicable Environmental Laws, and
all past off-site treatment, storage and disposal of Waste, including Hazardous
Waste, generated by the Borrower and, to its knowledge, by its predecessors have
been done in compliance with the currently applicable Environmental Laws. As
used in this Agreement, the terms (i) "ENVIRONMENTAL LAWS" include, but are not
limited to, any federal, state, local or foreign law, statute, charter or
ordinance, and any rule, regulation, binding interpretation, binding policy,
permit, order, court order or consent decree issued pursuant to any of the
foregoing, which pertains to, governs or otherwise regulates any of the
following activities, including, without limitation, (a) the emission,
discharge, release or spilling of any substance into the air, surface water,
groundwater, soil or substrata; (b) the manufacturing, processing, sale,
generation, treatment, storage, disposal labeling or other management of any
Waste, Hazardous Substance or Hazardous Waste, and (ii) "WASTE," "HAZARDOUS
SUBSTANCE," and "HAZARDOUS WASTE" include any substance defined as such by any
applicable Environmental Law.
3.20 PERMITS. Each Group Member has all franchises, permits, licenses
and any similar authority necessary for the conduct of its business, the lack of
which could result in a Material Adverse Effect and, to its knowledge, it can
obtain, without undue burden or expense, any similar authority for the conduct
of its business as planned to be conducted. Except as set forth on SCHEDULE
3.20, no Group Member is in default in any material respect under any of such
franchises, permits, licenses or other similar authority.
3.21 DISCLOSURE. The Borrower has made available to the Lender all
material information relating to the Group Members. This Agreement, including
all representations herein by the Borrower, each Loan Document and any exhibits
hereto or any certificate furnished or to be furnished to the Lender, taken
together, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made.
3.22 COMPLIANCE WITH OTHER LAWS. Except as set forth on SCHEDULE 3.22,
the Borrower has complied in all material respects with all laws, statutes,
rules, regulations and orders of federal, state, local and foreign agencies and
authorities, applicable to its business, properties and operations.
3.23 FEDERAL REGULATIONS. No part of the proceeds of the Term Loan, and
no other extensions of credit hereunder, will be used for "buying" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in effect or for any
purpose that violates the provisions of the Regulations of the Board. If
requested by the Lender, the Borrower will furnish to the Lender a statement to
the foregoing effect in conformity with the requirements of FR Form G-3 or FR
Form U-1, as applicable, referred to in Regulation U.
3.24 INVESTMENT COMPANY ACT; OTHER REGULATIONS. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) that limits its ability to incur Indebtedness.
3.25 USE OF PROCEEDS. The proceeds of the Term Loan shall be used to
repay the CSI Debt and a portion of the Xxxxx Debt, and to pay closing fees and
expenses payable hereunder.
3.26 SECURITY DOCUMENTS. (a) The Guarantee and Collateral Agreement is
effective to create for the benefit of the Lender, a legal, valid and
enforceable security interest in the Collateral
23
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Lender, and in the case of
the other Collateral described in the Guarantee and Collateral Agreement, when
financing statements and other filings specified on SCHEDULE 3.26 in appropriate
form are filed in the offices specified on SCHEDULE 3.26, the Guarantee and
Collateral Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person (except Liens permitted by Section 6.4).
3.27 SOLVENCY. Each Loan Party is, and after giving effect to the Term
Loan and the incurrence of all Indebtedness and obligations being incurred in
connection herewith and therewith will be and will continue to be, Solvent.
3.28 CERTAIN DOCUMENTS. The Borrower has delivered to the Lender a
complete and correct copy of the Equity Investment documentation, including any
amendments, supplements or modifications with respect to any of the foregoing.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO TERM LOAN. The agreement of the Lender to make the
Term Loan is subject to the satisfaction, prior to or concurrently with the
making of such Term Loan on the Closing Date, of the following conditions
precedent:
(a) CREDIT AGREEMENT; GUARANTEE AND COLLATERAL AGREEMENT. The Lender
shall have received (i) this Agreement, executed and delivered by the Borrower
and the Lender, (ii) the Guarantee and Collateral Agreement, executed and
delivered by the Borrower and each Subsidiary Guarantor and (iii) an
Acknowledgement and Consent in the form attached to the Guarantee and Collateral
Agreement, executed and delivered by each Issuer (as defined therein), if any,
that is not a Loan Party, and any indemnification, subordination, warrant and/or
other document that the Lender shall determine to be necessary or desirable.
(b) WARRANT. The Lender shall have received the Warrant, duly executed
and delivered by the Borrower.
(c) INTERCREDITOR AGREEMENT. The Intercreditor Agreement shall have
been duly executed and delivered by all parties thereto.
(d) EQUITY INVESTMENT. The following transactions shall have been
consummated, in each case on terms and conditions reasonably satisfactory to the
Lender:
(i) The Borrower shall have received at least $14,800,000 in
gross proceeds (including up to $2,250,000 in proceeds from the
cancellation of indebtedness) from the issuance of, and at least
$900,000 in commitments to purchase, the Series F Preferred Stock of
the Borrower with rights and restrictions similar to the existing
Series E Preferred Stock and on such terms as may be acceptable to the
Lender to existing shareholders of the Borrower (such transaction, the
"EQUITY INVESTMENT");
(ii) The Borrower shall have received at least $1,000,000 in
gross proceeds from the repayment of debt owing to it; and
24
(iii) (A) The Lender shall have received satisfactory evidence
that the CSI Debt shall have been terminated and all amounts
thereunder shall have been paid in full, (B) satisfactory arrangements
shall have been made for the termination of all Liens granted in
connection therewith, (C) the Lender shall have received satisfactory
evidence that $4,000,000 of the Xxxxx Debt shall have been repaid and
(D) the Lender shall be satisfied with the terms of the Xxxxx Debt and
the M Data Debt.
(e) FINANCIAL STATEMENTS. The Lenders shall have received unaudited
interim consolidated financial statements of the Borrower for each fiscal month
and quarterly period ended subsequent to the date of the latest audited
financial statements received by the Lender as to which such financial
statements are available, and such financial statements shall not, in the
reasonable judgment of the Lender, reflect any material adverse change in the
business prospects or consolidated financial condition of the Borrower.
(f) APPROVALS. (i) All governmental and third party approvals or
consents necessary in connection with the Equity Investment, the continuing
operations of the Group Members and the transactions contemplated hereby shall
have been obtained and be in full force and effect. (ii) The Lender shall have
received all requisite corporate approvals necessary to authorize the execution,
delivery and performance of this Agreement and the making of the Term Loan to
the Borrower.
(g) LIEN SEARCHES. The Lender shall have received the results of a
recent lien search in each of the jurisdictions where assets of the Borrower are
located, and such search shall reveal no liens on any of the assets of the Loan
Parties except for Liens permitted by Section 6.4 or discharged on or prior to
the Closing Date pursuant to documentation satisfactory to the Lender.
(h) FEES. The Lender shall have received all fees required to be paid,
and all reasonable expenses incurred by the Lender for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), in
connection with due diligence, preparation, execution, filing and recording of
this facility and any documents executed and delivered in connection herewith,
whether or not the transaction closes, on or before the Closing Date. All such
amounts will be paid with proceeds of the Term Loan made on the Closing Date and
will be reflected in the funding instructions given by the Borrower to the
Lender on or before the Closing Date.
(i) CLOSING CERTIFICATE; CERTIFIED CERTIFICATE OF INCORPORATION; GOOD
STANDING CERTIFICATES. The Lender shall have received (i) a certificate of each
Loan Party, dated the date hereof, substantially in the form of EXHIBIT C, with
appropriate insertions and attachments, including the certificate of
incorporation of each Loan Party that is a corporation certified by the relevant
authority of the jurisdiction of organization of such Loan Party, and (ii) a
long form good standing certificate for each Loan Party from its jurisdiction of
organization.
(j) LEGAL OPINIONS. The Lender shall have received the legal opinion of
(i) Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel to the Borrower and its Subsidiaries,
substantially in the form of EXHIBIT E, and (ii) local Delaware counsel with
respect to matters of perfection, in form and substance satisfactory to the
Lender.
(k) PLEDGED STOCK; STOCK POWERS; PLEDGED NOTES. The Lender shall have
received (i) the certificates representing the shares of Capital Stock pledged
pursuant to the Guarantee and Collateral Agreement, together with an undated
stock power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof and (ii) each promissory note (if any) pledged to
the Lender pursuant to the Guarantee and Collateral Agreement endorsed (without
recourse) in blank (or accompanied by an executed transfer form in blank) by the
pledgor thereof.
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(l) FILINGS, REGISTRATIONS AND RECORDINGS. Each document (including any
Uniform Commercial Code financing statement) required by the Security Documents
or under law or reasonably requested by the Lender to be filed, registered or
recorded in order to create in favor of the Lender, for the benefit of the
Lender, a perfected Lien on the Collateral described therein, prior and superior
in right to any other Person (other than with respect to Liens expressly
permitted by Section 6.4), shall be in proper form for filing, registration or
recordation.
(m) SOLVENCY CERTIFICATE. The Lender shall have received a certificate
of solvency from the chief financial officer of the Borrower.
(n) INSURANCE. The Lender shall have received insurance certificates
satisfying the requirements of Section 5.2(b) of the Guarantee and Collateral
Agreement.
(o) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents shall be
true and correct on and as of such date as if made on and as of such date.
(p) NO DEFAULT. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Term Loan.
(q) STRATEGIC ALLIANCE AGREEMENT AND SALES CHANNEL AGREEMENT. The
Lender and the Borrower shall have executed and delivered an amended and
restated Strategic Alliance Agreement and Sales Channel Agreement, together with
a software license and escrow agreement, on terms satisfactory to the Lender and
the Borrower and approved by any party whose consent is required thereto.
SECTION 5. AFFIRMATIVE COVENANTS
The Borrower agrees that, so long as the Term Loan or other amount is
owing to the Lender hereunder, the Borrower shall and shall cause each of its
Subsidiaries to:
5.1 FINANCIAL STATEMENTS. Furnish to the Lender:
(a) as soon as available, but in any event within 120 days after the
end of each fiscal year of the Borrower, a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the end of
such year and the related audited consolidated statements of income and of cash
flows for such year, setting forth in each case in comparative form the figures
for the previous year, reported on without a "going concern" or like
qualification or exception (other than with respect to fiscal year 2001), or
qualification arising out of the scope of the audit, by Ernst & Young LLP or
other independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than 45 days after
the end of each of the first three quarterly periods of each fiscal year of the
Borrower, the unaudited consolidated balance sheet of the Borrower as of the end
of such quarter and the related unaudited consolidated financial statements of
income and of cash flows for such quarter and the portion of the fiscal year
through the end of such quarter (including schedules, to the extent applicable),
setting forth in each case beginning with the quarter ended June 30, 2002 and
for each quarterly period thereafter, in comparative form the figures for the
previous year, certified by a Responsible Officer as being fairly stated in all
material respects (subject to normal year-end audit adjustments); and
(c) as soon as available, but in any event not later than 45 days after
the end of each month occurring during each fiscal year of the Borrower (other
than the third, sixth, ninth and twelfth
26
such month), the unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such month and the related unaudited consolidated
statements of income and of cash flows for such month and the portion of the
fiscal year through the end of such month, setting forth in each case (beginning
with the month ended April 30, 2002 and for each month thereafter) in
comparative form the figures for the previous year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP,
subject to year-end audit adjustments, applied consistently throughout the
periods reflected therein and with prior periods (except as approved by such
accountants or officer, as the case may be, and disclosed therein).
5.2 CERTIFICATES; OTHER INFORMATION. Furnish to the Lender:
(a) concurrently with the delivery of any financial statements pursuant
to Section 5.1, (i) a certificate of a Responsible Officer stating that, to the
best of each such Responsible Officer's knowledge, the Borrower during such
period has observed or performed all of its covenants and other agreements, and
satisfied every condition contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or satisfied by it,
and that such Responsible Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate and (ii) in the case of
quarterly or annual financial statements, (x) a Compliance Certificate
containing all information and calculations necessary for determining compliance
by each Group Member with the provisions of this Agreement referred to therein
as of the last day of the fiscal quarter or fiscal year of the Borrower, as the
case may be (it being understood that failure to demonstrate such compliance
shall not in and of itself be deemed a breach of this Section 5.2(a)), and (y)
to the extent not previously disclosed to the Lender, a listing of any county or
state within the United States where the Borrower keeps inventory or equipment
and of any Intellectual Property Rights acquired by the Borrower since the date
of the most recent list delivered pursuant to this clause (y) (or, in the case
of the first such list so delivered, since the Closing Date);
(b) as soon as available, and in any event no later than 30 days prior
to the end of each fiscal year of the Borrower, a detailed consolidated budget
for the following fiscal year (including a projected consolidated balance sheet
of the Borrower and its Subsidiaries as of the end of the following fiscal year,
the related consolidated statements of projected cash flow and projected income
and a description of the underlying assumptions applicable thereto), and, as
soon as available, significant revisions, if any, of such budget and projections
with respect to such fiscal year (collectively, the "PROJECTIONS"), which
Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Projections are based on reasonable estimates,
information and assumptions and that such Responsible Officer has no reason to
believe that such Projections are incorrect or misleading in any material
respect;
(c) within five days after the same are sent and to the extent not
otherwise delivered hereunder, copies of all financial statements and reports
that the Borrower sends to the holders of any class of its debt securities or
public equity securities and, within five days after the same are filed, to the
extent not publicly available, copies of all financial statements and reports
that the Borrower may make to, or file with, the SEC; and
(d) promptly, such additional financial and other information as the
Lender may from time to time reasonably request.
27
5.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its material
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with, and to the extent required by, GAAP with respect thereto
have been provided on the books of the relevant Group Member.
5.4 MAINTENANCE OF EXISTENCE; COMPLIANCE. (a) (i) Preserve, renew and
keep in full force and effect its organizational existence and (ii) take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 6.5 and except, in the case of clause (ii) above,
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect; and (b) comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.
5.5 MAINTENANCE OF PROPERTY; INSURANCE. (a) Keep all property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business.
5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and (b) permit
representatives of the Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records upon reasonable
prior notice at any reasonable time and not more than twice during any fiscal
quarter (so long as an Event of Default has not occurred and is continuing) and
to discuss the business, operations, properties and financial and other
condition of the Group Members with officers and employees of the Group Members
and with their independent certified public accountants; and (c) in the event
that neither the Lender nor an Affiliate of the Lender has a representative who
is a member of the Borrower's Board of Directors, grant the Lender or
representatives of the Lender the right to have one representative attend all
meetings of the Board of Directors of the Borrower as an observer, including all
committees and sub-committees and provide the Lender or representatives of the
Lender access to all written communications, minutes and materials.
5.7 NOTICES. Promptly upon obtaining knowledge thereof give notice to
the Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of any Group Member or (ii) litigation, investigation or proceeding
that may exist at any time between any Group Member and any Governmental
Authority, that in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting any Group Member (i) in
which the amount involved is $500,000 or more and not covered by insurance, (ii)
in which injunctive or similar relief is sought or (iii) which relates to any
Loan Document;
(d) any bona fide interest from a third party to acquire all of the
assets or shares of the Borrower, details of any such proposal; and
28
(e) any development or event that has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 5.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the relevant Group Member proposes to take with
respect thereto.
5.8 ENVIRONMENTAL LAWS. (a) Comply in all material respects with, and
ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) In the event that a Group Member acquires real property, conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws.
5.9 ADDITIONAL COLLATERAL, ETC. (a) With respect to any property
acquired after the Closing Date by any Group Member (other than (x) any property
described in paragraph (b), (c) or (d) below and (y) property acquired by any
Excluded Foreign Subsidiary) as to which the Lender does not have a perfected
Lien, promptly (i) execute and deliver to the Lender such amendments to the
Guarantee and Collateral Agreement or such other documents as the Lender deems
necessary or advisable to grant to the Lender a security interest in such
property to the extent set forth in the Guarantee and Collateral Agreement and
(ii) take all actions necessary or advisable to grant to the Lender a perfected
first priority (or, with respect to any property securing the Excluded Debt
(other than the Xxxxx Debt), a perfected second priority) security interest in
such property, including the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Lender.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $500,000 acquired after
the Closing Date by any Group Member (other than real property acquired by any
Excluded Foreign Subsidiary), promptly (i) execute and deliver a first priority
mortgage, for the benefit of the Lender, covering such real property, (ii) if
requested by the Lender, provide the Lenders with (A) title and extended
coverage insurance covering such real property in an amount at least equal to
the purchase price of such real property (or such other amount as shall be
reasonably specified by the Lender) as well as a current ALTA survey thereof,
together with a surveyor's certificate and (B) any consents or estoppels
reasonably deemed necessary or advisable by the Lender in connection with such
mortgage, each of the foregoing in form and substance reasonably satisfactory to
the Lender and (iii) if requested by the Lender, deliver to the Lender legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Lender.
(c) With respect to any new Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date by any Group Member
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly (i)
execute and deliver to the Lender such amendments to the Guarantee and
Collateral Agreement as the Lender deems necessary or advisable to grant to the
Lender, for the benefit of the Lender, a perfected first priority (or, with
respect to any property securing the Excluded Debt (other than the Xxxxx Debt
and the M Data Debt), a perfected second priority) security interest in the
Capital Stock of such new Subsidiary that is owned by any Group Member, (ii)
deliver to the Lender the certificates
29
representing such Capital Stock, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the relevant Group
Member, (iii) cause such new Subsidiary (A) to become a party to the Guarantee
and Collateral Agreement, (B) to take such actions necessary or advisable to
grant to the Lender a perfected first priority (or, with respect to any property
securing the Excluded Debt (other than the Xxxxx Debt), a perfected second
priority) security interest in the Collateral described in the Guarantee and
Collateral Agreement with respect to such new Subsidiary, including the filing
of Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement or by law or as may be
requested by the Lender and (C) to deliver to the Lender a certificate of such
Subsidiary, substantially in the form of EXHIBIT C, with appropriate insertions
and attachments, and (iv) if requested by the Lender, deliver to the Lender
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the Lender.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by any Group Member (other than by any Group
Member that is an Excluded Foreign Subsidiary), promptly (i) execute and deliver
to the Lender such amendments to the Guarantee and Collateral Agreement as the
Lender deems necessary or advisable to grant to the Lender, a perfected first
priority (or, with respect to any property securing the Excluded Debt (other
than the Xxxxx Debt and the M Data Debt), a perfected second priority) security
interest in the Capital Stock of such new Subsidiary that is owned by any such
Group Member (provided that in no event shall more than 66% of the total
outstanding voting Capital Stock of any such new Subsidiary be required to be so
pledged), (ii) deliver to the Lender the certificates representing such Capital
Stock, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the relevant Group Member, and take such other action
as may be necessary or, in the opinion of the Lender, desirable to perfect the
Lender's security interest therein, and (iii) if requested by the Lender,
deliver to the Lender legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Lender.
5.10 PAY-OFF LETTERS; PROOF OF PAYMENT. (a) Use commercially best
efforts to obtain executed pay-off letters from the holders of the CSI Debt to
the extent not previously provided to the Lender.
(b) Within 10 days after the Closing Date, provide satisfactory
evidence to the Lender with respect to the repayment in full of the CSI Debt.
SECTION 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Term Loan or other
amount is owing to the Lender hereunder, the Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly:
6.1 FINANCIAL CONDITION COVENANTS.
(a) CASH FLOW LEVERAGE RATIO. Permit the Cash Flow Leverage Ratio as at
the last day of any period of four consecutive fiscal quarters of the Borrower
(or, if less, the number of full fiscal quarters subsequent to the Closing Date)
ending with any fiscal quarter set forth below to exceed the ratio set forth
below opposite such fiscal quarter:
Cash Flow
Fiscal Quarter Leverage Ratio
-------------- --------------
12/31/2004 through 09/30/2005 2.3 : 1.0
30
12/31/2005 through 09/30/2006 2.0 : 1.0
12/31/2006 through 12/31/2007 1.5 : 1.0
(b) TOTAL CHARGE COVERAGE RATIO. Permit the Total Charge Coverage Ratio
for any period of four consecutive fiscal quarters of the Borrower (or, if less,
the number of full fiscal quarters subsequent to the Closing Date) ending with
any fiscal quarter set forth below to be less than the ratio set forth below
opposite such fiscal quarter:
Total Charge
Fiscal Quarter Coverage Ratio
-------------- --------------
03/31/2003 through 12/31/2007 1.1 : 1.0
(c) QUARTERLY REVENUE. Permit the Quarterly Revenue for any fiscal
quarter of the Borrower set forth below to be less than the amount set forth
below opposite such fiscal quarter:
Fiscal Quarter Minimum Quarterly Revenue
-------------- -------------------------
12/31/2001 $9,000,000
03/31/2002 $9,500,000
06/30/2002 $10,500,000
09/30/2002 $11,500,000
12/31/2002 $12,500,000
03/31/2003 $13,500,000
06/30/2003 $14,500,000
09/30/2003 $15,000,000
12/31/2003 through 12/31/2007 $15,500,000
(d) OPERATING CASH FLOW. Permit (i) the Operating Cash Flow for any
fiscal quarter of the Borrower set forth below, or (ii) the Operating Cash Flow
for any period of four consecutive fiscal quarters of the Borrower (the
"TRAILING FOUR-QUARTER OPERATING CASH FLOW") ending with any fiscal quarter set
forth below, to be less than the amount set forth below opposite such fiscal
quarter:
Trailing Four-quarter
Fiscal Quarter Operating Cash Flow Operating Cash Flow
-------------- ------------------- ---------------------
12/31/2001 $0 NA
03/21/2002 $300,000 NA
06/30/2002 $800,000 NA
09/30/2002 $1,300,000 $2,400,000
12/31/2002 $1,800,000 $4,200,000
03/31/2003 $2,200,000 $6,100,000
06/30/2003 $2,600,000 $7,900,000
09/30/2003 $3,000,000 $9,600,000
12/31/2003 $3,250,000 $11,050,000
03/31/2004 $3,500,000 $12,350,000
06/30/2004 $3,750,000 $13,500,000
09/30/2004 $4,000,000 $14,500,000
(e) The covenants set forth in Sections 6.1(a), (b) and (d) above shall
not be applicable to any fiscal quarter for which a Surplus Balance has been
achieved. If a Surplus Balance has been achieved, the Borrower may increase its
Product Development Costs by up to $10,000,000 over the
31
limitation set forth in Section 6.3, for a period deemed necessary and
reasonable by management, to develop the supplier side e-commerce software
products.
6.2 INDEBTEDNESS. Create, issue, incur, assume, become liable in
respect of or suffer to exist any additional funded Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Borrower to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Borrower or any other Subsidiary;
(c) Indebtedness outstanding on the date hereof and listed on SCHEDULE
6.2(c) and any refinancings, refundings, renewals or extensions thereof
(without increasing, or shortening the maturity of, the principal amount
thereof or increasing the rate of interest thereon (or, with respect to any
refinancing, refunding, renewal or extension of the National City Debt,
increasing the rate of interest to a rate above the then prevailing market
rate) or providing additional collateral with respect thereto (except, with
respect to any refinancing, refunding, renewal or extension of the Xxxxx
Debt, collateral that also becomes subject to a Lien pursuant to the
Security Documents)) (but in any event not including any additional draws
on any outstanding commitments under the National City Debt) (it being
understood that (i) the Lender agrees to enter into an intercreditor
agreement or similar arrangement reasonably necessary to effectuate any
refinancing, refunding, renewal or extension of the M Data Debt or the
National City Debt in a manner consistent with the existing terms thereof
(including with respect to priority) and on terms otherwise reasonably
acceptable to the Lender and (ii) any refinancing, refunding, renewal or
extension of the Xxxxx Debt shall require an assumption by the holder of
the Xxxxx Debt of the Intercreditor Agreement or other similar agreement in
form and substance satisfactory to the Lender); and
(d) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 6.4 in an aggregate
principal amount not to exceed $1,000,000 at any one time outstanding.
6.3 PRODUCT DEVELOPMENT COSTS. Permit the amount of Product Development
Costs to exceed $3,750,000 for each fiscal quarter; PROVIDED that the Borrower
may increase its cumulative Product Development Costs in accordance with Section
6.1(e).
6.4 LIENS. Create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except for Permitted
Liens.
6.5 FUNDAMENTAL CHANGES. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (PROVIDED that the Borrower shall be the continuing or
surviving corporation) or with or into any Wholly Owned Subsidiary
Guarantor (PROVIDED that the Wholly Owned Subsidiary Guarantor shall be the
continuing or surviving corporation);
(b) any Subsidiary of the Borrower may Dispose of any or all of its
assets (i) to the Borrower or any Wholly Owned Subsidiary Guarantor (upon
voluntary liquidation or otherwise)
32
(it being understood that after giving effect to any such Disposition of
all of its assets, such Subsidiary may be dissolved) or (ii) pursuant to a
Disposition permitted by Section 6.6; and
(c) any Investment expressly permitted by Section 6.9 may be
structured as a merger, consolidation or amalgamation.
6.6 DISPOSITION OF PROPERTY. Dispose of any of its property, whether
now owned or hereafter acquired, or, in the case of any Subsidiary, issue or
sell any shares of such Subsidiary's Capital Stock to any Person (it being
understood that this Section 6.6 shall not prohibit the issuance or sale of
shares of the Capital Stock of the Borrower), except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business;
(c) Dispositions permitted by Section 6.5(b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or any Wholly Owned Subsidiary Guarantor; and
(e) the Disposition of other property or assets having a fair market
value not to exceed $2,000,000 in the aggregate during the term of this
Agreement.
6.7 RESTRICTED PAYMENTS. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any Capital Stock of any Group Member, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of any Group Member
(collectively, "RESTRICTED PAYMENTS"), except that so long as no Default or
Event of Default shall have occurred and be continuing, the Borrower may
purchase its common stock or options to purchase its common stock, or Capital
Stock or options to purchase its Capital Stock, from present or former officers
or employees of any Group Member upon the death, disability or termination of
employment of such officer or employee (i) to the extent effected through the
discharge of the Shareholder Notes or (ii) so long as the aggregate amount of
such payments after the date hereof (net of any proceeds received by the
Borrower after the date hereof in connection with resales of any common stock or
common stock options so purchased) shall not exceed $50,000.
6.8 CAPITAL EXPENDITURES. Make or commit to make any Capital
Expenditure, except Capital Expenditures of the Borrower and its Subsidiaries in
the ordinary course of business not exceeding $750,000 in the aggregate for each
fiscal quarter.
6.9 INVESTMENTS. Make any advance, loan, extension of credit (by way of
guaranty or otherwise) or capital contribution to, or purchase any Capital
Stock, bonds, notes, debentures or other debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, "INVESTMENTS"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
33
(c) loans and advances to employees of any Group Member in the
ordinary course of business (excluding loans and advances (i) for travel,
entertainment and relocation expenses and (ii) evidenced by the Shareholder
Notes) in an aggregate amount for all Group Members not to exceed $100,000
at any one time outstanding;
(d) intercompany Investments by any Group Member in the Borrower or
any Person that, prior to such investment, is a Wholly Owned Subsidiary
Guarantor; and
(e) in addition to Investments otherwise expressly permitted by this
Section, Investments by the Borrower or any of its Subsidiaries in an
aggregate amount (valued at cost) not to exceed $2,000,000 during the term
of this Agreement.
6.10 CERTAIN PAYMENTS; MODIFICATIONS OF CERTAIN INSTRUMENTS; SYNTHETIC
PURCHASE AGREEMENTS. (a) Amend, modify, waive or otherwise change, or consent or
agree to any amendment, modification, waiver or other change to, any of the
terms of the Borrower's Certificate of Incorporation or its By-Laws in any
manner materially adverse to the Lender; (b) make or offer to make any optional
or voluntary payment, prepayment, repurchase or redemption of or otherwise
optionally or voluntarily defease or segregate funds with respect to the
Excluded Debt; (c) make or offer to make any payment, prepayment, repurchase or
redemption of or otherwise defease or segregate funds with respect to any
preferred Capital Stock; (d) amend, modify, waive or otherwise change, or
consent or agree to any amendment, modification, waiver or other change to, any
of the terms of the Excluded Debt that (i) would shorten the maturity or
increase the amount of any payment of principal thereof or increase the rate or
shorten any date for payment of interest thereon or provide additional
collateral with respect thereto (except, with respect to the Xxxxx Debt,
collateral that also becomes subject to a Lien pursuant to the Security
Documents), (ii) is materially adverse to the Lender or (iii) involves the
payment of a consent fee; (e) amend, modify, waive or otherwise change, or
consent or agree to any amendment, modification, waiver or other change to, any
of the terms of any preferred Capital Stock that (i) would shorten the scheduled
redemption date or increase the amount of any scheduled redemption payment or
increase the rate or shorten any date for payment of dividends thereon, (ii) is
materially adverse to the Lender or (iii) involves the payment of a consent fee;
or (f) enter into or be party to, or make any payment under, any Synthetic
Purchase Agreement.
6.11 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including any purchase, sale, lease or exchange of property, the rendering of
any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Borrower, any Wholly Owned Subsidiary Guarantor, the
Lender or any Affiliate of the Lender) unless such transaction is (a) otherwise
permitted under this Agreement, (b) in the ordinary course of business of the
relevant Group Member, and (c) upon fair and reasonable terms no less favorable
to the relevant Group Member than it would obtain in a comparable arm's length
transaction with a Person that is not an Affiliate.
6.12 SALES AND LEASEBACKS. Enter into any arrangement with any Person
providing for the leasing by any Group Member of real or personal property that
has been or is to be sold or transferred by such Group Member to such Person or
to any other Person to whom funds have been or are to be advanced by such Person
on the security of such property or rental obligations of such Group Member.
6.13 CHANGES IN FISCAL PERIODS. Permit the fiscal year of the Borrower
to end on a day other than December 31 or change the Borrower's method of
determining fiscal quarters.
6.14 NEGATIVE PLEDGE CLAUSES. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of any Group Member
to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, to secure
34
its obligations under the Loan Documents to which it is a party other than (a)
this Agreement and the other Loan Documents; (b) any agreements governing any
purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective against the
assets financed thereby); and (c) any agreement governing the Excluded Debt.
6.15 CLAUSES RESTRICTING SUBSIDIARY DISTRIBUTIONS. Enter into or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary of the Borrower to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary of the Borrower, (b) make loans or
advances to, or other Investments in, the Borrower or any other Subsidiary of
the Borrower or (c) transfer any of its assets to the Borrower or any other
Subsidiary of the Borrower, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement that has been entered into in connection with the Disposition of
all or substantially all of the Capital Stock or assets of such Subsidiary and
(iii) any restrictions existing under any agreement governing the Excluded Debt.
6.16 LINES OF BUSINESS. Enter into any business, either directly or
through any Subsidiary, except for those businesses in which the Borrower and
its Subsidiaries are engaged on the date of this Agreement or that are
reasonably related thereto (including, without limitation, technical businesses
within the graphic arts industry and e-commerce services).
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of the Term Loan when
due in accordance with the terms hereof; or the Borrower shall fail to pay
any interest on the Term Loan, or any other amount payable hereunder or
under any other Loan Document, within three days after any such interest or
other amount becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or that is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) any Loan Party shall default in the observance or performance of
any agreement contained in Section 6 of this Agreement or Sections 5.5 and
5.7(b) of the Guarantee and Collateral Agreement; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 15 days after notice
to the Borrower from the Lender; or
(e) any Group Member shall (i) default in making any payment of any
principal of any Indebtedness (including any Guarantee Obligation, but
excluding the Loan) on the scheduled or original due date with respect
thereto; or (ii) default in making any payment of any interest on any such
Indebtedness beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained
35
in any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit the holder or
beneficiary of such Indebtedness (or a trustee or agent on behalf of such
holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or (in the
case of any such Indebtedness constituting a Guarantee Obligation) to
become payable; or (iv) default in the observance or performance of any
material agreement or condition or obligation owing to the Lender under any
agreement or instrument; PROVIDED, that a default, event or condition
described in clause (i), (ii) or (iii) of this paragraph (e) shall not at
any time constitute an Event of Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii)
and (iii) of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness the outstanding principal amount of which exceeds
in the aggregate $500,000; or
(f) (i) any Group Member shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts,
or (B) seeking appointment of a receiver, trustee, custodian, conservator
or other similar official for it or for all or any substantial part of its
assets, or any Group Member shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced against any Group Member
any case, proceeding or other action of a nature referred to in clause (i)
above that (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against
any Group Member any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets that results in the entry of an order
for any such relief that shall not have been vacated, discharged, or stayed
or bonded pending appeal within 60 days from the entry thereof; or (iv) any
Group Member shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) any Group Member shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay
its debts as they become due; or
(g) one or more judgments or decrees shall be entered against any
Group Member involving in the aggregate a liability (not paid or fully
covered by insurance as to which the relevant insurance company has not
denied coverage) of $500,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal
within 30 days from the entry thereof; or
(h) any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security Documents
shall cease to be enforceable and of the same effect and priority purported
to be created thereby; or
(i) the guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect (other than as expressly permitted by this Agreement) or any Loan
Party or any Affiliate of any Loan Party shall so assert; or
(j) a Change of Control (as defined in the Borrower's Sixth Amended
and Restated Certificate of Incorporation) shall occur;
36
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to the
Borrower, automatically the Term Loan (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
shall immediately become due and payable, and (B) if such event is any
other Event of Default (other than an Event of Default under Section 7(c)
caused by a breach of Section 6.1) the Lender may declare the Term Loan
(with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable. Except as
expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived by the Borrower.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 8.1. The
Lender and each Loan Party party to the relevant Loan Document may, from time to
time, (a) enter into written amendments, supplements or modifications hereto and
to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lender or of the Loan Parties hereunder or thereunder or (b) waive, on such
terms and conditions as the Lender may specify in such instrument, any of the
requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences. Any such waiver and any such amendment,
supplement or modification shall be binding upon the Lender and the Borrower and
all future holders of the Term Loan. In the case of any waiver, the Loan Parties
and the Lender shall be restored to their former positions and rights hereunder
and under the other Loan Documents, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair any right
consequent thereon.
8.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case the Borrower and the Lender, or to
such other address as may be hereafter notified by the respective parties
hereto:
Borrower: printCafe, Inc.
Forty 00xx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: President
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Lender: Iris Graphics Inc.
0 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxx, President
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
PROVIDED that any notice, request or demand to or upon the Lender shall not be
effective until received.
37
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Lender, any right, remedy, power or privilege
hereunder or under the other Loan Documents shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Term Loan.
8.5 PAYMENT OF EXPENSES AND TAXES. The Borrower agrees (a) to pay or
reimburse the Lender for all reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and execution of, and
any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including the reasonable legal fees to the Lender's counsel, and
filing and recording fees and expenses, with statements with respect to the
foregoing to be submitted to the Borrower prior to the Closing Date (in the case
of amounts to be paid on the Closing Date) and from time to time thereafter on a
quarterly basis or such other periodic basis as the Lender shall deem
appropriate, (b) to pay or reimburse the Lender for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents, including
the fees and disbursements of counsel to the Lender, (c) to pay, indemnify, and
hold the Lender harmless from, any and all recording and filing fees and any and
all liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other taxes, if any, that may be payable or determined to be payable
in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold the Lender and its respective officers, directors,
employees, affiliates, agents and controlling persons (each, an "INDEMNITEE")
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other Loan
Documents and any such other documents, including any of the foregoing relating
to the use of proceeds of the Loan or the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of any Group
Member or any of the Properties and the reasonable fees and expenses of legal
counsel in connection with claims, actions or proceedings by any Indemnitee
against any Loan Party under any Loan Document (all the foregoing in this clause
(d), collectively, the "INDEMNIFIED LIABILITIES"), PROVIDED, that the Borrower
shall have no obligation hereunder to any Indemnitee with respect to Indemnified
Liabilities to the extent such Indemnified Liabilities are (i) based solely upon
a claim of equitable subordination or (ii) found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnitee. Without limiting the
foregoing, and to the extent permitted by applicable law, the Borrower agrees
not to assert and to cause its Subsidiaries not to assert, and hereby waives and
agrees to cause its Subsidiaries to waive, all rights for contribution or any
other rights of recovery with respect to all claims, demands, penalties, fines,
liabilities, settlements, damages, costs and expenses of whatever kind or
nature, under or related to Environmental Laws, that any of them might have by
statute or otherwise against any Indemnitee. All amounts due under this Section
8.5 shall be payable not later than 10 days after written demand therefore.
Statements payable by the Borrower pursuant to this Section 8.5 shall be
submitted to the President of the Borrower (Telephone No. 000-000-0000)
(Telecopy No. 412-456-1151), at the address of the Borrower set forth in Section
8.2, or to such
38
other Person or address as may be hereafter designated by the Borrower in a
written notice to the Lender. The agreements in this Section 8.5 shall survive
repayment of the Loan and all other amounts payable hereunder.
8.6 SUCCESSORS AND ASSIGNS; ASSIGNMENTS. (a) This Agreement shall be
binding upon and inure to the benefit the Borrower and the Lender, all future
holders of the Term Loan and their respective successors and assigns, except
that the Borrower may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of the Lender.
(b) The Lender (an "ASSIGNOR") may, in accordance with applicable law,
at any time and from time to time assign to any Person (an "ASSIGNEE") all or
any part of its rights and obligations under this Agreement and the other Loan
Documents pursuant to an Assignment and Acceptance, executed by such Assignee
and such Assignor; PROVIDED that unless otherwise agreed by the Borrower, no
such assignment to an Assignee shall be in an aggregate principal amount of less
than $2,000,000, in each case except in the case of an assignment of all of the
Lender's interests under this Agreement. Upon such execution, delivery,
acceptance and recording, from and after the effective date determined pursuant
to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of the Lender hereunder as set forth therein, and (y) the
Assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of an Assignor's rights and
obligations under this Agreement, such Assignor shall cease to be a party
hereto) (it being understood that, upon any such assignment, the rights of the
Lenders hereunder shall be exercised by a single, representative Lender acting
at the request of Lenders holding more than 50% of the aggregate unpaid
principal amount of the Term Loan then outstanding). In the case of an
assignment to a financial institution, the Borrower agrees to amend this
Agreement (subject to requisite shareholder approval, which approval the
Borrower shall use commercially best efforts to obtain) to the extent reasonably
requested by the Lender to add provisions with respect to the making or
maintaining of Eurodollar Loans.
8.7 SET-OFF. In addition to any rights and remedies of the Lender
provided by law, the Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise), to set off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Lender or any branch or agency
thereof to or for the credit or the account of the Borrower, as the case may be.
The Lender agrees promptly to notify the Borrower after any such setoff and
application made by the Lender, provided that the failure to give such notice
shall not affect the validity of such setoff and application.
8.8 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Lender.
8.9 SEVERABILITY. Any provision of this Agreement that 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
39
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
8.10 INTEGRATION. This Agreement and the other Loan Documents represent
the entire agreement of the Borrower and the Lender with respect to the subject
matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Lender relative to the subject matter
hereof not expressly set forth or referred to herein or in the other Loan
Documents.
8.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid to the
Borrower at its address set forth in Section 8.2 or at such other address
of which the Lender shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13 ACKNOWLEDGEMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) the Lender has no fiduciary relationship with or duty to the
Borrower arising out of or in connection with this Agreement or any of the
other Loan Documents, and the relationship between the Lender and the
Borrower in connection herewith or therewith is solely that of debtor and
creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby
between the Lender and the Borrower.
40
8.14 RELEASES OF GUARANTEES AND LIENS. At such time as the Term Loan
and the other obligations under the Loan Documents shall have been paid in full,
the Collateral shall be released from the Liens created by the Security
Documents, and the Security Documents and all obligations (other than those
expressly stated to survive such termination) of each Loan Party under the
Security Documents shall terminate, all without delivery of any instrument or
performance of any act by any Person.
8.15 CONFIDENTIALITY. The Lender agrees to keep confidential all
non-public information provided to it by any Loan Party pursuant to this
Agreement that is designated by such Loan Party as confidential; provided that
nothing herein shall prevent the Lender from disclosing any such information (a)
subject to an agreement to comply with the provisions of this Section, to any
actual or prospective Assignee (or any professional advisor to such
counterparty), (b) to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates, (c) upon the
request or demand of any Governmental Authority, (d) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (e) if requested or required to do so in
connection with any litigation or similar proceeding, (f) that has been publicly
disclosed, (g) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires
access to information about the Lender's investment portfolio in connection with
ratings issued with respect to the Lender, or (h) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
8.16 WAIVERS OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
PRINTCAFE, INC., as Borrower
By: /s/ Xxxx X. Xxxx
-------------------------------------
Name: Xxxx X. Xxxx
Title: President and
Chief Executive Officer
IRIS GRAPHICS INC., as Lender
By: /s/ M. Dance
-------------------------------------
Name: M. Dance
Title: Director, Iris &
EVP, Creo Products
